District of New Jersey

TRENTON, N.J. – Four men have been sentenced to federal prison terms for their respective roles in an interstate dog fighting network that extended from New Jersey to New Mexico and Indiana, U.S. Attorney Craig Carpenito, District of New Jersey, and Acting Assistant Attorney General Jeffrey H. Wood of the Justice Department’s Environment and Natural Resources Division, announced today.

The four defendants, arrested and charged as part of a coordinated effort across numerous federal judicial districts to combat organized dog fighting, previously pleaded guilty before U.S. District Judge Mary L. Cooper in Trenton federal court:

• Anthony “Monte” Gaines, 37, of Vineland, New Jersey, was sentenced March 5, 2018, to serve 42 months in prison. He previously pleaded guilty to two felony counts of conspiracy to buy, sell, receive, transport, deliver, and possess dogs intended for use in an animal fighting venture, and one felony count of possessing a dog intended for use in an animal fighting venture.

• Frank Nichols, 40, of Millville, New Jersey, was sentenced March 9, 2018, to serve 57 months in prison. He previously pleaded guilty to one felony count of conspiracy to transport, deliver and receive dogs intended for use in an animal fighting venture, and one felony count of possessing a stolen firearm subsequent to a felony conviction.

• Lydell Harris, 32, of Vineland, New Jersey, a/k/a “Sinn,” was sentenced today to serve 17 months in prison. He previously pleaded guilty to one felony count of conspiracy to sponsor or exhibit a dog in an animal fighting venture, and one felony count of possessing a dog intended for use in an animal fighting venture.

• Pedro Cuellar, 47, of Willow Springs, Illinois, was sentenced today to serve 12 months in prison. He had pleaded guilty to one felony count of conspiracy to transport, deliver, and receive dogs intended for use in an animal fighting venture.

 

A fifth co-defendant, Mario Atkinson, 42, of Asbury Park, New Jersey, has also pleaded guilty and is scheduled to be sentenced April 18, 2018. The court is expected to set a trial date for four additional defendants for some time this summer. Judge Anne E. Thompson sentenced Gaines and Judge Peter G. Sheridan sentenced Harris, Nichols and Cuellar.

“Dog fighting is vicious and cruel. And beyond the needless suffering it inflicts on animals, it exacts a toll on local animal shelters, charitable humane organizations, and the taxpayers of New Jersey,” U.S. Attorney Carpenito said. “We applaud our local and federal partners who investigated this case and brought the offenders to justice. The message from these sentencing hearing is simple: if you fight dogs in New Jersey, you will face prosecution and imprisonment.”

“Ending animal fighting ventures is important to our Division, and is often tied to other forms of crime. We dispatch prosecutors who focus in this area to districts across the country to join with our partners in the U.S. Attorneys’ Offices in aggressively pursuing illegal animal fighting,” said Acting Assistant Attorney General Wood. “This week’s sentencing proceeding demonstrates that our justice system will not tolerate the torment and death of animals in the fighting ring, all for the sake of illegal gambling.”

“The provisions of the Animal Welfare Act were designed to protect animals from being used in illegal fighting ventures, which often entail other forms of criminal activity involving drugs, firearms and gambling,” Special Agent in Charge Bethanne M. Dinkins for U.S. Department of Agriculture’s Office of Inspector General said. “Together with the Department of Justice, animal fighting is an investigative priority for USDA OIG, and we will work with our law enforcement partners to investigate and assist in the criminal prosecution of those who participate in animal fighting ventures.”

According to court documents filed in connection with the cases and statements made in court:

From October 2015 through June 1, 2016, the defendants and their associates fought dogs – including to the death – and trafficked in dogs with other dog fighters in Indiana, Illinois, New Mexico, and elsewhere so that those dogs could be used in dog fights. They also maintained fighting dogs and dog fighting equipment such as dog treadmills, intravenous drug bags and lines, “breeding stands” used to immobilize female dogs, and chains weighing up to several pounds per linear foot. Agents found canine blood on the floor, walls, and ceiling of the basement of one defendant’s residence, indicating that the area was likely used as a dog fighting pit. One of the pleading defendants admitted that his dog died in his car on the way home after losing a dogfight.

This case is part of Operation Grand Champion, a coordinated effort across numerous federal judicial districts to combat organized dog fighting. The phrase “Grand Champion” is used by dog fighters to refer to a dog with more than five dog fighting “victories.” To date, 98 dogs have been rescued as part of Operation Grand Champion, and either surrendered or forfeited to the government. The Humane Society of the United States assisted with the care of the dogs seized by federal law enforcement. The investigation is ongoing.

The government is represented by Assistant U.S. Attorney Kathleen O’Leary of the U.S. Attorney’s Office, District of New Jersey, and Trial Attorney Ethan Eddy of the Justice Department’s Environmental Crimes Section.

The case is being investigated by the U.S. Department of Agriculture – Office of Inspector General, the U.S. Department of Homeland Security – Homeland Security Investigations, and the FBI.

NEWARK, N.J. – A brother and sister from Plainfield, New Jersey, were indicted today on drug distribution, felony possession of a firearm, obstruction of justice, and other charges resulting from a violent encounter with law enforcement officers in October 2017, U.S. Attorney Craig Carpenito announced.

Arthur Forman, 35, is charged with possession of cocaine, marijuana, and oxycodone with intent to distribute, possession of a firearm in the course of committing a drug crime, and being a previously convicted felon in possession of a handgun. Courtney Jessica Forman, 30, is charged with misprision of a felony for taking acts to conceal Arthur Forman’s alleged crimes. Both defendants are charged with obstruction of justice. They are scheduled to be arraigned in Newark federal court at a later date. 

According to the documents filed in this case:

During an encounter with law enforcement on Oct. 13, 2017, Forman allegedly resisted arrest by choking a Plainfield detective. During the encounter, Forman transferred a bag containing contraband to Courtney Jessica Forman, who attempted to dispose of the contraband by throwing it out a window. The bag was recovered by law enforcement officers from a nearby rooftop landing. Law enforcement officers recovered cocaine, marijuana, and a .38 caliber semi-automatic handgun loaded with eight rounds from the bag and multiple oxycodone pills from Arthur Forman’s apartment.

Based on the combined charges, Arthur Forman faces a maximum sentence of 30 years to life in prison. Courtney Jessica Forman faces a maximum sentence of three years in prison for the misprision charge and five years in prison for the obstruction of justice charge.  

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

U.S. Attorney Carpenito credited special agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge John Devito, the Plainfield Police Division, under the leadership of Director Carl Riley, and the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Michael Monahan, with the investigation.

The government is represented by Assistant U.S. Attorneys Joshua L. Haber of the U.S. Attorney’s Office Healthcare Fraud Unit and Desiree Grace Latzer of the U.S. Attorney’s Office Violent Crimes Unit in Newark.

Defense counsel: 

Arthur Forman: Wanda M Akin Esq.
Courtney Jessica Forman: David Holman Esq.

CAMDEN, N.J. – A Camden woman today admitted defrauding the Federal Emergency Management Administration (FEMA) in 2014 after Hurricane Sandy struck New Jersey in 2012, U.S. Attorney Craig Carpenito announced.

Shanyra Bennett 40, pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to an information charging her with one count of Disaster Benefits Fraud.

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

When a natural disaster or federal emergency occurs in the United States, federal agencies, such as FEMA, provide relief and assistance to effected individuals and entities.  FEMA provides financial assistance by, among other things, helping effected individuals repair their property.

Due to FEMA's vast size and the typically large number of victims resulting from a disaster, FEMA is frequently targeted in disaster fraud schemes by individuals or groups seeking benefits to which they are not entitled. They do this by submitting fraudulent applications to FEMA for among other things, repairs and rental assistance.

In October 2012, various counties of southern New Jersey, including Camden County, sustained significant damage due to wind, rain, and flooding from Hurricane Sandy.

On Oct. 30, 2012, then-President Obama signed a Presidential Disaster Declaration for the State of New Jersey, enabling eligible individuals to seek financial assistance from FEMA when displaced by the storms.

Bennett admitted today that she applied for FEMA benefits in November 2012, requesting rental assistance, assistance to replace personal property that was damaged and assistance for transportation, as her car was damaged and not drivable.

Bennett faxed FEMA documents claiming that she worked as a senior health aide, which required her to travel for work. She sent FEMA a fraudulent letter indicating that she had insurance through Mercury Indemnity Co. of America. At the time of the hurricane, Bennett did not have insurance with Mercury Indemnity. Bennett also submitted fraudulent invoices from a mechanic in Camden.

Based on these false representations and fraudulent documents, on Dec. 10, 2012, FEMA electronically transferred $5,162 into Bennett’s bank account to replace her 2004 Dodge Durango, which she falsely reported destroyed by the hurricane.

To support her claim for personal property assistance, Bennett faxed FEMA a letter purported to be on the letterhead of her employer, which indicated that she was a Certified Home Health Aid and that her position required a laptop to perform her job. She also faxed FEMA earning statements from a company in Camden for July 2013, August 2013, September 2013 and October 2013. At the time of the hurricane, Bennett was unemployed.

As part of the application process for rental assistance, Bennett provided a fraudulent copy of a lease agreement for a house on South 41st Street, Camden, and fraudulent copies of rental receipt payments for June 2013 through November 2013. Bennett neither rented the property nor paid rent for use of the property.

Based on Bennett’s false statements and representations, between December 2012 and September 2013, FEMA transferred $22,190 in disaster related funds through electronic fund transfers into Bennett’s bank account.

Bennett admitted that she also defrauded FEMA in 2011, when Hurricane Irene struck the area. She admitted that between September 2011 and November 2012, based on her fraudulent claims and representations, she received approximately $30,200 in FEMA disaster related funds.

