District of New Jersey
Press releases recorded for this federal judicial district.
Executive Office for U.S. Attorneys Recognizes Seven Members of the U.S. Attorney’s Office/District of New Jersey for Outstanding WorkRead the Press Release
NEWARK, N.J. – Seven members of the U.S. Attorney’s Office, District of New Jersey, are among those who were honored by the Department of Justice’s 36th Annual Director’s Awards this year, U.S. Attorney Craig Carpenito announced today.
Executive Assistant U.S. Attorney Rahul Agarwal received a Director’s Award for Superior Performance in the Criminal Division. AUSA Agarwal led the investigation and prosecution of seven Paterson, New Jersey, police officers for crimes including the brutal assault of a suicidal hospital patient; the distribution and sale of narcotics; unlawful vehicle stops, searches, and seizures; unlawful use of force; and the theft and extortion of money and property from Paterson residents. His work, which was described in the local press as “a story of the justice system working,” is an example of the important role that the Department of Justice continues to play in maintaining public trust in our local police departments and in ensuring that every community receives the commitment to public safety to which it is entitled.
Assistant U.S. Attorneys Michael Campion, Chief of the office’s Civil Rights Unit, and Kelly Horan Florio, a member of that unit, each received a Director’s Award for Superior Performance in the Civil Division, for their productive and successful affirmative civil enforcement practice. Collaborating with DOJ’s Civil Rights Division and other Department of Justice colleagues, they zealously pursue and obtain justice on behalf of those who have been deprived of their civil rights. Among other causes, they have fought for the rights of military personnel under the Servicemembers Civil Relief Act, the disabled and mobility-impaired under the Americans with Disabilities Act, the imprisoned under the Civil Rights of Institutionalized Persons Act, victims of discrimination under the Civil Rights Act and the Fair Housing Act, and persons of faith under the Religious Land Use Institutionalized Persons Act. As recognized experts in civil rights, they are frequent speakers at events across New Jersey, educating the public about civil rights and the Department's notable civil rights initiatives, including the Department's Initiative to Combat Sexual Harassment in Housing, Place of Worship Initiative and the Servicemembers and Veterans Initiative.
A team comprised of nine attorneys and eLitigation professionals from the U.S. Attorney’s Office and the Executive Office for U.S. Attorneys (EOUSA) were honored for their cooperative effort in overhauling the eLitigation practices and protocols for the District of New Jersey. The award recipients from the U.S. Attorney’s Office, Jason DeJesus, Sergey Gluzberg, Richard Jones, and AUSA Daniel Shapiro, formulated the Office’s standalone eLitigation Unit; improved the eLitigation competencies of paralegals; developed and automated a common folder structure for civil and criminal cases; instituted an electronic system for the generation and tracking of grand jury subpoenas; and adopted workflows for the intake, processing, review, and production of data. They were honored together with Susan Cooke, John Haried, Tonia Jones, Tammy Reno, and Virginia Vance from EOUSA, who provided exemplary support throughout the restructuring.
“Every day, the men and women who work in our office do their jobs with an extraordinary level of skill and professionalism,” U.S. Attorney Craig Carpenito, District of New Jersey, said. “That our work was recognized in three separate areas this year – criminal, civil and administrative – speaks to that dedication throughout every aspect of our work. I am particularly pleased that the Department this year recognized our office’s enduring commitment to protecting Americans’ civil rights through both affirmative civil enforcement and criminal investigation and prosecution. I congratulate all of the recipients on their achievements and am proud to call myself their colleague.”
The traditional ceremony held in the Great Hall at the Robert F. Kennedy Department of Justice Building had to be cancelled this year in response to the COVID-19 pandemic.
EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.
Consulting/Staffing Company to Pay $345,000 to Resolve Allegations Concerning Violations of Immigration and Department of Labor RegulationsRead the Press Release
NEWARK, N.J. – A Middlesex County, New Jersey, corporation involved in consulting, technology and staffing and using primarily foreign nationals in the United States pursuant to H1-B visas has agreed to resolve allegations that it violated immigration and employment regulations concerning continuous employment and wage requirements, U.S. Attorney Craig Carpenito announced today.
The United States contended that from January 2014 through June 2018 many of Savantis Solutions LLC’s H-1B workers were not paid the required wage in regular intervals at the required wage rate throughout their period of employment. Savantis, based in Edison, New Jersey and formerly known as Vedicsoft Solutions LLC and Vedicsoft Holdings LLC, failed to properly pay many of its H-1B workers in conformance with their applications to the federal government and federal regulations. The United States also contended that Savantis improperly recruited H-1B workers by requesting that they provide security deposits to Savantis prior to Savantis submitting their H-1B Cap lottery applications.
The resolution requires the company to pay $345,365 in restitution, which will be used to pay back wages plus interest to employees and former employees of the company. Savantis cooperated in the investigation of the matter and undertook compliance efforts in response. Pursuant to the agreement, the company is also required to hire an outside law firm to serve as a monitor to ensure ongoing and continued compliance with the relevant rules and regulations for the next three years.
U.S. Attorney Carpenito credited special agents of the Department of Labor, Office of Inspector General, New York Region, under the direction of Special Agent in Charge Michael C. Mikulka; the U.S. Department of Homeland Security, Homeland Security Investigations, Newark Field Office, under the direction of Special Agent in Charge Jason Molina; the Department of Labor, Wage and Hour Division’s Southern New Jersey District Office under the direction of District Director, Charlene Rachor; and U.S. Citizenship and Immigration Services, Office of Fraud Detection and National Security, Vermont Service Center and Newark Field Office, leading to today’s resolution.
The government is represented by Assistant U.S. Attorney David E. Dauenheimer, Deputy Chief of the U.S. Attorney's Office’s Government Fraud Unit in Newark.
Texas Woman Admits Role in Conspiracy to Distribute HeroinRead the Press Release
CAMDEN, N.J. – A Texas woman today admitted her role in a conspiracy to distribute heroin, U.S. Attorney Craig Carpenito announced.
Cristina Godinez, 36, of San Antonio, Texas, pleaded guilty by videoconference before U.S. District Judge Joseph H. Rodriguez to an information charging her with one count of conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin.
Alba Lilia Diaz, 43, of Chicago, Illinois, a co-defendant, pleaded guilty July 28, 2020, to an information charging her with one count of conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin.
According to documents filed in this case and statements made in court:
On July 22, 2019, Diaz travelled to New Jersey to conduct a heroin sale. She provided a sample of heroin and agreed to deliver 15 kilograms of heroin several days later. On July 25, 2019, Diaz and Godinez drove to New Jersey from Chicago with the heroin in their vehicle. When they arrived in New Jersey, Godinez negotiated the sale while Diaz waited with the drugs in a hotel room. Once a price was agreed to, Diaz brought the heroin to the buyer’s car. Special agents from the Department of Homeland Security, Homeland Security Investigations (HSI) arrested the defendants and seized the drugs.
The conspiracy counts to which the defendants pleaded guilty carry a mandatory minimum term of 10 years in prison, a maximum of life in prison and a fine of $10 million, or twice the gross gain or loss caused by the offense. Sentencing for Godinez is scheduled for Jan. 19, 2021. Diaz is scheduled to be sentenced on Nov. 20, 2020.
U.S. Attorney Carpenito credited special agents of HSI, under the direction of Special Agent in Charge Jason Molina, with the investigation leading to the guilty pleas. He also thanked the Drug Enforcement Administration, the New Jersey State Police, the Camden County Prosecutor’s Office, and the Gloucester County HIDTA Task Force for their assistance with the case.
The government is represented by Assistant U.S. Attorney Andrew B. Johns of the Criminal Division in Camden.
Essex County Felon Admits to Possession of Firearm and AmmunitionRead the Press Release
NEWARK, N.J. – An Essex County, New Jersey, man previously convicted of multiple felonies admitted today to possessing a firearm and ammunition, U.S. Attorney Craig Carpenito announced.
Sharif Clarke, 38, of Irvington, New Jersey, pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti to a superseding indictment charging him with one count of possession of a firearm and ammunition by a convicted felon.
According to documents filed in this case and statements made in court:
On Dec. 3, 2018, Clarke knowingly possessed a Glock .40-caliber handgun loaded with nine rounds of Remington ammunition. At that time, Clarke had previously been convicted in Essex County Superior Court of resisting and eluding arrest and of possession of a controlled substance on school property, both of which are felonies.
The charge to which Clarke pleaded guilty carries a maximum penalty of 10 years in prison and a fine of up to $250,000. Sentencing is scheduled for Jan. 21, 2020.
This case is part of Project Guardian, the Department of Justice’s signature initiative to reduce gun violence and enforce federal firearms laws. Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs to reduce gun violence; enhances coordination of federal, state, local and tribal authorities in investigating and prosecuting gun crimes; improves information sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensures that federal resources are directed at the criminals posing the greatest threat to our communities. For more information about Project Guardian, please see https://www.justice.gov/projectguardian.
U.S. Attorney Carpenito credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Newark Field Division, under the leadership of Special Agent in Charge Charlie J. Patterson, and the Newark Department of Public Safety, under the leadership of Public Safety Director Anthony F. Ambrose, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Sarah A. Sulkowski of the U.S. Attorney’s Office Cybercrime Unit in Newark.
Pittsburgh Man Indicted for Possession with Intent to Distribute Fentanyl and CocaineRead the Press Release
NEWARK, N.J. – A Pittsburgh, Pennsylvania, man was indicted today on charges of possessing with intent to distribute fentanyl and cocaine, U.S. Attorney Craig Carpenito announced.
Kenswick Austin, 45, is charged with one count of possession with intent to distribute more than 400 grams of fentanyl and one count of possession with intent to distribute at least 500 grams of cocaine. Austin was previously charged by complaint on March 31, 2020.
According to the documents filed in this case and statements made in court:
Between March 13, 2020, and March 28, 2020, Austin participated in multiple meetings and telephone calls to arrange the shipment to New Jersey of a package containing controlled substances. On March 30, 2020, the package arrived at an agreed-upon location, and Austin accompanied several other individuals to take possession of it. After a trained narcotics detection canine alerted to the presence of narcotics, law enforcement searched the package pursuant to a federal search warrant and found it to contain approximately one kilogram each of substances confirmed by laboratory testing to be fentanyl and cocaine.
The charge of possession with intent to distribute more than 400 grams of fentanyl carries a minimum punishment of 10 years in prison, a maximum of life in prison, and a $10 million fine. The charge of possession with intent to distribute 500 grams or more of cocaine carries a minimum punishment of five years in prison, a maximum of 40 years in prison, and a $5 million fine.
U.S. Attorney Carpenito credited special agents and task force officers of the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Jason Molina, with the investigation leading to the charge. He also thanked the Bound Brook, New Jersey, Police Department, under the direction of Chief of Police Vito Bet, and the Somerset County Prosecutor’s Office’s Crime Suppression Unit, under the direction of Prosecutor Michael H. Robertson, for their assistance in the investigation.
The government is represented by Assistant U.S. Attorney Sarah A. Sulkowski of the Cybercrime Unit of the U.S. Attorney’s Office’s Criminal Division in Newark.
The charges and allegations in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Physician and Sales Representative Charged in $2.5 Million Health Care Fraud and with Unlawful Disclosure of Patient InformationRead the Press Release
CAMDEN, N.J. – A federal grand jury has returned a 16-count indictment charging a physician and pharmaceutical sales representative with defrauding New Jersey state health benefits programs and other insurers out of more than $2.5 million by submitting fraudulent claims for medically unnecessary prescriptions, as well as unlawfully obtaining and disclosing individually identifiable patient health information protected by HIPAA, U.S. Attorney Craig Carpenito announced.
Keith Ritson, 40, of Bayville, New Jersey, and Frank Alario, M.D., 63, of Delray Beach, Florida, are charged with conspiracy to commit health care fraud and wire fraud, as well as individual acts of health care fraud and wire fraud. Both men are charged with a second conspiracy to wrongfully obtain and disclose patients’ individually identifiable health information. Alario is additionally charged with making false statements in a health care matter, and Ritson faces additional charges of conspiring to commit money laundering and substantive counts of money laundering.
The cases are assigned to U.S. District Judge Robert B. Kugler in Camden. The indicted defendants are expected to make their initial appearances before U.S. Magistrate Judge Ann Marie Donio in Camden federal court via videoconference on Sept. 10, 2020.
According to the indictment:
Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient is allergic to a dye or other ingredient.
The conspirators recruited individuals to obtain very expensive and medically unnecessary compounded medications from a Louisiana pharmacy, Central Rexall Drugs Inc. (Central Rexall). The conspirators learned that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, and vitamin combinations – would be reimbursed by insurance providers in amounts in the thousands of dollars for a one-month supply.
The conspirators also learned that some New Jersey state and local government and education employees, including teachers, police officers, and state troopers, had insurance coverage for these particular compound medications. An entity referred to in the indictment as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services for the State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents, the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents, and other insurance plans. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey or the other insurance plans for the amounts paid.
In the first charged conspiracy, Ritson recruited individuals with prescription drug benefits administered by the Pharmacy Benefits Administrator to receive unnecessary compound medication prescriptions, which Alario signed without examining, speaking with, or establishing a physician-patient relationship with the patient. Alario sent a form to Central Rexall’s compliance program in which he falsely attested that he saw and spoke with patients in person and established a physician-patient relationship prior to prescribing Central Rexall medications. Ritson and Alario earmarked established patients of Alario’s medical practices who had insurance that covered the expensive compound medications. Alario prescribed the medications not for the patient’s need or request, but for the benefits he and Ritson stood to gain. The scheme caused the Pharmacy Benefits Administrator to pay over $2.5 million for the fraudulent prescriptions. For his role in the scheme, Ritson received a percentage of the amount that Central Rexall received from the Pharmacy Benefits Administrator for the medications, and Alario benefitted by receiving free meals, entertainment, travel, and other remuneration from Ritson.
The indictment also charges Ritson and Alario with a separate scheme to wrongfully obtain and disclose individually identifiable patient health information for their own personal gain and commercial advantage. As a sales representative not affiliated with Alario’s medical practices, Ritson should not have had access to patients’ confidential information. However, since only certain insurances covered the compound medications promoted by Ritson, the defendants accessed patient files and other identifying information to ascertain patients’ insurance coverage. On at least one occasion, Ritson and Alario jointly accessed patient information on an office computer for the purpose of determining insurance coverage for the medications. Ritson also had access to parts of Alario’s office where patient information was stored or could be heard and observed, including employee-restricted areas with medical files, fax machines, and computers. Ritson was also frequently present in exam rooms during patient appointments with Alario for the purpose of promoting the compound medications, at which time Alario commonly introduced Ritson to his patients as his “nephew” or gave the impression that Ritson was affiliated with the medical practice. By being present during the patient exams, Ritson had access to patients’ medical files and protected health information.
The health care fraud and wire fraud conspiracy count carries a maximum potential penalty of 20 years in prison; each wire fraud count carries a maximum potential penalty of 20 years in prison; each health care fraud count carries a maximum penalty of 10 years in prison; the false statement count and the conspiracy to wrongfully obtain or disclose individually identifiable patient health information count each carry a maximum penalty of five years in prison; and the money laundering charges carry a maximum penalty of 10 years in prison. All of the offenses are also each punishable by a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater.
U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; and the U.S. Department of Labor, Office of Inspector General, New York Region, under the direction of Special Agent in Charge Michael C. Mikulka, with the investigation leading to the indictment. He also thanked the Division of Pensions and Financial Transactions in the State Attorney General’s Office, under the direction of Attorney General Gurbir S. Grewal and Division Chief Aimee Nason, for its assistance in the investigation.
The government is represented by Assistant U.S. Attorneys Christina O. Hud and R. David Walk Jr. of the U.S. Attorney’s Office in Camden.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
OSHA Safety and Health Officer and His Brother Charged with Conspiring to Extort ContractorRead the Press Release
NEWARK, N.J. – Two Essex County, New Jersey, men – a compliance safety and health officer (CSHO) with the U.S. Department of Labor, Occupational Safety and Health Administration (OSHA) and his brother – are scheduled to appear today on charges that they conspired to extort $6,000 in cash from a general contractor, U.S. Attorney Craig Carpenito announced.
Alvaro Idrovo, 44, of Bloomfield, New Jersey, and Paul Idrovo, a/k/a “Jose Diaz,” 46, of Nutley, New Jersey, are charged by complaint with knowingly and intentionally conspiring to commit an offense against the United States, specifically to commit an act of extortion under color of Alvaro Idrovo’s office or employment with OSHA. The defendants are scheduled to appear later today by videoconference before U.S. Magistrate Judge Leda Dunn Wettre.
According to the complaint:
Alvaro Idrovo was assigned to investigate an anonymous complaint concerning the misuse of an extension ladder at a North Bergen work site of Company 1. He told Individual 1, the owner of Company 1, that Individual 1 was in violation of OSHA regulations for not having the necessary safety training certificates for Company 1’s workers to be on ladders at the work site. Alvaro Idrovo falsely advised Individual 1 that he needed to obtain training certificates with a specific vendor named “Jose Diaz” or Individual 1 would be subject to exorbitant fines and possible arrest for the violation.
Individual 1 contacted the phone number supplied by Alvaro Idrovo, which actually belonged to Paul Idrovo, posing as “Jose Diaz,” who told Individual 1 that the required OSHA training certificates would cost $13,000 in cash and repeated Alvaro Idrovo’s false assertions that if Individual 1 did not get the training certificates that Individual 1 would be in big trouble with OSHA, including big fines and possible jail. In follow-up telephone conversations with Paul Idrovo, Individual 1 was able to negotiate the fee down to $6,000 in cash.
When OSHA officials learned of Idrovo’s attempt to extort Individual 1 while questioning Individual 1 on an unrelated matter, the OSHA officials referred the matter to federal law enforcement officials, who arranged for Individual 1 to make consensual recordings with both Alvaro and Paul Idrovo. During an April meeting surveilled by law enforcement, Individual 1 paid Paul Idrovo $6,000 in cash in exchange for ladder and safety awareness training certificates and a safety and health plan. Alvaro Idrovo thereafter attached copies of the training certificates and the plan to his OSHA reports regarding Company 1’s violation despite knowing that the training certificates falsely claimed that training had been provided to the noted individuals in March 2020, “Jose Diaz” had provided training, and the alleged training was OSHA certified.
