District of New Jersey

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.

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.

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.

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.

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, 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.

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.

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, 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.

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.

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 (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.

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.

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.

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.

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, 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.

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.

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.

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, 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.

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

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.

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

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.

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.

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.

 

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.

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.

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.

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.

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.

NEWARK, N.J. – Three members and associates of a violent street gang operating in Newark made their initial court appearances today on charges of conspiring to distribute narcotics, U.S. Attorney Craig Carpenito announced.

Zaire Dickerson, a/k/a “Tarzan,” 23, Shaquejah Wilson-Jones, a/k/a “Kiwi,” 23, and Nassir Grimsley, a/k/a “Chop,” 19, all of Newark, are each charged by complaint with one count of conspiracy to distribute and possess with intent to distribute heroin and cocaine base. They all appeared today by videoconference before U.S. Magistrate Judge Edward S. Kiel.

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

Law enforcement has been investigating the 793 set of the Bloods street gang in Newark since at least June 2019. That investigation has revealed that Dickerson and Grimsley are members of the 793 Bloods and distribute narcotics for the gang. Wilson-Jones is associated with the 793 Bloods and distributes narcotics with Dickerson and Grimsley. 

Members of this 793 set have been engaging in violent disputes with other gangs, trafficked narcotics, and committed various firearms offenses within and around Newark for years. Several recent violent crimes in Newark and elsewhere, are believed to be related to this gang’s operations.

The narcotics conspiracy charge carries a maximum potential penalty of 20 years in prison and a $1,000,000 fine. 

U.S. Attorney Carpenito credited the Newark Department of Public Safety, under the direction of Director Anthony F. Ambrose, and special agents of the FBI, under the direction of Acting Special Agent in Charge Joe Denahan in Newark, with the investigations leading to the charges.

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 defendants are presumed innocent unless and until proven guilty.

CAMDEN, N.J. – A Camden County, New Jersey, businessman today admitted filing false tax returns that failed to report all of his business income, U.S. Attorney Craig Carpenito announced.

Rodney Bush-Rowland, 41, of Camden, pleaded guilty by videoconference before U.S. District Judge Robert B. Kugler to an information charging him with one count of making and subscribing a false income tax return.

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

Bush-Rowland was the sole owner of To & Fro Transportation Inc., a Camden business that provided medical transportation services. Bush-Rowland admitted that during 2014 and 2015, he used a commercial check casher to negotiate over $2.7 million of To & Fro’s revenue checks. He admitted that he failed to include a large portion of the cashed checks on To & Fro’s corporate income tax returns. Bush-Rowland also admitted that he substantially underreported To & Fro’s income on his own individual income tax returns, causing a tax loss of more than $25,000.

In addition to filing false income tax returns, Bush-Rowland admitted to failing to pay over to the IRS employment taxes for To & Fro’s employees. During 2014, 2015, and 2016, Bush-Rowland filed quarterly employment tax returns that falsely reported that To & Fro paid all of the employment taxes due and owing for its employees. Bush-Rowland admitted that he actually failed to pay over more than $147,000 of To & Fro’s employment taxes during these three years.

The charge to which Bush-Rowland pleaded guilty carries a maximum potential penalty of three years in prison and a $250,000 fine. Sentencing is 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 Jeffrey Bender of the U.S. Attorney’s Office Criminal Division in Camden.

The Department of Justice announced today that it has filed a lawsuit alleging that the owner of rental properties in Elizabeth, New Jersey violated the Fair Housing Act by subjecting tenants to sexual harassment. 

The complaint, filed in the U.S. District Court for the District of New Jersey, alleges that Joseph Centanni, who owns hundreds of rental units in and around Elizabeth, New Jersey, has subjected tenants and housing applicants to sexual harassment on multiple occasions since at least 2005. According to the complaint, Centanni demanded sexual favors like oral sex to get or keep housing, offered housing benefits like reduced rent in exchange for sexual favors, touched tenants and applicants in a way that was sexual and unwelcome, and made unwelcome sexual comments and advances to tenants and applicants. The complaint also alleges that Centanni initiated or threatened to initiate eviction actions against tenants who objected to or refused his sexual advances. According to the complaint, Centanni participates in the federal Housing Choice Voucher Program (also known as Section 8) and receives approximately $102,000 each month in Housing Choice Voucher payments.

“The Fair Housing Act protects the right of all persons in our nation to rent a home without suffering sexual exploitation at the hands of abusive landlords. Demanding sexual favors from tenants, especially those who are financially vulnerable, is illegal,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Fair Housing Act protects tenants from sexual harassment and retaliation by their landlords, and the Justice Department will hold accountable those who engage in such cruel, depraved, and illegal conduct and will work tirelessly to obtain relief for their victims.”

“No one should ever be forced to provide sexual favors, or otherwise endure sexual harassment, as a condition to keep or obtain housing,” said U.S. Attorney Craig Carpenito. “Sexual harassment in housing is illegal under the Fair Housing Act, and we will vigorously enforce this federal law to end this type of depraved behavior.”

Today’s lawsuit seeks monetary damages to compensate the victims, civil penalties to vindicate the public interest, and a court order barring future discrimination. The complaint contains allegations of unlawful conduct; the allegations must be proven in federal court.

Today’s lawsuit is the result of a joint investigative effort with the U.S. Department of Housing and Urban Development’s Fair Housing and Equal Opportunity Office and Office of Inspector General.

The Justice Department's Sexual Harassment in Housing Initiative is an effort to combat sexual harassment in housing led by the Civil Rights Division, in coordination with U.S. Attorney’s Offices across the country. The Attorney General recently reaffirmed this commitment by directing the Justice Department to deploy all available enforcement tools against anyone who tries to capitalize on the COVID-19 crisis by sexually harassing people in need of housing. U.S. Attorney Craig Carpenito has also reaffirmed the U.S. Attorney’s Office’s commitment to combatting sexual harassment in housing amid the COVID-19 pandemic. The goal of the department’s initiative is to address sexual harassment by landlords, property managers, maintenance workers, loan officers, or other people who have control over housing. As part of the initiative, the Justice Department developed a public service announcement and formed a joint task force with HUD to combat sexual harassment in housing. Since launching the Initiative in October 2017, the Department of Justice has filed 17 lawsuits alleging sexual harassment in housing.

The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt.

Individuals who believe that they may have been victims of sexual harassment or other types of housing discrimination at rental dwellings owned or managed by Centanni, or who have other information that may be relevant to this case, can contact the Housing Discrimination Tip Line toll free, at 1-833-591-0291, and select option number one to leave a message.

Individuals can also report sexual harassment and other forms of housing discrimination by contacting the U.S. Attorney’s Office Civil Rights Hotline at (855) 281-3339, by e-mailing the Justice Department at [email protected], or by submitting a report online.

NEWARK, N.J. – The Department of Justice announced today that it has filed a lawsuit alleging that the owner of rental properties in Elizabeth, New Jersey, violated the Fair Housing Act by subjecting tenants to sexual harassment, U.S. Attorney Craig Carpenito announced.

The complaint alleges that Joseph Centanni, who owns hundreds of rental units in and around Elizabeth, has subjected tenants and applicants to sexual harassment on multiple occasions since at least 2005.

“No one should ever be forced to provide sexual favors, or otherwise endure sexual harassment, as a condition to keep or obtain housing,” U.S. Attorney Craig Carpenito said. “Sexual harassment in housing is illegal under the Fair Housing Act, and we will vigorously enforce this federal law to end this depraved type of behavior.”

“The Fair Housing Act protects the right of all persons in our nation to rent a home without suffering sexual exploitation at the hands of abusive landlords. Demanding sexual favors from tenants, especially those who are financially vulnerable, is illegal,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Fair Housing Act protects tenants from sexual harassment and retaliation by their landlords, and the Justice Department will hold accountable those who engage in such cruel, depraved, and illegal conduct and will work tirelessly to obtain relief for their victims.”

According to the complaint:

Centanni demanded sexual favors to get or keep housing, offered housing benefits like reduced rent in exchange for sexual favors, touched tenants and applicants in a way that was sexual and unwelcome, and made unwelcome sexual comments and advances to tenants and applicants. The complaint also alleges that Centanni initiated or threatened to initiate eviction actions against tenants who objected to or refused his sexual advances. According to the complaint, Centanni participates in the federal Housing Choice Voucher Program (also known as “Section 8”) and receives approximately $102,000 each month in Housing Choice Voucher payments.

Today’s lawsuit seeks monetary damages to compensate the victims, civil penalties to vindicate the public interest, and a court order barring future discrimination. The complaint contains allegations of unlawful conduct; the allegations must be proven in federal court.

Today’s lawsuit is the result of a joint investigative effort with the U.S. Department of Housing and Urban Development’s Fair Housing and Equal Opportunity Office and Office of Inspector General.