The charge to which Bennett pleaded guilty carries a maximum potential penalty of 30 years in prison and a fine of $250,000. Bennett=s sentencing is scheduled for June 27, 2018.

U.S. Attorney Carpenito credited special agents of the Department of Homeland Security, Office of Inspector General, under the direction of Special Agent in Charge Mark Tasky, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Jason M. Richardson of the U.S. Attorney's Office Criminal Division in Camden in the criminal case.

Defendant Used Purported Non-Profit to Convince Seniors to Submit to Unnecessary Testing; Paid Healthcare Providers to Falsely Claim Tests Were Necessary

 

NEWARK, N.J. –A Somerset County, New Jersey, man was indicted by a federal grand jury today for using the purported non-profit The Good Samaritans of America to defraud the Medicare Program of more than $1 million by convincing hundreds of senior citizens to submit to unnecessary genetic testing, U.S. Attorney Craig Carpenito announced.

Seth Rehfuss, 43, of Somerset, New Jersey, is charged by indictment with conspiracy to commit health care fraud and conspiracy to wrongfully access individually identifiable health information and to pay illegal remunerations to health care professionals.

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

From July 2014 through December 2015, Rehfuss, conspirator Sheila Kahl of Point Pleasant, New Jersey, and others allegedly used The Good Samaritans of America and offers of “free ice cream” to gain access to low-income senior housing complexes. Rehfuss and other members of the scheme claimed that The Good Samaritans of America was a “trusted non-profit” that assisted senior citizens in navigating federal benefit programs. In reality, The Good Samaritans of America was a front to present information about genetic testing.

In order to convince senior citizens to submit to genetic testing, Rehfuss used fear-based tactics during the presentations, including suggesting the senior citizens would be vulnerable to heart attacks, stroke, cancer and suicide if they did not have the genetic testing. In addition, Rehfuss claimed that the genetic testing allowed for “personalized medicine.”

As part of the scheme, Seth Rehfuss and others frequently took DNA swabs in the community rooms where the presentations took place or made arrangements to visit the senior citizen’s apartment on another day to take the DNA swab. Regardless of the timing or location of the swabbing, the DNA swab was collected without the involvement of any healthcare provider and without any determination by a healthcare provider that such testing was medically necessary or appropriate.

To get the tests authorized, Rehfuss used advertisements on Craigslist to recruit healthcare providers for the scheme. After entering into contractual relationships with The Good Samaritans of America, the healthcare providers received requisition forms that often included a patient’s personal information, Medicare information, medication lists and diagnosis codes.

The healthcare providers were paid thousands of dollars per month by Rehfuss and Kahl to sign their names to requisition forms authorizing testing for patients they never examined and were in no way involved in the patients’ care or treatment. Rehfuss and Kahl used fraudulent email accounts to access the individually identifiable health information of the senior citizens, specifically the results of the DNA analysis.

Rehfuss, Kahl and others caused the Medicare program to pay more than $1 million to two clinical laboratories. Rehfuss obtained more than $100,000 and distributed commissions to Kahl of tens of thousands of dollars.

Rehfuss and others were actively working towards expanding the scheme outside of New Jersey into other states, including: Georgia, Delaware, Virginia, Maryland, Pennsylvania, South Carolina, Michigan, Mississippi, Florida, Tennessee and Arizona.

The healthcare fraud conspiracy charge 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. The conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sheila Kahl previously pleaded guilty and is awaiting sentencing.

U.S. Attorney Carpenito credited special agents of 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, along with special agents of the U.S. Attorney’s Office for the District of New Jersey, with the investigation leading to today’s indictment.

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

The government is represented by Danielle Alfonzo Walsman, Chief of the U.S. Attorney’s Office’s Public Protection Unit in Newark.

NEWARK, N.J. – A former Jersey City, New Jersey, police officer was sentenced today to 18 months in prison for paying bribes in order to obtain compensation for off-duty work he did not perform, U.S. Attorney Craig Carpenito announced.

Michael O’Leary, 35, of Jersey City, previously pleaded guilty before U.S. District Judge John Michael Vazquez to an information charging him with one count of conspiracy to commit bribery. Vazquez imposed the sentence today in Newark federal court.

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

Private contractors and utility companies sometimes needed the services of off-duty Jersey City police officers for certain projects, including work in Jersey City that could obstruct the flow of traffic. O’Leary was an officer who was eligible to perform off-duty work.

From November 2013 through April 2016, O’Leary engaged in a conspiracy in which he paid bribes to another Jersey City officer who was authorized to assign off-duty work, in exchange for that officer’s official assistance in submitting phony vouchers to Jersey City indicating that O’Leary had completed certain off-duty assignments. As a result, O’Leary was compensated for work he never performed.

In addition to the prison term, Judge Vazquez sentenced O’Leary to two years of supervised release and ordered him to pay restitution of $113,145 and forfeiture of $39,587.

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 Jersey City Police Department is cooperating 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: John Lynch Esq., Union City, New Jersey

NEWARK, N.J. – A Newark, New Jersey, man who was previously convicted of federal heroin distribution charges was indicted today with drug distribution and firearms crimes, U.S. Attorney Craig Carpenito announced.

Jihad Garrett, 34, is charged with possession of heroin with intent to distribute, possession of a firearm in the course of committing that drug crime, and being a previously convicted felon in possession of a handgun. He is scheduled to make his initial appearance next week before U.S. Magistrate Judge Cathy Waldor in Newark federal court. 

According to the indictment:

Garrett was charged in connection with the Feb. 23, 2018, seizure of a vehicle he was driving. Newark police subsequently recovered from the vehicle 500 packets of heroin that were prepared for distribution and a .40 caliber handgun loaded with seven rounds of ammunition.

Garrett was convicted in 2012 in Newark federal court on heroin distribution charges and was sentenced to 74 months in prison.

The current heroin distribution charge carries a maximum of 20 years in prison; the count of possession of a firearm during the drug offense carries a mandatory minimum sentence of five years in prison and a maximum term of life in prison that must be served upon completion of the drug offense. The charge of being a felon in possession of a firearm carries a maximum term of 10 years in prison. 

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

U.S. Attorney Carpenito credited the FBI, under the leadership of Special Agent in Charge Timothy Gallagher; the U.S. Marshal’s Service, under the leadership of U.S. Marshal Juan Mattos Jr., and the Newark Department of Public Safety, under the direction of Anthony F. Ambrose, with the investigation leading to the indictment.

The government is represented by Assistant U.S. Attorneys Robert Frazer and Desiree Latzer of the U.S. Attorney’s Office Violent Crimes Unit in Newark.

CAMDEN, N.J. – A Riverside, California, man was sentenced today to 36 months in prison for his role in a conspiracy to steal 94,000 credit and debit cards from customers at approximately 80 Michaels’ Stores and use that information to make fraudulent withdrawals from the customers’ bank accounts, U.S. Attorney Craig Carpenito announced.

Angel Angulo, 28, previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez to Count One and Count Two of an indictment charging him with conspiracy to commit bank fraud and aggravated identity theft. Judge Rodriguez imposed the sentence today in Camden federal court.

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

The conspirators installed devices that acquired customers’ bank account and personal identification number (PIN) information on point of sale (POS) terminals at stores operated by Michaels. The stolen account information was used to produce counterfeit bank cards, which were used with the stolen PINs to withdraw funds from the compromised bank accounts.

The conspirators allegedly replaced 88 POS terminals in 80 different stores operated by Michaels across 19 states, including New Jersey, with counterfeit POS devices. Each counterfeit device was equipped with wireless technology, which the conspirators used to retrieve the stolen information. From February 2011 to April 2011, conspirators stole approximately 94,000 debit and credit card account numbers.

From April 2011 to May 2011, Angulo, Crystal Banuelos, and others obtained counterfeit cards with the corresponding PIN numbers written on them from other conspirators. They used the cards and PIN numbers to withdraw money using ATMs from hundreds of bank accounts. On May 14, 2011, Angulo and Banuelos possessed 179 counterfeit cards in New Jersey.

In addition to the prison term, Judge Rodriguez sentenced Angulo to five years of supervised release and ordered him to pay restitution of $480,300.

Banuelos previously pleaded guilty to her role in the scheme and is scheduled to be sentenced Sept. 5, 2018.

U.S. Attorney Carpenito credited special agents of the U.S. Secret Service, under the direction of Special Agent in Charge Mark McKevitt, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Daniel Shapiro of the Computer Hacking and Intellectual Property Section of the U.S. Attorney’s Office Economic Crimes Unit.

Defense counsel: Lisa Lewis Esq., Assistant Federal Public Defender, Camden

TRENTON, N.J. – A Point Pleasant, New Jersey, man today admitted that he planned to construct and use a pressure cooker bomb in New York on behalf of the Islamic State of Iraq and al-Sham (ISIS), U.S. Attorney Craig Carpenito and Assistant Attorney General for National Security John C. Demers announced.

Gregory Lepsky, 20, pleaded guilty before U.S. District Court Judge Michael Shipp in Trenton federal court to an information charging him with one count of attempting to provide material support to a designated foreign terrorist organization, specifically ISIS.

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

On Feb. 21, 2017, Lepsky was arrested by the Point Pleasant Police Department in connection with an incident that occurred that day in his family’s home. Following the arrest, law enforcement officers searched the residence and found a new pressure cooker stored behind a roll of bubble wrap in Lepsky’s bedroom closet.

During searches of computers and other digital evidence linked to Lepsky, law enforcement officers found evidence of Lepsky’s plan to build and detonate a bomb as part of his support for ISIS. During several social media communications, Lepsky told others that he intended to fight on behalf of ISIS and that he would, if necessary, become a martyr by driving a “bunch of explosives” to where the “enemies” could be found and blowing himself up.

