Eastern District of New York
Press releases recorded for this federal judicial district.
Felon Convicted of Possessing Firearm and Ammunition Used in a Shooting in QueensRead the Press Release
Earlier today in the first federal criminal trial in the Eastern District of New York since the COVID-19 pandemic, a federal jury in Brooklyn returned a guilty verdict against Alonzo Shipp for being a felon in possession of a firearm and ammunition in connection with a 2018 shooting in South Jamaica, Queens. The verdict followed a six-day trial before United States District Judge Rachel P. Kovner. When sentenced, Shipp faces up to 10 years’ imprisonment on each count.
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), and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the verdict.
“A convicted felon armed with a gun is a fraught combination that oftentimes results in someone getting shot and that is precisely what happened in this case,” stated Acting United States Attorney DuCharme. “Today’s verdict is yet another reminder as to why this Office remains focused on prosecuting violent armed offenders who seem to think that they can shoot victims on our streets with impunity.”
“ATF’s message to violent criminals has always been and remains clear to this day. If you terrorize our communities, we will stop you, and you will serve time in federal prison. ATF is committed to working with our partners to ensure that all New Yorkers can safely walk their streets,” stated ATF Special Agent-in-Charge DeVito.
The evidence at trial established that in the early morning hours of July 20, 2018, Shipp, also known as “Pump,” shot the victim in the abdomen. The victim collapsed two blocks away and called 911. Shipp followed the victim and 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 tossing the gun in a dumpster. Later that morning, a civilian found the gun and contacted the NYPD. Police officers recovered the gun, and 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 and revealed a message in which he admitted to a friend that he was on the run because of the shooting at the location where the victim was found. The victim survived the shooting.
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. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorneys’ Offices to work in partnership with federal, state, local and tribal law enforcement and the local community 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
Age: 33
Richmond, VA.E.D.N.Y. Docket No. 19-CR-029 (RPK)
Staten Island Man Arrested in Connection with Threats to Kill Protesters, Politicians and Members of Law EnforcementRead the Press Release
A criminal complaint was unsealed earlier today in federal court in Brooklyn charging Brian Maiorana, a resident of Staten Island, with threatening to kill and ordering others to kill protestors, politicians and law enforcement in retaliation for the 2020 U.S. Presidential Election. Maiorana was arrested this morning, and made his initial appearance this afternoon before United States Magistrate Judge Sanket J. Bulsara. Maiorana was ordered detained pending trial.
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 Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the arrest and charges.
“The Department of Justice will not stand idly by when people like the defendant allegedly threaten to kill elected officials, lawful protesters and law enforcement simply because of animus towards the outcome of an election. Americans have a constitutional right to voice their opinions, but this Office will not tolerate violence or threats of violence used to intimidate others with whom they disagree,” stated Acting United States Attorney DuCharme.
“Mr. Maiorana’s online posts called for violence against our entire community—protestors, politicians, and law enforcement officers alike. His alleged threats are disturbing and far outside of acceptable norms, but they also violated federal law. A word of advice to those who haven’t yet figured this out—the FBI will carry out our mission to protect the public’s safety and our constitutional right to disagree with one another, but we will not tolerate threats and acts of violence. Any others who wish to follow the example set by Mr. Maiorana will be held accountable in the same way,” stated FBI Assistant Director-in-Charge Sweeney.
As set forth in the complaint, beginning in September 2020, Maiorana used a social media platform to post multiple threats to kill protestors, politicians and law enforcement officers and to encourage others to do the same. For example, on October 19, 2020, Maiorana posted that “[i]ts come to the point where pipe bombs need to be thrown into these mobs of potentially non violent violent protesters.” On November 8, 2020, Maiorana posted: “Soap Box, Ballot Box…that was fraudulently stolen from us, Now Cartridge Box,” a reference to ammunition or “cartridges.” On November 8, 2020, following the news media’s projection of the result of the 2020 Presidential Election, Maiorana posted that “The Turner Diaries must come to life. We blow up the FBI building for real. All the alphabet agencies assassination will become the new normal now . . . that the electoral process is finished.” The “Turner Diaries”—a 1978 novel influential among white nationalist and neo-Nazi groups—depicts an overthrow of the U.S. federal government, nuclear war, and ultimately, the extermination of non-whites. It has been cited as inspiration for numerous acts of terrorism, including the 1995 Oklahoma City bombing.