The conspiracy charge carries a maximum potential penalty of five years in prison and a $250,000 fine.
U.S. Attorney Carpenito credited special agents of the U.S. Department of Labor, Office of Inspector General, under the direction of Special Agent in Charge Michael C. Mikulka in New York, and special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to the charges.
The government is represented by Senior Trial Counsel Leslie Faye Schwartz, of the United States Attorney’s Office’s Special Prosecutions Division.
The charges and allegations in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Georgia Man Sentenced to 61 Months in Prison for Bank Fraud Conspiracy and Aggravated Identity TheftRead the Press Release
TRENTON, N.J. – A Duluth City, Georgia, man was sentenced today to 61 months in prison for his role in a conspiracy to hijack the credit card accounts of multiple victims in order to fraudulently purchase hundreds of thousands of dollars in gift cards and high-end products, U.S. Attorney Craig Carpenito announced.
Akintunde Adeyemi, 35, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an indictment charging him with one count of conspiring to commit bank fraud and one count of aggravated identity theft. Judge Sheridan imposed the sentence by videoconference today.
According to documents filed in this case and statements made in court:
From July 2016 through May 2017, Adeyemi and others participated in a “credit card takeover” conspiracy to obtain control of credit card accounts by using stolen personal information to apply for compromised credit cards. Upon credit approval, Adeyemi provided his conspirators with fake government identifications and the account information to retrieve the credit cards associated with the compromised accounts. Adeyemi directed conspirators to use the compromised credit card accounts to purchase gift cards and high-value items, such computer tablets, cell phones, and other electronic devices, throughout New Jersey and Georgia. The scheme caused over $600,000 in losses to financial institutions who issued the credit cards. Two of Adeyemi’s co-conspirators, Oluwaseun Jato and Funmilola Adekanmi, have also pleaded guilty to participating in the scheme and are scheduled to be sentenced on Oct. 7, 2020.
In addition to the prison term, Judge Sheridan sentenced Adeyemi to five years of supervised release and ordered him to pay restitution to be determined at a later date.
U.S. Attorney Carpenito credited inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn, and special agents of the Department of Homeland Security, Homeland Security Investigations, under the direction of Special Agent in Charge Jason Molina, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorneys Ray Mateo of the Criminal Division in Trenton, and Nicholas Grippo, Deputy Chief of the Criminal Division in Newark.
Two Maryland Men Admit Roles in Multi-State Patient Brokering and Bribery SchemeRead the Press Release
TRENTON, N.J. – Two Maryland men today admitted participating in a conspiracy to defraud health insurance companies through a multi-state patient brokering scheme in which they directed recruiters to bribe drug-addicted individuals to enroll in drug rehabilitation in exchange for referral fees from the rehabilitation centers, U.S. Attorney Craig Carpenito announced.
Seth Logan Welsh, 26, of Forest Hill, Maryland, and John C. Devlin, 33, of Baltimore, Maryland, each pleaded guilty by teleconference before U.S. District Judge Peter G. Sheridan to separate informations charging them with one count of conspiracy to commit health care fraud.
Peter Costas, of Red Bank, New Jersey, pleaded guilty to the same charge in May 2020.
According to documents filed in the case and statements made in court:
Welsh, Devlin, and their conspirators owned and operated a marketing company in California. Welsh and Devlin used the marketing company to help orchestrate a scheme in New Jersey, Maryland, California, and other states that involved bribing individuals addicted to heroin and other drugs to enter into drug rehabilitation centers so Welsh, Devlin, and their conspirators could generate referral fees from those facilities.
The marketing company maintained contractual relationships with drug treatment facilities around the country and engaged a nationwide network of recruiters – including Costas in New Jersey – to identify and recruit potential patients, from New Jersey and other states, who were addicted to heroin or other drugs and who had robust private health insurance.
To convince drug-addicted individuals to travel to and enroll in rehabilitation when they otherwise would not have, Costas and other recruiters offered to bribe them – often as much as several thousand dollars – with Welsh’s and Devlin’s approval. Once the patients agreed to enroll in drug rehabilitation in exchange for the offered bribe, Welsh, Devlin, and Costas would arrange and pay for cross-country travel to the drug treatment centers in California and other states. Costas would stay in touch with the New Jersey patients at the facilities and specifically instruct them to stay at the facilities long enough to generate referral payments, and he would pass along information to Welsh and Devlin about the patients’ status at the facilities. Welsh and Devlin would monitor the other patients they brokered by speaking to other recruiters or to the owners and employees of the drug treatment facilities themselves.
Welsh, Devlin, Costas, and their conspirators often directed patients to different rehabilitation facilities month after month to generate multiple referral payments without regard to whether the substance abuse treatment was medically necessary or effective.
Welsh, Devlin, Costas, and their conspirators also sent patients to facilities in California and other states that they knew provided ineffective drug treatment or actually fostered drug use on their premises. After sending one patient to a drug treatment facility in Los Angeles, California, the patient reported to Costas that “everyone’s high” that “it’s a flop,” meaning that it was not a legitimate substance abuse treatment facility providing bona fide drug treatment services. When that information was relayed to Devlin in a text message, he responded “Lol.” A few days later, Welsh texted Devlin and Costas to report that the patient was “smoking meth” at the drug treatment facility. Costas replied, “Yes. [The patient is] freaking out at me. [He] said out of the 10 ppl. [people] in [the drug treatment facility] only 4 are sober. The rest are smoking meth and dope . . . . [The patient] said everyone’s high and it’s a complete flop and [he] tried to stay sober around it without ‘ratting’ as long as he could.” Costas’s text message meant that the patient was trying to stay in drug rehabilitation long enough to trigger referral payments to Welsh’s and Devlin’s marketing company without relapsing.
The facilities typically paid Welsh’s and Devlin’s marketing company a fee of $5,000 to $10,000 per patient referral. Welsh, Devlin, and their conspirators shared that money among themselves. Costas and other recruiters received approximately half that amount for each patient they brokered. During the scheme, Welsh, Devlin, and their conspirators brokered scores of patients to drug treatment facilities around the country, and the conspiracy caused millions of dollars of losses for health insurers.
Welsh and Devlin face a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Jan. 11, 2021.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s guilty pleas.
The government is represented by Senior Trial Counsel Jason S. Gould of the Health Care Fraud Unit in Newark.
Supplier in Drug Trafficking Organization Sentenced to 10 Years in Prison for Role in Heroin and Cocaine Trafficking in Bayshore Area of New JerseyRead the Press Release
TRENTON, N.J. – A Union County, New Jersey, man today was sentenced to 120 months in prison for his role as the supplier of large quantities of heroin and cocaine in a narcotics trafficking conspiracy in the Bayshore area of Monmouth and Middlesex counties, U.S. Attorney Craig Carpenito announced today.
Gregory Gillens, 47, of Hillside, New Jersey, previously pleaded guilty before U.S. District Judge Brian R. Martinotti in Trenton federal court to an information charging him with one count of conspiracy to distribute and possess with intent to distribute more than one kilogram of heroin. Gillens also admitted to conspiring to distribute and possess with intent to distribute a quantity of cocaine. Judge Martinotti imposed the sentence today via videoconference.
Today’s sentence follows a coordinated takedown in November 2018 of 15 defendants charged in a federal criminal complaint with conspiracy to distribute heroin and cocaine. To date, 12 defendants have pleaded guilty, including lead defendant Guy Jackson. Defendant Deberal Rogers has been indicted.
According to documents filed in this case and statements made in court:
From May 2017 to November 2018, Gillens and others engaged in a narcotics conspiracy that operated in the Raritan Bayshore region of Middlesex and northern Monmouth counties.
Through the interception of telephone calls and text messages pursuant to court-authorized wiretap orders, controlled purchases of heroin and cocaine, the use of confidential sources of information, and other investigative techniques, law enforcement officers learned that Gillens regularly supplied large quantities of heroin and cocaine for further distribution, including to co-defendant Jackson. Some of the heroin distributed by the conspiracy contained fentanyl, a dangerous synthetic opioid.
Pursuant to search warrants executed on the day of Gillens’ arrest or soon thereafter, law enforcement recovered more than $96,000 in cash and more than 600 grams of cocaine from Gillens’ former residence and from inside a vehicle he had previously used to deal narcotics. The vehicle and the cash have been administratively forfeited to the United States.
In addition to the prison term, Judge Martinotti sentenced Gillens to five years of supervised release.
U.S. Attorney Carpenito credited special agents of the FBI, Newark Division, Red Bank Resident Agency, Jersey Shore Gang and Criminal Organization Task Force (including representatives from the Bradley Beach Police Department, Brick Police Department, Howell Police Department, Marlboro Police Department, Monmouth County Sheriff's Office, Toms River Police Department, and Union Beach Police Department) under the direction of Special Agent in Charge George M. Crouch Jr.; special agents of the FBI, Philadelphia Division, Scranton Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll; the New Jersey State Police, under the direction of Col. Patrick J. Callahan, Superintendent; the Matawan Police Department, under the direction of Chief Thomas J. Falco, Jr.; the Holmdel Police Department, under the direction of Chief John Mioduszewski; the Highlands Police Department, under the direction of Chief Robert Burton; the Monmouth County Prosecutor’s Office, under the direction of Prosecutor Christopher J. Gramiccioni; the Old Bridge Police Department, under the direction of Chief William A. Volkert; the Keansburg Police Department, under the direction of Chief James K. Pigott; the Hazlet Police Department, under the direction of Chief Philip Meehan; and the Aberdeen Police Department, under the direction of Chief Richard A. Derechailo, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Elisa T. Wiygul of the U.S. Attorney’s Office’s Criminal Division in Trenton.
The charges and allegations against the remaining three defendants are merely accusations and they are presumed innocent unless and until proven guilty.
Member of Paterson Drug Ring Charged with Conspiracy to Distribute Heroin and FentanylRead the Press Release
NEWARK, N.J. – A Paterson, New Jersey, woman was arrested today in connection with her alleged role in a conspiracy to distribute heroin and fentanyl in New Jersey and Vermont, U.S. Attorney Craig Carpenito announced.
Nysifah Deaveareaux, 27, is charged by criminal complaint with conspiracy to distribute 40 grams or more of fentanyl and 100 grams or more of heroin. She is scheduled to make her initial court appearance today by videoconference before U.S. Magistrate Judge James B. Clark III.
Caron J. Abrams, 26, of Paterson, was charged by criminal complaint on Aug.14, 2020, with possession with intent to distribute 40 grams or more of fentanyl. He appeared by videoconference before the U.S. Magistrate Judge Joseph A. Dickson and was detained without bail.
Shamir Williams, 25, of Paterson, was charged by complaint on Aug. 14, 2020, along with Deaveareaux, with conspiracy to distribute 40 grams or more of fentanyl and 100 grams or more of heroin. On Aug. 20, 2020, Williams appeared by videoconference before U.S. Magistrate Judge Cathy L. Waldor and was detained without bail.
According to documents filed in this case and statements made in court:
From May 2020 through Aug. 13, 2020, Williams negotiated sales of heroin to another individual. On June 11, 2020, pursuant to these negotiations, Deaveareaux transported approximately 250 “bricks,” or over 12,000 individual doses of heroin, from Paterson and distributed the heroin in Vermont. On Aug. 13, 2020, Abrams attempted to deliver 200 “bricks,” or over 9,000 individual doses of heroin and fentanyl, to an individual at a Passaic County Home Depot parking lot, where he was taken into custody.
Each of the crimes charged carries a minimum penalty of five years in prison, a maximum penalty of 40 years in prison, and a fine of at least $5 million.
U.S. Attorney Carpenito credited special agents and task force officers with the DEA in New Jersey and New England, under the direction of Special Agents in Charge Susan Gibson and Brian D. Boyle, respectively, with the investigation leading to the charges.
This investigation was conducted as part of the Paterson Violent Crime Initiative (VCI). The VCI was formed in 2020 by the U.S. Attorney’s Office for the District of New Jersey and the Passaic County Prosecutor’s Office, for the sole purpose of combatting violent crime in and around Paterson. As part of this partnership, federal, state, county, and city agencies collaborate to strategize and prioritize the prosecution of violent offenders who endanger the safety of the community. The VCI is composed of the U.S. Attorney’s Office, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Federal Bureau of Investigation (FBI), the Drug Enforcement Administration’s (DEA) New Jersey Division, the Department of Homeland Security – Homeland Security Investigations, the Paterson Police Department, the Passaic County Prosecutor’s Office, the Passaic County Sheriff’s Office, New Jersey State Parole, and the New Jersey State Police Regional Operations and Intelligence Center/Real Time Crime Center.
The government is represented by Assistant U.S. Attorney Francesca Liquori of the Organized Crime and Gangs Unit.
The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Gloucester City Man Charged with Bombing and Unlawful Possession of Explosives and Short-Barreled RifleRead the Press Release
CAMDEN, N.J. – A Camden County, New Jersey, man was charged today for detonating an explosive device at a local business and unlawfully possessing unregistered destructive devices and a short-barreled rifle, U.S. Attorney Craig Carpenito announced.
Dwayne A. Vandergrift Jr., 35, of Gloucester City, New Jersey, is charged by complaint with malicious use of explosives, unlawful possession of two destructive devices, and unlawful possession of a short-barreled rifle. Vandergrift will make his initial appearance before U.S. Magistrate Judge Karen M. Williams at a later date.
According to the complaint:
During the early morning hours of Aug. 26, 2020, Vandergrift placed an explosive device on the front door of a local gym near his home in Gloucester City. Security camera footage recorded Vandergrift fleeing the area moments before the device exploded, badly damaging the front door and shattering its glass. On Aug. 28, 2020, federal and local law enforcement officers executed a search warrant at Vandergrift’s home and found substantial quantities of bomb making materials, numerous weapons, including an unregistered short barreled rifle, several tactical vests outfitted with body armor and loaded 30-round ammunition magazines, and a marijuana grow operation containing approximately 85 marijuana plants. Upon examining Vandergrift’s personal computer devices, investigators discovered that he had recently researched how to construct and utilize various explosive devices, including pipe and pressure cooker bombs. Vandergrift was arrested by local authorities on Aug. 28, 2020, and charged by the Camden County Prosecutor’s Office. He is presently in custody on those charges.
The malicious use of explosive charge carries a maximum prison term of 20 years and a maximum fine of $250,000. The charges for possession of the unregistered destructive devices and short-barreled rifle carry maximum prison terms of 10 years each and maximum fines of $250,000.
U.S. Attorney Carpenito credited special agents and task force officers of the FBI’s South Jersey Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll and the FBI’s Philadelphia Joint Terrorism Task Force, with the investigation leading to today’s arrest. He also thanked officers of the Gloucester City Police Department, under the direction of Police Chief Brian Morrell; the Camden County Prosecutor’s Office, under the direction of Acting Prosecutor Jill S. Mayer; the Camden County Sheriff’s Office, under the direction of Sheriff Gilbert L. Wilson; the Bureau of Alcohol, Tobacco, Firearms and Explosives, Newark Field Division, under the direction of Special Agent in Charge Charlie J. Patterson; the New Jersey Office of Homeland Security and Preparedness, under the direction of Director Jared Maples; Homeland Security Investigations, under the direction of Special Agent in Charge Jason Molina; and the New Jersey State Police, under the direction of Col. Patrick J. Callahan.
The government is represented by Assistant U.S. Attorney Gabriel J. Vidoni of the U.S. Attorney’s Office’s Criminal Division in Camden.
The charges and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Trenton Man Sentenced to 160 Months in Prison for Participating in Heroin Trafficking ConspiracyRead the Press Release
TRENTON, N.J. – A Trenton man was sentenced today to 160 months in prison for his role in a large drug trafficking conspiracy that distributed more than one kilogram of heroin in Trenton and the surrounding area, U.S. Attorney Craig Carpenito announced.
Omar Council, a/k/a “Stacks,” a/k/a “O,” a/k/a “Y-O,” a/k/a “Snow,” 41, previously pleaded guilty before Chief 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 100 grams or more of heroin. Judge Wolfson imposed the sentence today.
According to documents filed in this case and statements made in court:
In October 2018, Council and 25 other members of a drug trafficking conspiracy operating in Trenton were charged by criminal complaint with conspiracy to distribute heroin. On Aug. 8, 2019, a grand jury returned a 15-count second superseding indictment charging Council and eight other defendants, Jerome Roberts, a/k/a “Righteous,” a/k/a “Lee”; David Antonio, a/k/a “Papi,” a/k/a “Pop,” a/k/a “Victor Arias,” a/k/a “Santiago Ramirez”; Brian Phelps, a/k/a “B-Money,” a/k/a “B”; Timothy Wimbush, a/k/a “Young Money”; Taquan Williams, a/k/a “Trip”; Jubri West; Dennis Cheston, Jr., a/k/a “Beans”; and Wayne K. Bush with various crimes relating to the drug-trafficking conspiracy, including firearms charges against Phelps, Wimbush, Williams, West, and Cheston. To date, 23 defendants have pleaded guilty in connection with their participation in the conspiracy.
From as early as October 2017 to October 2018, the defendants and others engaged in a narcotics conspiracy that operated in the areas of Martin Luther King Boulevard, Sanford Street, Middle Rose Street, Southard Street, Hoffman Avenue, and Coolidge Avenue in Trenton, and which sought to profit from the distribution of heroin and numerous other controlled substances. Through the interception of telephone calls and text messages pursuant to court-authorized wiretap orders – including over a cellular telephone used by Council – controlled purchases of heroin from Council and others, the use of confidential sources of information, and other investigative techniques, law enforcement learned that Council was a significant drug distributor in and around Trenton. Council maintained close relationships with other conspirators, including Jakir Taylor, who obtained regular supplies of hundreds of “bricks” of heroin from defendant David Antonio, whom they referred to as “Papi.” Council obtained supplies of heroin directly from Taylor and others (including supplies of heroin originating from Antonio), and regularly re-distributed that heroin to others in and around Trenton.
In addition to the prison term, Judge Wolfson sentenced Council to five years of supervised release.