Law enforcement officers also located a series of instructions that had been published online by another terrorist group that gave specific, step-by-step instructions on how to build a pressure cooker bomb, which coincided with the delivery of the pressure cooker to Lepsky a short time before his arrest. In addition, law enforcement officers recovered a message forwarded by Lepsky from another ISIS supporter stating that if a westerner could not travel to Syria to fight for ISIS, he could conduct a terrorist attack in his home country using improvised explosive devices.

During today’s plea hearing, Lepsky admitted that beginning in January 2017, he began to formulate a plan to detonate the pressure cooker bomb in New York City on behalf of ISIS. Lepsky admitted that he used the internet to access ISIS directives, obtain bomb-making instructions, and purchase the pressure cooker and other items to be used in the attack.

Under the terms of the plea agreement, if accepted by the Court, Lepsky will be given a sentence between 16 and 19 years in prison and a lifetime term of supervised release. Sentencing is scheduled for June 19, 2018.

U.S. Attorney Carpenito and Assistant Attorney General Demers credited the FBI and the Joint Terrorism Task Force, under the direction of Special Agent in Charge Timothy Gallagher in Newark; the N.J. State Attorney General’s Office under the direction of Attorney General Gurbir Grewal; the Ocean County Prosecutor’s Office, under the direction of Prosecutor Joseph Coronato; the Point Pleasant Police Department under the direction of Chief Richard P. Larsen; and the N.J. Office of Homeland Security and Preparedness under the direction of Director Jared Maples, with the investigation.

The government is represented by Assistant U.S. Attorney James Donnelly of the U.S. Attorney’s Office Criminal Division in Newark and Trial Attorney Justin Sher of the National Security Division’s Counterterrorism Section.

Defense counsel: Lisa Mack Esq., Assistant Federal Public Defender, Newark

Gregory Lepsky, 20, of Point Pleasant, New Jersey, pleaded guilty today to an information charging him with one count of attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization.  Lepsky admitted that he planned to construct and use a pressure cooker bomb in New York on behalf of ISIS.

Assistant Attorney General for National Security John C. Demers and U.S. Attorney Craig Carpenito announced the plea which was accepted by U.S. District Court Judge Michael Shipp.

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

On Feb. 21, 2017, Lepsky was arrested by the Point Pleasant Police Department in connection with an incident that occurred that day in his family’s home. Following the arrest, law enforcement officers searched the residence and found a new pressure cooker stored behind a roll of bubble wrap in Lepsky’s bedroom closet.

During searches of computers and other digital evidence linked to Lepsky, law enforcement officers found evidence of Lepsky’s plan to build and detonate a bomb as part of his support for ISIS. During several social media communications, Lepsky told others that he intended to fight on behalf of ISIS and that he would, if necessary, become a martyr by driving a “bunch of explosives” to where the “enemies” could be found and blowing himself up. 

Law enforcement officers also located a series of instructions that had been published online by another terrorist group that gave specific, step-by-step instructions on how to build a pressure cooker bomb, which coincided with the delivery of the pressure cooker to Lepsky a short time before his arrest. In addition, law enforcement officers recovered a message forwarded by Lepsky from another ISIS supporter stating that if a westerner could not travel to Syria to fight for ISIS, he could conduct a terrorist attack in his home country using improvised explosive devices.

During today’s plea hearing, Lepsky admitted that beginning in January 2017, he began to formulate a plan to detonate the pressure cooker bomb in New York City on behalf of ISIS.  Lepsky admitted that he used the internet to access ISIS directives, obtain bomb-making instructions, and purchase the pressure cooker and other items to be used in the attack.

Under the terms of the plea agreement, if accepted by the Court, Lepsky will be given a sentence between 16 and 19 years in prison and a lifetime term of supervised release.

Assistant Attorney General Demers and U.S. Attorney Carpenito credited the FBI and the Joint Terrorism Task Force, under the direction of Special Agent in Charge Timothy Gallagher in Newark; the N.J. State Attorney General’s Office under the direction of Attorney General Gurbir Grewal; the Ocean County Prosecutor’s Office, under the direction of Prosecutor Joseph Coronato; the Point Pleasant Police Department under the direction of Chief Richard P. Larsen; and the N.J. Office of Homeland Security and Preparedness under the direction of Director Jared Maples, with the investigation. 

The government is represented by Assistant U.S. Attorney James Donnelly for the District of New Jersey and Trial Attorney Justin Sher of the National Security Division’s Counterterrorism Section.

NEWARK, N.J. – A Totowa, New Jersey, man will appear in federal court today to face weapons charges after allegedly trying to get a firearm through security at Newark Liberty International Airport, U.S. Attorney Craig Carpenito announced.

Laron L. James, a/k/a “Juelz Santana,” 36, is charged by complaint with one count of possession of a firearm by a convicted felon and one count of carrying a weapon on an aircraft. He surrendered to law enforcement early this morning and will appear this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court.

According to the complaint:

On March 9, 2018, James submitted a carry-on bag for inspection at Newark Liberty International Airport. While he waited for his bag to be screened, James allegedly requested that the bag be examined quickly because he was going to miss his flight to San Francisco.

During the X-Ray screening of James’s luggage, a Transportation Security Administration (TSA) agent identified a suspected firearm and contacted the Port Authority Police. Upon seeing that his bag had attracted additional attention, James left the security checkpoint area without his belongings, including his driver’s license and boarding pass, and departed the airport in a taxi.

Further investigation of James’s bag revealed that it contained a Derringer .38 caliber handgun, which was loaded with two rounds. James was prohibited from possessing a firearm due to a 2013 conviction for manufacturing and distributing a controlled dangerous substance.

Both charges in the complaint carry a maximum potential penalty of 10 years 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 officers of the Port Authority Police Department, under the direction of Superintendent Michael A. Fedorko, with the investigation.  

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

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

 

NEWARK, N.J. – A Parlin, New Jersey, man who delivered two kilograms of heroin to another individual in Harrison, New Jersey, today pleaded guilty in Newark federal court, U.S. Attorney Craig Carpenito announced.

Pedro Rodriguez, 44, pleaded guilty before U.S. District Judge Claire C. Cecchi to an information charging him with conspiracy to possess with intent to distribute over a kilogram of heroin. 

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

On Oct 19, 2017, law enforcement officers observed Pedro Rodriguez outside of a restaurant in Newark, where he met with another individual and retrieved a bag that was suspected of containing narcotics. Afterwards, Pedro Rodriguez drove to Harrison, met with Rafaelito Rodriguez, 43, of East Stroudsburg, Pennsylvania, and provided him a bag containing approximately two kilograms of heroin. Rafaelito Rodriguez was arrested in Harrison shortly afterwards. Pedro Rodriguez was later arrested at his home in Parlin.

The drug 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. Sentencing is scheduled for July 19, 2018. Rafaelito Rodriguez pleaded guilty on March 6, 2018 and awaits sentencing.

The government is represented by Assistant U.S. Attorney Meredith Williams of the U.S. Attorney’s Office OCDETF/Narcotics Unit in Newark. 

U.S. Attorney Carpenito credited the Drug Enforcement Administration’s New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson, with the investigation.

Defense counsel: Pedro Rodriguez is represented by Michael Pedicini Esq.

NEWARK, N.J. – A former settlement agent from Wyckoff, New Jersey, was sentenced today to 144 months in prison for defrauding banks out of $1.1 million using phony loan applications for properties in Bergen and Morris Counties, New Jersey, and for failing to pay over $450,000 in personal income taxes, U.S. Attorney Craig Carpenito announced.

Mark Andreotti, 47, was previously convicted on all six counts of an indictment charging him with bank fraud, conspiracy to commit bank fraud, tax evasion, and failure to file tax returns. He was convicted following a two-week trial before U.S. District Judge Susan D. Wigenton, who imposed the sentence today in Newark federal court.

According to documents filed in this case and the evidence at trial:

In January 2010, Andreotti submitted a loan application to a bank requesting $625,000 to refinance the mortgage on his house in Wyckoff. Andreotti, who owned and operated Metropolitan Title and Abstract (Metropolitan), used Metropolitan as the settlement agent on the transaction. After the bank transferred the $625,000 for the refinance to Metropolitan’s escrow account, Andreotti spent the money on personal expenses instead of paying off the first mortgage on the house.

In April 2011, Andreotti conspired with another individual who worked as a real estate attorney to obtain $480,000 by claiming that the money would be used to refinance the mortgage on the attorney’s house in Montville, New Jersey. After the bank transferred the money for the refinance to Metropolitan’s escrow account, Andreotti kept $110,000 for himself before transferring the remaining funds to the other conspirator.

In 2010, the IRS initiated collection actions against Andreotti for unpaid personal income taxes. Despite numerous liens and levies and having five rental income properties in addition to his primary residence, Andreotti continued to evade his taxes. He also failed to file tax returns for the tax years 2010 and 2011.

In addition to the prison term, Judge Wigenton sentenced Andreotti to five years of supervised release and ordered him to pay restitution of over $2.1 million.

U.S. Attorney Carpenito credited special agents of the Federal Housing Finance Agency – Office of Inspector General, under the direction of Special Agent in Charge Steven Perez in Newark; 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 with the U.S. Attorney’s Office, with the investigation.

The government is represented by Assistant U.S. Attorney Shana Chen in of the U.S. Attorney’s Office Criminal Division in Newark and Special Assistant U.S. Attorney Charlie Divine of the Federal Housing and Finance Agency – Office of Inspector General.

Defense counsel: Marc Neff, Esq., of Marlton

NEWARK, N.J. – Two individuals who operate a Newark grocery store were charged today with fraudulently exchanging over $885,000 in Supplemental Nutrition Assistance Program (SNAP) benefits for cash, U.S. Attorney Craig Carpenito announced.