The Justice Department’s Sexual Harassment in Housing Initiative is an effort to combat sexual harassment in housing led by the Civil Rights Division, in coordination with U.S. Attorney’s Offices across the country. The Attorney General recently reaffirmed this commitment by directing the Justice Department to deploy all available enforcement tools against anyone who tries to capitalize on the COVID-19 crisis by sexually harassing people in need of housing. U.S. Attorney Carpenito has also reaffirmed the U.S. Attorney’s Office’s commitment to combatting sexual harassment in housing amid the COVID-19 pandemic. The goal of the Department initiative is to address sexual harassment by landlords, property managers, maintenance workers, loan officers, or other people who have control over housing.  As part of the initiative, the Justice Department developed a public service announcement and formed a joint task force with HUD to combat sexual harassment in housing. Since launching the Initiative in October 2017, the Department of Justice has filed 17 lawsuits alleging sexual harassment in housing.

The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status.  More information about the U.S. Attorney’s Civil Rights Unit and its enforcement efforts is available at https://www.justice.gov/usao-nj/civil-rights-enforcement. More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt. 

Individuals who believe that they may have been victims of sexual harassment or other types of housing discrimination at rental dwellings owned or managed by Centanni, or who have other information that may be relevant to this case, can contact the Housing Discrimination Tip Line, at 1-800-896-7743, and select option number one to leave a message.

Individuals can also report sexual harassment and other forms of housing discrimination by contacting the U.S. Attorney’s Office Civil Rights Hotline at (855) 281-3339 or e-mailing the Justice Department at [email protected].

The government is represented by Assistant U.S. Attorney Michael E. Campion, Chief of the U.S. Attorney’s Office’s Civil Rights Unit, Assistant U.S. Attorney Susan Millenky, of the U.S. Attorney’s Office Civil Rights Unit, and Trial Attorneys Erin Meehan Richmond and Kathryn Legomsky, U.S. Department of Justice, Civil Rights Division, Housing and Civil Enforcement Section.

NEWARK, N.J. – A Morris County, New Jersey, pharmacist today admitted participating in a conspiracy to pay bribes and kickbacks for compounded pain creams, U.S. Attorney Craig Carpenito announced.

Robert Fazzini, 53, of Succasunna, New Jersey, pleaded guilty by videoconference before U.S. District Judge Susan D. Wigenton to an information charging him with one count of conspiring to violate the anti-kickback statute.

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

Fazzini was a licensed pharmacist and owner of the now-closed White’s Pharmacy in Morristown, New Jersey. In the summer and fall of 2015, Fazzini participated in a bribe and kickback conspiracy stemming from a scheme to obtain millions of dollars in health benefits from the federal workers’ compensation program by prescribing and dispensing expensive compound pain creams. A Jersey City doctor prescribed compound pain creams for his patients, and a conspirator helped steer those prescriptions to White’s Pharmacy. In exchange for this arrangement, Fazzini routinely paid the conspirator bribes and kickbacks of approximately 50 percent of the reimbursement income White’s Pharmacy received for the pain cream prescriptions. Fazzini and the conspirator attempted to conceal some of these payments by having Fazzini write checks to a relative and different entities associated with the conspirator.  

As part of his plea agreement, Fazzini agreed that the improper benefit conferred was between $500,000 and $1.5 million for the charged conspiracy to violate the federal anti-kickback statute.

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 Dec. 8, 2020.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Acting Special Agent in Charge Joe Denahan in Newark; the U.S. Postal Service, Office of Inspector General, under the direction of Special Agent in Charge of the Northeast Area Field Office Matthew M. Modafferi; the Department of Labor, Office of Inspector General, New York Region, under the direction of Special Agent in Charge Michael C. Mikulka; and 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. Attorneys Joshua L. Haber and Nicole F. Mastropieri of the Health Care Fraud Unit in the Criminal Division, Newark.

CAMDEN, N.J. – A Florida man was arrested today and charged with seeking sex with a minor and inducing her to send him sexual explicit images, U.S. Attorney Craig Carpenito announced today.

Andrew Drechsel, 31, of Saint Cloud, Florida, is charged by complaint with manufacture of child pornography, enticement of a minor to travel for illicit sexual conduct, travel with the intent to engage in illicit sexual conduct with a minor, and use of interstate commerce to entice a minor. He made his initial appearance today in the U.S. District Court for the Middle District of Florida, prior to his transfer to the District of New Jersey.

According to the complaint:

Drechsel sought to have sex with a minor girl and traveled to New Jersey with the intent to engage in illicit sexual conduct with that minor. He also enticed and coerced a minor to travel to Connecticut to engage in illicit sexual conduct and engaged in online sexual communications with a minor and induced her to manufacture sexually explicit images of herself and send them to Drechsel. 

The count of use of interstate commerce to entice carries a maximum sentence of life in prison; the count of enticement to travel for illicit sexual conduct carries a maximum sentence of 20 years in prison; the count of travel with the intent to engage in illicit sexual conduct carries a maximum sentence of 30 years in prison; and the count of manufacture of child pornography carries a minimum of 15 years in prison and a maximum of 30 years in prison. All of the counts also carry a maximum fine of $250,000 per count.

This case was investigated by agents with the FBI South Jersey Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll in Philadelphia; with assistance from the Camden County Prosecutor’s Office, under the direction of Acting Prosecutor Jill S. Mayer; the Burlington County Prosecutor’s Office under the direction of Scott A. Coffina; the Cherry Hill Police Department under the direction of Chief William P. Monaghan; the U.S. Attorney’s Office for the District of Connecticut, under the direction of U.S. Attorney John H. Durham; agents of the FBI New Haven Division, under the direction of Special Agent in Charge David Sundberg; the Hartford and New Haven, Connecticut, state’s attorney’s offices; the Windsor, Connecticut, Police Department under the direction of Chief Donald Melanson; and the Hamden, Connecticut, Police Department under the direction of Chief John F. Cappiello; and agents of the FBI Tampa, Orlando Resident Agency, under the direction of Special Agent in Charge Michael F. McPherson.

The government is represented by Assistant U.S. Attorney Alisa Shver of the U.S. Attorney’s Office Criminal Division in Camden.

If you have information regarding the pending prosecution, or you believe you or someone you know may have been victimized by the defendant, the FBI requests that you contact them at 1-800-CALL-FBI or report it at tips.fbi.gov.  Identified victims may be eligible for certain services and rights under federal and/or state law.

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

NEWARK, N.J. – A federal grand jury today indicted a Union County, New Jersey, man for persuading, inducing and enticing numerous female victims to travel in interstate or foreign commerce to engage in prostitution and other sexual acts, often by use of force, violence and threats, U.S. Attorney Craig Carpenito announced.

Jose Torres, 42, of Elizabeth, New Jersey, was charged today in a superseding indictment with four counts of coercion and enticement. Torres was originally charged in February 2020 with two counts of coercing and enticing and on May 29, 2020, he was indicted on a third count involving another victim. Today’s indictment adds a fourth victim. Torres will be arraigned at a later date.

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

From May 2015 to October 2019, Torres persuaded, induced and enticed female victims, often commercial sex workers, to travel from various out of state locations, including Canada, New York, and Pennsylvania, in order to engage in prostitution with him. In each instance, Torres lured a female victim to New Jersey with promises of large payments. In three of the charged instances, when the victim asked for payment, Torres became aggressive, often assaulting and raping her. Torres never paid the women for their services.

The two most recently charged counts allege that in December 2015, Torres lured Victim-4 to travel from Pennsylvania to New Jersey on promises of large sums of payment.  In May 2018 Torres lured Victim-3 to travel from New York City to New Jersey on promises of large sums of payment. Once Victim-3 arrived, she began to feel uncomfortable. Torres threatened Victim-3, telling her it was in her best interest to remain in the hotel room. Victim-3 remained in the room and Torres then forced her to engage in unwanted sexual activity, including having sexual intercourse without a condom.

The coercion and enticement charges each carry a maximum term of 20 years in prison and a $250,000 fine.

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 Homeland Security, Homeland Security Investigations (HSI) under the direction of Special Agent in Charge Jason Molina in Newark; and the Middlesex County Prosecutor’s Office, under the direction of Prosecutor Yolanda Ciccone, with the investigation leading to today’s superseding indictment.

The government is represented by Assistant U.S. Attorney Emma Spiro of the U.S. Attorney’s Office Violent Crimes Unit in Newark.

The charges and allegations in the superseding indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

TRENTON, N.J. – Three people have been charged for their alleged roles in a years-long conspiracy to defraud the U.S. Department of Defense (DoD) by providing military equipment parts that were not authorized by contract, U.S. Attorney Craig Carpenito announced today.

Linda Mika, 69, and Paul Mika, 73, both of Jackson, New Jersey, and Kenneth Mika, 49, of Ewing, New Jersey, were arrested today and are scheduled to have their initial appearances this afternoon before U.S. Magistrate Judge Lois H. Goodman in Trenton federal court.

“As described in the criminal complaint, these defendants sought to make a greater profit by substituting products that were not those they had contractually agreed to provide to the Department of Defense,” U.S. Attorney Carpenito said. “By doing so, they potentially risked the safety of our men and women in uniform. We will continue to work with our law enforcement partners to root out this kind of fraud.”

“Protecting the integrity of the defense procurement system is a top priority for the Defense Criminal Investigative Service (DCIS),” Special Agent in Charge Leigh-Alistair Barzey, DCIS Northeast Field Office, said. “This case, which resulted in today's arrests, confirms the DCIS’ ongoing commitment to work with the USAO-NJ and the FBI, to investigate and prosecute contractors who engage in fraudulent schemes targeting the U.S. Department of Defense.”