Following Maiorana’s arrest, the FBI executed a search warrant at his residence and seized, among other things, a semiautomatic firearm and ammunition.
The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Maiorana faces up to five years’ imprisonment.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States Attorneys Artie McConnell and Jonathan E. Algor are in charge of the prosecution.
The Defendant:
BRIAN MAIORANA
Age: 54
Staten Island, New YorkE.D.N.Y. Docket No.: 20-MJ-1072
Managers of Queens Business Charged with Selling Ineffective Covid-19 Air SanitizerRead the Press Release
This afternoon, in federal court in Brooklyn, Po Shan Wong and Zhen Wu of JCD Distribution Inc. (JCD) will make their initial appearances before United States Magistrate Judge Sanket J. Bulsara on a criminal complaint charging the defendants with selling “Virus Shut Out Cards,” which they marketed as air sanitizers designed to kill the novel coronavirus (COVID-19), but which have not been demonstrated to be effective in treating or preventing the virus. Specifically, the defendants are charged with conspiring to distribute and sell one or more pesticides that are not registered with the United States Environmental Protection Agency (EPA) and that are adulterated or misbranded. The defendants surrendered to authorities this morning.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), and Tyler Amon, Special Agent-in-Charge, United States.Environmental Protection Agency, New York Region (EPA), announced the arrests.
As alleged in the complaint, between May 2020 and July 2020, Po Shan Wong served as the General Manager, and Zhen Wu served as Sales Manager at JCD which maintained a business address in College Point, Queens. During that time, the defendants and JCD advertised “Virus Shut Out Cards” on the company’s website and Facebook page, and marketed and sold these products to customers by phone, making various untested claims regarding the effectiveness of the cards. For example, JCD’s Facebook page claimed that the cards emit chlorine dioxide and, thereby, serve as “portable space disinfection and sterilization cards” with a “sterilization rate at 99%.” In fact, chlorine dioxide—a gas—is a bleaching agent and a pesticide as defined by Federal Insecticide, Fungicide and Rodenticide Act.
JCD’s Facebook page also contained images that depicted a blue card, approximately the size of a credit card, being used by children and adults. For example, the images showed the blue card worn on a lanyard around a woman’s neck, hung from the lapel of a man’s suit jacket, hung from the pocket of a medical doctor’s white coat, attached to a boy’s backpack and a girl’s stroller, and attached to computer monitors. JCD’s Facebook page also claimed that the cards “replace masks.” JCD sold the cards in minimum quantities of 50, charging $9.50 per card.
Random samples of the “Virus Shut Out Cards” were tested by the EPA’s National Enforcement Investigations Center and found to contain sodium chlorite in amounts sufficient to convert into chlorine dioxide when exposed to the water vapor and carbon dioxide in the air. Breathing air with sufficiently high concentrations of chlorine dioxide may cause difficulty breathing, irritation in the nose, throat and lungs, shortness of breath, chronic bronchitis and other respiratory problems.
“The brazenly false claims allegedly promoted by the defendants about their product potentially endangered the public not only by claiming to protect against the Covid-19 virus, but also by exposing users to the health hazard posed by a misbranded pesticide,” stated Acting U.S. Attorney DuCharme. “The Department of Justice is working closely with its law enforcement partners to protect the public from those who exploit the global pandemic to enrich themselves.”
“The COVID-19 pandemic has opened a flood gate of fraudsters whose only goal is to take advantage of the public with bogus and unsubstantiated claims of virus protection products, such as this one. Consumers should be skeptical of any device, elixir, lotion or potion claiming to prevent or cure COVID-19 because to date, there is no such product. Postal Inspectors are working hard to stop these fraudsters in their tracks,” stated USPIS Inspector-in- Charge Bartlett.
