District of New Jersey
Press releases recorded for this federal judicial district.
Justice Department Obtains over $2 Million for Service Members Who Terminated Their Motor Vehicle Leases with BMW Financial ServicesRead the Press Release
NEWARK, N.J. – BMW Financial Services N.A. (BMW FS) has agreed to pay over $2 million to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by failing to refund certain up-front car lease payments to 492 service members who lawfully terminated their motor vehicle leases early, U.S. Attorney Craig Carpenito and Acting Assistant Attorney General John Gore of the Justice Department’s Civil Rights Division announced today.
This is the first case brought by the Justice Department involving a motor vehicle lessor’s failure to refund lease amounts to service members who exercised their SCRA rights to terminate their leases.
The SCRA provides service members with protections that permit them to terminate motor vehicle leases early without penalty after entering military service or receiving qualifying military orders for a permanent change of station or to deploy. When service members lawfully terminate motor vehicle leases, the SCRA requires that they be refunded all lease amounts paid in advance.
BMW FS is a New Jersey-based auto financing company that provides auto leasing for customers of BMW, MINI, and Rolls-Royce. Individuals who lease vehicles from BMW FS, including service members, often contribute an up-front monetary amount at lease signing, in the form of a cash payment, credit for a trade-in vehicle, or rebates or other credits. A portion of this up-front amount can be applied to the first month of the lease and certain up-front costs such as licensing and registration fees. The remainder, which is called the capitalized cost reduction (CCR) amount, operates to reduce the monthly payment the lessee must make over the term of the lease.
The Department received complaints from two service members who were denied refunds of pre-paid CCR amounts by BMW FS. In October 2014, Kristi Steck, then a Senior Master Sergeant (SMSgt) in the U.S. Air Force stationed at Andrews Air Force Base in Maryland, leased a vehicle from BMW FS. Through the trade in of her previous car and a dealer rebate, she paid BMW FS an up-front CCR amount of approximately $4,000. SMSgt Steck made regular monthly lease payments for the next 10 months. After receiving orders from the Air Force ordering her to relocate to Japan, SMSgt Steck terminated her lease. BMW FS refused to refund any of the $4,000 she pre-paid when entering into the lease.In February 2015, Technical Sergeant (TSgt) A. Menard, who was also stationed at Andrews Air Force Base, leased a vehicle from BMW FS. TSgt Menard, through a trade in and rebate, paid an up-front CCR amount of approximately $5,000. After making regular monthly lease payments for seven months, TSgt Menard received orders from the Air Force to deploy to Afghanistan. BMW FS refused to refund Tsgt Menard any part of the $5,000 he had paid at the lease signing.
After learning about SMSgt Steck’s and TSgt Menard’s stories, the Department launched an investigation, which was handled jointly by the U.S. Attorney’s Office for the District of New Jersey and the Department’s Civil Rights Division. The investigation revealed that BMW FS had failed to refund any portion of the pre-paid CCR amounts to 492 service members who had lawfully terminated their auto leases.
“The men and women who serve in the armed forces have made enormous sacrifices while selflessly protecting our nation from danger,” said U.S. Attorney Carpenito. “We must honor their sacrifice by ensuring that their rights are protected when duty calls for their relocation or deployment overseas. Through this agreement, we are pleased that hundreds of service members will be compensated for the damages they suffered when they were not refunded pre-paid car lease payments after they were deployed.”
“We ask a great deal of those who serve our nation, including asking them to drop their affairs to deploy or serve in a new location, sometimes at a moment’s notice,” said Acting Assistant Attorney General Gore. “Our men and women in uniform should be able to devote their entire energy to their service and defense of our nation, and the Justice Department is committed to protecting these rights when their obligations to the American people force them to change their plans.”
The agreement resolves a suit filed today by the United States in the U.S. District Court for the District of New Jersey. It covers all leases terminated by service members since Aug. 24, 2011.
The agreement requires BMW FS to refund to each service member portions of the pre-paid CCR amount based on how many days were remaining in the lease. In addition, BMW FS will pay indirect damages to each service member of three times the refund or $500, whichever is larger. The agreement also requires BMW FS to deposit $2,165,518.84 into an escrow account to compensate the 492 service members whose rights were violated under the SCRA. BMW FS also must pay $60,788 to the U.S. Treasury.
The agreement also requires BMW FS to revise its policies and procedures to ensure that service members who terminate their auto leases early receive a full refund of all eligible pre-paid CCR amounts.
The Department’s enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section and U.S. Attorney’s Offices throughout the country. The SCRA provides protections for service members in areas such as evictions, rental agreements, security deposits, pre-paid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments. For more information about the Department’s SCRA enforcement, please visit www.servicemembers.gov.
Service members and their dependents who believe that their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations may be found at http://legalassistance.law.af.mil/content/locator.php.
Individuals who believe their civil rights have been violated may also file a complaint with the U.S. Attorney’s Office for the District of New Jersey at: http://www.justice.gov/usao-nj/civil-rights-enforcement/complaint or may call the U.S. Attorney’s Office’s Civil Rights Complaint Hotline at (855) 281-3339.
The government is represented by Assistant U.S. Attorney Michael E. Campion, Chief of the U.S. Attorney’s Office’s Civil Rights Unit, Civil Division; Assistant U.S. Attorney Christopher Amore, Civil Division; and Trial Attorney Alan Martinson, U.S. Department of Justice, Civil Rights Division, Housing and Civil Enforcement Section.
Two Men Sentenced to Prison for Roles in Trenton Cocaine Distribution ConspiracyRead the Press Release
TRENTON, N.J. – Two Trenton men were both sentenced to over seven years in prison today for conspiring to distribute over a kilogram of cocaine and 100 grams of crack cocaine in the Trenton area, U.S. Attorney Craig Carpenito announced.
Khalfini Richardson, 33, and Capitol T. Wellons, 32, were sentenced today to 156 and 84 months in prison, respectively. Both defendants previously pleaded guilty before U.S. District Judge Michael A. Shipp to Count One of an indictment charging them with conspiracy to distribute and possess 500 grams or more of cocaine and to manufacture, distribute, and possess 28 grams or more of cocaine base. Judge Shipp imposed the sentences today in Trenton federal court.
According to the documents filed in this case and statements made in court, from September 2013 through Jan. 13, 2016, Richardson and Wellons conspired with co-defendants Bobby Williams and William Enmond to distribute cocaine and manufacture crack cocaine from two adjacent residences in Trenton. Richardson and Wellons both admitted that they conspired to distribute and possess 1.72 kilograms of cocaine and 122.6 grams of cocaine base.
In addition to the prison term, Judge Shipp sentenced both Richardson and Wellons to five years of supervised release.
Enmond and Williams have also pleaded guilty. Williams awaits sentencing. Enmond was sentenced July 20, 2017 to 60 months in prison.
U.S. Attorney Carpenito credited special agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge Valerie Nickerson in Newark, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Molly Lorber and Senior Litigation Counsel Joseph Gribko of the U.S. Attorney’s Office Criminal Division in Trenton.
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Defense counsel:
Richardson: Brynn Giannullo Esq., New Brunswick, New Jersey
Wellons: Lawrence George Welle Esq., Wall, New Jersey
Securities Trader Indicted in Scheme That Netted Tens of Millions of Dollars in Illicit ProfitsRead the Press Release
NEWARK, N.J. – A New Jersey-based securities trader was indicted today on additional charges stemming from his alleged role in orchestrating a massive, long-running market manipulation scheme that netted tens of millions of dollars in illegal profits between 2014 and 2016, U.S. Attorney Craig Carpenito announced.
Joseph Taub, 38, of Clifton, New Jersey, was first charged by complaint with securities fraud conspiracy in 2016. Today’s 13-count indictment charges him with securities fraud conspiracy, market manipulation conspiracy, multiple substantive securities fraud and market manipulation counts, and tax fraud conspiracy. Taub will be arraigned before U.S. District Judge John Michael Vazquez at a later date.
According to documents filed in this case and statements made in court:
From 2014 to 2016, Taub and others conspired to manipulate securities prices of numerous public companies by coordinating trading in dozens of brokerage accounts that they secretly controlled. As part of the scheme, Taub and others engaged in a series of near simultaneous transactions in targeted securities that were designed to artificially influence the market price of the securities and induce other market participants to trade based on the false impression that there was real market interest.
Taub and others allegedly used “straw accounts” that were held in their names, the names of their family members, and the names of entities they controlled. Many of the accounts were opened in the names of individuals who neither controlled the accounts nor traded the securities held in the accounts. Taub funded many of these accounts and used the straw account holders to conceal the scheme from regulators and law enforcement.
The fraudulent trades typically involved two types of straw accounts. First, a “Winner Account” purchased a large block of shares in a particular security. Next, a “Loser Account” placed multiple small orders in the same security to create upward pressure on the stock price. Once the price of the security moved higher due to the Loser Account’s manipulative orders, the conspirators sold their large position in the Winner Account and the shares from any executed trades in the Loser Account. While the Loser Accounts would generally lose money, the conspirators expected the gains from the Winner Accounts to more than make up for them.
In addition, Taub allegedly conspired with accountant Shaun Greenwald, 40, of Cedarhurst, New York, and others to defraud the United States by hiding from the brokerage firms and the IRS the identities of 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 and other members of the conspiracy.
The securities fraud conspiracy, market manipulation conspiracy, and tax fraud conspiracy counts each carry a maximum potential penalty of five years in prison. Each substantive count of securities fraud and market manipulation carries a maximum potential penalty of 20 years in prison. All the counts in the indictment also carry a $250,000 fine, or twice of the gross gain or loss from the offenses.
Greenwald pleaded guilty to his role in the scheme on Feb. 21, 2018 and awaits sentencing.
The U.S. Attorney’s Office has filed a separate civil action seeking forfeiture of brokerage accounts in which the manipulative trades were executed, bank and brokerage accounts funded with proceeds of the scheme, and Taub’s interest in companies in which he invested the proceeds of the scheme. Civil forfeiture cases are “in rem” proceedings – proceedings against things. The forfeiture claims in this case are based on allegations that the forfeitable property is proceeds of the securities fraud scheme or is property involved in laundering the proceeds of the scheme. That civil forfeiture action is pending.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and special agents of the U.S. Attorney’s Office, District of New Jersey, with the investigation. He also thanked the SEC’s New York Regional Office for its assistance.
The government is represented by Assistant U.S. Attorneys Daniel Shapiro and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark; and Assistant U.S. Attorneys Sarah Devlin and Barbara Ward, Deputy Chief of the office’s Asset Recovery and Money Laundering Unit.
The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Defense counsel: Lawrence C. Lustberg Esq. and Steven Y. Yurowitz Esq.
New York Accountant Pleads Guilty in Stock Manipulation Scheme That Netted Millions in Illicit ProfitsRead the Press Release
NEWARK, N.J. – A Cedarhurst, New York, man today admitted his role in a long-running market manipulation scheme that netted millions in illegal profits between 2014 and 2016, U.S. Attorney Craig Carpenito announced.
Shaun Greenwald, 40, pleaded guilty before U.S. District Judge John Michael Vazquez to an information charging him with one count of securities fraud conspiracy and one count of tax fraud conspiracy.
According to documents filed in this case and statements made in court:
From 2014 to 2016, Greenwald, Joseph Taub, 38, of Clifton, New Jersey, and others conspired to manipulate securities prices of numerous public companies by coordinating trading in dozens of brokerage accounts that they secretly controlled.
These “straw accounts” were held in the conspirators’ own names, the names of their family members, and the names of entities they controlled. Many of the accounts were opened in the names of individuals who neither controlled the accounts nor traded the securities held in the accounts. Taub funded many of these accounts and used the account holders to conceal the scheme from regulators and law enforcement.
The fraudulent trades typically involved two types of straw accounts. First, a “Winner Account” purchased a large block of shares in a particular security. Next, a “Loser Account” placed multiple small orders in the same security to create upward pressure on the stock price. Once the price of the security moved higher due to the Loser Account’s manipulative orders, the conspirators sold their large position in the Winner Account and the shares from any executed trades in the Loser Account. While the Loser Accounts would generally lose money, the conspirators expected the gains from the Winner Accounts to more than make up for them.
Taub was one of Greenwald’s clients. As part of the scheme, Greenwald opened brokerage accounts in his name or entities that he controlled. However, the vast majority of the funding for these accounts was provided by Taub, which Greenwald concealed on the account opening forms. Greenwald then provided the log-in and password information to Taub so that he and others could use the accounts for trades. In return, Greenwald was paid a portion of the profits made from his accounts.
Greenwald also admitted that he performed accounting services for the conspiracy, including calculated the taxes on profits made from the straw accounts. Taxes were paid at the straw account holders’ tax rates, which were typically lower than Taub’s rates, even though the account holders – per their agreements with Taub – were only getting a fraction of the profits. While Taub did provide the account holders funds for the taxes on his portion of the straw account profits, he failed to declare any of this income on his tax returns.
Each count to which Greenwald pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for June 5, 2018.Taub was charged by complaint on Dec. 12, 2016. The charges and allegations against Taub are merely accusations, and he is presumed innocent unless and until proven guilty.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and special agents of the U.S. Attorney’s Office, District of New Jersey, with the investigation. He also thanked the SEC’s New York Regional Office for its assistance.
The government is represented by Assistant U.S. Attorneys Daniel Shapiro and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark; and Assistant U.S. Attorneys Sarah Devlin and Barbara Ward, Acting Chief of the office’s Asset Forfeiture and Money Laundering Unit.
Defense counsel: Marc Agnifilo Esq. and Joshua Kirshner Esq., New York
Hudson County Man Sentenced to 46 Months in Prison for Robbing Jersey City BankRead the Press Release
NEWARK, N.J. – A Bayonne, New Jersey, man was sentenced today to 46 months in prison for robbing Bayonne Community Bank in Jersey City, New Jersey, on May 25, 2016, U.S. Attorney Craig Carpenito announced.
Patrick O’Boyle, 60, previously pleaded guilty before U.S. District Judge Susan D. Wigenton to an indictment charging him with one count of bank robbery. Judge Wigenton imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
On May 25, 2016, O’Boyle robbed the Bayonne Community Bank by approaching the teller and demanding all “your 100s, 50s, and 20s and make it quick because my car is double parked outside.” O’Boyle had his left arm clutched at his side as if he had something under his hooded sweatshirt, which the teller thought might have been a gun. The teller handed him cash, and O’Boyle fled the bank.
In addition to the prison term, Judge Wigenton sentenced O’Boyle to three years of supervised release.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and officers of the Jersey City Police Department, under the direction of Director James Shea, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Ari B. Fontecchio of the U.S. Attorney’s Office Criminal Division in Newark.
Atlantic County Man Admits Health Care Fraud Conspiracy Targeting State Health Benefits ProgramsRead the Press Release
CAMDEN, N.J. – A retail director for a local candy company today admitted defrauding New Jersey state health benefits programs and other insurers out of over $2 million by submitting fraudulent claims for medically unnecessary prescriptions, U.S. Attorney Craig Carpenito and New Jersey Attorney General Gurbir S. Grewal announced.
Nicholas Tedesco, 44, of Linwood, New Jersey, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court to an information charging him with conspiracy to commit health care fraud.
Nicholas Tedesco’s brother and a leader in the conspiracy, Matthew Tedesco, pleaded guilty to his role in the scheme on Aug. 17, 2017.
According to documents filed in this case and statements made in court:
From January 2015 through April 2016, Nicholas Tedesco and others recruited individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the information as the “Compounding Pharmacy.”
The conspirators knew that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply. The conspirators also knew that some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had insurance coverage for these particular medications.
An entity referred to in the information 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, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid.
Nicolas Tedesco and others recruited public employees and other individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications that were not medically necessary. The prescriptions were faxed to the Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.
The pharmacy then paid one of Nicholas Tedesco’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to Nicholas Tedesco and other members of the conspiracy. Nicholas Tedesco paid individuals with insurance coverage in cash to reward them for obtaining prescriptions.
According to the information, the Pharmacy Benefits Administrator paid Compounding Pharmacy over $50 million for compounded medications mailed to individuals in New Jersey.
As part of the plea agreement, Nicholas Tedesco must forfeit $782,766.56 in criminal proceeds and pay restitution of at least $2,069,847.42. He faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for June 1, 2018.
Fourteen other conspirators – including Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, Timothy Frazier, Michael Pilate, and Shawn Sypherd – pleaded guilty from August through February 2018 and await sentencing.