 “Today's arrest of Linda Mika, Paul Mika and Kenneth Mika reflects the continuing impact federal and state partnerships have on combatting those who defraud the Department of Defense,” Acting FBI Special Agent in Charge Joe Denahan said. “These contractors of Monmouth Marine Engines Inc. knowingly provided substituted parts for military equipment for their own personal gain. We will continue to investigate these types of schemes and hold those who endanger the U.S. military accountable.”

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

From at least March 2017 through February 2020, the Mikas conspired with each other and others to defraud the DoD and its combat logistic support arm, the Defense Logistics Agency (DLA), by engaging in a pattern of unlawful product substitution. Paul Mika was the founder and owner of Monmouth Marine Engines Inc. (Monmouth Marine), a maritime equipment and servicing facility, which, as an approved federal contractor, also entered into contracts with DLA to supply DoD contracting entities with replacement parts for Naval vessels. Paul Mika’s wife and son, Linda Mika and Kenneth Mika, were employees of Monmouth Marine.

The Mikas, on behalf of Monmouth Marine, obtained contracts with the DoD by falsely claiming that the military parts they contracted to provide would be exact products furnished by authorized manufacturers. Once awarded the contracts, however, the Mikas sourced non-conforming substitute parts at a significantly reduced cost to fill the contracts. They did this to maximize their profit margin while also suppressing fair competition in the bidding of federal contracts. Upon receipt by Monmouth Marine, the non-conforming parts were then shipped to DLA in packaging disguising the parts’ identity in an effort by the Mikas to deceive DLA and its unwitting downstream purchasers. 

The count of conspiracy to commit wire fraud carries a maximum potential penalty of 20 years in prison and a $250,000 fine.

U.S. Attorney Carpenito credited special agents of the U.S. Department of Defense, Defense Criminal Investigative Service Northeast Field Office, under the direction of Special Agent in Charge Barzey; and special agents of the FBI, under the direction of Acting Special Agent in Charge Denahan with the investigation leading to today’s arrests.

The government is represented by Assistant U.S. Attorney Eric A. Boden of the U.S. Attorney=s Office Criminal Division in Trenton.

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

NEWARK, N.J. – An employee of a public university in New Jersey today admitted his role in a scheme to defraud public and private health benefits programs of at least $5.3 million for the billing of medically unnecessary compounded prescriptions, U.S. Attorney Craig Carpenito announced. 

John Cuffari, 58, of Cedar Grove, New Jersey, pleaded guilty by videoconference before U.S. District Judge John Michael Vazquez 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 ingredients in the prescription.

Between November 2014 and July 2016, Cuffari participated in a conspiracy that involved the submission of fraudulent prescriptions for compounded medications to public and private insurance plans. The scheme centered on the discovery that certain insurance plans paid for prescription compounded medications – including scar creams, wound creams, and metabolic supplements/vitamins – at exorbitant reimbursement rates.

Cuffari exploited this opportunity through working as a sales representative for several compounding pharmacies. In order to profit as a sales representative, Cuffari targeted individuals who had insurance plans that covered compounded medications and then convinced those individuals to obtain prescriptions for compounded medications, regardless of medical necessity, often by providing them with cash payments. In order to obtain prescriptions for compounded medications for some of the recruited individuals, Cuffari caused payments to be made to a New Jersey-based physician.

Once the prescriptions were written, they were filled by the compounding pharmacies with which Cuffari worked. The compounding pharmacies would then receive reimbursement from the insurance plans, and would pay Cuffari a percentage of the reimbursement amount.

As part of his plea agreement, Cuffari must forfeit $539,580 in criminal proceeds he received for his role in the scheme and pay restitution of at least $5,392,214. He faces a statutory maximum of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Dec. 9, 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 ongoing investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Sean M. Sherman of the United States Attorney’s Office, Opioid Abuse Prevention and Enforcement Unit in Newark.

NEWARK, N.J. – A Hudson County, New Jersey, man previously convicted of multiple felonies admitted today to possessing a firearm and ammunition, U.S. Attorney Craig Carpenito announced.

Benorce Duncan, 31, of Jersey City, pleaded guilty by videoconference before U.S. District Judge Katharine S. Hayden to an 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 May 21, 2019, Duncan knowingly possessed a Röhm .22-caliber RG10 revolver loaded with six rounds of ammunition. At that time, Duncan had previously been convicted in Hudson County Superior Court of aggravated assault and robbery, both of which are felonies.

The charge to which Duncan pleaded guilty carries a maximum penalty of 10 years in prison and a fine of up to $250,000. Sentencing is scheduled for Dec. 8, 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 the Newark Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the leadership of Special Agent in Charge Charlie J. Patterson, and the Jersey City Police Department, under the direction of Public Safety Director James Shea, 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.

NEWARK, N.J. – A New Jersey-based securities trader today admitted orchestrating a massive, long-running market manipulation scheme and tax fraud that netted more than $17 million in illegal profits between 2014 and 2016, U.S. Attorney Craig Carpenito announced.

Joseph Taub, 41, of Clifton, New Jersey, pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to counts four and five of a superseding indictment charging him with securities fraud and conspiracy to defraud the United States.

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

From 2014 to 2016, Taub and others conspired to manipulate the securities prices of numerous public companies by coordinating trading in dozens of brokerage accounts he secretly controlled. Taub used “straw accounts” that were held in the names of others to conduct much of his trading. Taub funded many of these straw accounts and used the straw account holders to conceal the scheme from regulators and law enforcement.

To manipulate securities prices, Taub engaged repeatedly in a series of contemporaneous transactions designed to artificially influence the market price of the securities of various publicly traded companies, and induce other market participants to trade in those securities based on the false impression that there was real market interest in the securities, using Run Based Manipulation and Order Based Manipulation.

Run Based Manipulation is a type of securities manipulation in which a manipulator takes either a long or a short position in a security, enters orders or trades in a manner designed to inflate or deflate the price of the security while attracting others to trade the security and finally reverse their position at the inflated or deflated price. A common feature of Run Based Manipulation is that the manipulator profits directly from the manipulated market by exploiting investors who bought at inflated prices or sold at depressed prices. Order Based Manipulation is a type of securities manipulation involving orders, sometimes but not always accompanied by trades, that are intended to give other market participants a false signal about the security’s demand or supply.

Taub also admitted defrauding the United States by hiding from the brokerage firms and the IRS the identities of those who actually controlled the straw accounts and who reaped the majority of the profits from the scheme. As a result, the profits from the straw accounts were taxed at the lower tax rates applicable to the straw account holders instead of the higher tax rates applicable to Taub, which allowed Taub to avoid $394,424 in taxes.

The securities fraud count carries a maximum potential penalty of 20 years in prison and a $5 million fine. The conspiracy to defraud the United States count carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Under the terms of the plea agreement, if accepted by the court, Taub will receive a sentence of 18 months in prison, will forfeit $17.1 million, and will be ordered to pay restitution in the amount of $394,424 to the IRS. Sentencing is scheduled for Dec. 1, 2020.

Sean Greenwald pleaded guilty to his role in the scheme on Feb. 21, 2018 and awaits sentencing.

The Department of Justice has also reached a settlement of its civil forfeiture case against assets acquired by Taub and his family using proceeds of the market manipulation scheme. Under the terms of the settlement, Taub and his family members agreed to forfeit all assets subject to the pending forfeiture complaint in which they have a potential interest. Taub is also required to cooperate with and assist the Justice Department in the orderly transfer, management and disposition of the relevant assets.

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 IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark, and special agents of the U.S. Attorney’s Office, District of New Jersey, with the investigation. He also thanked the Securities and Exchange Commission’s New York Regional Office, under the direction of Marc P. Berger, for its assistance in this investigation.

The government is represented by Criminal Division Deputy Chief Daniel V. Shapiro; Senior Trial Counsel Catherine R. Murphy and Assistant U.S. Attorney Jennifer S. Kozar of the U.S. Attorney’s Office Economic Crimes Unit in Newark; and Unit Chief Sarah Devlin, of the U.S. Attorney’s Office Asset Recovery and Money Laundering Unit.

NEWARK, N.J. – Pacira Pharmaceuticals Inc. will pay $3.5 million to resolve allegations that it paid kickbacks to doctors in the form of bogus research grants to induce them to prescribe its analgesic EXPAREL, Attorney for the United States Rachael A. Honig announced today. The allegations arose from a whistleblower suit filed under the False Claims Act.

“Pacira tried to accelerate sales of its EXPAREL product through an illegal kickback scheme,” Attorney for the United States Honig said. “Pharmaceutical companies may not entice doctors to use their products by offering research grants in return for sales. Illegal inducements can distort medical decision-making, lead to the use of overpriced drugs, and drive up health care costs for everyone.”

“The payment of kickbacks or bribes in exchange for phony research and other grants, robs the government and every American,” FBI-Newark Acting Special Agent in Charge Joe Denahan said. “Today’s agreement by Pacira Pharmaceuticals Inc., to pay $3.5 million, should send a strong message to anyone thinking about participating in this type of illegal activity.  The FBI remains committed to combating these types of schemes and bringing these perpetrators to justice.”