U.S. Attorney Carpenito credited special agents of the FBI, Newark Division, Trenton Resident Agency, under the direction of Special Agent in Charge George M. Crouch, Jr.; special agents of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Newark Division, Trenton Field Office, under the direction of Special Agent in Charge Charlie J. Patterson; officers of the Trenton Police Department, under the direction of Police Director Sheilah Coley; officers of the Princeton Police Department, under the direction of Chief of Police Nicholas Sutter; officers of the Ewing Police Department, under the direction of Chief of Police John P. Stemler III; officers of the Burlington Township Police Department, under the direction of Police Director Bruce Painter; and detectives of the Burlington County Prosecutor’s Office, under the direction of Prosecutor Scott A. Coffina, with the investigation leading to today’s conviction and sentence. He also thanked officers of the New Jersey State Police, under the direction of Superintendent Col. Patrick J. Callahan; detectives of the Mercer County Prosecutor’s Office, under the direction of Prosecutor Angelo Onofri; officers of the Mercer County Sheriff’s Office, under the direction of Sheriff John A. Kemler; and members of the New Jersey State Board of Parole for their assistance in the case.
The government is represented by J. Brendan Day, Attorney-in-Charge of the U.S. Attorney’s Office’s Trenton Branch Office, and Assistant U.S. Attorney Alexander Ramey of the U.S. Attorney’s Office’s Criminal Division in Trenton.
This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Greater Trenton Safe Streets Task Force, a partnership between federal, state and local law enforcement agencies to enhance the identification, apprehension, and prosecution of individuals involved in gang-related activities, violent crime, and drug distribution in and around the greater Trenton area. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking, and money laundering organizations and those primarily responsible for the nation’s illegal drug supply.
The charges and allegations against the remaining defendants are merely accusations and those defendants are presumed innocent unless and until proven guilty.
New Jersey Attorney Charged with Fraudulently Obtaining $9 Million in Loans Meant to Help Small Businesses During COVID-19 PandemicRead the Press Release
A New Jersey attorney was arrested today and charged with fraudulently obtaining approximately $9 million in Paycheck Protection Program (PPP) loans, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney Craig Carpenito of the District of New Jersey.
Jae H. Choi, 48, a licensed attorney of Cliffside Park, New Jersey, was charged by criminal complaint, unsealed today upon his arrest, in the District of New Jersey with three counts of bank fraud and one count of money laundering.
The complaint alleges that Choi submitted three fraudulent PPP loan applications to three different lenders on behalf of three different businesses that purportedly provided educational services. The complaint also alleges that Choi fabricated the existence of hundreds of employees, manipulated bank and tax records, and falsified a driver’s license on the applications.
Choi allegedly falsely represented to the lenders that the companies controlled by him had hundreds of employees and paid over $3 million in monthly wages. Based on Choi’s alleged misrepresentations, each lender funded each of the three businesses with an approximately $3 million PPP loan. As a result, the complaint alleges that Choi received a total of nearly $9 million in federal COVID-19 emergency relief funds meant for distressed small businesses.
Choi allegedly used the fraudulently-obtained PPP loan proceeds to pay for numerous personal expenses, including to buy, among other things, a nearly one million-dollar residential home in Cresskill, New Jersey, to fund approximately $30,000 in remodeling and other improvements, and to invest millions more in the stock market through an account held in the name of his spouse.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted March 29. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
A criminal complaint is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by IRS – Criminal Investigation, the U.S. Postal Inspection Service, the Small Business Administration Office of the Inspector General, and the Social Security Administration – Office of the Inspector General. Trial Attorney Andrew Tyler and Assistant U.S. Attorney Andrew Macurdy of the District of New Jersey are prosecuting the case.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Middlesex Man Charged with Conspiring with Brooklyn Men to Defraud New Jersey BanksRead the Press Release
NEWARK, N.J. – A Middlesex County, New Jersey, man and two Brooklyn, New York, men were charged today with bank fraud and identity theft, U.S. Attorney Craig Carpenito announced.
Benjamin Rich, 40, of Edison, New Jersey, and Frank Ambrosio, 35, and Felix Alamo, 59, both of Brooklyn, are each charged by complaint with conspiracy to commit bank fraud and aggravated identity theft. Rich and Alamo are scheduled to appear today by videoconference before U.S. Magistrate Judge James B. Clark III. Ambrosio remains at large.
According to the documents filed in this case and statements made in court:
Rich, Ambrosio, and Alamo, and others, allegedly conspired to defraud banks across New Jersey, and elsewhere, by using the personal identification information (PII) of victims to open fraudulent bank accounts in order to deposit fraudulently obtained checks. Rich would obtain checks that were either stolen or counterfeited. He would then create sham businesses with names closely resembling those of the payees appearing on the stolen or counterfeited checks. For example, if defendant Rich obtained a check made payable to “ABC Corp.,” he would create a sham business called “ABC LLC.” Rich would later provide Ambrosio, Alamo, and other conspirators, with fraudulent identification documents bearing their photographs and the victims’ PII and business opening documents in order to open the fraudulent bank accounts for the sham businesses. The conspirators would deposit the fraudulently obtained or counterfeited checks into those fraudulent bank accounts and then withdraw the funds before anyone could detect the fraud.
The charge of bank fraud carries a maximum of 30 years in prison and a maximum fine of $1 million, or twice the gain derived or loss caused by the offense, whichever is greater. The charge of aggravated identity theft carries a statutory minimum term of imprisonment of two years in prison, which must run consecutively to any other term of imprisonment imposed, and a fine of $250,000, or twice the gain derived or loss caused by the offense.
U.S. Attorney Carpenito credited postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorney Perry Farhat of the Government Frauds Unit of the U.S. Attorney’s Office’s Criminal Division in Newark.
The charges and allegations in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Medical Assistant Admits Role in Genetic Testing Kickback and Bribery SchemeRead the Press Release
TRENTON, N.J. – A Pennsylvania medical assistant today admitted participating in a conspiracy to receive bribes and kickbacks in exchange for ordering genetic tests, U.S. Attorney Craig Carpenito announced.
Amber Harris, 28, of Lake Ariel, Pennsylvania, pleaded guilty by videoconference before U.S. District Judge Anne E. Thompson to an information charging her with one count of conspiring to violate the anti-kickback statute.
Harris is the first of several defendants to plead guilty in long-running bribery and kickback schemes involving doctors and medical employees in the Scranton, Pennsylvania, area.
According to documents filed in this case and statements made in court:
Harris worked as a medical assistant for Yitzachok “Barry” Kurtzer, a primary care physician with offices in the Scranton area. From at least 2018, Kurtzer and his wife, Robin Kurtzer, accepted monthly cash kickbacks and bribes in exchange for collecting DNA samples from Medicare patients and sending them for genetic tests to clinical laboratories in New Jersey and Pennsylvania. The cash kickbacks ranged up to $5,000, and the Kurtzers typically accepted the cash in one of Kurtzer’s offices.
Even as the ongoing COVID-19 pandemic substantially reduced in-patient visits, the Kurtzers continued with their scheme. They went from receiving hand-delivered cash kickbacks and bribes to accepting payments by wire and through a cell phone money transfer app.
Harris and another employee, Shanelyn Kennedy, also participated in the scheme. They both helped collect the DNA swabs in exchange for also receiving kickbacks and bribes, both in cash and later using the money transfer app.
As a result of the scheme, Medicare paid $755,241 for genetic tests generated from Kurtzer’s practice.
The count of conspiracy to violate the federal anti-kickback statute is punishable by a maximum of five years in prison and a fine of $250,000, or twice the gross gain or loss derived from the offense, whichever is greater. Sentencing is scheduled for Jan. 5, 2020.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; and U.S. Department of Health and Human Services, Office of Inspector General, Philadelphia Regional Office, under the direction of Special Agent in Charge Maureen R. Dixon, with the investigation leading to the charges. He also thanked the FBI Scranton Field Office, FBI Philadelphia Division and the Pennsylvania Attorney General’s Office for their assistance.
The government is represented by Assistant U.S. Attorney Joshua L. Haber of the Health Care Fraud Unit in the Criminal Division, Newark.
The charges against and allegations against the remaining defendants are merely accusations, and those defendants are presumed innocent unless and until proven guilty.
California Man Admits to Securities and Tax Offenses Related to $722 Million Bitclub Network Fraud SchemeRead the Press Release
NEWARK, N.J. – A California man today admitted to conspiring to offer and sell unregistered securities and to subscribing to a false tax return in connection with his role in the BitClub Network, a cryptocurrency mining scheme worth at least $722 million, U.S. Attorney Craig Carpenito announced.
Joseph Frank Abel, 50, of Camarillo, California, pleaded guilty by videoconference before U.S. District Judge Claire C. Cecchi to count two of the indictment, charging him with conspiracy to offer and sell unregistered securities. He also pleaded guilty to a separate information charging him with subscribing to a false tax return for the tax year 2017.
Abel and four codefendants – Matthew Brent Goettsche, Russ Albert Medlin, Jobadiah Sinclair Weeks, and Joseph Frank Abel – were charged by indictment in December 2019.
According to documents filed in this case and statements made in court:
From April 2014 through December 2019, the BitClub Network was a fraudulent scheme that solicited money from investors in exchange for shares of purported cryptocurrency mining pools and rewarded investors for recruiting new investors into the scheme. Abel operated as a large-scale promoter of the BitClub Network. He promoted and sold shares of BitClub Network despite knowing that the network and its operators did not file a registration statement to register shares with the U.S. Securities and Exchange Commission.
Abel admitted taking money from investors in exchange for shares of the BitClub Network’s purported mining pools. In order to promote shares in the BitClub Network’s mining pools, he created and posted videos to the internet and gave presentations and speeches about the BitClub Network throughout the United States and numerous other countries, including in Asia, Africa, and Europe. As part of the conspiracy, Abel instructed investors in the United States to use a virtual private network, or “VPN,” to hide their U.S.-based IP addresses and evade detection and regulation by U.S. law enforcement.
Abel admitted failing to report on a Form 1040 United States Individual Income Tax Return for the tax year 2017 approximately $1 million in cryptocurrency as income he earned from his promotion of the BitClub Network.
The conspiracy charge to which Abel pleaded guilty carries a maximum penalty of five years in prison and a fine of $250,000, or twice the pecuniary gain to the defendant or loss to the victims. The tax charge to which Abel pleaded guilty carries a maximum penalty of three years in prison and a fine of $100,000. Sentencing is scheduled for Jan. 27, 2021.
U.S. Attorney Carpenito credited special agents and task force officers of the FBI Los Angeles Division’s West Covina Resident Agency, under the direction of Acting Assistant Director in Charge John F. Bennett; special agents of IRS - Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; special agents of the IRS Los Angeles Field Office, under the direction of Special Agent in Charge Ryan L. Korner; the FBI Criminal Investigative Division, under the supervision of Assistant Director Calvin A. Shivers and the Financial Crimes Section, under the leadership of Section Chief Steven Merrill, and members of the Ventura Police Department with the investigation leading to today’s guilty plea.
Anyone who believes they may be a victim can find more information about the case, including a questionnaire for victims to fill out and submit, at: www.justice.gov/usao-nj/bitclub or the Department of Justice’s large case website www.justice.gov/largecases.
The government is represented by Unit Chief David W. Feder, Assistant U.S. Attorneys Jamie L. Hoxie and Anthony P. Torntore of the Cybercrime Unit, and Unit Chief Sarah Devlin and Assistant U.S. Attorney Joseph Minish of the Asset Recovery and Money Laundering Unit, of the U.S. Attorney’s Office in Newark.
The charges and allegations against the other defendants are merely accusations, and they are presumed innocent unless and until proven guilty.
Bergen County Attorney Charged with Fraudulently Obtaining $9 Million in Loans Meant to Help Small Businesses During COVID-19 PandemicRead the Press Release
NEWARK, N.J. – A Bergen County, New Jersey, attorney was arrested today and charged with fraudulently obtaining approximately $9 million in Paycheck Protection Program (PPP) loans, U.S. Attorney Craig Carpenito and Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, announced.
Jae H. Choi, 48, of Cliffside Park, New Jersey, is charged by complaint with three counts of bank fraud and one count of money laundering. He is expected to make his initial appearance by videoconference today before U.S. Magistrate Judge James B. Clark III.
According to documents filed in this case and statements made in court:
Choi allegedly submitted three fraudulent PPP loan applications to three different lenders on behalf of three different businesses that purportedly provided educational services. The complaint also alleges that Choi fabricated the existence of hundreds of employees, manipulated bank and tax records, and falsified a driver’s license on the applications.
Choi allegedly falsely represented to the lenders that the companies controlled by him had hundreds of employees and paid over $3 million in monthly wages. Based on Choi’s alleged misrepresentations, each lender funded each of the three businesses with an approximately $3 million PPP loan. As a result, the complaint alleges that Choi received a total of nearly $9 million in federal COVID-19 emergency relief funds meant for distressed small businesses.
Choi allegedly used the fraudulently obtained PPP loan proceeds to pay for numerous personal expenses, including to buy, among other things, a nearly $1 million home in Cresskill, New Jersey, to fund approximately $30,000 in remodeling and other improvements, and to invest millions more in the stock market through an account held in the name of his spouse.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted March 29. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
The charges and allegations in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty in a court of law.
This case was investigated by IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James Buthorn; the Small Business Administration Office of the Inspector General; and the Social Security Administration – Office of the Inspector General.
The government is represented by Assistant U.S. Attorney Andrew Macurdy of the District of New Jersey and Trial Attorney Andrew Tyler.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Union County Woman Sentenced to 10 Years in Prison for Trafficking MethamphetamineRead the Press Release
NEWARK, N.J. – A Union County, New Jersey, woman was sentenced today to 120 months in prison for possessing with intent to distribute over 900 grams of methamphetamine, U.S. Attorney Craig Carpenito announced.
Lorena Marquez, 48, of Union Township, New Jersey, previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an information charging her with one count of possession with intent to distribute over 50 grams of methamphetamine. Judge Wigenton imposed the sentence by videoconference today; she sentenced Marquez to 108 months in prison on the drug count and 12 months in prison, to be served consecutively, for violation of supervised release.
According to documents filed in this case and statements made in court:
In 2019, during a combined federal and local investigation targeting narcotics trafficking in northern New Jersey, law enforcement learned that Marquez stored and sold crystal methamphetamine at a self-storage facility in Jersey City. Law enforcement officials ultimately executed a search of Marquez’s storage unit and recovered approximately two pounds of crystal methamphetamine from the unit. Marquez was arrested the same day.
In addition to the prison term, Marquez was sentenced five years of supervised release.
U.S. Attorney Craig Carpenito credited special agents of the U.S. Drug Enforcement Administration, under the direction of Special Agent in Charge Susan A. Gibson, with the investigation and arrest.
The government is represented by Assistant U.S. Attorney Ryan L. O’Neill of the U.S. Attorney’s Office’s Opioid Abuse Prevention and Enforcement Unit in Newark.
Former Luxury Car CEO and Luxury Watch Dealer Admit Tax Charges in Connection with Scheme to Misallocate Limited Edition Sports CarsRead the Press Release
NEWARK, N.J. – The former chief executive officer of a New Jersey-based importer of Italian luxury cars admitted today that he failed to report to the IRS as income kickback payments he received for misallocating limited edition sports cars, Attorney for the United States Rachael Honig announced.
A luxury watch dealer also admitted failing to report to the IRS commission he received for helping facilitate the unauthorized sale of one of those limited edition sports cars.
Maurizio Parlato, 58, of Washington, D.C., pleaded guilty by videoconference before U.S. District Judge Stanley R. Chesler to an information charging him with one count of subscribing to a false tax return and one count of failing to file a Report of Foreign Bank and Financial Accounts (FBAR). Gigi Knowle, 69, of Miami, Florida, pleaded guilty by videoconference before Judge Chesler to a separate information charging him with subscribing to a false tax return.
“This defendant admitting rigging access to purchase high-end sports cars to line his own pockets, then failed to pay taxes on the money he made on his deals,” Attorney for the United States Honig said. “He tilted the playing field to his own advantage, cheating legitimate buyers and the government in the process. Our office remains firmly committed to prosecuting those who defraud the public and the government.”
“Today, the IRS told Mr. Parlato ‘not so fast’ when he failed to report almost $2.8 million on his tax returns for the kickbacks he received to misallocate the distribution of several supercars,” Jonathan D. Larsen, Special Agent in Charge, New York Field Office, said. “Mr. Parlato tried to hide the income by moving the funds around the world. Offshore tax evasion is a top priority for IRS - Criminal Investigation and, as was shown today, we are wholeheartedly committed to bringing these offenders to justice.”
“Today's plea is another example of the great investigative work done daily by the IRS, U.S. Attorney's Office and our agents,” FBI Newark Special Agent in Charge George M. Crouch Jr. said. “It is a clear message that we will relentlessly pursue those attempting to defraud the government.”
According to documents filed in the case and statements made in court:
Parlato was a resident of Florida and served as the CEO of a company (Company B) based in Englewood Cliffs, New Jersey, from 2002 to 2009. Company B was responsible for distributing automobiles that were produced by a luxury automobile manufacturer (Company A) based in Maranello, Italy. Company B distributed Company A’s luxury automobiles in the Western Hemisphere through dealers based in the Americas.
Company A produced several highly desired automobile models in small quantities. Parlato had some measure of authority over the allocations of those limited edition automobiles. In 2013, Company A announced it was creating its most exclusive model to date: a “supercar,” limited to only 500 units and carrying a manufacturer’s suggested retail price (MSRP) of approximately $1.4 million. Company A and Company B established a formula to determine which customers would be placed on the approved list to buy a supercar.
After resigning as CEO of Company B, Parlato assisted Company B dealers and supercar purchasers in misallocating supercars in exchange for kickback payments. Between 2015 and 2017, Parlato received approximately $2.8 million from Company B dealers and supercar purchasers in exchange for, among other things, assisting them in misallocating supercars to customers who were not on the list of approved purchasers. Parlato admitted that he failed to report the $2.8 million in kickback payments he received as income on his federal individual income tax returns. Parlato also admitted that he attempted to hide some of these funds from the IRS by depositing them in a bank account in Spain and failing to disclose the existence of that bank account. Parlato admitted that he avoided paying more than $1.1 million in taxes.