“American consumers continue to be at risk from the illegal sale of products making bogus claims about effectiveness against viruses,” stated EPA Special Agent-in-Charge Amon. “EPA and our law enforcement partners will continue focusing our efforts on stopping these illegal sales and holding criminal opportunists accountable for their actions. Consumers can help protect themselves by visiting epa.gov/coronavirus for a list of EPA approved disinfectant products.”
The charge in the complaint is an allegation, and the defendants are presumed innocent unless and until proven guilty. If convicted of the charge, they face up to one year in prison.
The government’s case is being handled by the Office’s General Crimes Section. Assistant United States Attorneys Frank A. Cavanagh and Rachel A. Bennek are in charge of the prosecution.
The Defendants:
PO SHAN WONG
Age: 55
Jericho, New YorkZHEN WU
Age: 35
Flushing, New YorkE.D.N.Y. Docket No. 20-MJ-1054
Guyanese National Extradited to Face Cocaine Importation ChargeRead the Press Release
Shaun Nebblett, also known as “Shaun Wyatt” and “Dapper,” will be arraigned this afternoon in federal court in Brooklyn before United States Magistrate Judge Sanket J. Bulsara on an indictment charging him with conspiracy to import cocaine and other narcotics offenses. Nebblett was extradited to the United States from Guyana on November 6, 2020, the first from Guyana facing federal charges in the United States since 1999.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), and Troy Miller, Director of Field Operations, U.S. Customs and Border Protection, New York Field Office (CBP), announced the extradition.
“As alleged, the defendant recruited multiple individuals to fly into the United States on cocaine smuggling trips and supplied them with illegal narcotics,” stated Acting United States Attorney DuCharme. “The United States is committed to working with our international partners to dismantle the drug-trafficking organizations responsible for flooding our communities with dangerous drugs and bringing the individuals who run these operations to justice. I thank the Republic of Guyana for assisting with this extradition.” Mr. DuCharme extended his grateful appreciation to the DEA offices in Georgetown, Guyana, the United States Marshals Service, the United States Department of State, the Department of Justice’s Office of International Affairs, and the Government of Guyana.
“Nebblett is a former police officer in Guyana, yet he operated a transnational criminal organization responsible for smuggling large quantities of cocaine into the United States. Protecting our homeland extends beyond our borders, and HSI worked tirelessly with our law enforcement partners to take out yet another threat to the security of our border and the welfare of our communities, and Neblett will have to confront the justice he was once sworn to uphold,” stated HSI Special Agent-in-Charge Fitzhugh.
“This investigation exposes another insidious way traffickers smuggle drugs into our country,” stated DEA Special Agent-in-Charge Donovan. “To circumnavigate law enforcement detection, Nebblett allegedly recruited and used couriers to transport cocaine ladened shoes.”
“This case serves as a great example of collaborative law enforcement efforts to combat international narcotics trafficking conspirators. U.S. Customs and Border Protection thanks our partners at USAO, HSI, and DEA for their continued cooperation, as well as our international partners in helping to bring this fugitive to justice,” said Troy Miller, Director Field Operations in New York.
As alleged in court filings, between August 2015 and September 2015, Nebblett and others conspired to import 500 grams or more of a substance containing cocaine into the United States from Guyana. Specifically, in August 2015, Nebblett, who was a former police officer in Guyana, recruited an individual (“Courier 1”) to smuggle drugs into the United States in exchange for $8,000 and provided Courier 1 with money to purchase a plane ticket from Guyana to John F. Kennedy International Airport in Queens, departing on August 28, 2015. Nebblett packed Courier 1’s suitcase with seven pairs of shoes that concealed cocaine and directed Courier 1 to rent a hotel room near JFK. On August 28, 2015, upon arrival at JFK, Courier 1 was stopped by law enforcement officers who examined his luggage and discovered the cocaine in the shoes. A subsequent DEA laboratory test revealed that the shoes contained approximately 1.436 kilograms of cocaine.