U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark, IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and the U.S. Department of Labor, Office of Inspector General, under the direction of Acting Special Agent in Charge Peter Nozka in New York, with the investigation leading to the guilty plea. He also thanked the Pensions and Financial Transactions Section of the Division of Law, within the Attorney General’s Office, under the direction of Attorney General Grewal and Division Chief Eileen Schlindwein Den Bleyker, for its assistance in the investigation.
The government is represented by Assistant U.S. Attorneys Jacqueline M. Carle and R. David Walk, Jr. of the U.S. Attorney’s Office in Camden.
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Defense counsel: David Jay Glassman Esq., Philadelphia
Middle Township Teacher Admits Health Care Fraud Conspiracy Targeting State Health Benefits ProgramsRead the Press Release
CAMDEN, N.J. – A teacher in the Middle Township public schools today admitted defrauding New Jersey state health benefits programs and other insurers out of over $2,000,000 by submitting fraudulent claims for medically unnecessary prescriptions, U.S. Attorney Craig Carpenito and New Jersey Attorney General Gurbir S. Grewal announced.
Shawn Sypherd, 46, of Marmora, New Jersey, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court 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 supposed to be 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.
From January 2015 through April 2016, Sypherd served as a recruiter in the conspiracy and persuaded individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the informations as the “Compounding Pharmacy.” The conspirators learned that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply.
The conspirators also learned that some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had insurance coverage for these particular compound medications. An entity referred to in the information 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, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid.
Sypherd and others recruited public employees and other individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications from the Compounding Pharmacy which were not medically necessary. The prescriptions were faxed to the Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.
The pharmacy then paid one of Sypherd’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to Sypherd and other members of the conspiracy. Sypherd paid individuals with insurance coverage in cash to reward them for obtaining prescriptions.
According to the information, the Pharmacy Benefits Administrator paid Compounding Pharmacy over $50 million for compounded medications mailed to individuals in New Jersey.
Sypherd received approximately $354,264.06 for his role in the scheme.
As part of the plea agreement, Sypherd must forfeit $354,264.06 in criminal proceeds and pay restitution of at least $2,439,548.32.
The defendant faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for June 1, 2018.
Thirteen other conspirators – Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, Timothy Frazier, and Michael Pilate – pleaded guilty from August through January 2018 and await sentencing.
U.S. Attorney Carpenito credited agents of the Federal Bureau of Investigation’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark, IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen 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 pleas. 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 Eileen Schlindwein Den Bleyker, for its assistance in the investigation.
The government is represented by Assistant U.S. Attorneys Jacqueline M. Carle and R. David Walk, Jr. of the U.S. Attorney’s Office in Camden.
Defense counsel: Marc Neff, Esq., Philadelphia, PA
Two Russian Nationals Sentenced to Prison for Massive Data Breach ConspiracyRead the Press Release
Two Russian nationals were sentenced yesterday to federal prison terms for their respective roles in a worldwide hacking and data breach scheme that targeted major corporate networks, compromised 160 million credit card numbers and resulted in hundreds of millions of dollars in losses – one of the largest such schemes ever prosecuted in the United States.
The sentences were announced by Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, First Assistant U.S. Attorney William E. Fitzpatrick of the District of New Jersey and Director Randolph D. Alles of the U.S. Secret Service.
Vladimir Drinkman, 37, of Syktyvkar and Moscow, Russia, was sentenced to 144 months in prison. Drinkman previously pleaded guilty before U.S. District Judge Jerome B. Simandle of the District of New Jersey to one count of conspiracy to commit unauthorized access of protected computers and one count of conspiracy to commit wire fraud in a manner affecting a financial institution. Dmitriy Smilianets, 34, of Moscow, previously pleaded guilty to conspiracy to commit wire fraud in a manner affecting a financial institution and was sentenced to 51 months and 21 days in prison. Both men pleaded guilty in September 2015 before Judge Simandle, who imposed the sentences yesterday in Camden, New Jersey federal court. In addition to the prison terms, Judge Simandle sentenced Drinkman to three years of supervised release and Smilianets to five years of supervised release.
Drinkman and Smilianets were arrested in the Netherlands on June 28, 2012. Drinkman was extradited to the District of New Jersey on Feb. 17, 2015, and Smilianets was extradited on Sept. 7, 2012.
“Drinkman and Smilianets not only stole over 160 million credit card numbers from credit card processors, banks, retailers, and other corporate victims, they also used their bounty to fuel a robust underground market for hacked information,” said Acting Assistant Attorney General Cronan. “While mega breaches like these continue to affect millions of individuals around the world, hackers and would-be hackers should know that the Department of Justice will use all available tools to identify, arrest, and prosecute anyone who attacks the networks on which businesses and their customers rely.”
“These defendants operated at the highest levels of illegal hacking and trafficking of stolen identities,” First Assistant U.S. Attorney Fitzpatrick. “They used their sophisticated computer skills to infiltrate computer networks, steal information and sell it for a profit. Perpetrators of some of the largest data breaches in history, these defendants posed a real threat to our economy, privacy and national security, and cannot be tolerated.”
“This case demonstrates the investigative capabilities of the U.S. Secret Service and the collaborative efforts of our law enforcement partners, specifically the U.S. Attorney’s Office for the District of New Jersey, and the Dutch Ministry of Security and Justice,” Special Agent in Charge McKevitt said. “The Secret Service will continue to develop innovative ways to protect the financial infrastructure of the United States and bring to justice cyber criminals who use emerging technologies to conduct business.”
According to documents filed in this case and statements made in court:
Drinkman and Smilianets admitted to their roles in a conspiracy with three co-defendants to hack into the networks of corporate victims engaged in financial transactions, retailers that received and transmitted financial data and other institutions with information that the conspirators could exploit for profit, including the computer networks of NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard.
According to the indictment in this case and statements made in court, the five defendants each played specific roles in the scheme. Drinkman and Alexandr Kalinin, 31, of St. Petersburg, Russia, allegedly specialized in penetrating network security and gaining access to the corporate victims’ systems. Drinkman and Roman Kotov, 36, of Moscow, allegedly specialized in mining the networks to steal valuable data. The hackers hid their activities using anonymous web-hosting services allegedly provided by Mikhail Rytikov, 30, of Odessa, Ukraine. Smilianets sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.
Drinkman and Kalinin were previously charged in New Jersey as “Hacker 2” and “Hacker 1” in a 2009 indictment charging Albert Gonzalez, 34, of Miami, Florida, in connection with five corporate data breaches – including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: the first charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.
Kalinin, Kotov and Rytikov remain at large.
The Attacks
According to documents filed in this case and statements made in court, the five defendants allegedly penetrated the computer networks of corporate victims and stole user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders, acquiring more than 160 million card numbers through hacking.
The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programing language designed to manage data held in particular types of databases; the hackers allegedly identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants allegedly placed malicious code, or malware, in the system. This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network. In some cases, the defendants lost access to the system due to companies’ security efforts, but were allegedly able to regain access through persistent attacks.
Instant message chats obtained by law enforcement revealed the defendants allegedly often targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway. The defendants had malware implanted in multiple companies’ servers for more than a year.
The defendants allegedly used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then allegedly used an array of computers located around the world to store the stolen data and ultimately sell it to others.Selling the Data
According to documents filed in the case and statements made in court, after acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was in charge of sales, selling the data only to trusted identity theft wholesalers. He charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by withdrawing money from ATMs or making purchases with the cards.
Covering Their Tracks
According to documents filed in the case and statements made in court, the defendants allegedly used a number of methods to conceal the scheme. Unlike traditional Internet service providers, Rytikov allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.
Over the course of the conspiracy, the defendants allegedly communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators attempted to meet in person.
To protect against detection by the victim companies, the defendants allegedly altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also worked to evade existing protections by security software.
As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses – including more than $300 million in losses reported by just three of the corporate victims – and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges. The charges and allegations contained in indictments against the remaining defendants are merely accusations and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by special agents of the U.S. Secret Service, Newark Field Office and Criminal Investigative Division. The case is being prosecuted by by Trial Attorneys Andrew S. Pak and Richard Green and Deputy Chief of Litigation James Silver of the Criminal Division’s Computer Crime and Intellectual Property Section, and Assistant U.S. Attorney Justin Herring of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit and the Justice Department’s Office of International Affairs. The Criminal Division’s Office of International Affairs also provided substantial assistance in this case.
Acting Assistant Attorney General John P. Cronan and U.S. Attorney Carpenito thanked public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police. They also credited the special agents of the U.S. Secret Service, Newark Field Office, under the direction of Special Agent in Charge Mark McKevitt, and the Criminal Investigative Division, under the direction of Special Agent in Charge Michael D’Ambrosio, for the ongoing investigation leading to yesterday’s sentencings.
Owner of New Jersey Hedge Fund Guilty of Wire Fraud and Securities Fraud for Defrauding Investors of $4 MillionRead the Press Release
NEWARK, N.J. – The owner and manager of a New Jersey hedge fund was convicted by a federal jury today for defrauding two investors of $4 million, U.S. Attorney Craig Carpenito announced.
Nicholas Lattanzio, 61, of Montclair, New Jersey, was convicted on all counts of an indictment charging him with two counts of wire fraud and two counts of securities fraud following a three-week trial before the Honorable Kevin McNulty in Newark federal court.
According to documents filed in this case and the evidence at trial:
From June 2013 through November 2014, Lattanzio orchestrated a large-scale scheme through which he, his hedge fund, the Black Diamond Capital Appreciation Fund L.P. (BD Fund), and several other related entities collected millions of dollars in upfront fees from two unsuspecting corporate investors in exchange for the promise of future loans or investment opportunities that did not materialize. Instead of investing the victims’ money as promised, Lattanzio stole the majority of the funds and used them to pay himself more than $500,000 in salary and for numerous personal expenses, including the purchase of a $1 million home in Montclair, New Jersey, a new Range Rover, a diamond ring that cost $100,000, and the payment of half a million dollars in credit card debt that he incurred for other personal expenses. Lattanzio lied to the victims about the status of their funds to conceal the scheme and mislead them into believing that their investments were safe.
The wire and securities fraud counts with which Lattanzio was convicted each carry a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. The Government also forfeited a 2013 BMW 650 and various pieces of jewelry, and is seeking forfeiture of the home Lattanzio purchased in Montclair, New Jersey.
U.S. Attorney Carpenito credited special agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Timothy Gallagher in Newark, for the investigation leading to today’s conviction. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Marc P. Berger, and the N.J. Bureau of Securities, within the State Attorney General’s Division of Consumer Affairs, under the direction of Attorney General Gurbir S. Grewal.
The government is represented by Assistant U.S. Attorneys Nicholas P. Grippo and Daniel V. Shapiro of the Economic Crimes Unit, and Assistant U.S. Attorney Peter Gaeta of the Office’s Asset Recovery and Money Laundering Unit.
Defense Counsel: John D. Arseneault, Esq. and John J. Roberts, Esq., Chatham, New Jersey
Man Admits Role in Identity Theft and Wire Fraud ConspiracyRead the Press Release
NEWARK N.J. – A Georgia man today admitted using a fake driver’s license in order to obtain a check issued in response to false statements and representations, U.S. Attorney Craig Carpenito announced.
Temilade Adekunle, 30, of Lawrenceville, Georgia, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an information charging him with one count of aggravated identity theft and one count of conspiracy to commit wire fraud.
According to documents filed in this case and statements made in court:
Adekunle was a member of a conspiracy to fraudulently obtain money, including by committing identity theft, impersonating account holders and obtaining money from their accounts. On Aug. 8, 2017, a member of the conspiracy contacted an entity where an individual (Victim 2) had an account. The caller impersonated Victim 2 and asked to withdraw approximately $85,000 from the account. In response, the entity sent a check through a mail carrier to the account holder’s address.
A member of the conspiracy caused the mail carrier to hold the package containing the check for Victim 2 at one of its branch locations. On Aug. 14, 2017, Adekunle entered the branch and, using a driver’s license with Adekunle’s picture and Victim 2’s name and address, obtained the package containing the check. Sentencing is scheduled for May 30, 2018.
The conspiracy to commit wire fraud charge carries a maximum penalty of 20 years in prison, and a fine of $250,000, or twice the gross gain to the defendant or twice the gross loss to others, whichever is greater. The aggravated identity theft charge carries a sentence of two years in prison, which must be served consecutively to any prison sentence ordered for the conspiracy to commit wire fraud charge, and a fine of $250,000, or twice the gross gain to the defendant or twice the gross loss to others, whichever is greater.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and the U.S. Department of Labor, Office of Inspector General, under the direction of Special Agent in Charge Michael C. Mikulka in New York, with the investigation leading to today’s guilty plea. He also thanked the Unified Police Department of Greater Salt Lake, Utah, under the direction of Sheriff Rosie Rivera, for its role in the investigation.
The government is represented by Assistant U.S. Attorney Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
Defense counsel: Jean Barrett Esq., Montclair, New Jersey
Hammonton Man Pleads Guilty to Conspiracy to Distribute Crystal MethamphetamineRead the Press Release
CAMDEN, N.J. - A Hammonton, N.J., man admitted today to engaging in a conspiracy to distribute 50 grams or more of crystal methamphetamine to customers in the Hammonton area of Atlantic County, New Jersey.
Ignacio Cuesta, 41, of Atlantic City, N.J., pleaded guilty before U.S. District Judge Noel Hillman in Camden federal court to an Information charging him with one count of conspiracy to distribute and to possess with intent to distribute 50 grams or more of methamphetamine.
Cuesta was arrested on June 24, 2016, in Hammonton, New Jersey after agreeing to sell two pounds of crystal methamphetamine to an undercover narcotics detective. The two pounds of crystal methamphetamine were seized from Cuesta’s Ford Expedition, along with approximately $9,000 in cash. Several additional pounds of crystal methamphetamine possessed by Cuesta were found hidden in vehicles and buried in a bucket in the ground in a parking lot for a local business in Hammonton. Law enforcement officers also recovered additional cash inside the trunk of a vehicle owned and used by Cuesta, which was parked in the same parking lot in Hammonton. The total seized from Cuesta and this property was over $100,000. As part of the plea agreement, Cuesta agreed to forfeit all of the cash and two vehicles that were seized on the day of the arrest.
The drug conspiracy charge carries a minimum penalty of 10 years in prison, a maximum penalty of life imprisonment, and a maximum potential fine of up to $10,000,000. Sentencing is scheduled for May 18, 2018.
U.S. Attorney Carpenito credited special agents with the Drug Enforcement Agency, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, with the investigation. He also thanked the Camden County Prosecutor’s Office, under the direction of Prosecutor Mary Eva Colalillo, for its assistance.
The government is represented by Assistant U.S. Attorney Patrick C. Askin of the U.S. Attorney’s Office’s Criminal Division in Camden.
Defense counsel: Patrick Duffy, Esquire
Essex County, New Jersey, Man Sentenced to 20 Years for Robbing Two Banks, Firing A WeaponRead the Press Release
NEWARK, N.J. – An Essex County, New Jersey, man was sentenced to 20 years in prison for robbing the same Capital One Bank in Newark twice, including once in an armed robbery, U.S. Attorney Craig Carpenito announced.
Gregory A. Jones, 61, of Newark, was previously convicted of one count of bank robbery, one count of armed bank robbery, and one count of using a firearm during a crime of violence. Jones was convicted following a one-week trial before U.S. District Judge Kevin McNulty, who imposed today’s sentence in Newark federal court.
According to documents filed in this case and the evidence at trial:
On May 6, 2014, Jones entered the Capital One Bank wearing dark glasses and a scarf around his head and presented the teller a note demanding cash. After Jones left the bank with stolen money a hidden dye pack burst, and he left his glasses, scarf, and hat at the scene of the crime. Law enforcement officers recovered the glasses, hat, and scarf near the bank next to currency, saturated with ink from the dye pack. DNA recovered from the glasses, hat, and scarf matched a DNA sample that was lawfully obtained from Jones.
On Sept. 19, 2014, Jones entered the bank again, brandished a firearm from underneath his sweatshirt, and told a teller to give him money, stating that he had a gun and would shoot. Jones fired the weapon into the ceiling and left with several thousands of dollars. He was later identified using surveillance video and witness statements.
U.S. Attorney Carpenito credited special agents with the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; N.J. State Police, under the direction of Col. Patrick J. Callahan; the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Robert D. Laurino; and the Newark Division of Public Safety, under the direction of Public Safety Director Anthony Ambrose, with the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Daniel Shapiro of the U.S. Attorney’s Office Criminal Division in Newark.
