District of New Jersey

C. Tate George, former NBA basketball player and the CEO of purported real estate development firm The George Group, was sentenced today to 108 months in prison for his role in orchestrating a $2 million investment fraud scheme, announced U.S. Attorney Paul J. Fishman for the District of New Jersey.

After a three-week trial before U.S. District Judge Mary L. Cooper September 2013, a jury deliberated for four hours before convicting George, 47, of Newark, New Jersey, of all of four counts of the indictment. Judge Cooper imposed the sentence today in Trenton federal court.

“Those who perpetrate Ponzi schemes shamelessly trade on relationships with those who trust them,” U.S. Attorney Fishman said.  “In this case, George relied on his sports stardom to attract unwitting investors. His crimes justified today’s lengthy sentence.”

“By shamelessly cashing in on his celebrity C. Tate George stole $2 million from investors who trusted him as a former NBA athlete,” said Special Agent in Charge Richard M. Frankel for the FBI’s Newark Division.  “George used the money to pay other investors in the Ponzi-style scheme and lined his pockets with the rest, funding extensive renovations on his home, paying for his daughter’s sixteenth birthday party and producing a reality video about himself.”

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

George, a former player for the New Jersey Nets and Milwaukee Bucks professional basketball teams, held himself out as the CEO of The George Group and claimed to have more than $500 million in assets under management.  He pitched prospective investors, including several former professional athletes, to invest with the firm and told them their money would be used to fund The George Group’s purchase and development of real estate development projects, including projects in Connecticut and New Jersey.  George represented to some prospective investors that their funds would be held in an attorney trust account and personally guaranteed the return of their investments, with interest.

Based on George’s representations, investors invested more than $2 million in The George Group between 2005 and 2011, which he deposited in both the firm’s and his personal bank account.  Instead of using investments to fund real estate development projects as promised, George used the money from new investors to pay existing investors in Ponzi-scheme fashion, as well as paying for his daughter’s sixteenth birthday party, extensive renovations on his New Jersey home (that has since been foreclosed), the mortgage on a New Jersey home, the mortgage on a Florida home, taxes to the Internal Revenue Service (IRS) and traffic tickets.  The defendant gave money to family members and friends.  He also spent $2,905 for a reality video about himself – a “sizzle reel” for “The Tate Show” – which was made available on YouTube.  The George Group had virtually no income-generating operations.

During the sentencing proceeding, prosecutors asserted George had presented the court with fraudulent character witness letters.  The defendant claimed the letters, which contained suspicious similarities, were sent to the court in support of a more lenient sentence.  Some of the individuals who purportedly sent the letters signed declarations stating that they did not write the letters nor did they authorize the letters to be sent to the court on their behalf.

In addition to prison time, Judge Cooper also sentenced George to three years of supervised release, ordered him to $2.55 million in restitution and entered a forfeiture money judgment of $2.55 million.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; postal inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Maria L. Kelokates; and criminal investigators with the U.S. Attorney’s Office, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Joseph B. Shumofsky and Zach Intrater of the U.S. Attorney’s Office Criminal Division in Newark.

This case is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

TRENTON, N.J. – C. Tate George, former NBA basketball player and the CEO of purported real estate development firm The George Group, was sentenced today to 108 months in prison for his role in orchestrating a $2 million investment fraud scheme, U.S. Attorney Paul J. Fishman announced.

After a three-week trial before U.S. District Judge Mary L. Cooper September 2013, a jury deliberated for four hours before convicting George, 47, of Newark, New Jersey, of all of four counts of the indictment. Judge Cooper imposed the sentence today in Trenton federal court.

“Those who perpetrate Ponzi schemes shamelessly trade on relationships with those who trust them,” U.S. Attorney Fishman said. “In this case, George relied on his sports stardom to attract unwitting investors. His crimes justified today’s lengthy sentence.”           

“By shamelessly cashing in on his celebrity C. Tate George stole $2 million from investors who trusted him as a former NBA athlete,” FBI-Newark Special Agent in Charge Richard M. Frankel said. “George used the money to pay other investors in the Ponzi-style scheme and lined his pockets with the rest, funding extensive renovations on his home, paying for his daughter’s sixteenth birthday party and producing a reality video about himself.”

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

George, a former player for the New Jersey Nets and Milwaukee Bucks professional basketball teams, held himself out as the CEO of The George Group and claimed to have more than $500 million in assets under management. He pitched prospective investors, including several former professional athletes, to invest with the firm and told them their money would be used to fund The George Group’s purchase and development of real estate development projects, including projects in Connecticut and New Jersey. George represented to some prospective investors that their funds would be held in an attorney trust account and personally guaranteed the return of their investments, with interest.

Based on George’s representations, investors invested more than $2 million in The George Group between 2005 and 2011, which he deposited in both the firm’s and his personal bank account. Instead of using investments to fund real estate development projects as promised, George used the money from new investors to pay existing investors in Ponzi-scheme fashion, as well as paying for his daughter’s sixteenth birthday party, extensive renovations on his New Jersey home (that has since been foreclosed), the mortgage on a New Jersey home, the mortgage on a Florida home, taxes to the IRS, and traffic tickets. The defendant gave money to family members and friends. He also spent $2,905 for a reality video about himself – a “sizzle reel” for “The Tate Show” – which was made available on YouTube. The George Group had virtually no income-generating operations.

During the sentencing proceeding, prosecutors asserted George had presented the court with fraudulent character witness letters. The defendant claimed the letters, which contained suspicious similarities, were sent to the court in support of a more lenient sentence. Some of the individuals who purportedly sent the letters signed declarations stating that they did not write the letters nor did they authorize the letters to be sent to the court on their behalf.

In addition to prison time, Judge Cooper also sentenced George to three years of supervised release, ordered him to $2.55 million in restitution and entered a forfeiture money judgment of $2.55 million.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; postal inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Maria L. Kelokates; and criminal investigators with the U.S. Attorney’s Office, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Joseph B. Shumofsky and Zach Intrater of the U.S. Attorney’s Office Criminal Division in Newark.

This case is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Defense counsel: Pro se; John A. Azzarello Esq., Morristown, standby counsel

NEWARK, N.J. – The administrator of two criminal online hacking forums today admitted stealing log-in and payment card data as part of an international hacking conspiracy, U.S. Attorney Paul J. Fishman announced.

Sergey Vovnenko, a/k/a “Sergey Vovnencko,” “Tomas Rimkis,” “Flycracker,” “Flyck,” “Fly,” “Centurion,” “MUXACC1,”  “Stranier,” and “Darklife,” 29, most recently of Naples, Italy, pleaded guilty before the U.S. District Judge Esther Salas in Newark federal court to Count One and Count Three of an indictment charging him with wire fraud conspiracy and aggravated identity theft.

Vovnenko was arrested on June 13, 2014, following an international investigation led by the U.S. Secret Service in coordination with Italian law enforcement. He had been detained by the Italian authorities pending the resolution of extradition proceedings, which he contested for more than 15 months.

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

From September 2010 through August 2012, Vovnenko and his conspirators operated an international criminal organization that hacked into the computers of individual users and companies located in the United States and elsewhere. They used that access to steal user names and passwords for bank accounts and other online services, as well as debit and credit card numbers and related personal identifying information.

Vovnenko admitted that, in order to steal this data, he operated a “botnet” – more than 13,000 computers infected with malicious computer software – programmed to gain unauthorized access to computers and to identify, store, and export information from hacked computers. A number of the infected computers were located in New Jersey. Vovnenko admitted using malware known as “Zeus” to steal banking information and record the keystrokes of the users of infected computers.

According to the indictment, Vovnenko was a high-level administrator of several online criminal forums and used his position to traffic in the data he stole as part of the conspiracy. These forums featured electronic bulletin boards, which members used to publicly communicate with all members and also send private messages directly to individual members.

The public and private discussions on these forums typically pertained to criminal activity, including the purchase, sale, and use of stolen log-in credentials and payment card data, as well as discussions related to cybercrime activity such as malicious computer hacking. For example, in August 2012, one of the forums offered various illicit products for sale, including access to compromised computer servers located in the United States. A price was listed for each product, and customers could click an “order” button and purchase the product using “credits” associated with their accounts.

The wire fraud conspiracy charge to which Vovnenko pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The aggravated identity theft charge carries a mandatory two-year sentence, to be served consecutively to the conspiracy charge. Sentencing is scheduled for May 2, 2016.

U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, Criminal Investigations Division, under the direction of Director Joseph P. Clancy, and special agents from the Newark Field Office, under the direction of Acting Special Agent in Charge Kenneth Pleasant, with the ongoing investigation leading to today’s plea.

He also thanked the Department of Justice’s Office of International Affairs in Washington and its attaché in Rome; the Office of the U.S. Ambassador to the Italian Republic and the Republic of San Marino, John R. Phillips; and the Italian Ministry of Justice and Italian law enforcement officials for their extraordinary support.

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 Cousel: Timothy Anderson Esq., Red Bank, New Jersey

NEWARK, N.J. – Igor Dubovoy, 28, Alpharetta, Georgia, today admitted his role in an international scheme to hack into three business newswires and steal yet-to-be published press releases containing non-public financial information that was then used to make trades that allegedly generated approximately $30 million in illegal profits, New Jersey U.S. Attorney Paul J. Fishman announced.           

Igor Dubovoy pleaded guilty before U.S. District Judge Madeline Cox Arleo to Count One of an indictment charging him with conspiracy to commit wire fraud. He was arrested on Aug. 11, 2015, in connection with a federal indictment brought by the District of New Jersey (DNJ) charging five individuals – two computer hackers and three securities traders – in a large-scale, international conspiracy to hack and steal press releases containing confidential nonpublic financial information relating to hundreds of companies traded on the NASDAQ and NYSE from three newswires.

In addition to Igor Dubovoy, the 23-count DNJ indictment charges Ivan Turchynov, 27, Oleksandr Ieremenko, 24, and Pavel Dubovoy, 32, all of Ukraine, and Arkadiy Dubovoy, of Alpharetta, Georgia. The defendants are all charged with wire fraud conspiracy, securities fraud conspiracy, wire fraud, securities fraud, and money laundering conspiracy.  Additionally, Ivan Turchynov and Oleksandr Ieremenko are charged with computer fraud conspiracy, computer fraud, and aggravated identity theft.

The Eastern District of New York (EDNY), in a related indictment charged four securities traders: Vitaly Korchevsky, 50, of Glen Mills, Pennsylvania, Vladislav Khalupsky, 45, of Brooklyn, New York and Odessa, Ukraine, Leonid Momotok, 47, of Suwanee, Georgia, and Alexander Garkusha, 47, of Cummings and Alpharetta, Georgia. The EDNY defendants are charged with wire fraud conspiracy, securities fraud conspiracy, securities fraud, and money laundering conspiracy.  On Dec. 21, 2015, Alexander Garkusha pleaded guilty to Count One of the EDNY indictment, charging him with conspiracy to commit wire fraud.

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

Between February 2010 and August 2015, Turchynov and Ieremenko, computer hackers based in Ukraine, gained unauthorized access into the computer networks of Marketwired L.P. (Marketwired), PR Newswire Association LLC (PRN), and Business Wire.  They used a series of targeted cyber-attacks, including “phishing” attacks and SQL injection attacks, to gain access to the computer networks. The hackers moved through the computer networks and stole press releases about upcoming announcements by public companies concerning earnings, gross margins, revenues, and other confidential and material financial information.

At one point, one of the hackers sent an online chat message in Russian to another individual stating, “I’m hacking prnewswire.com.”  In another online chat, Ieremenko told Turchynov that he had compromised the log-in credentials of 15 Business Wire employees.

The hackers shared the stolen releases with the traders using overseas computer servers that they controlled. In a series of emails, the hackers even shared “instructions” on how to access and use the overseas server where they shared the stolen releases with the traders, and the access credentials and instructions were distributed amongst the traders.  In an email, which was sent by one of the traders, the instructions for accessing the overseas server suggested that users conceal their Internet Protocol address when accessing the server as a precaution to avoid detection.  For traders created “shopping lists” or “wish lists” for the hackers listing desired upcoming press releases for publicly traded companies from Marketwired and PRN for publicly traded companies.  Trading data obtained over the course of the investigation showed that, after the shopping list was sent, the traders and others traded ahead of several of the press releases listed on it. 

The traders generally traded ahead of the public distribution of the stolen releases, and their trading activities shadowed the hackers’ capabilities to exfiltrate stolen press releases. In order to execute their trades before the releases were made public, the traders sometimes had to execute trades in extremely short windows of time between when the hackers illegally accessed and shared the releases and when the press releases were disseminated to the public by the newswires, usually shortly after the close of the markets.  Frequently, all of this activity occurred on the same day.  Thus, the trading data often showed a flurry of trading activity around a stolen press release just prior to its public release.

The traders traded on stolen press releases containing material nonpublic information about the following publicly traded companies that included, among hundreds of others: Align Technology, Inc.; Caterpillar Inc.; Hewlett Packard; Home Depot; Panera Bread Co.; and Verisign, Inc.

The traders paid the hackers for access to the overseas servers based, in part, on a percentage of the money the traders made from their illegal trading activities. The hackers and traders used foreign shell companies to share in the illegal trading profits. 

At today’s plea hearing, Igor Dubovoy admitted that when he and others purchased stolen press releases from the computer hackers operating in Ukraine, he knew they contained earnings announcements for publicly trading companies that had not yet been made public. Igor Dubovoy also admitted that he sent the releases to Korchevsky so that he could review them and determine which trades would be profitable based on the stolen material information.

Based on Korchevsky’s recommendations, Igor Dubovoy then executed trades using a number of different brokerage accounts in his name and in Arkadiy Dubovoy’s name, as well as any entities they owned. He also admitted that he provided the hackers with access to at least one trading account held by Arkadiy Dubovoy so that they could confirm how much money was being made from the stolen information. According to Igor Dubovoy, the hackers were paid 50 percent of any profits made in the stock market based on the stolen press releases they provided.

The maximum potential penalties for Count One, conspiracy to commit wire fraud, is 20 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense.

U.S. Attorney Fishman credited the special agents of the U.S. Secret Service, Criminal Investigations Division, under the direction of Director Joseph P. Clancy, and special agents from the Newark Field Office, under the direction of Acting Special Agent in Charge Kenneth Pleasant, with the ongoing investigation leading to today’s plea.

The government is represented by Assistant U.S. Attorneys Andrew S. Pak, Daniel Shapiro, David M. Eskew, and Nicholas Grippo of the Economic Crimes Unit, Computer Hacking & Intellectual Property Section, Assistant U.S. Attorney Svetlana M. Eisenberg of the General Crimes Unit, and Assistant U.S. Attorney Sarah Devlin of the Asset Forfeiture and Money Laundering Unit.

Defense counsel: Lawrence S. Lustberg, Esq., Mary Frances Palisano, Esq., Gibbons PC

CAMDEN, N.J. – A Woolwich Township, New Jersey, was sentenced today to 72 months in prison for scamming distressed homeowners into giving him their houses and then soliciting fake real estate investments from private investors – secured by those same properties – that netted him more than $3 million in illicit profits, U.S. Attorney Paul J. Fishman announced.

Randy Poulson, 44, previously pleaded guilty before U.S. District Judge Renée Marie Bumb to Count One of an indictment charging him with mail fraud. Judge Bumb imposed the sentence today in Camden federal court.

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

Poulson owned and operated Equity Capital Investments, LLC and Poulson Russo LLC and was the former president of the South Jersey Real Estate Investors Association. Paulson gave speeches, seminars, monthly dinners and various private tutorial sessions, purporting to teach real estate investing tips to individuals who paid fees to attend.

Poulson engaged in a two-pronged scheme. First, he promised to pay the mortgages of distressed homeowners facing foreclosure if they sold their homes to him. Using this method, Poulson obtained the deeds to more than 25 distressed homeowners’ residences, causing them to vacate the homes so renters could move in. Afterwards, Poulson then stopped making the monthly mortgage payments, causing those mortgages to go into foreclosure without the distressed homeowners’ knowledge.

In the second part of the scheme, Poulson solicited seminar attendees and other private investors to invest in Equity Capital Investments, which purportedly bought and sold real estate. Poulson told the investors that their money would be used to acquire and rehabilitate a property, which Poulson claimed he would rent out and then sell for a 10 to 20 percent return on the investment.

The properties for which Poulson solicited the investments were those he acquired in the first part of the scheme. Although Poulson claimed that he would use funds to acquire and rehabilitate those properties, Poulson spent the money on personal expenses and to repay other investors. As a result of the scheme, Poulson was able to fraudulently obtain more than $3 million from investors.

In addition to the prison term, Judge Bumb sentenced Poulson to three years of supervised release and ordered him to pay $2.58 million in restitution.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special

Agent in Charge Richard M. Frankel, in Newark, for the investigation leading to today’s sentencing.

The government is represented by Attorney in Charge R. Stephen Stigall of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Gilbert J. Scutti Esq., Somerdale, New Jersey

Also Failed to Collect More Than $100,000 in Payroll Taxes

TRENTON, N.J. – The head of an engineering consulting firm in Wall Township, New Jersey, was sentenced today to 12 months and a day in prison for a scheme in which several of his employees fraudulently collected unemployment benefits while he paid the remaining portion of their salaries, U.S. Attorney Paul J. Fishman announced.

Lino DeAlmeida Jr., 67, of Point Pleasant, New Jersey, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with one count of conspiracy to defraud the N.J. State Division of Unemployment Insurance (NJUI) and one count of failing to collect Social Security, Medicare, and income payroll taxes. Judge Wolfson imposed the sentence today in Trenton federal court.