The extradition of Nebblett is the result of an ongoing Organized Crime Drug Enforcement Task Force (OCDETF) investigation led by the United States Attorney’s Office for the Eastern District of New York, HSI and the DEA. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
The charges in the indictment is are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Nebblett faces a mandatory minimum sentence of five years’ imprisonment.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorney Alicia N. Washington is in charge of the prosecution. The Department of Justice’s Office of International Affairs handled the extradition in this matter.
The Defendant:
SHAUN NEBBLETT
Age: 40
Georgetown, GuyanaE.D.N.Y. Docket No. 16-CR-317 (PKC)
CoConspirator Sentenced to 10 Years’ Imprisonment in Multi-Million Dollar Investment Fraud Scheme that Victimized Professional Hockey Players and Long Island InvestorsRead the Press Release
Earlier today, in federal court in Central Islip, Tommy Constantine was sentenced by United States Circuit Judge Joseph F. Bianco to 10 years’ imprisonment for stealing millions of dollars raised from Long Island residents and professional athletes that were intended for investment in land developments in Hawaii and a start-up credit card business based in Arizona, among other purposes. Constantine and coconspirator Phillip Kenner were convicted at trial in July 2015. Constantine was convicted of one count of conspiracy to commit wire fraud, five substantive counts of wire fraud, and one count of conspiracy to commit money laundering. The Court entered a forfeiture money judgment in the amount of approximately $8.5 million and ordered that Constantine forfeit all his right, title and interest in specific assets, including an oceanfront resort in Mexico, real property in Hawaii and a Falcon 10 jet airplane, and ordered restitution in the amount of $5.2 million. On October 5, 2020, Judge Bianco sentenced Kenner to 17 years’ imprisonment. The Court has scheduled a restitution proceeding for Kenner on November 18, 2020.
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 Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation (IRS-CI), announced the sentence.
“For years, Constantine and his coconspirator abused the trust that these victims placed in them, stealing their hard-won earnings and diverting millions of dollars for their own use. When the investors started asking questions, rather than come clean, Constantine doubled down, re-victimizing the victims by convincing them to put even more good money in their bad hands. The jury’s verdict, and the Court’s sentences, reaffirm that greed-fueled crime will not pay off for fraudsters in the end,” stated Acting United States Attorney DuCharme. Mr. DuCharme expressed his grateful appreciation to the FBI and IRS, the agencies responsible for leading the government’s investigation.
“Constantine convinced investors to trust him with their money, on more than one occasion, for the sole purpose of diverting their funds into entities that benefited him. He’s the next in line in this case to receive his sentence today and face the consequences of his actions,” stated FBI Assistant Director-in-Charge Sweeney.
“Tommy Constantine and co-conspirator, Phillip Kenner, created a multi-million dollar criminal enterprise based on other people’s money,” stated IRS Special Agent-in-Charge Larsen. “Constantine went to great lengths in cultivating relationships based on trust and promises of future earnings. Constantine then breached that trust of several victims who have reached the pinnacle of success all for his personal gain. IRS-CI will continue to unravel these criminal enterprises where fraud is perpetuated and victims harmed.”
As early as 2004, Constantine and Kenner siphoned millions of investor dollars into a labyrinth of holding companies, diverting those dollars from their approved uses into companies, real estate and other ventures – such as Constantine’s car racing endeavors – that solely benefited the defendants.
Constantine gained access to these investor funds via his relationship with Kenner. Kenner was a collegiate hockey player in upstate New York, and his teammate, Joe Juneau, a future Olympian and National Hockey League star, introduced Kenner to a number of other NHL players in the 1990’s as Kenner began his career as a Boston-based financial advisor. Through those early contacts, Kenner developed a roster of clients, including former New York Islander Michael Peca; former New York Islander and New York Ranger Brian Berard; Darryl Sydor and Bill Ranford, both two-time Stanley Cup champions; and other NHL players whose careers and playing earnings blossomed just as they placed more and more trust in Kenner to invest and manage their finances and wealth. Instead, Kenner and Constantine diverted these earnings for their own uses.
