Eastern District of New York
Press releases recorded for this federal judicial district.
Colombian Drug Kingpin Pleads Guilty to Running a Continuing Criminal Enterprise, Agrees to Pay $20 Million in ForfeitureRead the Press Release
Roman Narvaez Ansazoy, the founder and principal leader of an international drug trafficking enterprise based in Colombia, pleaded guilty today in federal court in Brooklyn to leading a continuing criminal enterprise as charged in a superseding indictment. When sentenced, Narvaez will face a mandatory minimum term of 20 years in prison and up to life in prison. As part of the plea agreement, Narvaez also agreed to pay a $20 million forfeiture money judgment. The proceeding was held before United States Magistrate Judge Robert M. Levy.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), Dermot F. Shea, Commissioner, New York City Police Department (NYPD), and Kevin P. Bruen, Acting Superintendent, New York State Police (NYSP), announced the guilty plea.
“With today’s guilty plea, the defendant will face significant punishment for the incalculable harm caused by poisoning our country with huge quantities of cocaine produced by his drug trafficking organization, while amassing substantial illicit wealth for himself,” stated Acting U.S. Attorney Lesko. “The United States is committed to cooperating with our international partners to dismantle illicit organizations like the Narvaez drug trafficking organization.” Mr. Lesko extended his grateful appreciation to the DEA’s offices in Bogota, the United States Marshals Service, the United States Department of State, the Department of Justice’s Office of International Affairs, the Colombian National Police, and the Government of Colombia.
“Ansazoy was admittedly a multi-ton supplier of cocaine with ties to narco-terrorist organizations. His arrest and plea are another victory for the Rule of Law and the victims of drug abuse, misuse, and overdoses. I applaud our global, state, local, and federal partners whose work resulted in today’s announcement,” stated DEA Special Agent-in-Charge Donovan.
“I commend the dedicated teamwork of the New York Organized Crime Drug Enforcement Strike Force which was instrumental in the takedown of this dangerous drug trafficker and bringing him to justice. This partnership of federal, state and local law enforcement continues to prevent dangerous narcotics making their way into our communities and helping to remove the violent criminals who profit at the expense of our communities. We are committed to working together with our law enforcement partners to keep these harmful narcotics off our streets and our neighborhoods safe,” stated NYSP Acting Superintendent Bruen.
As set forth in the superseding indictment and court filings, the drug trafficking organization led by Narvaez was responsible for producing multi-ton quantities of cocaine, on a monthly basis, in jungle laboratories in the Cauca region of Colombia. At its peak, the Narvaez drug trafficking organization was one of the top producers of cocaine in Colombia. After producing the cocaine, members of the Narvaez drug trafficking organization transported the cocaine to Colombian ports on the Pacific Ocean so that it could be exported from Colombia by sea. In transporting the cocaine from the jungle areas of Cauca to port cities, members and associates of the Narvaez drug trafficking organization paid money to paramilitary groups that controlled these areas in exchange for safe passage. One of the paramilitary groups that the Narvaez drug trafficking organization paid was the Revolutionary Armed Forces of Colombia (“FARC”), a designated Foreign Terrorist Organization. The vast majority of the cocaine that the Narvaez drug trafficking organization delivered was destined for the United States.
This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts and dismantles the highest-level money launderers and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Francisco J. Navarro and Gillian A. Kassner are in charge of the prosecution.
The Defendant:
ROMAN NARVAEZ ANSAZOY
Age: 46
Cauca, ColombiaE.D.N.Y. Docket No. 14-CR-048 (S-1) (BMC)
Three Current and Former NYPD Police Officers Charged with Towing Company Bribery SchemeRead the Press Release
A nine-count indictment was unsealed today in federal court in Brooklyn charging Heather Busch, Robert Hassett, and Robert Smith with five counts of using interstate facilities to commit bribery and two counts of conspiracy to violate the Travel Act. Smith is also charged with attempting to transport at least one kilogram of heroin and possessing a firearm during the commission of that crime. During the relevant period, Smith, Busch, and Hassett were New York City Police Department (“NYPD”) police officers assigned to the 105th Precinct in Queens. Smith retired from the NYPD in March 2020.
The defendants were arrested this morning and will be arraigned this afternoon before United States Chief Magistrate Judge Cheryl L. Pollak.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr. Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Dermot F. Shea, Commissioner, NYPD, announced the charges.
“As alleged, the defendants shamelessly violated their oaths of office and the public trust by trading their badges for cash payments,” stated Acting United States Attorney Lesko. “This Office will vigorously pursue corrupt public servants like these defendants, who exploited their positions as police officers for personal gain.” Mr. Lesko expressed his grateful appreciation to Internal Revenue Service-Criminal Investigation for their assistance with the case.
“Behavior like the type alleged today is a disgrace. It erodes public trust in law enforcement and tarnishes the reputations of the many thousands of officers who honorably serve our communities on a daily basis. The FBI and NYPD stand together on this – Our shared oath is to uphold the law and protect the public. Nobody is above the law, and we will not tolerate illegal behavior, especially among the ranks of sworn law enforcement officers,” stated FBI Assistant Director-in-Charge Sweeney.
“There is zero tolerance in the NYPD for corruption of any kind. Wherever it is alleged, our NYPD investigators, with our partners in the Federal Bureau of Investigation and the United States Attorney’s Office in the Eastern District of New York, work tirelessly to ensure it is punished to the fullest extent of the law,” stated NYPD Commissioner Shea.
The Tow Truck Scheme
Beginning in September 2016, NYPD Officers Smith and Hassett responded to automobile accidents by allegedly directing the damaged vehicles to a licensed tow trucking and automobile repair business (the “Business”) operated by an individual (the “Individual”), instead of using the NYPD’s Directed Accident Response Program (“DARP”), which requires NYPD officers to identify an appropriate licensed tow trucking business to respond to the scene of the automobile accident and remove the damaged vehicles from the scene. To ensure that no particular business receives favored treatment, NYPD officers are required to utilize a computer system that randomly selects a licensed tow trucking business. Smith and Hassett allegedly bypassed DARP and directed damaged vehicles directly to the Business in exchange for thousands of dollars in cash bribe payments. Smith and Hassett continued to participate in the scheme until at least June 2017, when they temporarily suspended their participation.
In November 2019, Smith resumed his participation in the scheme and continued to steer vehicles damaged in automobile accidents to the Business in exchange for cash. Beginning in January 2020, Smith discussed his plan to recruit Busch to participate in the scheme in advance of his retirement from the NYPD. In March 2020, Busch, at Smith’s invitation, met with Smith and the Individual and Busch agreed to participate in the scheme. Thereafter, Busch began steering vehicles damaged in automobile accidents to the Business in exchange for cash bribe payments, in lieu of utilizing DARP as required.
The Victim Database Scheme
Beginning in January 2020, Smith and Hassett obtained the names and identifying information of recent automobile accident victims from NYPD databases and provided that information to the Individual in exchange for cash. Smith and Hassett understood that the Individual would sell that information to physical therapy businesses and personal injury attorneys so that they could seek to solicit the automobile accident victims as customers.
On numerous occasions, Hassett accessed NYPD databases in violation of NYPD regulations for the purpose of obtaining the names and identifying information of victims of recent automobile accidents. Hassett then arranged for that information to be delivered to the Individual, sometimes through Smith. Upon receipt of that information, the Individual made payments in cash to Smith who, in turn, redistributed a portion of those payments to Hassett. In total, between January 2020 and March 2020, Smith and Hassett sold the names and identifying information of more than 100 victims to the Individual, in exchange for more than $7,000 in cash.
The Armed Drug Trafficking Scheme
Beginning in January 2020, Smith sought opportunities from the Individual to transport illegal narcotics, in exchange for payment, upon his retirement from the NYPD. In June 2020, Smith met with two individuals to discuss his interest in participating in a scheme to traffic drugs and told them he could carry a firearm and his retired NYPD identification while he was transporting the drugs. In July 2020, Smith met with an individual in Brooklyn and accepted a bag containing what Smith understood to be a kilogram of heroin. Smith then transported the bag to a location in Queens where he delivered it to another individual. Smith received a payment of approximately $1,200 in cash for his participation in the scheme.
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, Smith faces up to life imprisonment on the drug trafficking charge, up to 5 years’ imprisonment on each bribery count and a mandatory consecutive sentence of five years to life imprisonment on the firearm charge. Hassett and Busch face up to five years’ imprisonment on each bribery count, and the defendants each face up to five years’ imprisonment on the conspiracy to violate the Travel Act counts.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorneys Ryan C. Harris and Nicholas J. Moscow are in charge of the prosecution.
The Defendants:
HEATHER BUSCH
Age: 34
Massapequa, New YorkROBERT HASSETT
Age: 36
Farmingville, New YorkROBERT SMITH
Age: 44
Plainview, New YorkE.D.N.Y. Docket No. 21-CR-254 (RPK)
Felon Sentenced to 10 Years’ Imprisonment for Possessing Firearm Used in 2018 Shooting in QueensRead the Press Release
Earlier today in federal court in Brooklyn, Alonzo Shipp was sentenced to 10 years’ imprisonment by United States District Judge Rachel P. Kovner for being a felon in possession of a firearm that wounded an individual in Queens in 2018. Shipp was convicted in November 2020 following a six-day jury trial.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, announced the sentence.
“Today’s sentence is intended to serve notice to repeat offenders that wielding a loaded weapon and deliberately shooting a victim with it may result in a federal prosecution and lengthy prison sentence,” stated Acting U.S. Attorney Lesko. “This Office is committed to working with its law enforcement partners to reduce gun violence and make our communities safer.” Mr. Lesko expressed his grateful appreciation to the Bureau of Alcohol, Tobacco, Firearms and Explosives and the New York City Police Department (NYPD) for their outstanding investigative work on the case.
The evidence at trial proved that on July 20, 2018, Shipp, also known as “Pump,” shot the victim in the abdomen on 147th Street in South Jamaica. The victim collapsed two blocks away and called 911. Shipp then stood over him, holding his gun as the victim begged for his life. While on the line with the 911 operator, the victim spoke directly to Shipp, stating: ‘I don't want to die, Pump. Please, I don't want to die, Pump.” Shipp’s gun jammed, and he fled the scene, tossing the gun in a dumpster. Later, a civilian found the gun and contacted the NYPD. Ballistics examiners determined that a shell casing found where the victim was shot was consistent with being fired from the gun found in the dumpster. A search of Shipp’s Facebook account also revealed a message in which he admitted to a friend that he was on the run because of the shooting. The victim survived. Prior to possessing this firearm and shooting the victim, Shipp had been convicted of more than 20 offenses in Virginia, New Jersey and New York.
This case was brought as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. As part of the program, U.S. Attorneys’ Offices work in partnership with federal, state, local and tribal law enforcement and their local communities to develop effective, locally based strategies to reduce violent crime.
The government’s case is being prosecuted by Assistant United States Attorneys Philip Pilmar and Michael W. Gibaldi.
The Defendant:
ALONZO SHIPP (also known as “Pump”)
Age: 33
Richmond, VirginiaE.D.N.Y. Docket No. 19-CR-029 (RPK)
Acting United States Attorney Mark J. Lesko Recognizes National Police WeekRead the Press Release
BROOKLYN, NY— In honor of National Police Week, Acting United States Attorney Mark J. Lesko recognizes the service and sacrifice of federal, state, local, and Tribal law enforcement. This year, the week is observed Sunday, May 9, 2021, through Saturday, May 15, 2021.
“This week is a time to honor our law enforcement officers who have made the ultimate sacrifice in service to our nation,” stated Attorney General Merrick B. Garland. “I am constantly inspired by the extraordinary courage and dedication with which members of law enforcement act each day, putting their lives on the line to make our communities safer. To members of law enforcement and your families: we know that not a single day, nor a single week, is enough to recognize your service and sacrifice. On behalf of the entire Department of Justice, you have our unwavering support and eternal gratitude.”
“The United States Attorney’s Office for the Eastern District of New York is deeply grateful to the brave men and women of law enforcement who risk their lives every tour of duty to keep us safe, especially during the challenges posed over the past year by the pandemic,” stated Acting United States Attorney Lesko. “This week, and always, we will remember those who have sacrificed so much, including NYPD Highway Police Officer Anastasios Tsakos, who was killed by an alleged drunk driver on the Long Island Expressway this month, and Suffolk County Police Officer Christopher Racioppo, who was stabbed and nearly bled to death while heroically grappling with an alleged drunk driver in Patchogue in April. Please remember them and their families who have also suffered.”
In 1962, President Kennedy issued the first proclamation for Peace Officers Memorial Day and National Police Week to remember and honor law enforcement officers for their service and sacrifices. Peace Officers Memorial Day, which every year falls on May 15, specifically honors law enforcement officers killed or disabled in the line of duty.
Each year, during National Police Week, our nation celebrates the contributions of law enforcement from around the country, recognizing their hard work, dedication, loyalty and commitment to keeping our communities safe. This year the COVID-19 pandemic has highlighted law enforcement officers’ courage and unwavering devotion to the communities that they have sworn to serve.
During the Roll Call of Heroes, a ceremony coordinated by the Fraternal Order of Police (FOP), more than 300 officers will be honored. Based on data submitted to and analyzed by the National Law Enforcement Officer Memorial Fund (NLEOMF), of the law enforcement officers who died nationwide in the line of duty in 2020, nearly 60 percent succumbed to COVID-19. In the past year in the Eastern District of New York, NYPD Police Officer Anastasios Tsakos and New York State Trooper Joseph Gallagher died in the line of duty. At least 55 members of the NYPD, one member of the Sands Point Police Department and two members of the Suffolk County Police Department have died from the Coronavirus during the pandemic.
Additionally, according to statistics reported by the Federal Bureau of Investigation (FBI) through the Law Enforcement Officer Killed and Assaulted (LEOKA) Program, 46 law enforcement officers died as a result of felonious acts and 47 died in accidents in 2020. LEOKA statistics can be found on FBI’s Crime Data Explorer website.
The names of the 394 fallen officers who have been added in 2020 to the wall at the National Law Enforcement Officer Memorial will be read on Thursday, May 13, 2021, during a Virtual Candlelight Vigil, which will be livestreamed to the public at 8:00 p.m. EDT. The Police Week in-person public events, originally scheduled for May, have been rescheduled due to ongoing COVID-19 concerns to October 13-17, 2021. An in-person Candlelight Vigil event is scheduled for October 14, 2021.
Those who wish to view the Virtual Candlelight Vigil on May 13, 2021, can watch on the NLEOMF YouTube channel found at https://www.youtube.com/user/TheNLEOMF. The FOP’s Roll Call of Heroes can be viewed at www.fop.net. To view the schedule of virtual Police Week events in May, please view NLEOMF’s Police Week Flyer.
To learn more about National Police Week in-person events scheduled for October, please visit www.policeweek.org.
Maimonides Medical Center in Brooklyn Agrees to Settle Claims of Employment Discrimination by U.S. Army ReservistRead the Press Release
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, announced today a settlement with Maimonides Medical Center (Maimonides) in Brooklyn to resolve a lawsuit filed on behalf of Lieutenant Colonel Louis Rego, a U.S. Army Reservist and former Maimonides pharmacist. Maimonides is the largest hospital in Brooklyn and is an affiliate of Northwell Health, New York State’s largest health care provider and private employer. According to the United States’ complaint, Maimonides violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by terminating Lieutenant Colonel Rego’s employment in the Pharmacy Department after he was called up to active military duty status. USERRA prohibits discrimination in employment based on an individual’s prior service in the uniformed services; current service in the uniformed services; or intent to join the uniformed services. Under the terms of the settlement, Maimonides will pay Lieutenant Colonel Rego $195,000 to compensate him for lost wages and other damages. The settlement also requires Maimonides to provide annual training to hospital officials and human resources staff on the rights of service members under USERRA.
“Lieutenant Colonel Rego’s honorable service to his country cost him his job as a pharmacist, even though USERRA flatly prohibits employers from discriminating against employees on account of their military service,” stated Acting U.S. Attorney Lesko. “This Office is firmly committed to enforcing USERRA’s requirements and to holding employers like Maimonides accountable for their failure to comply.”
Rego was ordered to full-time active duty with the U.S. Army Reserves on July 17, 2017, when he was deployed for a tour of duty with U.S. Army Medical Materiel Agency at Fort Detrick in Maryland. Rego took a leave of absence from Maimonides in order to perform his military service. Rego returned to work at MMC on October 2, 2017. Just seven weeks later, on November 21, 2017, Rego was informed by a supervisor that his position was being eliminated and that he was being terminated as part of a reduction in force designed to save money at the hospital. Rego was the only employee terminated of the more than 100 employees in the Pharmacy Department. After Rego was fired, Maimonides promoted and gave pay raises to two mid-level managers in order to cover some of Rego’s duties, used non-managers to perform other duties and paid those non-managers overtime. Maimonides also hired new Pharmacy Department employees immediately before and after it fired Rego and had posted an opening for his job on a job search website one week before he was dismissed.
The claims resolved by the settlement are allegations only; there has been no determination of liability and Maimonides denies that it has violated USERRA.
The case is being handled by Assistant U.S. Attorney Sean P. Greene-Delgado of the Office’s Civil Division.
The protection of servicemembers’ rights is a priority for the U.S. Attorney’s Office. Individuals who believe they may have experienced discrimination, harassment or retaliation on account of their military service should contact the United States Attorney’s Office by emailing [email protected] or the Department of Justice Civil Rights Division by e-mailing [email protected]. Additional information about USERRA can be found on the Justice Department’s websites at https://www.justice.gov/crt/employment-litigation-section and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
E.D.N.Y. Docket No.: 21-CV-2448
Brooklyn Man Pleads Guilty to Sabotage of NYPD Vehicle and Covid-19 Related FraudRead the Press Release
Earlier today, in federal court in Brooklyn, Jeremy Trapp pleaded guilty before United States Magistrate Judge Cheryl L. Pollak to one count of destruction of a vehicle for his cutting a brake line of a New York City Police Department (“NYPD”) van during a time of anti-law enforcement protests in the summer of 2020, and one count of wire fraud in connection with the Economic Injury Disaster Loan (“EIDL”) program.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the guilty pleas.
“With his admissions of guilt today, Trapp will face the consequences of his flagrantly lawless and fraudulent conduct, first, in endangering the lives of police officers by sabotaging one of their vehicles, and second, by lining his pockets with stolen government funds intended to provide relief during the COVID-19 pandemic.” stated Acting United States Attorney Lesko. “This Office and its law enforcement partners will bring to justice any individual who deliberately jeopardizes the safety of the police and steals funds from government programs intended to help deserving recipients.”
As set forth in court filings and today’s proceeding, on July 17, 2020, Trapp crawled under a marked NYPD van parked near Fourth Avenue and 42nd Street in Sunset Park and partially severed a line that is part of the NYPD Van’s anti-lock braking system, which is similar in appearance to, and in the same location as, the NYPD vehicle’s main brake line. A malfunctioning anti-lock braking system adversely impacts a driver’s ability to stop and maintain control of a vehicle in an emergency.
In addition, in June 2020, Trapp submitted a fraudulent EIDL loan and grant application. The EIDL program provides qualifying small businesses with low-interest loans. The Coronavirus Aid, Relief and Economic Security (CARES) Act expanded EIDL to provide economic support to help offset the temporary loss of revenue experienced by businesses due to the COVID-19 pandemic. In the application, Trapp claimed that he was the sole proprietor of a car wash business located at his home address in Brooklyn, which, in reality, is a multi-unit residential building. Trapp further represented that he employed 10 individuals and that his gross revenue for the 12 months prior to the COVID-19 pandemic was $150,000. Based on Trapp’s false representations, the Small Business Administration approved a $42,500 loan and $10,000 grant to Trapp, and these funds were deposited into Trapp’s bank account.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States Attorneys Francisco J. Navarro and Sara K. Winik are in charge of the prosecution.
The Defendant:
JEREMY TRAPP
Age: 24
Brooklyn, New YorkE.D.N.Y. Docket Nos. 20-CR-308 and 20-CR-454
Two Queens Men Plead Guilty to Multi-Million Dollar Bank Fraud and Identity Theft ConspiracyRead the Press Release
Earlier today, in federal court in Brooklyn, Abed Ahmad and his brother Alaa Ahmad, pleaded guilty before United States District Judge Eric N. Vitaliano to bank fraud conspiracy and conspiracy to commit aggravated identity theft relating to a scheme to defraud JPMorgan Chase & Co. and its customers. Abed Ahmad also pleaded guilty to conspiracy to commit money laundering and one count of aggravated identity theft.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), John Grasso, Special Agent-in-Charge, Social Security Administration Office of Inspector General, New York Field Office (SSA-OIG), and Cyrus Vance, District Attorney, New York County District Attorney’s Office, announced the guilty pleas.