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

DeAlmeida operated an engineering consulting firm, Consolidated Construction Management Services (CCMS) in Wall Township. In late 2011, DeAlmeida told his four employees that due to financial difficulties, he could not continue paying their salaries. He proposed a scheme in which the employees would claim to have been terminated from CCMS and seek unemployment benefits from the NJUI. In return, he promised to continue to pay them “under the table” for the remaining portion of their salaries that would not be covered by the benefits. Three of the CCMS employees agreed to the scheme and submitted false applications with the NJUI. 

DeAlmeida’s employee/conspirators received a total of $130,363 in benefits between July 2011 and January 2013 while receiving CCMS checks from DeAlmeida. In addition, DeAlmeida failed to pay payroll taxes of $109,068 on the undisclosed wages of $790,860 he and his conspirators received during the scheme.

In addition to the prison term, Judge Wolfson sentenced DeAlmeida to two years of supervised release, fined him $10,000, ordered him to pay restitution of $138,532 to NJUI and pay his unpaid federal corporate and personal taxes.

U.S. Attorney Fishman credited special agents of the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Cheryl Garcia, New York Region; and IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentencing.

The government is represented by V. Grady O’Malley, Senior Litigation Counsel of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.

Defense counsel: Jeffrey D. Smith Esq., Teaneck, New Jersey

CAMDEN, N.J. – A Pleasantville, New Jersey, man today admitted participating in a nearly three-year conspiracy to distribute cocaine and crack cocaine in the Atlantic City, New Jersey area, U.S. Attorney Paul J. Fishman announced.

Ronald Douglas Byrd, 51, pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to Count One of an indictment charging him with conspiring with others to distribute more than 280 grams of crack cocaine.

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

From February 2012 through Dec. 10, 2014, Byrd admitted that he and others engaged in a drug trafficking conspiracy through which Byrd distributed more than one kilogram of crack cocaine. Members of the conspiracy used Byrd’s Pleasantville residence and at least two other residences in Pleasantville and Absecon to store and package cocaine and crack cocaine.

The distribution conspiracy charge to which Byrd pleaded guilty is punishable by a minimum penalty of 10 years in prison, a maximum potential penalty of life in prison and a $10 million fine. Sentencing is scheduled for June 10, 2016.

Byrd is the sixth person to plead guilty to participating in this drug trafficking conspiracy. Kareem Taylor, 41, of Atlantic City; Talib Tiller, 43, of Mays Landing, New Jersey; John Wellman, 41, of Somers Point, New Jersey; and Phillip Horton, 50, of Los Angeles, California, have all pleaded guilty and await sentencing. Francisco Alberto Rascon-Muracami, 22, of Obregon, Mexico, was sentenced Oct. 30, 2015 to 70 months in prison. Trial for the remaining defendants is scheduled for May 23, 2016.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel; the Drug Enforcement Administration’s Newark Division, under the direction of Special Agent in Charge Carl J. Kotowski; the Atlantic County Prosecutor’s Office, under the direction of Prosecutor James P. McClain; and the Atlantic City Police Department, under the direction of Police Chief Henry White, with the investigation leading to today’s plea.

He also thanked the N.J. State Police; the Bureau of Alcohol, Tobacco and Firearms; U.S. Immigration and Customs Enforcement (ICE)-Homeland Security Investigation (HSI); U.S. Postal Inspection Service; Cumberland County Sheriff’s Office and the Ventnor, Northfield and Millville police departments for their assistance.

The government is represented by Assistant U.S. Attorney Diana Vondra Carrig of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Michael Huff Esq., Philadelphia

NEWARK, N.J. - A Springfield, New Jersey, man today admitted his role in a scheme that used bogus records and unqualified home health aides to defraud Medicare out of $7 million, U.S. Attorney Paul J. Fishman announced. 

Paul Mil, 66, pleaded guilty before U.S. District Judge Katharine S. Hayden in Newark federal court to an information charging him with conspiracy to commit health care fraud, money laundering and tax evasion.

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

Mil was the owner of People Choice Home Care Inc., a home health care agency located in Elizabeth, New Jersey, that provided home health aides and health care services to New Jersey residents. Mil was also the registered agent for HHCH Health Care Inc. in Linden, New Jersey, a home health care agency owned by Irina Krutoyarsky, 61, of Springfield, New Jersey. Home health aides visit patients at their homes and provide a variety of services, such as assistance with eating, dressing and grooming. These services were subsidized under the New Jersey Medical Assistance Program (Medicaid).

Mil, Krutoyarsky and others defrauded Medicaid through a variety of ways. First, they submitted false documents to the New Jersey Board of Nursing, the state agency responsible for issuing home health aide certifications. Krutoyarsky falsely represented that prospective home health aides had attended and satisfactorily completed required training and testing. In truth, Krutoyarsky charged prospective home health aides hundreds of dollars for fraudulently obtaining their certifications.   

Second, Mil, Krutoyarsky and others fraudulently billed Medicaid for services not actually rendered to patients. Numerous HHCH home health aides routinely falsified records that claimed they had visited patients and provided them health care services. In truth, these home health aides had other jobs, were on vacations overseas, or were in other parts of the state during the times they claimed they were with patients. In certain instances, home health aides gave cash kickbacks to patients who were also participating in the scheme. 

Third, Mil, Krutoyarsky and others hired individuals with no home health certifications and no status in the country and then sent them to patients’ homes. They then billed Medicaid, fraudulently claiming that the services had been provided by duly certified home health aides. 

In total, Mil and others defrauded Medicaid out of $7 million. After Medicaid paid the claims and transferred the funds into bank accounts controlled by Mil, he used the proceeds to purchase real estate and personal property.

Additionally, between 2007 and 2011, Mil cheated the IRS out of approximately $918,000 in taxes due and owing. As part of the scheme, home health aides were sent to the homes of patients who were not eligible for Medicaid. These patients wrote checks payable to HHCH and People Choice. Mil then cashed these checks at check cashing businesses and equally divided the cash with Krutoyarsky. On his corporate tax returns, he falsely characterized these payments as legitimate business deductions, thus reducing his business’ corporate taxes.  He then filed federal individual income tax returns that concealed this income.

Nine other individuals, including Krutoyarsky, have already pleaded guilty to their respective roles in the scheme. 

The conspiracy and money laundering counts to which Mil pleaded guilty each carry a maximum potential penalty of 10 years in prison. The tax evasion count carries a maximum potential penalty of five years in prison. Each charge carries a potential $250,000 fine.  Sentencing is scheduled for May 3, 2016. In addition, Mil will be ordered to pay a $7 million forfeiture money judgment to the United States and to forfeit six homes and properties in New Jersey and New York, as well as hundreds of thousands of dollars seized from bank accounts he controlled.

U.S. Attorney Fishman credited agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; U.S. Citizenship and Immigration Services; New Jersey Office of the State Comptroller, Medicaid Fraud Division under the direction of Director Josh Lichtblau; The Enforcement Bureau of the New Jersey Attorney General’s Office on behalf of the Board of Nursing, Acting Attorney General John Jay Hoffman; the New Jersey Department of Labor under the direction of Commissioner Hal Wirths; the Marlboro Police Department, under the direction of Chief Bruce Hall; and the U.S. Department of State-Diplomatic Security for the investigation leading to today’s plea.

The government is represented by Senior Litigation Counsel V. Grady O’Malley and Assistant U.S. Attorneys Peter Gaeta and Anthony Moscato of the New Jersey U.S. Attorney’s Office Criminal Division in Newark.

Defense Counsel: Nicholas G. Kaizer Esq., New York

CAMDEN, N.J. – A Manchester, New Jersey, man today admitted paying tens of thousands of dollars in bribes to a sports medicine doctor on behalf of Prescriptions R Us, a compound pharmacy in Lakewood, New Jersey, U.S. Attorney Paul J. Fishman announced. 

Howard Wertheim, 67, pleaded guilty before U.S. District Judge Joseph H. Rodriguez in Camden federal court to an information charging him with one count of paying kickbacks.

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

Wertheim admitting that from February 2013 through October 2013, he worked for Vladimir Kleyman, 44, of Lakewood, New Jersey, the president and pharmacist-in-charge of Prescriptions R Us. As a compounding pharmacy, Prescriptions R Us prepared medication using different types and dosages of drugs in order to provide more personalized medications for patients. Prescriptions R Us supplied a topical cream for pain treatment that was made from ketamine (a Schedule III non-narcotic), lidocaine, diclofenac and other ingredients.

Wertheim admitted that Kleyman paid him to help recruit and pay physicians to refer their prescriptions to Prescriptions R Us. Wertheim admitted that as part of the scheme, he paid tens of thousands of dollars in cash bribes to James Morales, 45, a sports medicine doctor with a practice in Toms River, New Jersey, in exchange for referring pain cream prescriptions.

The kickback charge to which Wertheim pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for April 25, 2016. As part of his plea agreement, Wertheim must forfeit $25,000, representing the money he made as payment for his work as a middle-man in the scheme.

Morales, who admitted accepting more than $60,000 in cash bribes as part of the scheme, pleaded guilty to an information charging him with conspiracy to accept kickbacks and health care fraud on June 29, 2015 and awaits sentencing. Kleyman, who previously pleaded guilty to an information charging him with conspiracy to pay kickbacks and to commit health care fraud on Oct. 14, 2014, was sentenced Nov. 4, 2015 to 20 months in prison.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; and U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the ongoing investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorneys Jane H. Yoon and R. David Walk Jr. of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $640 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

Defense counsel: William Cunningham, Brick, New Jersey                                                                                                                                      

NEWARK, N.J. – An Essex County, New Jersey, man charged with robbing Capital One Bank in Newark twice, including once in an armed robbery, will make his initial court appearance today, U.S. Attorney Paul J. Fishman announced.

Gregory A. Jones, 59, of Newark, is charged by complaint with two counts of bank robbery and one count of using a firearm during the commission of a crime of violence. Jones is expected to make his initial appearance this afternoon before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court. 

According to the complaint and statements made in court:

On May 6, 2014, Jones entered the Capital One Bank wearing dark glasses and a scarf and presented the teller a note demanding cash. After Jones left the bank with stolen money, including a dye pack, law enforcement recovered a pair of dark glasses and a scarf near the bank next to currency, saturated with ink from the dye pack. DNA recovered from the glasses and the scarf matched a DNA sample that previously was lawfully obtained from Jones. He was later identified based on surveillance video and witness statements.

On Sept. 19, 2014, Jones entered the bank again, brandished a firearm from underneath his sweater, and told a teller to give him money, stating that he had a gun and would shoot. Jones fired the weapon into the ceiling. He was later identified using surveillance video and witness statements.

Jones has been detained in the Essex County Jail on state charges related to the May 6, 2014 robbery.

The bank robbery counts each carry a maximum potential penalty of up to 20 years in prison and a fine of up to $250,000 or twice the gross pecuniary gain or loss. The discharging a firearm during the bank robbery count carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison, which must be served consecutive to the other counts.

U.S. Attorney Fishman credited special agents with the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, New Jersey; N.J. State Police, under the direction of Col. Rick Fuentes; the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray; and the Newark Police Department, under the direction of Public Safety Director Anthony Ambrose, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Svetlana M. Eisenberg of the U.S. Attorney’s Office General Crimes Unit in Newark.

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

CAMDEN, N.J. – An Atlantic City, New Jersey, man was sentenced today to 30 months in prison for assisting members and associates of an organized crime family in a fraud scheme, U.S. Attorney Paul J. Fishman announced.

John Parisi, 54, previously pleaded guilty before U.S. District Judge Robert B. Kugler to conspiring to defraud FirstPlus Financial Group Inc. (FPFG), a Texas-based financial services company targeted for extortionate takeover and looting by a group led by Nicodemo S. Scarfo. Judge Kugler imposed the sentence today in Camden federal court.

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

Parisi and 12 others – including his cousin, Scarfo, an alleged member of the Lucchese La Cosa Nostra (LCN) crime family, and Salvatore Pelullo, an alleged associate of the Lucchese and Philadelphia LCN families – were variously charged in a November 2011 indictment with a racketeering conspiracy, including acts of securities fraud, wire fraud, mail fraud, bank fraud, extortion, interstate travel in aid of racketeering, money laundering and obstruction of justice. The indictment charged that FPFG was targeted for extortionate takeover and looting by a group of the conspirators. A substantial part of the enterprise’s activities occurred in New Jersey, including communications and the transfer of money into and out of the state. John Parisi admitted that he joined the conspiracy in April 2007.

Parisi managed a family trust and a limited liability company on behalf of Scarfo as part of the scheme to defraud FPFG.  Parisi said Scarfo directed him in the use of various bank accounts through which Scarfo received hundreds of thousands of dollars between July 2007 and April 2008 as part of the scheme. As alleged in the indictment, the money involved proceeds of the fraud that Scarfo allegedly received as part of a fraudulent “consulting” agreement between his shell company, Learned Associates, and one controlled by Pelullo. The money also involved proceeds received from the fraudulent sale of Scarfo and Pelullo’s worthless companies to FPFG in 2007. The receipt of the fraudulent proceeds often occurred in the form of wire transfers from accounts in Pennsylvania to accounts in New Jersey.

Parisi admitted that beginning in February 2008 he assisted Scarfo and his then-fiancée, Lisa Marie Scarfo, obtain a mortgage for a $715,000 house in Egg Harbor Township, New Jersey, that the Scarfos intended to purchase. Lisa Marie Scarfo pleaded guilty on Sept. 17, 2013, to a conspiracy to make a false mortgage loan application in connection with the purchase of the Egg Harbor Township house.

In addition to the prison term, Judge Kugler sentenced Parisi to two years of supervised release and ordered him to pay $14 million in restitution.

Scarfo, Pelullo, and William and John Maxwell were convicted in convicted in July 2014 of racketeering conspiracy and related offenses, including securities fraud, wire fraud, mail fraud, bank fraud, extortion, money laundering and obstruction of justice, after a six-month trial before Judge Kugler.  Scarfo and Pelullo were previously sentenced to 30 years in prison.  William and John Maxwell were previously sentenced to 20 and 10 years in prison, respectively.

U.S. Attorney Fishman credited special agents of the FBI in Newark, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s sentencing. They also thanked the U.S. Department of Labor-Office of Inspector General’s Office of Labor Racketeering and Fraud Investigations New York Region, the FBI’s Philadelphia Division and the Bureau of Alcohol, Tobacco, Firearms and Explosives for their roles in the case.

The government is represented by Assistant U.S. Attorneys Steven D’Aguanno and Howard Wiener of the New Jersey U.S. Attorney’s Office Camden Office.

Defense counsel:  Lisa Evans Lewis Esq., Camden

TRENTON, N.J. – Two people appeared in federal court today on charges they conspired to engage in sex trafficking of a minor and engaged in sex trafficking of a minor, U.S. Attorney Paul J. Fishman announced.

Aaron Gray, 29, a/k/a “AR,” Aja Easley, 22, both of Camden, appear this afternoon before U.S. Magistrate Judge Tonianne J. Bongiovanni in Trenton federal court. Gray, Easley and a third defendant, Kenneth Mertz, 35, of Collingswood, who remains at large, are each charged in a three-count complaint with conspiracy to engage in sex trafficking of a minor and with sex trafficking of a minor. Gray is also charged with being a felon in possession of a firearm. Gray and Easley were ordered detained without bail.

According to the documents filed in this case:

On March 2, 2015, Easley allegedly communicated with the victim, a minor, using a social media website. She told the victim she was “worried about” the victim because of a previous assault by the victim’s boyfriend. She offered the victim money, clothing and shelter and met with the victim at the Camden Transportation Center. Easley allegedly told the victim about a dating website and said the victim could make money through the website by going on “dates.” Easley and the victim later met Gray and Mertz at a residence in Camden. Mertz then drove everyone to a motel in Cherry Hill.

At the motel, Gray and Easley allegedly attempted to convince the victim to engage in commercial sex acts and took suggestive photos of the victim, which were used as part of an advertisement on the website. Easley used her cellular telephone to communicate with multiple individuals who responded to the ad. Gray gave the victim instructions on what to do when the respondents arrived. The victim observed Gray in possession of a firearm and also observed a collapsible nightstick, which was later determined to belong to Mertz.

On March 3, 2015, at a motel in Mount Laurel, New Jersey, the victim engaged in sex acts with multiple individuals, who responded to the ad and paid money to the defendants. The defendants later told the victim they were taking the victim to Atlantic City, New Jersey, to meet another person who had responded to the ad.

On the way to Atlantic City, the defendants allegedly agreed to let the victim stop at a residence in Gloucester City, New Jersey. The victim went inside and contacted the police, leading to the defendants’ arrest.

The count of conspiracy to engage in the sex trafficking of a minor carries a maximum penalty of life in prison. The substantive count of sex trafficking of a minor carries a statutory mandatory minimum of 10 years in prison and a statutory maximum of life in prison.  The felon-in-possession count carries a maximum statutory penalty of 10 years in prison. Each count also carries a maximum fine of $250,000.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel, and members of the Mount Laurel Police Department, under the direction of Police Chief Dennis Cribben, and the Gloucester City Police Department, under the direction of Acting Police Chief Michael Morell, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney J. Brendan Day in Trenton.

The charges and allegations summarized above are merely accusations, and the defendants are considered innocent unless and until proven guilty.

TRENTON, N.J. – A Mercer County, New Jersey, man was sentenced today to 70 months in prison for possessing with the intent to distribute 157 grams of cocaine base, U.S. Attorney Paul J. Fishman announced.

Donald Jackson, 32, of Trenton, previously pleaded guilty before U.S. District Judge Anne E. Thompson to an indictment charging him with possessing with intent to distribute 28 grams or more of cocaine base. Judge Thompson imposed sentence today in Trenton federal court.