“Offering phony research grants in order to increase sales and fatten the bottom line is illegal and can be detrimental to the medical decision-making process,” Scott J. Lampert, Special Agent in Charge of the Office of Inspector General for the U.S. Department of Health and Human Services, said. “We will continue to work with our law enforcement partners to safeguard our government health care programs and the taxpayers picking up the bill.”

According to documents filed in this case and the contentions of the United States contained in the settlement agreement:

From Dec. 1, 2012, through April 30, 2015, Pacira paid disguised kickbacks in the form of research and other grants to healthcare providers and institutions. Pacira intended these payments to induce sales of its newly-launched local analgesic, EXPAREL, to the targeted physicians and their respective hospitals. The research grants in question were typically initiated by Pacira sales representatives or marketing executives, who discussed internally their sales goals in connection with the grant. Pacira also required that EXPAREL be placed on formulary at the physician’s institution before awarding any research grant.

After awarding the grant money, Pacira expressed little interest in the proposed research. Pacira did not contractually require that the grant recipient adhere to the proposed research topic or achieve certain milestones before payment. In many cases, Pacira did not follow up with the grant recipient to ensure that the work was being performed, and in some cases, the grant recipient did no work at all. Pacira did not document why it needed the research or the fair market value of the proposal. Finally, Pacira executives coached grant recipients and other employees on how to avoid internal scrutiny of the grant payments.

Medicare and Medicaid do not pay for claims that include products tainted by illegal kickbacks. Pacira caused the submission of false claims by using these research grants to induce sales of EXPAREL, which it knew would be used in procedures reimbursed by Medicare and Medicaid.

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. As part of today’s resolution, the whistleblower—a pharmacist who brought the misconduct to the government’s attention—will receive approximately $520,000 of the recovery from the federal share of the settlement, plus approximately $118,000 from the state share of the settlement. 

Attorney for the United States Honig credited special agents of the FBI, under the direction of Acting Special Agent in Charge Denahan in Newark; special agents of the HHS-OIG, under the direction of Special Agent in Charge Lampert, as well as special agents with the U.S. Attorney’s Office in Newark, with the investigation.  ­­­­­­­­­­

The government is represented by Assistant U.S. Attorney Andrew A. Caffrey, III, of the U.S. Attorney’s Office’s Health Care Fraud Unit in Newark.

The case is captioned United States ex rel. Schneider v. Pacira Pharmaceuticals, Inc. (D.N.J.). The claims settled by this agreement are allegations only, and there have been no admissions of liability.

TRENTON, N.J. – A Somerset County, New Jersey, man admitted today that he stole almost 300 iPhones that had been seized by Customs and Border Protection (CBP) and were temporarily stored at a warehouse in Dayton, New Jersey, U.S. Attorney Craig Carpenito announced.

Joel Cruz, 27, of Franklin Park, New Jersey, pleaded guilty today by videoconference before U.S. District Court Judge Michael Shipp to an information charging him with theft from an interstate or foreign shipment.     

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

In November 2014, CBP seized approximately 14 boxes, containing 628 iPhones, from Boston Logan International Airport.  All of the boxes were shipped from the United States, and were en route to Dubai, United Arab Emirates. After their seizure, the boxes were consolidated into six containers, each containing a unique shipping code, and were shipped and delivered to the Dayton warehouse.

Cruz was an employee of Company 1, which had contracted with the Treasury Executive Office for Asset Forfeiture (TEOAF), a federal agency, to provide services regarding the management of property seized by CBP and stored at the warehouse. Company 1 contracted with third parties, including Company 2, to provide temporary contractors to work at the warehouse.

Between Jan. 9, 2015, and Feb. 2, 2015, Cruz scanned the location of the seized boxes inside the warehouse and stole 292 iPhones worth $218,372. He removed the iPhones from the warehouse on separate occasions by concealing them in his pants, boots, and jacket. Luis Ramos, a Company 2 employee, assisted Cruz in removing a small number of the iPhones in exchange for one or two of the phones. Ramos was previously charged in connection with his role in the scheme, and those charges remain pending.

Cruz provided 175 to 200 of the stolen iPhones to a former employee of the warehouse to sell on Cruz’s behalf. Cruz sold the remaining stolen iPhones on his own.

The theft from interstate or foreign shipment carries a maximum potential penalty of 10 years in prison and is punishable by a fine of $250,000 or twice the amount of the pecuniary gain or loss from the offense.

U.S. Attorney Carpenito credited special agents of the U.S. Department of Homeland Security, Office of Inspector General, Newark Field Office, under the direction of Assistant Special Agent in Charge Brian C. McCarthy; U.S. Department of Homeland Security, Federal Protective Service, Region 2, under the direction of Regional Director Robert Sooter; Customs and Border Protection, Office of Professional Responsibility, SAC/NYC, under the direction of Special Agent in Charge Vance Kuhner; and the U.S. Department of Treasury, Office of Inspector General, Washington, D.C., under the direction of Assistant Inspector General for Investigations Sally D. Luttrell with the investigation leading to today’s guilty plea.

The government is represented by Senior Trial Counsel Leslie F. Schwartz of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

NEWARK, N.J. – The former co-owner of a New Jersey marketing company today admitted her role in a scheme to defraud public and private health benefits programs of at least $8.8 million for the billing of medically unnecessary compounded prescriptions, U.S. Attorney Craig Carpenito announced. 

Christine Myers, 38, of Phillipsburg, New Jersey, pleaded guilty by videoconference before U.S. District Judge John Michael Vazquez to an information charging her with conspiracy to commit health care fraud.

“In an era when many Americans worry about securing health insurance for their families, we’ve seen far too many instances where both private and publicly funded insurance providers are being raided for millions in phony reimbursements on compounded medications,” U.S. Attorney Carpenito said. “Myers admitted that she and others sought to defraud insurers by recruiting the very people who enjoy that coverage, offering them cash bribes to get medications they didn’t need. Her conviction should serve as a warning to those who would exploit their health coverage for financial gain.”

FBI Newark Acting Special Agent in Charge Joe Denahan said, “Christine Myers treated health insurance plans as a vehicle to line her own pockets when she engaged in an elaborate scheme that resulted in defrauding insurers out of at least $8.8 million. The FBI, in conjunction with our law enforcement partners, will continue to investigate and bring to justice criminals who defraud the system and cheat the American taxpayer.”

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 ingredients in the prescription.

Between February 2015 and February 2017, Myers participated in a conspiracy that involved the submission of fraudulent prescriptions for compounded medications to public and private insurance plans. The scheme centered on the discovery that certain insurance plans paid for prescription compounded medications – including scar creams, wound creams, and metabolic supplements/vitamins – at exorbitant reimbursement rates.

Myers exploited this opportunity through creating a New Jersey marketing company (Marketing Company-1) and hiring sales representatives to work on the company’s behalf. At Myers’ direction, the sales representatives targeted individuals who had insurance plans that covered compounded medications. The sales representatives then convinced those individuals to obtain prescriptions for compounded medications, regardless of medical necessity, often by providing them with cash payments. The individuals were then directed to certain telemedicine companies, which Marketing Company-1 or its affiliates paid, to receive the prescriptions.

Once the prescriptions were written, they were filled by certain compounding pharmacies with which Marketing Company-1 conspired. The compounding pharmacies would then receive reimbursement from the insurance plans, and would pay Marketing Company-1 a percentage of the reimbursement amount. As one of the owners of Marketing Company-1, Myers retained a portion of the payment and provided a “commission” payment to the relevant sales representative.

Two sales representatives that worked for Marketing Company-1, Christopher Frusci and Enver Kalaba, were former Metropolitan Transportation Authority (MTA) employees. Since the MTA’s health insurance plan covered compounded medications, Frusci and Kalaba targeted co-workers at the MTA and paid them cash bribes for every compounded prescription they submitted. Frusci and Kalaba have both previously pleaded guilty to conspiracy to commit health care fraud charges based on their respective roles in the scheme. On Feb. 7, 2019, Kalaba was sentenced in Newark federal court to 20 months in prison and one year of supervised release, and must forfeit $138,630 in criminal proceeds he received for his role in the scheme and pay restitution of $2.9 million. Frusci is awaiting sentencing.

“The global pandemic brings into stark relief how critical it is to have access to affordable healthcare,” MTA Inspector General Carolyn Pokorny said. “That this individual recruited former MTA employees to help steal millions of dollars from taxpayers, riders and other transportation stakeholders is especially despicable. We will continue to work with our law enforcement partners in this ongoing investigation to ensure that anyone else involved with the scheme is brought to justice.”

“Protecting TRICARE, the healthcare system for U.S. military members and their dependents, is a top priority for the Defense Criminal Investigative Service (DCIS),” Special Agent in Charge Leigh-Alistair Barzey, DCIS Northeast Field Office, said. “Schemes to defraud TRICARE, such as those alleged in the information announced today, waste precious resources and ultimately threaten the quality of health care that our Service members and their families deserve.  Myers' guilty plea is the result of a joint effort by the U.S. Attorney’s Office, the DCIS, the FBI and MTA-OIG, and it demonstrates the ongoing commitment of the DCIS to work with its law enforcement partners to investigate and prosecute those who engage in health care fraud.”