The Hawaii Real Estate Investment Scheme
Beginning in 2003, Kenner convinced Peca, Berard and several others to invest $100,000 each for the development of land in Hawaii into luxury estates and to open personal lines of credit at a bank, collateralized by their personal stock, bond and savings accounts worth at least $10 million. Kenner assured the investors that the lines of credit would be used only to pay for initial development costs associated with the Hawaii project and would be fully replenished after Lehman Brothers Holdings, Inc. agreed to loan the project up to $105 million in August 2006. In fact, Kenner borrowed nearly all of investors’ lines of credit to acquire his personal interest in unrelated real estate projects in Hawaii and Mexico and to cover his own and Constantine’s personal expenses.
In an offshoot of the scheme, Constantine brokered a $3.5 million loan from an Arizona businessman ostensibly to close on a Hawaii parcel of land. Constantine put up no money of his own, but walked away from the transaction – funded with assets diverted from Peca, Berard and others – with approximately $2 million.
The Eufora LLC Scheme
In 2002, Constantine founded Eufora LLC, a prepaid debit card business. Between February 2008 and May 2009, Eufora was operating in the red, and as Constantine testified in civil depositions, the company was nearly worthless. Notwithstanding, Kenner persuaded clients to invest in Eufora. While representing that he was investing his clients’ funds in Eufora, Kenner instead wired $725,000 of his clients’ funds to Constantine’s personal account. Kenner also directed the wiring of an additional $700,000 of his clients’ funds to Eufora’s account, and promptly re-wired those funds to a coconspirator’s personal account. The diverted funds were used to cover the costs of Kenner’s and Constantine’s home mortgages, credit card bills and other debts.
The Global Settlement Fund Scheme
In early 2009, Kenner’s clients who had opened lines of credit for the Hawaii venture received notices that their credit lines were in default. For years, Kenner concealed that he had wiped out most of his clients’ funds by borrowing against one line of credit to pay monthly interest charges for other another account. By late 2008, the concealment scheme collapsed. Notwithstanding, Kenner and Constantine persuaded their clients to invest additional funds to a Global Settlement Fund. The clients contributed more than $2.9 million toward the fund, but the vast majority of the money was diverted to the defendants’ personal use, which included Constantine buying his personal home out of foreclosure, Kenner and Constantine paying legal bills related to Kenner’s personal investment in a tequila company in Mexico, defending Constantine in Florida litigation over his race car sponsorship activities, and an exploratory and unsuccessful effort by Constantine to buy Playboy Enterprises.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Saritha Komatireddy and J. Matthew Haggans are in charge of the prosecution. Assistant United States Attorneys Diane Leonardo and Madeline O’Connor are responsible for the forfeiture of assets.
The Defendants:
PHILLIP A. KENNER
Age: 51
Scottsdale, ArizonaTOMMY CONSTANTINE
Age: 54
Scottsdale, ArizonaE.D.N.Y. Docket No. 13-CR-607 (JFB)
New York City Police Department Officer and Four Others Arrested for Conspiracy to Import and Distribute CocaineRead the Press Release
An indictment was unsealed today in federal court in Brooklyn charging Amaury Abreu, an NYPD Police Officer, and two co-defendants, Julio Bautista and Gustavo Valerio, with conspiring to import and distribute cocaine. Between at least January 2016 and October 2020, Abreu, Bautista and Valerio were allegedly members of a multinational drug trafficking organization (DTO) with distributors in the New York-metropolitan area and the Dominican Republic. The indictment also charges Bautista and a fourth defendant, Cesar Diaz-Bautista, with possession with the intent to distribute cocaine. A fifth defendant, Junior Ortiz, is charged in a complaint with cocaine importation conspiracy. Abreu, Julio Bautista, Cesar Diaz-Bautista, Valerio and Ortiz were arrested this morning and are scheduled to be arraigned this afternoon before United States Magistrate Judge Sanket J. Bulsara.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Madeline Singas, Nassau County District Attorney, and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the arrests and charges.