Knowle also received payments in connection with his role in misallocating a supercar. In 2015, Knowle lived in Florida and worked as a luxury watch dealer. That year, Knowle assisted Parlato in facilitating the sale of a supercar to another individual who was not on the approved list. Knowle received approximately $560,000 as commission for his role in the sale, some of which Knowle distributed to Parlato and others who were also involved in misallocating the supercar to the unapproved purchaser. Knowle failed to disclose the commission on his personal income tax returns. Knowle admitted that he avoided paying approximately $175,000 in taxes.
The count of subscribing to a false tax return carries a maximum potential penalty of three years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The count of failing to file a FBAR carries a maximum potential penalty of five years in prison and a $250,000 fine.
Sentencings for Parlato and Knowle are scheduled for Jan. 12, 2021.
Attorney for the United States Honig credited special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in New York, and special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorney Dara Aquila Govan, Chief of the Government Fraud Unit, and Assistant U.S. Attorney Catherine R. Murphy of the Economic Crimes Unit.
Morris County Resident Sentenced to 94 Months in Prison for Computer Intrusions that Targeted Two New Jersey CompaniesRead the Press Release
NEWARK, N.J. – A Morris County, New Jersey, resident was sentenced today to 94 months in prison for perpetrating a sophisticated computer hacking scheme that targeted two companies in New Jersey, U.S. Attorney Craig Carpenito announced.
Ankur Agarwal, 45, of Montville, New Jersey, previously pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to two counts of obtaining information from computers and one count of aggravated identity theft. Judge Wigenton imposed the sentence today.
According to documents filed in this case and statements made in court:
Beginning in February 2017, Agarwal admitted that he physically trespassed onto a company’s premises in New Jersey (Company One). Agarwal illegally installed hardware key-logger devices onto Company One’s computers. The key-logger devices covertly recorded the keystrokes of the company’s employees and gave Agarwal their usernames and passwords. Agarwal also surreptitiously installed his personal computer and a hard drive onto the company’s computer network. Using the fraudulently obtained logon credentials of company employees, Agarwal hacked into the company’s computer network and targeted various employees, including employees developing an emerging technology. Agarwal admitted that he stole, transferred, and exfiltrated Company One’s data and information, including its emerging technology. Agarwal also created a malicious computer code designed to exfiltrate data, installed it on the company’s computer systems, and executed the code to steal and transfer data to himself.
Agarwal also admitted that he hacked into, targeted, and stole data and information from a second company in New Jersey (Company Two). Using the same general scheme, Agarwal physically trespassed onto Company Two’s premises, illegally installed hardware key-logger devices onto the company’s computers, installed his personal computer and a hard drive onto the company’s computer network, and stole, transferred, and exfiltrated Company Two’s data and information, including an emerging technology that Company Two was developing.
In furtherance of his hacking scheme against Company Two, Agarwal also obtained unauthorized access into an employee’s computer system and then fraudulently created an access badge for himself. This fraudulently obtained access badge, bearing another individual’s name, allowed Agarwal to physically trespass onto Company Two’s premises.
In addition to the prison term, Judge Wigenton sentenced Agarwal to three years of supervised release and fined him $25,000.
U.S. Attorney Carpenito credited special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Matthew Feldman Nikic of the Cybercrime Unit in Newark.
Tennessee Man Charged with Wire FraudRead the Press Release
NEWARK, N.J. – A Tennessee man charged with two counts of wire fraud will make his initial appearance before a New Jersey judge today, U.S. Attorney Craig Carpenito.
Ketan Ghutadaria, 50, of Johnson City, Tennessee, is charged by complaint with two counts of wire fraud and is scheduled to appear by videoconference before U.S. Magistrate Judge Edward S. Kiel. Ghutadaria was arrested in Tennessee on Aug. 13, 2020, by inspectors of the U.S. Postal Inspection Service (USPIS) and appeared before U.S. Magistrate Judge Cynthia Richardson Wyrick in Greenville, Tennessee, federal court.
According to documents filed in this case and statements made in court:
From March 2018 through September 2018, Ghutadaria used a company’s bank account information to pay off his personal financial debts and without prior approval or authorization. Ghutadaria authorized companies to submit Automated Clearing House (ACH) debit transactions for bill payments, which were deducted from the victim company’s bank account in New York. During many of these transactions, Ghutadaria falsely represented that he was the authorized account holder for the victim company’s bank account. Ghutadaria used some of the fraudulently obtained funds to pay for a new 2017 Audi Q7 and a new 2017 Audi A6. Ghutadaria authorized 31 fraudulent ACH debit transactions utilizing the victim company’s bank account information.
The charge of wire fraud carries a maximum sentence of 20 years in prison and a $250,000 fine, or twice the gross pecuniary gain or loss from the offense, whichever is greater.
U.S. Attorney Carpenito credited postal inspectors from the USPIS, Newark Division, under the direction of Inspector in Charge James Buthorn; postal inspectors from the USPIS – Knoxville Domicile, Atlanta Division, under the direction of Inspector in Charge Tommy Coke; the U.S. Marshals Service from the Eastern District of Tennessee, under the direction of U.S. Marshal David Jolley; and the Hudson County Prosecutor’s Office Special Investigations Unit, under the direction of Prosecutor Esther Suarez with the investigation leading to the charges.
The government is represented by Assistant U.S. Attorney Cassye Cole of the U.S. Attorney’s Office’s Criminal Division in Newark.
The charges and allegations in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Iowa Man Admits Producing and Possessing Child PornographyRead the Press Release
CAMDEN, N.J. – An Iowa man today admitted to producing and possessing images of child sexual abuse, U.S. Attorney Craig Carpenito announced.
Donavon Oliphant, 38, of Independence, Iowa, pleaded guilty by videoconference before U.S. District Judge Noel L. Hillman to an information charging him with one count of sexual exploitation of a minor and one count of possession of child pornography.
According to documents filed in this case and statements made in court:
In August 2019 Oliphant produced 11 images and four videos of child sexual abuse. The videos depicted sexual acts involving a pre-pubescent child and an adult male. Oliphant then used a peer-to-peer file-sharing program to share these images and videos with an individual located in Gloucester County, New Jersey. When law enforcement accessed Oliphant’s file-sharing account, they found more than 100 videos and 100 images of child sexual abuse.
The sexual exploitation of a minor charge carries a mandatory minimum sentence of 15 years in prison, a maximum potential penalty of 30 years in prison, and a $250,000 fine. The possession of child pornography offense carries a maximum potential penalty of 20 years in prison, and a $250,000 fine. Oliphant will be required to register as a sex offender. Sentencing is scheduled for Jan. 7, 2020.
U.S. Attorney Carpenito credited special agents of U.S. Department of Homeland Security, Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Jason Molina, with the investigation leading to today’s guilty plea.
The government is represented by Deputy U.S. Attorney Matthew J. Skahill and Assistant U.S. Attorney Daniel A. Friedman of the U.S. Attorney’s Office’s Criminal Division in Camden.
Trenton Man Sentenced to 10 Years in Prison for Role in Heroin Trafficking ConspiracyRead the Press Release
TRENTON, N.J. – A Mercer County, New Jersey, man was sentenced today to 120 months in prison for his role in a large drug trafficking conspiracy that distributed more than one kilogram of heroin in Trenton and the surrounding area, U.S. Attorney Craig Carpenito announced.
Davias Taylor, a/k/a “Vicey,” 28, of Trenton, previously pleaded guilty before Chief 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 one kilogram or more of heroin. Chief Judge Wolfson imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
In October 2018, Taylor and 25 other members of a drug trafficking conspiracy operating in Trenton were charged with conspiracy to distribute heroin. On Feb. 27, 2020, a grand jury returned a 10-count second superseding indictment charging Jerome Roberts, a/k/a “Righteous,” a/k/a “Lee”; David Antonio, a/k/a “Papi,” a/k/a “Pop,” a/k/a a/k/a “Santiago Ramirez”; Timothy Wimbush, a/k/a “Young Money”; Taquan Williams, a/k/a “Trip”; Jubri West; Dennis Cheston Jr., a/k/a “Beans”; and Wayne K. Bush with various crimes relating to the drug-trafficking conspiracy, as well as firearms offenses. To date, 23 defendants have pleaded guilty in connection with their participation in the conspiracy.
From as early as October 2017 to October 2018, the defendants and others engaged in a narcotics conspiracy that operated in the areas of Martin Luther King Boulevard, Sanford Street, Middle Rose Street, Southard Street, Hoffman Avenue, and Coolidge Avenue in Trenton, and that sought to profit from the distribution of heroin and numerous other controlled substances. Through the interception of telephone calls and text messages pursuant to court-authorized wiretap orders, controlled purchases of heroin, the use of confidential sources of information, and other investigative techniques, law enforcement learned that defendants Jakir Taylor and Jerome Roberts obtained regular supplies of hundreds of “bricks” of heroin from defendant David Antonio, to whom they referred as “Papi.” The investigation revealed that during the conspiracy, Davias Taylor met David Antonio and introduced him to his conspirators, Jakir Taylor and Jerome Roberts, so that Antonio could supply the conspiracy with significant quantities of heroin. Davias Taylor himself also obtained and redistributed significant quantities of heroin for profit.
In addition to the prison term, Davias Taylor was sentenced five years of supervised release.
U.S. Attorney Carpenito credited special agents of the FBI, Newark Division, Trenton Resident Agency, under the direction of Special Agent in Charge George M. Crouch Jr.; special agents of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Newark Division, Trenton Field Office, under the direction of Special Agent in Charge Charlie J. Patterson; officers of the Trenton Police Department, under the direction of Police Director Sheilah Coley; officers of the Princeton Police Department, under the direction of Chief of Police Nicholas Sutter; officers of the Ewing Police Department, under the direction of Chief of Police John P. Stemler III; officers of the Burlington Township Police Department, under the direction of Police Director Bruce Painter; and detectives of the Burlington County Prosecutor’s Office, under the direction of Prosecutor Scott A. Coffina, with the investigation leading to today’s sentencing. He also thanked officers of the New Jersey State Police, under the direction of Superintendent Col. Patrick J. Callahan; detectives of the Mercer County Prosecutor’s Office, under the direction of Prosecutor Angelo Onofri; officers of the Mercer County Sheriff’s Office, under the direction of Sheriff John A. Kemler; and members of the New Jersey State Board of Parole for their assistance in the case.
The government is represented by J. Brendan Day, Attorney-in-Charge of the U.S. Attorney’s Office’s Trenton Office, and Assistant U.S. Attorney Alexander Ramey of the U.S. Attorney’s Office’s Criminal Division in Trenton.
This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Greater Trenton Safe Streets Task Force, a partnership between federal, state and local law enforcement agencies to enhance the identification, apprehension, and prosecution of individuals involved in gang-related activities, violent crime, and drug distribution in and around the greater Trenton area. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking, and money laundering organizations and those primarily responsible for the nation’s illegal drug supply.
The charges and allegations against the remaining defendants are merely accusations and those defendants are presumed innocent unless and until proven guilty.
New Jersey Electronic Health Records Company to Pay $500,000 to Resolve False Claims Act AllegationsRead the Press Release
NEWARK, N.J. – An electronic health records company based in Passaic County, New Jersey, has agreed to pay $500,000 to resolve allegations that a former subsidiary caused users to file false claims with the government, U.S. Attorney Craig Carpenito announced today.
Konica Minolta Healthcare Americas Inc., based in Wayne, New Jersey, has agreed to pay $500,000 to resolve False Claims Act allegations that its former subsidiary, Viztek LLC, caused users to submit false claims by misrepresenting the capabilities of its electronic health records (EHR) software.
According to documents filed in this case and the contentions of the United States contained in the settlement agreement:
The American Recovery and Reinvestment Act of 2009 established the Medicare & Medicaid EHR Incentive Program to encourage hospitals and eligible professionals – health care providers – to adopt and demonstrate their meaningful use of EHR technology. The U.S. Department of Health and Human Services (HHS) made incentive payments available to eligible professionals and hospitals that adopted certified EHR technology and met certain requirements relating to their use of the technology. To obtain certification for their product, companies that developed and marketed EHR technology were required to, among other things, demonstrate that their products satisfied certain HHS-adopted criteria.
The United States contends that Viztek fraudulently obtained certification for its product, known as “EXA EHR,” when it misrepresented to its certifying entity that the product complied with all applicable requirements for certification. Viztek knowingly caused eligible providers who used EXA EHR to falsely attest to compliance with the HHS requirements, which caused false claims for incentive payments to be submitted to the Medicare Program.
The allegations were raised in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery.
U.S. Attorney Carpenito 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 Scott J. Lampert, with the investigation leading to today’s settlement.
The government is represented by Assistant U.S. Attorneys Marihug P. Cedeño, of the U.S. Attorney’s Office’s Opioid Abuse Prevention and Enforcement Unit, and Nicole F. Mastropieri, of the Health Care Fraud Unit, in Newark.
The case is captioned United States ex rel. Leighsa Wilson v. Viztek Inc. et al. The claims settled by this settlement are allegations only, and there has been no determination of liability.
Fourth Person Admits Trafficking High-Dosage Oxycodone Pills Related to Gloucester City Drug RingRead the Press Release
CAMDEN, N.J. – A Camden County, New Jersey, man today admitted buying and reselling high-dosage oxycodone pills in Gloucester City, New Jersey, U.S. Attorney Craig Carpenito announced.
Kenneth Rushworth, 59, of Gloucester City, pleaded guilty by videoconference before U.S. District Judge Renée Marie Bumb to an information charging him with distributing and possessing with intent to distribute a quantity of oxycodone. He is the fourth individual to plead guilty for his role in drug trafficking operations based in Gloucester City and Camden.
According to documents filed in this case and statements made in court:
In communications that were intercepted during a wiretap investigation led by the FBI, Rushworth asked Rocco DePoder to provide Rushworth with $1,100 for high-dosage oxycodone pills on Jan. 25, 2020. Rushworth and DePoder then met in Gloucester City and, in exchange for the $1,100, Rushworth sold DePoder a quantity of 60 mg. oxycodone pills, which Rushworth had purchased from another individual for $900. Rushworth was aware that DePoder intended to re-distribute those high-dose pills.
On July 7, 2020, Wayne Muse pleaded guilty to his involvement in the drug trafficking operations with DePoder and Erick Bell. DePoder, Bell, and others were charged in criminal complaints in March 2020. On Aug. 11, 2020, Robert Pratt, 57, of Myrtle Beach, South Carolina, formerly of Blackwood, New Jersey, pleaded guilty before Judge Bumb to an information charging him with distributing and possessing with intent to distribute a quantity of oxycodone. On Aug. 12, 2020, Steven Walker, 47, of Camden, pleaded guilty before Judge Bumb to an information charging him with one count of conspiracy to distribute and possess with intent to distribute a quantity of oxycodone and one count of distributing and possessing with intent to distribute a quantity of oxycodone. The individuals who have pleaded guilty await sentencing.
The count of distributing and possessing with intent to distribute a quantity of oxycodone carries a maximum penalty of 20 years in prison and a $1 million fine. Rushworth’s sentencing is scheduled for Jan. 4, 2021.
U.S. Attorney Carpenito credited special agents of the FBI, Philadelphia Division, South Jersey Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll; U.S. Department of Health and Human Services-Office of the Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; the Camden County Sheriff's Office, under the direction of Sheriff Gilbert L. Wilson; New Jersey Office of Homeland Security and Preparedness, under the direction of Director Jared M. Maples; the Camden County Police Department, under the direction of Chief Joseph Wysocki; and the U.S. Department of Agriculture-Office of Inspector General, under the direction of Special Agent in Charge Bethanne M. Dinkins, with the investigation leading to today’s guilty plea. He also thanked the FBI Newark Division, New Jersey State Police, Camden County Prosecutor’s Office, and U.S. Drug Enforcement Administration (DEA) for their assistance.
The government is represented by Assistant U.S. Attorneys Gabriel J. Vidoni of the Office’s Camden branch and Sara F. Merin of the Newark Office.
The charges against DePoder and Bell remain pending, and they are presumed innocent unless and until proven guilty.
Camden County Man Admits Role in Government Benefits Fraud SchemeRead the Press Release
CAMDEN, N.J. – A Camden, New Jersey, man today admitted his role in a scheme that netted tens of thousands of dollars in government funds using fraudulently procured electronic benefits transfer (EBT) cards, U.S. Attorney Craig Carpenito announced.
Jose Garcia, 53, pleaded guilty by videoconference before U.S. District Court Judge Renée Marie Bumb to an information charging him with one count of conspiracy to defraud the United States and one count of defrauding the U.S. Department of Agriculture’s (USDA) Supplemental Nutrition Assistance Program (SNAP).
Garcia and his co-defendants, Luciano Estevez, 51, also of Camden; Octavio Rodriguez, 51, of Pennsauken, New Jersey; and Juan Melo, 57, of Woodlynne, New Jersey, were previously charged by separate complaints in August 2019 with participating in the conspiracy and defrauding SNAP. Estevez, Rodriguez, and Melo all previously pleaded guilty to participating in the conspiracy and defrauding SNAP.
SNAP, formerly known as the food stamp program, is administered by the USDA to assist low-income individuals and families with the purchase of groceries and food items. SNAP recipients receive EBT cards, similar to commercial debit cards, to make food purchases. Retailers authorized to accept SNAP benefits have EBT terminals to process the food purchases. Food purchases are made by swiping the EBT card at the terminal, and having customers enter a 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. The amount of the purchase is deducted electronically from the SNAP benefits reserved for the customer and the purchase amount is credited to the retailer’s designated bank account.
According to documents filed in this case and statements made in court:
Garcia, Estevez, Rodriguez, Melo, and others allegedly targeted low-income individuals who possessed or had access to EBT cards, and unlawfully purchased the cards from these individuals in exchange for cash and controlled substances. Two confidential sources working with law enforcement engaged in 43 controlled transactions involving EBT cards totaling more than $40,500, which they exchanged for cash and controlled substances, including prescription opioids.
The defendants used the unlawfully procured EBT cards to purchase bulk goods and food items from large national superstores. These goods and food items were often then resold in small convenience and grocery stores owned or affiliated with the defendants or their associates, resulting in a profit for the defendants. Hundreds of EBT cards fraudulently procured by the defendants were used at these superstores, resulting in the misappropriation of tens of thousands of dollars in government funds.