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

On Jan. 30, 2014, Jackson, who had been the target of an investigation led by detectives from the Mercer County Prosecutor’s Office, Special Investigations Unit, and officers from the Trenton Police Department, was apprehended in the parking lot of the Gregory Elementary School.  A search of his vehicle – in which he had been traveling with two young children – revealed a loaded .45 caliber handgun with a defaced serial number, as well as a plastic bag containing 16 grams of cocaine base.  On the same day, a search of an apartment to which Jackson had access and from which he operated his trafficking operations uncovered an additional 141 grams of cocaine base.

In addition to the prison term, Judge Thompson sentenced Jackson to five years of supervised release and fined him $1,000.

U.S. Attorney Fishman credited special agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Special Agent in Charge George P. Belsky Jr.; and detectives of the Mercer County Prosecutor’s Office, Special Investigations Unit, under the direction of Acting Prosecutor Angelo J. Onofri, with the investigation leading to today’s sentencing.  He also thanked officers of the Trenton Police Department under the direction of Police Director Ernest Parrey for their assistance.

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

NEWARK, N.J. - A Colombian cartel leader expelled from Venezuela to face federal charges in New Jersey for his role in an international cocaine distribution conspiracy was sentenced today to 132 months in prison, U.S. Attorney Paul J. Fishman announced.

Colombian national Salomon Camacho Mora, 71, a/k/a “Papa Grande,” a/k/a “El Viejo,” a/k/a  “Hector,” was arrested in Valencia, Venezuela, on Jan. 13, 2010, and subsequently expelled by Venezuelan authorities to the United States. Camacho was originally indicted in September 2002 in U.S. District Court for the District of New Jersey and had been designated a Consolidated Priority Organization Target (CPOT) by the Department of Justice. He was a New Jersey FBI fugitive for more than eight years.

On Oct. 15, 2014, Camacho pleaded guilty before U.S. District Judge William H. Walls to Count Seven of a superseding indictment charging him with conspiracy to commit narcotics trafficking. Judge Walls imposed the sentence today in Newark federal court.

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

Camacho admitted that he and members of his drug organization purchased multi-kilogram quantities of cocaine from processing laboratories located in Colombia and arranged for the transportation of the cocaine to various shipping ports in Venezuela. Camacho and members of his drug organization then sold the cocaine shipments to other drug trafficking organizations operating in Puerto Rico, the Dominican Republic and the United States.

He also acknowledged that others in his organization received and stored the drug shipments in Venezuela, and arranged for their maritime transportation to Puerto Rico and the United States.

In addition to the prison term, Judge Walls sentenced Camacho to five years of supervised release. Camacho must also forfeit $1.6 million and eight Colombian properties that were the product of ill-gotten gains. 

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; the Drug Enforcement Administration (DEA), under the direction of Special Agent in Charge Carl J. Kotowski in Newark; and the New Jersey National Guard Anti-Narcotics Task Force for the investigation.

U.S. Attorney Fishman also thanked the U.S. Department of Justice Criminal Division's Office of International Affairs for providing assistance in this matter. Additionally, he thanked the Venezuelan agencies Oficina Nacional Anti Drogas (ONA), Servicio Bolivariano de Intelligencia Nacional, (SEBIN), Servicio Administrativo de identificacion migracion y Extranjeria, (SAIME) and the Colombian law enforcement authorities for their assistance in Camacho’s arrest and deportation.

The government is represented by Assistant U.S. Attorney Adam N. Subervi of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: William Clay Esq., Miami

TRENTON, N.J. - A husband and wife from Lakewood, New Jersey, were sentenced today for their roles in a conspiracy to kidnap a Jewish man and force him to give his wife a religious divorce, known as a “get,” U.S. Attorney Paul J. Fishman announced.

David Wax, 53, who previously pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with conspiracy to commit kidnapping, was sentenced to 84 months in prison. Judy Wax, 51, who previously pleaded guilty before Judge Wolfson to an information charging her with misprision of a felony, was sentenced to two years of probation. Judge Wolfson imposed both sentences today in Trenton federal court.

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

David Wax admitted that in October 2010, he and his conspirators agreed to force a Jewish man to give his wife a get, a document which, according to Jewish law, must be presented by a husband to his wife to effect their divorce.

David Wax lured the victim from Brooklyn, New York, to Wax’s home in Lakewood on Oct. 17, 2010, under the pretense that the victim would work on Talmudic books that David Wax was publishing. When the victim arrived, he was brought upstairs, blindfolded, handcuffed and bound. The victim was then assaulted by Wax and his conspirators until he provided the get.

Judy Wax admitted that she and her husband later replaced a blood-soaked carpet in their home in order to conceal the kidnapping. She also admitted to knowingly failing to notify the authorities of the kidnapping.

The family of the victim’s wife paid David Wax approximately $100,000 to obtain the forced get. His conspirators received approximately $50,000. 

In addition to the prison term, Judge Wolfson sentenced David Wax to two years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation.

The government is represented by Assistant U.S. Attorneys R. Joseph Gribko and Sarah Wolfe of the U.S. Attorney’s Office in Trenton.

Defense counsel:

David Wax: Mitchell J. Ansell Esq., Ocean, and Edward Dauber Esq., Newark, New Jersey

Judy Wax: Steven Secare Esq., Toms River, New Jersey.

NEWARK, N.J. – A United States commercial airline pilot who holds a U.S Customs and Border Protection (CBP) Global Entry Card was arrested yesterday morning after allegedly attempting to smuggle $195,736 in undeclared currency into the country, U.S. Attorney Paul J. Fishman announced. 

Anthony Warner, 55, of Dallas, Texas, was arrested at Newark Liberty International Airport by special agents of Immigration and Customs Enforcement’s Homeland Security Investigations after arriving as a passenger on a flight from Mumbai, India. He is charged by complaint with one count of bulk cash smuggling and one count of making false statements. He made his initial appearance before U.S. Magistrate Judge Steven C. Mannion and was released on $100,000 bond.

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

Global Entry is a CBP program that allows expedited clearance upon arrival in the United States for pre-approved travelers who have been determined to be low-risk. Pre-approval must be completed before enrollment, and the process includes a background check and an in-person interview. At airports, program members proceed to Global Entry kiosks, present their machine-readable passport or U.S. permanent resident card, place their fingers on the scanner for fingerprint verification, and complete a Customs verification. The kiosk issues the traveler a transaction receipt and directs the traveler to baggage claim and the exit.

When Warner arrived at Newark Liberty International Airport, the Global Entry computer system was not functioning, so he presented his customs declaration to a CBP officer.   CBP’s screening determined that he was carrying a laptop-style bag that contained $195,736 in United States currency wrapped in newspaper.  He also had 10 rings, four sets of earrings, and other assorted jewelry of undetermined value. 

Warner’s possession of currency was contrary to the statements in his customs declaration and verbal statements

Count One of the complaint carries a maximum term of imprisonment of five years and a fine of $250,000. Count two of the complaint, bulk cash smuggling, carries a maximum term of imprisonment of five years and forfeiture of all property involved in the offense.

U.S. Attorney Fishman credited special agents of Immigration and Customs Enforcement’s Homeland Security Investigations, Newark Division, under the direction of Special Agent in Charge Terence S. Opiola, and U.S. Customs and Border Protection, under the leadership of Robert E. Perez, Director, New York Field Office, with the investigation leading to today’s charges.

The government is represented by Assistant U.S. Attorney Sara F. Merin of the OCDETF/Narcotics Unit in Newark.

Defense counsel: Jeffrey Altman and Steven Altman Esqs., New Brunswick, New Jersey

CAMDEN, N.J. – The leader of a criminal street gang that used threats, intimidation and violence to maintain control of the illegal drug trade in Atlantic City, New Jersey, was sentenced today to life in prison for drug conspiracy and weapons charges, U.S. Attorney Paul J. Fishman announced.                                         

Mykal Derry, a/k/a “Koose,” 35, of Atlantic City, was previously convicted of conspiracy to distribute one kilogram or more of heroin, distributing heroin, maintaining a place for the purposes of storing and distributing heroin, possessing, brandishing and discharging firearms in furtherance of the drug conspiracy and using a communications device in furtherance of a drug trafficking crime. Mykal Derry was convicted following a six-week trial before U.S. District Judge Noel L. Hillman, who imposed the sentence today in Camden federal court.

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

Mykal Derry was the leader of the gang known as “Dirty Block,” a/k/a “Crime Fam,” “3.6.6.12,” or “3.6,” which operated in a geographic area of Atlantic City and controlled the lucrative drug trafficking area of the Stanley Holmes public housing complex, Brown’s Park and the surrounding area.

 The evidence showed that Derry and other members of the group routinely carried loaded handguns and engaged in at least eight drug related shootings between October 2010 and February 2013, including the shooting of a teenager on April 17, 2011, which left the teenager paralyzed. The trial testimony of a cooperating witness established that Derry had his cousin shoot the teenager because he was cooperating with police in an earlier case involving Derry and other drug associates’ assault of the teenager in October 2010.

Additional testimony established that Mykal Derry and his brother, Malik Derry, a/k/a “Lik,” 24, also of Atlantic City, planned and carried out the shooting murder of a rival drug dealer in Atlantic City on the evening of Feb. 10, 2013. Mykal Derry told members of his gang that he wanted them to “put him down” (referring to an order to shoot the rival dealer) when they saw him. Malik Derry shot the victim in the head from close range while riding a bicycle past him as the victim stood in front of an Atlantic City restaurant.

The murder weapon, a stolen .380 caliber semi-automatic handgun, was later recovered from the drop ceiling in an apartment located on Green Street in Atlantic City, which, at the time, was shared by Mykal Derry and his girlfriend, Kimberly Spellman, 34, of Egg Harbor Township, New Jersey. Atlantic City police detectives also found 18 “bricks” of heroin (approximately 900 individual packets of heroin) and drug packaging materials inside the apartment.

The evidence presented by the government at trial consisted of recordings of hundreds of telephone calls and text messages between Mykal Derry and over twenty other members of the drug gang, physical evidence including the recovery of twenty firearms, ballistics evidence from shooting scenes, crime scene evidence from eight different shooting scenes in Atlantic City, recovery of substantial quantities of heroin and drug packaging materials, approximately $40,000 in drug proceeds, the testimony of dozens of FBI agents and Atlantic City police detectives, the testimony of ballistics experts, a narcotics expert, and the testimony of two cooperating witnesses who had previously pleaded guilty to federal drug trafficking offenses.

Malik Derry still awaits sentencing after being convicted at trial of conspiracy to distribute one kilogram or more of heroin, possessing and discharging firearms in furtherance of the conspiracy and using a communications device in furtherance of a drug trafficking crime.  Spellman previously pleaded guilty to a superseding information charging her with conspiracy to distribute heroin and awaits sentencing.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Division, Atlantic City Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel; the Atlantic County Prosecutor’s Office, under the direction of Prosecutor James P. McClain; the Atlantic City Police Department, under the direction of Chief Henry White; and the South Jersey Safe Streets Violent Incident and Gang (Safe Streets) Task Force, with the investigation leading to today’s sentencing.

He also thanked the N.J. State Police, the Atlantic County Sheriff’s Office, the Northfield Police Department, the Vineland Police Department, the Brigantine Police Department, and the Millville Police Department for their contributions.

The government is represented by Assistant U.S. Attorneys Patrick Askin and Justin Danilewitz of the U.S. Attorney’s Office in Camden and Special Assistant U.S. Attorney Edmund Mallqui-Burgos of the Atlantic County Prosecutor’s Office.

Defense Counsel: Emmett Madden Esq., Philadelphia

NEWARK, N.J. - A Union County, New Jersey, man was arrested today and charged with aiming a laser pointer at a WABC-TV helicopter, U.S. Attorney Paul J. Fishman announced.

Stiven Lopez-Bender, 26, of Elizabeth, New Jersey, was charged by complaint with one count of aiming a laser pointer at an aircraft.  Lopez-Bender is scheduled to make his initial appearance today before U.S. Magistrate Judge Steven C. Mannion in Newark federal court. 

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

On Nov. 11, 2015, a reporter working for WABC-TV, Channel 7, New York, an affiliate of ABC Inc., requested a helicopter operator, also working on behalf of WABC, to fly the helicopter to a location in Elizabeth to cover a story on a house fire.  At approximately 5:20 pm, while facing south at an altitude of approximately 1,000 feet, a green laser was aimed at and struck the flight deck of the helicopter through the main windshield. 

The reporter and the helicopter operator saw Lopez-Bender emerge from a sports utility vehicle, reach into the passenger side, and then point a green laser at the helicopter, causing a second laser strike to the helicopter.

The helicopter operator lowered the helicopter to approximately 500 feet.  As Lopez-Bender walked towards an apartment building, Lopez-Bender turned and again pointed the green laser towards the helicopter before entering the apartment building.   

The helicopter operator then circled the area at an altitude of approximately 800 feet.

Within approximately 10 minutes, the helicopter was again lasered from a window in the apartment building Lopez-Bender had just entered. 

The count with which Lopez-Bender is charged carries a maximum punishment of five years in prison and a $250,000 fine. 

U.S. Attorney Fishman credited special agents, detectives and investigators assigned to the Joint Terrorism Task Force, under the direction of FBI Special Agent in Charge Richard M. Frankel, and members of the Elizabeth Police Department, under the direction of Police Director James Cosgrove, with the investigation leading to the charge.

The government is represented by Assistant U.S. Attorney Joyce M. Malliet of the National Security 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.

CAMDEN, N.J. – A property manager was sentenced today to 15 months in prison for his role in a scheme to defraud financial institutions as part of a multimillion-dollar mortgage fraud that used phony documents and “straw buyers” to make illegal profits on over-developed condominiums in the Wildwood, New Jersey, area, U.S. Attorney Paul J. Fishman announced.

Paul Watterson, 55, of Mountainside, New Jersey, previously pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to an information charging him with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. Judge Simandle imposed the sentence today in Camden federal court.

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

Watterson and his conspirators identified homes in Wildwood and Wildwood Crest and recruited straw buyers to purchase those properties at the inflated rates. The straw buyers had good credit scores, but lacked the financial resources to qualify for mortgage loans. Watterson created fraudulent loan applications that contained false information about the straw buyers’ employment, income, assets and intended use of the properties. Watterson also obtained on behalf of his conspirators false documents to support the phony loan applications for certain straw purchasers.  Watterson’s actions were designed to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans.

Watterson and his conspirators caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings, Watterson’s conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled. They also distributed a portion of the proceeds to other members of the conspiracy for their respective roles.  Watterson received $273,600 from five separate real estate transactions.

In addition to the prison term, Judge Simandle sentenced Watterson to three years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; and IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, for the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Jacqueline M. Carle of the U.S. Attorney’s Office Criminal Division in Camden.

Defense counsel: Thomas R. Ashley Esq., Newark

TRENTON, N.J. – A New York man was sentenced today to 80 months for leading one of the largest credit card fraud schemes ever charged by the U.S. Department of Justice, U.S. Attorney Paul J. Fishman announced.

Tahir Lodhi, 56, of Hicksville, N.Y., previously pleaded guilty before U.S. District Judge Anne E. Thompson to an information charging him with one count of conspiracy to commit bank fraud. Judge Thompson imposed the sentence today in Trenton federal court.

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

Lodhi directed the activities of a number of other conspirators in fabricating more than 7,000 false identities to obtain tens of thousands of credit cards. They doctored credit reports to pump up the spending and borrowing power associated with the cards. Lodhi and others then borrowed or spent as much as they could, based on the phony credit history, but did not repay the debts, causing more than $200 million in confirmed losses to businesses and financial institutions.

The scheme involved a three-step process in which the defendants would:

• “Make up” a false identity by creating fraudulent identification documents and a fraudulent credit profile with the major credit bureaus.

• “Pump up” the credit of the false identity by providing false information about that identity’s creditworthiness to the credit bureaus. Believing the furnished information to be accurate, the credit bureaus would incorporate this material into the false identity’s credit report, making it appear that the false identity had excellent credit.

• “Run up” large loans using the false identity. The higher the fraudulent credit score, the larger the loans that the defendants could obtain. These loans were never repaid, and Lodhi and his conspirators reaped the profits.

The Sham Companies

The enormous size and scope of the criminal fraud enterprise required Lodhi and his conspirators to construct an elaborate network of false identities. Across the country, Lodhi and his conspirators maintained more than 1,800 “drop addresses,” including houses, apartments, and post office boxes, which they used as the mailing addresses of the false identities.

They created dozens of sham companies that did little or no legitimate business, obtained credit card terminals for the companies and then ran up charges on the fraudulent cards. To accept payments in the form of credit cards, a business must establish a merchant account with an entity known as a merchant processor. The merchant processor provides the business with equipment to process credit cards, receives payments from credit card companies for credit cards run at the business, and deposits those payments, minus a fee, into the business’ bank account. When the merchant processors shut down accounts operated by the conspirators for fraud, they would apply for new terminals and create new companies.

The sham companies also served as “furnishers,” providing the credit bureaus with false information about the credit history of numerous false identities of people who purportedly worked at or owned the companies.

Tradelines

Lodhi and his conspirators also used sophisticated methods – including a network of black-market businesses called “tradelines” providers – to commit fraud.

Tradelines come in two varieties: primary tradelines and authorized user tradelines. Primary tradelines are lines of credit in a credit history. If a credit card user has primary tradelines in good standing, it can have a significant impact on the user’s credit score, enabling the user to borrow more from credit card issuers. Lodhi and his conspirators, however, trafficked in fraudulent primary tradelines.

A second kind of tradeline is the “authorized user” tradeline, where a credit card holder adds another, so-called “authorized user,” to a credit card account. This raises the credit score of the authorized user, who inherits some of the primary user’s credit history.

Certain of Lodhi’s conspirators created and sold fake lines of credit for false identities made up by Lodhi and others. These fraudulent primary tradelines were then used to increase the credit limits on fraudulent cards, so that the conspirators could reap even larger profits. Lodhi and other conspirators used the authorized user tradelines to create new identities.