Defense counsel: Assistant Federal Defenders Carol Gillen and David Holman
Two Russian Nationals Sentenced to Prison for Massive Data Breach ConspiracyRead the Press Release
CAMDEN, N.J. – Two Russian nationals were sentenced today to federal prison terms for their respective roles in a worldwide hacking and data breach scheme that targeted major corporate networks, compromised 160 million credit card numbers and resulted in hundreds of millions of dollars in losses – the largest such scheme ever prosecuted in the United States.
The sentencings were announced by New Jersey, Acting U.S. Attorney William E. Fitzpatrick, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, and Mark McKevitt, Special Agent in Charge of the U.S. Secret Service Newark Field Office.
Vladimir Drinkman, 37, of Syktyvkar and Moscow, Russia, previously pleaded guilty before U.S. District Judge Jerome B. Simandle of the District of New Jersey to one count of conspiracy to commit unauthorized access of protected computers and one count of conspiracy to commit wire fraud. He was sentenced to 144 months in prison. Dmitriy Smilianets, 34, of Moscow, previously pleaded guilty to conspiracy to commit wire fraud in a manner affecting a financial institution and was sentenced to 51 months and 21 days (in prison) time served. Both men pleaded guilty in September 2013 before Judge Simandle, who imposed the sentences today in Camden federal court.
Drinkman and Smilianets were arrested in the Netherlands on June 28, 2012. Drinkman was extradited to the District of New Jersey on Feb. 17, 2015, and Smilianets was extradited on Sept. 7, 2012.
“These defendants operated at the highest levels of illegal hacking and trafficking of stolen identities,” Acting U.S. Attorney Fitzpatrick said. “They used their sophisticated computer skills to infiltrate computer networks, steal information and sell it for a profit. Perpetrators of some of the largest data breaches in history, these defendants posed a real threat to our economy, privacy and national security, and cannot be tolerated.”
“Drinkman and Smilianets not only stole over 160 million credit card numbers from credit card processors, banks, retailers, and other corporate victims, they also used their bounty to fuel a robust underground market for hacked information,” Acting Assistant Attorney General Cronan said. “While mega breaches like these continue to affect millions of individuals around the world, hackers and would-be hackers should know that the Department of Justice will use all available tools to identify, arrest, and prosecute anyone who attacks the networks on which businesses and their customers rely.”
“This case demonstrates the investigative capabilities of the U.S. Secret Service and the collaborative efforts of our law enforcement partners, specifically the U.S. Attorney’s Office District of New Jersey, and the Dutch Ministry of Security and Justice,” Special Agent in Charge McKevitt said. “The Secret Service will continue to develop innovative ways to protect the financial infrastructure of the United States and bring to justice cyber criminals who use emerging technologies to conduct business.”
According to documents filed in this case and statements made in court:
Drinkman, Smilianets and three co-defendants hacked into the networks of corporate victims engaged in financial transactions, retailers that received and transmitted financial data and other institutions with information that the conspirators could exploit for profit, including the computer networks of NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard.
The five defendants each played specific roles in the scheme. Drinkman and Alexandr Kalinin, 31, of St. Petersburg, Russia, specialized in penetrating network security and gaining access to the corporate victims’ systems. Drinkman and Roman Kotov, 36, of Moscow, also a hacker, specialized in mining the networks to steal valuable data. The hackers hid their activities using anonymous web-hosting services provided by Mikhail Rytikov, 30, of Odessa, Ukraine. Smilianets sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.
Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 34, of Miami, Florida, in connection with five corporate data breaches – including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported. Gonzalez is currently serving 20 years in federal prison for those offenses. Kalinin is also charged in two federal indictments in the Southern District of New York: the first charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions. Rytikov was previously charged in the Eastern District of Virginia with an unrelated scheme.
Kalinin, Kotov and Rytikov are fugitives.
The Attacks
The five defendants penetrated the computer networks of corporate victims and stole user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders. The conspirators allegedly acquired more than 160 million card numbers through hacking.
The initial entry was often gained using a “SQL injection attack.” SQL, or Structured Query Language, is a type of programing language designed to manage data held in particular types of databases; the hackers identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network. Once the network was infiltrated, the defendants placed malicious code, or malware, in the system. This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network. In some cases, the defendants lost access to the system due to companies’ security efforts, but were able to regain access through persistent attacks.
Instant message chats obtained by law enforcement revealed the defendants often targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway. The defendants had malware implanted in multiple companies’ servers for more than a year.
The defendants used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks. The defendants then used an array of computers located around the world to store the stolen data and ultimately sell it to others.
Selling the Data
After acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators sold it to resellers around the world. The buyers then sold the dumps through online forums or directly to individuals and organizations. Smilianets was in charge of sales, selling the data only to trusted identity theft wholesalers. He charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers. Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by withdrawing money from ATMs or making purchases with the cards.
Covering Their Tracks
The defendants used a number of methods to conceal the scheme. Unlike traditional Internet service providers, Rytikov allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.
Over the course of the conspiracy, the defendants communicated through private and encrypted communications channels to avoid detection. Fearing law enforcement would intercept even those communications, some of the conspirators attempted to meet in person.
To protect against detection by the victim companies, the defendants altered the settings on victim company networks to disable security mechanisms from logging their actions. The defendants also worked to evade existing protections by security software.
* * *
As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions in losses – including more than $300 million in losses reported by just three of the corporate victims – and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges. The charges and allegations contained in indictments against the remaining defendants are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
In addition to the prison terms, Judge Simandle sentenced Drinkman and Smilianets to three years of supervised release.
Acting U.S. Attorney Fitzpatrick and Acting Assistant Attorney General Cronan credited the special agents of the U.S. Secret Service, Newark Field Office, under the direction of Special Agent in Charge McKevitt, and the Criminal Investigative Division, under the direction of Special Agent in Charge Michael D’Ambrosio, for the ongoing investigation leading to today’s sentencings. They also thanked public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police.
The government is represented by Assistant U.S. Attorney Justin Herring of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit, Trial Attorneys Richard Green of the Criminal Division’s Computer Crime and Intellectual Property Section, and Judith Friedman of the Office of International Affairs.
Previously Convicted Felon from Essex County Admits Firearms Possession, Drug Distribution OffensesRead the Press Release
NEWARK, N.J. – A Newark man with at least six prior felony convictions today admitted distributing narcotics and possessing multiple firearms, including two assault rifles and a 12-guage shotgun, U.S. Attorney Craig Carpenito announced.
Carlos Bess, 37, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an indictment charging him with two counts of illegal possession of a firearm as a convicted felon and four counts of distribution and possession with intent to distribute heroin and cocaine.
According to documents filed in this case and statements made in court:
Bess admitted that as a previously convicted felon, he knowingly possessed multiple firearms, including two Rebel Arms AR-15 rifles, a loaded .357 revolver, two loaded .380 pistols, a loaded 9 millimeter pistol, and a 12-gauge shotgun. Bess also admitted distributing heroin in an around Newark on Sept. 30, 2015 and Dec. 1, 2015, and knowingly possessing the heroin and more than 500 grams of cocaine that were found at his residence when he was arrested in December 2015. Sentencing is scheduled for May 31, 2018.
U.S. Attorney Carpenito credited special agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), under the direction of Special Agent in Charge John B. Devito, and special agents with the Drug Enforcement Administration’s (DEA) New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark.
The government is represented by Assistant U.S. Attorney Melissa Wangenheim of the U.S. Attorney’s Office Organized Crime/Drug Enforcement Task Force Unit in Newark.
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Defense Counsel: Frank Arleo, Esq., West Orange, New Jersey
New York Man Admits Orchestrating $45 Million Dollar Compounding Pharmacy SchemeRead the Press Release
NEWARK, N.J. – A North Tonawanda, New York, man today admitted running a large-scale scheme to defraud private and federally-funded health care benefit programs out of millions of dollars by submitting fraudulent claims for medically unnecessary compounded medications, U.S. Attorney Craig Carpenito announced.
Steven M. Butcher, 39, a former pharmaceutical sales representative turned owner and operator of MedMax LLC, a marketing company for compounded medications, pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to an information charging him with conspiracy to commit health care fraud and violate the Anti-Kickback Statute.
According to documents filed in this case and statements made in court:
Butcher admitted that from July 2014 through April 2016, he organized a large-scale scheme to defraud health insurance plans by submitting phony claims for medically unnecessary prescription compounded medications, including scar creams, pain creams, and metabolic supplements marketed by MedMax for certain compounding pharmacies.
Through MedMax, Butcher and others targeted individuals covered by private and federally-funded insurance plans that paid for compounded medications and convinced these individuals to obtain them regardless of medical necessity. Butcher also admitted that from December 2014 through June 2015, he conspired with others to pay kickbacks to persuade individuals to bill TRICARE – a health care benefit program for members of the military and their families – for medically unnecessary compounded medications.
During the scheme, Butcher would either send prescriptions directly to a compounding pharmacy or to a billing distribution company, which would then refer the prescription to a particular compounding pharmacy and submit a claim to the appropriate health insurance plan on behalf of that pharmacy. In return, Butcher received anywhere between 40 and 53 percent of the reimbursement received for each paid claim. At that time, health insurance plans were reimbursing compounding pharmacies anywhere between $3,000 and $43,000 for each compounded prescription.
To maximize profit in the compounding scheme, Butcher recruited several individuals as “sales representatives” who were paid a certain percentage for each compounded medication that they caused to be billed to a targeted health insurance plan. If a sales representative was a direct beneficiary of a targeted health insurance plan, Butcher paid them to obtain medically unnecessary compounded medications for themselves or their family. In addition, Butcher paid sales representatives for any individual that they recruited to the scheme.
For instance, Butcher recruited former pharmaceutical employee Peter Pappas, 45, of Drexel Hill, Pennsylvania. As a MedMax sales representative, Pappas received medically unnecessary prescriptions for himself and also recruited several other individuals, including other former pharmaceutical sales representatives Jason Cerge, 41, of Media, Pennsylvania, and Julie Andresen, 40, of Haddonfield, New Jersey. Cerge recruited an individual identified in the information as “CC-1,” a New Jersey resident who targeted TRICARE beneficiaries.
Butcher paid Pappas for each of his personal compounded prescriptions and for each medically unnecessary medication Cerge, CC-1, and Andresen caused to be billed to a targeted health insurance plan.
Butcher and other conspirators, including Pappas, Cerge, and Andresen, took advantage of their relationships with physicians and other health care professionals to get prescriptions. For instance, Butcher used his relationship with an individual identified in the information as “Physician Assistant 1,” to request that Physician Assistant 1 prescribe several medically unnecessary compounded medications for TRICARE beneficiaries. Physician Assistant-1 agreed and Butcher and others profited from phony claims to TRICARE.
As part of his plea agreement, Butcher must forfeit $4,584,597.92 in criminal proceeds and pay restitution of at least $45 million.
Of the $45 million loss Butcher caused to health care benefit programs, at least $3 million was attributable to TRICARE.
For the conspiracy to commit health care fraud charge, Butcher faces a statutory maximum of 10 years in prison. For the conspiracy to violate the Anti-Kickback Statute charge, Butcher faces a statutory maximum of five years in prison. Each offense is also punishable by a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for May 18, 2018.
Pappas, Andresen and Cerge have all pleaded guilty to their roles in the scheme. Pappas and Cerge await sentencing. Andresen was sentenced Feb. 7, 2018 to 15 months in prison.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; and the U.S. Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Leigh-Alistair Barzey, with the ongoing investigation leading to today’s plea.
The government is represented by Assistant U.S. Attorneys Erica Liu and Vikas Khanna, Deputy Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark and Assistant U.S. Attorney Jafer Aftab of the Asset Forfeiture and Money Laundering Unit.
To date, the New Jersey U.S. Attorney’s Office has prosecuted 19 individuals involved in various compounding pharmacy schemes across New Jersey to defraud health care benefit programs, and has recovered more than $4 million through forfeiture and restitution. These schemes have caused a total loss of more than $70 million to the health care industry, which has affected state, federal and private health care benefit programs.
The New Jersey U.S. Attorney’s Office reorganized its health care practice in 2010 and created a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since that time, the office has recovered more than $1.38 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
Defense counsel: Herbert L. Greenman Esq., Buffalo, New York
Bronx Man Sentenced to 51 Months in Prison for Transporting Multiple Kilograms of Heroin as Part of A Cross-Country Drug Distribution ConspiracyRead the Press Release
TRENTON, N.J. – A Bronx, New York, man was sentenced to 51 months in prison for transporting fifteen kilograms of heroin hidden in a secret compartment on Christmas Eve in 2014, United States Attorney Craig Carpenito announced.
Dany Francisco-Valerio, 44, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an Information charging him with conspiracy to distribute heroin. Judge Sheridan imposed the sentence today in federal court.
According to documents filed in this case and statements made in court:
In or around December 2014, Francisco-Valerio engaged in a conspiracy with members of a drug trafficking organization to transport and distribute kilogram quantities of heroin. On December 24, 2014, Francisco-Valerio was arrested in Warren County while transporting fifteen kilograms of heroin contained in a hidden compartment in his vehicle. Vionel Rondon Cortorreal, Francisco-Valerio’s conspirator, has also pleaded guilty before Judge Sheridan and is awaiting sentencing.
In addition to the prison term, Judge Sheridan sentenced Francisco-Valerio to 3 years of supervised release.
U.S. Attorney Carpenito credited the Drug Enforcement Administration New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, and officers of the New Jersey State Police, under the direction of Acting Superintendent Col. Patrick J. Callahan, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorneys Thomas S. Kearney and Jamari Buxton of the U.S. Attorney’s Office OC/Gangs Unit in Newark.
Defense counsel: John D. Lynch, Esq., Jersey City, New Jersey
New York Man Charged with Conspiracy to Distribute CocaineRead the Press Release
NEWARK, N.J. – A Bronx, New York, man who was arrested with 24 kilograms of narcotics stored in the trunk of a taxi made his initial appearance today in Newark federal court, U.S. Attorney Craig Carpenito announced.
Franklin Grullon, 43, is charged by complaint with one count of conspiracy to distribute five kilograms or more of cocaine. He appeared this afternoon before U.S. Magistrate Judge James B. Clark III and was released on $200,000 unsecured bond.
According to the complaint:
During a Drug Enforcement Administration (DEA) investigation of a drug trafficking ring operating in New Jersey, New York, and elsewhere, law enforcement officers learned that Grullon was supposed to collect a shipment of narcotics in the area.
On Feb. 11, 2018, law enforcement officers observed Grullon drive a New York taxi to meet with an individual at a gas station and truck stop in Pennsylvania. After the two met, Grullon drove away and checked into a hotel in White Haven, Pennsylvania.
Shortly thereafter, law enforcement officers spoke to Grullon, who said that he traveled to the area to drop off a passenger at a nearby mall. However, a search of the taxi’s trunk revealed two bags containing a total of 24 kilograms of a substance that tested positive for cocaine.
The cocaine distribution conspiracy charge carries a mandatory minimum penalty of 10 years in prison, a maximum of life imprisonment, and a $10 million fine.
The charge and allegations in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
U.S. Attorney Carpenito credited special agents of the DEA, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, as well as the DEA Scranton Resident Office, with the investigation leading to the charge.
The government is represented by Assistant U.S. Attorney Meredith Williams of the U.S. Attorney’s Office Organized Crime Drug Enforcement Task Force/Narcotics Unit in Newark.
Defense counsel: Lisa Mack Esq., Assistant Federal Public Defender
Former Mail Carrier Admits Accepting Bribes for Delivering Parcels Containing DrugsRead the Press Release
NEWARK, N.J. – A former U.S. Postal Service (USPS) mail carrier today admitted that he accepted cash bribes in return for intercepting and delivering parcels containing illegal narcotics, U.S. Attorney Craig Carpenito announced.
Leonard Gresham, 50, of Rahway, New Jersey, pleaded guilty before U.S. District Judge Esther D. Salas in Newark federal court to an information charging him with one count of accepting bribes. He was released on $50,000 unsecured bond.
According to documents filed in this case and statements made in court:
Gresham was a mail carrier at the USPS Springfield Station in Newark. From October 2014 through September 2017, Gresham accepted cash bribes from two individuals who were receiving parcels containing illegal narcotics through the mail.
While on duty, Gresham intercepted these parcels and personally delivered them to various locations in Newark other than to the recipient address noted on the parcels. Gresham received payments of between $50 and $200 from the individuals for each delivery.