Estevez also unlawfully procured an EBT terminal registered to a superstore in Philadelphia, Pennsylvania. to use at his small grocery store in Camden, which was not registered as a lawful SNAP merchant in the USDA program. Through this terminal, the scheme netted an additional approximately $110,000 in SNAP funds.
The conspiracy count to which Garcia pleaded guilty carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. The SNAP fraud offense to which Garcia pleaded guilty carries a maximum penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. Garcia’s sentencing is scheduled for Jan. 4, 2020.
U.S. Attorney Carpenito credited special agents of the U.S. Department of Agriculture-Office of Inspector General, Northeast Region, under the direction of Special Agent in Charge Bethanne M. Dinkins; the U.S. Department of Health and Human Services-Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; the FBI Philadelphia Field Office, South Jersey Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll in Philadelphia; and the Camden County Police Department, under the direction of Chief of Police Joseph D. Wysocki, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Christina O. Hud of the U.S. Attorney’s Office’s Criminal Division in Camden.
Union County Man Indicted on Public Corruption ChargesRead the Press Release
NEWARK, N.J. – A Union County, New Jersey, man has been indicted on charges of making corrupt payments to a public official, wire fraud, and using a facility in interstate commerce to facilitate bribery, U.S. Attorney Craig Carpenito announced today.
Jeanmarie Zahore, 56, of Rahway, New Jersey, is charged in an indictment unsealed today with one count of making corrupt payments to an agent of a local government receiving federal funds, two counts of wire fraud, and one count of violating the Travel Act to carry on bribery. Zahore made his initial appearance before U.S. Magistrate Judge Cathy L. Waldor and was released on $100,000 unsecured bond. No date has been scheduled for Zahore’s arraignment.
According to the indictment:
Zahore was the sole owner of JZ Nettech, a computer consulting business that he operated out of his residence. On Sept.15, 2015, the City Council of Orange Township, New Jersey, passed a resolution awarding JZ Nettech, without competitive bidding, a $350,000 emergency contract to install a computer networking system at a municipal complex that housed the Orange Municipal Court and the Orange Police Department (the “Municipal Complex Project”).
From August 2015 through at least Nov. 23, 2015, Zahore engaged in a scheme to offer and give corrupt cash payments to an unnamed Orange public official (“Individual 1”) to influence and reward Individual 1 for using Individual 1’s influence to arrange for Orange to award JZ Nettech the emergency contract and to facilitate payments from Orange to JZ Nettech.
After communications between Zahore and Individual 1, at a meeting at the Municipal Complex on Sept. 14, 2015, Individual 1 advised a senior official of the Orange Municipal Court (the “Court Official”) and a senior official of the Orange Police Department (the “Police Department Official”) that: (a) there was an urgent need to address a potential security vulnerability in the Municipal Complex’s computer network, and (b) JZ Nettech had been selected as the vendor to fix the problem. Individual 1 caused Orange to issue a Certification of Funds, certifying that $350,000 was available for the Municipal Complex Project and identifying the vendor as JZ Nettech.
On Sept. 15, 2015, Individual 1 spoke before the Orange City Council in support of allocating emergency funds for the Municipal Complex Project and awarding the Municipal Complex Project to JZ Nettech. At the meeting, during which Orange City Council members raised questions about the selection of JZ Nettech as the vendor for the Municipal Complex Project, Individual 1 did not disclose that Individual 1 had engaged in communications with Zahore since at least Aug. 31, 2015.
On Sept. 16, 2015, the day after the Orange City Council approved the $350,000 contract, Individual 1 approved the issuance of a blanket purchase order authorizing Orange to pay JZ Nettech $350,000 in connection with the Municipal Complex Project.
On Sept. 17, 2015, after Zahore and Individual 1 text-messaged about Zahore’s invoice to Orange and meeting with each other, Zahore sent an email to Orange Employee 1, attached to which was a JZ Nettech “invoice related to the 1st stage of the project” seeking a payment of $115,000. On the same date, Zahore sent a text message to Individual 1, stating, “I sent [the JZ Nettech invoice for $115,000] to [Orange Employee 1]. Do you want a copy sent to u?”
On Sept. 18, 2015, Zahore sent an email to Orange Employee 1, attached to which was a revised JZ Nettech invoice, still seeking a payment of $115,000, but now indicating that $34,460 of the $115,000 was for the “Purchase of wiring for buildings.” On the same date, at Individual 1’s direction, the Police Department Official signed and approved a purchase order for the payment of $115,000 to JZ Nettech for the “PURCH[ASE] OF WIRING/CABLE/SUPPLIES” for the Municipal Complex Project. Typically, vendors are not pre-paid by Orange to purchase supplies for a project.
From Sept. 18, 2015, to Nov. 10, 2015, Zahore received and deposited three Orange checks totaling $350,000 in connection with the Municipal Complex Project into a bank account for him and JZ Nettech.
On Nov. 20, 2015, and Nov. 23, 2015, Zahore withdrew a total of approximately $50,000 in cash from this bank account, which was obtained, in substantial part, from the funds paid by Orange. On each of those same dates, Zahore gave, and Individual 1 accepted, approximately $10,000 in cash, which was intended to influence and reward Individual 1 for Individual 1’s assistance in connection with the Municipal Complex Project. Zahore characterized those two cash payments to Individual 1 totaling approximately $20,000 in a spreadsheet that Zahore maintained of expenses related to the Municipal Complex Project as follows:
11/20/2015
Gift: [Initials of Individual 1]
$10,000.00
11/23/2015
Gift: [Initials of Individual 1]
$10,000.00
Each of the following charges carries the following maximum potential penalties:
The count of making corrupt payments to an agent of a local government receiving federal funds is punishable by a maximum of 10 years in prison; the count of wire fraud is punishable by a maximum of 20 years in prison; and the count of use of an interstate facility to facilitate bribery is punishable by a maximum of five years in prison. Each count also carries a potential fine of $250,000.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Acting Special Agent in Charge Joe Denahan in Newark; special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorneys Cari Fais and J Fortier Imbert of the U.S. Attorney’s Office’s Special Prosecutions Division.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The Bank of Nova Scotia Agrees to Pay $60.4 Million in Connection with Commodities Price Manipulation SchemeRead the Press Release
NEWARK, N.J. – The Bank of Nova Scotia (Scotiabank), a Toronto, Canada-based global banking and financial services firm, has entered into a resolution with the Department of Justice to resolve criminal charges related to a price manipulation scheme involving thousands of episodes of unlawful trading activity by four traders in the precious metals futures contracts markets.
Scotiabank entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed today in the District of New Jersey charging the company with one count of wire fraud and one count of attempted price manipulation. Under the terms of the DPA, Scotiabank has agreed to the imposition of an independent compliance monitor, and will pay over $60.4 million in a criminal monetary penalty, criminal disgorgement, and victim compensation, with part of the criminal monetary penalty credited against payments made to the Commodity Futures Trading Commission (CFTC) under a separate agreement with the CFTC being announced today.
“For over eight years, Scotiabank traders placed thousands of orders for precious metals futures contracts in an attempt to manipulate prices for their own and the bank’s benefit and to deceive other market participants,” said Chief Robert A. Zink of the Justice Department’s Criminal Division, Fraud Section. “This deferred prosecution agreement—which includes a criminal monetary penalty at the top of the United States Sentencing Guidelines range, money to compensate victims, and an independent compliance monitor—reflects the seriousness of the offense and the state of Scotiabank’s compliance program, and further helps to promote the integrity of our public markets.”
“For the markets to work fairly, everyone needs to be able to make trading decisions with consistent, accurate information,” said U.S. Attorney Craig Carpenito for the District of New Jersey. “In the conduct described here, four Scotiabank traders attempted to rig precious metals futures prices in their favor by placing thousands of orders they knew they would cancel before the trades were executed. In this way, they sought to illegally manipulate the market to their own advantage, and to the disadvantage of other traders. The resolution announced requires Scotiabank to pay a substantial penalty and places them under watch by an independent compliance monitor.”
“Today, Scotiabank has admitted to their role in a massive price manipulation scheme aimed at falsely manufacturing the prices of precious metals futures contracts to serve the bank’s best interests,” said Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. “The bank’s actions were designed to lead others to trade in ways they never would have without what was believed to be legitimate market activity. Scotiabank’s agreement to surrender more than $60 million in criminal fines, disgorgement and victim compensation underscores the severe penalties that can be levied against those who wish to engage in similar, illegal business tactics.”
“The consequences of the actions of these traders are far reaching, affecting not only the economy of the United States, but also the world’s financial markets,” said Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service’s Criminal Investigations Group. “Anyone who thinks that manipulating trading markets to benefit their own bank accounts should see today’s announcement as a significant warning. The U.S. Postal Inspection Service has an extensive history of investigating complex financial fraud schemes in order to protect investors as well as the integrity of the financial marketplace.”
According to admissions and court documents, between approximately January 2008 and July 2016, four precious metals traders located in New York, London and Hong Kong engaged in fraudulent and manipulative trading practices in the markets for gold, silver, platinum, and palladium futures contracts (collectively, precious metals futures contracts) that traded on the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by the CME Group, Inc. One of the traders, Corey Flaum, 42, of Delray Beach, Florida, pleaded guilty on July 25, 2019, to one count of attempted price manipulation in connection with his precious metals futures contracts trading at Scotiabank and another financial services firm, and his sentencing is scheduled for Jan. 27, 2021, before U.S. District Judge Brian M. Cogan of the Eastern District of New York.
As part of the DPA, Scotiabank has agreed to, among other things, continue to cooperate with the department in any ongoing investigations and prosecutions relating to the underlying misconduct, to modify its compliance program where necessary and appropriate, and to retain an independent compliance monitor for a period of three years.
A number of relevant considerations contributed to the department’s criminal resolution with Scotiabank, including the nature and seriousness of the offense, the state of Scotiabank’s compliance program, and Scotiabank’s failure to fully and voluntarily self-disclose the offense conduct to the department.
As Scotiabank admitted in the DPA, Flaum and the three other traders, collectively, placed thousands of orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution. By placing these orders, the traders intended to artificially move the prices of precious metals futures contracts in a direction that was favorable to them, and to inject false and misleading information into the precious metals futures markets in order to deceive other market participants into believing something untrue, namely that the market reflected legitimate supply and demand. This false and misleading information was intended to, and at times did, trick other market participants into reacting to the apparent change and imbalance in supply and demand by buying and selling futures contracts at quantities, prices, and times that they otherwise likely would not have traded.
As set forth in the DPA, Scotiabank’s compliance function failed to detect or prevent the four traders’ unlawful trading practices. Moreover, between August 2013 and February 2016, three Scotiabank compliance officers possessed information regarding unlawful trading by one of the traders other than Flaum but failed to prevent further unlawful conduct by this same trader. These facts were significant considerations that counseled for the imposition of a criminal monetary penalty at the high end of the applicable United States Sentencing Guidelines range under the DPA.
Since the time of the underlying offense conduct, Scotiabank has made significant investments to improve its compliance technology and trade surveillance tools, has nearly doubled its annual compliance operating budget, has added more than 200 full-time equivalent compliance positions, and is in the process of winding down its precious metals business. The department ultimately determined, however, that an independent compliance monitor was necessary because Scotiabank’s remedial improvements to its compliance and ethics program have yet not been fully implemented and tested to demonstrate that they would be effective in detecting and preventing similar misconduct in the future.
Scotiabank did not receive voluntary disclosure credit because it did not voluntarily and timely disclose the offense conduct to the department. In 2016, after one of its futures commission merchants flagged trading by Flaum for possible spoofing, Scotiabank made a voluntary disclosure regarding Flaum to the CFTC. As a result of recordkeeping failures, however, Scotiabank’s disclosure to the CFTC was materially incomplete. As a result, the CFTC was impaired in its ability to fully investigate Flaum’s unlawful trading and discover the true extent of the misconduct. The CFTC, relying on Scotiabank’s incomplete and, ultimately, inaccurate disclosure, entered into a resolution with Scotiabank in 2018 that did not reflect the full extent of Flaum’s conduct (2018 CFTC Resolution). In the 2018 CFTC resolution, Scotiabank received a substantially reduced penalty in recognition of, among other things, its purported self-reporting.
Today, the CFTC announced two separate settlements with Scotiabank in connection with related, parallel proceedings. One of Scotiabank’s resolutions with the CFTC relates to unlawful trading by Flaum and the three other traders that Scotiabank did not fully disclose to the CFTC in connection with the CFTC’s prior investigation that resulted in the 2018 CFTC Resolution, discussed above. Under the terms of the new agreement between Scotiabank and the CFTC, Scotiabank agreed to pay approximately $60.4 million, which includes a civil monetary penalty of $42 million, as well as restitution and disgorgement that will be credited to any such payments made to the department. The second resolution between Scotiabank and the CFTC relates to certain false statements that Scotiabank made to the CFTC (including in connection with the investigation that resulted in the 2018 CFTC Resolution), the COMEX, and the National Futures Association. Under the terms of this agreement, Scotiabank has agreed to pay a civil monetary penalty of approximately $17 million.
The FBI’s New York Field Office and the USPIS investigated this case. Assistant Chief Avi Perry and Trial Attorneys Matthew F. Sullivan and Alexander Kramer of the Fraud Section and Assistant U.S. Attorney Catherine R. Murphy of the District of New Jersey prosecuted the case. The CFTC’s Division of Enforcement provided assistance in this matter.
Individuals who believe that they may be a victim in this case should visit the Fraud Section’s Victim Witness website at https://www.justice.gov/criminal-vns/case/the-bank-of-nova-scotia-dpa or call (888) 549-3945.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
The Bank of Nova Scotia Agrees to Pay $60.4 Million in Connection with Commodities Price Manipulation SchemeRead the Press Release
The Bank of Nova Scotia (Scotiabank), a Toronto, Canada-based global banking and financial services firm, has entered into a resolution with the Department of Justice to resolve criminal charges related to a price manipulation scheme involving thousands of episodes of unlawful trading activity by four traders in the precious metals futures contracts markets.
Scotiabank entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed today in the District of New Jersey charging the company with one count of wire fraud and one count of attempted price manipulation. Under the terms of the DPA, Scotiabank has agreed to the imposition of an independent compliance monitor, and will pay over $60.4 million in a criminal monetary penalty, criminal disgorgement, and victim compensation, with part of the criminal monetary penalty credited against payments made to the Commodity Futures Trading Commission (CFTC) under a separate agreement with the CFTC being announced today.
“For over eight years, Scotiabank traders placed thousands of orders for precious metals futures contracts in an attempt to manipulate prices for their own and the bank’s benefit and to deceive other market participants,” said Chief Robert A. Zink of the Justice Department’s Criminal Division, Fraud Section. “This deferred prosecution agreement—which includes a criminal monetary penalty at the top of the United States Sentencing Guidelines range, money to compensate victims, and an independent compliance monitor—reflects the seriousness of the offense and the state of Scotiabank’s compliance program, and further helps to promote the integrity of our public markets.”
“For the markets to work fairly, everyone needs to be able to make trading decisions with consistent, accurate information,” said U.S. Attorney Craig Carpenito for the District of New Jersey. “In the conduct described here, four Scotiabank traders attempted to rig precious metals futures prices in their favor by placing thousands of orders they knew they would cancel before the trades were executed. In this way, they sought to illegally manipulate the market to their own advantage, and to the disadvantage of other traders. The resolution announced requires Scotiabank to pay a substantial penalty and places them under watch by an independent compliance monitor.”
“Today, Scotiabank has admitted to their role in a massive price manipulation scheme aimed at falsely manufacturing the prices of precious metals futures contracts to serve the bank’s best interests,” said Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. “The bank’s actions were designed to lead others to trade in ways they never would have without what was believed to be legitimate market activity. Scotiabank’s agreement to surrender more than $60 million in criminal fines, disgorgement and victim compensation underscores the severe penalties that can be levied against those who wish to engage in similar, illegal business tactics.”
“The consequences of the actions of these traders are far reaching, affecting not only the economy of the United States, but also the world’s financial markets,” said Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service’s (USPIS) Criminal Investigations Group. “Anyone who thinks that manipulating trading markets to benefit their own bank accounts should see today’s announcement as a significant warning. The U.S. Postal Inspection Service has an extensive history of investigating complex financial fraud schemes in order to protect investors as well as the integrity of the financial marketplace.”
According to admissions and court documents, between approximately January 2008 and July 2016, four precious metals traders located in New York, London and Hong Kong engaged in fraudulent and manipulative trading practices in the markets for gold, silver, platinum, and palladium futures contracts (collectively, precious metals futures contracts) that traded on the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by the CME Group, Inc. One of the traders, Corey Flaum, 42, of Delray Beach, Florida, pleaded guilty on July 25, 2019, to one count of attempted price manipulation in connection with his precious metals futures contracts trading at Scotiabank and another financial services firm, and his sentencing is scheduled for Jan. 27, 2021, before U.S. District Judge Brian M. Cogan of the Eastern District of New York.
As part of the DPA, Scotiabank has agreed to, among other things, continue to cooperate with the department in any ongoing investigations and prosecutions relating to the underlying misconduct, to modify its compliance program where necessary and appropriate, and to retain an independent compliance monitor for a period of three years.
A number of relevant considerations contributed to the department’s criminal resolution with Scotiabank, including the nature and seriousness of the offense, the state of Scotiabank’s compliance program, and Scotiabank’s failure to fully and voluntarily self-disclose the offense conduct to the department.
As Scotiabank admitted in the DPA, Flaum and the three other traders, collectively, placed thousands of orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution. By placing these orders, the traders intended to artificially move the prices of precious metals futures contracts in a direction that was favorable to them, and to inject false and misleading information into the precious metals futures markets in order to deceive other market participants into believing something untrue, namely that the market reflected legitimate supply and demand. This false and misleading information was intended to, and at times did, trick other market participants into reacting to the apparent change and imbalance in supply and demand by buying and selling futures contracts at quantities, prices, and times that they otherwise likely would not have traded.
As set forth in the DPA, Scotiabank’s compliance function failed to detect or prevent the four traders’ unlawful trading practices. Moreover, between August 2013 and February 2016, three Scotiabank compliance officers possessed information regarding unlawful trading by one of the traders other than Flaum but failed to prevent further unlawful conduct by this same trader. These facts were significant considerations that counseled for the imposition of a criminal monetary penalty at the high end of the applicable United States Sentencing Guidelines range under the DPA.