Maria Teresa Venegas, 25, and her father, Manuel Venegas, 53, both of Newark, are charged by complaint with SNAP benefits fraud. Both were arrested this morning and appeared in the afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court. They were released on $200,000 unsecured bond.

According to the complaint:

Since November 2011, the defendants managed Jenny’s Deli, a small grocery store in Newark that was authorized to accept SNAP benefits, 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 but may not exchange SNAP benefits for cash. 

Manuel and Maria Teresa Venegas allegedly exchanged more than $885,000 in SNAP benefits for cash between 2011 and 2018. In addition to the high volume of SNAP redemptions for Jenny’s Deli indicating fraud, law enforcement officers used an undercover agent who engaged in approximately 20 “purchases” at Jenny’s Deli where one or both defendants allegedly exchanged cash for SNAP benefits.

The SNAP benefits 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 Agriculture – Office of Inspector General, under the direction of Special Agent in Charge Bethanne M. Dinkins, with the investigation leading to today’s charges.

The government is represented by Assistant U.S. Attorney Jason S. Gould of the U.S. Attorney’s Office Criminal Division in Newark.

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

Defense counsel: Maria Teresa Venegas: Linda Foster, Esq., Assistant Federal Public Defender, Newark
Manuel Venegas: Laurie Fierro Esq., Kinnelon, New Jersey

Beam Bros. Trucking Inc. (BBT), and its principals Gerald Beam and Garland Beam, have agreed to pay $1,025,000 to resolve allegations under the False Claims Act that BBT overcharged the U.S. Postal Service (USPS) on contracts to transport mail.  BBT is a trucking company located in Mt. Crawford, Virginia.

 

“The Department of Justice takes seriously its role in protecting the federal procurement process from false claims,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “This settlement demonstrates that we will hold accountable federal contractors engaging in fraud, and will ensure that federal funds are protected from overcharges and abuse.”

 

“We are gratified to have contributed to this investigation and applaud the exceptional work by the investigative team for both protecting the contracting process and overall program costs,” said Special Agent in Charge Scott Pierce of the U.S. Postal Service Office of Inspector General.  “Along with our law enforcement partners, the USPS OIG will continue to aggressively investigate those who engage in activities designed to defraud the Postal Service.” 

 

“Contractors working for the federal government are held to the same high ethical standards as full-time employees,” U.S. Attorney for the District of New Jersey Craig Carpenito said. “This settlement will return more than $1 million to the USPS.”

 

USPS contracts with trucking companies, including BBT, to transport mail throughout the United States.  On some contracts, USPS had provided trucking contractors with credit cards, known as Voyager Cards, to pay for fuel.  This settlement resolves allegations that BBT misused Voyager Cards to purchase fuel on contracts that did not allow for their use, resulting in inflated charges in violation of the False Claims Act.     

 

The settlement resolves allegations made in lawsuit filed under the whistleblower provision of the False Claims Act by Bobby Blizzard, a former BBT employee.  The False Claims Act permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  Mr. Blizzard’s share of the recovery has yet to be determined. 

 

The settlement was the result of a coordinated effort between the United States Attorney’s Office for the District of New Jersey, the Civil Division of the Department of Justice, and the USPS, Office of the Inspector General.

 

The lawsuit, which was filed in the District of New Jersey, is captioned United States ex rel. Doe v. Beam Bros. Trucking, Inc., Civil Action No. 10-657 (D.N.J.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability. 

NEWARK, N.J. – Beam Bros. Trucking Inc. (BBT), and its principals Gerald Beam and Garland Beam, have agreed to pay $1,025,000 to resolve allegations under the False Claims Act that BBT overcharged the U.S. Postal Service (USPS) on contracts to transport mail. BBT is a trucking company located in Mt. Crawford, Virginia.

“Contractors working for the federal government are held to the same high ethical standards as full-time employees,” U.S. Attorney for the District of New Jersey Craig Carpenito said. “This settlement will return more than $1 million to the USPS.”

“The Department of Justice takes seriously its role in protecting the federal procurement process from false claims,” Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division said. “This settlement demonstrates that we will hold accountable federal contractors engaging in fraud, and will ensure that federal funds are protected from overcharges and abuse.”

“We are gratified to have contributed to this investigation and applaud the exceptional work by the investigative team for both protecting the contracting process and overall program costs,” Special Agent in Charge Scott Pierce of the U.S. Postal Service Office of Inspector General, said. “Along with our law enforcement partners, the USPS OIG will continue to aggressively investigate those who engage in activities designed to defraud the Postal Service.”

USPS contracts with trucking companies, including BBT, to transport mail throughout the United States. On some contracts, USPS had provided trucking contractors with credit cards, known as Voyager Cards, to pay for fuel. This settlement resolves allegations that BBT misused Voyager Cards to purchase fuel on contracts that did not allow for their use, resulting in inflated charges in violation of the False Claims Act.

The settlement resolves allegations made in lawsuit filed under the whistleblower provision of the False Claims Act by Bobby Blizzard, a former BBT employee. The False Claims Act permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. Mr. Blizzard’s share of the recovery has yet to be determined.

The settlement was the result of a coordinated effort between the United States Attorney’s Office for the District of New Jersey, the Civil Division of the Department of Justice, and the USPS, Office of the Inspector General. The government is represented by Assistant U.S. Attorney Frances Bajada, District of New Jersey, and Trial Attorney Gregory Pearson, Commercial Litigation Branch, Civil Division, U.S. Department of Justice.

The lawsuit, which was filed in the District of New Jersey, is captioned United States ex rel. Doe v. Beam Bros. Trucking, Inc., Civil Action No. 10-657 (D.N.J.). The claims resolved by this settlement are allegations only, and there has been no determination of liability.

 

CAMDEN, N.J. – A Essex County, New Jersey, man today admitted being a felon in possession of a weapon – for the second time – as well as a violation of supervised release from his first felon in possession conviction, and agreed to a 144-month sentence, U.S. Attorney Craig Carpenito announced.

John Cottle, 47, pleaded guilty to an information charging him with one count of being a felon in possession of a firearm and one count of violation of supervised release from his first felon in possession of a firearm conviction from 2010. Cottle entered his plea before U.S. District Judge Noel L. Hillman in Camden federal court.

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

In December 2016, investigators from the Newark and Hillside police departments responded to reports of a robbery in the area of South 13th Street, near Avon Avenue, in Newark.  Officers encountered Cottle in the area and upon investigation found him to be in possession of a loaded .40 caliber Glock semi-automatic handgun. Cottle has numerous prior felony convictions, including a 2010 felon in possession of a firearm conviction in the District of New Jersey – from which he was still on supervised release at the time of the 2016 arrest – and is prohibited from possessing a firearm under federal law.  

The felon in possession of a firearm charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine; the violation of supervised release carries a maximum potential penalty of 24 months in prison. As part of his plea agreement, Cottle agreed to the maximum penalty for each of the crimes charged.  
  
U.S. Attorney Carpenito credited FBI special agents, under the direction of Special Agent in Charge Timothy Gallagher, with the investigation leading to the guilty plea. He also thanked the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Robert D. Laurino; the Newark Police Department, under the direction of Public Safety Director Anthony F. Ambrose; the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Michael A. Monahan; and the Hillside Police Department, under the direction of Chief of Police Vincent Ricciardi, for their assistance.

The government is represented by Assistant U.S. Attorney Zach Intrater of the U.S. Attorney’s Office in Newark.
 

TRENTON, N.J. -The owner and operator of a stock trading operation today admitted participating in a multi-year insider trading scheme that made over $3 million in illicit profits by exploiting material information in violation of confidentiality agreements, U.S. Attorney Craig Carpenito announced.

Steven Fishoff, 60, of Westlake Village, California, pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to Count Four of an indictment charging him with securities fraud.

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

On numerous occasions between May 2010 and August 2013, Fishoff, Ronald Chernin, 69, of Oak Park, California, Steven Costantin, 57, of Farmingdale, New Jersey, Paul Petrello, 56, of Boca Raton, Florida, and Joseph Spera, 56, of Boca Raton, short-sold the securities of numerous public companies using inside information obtained by Fishoff and others.

For each of these offerings, Fishoff or one or more of the day traders that he employed – including his friend, Chernin, and his brother-in-law, Costantin – entered into confidentiality or “wall-crossing” agreements as representatives of Fishoff’s trading entities, whereby they agreed not to disclose or trade on inside information concerning the offerings, such as the name of the issuers and the timing and pricing of the transactions, and were “brought over the wall” for the narrow purpose of determining whether to purchase the offered securities.

In breach of these confidentiality and trading restrictions, Fishoff tipped Petrello and Spera – identified as “CC-1” in the indictment – with the inside information about the confidentially marketed offerings, including the stock trading symbols of the companies and the timing or pricing of the upcoming offerings.

In furtherance of the scheme, Fishoff short sold the stock of the public companies, including Synergy Pharmaceuticals Inc., based on the inside information, in anticipation of a drop in the stocks’ price when the stock offerings were disclosed to the public. Fishoff and his co-defendants traded through the accounts of their respective trading entities or through related accounts that they controlled.

Fishoff and his co-defendants used the inside information to gain more than $3 million in illegal profits over the course of the three-year scheme. Chernin and Costantin, who executed trades using Fishoff’s capital, along with Petrello and Spera, generally split their profits with Fishoff on a 50-50 basis as compensation for the inside information.

Fishoff faces a maximum potential penalty of 20 years in prison and a $5 million fine on the securities fraud charge. Fishoff also agreed to settle the parallel civil forfeiture action, United States of America v. The Contents of Wedbush Securities Account Number 8313 et al., and to forfeit the over $1.6 million in assets sought by the government in that complaint. His sentencing is scheduled for June 20, 2018.