Gresham received a total of $14,900 in cash payments in exchange for delivering parcels containing illegal narcotics.
The bribery charge is punishable by a maximum potential penalty of 15 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for May 30, 2018.
U.S. Attorney Carpenito credited special agents with the USPS Office of Inspector General, under the direction of Special Agent in Charge Eileen Neff, Northeast Area Field Office, and inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Ruth M. Mendonca, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Jihee G. Suh of the U.S. Attorney’s Office Special Prosecutions Division in Newark.
Defense counsel: David Holman Esq., Assistant Federal Public Defender, Newark
Two Newark Men Charged with Participating in Multiple Armed CarjackingsRead the Press Release
NEWARK, N.J. – Two Newark men have been arrested and charged for their respective roles in a string of armed carjackings in Jersey City, New Jersey, in June 2017, U.S. Attorney Craig Carpenito announced today.
Tarrance Atkins, 23, and Jarrett Nelson, 19, are each charged by complaint with one count of conspiracy to commit carjacking, one count of conspiracy to use or possess a firearm during the commission of a crime of violence, one count of theft of a motor vehicle by force, violence, and intimidation, and one count of using or possessing a firearm during the commission of a crime of violence. Atkins made his initial court appearance today before U.S. Magistrate Judge Michael A. Hammer in Newark federal court. Nelson made his initial appearance Feb. 8, 2018, before Judge Hammer.
According to documents filed in this case and statements made in court:
From June 12, 2017, to June 18, 2017, Nelson, Atkins, and others committed six carjackings and attempted carjackings in Jersey City. For each carjacking or attempted carjacking, the victims were inside their vehicles, parked on residential streets. On each occurrence, two conspirators exited a getaway car and forced the passengers out of their vehicles at gunpoint. Over the course of three different evenings, Nelson, Atkins, and others carjacked four newer-model, high-end vehicles and attempted to carjack two others. After carjacking the vehicles in Jersey City, Nelson, Atkins, and others fled to Newark, where the cars were discovered shortly thereafter.
The conspiracy to commit carjacking count carries a maximum potential penalty of five years in prison, and the count of conspiracy to use a firearm in furtherance of a crime of violence carries a maximum potential penalty of 20 years in prison. The carjacking count with which Atkins and Nelson are charged is punishable by a maximum potential penalty of 15 years in prison. The charge of use of a firearm in furtherance of a crime of violence is punishable by 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. Each of the four counts also carries a maximum fine of $250,000.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher, with the investigation leading to the charges. He also thanked the Hudson County Prosecutor’s Office, under the direction of Hudson County Prosecutor Esther Suarez, and the Jersey City Police Department for their contribution to the case.
The government is represented by Assistant U.S. Attorney Desiree Grace Latzer of the General Crimes Unit and Senior Litigation Counsel Robert Frazer of the Organized Crime/Gangs Unit.
The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Defense counsel:
Nelson: John Yauch Esq., Federal Public Defenders Office, Newark
Atkins: David Schafer Esq., Lawrenceville, New JerseyEssex County Man Charged with Heroin Trafficking Conspiracy Operating in Newark, New JerseyRead the Press Release
NEWARK, N.J. – Federal law enforcement authorities today took custody of the last of seven members of a drug trafficking organization that allegedly distributed over a kilogram of heroin and other narcotics in Newark and the surrounding areas, U.S. Attorney Craig Carpenito announced.
Carlos Velasquez, a/k/a “Birdie,” 39, of Newark, is charged by complaint with conspiracy to distribute one kilogram or more of heroin. Velasquez, who was in state custody on unrelated charges, appeared this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court and was detained.
According to the complaint:
From September 2016 through June 2017, Velasquez and others engaged in a heroin distribution conspiracy that operated in and around Newark.
Through the authorized interception of telephone calls and text messages, controlled purchases of heroin, the use of confidential sources of information, and other investigative means, law enforcement officers learned that Ahmad Johnson, a/k/a “OC,” 38, of Newark, was a leader of the conspiracy and was responsible for obtaining wholesale amounts of narcotics, including heroin and cocaine, and processing and packaging the narcotics for sale in and around Newark. Velasquez was an alleged heroin and cocaine dealer who got his narcotics from Johnson.
At times, after the narcotics were processed and packaged for sale, Johnson found users to “test” the narcotics to evaluate the quality, potency, and danger for broader distribution. After the narcotics were tested, members of drug trafficking organization sold the narcotics to other distributors and users in and around Newark.
During the takedown, law enforcement officers conducted a series of search warrants and found over a kilogram of heroin, over 200 grams of crack cocaine, and over 150 grams of fentanyl.
The conspiracy charge carries a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine.
The complaint charges six other defendants with conspiracy to distribute heroin. Johnson, Sacha Negron, 33, and Keith Henderson, 46, all of Newark, were arrested in June 2017. Cory Canzater, 45, and Willie McPhatter, 46, both of Newark, were arrested in September 2017. Willie McPhatter’s brother, Maurice McPhatter, 45, of Newark, was arrested Feb. 8, 2018. Negron, Henderson, Canzater, and Willie McPhatter are out on bail. Johnson and Henderson remain in custody.
U.S. Attorney Carpenito credited special agents of the Drug Enforcement Administration’s (DEA) New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark.
The government is represented by Assistant U.S. Attorney Ari B. Fontecchio of the U.S. Attorney’s Office’s Criminal Division in Newark.
The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Defense counsel: Michael A. Armstrong Esq., Willingboro, New Jersey
Pennsylvania Couple Charged with Distributing Fake Oxycodone Pills Containing HeroinRead the Press Release
NEWARK, N.J. – A man and woman from Hazleton, Pennsylvania, were charged today with conspiring to distribute heroin pills that were made to look like 30-milligram tablets of oxycodone, U.S. Attorney Craig Carpenito announced.
Francisco Perez, 31, and Nadia Moronta Pena, 33, are charged by criminal complaint with conspiring to distribute more than 100 grams of heroin. The defendants appeared this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court. Perez was detained. Pena was released on $150,000 unsecured bond.
According to the complaint:
During the course of an investigation into the illegal manufacturing and distribution of opioids and other narcotics in New Jersey, an undercover law enforcement agent received information that Perez was illegally distributing oxycodone.
On Jan. 23, 2018, Perez allegedly met the undercover agent in Paterson, New Jersey, and sold the undercover agent approximately 1,000 pills that were similar in size, shape, color, and physical markings to 30-milligram oxycodone tablets manufactured by pharmaceutical companies. However, when the pills were tested in a lab, they were found to contain a mixture of Tramadol, a Schedule IV synthetic opioid, and heroin.
On Feb. 7, 2018, the undercover agent again met with Perez in Paterson, this time to purchase up to 40,000 pills. During the meeting, Perez motioned to Pena, who brought over a white bag containing thousands of pills for the undercover agent to examine before the deal. Perez and Pena were then arrested at the scene, and law enforcement agents recovered more than 20,000 additional pills that were similar in appearance to the heroin pills that Perez sold the undercover agent on Jan. 23, 2018.
Around the time Perez and Pena were arrested, law enforcement officers conducted a search of their residence in Pennsylvania. They recovered numerous other pills, approximately one kilogram of a powdery substance believed to be heroin, pill-press materials, and a box containing several bottles of liquid labeled “Fentanyl.” A firearm was recovered from inside a compartment in the wall of the residence.
U.S. Attorney Carpenito credited special agents with the DEA, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, as well as the DEA Scranton Resident Office, the Hazleton Police Department, and the Passaic County Sheriff’s Office with the investigation leading to the charges.
The government is represented by Assistant U.S. Attorney Melissa Wangenheim of the Organized Crime Drug Enforcement Task Force/Narcotics Unit in Newark.
The charge and allegations contained in the complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Defense Counsel:
Perez: John Yauch Esq.
Pena: Paulette Pitt Esq.Former Pharmaceutical Employee Sentenced to 15 Months in Prison for Role in Scheme to Obtain Medically Unnecessary Prescription Compounded MedicationRead the Press Release
NEWARK, N.J. – A former pharmaceutical employee was sentenced today to 15 months in prison for accepting thousands of dollars in exchange for filling medically unnecessary prescriptions for compounded medications for herself and her husband, causing losses of $956,885, U.S. Attorney Craig Carpenito announced.
Julie Andresen, 40, of Haddonfield, New Jersey, previously pleaded guilty before U.S. District Judge John Michael Vazquez to an information charging her with conspiracy to commit health care fraud. Judge Vazquez imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
Andresen, a former employee of a New Jersey pharmaceutical company, admitted that from September 2014 through September 2015, she would receive payments from a marketing business identified in the information as “Company A” in return for filling and obtaining medically unnecessary prescription compounded medications for herself and her husband through the New Jersey pharmaceutical company’s prescription drug benefit plan.
Andresen approached a physician identified in the information as “Physician-1,” who was Andresen’s close friend, at social gatherings. Andresen would provide Physician-1 with preprinted prescription forms listing various compounded medications. Andresen requested that Physician-1 authorize certain compounded medications for her and her husband, such as scar creams and metabolic supplements. Physician-1 did authorize the prescriptions and multiple refills.
Andresen faxed prescriptions for the compounded scar creams and metabolic supplements authorized by Physician-1 to various compounding pharmacies designated by Company A that were located outside of New Jersey. The compounding pharmacies would fill and bill Andresen’s prescription drug benefit plan for the compounded prescriptions. The New Jersey pharmaceutical company’s prescription drug benefit plan reimbursed the compounding pharmacies anywhere between $13,572 and $43,689 for each compounded medication Andresen and her husband received.
The compounding pharmacies would then pay Company A an agreed upon percentage of the reimbursement amount. Company A would pay Andresen an agreed upon percentage of the amount Company A received from the compounding pharmacies. Andresen also requested multiple refills of her and her husband’s prescriptions, and received monetary payment for the refills as well. Altogether, Andresen received $161,378 from Company A for her role in the conspiracy. The New Jersey pharmaceutical company lost $956,885 from this scheme.
In addition to the prison term, Judge Vazquez sentenced Andresen to three years of supervised release, ordered her to pay restitution of $956,885 and to forfeit $161,378.
On June 29, 2016, Stephanie Naar, 28, of St. Louis, Missouri, who had been an employee of the same New Jersey pharmaceutical company as Andresen, pleaded guilty before Judge Vazquez and admitted to accepting thousands of dollars in exchange for obtaining and filling her own medically unnecessary prescriptions for compounded medications.
On July 19, 2016, Peter Pappas, 45, of Drexel Hill, Pennsylvania, another former employee of the same New Jersey pharmaceutical company as Andresen, also pleaded guilty before Judge Vazquez and admitted to accepting thousands of dollars in exchange for obtaining and filling his own medically unnecessary prescriptions for compounded medications. Pappas also admitted to recruiting others into this scheme to defraud.
Naar and Pappas are awaiting sentencing.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; and U.S. Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Leigh-Alistair Barzey, with the ongoing investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Erica Liu of the United States Attorney’s Office, Health Care and Government Fraud Unit in Newark.
The New Jersey U.S. Attorney’s Office reorganized its health care fraud practice in 2010 and created a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since that time, the office has recovered more than $1.38 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
Passaic County, New Jersey, Man Admits String of Bank RobberiesRead the Press Release
NEWARK, N.J. – A Passaic, New Jersey, man today admitted robbing six banks in Hudson, Union, and Passaic counties in June and July of 2016, U.S. Attorney Craig Carpenito announced.
Quentin Morales, a/k/a “Quinton Morales,” 27, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an information charging him with three counts of bank robbery. He also admitted to robbing two additional banks and attempting to rob another.
Prior to his arrest in August 2016, Morales was one of Newark FBI’s most wanted bank robbers.
According to documents filed in this case and statements made in court:
Morales robbed, or attempted to rob, the following New Jersey banks:
Bank
Location
Date
Wells Fargo Bank
Kearny, New Jersey
June 24, 2016
Capital One Bank (attempted)
Elizabeth, New Jersey
June 27, 2016
Wells Fargo Bank
Kenilworth, New Jersey
June 30, 2016
Wells Fargo Bank
Linden, New Jersey
July 6, 2016
Wells Fargo Bank
Clifton, New Jersey
July 13, 2016
Wells Fargo Bank
Union, New Jersey
July 25, 2016
At each bank, Morales presented a note demanding cash from bank tellers. For example, during the June 24, 2016 robbery, Morales handed the teller a note stating “You are being robbed. Give me all the large bills you have, no alarms, no noise.” On at least two occasions, Morales said he had a gun and urged bank tellers to hurry. He was apprehended on Aug. 2, 2016, by officers of the N.J. State Parole Board.
The bank robbery charges to which Morales pleaded guilty each carry a maximum penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for May 14, 2018.
U.S. Attorney Carpenito credited special agents of the FBI’s Violent Crimes/Interstate Theft Task Force, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to today’s plea. He also thanked the N.J. State Parole Board and the Kearny, Elizabeth, Kenilworth, Linden, Clifton, Union Township and Newark police departments, as well as the Essex County Prosecutor’s Office for their efforts in the investigation and apprehension of Morales.
The government is represented by Assistant U.S. Attorney Veronica Allende of the U.S. Attorney’s Office Criminal Division in Trenton.
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Defense counsel: Linda D. Foster, Esq., Assistant Federal Public Defender
Monmouth County, New Jersey, Man Admits Illegally Possessing Firearm During Drive-By ShootingRead the Press Release
TRENTON, N.J. – A Monmouth County, New Jersey, man today admitted being a felon in possession of a firearm while serving as the driver in a drive-by shooting in Asbury Park, New Jersey, U.S. Attorney Craig Carpenito announced.
Roosevelt Dante Harris, 39, of Asbury Park, pleaded guilty before U.S. District Judge Peter G. Sheridan in Trenton federal court to an information charging him with one count of being a felon in possession of a firearm.
According to documents filed in this case and statements made in court:
Harris admitted that despite having one or more prior felony convictions in Monmouth County, he knowingly possessed a Taurus, model PT709 Slim, 9 mm pistol on Nov. 24, 2016, in Asbury Park. Harris admitted that three days earlier he accompanied another individual to a firearms dealer in South Carolina, where the other individual purchased three firearms—including the Taurus pistol that Harris possessed – on Harris’ behalf. Harris transported the three firearms from South Carolina to New Jersey.
Harris admitted that on Nov. 24, 2016, while he was driving a black minivan in Asbury Park, he possessed the Taurus pistol, which was located behind the glove compartment of the black minivan. Harris admitted that another individual shot a firearm out of the black minivan while Harris was driving.
The count of being a felon in possession of a firearm carries a maximum potential penalty of 10 years in prison and a $250,000 fine. Sentencing is scheduled for May 14, 2018.
U.S. Attorney Carpenito credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge John B. Devito in Newark, New Jersey; officers of the Monmouth County Prosecutor’s Office, under the direction of Monmouth County Prosecutor Christopher J. Gramiccioni; and officers of the Asbury Park Police Department, under the direction of Deputy Chief David Kelso, with the investigation leading to today’s guilty plea. U.S. Attorney Carpenito also thanked officers of the Lakewood Police Department, under the direction of Chief Gregory Meyer, for their assistance in the case.
The government is represented by Assistant U.S. Attorney Elisa T. Wiygul of the U.S. Attorney’s Office Criminal Division in Trenton.
18-051Defense counsel: Andrea D. Bergman Esq., Assistant Federal Public Defender, Trenton
Essex County, New Jersey, Man Admits Role in $1.5 Million Bank Fraud SchemeRead the Press Release
NEWARK, N.J. – An Orange, New Jersey, man today admitted his role in a scheme that defrauded New Jersey banks out of $1.5 million by deceiving them into crediting certain customer accounts that were controlled by members of the conspiracy, U.S. Attorney Craig Carpenito announced.
Chad Brown, 21, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to an information charging him with one count of bank fraud conspiracy.
According to documents filed in this case and statements made in court:
From September 2015 through May 2017, Brown and others conspired to fraudulently obtain money from two victim banks. First, Brown and others obtained information from actual bank accounts belonging to customers of the two victim banks, including the customers’ bank account numbers and their personal identification numbers. In some instances, Brown and others obtained debit cards associated with the accounts or personally requested access from the account owners.
Afterwards, members of the conspiracy called tellers at the victim bank, posed as bank employees, and deceived the tellers into crediting funds into the above customer accounts.