“As alleged, Police Officer Abreu conspired with drug traffickers who distributed large quantities of cocaine in the Eastern District of New York. By joining forces with his co-conspirators, Abreu has allegedly committed serious crimes, disgraced his NYPD badge and betrayed the public trust as well as fellow members of law enforcement who put their lives on the line to interdict drugs that endanger our communities,” stated Acting United States Attorney DuCharme. Mr. DuCharme thanked the U.S. Drug Enforcement Administration, New York Field Division, HSI Office of Inspector General, the New York City Police Department’s Internal Affair Bureau and the Office of the Special Narcotics Prosecutor for the City of New York for their assistance with the investigation.
"Abreu is a sworn law enforcement officer who abused his badge and brought shame to his brothers and sisters in blue with his alleged involvement in a drug trafficking organization. There is no such thing as being above the law and we will stop anyone who exploits their position in public trust to conduct illicit acts. Dismantling this dangerous criminal organization is critical to protecting the homeland and our communities and HSI, working with its law enforcement partners, remains committed to making sure that Abreu, along with his co-conspirators, will face the consequences of their actions,” stated HSI Special Agent-in-Charge Fitzhugh.
“Officer Abreu and his co-conspirators served as a direct pipeline for the importation and distribution of cocaine in our city, as we allege today. While Abreu’s principal role in the DTO was more behind the scenes than out on the street, his double-dealing method of providing information and guidance to those who were on the front line of the illegal enterprise put the lives and safety of both the citizens of this city and his fellow NYPD officers at risk. The law enforcement community has no tolerance for imposters like Abreu, and we’ll be the first to show them the door when they engage in illegal activity of this magnitude,” stated FBI Assistant Director-in-Charge Sweeney.
“This criminal network allegedly trafficked more than 350 kilos of cocaine and was assisted by an NYPD officer, who used his knowledge and access to help them stay one step ahead of the law,” stated District Attorney Singas. “I am grateful we were able to assist our partners at the Eastern District of New York, Federal Bureau of Investigation and Homeland Security Investigations in unraveling this complex narcotics ring, which flooded New York with illicit drugs.”
“There is no place for corruption in the NYPD and it will always be prosecuted fully. We commend our IAB investigators and law enforcement partners in this case,” stated NYPD Commissioner Shea.
As set forth in the indictment and other court filings, the DTO imported multi-kilogram quantities of cocaine into the United States through a variety of means, including by sending drug couriers on flights to the United States, concealing narcotics in mail and tractor trucks that entered the United States from Mexico, and concealing narcotics in produce shipments that were imported into the United States. Since 2016, law enforcement agents have seized more than 350 kilograms of cocaine belonging to the DTO.
As alleged, Abreu, Bautista and Valerio played key roles in the DTO. Specifically, Bautista and Valerio were high-ranking members of the DTO based in New York, and were responsible for distributing and overseeing the distribution of cocaine once it arrived in New York. Abreu used his position as a police officer to protect his co-conspirators by providing information to the DTO about law enforcement procedures, performing warrant checks on DTO members on the NYPD arrest database and, on at least one occasion, distributing cocaine for the DTO. For example, in January 2016, Abreu messaged the DTO’s leadership, stating: “Today I’m going to find out the thing I couldn’t yesterday because there were too many people at the office.” One day later, Abreu messaged the DTO’s leadership that an associate of the DTO was “fine, because here in New York you don’t see information from another state when we run a license from another state only if they’re wanted so if they stop him tell him to say he lives in Pennsylvania and not in New York and it’s cool . . . .” On March 11, 2016, the DTO’s leadership sent Abreu a message containing defendant Valerio’s full name, date of birth and social security number. An audit of the NYPD’s arrest database revealed on that same day, Abreu searched for Valerio’s name in the warrants database despite having no legitimate law enforcement purpose for doing so. Ortiz allegedly operated a produce importation business that accepted shipments of cocaine from the DTO.