The count of conspiracy to commit health care fraud is punishable by a maximum of 10 years in prison and a fine of $250,000 fine, or twice the gross gain or loss from the offense. As part of her plea agreement, Myers must forfeit $1.475 million in criminal proceeds she received for her role in the scheme and pay restitution of at least $8.8 million. Sentencing is scheduled for Dec. 1, 2020.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Acting Special Agent in Charge Denahan; the U.S. Department of Defense, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Leigh-Alistair Barzey; and the Office of the Inspector General, Metropolitan Transportation Authority, under the direction of Inspector General Pokorny, with the ongoing investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Adam Baker of the U.S. Attorney’s Office, Opioid Abuse Prevention and Enforcement Unit in Newark.

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Defense counsel: Marc A. Agnifilo Esq., New York

NEWARK, N.J. – The Americans with Disabilities Act (ADA) was passed on July 26, 1990, and is the nation’s preeminent law for providing access and equal opportunity for people with disabilities. The U.S. Attorney’s Office has played a vital role in enforcing the ADA in order to help eliminate discrimination against people with disabilities. U.S. Attorney Craig Carpenito today reinforces the Office’s commitment to vigorously enforce the ADA in the years to come.

“The ADA is a landmark civil rights statute that guarantees people with disabilities equal opportunity to fully participate in mainstream life without discriminatory barriers,” U.S. Attorney Carpenito said. “Despite the tremendous progress that has been made in the 30 years since this historic legislation was signed, we still see unlawful barriers that prevent individuals with disabilities from fully participating in many aspects of society. The U.S. Attorney’s Office will continue to work tirelessly to shatter those discriminatory barriers.”

Over the past 30 years, our country has worked to change attitudes about disability, remove obstacles to equality, and dismantle the systems that have historically excluded people with disabilities. We commemorate the many ways that the ADA has transformed our society – by replacing exclusion with access, segregation with integration, and limitations with self-determination. The ADA has advanced the promise of the American dream, ensuring that people with disabilities can write their own stories. We are better and stronger because of the contributions that people with disabilities make.

The U.S. Attorney’s Office has prioritized enforcing the ADA to vindicate the rights of people with disabilities in several recent matters. These efforts include:

• Ensuring Equal Access to Polling Places. On Aug. 15, 2019, in connection with the Justice Department’s ADA Voting Initiative, the U.S. Attorney entered into comprehensive settlement agreements with the Ocean County Board of Elections and the Union County Board of Elections to ensure that people with mobility disabilities can physically access polling locations so as to not be denied their fundamental right to vote.  https://www.justice.gov/usao-nj/pr/united-states-reaches-agreements-ocean-county-and-union-county-boards-elections-ensure
• Combatting Discrimination in Childcare Settings.  On Nov. 13, 2019, the U.S. Attorney’s Office settled a lawsuit, resolving allegations that a national daycare provider, Spring Education Inc., discriminated against a 3-year-old girl and her parents when it expelled the child on the basis of her disability and refused to make reasonable modifications to its policies and practices. Under the terms of the settlement, the defendant was required to agree to injunctive remedies, including adopting policies to provide reasonable modifications for children, as well as paying damages to the child and a civil penalty to the United States. https://www.justice.gov/usao-nj/pr/us-attorney-s-office-reaches-agreement-nationwide-daycare-provider-ensure-equal-rights 
• Providing Equal Access for Children with Disabilities in Youth Activities. On Oct. 11, 2019, the U.S. Attorney’s Office reached an agreement with a gymnastics facility in Bergen County to implement polices to ensure equal access for children with disabilities, as well as damages to the child and her parents and a civil penalty to the United States.  https://www.justice.gov/usao-nj/pr/us-attorney-s-office-reaches-ada-settlement-gymnastics-facility-ensure-children On April 5, 2018, the U.S. Attorney’s office entered into an agreement with a gymnastics center that excluded a child on the basis of her disability. The agreement required the center to adopt policies and practices to comply with the ADA and pay damages to the child. https://www.justice.gov/usao-nj/pr/us-attorney-s-office-reaches-settlement-gymnastics-center-ensure-equal-access-children
• Protecting the Rights of Students with Disabilities. On Feb. 21, 2019, the U.S. Attorney’s Office entered into an agreement with Rider University that required the university to make reasonable modifications to its policies, practices, and procedures for students with food allergy-related disabilities. https://www.justice.gov/usao-nj/pr/us-attorney-s-office-reaches-agreement-rider-university-resolve-allegations-under  On Sept. 11, 2019, the U.S. Attorney’s Office executed a settlement agreement to resolve allegations that the Watchung Hills Regional High School failed to evacuate at least one student with a mobility disability during a school-wide evacuation and failed to implement any policies addressing emergency evacuations of students with disabilities. https://www.justice.gov/usao-nj/pr/watchung-hills-high-school-district-agrees-settle-claim-it-violated-americans
• Protecting the Rights of Combat Veterans with Disabilities. On Feb. 6, 2020, the U.S. Attorney’s Office reached a settlement with a charter bus company, Academy Express, LLC, to resolve allegations that the bus company discriminated against a 74-year-old combat veteran with multiple disabilities by denying him accessible transportation on a multi-day tour of historic sites with his fellow combat veterans. The settlement agreement requires the bus company to implement policies to ensure persons with disabilities receive accessible – and timely – transportation, as well as to pay damages to the veteran and a civil penalty to the United States.  https://www.justice.gov/usao-nj/pr/us-attorney-s-office-reaches-ada-settlement-charter-bus-company-protect-rights-americans
• Ensuring Physical Access to Places of Public Accommodation. The U.S. Attorney’s Office has successfully resolved multiple matters to ensure physical access to places of public accommodate to those with mobility disabilities. On Nov. 19, 2019, the U.S. Attorney’s Office reached a settlement with the owner of the historic Paramount Theater in Asbury Park to ensure physical accessibility for people with disabilities.  https://www.justice.gov/usao-nj/pr/us-atorney-s-office-reaches-ada-settlement-owner-historic-paramount-theater-ensure
• Combatting HIV Discrimination.  On Dec. 17, 2019, the U.S. Attorney entered into a settlement with a Middlesex County day care facility to resolve allegations that the facility denied a child admission based on the parent’s disclosure that the child may have a disability – either HIV or Hepatitis. The settlement required the day care to implement policies and procedures to ensure that children with disabilities are afforded full and equal opportunities to participate in its services, as well as to provide damages to the child and his parent.  https://www.justice.gov/usao-nj/pr/us-attorney-s-office-reaches-ada-settlement-middlesex-county-day-care-facility-over

 

The Justice Department’s ADA Voting Initiative focuses on protecting the right of individuals with disabilities. A hallmark of the ADA Voting Initiative is its collaboration with jurisdictions to increase accessibility at polling places. The Department of Justice has surveyed more than 2,200 polling places and increased polling place accessibility in more than 35 jurisdictions, including in Ocean County and Union County, New Jersey.

For more information about the 30th Anniversary of the ADA, please visit www.ada.gov.  More information about the U.S. Attorney’s Civil Rights Unit and its enforcement efforts is available at https://www.justice.gov/usao-nj/civil-rights-enforcement

Individuals who believe they may have been victims of discrimination may file a complaint with the U.S Attorney’s Office at https://www.justice.gov/usao-nj/civil-rights-enforcement/complaint.

NEWARK, N.J. – A Newark man made his initial appearance today on charges stemming from a July 9, 2020, attempted carjacking in Jersey City during which a victim was shot in the abdomen, U.S. Attorney Craig Carpenito announced.

Tevin Browning, 29, of Newark, is charged by complaint with one count of conspiracy to commit carjacking, one count of attempted carjacking, one count of discharge of a firearm during a crime of violence, and one count of possession of a firearm and ammunition by a convicted felon. He is appeared by video conference this afternoon before U.S. Magistrate Judge James B. Clark III and was detained.

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

At approximately 5:00 p.m. on July 9, 2020, a carjacking occurred in the area of Tonnelle and Broadway avenues in Jersey City, which was recorded on several video cameras in the area.  Browning and an armed conspirator attempted to forcibly enter an Acura MDX which had pulled over to the side of Tonnelle Avenue to pick up a passenger. As the passenger entered the Acura, Browning and his conspirator forcibly attempted to enter the vehicle. Browning attempted to enter the rear right passenger side of the Acura, and punched the passenger in the head. At that point, the driver quickly attempted to drive away from the area. As the driver drove away, the gunman attempted to enter the front passenger side of the Acura and held onto the Acura. After a short distance, the gunman shot the driver in the abdomen, and then fell off the Acura as its driver was able to escape.

Moments later, a Dodge Challenger arrived at the scene and picked up the gunman before fleeing the area. Police officers found a spent .45 caliber shell casing stamped “Blazer .45 Auto” in the area where the gunman had fallen to the ground.

At approximately 8:00 p.m., Jersey City Police officers observed the Challenger parked and unoccupied on a residential street in Jersey City. The officers then observed Browning place an unknown item in the trunk of the car before walking into a nearby residence. Moments later, the officers observed Browning re-enter the trunk of Challenger before he was taken into custody. A lawful search warrant of the Challenger produced a .45 caliber Hi-Point Model JHP semiautomatic handgun, bearing serial number 406099, which was loaded with four rounds of ammunition. Two of the rounds were stamped “Blazer .45 Auto” on the shell casing.