Chernin, Costantin, Petrello, and Spera have all pleaded guilty for their involvement in the scheme and await sentencing.

U.S. Attorney Craig Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, for the investigation leading to today’s guilty plea. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Regional Director Marc P. Berger and Senior Associate Regional Director Sanjay Wadhwa, for its assistance.

The government is represented by Assistant U.S. Attorney Shirley U. Emehelu, Chief of the Asset Recovery and Money Laundering Unit, Assistant U.S. Attorney Nicholas P. Grippo of the Economic Crimes Unit, and Assistant U.S. Attorney Sarah Devlin of the Asset Recovery and Money Laundering Unit.

Defense counsel: Daniel Brown Esq. and Lionel André Esq.

TRENTON, N.J. – An Elizabeth, New Jersey, man was sentenced today to 97 months in prison for using his home computer to distribute sexually explicit videos and images of children, U.S. Attorney Craig Carpenito announced.

Thomas J. Leonard, 36, previously pleaded guilty before U.S. District Judge Brian R. Martinotti to an information charging him with one count of distributing child pornography. Judge Martinotti imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court, Leonard admitted that he used the online peer-to-peer file sharing program BitTorrent to obtain and distribute images and videos of children engaged in sexual acts.

In addition to the prison term, Judge Martinotti sentenced Leonard to five years of supervised release and fined him $30,000.

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. He also thanked the Union County Prosecutor’s Office, the N.J. State Police, and the N.J. Regional Computer Forensics Laboratory, for their assistance.

The government is represented by Assistant U.S. Attorney Veronica Allende of the U.S. Attorney’s Office Criminal Division in Trenton.

Anyone with information regarding possible victims of this activity is urged to contact the FBI in Newark at 973-792-3000.

Defense counsel: Rubin M. Sinins Esq., Springfield, New Jersey

NEWARK, N.J. – Federal and local law enforcement authorities arrested six people today for their alleged roles in a drug trafficking organization that distributed heroin in Newark, U.S. Attorney Craig Carpenito announced.

Tyrone Brown, 34, Lamarr Burwell, 22, and Miles McCloud, 37, all of Newark, and Martin Pettiford, 23, of Irvington, New Jersey, are each charged by complaint with one count of conspiracy to distribute heroin and one or more counts of possession with intent to distribute heroin. Tyrone Brown is also charged with one count of possession with intent to distribute a fentanyl analogue. Omar Wyche, 29, of Newark, and Keyeen Scott, 37, of Myrtle Beach, South Carolina, were each charged with one or more counts of possession with intent to distribute heroin.

Five of the defendants are scheduled to appear before U.S. Magistrate Judge Mark Falk in Newark federal court today; Keyeen Scott is scheduled to appear before U.S. Magistrate Judge Kaymani D. West in Florence, South Carolina.

“The activities described in the criminal complaints unsealed today describe an active marketplace where heroin and crack cocaine are sold openly on the streets of Newark and surrounding areas,” U.S. Attorney Carpenito said. “The wiretaps and surveillance provide a glimpse into the violent and dangerous world these defendants have created in one neighborhood. Our office, working together with our federal and local law enforcement partners, is focusing on ridding neighborhoods of just this type of activity, one gang at a time. Today’s arrests signal an important new beginning in our fight to retake our streets from dangerous gangs and drug dealers.”

“Gangs are the mechanism by which drugs are transmitted to the ‘bad seeds’ in our cities, and are at the root of the violent crime problem,” FBI Special Agent in Charge Timothy Gallagher said. “The FBI Newark Field Office is committed to making Newark, and its surrounding communities, a safe place to be. The most effective way to combat this epidemic of violence is through cooperation; the efforts of all law enforcement agencies with the support and understanding of the citizens whom we protect and serve.”

“We appreciate our partnership with U.S. Attorney Craig Carpentino and Special Agent in Charge, Timothy Gallagher of the F.B.I. in Newark for lending their invaluable law enforcement expertise and resources in the apprehension of these suspects,” Newark Department of Public Safety Director Anthony Ambrose said.  “These arrests represent our commitment to ensuring that the neighborhood in and around New Community Corporation complex is free from individuals who blatantly commit crimes and jeopardize the safety and quality of life of our residents. We will continue working tirelessly with our federal and local law enforcement partners to keep Newark safe.”

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

The defendants are allegedly members of a drug trafficking organization that dealt heroin in and around Newark, specifically the area of Hayes Street and 14th Avenue near the New Community Corp. community development (NCC). The organization also supplied drugs to customers and other distributors elsewhere.

The organization is composed of members of the Brick City Brims set of the Bloods street gang. The investigation revealed that in addition to selling narcotics in and around NCC – primarily in a courtyard area they refer to as “the desert” – the members of the drug trafficking organization alerted each other to the presence of police, rival gang members or drug dealers within NCC; pooled narcotics; shared narcotics proceeds and customers; and raised bail money for each other following an arrest. Members of the organization have also engaged in violence and been the subject of violence in connection with their narcotics trafficking activities.

An investigation led by the FBI used physical and video surveillance, confidential informants, cooperating witnesses, dozens of controlled narcotics purchases, record checks, narcotics seizures, including of heroin, and multiple telephone wiretaps to uncover the operations of the drug trafficking organization.

The count of drug trafficking conspiracy carries a mandatory minimum penalty of five years in prison, a maximum potential penalty of 40 years in prison, and a $5 million fine. The drug possession counts carry a maximum potential penalty of 20 years in prison and a $1 million fine.

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

He also thanked the Essex County Prosecutor’s Office, the Essex County Sheriff’s Office, the New Jersey Department of Corrections, New Jersey State Parole, the East Orange Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and the U.S. Marshals for their assistance.

The drug trafficking organization operating out of the NCC was an original focus of the Violent Crime Initiative (VCI). The VCI was formed in August 2017 by the U.S. Attorney’s Office for the District of New Jersey, the Essex County Prosecutor’s Office, and the City of Newark’s Department of Public Safety for the sole purpose of combatting violent crime in and around the Newark. As part of this partnership, federal, state, county, and city agencies collaborate and pool resources to prosecute violent offenders who endanger the safety of the community. The VCI includes the U.S. Attorney’s Office, the FBI, the ATF, the Drug Enforcement Administration’s (DEA) New Jersey Division, the U.S. Marshals, the Newark Department of Public Safety, the Essex County Prosecutor’s Office, the Essex County Sheriff’s Office, New Jersey State Parole Board, Union County Jail, New Jersey State Police Regional Operations and Intelligence Center/Real Time Crime Center, New Jersey Department of Corrections, the East Orange Police Department, and the Irvington Police Department.

The government is represented by Assistant U.S. Attorney Elaine K. Lou of the U.S. Attorney’s Office’s Organized Crime/Gangs Unit Division in Newark.

The charges and allegations contained in the complaints are merely accusations, and the defendants are considered innocent unless and until proven guilty.

NEWARK, N.J. – A Jersey City, New Jersey, woman was charged today with possessing a weapon as a previously convicted felon, U.S. Attorney Craig Carpenito announced.

Shahouna Dutton, 24, is charged by complaint with one count of being a felon in possession of a firearm. Dutton was arrested at her home by special agents of the FBI. She made her initial appearance before U.S. Magistrate Judge Mark Falk in Newark federal court and was detained.

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

On Feb. 22, 2018, investigators from the Hudson County Prosecutor’s Office executed a search warrant at Dutton’s home to look for further evidence of Dutton’s witness tampering related to a homicide case pending in Hudson County, which was scheduled to begin on Feb. 27, 2018. Investigators found a loaded .22 caliber handgun in Dutton’s bedroom. Dutton has two prior felony convictions in the State of New Jersey and is prohibited from possessing a firearm under federal law.  

The felon in possession of a firearm charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine.

U.S. Attorney Carpenito credited FBI special agents, under the direction of Special Agent in Charge Timothy Gallagher, with the investigation leading to the arrest. He also thanked the Hudson County Prosecutor’s Office, under the direction of Prosecutor Esther Suarez, and the Jersey City Police Department, under the direction of Department of Public Safety Director James Shea, for their assistance.

The government is represented by Senior Litigation Counsel Robert Frazer of the U.S. Attorney’s Office Violent Crimes Unit in Newark.

The charge and allegations contained in the complaint are merely accusations and the defendant is considered innocent unless and until proven guilty.

NEWARK, N.J. – A Jersey City, New Jersey, man was charged today with conspiracy to distribute cocaine after law enforcement conducted a wiretap of his phone and found 2.5 kilograms of cocaine in his apartment, U.S. Attorney Craig Carpenito announced.

Rayfeal Roman, 34, is charged by complaint with one count of conspiracy to distribute 500 grams or more of cocaine. He was arrested on state charges last month and remains in custody; he will have his initial appearance on the federal charges later this week before U.S. Magistrate Judge Mark Falk in Newark federal court. 

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

Since September 2017, law enforcement officers in New Jersey have been investigating a large drug distribution network involving Roman and others. The investigation included lawfully intercepted communications, as well as physical surveillance, a comprehensive review of records, and other investigative methods.

Law enforcement officers obtained a court order to intercept wire and electronic communications occurring over the cellular telephone used by Roman. Law enforcement officers intercepted numerous telephone conversations in which Roman others discussed the distribution of cocaine.

On Feb. 6-7, 2018, law enforcement officers intercepted communications between Roman and a conspirator regarding the sale of one kilogram of cocaine. The conspirator wanted to obtain the cocaine from Roman for $29,500, and that the conspirator would, in turn, be providing the cocaine to another unnamed individual. Roman directed the conspirator to go to Roman’s apartment in Jersey City in order to obtain the cocaine.