“The defendants abused their positions of trust at JP Morgan Chase in furtherance of a sordid scheme to steal the identities of elderly and deceased customers in order to misappropriate millions in funds from their accounts,” stated Acting United States Attorney Lesko. “This Office and its law enforcement partners will spare no effort in holding the defendants to account for their brazen fraud.” Mr. Lesko expressed his grateful appreciation to the New York City Police Department’s Intelligence Bureau, U.S. Department of Veterans Affairs Office of Inspector General, and the Social Security Administration Office of Inspector General, for their work on the case.
“Out of sheer greed, the defendants abused their positions to steal from arguably the most vulnerable of banking customers,” stated IRS-CI Special Agent-in-Charge Larsen. “Their admissions today will hopefully provide some measure of closure to all of those impacted by their crimes and put them on a path to full restoration.”
“This $7 million fraud scheme was perpetrated by bank employees that misused their access to sensitive information to victimize the bank and its customers. Today’s guilty pleas highlight that HSI and our law enforcement partners will continue to use every available resource to bring those who prey on innocent victims to justice,” stated HSI Special Agent-in-Charge Fitzhugh.
“These guilty pleas are the result of a true collaborative effort between Federal and local agencies to identify this massive fraud and hold accountable those who abused their authority for personal gain. These individuals stole these funds not only from private citizens and financial institutions, but also from the Social Security Administration,” stated SSA-OIG Special Agent-in-Charge Grasso. “I want to recognize our law enforcement partners, the Manhattan District Attorney’s Office, and the United States Attorney’s Office, for their efforts leading to today’s announcement.”
“These guilty pleas put high-tech cyber thieves on notice: the Manhattan D.A.’s Office has built the expertise, resources, and seamlessly collaborative partnerships to find you, hold you accountable, and secure justice for your victims,” stated District Attorney Vance. “I thank Acting U.S. Attorney Lesko and my Office’s Cybercrime and Identity Theft Bureau for their exceptional collaboration as we continue working together to protect our residents and markets from increasingly sophisticated, large-scale frauds. I also commend my Office’s Forensic Accounting and Financial Investigations Bureau; the NYPD’s Financial Crimes Task Force, Cybercrime and Identity Theft Task Force, and Intelligence Bureau; and our federal partners at IRS and HSI for this expert, joint investigation, as well as the Veterans Affairs OIG and Social Security Administration OIG for their important work.”
As set forth in court filings and today’s proceedings, between approximately 2012 and 2017, Abed and Alaa Ahmad, both of whom worked at branches of JPMorgan Chase & Co. in Queens, used their positions at the bank to target high-dollar value customer accounts of elderly or deceased individuals that had been dormant for a period of time. After identifying these accounts, Abed and Alaa Ahmad passed the account information, as well as the personal identifying information of the account holders, to another co-conspirator, Moustafa Ayoub. Ayoub used the account information to transfer nearly $7 million of victim funds from the JPMorgan Chase accounts to other financial accounts controlled by Ayoub.
Ayoub previously pleaded guilty in January 2021 before Judge Vitaliano to conspiracy to commit bank fraud, conspiracy to commit money laundering, conspiracy to commit aggravated identity theft and aggravated identity theft. He is awaiting sentencing.
The government’s case is being handled by the Office’s National Security and Cybercrime Section, with the assistance of the New York County District Attorney’s Office. Assistant United States Attorneys Josh Hafetz, Jonathan E. Algor and Special Assistant U.S. Attorney Beth F. Potashnick are in charge of the prosecution.
The Defendants:
ABED AHMAD
Age: 37
Boca Raton, FloridaE.D.N.Y. Docket No. 21-CR-095 (ENV)
ALAA AHMAD
Age: 34
Boca Raton, FloridaE.D.N.Y. Docket No. 21-CR-228 (ENV)
MOUSTAFA AYOUB
Age: 50
Queens, New YorkE.D.N.Y Docket No. 20-142 (ENV)
Queens Man Convicted of Threatening to Murder Members of CongressRead the Press Release
Earlier today, following a one-week trial before United States District Judge Pamela K. Chen, a federal jury in Brooklyn convicted Brendan Hunt, also known as “X-Ray Ultra,” of threatening to assault and murder members of the United States Congress to impede, interfere and intimidate with those members and to retaliate against them on account of their performance of their official duties. When sentenced on June 22, 2021, Hunt faces up to 10 years in prison.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the verdict.
“With today’s verdict, the defendant is now a convicted felon, not for his repugnant, racist rants, but because he threatened to attack and kill members of Congress to prevent them from carrying out their constitutional duties, and that is a federal crime,” stated Acting United States Attorney Lesko. “This Office will not tolerate threats of violence against public officials who are entrusted with upholding the Constitution.”
Mr. Lesko and Mr. Sweeney praised the outstanding work of the FBI’s New York Joint Terrorism Task Force on the case.
On January 8, 2021, two days after the violent assault on the U.S. Capitol in Washington, D.C., Hunt posted a video called “KILL YOUR SENATORS” that included the summary “Slaughter them all,” to BitChute, an Internet-based video sharing site. In the video, Hunt made additional threats, exhorting his viewers to violence and telling them that “[w]e need to go back to the U.S. Capitol when all of the Senators and a lot of the Representatives are back there, and this time we have to show up with our guns. And we need to slaughter these m-----f-----s.” Hunt also advocated for the violent overthrow of the federal government, claiming that “our government at this point is basically a handful of traitors . . . so what you need to do is take up arms, get to D.C., probably the inauguration . . . so called inauguration of this m-----f-----g communist Joe Biden . . . [T]hat’s probably the best time to do this, get your guns, show up to D.C., and literally just spray these m-----f-----s . . . put some bullets in their f------g heads.” Hunt stated, “If anybody has a gun, give me it, I’ll go there myself and shoot them and kill them . . . [W]e have to take out these Senators and then replace them with actual patriots. This is a [Zionist Occupied Government].”
The evidence at trial also showed that, between December 6, 2020 and January 8, 2021, Hunt made a series of posts on various social media websites in which he targeted Members of Congress, including Speaker of the House of Representatives Nancy Pelosi, Senate Majority Leader Charles Schumer, and Representative Alexandria Ocasio-Cortez. On December 6, 2020, Hunt posted two messages on his Facebook account, the first calling Speaker Pelosi, Senator Schumer, and Congresswoman Ocasio-Cortez “high-value target[s].” Hunt stated: “They really need to be put down. These commies will see death before they see us surrender.” A second message called on former President Donald Trump to hold a public execution of Pelosi, Schumer, and Ocasio-Cortez. “If you don't do it, the citizenry will. We’re not voting in another rigged election. Start up the firing squads, mow down these commies, and lets take America back,” Hunt stated.
The evidence included the defendant’s social media and video accounts, as well as videos, text messages, emails, and documents downloaded from the defendant’s electronic devices espousing white supremacist and anti-Semitic views, including Adolf Hitler’s “Mein Kampf” and accused mass murderer Dylan Roof’s manifesto.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States Attorneys David K. Kessler, Ian C. Richardson and Francisco J. Navarro are in charge of the prosecution.
The Defendant:
BRENDAN HUNT (also known as “X-Ray Ultra”)
Age: 37
Ridgewood, QueensE.D.N.Y. Docket No. 21-CR-086 (PKC)
Former Minister of Industry and Member of Parliament of Barbados Sentenced for Laundering BribesRead the Press Release
A former Minister of Industry and elected member of Parliament of Barbados was sentenced today to two years in prison for his role in a scheme to launder bribe payments from a Barbadian insurance company through bank accounts in New York.
Donville Inniss, 55, a U.S. lawful permanent resident who resided in Tampa, Florida, and Barbados, was convicted by a federal jury of two counts of money laundering and one count of conspiracy to commit money laundering on Jan. 16, 2020. According to the evidence presented at trial, in 2015 and 2016, Inniss took part in a scheme to launder into the United States approximately $36,000 in bribes that he had received from high-level executives of the Insurance Corporation of Barbados Limited (ICBL). In exchange for the bribes, Inniss leveraged his position as the Minister of Industry to enable ICBL to obtain two insurance contracts from the Barbados government to insure over $100 million worth of government property. To conceal the bribes, Inniss arranged to receive them through a U.S. bank account in the name of his friend’s dental company, which had an address in Elmont, New York.
“Donville Inniss engaged in a bribery and money laundering scheme to line his own pockets at the expense of the people of Barbados,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division. “International corruption undermines trust in governments, threatens our national security, and prevents the free market from functioning fairly for law-abiding people and companies. Today’s sentence sends a strong message that the Department is committed to prosecuting corrupt officials like Inniss who seek to use the U.S. financial system to hide their bribe payments.”
“In accepting bribes and laundering the payments through banks on Long Island, Inniss not only abused the public trust that was placed in him by the people of Barbados, he also stained the U.S. banking system with the proceeds of his corrupt scheme,” said Acting U.S. Attorney Mark J. Lesko of the Eastern District of New York. “The defendant’s sentence today reflects the seriousness of his crimes.”
In addition to the prison sentence, the court also ordered Inniss to pay $36,536.73 in forfeiture.
The FBI investigated the case.
Assistant Chief Gerald M. Moody Jr. of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Sylvia Shweder and David Gopstein for the Eastern District of New York prosecuted the case. Assistant U.S. Attorney Claire Kedeshian is handling the forfeiture aspects of the case.
The Justice Department’s Office of International Affairs also provided assistance in this matter. The department appreciates the cooperation provided by its law enforcement colleagues in Barbados during this investigation.
The Fraud Section is responsible for investigating and prosecuting all Foreign Corrupt Practices Act (FCPA) matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Former Member of Barbados Parliament Sentenced to 24 Months in Prison for Money Laundering SchemeRead the Press Release
Donville Inniss, a former member of Parliament in Barbados, was sentenced today in federal court in Brooklyn by United States District Court Judge Kiyo A. Matsumoto to 24 months in prison for laundering bribe payments from a Barbados-based insurance company through banks on Long Island. The Court also ordered Inniss to pay $36,536.73 in forfeiture. Inniss was convicted in January 2020, following a one-week trial.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.
“In accepting bribes and laundering the payments through banks on Long Island, Inniss not only abused the public trust that was placed in him by the people of Barbados, he also stained the U.S. banking system with the proceeds of his corrupt scheme,” stated Acting U.S. Attorney Lesko. “The defendant’s sentence today reflects the seriousness of his crimes.”
“Donville Inniss engaged in a bribery and money laundering scheme to line his own pockets at the expense of the people of Barbados,” stated Acting Assistant Attorney General McQuaid. “International corruption undermines trust in governments, threatens our national security, and prevents the free market from functioning fairly for law-abiding people and companies. Today’s sentence sends a strong message that the Department is committed to prosecuting corrupt officials like Inniss who seek to use the U.S. financial system to hide their bribe payments.”
Between August 2015 and April 2016, Inniss accepted approximately $36,000 in bribes from high-level executives of Insurance Corporation of Barbados Limited (ICBL) and laundered that money through banks on Long Island. In exchange for the bribes, Inniss leveraged his position as the Minister of Industry, International Business, Commerce and Small Business Development of Barbados to enable ICBL to obtain two contracts from the Barbados government to insure over $100 million worth of government property. Inniss concealed the bribes by arranging to receive them through a Long Island bank account in the name of a friend’s dental company in Elmont, New York. ICBL executives transferred the funds to the dental company using an invoice falsely claiming that the payments were for consulting services. During the time of the charged conspiracy, Inniss was a legal permanent resident of the United States residing in Tampa, Florida and Barbados.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Sylvia Shweder and David Gopstein, and Assistant Chief Gerald M. Moody, Jr., of the Department of Justice Criminal Division’s Fraud Section are in charge of the prosecution. Assistant United States Attorney Claire Kedeshian of the Office’s Asset Forfeiture Unit is handling forfeiture matters.
The Defendant:
DONVILLE INNISS
Age: 55
Tampa, Florida and BarbadosE.D.N.Y. Docket No. 18-134 (S-2) (KAM)
Man Pleads Guilty to Attempting to Provide Material Support to Foreign Terrorist OrganizationsRead the Press Release
A New York man pleaded guilty to attempting to provide material support and resources to the Islamic State of Iraq and al-Sham (ISIS) and the al-Nusrah Front, both designated by the U.S. Department of State as foreign terrorist organizations.
According to court documents, Elvis Redzepagic, 30, of Commack, New York, began communicating in early 2015 with an individual he believed to be both the commander of a battalion in Syria and a member of ISIS or the al-Nusrah Front, and made attempts to join that individual’s battalion to engage in violent jihad. In July 2015, Redzepagic traveled to Turkey and made multiple unsuccessful attempts to cross the border into Syria. Unable to enter Syria from Turkey, Redzepagic traveled to Jordan in August 2016, but was stopped and deported by Jordanian authorities.
“Redzepagic has admitted to travelling overseas to try to join and provide material support to ISIS and the al-Nusrah Front, two foreign terrorist organizations that were engaged in fighting in Syria,” said Assistant Attorney General John C. Demers for the Justice Department’s National Security Division. “The threat from these terrorist organizations has not ended, and we will continue to work to stem the flow of fighters and bring to justice those who provide material support to these groups.”
“Redzepagic, a Long Island resident, admitted that he attempted to travel to Syria on several occasions to wage jihad on behalf of ISIS and other organizations dedicated to violence and mass destruction,” said Acting U.S. Attorney Mark Lesko for the Eastern District of New York. “This Office is committed to preventing the spread of terrorism by stopping individuals like the defendant in their tracks and prosecuting them before they are able to harm the United States and its allies.” Acting U.S. Attorney Lesko praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies.
In Facebook messages from October 2015, Redzepagic explained that “jihad” is when “you fight for the sake of God” and “die for the sake of Allah.” Redzepagic stated that he traveled to Turkey to “perform Jihad and join Jabhat Al-Nusra.” He predicted, “there will come a time where people will only know to say Allahu Akbar.” In subsequent interviews with law enforcement, Redzepagic admitted that at the time he attempted to enter Syria, he was prepared to strap a bomb to himself.
Redzepagic pleaded guilty to attempting to provide material support to a designated foreign terrorist organization. If convicted, he faces up to 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI’s New York Field Office is investigating the case.
Trial Attorney Stephanie Sweeten of the National Security Division’s Counterterrorism Section and Assistant U.S. Attorneys Saritha Komatireddy and Artie McConnell are prosecuting the case.
Long Island Man Pleads Guilty to Attempting to Provide Material Support to TerroristsRead the Press Release
Earlier today, in federal court in Central Islip, Elvis Redzepagic pleaded guilty to attempting to provide material support and resources to the Islamic State of Iraq and al-Sham (ISIS) and the al-Nusrah Front, both having been designated by the U.S. Secretary of State as foreign terrorist organizations. When sentenced, Redzepagic faces up to 20 years in prison. The guilty plea was entered before United States Magistrate Judge A. Kathleen Tomlinson.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, John C. Demers, Assistant Attorney General for National Security, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty plea.
“Redzepagic, a Long Island resident, admitted that he attempted to travel to Syria on several occasions to wage jihad on behalf of ISIS and other organizations dedicated to violence and mass destruction,” stated Acting United States Attorney Lesko. “This Office is committed to preventing the spread of terrorism by stopping individuals like the defendant in their tracks and prosecuting them before they are able to harm the United States and its allies.” Mr. Lesko praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies.
Mr. Lesko also thanked the Justice Department’s Office of International Affairs, the FBI Legal Attaché Office for Serbia, and the Government of Montenegro Ministry of Justice, Prosecutor’s Office, and Special Police Unit for their assistance in this case.
“Redzepagic has admitted to travelling overseas to try to join and provide material support to ISIS and the al-Nusrah Front, two foreign terrorist organizations that were engaged in fighting in Syria,” stated Assistant Attorney General Demers. “The threat from these terrorist organizations has not ended, and we will continue to work to stem the flow of fighters and bring to justice those who provide material support to these groups.”
In early 2015, Redzepagic began communicating with an individual he believed to be both the commander of a battalion in Syria and a member of ISIS or the al-Nusrah Front, and made attempts to join that individual’s battalion to engage in violent jihad. In July 2015, Redzepagic traveled to Turkey and made multiple unsuccessful attempts to cross the border into Syria. Unable to enter Syria from Turkey, Redzepagic traveled to Jordan in August 2016, but was stopped and deported by Jordanian authorities.
In Facebook messages from October 2015, Redzepagic explained that “jihad” is when “you fight for the sake of God” and “die for the sake of Allah.” Redzepagic stated that he traveled to Turkey to “perform Jihad and join Jabhat Al-Nusra.” He predicted, “there will come a time where people will only know to say Allahu Akbar.” In subsequent interviews with law enforcement, Redzepagic admitted that at the time he attempted to enter Syria, he was prepared to strap a bomb to himself.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States Attorneys Saritha Komatireddy and Artie McConnell are in charge of the prosecution, with assistance provided by Trial Attorney Stephanie Sweeten of the National Security Division’s Counterterrorism Section.
The Defendant:
ELVIS REDZEPAGIC
Age: 30
Commack, New YorkE.D.N.Y. Docket No. 17-CR-228 (DRH)
Queens Pharmacy Owner Pleads Guilty to Health Care FraudRead the Press Release
BROOKLYN, NY – Earlier today, in federal court in Brooklyn, Aleah Mohammed pleaded guilty before United States District Judge Eric N. Vitaliano to mail fraud, health care fraud, and conspiracy to commit health care fraud stemming from multiple schemes to defraud health care programs, including obtaining more than $6.5 million from Medicare Part D Plans and Medicaid drug plans. When sentenced, the defendant faces up to 40 years’ imprisonment. As part of her plea agreement, Mohammed has agreed to forfeit $5.1 million and pay over $6.5 million in restitution.
Mark. J. Lesko, Acting United States Attorney for the Eastern District of New York; Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG); announced the guilty plea.
“With today’s guilty plea, Mohammed is held accountable for stealing millions of dollars from the taxpayer-funded Medicare and Medicaid programs to line her own pockets,” stated Acting U.S. Attorney Lesko. “This Office and our law enforcement partners are committed to safeguarding these vital health care programs and recovering ill-gotten proceeds from corrupt healthcare operators.”
“In attempting to finance a lavish lifestyle, Mohammed stole millions of dollars intended to provide medical and health services to the elder population, individuals with disabilities, and other HHS beneficiaries,” stated HHS-OIG Special Agent-in-Charge Lampert. “HHS-OIG, in collaboration with our law enforcement partners, is boldly committed to investigating illegal acts that target Federal health care programs and bringing the fraudsters to justice.”
According to court filings, Mohammed, 36, of Queens, New York, was an owner and operator of Superdrugs Inc., Superdrugs I Inc., Superdrugs II Inc., S&A Superdrugs II Inc. and Village Stardrugs Inc. From approximately May 2015 to January 2018 and December 2018 to March 2020, Mohammed submitted fraudulent claims to Medicare and Medicaid, for reimbursement for prescription drugs that were not dispensed, prescribed as claimed, or medically necessary, or that were purportedly dispensed during a time when Village Stardrugs was no longer registered with the State of New York. The fraudulent claims included claims for prescription drugs for the treatment of the human immunodeficiency virus (HIV). Mohammed used the proceeds of the scheme, among other things, to purchase luxury items such a Porsche and jewelry.
The FBI and HHS-OIG are investigating the case, which was brought as part of the Medicare Fraud Strike Force under the supervision by the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section. Trial Attorney Andrew Estes of the Fraud Section is in charge of the prosecution.
The Defendant:
ALEAH MOHAMMED
Age: 36
Queens, New YorkE.D.N.Y Docket Nos: 18-CR-509 and 20-CR-581 (ENV)
Pharmacy Owner Pleads Guilty to $6.5 million Health Care Fraud SchemesRead the Press Release
A New York woman pleaded guilty today to perpetrating schemes to defraud health care programs, including obtaining more than $6.5 million from Medicare Part D Plans and Medicaid drug plans.
According to court documents, Aleah Mohammed, 36, of Queens, was an owner and operator of five pharmacies: Superdrugs Inc., Superdrugs I Inc., Superdrugs II Inc., S&A Superdrugs II Inc. and Village Stardrugs Inc. Between 2018 and 2020, the defendant engaged in schemes that defrauded health care programs, including Medicare and Medicaid, through claims for prescription drugs that were not dispensed, not prescribed as claimed, not medically necessary, or that were purportedly dispensed during a time when the pharmacy was no longer registered with the State of New York. The fraudulent claims included, among others, claims for prescription drugs for the treatment of the human immunodeficiency virus (HIV). Mohammed admitted to using the proceeds of the scheme, among other things, to purchase luxury items such a Porsche and jewelry.
Mohammed pleaded guilty to mail fraud, health care fraud, and conspiracy to commit health care fraud. She is scheduled to be sentenced at a later date and faces a maximum penalty of 40 years in prison. Mohammed is required to pay $6.5 million in restitution to Medicare and Medicaid, and, as part of her plea agreement, agreed to a $5.1 million forfeiture money judgment. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Mark J. Lesko of the Eastern District of New York; Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office; and Special Agent in Charge Scott J. Lampert of the Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
The FBI and HHS-OIG are investigating the case.