Since the time of the underlying offense conduct, Scotiabank has made significant investments to improve its compliance technology and trade surveillance tools, has nearly doubled its annual compliance operating budget, has added more than 200 full-time equivalent compliance positions, and is in the process of winding down its precious metals business. The department ultimately determined, however, that an independent compliance monitor was necessary because Scotiabank’s remedial improvements to its compliance and ethics program have yet not been fully implemented and tested to demonstrate that they would be effective in detecting and preventing similar misconduct in the future.
Scotiabank did not receive voluntary disclosure credit because it did not voluntarily and timely disclose the offense conduct to the department. In 2016, after one of its futures commission merchants flagged trading by Flaum for possible spoofing, Scotiabank made a voluntary disclosure regarding Flaum to the CFTC. As a result of recordkeeping failures, however, Scotiabank’s disclosure to the CFTC was materially incomplete. As a result, the CFTC was impaired in its ability to fully investigate Flaum’s unlawful trading and discover the true extent of the misconduct. The CFTC, relying on Scotiabank’s incomplete and, ultimately, inaccurate disclosure, entered into a resolution with Scotiabank in 2018 that did not reflect the full extent of Flaum’s conduct (2018 CFTC Resolution). In the 2018 CFTC resolution, Scotiabank received a substantially reduced penalty in recognition of, among other things, its purported self-reporting.
Today, the CFTC announced two separate settlements with Scotiabank in connection with related, parallel proceedings. One of Scotiabank’s resolutions with the CFTC relates to unlawful trading by Flaum and the three other traders that Scotiabank did not fully disclose to the CFTC in connection with the CFTC’s prior investigation that resulted in the 2018 CFTC Resolution, discussed above. Under the terms of the new agreement between Scotiabank and the CFTC, Scotiabank agreed to pay approximately $60.4 million, which includes a civil monetary penalty of $42 million, as well as restitution and disgorgement that will be credited to any such payments made to the department. The second resolution between Scotiabank and the CFTC relates to certain false statements that Scotiabank made to the CFTC (including in connection with the investigation that resulted in the 2018 CFTC Resolution), the COMEX, and the National Futures Association. Under the terms of this agreement, Scotiabank has agreed to pay a civil monetary penalty of approximately $17 million.
The FBI’s New York Field Office and the USPIS investigated this case. Assistant Chief Avi Perry and Trial Attorneys Matthew F. Sullivan and Alexander Kramer of the Fraud Section and Assistant U.S. Attorney Catherine R. Murphy of the District of New Jersey prosecuted the case. The CFTC’s Division of Enforcement provided assistance in this matter.
Individuals who believe that they may be a victim in this case should visit the Fraud Section’s Victim Witness website at https://www.justice.gov/criminal-vns/case/the-bank-of-nova-scotia-dpa or call (888) 549-3945.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Passaic County Man Admits Participating in Heroin ConspiracyRead the Press Release
NEWARK, N.J. – A Passaic County, New Jersey, man today admitted conspiring to distribute heroin and to distributing a quantity of heroin, U.S. Attorney Craig Carpenito announced.
Dwayne Northern, a/k/a “Black,” a/k/a “D Black,” 35, of Paterson, New Jersey, pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti to an information charging him with conspiracy to distribute and possess with the intent to distribute heroin and knowingly and intentionally distributing heroin.
According to documents filed in this case and statements made in court:
The defendant and his conspirators are members and associates of the 230 Boys street gang, which operates primarily around Rosa Parks Boulevard and Godwin Avenue in Paterson. Through investigative techniques, including numerous controlled purchases of narcotics, consensually recorded telephone calls and text messages, physical surveillance, and the analysis of telephone call detail records, law enforcement determined that from at least September 2018 through Oct. 1, 2019, the defendant and his conspirators conspired to distribute narcotics, including heroin and fentanyl.
Each count to which Northern pleaded guilty carries a maximum penalty of 20 years in prison and a fine of at least $1 million. Sentencing is scheduled for Dec. 21, 2020.
This case is being conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF). The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
U.S. Attorney Carpenito credited special agents and task force officers with the Bureau of Alcohol, Tobacco, Firearms and Explosives, Newark Division, under the direction of Special Agent in Charge Charlie J. Patterson; special agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge Susan A. Gibson in Newark; officers of the N.J. State Police, under the direction of Col. Patrick J. Callahan; officers of the Paterson Police Department, under the direction of Director Jerry Speziale and Police Chief Ibrahim Baycora; detectives of the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia Valdes; and the Passaic County Sheriff’s Office, under the direction of Sheriff Richard H. Berdnik, with the investigation leading to the charges. He also thanked the U.S. Marshals Service, the Bergen County Sheriff's Office and the Belleville and Livingston police departments for their assistance with the case.
The government is represented by Assistant U.S. Attorney Francesca Liquori, of the Organized Crime and Gangs Unit.
Owner of Car Dealership Admits Engaging in Large-Scale FraudRead the Press Release
NEWARK, N.J. – An Atlantic County, New Jersey, man today admitted his role in engaging in a pattern of fraudulent activity through his auto dealership, U.S. Attorney Craig Carpenito announced.
Afzal Khan, a/k/a “Bobby Khan,” 38, of Egg Harbor Township, New Jersey, pleaded guilty by videoconference before U.S. District Judge William J. Martini to Count One of an indictment charging him with wire fraud.
According to documents filed in the case and statements made in court:
From at least December 2013 through September 2014, Khan, through his car dealership, Emporio Motor Group (Emporio) of Ramsey, New Jersey, engaged in acts to defraud lenders and customers. Khan obtained loans from the auto finance division of a large bank for cars that he never delivered, but for which the purchaser was still responsible. Khan also obtained loans from the victim bank for cars that were delivered, but for which neither he nor Emporio had title. As a result, the purchasers of these cars were liable for the loans, but could not register the cars. In addition, Khan offered to sell cars for individuals on consignment, but did not return the cars or provide any money to the individuals from the sale of the cars. Khan admitted that as a result of his actions, he exposed the victim bank to a potential loss of at least $550,000.
Khan faces a maximum penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. Sentencing is scheduled for Dec. 17, 2020.
U.S. Attorney Carpenito credited special agents of the FBI’s Newark Division, under the direction of Acting Special Agent in Charge Joe Denahan, with the investigation leading to today’s guilty plea. He also thanked the Bergen County Prosecutor’s Office and the Ramsey Police Department for their assistance.
The government is represented by Assistant U.S. Attorney Andrew Kogan of the U.S. Attorney’s Office Cybercrime Unit in Newark.
Union County Man Indicted on Tax and Fraud ChargesRead the Press Release
NEWARK, N.J. – A Union County, New Jersey, man was indicted today on charges of filing false tax returns, statements, and other documents; failing to file a tax return; wire fraud; and student aid fraud, U.S. Attorney Craig Carpenito announced.
Anthony Salters, 58, of Hillside, New Jersey, was charged by indictment with one count of subscribing to a false tax return for tax year 2013, two counts of subscribing to false tax returns, statements, and other documents for tax years 2014 and 2015, one count of failing to file a tax return for tax year 2016, and four counts of wire fraud and three counts of student aid fraud in connection with student financial aid obtained for his dependent child. No date has been scheduled for Salters’ arraignment.
According to the indictment:
Salters was a principal of Media Allies LLC, a company that purportedly provided public relations services. Salters signed, filed, and caused to be filed with the IRS U.S. Individual Income Tax Returns, Forms 1040, for tax years 2013, 2014 and 2015, each of which contained a written declaration that it was filed under penalties of perjury. Each Form 1040 falsely stated that Salters’ business income was zero and his total income was zero, when, in fact, Salters and Media Allies had substantial gross receipts in tax years 2013 to 2015, as well as tens of thousands of dollars in gross income in 2016, the tax year for which Salters failed to file a tax return.
Salters reported false information about his income in connection with his dependent child’s application for student financial aid. From January 2014 to May 2017, Salters engaged in a scheme to defraud the United States Department of Education, the New Jersey Higher Education Student Assistance Authority, and a university in New Jersey where Salters’ dependent child was an undergraduate, by submitting and causing to be submitted materially false information underreporting Salters’ income, including the information provided in his dependent child’s Free Applications for Federal Student Aid, or FAFSAs.
The count of subscribing to a false tax return, statement, or other document is punishable by a maximum of three years in prison; the count of wire fraud is punishable by a maximum of 20 years in prison; the count of student loan fraud is punishable by a maximum of five years in prison. All three counts are also punishable by a fine of $250,000. The count of failure to file a tax return is punishable by a maximum of one year in prison and a fine of $100,000.
U.S. Attorney Carpenito credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez; special agents of the FBI, under the direction of Acting Special Agent in Charge Joe Denahan in Newark; special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi, and special agents of the U.S. Department of Education, Office of Inspector General, under the direction of Special Agent in Charge Geoff Wood in Philadelphia, with the investigation leading to today’s indictment.
The government is represented by Assistant U.S. Attorneys J Fortier Imbert and Cari Fais of the U.S. Attorney’s Office’s Special Prosecutions Division.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Passaic County Man Admits Participating in Heroin ConspiracyRead the Press Release
NEWARK, N.J. – A Passaic County, New Jersey, man today admitted his role in a scheme to distribute heroin and fentanyl in Paterson, New Jersey, U.S. Attorney Craig Carpenito announced.
Isaiah Hargrove, 20, of Paterson, pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti to an information charging him with conspiracy to distribute and possess with the intent to distribute 100 grams or more of heroin and 40 grams or more of fentanyl and knowingly and intentionally distributing fentanyl.
According to documents filed in this case and statements made in court:
Hargrove and his conspirators are members and associates of the 230 Boys street gang, which operates primarily around Rosa Parks Boulevard and Godwin Avenue in Paterson. Through investigative techniques, including numerous controlled purchases of narcotics, consensually recorded telephone calls and text messages, physical surveillance, and the analysis of telephone call detail records, law enforcement determined that from at least September 2018 through Oct. 1, 2019, the defendant and his conspirators conspired to distribute narcotics, including heroin and fentanyl.
The count of conspiracy to distribute heroin and fentanyl carries a mandatory minimum of five years in prison, maximum penalty of 40 years in prison and a fine of $5 million. The count of distribution of fentanyl carries a maximum of 20 years in prison and a fine of $1 million. Sentencing is scheduled for Dec. 21, 2020.
This case is being conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF). The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
U.S. Attorney Carpenito credited special agents and task force officers with the Bureau of Alcohol, Tobacco, Firearms and Explosives, Newark Division, under the direction of Special Agent in Charge Charlie J. Patterson; special agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge Susan A. Gibson in Newark; officers of the N.J. State Police, under the direction of Col. Patrick J. Callahan; officers of the Paterson Police Department, under the direction of Director Jerry Speziale and Police Chief Ibrahim Baycora; detectives of the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia Valdes; and the Passaic County Sheriff’s Office, under the direction of Sheriff Richard H. Berdnik, with the investigation leading to today’s guilty plea. He also thanked the U.S. Marshals Service, the Bergen County Sheriff's Office and the Belleville and Livingston police departments for their assistance with the case.
The government is represented by Assistant U.S. Attorney Francesca Liquori, of the Organized Crime and Gangs Unit.
Newark Man Sentenced to 90 Months for Narcotics Trafficking and Weapon Possession OffensesRead the Press Release
NEWARK, N.J. – A Newark man was sentenced today to 90 months in prison for drug and weapons offenses, U.S. Attorney Craig Carpenito announced.
Terrance Bradley, 28, of Newark, New Jersey, previously pleaded guilty before U.S. District Judge Madeline Cox Arleo to an information charging him with one count of possessing with intent to distribute heroin, cocaine, and a fentanyl analogue; one count of being a prior felon in possession of a firearm and ammunition; and one count of possessing a firearm in furtherance of a drug trafficking crime. Judge Arleo imposed the sentence today.
According to the documents filed in this case and statements made in court:
On Dec. 6, 2018, members of the Newark Police Department were conducting surveillance near a residence on Renner Avenue in Newark, when they observed Bradley engage in a suspected hand-to-hand drug transaction with a buyer. Upon completion of the suspected drug transaction, Bradley re-entered the residence while the buyer walked a short distance away, where law enforcement placed the buyer under arrest and recovered heroin from the buyer.
On Dec. 7, 2018, Newark Police Department executed a search warrant at the residence. During a search of Bradley’s bedroom, law enforcement recovered approximately 3,151 glassine envelopes of heroin and 455 vials of crack cocaine, more than $6,000 in U.S. currency, and a loaded 9mm semi-automatic pistol. Law enforcement also recovered from the residence more than 200 additional rounds of ammunition of varying calibers. Bradley acknowledged that the firearm, ammunition, and narcotics belonged to him.
In addition to the prison term, Judge Arleo sentenced Bradley to three years of supervised release.
U.S. Attorney Carpenito credited members of the Newark Police Department, under the direction of Public Safety Director Anthony F. Ambrose, with the investigation leading to today’s sentencing.
This investigation is part of the Violent Crime Initiative (VCI) in Newark. The VCI was formed in August 2017 by the U.S. Attorney’s Office for the District of New Jersey, the Essex County Prosecutor’s Office, and the City of Newark’s Department of Public Safety to combat violent crime in and around Newark. As part of this partnership, federal, state, county, and city agencies collaborate and pool resources to prosecute violent offenders who endanger the safety of the community. The VCI is composed of the U.S. Attorney’s Office, the FBI, the ATF, the DEA New Jersey Division, the U.S. Marshals, the Newark Department of Public Safety, the Essex County Prosecutor’s Office, the Essex County Sheriff’s Office, N.J. State Board of Parole, Union County Jail, N.J. State Police Regional Operations and Intelligence Center/Real Time Crime Center, N.J. Department of Corrections, the East Orange Police Department, and the Irvington Police Department.
The government is represented by Assistant U.S. Attorney Angelica M. Sinopole of the U.S. Attorney’s Office’s Organized Crime and Gangs Unit in Newark.
Two Ocean County Companies Agree to Resolve Price-Gouging Charges Involving 11 Million Items of Scarce Personal Protective Equipment by Selling Them at Cost and Disgorging Illicit ProfitsRead the Press Release
NEWARK, N.J. – Two Ocean County, New Jersey, import companies have agreed to resolve violations of the Defense Production Act (DPA) of 1950 for price-gouging customers of personal protective equipment (PPE) during the COVID-19 pandemic by agreeing to sell at cost approximately 11 million items of PPE seized from three warehouses by law enforcement in April 2020, U.S. Attorney Craig Carpenito announced today.
The two companies – CSG Imports LLC and KG Imports LLC, both of Lakewood, New Jersey – have also agreed to disgorge $400,000 in profits relating to transactions with two customers who purchased PPE from CSG Imports at excessive prices and to compensate those customers for their losses.
“The defendants in this case sought to profit illegally from a pandemic just as it was starting to sweep across the country,” U.S. Attorney Carpenito said. “Today’s agreements will ensure that needed personal protective equipment gets into the hands of the people who need it, and at a fair price. We will continue to investigate these price-gouging cases with our law enforcement partners and make sure that vendors stop trying to make excess profits during this national emergency.”
“Profiteers who choose to shamelessly defraud the America public should know the FBI will utilize every means under the law to bring them to justice,” FBI Newark Acting Special Agent in Charge Joe Denahan said.
Prior to the COVID-19 pandemic, CSG Imports had never imported PPE or health-care equipment or products of any kind. KG Imports was formed after the pandemic began specifically to import PPE into the United States.
The resolutions arise out of law enforcement’s April 22, 2020, seizure of over 11 million items of PPE – predominantly N-95 respirator face masks and three-ply disposable face masks – owned by CSG Imports and KG Imports from three warehouses in Lakewood. Law enforcement seized the PPE after learning that the companies were violating the DPA by offering for sale and selling scarce PPE at prices in excess of prevailing market prices for those items.
Both CSG Imports and KG Imports entered into deferred prosecution agreements with the U.S. Attorney’s Office for the District of New Jersey in connection with criminal complaints filed today charging each company with one count of violating the DPA. CSG Imports has committed to selling the seized PPE at cost and compensating two entities that it sold PPE to in excess of prevailing market prices in the amount of $400,000. The agreement provides that CSG Imports must pay a minimum of $200,000 to these entities directly in amounts proportionate to CSG Imports’ profits on PPE sold to those entities and that CSG Imports may compensate the remaining portion of the $400,000 by transferring PPE to these entities at no cost. Pursuant to a separate deferred prosecution agreement, KG Imports has also agreed to sell the seized PPE at cost.
According to the admissions:
CSG Imports
Beginning in March 2020, with the COVID-19 pandemic affecting New Jersey and the rest of the United States and world, CSG Imports began to obtain directly from international manufacturers and import various items of PPE into the United States. When it did not deliver directly to customers, CSG Imports stored the PPE at warehouses in Lakewood and sold the PPE to customers, including hospitals, health care providers, health care suppliers, and end users in New Jersey and elsewhere.
From March 2020 through May 2020, CSG Imports imported into the United States and offered for sale PPE and other health and medical resources that were Designated Scarce Materials in excess of prevailing market prices. For example, CSG Imports imported N-95 masks for a blended per-unit cost of $3.47 and sold them with markups ranging from $0.78 to $2.53. CSG Imports also imported three-ply disposable face masks for a blended per-unit cost of $0.37 and sold them with markups ranging from $0.09 to $0.28.
KG Imports
Beginning in March 2020, KG Imports also began to import various items of PPE that were stored in warehouses in Lakewood and sold to customers in New Jersey and elsewhere. Until that time, KG Imports had not dealt in such products.
From April 2020 through May 2020, KG Imports offered and sold these items at prices that exceeded prevailing market prices. For example, KG Imports imported three-ply disposable face masks for a blended per-unit cost of $0.37 and sold them with markups ranging from $0.11 to $0.43.
As part of the agreements, both CSG Imports and KG Imports agreed to continue to cooperate with the government in any ongoing or future criminal investigations during the term of their respective agreements.