Law enforcement officers obtained and executed a search warrant for Roman’s apartment in Jersey City. They found approximately 2.5 kilograms of cocaine, approximately $30,000 in cash, and various other materials commonly used in connection with drug distribution, such as an electronic money-counting machine, a digital scale, and drug-packaging materials.

The cocaine distribution conspiracy charge carries a mandatory minimum penalty of five years in prison, a maximum of 40 years in prison, and a $2 million fine. 

U.S. Attorney Carpenito credited the Hudson County Prosecutor’s Office under the leadership of Prosecutor Esther Suarez, and special agents of the Drug Enforcement Administration, under the direction of Valerie A. Nickerson, with the investigation leading to the charge.

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

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

TRENTON, N.J. – A Norcross, Georgia, man was sentenced today to 84 months in prison for his role in an international drug trafficking organization, U.S. Attorney Craig Carpenito announced.

Wilson Madrid, 32, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an information charging him with conspiracy to launder money. Judge Sheridan imposed the sentence today in Trenton federal court.

According to documents filed in these and other cases and statements made in court:

From June 2014 through November 2014, Madrid conspired with other members of an international drug trafficking organization, with cells operating in New Jersey, to launder more than $150,000 related to the distribution of heroin. In December 2014, a co-defendant, Dany Francisco-Valerio, 44, of Bronx, New York, conspired with members of the drug trafficking organization to transport and distribute kilogram quantities of heroin; on Dec. 24, 2014, he was arrested while transporting 15 kilograms of heroin contained in a hidden compartment in his vehicle. Francisco-Valerio pleaded guilty before Judge Sheridan to an information charging him with conspiracy to distribute heroin and has been sentenced to 51 months in prison.

One of their conspirators, Henry Zamora, pleaded guilty before Judge Sheridan on Aug. 31, 2017, to conspiring to distribute four kilograms of heroin that were recovered from a hidden compartment in Zamora’s vehicle. Another conspirator, Harry Madrid, pleaded guilty before Judge Sheridan on Sept. 7, 2017, to conspiring to launder more than $150,000 on behalf of the drug trafficking organization.

In addition to the prison term, Judge Sheridan sentenced Madrid to five years of supervised release.

U.S. Attorney Carpenito credited the Drug Enforcement Administration’s (DEA) New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson, officers of the N.J. State Police, under the direction of Superintendent Col. Patrick Callahan, and officers from the DeKalb (Illinois) Police Department, under the direction of Chief Gene Lowrey, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Thomas S. Kearney and Assistant U.S. Attorney Jamari Buxton of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.

Defense counsel: Mark Davis Esq., Hamilton, New Jersey

NEWARK, N.J. – A former Newark police officer was indicted by a federal grand jury today for allegedly conspiring to defraud the Newark Watershed Conservation and Development Corporation (NWCDC) and giving kickbacks to its former executive director, U.S. Attorney Craig Carpenito announced.

Janell Robinson, 42, of Newark, is charged with one count of conspiracy to defraud the NWCDC facilitated by use of mails and wire transmissions, two counts of mail fraud, and one count of conspiracy to commit extortion under color of official right affecting interstate commerce. 

According to documents filed in this case:

Between March 2010 and May 2013, while Robinson was a Newark police officer, she controlled Protected and Secured Services LLC (P&S), a company that purported to provide security-consulting services to its only client, the NWCDC. 

Between March 2010 and May 2013, Robinson allegedly conspired with Brashear to pay Brashear a stream of concealed and undisclosed kickbacks from the proceeds that P&S received from the NWCDC. In exchange for Brashear’s assistance with securing P&S a contract with the NWCDC and approving fraudulent and inflated invoices that Robinson submitted, Robinson paid Brashear approximately $3,000 each time P&S received payment from the NWCDC. 

In total, the NWCDC paid P&S approximately $289,000 during the scheme, some of which Robinson used to pay Brashear as kickbacks.    

The wire and mail fraud conspiracy, mail fraud, and conspiracy to commit extortion under color of official right charges each carry a maximum potential penalty of 20 years in prison and a $250,000 fine. The indictment also seeks forfeiture of the approximately $289,000 in ill-gotten gains obtained from the scheme.  

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and 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. Attorneys Leslie F. Schwartz and Jacques S. Pierre of the U.S. Attorney’s Office Special Prosecutions Division. 

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

Defense counsel: Cynthia H. Hardaway Esq.
 

NEWARK, N.J. – A Kenvil, New Jersey, man today admitted conspiring with a former Middlesex Borough fire inspector to use threats of violence to extort cash payments from the owner of a real estate development company, U.S. Attorney Craig Carpenito announced.

Joseph P. Martinelli, 64, pleaded guilty before U.S. District Judge Madeline Cox Arleo in Newark federal court to an information charging him with conspiring to commit extortion using threats of force, violence, and fear. 

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

From December 2016 through June 2017, Martinelli conspired with Billy A. Donnerstag, 49, of Hackettstown, New Jersey, then a fire inspector for Middlesex Borough and other New Jersey municipalities, to extort the owner and operator of a real estate development and construction company, referred to in the information as “Individual 1,” using threats of physical harm if Individual 1 did not pay Martinelli and Donnerstag thousands of dollars.

Martinelli and Donnerstag agreed that the pretext for demanding money would be that Individual 1 supposedly didn’t pay enough for a property he bought from Martinelli in 2007. In a series of telephone and in-person conversations with Individual 1, Martinelli and Donnerstag demanded money from Individual 1 by suggesting that Individual 1 would be physically harmed by Donnerstag if Individual 1 refused.

Martinelli and Donnerstag obtained $15,000 in cash from Individual 1 over two separate meetings. The cash had been provided by the FBI.

The count of conspiracy to commit extortion 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. Sentencing is scheduled for June 12, 2018.

U.S. Attorney Carpenito credited special agents with 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 Lee M. Cortes Jr., Deputy Chief of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

Donnerstag remains charged by indictment. The charge and allegations against him are merely accusations, and he is presumed innocent unless and until proven guilty. 

Defense counsel: Brian N. DiGiacomo Esq., Madison, New Jersey

NEWARK, N.J. – A Staten Island, New York, man today admitted his role in a scheme to use phony prescriptions for medically unnecessary compounded medications to defraud the Metropolitan Transportation Authority (MTA)’s health insurance plan and other insurers out of $5 million, U.S. Attorney Craig Carpenito announced.

Christopher Frusci, 33, an MTA bus driver, 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.

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

Frusci admitted that from May 2015 through May 2017, he conspired to defraud health insurance plans, including the MTA’s privately-funded health plan, using fraudulent claims for compounded medications, such as scar creams, pain creams, and metabolic supplements marketed by a company referred to as “Company A” in the information. 

In order to secure prescriptions for the compounded medications, Company A and its “sales representatives,” referred beneficiaries to telemedicine physicians who were paid by Company A or its affiliates.

Company A recruited Frusci as a sales representative and instructed him to target individuals with certain health plans, including the MTA’s health plan, that covered compounded medications. Frusci then convinced multiple MTA employees to obtain medically unnecessary medications by paying them monthly cash bribes of approximately $100 to $1,500. In order to increase his profits, Frusci also recruited other individuals to work as sales representatives under him. 

As part of his plea agreement, Frusci must forfeit $724,448.73 in criminal proceeds he received for his role in the scheme and pay restitution of at least $5 million. He faces a statutory maximum of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for June 4, 2018.

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

FBI Special Agent in Charge Timothy Gallagher said, "Christopher Frusci treated his own employer's health insurance plan of Metropolitan Transportation Authority as a vehicle to line his own pockets when he engaged in an elaborate scheme that resulted in defrauding insurers out of $5 million. The FBI, in conjunction with our law enforcement partners will continue to investigate and bring to justice criminals who defraud the system and cheat the American taxpayer."

“Our investigation is ongoing to determine the extent to which additional MTA employees may have participated in this fraudulent scheme,” said Inspector General Barry Kluger of the MTA Office of the Inspector General. “I applaud and am pleased to support the efforts of the U.S. Attorney, along with the FBI and the Department of Defense Office of Inspector General, to combat this nationwide epidemic of health care fraud that unfortunately, and at great cost, has infected the MTA as well.”

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; the MTA Office of the Inspector General, under the direction of Inspector General Barry Kluger; 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.

The government is represented by Assistant U.S. Attorney Erica Liu, Chief of the U.S. Attorney's Office Opioid Abuse Prevention and Enforcement Unit in Newark.

To date, the New Jersey U.S. Attorney’s Office has prosecuted over 20 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: Patrick V. Parrotta, Staten Island, New York

NEWARK, N.J. – A South Orange, New Jersey, man was sentenced today to 135 months in prison for his participation in the September 2015 armed robbery of a club in Passaic, New Jersey, U.S. Attorney Craig Carpenito announced.

Keontrae Lawrence, a/k/a “Taz,” 29, previously pleaded guilty before U.S. District Judge Madeline Cox Arleo to an indictment charging him with one count of conspiracy to commit Hobbs Act robbery and one count of brandishing a firearm during a crime of violence. Judge Arleo imposed the sentence today in Newark federal court.

According to the indictment and other documents filed in this case:

On Sept. 6, 2015, Lawrence and others agreed to rob a club in Passaic at gunpoint.  During his plea hearing, Lawrence admitted that he knowingly and willfully participated in the robbery and that he and another conspirator brandished a firearm and threatened to use violence against a club employee. He also admitted that he and the other conspirator took $26,084 in cash from the club before fleeing in a getaway car.

In addition to the prison term, Judge Arleo sentenced Lawrence to five years of supervised release.