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants each face a mandatory minimum sentence of 10 years’ imprisonment and a maximum of life imprisonment on each of the charges.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorney Erin Reid is in charge of the prosecution.
The Defendants:
AMAURY ABREU
Age: 34
Hauppauge, New YorkJULIO BAUTISTA
Age: 35
Roosevelt, New YorkCESAR DIAZ-BAUTISTA
Age: 43
Roosevelt, New YorkGUSTAVO VALERIO
Age: 38
South Ozone Park, New YorkE.D.N.Y. Docket No. 20-CR-433 (RRM)
JUNIOR ORTIZ
Age: 29
Uniondale, New YorkE.D.N.Y. Docket No. 20-MJ-243
Medical Doctor Settles Civil Fraud Allegations in Adult Homes InvestigationRead the Press Release
Dr. Dominick Piacente, a New York family physician, has agreed to pay the United States $150,000 to resolve civil allegations that he paid kickbacks and caused false claims to be submitted to Medicare in connection with care that he purportedly provided to residents of adult homes.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (FBI) announced the settlement. Mr. DuCharme thanked the United States Department of Health and Human Services, Office of Inspector General, for its assistance in the investigation.
“Patients requiring the care of adult home service providers deserve to have the benefit of Medicare, and to be treated as people, not commodities. Doctors who bilk our federal healthcare programs, in the guise of caring for disabled and elderly patients, will be held accountable for their actions,” stated Acting United States Attorney DuCharme.
Adult homes are privately-owned residential facilities licensed by the State of New York to provide long-term care and supervision to adults with disabilities or mental illnesses. An investigation by the FBI revealed that from October 2015 through April 2016, Dr. Piacente paid medical management companies in adult homes to induce the companies to allow him to receive payment from Medicare for services that he did not actually provide to residents. The settlement resolves potential claims that Piacente’s alleged conduct violated the False Claims Act.
The claims resolved by the settlement are allegations only. The government’s case is being handled by Assistant United States Attorney Lisa Kutlin of the Office’s Civil Division.
Former CFO of Long Island Pharmaceutical Company Pleads Guilty to Insider TradingRead the Press Release
Earlier today, at the federal courthouse in Central Islip, Douglas Roth, the former Chief Financial Officer (CFO) of Aceto Corporation (Aceto), a pharmaceutical company based in Port Washington, New York, pleaded guilty to securities fraud for insider trading. Roth obtained material non-public information about Aceto’s financial condition while serving as the company’s CFO, then sold shares of Aceto ahead of a public announcement detailing negative information about the company’s finances and avoided more than $145,000 in losses. Today’s proceeding took place before United States District Judge Joan M. Azrack. When sentenced, Roth faces up to 20 years in prison, as well as forfeiture and a fine of up to $5 million.
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 guilty plea.
“Corporate officers cannot use their positions of trust for personal benefit at the expense of shareholders,” stated Acting United States Attorney Seth D. DuCharme. “As demonstrated by today’s guilty plea, this Office will vigorously prosecute those who abuse their positions to defraud the financial markets.” Mr. DuCharme thanked the New York Regional Office of the Securities and Exchange Commission (SEC) for their cooperation and assistance during the investigation.
According to court filings and facts presented during the plea proceeding, Roth was CFO of Aceto from approximately May 2001 to March 31, 2018. During the relevant time period, shares of Aceto traded on the NASDAQ exchange under the ticker ACETQ. Between January and March 2018, Roth was aware of non-public information that Aceto’s financial performance had worsened substantially as compared to its most-recent publicly-released financial statements, including that Aceto was likely to breach certain financial covenants it owed to its bank lenders, and that Aceto might need to write down more than $100 million in goodwill assets. While in possession of that non-public information, Roth sold approximately 69,549 shares of Aceto stock. Shortly thereafter, Aceto issued a press release publicly announcing that its financial condition had worsened, that it had breached certain financial covenants and that it would need to write down significant goodwill assets, after which Aceto’s share price dropped significantly. By selling his shares before the press release was issued, Roth avoided more than $145,000 in losses.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Alixandra E. Smith and Mathew S. Miller are in charge of the prosecution.