The government reached these resolutions with CSG Imports and KG Imports based on a number of factors, including: both entities’ failure to timely and voluntarily self-disclose the conduct that triggered the investigations; the nature and seriousness of the offenses; and credit for each company’s respective cooperation. Both entities also agreed to sell all PPE seized by the government at prices not to exceed their costs in obtaining the PPE and to provide semi-annual written reports to the government regarding their PPE sales.
Attorney General William P. Barr created the COVID-19 Hoarding and Price Gouging Task Force, led by U.S. Attorney Carpenito, who is coordinating efforts with the Antitrust Division and U.S. Attorneys across the country wherever illegal activity involving protective personal equipment occurs. The Secretary of Health and Human Services has issued a Notice designating categories of health and medical supplies that must not be hoarded or sold for exorbitant prices.
Please report COVID-19 fraud, hoarding or price-gouging to the National Center for Disaster Fraud’s National Hotline at (866) 720-5721, or e-mail: [email protected]
U.S. Attorney Carpenito credited special agents of the FBI under the direction of Acting Special Agent in Charge Joe Denahan, with the investigation leading to today’s resolutions. He also thanked the Lakewood Police Department for its assistance.
The government is represented by Senior Trial Counsel Jason S. Gould and Assistant U.S. Attorney Nicole F. Mastropieri of the Health Care Fraud Unit.
California Man Charged with Investment FraudRead the Press Release
CAMDEN, N.J. – A California man has been arrested for defrauding victims in New Jersey through an investment scheme, U.S. Attorney Craig Carpenito announced today.
Christopher Glynn, 57, of Burbank, California, was indicted in August 2019 on seven counts of wire fraud and four counts of money laundering. After evading law enforcement for nearly a year, Glynn was arrested in Medford, Oregon, and is expected to make his initial appearance before a judge in the District of Oregon later this afternoon.
According to the indictment:
In 2014, Glynn maintained a variety of corporate entities, including U.S. Grant Distribution Group, PG Philanthropic Initiative, Perrarus Global Philanthropic Initiative, and others. Glynn also claimed affiliation with an international trust that purportedly was funded with billions of dollars, whose stated purpose was to “aide in the economic recovery of each of the individual US States, as well as the United States of America as a whole.”
Relying on the air of legitimacy created by his various entities and the international trust, Glynn approached two victims in Vineland, New Jersey, and offered them a “once in a lifetime opportunity” to invest in a “business development loan” related to the international trust. Glynn told the victims that this business development loan would be used for authorized business and legal expenses related to his entities and the international trust. The loan also would be used for expenses related to an animal care foundation and shelter that Glynn was helping the victims to set up, in memory of the victims’ recently deceased family member. Glynn assured the victims that the international trust would guarantee their business development loan, the loan would generate specific returns for the victims, and the victims could use the returns to fund their animal care foundation and shelter.
As part of his fraudulent scheme, Glynn sent emails and other correspondence and contracts to the victims. Glynn also arranged for conference calls between himself, his associates, and the victims, including one call that purportedly included “a direct representative from the NSA (National Security Agency), and a representative from either DHS (Department of Homeland Security) or the FBI.” Glynn took these steps in order to convince the victims that they were investing in a legitimate business opportunity.
Glynn ultimately directed the victims to wire funds to various bank accounts that Glynn controlled, in order to fund the “business development loan.” The victims did so, relying on Glynn’s representations about how the funds would be used.
Instead of using the loan in the manner he had promised, however, Glynn and his associates misappropriated the victims’ loan money and used it for personal expenses and other expenses that were unrelated to any charitable or business purpose that the victims sought to advance or that Glynn promised to achieve.
Glynn also took out credit cards in the name of the victims’ animal foundation, which he promised that he and his associates would only use for authorized expenses related to that foundation. Instead of using the credit cards in the manner he had promised, Glynn and his associates used the credit cards for retail items and other unauthorized personal expenses and incurred late fees.
The wire fraud counts each carry a maximum potential penalty of 20 years in prison and a $250,000 fine. The money laundering counts each carry a maximum potential penalty of 20 years in prison and a $500,000 fine or twice the value of the property involved in the offense.
U.S. Attorney Carpenito credited special agents of the FBI’s Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Joe Denahan in Newark, with the investigation leading to the charges.
The government is represented by Assistant U.S. Attorney Sara A. Aliabadi of the U.S. Attorney’s Office Criminal Division in Camden.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Former Union Officer and Daughter Charged with EmbezzlementRead the Press Release
NEWARK, N.J. – The former secretary treasurer of a Jersey City Medical Center union and her daughter made their initial appearances today on charges they embezzled $40,455 from the union’s checking and savings accounts, U.S. Attorney Craig Carpenito announced.
Linda Rogers, 71, and her daughter, Jennifer Rogers, 38, both of Jersey City, were indicted by a federal grand jury with one count each of conspiracy to embezzle and embezzlement. They allegedly embezzled $40,500 from Local 2254 of the American Federal State County and Municipal Amalgamated Transit Workers Union (AFSCME). The defendants made their initial appearances today by videoconference before U.S. Magistrate Judge Joseph A. Dickson and were released on bond. They will be arraigned Aug. 19, 2020, by videoconference before U.S. District Judge Stanley R. Chesler.
According to the indictment :
Linda Rogers was formerly employed at the Jersey City Medical Center as a medical clerk; she also held a part-time position at Local 2254 as its secretary treasurer. She had sole control over the union’s checkbook and savings account. From July 2016 through August 2017, she and her daughter, also a former employee at the hospital, deposited 112 unauthorized checks from the Local 2254’s checkbook to their joint checking and savings accounts, totaling $35,267. From October 2016 through December 2016, Linda Rogers made six telephonic wire transfers from the Local 2254’s savings account, totaling $5,188, into her personal credit card account. None of the expenditures were authorized or for legitimate union purposes. The total loss to AFSCME Local 2254 was $40,455.
The counts of conspiracy to embezzle and embezzlement each carry a maximum penalty of five years in prison and a $250,000 fine.
U.S. Attorney Carpenito credited the investigators of the U.S. Department of Labor, Office of Labor Management Standards, under the direction of Adriana Vamvakas, Regional Director; and special agents of the Department of Labor (OIG), New York Region, under the direction of Special Agent in Charge Michael Mikulka, with the investigation leading to the charges.
The government is represented by Senior Litigation Counsel V. Grady O’Malley of the U.S. Attorney’s Office’s Organized Crime/Gangs Unit.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Camden County Man Charged with Attempting to Hire Hitman on Dark Net to Kill Victim of His Child Pornography CrimeRead the Press Release
CAMDEN, N.J. – A Camden County, New Jersey, man under investigation by the Atlantic County Prosecutor’s Office for child pornography-related offenses was arrested today for allegedly paying $20,000 in Bitcoin to have the child victim murdered, U.S. Attorney Craig Carpenito announced.
John Michael Musbach, 31, of Haddonfield, New Jersey, is charged by complaint with one count of murder-for-hire. He is scheduled to appear this afternoon by videoconference before U.S. Magistrate Judge Karen M. Williams.
According to documents filed in this case and statements made in court:
In the summer of 2015 Musbach began communicating via an Internet Relay Chat (IRC) website with his victim, who was 13 years old at the time. At some point, Musbach began using those IRC conversations to request and receive sexually explicit videos and photographs of the minor victim and to send to the victim sexually explicit videos and photographs of himself.
In September 2015 the victim’s parents discovered the nature of Musbach’s communications with the victim and notified local law enforcement officers in the State of New York, where the victim resided. Officers began investigating Musbach’s conduct and called Musbach to notify him that he was under investigation for his online sexual contact with the victim and that he was to stay away from the victim. Upon identifying Musbach as a resident of Atlantic County, New Jersey, New York law enforcement officers reached out to the Atlantic County Prosecutor’s Office (ACPO), which continued the investigation.
On March 31, 2016, officers from the ACPO arrested Musbach on child pornography charges and executed a search warrant at his residence, then in Galloway, New Jersey. Law enforcement officers seized Musbach’s cellular telephone and also his business laptop provided to him by his then-employer, a cloud hosting company. Musbach admitted to having sent sexually explicit images and videos of himself to the victim and having requested and received sexually explicit images and videos from the victim, all while knowing that the victim was 13-years old.
On Oct. 11, 2017, Musbach pleaded guilty to endangering the welfare of a child (the victim) by sexual contact and was sentenced on Feb. 9, 2018, by a New Jersey Superior Court Judge to a two-year suspended sentence with parole supervision for life.
In 2019, a cooperating informant began providing information to agents from Homeland Security Investigations in St. Paul, Minnesota, and provided messages between Musbach and a murder-for-hire website, which operated on the dark net, and which purported to offer contract killings or other acts of violence in return for payment in cryptocurrency.
Those messages revealed that in May 2016, Musbach arranged for a murder-for-hire from the website. He asked if a 14-year-old was too young to target, and upon hearing that the age was not a problem, paid approximately 40 bitcoin (approximately $20,000) for the hit. Musbach repeatedly messaged the website’s administrator following up on the hit and asking when it would occur. When pressed for an additional $5,000 to secure the hit, Musbach eventually sought to cancel and asked for a refund of his $20,000. The website’s administrator then revealed that the website was a scam and threatened to reveal Musbach’s information to law enforcement.
Agents were able to confirm Musbach’s identity through several means, including linking him to the same screen name he used to communicate with the murder-for-hire website and also by tracing the flow of monies from Musbach’s bank account to the purchase of bitcoin used to pay for the hit.
The charge of use of interstate commerce facilities in the commission of murder-for-hire is punishable by a maximum potential penalty of 10 years in prison and a fine of the greater of $250,000, twice the gross profits to Musbach or twice the gross losses to the victim of his offense.
U.S. Attorney Carpenito credited special agents of the U.S. Department of Homeland Security, Homeland Security Investigations (HSI), in Newark, under the direction of Special Agent in Charge Jason Molina, and in St. Paul, Minnesota, under the direction of Tracy Cormier, with the investigation. He also thanked the Atlantic County Prosecutor’s Office for its assistance.
The government is represented by Assistant U.S. Attorney Diana Vondra Carrig in Camden.
The charge and allegations in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Chief Executive Officer of Louisiana Compounding Pharmacy Used to Defraud State Health Benefits Programs Pleads GuiltyRead the Press Release
CAMDEN, N.J. – The chief executive officer of Central Rexall Drugs Inc., a Louisiana pharmacy used by numerous individuals to defraud New Jersey health benefits programs and other insurers out of more than $50 million, has admitted her guilt, U.S. Attorney Craig Carpenito announced.
Hayley Taff, 37, of Hammond, Louisiana, pleaded guilty by videoconference before U.S. District Judge Robert B. Kugler to an information charging her with one count of conspiracy to commit healthcare fraud.
According to documents filed in this case and statements made in court:
Central Rexall was a retail pharmacy in Louisiana that prepared compounded medications, which are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Hayley Taff was Central Rexall’s chief executive officer and 22 percent owner. In 2013, Taff entered into an agreement with two individuals, identified as Individual 1 and Individual 2, to expand the compounding business, with Individual 1 and 2’s company receiving 90 percent of the profits.
Taff and her conspirators learned that certain insurance plans administered by an entity referred to in the information as the “Pharmacy Benefits Administrator” would reimburse thousands of dollars for a one-month supply of certain compounded medications – including pain, scar, antifungal, and libido creams, as well as vitamin combinations. The health plans for New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had this insurance coverage.
Taff’s conspirators designed compounded medications and manipulated the ingredients in the medications in order to obtain high insurance reimbursements rather than serve the medical needs of patients. To determine which ingredients and combinations resulted in the high insurance reimbursement, Taff’s conspirators sent the Pharmacy Benefits Administrator false prescription claims to test out different combinations of ingredients, but the prescriptions did not exist. By trial and error use of these false claims, Taff’s conspirators designed compounded medications with combinations of ingredients that were chosen solely based on the amount of money that insurance would pay rather than on the medications’ ability to serve the medical needs of patients. At Taff’s direction, Central Rexall sent compounded medications to patients based solely on financial gain.
When the Pharmacy Benefits Administrator stopped covering one combination, Central Rexall would develop a compounded medication with a different combination of ingredients based solely on the insurance reimbursement and without considering the medical necessity or effectiveness of the new combination. Central Rexall then would send that new compounded medication to patients, even though the new combination of ingredients was not medically equivalent to the combination originally prescribed for the patients and without telling the patients or their doctor about the differences.
Taff admitted that during the conspiracy, Central Rexall stopped being concerned about the health of its compounded medication patients or the medical necessity of its compounded medications. Instead, she admitted, Central Rexall devoted itself solely to making money.
At Taff’s direction, Central Rexall also stopped requiring that patients make copayments in order to receive medications, even though Central Rexall told the Pharmacy Benefits Administrator that it was collecting copayments. Taff admitted that Central Rexall continued shipping medications to individuals who had not paid their copayments because Central Rexall was making so much money on its medications.
Taff and her conspirators caused numerous fraudulent insurance claims for compounded medications that were not medically necessary. The Pharmacy Benefits Administrator paid Central Rexall over $50 million for compounded medications shipped to New Jersey. Taff received $1,553,616 from Central Rexall during the conspiracy.
Taff faces a maximum of 10 years in prison and a $250,000 fine, or twice the gain or loss from the offense. As part of the plea agreement, Taff must pay restitution of $51,670,251 and forfeiture of $1,553,616. Sentencing for is scheduled for Dec. 1, 2020.
U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Joe Denahan in Newark; IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; and the U.S. Department of Labor, Office of Inspector General, New York Region, under the direction of Special Agent in Charge Michael C. Mikulka, with the investigation leading to the guilty plea. He also thanked the Division of Pensions and Financial Transactions in the State Attorney General’s Office, under the direction of Attorney General Gurbir S. Grewal and Division Chief Aimee Nason, for its assistance in the investigation.
The government is represented by Assistant U.S. Attorneys R. David Walk Jr. and Christina O. Hud of the U.S. Attorney’s Office in Camden and Assistant U.S. Attorney Barbara Ward, Senior Trial Counsel of the Asset Recovery and Money Laundering Unit.
Defense counsel: J. Garrison Jordan Esq., Hammond, Louisiana
Bergen County Man Admits Using Online Web Forums to Engage in CyberstalkingRead the Press Release
NEWARK, N.J. – A Bergen County, New Jersey, man today admitted using Facebook and other online web forums to cyberstalk victims, U.S. Attorney Craig Carpenito announced.
Rino Diamante, 25, of Bergenfield, New Jersey, pleaded guilty by videoconference before U.S. District Judge William J. Martini to an information charging him with one count of cyberstalking.
According to documents filed in this case and statements made in court:
Diamante admitted that from January 2016 through August 2019 he engaged in continued online harassment of known and unknown adult victims, including Victims 1-23, by posting semi-nude or nude pictures purporting to be the victims on online web forums such as 4Chan and Volafile. Diamante also admitted to contacting the victims, their friends and their family members to direct those individuals to the online web forums that contained the purported nude or semi-nude photographs of the victims.
The charge to which Diamante pleaded guilty carries a maximum sentence of five years in prison and a $250,000 fine. Sentencing is scheduled for Dec. 16, 2020.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Acting Special Agent in Charge Joe Denahan in Newark, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Cassye Cole of the U.S. Attorney’s Office’s Criminal Division in Newark.
Co-Owner of Commercial Cleaning Service Admits Filing False Tax ReturnsRead the Press Release
NEWARK, N.J. – The co-owner of a commercial cleaning company in Bergen County, New Jersey, today admitted evading more than $300,000 in tax payments by cashing checks at a commercial check cashier, paying employees off-the-books cash wages, and failing to report all his income, U.S. Attorney Craig Carpenito announced.
Peter Jamgochian, 53, of Paramus, New Jersey, pleaded guilty by videoconference before U.S. District Judge William J. Martini to Count One of an information charging him with subscribing to false corporate tax returns.
According to documents filed in this case and statements made in court:
Jamgochian was a co-owner of a commercial cleaning company in Hackensack, New Jersey. His duties included managing company payroll and interacting with the company’s accountant.
In 2013 and 2014, Jamgochian cashed over $2 million in check payments received from the company’s customers at a commercial check cashier. He then used the cash to pay off-the-books cash wages to his employees and kept a portion for himself. Jamgochian hid these cashed checks from the IRS by not disclosing this information to the company’s accountant. After the accountant prepared the corporate taxes, Jamgochian signed these false corporate returns under penalty of perjury, knowing that they were false.
Jamgochian caused the company to underpay $248,936 in Medicare and Social Security taxes. He also understated his personal income received from the company, causing an additional tax loss to the IRS of $76,201.
The charge of subscribing to a false tax return carries a maximum potential penalty of three years in prison and a $250,000 fine. Sentencing is currently scheduled for Dec. 16, 2020.
U.S. Attorney Carpenito credited special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney David E. Malagold of the U.S. Attorney’s Office Criminal Division.
Defense counsel: Frank Agostino Esq., Hackensack, New Jersey
Union County Men Indicted for Violent Robbery SpreeRead the Press Release
NEWARK, N.J. – A federal grand jury today indicted two Union County, New Jersey, men for allegedly committing multiple armed robberies from August 2018 through February 2019, U.S. Attorney Craig Carpenito announced.
Jaime Fontanez, 43, and Vincent Chan-Guillen, 30, both of Elizabeth, New Jersey, are charged in a 13-count indictment with conspiracy to commit Hobbs Act robbery, multiple counts of Hobbs Act robbery, as well as brandishing and discharging a firearm during the commission of a crime of violence. Fontanez and Chan-Guillen will be arraigned at a date to be determined. Both men were previously arrested on a criminal complaint for this conduct on Feb. 21, 2019.
According to documents filed in this case and statements made in court:
From August 2018 through February 2019, Fontanez and Chan-Guillen conspired with each other, and others, to commit robberies in Bronx and New York counties in New York and Union, Middlesex, and Essex counties in New Jersey. The conspirators targeted convenience and liquor stores. After entering the business, one of the conspirators pointed a firearm at the store clerk while another conspirator went behind the counter to steal money from the cash register. On one occasion, Chan-Guillen discharged a firearm into the liquor store. That firearm was subsequently discovered in Chan-Guillen’s possession.