The counts of conspiracy to commit carjacking and attempted carjacking carry a maximum potential sentence of 25 years in prison. The count of discharge of a firearm during a crime of violence is punishable by a mandatory minimum of 10 years in prison and a maximum sentence of life in prison, which must run consecutively to any term of imprisonment imposed on any other charges. On the count of possession of a firearm and ammunition by a convicted felon, Browning faces a maximum of 10 years in prison.

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; 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.

This investigation was conducted as part of the Jersey City Violent Crime Initiative (VCI). The VCI was formed in 2018 by the U.S. Attorney’s Office for the District of New Jersey, the Hudson County Prosecutor’s Office, and the Jersey City Police Department, for the sole purpose of combatting violent crime in and around Jersey City. 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 FBI, the ATF, the Drug Enforcement Administration’s (DEA) New Jersey Division, the U.S. Marshals, the Jersey City Police Department, the Hudson County Prosecutor’s Office, the Hudson County Sheriff’s Office, New Jersey State Parole, the Hudson County Jail, and the New Jersey State Police Regional Operations and Intelligence Center/Real Time Crime Center.

The government is represented by Assistant U.S. Attorney Jonathan W. Romankow of the Violent Crimes Unit in Newark.

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

NEWARK, N.J. – Indivior Solutions today pleaded guilty to a one-count felony information and, together with its parent companies Indivior Inc. and Indivior plc, agreed to pay a total of $600 million to resolve criminal and civil liability associated with the marketing of the opioid-addiction-treatment drug Suboxone, New Jersey U.S. Attorney Craig Carpenito, other Department of Justice officials, and officials from other state and federal agencies announced.  Together with a $1.4 billion resolution with Indivior’s former parent, Reckitt Benckiser Group PLC (RB Group), announced in 2019, and a plea agreement with Indivior plc’s former CEO, Shaun Thaxter, announced last month, the total resolution relating to the marketing of Suboxone is more than $2 billion — the largest-ever resolution in a case brought by the Department of Justice involving an opioid drug.

Suboxone is a drug product approved for use by recovering opioid addicts to avoid or reduce withdrawal symptoms while they undergo treatment for opioid-use disorder.  Suboxone contains buprenorphine, a powerful opioid. 

“Combatting the opioid crisis is a Department of Justice priority,” said Principal Deputy Associate Attorney General Claire M. Murray.  “Today’s announced resolution and related actions hold accountable entities and individuals that unlawfully marketed opioid-addiction products.”

“The opioid crisis is a public health emergency.  Prevention and access to effective treatments for opioid addiction are critical to fighting this epidemic,” said Deputy Assistant Attorney General Michael D. Granston for the Department's Civil Division.  “When a drug manufacturer claims to be part of a solution for opioid addicts, we expect honesty and candor to government officials, as well as to the physicians and patients making important treatment decisions based on those representations.”

Resolution of the Criminal Investigation

Indivior Solutions pleaded guilty today in U.S. District Court for the Western District of Virginia to a one-count felony criminal information charging false statements relating to health care matters.  In connection with its guilty plea, Indivior Solutions admitted making false statements to promote the film version of Suboxone (Suboxone Film) to the Massachusetts Medicaid program (MassHealth) relating to the safety of Suboxone Film around children.  The resolution includes a criminal fine, forfeiture, and restitution totaling $289 million.  On June 30, 2020, Indivior plc’s former CEO Shaun Thaxter pleaded guilty to a one-count misdemeanor information, also in the Western District of Virginia, related to Indivior’s false and misleading representations to MassHealth.

In 2002, Indivior Inc. received approval to market Suboxone tablets for use in the treatment of opioid addiction and dependence.  At that time, Indivior Inc. was an RB Group subsidiary known as Reckitt Benckiser Pharmaceuticals Inc.  In December 2014, RB Group spun off Indivior Inc., and the two companies are no longer affiliated.  Thereafter, Indivior Inc. became a subsidiary of Indivior plc.  On April 9, 2019, a federal grand jury sitting in Abingdon, Virginia, indicted Indivior Inc. and Indivior plc for allegedly engaging in an illicit nationwide scheme to increase prescriptions of Suboxone.

In its guilty plea today, Indivior Solutions, which employed marketing and sales personnel for the Indivior group of companies, admitted to an aspect of the scheme alleged in the indictment.  Specifically, Indivior Solutions admitted that, in October 2012, it sought to convince MassHealth to expand Medicaid coverage of Suboxone Film in Massachusetts and sent MassHealth false data and a chart that was misleading in light of the false data indicating that Suboxone Film had the lowest rate of accidental pediatric exposure (i.e., children taking medication by accident) of all buprenorphine drugs in Massachusetts, when in fact, it did not.  Indivior Solutions further admitted that sending the false and misleading information occurred in the context of marketing and promotional efforts directed at MassHealth, which were overseen by top executives.  MassHealth announced it would provide access to Suboxone Film for patients with children under the age of six shortly after Indivior provided the false and misleading information to agency officials.

“During the nationwide opioid epidemic, Indivior Solutions made false statements about Suboxone’s safety to increase its sales.  In doing so, Indivior Solutions misled government health care officials and is being held accountable today for its felonious conduct,” First Assistant United States Attorney Daniel P. Bubar of the Western District of Virginia said today. “This resolution is the culmination of years of work by prosecutors and agents and demonstrates that we will continue to work tirelessly to hold pharmaceutical manufacturers responsible for illegal conduct.”

In addition to its financial aspects, the agreement with Indivior Inc. includes novel provisions that:

• Require Indivior Inc. to disband its Suboxone sales force and not reinstate it;
• Require Indivior Inc.’s CEO to personally certify, under penalty of perjury, on an annual basis that during the prior year (a) Indivior was in compliance with the Food Drug and Cosmetic Act and did not commit health care fraud or (b) list all non-compliant activity and the steps taken by Indivior to remedy these acts;
• Prohibit Indivior Inc. from using data obtained from surveys of health care providers for marketing, sales, and promotional purposes;
• Require Indivior Inc. to remove health care providers from their promotional programs who are at a high risk of inappropriate prescribing; and
• Make Indivior subject to contempt sanctions by the Court and reinstatement of the dismissed charges if it violates the agreement.

 

“The opioid crisis has devastated families and communities across the Commonwealth and drug manufacturers must be held accountable for their role in creating and prolonging this crisis,” said Virginia Attorney General Mark R. Herring.  “I want to thank my Medicaid Fraud Control Unit for their work on this important case, as well as our local, state and federal partners for their continued collaboration.  My team and I will continue to do everything in our power to hold pharmaceutical companies accountable for their role in the opioid crisis and help to ensure justice for those families who have been effected by the opioid crisis.”

“Parties that contract with the government will be held to the letter of the contract,” said Kenneth Cleevely, Special Agent in Charge of the Eastern Field Office for the U.S. Postal Service Office of Inspector General.  “The U.S. Postal Service spends billions of dollars per year in workers compensation-related costs, most of which are legitimate.  However, when medical providers or companies choose to flout the rules and profit illegally, special agents with the USPS OIG will work with our law enforcement partners to hold them responsible.  To report fraud or other criminal activity involving the Postal Service, contact USPS OIG special agents at www.uspsoig.gov or 888-USPS-OIG.”

United States District Judge James P. Jones accepted the guilty plea but deferred acceptance of the plea agreement until after the preparation of a presentence report. He scheduled sentencing for Oct. 20, 2020 at the United States Courthouse in Abingdon, Virginia.

The Civil Settlement

Under the civil settlement, Indivior Inc. and Indivior plc have agreed to pay a total of $300 million to resolve claims that the marketing of Suboxone caused false claims to be submitted to government health care programs.  The $300 million settlement amount includes approximately $209.3 million to the federal government and $90.7 million to states that opt to participate in the agreement.

The civil settlement resolves allegations by the United States that, from 2010 through 2015, Indivior companies knowingly (a) promoted the sale and use of Suboxone to physicians who were writing prescriptions that were not for a medically accepted indication and that lacked a legitimate medical purpose, were issued without any counseling or psychosocial support, were for uses that were unsafe, ineffective, and medically unnecessary, and were often diverted; (b) promoted the sale or use of Suboxone Film to physicians and state Medicaid agencies using false and misleading claims that Suboxone Film was less susceptible to diversion and abuse than other buprenorphine products and that Suboxone Film was less susceptible to accidental pediatric exposure than tablets; and (c) submitted a petition to the Food and Drug Administration on Sept. 25, 2012, claiming that Suboxone Tablet had been discontinued “due to safety concerns” about the tablet formulation of the drug and took other steps to delay the entry of generic competition for Suboxone to improperly control pricing of Suboxone, including pricing to federal healthcare programs. 

“Prescription opioids are both addictive and dangerous when diverted for improper use or prescribed without accurate information about the risks that they pose,” U.S. Attorney Craig Carpenito for the District of New Jersey said.  “This resolution holds Indivior to account for placing profit above patient and community safety.”