Complicit Businesses

Lodhi and his conspirators also relied upon complicit businesses, including several jewelry stores in the Jersey City, N.J., area, to extract money from the fraudulent cards. The complicit businesses would allow certain conspirators to conduct sham transactions on the phony cards and would then receive the proceeds from the credit card companies and split them with the other conspirators. These complicit businesses maintained multiple credit card merchant processing accounts at the same time. By operating dozens of accounts, these businesses furthered the conspiracy by allowing more fraudulent transactions to be processed before the merchant processors shut down the account. The proceeds from these merchant terminals were deposited into various business checking accounts, and the money was paid out to the owners of the complicit businesses, along with other conspirators.

Lavish Spending

The conspiracy generated enormous profits for Lodhi and his conspirators – even though they spent millions of dollars sustaining the elaborate network of drop addresses and running credit reports on the thousands of false identities. Records of the New York and New Jersey Departments of Labor reveal that many of Lodhi’s conspirators had no reported legitimate employment in the last five years. Nonetheless, Lodhi and his conspirators used the proceeds of the criminal enterprise to buy luxury automobiles, electronics, spa treatments, expensive clothing and millions of dollars in gold. They also stockpiled large sums of cash. Law enforcement discovered approximately $70,000 in cash in the oven of one of Lodhi’s conspirators.

Lodhi’s conspirators also moved millions of dollars through accounts under their control, and wired millions of dollars overseas. An analysis of 169 bank accounts of the defendants, sham companies, and complicit businesses has identified $60 million dollars in proceeds that flowed through the accounts, much of it withdrawn in cash. The conspirators wired millions of dollars to Pakistan, India, the United Arab Emirates, Canada, Romania, China and Japan. Due to the massive scope of the conspiracy, which involved more than 25,000 fraudulent credit cards, loss calculations are ongoing. Final figures may grow beyond the present confirmed losses of more than $200 million.

The investigation previously resulted in the arrest of 22 defendants and the seizure of more than $4 million in gold from jewelry stores in Jersey City.

In addition to the prison term, Judge Thompson sentenced Lodhi to five years of supervised release and fined him $25,000.

U.S. Attorney Fishman praised special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge Richard M. Frankel, for the investigation leading to today’s guilty plea. He also thanked postal inspectors under the direction of Postal Inspector in Charge Marie L. Kelokates, the U.S. Secret Service, under the direction of Special Agent in Charge David Beach, and the U.S. Social Security Administration for their roles in the investigation.

The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro and Zach Intrater of the Economic Crimes Unit and Barbara Ward of the Asset Forfeiture Unit of the U.S. Attorney’s Office in Newark.

Defense counsel: Howard Simmons Esq., New York

NEWARK, N.J. – An MS-13 gang member from Union County, New Jersey, today admitted that after being arrested on charges of plotting to kill rival gang members, he and others planned to murder suspected government witnesses from prison, New Jersey U.S. Attorney Paul J. Fishman and Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division announced.

Julio Adalberto Orellana-Carranza, a/k/a “Player,” 27, of Plainfield, New Jersey, pleaded guilty before U.S. District Judge Stanley R. Chesler to Count One of an indictment charging him with conspiring to engage in a racketeering enterprise known as La Mara Salvatrucha, or MS-13.

According to the documents filed and statements made in court:

MS-13 is a national and international gang composed primarily of immigrants or descendants from El Salvador.  Branches, or “cliques,” of MS-13 operate throughout the United States, including Plainfield. MS-13 members are required to commit acts of violence to maintain membership and discipline within the gang.

According to statements made by Orellana-Carranza in court, he was a member of the Plainfield Locos Salvatrucha (PLS) clique of MS-13 from at least August 2011. Orellana-Carranza admitted that he conspired with other members of MS-13 to engage in racketeering activity including murder, robbery, extortion and drug trafficking.

Orellana-Carranza stated that in June 2011, he and other members of the PLS clique plotted to kill members of rival gangs on the streets of Plainfield. Orellana-Carranza further admitted that after being arrested on those charges, he and other jailed MS-13 members hatched a plan to intimidate and/or kill individuals they believed were cooperating with law enforcement in the prosecution of MS-13 members.

Orellana-Carranza faces a maximum potential penalty of 20 years in prison and a $250,000 fine. Orellana-Carranza will remain detained pending sentencing, which is currently scheduled for May 4, 2016.

Eleven additional members and associates of the PLS clique of MS-13 are scheduled for trial in front of Judge Chesler on Feb. 9, 2016.  The charges include several counts of murder, conspiracy to commit murder, robbery, extortion, witness retaliation and sexual assault.

U.S. Attorney Fishman and Assistant Attorney General Caldwell credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Acting Special Agent in Charge Kevin Kelly, and ICE’s Enforcement and Removal Operations (ERO), under Newark Field Office Director John Tsoukaris, with the investigation leading to today’s plea. They also thanked the Union County Prosecutor’s Office, under the direction of Acting Prosecutor Grace H. Park, and the Plainfield Police Department, for their work on the case.

The government is represented by Assistant United States Attorneys James Donnelly and

Jamari Buxton of the U.S. Attorney’s Office Criminal Division in Newark as well as Trial

Attorney Kevin L. Rosenberg with the Justice Department Criminal Division’s Organized Crime and Gang Section.

Defense counsel:  Bruce Rosen Esq., Roseland, New Jersey

A Plainfield, New Jersey, man pleaded guilty today to one count of conspiring to engage in a racketeering enterprise known as La Mara Salvatrucha, or MS-13.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Acting Special Agent in Charge Richard M. Frankel of the FBI’s Newark, New Jersey, Division made the announcement.

Julio Adalberto Orellana-Carranza, aka Player, 27, pleaded guilty before U.S. District Judge Stanley R. Chesler of the District of New Jersey, who scheduled sentencing for May 4, 2016.  Orellana-Carranza remains detained pending sentencing.

According to court documents, MS-13 is a national and international gang with branches or “cliques” operating throughout the United States, including in Plainfield.  In connection with his plea, Orellana-Carranza admitted that he was a member of the Plainfield Locos Salvatrucha (PLS) Clique of MS-13 for a period of time continuing through at least August 2011.  Orellana-Carranza admitted that in June 2011, he and other members of the PLS clique plotted to kill rival gang members in Plainfield.  Orellana-Carranza also admitted that after local authorities arrested him for that plot, he and other jailed MS-13 members hatched a plan to intimidate and/or kill individuals they believed were cooperating with law enforcement in the prosecution of MS-13 members.                 

Eleven other members and associates of the PLS Clique are scheduled for trial in front of Judge Chesler on Feb. 9, 2016.  The charges include several counts of murder, conspiracy to commit murder, robbery, extortion, witness retaliation and sexual assault.  

Co-defendant Jose Romero-Aguirre, aka Conejo, pleaded guilty on Dec. 2, 2015.

FBI’s Newark Division, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations’s Newark Field Office, ICE-Enforcement and Removal Operations, the Plainfield Police Department and the Union County, New Jersey, Prosecutor’s Office investigated the case.  Trial Attorney Kevin L. Rosenberg of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys James Donnelly and Jamari Buxton of the District of New Jersey are prosecuting this case.

NEWARK, N.J. – A Newton, New Jersey, man appeared in federal court today to face charges that he planned the kidnapping and murder of a Paterson, New Jersey, woman, U.S. Attorney Paul J. Fishman announced.

Christopher Thieme, 35, is charged by criminal complaint with one count of murder-for-hire and one count of attempted kidnapping. He appeared this afternoon before U.S. Magistrate Judge Steven C. Mannion in Newark federal court and was detained.   

According to the complaint:

From December 2015 through Jan. 4, 2016, Thieme sought assistance from an associate in order to kidnap and ultimately murder a female victim whom Thieme had previously met through an online dating service. Thieme’s associate alerted law enforcement to Thieme’s plans, and cooperated with law enforcement’s investigation into Thieme’s plot.

In early January, at the direction of law enforcement, Thieme’s associate introduced Thieme to an undercover FBI agent posing as a hitman. Thieme explained to the undercover FBI agent that, once the victim was kidnapped, Thieme planned to empty her bank accounts and fraudulently sell off her home, the proceeds of which Thieme planned to use to pay for the kidnapping and murder. On Jan. 4, 2016, Thieme met his associate and the undercover hitman and drove them to the victim’s home and other locations where the victim could be found. Thieme was apprehended shortly afterwards.

The murder-for-hire charge carries a statutory maximum of 10 years in prison and $250,000 fine. The attempted kidnapping charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine.

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

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to the charges. He also thanked members of the Passaic County Prosecutor’s Office, the New Jersey State Police, the Newton Police Department, the Paramus Police Department, the Paterson Police Department, the Roxbury Police Department, and the Wayne Police Department for their assistance.

The government is represented by Assistant U.S. Attorney Josh Hafetz of the U.S. Attorney’s Organized Crime/Gangs Unit in Newark.

Defense counsel: Patrick McMahon Esq., Assistant Federal Public Defender, Newark

TRENTON, N.J. – A Monmouth County, New Jersey, man today made his initial appearance in federal court on charges that he possessed 36 machine guns, which are illegal under federal law, U.S. Attorney Paul J. Fishman announced.

John Lafergola, 52, of Millstone Township, New Jersey, was charged by complaint with knowingly possessing machine guns, defined as a weapon that can shoot automatically more than one shot, without manual reloading, by a single function of the trigger. Lafergola appeared today before U.S. Magistrate Judge Lois H. Goodman and was detained without bail.

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

In the early morning of Oct. 5, 2014, law enforcement officers responded to a call from Lafergola’s residence, where they learned he allegedly pointed a handgun at another member of his household. It was learned that possessed 72 firearms – including 36 machine guns – and dozens of firearms components, ammunition, accessories, and manufacturing tools.

Of those 36 machine guns, 13 were found to be operational as automatic weapons, each of which was found to have been assembled out of separate components, including a machine gun receiver of unknown origin, including:

• A 9 mm Luger caliber, FBP M948-type firearm, 31 ½ inches long, bearing no serial number nor manufacturer’s marks of identification;
• A 9 mm Luger caliber, Suomi M31-type firearm, 34 inches long, and bearing no manufacturer’s marks of identification;
• A 7.62x25 mm caliber, M56-type firearm, 34 ½ long, bearing no serial number nor manufacturer’s marks of identification.

Lafergola also was found to be in possession of three short-barreled rifles, including one that had an obliterated serial number; two silencers; and items determined by local law enforcement to be non-smoke gunpowder, fuses, other materials that could be used to make explosive devices, and explosive devices.

U.S. Attorney Fishman credited special agents of the ATF, under the direction of Special Agent in Charge George P. Belsky, and the N.J. State Police, under the direction of Col. Rick Fuentes, superintendent, with the investigation leading to the charges. He also thanked the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher J. Gramiccioni, for its role in the case.

The government is represented by Assistant U.S. Attorney Elisa T. Wiygul of the U.S. Attorney’s Office Criminal Division in Trenton.

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

Defense counsel: Evan Nappen Esq., Eatontown, New Jersey

NEWARK, N.J. – A former high-ranking employee of the Newark Watershed Conservation and Development Corp. (NWCDC) today admitted accepting $956,948 in kickback payments for his and the former executive director’s assistance in awarding work to contractors, U.S. Attorney Paul J. Fishman announced.

Donald Bernard Sr., 68, of West Orange, New Jersey, pleaded guilty before U.S. District Judge Jose Linares in Newark federal court to Counts 9 and 10 of a 20-count indictment returned in December 2014, charging him with the use of interstate facilities to promote and facilitate bribery in violation of the Travel Act, and Count 1 of an information that charges him with making and subscribing a false personal tax return for the 2009 tax year.

Separately before Judge Linares, Giacomo “Jack” DeRosa, 59, of Clinton Township, New Jersey, who was also previously indicted in December 2014, pleaded guilty today to Counts 4 through 6 of the indictment charging him with laundering a portion of $85,000 he provided to Bernard from January 2008 to August 2012 in connection with roofing work that Bernard facilitated for DeRosa with the NWCDC. 

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

Bernard served as a consultant to the NWCDC (from 2008 to January 2010) and then as a salaried employee (from January 2010 to March 2013). From 2008 to March 2013, Bernard was part of a corrupt arrangement with former NWCDC Executive Director Linda Watkins Brashear to solicit $956,948 in cash kickbacks from certain NWCDC contractors in exchange for providing them work and other assistance. Bernard and Brashear facilitated NWCDC payments to contractors to fund cash kickbacks to themselves, knowing payments were inflated above the amount of any work performed. They knew that in numerous instances no work at all had been performed. Bernard and Brashear used their email accounts to facilitate this scheme.

Two contractors from whom Bernard and Brashear obtained substantial cash kickbacks were Jim P. Enterprises and New Beginnings Environmental Services, both companies hired to perform landscaping, snow removal, clean-up and sign-posting services, which were affiliated with Bernard but purportedly operated by James Porter. Bernard admitted receiving $409,823 in bribes and kickbacks from Porter’s companies, funded by inflated and fraudulently obtained payments from the NWCDC, during the period January 2008 to December 2012.  Bernard also admitted receiving approximately $85,000 from Essex Home Improvements, a contracting company operated by DeRosa, during the period January 2008 to March 2013, which he received either directly or indirectly through companies Bernard controlled. 

Bernard also admitted filing a U.S. Individual Income Tax Return, Form 1040, for tax year 2009, which did not include approximately $314,000 in unreported income he received in kickbacks.

Brashear pleaded guilty on Dec. 21, 2015, to devising a scheme to defraud the NWCDC as well as filing a false tax return by failing to report substantial income she received in connection with the kickback scheme. Among the approximately $1 million in kickbacks that Brashear admitted receiving were approximately $260,000 from James Porter and $27,000 from DeRosa. Porter pleaded guilty in January 2015 to conspiracy to defraud the NWCDC of honest services, money and property through the use of interstate wire transmissions, as well as tax evasion for his role in the kickback scheme.   

DeRosa admitted that from January 2008 to August 2012 he provided Bernard with a stream of payments totaling approximately $85,000 for Bernard’s action and assistance in procuring NWCDC roofing work for DeRosa’s company. DeRosa provided these payments to Bernard either directly, or to Bernard’s consulting firm, or to a Newark-based civic organization run by Bernard, the African American Heritage Parade Committee. DeRosa also admitted to laundering $20,000 of the money by having it paid to Bernard indirectly through intermediaries in order to disguise DeRosa or Essex Home Improvements as the source of the funds. Two intermediaries DeRosa admitted to using to launder funds provided to Bernard included a subcontractor doing work for DeRosa’s company and James Porter.

The Travel Act charges to which Bernard pleaded guilty each carry a maximum potential penalty of five years in prison; the charge of filing a false tax return is punishable by a maximum potential penalty of three years in prison. Under the terms of the plea, the sentences on all three counts to which Bernard pleaded guilty shall run consecutively. All charges are also punishable by a fine of $250,000 or twice the amount of the pecuniary gain from the offense.

The money laundering counts to which DeRosa pleaded guilty each carry a maximum penalty of 20 years in prison and a maximum fine equal to the greatest of $500,000;  twice the value of the property involved in the money laundering transactions; or  twice the gain or loss resulting from the offense.

Sentencing for both defendants is scheduled for April 7, 2016.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Field Office, under the direction of Special Agent in Charge Richard M. Frankel; IRS – Criminal Investigation, Newark Field Office, under the direction of Special Agent in Charge Jonathan D. Larsen; and the U.S. Department of Housing and Urban Development, Office of Inspector General, Newark office, under the direction of Special Agent in Charge Christina Scaringi, as well as criminal investigators of the U.S. Attorney’s Office, for the investigation leading to today’s guilty pleas. U.S. Attorney Fishman also thanked the N.J. Office of the State Comptroller, under the direction of Acting State Comptroller Philip James Degnan, for its assistance in the investigation.

The government is represented by Assistant U.S. Attorneys Jacques Pierre, Mala Ahuja Harker, and Senior Litigation Counsel Leslie Schwartz of the U.S. Attorney’s Office Special Prosecutions Division.

Defense counsel:

Bernard: Thomas Ashley Esq., Newark

DeRosa: Anthony Pope Esq., Newark

NEWARK, N.J. – An associate of the DeCavalcante crime family of La Cosa Nostra was sentenced today to 72 months in prison for selling 1,915 grams of cocaine, planning a prostitution operation and possessing a 12-gauge shotgun as a convicted felon, U.S. Attorney Paul J. Fishman announced. 

Anthony Stango, 34, of  Brick, New Jersey, previously pleaded guilty before U.S. District Judge William H. Walls to an information charging him with conspiracy to distribute 500 grams or more of cocaine, use of the telephone in interstate commerce to promote a prostitution operation and possession of a firearm by a convicted felon. Judge Walls imposed the sentence today in Newark federal court.

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

Stango was arrested March 12, 2015, as part of a sweep of 10 members of the DeCavalcante crime family, which operated in New Jersey and elsewhere. The crime family engaged in numerous offenses, including fraud, distribution of controlled substances, prostitution, gambling, the sale of stolen and contraband goods, murder, assault, extortion, and other crimes of violence.

Stango admitted conducting a drug operation that, on eight separate occasions from December 2014 to March 2015, sold a total of 1,915 grams of cocaine to an undercover law enforcement officer. During that same time period, Stango worked to set up a prostitution operation in New Jersey. Recorded conversations reflected discussions he had with a conspirator (identified as “CS”) who at the time was living in Nevada. Stango advised CS that he had already talked to one or more prostitutes about the details of the operation, their fees and the conditions under which the women would be providing services. Stango also admitted possessing an H&R Pardner 12-gauge pump action shotgun while being a convicted felon.

In addition to the prison term, Judge Walls sentenced Stango to serve five years of supervised release.