Trial Attorney Andrew Estes of the Criminal Division’s Fraud Section is prosecuting the case.
Three Brooklyn Residents Charged in Money Laundering Scheme with Stealing over $30 Million from Foreign BanksRead the Press Release
An indictment was unsealed earlier today in federal court in Brooklyn charging Val Cooper, Alex Levin and Garri Smith with money laundering conspiracy and conspiracy to violate the Travel Act in connection with their roles in a scheme to steal over $30 million in cash and other valuables from safe deposit boxes located at banks abroad, primarily in Eastern Europe. The defendants were arrested this morning and will be arraigned this afternoon before United States Magistrate Judge Robert M. Levy.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York Office (HSI); and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the arrests and charges.
“The defendants and their co-conspirators were allegedly part of a sophisticated network of criminals that used high-tech camera equipment to steal millions in cash and other valuables from victims who had tried to protect their property by using safe deposit boxes in foreign countries, and they then laundered the proceeds of their scheme through the United States financial system,” stated Acting United States Attorney Lesko. “This Office will hold accountable anyone who uses our financial system to commit fraud and theft here or abroad.” Mr. Lesko expressed his grateful appreciation to the European Union Agency for Law Enforcement Cooperation (Europol), and the governments of Azerbaijan, Latvia, Moldova, North Macedonia, Ukraine and Uzbekistan for their assistance in the investigation.
“The crimes we allege in this indictment read like something straight out of Hollywood fiction,” stated FBI Assistant Director-in-Charge Sweeney. “The thieves used sophisticated tools to thwart security systems at foreign banks and tried to cover their tracks by laundering money through U.S. banks. However, thanks to the outstanding work of our FBI Eurasian Organized Crime Task Force and our international partners, these criminals now face real federal charges and the possibility of real time in federal prison.”
“Using state of the art technology, these modern-day bank robbers allegedly exploited small, unsophisticated banks to gain access to safety deposit boxes and looted $30 million in other people’s cash and valuables. Cooper, Levin and Smith then used bank accounts located in the United States, to launder the proceeds of their illegal activities,” stated HSI Special Agent-in-Charge Fitzhugh. “HSI is proud to work along-side our domestic and international law enforcement partners, including the United States Attorney’s Office, EDNY, and will utilize our unique and broad authorities to bring to justice those who engage in criminal activity for their own financial gain. These defendants must now face our system of justice and answer to the allegations contained in the indictment.”
As set forth in the indictment and court filings, between March 2015 and October 2019, the defendants and their co-conspirators allegedly stole over $30 million in cash and other valuables from safe deposit boxes at banks in multiple foreign countries, including the Ukraine, Russia, North Macedonia, Moldova, Latvia, Uzbekistan and Azerbaijan. The co-conspirators targeted foreign banks that appeared to lack security features, including video surveillance cameras in certain areas. After a bank was selected, they rented safe deposit boxes at the location by posing as customers. The co-conspirators entered the safe deposit box rooms of the targeted banks and used sophisticated camera equipment, including borescopes that are typically used in medical procedures, to photograph the insides of locks of safe deposit boxes belonging to other individuals. Another co-conspirator used these photographs to create duplicate keys, and then other co-conspirators used the duplicate keys to open the victim safe deposit boxes in order to steal the contents, including currency, gold bars, jewelry and other property.
Cooper, the leader of the network, directed others, received stolen property and used his bank accounts in the United States to launder proceeds from the scheme. Levin used his bank accounts in the United States to purchase camera equipment used in some of the thefts and also to launder the proceeds. Smith committed some of the safe deposit box thefts himself, flying from the United States to foreign countries to steal property from victim safe deposit boxes at the targeted banks.
Earlier today, agents executed a search warrant at, among other places, Cooper’s residence. There, agents discovered, among other things, safe deposit box keys with no numbering on them, cash, jewelry and high-end handbags. Agents also searched a storage unit in Brooklyn controlled by Cooper and found a borescope and a safe deposit box lock.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of money laundering conspiracy, the defendants face up to 20 years’ imprisonment.
This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts and dismantles the highest-level money launderers and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Keith D. Edelman, Andrey Spektor and Joy Lurinsky are in charge of the prosecution, assisted by Assistant United States Attorney Brian D. Morris of the Office’s Asset Forfeiture Unit.
The Defendants:
VAL COOPER (also known as “Val Konon” and “Valeriy Kononenko”)
Age: 56
Brooklyn, New YorkALEX LEVIN
Age: 52
Brooklyn, New YorkGARRI SMITH (also known as “Igor Berk” and “Igor Berkovich”)
Age: 49
Brooklyn, New YorkE.D.N.Y. Docket No. 21-CR-208 (LDH)
Brooklyn Man Charged with Molotov Cocktail Attack on NYPD OfficersRead the Press Release
A criminal complaint was filed today in federal court in Brooklyn charging Lionel Virgile with attempted arson by allegedly using an improvised incendiary device commonly known as a “Molotov Cocktail” to damage and destroy a New York City Police Department (NYPD) vehicle while police officers were inside the vehicle. Virgile was arrested on Saturday and made his initial appearance this afternoon before United States Magistrate Judge Robert M. Levy. The defendant was ordered detained pending trial.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Dermot F. Shea, Commissioner, NYPD, announced the arrest and charges.
“As alleged, the defendant deliberately sought to severely injure an NYPD police officer by throwing bleach at his eyes and to ignite an NYPD vehicle with officers inside by hurling a lit Molotov cocktail at it," stated Acting United States Attorney Lesko. “This Office simply will not tolerate the intentional infliction of physical harm on NYPD officers while they are working to protect our communities.” Mr. Lesko thanked the Kings County District Attorney’s Office for their assistance with the investigation.
“Virgile’s alleged attack on members of the NYPD is yet another reminder of the danger law enforcement officers face on a daily basis—and today’s charges should serve as a reminder to all that this type of behavior will be met with a swift response. As Virgile has now learned, the federal charge he faces carries the potential for a lengthy federal prison sentence. The NYPD’s quick response in neutralizing this threat to the public is a testament to its professionalism and dedication to keeping our city safe,” stated FBI Assistant Director-in-Charge Sweeney.
“Attacks on uniformed police officers, as alleged in this federal complaint, are not only crimes against our sworn public servants but are unacceptable assaults on the fabric of society. I commend our NYPD officers and our partners in the FBI and the United States Attorney’s Office in the Eastern District of New York for working closely to ensure that Lionel Virgile, the accused assailant in this case, faces justice,” stated NYPD Commissioner Shea.
According to the complaint, in the morning of April 17, 2021, NYPD officers in a marked vehicle observed Virgile drive his Lincoln Town Car through a steady red traffic light at the intersection of Clarendon Road and East 45th Street in East Flatbush. When the officers approached Virgile’s car, he opened the driver side door and threw a cup containing a chemical substance in one of the NYPD officer’s eyes that was later determined to be bleach. The officer sustained chemical burns on his face and has since been discharged from the hospital. Virgile fled in the Lincoln Town car and was pursued by officers in another NYPD vehicle. Approximately 10 minutes later, Virgile pulled over, exited his Lincoln Town Car and threw a lit Molotov cocktail at the NYPD vehicle pursuing him. The Molotov cocktail struck the windshield of the NYPD vehicle and shattered on the sidewalk. The Molotov cocktail consisted of a glass beverage bottle containing gasoline and a cloth wick. The defendant subsequently crashed into a parked car on Snyder Avenue and was apprehended by the NYPD. Five additional Molotov cocktails and a red jerry can were found in Virgile’s Lincoln Town Car.
The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Virgile faces up to 20 years’ imprisonment.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States Attorneys Sara K. Winik and Joy Lurinsky are in charge of the prosecution.
The Defendant:
LIONEL VIRGILE
Age: 44
Brooklyn, New YorkE.D.N.Y. Docket No. 21-MJ-483
United States District Court Orders Forfeiture of Real Estate Purchased by Mexican Cartel Leader Rafael Caro Quintero with Proceeds of His Drug Trafficking OrganizationRead the Press Release
Today, in federal court in Brooklyn, United States District Judge Eric N. Vitaliano entered a Default Judgment and Partial Decree of Forfeiture authorizing the seizure and forfeiture of five pieces of real property located in and around Guadalajara, Mexico. These properties, described in the civil forfeiture complaint filed on October 11, 2019, were purchased by Rafael Caro Quintero (“RCQ”) with drug proceeds generated by the Caro Quintero drug trafficking organization, a faction of the Mexican organized crime syndicate known as the Sinaloa Cartel. The United States will seek to enforce this Order through diplomatic channels.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, and Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), announced the District Court’s Forfeiture Order.
“Today’s order is another step forward in our relentless pursuit of justice for the victims of Caro Quintero’s brutal drug trafficking organization and especially for DEA Special Agent Enrique Camarena, who was tragically murdered at the hands of Caro Quintero’s crime syndicate,” stated Acting United States Attorney Lesko. “In forfeiting these drug-tainted properties, we join with the Mexican government and our law enforcement partners at the DEA to commemorate Special Agent Camarena’s life and remember his ultimate sacrifice.” Mr. Lesko extended his grateful appreciation to the DEA New York Division Organized Crime and Drug Enforcement Strike Force, as well as the DEA Raleigh Resident Office and DEA Mexico City Country Office for their assistance with the case.
“Rafael Caro Quintero is one of the world’s most wanted criminals for years of drug trafficking and his role in killing one of our own, DEA Special Agent Enrique Kiki Camarena,” stated DEA Special Agent-in-Charge Donovan. “The unprecedented seizures and forfeitures announced today exemplify our resolve and perseverance in bringing RCQ to justice to face the consequences of his alleged crimes. As we continue to safeguard the American public from drug trafficking and the dangers associated, we will never forget Special Agent Camarena’s courage and sacrifice.”
According to the forfeiture complaint, between January 1980 and March 2015, the Caro Quintero drug trafficking organization was involved in the transportation of multi-ton quantities of marijuana, multi-kilogram quantities of methamphetamine and multi-kilogram quantities of cocaine from Mexico to the United States. As part of its investigation, law enforcement learned that Caro Quintero used proceeds from the sale of illegal narcotics to purchase real estate in and around his home area of Guadalajara. Caro Quintero allegedly placed the properties in the names of family members to conceal his ownership of the properties and use of illegal proceeds to purchase them, and to prevent Mexican authorities from seizing them.
Caro Quintero is a fugitive from several indictments in the United States and is on the FBI’s list of “Ten Most Wanted” criminals. In April 2018, an indictment was unsealed in federal court in Brooklyn charging Caro Quintero with leading a continuing criminal enterprise and other crimes, including his participation in the 1985 kidnapping, torture and murder of DEA Special Agent Enrique “Kiki” Camarena. A $20 million reward provided by the United States Department of State is being offered for information leading to his capture.
The government’s forfeiture case is being prosecuted by Assistant United States Attorneys Brendan G. King and Patricia E. Notopoulos.
E.D.N.Y. Docket No. 19-CV-5748 (ENV)
Former Chief Executive Officer of Publicly Traded Petrochemical Company Pleads Guilty to Foreign Bribery and Securities Law ViolationsRead the Press Release
A Brazilian national who previously served as a chief executive officer (CEO) of Braskem S.A. (Braskem), a publicly traded Brazilian petrochemical company, pleaded guilty today to conspiring to divert hundreds of millions of dollars from Braskem into a secret slush fund and to pay bribes to government officials, political parties, and others in Brazil to obtain and retain business.
According to court documents, between approximately 2002 and 2014, Jose Carlos Grubisich, 64, a citizen of Brazil — who served as the CEO and a member of the board of directors of Braskem as well as in various capacities for Braskem’s parent company, Odebrecht S.A. (Odebrecht) — engaged in a scheme to bribe Brazilian government officials in violation of the Foreign Corrupt Practices Act (FCPA). As part of the scheme, Grubisich and his co-conspirators diverted approximately $250 million from Braskem into a secret slush fund, which Grubisich and others had generated through fraudulent contracts and offshore shell companies secretly controlled by Braskem.
Grubisich admitted that while CEO of Braskem, he agreed to pay bribes to Brazilian government officials to ensure Braskem’s retention of a contract for a significant petrochemical project from Petroleo Brasileiro S.A. (Petrobras), Brazil’s state-owned and state-controlled oil company. Grubisich also admitted that, as Braskem’s CEO, he falsified Braskem’s books and records by falsely recording the payments to Braskem’s offshore shell companies as payments for legitimate services. Grubisich also signed false Sarbanes-Oxley certifications submitted to the U.S. Securities and Exchange Commission (SEC) that, among other things, attested that Braskem’s annual reports fairly and accurately represented Braskem’s financial condition, and that Grubisich, as Braskem’s principal officer, had disclosed all fraudulent conduct by Braskem’s management and other employees with control over Braskem’s financial reporting.
“As CEO of a publicly traded company, Grubisich and other senior executives at Braskem engaged in a large-scale, sophisticated international bribery and fraud scheme and then lied to U.S. shareholders and authorities to conceal their criminal conduct,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division. “Today’s guilty plea demonstrates the Department’s commitment to holding individuals accountable for corrupt and fraudulent conduct, including those at the highest corporate echelons.”
“Grubisich abused his position of trust as CEO of Braskem to both facilitate and conceal the payment of millions of dollars in bribes so that Braskem could increase its profits and its senior executives — including Grubisich himself — could personally benefit,” said Acting U.S. Attorney Mark J. Lesko of the Eastern District of New York. “This office is committed to the prosecution of corrupt gatekeepers, including officers and directors of public companies, who, like Grubisich, use the United States’ financial system to commit crimes.”
Grubisich pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the books and records provision of the FCPA and to fail to accurately certify Braskem’s financial reports. Grubisich has also agreed to pay approximately $2.2 million in forfeiture. He is scheduled to be sentenced on Aug. 5, and faces a maximum penalty of 10 years in prison. Any sentence will be determined after considering the U.S. Sentencing Guidelines and other statutory factors.
In December 2016, Braskem and Odebrecht each pleaded guilty in the Eastern District of New York to separate one-count criminal informations charging them with conspiracy to violate the anti-bribery provisions of the FCPA. Braskem settled with the SEC in related proceedings on the same day.
The FBI’s International Corruption squad in New York is investigating the case. The Justice Department’s Office of International Affairs also provided substantial assistance. The department also expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement, Ministério Público Federal and the Departamento de Polícia Federal in Brazil, the Office of the Attorney General in Switzerland, the Swiss Federal Office of Justice, and the governments of Portugal, Andorra, United Kingdom, and Panama.
Assistant Chief Lorinda Laryea and Trial Attorney Leila Babaeva of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Julia Nestor and Alixandra Smith of the Eastern District of New York are prosecuting the case, with Assistant U.S. Attorney Laura Mantell of the Eastern District’s Civil Division handling forfeiture matters.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Former CEO of Braskem Pleads Guilty to BriberyRead the Press Release
BROOKLYN, NY – Earlier today, in federal court in Brooklyn, Jose Carlos Grubisich, the former chief executive officer of Braskem S.A. (Braskem), a publicly traded Brazilian petrochemical company, pleaded guilty before United States District Judge Raymond J. Dearie to (1) conspiring to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and (2) conspiring to violate the books and records provisions of the FCPA in failing to accurately certify Braskem’s financial reports. Grubisich and his co-conspirators engaged in a massive bribery scheme involving Braskem and its parent company Odebrecht S.A. (Odebrecht), in which hundreds of millions of dollars were diverted from Braskem to a secret slush fund that was used, in part, to pay bribes to government officials, political parties and others in Brazil to obtain and retain business for Braskem. Under the plea agreement, Grubisich has agreed to pay approximately $2.2 million in forfeiture.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty plea.
“Grubisich abused his position of trust as CEO of Braskem to both facilitate and conceal the payment of millions of dollars in bribes so that Braskem could increase its profits and its senior executives — including Grubisich himself — could personally benefit,” stated Acting United States Attorney Lesko. “This Office is committed to the prosecution of corrupt gatekeepers, including officers and directors of public companies, who, like Grubisich, use the United States’ financial system to commit crimes.”
“As CEO of a publicly traded company, Grubisich and other senior executives at Braskem engaged in a large-scale, sophisticated international bribery and fraud scheme and then lied to U.S. shareholders and authorities to conceal their criminal conduct,” stated Acting Assistant Attorney General McQuaid. “Today’s guilty plea demonstrates the Department’s commitment to holding individuals accountable for corrupt and fraudulent conduct, including those at the highest corporate echelons.”
As set forth in court filings and at today’s proceedings, between approximately 2002 and 2014, Grubisich, a citizen of Brazil, who served as the CEO and a member of the Board of Directors of Braskem as well as in various capacities for Odebrecht— engaged in a scheme to bribe Brazilian government officials in violation of the FCPA. As part of the scheme, Grubisich and his co-conspirators diverted approximately $250 million from Braskem into a secret slush fund which Grubisich and others had set up through fraudulent contracts and offshore shell companies that were secretly controlled by Braskem. At the time of the conspiracy, Braskem’s American Depositary Receipts were publicly traded on the New York Stock Exchange.
Grubisich admitted that, while CEO of Braskem, he agreed to pay bribes to Brazilian government officials to ensure Braskem’s retention of a contract for a significant petrochemical project from Petroleo Brasileiro S.A.–Petrobras, Brazil’s state-owned and state-controlled oil company. Grubisich further admitted that while CEO of Braskem, he agreed to falsify Braskem’s books and records by causing Braskem to falsely record the payments to offshore shell companies controlled by Braskem as payments for legitimate services. Grubisich signed false Sarbanes-Oxley certifications submitted to the United States Securities and Exchange Commission (SEC) that, among other things, attested that Braskem’s annual reports fairly and accurately represented Braskem’s financial condition, and that Grubisich, as Braskem’s principal officer, had disclosed all fraudulent conduct by Braskem’s management and other employees with control over Braskem’s financial reporting.
In December 2016, Braskem and Odebrecht pleaded guilty in the Eastern District of New York to one-count criminal informations charging each with conspiracy to violate the anti-bribery provisions of the FCPA. Braskem settled with the SEC in related proceedings on the same day.
The government’s case is being prosecuted by Assistant U.S. Attorneys Julia Nestor and Alixandra Smith of the Office’s Business and Securities Fraud Section, and Assistant Chief Lorinda Laryea and Trial Attorney Leila Babaeva of the Criminal Division’s Fraud Section. Assistant U.S. Attorney Laura Mantell of the Office’s Civil Division is handling forfeiture matters. The FBI’s International Corruption squad in New York is investigating the case.
The Criminal Division’s Office of International Affairs provided substantial assistance, as did the SEC’s Division of Enforcement, Ministério Público Federal and the Departamento de Polícia Federal in Brazil, the Office of the Attorney General in Switzerland, and the governments of Portugal, Andorra, United Kingdom, and Panama.
The Defendant
JOSE CARLOS GRUBISICH
Age: 64
Sao Paulo, BrazilE.D.N.Y. Docket No. 19-CR-102 (RJD)
Two Individuals Charged with Bank Secrecy Act Offenses and Operating an Unlicensed Money Transmitting BusinessRead the Press Release
BROOKLYN, NY - An indictment was unsealed today in federal court in Brooklyn charging Gyanendra Asre and Hanan Ofer with Bank Secrecy Act (BSA) offenses and operating an unlicensed money transmitting business. Asre is charged with two counts of failure to maintain an anti-money laundering program, five counts of failure to file Suspicious Activity Reports and one count of operation of an unlicensed money transmitting business. Ofer is charged with one count of operation of an unlicensed money transmitting business. The defendants were arrested today and are scheduled to be arraigned this afternoon before United States Magistrate Judge Vera M. Scanlon.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division, and Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), announced the arrests and charges.
“The defendants allegedly operated an illegal money transmitting business and took advantage of smaller financial institutions to engage in risky financial transactions, without the oversight and compliance with anti-money laundering controls they had promised,” stated Acting United States Attorney Lesko. “This Office will vigorously prosecute those who deliberately avoid reporting requirements and put the integrity of U.S. financial institutions at risk.”
“As alleged, Asre and Ofer used a small, unsophisticated financial institution to process high-risk, high-dollar international transactions without the anti-money laundering procedures required by law,” stated Acting Assistant Attorney General McQuaid. “Today's announcement demonstrates the Department's commitment to hold accountable individuals who knowingly expose the U.S. financial system and U.S. financial institutions to the risk of laundering criminal proceeds.”
"The Bank Secrecy Act was established to protect our financial system and maintain the integrity of our banking system. As alleged, Ofer and Asre blatantly disregarded our laws and placed their own enrichment above all else,” stated HSI Special Agent-in-Charge Fitzhugh. “The defendants took advantage of a small, unsophisticated financial institution and pumped billions of dollars of high-risk transactions through it, any one of which could have left the bank in ruin. HSI New York’s El Dorado Task Force continues to protect the nation’s financial systems and working with its partners, will see to it that those seeking to exploit our laws for their own financial gain are brought to justice.”