Lawrence was originally charged with Jimmy Cooper, a/k/a “Flip,” 32, of Irvington, New Jersey, and Shaheed Blamahsah, a/k/a “Aboo,” 30, of East Orange, New Jersey, in November 2016. Cooper and Lawrence were later indicted by a federal grand jury on March 24, 2017, for their roles in the robbery.

Blamahsah pleaded guilty to his role in the robbery and was sentenced Oct. 6, 2017, to 150 months in prison. The charges against Cooper are still pending, 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, and members of the Passaic County Prosecutor’s Office, under the direction of Prosecutor Camelia M. Valdes, with the investigation leading to today’s sentencing. He also thanked the Passaic County Sheriff’s Office, the Passaic Police Department, and the Newark Police Division for their assistance.

The government is represented by Assistant U.S. Attorney Elaine K. Lou of the U.S. Attorney’s Office’s Criminal Division in Newark.

Defense counsel: John A. Azzarello Esq., Morristown, New Jersey

NEWARK, N.J.  – A Salem County, New Jersey, woman today admitted signing false tax returns for shell companies resulting in $286,742 in fraudulent refunds, U.S. Attorney Craig Carpenito announced.

Marilyn Crespo, 50, of Carney’s Point, New Jersey, pleaded guilty before U.S. Chief District Judge Jose L. Linares in Newark federal court to an information charging her one count of filing a false corporate tax return for tax year 2009.

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

Crespo previously resided in Guttenberg, New Jersey. At the direction of her husband, Jose Crespo, she signed under penalty of perjury numerous false corporate tax returns, Forms 1120, for fake businesses, knowing that the businesses were not real and that the credits claimed on the tax returns were false.

In signing these false tax returns, Marilyn Crespo took advantage of fuel excise tax credits offered under federal tax law. The federal government taxes gasoline, diesel fuel, and certain other types of fuel, but certain commercial uses of these fuels are nontaxable. Businesses that purchase fuel for a nontaxable use can claim a tax credit by filing Form 4136 entitled “Credit for Federal Tax Paid on Fuels.”

Marilyn Crespo signed a federal corporate tax return for 2009 for Magnum Cleaning Service Corp. that claimed gross receipts of $115,027, a fuel excise tax credit of $20,859 and a resulting refund of $15,750. In fact, Magnum was a shell company and the gross receipts and fuel excise tax credit numbers were false. Marilyn Crespo received and cashed the $15,750 refund check at a check-cashing facility in Guttenberg. She cashed many other refund checks for similar false tax returns at this same check-cashing facility.

Jose Crespo pleaded guilty on Sept. 11, 2017, before Judge Linares, to engaging in the fuel excise tax credit scheme and another tax fraud scheme and causing an anticipated loss to the IRS of nearly $1.5 million. He was sentenced Dec. 20, 2017, to three years in prison.

The count of filing a false tax return carries a maximum potential penalty of three years in prison, and a potential $250,000 fine or twice the gross gain or loss from the offense. Sentencing is set for June 20, 2018.

U.S. Attorney Carpenito credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Rahul Agarwal of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

Defense counsel: Kenneth W. Kayser Esq., East Hanover, New Jersey

CAMDEN, N.J. – A Northfield, New Jersey, man today admitted defrauding New Jersey state health benefits programs and other insurers out of millions of dollars by submitting fraudulent claims for medically unnecessary prescriptions, U.S. Attorney Craig Carpenito and New Jersey Attorney Gurbir S. Grewal announced.

Michael Sher, 40, 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.

“Michael Sher paid kickbacks to patients, gave an envelope of cash to a medical doctor who caused thousands of fraudulent compounded medication prescriptions to be filled, and actively recruited others below him as part of the conspiracy to defraud New Jersey state health benefits programs,” U.S. Attorney Carpenito said. “It is unconscionable for a public servant to defraud the very public he swore to protect, yet that is exactly what Michael Sher did. The defendants convicted in this case include two firefighters, a guidance counselor, a teacher, a medical doctor, and several pharmaceutical employees, which speaks to the extensive network employed by this conspiracy and the efforts of federal and state law enforcement partners to bring this wasteful and brazen scheme to an end.”

“Firemen take an oath to uphold the law. The FBI works to ensure that they are held accountable when they violate that pledge and break the law,” Special Agent in Charge Timothy Gallagher of the Newark FBI Field Office said. “The guilty plea by Michael Sher sends a clear message that the FBI and our law enforcement partners will relentlessly pursue those who defraud the State Health Benefits Program, which ultimately affects the hardworking citizens of New Jersey.”

“Michael Sher acted as a recruiter in this conspiracy by persuading individuals in New Jersey to obtain medically unnecessary and very expensive compounded medications from an out-of-state pharmacy. Sher’s co-conspirators paid him $1.7 million to engage in this criminal conduct. 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 of Labor," said Peter Nozka, Acting Special Agent in Charge, New York Region, U.S. Department of Labor Office of Inspector General.

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

From January 2015 through April 2016, Sher 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. They 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.

Sher and conspirators working under him recruited public employees and other individuals covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications. Sher and others often used pre-printed prescription forms in which they selected medications with the highest possible reimbursement, without any consideration for medical necessity. The prescriptions were faxed to the Compounding Pharmacy, which filled the prescriptions and billed the Pharmacy Benefits Administrator.

The pharmacy paid one of Sher’s conspirators a percentage of each prescription filled and paid by the Pharmacy Benefits Administrator, which was then distributed to Sher and other members of the conspiracy. Sher admitted paying one of the doctors to reward the doctor for signing prescriptions. Sher also paid individuals covered by the Pharmacy Benefits Administrator, as well as the other recruiters who worked under him during the conspiracy.

According to the information, the Pharmacy Benefits Administrator paid Compounding Pharmacy more than $50 million for compounded medications mailed to individuals in New Jersey, including $7,065,303.00 for prescriptions submitted by Sher and his cohorts. Sher received approximately $1,728,372.29 for his role in the scheme.

Sher faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. As part of his plea agreement, Sher must forfeit his criminal proceeds and pay restitution in an amount to be determined at sentencing. Sentencing is scheduled for June 8, 2018.

Fifteen 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, Michael Pilate, Shawn Sypherd, and Nicholas Tedesco – 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 Gurbir 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: William J. Hughes, Jr., Esquire, Morristown, New Jersey 

NEWARK, N.J. – A Washington, New Jersey, man was convicted today of sex crimes, extortion and stalking – including asking a minor girl to produce explicit images of herself and threatening a second girl if she didn’t agree to meet and date him, U.S. Attorney Craig Carpenito announced.

Brandon McIntyre, 25, was convicted of two counts of the production of child pornography, one count of the online enticement of a minor to engage in criminal sexual conduct, two counts of sending interstate extortionate threats, and one count of stalking. The jury deliberated approximately four hours following a one-week trial before U.S. District Judge Kevin McNulty in Newark federal court.

According to the documents filed in this case and the evidence at trial:

McIntyre met various minor girls through Facebook, sometimes as himself, other times pretending to be a teenage girl. Over the course of the correspondence with one female, McIntyre threatened to hurt her boyfriend and kill her family when she refused to go out with him. In his interaction with another girl, McIntyre sent her images of his genitals and demanded that she send nude images of herself. McIntyre threatened the girl, claiming he was a state trooper who could arrest and imprison her family members if she did not send him nude images of herself. When one victim threatened to report McIntyre to her school guidance counselor, McIntyre responded, “Do it and see what happens” and “I can have ur family killed too and make u watch.”

McIntyre admitted to law enforcement that he, at times, pretended to be a teenage girl using the alias “Katie Thompson” in online chats with minors. He said he solicited minors to take and send nude images of themselves to him and threatened to harm minors and their loved ones on multiple occasions if they did not comply with his demands. 

The charges of sexual exploitation of a child each carry a mandatory minimum penalty of 15 years in prison, and a maximum potential penalty of 30 years in prison. The charge of online enticement carries a mandatory minimum penalty of 10 years in prison, and a maximum potential penalty of life in prison. The charges of interstate extortionate threats each carry a maximum potential penalty of five years in prison. The charge of stalking carries a maximum penalty of five years in prison. All of the counts are also punishable by a $250,000 fine. Sentencing will be scheduled at a later date.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; the Middlebury, Vermont, Police Department, and the Clinton Police Department with the investigation leading to today’s conviction.

The government is represented by Assistant U.S. Attorneys Erica Liu and Danielle Alfonzo Walsman of the U.S. Attorney’s Office’s Criminal Division in Newark.

NEWARK, N.J. – A Bronx, New York, man was sentenced today to 54 months in prison for his role in an extensive scheme to obtain money through fraudulently obtained refund checks issued by the U.S. Treasury, U.S. Attorney Craig Carpenito announced.     

Hector Urena previously pleaded guilty before U.S. District Judge John Michael Vazquez to an information charging him with one count each of conspiracy to steal government funds, theft of government funds, and aggravated identity theft (Count Three). Judge Vazquez imposed the sentence today in Newark federal court

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

Stolen Identity Refund Fraud (SIRF) is a common type of fraud committed against the United States government that involves the use of stolen identities to commit tax refund fraud. SIRF schemes generally share a number of hallmarks. Perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals, who often reside in the Commonwealth of Puerto Rico. They then complete Form 1040 tax returns using the fraudulently obtained information and falsifying wages earned, taxes withheld, and other data, always ensuring that the fraudulent tax return generates a refund. They direct the U.S. Treasury Department to mail refund checks to locations that the perpetrators control or can access. With the fraudulently obtained refund checks in hand, SIRF perpetrators generate cash proceeds by depositing the checks into bank accounts that they control or cashing the checks at check cashing businesses.

The investigation revealed that Urena and others participated in a classic SIRF scheme.  Urena’s conspirators obtained stolen identities to file fraudulent Form 1040s. He and his conspirators then used false and fraudulent documents to convert treasury checks into cash or other proceeds for their own profit at a check cashing business Urena owned. From August 2013 through May 2015, the scheme caused more than $2.7 million in losses to the U.S. Treasury.