U.S. Attorney Fishman credited the members of the FBI’s Organized Crime Task Force under the direction of Special Agent in Charge Richard M. Frankel in Newark; the Waterfront Commission of New York Harbor, under the direction of Executive Director Walter M. Arsenault; the Bayonne Police Department, under the direction of Chief Drew Niekrasz; and the N.J. State Commission of Investigation, under the direction of Acting Executive Director Lee C. Seglem, with the investigation leading to today’s sentencing. He also thanked the FBI’s Las Vegas office and the Union County Prosecutor’s Office for their roles in the investigation.

The government is represented by Senior Litigation Counsel V. Grady O’Malley and Assistant U.S. Attorney James Donnelly of the U.S. Attorney’s Office’s Organized Crime/Gangs Unit.

Defense counsel: Gary Mizzone Esq., Little Falls, New Jersey

NEWARK, N.J. – A Teaneck, New Jersey, man was sentenced today to 36 months in prison for failing to register as a sex offender when he moved to New Jersey in the fall of 2013, U.S. Attorney Paul J. Fishman announced.

Richard Joseph, a/k/a “Richard Beltre,” a/k/a “Joseph Richards,” a/k/a “Aaron Joseph,” 43, who is classified as a Tier III sex offender in New York, was previously convicted of one count of failing to register or update a registration as required by the Sex Offender Registration and Notification Act (“SORNA”). Joseph was convicted following a bench trial before U.S. District Judge Susan D. Wigenton, who imposed the sentence today in Newark federal court.

SORNA requires that all sex offenders who, among other things, travel in interstate or foreign commerce, must register as a sex offender and keep that registration current in each jurisdiction where the sex offender resides.

According to documents filed in this case and the factual stipulations presented at trial:

Joseph was required to register as a sex offender due to his 2002 conviction in New York for rape in the third degree. He first registered as a sex offender in New York using the alias “Richard J. Beltre” in 2006 and knew that he was required to register as a sex offender every time he changed his address. However, when Joseph was released from the custody of the N.Y. State Department Correctional Services in 2013, he failed to report as directed by the N.Y. State Division of Parole and a warrant was issued for his arrest. He was eventually arrested on Oct. 11, 2013, having lived in Bergen County since Sept. 7, 2013. During that time, Joseph failed to register as a sex offender in New Jersey.

In addition to the prison term, Judge Wigenton sentenced Joseph to serve three years of supervised release.

U.S. Attorney Fishman credited the U.S. Marshals Service, under the direction of U.S. Marshal Juan Mattos, Jr., and the U.S. Marshals Service New York/New Jersey Regional Fugitive Task Force with the investigation leading to today’s sentence.

The government is represented by Assistant U.S. Attorneys Sara F. Merin and Jane H. Yoon of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Timothy Donohue Esq., West Orange, New Jersey

TRENTON, N.J. – Two Monmouth County men were sentenced to prison today for their roles in a large-scale drug trafficking organization that distributed heroin in Ocean and Monmouth counties, U.S. Attorney Paul J. Fishman announced.

Tyshon Young, a/k/a “Young Money,” a/k/a “Young Boy,” 30, of Asbury Park, New Jersey, and Matthew Miller, a/k/a “Star,” 41, of Neptune, New Jersey, were sentenced to 21 and 36 months in prison, respectively. Young and Miller previously pleaded guilty before U.S. District Judge Peter G. Sheridan to separate informations charging them with one count of conspiracy to distribute heroin. Judge Sheridan imposed both sentences today in Trenton federal court.

To date, 20 alleged members or affiliates of the “Britt-Young Drug Trafficking Organization” – so named after its leaders, Robert Britt and Rufus Young, in the criminal complaint – have pleaded guilty to narcotics offenses.

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

Between February 2013 and March 2014, Tyshon Young conspired with Rufus Young and others to distribute heroin in Ocean and Monmouth counties. Tyshon Young admitted distributing between 40 and 60 grams of heroin in furtherance of the conspiracy. Miller admitted that, between February 2013 and March 2014, he agreed to store between 40 and 60 grams of heroin at his residence for use in the distribution conspiracy.

In addition to the prison terms, Judge Sheridan sentenced Young and Miller to each serve three years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, Red Bank Resident Agency, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation leading to today’s sentencing.

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

The allegations in the complaint against the remaining defendants are merely accusations, and they are presumed innocent unless and until proven guilty.

Defense Counsel:

Young:  James R. Murphy Esq., Princeton, New Jersey

Miller:  Charles Edward Waldron Esq., Lawrenceville, New Jersey

NEWARK, N.J. – A physician’s assistant was sentenced to prison, and a doctor admitted taking bribes in connection with a long-running and elaborate test referral scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, U.S. Attorney Paul J. Fishman announced today.

Leonard Marchetta, 49, of Staten Island, New York, a physician’s assistant who previously pleaded guilty to one count of accepting bribes, was sentenced to 42 months in prison. Bret Ostrager, 50, of Woodbury, New York, a doctor with practices in Nassau County, New York, pleaded guilty to Count One, Count Two and Count Five of an indictment charging him with conspiracy to violate the Anti-Kickback Statute and the Federal Travel Act by accepting bribes, one substantive violation of the Anti-Kickback Statute, and one substantive violation of the Federal Travel Act. Both the sentencing and plea hearing took place today before U.S. District Judge Stanley R. Chesler in Newark federal court.             

Marchetta and Ostrager are two of the 39 people – 26 of them doctors – who have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies. It is believed to be the largest number of medical professionals ever prosecuted in a bribery case. The investigation has to date recovered more than $12 million through forfeiture.

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

Marchetta previously admitted that he accepted bribes in return for referring patient blood specimens to BLS and was paid approximately $3,000 per month. Marchetta’s referrals generated approximately $660,000 in lab business for BLS.

Ostrager admitted today that, between February 2011 and April 2013, he received monthly cash bribes of approximately $3,300 from BLS employees and associates. He periodically solicited and received from the BLS employees and associates tickets and meals that cost thousands of dollars. These additional bribes in response to specific requests from Ostrager included tickets to a New York Mets baseball game, a New York Knicks basketball game, a Katy Perry concert, a Justin Bieber concert, and the Broadway show “Newsies.” In exchange, Ostrager referred patient blood samples to BLS. Ostrager’s referrals generated approximately $909,000 in lab business for BLS.

Each count to which Ostrager pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. His sentencing is scheduled for March 29, 2016.

In addition to the prison term he received today, Marchetta must serve three years of supervised release and forfeit $72,000.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; and IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen with the ongoing investigation.

The government is represented by Assistant U.S. Attorneys Joseph N. Minish, Danielle Alfonzo Walsman, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward, Acting Chief of the office’s Asset Forfeiture and Money Laundering Unit.

U.S. Attorney Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $640 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

Defense counsel:

Marchetta: Leo Duval Esq., Staten Island

Ostrager: Marc Agnifilo Esq., New York

NEWARK, N.J. – A member of the New Jersey set of the Grape Street Crips gang was sentenced today to 60 months in prison for conspiring to distribute crack-cocaine, and two other members of the gang have pleaded guilty to drug trafficking charges, U.S. Attorney Paul J. Fishman announced.

Willie Brooks, a/k/a “Animal,” 24, was sentenced by U.S. District Judge José Linares in Newark federal court for conspiring to distribute crack-cocaine. Max LaRue, a/k/a “Max,” 26, pleaded guilty today before Judge Linares to an information charging him with one count of conspiracy to distribute crack-cocaine. On Dec. 21, Tyquan Clark, a/k/a “Tah,” 29, pleaded guilty before U.S. District Judge Madeline Cox Arleo in Newark federal court to Count 21 of the third superseding indictment charging him with engaging in a continuing criminal enterprise.

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

The Grape Street Crips controlled drug trafficking and other criminal activities in various areas of Newark. Clark and other members of the gang, including Hakeem Vanderhall, a/k/a “Keem,” a/k/a “Sugar Bear;” Eric Concepcion, a/k/a “Eddie Arroyo,” a/k/a “E-Wax,” a/k/a “Wax;” Jamar Hamilton, a/k/a “Gunner,” a/k/a “Jamaal A. Hamilton;” and Rashan Washington, a/k/a “Shoota,” operated a continuing criminal enterprise in the area of 6th Avenue and North 5th Street in Newark. The enterprise allegedly sold crack-cocaine to other distributors of the drug, including other members of the gang. Brooks and LaRue were two distributors who were members of the gang and obtained crack-cocaine from the criminal enterprise.

To protect their gang and drug territory, the Grape Street Crips used “community guns” that were easily accessible to gang members. Law enforcement agents seized numerous firearms, including a .410-caliber assault rifle, a .45-caliber Thompson semi-automatic carbine, a 7.62-caliber assault rifle, and numerous semi-automatic handguns.

In addition to the prison term, Judge Linares sentenced Brooks to five years of supervised release.

The conspiracy to which LaRue pleaded guilty carries a statutory mandatory minimum punishment of five years in prison and a maximum of 40 years in prison, and a maximum fine of $5 million. His sentencing is scheduled for April 6, 2016. The charge to which Clark pleaded guilty carries a statutory mandatory minimum term of 20 years in prison and a maximum of life in prison, and a maximum fine of $2 million. He is scheduled to be sentenced on March 28, 2016.

U.S. Attorney Fishman credited special agents of the Drug Enforcement Administration, under the direction of Special Agent in Charge Carl J. Kotowski, and special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel, for the investigation leading to the charges. He also thanked prosecutors and detectives of the Essex County Prosecutor’s Office, under the direction of Acting Prosecutor Carolyn A. Murray, police officers and detectives of the Newark Police Department, under the direction of Acting Public Safety Director Anthony Ambrose, and the Essex County Sheriff’s Office, under the direction of Armando B. Fontoura, for their work on the investigation.

The government is represented by Assistant U.S. Attorneys Osmar J. Benvenuto, Elizabeth M. Harris, and Barry A. Kamar of the Criminal Division in Newark.

This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF) and the FBI’s Safe Streets Task Force, a partnership between federal, state and local law enforcement agencies. 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:

Brooks: John P. McDonald Esq. Somerville, New Jersey
LaRue: Michael J. Pappa Esq., Hazlet, New Jersey
Clark: Howard Brownstein Esq., Union City, New Jersey

NEWARK, N.J. – Two Hudson County, New Jersey, men appeared in federal court today to face charges that they conspired to kill a gang member who was suspected of cooperating with law enforcement, U.S. Attorney Paul J. Fishman announced.

Juan Pablo Escalante-Melgar, a/k/a “Humilde,” 26, and Elmer Cruz-Diaz, a/k/a “Locote,” 27, both of Union City, New Jersey, are charged in a one-count criminal complaint with conspiring to kill an individual to prevent them from communicating with a law enforcement officer. Escalante-Melgar and Cruz-Diaz made their initial appearances this afternoon before U.S. Magistrate Judge James B. Clark III and were detained. Both were originally taken into custody on Sept. 3, 2015 for immigration charges.

According to the complaint:

Escalante-Melgar and Cruz-Diaz are members of the international street gang Mara Salvatrucha, commonly known as “MS-13.” Multiple sub-sets, or “cliques,” of MS-13 operate in Hudson County including Pinos Locos Salvatrucha (the “Pinos clique”) and Hudson Locotes Salvatrucha (the “Hudson Locotes clique”). Escalante-Melgar was the “First Word,” or leader, of the Pinos clique; Cruz-Diaz was the First Word of the Hudson Locotes clique.

MS-13’s rules strictly prohibit cooperating with law enforcement, and it is well understood within the gang that police informants will be punished by death. The process of obtaining authorization to kill a disobedient gang member is known as “green lighting.” Obtaining a “green light” typically requires the authorization of a clique leader and, in some cases, approval from gang leaders in California or El Salvador. When preparing to kill disloyal or disobedient gang members, MS-13 often assigns gang members to follow the targeted individuals to learn their patterns and movements, enabling the gang to carry out the murders at opportune times without alerting law enforcement.

On Aug. 11, 2015, law enforcement intercepted a telephone call between a high-ranking MS-13 member in El Salvador (“Gang Leader-1”), Escalante-Melgar and another MS-13 member. During the call, Gang Leader-1 told Escalante-Melgar and the other MS-13 member that they needed to kill three individuals, including Victim-1, a member of the Hudson Locotes clique who was suspected of cooperating with law enforcement.

Four days later, on August 15, 2015, law enforcement intercepted a telephone call between Cruz-Diaz and another MS-13 member. During that call, Cruz-Diaz confirmed that senior MS-13 members in El Salvador had authorized the green lighting – or murder – of Vicitm-1, and went on to state that the gang would likely assign members of another MS-13 clique to “watch” Victim-1 in preparation for the killing.

On the evening of Aug. 16, 2015, Escalante-Melgar spoke by telephone with another MS-13 member and confirmed that four individuals, including Victim-1, had been green lighted.  Escalante-Melgar explained to the other MS-13 members that the gang would take its time carrying out the murders in order to prevent gang members from being arrested.

On the evening on Aug. 31, 2015, Cruz-Diaz and Escalante-Melgar had separate telephone conversations with another member of MS-13. During the calls, the MS-13 member informed Cruz-Diaz and Escalante-Melgar that he had seen Victim-1 on the street in Union City, New Jersey. 

Cruz-Diaz ordered the MS-13 member to follow Victim-1 to see what time Victim-1 left and returned home. Cruz-Diaz informed the caller that another MS-13 member had previously been assigned to follow Victim-1. Escalante-Melgar likewise ordered the caller to follow Victim-1, and instructed the caller to contact Escalante-Melgar with developments.

The conspiracy charge carries a maximum potential penalty of life in prison and a $250,000 fine.

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

U.S. Attorney Fishman credited special agents of Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Acting Special Agent in Charge Kevin Kelly, ICE’s Enforcement and Removal Operations (ERO), under Newark Field Office Director John Tsoukaris, and the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, for the investigation leading to today’s charges. He also thanked the Hudson County Prosecutor’s Office, under the direction of Prosecutor Esther Suarez, the Union City Police Department, and the West New York Police Department for their work on the case.

The government is represented by Assistant United States Attorneys James Donnelly and Jamari Buxton of the U.S. Attorney’s Office Criminal Division in Newark as well as Trial Attorney Kevin L. Rosenberg with the Justice Department Criminal Division’s Organized Crime and Gang Section.

Defense Counsel:

Escalante-Melgar: Leigh-Anne Mulrey Esq., Newark

Cruz-Diaz: Perry Primavera Esq., Hackensack, New Jersey

NEWARK, N.J. – A federal grand jury today indicted a Las Vegas investment adviser for allegedly accepting hundreds of thousands of dollars in cash kickbacks in return for his assistance in getting his clients to purchase microcap stocks that were the subject of a stock market manipulation scheme, U.S. Attorney Paul J. Fishman announced. 

Donald S. Toomer, 44, of Henderson, Nevada, is charged by indictment with one count of conspiracy to commit securities fraud and investment adviser fraud, two counts of securities fraud, and two counts of investment adviser fraud. 

According to the indictment:

Between 2008 and 2010, Toomer participated in an extensive “pump-and-dump” scheme in which he and others fraudulently inflated the prices of certain shares in order to sell them later at artificially inflated prices. The scheme involved four public companies: BioNeutral Group Inc. (BONU), NXT Nutritionals Holdings Inc. (NXTH), Mesa Energy Holdings Inc. (MSEH), and Clear-Lite Holdings Inc. (CLRH) (collectively, the “Target Companies”).

First, other conspirators obtained control over large blocks of the free trading shares of the Target Companies. Next, Toomer and others “pumped” the price of those shares by, among other things, engaging in manipulative trading of the stocks of the Target Companies and disseminating promotional materials encouraging others to purchase them. Finally, they “dumped” them by selling large volumes of the Target Companies’ stock to victim investors. The target companies’ stock price would then drop, resulting in losses to the victims.

As part of the scheme, Toomer caused his clients to purchase the stock of the Target Companies in order to create the false impression of market interest and demand in the stock of the Target Companies; build trading volume that would be attractive to potential investors who would later receive promotional materials about the stock; and generate income to fund the promotional campaigns that occurred in the later phases of the scheme. 

Toomer made various material misrepresentations and omissions to his clients to obtain their authorization to buy the Target Companies’ stock in their brokerage accounts, including falsely representing that he had done independent research regarding the Target Companies. He also failed to disclose the cash payments or other compensation that he received in exchange for convincing his clients that the Target Companies were promising investments.     

Over the course of the conspiracy, Toomer received hundreds of thousands of dollars in cash kickbacks from his conspirators’ illicit trading profits, none of which were disclosed to his investment advisory clients. Rather than providing investment recommendations and advice based upon the best interests of his clients, as he was legally required to do, Toomer allegedly made investment recommendations based on his own personal interests and those of his conspirators.

The scheme collectively generated over $30 million in illicit trading proceeds.

The conspiracy count with which Toomer is charged carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. The securities and investment adviser fraud counts each carry a maximum potential penalty of five years in prison and a $5 million fine.

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

The U.S. Securities and Exchange Commission (SEC) filed a civil complaint against Toomer today.

On Dec. 15, 2015, Samuel DelPresto, 48, a stock promoter from Holmdel, New Jersey, pleaded guilty before U.S. District Judge Jose L. Linares to a one-count information charging him with conspiracy to commit securities fraud for his involvement in the scheme.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, for the investigation leading to today’s indictment. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Andrew Calamari, for its assistance in this matter.

The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

Defense Counsel: Michael Critchley Esq., Roseland, New Jersey

NEWARK, N.J. – The former executive director of the Newark Watershed Conservation and Development Corp. (NWCDC) today admitted accepting approximately $999,000 in kickback payments in exchange for her assistance in awarding work to various vendors and contractors of the agency, U.S. Attorney Paul J. Fishman announced.