As alleged in the indictment, from 2014 to 2016, Asre and Ofer devised a scheme to bring lucrative and high-risk international financial business lines such as international currency trading to small, unsophisticated financial institutions. Asre and Ofer were trained in anti-money laundering compliance and procedures, and represented to the financial institutions that, because of their experience and training, they understood the risks associated with the high-risk business lines and would conduct appropriate anti-money laundering oversight as required by the Bank Secrecy Act.
Based on Asre and Ofer’s representations, the New York State Employees Federal Credit Union (“NYSEFCU”), a small financial institution with a volunteer board that primarily served New York state public employees, allowed Asre and Ofer to conduct high-risk transactions through the NYSEFCU. Asre and Ofer then caused the transfer of more than $1 billion in high-risk transactions, including hundreds of millions of dollars originating from high-risk foreign jurisdictions, through the NYSEFCU and other entities. Contrary to their representations, Asre willfully failed to implement and maintain the requisite anti-money laundering programs or conduct oversight required to detect, identify and report suspicious transactions. This caused, among other things, the NYSEFCU to process more than $1 billion in high-risk transactions during Asre’s tenure, without ever filing a single Suspicious Activity Report as required by law.
Asre and Ofer also owned and operated DDH Group, LLC, a money transmitting business and money services business that conducted some of these high-risk transactions without licensing or registering that entity as required by law.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section, in coordination with the Office’s Bank Integrity Task Force, which is charged with investigating and charging corporate and individual actors who launder criminal proceeds using the U.S. banking system and enforcing anti-money laundering controls under the Bank Secrecy Act. Assistant United States Attorneys Ryan C. Harris and Francisco J. Navarro of the Eastern District of New York are prosecuting the case with Trial Attorneys Margaret Moeser and Leigh Kessler of the Criminal Division’s Money Laundering and Asset Recovery Section. The investigation is being conducted by HSI’s El Dorado Task Force in New York.
The Defendants:
GYANDERA ASRE
Age: 53
Greenwich, ConnecticutHANAN OFER
Age: 67
New York, New YorkE.D.N.Y. Docket No. 21-CR-174 (DG)
Two Charged in High-Risk International Financial SchemeRead the Press Release
An indictment was unsealed today in the Eastern District of New York charging two defendants with failing to maintain anti-money laundering controls, failing to file suspicious activity reports, and operating an unlicensed money transmitting business.
As alleged in the indictment, from 2014 to 2016, Gyanendra Asre, 53, of Greenwich, Connecticut, and Hanan Ofer, 67, of New York, New York, devised and executed a scheme to bring lucrative and high-risk international financial business to small, unsophisticated financial institutions. Asre and Ofer were trained in anti-money laundering compliance and procedures, and represented to the financial institutions that, because of their experience and training, they understood the risks associated with the high-risk business and would conduct appropriate anti-money laundering oversight as required by the Bank Secrecy Act.
Based on Asre and Ofer’s representations, the New York State Employees Federal Credit Union (NYSEFCU), a small financial institution with a volunteer board that primarily served New York state public employees, allowed Asre and Ofer to conduct high-risk transactions through the NYSEFCU. Asre and Ofer then caused the transfer of more than $1 billion in high-risk transactions, including hundreds of millions of dollars originating from foreign jurisdictions, through the NYSEFCU and other entities. Contrary to their representations, Asre willfully failed to implement and maintain the requisite anti-money laundering programs or conduct oversight required to detect, identify, and report suspicious transactions. This caused, among other things, the NYSEFCU to process more than a billion dollars in high-risk transactions during Asre’s tenure, without ever filing a single Suspicious Activity Report, as required by law.
Asre and Ofer owned and operated DDH Group LLC, a money transmitting business and money services business that conducted some of these high-risk transactions, without it being licensed or registered as required by law.
“As alleged, Asre and Ofer used a small, unsophisticated financial institution to process high-risk, high-dollar international transactions without the anti-money laundering procedures required by law,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division. “Today's announcement demonstrates the department's commitment to hold accountable individuals who knowingly expose the U.S. financial system and U.S. financial institutions to the risk of laundering criminal proceeds.”
“The defendants allegedly operated an illegal money transmitting business and took advantage of smaller financial institutions to engage in risky financial transactions, without the oversight and compliance with anti-money laundering controls they had promised,” said Acting U.S. Attorney Mark J. Lesko for the Eastern District of New York. “This office will vigorously prosecute those who deliberately avoid reporting requirements and put the integrity of U.S. financial institutions at risk.”
“The Bank Secrecy Act was established to protect our financial system and maintain the integrity of our banking system,” said Special Agent in Charge Peter C. Fitzhugh of Homeland Security Investigations (HSI) New York. “As alleged, Ofer and Asre blatantly disregarded our laws and placed their own enrichment above all else. The defendants took advantage of a small, unsophisticated financial institution and pumped billions of dollars of high-risk transactions through it, any one of which could have left the bank in ruin. HSI New York’s El Dorado Task Force continues to protect the nation’s financial systems and working with its partners, will see to it that those seeking to exploit our laws for their own financial gain are brought to justice.”
Asre is charged with two counts of failure to maintain an anti-money laundering program, five counts of failure to file Suspicious Activity Reports, and one count of operation of an unlicensed money transmitting business. Ofer is charged with one count of operation of an unlicensed money transmitting business. The defendants are scheduled to be arraigned on the indictment this afternoon.
HSI is investigating the case.
Trial Attorneys Margaret Moeser and Leigh Kessler of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorneys Ryan C. Harris and Francisco J. Navarro of the U.S. Attorney’s Office for the Eastern District of New York are prosecuting the case.
MLARS’s Bank Integrity Unit investigates and prosecutes banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Five Individuals Charged in Offering Fraud, Stock Manipulation and Money Laundering SchemesRead the Press Release
A five-count indictment was filed today in federal court in Brooklyn charging Richard Dale Sterritt, Jr., Michael Greer, Robert Magness, Mark Ross and Robyn Straza with conspiracy to commit securities fraud, wire fraud and money laundering, among other offenses. The charged crimes arise out of a series of securities fraud schemes, including an offering fraud targeted at investors and potential investors in an oil and gas company in Texas and the attempted manipulation of the publicly traded stock of a cannabis company. The defendants were arrested today. Sterritt, Greer and Straza will make their initial appearance in federal court in Dallas, Texas; Magness and Ross will make their initial appearance in Brooklyn.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the arrests and indictment.
“Through a web of related schemes, Sterritt and his co-defendants allegedly stole millions of dollars from investors, attempted to manipulate a publicly-traded stock and laundered the proceeds of their crimes through the purchase of luxury items like a Bentley,” stated Acting U.S. Attorney Lesko. “This Office will identify and vigorously prosecute those who take advantage of investors to enrich themselves at the expense of the integrity of our financial markets.” Mr. Lesko thanked the U.S. Securities and Exchange Commission, New York Regional Office, for its assistance during the investigation.
“Investor confidence is essential to keeping our financial markets afloat. Actions like the ones Sterritt, Greer, Magness, Ross, and Straza are charged with today chip away at the faith investors place in the process and have the potential to create far-reaching consequences. Our office is committed to tackling these types of financial crimes and bringing their perpetrators to justice,” stated FBI Assistant Director-in-Charge Sweeney.
According to the indictment, between March 2018 and January 2021, Sterritt, Greer, Magness and Ross engaged in a series of related fraudulent schemes. The schemes included an offering fraud in the securities of Zona Energy (the “Zona Energy Offering Fraud”) and a scheme to manipulate the price and trading volume of publicly traded shares of stock in OrgHarvest, Inc., which traded under the stock ticker “ORGH” (the “ORGH Market Manipulation,” and, together with the Zona Energy Offering Fraud, the “Fraudulent Schemes”). In addition, all of the defendants, including Straza, laundered the proceeds of the Fraudulent Schemes by facilitating financial transactions to conceal and promote the Fraudulent Schemes.
As part of the Zona Energy Offering Fraud, the defendants misappropriated more than $10 million of investor funds through the sale of shares in Zona Energy, an oil and gas exploration production company based in the Permian basin of West Texas. Sterritt elicited investors in Zona Energy using the alias “Richard Richman.” Sterritt and his co-conspirators made material misrepresentations about Zona Energy’s business, management and the use of proceeds from the share offering. Of the more than $16 million raised from Zona Energy investors in the offering, Sterritt and his co-conspirators, including Ross, Straza and Greer, misappropriated more than $10 million, including to purchase luxury items, pay personal expenses or funnel funds into other businesses Sterritt controlled, including a cannabis company.
With regard to the ORGH Market Manipulation scheme, Sterritt, Magness and Ross engaged in matched trading to artificially prop up the price of ORGH shares as a part of a scheme to raise revenue and hide the misappropriation from and true financial condition of Zona Energy. They coordinated those ORGH trades with an undercover law enforcement agent (the “Undercover Agent”) posing as a corrupt stock promoter, who they believed controlled a team of corrupt brokers who would buy the artificially inflated ORGH stock in their customers’ accounts. Sterritt, who secretly controlled the majority of ORGH shares through trusts in the name of his girlfriends, family members and co-conspirators, agreed with the Undercover Agent to place matched trades at specific prices, volumes and times to inflate the price of ORGH stock
To facilitate the misappropriation of funds from Zona Energy, Sterritt, Greer, Ross and Straza laundered investor money from the sale of Zona Energy shares between bank accounts controlled by Sterritt, Greer and Straza. In some cases, investor funds were wired between bank accounts for multiple different entities in the name of Greer and/or Straza, or their entities, before those funds were used to pay personal expenses; to purchase luxury goods, including plastic surgery; or provided in cash to Sterritt’s family, friends, girlfriends and to co-conspirators.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of securities fraud or money laundering, they face up to 20 years’ imprisonment.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys David C. Pitluck and Michael P. Robotti are in charge of the prosecution, with assistance on forfeiture matters from Assistant United States Attorney Laura D. Mantell of the Office’s Asset Forfeiture Section.
The Defendants:
RICHARD DALE STERRITT, JR., (also known as “Richard Richman”)
Age: 64
Garland, TexasMICHAEL GREER
Age: 45
Dallas, TexasROBERT MAGNESS
Age: 51
New York, New YorkMARK ROSS
Age: 53
Parkland, FloridaROBYN STRAZA
Age: 58
Dallas, TexasE.D.N.Y. Docket No. 21-CR-193 (KAM)
Individual Pleads Guilty in Brooklyn Federal Court to Extorting Cryptocurrency from Startup CompanyRead the Press Release
Earlier today, in federal court in Brooklyn, Michael Hlady pled guilty before United States Chief District Court Judge Margo K. Brodie to conspiring to extort a startup company for millions of dollars in the cryptocurrency Ether (ETH). When sentenced, Hlady faces up to 20 years in prison, as well as a fine.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, announced the guilty plea.
“Hlady and his co-conspirator used strong-arm tactics to shake down a startup company of cryptocurrency and will now face punishment just like anyone else who extorts a business,” stated Acting United States Attorney Lesko. “This Office and its law enforcement partners are committed to protecting businesses from extortion in whatever manner it is perpetrated.” Mr. Lesko thanked the Federal Bureau of Investigation, New York Field Office, for their outstanding work on the case.
As set forth in court filings and at today’s proceeding, the victim company (“Company”) was a startup mobile-based business that issued cryptocurrency tokens such as Ether as loyalty rewards for generating user traffic to its clients’ products. To raise capital, the Company planned to conduct an Initial Coin Offering (“ICO”) in November 2017. In connection with the ICO, Hlady told the Company’s executives that he had been a part of the Irish Republican Army, the National Security Agency, the Central Intelligence Agency and the Federal Bureau of Investigation; that he had been shot at and had killed people; and that he had “taken down” a head of state. In March 2018, Hlady and his co-conspirator Steven Nerayoff issued threats to Company executives that included destruction of the Company if it did not agree to demands for additional funds and Company tokens. On March 28, 2018, Hlady sent a text message to a Company executive stating, in part, “I promise I will destroy your community” if the Company did not comply with the demands. As a result of this threat, the Company transferred 10,000 ETH to Nerayoff.
Nerayoff has entered a plea of not guilty to extortion charges and is awaiting trial.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Mark E. Bini and Andrey Spektor are in charge of the prosecution.
The Defendant:
MICHAEL HLADY (also known as “Michael Peters”)
Age: 48
East Greenwich, Rhode IslandE.D.N.Y. Docket No. 20-CR-8 (MKB)
Acting U.S. Attorney Announces Appointment of Former Assistant U.S. Attorney James R. Cho to Serve as Magistrate Judge in Brooklyn Federal CourtRead the Press Release
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, today announced that former Assistant U.S. Attorney (AUSA) James R. Cho has been appointed to serve as a United States Magistrate Judge. He will sit in federal court in Brooklyn. Mr. Cho was sworn in today by United States Chief District Court Judge Margo K. Brodie.
“I am proud that James Cho has been selected to serve as a Magistrate Judge for the Eastern District of New York. James was an excellent AUSA who handled some of our Office’s most difficult and complex cases. I am confident that as a federal judge, James will continue to serve the people of our district with integrity and a keen sense of fairness.”
Mr. Cho served in the Office’s Civil Division for more than 12 years and, most recently, served as the Office’s Chief of Immigration Litigation and Chief of Bankruptcy Litigation. Mr. Cho is a seasoned trial lawyer who litigated numerous complex affirmative and defensive matters.
Mr. Cho also previously served as the Civil Division’s training coordinator, where he was responsible for AUSA training, and on the Office’s hiring and diversity and inclusion committees.
As an AUSA, Mr. Cho represented the United States and its agencies and employees in some of the Office’s most challenging cases. He brought affirmative civil enforcement lawsuits on behalf of the United States resulting in significant recoveries arising from fraud against the government or environmental violations. He defended lawsuits challenging government actions, and employment, constitutional and tort claims against the federal government and its employees. Mr. Cho also argued routinely before the Second Circuit Court of Appeals.
Mr. Cho previously taught a course in government civil litigation as an adjunct professor at Brooklyn Law School and New York University Law School. Mr. Cho also previously served as president of the Korean American Lawyers Association of Greater New York and the Asian American Bar Association of New York.
Before joining the Office, Mr. Cho worked in private practice. He graduated from the University of Minnesota Law School cum laude, and from the University of Michigan with high honors.
Mr. Cho will be the first Korean American to serve on the EDNY bench.
United States Settles Housing Discrimination Lawsuit Against Staten Island Rental Agent and Real Estate AgencyRead the Press Release
BROOKLYN – Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, and Pamela S. Karlan, Principal Deputy Assistant Attorney General of the Justice Department’s Civil Rights Division, announced today a settlement with Village Realty of Staten Island Ltd. and Denis Donovan, a sales and former rental agent at Village Realty, to resolve a lawsuit filed last year alleging discrimination against African Americans in violation of the Fair Housing Act.
The settlement resolves claims that Donovan discriminated against prospective renters on the basis of race by treating African Americans who inquired about available rental units less favorably than similarly-situated white persons, and that Village Realty is legally responsible for Donovan’s alleged discrimination because he was acting as Village Realty’s agent. The lawsuit was based on the results of testing conducted by the department’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices. According to the complaint, Donovan allegedly told African-American testers about fewer rental units than white testers, offered white testers rental discounts and opportunities to inspect units that were not offered to African-American testers, generally offered African-American testers units only in racially mixed neighborhoods while offering white testers units in both overwhelmingly white and racially mixed neighborhoods, and made more encouraging comments to white testers about available rental units.
“Today's settlement underscores the importance of making housing equally available to all residents of this district, regardless of race," stated Acting U.S. Attorney Lesko. “This Office is committed to ending racial discrimination and to achieving fairness and equality in housing.”
“For 30 years – since its establishment in 1991 – the Fair Housing Testing Program has played a critical role in helping the Department of Justice root out discrimination that might otherwise go undetected,” said Principal Deputy Assistant Attorney General Karlan. “Today’s settlement reflects the Department’s continued commitment to uncover and eliminate discrimination in all forms and to ensure equal access to housing regardless of race.”
Under the consent decree, the defendants will establish a settlement fund of $15,000 to compensate victims of Donovan’s alleged discriminatory practices and pay a civil penalty of $2,500 to the United States. The agreement prohibits the defendants from engaging in further acts of discrimination and requires them to implement nondiscriminatory standards and procedures, undergo fair housing training, and provide periodic reports to the department.
This case is being handled by Eastern District of New York Assistant U.S. Attorney Rachel G. Balaban, along with Trial Attorney Katherine A. Raimondo of the Civil Rights Division’s Housing and Civil Enforcement Section.
Individuals who believe they may have experienced discrimination at Village Realty should contact the Justice Department toll-free at 1-800-896-7743 or by email at [email protected]. Individuals may be entitled to relief from the settlement fund if they (1) are African American; (2) visited or called Village Realty to inquire about units available for rent prior to March 31, 2019; and (3) were denied the opportunity to rent a unit or provided untrue or incomplete information about available rental units.
The Civil Rights Division enforces the federal Fair Housing Act, which prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the department’s fair housing enforcement can be found at www.justice.gov/fairhousing.
Two Former Mortuary Technicians of New York City Office of Chief Medical Examiner Charged with Stealing Decedents’ PropertyRead the Press Release
Two criminal complaints were unsealed today in federal court in Brooklyn charging Charles McFadgen and Willie Garcon with access device fraud for using credit and debit cards that belonged to decedents whose bodies were in the care and custody of the New York City Office of Chief Medical Examiner (“OCME”). McFadgen and Garcon were arrested this morning and are scheduled to make their initial appearances this afternoon before United States Magistrate Judge Roanne L. Mann.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Margaret Garnett, Commissioner, New York City Department of Investigation (DOI), announced the arrests and charges.
“As alleged, the defendants, as mortuary technicians employed by New York City’s OCME, had a solemn duty to care for the bodies of the deceased and treat their personal effects with the utmost respect. Instead, the defendants brazenly pilfered the belongings of the deceased, stole their property and enriched themselves by making unauthorized purchases worth several thousand dollars,” stated Acting United States Attorney Lesko. “These arrests serve as a warning to corrupt city employees that they will be prosecuted and held accountable for their criminal acts and breach of public trust.”
“Government employees, regardless of their position, are supposed to serve their fellow citizens, not steal from them. The alleged behavior of these two former medical examiner office employees stripped families of the dignity they expected to be afforded to their deceased family members, and it broke federal law. Today’s charges serve as a reminder that there are consequences for illegal behavior,” stated FBI Assistant Director-in-Charge Sweeney.
“As representatives of the City's Office of Chief Medical Examiner, these defendants should have provided compassion, dignity, and respect for the deceased New Yorkers they were serving. Instead, they exploited the access of their positions and breached the trust the City placed in them by stealing from the dead, according to the charges. DOI thanks the NYPD, FBI and the U.S. Attorney’s Office for the Eastern District of New York for working together to expose the corruption and bring accountability to this charged conduct. Individuals who have experienced similar issues with theft from deceased loved ones are encouraged to make a report to DOI's Office of Inspector General for OCME at (212) 825-5904,” stated DOI Commissioner Garnett.
Garcon Complaint:
Garcon was employed at the OCME between May 2018 and July 2020 as a forensic mortuary technician. His duties included transporting the bodies of decedents from the location of death to the OCME. Garcon was simultaneously employed by the Burlington County Medical Examiner’s Office from February 2020 to May 21, 2020. In May 2020, Garcon was arrested by state authorities in New Jersey and found in possession of property that belonged to four decedents who died in New York City and whose bodies had been placed in the OCME’s custody. According to the OCME’s records, Garcon was assigned to transport the bodies of three of those decedents and was working as an autopsy technician at the OCME in New York when the body of the fourth decedent arrived there. A subsequent investigation revealed that Garcon made nearly $6,500 in unauthorized purchases, including airline travel from Newark to Fort Lauderdale, Florida, using credit and debit cards that belonged to the four decedents.
McFadgen Complaint:
McFadgen was employed at the OCME as a mortuary technician between October 2003 and July 2016 when he retired. McFadgen admitted to investigators that both during and after his employment at the OCME, he used debit and credit cards that he knew had been stolen. McFadgen made more than $13,500 in unauthorized purchases using debit and credit cards stolen from five decedents whose bodies were in the OCME’s custody.
The charges in the complaints are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, each defendant faces a maximum of 10 years’ imprisonment.
The government’s case is being handled by the Office’s Public Integrity Section. Special Assistant United States Attorney Virginia Nguyen is in charge of the prosecution.
The Defendants:
CHARLES MCFADGEN
Age: 66
Bronx, New YorkE.D.N.Y. Docket No. 21-MJ-378
WILLIE GARCON
Age: 50
Brooklyn, New YorkE.D.N.Y. Docket No. 21-MJ-379
Queens Man Pleads Guilty to Securities Fraud ConspiracyRead the Press Release
Earlier today, in federal court in Brooklyn, Tae Hung Kang, also known as “Kevin Kang,” pleaded guilty before United States Magistrate Judge Peggy Kuo to conspiring to commit securities fraud in connection with a scheme involving foreign exchange trading that targeted members of the Korean-American community. When sentenced, Kang faces up to five years in prison, as well as forfeiture and a fine. Kang has also agreed to pay restitution in the amount of $835,058.32.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, announced the guilty plea.