In addition to the prison term, Judge Vazquez sentenced Urena to three years of supervised release and ordered him to pay $2.78 million in restitution.       

U.S. Attorney Carpenito credited special agents of the IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; postal inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Joseph W. Cronin; special agents of the U.S. Postal Service Office of Inspector General, under the direction of Special Agent in Charge Monica Weyler; and special agents of the U.S. Secret Service, under the direction of Special Agent in Charge Mark McKevitt; with the investigation leading to today’s sentencing. 

The government is represented by Assistant U.S. Attorney Elaine K. Lou of the Criminal Division in Newark.

NEWARK, N.J. – U.S. Attorney Craig Carpenito announced today that he is reorganizing the District of New Jersey office to add additional resources to areas that are vital to the health and safety of the people of New Jersey.

U.S. Attorney Carpenito said this new structure will take best advantage of the depth and breadth of experience of the 130 Assistant U.S. Attorneys that staff the Newark, Trenton and Camden offices and focus their work on areas of criminal and civil enforcement that will pay the biggest dividends in protecting the public.

“After spending the past six weeks conducting an in-depth review of our operations, meeting with federal and state law enforcement leaders from across the state, and working closely with the Department of Justice, I have identified several areas of criminal activity where we need to intensify our efforts,” U.S. Attorney Carpenito said. “This sharpened focus will help us get the most dangerous criminals off our streets, address the ongoing opioid epidemic in our state, and stop the hackers and identity thieves who prey on our residents.”

U.S. Attorney Carpenito announced the following strategic changes in how the office will be organized:

• Three new units in the Criminal Division:

o Opioid Abuse Prevention and Enforcement – Among the first stand-alone units of its kind in the country, this unit will work with the existing Health Care and Government Fraud Unit and the Organized Crime and Drug Enforcement Task Force (OCDETF) Unit to target everyone who is making a living on these dangerous and addictive drugs, from the people who are running street-level distribution networks, to the doctors and pharmacists who turn a blind eye to over-prescribing and phony prescriptions, to the manufacturers and distributors who abdicate their responsibility to ensure these medications are being used lawfully. The Centers for Disease Control and Prevention reports that drug overdose deaths and opioid-involved deaths continue to increase in the United States. The majority of drug overdose deaths (66 percent) involve an opioid. In 2016, the number of overdose deaths involving opioids (including prescription opioids and heroin) was five times higher than in 1999. From 2000 to 2016, more than 600,000 people died from drug overdoses. On average, 115 Americans die every day from an opioid overdose. This unit will be enhanced by two Special U.S. Attorneys from the N.J. Office of the Attorney General, part of a joint state/federal effort to combat the growing problem of opioid abuse.

“U.S. Attorney Carpenito and I have forged a partnership dedicated to preventing illegal narcotics and prescription painkillers from flowing unchecked into our communities,” N.J. Attorney General Grewal said. “This collaboration of state and federal law enforcement allows us to share resources and strategies to identify, apprehend, and prosecute drug traffickers, unscrupulous doctors, and others who profit from the suffering and death caused by opioid addiction.”

o Violent Crimes Enforcement Unit – According to national crime data from the FBI, New Jersey’s homicide rate per 100,000 people rose from 3.9 to 4.2 and the rape rate rose from 10.7 to 16.2 between 2014 and 2016. The new Violent Crimes Enforcement Unit will work together with the Organized Crime/Gangs Unit to address these trends by targeting seven strategic areas:

• Federal Interest Murder/Major Violent Crimes
• Gang prosecution
• Carjacking
• Gun Trafficking
• Armed Bank Robberies
• Hobbs Act Robberies
• Human trafficking

o Cyber Crime Prevention and Enforcement – The attorneys in this unit are responsible for some of the most complex investigations the office handles, dealing with the unique and ever-changing issues presented by computer and communications technologies. Computer hacking, mass identity theft, ATM hacking – this unit will partner with the National Security and Economic Crimes units to focus on those cases and other emerging illegal uses of technology. In addition to litigating their own cases, they will provide their support and special expertise to federal and state partners as needed. The most recent report from the FBI Internet Crime Complaint Center found that, nationally, there were an average of 280,000 complaints per year from 2010 through 2016, and in 2016, the number of complaints reached 298,728, resulting in victim losses of $1.33 billion in that year alone. That same year, New Jersey received 6,690 complaints (13th in the nation), resulting in losses to victims of $24.5 million (11th in the nation.)

• A fourth unit, the current General Crimes Unit, will be recast as the Public Protection Unit. This unit will lead the office’s realignment with the Department of Justice’s renewed focus on the Project Safe Neighborhoods program, a nationwide strategy for using existing resources to most effectively combat violent crime in partnership with state and local law enforcement and the communities we serve. The unit handles any and all types of crime, but in this restructuring, the focus will be on criminals who prey on the public, including those who commit violent crimes and white collar scams, human trafficking and child exploitation.

“The changes I am announcing today will enhance our ability to do our most important job – protecting the public – more efficiently and with greater impact,” U.S. Attorney Carpenito said. “They will align our office with the priorities outlined and implemented by Attorney General Sessions and the Department of Justice. Of course, the office will continue to focus on all areas of federal interest, including national security, economic crimes, federal taxes, political corruption, civil rights, health care and government frauds.”

“The FBI dedicates significant resources in combating violent crime, cybercrime and the alarming rise in opioid abuse,” Special Agent In Charge of the FBI Newark Division Timothy Gallagher said. “We strongly support U.S. Attorney Carpenito’s focus to get the most dangerous drugs and criminals off our streets, particularly those who intend on defrauding our citizens and praying on the young and old. We look forward to continuing to work closely with the U.S. Attorney’s Office, so together we can make our state a safer place for our citizens.”

Valerie A. Nickerson, Special Agent in Charge of the Drug Enforcement Administration’s New Jersey Division said, “The men and women of the Drug Enforcement Administration work tirelessly to combat the current opioid epidemic in New Jersey. We look forward to the opportunity to continue our work with the U.S. Attorney’s Office and the New Jersey Attorney General’s Office to investigate and prosecute those who continue to profit off of the misery that this epidemic has caused.”

“We look forward to expanding upon our great working relationship with the U.S. Attorney’s Office,” Bureau of Alcohol, Tobacco and Firearms Special Agent in Charge John Devito said. “With this reorganization, both ATF and the USAO will be better situated to protect the citizens of New Jersey and mitigate the risk that violent crime poses to the public.”

U.S. Attorney Carpenito also announced new leadership of the office:

The First Assistant U.S. Attorney will be Rachael Honig, who is rejoining the office from the private sector. She worked for the U.S. Attorney’s Office for 14 years, most recently as Counsel to the U.S. Attorney. The Executive Assistant to the U.S. Attorney is Zach Intrater, who has been with the office for eight years in the Criminal Division, most recently as Deputy Chief of the Economic Crimes Unit. The Acting Counsel to the U.S. Attorney is Caroline Sadlowski, who has been with the office for 15 years, including nine years in the Appeals Division and six years in the Civil Division. Most recently, she was chief of the Civil Division. The Deputy U.S. Attorney, overseeing the Trenton and Camden Vicinages, is Thomas J. Eicher, who has been with the office more than 14 years, most recently as Chief of the Criminal Division.

“Let me be clear: The U.S. Attorneys’ Office for the District of New Jersey has a long and proud history,” U.S. Attorney Carpenito said. “Every U.S. Attorney who has sat in this seat has inherited a great office, and then worked to make it even better before handing it off to his or her successor. I intend to be no different. The changes I am announcing today are my first steps in making this office stronger and more successful.”

TRENTON, N.J. – A National City, California, man today pleaded guilty to his role in a conspiracy to transport 141 kilograms of narcotics from California to New Jersey, U.S. Attorney Craig Carpenito announced.

Hector Lucas-Ramos, 42, pleaded guilty before U.S. District Judge Brian R. Martinotti in Trenton federal court to an information charging him with conspiracy to possess with intent to distribute more than one kilogram of heroin and five kilograms of cocaine.

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

On Aug. 27, 2017, Lucas-Ramos was arrested in Essex County while he and Abraham Castro, 33, of San Diego, California, were driving a tractor trailer. After the tractor trailer was seen committing several traffic violations, law enforcement officers conducted a motor vehicle stop. During a subsequent search of the tractor trailer, law enforcement officers recovered five large duffle bags containing a total of 56 kilograms of heroin and 85 kilograms of cocaine.

Lucas-Ramos admitted today that he and Castro drove the tractor trailer from California to deliver the narcotics to other conspirators in New Jersey.

The conspiracy charge to which Lucas-Ramos pleaded guilty carries a mandatory minimum penalty of 10 years in prison, a maximum potential penalty of life in prison, and a $10 million fine. His sentencing is scheduled for June 27, 2018. Castro pleaded guilty to his role in the conspiracy on Nov. 14, 2017, and awaits sentencing.

The government is represented by Assistant U.S. Attorney Meredith Williams of the U.S. Attorney’s Office Organized Crime Drug Enforcement Task Force (OCDETF)/Narcotics Unit.

U.S. Attorney Carpenito credited the Drug Enforcement Administration’s New Jersey Division, under the direction of Special Agent in Charge Valerie A. Nickerson in Newark, with the investigation.

This case is being conducted under the auspices of the OCDETF. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.

Defense counsel: Paula Notari Esq. New York

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.

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
 

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. 

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
 

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.

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

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 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.

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

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

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

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

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.

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.

18-059

Defense Counsel: Frank Arleo, Esq., West Orange, New Jersey

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

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   

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 

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