Linda Watkins Brashear, 56, of West Orange, New Jersey, pleaded guilty before U.S. District Judge José Linares in Newark federal court to Counts 1 and 5 of a five-count information charging her with a wire fraud scheme to defraud the NWCDC by accepting bribes and kickback payments from contractors and an employee of the corporation, which were funded by payments from the NWCDC based on fraudulently inflated invoices or issued for work that was not performed by the contractors (Count 1), and subscribing a false tax return for the year 2012 (Count 5).

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

Brashear served as the executive director for the NWCDC from 2007 to March 2013. During this time, she and others devised a scheme to defraud the NWCDC of her honest services in the affairs of the NWCDC and of the NWCDC’s money and property. The object of the scheme was for Brashear and others to accept a substantial stream of concealed and undisclosed kickbacks from NWCDC contractors and an employee of the NWCDC for her direct and indirect benefit in exchange for action and assistance in the affairs of the NWCDC, and for her violating her official duties and responsibilities.

Between 2008 and March 2013, Brashear accepted approximately $999,000, in kickbacks financed through the receipt of payments by contractors and an employee of the NWCDC that were fraudulently obtained from the NWCDC with Brashear’s assistance, through materially false pretenses, representations and promises. In particular, Brashear accepted kickbacks as summarized below:

Time Period

Approximate Amount of Kickbacks

Paid By

September 2012 - March 2013

$39,000

NWCDC “Employee 1”

January 2009 – December 2012

$260,000

James Porter (identified in Count 1 as “partner of the special projects manager”)

January 2008 – June 2012

$70,000

Printing contractor

January 2011 – January 2013

$33,000

Marketing contractor

September 2012 – April 2013

$90,000

Cleaning contractor

April 2009 – February 2013

$118,000

Homeland Security contractor

January 2009 – May 2012

$40,000

Interior designer

January 2008 – March 2013

$177,000

Internet research consultant

October 2011 – March 2013

$29,000

Political consultant

April 2011 – September 2012

$32,000

Media consultant

January 2008 – March 2013

$27,000

Giacomo “Jack” DeRosa

May 2011 – March 2013

$84,000

Security consultant

Brashear routinely accepted payments from some of these contractors through Donald Bernard Sr. Brashear and Bernard also used their email accounts to facilitate this kickback and fraud scheme. Bernard was previously charged in December 2014 in a 20-count indictment with various federal offenses involving a scheme to defraud the NWCDC of his honest services and the NWCDC’s money and property by accepting and agreeing to accept bribes and kickbacks from certain NWCDC contractors, which were financed at least in part through the contractors’ fraudulent padding of invoices to the NWCDC. 

Brashear admitted taking payments from James Porter, a contractor who pleaded guilty in January 2015 to conspiracy to defraud the NWCDC of honest services, money and property through the use of interstate wire transmissions, as well as tax evasion for his role in the kickback scheme. The roofing contractor referred to in Count 1 of the information, Giacomo “Jack” DeRosa, was charged in a six-count fraud and money laundering indictment in December 2014 for his role in passing kickbacks to Bernard, which were shared, in part, with Brashear.

Brashear also admitted making and subscribing a U.S. Individual Income Tax Return, Form 1040, for tax year 2012, signed and filed with the IRS under penalty of perjury, which she did not believe to be true and correct, including approximately $316,000 in unreported income that she received through the kickback payments.

The wire fraud charge to which Brashear pleaded guilty carries a maximum potential penalty of 20 years in prison. The charge of filing a false tax return carries a maximum potential penalty of three years in prison. Both charges are punishable by a fine of $250,000 or twice the amount of the pecuniary gain or loss from the offense. Sentencing is scheduled for April 5, 2016.

U.S. Attorney Fishman credited special agents of the FBI’s Newark Field Office, under the direction of Special Agent in Charge Richard M. Frankel; IRS – Criminal Investigation, Newark Field Office, under the direction of Special Agent in Charge Jonathan D. Larsen; and the U.S. Department of Housing and Urban Development, Office of Inspector General, Newark office, under the direction of Special Agent in Charge Christina Scaringi, as well as criminal investigators of the U.S. Attorney’s Office, for the investigation leading to today’s guilty plea. U.S. Attorney Fishman also thanked the N.J. Office of the State Comptroller, under the direction of Acting State Comptroller Philip James Degnan, for its assistance in the investigation.

The government is represented by Assistant U.S. Attorneys Jacques Pierre, Mala Ahuja Harker and Leslie Schwartz of the U.S. Attorney’s Office Special Prosecutions Division.

Defense counsel: Michael Baldassare Esq., Newark

TRENTON, N.J. – A Monmouth County, New Jersey, man was sentenced today to 144 months in prison for his role in a large-scale drug trafficking organization that distributed heroin in Ocean and Monmouth Counties, U.S. Attorney Paul J. Fishman announced.

Jason O’Neal, a/k/a “Born,” 43, of Farmingdale, New Jersey, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an information charging him with one count of conspiracy to distribute heroin. Judge Sheridan imposed the sentence today in Trenton federal court.

To date, 19 other alleged members or affiliates of the “Britt-Young Drug Trafficking Organization” – so named after its leaders, Rufus Young, a/k/a “Equan,” a/k/a “E-Money, and Robert Britt, a/k/a “True,” in the criminal complaint – have pleaded guilty to narcotics offenses.

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

Between February 2013 and March 2014, O’Neal conspired with Rufus Young and others to distribute heroin in Ocean and Monmouth counties as part of the Britt-Young Drug Trafficking Organization. O’Neal admitted that he served as a supervisor and distributed between 100 and 400 grams of heroin in furtherance of the conspiracy.

In addition to the prison term, Judge Sheridan sentenced O’Neal to serve three years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, Red Bank Resident Office, under the direction of Special Agent in Charge Richard M. Frankel, with the investigation.

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

Defense counsel: Aidan P. O’Connor Esq., Hackensack, New Jersey

TRENTON, N.J. - An Orthodox Jewish Rabbi was sentenced today to 96 months in prison for conspiring to kidnap Jewish men in an effort to force them to give their wives religious divorces, referred to as “gets,” U.S. Attorney Paul J. Fishman announced.

Jay Goldstein a/k/a “Yaakov,” 61, of Brooklyn, New York, was previously convicted by a federal jury of Count One and Count Five of an indictment charging him with conspiracy to commit kidnapping and attempted kidnapping. Jay Goldstein was convicted following an eight-week trial before U.S. District Judge Freda L. Wolfson, who imposed the sentence today in Trenton federal court.

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

On Dec. 1, 2009, in Lakewood, an Orthodox Jewish man, Israel Markowitz, was assaulted, placed in a van, tied up, beaten and shocked with a stun-gun until he agreed to give his wife a get.

On Oct. 16, 2010, in Lakewood, another Orthodox Jewish man, Ysrael Bryskman, was assaulted, tied up and beaten until he agreed to give his wife a get.

On Aug. 22, 2011, in Brooklyn, another Orthodox Jewish man, Usher Chaimowitz, and his roommate, Menachem Teitlebaum, were assaulted, tied up and beaten until Chaimowitz agreed to give his wife a get.

Based upon these incidents, the FBI began an undercover operation in August 2013 in which two FBI agents posed as a wife who was seeking a get from her recalcitrant husband, and her brother, who was trying to help her obtain the get. Over the next several weeks, the undercover agents had multiple recorded phone calls and in-person meetings with Mendel Epstein, 70, Lakewood, New Jersey. In those meetings, Epstein arranged to have his team kidnap the husband at a warehouse in exchange for $60,000.

On Oct. 9, 2013, Jay Goldstein, his sons Moshe Goldstein, 32, and Avrohom Goldstein, 36, and others – including Binyamin Stimler, 40, Simcha Bulmash, 32, David Hellman, 33, Sholom Shuchat, 31, all of Brooklyn, and Ariel Potash, 42, of Monsey, New York – traveled from New York to a warehouse in Middlesex County, New Jersey, to execute the planned kidnapping of the husband to force him to give the get.

They arrived at the warehouse in two dark minivans shortly after 8:00 p.m. Some of the kidnap team members put on masks and entered the warehouse office with the undercover agent posing as the brother. The remaining kidnappers walked around the outside with flashlights. Over the next 15 minutes, members of the kidnap team went in and out of the warehouse office wearing disguises, including ski masks, Halloween masks and bandanas. They discussed their plan for kidnapping and assaulting the husband, how they planned to grab him, pull him down, tie him up, and take his phone. Members of the kidnap team brought with them to the warehouse a 30-foot nylon rope, a blindfold, vodka, license plates they had switched out, and items used to ceremonially record the get. At 8:23 p.m., law enforcement moved into the warehouse office and arrested the eight men.

In addition to the prison term, Judge Wolfson sentenced Jay Goldstein to five years of supervised release.

Avrohom Goldstein, Potash, Shuchat, Moshe Goldstein, Hellman, and Bulmash have all pleaded guilty to one count of traveling in interstate commerce to commit extortion. Avrohom Goldstein and Potash were sentenced Nov. 19, 2015 to 45 and 14 months in prison, respectively. Shuchat was sentenced to time served on Nov. 19, 2015. Moshe Goldstein was sentenced Nov. 16, 2015 to 48 months in prison. Hellman and Bulmash were sentenced Nov. 17, 2015 to 44 and 48 months in prison, respectively. Martin Wolmark, 57, of Monsey, previously pleaded guilty to conspiracy to travel in interstate commerce to commit extortion and was sentenced Dec. 14, 2015 to 38 months in prison.

Epstein and Stimler were also previously convicted at trial of Count One of the indictment charging them with conspiracy to commit kidnapping. Stimler was additionally convicted on Count Five of the indictment, attempted kidnapping. Epstein and Stimler were sentenced yesterday to 120 and 39 months in prison, respectively.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, and the Lakewood Police Department with the investigation.

The government is represented by Assistant U.S. Attorneys R. Joseph Gribko and Sarah M. Wolfe of the U.S. Attorney’s Office in Trenton.

TRENTON, N.J. – A leader of a large-scale drug trafficking organization was sentenced today to 15 years in prison for conspiring to distribute heroin in Ocean and Monmouth counties and elsewhere in New Jersey, U.S. Attorney Paul J. Fishman announced.

Rufus Young, a/k/a “Equan,” a/k/a “E-Money,” 42, of Asbury Park, New Jersey, previously pleaded guilty before U.S. District Judge Peter G. Sheridan to an information charging him with conspiring to distribute 100 grams or more of heroin. Judge Sheridan imposed the sentence today in Trenton federal court.  

To date, 19 other alleged members or affiliates of the “Britt-Young Drug Trafficking Organization” – so named after its leaders, Young and Robert Britt, a/k/a “True,” in the criminal complaint – have pleaded guilty to narcotics offenses.

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

Between February 2013 and March 2014, Young conspired with others to distribute heroin in Ocean and Monmouth counties as part of the Britt-Young DTO. Young was a leader of the organization and was responsible for, among other things, supplying heroin to various sub-dealers who distributed the heroin to others. To carry out Britt-Young DTO’s drug trafficking business, Young maintained several stash house locations that he and his conspirators used to package, store and sell heroin, including a recording studio in Toms River and two apartments in Neptune, New Jersey. Young was responsible for distributing between one and three kilograms of heroin during the conspiracy.        

In addition to the prison term, Judge Sheridan sentenced Young to four years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, Red Bank Resident Office, under the direction of Special Agent in Charge Richard M. Frankel; officers of the Brick Township Police Department, under the direction of Chief Nils R. Bergquist: and officers of the Toms River Police Department, under the direction of Chief Mitchell Little, with the investigation. He additionally credited special agents of the Bureau of Alcohol Tobacco Firearms and Explosives, under the direction of Special Agent in Charge George P. Belsky; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates; officers of the Monmouth County Prosecutor’s Office, under the direction of Acting Prosecutor Christopher J. Gramiccioni; and officers of the Ocean County Prosecutor’s Office, under the direction of Prosecutor Joseph D. Coronato. He also thanked the Monmouth County Sheriff’s Office and the Neptune Township, Asbury Park, Marlboro, Long Branch and Freehold police departments for their roles in the case.

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

Defense counsel: Stacy A. Biancamano Esq., West Orange, New Jersey

CAMDEN, N.J. – A Williamstown, New Jersey, man who was charged on Dec. 4, 2015 with receiving images and videos of child sexual abuse was arrested again this morning by FBI agents on a new charge of producing child pornography, U.S. Attorney Paul J. Fishman announced. 

Eric Ziegler, 37, is charged by criminal complaint with producing and receiving child pornography. He is scheduled to appear this afternoon before U.S. Magistrate Judge Ann Marie Donio in Camden federal court.

According to documents filed in this case:

Beginning in February 2015, law enforcement officers learned that a user of an Internet account registered to a Williamstown residence was linked to an online community of individuals who regularly sent and received child pornography via a website that operated on an anonymous online network. Further investigation revealed that Ziegler, who previously worked from home providing technological support to computer users who work for financial institutions, was utilizing the anonymous network to view and receive images of child sexual abuse.

On Dec. 3, 2015, law enforcement officers executed a search warrant at Ziegler’s residence. An initial review of the evidence recovered revealed dozens of computer discs containing images of child sexual abuse, including images and video files of adult men engaged in intercourse with prepubescent girls.

Further review of Ziegler’s computer revealed still images and a video file showing prepubescent girls who were recorded in the first-floor bathroom of Ziegler’s Williamstown home. The images and video file, which focused on the girls’ genitalia, showed them changing into swimsuits and using the bathroom.

The search of Ziegler’s computer also revealed dozens of similar hidden-camera videos of prepubescent females ranging in age from 8 to 12. The videos were recorded in what appear to be fitting rooms, bathrooms and locker rooms. It is unknown at this time if Ziegler made those images himself or obtained them through other means. To date, law enforcement officers have positively identified four minor children who appear in the images and video file recovered from Ziegler’s computer. The investigation regarding the identification of additional victims is ongoing.

Anyone with information regarding possible victims of this activity is urged to contact the FBI in Cherry Hill, New Jersey at 856-795-9556.

The charge of producing child pornography is punishable by a mandatory minimum sentence of 15 years in prison, a maximum potential penalty of 30 years in prison and a $250,000 fine. The count of receiving child pornography is punishable by a mandatory minimum sentence of five years in prison, a maximum potential penalty of 20 years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge William F. Sweeney in Philadelphia, with the investigation leading to today’s arrest. U.S. Attorney Fishman also thanked the Monroe Township Police Department under the direction of Chief John McKeown for its assistance with the investigation. 

The government is represented by Assistant U.S. Attorney Steven D’Aguanno of the New Jersey U.S. Attorney’s Office Camden Office.

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

Defense counsel: Rocco C. Cipparone Jr. Esq., Haddon Heights, New Jersey

NEWARK, N.J. – The former tax preparer for television personality Michael “The Situation” Sorrentino and his brother, Marc Sorrentino, today admitted filing fraudulent tax returns on their behalf, U.S. Attorney Paul J. Fishman and Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced. 

Gregg Mark, 51, of Spotswood, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with one count of conspiracy to defraud the United States.

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

Mark, formerly an accountant at a Staten Island-based accounting firm, admitted preparing fraudulent tax returns for the Sorrentinos for tax years 2010 and 2011, during which time the Sorrentinos and their businesses – MPS Entertainment LLC and Situation Nation Inc. – received millions of dollars in income. To reduce the taxes the Sorrentinos owed, Mark caused to be prepared and filed with the IRS fraudulent business and personal tax returns. Mark admitted the Sorrentinos’ false returns defrauded the IRS out of $550,000 to $1.5 million.   

On Sept. 24, 2015, a grand jury in Newark returned a seven-count indictment charging the Sorrentinos with conspiracy to defraud the United States and filing false tax returns. Michael Sorrentino was also charged with failing to file a tax return. According to the indictment, the brothers received several million dollars in connection with Michael Sorrentino’s role as a cast member on the MTV television show “Jersey Shore” and other promotional activities. The brothers are charged with failing to report all of the income they received. They are also charged with claiming personal expenses as business expenses, including payments for luxury vehicles, high-end clothing, and making distributions – or direct payments – from the businesses to personal bank accounts.  Both have pleaded not guilty; a trial date has not yet been set.

The conspiracy charge to which Mark pleaded guilty carries a statutory maximum penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for March 24, 2016.

U.S. Attorney Fishman and Acting Assistant Attorney General Ciraolo 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 Jonathan W. Romankow of the U.S. Attorney’s Office Criminal Division in Newark as well as Assistant Chief Tino M. Lisella and Trial Attorneys Yael T. Epstein and Jeffrey B. Bender of the Tax Division of the U.S. Department of Justice.

Defense counsel: Jack Arseneault Esq. and John Roberts Esq., Chatham, New Jersey

TRENTON, N.J. - Two Orthodox Jewish Rabbis were sentenced to prison today for conspiring to kidnap Jewish men in an effort to force them to give their wives religious divorces, referred to as “gets,” U.S. Attorney Paul J. Fishman announced.

Rabbis Mendel Epstein, 70, of Lakewood, New Jersey, and Binyamin Stimler, 40, of Brooklyn, New York, were sentenced to 120 and 39 months in prison, respectively. They were both convicted at trial of Count One of an indictment charging them with conspiracy to commit kidnapping. Stimler was additionally convicted on Count Five of the indictment, attempted kidnapping. Judge Wolfson imposed both sentences today in Trenton federal court.

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

On Dec. 1, 2009, in Lakewood, an Orthodox Jewish man, Israel Markowitz, was assaulted, placed in a van, tied up, beaten and shocked with a stun-gun until he agreed to give his wife a get.

On Oct. 16, 2010, in Lakewood, another Orthodox Jewish man, Ysrael Bryskman, was assaulted, tied up and beaten until he agreed to give his wife a get.