The Hobbs Act charges each carry a maximum potential penalty of 20 years in prison. The brandishing of a firearm during a crime of violence carries a maximum potential penalty of life in prison and a mandatory minimum sentence of seven years in prison, which must run consecutively to any other prison term. The discharging of a firearm during a crime of violence carries a maximum potential 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 potential $250,000 fine, or twice the gross gain or loss from the offense.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Acting Special Agent in Charge Joe Denahan in Newark, with the investigation leading to the charges. He also thanked the U.S. Attorney’s Office for the Southern District of New York, under Acting U.S. Attorney Audrey Strauss, for their assistance with this case and the Elizabeth Police Department, under the direction of Chief Giacomo Sacca; the Rahway Police Department, under the direction of Chief John Rodger; the Woodbridge Police Department, under the direction of Director Robert Hubner; the Bloomfield Police Department, under the direction of Public Safety Director Samuel A. DeMaio; the Linden Police Department, under the direction of Chief David Hart; the Kenilworth Police Department, under the direction of Chief John Zimmerman; the Township of Union Police Department, under the direction of Director Dan Zieser; the N.J. State Police, under the direction of Col. Patrick J. Callahan; and the New York City Police Department, under the direction of Commissioner Dermot Shea for their work on this case.
The government is represented by Assistant U.S. Attorneys Tracey Agnew and Shawn Barnes 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 presumed innocent unless and until proven guilty.
Member of Jersey City Gang Charged with Gun Possession and Distribution of PCPRead the Press Release
NEWARK, N.J. – A high-ranking member of a violent street gang operating in Jersey City, New Jersey, made his initial court appearance today on charges he possessed a weapon as a convicted felon, possessed Phencyclidine (more commonly known as PCP) with intent to distribute, and possessed a firearm in furtherance of his PCP distribution, U.S. Attorney Craig Carpenito announced.
Jalil Burns, a/k/a “Big Ben,” 33, of Jersey City, was charged by complaint on Aug. 4, 2020, with one count of unlawful possession of a firearm and ammunition by a convicted felon, one count of possession with intent to distribute PCP, and one count of possessing a firearm in furtherance of a drug trafficking crime. Burns appeared today by videoconference before U.S. Magistrate Judge Edward S. Kiel and was detained.
According to documents filed in this case and statements made in court:
On Aug. 3, 2020, Burns was found in possession of a .40 caliber handgun, which was loaded with six rounds of ammunition, and a jar of Phencyclidine. In 2009, Burns was convicted in federal court of unlawfully possessing a firearm as a convicted felon.
The charge of unlawfully possessing a firearm as a convicted felon carries a maximum potential penalty of 10 years in prison and a $250,000 fine. The charge of possessing with intent to distribute Phencyclidine carries a maximum potential penalty of 20 years in prison, and a $1 million fine. The charge of possessing a firearm in furtherance of a drug trafficking crime carries a mandatory minimum penalty of five years in prison, a maximum of life imprisonment, and a $250,000 fine.
U.S. Attorney Carpenito credited the Jersey City Police Department, under the direction of Public Safety Director James Shea; the Hudson County Prosecutor’s Office, under the direction of Prosecutor Esther Suarez; special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge Charlie J. Patterson, Newark Field Division; and special agents of the FBI, under the direction of Acting Special Agent in Charge Joe Denahan in Newark, with the investigation leading to the charges and arrest.
The government is represented by Assistant U.S. Attorney Desiree Grace Latzer of the U.S. Attorney’s Office Organized Crime and Gangs Unit in Newark.
The charges and allegations in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Founder of Plastics Company Indicted in $61 Million Tax Evasion SchemeRead the Press Release
NEWARK, N.J. – A federal grand jury today indicted a Florida man for evading over $61 million in income taxes from 2016 through 2018, U.S. Attorney Craig Carpenito announced.
Alfred Teo, 74, of Boca Raton, Florida, is charged with three counts of tax evasion and six counts of making and subscribing false personal and corporate tax returns in tax years 2016, 2017, and 2018. The indictment follows a June 17, 2020, complaint charging tax evasion, for which U.S. Magistrate Judge Edward S. Kiel set bond at $20 million. Teo will be arraigned at a date to be determined.
According to documents filed in this case and statements made in court:
Teo was the majority shareholder of multibillion-dollar plastics manufacturing holding company Alpha Industries Management (Alpha). During the tax years 2016, 2017, and 2018, Alpha transferred funds directly into trading accounts for Teo’s benefit. Instead of reporting the funds Alpha sent for Teo’s benefit as income on his personal tax returns, a significant portion of Teo’s income from Alpha was recorded as 1099 Income to AAST Holding Corp. (AAST), another Teo-owned entity that was unrelated to his plastics business. Through AAST, Teo engaged in numerous acts to conceal and attempt to conceal the income he received from Alpha in order to evade income taxes.
According to AAST’s corporate tax returns, AAST received 1099 income from Alpha of approximately $27 million, $53 million, and $89 million in 2016, 2017, and 2018, respectively, for a total of approximately $169 million.
However, Alpha did not transfer these amounts to bank accounts controlled by AAST. The money Alpha recorded as 1099 income to AAST was instead money provided for the benefit of Teo and included money that Alpha sent directly to Teo’s brokerage accounts. Instead of reporting the $169 million of income from Alpha on Teo’s personal tax returns in 2016, 2017, and 2018, and paying taxes on that income, the income was reported on AAST’s corporate tax returns. Teo then provided false deduction information to his tax preparer in the form of fictitious “cost of goods sold” to artificially reduce his income and evade the income taxes owed.
AAST was organized as a holding company, and, in reality, AAST did not have cost of goods sold of these amounts for these years.
In 2016, 2017, and 2018, Teo’s tax preparer provided draft AAST corporate tax forms for Teo’s review. Teo then returned the corporate tax forms with handwritten notes that indicated AAST had tens of millions of dollars of cost of goods sold. Teo’s tax preparer used the information that Teo provided to report AAST’s cost of goods sold on AAST’s corporate tax returns in the amounts of approximately $26 million, $51 million, and $87 million for 2016, 2017, and 2018, respectively.
By submitting fraudulent cost of goods sold expenses to his tax preparer for inclusion on AAST’s corporate tax returns, Teo used AAST to avoid paying tens of millions of dollars of income taxes. He reduced AAST’s net business income by approximately $165 million for tax years 2016, 2017, and 2018 combined.
Teo’s personal IRS Forms 1040 for 2016, 2017, and 2018 included AAST’s net business income – as reduced by the approximately $165 million in AAST’s false cost of goods sold – as income to Teo. As a result, Teo understated his personal income for those years by approximately $165 million.
Because Teo’s personal tax returns for 2016, 2017, and 2018 included AAST’s net business income, Teo’s fraudulent reduction of AAST’s net business income with purported cost of goods sold expenses resulted in a tax loss of approximately $10 million, $20 million, and $31 million in 2016, 2017 and 2018, respectively, for a total tax loss of approximately $61 million.
The tax evasion charges in Counts 1 through 3 of the indictment each carry a maximum potential penalty of five years in prison and a $250,000 fine. The six false tax return charges in Counts 4 through 9 each carry a maximum potential penalty of three years in prison and a $250,000 fine.
U.S. Attorney Carpenito credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorneys Ari B. Fontecchio and Vijay Dewan of the Economic Crimes 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.
Two Charged in $1 Million Embezzlement SchemeRead the Press Release
NEWARK, N.J. – Two New Jersey residents were charged for their participation in a multi-year $1 million embezzlement scheme, U.S. Attorney Craig Carpenito announced today.
Ruby Baroni, 53, of Lyndhurst, New Jersey, and Rolando Veloso, 41, of Haskell, New Jersey, were each charged by a criminal complaint unsealed today in Newark federal court with one count of conspiracy to commit wire fraud. They made their initial appearances today by videoconference before U.S. Magistrate Judge Edward S. Kiel.
According to documents filed in this case and statements made in court:
Between October 2010 and August 2016, Baroni and Veloso conspired with others to carry out a large-scale, multifaceted scheme to embezzle funds from an area guided-tour company. In some instances, Baroni, who served as the company’s accounting manager, cut checks drawn against the company’s checking accounts made out to either other company employees or fictitious individuals and then cashed those checks herself. In other instances, Baroni cut checks made out to various shell business entities formed by Veloso, none of which ever performed any services for the company; Veloso then deposited or cashed those checks for his personal use. Veloso also made substantial charges for his shell business entities on a company credit card issued to another conspirator, none of which reflected any actual work performed for the company by any of those entities. In all, Baroni, Veloso, and their conspirators embezzled over $1 million from the company.
The charge of conspiracy to commit wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine.
U.S. Attorney Carpenito credited inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn, and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez, with the investigation leading to the charges.
The government is represented by Assistant U.S. Attorney Andrew M. Trombly of the U.S. Attorney’s Office Cybercrime Unit in Newark.
The charge and allegations in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Two Additional Individuals Arrested for Attempting to Ignite Police Vehicle Following Trenton ProtestsRead the Press Release
TRENTON, N.J. – Two New Jersey men have been charged with attempting to set fire to a marked police vehicle following the May 2020 protests in Trenton, U.S. Attorney Craig Carpenito announced today.
Killian F. Melecio, 20, of Columbus, New Jersey, and Kadeem A. Dockery, 29, of Trenton, were arrested Aug. 5, 2020, by special agents of the FBI and charged by complaint with one count of attempting to damage or destroy by fire a vehicle owned or possessed by an institution receiving federal financial assistance, and one count of attempting to damage or destroy by fire a vehicle used in and affecting interstate commerce. Melecio and Dockery appeared by videoconference before U.S. Magistrate Judge Tonianne J. Bongiovanni. Dockery was released; Melecio was detained pending a bail hearing.
According to documents filed in this case and statements made in court:
On May 31, 2020, large-scale protests were held throughout the United States, including in Trenton, in response to the death of George Floyd, who died on May 25, 2020, while in the custody of the Minneapolis Police Department. Although the protest in Trenton was peaceful earlier in the day, violence erupted later. A group of individuals proceeded down East State Street and began to smash store fronts, loot stores, and attack multiple marked Trenton Police Department vehicles.
A street camera and other video footage taken by an individual present recorded Dockery light an explosive device and throw it through the open front driver’s side window of a Trenton Police Department vehicle. Dockery then removed his shirt and handed it to Melecio, who attempted to stuff the shirt in the gas tank of the police vehicle and ignite it. Melecio was assisted by Justin D. Spry, who was charged in a criminal complaint on June 2, 2020, for his role in the riot. Law enforcement officers on scene observed Spry as he attempted to ignite the vehicle. Melecio fled, and Spry attempted to flee, but was arrested. During the course of Spry’s arrest, Dockery lit another explosive device and threw it over the Trenton Police vehicle at the arresting officers, where it exploded at their feet. Law enforcement identified Melecio and Dockery through their distinctive tattoos seen on the video footage.
Both counts carry a statutory mandatory minimum term of five years in prison, a maximum potential penalty of 20 years in prison, and a maximum fine of $250,000.
U.S. Attorney Carpenito credited special agents of the FBI and task force officers of the Joint Terrorism Task Force in Newark, under the direction of Acting Special Agent in Charge Joe Denahan, with the investigation leading to the charges. He also thanked officers of the Trenton Police Department, under the direction of Police Director Sheilah Coley; troopers of the New Jersey State Police, under the direction of Col. Patrick J. Callahan; and officers of the New Jersey Department of Corrections, under the direction of Commissioner Marcus O. Hicks, for their assistance.
The government is represented by Assistant U.S. Attorneys Alexander E. Ramey and Michelle S. Gasparian of the U.S. Attorney’s Office’s Criminal Division in Trenton.
The charges and allegations contained in the complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.
Pharmaceutical Representative Admits Role in Health Care Fraud Conspiracy Targeting State Health Benefits ProgramsRead the Press Release
CAMDEN, N.J. – A pharmaceutical representative today admitted his role in a conspiracy to defraud New Jersey state health benefits programs, U.S. Attorney Craig Carpenito announced.
Dan Irvine, 50, of Oceanport, New Jersey, pleaded guilty by video conference before U.S. District Judge Robert B. Kugler to an information charging him with conspiracy to commit health care fraud.
According to documents filed in this case and statements made in court:
Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient is allergic to a dye or other ingredient.
Between October 2015 and March 2016, Irvine participated in a conspiracy that targeted insurance plans that paid thousands of dollars for certain prescription compound medications – including vitamins and pain creams – from an out-of-state pharmacy, identified in the information as “Compounding Pharmacy.” The conspirators found patients with these insurance plans, particularly New Jersey state and local government and education employees. An entity referred to as the “Pharmacy Benefits Administrator” provided pharmacy benefit management services for the State Health Benefits Program, which covers qualified state and local government employees, retirees, and eligible dependents; the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents; and other insurance plans. The Pharmacy Benefits Administrator paid prescription drug claims and then billed the State of New Jersey or the other insurance plans for the amounts paid.
Irvine obtained insurance information from individuals with favorable insurance coverage and filled out prescriptions for compounded medications. Irvine selected medications based on their high insurance reimbursements and selected the maximum quantities and refills to generate the highest insurance reimbursements. Irvine then had doctors sign the prescriptions without the doctors examining the individuals or determining that the individuals had a medical necessity for the compounded medications. Irvine faxed the completed, signed prescriptions to the Compounding Pharmacy. Irvine had an agreement to receive as a commission a portion of the amount paid by the Pharmacy Benefits Administrator for prescriptions he obtained. He received $63,017 in commissions.
Irvine faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gain or loss from the offense. As part of his plea agreement, Irvine must forfeit $63,017 in criminal proceeds and pay restitution of at least $208,989. Sentencing is scheduled for Dec. 16, 2020.
U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Acting Special Agent in Charge Joe Denahan in Newark; IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; and the U.S. Department of Labor, Office of Inspector General, New York Region, under the direction of Special Agent in Charge Michael C. Mikulka, with the investigation leading to the guilty plea. He also thanked the Division of Pensions and Financial Transactions in the State Attorney General’s Office, under the direction of Attorney General Gurbir S. Grewal and Division Chief Aimee Nason, for its assistance in the investigation.
The government is represented by Assistant U.S. Attorneys R. David Walk Jr. and Christina O. Hud of the U.S. Attorney’s Office in Camden.
Passaic County Man Admits Participating in Fentanyl ConspiracyRead the Press Release
NEWARK, N.J. – A Passaic County, New Jersey, man today admitted conspiring to distribute fentanyl and distributing a quantity of fentanyl, U.S. Attorney Craig Carpenito announced.
Keith Brinkley, a/k/a “K Murder,” 30, of Paterson, New Jersey, pleaded guilty by videoconference before U.S. District Judge Brian R. Martinotti to an indictment charging him with conspiracy to distribute and possess with the intent to distribute fentanyl and knowingly and intentionally distributing fentanyl.
According to documents filed in this case and statements made in court:
The defendant and his conspirators are members and associates of the 230 Boys street gang, which operates primarily around Rosa Parks Boulevard and Godwin Avenue in Paterson. Through investigative techniques, including numerous controlled purchases of narcotics, consensually recorded telephone calls and text messages, physical surveillance, and the analysis of telephone call detail records, law enforcement determined that from at least September 2018 through Oct. 1, 2019, the defendant and his conspirators conspired to distribute narcotics, including heroin and fentanyl.
Each of the charges to which Brinkley pleaded guilty carries a maximum penalty of 20 years in prison and a fine of $1 million. Sentencing is scheduled for Dec. 7, 2020.
This case is being conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF). The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
U.S. Attorney Carpenito credited special agents and task force officers with the Bureau of Alcohol, Tobacco, Firearms and Explosives, Newark Division, under the direction of Special Agent in Charge Charlie J. Patterson; special agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge Susan A. Gibson in Newark; officers of the N.J. State Police, under the direction of Col. Patrick J. Callahan; officers of the Paterson Police Department, under the direction of Director Jerry Speziale and Police Chief Ibrahim Baycora; detectives of the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia Valdes; and the Passaic County Sheriff’s Office, under the direction of Sheriff Richard H. Berdnik, with the investigation leading to the charges. He also thanked the U.S. Marshals Service, the Bergen County Sheriff's Office and the Belleville and Livingston police departments for their assistance with the case.
The government is represented by Assistant U.S. Attorney Francesca Liquori, of the Organized Crime and Gangs Unit.
New Jersey Man Admits Trafficking and Unlawfully Possessing FirearmsRead the Press Release
CAMDEN, N.J. – An Atlantic County, New Jersey, man with five prior felony convictions today admitted illegally selling multiple firearms, U.S. Attorney Craig Carpenito announced.
Brandon Groce, 36, of Newtonville, New Jersey, pleaded guilty by videoconference before U.S. District Judge Robert B. Kugler to an information charging him with one count of illegally engaging in the business of dealing in firearms and one count of possession of a firearm by a convicted felon.
According to documents filed in this case and statements made in court:
On six different dates between February 2019 and September 2019, Groce met with an individual at a parking lot in Paulsboro, New Jersey, for the purpose of selling firearms. During each meeting, Groce sold at least one firearm and ammunition for cash. Groce lacked a license to sell firearms. At the time of the sales, Groce had previously been convicted in New Jersey Superior Court of five felonies, including a firearms offense, resisting arrest, and three controlled substances offenses.
The count of being a felon in possession of a firearm carries a maximum potential penalty of up to 10 years in prison. The charge of engaging in the business of dealing firearms, while not being a federally licensed importer, licensed manufacturer, or licensed dealer carries a maximum potential penalty of up to five years in prison. Each count carries a maximum fine of $250,000. Sentencing is scheduled for Dec. 16, 2020.
This case is part of Project Guardian, the Department of Justice’s signature initiative to reduce gun violence and enforce federal firearms laws. Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs to reduce gun violence; enhances coordination of federal, state, local and tribal authorities in investigating and prosecuting gun crimes; improves information sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensures that federal resources are directed at the criminals posing the greatest threat to our communities. For more information about Project Guardian, please see https://www.justice.gov/projectguardian.
U.S. Attorney Carpenito credited special agents of the Newark Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the leadership of Special Agent in Charge Charlie J. Patterson, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Jeffrey Bender of the U.S. Attorney’s Office Criminal Division in Camden.