“With today's plea, Kang is held accountable for his fraud and for betraying the trust of the Korean-American community who, believing in Kang's integrity, invested hundreds of thousands of dollars in his company's stock," stated Acting U.S. Attorney Lesko. "This Office is committed to safeguarding the investing public and protecting investors whose hard-earned money has been fraudulently misappropriated.” Mr. Lesko thanked the Federal Bureau of Investigation, New York Field Office, for their investigative work on the case, and the United States Commodities and Futures Trading Commission for their assistance during the investigation.
As set forth in court filings and today’s proceeding, Kang defrauded investors located in the Eastern District of New York and elsewhere in connection with foreign exchange trading which refers to trading one currency for another in an effort to profit from fluctuating exchange rates. Kang enticed investors to invest their money into stock issued by his company, Safety Capital Management, Inc. (“Safety Capital”), which did business as FOREXNPOWER. The investors were told their investments would be pooled by Kang and others to conduct foreign exchange trading, or to expand the FOREXNPOWER business. Kang falsely promised investors outsized returns at minimal risk. Ultimately, nearly all of the money that was invested in Safety Capital stock was misappropriated by Kang and his co-conspirators. Kang used some of the money stolen from clients to pay for advertisements targeting additional investors and promoting FOREXNPOWER’s outsized trading returns based on a algorithmic trading method that did not actually exist. Kang’s co-defendant John Won is awaiting trial.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Julia Nestor, Lauren Howard Elbert, Mathew S. Miller and Trial Attorney Gerald M. Moody, Jr., of the Criminal Division’s Fraud Section, are in charge of the prosecution.
The Defendant:
TAE HUNG KANG (also known as “Kevin Kang”)
Age: 57
Bayside, New YorkE.D.N.Y. Docket No. 18-CR-184 (RJD)
Staten Island-Based International Narcotics Trafficker and Money Launderer Sentenced to 48 Months in PrisonRead the Press Release
Earlier today, in federal court in Brooklyn, Adolfo LaCola was sentenced by United States Chief District Court Judge Margo K. Brodie to 48 months in prison for his participation in a narcotics distribution conspiracy and money laundering. LaCola pleaded guilty to the charges in September 2020.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York; Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA); Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation (IRS-CI); Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI); and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the sentence.
“The defendant aspired to be a one-stop-shop for cocaine trafficking and money laundering, but thanks to the outstanding work of our law enforcement partners, LaCola’s next stop will be federal prison,” stated Acting U.S. Attorney Lesko. “This Office will vigorously pursue narcotics traffickers who peddle drugs that endanger our communities.”
“LaCola’s criminal enterprise landed him in jail,” stated DEA Special Agent-in-Charge Donovan. “The DEA and our law enforcement partners investigate traffickers and money launderers alike who enable drug addiction in our communities. I applaud the partnership and hard work of the U.S. Attorney’s Office Eastern District of New York and the Internal Revenue Service Criminal Investigation throughout this investigation.”
“The elaborate criminal network established by LaCola led to the appropriate sentence handed down today stated IRS-CI Special Agent-in-Charge Larsen. “This investigation highlights the excellent work done through our partnership at the DEA Strike Force to tackle these drug and money laundering organizations.”
“LaCola operated with a complete disregard for law enforcement as he ran a large-scale cocaine distribution scheme and offered to ‘clean’ hundreds of thousands of dollars for who he thought was just another criminal looking to make a buck,” stated HSI Special Agent-in-Charge Fitzhugh. “LaCola’s brazen pride and cavalier attitude yielded the evidence needed to arrest and charge this self-purported, high level, international narcotics trafficker/money launderer. Once again, we demonstrate our collective investigative acumen showing that the work of HSI New York with the DEA Strike Force and NYPD is unyielding, and we will persist to make sure deadly drugs do not reach our communities.”
“Today’s sentencing demonstrates the investigative efforts of New York City law enforcement and our dedication to stop the threat that narcotics trafficking poses to public safety. I commend and thank the NYPD investigators involved in this investigation in addition to our colleagues at the U.S. Attorney, Eastern District, Internal Revenue Service Criminal Investigation, and Homeland Security Investigations for building such a strong conspiracy case,” stated NYPD Commissioner Shea.
LaCola’s arrest arose out of a long-term investigation by the DEA and IRS-CI of local narcotics trafficking and distribution in New York City. Between April 2018 and December 2018, LaCola conspired with others to import kilograms of cocaine from Mexico into the United States. Unbeknownst to LaCola, one of the individuals with whom he was negotiating a multi-kilogram deal was cooperating with the DEA. In his meetings with this individual, LaCola offered his services as a large-scale cocaine distributor in Staten Island and as a money launderer for narcotics traffickers. The defendant arranged for the individual to try a 100-gram sample of his cocaine, after which he attempted to negotiate a deal for regular shipments of multi-kilogram loads of cocaine. LaCola informed the individual that the sample he provided came from a 10-kilogram shipment he had received and that he could regularly provide the individual with 10 to 15 kilograms of cocaine from his sources of supply in Mexico.
LaCola also offered his services as a money launderer for narcotics traffickers. He offered to use a co-conspirator’s businesses to launder up to $300,000 a-month for another individual who turned out to also be cooperating with the DEA. The defendant facilitated the laundering of $100,000 of purported heroin trafficking proceeds. This money, in reality, came from the DEA informant.
The case was the result of an investigation by the New York Strike Force, a crime-fighting unit comprising federal, state and local law enforcement agencies supported by the Organized Crime Drug Enforcement Task Force and the New York/New Jersey High Intensity Drug Trafficking Area. The New York OCDETF Strike Force is housed at the DEA’s New York Division and includes agents and officers of the DEA; the NYPD; the New York State Police; HSI; IRS-CI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Customs and Border Protection; U.S. Secret Service; the U.S. Marshals Service; New York National Guard; the Clarkstown Police Department; U.S. Coast Guard; Port Washington Police Department; and New York State Department of Corrections and Community Supervision.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorney David J. Lizmi is in charge of the prosecution.
The Defendant:
ADOLFO LACOLA
Age: 54
Staten Island, New YorkE.D.N.Y. Docket No. 19-CR-187 (MKB)
Acting United States Attorney Mark J. Lesko, FBI Assistant Director-in-Charge and Homeland Security Investigations Special Agent-in-Charge Urge the Public to Report Hate CrimesRead the Press Release
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York announced today that the Office will double the size of its Civil Rights Section in the Criminal Division to provide additional resources to evaluate and, where appropriate, prosecute hate crimes. The Civil Rights Section will continue to be responsible for spearheading the Office’s prosecution of three types of offenses: (1) traditional civil rights crimes by individuals who operate under the color of law; (2) hate crimes; and (3) sex trafficking.
“The spiking number of hate crimes directed at Asian Americans in this District and throughout the country runs contrary to deeply-held American values of fairness, respect and equal treatment for all without regard to ethnic origin. The additional resources allocated to the Civil Rights Section reflect the commitment of this Office and its federal, state and local law enforcement partners to upholding these important and enduring values, which categorically reject hate, intolerance and the violence they spawn,” stated Acting U.S. Attorney Lesko. “We strongly encourage members of all communities to report hate-based crimes as we continue to work with our law enforcement partners to investigate and prosecute these crimes to the fullest extent of the law.”
Mr. Lesko thanked the District Attorneys of Brooklyn, Queens, Staten Island and Long Island for their cooperation and coordination, and the Federal Bureau of Investigation, New York Field Office (FBI), Homeland Security Investigations; the New York City Police Department; and the Nassau and Suffolk County Police Departments for their continued partnership.
“Investigating hate crimes remains the highest priority of the FBI's civil rights program, and the public should know that we will continue to work hand in hand with all of our law enforcement partners to investigate any and all allegations of hate crimes. We can't investigate what we don't know, however, so I would urge anyone who has been the victim of a hate crime, or anyone who has witnessed a hate crime, to report this information to the FBI by calling 1-800-CALL-FBI or submitting a tip online at tips.fbi.gov. Victims should know that information may be reported anonymously and in their native language. Help us fight hate in our communities together,” stated FBI Assistant Director-in-Charge William F. Sweeney, Jr.
“Homeland Security Investigations (HSI) is proud to join together with the FBI and the United States Attorney’s Office, EDNY, in combatting the rising trend of Hate Crimes that we are seeing throughout our region. Every person should be free to live and worship as they wish without fear for repercussions or their safety,” stated HSI New York Special Agent-in-Charge Peter C. Fitzhugh. “Working with our partners, HSI will hold those who victimize others based on their nationality, race, religion or otherwise, responsible for their actions.”
MS-13 Gang Associate Indicted for Murder of 17-Year Old Victim in Kissena Park in QueensRead the Press Release
A superseding indictment was returned yesterday in federal court in Brooklyn charging Oscar Flores-Mejia, an associate of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, with murder in-aid-of racketeering and conspiracy to commit murder in-aid-of racketeering in connection with the April 23, 2018 murder of 17-year-old Andy Peralta in Queens, New York. Flores-Mejia was arrested on a criminal complaint in February 2021 and ordered detained pending trial. The defendant will be arraigned at a later date.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York Field Office (HSI), and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the superseding indictment.
“After allegedly helping to torture and murder the teenage victim, the defendant leaned over his lifeless body and displayed the MS-13 hand sign, openly revealing his presence at the scene and linking MS-13 to this horrific crime,” stated Acting U.S. Attorney Lesko. “This Office and its federal, state and local law enforcement partners will not rest until the senseless brutality and violence of MS-13 has been eliminated and those responsible for the victim’s cruel and cold-blooded murder in Kissena Park have been held to account.” Mr. Lesko expressed his appreciation to the Queens County District Attorney’s Office and the New York City Department of Investigation for their assistance in the investigation.
“No one deserves to die simply to boost the standing of a gang member. Today’s indictment should serve as the FBI’s continuing sign to other gang members who commit violence in our neighborhoods. We work around the clock, and our connections are global. Behavior like the kind we allege today leads to a federal prison cell. Your stay will be a long one,” stated FBI Assistant Director-in-Charge Sweeney.
“The heinous details of the Flores-Mejia case and his alleged involvement in the ruthless murder of a teen in 2018 is on par with MS-13’s core values of extreme violence and control,” stated HSI Special Agent-in-Charge Fitzhugh. “Transnational criminal street gangs like MS-13 serve only to terrorize our communities and prey upon our most vulnerable youth who are often left with little choice, join the gang or face the consequence. This unfair choice ends one of two ways, jail or death. In facing this threat, HSI continues to work with its federal and local law enforcement partners to arrest and prosecute those who commit senseless violence while simultaneously working with our communities to offer a better option, a chance for a future.”
“The federal indictment announced today answers for an unspeakably violent crime and sends a message that gangs like La Mara Salvatrucha can never be tolerated. I commend our NYPD detectives, our law enforcement partners and the United States Attorney’s Office for the Eastern District of New York for bringing this important case,” stated NYPD Commissioner Shea.
According to court filings, on the evening of April 23, 2018, Peralta was lured to Kissena Park where he was ambushed in a wooded area by Flores-Mejia and two others. Peralta was believed to be a member of the 18th Street gang. Peralta had a tattoo of a crown on his chest which the defendant mistakenly believed to be a symbol of a rival gang. Peralta was repeatedly slashed, stabbed, beaten and strangled. A photograph taken of Peralta’s body depicts Flores-Mejia leaning over the victim and displaying an MS-13 hand sign.
The charges in the superseding indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Flores-Mejia faces a mandatory sentence of life imprisonment.
Today’s charges are the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13. The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America. Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York. A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults. Since 2010, this Office has obtained indictments charging MS-13 members with carrying out more than 45 murders in the district and has convicted dozens of MS-13 leaders and members in connection with those murders. These prosecutions are the product of investigations led by our law enforcement partners.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Nadia E. Moore and Phil Selden and Special Assistant United States Attorney Kirk Sendlein are in charge of the prosecution.
The Defendant Charged in the Superseding Indictment:
OSCAR FLORES-MEJIA (also known as “Chamuco”)
Age: 21
Elmhurst, New YorkDefendants Previously Indicted:
JUAN AMAYA-RAMIREZ (also known as “Cadaver”)
Age: 23
Fresh Meadows, New YorkRAMIRO GUTIERREZ (also known as “Cara de Malo”)
Age: 28
Flushing, New YorkVICTOR LOPEZ (also known as “Curioso”)
Age: 22
Flushing, New YorkTITO MARTINEZ-ALVARENGA (also known as “Imprudente”)
Age: 21
Flushing, New YorkJAIRO MARTINEZ-GARCIA (also known as “Colmillo”)
Age: 22
Flushing, New YorkEMERSON MARTINEZ-LARA (also known as “Fugitivo”)
Age: 21
College Point, New YorkDOUGLAS MELGAR-SURIANO (also known as “Clemencia”)
Age: 24
Flushing, New YorkVICTOR RAMIREZ (also known as “Frijolito”)
Age: 21
Elmhurst, New YorkISMAEL SANTOS-NOVOA (also known as “Profe” and “Travieso”)
Age: 32
Flushing, New YorkE.D.N.Y. Docket Nos. 20-CR-228 (SJ)
Popular Instagram Personality Known as “Jay Mazini” Charged with Wire FraudRead the Press Release
A complaint was filed in federal court in Brooklyn yesterday charging Jegara Igbara, also known as “Jay Mazini,” with wire fraud related to a scheme in which the defendant allegedly induced victims to send him Bitcoin by falsely claiming to have sent wire transfers of cash in exchange for the Bitcoin. In reality, Igbara never sent the money, and stole at least $2.5 million worth of Bitcoin from victims. Igbara is currently being held on state charges in New Jersey and will make his initial appearance in the Eastern District of New York at a later date.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the charge.
“As alleged, Igbara used his immense social media popularity to dupe his followers into selling him Bitcoin,” stated Acting United States Attorney Lesko. “This Office will continue to work closely with its law enforcement partners to stop fraudsters like the defendant from perpetrating social media scams that prey on innocent victims.”
“As we allege, Igbara’s social media persona served as a backdrop for enticing victims to sell him their Bitcoin at attractive, but inflated, values. A behind-the-scenes look, however, revealed things aren’t always as they seem. There was nothing philanthropic about the Bitcoin transactions Igbara engaged in with his victims. A quick search of the Interwebs today will reveal an entirely different image of this multimillion-dollar scammer.” stated FBI Assistant Director-in-Charge Sweeney. “If anyone out there has information about this case, we urge you to file a complaint online at tips.fbi.gov.”
“Buyer beware when making purchases of Bitcoin or any other cryptocurrency over social media,” stated IRS-CI Special Agent-in-Charge Larsen. “This defendant allegedly used his online popularity to defraud those seeking to exchange Bitcoin for cash above the market value. Always be on your guard and don’t fall prey to these cryptocurrency schemes.”
As set forth in the complaint, up until March 2021, Igbara, under the name “Jay Mazini,” maintained a popular Instagram account with nearly one million followers where he would post videos depicting himself handing out large amounts of cash to individuals as gifts. Beginning in or around January 2021, Igbara began posting videos to his Instagram account offering to buy Bitcoin from other Instagram users at prices 3.5% to 5% over market value. Igbara claimed that he was willing to pay above-market prices because the traditional Bitcoin exchanges were limiting how much Bitcoin he could purchase. When victims agreed to transact in Bitcoin with Igbara, he sent them documents that included images of purported wire transfer confirmation pages that falsely confirmed Igbara had sent a wire transfer for the promised amounts. In response, the victims supplied Igbara with the Bitcoin, but the promised wire transfers never arrived. Bank records showed that, as to at least one victim, Igbara did not have funds in the account identified in the wire transfer receipt that were sufficient to cover the wire transfer he had promised to make.
This investigation remains ongoing, and anyone who thinks they may have been a victim of this scheme is asked to file a complaint online with the FBI at tips.fbi.gov.
The charge in the indictment is an allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Igbara faces up to 20 years’ imprisonment.
The government’s case is being handled by the Office’s Business & Securities Fraud Section. Assistant United States Attorneys Nathan Reilly and Lauren Howard Elbert are in charge of the prosecution.
The Defendant:
JEBERA IGBARA (also known as “Jay Mazini”)
Age: 25
Edgewater, New JerseyE.D.N.Y. Docket No.: 20-MJ-356
German Attorney Pleads Guilty to Money LaunderingRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, Henning Schwarzkopf, a citizen of Germany and an attorney licensed to practice in Germany, pleaded guilty before United States Magistrate Judge Ramon E. Reyes, Jr., to money laundering by transferring funds that he believed to be the proceeds of a securities fraud scheme through the bank account of a Hong Kong shell company controlled by the defendant. Schwarzkopf was arrested on a criminal complaint in October 2020. When sentenced, Schwarzkopf faces up to 20 years in prison, as well as forfeiture and a fine of up to $250,000.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty plea.
“Schwarzkopf brazenly plotted to launder over $1 million in funds that he believed had been stolen from investors trading in the securities markets,” stated Acting United States Attorney Lesko. “This Office, together with our law enforcement partners, will vigorously prosecute and hold accountable corrupt lawyers like the defendant who abuse their specialized knowledge to commit crimes.” Mr. Lesko thanked the Hamburg, Germany State Bureau of Criminal Investigation, the Hamburg, Germany Prosecution Service, and the Monaco Police Department Criminal Division for their assistance during the investigation.
“Schwarzkopf knew the money he was moving from the account of a Hong Kong-based shell company to bank accounts in New York was obtained through fraudulent means, but proceeded to engage in this money laundering scheme anyway in exchange for more than $50,000 in illegal kickbacks. Today’s guilty plea signals an end to Schwarzkopf’s fraud, but our office will continue to pursue all criminals whose crimes affect the integrity of the financial markets,” stated FBI Assistant Director-in-Charge Sweeney.
According to court filings and facts presented at his guilty plea, an undercover agent (“Undercover Agent”) was introduced to Schwarzkopf in October 2019 as someone who would launder money for the Undercover Agent. In subsequent encrypted communications and in two face-to-face meetings in Monaco and Germany, the Undercover Agent told Schwarzkopf that he was a stock promoter who operated pump-and-dump schemes in which he manipulated the price and trading volume of shares of publicly-traded companies. Furthermore, the Undercover Agent explained that as part of those schemes, he paid illegal kickbacks to stockbrokers who purchased the shares. The Undercover Agent advised Schwarzkopf that he wanted him to “create a fog” around those illegal kickbacks in order to disguise the source of the funds before they reached the brokers. Schwarzkopf agreed to transfer the funds and to falsely characterize the payments as “invoices” or “loan agreements.” Schwarzkopf retained a five percent fee from each transfer, even though he provided no services except to receive funds from the Undercover Agent in the bank account of a Hong Kong-based shell company that he controlled, and then forward those funds to bank accounts in New York.
Between December 29, 2019 and August 2020, Schwarzkopf sent 30 transfers totaling approximately $1,100,784 that he believed were the proceeds of securities fraud from the Hong Kong bank account of his shell company to bank accounts in the United States, earning approximately $57,936 in fees.
The case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Mathew S. Miller and David Gopstein are in charge of the prosecution.
The Defendant:
HENNING SCHWARZKOPF
Age: 69
Hamburg, GermanyE.D.N.Y. Docket No. 21-CR-117 (EK)
Queens Man Indicted for $1.7 Million Paycheck Protection Program FraudRead the Press Release
An indictment was returned in federal court in Brooklyn yesterday charging Gelpys Joel Peralta-Gutierrez with wire fraud conspiracy relating to a fraudulent application for a loan under the United States Small Business Administration (the “SBA”)’s Paycheck Protection Program (“PPP”), which Congress created as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. Peralta-Gutierrez was previously arrested in February 2021 on a criminal complaint and will be arraigned at a later date.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Amaleka McCall-Brathwaite, Special Agent-in-Charge, Office of the Inspector General of the U.S. Small Business Administration, Eastern Region Office (SBA-OIG), announced the charges.
“As alleged, Peralta-Gutierrez claimed falsely that he needed government loan benefits to pay his employees during the pandemic, but instead deliberately lined his own pockets with $1.7 million,” stated Acting United States Attorney Lesko. “This Office will not hesitate to bring the full weight of the law against those who, for personal gain, take advantage of the COVID crisis and unlawfully divert funds from vitally important government relief programs.”
“Peralta, as alleged, took advantage of the Paycheck Protection Program, which was created to provide emergency financial assistance to businesses who need it during the pandemic. While claiming to have 62 employees on his payroll, he received $1.7 million worth of taxpayer-funded relief in support of his claims. According to other business relief applications he filed, however, he had only one employee. The FBI will continue to aggressively pursue those who are using the money from this economic relief program to pad their own pockets. If you know of similar instances of fraud, please call us at 1-800-CALL-FBI,” stated FBI Assistant Director-in-Charge Sweeney.