On Aug. 22, 2011, in Brooklyn, another Orthodox Jewish man, Usher Chaimowitz, and his roommate, Menachem Teitlebaum, were assaulted, tied up and beaten until Chaimowitz agreed to give his wife a get.

Based upon these incidents, the FBI began an undercover operation in August 2013 in which two FBI agents posed as a wife who was seeking a get from her recalcitrant husband, and her brother, who was trying to help her obtain the get. Over the next several weeks, the undercover agents had multiple recorded phone calls and in-person meetings with defendant Epstein. In those meetings, Epstein arranged to have his team kidnap the husband at a warehouse in exchange for $60,000.

On October 9, 2013, Stimler and others – including Jay Goldstein, 61, Moshe Goldstein, 32, Avrohom Goldstein, 36, Simcha Bulmash, 32, David Hellman, 33, and Sholom Shuchat, 31, all of Brooklyn, and Ariel Potash, 42, of Monsey, New York – traveled from New York to a warehouse in Middlesex County, New Jersey, to execute the planned kidnapping of the husband to force him to give the get.

They arrived at the warehouse in two dark minivans shortly after 8:00 p.m. Some of the kidnap team members put on masks and entered the warehouse office with the undercover agent posing as the brother. The remaining kidnappers walked around the outside with flashlights. Over the next 15 minutes, members of the kidnap team went in and out of the warehouse office wearing disguises, including ski masks, Halloween masks and bandanas. They discussed their plan for kidnapping and assaulting the husband, how they planned to grab him, pull him down, tie him up, and take his phone. Members of the kidnap team brought with them to the warehouse a 30-foot nylon rope, a blindfold, vodka, license plates they had switched out, and items used to ceremonially record the get.

At 8:23 p.m., law enforcement moved into the warehouse office and arrested the eight men, including Stimler. Epstein was arrested at his Brooklyn home the same night.

In addition to the prison terms, Judge Wolfson sentenced both Epstein and Stimler to five years of supervised release.

Avrohom Goldstein, Potash, Shuchat, Moshe Goldstein, Hellman, and Bulmash have all pleaded guilty to one count of traveling in interstate commerce to commit extortion. Avrohom Goldstein and Potash were sentenced Nov. 19, 2015 to 45 and 14 months in prison, respectively. Shuchat was sentenced to time served on Nov. 19, 2015. Moshe Goldstein was sentenced Nov. 16, 2015 to 48 months in prison. Hellman and Bulmash were sentenced Nov. 17, 2015 to 44 and 48 months in prison, respectively. Martin Wolmark, 57, of Monsey, previously pleaded guilty to conspiracy to travel in interstate commerce to commit extortion and was sentenced yesterday to 38 months in prison.

Jay Goldstein, who was convicted at trial of conspiracy to commit kidnapping and attempted kidnapping, is scheduled for sentencing tomorrow.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, and the Lakewood Police Department with the investigation.

The government is represented by Assistant U.S. Attorneys R. Joseph Gribko and Sarah M. Wolfe of the U.S. Attorney’s Office in Trenton.

Defense counsel:

Mendel Epstein: Robert G. Stahl Esq. and Laura Gasiorowski Esq., Westfield, New Jersey

Binyamin Stimler: Nathan Lewin Esq., Washington, D.C.

NEWARK, N.J. – Three men from Florida, New Jersey, and Maryland were charged today with a wide-ranging computer hacking and identity theft scheme that compromised the personally identifiable information (PII) of millions of people and generated more than $2 million in illegal profits, U.S. Attorney Paul J. Fishman announced.

Timothy Edward Livingston, 30, of Boca Raton, Florida; Tomasz Chmielarz, 32, of Rutherford, New Jersey; and Devin James McArthur, 27, of Ellicott City, Maryland, are charged by indictment with conspiracy to commit fraud and related activity in connection with computers and conspiracy to commit wire fraud. Livingston and Chmielarz are also charged with conspiracy to commit fraud and related activity in connection with electronic mail.

According to the indictment:

Beginning as early as 2011, Livingston and others allegedly operated A Whole Lot of Nothing LLC — a business that specialized in sending unsolicited, or “spam,” emails on behalf of its clients. Livingston’s clients included legitimate businesses, such as insurance companies that wished to send bulk emails to advertise their businesses, as well as illegal entities, such as online pharmacies that sold narcotics without prescriptions. Typically, Livingston charged $5 to $9 for each spam email that resulted in a completed transaction for a client.

Many internet service providers used spam filters to prevent spam from reaching their customers’ email accounts. Beginning in January 2012, Livingston allegedly solicited Chmielarz to write computer programs to send spam in a manner that would conceal the true origin of the email and bypass spam filters. Livingston and Chmielarz started using proxy servers to send out spam messages using botnets to hide the true origin of the spam, help them remain anonymous, and to evade anti-spam filters and other spam blocking techniques. Livingston also registered certain websites used in the spam campaigns in the name of his alias, “Mark Lloyd,” to avoid detection.  

Livingston and Chmielarz allegedly hacked into the email accounts of individuals and compromised and seized control of the mail servers of some of the corporate victims to further their spam campaigns. They created custom software designed to hack into the email accounts of customers of a company identified in the indictment as “Corporate Victim 1.” Once the email account software gained access to a Corporate Victim 1 user’s account, it created sub-accounts on the account and used them to send out spam. Livingston and Chmielarz programmed the email account software to access the mail server of Corporate Victim 1 through proxy servers to obscure their true identities. This allowed them to send out massive amounts of spam without identifying themselves as the senders, and instead using Corporate Victim 1’s mail servers and customer accounts.

Livingston and Chmielarz also allegedly created custom software that leveraged vulnerabilities in the websites of a number of corporations, including one identified in the indictment as “Corporate Victim 2” (the web form software), which allowed Livingston and Chmielarz to use Corporate Victim 2’s email servers to send out spam that appeared to be from Corporate Victim 2, but in reality was from Livingston and his conspirators.

Livingston, Chmielarz and McArthur also worked together to steal the confidential business information of the corporate victims, including databases containing the PII of millions of Americans, so that they could use that information in spam campaigns. In May of 2013, Livingston and Chmielarz discussed stealing confidential business information from “Corporate Victim 3,” as identified in the indictment. In an online chat, Livingston told Chmielarz, “here is the site I need scrapped (sic),” and provided Chmielarz with an address for Corporate Victim 3’s website and the login credentials for an employee. “Scraping” is a technique employed to extract large amount of data from websites.

In another online chat, Livingston told Chmielarz that the database they were going to steal from Corporate Victim 3 contained 10 million records. Livingston subsequently paid Chmielarz to write a computer program to steal the database.

From February 2014 through February 2015, McArthur worked as a sales representative at a corporation identified in the indictment as “Corporate Victim 4.” In a series of online chats in August 2014, Livingston, Chmielarz, and McArthur discussed using McArthur’s position at Corporate Victim 4 to steal confidential business information, including the PII of millions of the company’s customers.

On Aug.11, 2014, McArthur allegedly provided Livingston with access to a remote administration tool on a computer with access to the computer network of Corporate Victim 4 without authorization from his employer. McArthur gave Livingston and Chmielarz access to Corporate Victim 4’s computer network using the remote administration tool to steal the names, addresses, phone numbers, and email addresses of potential customers, current customers, and former customers. The defendants and others could use that information to send spam to those individuals.

Livingston told defendant Chmielarz that he estimated that Corporate Victim 4’s database had records for 50 million people; Livingston also discussed the technical challenges associated with stealing such a large volume of data from Corporate Victim 4.

In an online chat dated Sept. 3, 2014, Livingston and McArthur discussed the contents of the database that they had stolen from Corporate Victim 4. McArthur estimated that they had succeeded in stealing 24.5 million records.

The maximum potential penalties for each count are as follows:

Count

Defendants

Violation

Maximum Penalty

1

Livingston

Chmielarz

McArthur

Conspiracy to Commit Fraud and Related Activity in Connection with Computers

Five years in prison and a fine in an amount the greater of $250,000 or twice the gain or loss from the offense

2

Livingston

Chmielarz

McArthur

Conspiracy to Commit Wire Fraud

20 years in prison and a fine in an amount the greater of $250,000 or twice the gain or loss from the offense

3

Livingston

Chmielarz

 

Conspiracy to Commit Fraud and Related Activity in Connection with Electronic Mail

Five years in prison and a fine in an amount the greater of $250,000 or twice the gain or loss from the offense

The indictment also notices the forfeiture of $299,653 from several bank accounts, a 2006 Ferrari F430 two-door Spider Convertible and a 2009 Cadillac Escalade SUV.

U.S. Attorney Fishman credited special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to today’s arrests.

The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro of the Computer Hacking and Intellectual Property Section of the Economic Crimes Unit and Peter Gaeta of the Asset Forfeiture-Money Laundering Unit.

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

Defense counsel:

Livingston: Jeffrey Cox Esq., Boca Raton, Florida

Chmielarz: Michael Koribanics Esq., Clifton, New Jersey

NEWARK, N.J. – A former U.S. Army major and his wife were sentenced today for abusing their adopted children, who all were less than 4 years old and developmentally delayed, through neglectful and cruel acts, including by breaking their bones, denying them medical attention, withholding water and force-feeding them hot sauce, U.S. Attorney Paul J. Fishman announced.

Carolyn Jackson, 38, was sentenced to 24 months in prison and her husband, John E. Jackson, 40, formerly a major in the Army at the Picatinny Arsenal Installation in Morris County, New Jersey, was sentenced to 400 hours of community service. The government had been seeking sentences of more than 19 years and more than 15 years, respectively.

“In every case, our office seeks a sentence that is fair and just in punishing the defendants and offering justice to the victims of their crimes,” U.S. Attorney Fishman said. “In this case, those victims were the children entrusted to the Jacksons’ care. Using the federal sentencing guidelines, our analysis of the crimes of which the Jacksons were convicted by a jury called for severe penalties. Obviously, we are disappointed that the court did not agree.”

The Jacksons were each found guilty in July 2015 following four months of trial before U.S. District Judge Katharine S. Hayden in Newark federal court of one count of conspiracy to endanger the welfare of a child; Carolyn Jackson was found guilty of 11 substantive counts of endangering the welfare of a child and John Jackson was found guilty of nine substantive counts of endangering the welfare of a child. Judge Hayden imposed the sentences today in Newark federal court.

The case falls under federal jurisdiction because the crimes were committed on a military base. John Jackson was discharged from the Army in May 2015.

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

From August 2005 until April 23, 2010, Carolyn and John Jackson conspired to engage in a constant course of neglect and cruelty towards three children they fostered and then adopted. The Jacksons told their biological children not to report the physical assaults to others, saying that the punishments and disciplinary techniques were justified, as they were “training” the adopted children how to behave.

After John Jackson was informed by a family friend that the oldest biological child had revealed the abuse in the Jackson household, John Jackson reported the breach to Carolyn Jackson, who retaliated against that biological child by beating the child 30 times with a belt.

As part of the conspiracy, the Jacksons physically assaulted their adopted children with various objects, causing two children to sustain fractured bones (including a fractured spine, fractured skull and fractured upper arms); failed to seek prompt medical attention for their injuries; withheld sufficient nourishment and food from their adopted children; withheld adequate water from two of their children and, at times, prohibited them from drinking water altogether; forced two of the children to consume foods intended to cause them pain and suffering, such as red pepper flakes and hot sauce, and caused one child to ingest excessive sodium or sodium-laden substances while being deprived of water, leading to a life-threatening condition on two separate occasions in two states. The Jacksons even punished one adopted child, who had to resort to sneaking food and drinking from the toilet, by hitting the child, making the child ingest hot sauce, and forcing the child to eat a raw onion like an apple. 

None of the children, adoptive and biological, remain in the custody of the defendants.

Judge Hayden sentenced both of the Jacksons to three years of supervised release.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, with the investigation leading to today’s convictions. He also thanked the U.S. Army Criminal Investigation Command, under the command of Major General Mark S. Inch, and the Morris County Prosecutor’s Office, under the direction of Prosecutor Fredric M. Knapp.

The government is represented by Assistant U.S. Attorneys Melissa L. Jampol and Joseph B. Shumofsky of the U.S. Attorney’s Office Criminal Division in Newark.

NEWARK, N.J. – A Holmdel, New Jersey, man today admitted his role in a stock market manipulation scheme that artificially inflated the stock price of four publicly traded companies through manipulative trading and other fraudulent means, U.S. Attorney Paul J. Fishman announced. 

Samuel DelPresto, 48, pleaded guilty today before U.S. District Judge Jose Linares in Newark federal court to an information charging him with conspiracy to commit securities fraud. 

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

From 2008 through 2010, DelPresto, a penny stock promoter who owned and operated MLF Group LLC, participated in an extensive “pump-and-dump” scheme in which he and others fraudulently inflated the prices of certain shares in order to sell them later at artificially inflated prices. The scheme involved four public companies: BioNeutral Group Inc. (BONU), NXT Nutritionals Holdings Inc. (NXTH), Mesa Energy Holdings Inc. (MSEH), and Clear-Lite Holdings Inc. (CLRH) (collectively, the “Target Companies”).

As part of the scheme, DelPresto and others first obtained control over large blocks of the free trading shares of the Target Companies. Next, DelPresto and others “pumped” the price of those shares by, among other things, engaging in manipulative trading of the stocks of the Target Companies and disseminating promotional materials encouraging others to purchase them. After pumping the stocks, DelPresto and the other conspirators “dumped” them by selling large volumes of the Target Companies’ stock to victim investors. The target companies’ stock price would then drop, resulting in losses to the victims. 

In order to fraudulently inflate the price and volume of the Target Companies’ stocks, DelPresto’s conspirators paid cash kickbacks to an investment advisor in Las Vegas so that he would purchase the Target Companies’ stock on behalf of his clients. The purpose of these purchases was to, among other things, create the false appearance of market interest and demand in the stock; build trading volume that would be attractive to potential investors who would later receive promotional materials about the stock; and generate income to fund the promotional campaigns, including email blasts and newsletters, that occurred in the later phases of the scheme. Additionally, DelPresto and other conspirators engaged in coordinated trading of the Target Companies’ stock using various brokerage accounts that they owned or controlled, including the accounts of friends, family and other third parties.              

The scheme collectively generated approximately $33 million in illicit trading proceeds, of which DelPresto received approximately $13 million.

The conspiracy count to which DelPresto pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. Sentencing is scheduled for April 5, 2016.

The U.S. Securities and Exchange Commission (SEC) filed a civil complaint against DelPresto today. 

U.S. Attorney Fishman credited special agent s of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, for the investigation leading to DelPresto’s guilty plea. He also thanked the SEC’s New York Regional Office, under the direction of Andrew Calamari, for its assistance in this matter.

The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Economic Crimes Unit.

Defense Counsel: Jack Arsenault Esq., Chatham, New Jersey

NEWARK, N.J. – An associate of the DeCavalcante organized crime family of La Cosa Nostra today admitted his role in distributing more than 500 grams of cocaine, U.S. Attorney Paul J. Fishman announced.

James Heeney, 36, of Elizabeth, New Jersey pleaded guilty before U.S. District Judge William H. Walls to an information charging him with one count of conspiring to distribute more than 500 grams of cocaine.

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

Heeney was arrested and charged by complaint in March 2015, along with eight members of the DeCavalcante crime family. He admitted that between August 2012 and March 2013, in conjunction with other family associates, he sold more than one-half a kilo of cocaine to an undercover FBI agent for at least $30,000.  

The drug distribution count to which Heeney pleaded guilty carries a mandatory minimum of five years in prison, a maximum potential penalty of 40 years in prison and a $5 million fine. Sentencing is scheduled for March 23, 2016.        

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; the N.J. State Commission of Investigation, under the direction of Acting Executive Director Lee C. Seglem; detectives of the Waterfront Commission of New York Harbor, under the direction of Executive Director Walter M. Arsenault; and the Union County Prosecutor’s Office, under the direction of Acting Union County Prosecutor Grace H. Park, for the investigation leading to today’s plea.

The government is represented by Senior Litigation Counsel V. Grady O’Malley and Assistant U.S. Attorney James Donnelly of the U.S. Attorney’s Office’s Organized Crime/Gangs Unit.

Defense counsel: Paulette Pitt Esq. Woodbridge, New Jersey

TRENTON, N.J. - An Orthodox Jewish rabbi was sentenced today to 38 months in prison for his role in a conspiracy to coerce a Jewish man to give his wife a religious divorce – referred to as a “get” – through threats of violence, U.S. Attorney Paul J. Fishman announced.

Martin Wolmark, 57, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with conspiracy to travel in interstate commerce to commit extortion. Judge Wolfson imposed the sentence today in Trenton federal court.

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

On Aug. 7, 2013, Wolmark, an ordained Orthodox Jewish rabbi, spoke with a woman and her brother about obtaining a Jewish divorce from the woman’s recalcitrant husband. A get is a divorce document which, according to Jewish Law, must be presented by a husband to his wife to effect their divorce. Unbeknownst to Wolmark, the woman and the brother were actually undercover FBI agents.

During the conversation, which was recorded by law enforcement, Wolmark informed the agents that there were two ways to go about obtaining a get from such a recalcitrant husband, one of which was to “nail him.” Wolmark also told the agents that coercing the husband into giving a get could be expensive. He then recommended that the agents speak with his colleague, Mendel Epstein, 70, of Lakewood, New Jersey, who he knew had previously used violence to coerce recalcitrant husbands into giving gets to their wives. Wolmark then initiated a conference call with the agents and Epstein.