Once the funds were credited into the customer accounts, members of the conspiracy, including Brown, used debit cards associated with the accounts to obtain the fraudulently credited funds, either by withdrawing the funds directly from ATM machines at victim branch locations or purchasing postal money orders.
The victim banks suffered losses of more than $1.5 million from the scheme.
The charge to which Brown pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for May 15, 2018.
U.S. Attorney Carpenito credited inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Ruth M. Mendonca, with the investigation.
The government is represented by Assistant U.S. Attorney Ari Fontecchio of the U.S. Attorney’s Office Criminal Division in Newark.
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Defense counsel: Perry Primavera, Esq., Hackensack, New Jersey
Contractor Admits Stealing from Paterson Municipal Utilities Authority and Jersey City Childhood Development CentersRead the Press Release
NEWARK, N.J. – A Linden, New Jersey, man today admitted conspiring with officials at the Paterson Municipal Utilities Authority (MUA) and the Jersey City Childhood Development Centers Inc. (JCCDC) to fraudulently obtain payments for services he never provided, U.S. Attorney Craig Carpenito announced.
Carnell Baskerville, 51, pleaded guilty before U.S. District Judge Jose L. Linares to an information charging him intentionally conspiring with a former commissioner with the Paterson MUA to commit extortion under color of official right and conspiring with Robert E. Mays, the former Executive Director of the JCCDC, to embezzle and obtain by fraud funds that were under the care and control of the JCCDC, an organization that received more than $10,000 in federal program benefits annually.According to documents filed in this case and statements made in court:
Baskerville was a self-employed contractor based in Linden who provided contracting services for both residential homes and commercial businesses. Around 2014, Baskerville became acquainted with an individual identified in the information as “Coconspirator 1,”who was then a commissioner with the since-dissolved Paterson MUA, which had been created to manage the hydroelectric plant on the Passaic River and care for certain surrounding properties.
Baskerville and Coconspirator 1 entered into an agreement whereby Coconspirator 1, who exercised control over Paterson MUA finances, would approve payments from the Paterson MUA to Baskerville’s company for services rendered, even though both Baskerville and Coconspirator 1 knew that Baskerville had not and would not perform those services.
Between December 2014 and May 2015, Coconspirator 1 wrote a series of Paterson MUA checks totaling $146,500 to Baskerville’s company. Baskerville deposited these checks in his bank account and kicked back a significant percentage in cash to Coconspirator 1 to reward him for his official assistance in carrying out the scheme.
Baskerville entered into a similar scheme with Mays, the Executive Director of the JCCDC, which operated as a non-profit organization created to serve impoverished and disabled children in Jersey City. In February 2014, Baskerville and Mays entered into a purported contract for Baskerville to provide kitchen renovation work on behalf of JCCDC, knowing full well that Baskerville had not and would not perform those services.
In late February 2014, Mays issued a JCCDC check in the amount of $29,675 to Baskerville. Baskerville and Mays met at a check cashing business in Jersey City where they cashed the check and split the proceeds between them.
The count of conspiracy to commit extortion by color of official right carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The count of conspiracy to commit theft concerning programs receiving federal benefits carries a maximum potential penalty of 10 years in prison and a $250,000 fine. As part of his plea, Baskerville must pay restitution in the amount of $176,175. Sentencing is scheduled for May 16, 2018.Mays pleaded guilty to wire fraud on June 7, 2016 before U.S. District Judge Susan D. Wigenton. On July 31, 2017, he was sentenced to 18 months in prison and ordered to pay restitution in the amount of $257,418.20.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation.
The government is represented by Assistant U.S. Attorney Mark J. McCarren of the U.S. Attorney’s Office’s Special Prosecutions Division in Newark.
Defense counsel: Arthur Abrams Esq., Jersey City
Three Inmates at Fort Dix Federal Prison Arrested for Distributing and Possessing Images of Child Sexual AbuseRead the Press Release
CAMDEN, N.J. – Three men who are already serving prison sentences for child pornography were arrested today at the Federal Correctional Institution-Fort Dix (FCI-Fort Dix) and charged with using contraband cellphones and micro SD cards to distribute, possess, and view images and videos of child sexual abuse within the prison, U.S. Attorney Craig Carpenito announced.
William H. Noble, 52, of Lowell, Massachusetts, and Charles Wesley Bush, 38, of Knoxville, Tennessee, are charged by complaint with one count each of conspiracy to distribute child pornography, distributing child pornography, and possession of child pornography on federal property. Jacob S. Good, 31, of Fredericksburg, Virginia, is charged by complaint with one count of possession of child pornography on federal property and one count of accessing with intent to view child pornography on federal property.
All three defendants were arrested this morning and are scheduled to appear this afternoon before U.S. Magistrate Judge Karen M. Williams in Camden federal court.
According to the complaints:
Noble allegedly transferred a micro SD card containing child pornography to a government informant at FCI-Fort Dix on April 19, 2017. The micro SD card included over a thousand images and videos, many of which depicted sexual abuse of children, including infants and toddlers. Noble allegedly made statements about downloading the child pornography himself and with the assistance of other inmates in the prison. Noble previously pleaded guilty in the District of Massachusetts to transportation and distribution of child pornography and is serving an 81-month sentence with a scheduled release date of March 8, 2018.
Bush jointly possessed the SD Card that was transferred by Noble on April 19, 2017, which he also allegedly used to download videos of children being sexually abused. Bush expected to be compensated as part of the transfer of the SD card to the government informant. Bush previously pleaded guilty in the Eastern District of Tennessee to three counts of distribution of child pornography and possession of materials containing child pornography. He is serving a 151-month sentence with a scheduled release date of May 24, 2024.Good allegedly possessed and accessed child pornography while imprisoned at FCI-Fort Dix, which he downloaded from the “Dark Web” and stored on a micro SD card. Good allegedly told a government informant during a recorded conversation that he never intended to stop viewing child pornography. Good also described plans to take child pornography accumulated while in the prison home with him following his release. Good previously pleaded guilty in the Eastern District of Virginia to distribution of child pornography. He is serving a 60-month sentence with a scheduled release date of Feb. 6, 2018.
Due to the defendants’ prior convictions, the counts of distributing child pornography and conspiring to distribute child pornography are each punishable by a mandatory minimum sentence of 15 years in prison, a maximum potential penalty of 40 years in prison, and a $250,000 fine. The counts of possessing and accessing child pornography on federal property each carry a mandatory minimum sentence of 10 years in prison, a maximum potential penalty of 20 years in prison, and a $250,000 fine.
The charges and allegations in the complaints are merely accusations, and the defendants are considered innocent unless and until proven guilty.
The charges against Good, Bush, and Noble stem from a long-term investigation by the FBI, which led to similar charges against five other FCI-Fort Dix inmates in April 2017. Charges against four of those inmates – Anthony C. Jeffries, Brian J. McKay, Christopher D. Roffler, and Jordan T. Allen – remain pending. A fifth inmate, Erik M. Smith, has since pleaded guilty to possession of child pornography.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to today’s arrests. He also thanked officials of the Bureau of Prisons and FCI-Fort Dix for their assistance with the investigation.
The government is represented by Assistant U.S. Attorneys Gabriel J. Vidoni and Alyson M. Oswald of the U.S. Attorney’s Office’s Criminal Division in Camden.
Defense counsel:
Charles Bush: David Rudenstein Esq.
Jacob Good: David Simon Esq.
William Noble: Marty Isenberg Esq.Passaic County, New Jersey Couple Charged in Food Stamps SchemeRead the Press Release
NEWARK, N.J. – A Passaic County, New Jersey, couple was charged today for their respective roles in a food stamps fraud scheme, U.S. Attorney Craig Carpenito announced.
Ibrahim Zughbi, 64, and his wife, Miriam Zughbi, 59, of Wayne, New Jersey, are charged by complaint with Supplemental Nutrition Assistance Program (SNAP) benefit fraud and conspiracy to commit wire fraud. Ibrahim Zughbi is also charged with money laundering. Both appeared today before U.S. Magistrate Judge Michael Hammer in Newark federal court.
According to documents filed in this case and statements made in court:
From January 2014 to the present, the defendants managed Jamaica Meat Market, a medium-size grocery store in Paterson, New Jersey, that was authorized to accept benefits provided by SNAP, formerly known as the Food Stamp Program. The program is administered by the U.S. Department of Agriculture. Retail food stores approved for participation in SNAP may sell food in exchange for SNAP benefits. They may not exchange SNAP benefits for cash. While the Zughbis ran the store, another individual owns the store and is the person registered with SNAP. According to the complaint, Ibrahim and Miriam Zughbi exchanged more than $4 million in SNAP benefits for cash between 2014 and 2017.
Every SNAP recipient receives an Electronic Benefit Transfer (EBT) card, similar to a debit card, with which to make purchases. Every retailer authorized to accept SNAP benefits has an EBT terminal. Food purchases are made by swiping the card at the terminal. After the customer enters 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 amount is credited to the retailer’s designated bank account. In addition to the high volume of SNAP benefits redemptions for Jamaica Meat Market indicating fraud, law enforcement agents verified the fraudulent exchange of SNAP benefits for cash through the use of a confidential source who, at the direction of law enforcement, engaged in 16 “purchases” at Jamaica Meat Market where one or both defendants exchanged money for SNAP benefits.
Ibrahim Zughbi had previously participated in SNAP when he was the owner of Neighborhood Supermarket, a grocery store that operated out of the same location as the Jamaica Meat Market. In March 2011, the USDA had permanently disqualified Ibrahim Zughbi from SNAP when Zughbi and the Neighborhood Supermarket were administratively charged with SNAP violations. Another individual took over the business, changed its name to Jamaica Meat Market, and certified in writing to the USDA that Ibrahim Zughbi would have nothing to do with the business or its participation in the program. Zughbi continued to run Jamaica Meat Market, and continued to exchange cash for SNAP benefits.
The complaint also charges Ibrahim Zughbi with money laundering. The bank account of Jamaica Meat Market, where the store receives SNAP payments, shows payments in excess of $471,000 to Ibrahim Zughbi and various family members not connected to the business, even though Ibrahim Zughbi is not permitted to associate with Jamaica Meat Market as a participant in SNAP.
Each of the counts with which the defendants are charged carries a maximum penalty of 20 years in prison and a fine of $250,000, or twice the gross pecuniary gain/loss. The count of money laundering with which Ibrahim Zughbi is charged carries a maximum penalty of 20 years in prison and a fine of $500,000 or twice the value of the property involved in the transaction.
U.S. Attorney Carpenito credited special agents of the U.S. Department of Agriculture – Office of Inspector General, under the direction of Special Agent in Charge Bethanne M. Dinkins, and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), under the direction of Acting Special Agent in Charge Michael McCarthy, with the investigation leading to today’s charges. He also thanked the Passaic County Prosecutor’s Office, the Wayne Township Police Department and the Paterson Police Department for their roles in the investigation.
The government is represented by Assistant U.S. Attorney Sammi Malek of the U.S. Attorney’s Office Criminal Division in Newark.
The allegations and charges in the complaint are only accusations and the defendants are considered innocent unless and until proven guilty.
Essex County, New Jersey, Man Gets 42 Months in Prison for Selling Fake Driver’s Licenses Online, Filing Bogus Tax ReturnsRead the Press Release
NEWARK, N.J. – A Newark man was sentenced today to 42 months in prison for selling fake driver’s licenses through an online shop and filing fraudulent tax returns using stolen identity information, U.S. Attorney Craig Carpenito announced.
Alexis Scott Carthens, 40, previously pleaded guilty before U.S. District Judge Jose L. Linares to an information charging him with one count of conspiracy to commit fraud in connection with authentication features and one count of conspiracy to defraud the government with respect to claims. Judge Linares imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
From October 2012 through August 2014, Ricardo Rosario, 35, of Jersey City, New Jersey, with the assistance of Carthens and Abraham Corcino, 36, of Jersey City, sold fake driver’s licenses over the Internet. In connection with their illegal operation, the defendants ran a website that was available at “fakeidstore.co” and “fakedlstore.com.”
A number of the fake driver’s licenses sold by Rosario and other conspirators were used by criminal actors in connection with “cash out” schemes where stolen credit card information, usually obtained through hacking or ATM skimming operations, was encoded on to counterfeit credit cards and used to steal cash from victims’ accounts.
The website sold fake New Jersey, Florida, Illinois, Pennsylvania, Rhode Island, and Wisconsin driver’s licenses, and the website boasted that the licenses had “scannable barcodes” and “real” holographic overlays. The price for each fake driver’s license was approximately $150, but the website offered bulk pricing for orders of 10 or more.
The website allowed its users to pay by bitcoin, a cryptographic-based digital currency, or MoneyPak, a type of prepaid payment card that could be purchased at retail stores. The “FAQ” section of the website indicated that orders would be received approximately one to two days after payment was received and described the website’s policy with respect to returns: “No Refunds. No snitching.”
Rosario created and ran the website. Corcino and Carthens assisted Rosario by creating and mailing the fake driver’s licenses purchased through the website. Corcino also maintained an Instagram account to promote the website.
At his plea hearing, Carthens admitted that his role was to create the driver’s licenses and to mail them to the website’s customers. Carthens also admitted that he believed that some of the website’s clients were using the fake driver’s licenses to commit credit card fraud.
Carthens also admitted to his involvement in a separate scheme, spanning from December 2012 through November 2013, to use information stolen from a medical lab to file false and fraudulent tax returns. Carthens admitted working with at least one other conspirator, who assisted Carthens by providing him with email addresses and physical addresses to receive the fraudulently claimed tax refund money.
In addition to the prison term, Judge Linares sentenced Carthens to three years of supervised release and ordered him to pay restitution of $121,922.32.
Rosario and Corcino have both pleaded guilty to related charges. Rosario was sentenced to 63 months in prison. Corcino was given three years of probation.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Ruth M. Mendonca; and special agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation.
The government is represented by Assistant U.S. Attorney Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit and Assistant U.S. Attorney Barbara Ward, deputy chief of the asset forfeiture program.
Defense counsel: Wanda M. Akin Esq., Newark
Jersey City Police Officer Admits Conspiracy to Commit Fraud and Accept Corrupt PaymentsRead the Press Release
NEWARK, N.J. – A Jersey City police officer today admitted accepting corrupt payments in exchange for helping employers operate at worksites without the required presence of an off-duty police officer, U.S. Attorney Craig Carpenito announced.
Juan Berrios, 41, of Rahway, New Jersey, pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to an information charging him with one count of conspiracy to commit fraud and accept corrupt payments.According to documents filed in this case and statements made in court:
Berrios was a police officer with the Jersey City Police Department from 2004 to 2017. Under Jersey City’s municipal code, police officers performing off-duty work were not permitted to receive cash payments directly from other employers. Rather, the employers were supposed to pay Jersey City, which would then pay the off-duty police officers, minus certain fees, taxes and deductions.
Berrios agreed with numerous off-duty employers to accept payments directly from them and cut Jersey City out of the process. In exchange for the payments, Berrios permitted off-duty employers to operate at worksites without the presence of a police officer when such a presence was required.
On several occasions, Berrios submitted off-duty vouchers seeking and obtaining compensation for working as a traffic director or security guard. Berrios also sought and received overtime compensation for appearing in court at the same time he was purportedly performing off-duty work. As a result, Berrios fraudulently obtained compensation from Jersey City for separate assignments that occurred at the same time.
Berrios faces a maximum statutory penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Pursuant to the plea agreement, Berrios will forfeit $50,000. His sentencing is scheduled for April 16, 2018.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy A. Gallagher in Newark, with the investigation.
The government is represented by Assistant U.S. Attorney Vikas Khanna of the U.S. Attorney’s Office Criminal Division in Newark.
Defense counsel: Danny J. Welsh Esq. Jersey City, New Jersey
Essex County Loan Officer Charged with Mortgage FraudRead the Press Release
NEWARK N.J. – A Nutley, New Jersey, man was charged today with using fraudulent documents to deceive his employer into approving a loan, U.S. Attorney Craig Carpenito announced.
Richard Patino, 42, is charged by complaint with one count of wire fraud. He made his initial appearance before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court and was released on bail.
According to the complaint:
Patino was a loan officer with a mortgage company based in New Jersey. On Aug. 15, 2013, a person identified in the complaint as “Individual A” signed a loan application in connection with Individual A’s purchase of a property in Elizabeth, New Jersey. Patino signed the loan application indicating that he had reviewed and approved it.
However, the bank statements that were included in the application were allegedly Patino’s own bank statements that he altered to make them appear as though they belonged to Individual A. Afterwards, the mortgage company approved the application and issued the loan to Individual A.