“Lying to gain access to economic stimulus funds will be met with justice,” stated SBA-OIG Special Agent-in-Charge McCall-Brathwaite. “SBA-OIG will aggressively pursue evidence of fraud against SBA’s programs aimed at assisting the nation’s small businesses struggling with the pandemic challenges. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”
As set forth in court filings, in June 2020, Peralta-Gutierrez arranged for a PPP loan application to be submitted on behalf of his company, J Films HD Inc., claiming that he employed 62 employees with a total monthly payroll of nearly $700,000. Based on these representations, Peralta-Gutierrez’s business was granted a loan in excess of $1.7 million. The location that Peralta-Gutierrez submitted as his business address, however, was a New York City Housing Authority apartment at the Queensbridge Houses. In applications Peralta-Gutierrez submitted for other business relief, he acknowledged that, in reality, his business had only one employee, and total revenues of approximately $50,000.The charge in the indictment is an allegation, and the defendant is presumed innocent unless and until proven guilty. If convicted, he faces up to 20 years’ imprisonment.
The government’s case is being handled by the Office’s Business & Securities Fraud Section. Assistant United States Attorney Lauren Howard Elbert is in charge of the prosecution.
The Defendant:
GELPYS JOEL PERALTA-GUTIERREZ (also known as “Joel Peralta”)
Age: 31
Long Island City, New YorkE.D.N.Y. Docket No. 21-CR-149 (DG)
Brooklyn Man Charged in Long-Running International Insider Trading SchemeRead the Press Release
A 10-count indictment was filed today in federal court in Brooklyn charging Jason Peltz with securities fraud, money laundering and tax evasion, among other offenses, including related conspiracy offenses. The charged crimes arise out of a long-running insider trading scheme, in which Peltz executed securities transactions in the brokerage accounts of co-conspirators based on material nonpublic information (“MNPI”) from a variety of sources. Peltz was previously arrested on a complaint in December 2020 and will be arraigned on the indictment at a later date.
Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Jonathan D. Larsen, Special Agent-in-Charge, IRS Criminal Investigation, New York (IRS-CI), announced the indictment.
“As alleged, Peltz used material nonpublic information about publicly traded companies to line his own pockets and then concealed his illegally earned income to avoid paying taxes,” stated Acting U.S. Attorney Lesko. “This Office will spare no effort to identify and prosecute defendants who seek to profit from insider trading schemes that harm the investing public and undermine the integrity of our financial markets.” Mr. Lesko thanked the Securities and Exchange Commission, New York Regional Office, for their assistance during the investigation.
“As alleged, today’s indictment details a very deliberate attempt by Peltz to illegally profit from receiving and providing advanced knowledge of nonpublic information about publicly traded companies. When one has access to material, nonpublic information, they’re afforded significant knowledge that could give them a competitive edge in stock and options trading. Exploiting this knowledge is illegal, and the FBI will continue to investigate and prosecute those who cheat the system in this way,” stated FBI Assistant Director-in-Charge Sweeney.”
“While most Americans dream of winning the lottery or finding a stock before it takes off, Peltz rigged the system for his personal gain, creating fortune for himself at the expense of others,” stated IRS-CI Special Agent-in-Charge Larsen. “Peltz stands accused of a multitude of crimes that go far beyond his initial investments, extending to tax crimes and lying. Thanks to our work with the Joint Chiefs of Global Tax Enforcement (J5), we were able to unravel the web of lies that Peltz wove to cover his greedy crimes and send a message to others involved in similar schemes.”
According to the indictment, between November 2015 and October 2020, Peltz and his co-conspirators engaged in a fraudulent scheme by which they obtained MNPI about publicly traded companies from a variety of sources, including a corporate insider and a reporter at a financial news organization (the “Reporter”). Peltz and his co-conspirators allegedly used the MNPI to profitably trade in securities in advance of public disclosure through news articles. For example, the brokerage accounts of members of the conspiracy made purchases of certain companies’ securities shortly before significant corporate events, such as announcements of potential mergers or acquisitions that sometimes resulted in near-immediate increases in the companies’ share prices. The co-conspirators’ brokerage accounts sold the shares at a later date in close proximity to the relevant corporate events or announcements of the events. To prevent scrutiny of their communications, Peltz and his co-conspirators often communicated via the use of smartphone applications with end-to-end encryption. Peltz also used prepaid cellular telephones, known as “burner” phones, to prevent scrutiny of his communications.
In February 2016, Peltz obtained MNPI from an insider at Ferro Corporation (“Ferro”) about a potential takeover offer (the “Ferro Takeover Bid”). Peltz used that MNPI to (1) profitably trade in Ferro in the brokerage accounts of two co-conspirators, (2) tip certain other co-conspirators, each of whom also profitably traded on MNPI about the Ferro Takeover Bid, and (3) tip the Reporter, who wrote an article making public the news of the Ferro Takeover Bid, which resulted in an increase in the price of Ferro’s stock. Peltz and the Ferro insider each received significant financial benefits from other co-conspirators shortly after Peltz traded in those co-conspirators’ brokerage accounts.
Following his profitable insider trading in Ferro, Peltz continued to cultivate his relationship with the Reporter and obtained information about the Reporter’s upcoming news articles. On multiple occasions thereafter, Peltz traded in the brokerage accounts of co-conspirators shortly before the publication of articles by the Reporter about publicly traded companies. The articles were often followed by increases in the prices of the companies’ stock.
During the course of the conspiracy, Peltz received large payments from co-conspirators, as well as other benefits, as payment for his trading activity. Peltz received these payments in corporate and nominee bank and credit card accounts, in order to conceal his income from the IRS. Despite receiving such payments, in 2017 Peltz falsely swore under penalty of perjury to the IRS that he had been unemployed since December 2015 and had no income.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted of securities fraud, Peltz faces up to 25 years’ imprisonment.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Kaitlin T. Farrell and Sarah M. Evans are in charge of the prosecution, with assistance from Assistant United States Attorney Brian Morris of the Office’s Asset Forfeiture Section.
The Defendant:
JASON PELTZ
Age: 38
Brooklyn, New YorkE.D.N.Y. Docket No. 21-CR-154 (NGG)
Mark J. Lesko Appointed Acting United States Attorney for the Eastern District of New YorkRead the Press Release
Mark J. Lesko has begun serving as Acting United States Attorney for the Eastern District of New York, as per the Vacancies Reform Act. Mr. Lesko was sworn in today by United States Chief Judge for the Eastern District of New York Margo K. Brodie. Mr. Lesko has served as the First Assistant United States Attorney since March 2019. In that role he has been second-in-command of the U.S. Attorney’s Office and a key decision-maker in both criminal prosecutions and civil litigation in the Office. Mr. Lesko succeeds Seth D. DuCharme, who resigned on March 19, 2021.
“It is an absolute honor and privilege to serve as the Acting United States Attorney for the Eastern District of New York,” stated Acting U.S. Attorney Lesko. “After having spent many years on the line prosecuting federal crimes, as well as significant time overseeing prosecutions and civil cases in a wide range of supervisory positions, I look forward to leading the Office and working with our law enforcement and agency partners to protect and serve the Eastern District’s more than eight million residents. I’m also particularly proud that I get to continue to work with the outstanding and dedicated women and men in the Office as they continue their tireless efforts to prosecute criminal cases and defend the interests of the United States, all in the unwavering pursuit of the fair administration of equal justice under the law.”
In October 2018, Mr. Lesko returned to the Office and assumed the position of Special Counsel to the United States Attorney before he was appointed to the position of First Assistant United States Attorney two years ago. Mr. Lesko was a member of the prosecution team that won the trial conviction of Nxivm founder Keith Raniere on all counts of a superseding indictment charging him with racketeering and racketeering conspiracy; sex trafficking, attempted sex trafficking and sex trafficking conspiracy; forced labor conspiracy and wire fraud conspiracy.Mr. Lesko previously served in the Office from 2002 to 2009. He served as the Deputy Chief of the Long Island Criminal Division and as a Computer Hacking and Intellectual Property Coordinator. While in the Office, Mr. Lesko conducted complex and wide-ranging criminal investigations and handled numerous jury trials and appeals. His most notable cases include the prosecutions of the former CEO and CFO of Symbol Technologies; a titanium manufacturing company and its CEO for violations of the Resource Conservation Recovery Act for illegal storage of hazardous waste; two fraudulent financiers of a major motion picture; and a Colombo associate. His trial convictions include a Muttontown, New York couple who tortured two Indonesian domestic servants held in a condition of forced labor and servitude; gang members convicted of the racketeering murder of a man they mistakenly believed to be a member of the MS-13; and the leader of a robbery crew based in the Louis H. Pink Houses in East New York who was responsible for more than 50 armed robberies throughout New York City and Long Island.
Prior to joining the Office, he served as an Assistant United States Attorney for the District of Columbia from 1999 to 2002, where he was in the Homicide/Major Crimes Section and handled numerous jury trials and appellate arguments. He also worked as an associate at the law firms of Miller & Chevalier in Washington, D.C. and Kirkpatrick & Lockhart in Pittsburgh, Pennsylvania (now K&L Gates). He received his B.A. from Yale University in 1989 and his J.D. from the Georgetown University Law Center in 1994.
Mr. Lesko has also previously served as the Vice President for Economic Development, the Executive Dean of the Center for Entrepreneurship and an Adjunct Professor of Law at Hofstra University. Prior to Hofstra, Mr. Lesko served as the Executive Director of Accelerate Long Island, a regional collaboration between Brookhaven National Laboratory, Cold Spring Harbor Laboratory, Hofstra University, Northwell Health and Stony Brook University that oversaw a seed-stage investment program for biotech companies in New York City and on Long Island. Before Accelerate Long Island, Mr. Lesko was the three-time elected Supervisor of the Town of Brookhaven, New York State’s second-largest town with a population of 486,000 residents.
Bloods Gang Leader Sentenced to 10 Years in Prison for Murder Conspiracy on Long IslandRead the Press Release
Earlier today, at the federal courthouse in Central Islip, Jonathan Mayzick, also known as “J-Reck,” a leader of the Nine Trey Gangster set of the Bloods street gang based in Hempstead, New York, was sentenced by United States District Judge Sandra J. Feuerstein to 10 years’ imprisonment for conspiring to murder rival gang members. The charge arose out of the defendant’s participation in a year-long war with the rival Outlaws street gang in the “Heights” neighborhood of Hempstead. Judge Feuerstein ordered the sentence imposed today to run consecutively to a 13 ½-year federal prison term that was imposed in 2018 after Mayzick pled guilty to distributing narcotics. As a result, Mayzick will serve a total of 23 ½ years in prison.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD), announced the sentence.
“Mayzick was a leader of a murderous street gang that, in its thirst for revenge, engaged in a shooting rampage that terrorized the community and put the public at risk for over a year,” stated Acting U.S. Attorney DuCharme. “Today’s lengthy sentence reflects the tireless efforts of this Office and its law enforcement partners to bring an end to senseless violence and loss of life and eradicate gangs like the Bloods.”
Mr. DuCharme expressed his grateful appreciation to the FBI’s Long Island Gang Task Force, the NCPD’s Gang Investigations Squad and the Firearms Section of the Suffolk County Crime Laboratory for their outstanding investigative work on the case.
“Violent criminals engage in turf battles without any thought about the communities they endanger. Think again. The agencies which compose the FBI Long Island Gang Task Force put our communities first, and we will work round-the-clock to remove and hold violent offenders accountable. Today’s sentence is the community’s message back that violent behavior comes with consequences, and offenders who break federal law should be prepared for a lengthy stay in federal prison,” stated FBI Assistant Director-in-Charge Sweeney.
“Today’s announcement of another gang member going to jail is a clear reminder that these types of illegal activity will never be tolerated in Nassau County, stated NCPD Commissioner Ryder. “The arrest and sentencing comes after a lengthy and extensive investigation and I would like to thank the dedicated members of law enforcement for a job well done. We continue to work with our local, state and federal partners to keep our neighborhoods, communities and residents safe.”
Mr. DuCharme expressed his grateful appreciation to the FBI’s Long Island Gang Task Force, the NCPD’s Gang Investigations Squad and the Firearms Section of the Suffolk County Crime Laboratory for their outstanding investigative work on the case.
Between September 2013 and November 2014, Mayzick, along with members of the Nine Trey, engaged in multiple shootings in retaliation for the September 2013 murder of Dante Quinones, a Bloods associate, by Outlaws member Pedro Merchant. Four individuals were shot by the Bloods: one was shot in the arm, another was shot in the chest and an associate of the Outlaws was shot in the testicles. When gang members attempted to kill the leader of the Outlaws on the front porch of his home, a teenage girl was shot in the face. In addition, the homes of several Outlaws members were sprayed with bullets.
While the gang war was ongoing, Mayzick and his fellow Nine Trey members operated a crack cocaine trafficking business in the Hempstead area. In January 2018, following his plea of guilty, Mayzick was sentenced by United States District Judge Denis R. Hurley to 162 months’ imprisonment for conspiring to distribute crack cocaine.
The government’s investigation into the Bloods and Outlaws gang war has led to the arrest and conviction of nine members and associates of the Nine Trey Gangster Bloods and six members and associates of the Outlaws. Mayzick is the final defendant to be sentenced. The defendants previously sentenced include:
- Bloods member Billy McLen, who was sentenced to 15 years’ imprisonment following his guilty plea to attempted murder in-aid-of racketeering and discharging a firearm during a crime of violence;
- Bloods members Khalil Brown and Naree Barnes, who were each sentenced to 10 years’ imprisonment following their guilty pleas to discharging firearms during a crime of violence for shooting at a rival gang member on October 21, 2014.
- Bloods member Jovan Ramirez, who was sentenced to 10 years’ imprisonment following his guilty plea to conspiracy to distribute and possess with intent to distribute cocaine base;
- Bloods member Philip Saunders, who was sentenced to 12 years’ imprisonment following his guilty plea to discharging a firearm during a crime of violence for his role in a May 9, 2014 assault of a rival gang member;
- Bloods associate Johnathan Winslow, who was sentenced to 13 years’ imprisonment following his guilty plea to conspiracy to distribute and possess with intent to distribute cocaine base;
- Bloods associate Rashon Campbell, who was sentenced to 5 years’ imprisonment following his guilty plea to conspiracy to distribute cocaine base;
- Outlaws member Alton Gore, who was sentenced to 15 years’ imprisonment following his guilty plea to assault in aid of racketeering and discharging a firearm in connection with a crime of violence;
- Outlaws member Pedro Merchant, who was sentenced to 20 years’ imprisonment for the September 11, 2013 firearm-related murder of Dante Quinones; and
- Outlaws associate Everett Brown, who was sentenced to 15 years’ imprisonment following his guilty plea to discharging a firearm during a crime of violence for his role in one of three shootings of rivals’ homes committed by the gang on August 19, 2014.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Nicole Boeckmann and Michael Maffei are in charge of the prosecution.
The Defendant:
JONATHAN MAYZICK (also known as “J-Reck”)
Age: 32
Hempstead, New YorkE.D.N.Y. Docket No. 16-CR-429 (S-2) (SJF
Former Long Island Rail Road Employee Charged with Falsifying Inspection ReportRead the Press Release
Earlier today, a criminal complaint was unsealed in federal court in Brooklyn charging Stuart Conklin, a former employee of the Long Island Rail Road (LIRR), with making a false entry in a railroad inspection report required to be maintained by the LIRR under United States Department of Transportation regulations. Conklin surrendered to federal authorities earlier today, and his initial appearance is scheduled for this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York; Daniel M. Helzner, Acting Special Agent-in-Charge, U.S. Department of Transportation Office of Inspector General, Northeastern Region (DOT-OIG); and Carolyn Pokorny, Inspector General for the Metropolitan Transportation Authority, announced the arrest.
“As alleged, Conklin’s false inspection report endangered passengers on a heavily used line of the Long Island Rail Road and potentially placed scores of riders in harm’s way,” stated Acting United States Attorney DuCharme. “Today’s arrest sends a strong message that this Office is committed to ensuring integrity in reports that are critical to the safe operation of the transport system.”
“This investigation demonstrates our commitment to maintaining the safety and integrity of commuter rail systems in New York and around the country,” stated DOT-OIG Acting Special Agent-in-Charge Helzner. “Working with our law enforcement and prosecutorial partners, we will continue to hold accountable those individuals who are responsible for inspections and oversight when their neglectful actions compromise the safety of the traveling public.”
“It was an unconscionable betrayal to all New Yorkers for this signal inspector to allegedly claim a critical piece of Long Island Railroad infrastructure was safe when he didn’t even bother to look at it," stated MTA Inspector General Pokorny. “This is yet another example of why the MTA must stop relying on honor systems and implement systemic reforms to verify that claimed work was actually completed. By falsifying federally required documents, this individual put many riders at risk and it is a miracle no one was critically injured because of his actions.”
As alleged in the complaint, Conklin was employed by LIRR as a Signalman and his responsibilities included performing regular inspections of rail bonds. Rail bonds are electronic jumpers around joints in the rails of a railroad track to ensure continuity of conductivity for signal currents. Conklin completed an inspection report indicating that he had inspected a particular rail bond on April 26, 2019, and that the bond had passed inspection. Video footage from a LIRR camera showed that Conklin in fact did not inspect the bond during his shift that day.
On May 25, 2019, at approximately 3 a.m., a westbound LIRR train collided with the rear of an eastbound train that had pulled onto a sidetrack to permit the westbound train to pass. A subsequent investigation by the LIRR determined that the rail bond Conklin had falsely indicated he had inspected on April 26, 2019, was broken and was the cause of the derailment. Conklin submitted a handwritten letter of resignation six days after the derailment.
The charge in the complaint is an allegation, and the defendant is presumed innocent unless and until proven guilty. If convicted of the charge, Conklin faces up to two years in prison.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorney Turner Buford is in charge of the prosecution.
The Defendant:
STUART CONKLIN
Age: 63
Magnolia, TexasE.D.N.Y. Docket No. 21-MJ-329
Pharmacist Charged in $4 Million Health Care Fraud and Kickback SchemeRead the Press Release
A New York man was arrested today for his role in a conspiracy to commit health care fraud and to pay kickbacks and bribes to customers for expensive prescription orders in connection with more than $4 million in Medicare and Medicaid reimbursements.
According to an indictment returned by a federal grand jury in the Eastern District of New York, Robert John Sabet, 44, of Brooklyn, was the owner of Brooklyn Chemists in Gravesend, Brooklyn, and Lucky Care Pharmacy in Flushing, Queens. Since September 2016, Sabet allegedly conspired to bill Medicare and Medicaid for expensive prescription drugs that were not eligible for reimbursement because, among other reasons, they were not needed or not dispensed. Sabet also allegedly conspired to pay kickbacks and bribes to customers to convince them to fill prescriptions at his pharmacies, and to pay customers cash in exchange for the ability to bill Medicare and Medicaid for over-the-counter health care-related products on their behalf.
In December 2020, Sabet allegedly wired nearly $100,000 from Lucky Care’s bank accounts to an automobile dealership to pay for a luxury car. Investigators conducted a search warrant at Sabet’s home at the time of his arrest and seized a 2020 Porsche Taycan worth over $250,000, as well as cash and luxury goods.
Sabet is charged with conspiracy to commit health care fraud, conspiracy to defraud the United States by paying kickbacks and bribes in connection with the provision of health care services, and unlawfully spending the proceeds of his fraud. The defendant is scheduled for his initial court appearance today before U.S. Magistrate Judge Ramon E. Reyes, Jr. of the U.S. District Court for the Eastern District of New York. If convicted, he faces a maximum penalty of 10 years in prison for conspiracy to commit health care fraud, five years in prison for conspiracy to pay kickbacks and bribes, and 10 years in prison for unlawful spending. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Seth D. DuCharme of the Eastern District of New York; Special Agent in Charge Scott J. Lampert of the Health and Human Services Office of Inspector General (HHS-OIG), New York Regional Office; Special Agent in Charge Jonathan D. Larsen of IRS-Criminal Investigation (IRS-CI), New York; and Acting Medicaid Inspector General Frank T. Walsh Jr. of the New York State Office of the Medicaid Inspector General (OMIG) made the announcement.
HHS-OIG, IRS-CI, and OMIG are investigating the case.
Trial Attorney Miriam L. Glaser Dauermann of the Justice Department’s Fraud Section is prosecuting the case.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Owner of Pharmacies in Brooklyn and Queens Charged in Healthcare Fraud and Kickback SchemeRead the Press Release
BROOKLYN, NY – An indictment was unsealed today in federal court in Brooklyn charging Robert John Sabet, the owner of Brooklyn Chemists in Gravesend, Brooklyn, and Lucky Care Pharmacy in Flushing, Queens, with conspiracy to commit health care fraud, conspiracy to defraud the United States by paying kickbacks and bribes in connection with the provision of health care services, and unlawfully spending the proceeds of his fraud. Sabet was arrested today and is scheduled to be arraigned this afternoon via videoconference before United States Magistrate Judge Ramon E. Reyes, Jr.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York; Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division; Scott J. Lampert, Special Agent-in-Charge, Health and Human Services, Office of Inspector General, New York Regional Office (HHS-OIG); Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI); and Frank T. Walsh, Jr., Acting Medicaid Inspector General, New York State Office of the Medicaid Inspector General (OMIG), announced the arrest and indictment..