The civil settlement resolves claims against Indivior in six lawsuits pending in federal court in the Western District of Virginia and the District of New Jersey under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery.  The False Claims Act also permits the government to intervene in such actions, as the government previously did in the three lawsuits pending in the Western District of Virginia. The whistleblower share to be awarded in this case has not yet been determined.

 “Opioid addiction and abuse is an immense public health crisis and taking steps to address it is one of the FDA’s highest priorities,” said FDA Commissioner Stephen M. Hahn, M.D.  “Medication-assisted treatments incorporating drugs like Indivior’s Suboxone, in combination with counseling and behavioral therapy, are an important tool in combating opioid use disorder but can quickly become part of the problem if not used responsibly.  When companies encourage the use of powerful drugs where not medically necessary and provide misleading information about relative product benefits, they can ultimately risk more misuse, abuse, diversion, and accidental exposure to opioid drugs as well as make treatment more difficult to obtain for those suffering from this crisis. We will continue to work with the Department of Justice to investigate and hold accountable those who devise and participate in schemes to the detriment of the public health.”

Non-monetary Provisions of the Corporate Integrity Agreement

In addition to the criminal and civil resolutions, Indivior executed a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  The CIA requires that Indivior implement numerous accountability and auditing provisions.  On an annual basis, top executives and the Board of Directors must certify about compliance, Indivior must conduct annual risk assessments and other monitoring, and an independent review organization will conduct multi-faceted audits.

“Addressing the opioid crisis is a top priority for OIG, and we will continue to work closely with the Department of Justice to hold corporations and individuals accountable when they use illegal tactics to promote and sell opioids,” said Gregory E. Demske, Chief Counsel to the Inspector General, HHS-OIG.  “Among other things, our CIA with Indivior imposes accountability on the Board and top executives, subjects the company to internal and external auditing, and ensures that the company will separate itself from its prior top leadership.”

“The opioid epidemic has ravaged this nation,” said Elton Malone, Assistant Inspector General for Investigations with the Office of Inspector General of the U.S. Department of Health and Human Services.  “This resolution, along with our law enforcement partners’ work, should serve as a warning that large companies will face prosecution if they break the law.”

FTC Resolution

Under a separate agreement with the Federal Trade Commission (FTC), Indivior has agreed to pay $10 million to resolve claims that it engaged in unfair methods of competition in violation of the Federal Trade Commission Act, 15 U.S.C. § 53(b).  The FTC filed a complaint in the United States District Court for the Western District of Virginia alleging anticompetitive activities by Indivior designed to impede competition from generic equivalents of Suboxone.  As part of a consent decree, Indivior agreed that it would notify the FTC if it filed a Citizen Petition with the FDA in connection with a drug product, it would simultaneously disclose to both the FDA and the FTC all studies and data relevant to that Citizen Petition.  Indivior further agreed not to withdraw a drug from the market or otherwise disadvantage a drug after obtaining approval to market another drug containing the same active ingredient.

“As alleged in the FTC’s complaint, in the midst of the nation’s opioid crisis, a critical opioid-addiction treatment was about to become more affordable,” said Gail Levine, a Deputy Director of the FTC’s Bureau of Competition. “But Indivior prevented that.  It kept its drug prices high by unlawfully impeding generic manufacturers from competing effectively.”

A Multilateral Effort

The criminal case against Indivior was prosecuted by Randy Ramseyer of the U.S. Attorney’s Office for the Western District of Virginia, Albert P. Mayer and Carol Wallack of the Department of Justice Civil Division’s Commercial Litigation Branch, Charles J. Biro and Matthew J. Lash of the Department of Justice Civil Division’s Consumer Protection Branch, Kristin L. Gray, Joseph S. Hall and Janine M. Myatt of the Virginia Medicaid Fraud Control Unit of the Office of the Virginia Attorney General, and Garth W. Huston of the Federal Trade Commission.  This matter was investigated by the Virginia Attorney General’s Medicaid Fraud Control Unit; FDA - Office of Criminal Investigation; United States Postal Service – Office of Inspector General; and Department of Health and Human Services - Office of Inspector General.

The civil settlement was handled by Edward Crooke of the Civil Division’s Commercial Litigation Branch, Sara Bugbee Winn of the U.S. Attorney’s Office for the Western District of Virginia, and Andrew A. Caffrey III of the U.S. Attorney’s Office for the District of New Jersey. Assistance was provided by representatives of the HHS Office of Counsel to the Inspector General; the HHS Office of the General Counsel, CMS Division; FDA’s Office of Chief Counsel; the U.S. Attorney’s Office for the Eastern District of Virginia; the U.S. Department of Agriculture Office of the General Counsel; the National Association of Medicaid Fraud Control Units; the Defense Criminal Investigative Service; the Office of Personnel Management - Office of Inspector General; the Department of Veterans’ Affairs Office of Inspector General; the Department of Labor - Office of Inspector General; and TRICARE Program Integrity.

The joint effort advances the goals of the Department’s Prescription Interdiction & Litigation (PIL) Task Force to deploy all available criminal, civil, and regulatory tools to hold opioid manufacturers accountable for unlawful practices and to ensure that prescription opioid products are marketed truthfully. 

Except to the extent admitted as part of the criminal resolution, the claims resolved by the civil settlement are allegations only.  There has been no determination of liability in the civil case.

Additional information about the Consumer Protection Branch and the Civil Fraud Section and their enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

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.

20-229

Indivior Solutions today pleaded guilty to a one-count felony information and, together with its parent companies Indivior Inc. and Indivior plc, agreed to pay a total of $600 million to resolve criminal and civil liability associated with the marketing of the opioid-addiction-treatment drug Suboxone.  Together with a $1.4 billion resolution with Indivior’s former parent, Reckitt Benckiser Group PLC (RB Group), announced in 2019, and a plea agreement with Indivior plc’s former CEO, Shaun Thaxter, announced last month, the total resolution relating to the marketing of Suboxone is more than $2 billion — the largest-ever resolution in a case brought by the Department of Justice involving an opioid drug.

Suboxone is a drug product approved for use by recovering opioid addicts to avoid or reduce withdrawal symptoms while they undergo treatment for opioid-use disorder.  Suboxone contains buprenorphine, a powerful opioid. 

“Combatting the opioid crisis is a Department of Justice priority,” said Principal Deputy Associate Attorney General Claire M. Murray.  “Today’s announced resolution and related actions hold accountable entities and individuals that unlawfully marketed opioid-addiction products.”

“The opioid crisis is a public health emergency.  Prevention and access to effective treatments for opioid addiction are critical to fighting this epidemic,” said Deputy Assistant Attorney General Michael D. Granston for the Justice Department's Civil Division.  “When a drug manufacturer claims to be part of a solution for opioid addicts, we expect honesty and candor to government officials, as well as to the physicians and patients making important treatment decisions based on those representations.”

Resolution of the Criminal Investigation

Indivior Solutions pleaded guilty today to a one-count felony criminal information charging false statements relating to health care matters.  In connection with its guilty plea, Indivior Solutions admitted to making false statements to promote the film version of Suboxone (Suboxone Film) to the Massachusetts Medicaid program (MassHealth) relating to the safety of Suboxone Film around children.  The resolution includes a criminal fine, forfeiture, and restitution totaling $289 million.  On June 30, 2020, Indivior plc’s former CEO Shaun Thaxter pleaded guilty to a one-count misdemeanor information related to Indivior’s false and misleading representations to MassHealth.

In 2002, Indivior Inc. received approval to market Suboxone tablets for use in the treatment of opioid addiction and dependence.  At that time, Indivior Inc. was an RB Group subsidiary known as Reckitt Benckiser Pharmaceuticals Inc.  In December 2014, RB Group spun off Indivior Inc., and the two companies are no longer affiliated.  Thereafter, Indivior Inc. became a subsidiary of Indivior plc.  On April 9, 2019, a federal grand jury sitting in Abingdon, Virginia, indicted Indivior Inc. and Indivior plc for allegedly engaging in an illicit nationwide scheme to increase prescriptions of Suboxone.

In its guilty plea today, Indivior Solutions, which employed marketing and sales personnel for the Indivior group of companies, admitted to an aspect of the scheme alleged in the indictment.  Specifically, Indivior Solutions admitted that, in October 2012, it sought to convince MassHealth to expand Medicaid coverage of Suboxone Film in Massachusetts and sent MassHealth false data indicating that Suboxone Film had the lowest rate of accidental pediatric exposure (i.e., children taking medication by accident) of all buprenorphine drugs in Massachusetts, when in fact, it did not.  Indivior Solutions further admitted that sending the false and misleading information occurred in the context of marketing and promotional efforts directed at MassHealth, which were overseen by top executives.  MassHealth announced it would provide access to Suboxone Film for patients with children under the age of six shortly after Indivior provided the false and misleading information to agency officials.

“During the nationwide opioid epidemic, Indivior Solutions made false statements about Suboxone’s safety to increase its sales.  In doing so, Indivior Solutions misled government health care officials and is being held accountable today for its felonious conduct,” said First Assistant U.S. Attorney Daniel P. Bubar of the Western District of Virginia.  “This resolution is the culmination of years of work by prosecutors and agents and demonstrates that we will continue to work tirelessly to hold pharmaceutical manufacturers responsible for illegal conduct.”