The loan was later sold to another financial institution, which was provided with both the loan application and supporting documents, including the fraudulent statements Patino created. The Federal Housing Administration (FHA) guaranteed the loan based in part on those phony documents.
As of January 2018, Individual A has ceased paying the loan and the financial institution has begun foreclosure proceedings on the property. Overall, law enforcement is aware of approximately 23 loans that Patino approved that are suspected of fraudulent activity.
The wire fraud charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.U .S. Attorney Carpenito credited special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi, with the investigation leading to today’s charge.
The government is represented by Assistant U.S. Attorney Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Defense counsel: Aidan P. O’Connor Esq., Hackensack, New Jersey
Chinese National Pleads Guilty to Conspiracy and Trafficking of Counterfeit Apple Goods into the United StatesRead the Press Release
A Chinese national living in the United States on a student visa pleaded guilty today for his role as a counterfeit distributor in a scheme to traffic and smuggle counterfeit electronics purporting to be Apple iPhones and iPads, from China into the United States.
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Craig Carpenito of the District of New Jersey, Deputy Special Agent in Charge Michael S. McCarthy of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Newark and Acting Bergen County Prosecutor Dennis Calo made the announcement.
Jianhua “Jeff” Li, 43, pleaded guilty before U.S. District Court Judge Kevin McNulty of the District of New Jersey to one count of conspiracy to traffic in counterfeit goods and labels and to smuggle goods into the United States, and one count of trafficking in counterfeit goods. Li will be sentenced on May 30.
According to the documents filed in this case and statements made in court, from July 2009 through February 2014, Mr. Li, working through his company Dream Digitals, conspired with Andreina Becerra, Roberto Volpe, Rosario LaMarca, and others to smuggle and traffic into the United States from China more than 40,000 electronic devices and accessories, including iPads and iPhones, along with labels and packaging bearing counterfeit Apple trademarks. Mr. Li also received payments totaling over $1.1 million in sales proceeds from U.S. accounts into his bank accounts. Becerra, Volpe and LaMarca have also pleaded guilty to their roles in the conspiracy. LaMarca was sentenced on July 20, 2017 to 37 months in prison and Becerra and Volpe are awaiting sentencing.
Further, the documents filed in this case and statements made in court showed that Mr. Li shipped devices separately from the labels bearing counterfeit trademarks for later assembly to avoid detection by U.S. Customs and Border Protection officials. The devices were then shipped to conspirators all over the United States. Proceeds from the sales of the devices were funneled back to the co-conspirators’ accounts in Florida and New Jersey via structured cash deposits and a portion of the proceeds was then transferred to conspirators in Italy, further disguising the source of the funds.
The HSI Newark Seaport Investigations Group and the Bergen County Prosecutor’s Financial Crimes Unit investigated the case with significant assistance from Europol and Italy’s Guardia di Finanza.
Senior Trial Attorney Kebharu Smith of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Leslie Schwartz of the District of New Jersey are prosecuting the case.
Chinese National Admits Trafficking Counterfeit Apple Goods into the United StatesRead the Press Release
NEWARK, N.J. - A Chinese national living in the United States on a student visa today admitted his role in a scheme to traffic and smuggle counterfeit Apple products, including phony iPhones and iPads, from China into the United States.
U.S. Attorney Craig Carpenito of the District of New Jersey; Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division; Acting Special Agent in Charge Michael McCarthy of Homeland Security Investigations (HSI) in Newark, and Acting Bergen County Prosecutor Dennis Calo made the announcement.
Jianhua “Jeff” Li, 43, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to one count of conspiracy to traffic in counterfeit goods and labels and to smuggle goods into the United States and one count of trafficking in counterfeit goods.
According to the documents filed in this case and statements made in court:
From July 2009 through February 2014, Li, working through his company Dream Digitals, conspired with Andreina Becerra, Roberto Volpe, Rosario LaMarca, and others to smuggle and traffic into the United States from China more than 40,000 electronic devices and accessories, including iPads and iPhones, along with labels and packaging bearing counterfeit Apple trademarks.
Li shipped the devices separately from the labels to avoid detection by U.S. Customs and Border Protection officials. The devices were then shipped to conspirators all over the United States. Proceeds were funneled back to conspirator accounts in Florida and New Jersey via structured cash deposits and then a portion was transferred to conspirators in Italy, further disguising the source of the funds. Over $1.1 million in sales proceeds were wired from U.S. accounts into accounts Li controlled overseas.
The conspiracy charge to which Li pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. The trafficking charge carries a maximum potential penalty of 10 years in prison and a $2 million fine. His sentencing is scheduled for May 30, 2018.
LaMarca previously pleaded guilty to his role in the scheme and was sentenced July 21, 2017 to 37 months in prison. Becerra and Volpe have also pleaded guilty and await sentencing.
The HSI Newark Seaport Investigations Group and the Bergen County Prosecutor’s Financial Crimes Unit investigated the case with significant assistance from Europol and Italy’s Guardia di Finanza.
Assistant U.S. Attorney Leslie Schwartz of the District of New Jersey and Senior Trial Attorney Kebharu Smith of the Criminal Division’s Computer Crime and Intellectual Property Section and are prosecuting the case.
Defense counsel: Perry Primavera Esq., Hackensack, New Jersey
Pleasantville Guidance Counselor Admits Health Care Fraud Conspiracy Targeting State Health Benefits ProgramsRead the Press Release
CAMDEN, N.J. – A guidance counselor with the Pleasantville public school district today admitted defrauding New Jersey state health benefits programs and other insurers out of over $3 million by submitting fraudulent claims for medically unnecessary prescriptions, U.S. Attorney Craig Carpenito and New Jersey Attorney General Gurbir S. Grewal announced.
Michael Pilate, 39, of Williamstown, New Jersey, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court to an information charging him with conspiracy to commit health care fraud.
“Pilate was part of a network of recruiters, doctors, and state and local government employees who abused their access to state benefits plans to rack up millions in reimbursements for medically unnecessary prescriptions, all while profiting off the backs of New Jersey tax payers,” U.S. Attorney Carpenito said. “His guilty plea, which marks the 13th conviction in the ongoing investigation, is a testament to the combined success of our federal law enforcement partners and the New Jersey Attorney General’s office to find those responsible for this brazen scheme and bring them to justice.”
“The health care fraud committed by this individual and his co-defendants costs us all, and cannot be tolerated,” said New Jersey Attorney General Grewal. “We appreciate the vigorous pursuit of this conspiracy by our partners at the U.S. Attorney’s Office, and we're glad to collaborate in the effort. As Attorney General, I am committed to investigating health care fraud on behalf of New Jersey taxpayers, and to holding those engaged in such conduct accountable.”
“Today’s plea is a direct result of the commitment by federal, state and local law enforcement to aggressively pursue and charge those who willingly defraud our citizens," stated Special Agent in Charge Timothy Gallagher of the Newark FBI Field Office. “Health Care fraud costs our country billions each year, which is not just absorbed, it is passed down to the consumer. We will remain vigilant to assure that unscrupulous individuals are brought to justice."
“In today's plea, the thirteenth in this case, Michael Pilate admitted to conspiring to cause the submission of fraudulent insurance claims for medically unnecessary compounded prescription medications. We will continue to work with our law enforcement partners to aggressively investigate illegal prescription drug schemes, particularly when they impact patients of programs administered by the Department," said Peter Nozka, Acting Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General New York Region.
According to documents filed in this case and statements made in court:
From January 2015 through April 2016, Pilate and others recruited individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from an out-of-state pharmacy, identified in the informations as the “Compounding Pharmacy.”
Certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply. The conspirators knew that some New Jersey state and local government and education employees, including teachers, firefighters, municipal police officers, and state troopers, had insurance coverage for these particular compound medications.
An entity referred to in the information 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, and the School Employees’ Health Benefits Program, which covers qualified local education employees, retirees, and eligible dependents. The Pharmacy Benefits Administrator would pay prescription drug claims and then bill the State of New Jersey for the amounts paid.
Pilate agreed to personally receive compounded prescription creams that he did not need without being examined by a doctor and helped recruit other public employees and individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain medically unnecessary medications from the Compounding Pharmacy. Pilate secured insurance information from the individuals and passed it along to another conspirator, who had a doctor sign the prescriptions without examining the individuals. The prescriptions were faxed to the Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.
The pharmacy then paid one of Pilate’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to Pilate and other members of the conspiracy. Pilate paid individuals with the insurance coverage $500 to reward them for obtaining the prescriptions.
According to the information, the Pharmacy Benefits Administrator paid Compounding Pharmacy over $50 million for compounded medications mailed to individuals in New Jersey.
As part of the plea agreement, Pilate must forfeit $392,684.20 in criminal proceeds he received for his role in the scheme and pay restitution of at least $3,493,170.18.
Pilate faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for May 11, 2018.
Twelve other conspirators – Matthew Tedesco, Robert Bessey, Michael Pepper, Thomas Hodnett, Steven Urbanski, John Gaffney, Judd Holt, George Gavras, Richard Zappala, Michael Neopolitan, Andrew Gerstel, and Timothy Frazier – have pleaded guilty to their roles in the scheme and await sentencing.
U.S. Attorney Carpenito credited agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark, IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and the U.S. Department of Labor, Office of Inspector General, under the direction of Acting Special Agent in Charge Peter Nozka in New York, with the investigation leading to the guilty plea. He also thanked the Pensions and Financial Transactions Section of the Division of Law, within the Attorney General’s Office, under the direction of Attorney General Grewal and Division Chief Eileen Schlindwein Den Bleyker, for its assistance in the investigation.
The government is represented by Assistant U.S. Attorneys R. David Walk, Jr. and Jacqueline M. Carle of the U.S. Attorney’s Office in Camden.
Defense counsel: Teri Lodge Esq., Marlton, New Jersey
Pennsylvania Business Owner Admits Defrauding Veterans’ GI BillRead the Press Release
Agrees to 60-Month Prison Term
NEWARK, N.J. – A Harrisburg, Pennsylvania, man today admitted his role in a conspiracy that fraudulently obtained more than $24 million from the Post 9/11 GI Bill, a federal education benefits program designed to help veterans who served in the armed forces following the terrorist attacks on Sept. 11, 2001, U.S. Attorney Craig Carpenito announced.
David Alvey, 51, pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to an information charging him with one count of conspiracy to commit wire fraud.
“Alvey and his codefendants stole money that was intended to provide educational opportunities to the armed services members who served following the attacks on 9/11,” U.S. Attorney Carpenito said. “Their scam targeted unwitting veterans, enrolling them in unapproved online courses without their knowledge. Our office will always work together with our law enforcement partners to find and stop this kind of government fraud, especially when it seeks to victimize those who serve our country with such courage.”
“The VA’s Post-9/11 GI Bill is a comprehensive educational program meant to help our nation’s veterans advance their education and careers as they move from military service to civilian life. Defrauding this important VA program costs our nation’s taxpayers and VA and does a tremendous disservice to our veterans,” Sean Smith, Special Agent in Charge, Northeast Field Office, U.S. Department of Veterans, Office of Inspector General, said. “VA OIG is committed to working closely with our fellow law enforcement partners and thanks the U.S. Attorney’s Office, District of New Jersey, for its dedication to this time-intensive, complex case.”
According to documents filed in this case and statements made in court:
The Post-9/11 GI Bill provides educational assistance to eligible veterans of the U.S. Armed Forces by paying for veterans’ tuition, housing costs, and other educational expenses as long as their courses meet certain criteria. Because these tuition benefits are paid by the United States directly to the school, all entities involved in developing and administering the courses must be fully disclosed to the United States in order to assess the courses for approval.
From 2009 through August 2013, Alvey – founder and president of Ed4Mil – Lisa DiBisceglie and Helen Sechrist, both of whom previously pleaded guilty to a similar wire fraud conspiracy count, and others, conspired to fraudulently obtain millions of dollars in tuition assistance and other education-related benefits under the Post-9/11 GI Bill.
DiBisceglie, then an associate dean at Caldwell University, helped Alvey get approval from Caldwell’s administration to develop and administer a series of non-credit online courses for veterans in Caldwell’s name. In order for the courses to be eligible for education benefits under the Post-9/11 GI Bill, DiBisceglie, Alvey, and others prepared and submitted an application with the Veterans Administration stating that the courses were developed, taught, and administered by Caldwell faculty and met Caldwell’s stringent educational standards. The courses were subsequently approved, and Alvey, Sechrist, and others aggressively marketed the courses to veterans who were eligible to receive the benefits.
However, Caldwell did not participate in developing or teaching the online courses. The veterans were instead enrolled in online correspondence courses developed and administered by a sub-contractor of Ed4Mil. Neither Ed4Mil nor its sub-contractor were disclosed to the government, and neither were eligible to receive Post-9/11 GI Bill benefits.
Alvey and others concealed the true nature of the courses from the government and the veterans who enrolled in the courses. Thousands of veterans enrolled in the online courses believing they were taking courses from Caldwell. The scheme caused the United States to pay more than $24 million in tuition benefits under the Post-9/11 GI Bill.
“David Alvey knowingly and willfully abused his position for personal gain and did so at the expense of those who truly deserve better – our veterans who were looking to make their dreams of a higher education a reality,” Debbi Mayer, Assistant Special Agent in Charge of the U.S. Department of Education Office of Inspector General's Eastern Regional Office, said. “I’m proud of the work of OIG Special Agents and our law enforcement partners for holding Mr. Alvey accountable for his criminal actions. America’s veterans and students deserve nothing less.”
“The guilty plea by David Alvey sends a clear and unequivocal message that the FBI and our law enforcement partners will relentlessly pursue those who defraud the government. This is the third conspirator who pleaded guilty in this fraud scheme. These crimes are especially egregious since they target our veterans and the educational system,” Timothy Gallagher, Special Agent in Charge of the Newark FBI Field Office, said.
The wire fraud conspiracy charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. As part of his plea agreement, Alvey has agreed to a prison term of five years and to forfeit proceeds of the crime, including $702,073 in cash proceeds, as well as artwork, and stock. Sentencing is scheduled for May 15, 2018.
U.S. Attorney Carpenito credited special agents of the U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigation Division, Northeast field office, under the direction of Special Agent in Charge Smith in Newark; the FBI, under the direction of Special Agent in Charge Gallagher in Newark; and the U.S. Department of Education, Office of Inspector General Eastern Regional Office, under the direction of Assistant Special Agent in Charge Mayer, with the ongoing investigation.
The government is represented by Assistant U.S. Attorneys David M. Eskew and David Malagold of the U.S. Attorney’s Office Criminal Division in Newark, Assistant U.S. Attorney Nicole Mastropieri of the Healthcare and Government Fraud Unit, and Assistant U.S. Attorney Jafer Aftab of the Asset Recovery and Money Laundering Unit.
Owner of Information Technology Companies Admits Visa Fraud and Tax CrimesRead the Press Release
NEWARK, N.J. – An owner of two IT staffing and consulting companies today admitted using phony documents to fraudulently obtain H1-B visas for foreign workers and submitting false tax returns, U.S. Attorney Craig Carpenito announced.
Sowrabh Sharma, 33, of New York, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to a superseding information charging him with conspiracy to commit visa fraud and subscribing to false tax returns.
“For years, Sharma and others working at SCM Data and MMC systems lied about hiring full-time foreign workers in order to secure H1-B visas,” U.S. Attorney Carpenito said. “In reality and contrary to immigration laws, these workers were often ‘benched’ without pay while the companies created false documents to cover-up the scheme. This investigation, which has resulted in the conviction of an owner and several employees, including an immigration attorney, shows that businesses that use the H1-B visa program better do so with the utmost adherence to this nation's immigration and labor laws.”
“This conviction shows that even those with powerful business interests are not immune from HSI’s long and expert investigative reach when it comes to visa fraud and worker exploitation,” said Michael McCarthy, Acting Special Agent in charge of HSI Newark. “Such activities not only have a negative impact on the U.S. economy, but are harmful to the overall work environment of companies and individuals.”
“Sowrabh Sharma misused the H-1B program in order to enrich himself at the expense of the foreign workers he sponsored for H-1B visas. His company submitted false documents to the Departments of Labor and Homeland Security in order to perpetrate this fraud. The U.S. Department of Labor Office of Inspector General will continue to work with Homeland Security Investigations and our other law enforcement partners to vigorously pursue those who commit fraud involving the foreign labor certification programs which are jointly administered by the Departments of Labor, Homeland Security and State,” stated Peter Nozka, Acting Special Agent-in-Charge, U.S. Department of Labor Office of Inspector General New York Region.