“The defendant’s alleged participation in health care fraud, and his payment of kickbacks and bribes, corrupted the trusted relationship between pharmacies and patients, and potentially harmed the very people that the Medicare and Medicaid programs are intended to serve,” stated Acting U.S. Attorney DuCharme.
“Billing Medicare and Medicaid for medically unnecessary costs diverts taxpayer funds from their intended purpose of providing life-sustaining health care services to beneficiaries. Sabet’s alleged payment of bribes and kickbacks also threatens the integrity of federal health care programs. It is unacceptable when health care providers seek personal enrichment by defrauding the programs on which their patients rely, and along with our law enforcement partners, we will continue to hold these individuals accountable for their actions,” stated HHS-OIG Special Agent-in-Charge Lampert.
“Many Americans rely heavily on the social safety nets provided by Medicare and Medicaid when they are needed,” stated IRS Special Agent-in-Charge Larsen. “Benefiting personally as alleged impacts all of us both today and tomorrow.”
“Particularly as we continue to recover from the COVID pandemic, individuals who commit Medicaid fraud prey on the most vulnerable New Yorkers, threaten the viability of programs that provide vital health care services, and steal taxpayer dollars. My office will continue to work closely with our partners in law enforcement to hold fully accountable those who seek to exploit the Medicaid program for personal gain,” stated OMIG Acting Inspector General Walsh.
As set forth in court filings, since September 2016, Sabet allegedly conspired to bill Medicare and Medicaid for expensive prescription drugs that were not eligible for reimbursement because they were not needed or not dispensed. Sabet also allegedly conspired to pay kickbacks and bribes to customers to convince them to fill prescriptions at his pharmacies, and to pay customers cash in exchange for the ability to bill Medicare and Medicaid for over-the-counter health care-related products on their behalf.
In December 2020, Sabet allegedly wired nearly $100,000 from Lucky Care’s bank accounts to an automobile dealership to pay for a luxury car. Investigators conducted a search warrant at Sabet’s home at the time of his arrest and seized a 2020 Porsche Taycan worth over $250,000, as well as cash and luxury goods.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Sabet faces a maximum sentence of 10 years in prison for conspiracy to commit health care fraud; five years in prison for conspiracy to pay kickbacks and bribes and 10 years in prison for unlawful spending.
The case is being prosecuted by Trial Attorney Miriam L. Glaser Dauermann of the Justice Department’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.
The Defendant:
ROBERT SABET
Age: 44
Brooklyn, New YorkE.D.N.Y. Docket No.: 21-CR-140 (VMS)
Staten Island Man Charged with Attempted Production of Child PornographyRead the Press Release
A criminal complaint was unsealed today in federal court in Brooklyn charging Ryan Behar with attempted sexual exploitation of a child. The charges relate to sexually explicit live streamed and recorded depictions that the defendant requested from a minor whom he targeted on Instagram. Behar was arrested today and will make his initial appearance via videoconference this afternoon before United States Magistrate Judge Sanket J. Bulsara.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the arrest and charge.
“As alleged, Behar misused social media in an effort to lure an underage teenager into having sexually explicit communications with him,” stated Acting United States Attorney DuCharme. “This Office will continue to make every effort to protect minors and hold to account those who contribute to their victimization.” Mr. DuCharme extended his grateful appreciation to the FBI Violent Crimes Against Children Squad for its investigative work, the New York City Police Department and the Richmond County District Attorney’s Office for their assistance on the case.
“Predators are appallingly aggressive in targeting society’s youth. If you think your child or teen is shielded from this type of predator, who can quietly target your child without ever having to physically enter your home, please think again. Do you know who your children are interacting with online? Have you asked? Adults did not grow up with this type of threat. Technology has changed, and we need your help educating and protecting our children,” stated FBI Assistant Director-in-Charge Sweeney. “We believe Mr. Behar had contact with many more victims, and we are urging those victims or their parents or guardians to call us at 1-800-CALL-FBI, or reach out for us online at tips.fbi.gov.”
As set forth in court filings, beginning on September 13, 2020, Behar, age 42, falsely claimed he was a teenage boy and engaged in a series of sexually explicit communications with the 16-year-old victim. Using an Instagram account, Behar repeatedly messaged the victim requesting that the victim create pornographic videos, photographs and live visual depictions. These communications occurred between September 2020 and October 2020. During these communications, Behar also sent the victim sexually explicit images he represented to be of himself and directed her to perform sexual acts while participating in video calls.
The charge in the complaint is an allegation, and the defendant is presumed innocent unless and until proven guilty. If convicted of attempted sexual exploitation of a child, Behar faces a mandatory minimum sentence of 15 years’ imprisonment and a maximum of 30 years in prison.
This prosecution is part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and the Department of Justice Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The government’s case is being handled by the Office’s General Crimes Section. Assistant United States Attorney Garen S. Marshall is in charge of the prosecution.
The Defendant:
RYAN BEHAR
Age: 42
Staten Island, New YorkE.D.N.Y. Docket No. 21-MJ-293
Acting U.S Attorney Seth D. DuCharme Announces Resignation from OfficeRead the Press Release
Seth D. DuCharme is resigning as Acting United States Attorney for the Eastern District of New York effective March 19, 2021. Mr. DuCharme has served in the position as chief federal law enforcement officer for the district comprising Brooklyn, Queens and Staten Island in New York City, and Nassau and Suffolk Counties on Long Island, since July 10, 2020. Earlier today, Mr. DuCharme sent letters to President Biden and Acting United States Attorney General Monty Wilkinson informing them of his decision.
First Assistant U.S. Attorney Mark J. Lesko will become the Acting U.S. Attorney upon Mr. DuCharme’s departure.
Statement from Acting United States Attorney DuCharme:
“Earlier today, I announced that I am stepping down as Acting U.S. Attorney in the Eastern District of New York, effective March 19, 2021. I have enjoyed a long and rewarding career in the Department, from Deputy U.S. Marshal to Principal Deputy Associate Attorney General of the United States, to my current position. At each stage of my career, I was blessed to be faced with worthy challenges on behalf of the American people. My time in EDNY and the Department gives me great confidence that the American people are well served by forward-leaning professionals, who put mission first, and assume risks every day on behalf of the people they are sworn to serve. My guiding principles have been to serve others and to do my best to go where I am needed most. After having had the opportunities to serve at so many levels, from junior AUSA, to close advisor to the Attorney General and Deputy Attorney General, and most recently as Acting U.S. Attorney, I am now thrilled to be spending more time with my family, and to transitioning thoughtfully and successfully into private practice, where I intend to serve clients zealously, capably and honorably. To all of those who offered me the chances to take risks, to test myself against the most skilled adversaries in the defense bar, to grow as a lawyer, and to serve the public, I am forever grateful. Over the next two weeks, I will be increasingly shifting responsibility to my First Assistant U.S. Attorney, Mark Lesko – a proven professional who has served the District and the nation with distinction. I have great confidence that the Office and the Department will function smoothly and effectively as we prepare for my departure.”
During his tenure as Acting U.S. Attorney, Mr. DuCharme’s notable achievements include the expansion of the Office’s Rapid and Strategic Prosecution (RASP) Initiative to more effectively use crime data to identify, investigate, disrupt and prosecute violent armed criminals and organizations; and the creation of a Bank Integrity Task Force to investigate and charge corporate and individual actors who launder criminal proceeds using the U.S. banking system and to enforce anti-money laundering controls.
Prior to his designation as Acting United States Attorney, Mr. DuCharme served as the Principal Associate Deputy Attorney General at the Department of Justice in Washington, D.C. from December 2019 until July 2020. From March 2019 to December 2019, Mr. DuCharme served as Counselor to Attorney General William P. Barr. He worked with Attorney General Barr and Deputy Attorney General Jeffrey Rosen to supervise and coordinate the work of all of the Department’s components, including all 94 United States Attorney’s Offices. In addition, he helped to coordinate national initiatives against fraud, opioid trafficking, transnational organized crime, international terrorism and other national security priorities.
Prior to his work at Main Justice, Mr. DuCharme served as Chief of the Criminal Division in the U.S. Attorney’s Office for the Eastern District of New York, where he initiated and supervised numerous investigations and prosecutions across a wide range of subject areas, including corporate and securities fraud, terrorism, cybercrime, public corruption, international narcotics trafficking, civil rights violations, and violent and organized crime.
Mr. DuCharme first joined the U.S. Attorney’s Office for the Eastern District of New York in March 2008 and has served in the General Crimes, Violent Crimes and Terrorism, and National Security and Cybercrime Sections. He also has served as Chief and Deputy Chief of the Office’s National Security and Cybercrime Section, the Office’s National Security Cyber Specialist and the Office’s representative on the Anti-Terrorism Advisory Council.
District Court Orders Long Island Company and its Operators to Stop Distributing Adulterated Dietary SupplementsRead the Press Release
BROOKLYN, NY – The United States Court for the Eastern District of New York has permanently enjoined a New York company and its operators from manufacturing or distributing dietary supplements unless and until they comply with the law, the Department of Justice Civil Division’s Consumer Protection Branch and the United States Attorney’s Office for the Eastern District of New York announced today.
A complaint filed May 23, 2019, alleged that defendants Confidence USA Inc., of Port Washington, New York, the company’s president Helen Chian, and manager Jim Chao violated the Federal Food, Drug, and Cosmetic Act (FDCA) by distributing adulterated dietary supplements. The complaint alleged that inspections conducted by the U.S. Food and Drug Administration (FDA) in 2016, 2017, and 2018 showed that the defendants repeatedly failed to verify that their finished dietary supplements met product specifications for identity, purity, strength, composition, and contamination limits, and failed to verify the identity of each dietary ingredient used in the manufacture of the supplements. The United States filed the complaint in U.S. District Court for the Eastern District of New York at the request of the FDA.
“The millions of Americans who take dietary supplements trust that they are unadulterated and meet product specifications under good manufacturing practice regulations,” said Acting U.S. Attorney Seth D. DuCharme. “The injunctive relief obtained by the United States in this case protects consumers by requiring defendants to follow the law and adhere to the regulations in manufacturing and distributing dietary supplements.”
“American consumers expect dietary supplements to contain the ingredients stated on the label, in the stated amounts,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The department will continue to work with the FDA to ensure that dietary supplement manufacturers follow the law.”
“Consumers deserve access to dietary supplements that are manufactured to assure their quality. If a dietary supplement company repeatedly fails to comply with basic good manufacturing practice requirements, the public cannot trust that their products are what they say they are,” said Judy McMeekin, Pharm.D., FDA’s Associate Commissioner for Regulatory Affairs. “The FDA will continue to protect American consumers by taking appropriate actions necessary when companies violate the law.”
According to the complaint, the defendants made and distributed more than 50 dietary supplements under brand names that include Confidence USA, American Best, USA Natural and The Herbal Store.
Dietary supplements not prepared, packed and held in conformance with current good manufacturing practices (cGMP) regulations are adulterated in violation of the FDCA. The FDA issued a warning letter to Confidence USA in 2011 regarding deficiencies with the company’s manufacturing practices, and U.S. Marshals previously seized certain Confidence USA products in connection with a 2012 complaint alleging the products were adulterated.
Assistant United States Attorney Robert Schumacher from the U.S. Attorney’s Office for the Eastern District of New York and Trial Attorney Raquel Toledo of the Justice Department’s Consumer Protection Branch handled the case, with assistance from Associate Chief Counsel for Enforcement Jennifer Argabright of the FDA’s Office of General Counsel.
E.D.N.Y. Docket No: 19–CV–3073 (ERK)
Brooklyn Man Charged with Enticing a 15-Year-Old Girl to Travel to Engage in Sexual ActivityRead the Press Release
Earlier today, in federal court in Brooklyn, a three-count indictment was unsealed charging Jacob Daskal with coercing a minor to engage in illicit sexual conduct, transportation of a minor with intent to engage in criminal sexual activity and travelling with intent to engage in illicit sexual conduct. Daskal was arrested today and is scheduled to be arraigned this afternoon before United States Magistrate Judge Peggy Kuo.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the arrest and charges.
“As alleged, Daskal, who was almost 60 years old when these crimes were committed, exploited the vulnerability of a young teenager by grooming her for sex and enticing her into having sexual relations with him,” stated Acting United States Attorney DuCharme. “Protecting underage minors from flagrant sexual abuse and predators like the defendant will always be a high priority of this Office and the Department of Justice.” Mr. DuCharme expressed his grateful appreciation to the Kings County District Attorney’s Office and the New York City Police Department for their assistance with the case.
“A man who founded an organization aimed at creating a safer community should know the difference between right and wrong. As we allege, Mr. Daskal’s position of influence may have helped him attempt to silence his victim, but it won’t stop the FBI from holding him accountable. Sexually exploiting a teenaged girl is a crime that carries severe consequences, and we hope Mr. Daskal’s arrest will demonstrate to other victims that they can come forward. We are asking anyone with information about this investigation or the identities of additional victims to call us at 212-384-1000,” stated FBI Assistant Director-in-Charge Sweeney.
As set forth in court filings, between August and November 2017, Daskal, then age 59, allegedly engaged in a sexual relationship with a 15-year-old girl whom he took into his home in Brooklyn, where he groomed her for sex. During the summer of 2017, Daskal is alleged to have engaged in sexual relations with the victim primarily at his residence and at his summer home in South Fallsburg, New York. In October 2017, the victim moved to Chicago to attend a new school and live with another family. While the victim was in Chicago, Daskal communicated with her via text message and over Skype video chat. He requested that she pose nude for him during their video chats and send him nude photographs as well. On November 5, 2017, Daskal traveled by plane to Chicago to visit the victim and brought her to a hotel room he had booked. There, he engaged in sexual intercourse and oral sex with the victim.
Throughout the abuse, Daskal was the founder and chief of the Borough Park Shomrim Society, a private anti-crime patrol group, a position in the community which led the victim to feel threatened when he told her not to tell anyone about their sexual relationship.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted of the charges, Daskal faces a mandatory minimum of 10 years’ imprisonment and a maximum of life in prison.
The government’s case is being prosecuted by the office’s Civil Rights Section. Assistant United States Attorneys Erin Reid and Jonathan Algor are in charge of the prosecution.
The Defendant:
JACOB DASKAL
Age: 62
Brooklyn, New YorkE.D.N.Y. Docket No. 21-110 (NGG)
Provider of Federally-Funded Tutoring Services to Underprivileged New York City Public School Students Agrees to Settle Civil Fraud AllegationsRead the Press Release
Innovative Educational Programs, LLC (Innovative), an educational services provider, has agreed to pay the United States $1,185,000 to resolve civil allegations that it fraudulently billed the United States for tutoring services for underprivileged New York City students that it never actually provided.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and Terry Harris, Special Agent-in-Charge, U.S. Department of Education, Office of Inspector General, Eastern Regional Office (DOE-OIG), announced the settlement.
“This settlement should put providers of educational services on notice that this Office will aggressively protect federal programs meant to help disadvantaged students and will hold accountable those who exploit and manipulate such programs,” stated Acting United States Attorney DuCharme.
“The Office of Inspector General has a unique and special law enforcement mission – to protect public education funds for eligible students. Today’s settlement is a result of the hard work and effort of OIG special agents and staff,” stated DOE-OIG Special Agent-in-Charge Harris. “I'm proud of their efforts, as well as those of our law enforcement partners and the U.S. Attorney’s Office whose actions today corroborates the importance of maintaining the integrity of Federal education programs and the taxpayer funds that support them.”
The settlement resolves allegations that, between 2009 and 2012, Innovative, a New Jersey limited liability corporation, fraudulently obtained federal funds for purportedly providing after-school tutoring services to underprivileged students attending underperforming New York City public schools. The New York City Department of Education paid Innovative $72.80 per hour for each student that Innovative tutored. This money consisted entirely of funds made available to New York State by the United States under the Elementary and Secondary Education Act of 1965, as amended by the No Child Left Behind Act of 2001. As a condition for receiving payment for its tutoring services, Innovative was required to certify that its attendance records were true and accurate. The government’s investigation revealed that Innovative billed the government for allegedly providing after-school tutoring services to students on days when the students were, in reality, absent from school.
The allegations were brought to the government’s attention through the filing of a complaint pursuant to the qui tam provisions of the False Claims Act (the Act). Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. The Act also permits the government to intervene in such actions, as the government has done in this case.
The claims resolved by the settlement are allegations only and there has been no finding of liability by a court. Innovative has expressly denied these allegations and any liability under the Act.
The United States’ case was handled by Assistant U.S. Attorney James R. Cho of the Office’s Civil Division, with assistance from Affirmative Civil Enforcement Paralegal Loan Nguyen.
E.D.N.Y. Docket No. 12-CV-094 (FB)
11 Members and Associates of the “Bully Gang” Charged with Racketeering OffensesRead the Press Release
A third superseding indictment was unsealed today in federal court in Brooklyn charging 11 members and associates of the violent New York City-based street gang known as the “Bully Gang” with racketeering for their role in multiple crimes, including attempted murder, armed robbery, narcotics trafficking, bribery, extortion and money laundering. Charges against multiple co-conspirators were also unsealed, including a New York City Department of Correction (DOC) officer and a former DOC officer who are charged with participating in a drug trafficking conspiracy led by the founder and leader of the Bully Gang which trafficked drugs into DOC facilities. Six defendants were arrested in the New York area today and will be arraigned via videoconference this afternoon before United States Magistrate Judge Vera M. Scanlon. The remaining defendants will be arraigned at a later date.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, John B. DeVito, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Division (ATF), Dermot F. Shea, Commissioner, New York City Police Department (NYPD), and Margaret Garnett, Commissioner, New York City Department of Investigation (DOI), announced the arrests and charges.
“For years, members and associates of the Bully Gang have committed brutal and wanton acts of violence while spreading the poison of dangerous and illicit drugs throughout communities and even correctional institutions,” stated Acting United States Attorney DuCharme. “Thanks to the tireless efforts of our law enforcement partners, today’s charges mark significant progress towards permanently neutralizing the Bully Gang and dismantling its destructive drug-trafficking network.”
“Today, a sophisticated criminal network, committing acts of violence, trafficking in firearms, and distributing dangerous narcotics across the east coast has been dismantled. Thanks to the unwavering efforts of the ATF/NYPD Joint Firearms Task Force, these Bully Gang members and their associates are off the streets and facing lengthy prison sentences, where they will no longer be a threat to public safety,” stated ATF Special Agent-in- Charge DeVito.
“This investigation deals a substantial blow to gang violence on our City streets and demonstrates the critical need to uphold integrity as a City employee and in all City operations. As charged, these current and former City Correction officers used the access and influence of their position to traffic dangerous drugs from the Bully Gang to inmates on Rikers Island in exchange for bribes, undermining the safety of the City's jails and that of their fellow officers. DOI is proud to partner with the U.S. Attorney for the Eastern District of New York, the ATF, and the NYPD on this important investigation and we will continue to work together to protect our City jails from contraband smuggling,” stated DOI Commissioner Garnett.
As set forth in the indictment and other court filings, the defendants used force and violence to promote their power, terrorize surrounding communities and enrich themselves and their members. For example, in June 2018, Moeleek Harrell, the founder and leader of the Bully Gang, conspired with Derrick Ayers, another member, to murder a perceived “rival” of the gang, whom Harrell later shot at multiple times on a street in Brooklyn. Harrell’s leadership of the gang continued even after his incarceration at Rikers Island, where he led a drug trafficking, bribery and money laundering scheme responsible for smuggling drugs into the jail through the use of conspirators and the payment of bribes to correctional officers.
As alleged, the defendants also operated a years-long, sophisticated drug trafficking network responsible for trafficking large quantities of dangerous drugs like cocaine base (“crack”), heroin and fentanyl through New York to Maine, and elsewhere. As alleged, the gang’s leaders sent Brooklyn-based drug dealers, including Bully Gang members and associates, from New York to Maine to operate “trap” houses where narcotics were stored and sold. The organization’s drug proceeds were collected on a regular basis and laundered through financial transactions and the purchase of high-value assets, including jewelry and cars. During the investigation, law enforcement seized more than $380,000 in cash, more than 15 firearms, six kilograms of cocaine, 600 grams of fentanyl, multiple luxury watches and four vehicles with concealed “trap” compartments installed.
In the summer of 2020, Bully Gang members Franklin Gillespie and Latrell Johnson committed a spree of gunpoint robberies, displaying firearms to victims on the street in lower Manhattan to overpower them. In 2020 and 2021, Johnson also extorted a local business in Brooklyn, brandishing a firearm as part of the extortion scheme.