In addition to its financial aspects, the agreement with Indivior Inc. includes novel provisions that:

• Require Indivior Inc. to disband its Suboxone sales force and not reinstate it;
• Require Indivior Inc.’s CEO to personally certify, under penalty of perjury, on an annual basis that during the prior year (a) Indivior was in compliance with the Food Drug and Cosmetic Act and did not commit health care fraud or (b) list all non-compliant activity and the steps taken by Indivior to remedy these acts;
• Prohibit Indivior Inc. from using data obtained from surveys of health care providers for marketing, sales, and promotional purposes;
• Require Indivior Inc. to remove health care providers from their promotional programs who are at a high risk of inappropriate prescribing; and
• Make Indivior subject to contempt sanctions by the court and reinstatement of the dismissed charges if it violates the agreement.

“The opioid crisis has devastated families and communities across the Commonwealth and drug manufacturers must be held accountable for their role in creating and prolonging this crisis,” said Virginia Attorney General Mark R. Herring.  “I want to thank my Medicaid Fraud Control Unit for their work on this important case, as well as our local, state and federal partners for their continued collaboration.  My team and I will continue to do everything in our power to hold pharmaceutical companies accountable for their role in the opioid crisis and help to ensure justice for those families who have been effected by the opioid crisis.”

“Parties that contract with the government will be held to the letter of the contract,” said Kenneth Cleevely, Special Agent in Charge of the Eastern Field Office for the U.S. Postal Service Office of Inspector General.  “The U.S. Postal Service spends billions of dollars per year in workers compensation-related costs, most of which are legitimate.  However, when medical providers or companies choose to flout the rules and profit illegally, special agents with the USPS OIG will work with our law enforcement partners to hold them responsible.  To report fraud or other criminal activity involving the Postal Service, contact USPS OIG special agents at www.uspsoig.gov or 888-USPS-OIG.”

U.S. District Judge James P. Jones accepted the guilty plea but deferred acceptance of the plea agreement until after the preparation of a presentence report.  He scheduled sentencing for Oct. 20, 2020 at the U.S. Courthouse in Abingdon, Virginia.

The Civil Settlement

Under the civil settlement, Indivior Inc. and Indivior plc have agreed to pay a total of $300 million to resolve claims that the marketing of Suboxone caused false claims to be submitted to government health care programs.  The $300 million settlement amount includes approximately $209.3 million to the federal government and $90.7 million to states that opt to participate in the agreement.

The civil settlement resolves allegations by the United States that, from 2010 through 2015, Indivior companies knowingly (a) promoted the sale and use of Suboxone to physicians who were writing prescriptions that were not for a medically accepted indication and that lacked a legitimate medical purpose, were issued without any counseling or psychosocial support, were for uses that were unsafe, ineffective, and medically unnecessary, and were often diverted; (b) promoted the sale or use of Suboxone Film to physicians and state Medicaid agencies using false and misleading claims that Suboxone Film was less susceptible to diversion and abuse than other buprenorphine products and that Suboxone Film was less susceptible to accidental pediatric exposure than tablets; and (c) submitted a petition to the Food and Drug Administration on Sept. 25, 2012, claiming that Suboxone Tablet had been discontinued “due to safety concerns” about the tablet formulation of the drug and took other steps to delay the entry of generic competition for Suboxone to improperly control pricing of Suboxone, including pricing to federal healthcare programs. 

“Prescription opioids are both addictive and dangerous when diverted for improper use or prescribed without accurate information about the risks that they pose,” said U.S. Attorney Craig Carpenito for the District of New Jersey.  “This resolution holds Indivior to account for placing profit above patient and community safety.”

The civil settlement resolves claims against Indivior in six lawsuits pending in federal court in the Western District of Virginia and the District of New Jersey under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery.  The False Claims Act also permits the government to intervene in such actions, as the government previously did in the three lawsuits pending in the Western District of Virginia.  The whistleblower share to be awarded in this case has not yet been determined.

“Opioid addiction and abuse is an immense public health crisis and taking steps to address it is one of the FDA’s highest priorities,” said FDA Commissioner Stephen M. Hahn, M.D.  “Medication-assisted treatments incorporating drugs like Indivior’s Suboxone, in combination with counseling and behavioral therapy, are an important tool in combating opioid use disorder but can quickly become part of the problem if not used responsibly.  When companies encourage the use of powerful drugs where not medically necessary and provide misleading information about relative product benefits, they can ultimately risk more misuse, abuse, diversion, and accidental exposure to opioid drugs as well as make treatment more difficult to obtain for those suffering from this crisis.  We will continue to work with the Department of Justice to investigate and hold accountable those who devise and participate in schemes to the detriment of the public health.”

Non-monetary Provisions of the Corporate Integrity Agreement

In addition to the criminal and civil resolutions, Indivior executed a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  The CIA requires that Indivior implement numerous accountability and auditing provisions.  On an annual basis, top executives and the Board of Directors must certify about compliance, Indivior must conduct annual risk assessments and other monitoring, and an independent review organization will conduct multi-faceted audits.

“Addressing the opioid crisis is a top priority for OIG, and we will continue to work closely with the Department of Justice to hold corporations and individuals accountable when they use illegal tactics to promote and sell opioids,” said Gregory E. Demske, Chief Counsel to the Inspector General, HHS-OIG.  “Among other things, our CIA with Indivior imposes accountability on the Board and top executives, subjects the company to internal and external auditing, and ensures that the company will separate itself from its prior top leadership.”

“The opioid epidemic has ravaged this nation,” said Elton Malone, Assistant Inspector General for Investigations with the Office of Inspector General of the U.S. Department of Health and Human Services.  “This resolution, along with our law enforcement partners’ work, should serve as a warning that large companies will face prosecution if they break the law.”

FTC Resolution

Under a separate agreement with the Federal Trade Commission (FTC), Indivior has agreed to pay $10 million to resolve claims that it engaged in unfair methods of competition in violation of the Federal Trade Commission Act, 15 U.S.C. § 53(b).  The FTC filed a complaint in the U.S. District Court for the Western District of Virginia alleging anticompetitive activities by Indivior designed to impede competition from generic equivalents of Suboxone.  As part of a consent decree, Indivior agreed that it would notify the FTC if it filed a Citizen Petition with the FDA in connection with a drug product, it would simultaneously disclose to both the FDA and the FTC all studies and data relevant to that Citizen Petition.  Indivior further agreed not to withdraw a drug from the market or otherwise disadvantage a drug after obtaining approval to market another drug containing the same active ingredient.

“As alleged in the FTC’s complaint, in the midst of the nation’s opioid crisis, a critical opioid-addiction treatment was about to become more affordable,” said Gail Levine, a Deputy Director of the FTC’s Bureau of Competition.  “But Indivior prevented that.  It kept its drug prices high by unlawfully impeding generic manufacturers from competing effectively.”

A Multilateral Effort

The criminal case against Indivior was prosecuted by Randy Ramseyer of the U.S. Attorney’s Office for the Western District of Virginia, Albert P. Mayer and Carol Wallack of the Department of Justice Civil Division’s Commercial Litigation Branch, Charles J. Biro and Matthew J. Lash of the Department of Justice Civil Division’s Consumer Protection Branch, Kristin L. Gray, Joseph S. Hall and Janine M. Myatt of the Virginia Medicaid Fraud Control Unit of the Office of the Virginia Attorney General, and Garth W. Huston of the Federal Trade Commission.  This matter was investigated by the Virginia Attorney General’s Medicaid Fraud Control Unit; FDA - Office of Criminal Investigation; United States Postal Service – Office of Inspector General; and Department of Health and Human Services - Office of Inspector General.

The civil settlement was handled by Edward Crooke of the Civil Division’s Commercial Litigation Branch, Sara Bugbee Winn of the U.S. Attorney’s Office for the Western District of Virginia, and Andrew A. Caffrey III of the U.S. Attorney’s Office for the District of New Jersey.  Assistance was provided by representatives of the HHS Office of Counsel to the Inspector General; the HHS Office of the General Counsel, CMS Division; FDA’s Office of Chief Counsel; the U.S. Attorney’s Office for the Eastern District of Virginia; the U.S. Department of Agriculture Office of the General Counsel; the National Association of Medicaid Fraud Control Units; the Defense Criminal Investigative Service; the Office of Personnel Management - Office of Inspector General; the Department of Veterans’ Affairs Office of Inspector General; the Department of Labor - Office of Inspector General; and TRICARE Program Integrity.

The joint effort advances the goals of the Department’s Prescription Interdiction & Litigation (PIL) Task Force to deploy all available criminal, civil, and regulatory tools to hold opioid manufacturers accountable for unlawful practices and to ensure that prescription opioid products are marketed truthfully. 

Except to the extent admitted as part of the criminal resolution, the claims resolved by the civil settlement are allegations only.  There has been no determination of liability in the civil case.

For more information about the U.S. Attorney’s Office for the Western District of Virginia, visit its website at https://www.justice.gov/usao-wdva.  Additional information about the Consumer Protection Branch and the Civil Fraud Section and their enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch and http://www. justice.gov/civil/fraud-section.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).