According to the documents filed in this case and statements made in court:
SCM Data Inc. and MMC Systems Inc. offered consultants to clients in need of IT support. Both companies recruited foreign nationals with purported IT expertise, often student visa holders or recent college graduates, and sponsored them for H-1B visas with the stated purpose of working for SCM Data and MMC Systems’ clients throughout the United States.
Sharma admitted today that from 2010 through April 2015, he and others falsely represented to U.S. Department of Homeland Security, U.S. Citizenship and Immigrations Services (USCIS) that dozens of foreign workers had full-time “in-house” positions, and would be paid an annual salary, as required to secure the visas. However, Sharma and his companies only paid the foreign workers when they were placed at a third-party client, or a company that entered into a contract for services with SCM Data and MMC Systems.
Sharma also admitted that in some instances, foreign workers who were “benched” between projects and not working were told that if they wanted to maintain their H-1B visa status, they would need to come up with what their gross wages would be in cash and give it to SCM Data and MMC Systems to generate phony payroll checks.
In addition, Sharma also admitted that he intentionally overstated and claimed false expenses pertaining to SCM Data and MMC Systems on his individual tax returns for 2011, 2012, 2013, and 2014, resulting in a tax loss to the United States of approximately $1,114,824.Sharma faces a maximum potential penalty of five years in prison on the visa fraud conspiracy count and three years in prison on the tax fraud count. Both charges carry a maximum $250,000 fine. His sentencing is scheduled for May 30, 2018.
U.S. Attorney Carpenito credited special agents of the U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), Newark Field Office, under the direction of Acting Special Agent in Charge Michael McCarthy, the U.S. Department of Labor, Office of Inspector General, under the direction of Acting Special Agent in Charge Peter Nozka in New York, and IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, with the investigation.
The government is represented by Assistant U.S. Attorneys Joyce M. Malliet and Francisco J. Navarro of the U.S. Attorney’s Office’s National Security Unit in Newark.
Defense Counsel: John P. Lacey Esq., and Leo J. Hurley Esq.
Man Admits Role in Identity Theft and Wire Fraud ConspiracyRead the Press Release
NEWARK N.J. – A Georgia man today admitted using fake driver’s licenses in order to obtain checks issued in response to false statements and representations, U.S. Attorney Craig Carpenito announced.
Abdulrasheed Yusuf, 29, of Lilburn, Georgia, pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to an information charging him with one count of aggravated identity theft and one count of conspiracy to commit wire fraud.
According to documents filed in this case and statements made in court:
Yusuf was a member of a conspiracy to fraudulently obtain money, including by committing identity theft, impersonating account holders and obtaining money from their accounts. On Aug. 8, 2017, a member of the conspiracy contacted an entity where an individual (Victim 1) had an account. The caller impersonated Victim 1 and stated that he/she wanted to withdraw $34,636 from his/her account. The entity sent a check through a mail carrier to the account holder at his/her address.
A member of the conspiracy caused the mail carrier to hold the packages containing the check for Victim 1 at one of its branch locations. On Aug. 14, 2017, Yusuf entered the branch and, using a driver’s license with Yusuf’s picture and Victim 1’s name and address, obtained a package he believed contained the check to Victim 1. Yusuf used a separate fake driver’s license in connection with obtaining a different check similarly issued in response to fraudulent statements.
The conspiracy to commit wire fraud charge carries a maximum penalty of 20 years in prison, and a fine of $250,000, or twice the gross gain to the defendant or twice the gross loss to others, whichever is greater. The aggravated identity theft charge carries a sentence of two years in prison, which must be consecutive to any imprisonment ordered concerning the conspiracy to commit wire fraud charge, and a fine of $250,000, or twice the gross gain to the defendant or twice the gross loss to others, whichever is greater. Sentencing is scheduled for May 10, 2018.U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and the U.S. Department of Labor, Office of Inspector General, under the direction of Special Agent in Charge Michael C. Mikulka in New York, with the investigation leading to today’s guilty pleas. He also thanked the Salt Lake City, Utah, Police Department for its role in the investigation.
The government is represented by Assistant U.S. Attorney Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
Defense counsel: David B. Glazer Esq., Livingston New Jersey
Bronx Man Admits Transporting Multiple Kilograms of Heroin as Part of A Cross-Country Drug Distribution ConspiracyRead the Press Release
TRENTON, N.J. – A Bronx, New York, man who was arrested in Warren County on Christmas Eve in 2014 while transporting 15 kilograms of heroin pleaded guilty today in Trenton federal court, U.S. Attorney Craig Carpenito announced.
Vionel Rondon Cortorreal, 29, pleaded guilty before U.S. District Judge Peter G. Sheridan to an information charging him with conspiracy to distribute heroin.
According to documents filed in this case and statements made in court:
In December 2014, Rondon Cortorreal engaged in a conspiracy with members of a drug trafficking organization to transport and distribute kilogram quantities of heroin. On Dec. 24, 2014, Rondon Cortorreal was arrested after law enforcement seized 15 kilograms of heroin from a hidden compartment in the vehicle that he and another conspirator, Dany Francisco-Valerio, 44, of Bronx, were operating.
The narcotics charge to which Rondon Cortorreal pleaded guilty carries a maximum penalty of life in prison and a $10 million fine. Sentencing is scheduled for May 30, 2018.
Francisco-Valerio previously pleaded guilty to the same charge before Judge Sheridan on Oct. 26, 2017 and awaits sentencing.
U.S. Attorney Carpenito credited special agents of the Drug Enforcement Administration’s New Jersey Division, under the direction of Special Agent in Charge Valerie Nickerson in Newark, and officers of the N.J. State Police, under the direction of Acting Superintendent Col. Patrick J. Callahan, with the investigation leading to today’s guilty plea.
Defense counsel: Brian J. Neary Esq., Hackensack, New Jersey
Two Men Sentenced to Prison in International $200 Million Credit Card Fraud ConspiracyRead the Press Release
Last of 22 Defendants Convicted and Sentenced
TRENTON, N.J. – A New York man and a Middlesex County, New Jersey, man were sentenced to today to federal prison terms for their respective roles in one of the largest credit card fraud schemes ever charged by the Justice, U.S. Attorney Craig Carpenito announced.
Qaiser Khan, 53, of Valley Stream, New York, previously pleaded guilty to an information charging him with one count of conspiracy to commit bank fraud. He was sentenced today to six months in prison. Sat Verma, 65, of Iselin, New Jersey, previously pleaded guilty to an information charging him with one count of access device fraud. He was sentenced to one year in prison. U.S. District Judge Anne E. Thompson imposed both sentences today in Trenton federal court.
According to documents filed in this case and statements made in court:
Khan and Verma were originally charged in February 2013 as part of a conspiracy to fabricate more than 7,000 false identities to obtain tens of thousands of credit cards. They are the last of 22 defendants to be sentenced in this scheme.
The scheme involved a three-step process in which the defendants would make up a false identity by creating fraudulent identification documents and a phony credit profile with the major credit bureaus; pump up the credit of the false identity by providing bogus information about that identity’s creditworthiness; then borrow or spend as much as they could without repaying the debts. The scheme caused more than $200 million in confirmed losses to businesses and financial institutions.
The scope of the criminal fraud enterprise required the conspirators to construct an elaborate network of false identities. Across the country, the conspirators maintained more than 1,800 “drop addresses,” including houses, apartments and post office boxes, which they used as the mailing addresses for the false identities.
Khan admitted he helped obtain credit cards in the name of third parties – many of which were fictional – then directed the credit cards to be mailed to addresses controlled by members of the conspiracy. He also admitted they knew the cards would be used fraudulently at businesses. Verma admitted he effected transactions with access devices issued to another person.
In addition to the prison terms, Judge Thompson sentenced Qaiser to five years of supervised release and fined him $10,000. Verma was sentenced to three years of supervised release, ordered to forfeit $270,000 and fined $1,000.
U.S. Attorney Carpenito credited special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation. He also thanked postal inspectors with the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Ruth M. Mendonca, Newark Division, special agents of the U.S. Secret Service, under the direction of Special Agent in Charge Mark McKevitt, and the U.S. Social Security Administration for their assistance.
The government is represented by Assistant U.S. Attorneys Zach Intrater and Daniel Shapiro of the U.S. Attorney’s Office Economic Crimes Unit, as well as Assistant U.S.
Attorney Sarah Devlin of the Asset Forfeiture and Money Laundering Unit.This case was brought in coordination with the Financial Fraud Enforcement Task Force, which was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
Defense counsel:
Khan: Christopher Adams Esq., Roseland, New Jersey
Verma: Jerard A. Gonzalez Esq., Hackensack, New JerseyPhiladelphia Man Admits Role in Scheme to Steal and Cash Postal Money OrdersRead the Press Release
CAMDEN, N.J. – A Philadelphia, Pennsylvania, man today admitted his role in fraudulently cashing stolen U.S. Postal Service money orders, resulting in more than $22,000 in losses, U.S. Attorney Craig Carpenito announced.
Anthony J. Bell, 38, pleaded guilty before U.S. District Judge Joseph H. Rodriguez to an information charging him with one count of transmitting and presenting unlawfully issued U.S. Postal Service money orders with intent to defraud the United States.
According to the documents filed in this case, other cases, and statements made in court:
Bell admitted that a former U.S. Postal Service employee, Marc. E Saunders, 39, of Sicklerville, New Jersey, provided Bell with stolen money orders and told him to recruit others to cash them. Bell admitted that he recruited individuals to cash the money orders and paid them a small fee, while keeping the rest of the money from the fraudulently cashed money orders for Saunders and himself. Bell also admitted he recruited an individual in York, Pennsylvania, to cash the money orders and paid the individual a small fee, keeping the rest of the money from the fraudulently cashed money orders for himself.
The charge for transmitting and presenting unlawfully issued U.S. Postal Service money orders carries a maximum penalty of five years in prison and $250,000 fine. Sentencing is scheduled for May 2, 2018.
U.S. Attorney Carpenito credited special agents of the U.S. Postal Inspection Service, under the direction of Executive Special Agent in Charge Kenneth Cleevely of the Eastern Area Field Office with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Alyson M. Oswald of the U.S. Attorney’s Office Criminal Division in Camden.
New York Man Arrested for Role in ‘Shotgun’ Loan SchemeRead the Press Release
NEWARK, N.J. – A Bronx, New York, man is charged with carrying out a scheme to use bogus information and simultaneous loan applications at multiple banks to fraudulently obtain home equity lines of credit, a practice known as “shotgunning,” U.S. Attorney Craig Carpenito announced today.
Saoud “Sam” Rihan, 57, was arrested Jan. 28, 2018 and charged by complaint with one count of conspiracy to commit bank fraud. He is scheduled to appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.
According to the complaint:
Rihan was a business partner of Simon Curanaj, 63, of Yonkers, New York. From 2012 through January 2014, Rihan, Curanaj, and others conspired to fraudulently obtain multiple home equity lines of credit (HELOC) from banks on residential properties in New Jersey and New York.
For example, Rihan and Curanaj executed a deed to transfer ownership of a Bronx property to people identified in the complaint as “Individual 1” and “Individual 2,” neither of whom lived at the property. Rihan and Curanaj then applied for three HELOCs from multiple banks in the name of Individual 2.
Rihan and Curanaj hid the fact that the same Bronx property was pledged as collateral in all three applications. The applications also fraudulently inflated Individual 2’s income. In addition, at the time the applications were made, the value of the Bronx property, which was encumbered by a mortgage, was far less than the amount of the HELOC loans that Rihan and the real estate broker applied for.
The victim banks eventually issued loans to Individual 2 in excess of $370,000. After the victim banks funded the HELOCs and deposited money into Individual 2’s bank accounts, Individual 2 disbursed almost all of the funds to Rihan, Curanaj, and others. In 2014, Individual 2 defaulted on all the HELOC loans.
The conspiracy to commit bank fraud charge carries a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense.
The charge and allegations against Rihan are merely accusations, and he is presumed innocent unless and until proven guilty.
Curanaj previously pleaded guilty to his role in the scheme and awaits sentencing.
U.S. Attorney Carpenito credited special agents of the Federal Housing Finance Agency – Office of Inspector General (FHFA-OIG), under the direction of Special Agent in Charge Steven Perez in Newark; and special agents of the FBI, under the direction Special Agent in Charge Timothy Gallagher in Newark, with the investigation.
The government is represented by Assistant U.S. Attorney Jason S. Gould of the U.S. Attorney’s Office Criminal Division in Newark and Special Assistant U.S. Attorney Kevin DiGregory of the FHFA-OIG.Former Newark Watershed Conservation and Development Consultant Admits Wire Fraud SchemeRead the Press Release
NEWARK, N.J. – A political consultant from Essex County, New Jersey, today admitted her role in a fraud scheme related to contracts with the Newark Watershed Development Corp. (NWCDC) and kickbacks to officials there, U.S. Attorney Craig Carpenito announced.
Dianthe Martinez Brooks, 42, of West Orange, New Jersey, pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to an information charging her with one count of wire fraud.
According to documents filed in this case and statements made in court:
Martinez Brooks was the owner and proprietor of a consulting company called DMart127 LLC, which provided political consulting services to local candidates and elected officials, among others, in the Essex County area. Between May 2011 and March 2013, she participated in a scheme with Linda Watkins Brashear, the former NWCDC Executive Director, and Donald Bernard, the former Director of Special Projects, to defraud the NWCDC of the honest services of Brashear and Bernard, and of money and property.
Martinez Brooks submitted fraudulent invoices to the NWCDC in the name of DMart127 detailing services that were purportedly performed, but which sought payments that overstated the value of any services she or her company performed. Martinez-Brooks also assisted in obtaining contracts between companies owned by Kevin Gleaton and the NWCDC and contracts between a company owned by her relative and the NWCDC through Bernard and Brashear. Fraudulent invoices were submitted in the name of those companies to the NWCDC detailing services that were purportedly performed, but were never rendered by Gleaton, his companies, or Martinez Brooks’ relative. Based on the fraudulent invoices, the NWCDC issued checks to DMart127, Gleaton’s companies and company belonging to Martinez’s relative totaling $225,666. Martinez Brooks kicked back a substantial amount of those proceeds to Brashear and Bernard.
The wire fraud charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for May 21, 2018.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; and special agents of the U.S. Department of Housing and Urban Development, Office of Inspector General, under the direction of Special Agent in Charge Christina Scaringi, with the investigation leading to today’s guilty plea.The government is represented by Assistant U.S. Attorneys Jacques S. Pierre and Jihee G. Suh of the Special Prosecutions Division.
Defense counsel: Paulette Pitt Esq., Woodbridge, New Jersey
Leader of Newark Bloods Street Gang – The South Side Cartel – Admits Five Murders, Racketeering, Other Violent Crimes in Furtherance of the Gang EnterpriseRead the Press Release
Plea Deal Calls for 45-year Prison Sentence
NEWARK, N.J. – The leader of one of Newark’s most violent street gangs today admitted his role in five murders, an armed carjacking, an armed robbery of a drug dealer, two counts of assault with a deadly weapon, and drug conspiracy as part of a racketeering conspiracy involving the South Side Cartel, U.S. Attorney Craig Carpenito announced.
Farad Roland, 33, had been charged with violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) as part of a 27-count second superseding indictment, which was returned in June 2013.
“With today’s guilty plea, Farad Roland’s reign as the leader of the South Side Cartel is over.” U.S. Attorney Carpenito said. “It is the mission of this office to make the streets of New Jersey safe for all of its citizens. The Roland case is a perfect example of cooperation between my office, the FBI, Newark police and the Essex County prosecutor effectively working to remove a dangerous felon from our community.”
“Today's plea is a direct result of the hard work and dedication shared between state, local and federal authorizes in their efforts to combat violent gangs in our communities,” FBI Special Agent in Charge Timothy A. Gallagher said. “We are committed to combating this epidemic of violence that often takes young lives and creates fear in our communities. The FBI and our partners will aggressively pursue gangs wherever they surface and are steadfast to making Newark and the surrounding communities, a safe place for our citizens.”
According to documents filed in this case:
The South Side Cartel was a sub-set of the Bloods street gang that operated primarily on Hawthorne Avenue in Newark. Originally a neighborhood-based gang whose main activities were selling drugs and committing violent acts to aid the drug-trafficking business, many of the gang’s members were officially brought into the Bloods gang in 2002 and 2003. The gang often operated out of apartments located at 496-500 Hawthorne Avenue, which were dubbed “the Twin Towers.” Local law enforcement made repeated narcotics and gun arrests at this location. Many of the South Side Cartel members had tattoos showing the Twin Towers and the logo “SSC,” which represented the gang’s initials.