On Aug. 14, 2013, the agents met with Epstein at his home to discuss the case further. On Oct. 2, 2013, Wolmark convened a rabbinical court (a “beth din”) with Epstein and Jay Goldstein in his office in Suffern, New York. The purpose of this proceeding was to determine whether there were grounds under Jewish law to coerce the husband into giving the get. The female agent also attended and recorded the meeting. During this meeting, Epstein discussed openly the plan to kidnap and assault the purported husband in order to obtain the get.

On Oct. 9, 2013, a group of Wolmark’s conspirators – including Jay Goldstein, 61, Moshe Goldstein, 32, Avrohom Goldstein, 36, Simcha Bulmash, 32, Binyamin Stimler, 40, David Hellman, 33, and Sholom Shuchat, 31, all of Brooklyn, and Ariel Potash, 42, of Monsey, New York – traveled from New York to a warehouse in Edison, New Jersey, with the intent of forcing the purported husband to give his wife a get by means of violence and threats of violence. 

In addition to the prison term, Judge Wolfson ordered Wolmark to serve two years of supervised release and pay a $50,000 fine.

Avrohom Goldstein, Potash, Shuchat, Moshe Goldstein, Hellman, and Bulmash have all pleaded guilty to one count of traveling in interstate commerce to commit extortion. Avrohom Goldstein and Potash were sentenced Nov. 19, 2015 to 45 and 14 months in prison, respectively. Shuchat was sentenced to time served on Nov. 19, 2015. Moshe Goldstein was sentenced Nov. 16, 2015 to 48 months in prison. Hellman and Bulmash were sentenced Nov. 17, 2015 to 44 and 48 months in prison, respectively.

Epstein, Jay Goldstein and Stimler were all convicted at trial on April 21, 2015. Epstein, who was convicted of conspiracy to commit kidnapping, is scheduled for sentencing on Dec. 15, 2015. Stimler and Jay Goldstein, both convicted of conspiracy to commit kidnapping and attempted kidnapping, are scheduled for sentencing on Dec. 15, 2015 and Dec. 16, 2015, respectively.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, for the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys R. Joseph Gribko and Sarah Wolfe of the U.S. Attorney’s Office in Trenton.

Defense counsel:  Benjamin Brafman Esq., New York

NEWARK, N.J. – A Sayreville, New Jersey, man was convicted today by a federal jury for his role in a conspiracy to import heroin from India into the United States, U.S. Attorney Paul J. Fishman announced.

Adolphus Nwokedi, 47, was convicted of an indictment charging him with one count of conspiring with others to import 100 grams or more of heroin. He was convicted following a three-day trial before U.S. District Judge Esther Salas in Newark federal court. The jury deliberated for about three hours before returning the guilty verdict.

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

From Oct. 2013 through Dec. 2013, Nwokedi conspired with an individual in India to ship a parcel containing heroin into the United States. In return for $3,000, Nwokedi agreed to accept the package at his business address in Newark and then deliver it to another conspirator living in Bronx, New York. On Dec. 11, 2013, customs officers at the John F. Kennedy International Airport mail facility intercepted the parcel and found 524 grams of heroin. On Jan. 2, 2014, agents with Homeland Security Investigations conducted a controlled delivery of the parcel. Nwokedi personally accepted the parcel in Newark and was subsequently arrested.

The conspiracy count carries a mandatory minimum of five years in prison and a maximum potential penalty of 40 years in prison. Sentencing is set for March 21, 2016.

U .S. Attorney Fishman credited special agents of Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Newark Division, under the direction of Acting Special Agent in Charge Kevin Kelly, with the investigation.

The government is represented by Assistant U.S. Attorneys David M. Eskew and Melissa Wangenheim of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Kevin F. Carlucci Esq., Assistant Federal Public Defender, Newark       

TRENTON, N.J. – A Madison, New Jersey, man was sentenced today to 60 months in prison for distributing images of child sexual abuse from his home computer, U.S. Attorney Paul J. Fishman announced.

Michael Hodukavich, 25, previously pleaded guilty before U.S. District Judge Freda L. Wolfson to an information charging him with one count of distributing child pornography over the Internet. Judge Wolfson imposed the sentence today in Trenton federal court.

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

Hodukavich admitted that, on Nov. 20 and 21, 2014, he distributed videos and images depicting child sexual abuse on the Internet via peer-to-peer file sharing software, which allowed others access to the material in shared directories. An undercover agent discovered and downloaded the images and videos, and the username and IP address of the sharer was traced back to Hodukavich’s residence. Hodukavich also admitted to having more than 600 images of child sexual abuse saved on his computer.

In addition to the prison term, Judge Wolfson sentenced Hodukavich to five years of supervised release.

U.S. Attorney Fishman credited special agents of FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, and the Madison Police Department, under the direction of Chief of Police Darren P. Dachisen Sr., with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Melissa M. Wangenheim of the U.S. Attorney’s Office General Crimes Unit in Newark.

Defense counsel: James S. Friedman Esq., Newark

TRENTON, N.J. - A Hicksville, New York, man today admitted his role in one of the largest credit card fraud schemes ever charged by the Justice Department, U.S. Attorney Paul J. Fishman announced.

Ijaz Butt, 56, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to Count One of an indictment charging him with conspiracy to commit bank fraud.

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

Butt was originally charged in February 2013 as part of a conspiracy to fabricate more than 7,000 false identities to obtain tens of thousands of credit cards. Since then, 19 people, including Butt, have pleaded guilty in connection with the scheme.

Members of the conspiracy doctored credit reports to pump up the spending and borrowing power associated with the cards. They then borrowed or spent as much as they could, based on the phony credit history, but did not repay the debts – causing more than $200 million in confirmed losses to businesses and financial institutions.

The scheme involved a three-step process in which the defendants would make up a false identity by creating fraudulent identification documents and a fraudulent credit profile with the major credit bureaus; pump up the credit of the false identity by providing false information about that identity’s creditworthiness to those credit bureaus; and finally, run up large loans.

The scope of the criminal fraud enterprise required Butt and other conspirators to construct an elaborate network of false identities. Across the country, the conspirators maintained more than 1,800 “drop addresses,” including houses, apartments and post office boxes, which they used as the mailing addresses of the false identities.

Butt admitted that he helped obtain credit cards in the name of third parties – many of which were fictional – then directed the credit cards to be mailed to addresses controlled by members of the conspiracy. He also admitted they knew the cards would be used fraudulently at businesses.

The conspiracy charge to which Butt pleaded guilty carries a maximum potential penalty of 30 years in prison and a $1 million fine. Sentencing is scheduled for March 21, 2016.

U.S. Attorney Fishman praised special agents of the FBI’s Cyber Division, under the direction of Special Agent in Charge Richard M. Frankel in Newark; postal inspectors, under the direction of Inspector in Charge Maria L. Kelokates; and special agents of the U.S. Secret Service, under the direction of Special Agent in Charge Carl Agnelli, for the investigation leading to today’s sentencing. He also thanked the U.S. Social Security Administration for its role in the investigation.

The government is represented by Assistant U.S. Attorneys Daniel V. Shapiro and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit and Barbara Ward, Acting Chief of the office’s Asset Forfeiture and Money Laundering Unit in Newark.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.

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

NEWARK, N.J. – A former resident of Bergen County, New Jersey, today admitted that he conspired to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, U.S. Attorney Paul J. Fishman, Assistant Attorney General for National Security John P. Carlin, and Special Agent in Charge Richard M. Frankel of the FBI’s Newark Division announced.

Nader Saadeh, 20, of Rutherford, New Jersey, pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to an information charging him with one count of conspiring with others to provide material support to ISIL. He remains detained without bail.

“Nader Saadeh is the last of the three defendants charged in the District of New Jersey in this case to admit his role in trying to provide material support to a known terrorist organization,” U.S. Attorney Fishman said. “ISIL is intent on threatening the safety of Americans here and abroad, and we and our law enforcement partners are just as intent on stopping them.”

“Nader Saadeh conspired with others, including his brother, to travel to Syria to join ISIL,” Assistant Attorney General Carlin said.  “Counterterrorism is the National Security Division’s highest priority and we will continue to hold accountable those who seek to provide material support to designated foreign terrorist organizations.”

“Today in the District Court of New Jersey Nader Saadeh admitted he conspired to provide material to the Islamic State of Iraq and the Levant (ISIL),” FBI Special Agent in Charge Richard M. Frankel said. “He is one of three New Jersey men who conspired to travel overseas to join ISIL but were stopped by the outstanding work of the Newark FBI’s Joint Terrorism Task Force. I ask the citizens of New Jersey to remain vigilant and contact the FBI if they see or hear something suspicious.” 

According to documents filed in this and related cases and statements made in court:

Saadeh admitted that prior to his arrest on Aug. 10, 2015, by the FBI-Newark Joint Terrorism Task Force (JTTF), he planned to travel overseas to join ISIL along with others. Saadeh discussed his plans to join ISIL with his brother, Alaa Saadeh, Samuel Rahamin Topaz, Munther Omar Saleh, and Fareed Mumuni, and admitted that at various times each of them indicated that they wanted to join ISIL. Saadeh also admitted that he and these other men watched ISIL-related videos, some of which depicted the execution of individuals – both Muslim and non-Muslim – regarded by ISIL as enemies.

On May 5, 2015, Saadeh departed the United States with plans to travel overseas to join ISIL in furtherance of the conspiracy, according to his statements in court today. Saadeh admitted that once he reached ISIL-controlled territory he intended to fight on behalf of ISIL.  Saadeh further admitted that Saleh assisted him by giving him a contact who would facilitate his travel from Turkey to ISIL in Syria.

Saadeh admitted that prior to his departure from the United States Saleh showed him technical drawings for making homemade bombs. Saadeh admitted that Saleh and Mumuni discussed plans to carry out an attack in ISIL’s name using homemade bombs at locations in New York City, including Times Square, the World Trade Center, and Vaughn College of Aeronautics and Technology, in Queens, New York.

Saadeh admitted knowing that ISIL was a designated terrorist organization and was taking over territory overseas, expelling non-Muslims from their homes, and executing individuals who did not obey ISIL’s commands. 

The count of conspiracy to provide material support to a designated foreign terrorist organization carries a maximum potential penalty of 15 years in prison and a fine of $250,000.  Sentencing is scheduled for March 18, 2016.

Saadeh’s alleged conspirators are being prosecuted and are currently in federal custody.  On Sept. 9 and Oct. 29, 2015, respectively, Topaz and Alaa Saadeh pleaded guilty before Judge Wigenton to conspiring to provide material support to ISIL. Saleh and Mumuni have been indicted on terrorism-related charges brought by the U.S. Attorney’s Office for the Eastern District of New York.

The charges and allegations against Saleh and Mumuni are merely accusations, and they are presumed innocent unless and until proven guilty.

U.S. Attorney Fishman and Assistant Attorney General Carlin credited special agents of the FBI, under the direction of Special Agent in Charge Frankel in Newark, and the Newark JTTF with the investigation leading to today’s guilty plea.  The JTTF is made up of agents and officers from the U.S. Department of Homeland Security’s Homeland Security Investigations, Bergen County Prosecutor’s Office, Passaic County Prosecutor’s Office, New Jersey State Police, Paterson Police Department, and New York City Police Department, among other federal, state, and local law enforcement agencies.

The government is represented by Assistant U.S. Attorneys L. Judson Welle, Dennis C. Carletta, and Francisco J. Navarro of the U.S. Attorney’s Office National Security Unit in Newark, with assistance from Trial Attorney Robert Sander of the National Security Division’s Counterterrorism Section.

Defense counsel: Frank P. Arleo Esq., West Orange, New Jersey

A former resident of Bergen County, New Jersey, today admitted that he conspired to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, announced Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Richard M. Frankel of the FBI’s Newark Division.

Nader Saadeh, 20, a former resident of Rutherford, New Jersey, pleaded guilty before U.S. District Judge Susan D. Wigenton of the District of New Jersey in Newark to an information charging him with one count of conspiring with others to provide material support to ISIL. He remains detained without bail.

“Nader Saadeh conspired with others, including his brother, to travel to Syria to join ISIL,” said Assistant Attorney General Carlin.  “Counterterrorism is the National Security Division’s highest priority and we will continue to hold accountable those who seek to provide material support to designated foreign terrorist organizations.”

“Nader Saadeh is the last of the three defendants charged in the District of New Jersey in this case to admit his role in trying to provide material support to a known terrorist organization,” said U.S. Attorney Fishman. “ISIL is intent on threatening the safety of Americans here and abroad, and we and our law enforcement partners are just as intent on stopping them.”

“Today in the District Court of New Jersey Nader Saadeh admitted he conspired to provide material to the Islamic State of Iraq and the Levant (ISIL),” said Special Agent in Charge Frankel.  “He is one of three New Jersey men who conspired to travel overseas to join ISIL but were stopped by the outstanding work of the Newark FBI’s Joint Terrorism Task Force. I ask the citizens of New Jersey to remain vigilant and contact the FBI if they see or hear something suspicious.”

According to documents filed in this and related cases and statements made in court:

Saadeh admitted that prior to his arrest on Aug. 10, 2015, by the FBI Joint Terrorism Task Force (JTTF), he planned to travel overseas to join ISIL along with others.  Saadeh discussed his plans to join ISIL with his brother, Alaa Saadeh, Samuel Rahamin Topaz, Munther Omar Saleh and Fareed Mumuni, and admitted that at various times each of them indicated that they wanted to join ISIL.  Saadeh also admitted that he and these other men watched ISIL-related videos, some of which depicted the execution of individuals – both Muslim and non-Muslim – regarded by ISIL as enemies.

On May 5, 2015, Saadeh departed the United States with plans to travel overseas to join ISIL in furtherance of the conspiracy, according to his statements in court today.  Saadeh admitted that once he reached ISIL-controlled territory he intended to fight on behalf of ISIL.  Saadeh further admitted that Saleh assisted him by giving him a contact who would facilitate his travel from Turkey to ISIL in Syria.

Saadeh admitted that prior to his departure from the United States, Saleh showed him technical drawings for making homemade bombs.  Saadeh further told the court that Saleh and Mumuni discussed plans to carry out an attack in ISIL’s name using homemade bombs at locations in New York City, including Times Square, the World Trade Center and Vaughn College of Aeronautics and Technology, in Queens, New York.

Saadeh admitted knowing that ISIL was a designated foreign terrorist organization and was taking over territory overseas, expelling non-Muslims from their homes and executing individuals who did not obey ISIL’s commands. 

The count of conspiracy to provide material support to a designated foreign terrorist organization carries a maximum potential penalty of 15 years in prison and a fine of $250,000.  Sentencing is scheduled for March 18, 2016.

Saadeh’s alleged conspirators are being prosecuted and are currently in federal custody.  On Sept. 9 and Oct. 29, 2015, respectively, Topaz and Alaa Saadeh pleaded guilty before Judge Wigenton to conspiring to provide material support to ISIL.  Saleh and Mumuni have been indicted on terrorism-related charges brought by the U.S. Attorney’s Office of the Eastern District of New York.  The charges and allegations against Saleh and Mumuni are merely accusations, and they are presumed innocent unless and until proven guilty.

U.S. Attorney Fishman and Assistant Attorney General Carlin credited special agents of the FBI, under the direction of Special Agent in Charge Frankel in Newark, and the JTTF with the investigation leading to today’s guilty plea.  The JTTF is made up of agents and officers from the U.S. Department of Homeland Security’s Homeland Security Investigations, Bergen County Prosecutor’s Office, Passaic County Prosecutor’s Office, New Jersey State Police, Paterson Police Department, and New York City Police Department, among other federal, state, and local law enforcement agencies.

The government is represented by Assistant U.S. Attorneys L. Judson Welle, Dennis C. Carletta and Francisco J. Navarro of the District of New Jersey, with assistance from Trial Attorney Robert Sander of the National Security Division’s Counterterrorism Section.

Nader Saadeh Information

Nader Saadeh Plea Agreement

The former CEO and a managing partner of a now-defunct public charter flight company were indicted today on fraud and conspiracy charges for their alleged roles in a multimillion-dollar fraud scheme. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Todd A. Damiani of the U.S. Department of Transportation Office of Inspector General made the announcement.

Judy Tull, 70, of Denton, Texas, and Kay Ellison, 55, of Kentucky, were each charged with one count of conspiracy to commit wire fraud and bank fraud, seven counts of wire fraud and seven counts of bank fraud.  Tull and Ellison were the co-owners and, respectively, the CEO and managing partner of Southern Air & Tours, doing business as Myrtle Beach Direct Air & Tours (Direct Air), a public charter flight operator headquartered in Myrtle Beach, South Carolina.

The U.S. Department of Transportation’s regulations required charter operators to financially protect passengers either by posting a security or by keeping passenger payments for future flights in an escrow account with an approved bank.  According to the indictment, Direct Air maintained such an account at a bank in New Jersey.  Under the escrow agreement, the bank would not release these payments to Direct Air until Direct Air submitted a request for payment and a summary report detailing the completed flights and passengers, according to the indictment.

The indictment alleges that Tull, who handled Direct Air’s flight operations, and Ellison, who was involved in its customer reservations: made or caused others to make “ghost” reservations for fictitious passengers in Direct Air’s reservation system; submitted fraudulent documents, including request for payments and summary reports to the bank; requested payment for certain amounts on two occasions; and concealed the criminal activity and their participation in the criminal activity.

According to the indictment, in or around March 2012, Direct Air ceased operations and at that time, passengers had purchased tens of thousands of tickets for future travel, the funds for which should have been in the escrow account.  At that time, however, the indictment alleges that the escrow account was $30 million short.

An indictment is merely a formal accusation.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The U.S. Department of Transportation’s Office of Inspector General investigated the case.  Trial Attorney L. Rush Atkinson and Senior Litigation Counsel Carol L. Sipperly of the Criminal Division’s Fraud Section, and Deputy Chief Scott McBride and Assistant U.S. Attorney Andrew Kogan of the District of New Jersey are prosecuting the case.