Between June 2019 and June 2020, Johnny Chiles, currently employed by DOC as an officer, and then-DOC officer Darius Murphy accepted payments from gang associates in exchange for delivering papers soaked in synthetic cannabinoids to inmates at Rikers Island.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section and Public Integrity Section. Assistant United States Attorneys Drew G. Rolle, Nicholas J. Moscow and Lindsey R. Oken and Special Assistant United States Attorney Virginia T. Nguyen, are in charge of the prosecution.
New Defendants:
KASSIN APPLING (also known as “Killa” and “Kassim”)
Age: 34
Brooklyn, New YorkJOHNNY CHILES
Age: 36
Brooklyn, New YorkRONALD DAVIS (also known as “Ronno”)
Age: 29
Brooklyn, New YorkBRITTANY DUNCAN
Age: 26
Bayonne, New JerseyNEHEMIE ERIL (also known as “Poca”)
Age: 24
Orange, New JerseyLARON ESTRADA (also known as “Yetta”)
Age: 27
Brooklyn, New YorkROBERT HOLT (also known as “Ricky” and “Ghost”)
Age: 33
Brooklyn, New YorkDARIUS MURPHY
Age: 24
Brooklyn, New YorkTERRELL RATLIFF (also known as “Rello”)
Age: 29
Brooklyn, New YorkJAMEL SMITH
Age: 23
Bronx, New YorkDefendants Previously Indicted:
JESSICA ALMEIDA
Age: 33
Detroit, MaineDERRICK AYERS (also known as “Dee” and “Mel”)
Age: 34
Rahway, New JerseyTYRONE BANKS (also known as “Ty Hitta”)
Age: 23
Brooklyn, New YorkJANET BLOOD
Age: 47
Troy, MaineDAYVON BOSTICK-SAMUELS (also known as “Daytoe”)
Age: 22
Brooklyn, New YorkBERMON CLARKE (also known as “G” and “Blue”)
Age: 28
Rahway, New JerseyMIKE GUSTAVO CONNOR (also known as “Gus”)
Age: 21
Brooklyn, New YorkRASHAAD CRAIG (also known as “Skeeno”)
Age: 25
Brooklyn, New YorkQUINTEN DELVALLE (also known as “Q”)
Age: 24
Brooklyn, New YorkELIZABETH DUECASTER
Age: 35
Searsport, MaineCHRISTINA ESTEVEZ
Age: 31
Queens, New YorkERICA FAGGIOLE
Age: 44
MaineANTONIO FULTON (also known as “Tone”)
Age: 23
Brooklyn, New YorkFRANKLIN GILLESPIE (also known as “Spazz” and “Frankie Gino”)
Age: 30
Newark, New JerseyROMEO GONZALES
Age: 22
Brooklyn, New YorkNIA GOVAN (also known as “Cam” and “V”)
Age: 29
Boston, MassachusettsKEON GRANT (also known as “Keys”)
Age: 34
Brooklyn, New YorkMOELEEK HARRELL (also known as “Moe Money”)
Age: 31
Brooklyn, New YorkPAUL HARRIS (also known as “Baldhead”)
Age: 31
Brooklyn, New YorkNADINE HEATH
Age: 54
Troy, MaineAMANDA HUARD
Age: 38
Raymond, MaineLATRELL JOHNSON (also known as “Barlie Buckz”)
Age: 27
Brooklyn, New YorkANTHONY KENNEDY (also known as “Biggie”)
Age: 34
Queens, New YorkTYQUAWN LANE (also known as “Bicks” and “Tah Tah”)
Age: 27
Brooklyn, New YorkJOANNE LYDEM
Age: 49
Garland, MaineJESSICA PELKEY
Age: 26
Presque Isle, MaineCHRISHAWN PENN (also known as “Prince”)
Age: 26
Brooklyn, New YorkMICHAEL PEREZ (also known as “White Mike”)
Age: 29
Brooklyn, New YorkJOELLE POCHE (also known as “Rico”)
Age: 21
Brooklyn, New YorkMICHAEL REID (also known as “Half”)
Age: 39
Brooklyn, New YorkISAIAH TERRY SANDIFORD
Age: 21
Brooklyn, New YorkCHINASA STRACHAN
Age: 33
Brooklyn, New YorkNICOLETTE TOMPKINS
Age: 22
Westfield, MaineAMANDA WALTON (also known as “A”)
Age: 32
Portland, MaineDANIELLE WHITE
Age: 47
Swanville, MaineE.D.N.Y. Docket No. 20-CR-239 (S-3) (BMC)
Serbian Founder of Digital-Asset Companies Indicted in International Cryptocurrency SchemeRead the Press Release
A Serbian man was charged in an indictment today for his alleged participation in a coordinated cryptocurrency scheme in which he solicited U.S. investors using two fraudulent online investment platforms.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, Acting U.S. Attorney Seth D. DuCharme of the Eastern District of New York, Assistant Director in Charge Kristi K. Johnson of the FBI’s Los Angeles Field Office, and Special Agent in Charge Ryan L. Korner of the IRS Criminal Investigation (IRS-CI) Los Angeles Field Office made the announcement.
Kristijan Krstic, 45, was charged in an indictment filed today in the Eastern District of New York with one count of conspiracy to commit securities fraud, one count of securities fraud, one count of conspiracy to commit wire fraud, and one count of conspiracy to commit money laundering.
According to the indictment, Krstic was the founder of two digital-asset investment platforms, “Start Options” and “B2G,” and also served as the chief financial officer of Start Options. As alleged, between approximately 2017 and 2018, Krstic and others fraudulently induced U.S.-based investors to purchase securities in the form of investment contracts in Start Options and B2G. In order to perpetuate the fraud, Krstic allegedly used the alias “Felix Logan” and created the Twitter handle “@felixlogan_cfo” to communicate with investors in Start Options and B2G.
The indictment alleges that Start Options purported to be an online investment platform that provided cryptocurrency mining and digital-asset trading services, including trading in cryptocurrencies, commodities, stocks, and indices. Start Options also allegedly claimed that it was “the largest Bitcoin exchange in euro volume and liquidity” and that it was “consistently rated the best and most secure Bitcoin exchange by independent news media.” The indictment further alleges that B2G purported to be an “ecosystem” that would allow users to trade B2G tokens, as well as digital and fiat currencies, “on a secure, comprehensive platform.”
As alleged, Krstic and others represented that once investors opened a B2G account, a deposit of B2G “open[ed] a door to all the curtains inside Aladdin’s cave. Dollars buy B2G; B2G tokens can be exchanged back into dollars, or for Euros, or for other national fiat currencies. B2G holdings can be traded for original bitcoin or other altcoins.”
According to the indictment, however, both Start Options and B2G were fraudulent. In truth, the money sent by investors in Start Options and B2G allegedly was never invested and instead was laundered internationally to a Phillippines-based financial account and digital-currency wallet, and diverted to a U.S.-based promoter of the fraud. Subsequently, as alleged, the promoter transferred to Krstic approximately $7 million in investor funds from B2G and Start Options, and Krstic thereafter stopped responding to all communications and absconded with those investors’ funds. A press release issued by Start Options claimed that the company had been sold to Russian venture capitalists.
The former Director of North American Operations for Start Options and B2G, John DeMarr, 55, of Santa Ana, California, was previously charged for his role in the scheme.
The charges in an indictment are based on allegations, and the defendants are presumed innocent unless and until proven guilty.
This case was investigated by the FBI and IRS-CI. Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Kaitlin Farrell, Hiral Mehta, and David Pitluck of the Eastern District of New York are prosecuting the case, with assistance on forfeiture matters from Assistant U.S. Attorney Laura Mantell.
The Criminal Division’s Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country.
Leader of Internet Marketing Schemes Charged with Defrauding Customers and Financial Institutions of Millions of DollarsRead the Press Release
An indictment was unsealed today in federal court in Brooklyn charging Larby Amirouche with conspiracy to commit bank and wire fraud, bank fraud, making false statements to banks and conspiracy to commit money laundering. These charges are brought in connection with a series of internet marketing schemes that utilized internet e-commerce websites to defraud consumers and financial institutions. Amirouche was arrested today and will make his initial appearance this afternoon in federal court in Chicago, Illinois.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York Field Office (IRS-CI), announced the arrest and the charges.
“Amirouche was the alleged ringleader of an elaborate internet marketing scheme designed to fleece unwitting consumers and financial institutions,” stated Acting United States Attorney DuCharme. “This Office is committed to protecting consumers from fraudulent marketing practices and ensuring integrity in the e-commerce marketplace.”
“Amirouche allegedly victimized unsuspecting consumers by creating a web of lies in layering financial transactions to ultimately defraud these victims for his own personal gain,” stated IRS Special Agent-in-Charge Larsen. “IRS-Criminal Investigation stands at the ready to follow the money and unravel these fraudulent schemes to protect the integrity of our financial system.”
As detailed in the indictment and other court documents, Amirouche was the managing member of Angry Elephant Marketing LLC and Purple Whale Management LLC. Between January 2012 and April 2016, Amirouche allegedly orchestrated a series of internet marketing schemes that utilized internet e-commerce websites that purported to sell various types of dietary supplements, hair care products, skin care products, testosterone and web-based business tutorials. Amirouche and his co-conspirators earned illegal profits by (1) charging consumer credit cards for products that were ordered, but never delivered to the consumer; (2) charging consumer credit cards for products that were not purchased by the consumers and (3) repeatedly charging consumers for products that they had ordered from Amirouche’s websites.
Amirouche and his co-conspirators set up dozens of shell companies fronted by nominees they recruited to distance themselves from the fraudulent schemes and maximize the ill-gotten profits. The profits were funneled to a bank account that was in the name of a nominee, but was actually controlled by Amirouche. From that account, Amirouche sent over $1.3 million to bank accounts in the names of other companies he controlled.
Amirouche and his co-conspirators also fraudulently established bank and merchant accounts for the shell companies so they could process credit card transactions and collect and transfer the proceeds of their crimes.
In addition, Amirouche and his co-conspirators concealed material information from the financial institutions that supported the merchant card accounts. The misrepresentations were designed to prevent the financial institutions from discovering the frauds, which would have led to the financial institutions shutting off the accounts for the websites and stopping payment of funds to Amirouche.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, the defendant faces up to 20 years’ imprisonment.
The government’s case is being handled by the Office’s Business & Securities Fraud Section. Assistant United States Attorneys David Pitluck and Michael Keilty are in charge of the prosecution.
The Defendant:
LARBY AMIROUCHE
Age: 31
Chicago, IllinoisE.D.N.Y. Docket No. 21-CR-64 (RPK)
Founder of International Cryptocurrency Companies Indicted in Multi-Million Dollar Securities Fraud SchemeRead the Press Release
BROOKLYN, NY – Earlier today, in federal court in Brooklyn, an indictment was unsealed charging Krstijan Krstic with conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering for his alleged participation in a cryptocurrency scheme in which he solicited U.S. investors using two fraudulent online investment platforms.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division, Kristi K. Johnson, Assistant Director-in-Charge, Federal Bureau of Investigation, Los Angeles Field Office (FBI), and Ryan L. Korner, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, Los Angeles Field Office (IRS-CI), announced the indictment.
“As alleged, Krstic convinced U.S. investors to pour millions of dollars into fraudulent cryptocurrency schemes through misrepresentations and false statements, and then ran off with their money,” stated Acting U.S. Attorney DuCharme. “This Office is committed to vigorously prosecuting those who cheat investors." Mr. DuCharme expressed his grateful appreciation to the U.S. Securities and Exchange Commission, New York Regional Office, for its assistance with the case.
“Mr. Krstic and others devised fraudulent platforms which purported to offer sophisticated options appealing to bitcoin investors, then fabricated positive reports about the company in an attempt to add legitimacy to the scheme,” stated FBI Assistant Director-in-Charge Johnson. “Cryptocurrency scams are on the rise. The charges against Mr. Krstic should send a message that the FBI and our partners take securities fraud very seriously and will hold accountable individuals who steal from American investors.”
“Today’s indictment of Kristijan Krstic highlights just how seriously IRS Criminal Investigation and the federal law enforcement community are taking criminal activity related to cryptocurrency and online fraud schemes,” stated Special Agent-in-Charge Korner. “Under the cloak of an international online digital currency exchange, $7 million in investor funds from B2G and Start Options were allegedly funneled from unwitting investors directly to Krstic’s pocket. Whether online or on the streets, financial crime never pays, and IRS Criminal Investigation will continue to work tirelessly to ensure those who are involved are brought to justice.
As alleged in the indictment, Krstic was the founder of two digital-asset investment platforms, “Start Options” and “B2G,” and also served as the chief financial officer of Start Options. Between approximately 2017 and 2018, Krstic and others fraudulently induced U.S.-based investors to purchase securities in the form of investment contracts in Start Options and B2G. To perpetuate the fraud, Krstic used the alias “Felix Logan” and created the Twitter handle “@felixlogan_cfo” to communicate with investors in Start Options and B2G.
Start Options purported to be an online investment platform that provided cryptocurrency mining and digital-asset trading services, including trading in cryptocurrencies, commodities, stocks and indices. Start Options also claimed that it was “the largest Bitcoin exchange in euro volume and liquidity” and that it was “consistently rated the best and most secure Bitcoin exchange by independent news media.” B2G purported to be an “ecosystem” that would allow users to trade B2G tokens, as well as digital and fiat currencies, “on a secure, comprehensive platform.” Krstic and others represented that once investors opened a B2G account, a deposit of B2G “open[ed] a door to all the curtains inside Aladdin’s cave. Dollars buy B2G; B2G tokens can be exchanged back into dollars, or for Euros, or for other national fiat currencies. B2G holdings can be traded for original bitcoin or other altcoins.”
In reality, the money sent by investors in Start Options and B2G was never invested as promised, and instead was funneled to a Philippines-based financial account and digital-currency wallet, and to a U.S.-based promoter of the fraud. Subsequently, the U.S.-based promoter transferred approximately $7 million in investor funds from B2G and Start Options to Krstic, and Krstic thereafter stopped responding to all communications and absconded with those investors’ funds. A press release issued by Start Options falsely claimed that the company had been sold to Russian venture capitalists.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Kristic faces up to 20 years’ imprisonment.
This case was investigated by the FBI and IRS-CI. The prosecution is being handled by the Business & Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section. Assistant U.S. Attorneys Kaitlin T. Farrell, Hiral D. Mehta and David C. Pitluck of the Eastern District of New York, assisted by a Special Agent of the Eastern District of New York’s Business & Securities Fraud Section and Trial Attorney Kevin Lowell of the Criminal Division are prosecuting the case. Assistant U.S. Attorney Laura D. Mantell of the Eastern District of New York’s Civil Division is handling forfeiture matters.
The Defendant:
KRISTIJAN KRSTIC
Age: 45
SerbiaE.D.N.Y. Docket No.: 21-CR-
CEO of Medifirst Solutions, Inc. Arrested for Securities FraudRead the Press Release
A criminal complaint was unsealed today in federal court in Brooklyn charging Bruce Schoengood, the chief executive officer of Medifirst Solutions, Inc. (MFST"), a publicly-traded company, with securities fraud in connection with a scheme that yielded hundreds of thousands of dollars in profits for Schoengood and others, while defrauding MFST investors. Schoengood was arrested earlier today and made his initial appearance this afternoon via videoconference before United States Magistrate Judge Robert M. Levy. The defendant was released on a $500,000 bond.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charge.
“CEOs of publicly-traded companies cannot enrich themselves at the expense of investors by illegally manipulating the stock of their companies,” stated Acting United States Attorney DuCharme. “This Office is committed to upholding the integrity of financial markets and to prosecuting, to the fullest extent of the law, company executives who abuse investors' trust.” Mr. DuCharme expressed his grateful appreciation to the U.S. Securities and Exchange Commission for its assistance with the case.
“As alleged, Schoengood stood to illegally profit from the exploitation of his victims, whom he defrauded through manipulative practices carried out in relation to the purchase and sale of stock for Medifirst Solutions, Inc. These illegal business practices, while all too common, tend to catch the eye of federal investigators. The FBI is committed to bringing to justice all those who attempt to defeat the integrity of the financial markets in this way,” stated FBI Assistant Director-in-Charge Sweeney.
According to the complaint, between May 2016 and January 2019, Schoengood, together with others, engaged in a scheme to defraud MFST investors by manipulating the volume of MFST stock and concealing the sale of that stock by others. Specifically, Schoengood entered into sham consulting agreements with a co-conspirator (Co-Conspirator 1) so that Co-Conspirator 1 would appear to be working for MFST. Schoengood then transferred MFST stock to Co-Conspirator 1 and made false statements in public filings and related filings to enable the shares to be deposited and sold by Co-Conspirator 1, so that Co-Conspirator 1 and an investment relations firm could participate in the undisclosed promotion of MFST stock. Schoengood also issued stock to co-conspirators so that they could sell their shares into the artificially created volume by Co-Conspirator 1 and the investment relations firm, then “kickback” portions of the proceeds to Schoengood.
The charge in the complaint is an allegation, and the defendant is presumed innocent unless and until proven guilty. If convicted of securities fraud, Schoengood faces up to 20 years in prison.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Hiral D. Mehta is in charge of the prosecution.
The Defendant:
BRUCE SCHOENGOOD
Age: 62
Manalapan, New JerseyE.D.N.Y. Docket No. 20-MJ-206
Mexican National Extradited to Face Sex Trafficking and Related ChargesRead the Press Release
Hugo Hernandez-Velazquez, also known as “Norberto Hernandez Velasquez” and “La Gallina,” will be arraigned via videoconference this afternoon before United States Magistrate Judge Vera M. Scanlon at the federal courthouse in Brooklyn on a 12-count indictment. Along with his siblings Arcelia Hernandez-Velazquez, also known as “La Gordis,” and Ernesto Hernandez-Velazquez, also known as “Chapas,” Hugo Hernandez-Velazquez is charged with racketeering and racketeering conspiracy involving predicate acts of sex trafficking by force, fraud and coercion, interstate prostitution, alien smuggling, money laundering and related offenses. Hugo Hernandez-Velazquez was arrested on a provisional arrest warrant in August 2020 and extradited on Wednesday, February 17, 2021, from Mexico to the United States. His co-defendants were previously arrested in New York in November 2019 and are currently awaiting trial.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), announced the charges.
“For nearly two decades, the defendants lured young women into a brutal life of forced prostitution through false promises of a better life,” stated Acting United States Attorney DuCharme. “This Office will leave no stone unturned in its efforts to end the illegal exploitation of young women and in holding the defendants to account for their crimes and the lasting harm they have inflicted on their victims.”
Mr. DuCharme thanked the Department of Justice’s Office of International Affairs for their assistance, the New York City Police Department for its longstanding partnership in the Office’s coordinated anti-trafficking program, and the State Department. Mr. DuCharme also thanked the many victim service providers and advocates for their dedicated efforts to restore and improve the lives of survivors of trafficking. In particular, Mr. DuCharme thanked the organizations and individuals who provided services and advocacy to the victims in this case.
“Words can’t describe the type of person who preys on and victimizes women by forcing them into prostitution while using violence to maintain control over them. Hugo Hernandez-Velazquez and his organization did just that, treating women as mere commodities meant to be bought and sold rather than as human beings deserving of respect,” stated HSI Special Agent-in-Charge Fitzhugh. “As human trafficking operates in darkness, HSI works tirelessly to rescue victims out of the shadows as we investigate and hold accountable those who exploit and victimize others for their own financial advantage.”
As set forth in the indictment, since at least 2001, the Hernandez-Velazquez Trafficking Organization, a family organization based in Mexico, has used force, fraud and coercion to cause young women in Mexico to engage in prostitution in the United States. Members of the organization lured victims into romantic relationships through false promises of love and support. Victims were taken to the homes of members of the organization in Tenancingo, Mexico, where they were often not allowed to leave the home and not allowed to contact their families. The victims were pressured to travel to the United States with promises of a better life with their trafficker. After the young women were smuggled into the United States, members of the organization transported them to various states, including Alabama, Connecticut, Florida, Georgia, Louisiana, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Tennessee and Virginia, to engage in prostitution. In addition, the organization maintained a base of operations in Queens, New York. Members of the organization used violence, including physical beatings and forced abortions, and threatened violence to the victims’ families to force the victims to continue prostituting. The prostitution proceeds were sent to members of the organization in Mexico through wire transfers and cash shipments.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of the charges, the defendants face life imprisonment.
The government’s case is being prosecuted by the Office’s Civil Rights Section. Assistant United States Attorneys Margaret Lee and Erin Reid are in charge of the prosecution.
The Defendants:
ARCELIA HERNANDEZ-VELAZQUEZ
Age: 47
Queens, New YorkERNESTO HERNANDEZ-VELAZQUEZ
Age: 40
Queens, New YorkHUGO HERNANDEZ-VELAZQUEZ
Age: 45
MexicoE.D.N.Y. Docket No. 19-CR-306(S-1)(WFK)