Between 2003 and 2010, the South Side Cartel was generally known among law enforcement and the FBI as the most violent street gang in Newark, committing numerous murders, shootings, robberies and other violent acts in furtherance of the enterprise. At its peak, the South Side Cartel had about 20 members or associates, many of whom have since been killed in gang-related murders or who are serving prison sentences for gang-related crimes. Roland’s two co-defendants, Malik Lowery and Mark Williams, previously pleaded guilty in federal court. Lowery was sentenced in August 2016 to more than 26 years in federal prison. Williams is awaiting sentencing.
Today’s admission of guilt includes Roland’s participation in a host of racketeering acts to further the South Side Cartel’s goals, including:
- The Feb. 20, 2005, murder of a Newark resident who was shot during a robbery attempt that Roland ordered one of his gang associates to carry out;
- The Feb. 23, 2005, murder of the 19-year-old gang associate who committed the Feb. 20, 2005 robbery-murder, to prevent him from cooperating with law enforcement and implicating Roland;
- The Oct. 20, 2007, murder of a fellow South Side Cartel member who had fallen into disfavor with the gang;
- The retaliation murders of two people on March 27, 2008, outside the Oasis Bar located on Lyons Avenue in Newark.
Roland also admitted committing an armed carjacking; an assault with a dangerous weapon in the 2008 shooting of a fellow gang member with whom Roland had a dispute; an assault with a dangerous weapon in the 2009 shooting of a rival gang member; the armed robbery of a drug dealer in East Orange, New Jersey; and conspiracy to distribute more than a kilogram of heroin and 280 grams of crack cocaine.
Under terms of the plea agreement, Farad agreed to a prison term of 45 years. He is scheduled to be sentenced May 14, 2018.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher; the Newark Police Division, under the direction of Department of Public Safety Director Anthony F. Ambrose; and Acting Essex County Prosecutor Robert D. Laurino, with the investigation leading to today’s guilty plea.
The government is represented by Senior Litigation Counsel Robert Frazer, Assistant U.S. Attorney Courtney Howard of the Organized Crime/Gangs Unit, and Assistant U.S. Attorney Desiree Grace Latzer of the General Crimes Unit.
Defense counsel:
Farad Roland: Richard Jasper Esq. and Michael Bachrach Esq., New York; and Stephen Turano Esq., Newark
Trucking Company Owner Sentenced to 18 Months in Prison for Tax Evasion and Bankruptcy FraudRead the Press Release
TRENTON, N.J. –The owner of a New Jersey trucking company was sentenced today to 18 months in prison for committing tax evasion and bankruptcy fraud while operating his wine delivery business, U.S. Attorney Craig Carpenito announced.
Giacomo Giorlando, 54, of Morganville, New Jersey, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an information charging him with three counts of tax evasion and one count of bankruptcy fraud. Judge Sheridan imposed the sentence today in Trenton federal court.
According to documents filed in this case and statements made in court:
As an owner of 4 G’s Trucking, Giorlando comingled business revenue with his personal funds, utilized a check-casher to cash business checks, deposited the proceeds of his business into various bank accounts, and then significantly inflated expenses to reduce his taxable income for the years 2011, 2012 and 2014. He admitted he was responsible for a $460,012 tax loss from those three years.
When Giorlando filed for bankruptcy in May 2014, he failed to accurately report his assets from at least 10 accounts at TD Bank and one account at Provident Bank that he maintained during the time frame covered by the bankruptcy. The bankruptcy was approved based upon this false and incomplete information. He was discharged on March 13, 2015.
In addition to the prison term, Judge Sheridan sentenced Giorlando to three years of supervised release and ordered him to pay $750,000 in restitution to the IRS and $65,000 to victims of the fraud.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher, and IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation.
The government is represented by Senior Litigation Counsel V. Grady O’Malley of the U.S. Attorney’s Office’s Criminal Division in Newark.
Defense counsel: Rocco C. Cipparone Jr. Esq., Haddon Heights, New Jersey
Salem County, New Jersey, Man Indicted for Illegal Storage and Disposal of Hazardous WasteRead the Press Release
NEWARK, N.J. – The former owner and president of a Glassboro, New Jersey, drum reconditioning company was indicted today for allegedly illegally storing and disposing of hazardous waste, U.S Attorney Craig Carpenito and Acting Assistant Attorney General Jeffrey H. Wood of the Environment and Natural Resources Division of the U.S. Department of Justice, announced.
Thomas Toy, 73, of Elmer, New Jersey, was charged with one count of illegal storage and disposal of hazardous waste at the site of Superior Barrel and Drum Company Inc. (Superior) in Glassboro, New Jersey, in violation of the Resource Conservation and Recovery Act (RCRA).
According to the Indictment:
Superior received drums from various industrial customers, cleaned and processed those drums, and then resold them. Toy directed and supervised the operations of Superior, including the storage and disposal of large amounts of waste – including hazardous waste – at the company’s site. Superior did not have a permit to store or dispose of hazardous waste there. From Sept. 27, 2013, to Sept. 25, 2014, the U.S. Environmental Protection Agency (EPA) removed waste stored at Superior’s site. Approximately 1,800 containers of waste were removed, and much of the waste was found to be hazardous. The EPA’s removal cost was $4.2 million.
Toy was charged under RCRA, which was enacted in 1976 to address a growing nationwide problem with industrial and municipal waste. The law is designed to protect human health and the environment and provided controls on the management and disposal of hazardous waste. It prohibits the treatment, storage or disposal of any hazardous waste without a permit.
The charge on which Toy was indicted carries a maximum penalty of five years in prison and a maximum fine of $250,000 or twice the gain or loss caused by the offense.
U.S. Attorney Carpenito credited special agents of the U.S. Environmental Protection Agency-Office of Criminal Enforcement, under the direction Special Agent in Charge Tyler C. Amon, with the investigation leading to today’s charge.
The government is represented by Assistant U.S. Attorney Kathleen P. O’Leary of the Health Care and Government Fraud Unit in Newark and Trial Attorney Adam Cullman of the Environmental Crimes Section of the U.S. Department of Justice.
The charge and allegations against Toy are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
South Jersey Man Admits Stealing Car, Robbing Three BanksRead the Press Release
CAMDEN, N.J. - A Vineland, New Jersey, man today admitted stealing a car and using it as part of a South Jersey bank robbery spree in September and October 2016, U.S. Attorney Craig Carpenito announced.
Nathan L. Wallace, 29, pleaded guilty before U.S. District Judge Renée Marie Bumb to an information charging him with three counts of bank robbery. Wallace has been in custody since his arrest in October 2016.
According to documents filed in this case and statements made in court:
Wallace admitted stealing a 2003 Chrysler Sebring on Sept. 22, 2016 by threatening the victim with a toy revolver resembling an actual firearm. Wallace also admitted taking the Sebring on Sept. 24, 2016 to a BB & T Bank in Buena Vista Township, New Jersey, where he used the toy revolver to threaten bank employees and demand money. After taking cash from the employees, Wallace fled in the Sebring.
Wallace also admitted traveling in the same stolen Sebring with Quintin L. Jones, 35, of Vineland, to rob a Newfield National Bank in Newfield, New Jersey, on Oct. 7, 2016, and a Cape Bank in Upper Deerfield Township, New Jersey, on Oct. 11, 2016. During both robberies, one of the defendants used a toy revolver to threaten bank employees and steal money before they both fled in the stolen Searing.
In addition, Wallace admitted that he and Jones set fire to the Sebring on Oct. 15, 2016 in order to destroy evidence of the robberies.
Each bank robbery count is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine. Wallace’s sentencing is set for April 30, 2018.
Jones pleaded guilty on Nov. 8, 2017 and is scheduled to be sentenced on March 23, 2018.
U.S. Attorney Carpenito credited special agents of the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark, the FBI’s South Jersey Resident Agency, under the direction of Special Agent in Charge Michael Harpster in Philadelphia, the N.J. State Police, under the direction of Acting Superintendent Col. Patrick J. Callahan, as well as the Vineland Police Department, the Hamilton Township Police Department, the Newfield Police Department, the Cumberland County Prosecutor’s Office, and the Salem County Prosecutor’s Office, with the investigation.
The government is represented by Assistant U.S. Attorney Gabriel J. Vidoni of the U.S. Attorney’s Office Criminal Division in Camden.
Defense counsel: Maggie F. Moy Esq., Camden
Pharmacy Employee Charged in $1.5 Million Health Care Fraud ConspiracyRead the Press Release
NEWARK, N.J. – A Marlboro, New Jersey, man was charged today for his role in a conspiracy to falsely bill public and private insurance providers for medications that were never dispensed to patients, U.S. Attorney Craig Carpenito announced.Ruben Sevumyants, 34, is charged by criminal complaint with one count of conspiracy to commit health care fraud. He appeared today before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court and was released on $100,000 unsecured bond.
According to the complaint:
From June 2014 through Sept. 11, 2017, Sevumyants worked as the operations manager for a specialty pharmacy in Union City, New Jersey.
While employed at the pharmacy, Sevumyants allegedly forged documents and submitted false bills to Medicare, Medicaid, and other payors for medications that were never actually dispensed to patients. When health insurance providers, such as Amerihealth Caritas and Connecticut Medicaid, questioned the specialty pharmacy and Sevumyants about charges for medications that patients never received, Sevumyants allegedly forged Federal Express shipping records to make it appear that the medications were shipped to the patients.
Based on billing and shipping records, the specialty pharmacy received over $1.5 million from health insurance providers for prescriptions that were never actually dispensed to patients.
The count of conspiracy to commit health care fraud carries a maximum potential penalty of 10 years in prison and a $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 Special Agent in Charge Timothy Gallagher in Newark; and the U.S. Department of Health and Human Services – Office of the Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the ongoing investigation.
The charge and allegations in the complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.
The government is represented by Assistant U.S. Attorney Brian Urbano of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.
The New Jersey U.S. Attorney’s Office reorganized its health care practice in 2010 and created a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since that time, the office has recovered more than $1.38 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
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Defense Counsel: Thomas Calcagni Esq., Newark
Middlesex County, New Jersey, Duo Charged with Credit Card Fraud and Aggravated Identity Theft ConspiracyRead the Press Release
NEWARK, N.J. – A man and woman from Middlesex County, New Jersey, were arrested today for their alleged participation in a credit card fraud and aggravated identity theft conspiracy, U.S. Attorney Craig Carpenito announced.
Henry Abdul, 30, and Alexus Omowole, 22, both of North Brunswick, New Jersey, are each charged by complaint with one count of bank fraud conspiracy and one count of aggravated identity theft. Abdul and Omowole are expected to make their initial appearances this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court.
According to the complaint:
Between October 2015 and the present, Abdul and Omowole participated in a conspiracy to obtain control of and use credit card accounts of others through a fraudulent scheme commonly referred to as a “credit card takeover” scheme. A person who is not the account owner or authorized user of a credit card account contacts the financial institution and poses as the account owner in order to change the personal information associated with the account to information familiar to the criminal. The information changed may include the residence, email address, or telephone number associated with the account. These changes to the account are designed to give the criminal control of the account without the actual account owners’ knowledge or authorization, and may permit the criminal to receive new credit cards associated with the compromised accounts. Once in control of the account, the criminals profit by using the compromised accounts to make purchases, transfer funds to other accounts under the criminal’s control, or sell the account information to third parties.
In this case, Abdul’s residential address was used as part of the takeover conspiracy, and both Abdul and Omowole profited from the conspiracy by using several compromised credit cards at various retail locations in New Jersey and elsewhere.
The bank fraud conspiracy charge carries a maximum potential penalty of 30 years in prison and a fine of up to $1 million. The aggravated identity theft charge carries a mandatory sentence of two years in prison, which must run consecutive to any other term of imprisonment imposed by the Court.
U.S. Attorney Carpenito credited special agents with the U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), under the direction of Acting Special Agent in Charge Michael McCarthy in Newark, New Jersey; and the U.S. Postal Inspection Service under the direction of Acting Inspector in Charge Ruth M. Mendonca, with the investigation leading to today’s arrests.
The government is represented by Assistant U.S. Attorneys David M. Eskew and Nicholas Grippo of the U.S. Attorney’s Office Criminal Division in Newark.
The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty
Former IRS Employee Charged with Impersonating A Federal OfficerRead the Press Release
NEWARK, N.J. – A former IRS attorney appeared in federal court today to face charges related to his alleged unauthorized use of a federal agency identification card during multiple traffic stops, U.S. Attorney Craig Carpenito announced.
Deon Owensby, 42, of Trenton, New Jersey, is charged by criminal complaint with one count of impersonating a federal officer and one count of possessing an official identification card of a federal agency without authorization. He appeared today before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court and was released on $20,000 unsecured bond.
According to the complaint:
From August 2015 to April 2017, after the termination of his employment with the IRS, Owensby allegedly pretended to be an IRS employee and displayed federal employee identification, including an official IRS identification card known as an “IRS Pocket Commission,” to law enforcement officers after committing traffic violations.
Owensby obtained the IRS Pocket Commission during his employment as an attorney with the IRS. The IRS Pocket Commission, which IRS employees use as a means of identifying themselves to the public when performing official duties, was to be returned to the IRS upon the end of his employment in April 2015. However, Owensby told his supervisor that it was stolen.
Afterwards, Owensby allegedly displayed the IRS Pocket Commission or some form of federal employee identification to state or local police on three separate occasions from August 2015 to April 2017 after he was stopped for committing traffic infractions, once by a Millburn police officer and twice by N.J. State Police officers. During one of the encounters, Owensby claimed that the IRS Pocket Commission was still valid even after the police officer pointed out that the expiration date on it had passed.
The count of impersonating a federal officer is punishable by a maximum potential penalty of three years in prison and a $250,000 fine. The count of possessing an official identification card of a federal agency without authorization is punishable by a maximum potential penalty of six months in prison and a $5,000 fine.
U.S. Attorney Carpenito credited special agents of the U.S. Treasury Inspector General for Tax Administration, under the direction of Special Agent in Charge Rodney A. Davis, with the investigation. He also thanked the N.J. State Police, under the direction of Acting Superintendent Col. Patrick J. Callahan, and the Millburn Police Department, under the direction of Chief Brian Gilfedder, for their assistance.The government is represented by Jihee G. Suh of the U.S. Attorney Office’s Special Prosecutions Division in Newark.
The charges and allegations contained in the complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.
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Defense counsel: Patrick McMahon Esq., Assistant Federal Public Defender, Newark
Former Executive of New York Hotel Company Admits Stealing over $13 Million from EmployerRead the Press Release
NEWARK, N.J. – A Passaic County, New Jersey, man today admitted embezzling millions of dollars from a New York-based hospitality company where he was the chief operating officer, U.S. Attorney Craig Carpenito announced.
George Dfouni, 47, of Wayne, New Jersey, pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to an information charging him with one count of wire fraud and one count of tax evasion. He was released on $150,000 unsecured bond.
According to documents filed in the case and statements made in court:
From 1996 through 2015, Dfouni worked as the chief operating officer for a company identified in the information as “Company A,” which owns and operates hotels in New York and New Jersey.
From 2007 through September 2015, Dfouni negotiated multiple contracts on behalf of Company A, whereby two other companies – identified as “Company B” and “Company C” in the information – leased New York hotel properties from Company A. As consideration for the leases, Company B and Company C agreed to pay millions of dollars to Company A. Each contract included a signing bonus for Dfouni, who arranged for Company B and Company C to transmit their payments directly to him in New Jersey.
Dfouni was expected to keep his signing bonus and pay the remaining balances to Company A. Instead, Dfouni skimmed a portion of the payments due to Company A to support his lavish lifestyle and gambling expenses. In total, Dfouni embezzled approximately $13,807,034 from Company A.
In addition, Dfouni willfully failed to report $27,739,114 in income to the IRS between 2007 and 2014, including the funds that he embezzled from Company A.
The wire fraud charge is punishable by a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The tax evasion charge is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for April 30, 2018.
U.S. Attorney Carpenito credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, and special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, with the investigation leading to today’s plea.
The government is represented by Assistant U.S. Attorney Francisco J. Navarro of the U.S. Attorney’s Office Criminal Division in Newark.
Defense counsel: Peter Carter Esq., Newark, New Jersey