The Defendant:
DOUGLAS ROTH
Age: 63
East Northport, New YorkE.D.N.Y. Docket No. 20-481 (JMA)
MS-13 Gang Member Fugitive Extradited from El Salvador to Face Charges of Murdering a 15-Year-Old Boy on Long IslandRead the Press Release
Eduardo Portillo, also known as “Firuli” and “Tito” (Portillo), a member of the violent transnational criminal organization La Mara Salvatrucha, also known as the “MS-13,” and a fugitive from justice, was extradited from El Salvador to the United States early this morning. Portillo, who was arrested in Morazán, El Salvador on February 23, 2019, has been detained pending his extradition to the United States, which was formally authorized by the Supreme Court of Justice of El Salvador on October 6, 2020. Portillo was originally charged with the murder of 15-year-old Javier Castillo in an indictment returned by a federal grand jury in Central Islip, New York, on May 30, 2018. An INTERPOL Red Notice for his arrest was published on December 13, 2018 in connection with these charges. Portillo was arraigned this afternoon before United States Circuit Judge Joseph F. Bianco and ordered detained pending trial.
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 extradition.
“Today’s extradition of defendant Portillo demonstrates the resolve of law enforcement to bring to justice all gang members who commits violent crimes in our district no matter where in the world they may run and try to hide,” stated Acting U.S. Attorney DuCharme. “I hope the extradition of the defendant and his prosecution in a U.S. court will bring some measure of closure to the family of the young victim.”
Acting United States Attorney DuCharme expressed his grateful appreciation to the investigators and analysts of El Salvador’s Policía Nacional Civil (PNC) Centro Antipandillas Transnacional (CAT) unit, who are assigned to the Transnational Anti-Gang (TAG) Unit, for their outstanding collaboration in locating and apprehending this fugitive, and to the Office of the Attorney General of the Republic of El Salvador for its crucial assistance during the extradition process. Additionally, Mr. DuCharme expressed sincere thanks to all the members of the FBI’s Long Island Gang Task Force and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), as well as to the International Criminal Police Organization (INTERPOL), and the Department of Justice’s Office of International Affairs (OIA), for their partnership in this case.
“Bringing Mr. Portillo back to the U.S. to face justice for the heinous murder of a 15-year-old is a big step toward healing a family and community terrorized by MS-13. We have made incredible inroads with members of that community, building relationships and trust which are vital to keeping the violence at bay. But we’re not done, and we have more work to do. We hope people see this action as a sign that the FBI Long Island Gang Task Force and our partners are not slowing down in our resolve to dismantle MS-13,” stated FBI Assistant Director-in-Charge Sweeney.
Portillo is presently charged in an 89-count seventh superseding indictment, along with 22 other MS-13 members, with racketeering offenses, murder and narcotics trafficking. In particular, Portillo has been charged with participating in the murder of Castillo, who was believed to be a member of the 18th Street gang, one of MS-13’s principal rivals. On October 10, 2016, Portillo and other Brentwood-based members of the Sailors Locos Salvatruchas Westside (Sailors) clique of MS-13 convinced Castillo, who lived in Central Islip, to go with them to Freeport – approximately 30 miles away – to smoke marijuana. They lured Castillo to an isolated marsh area along the water in Cow Meadow Park, Freeport, where they attacked and killed him, taking turns hacking him with a machete. Afterwards, the MS-13 members dug a hole and buried Castillo’s body, which was not recovered until one year later, in October 2017.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Portillo faces up to life in prison.
This indictment is 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, a violent transnational criminal organization. The MS-13’s leadership is based in El Salvador, Mexico, Guatemala and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America. With numerous branches, or “cliques,” the MS-13 is the largest and most violent street gang on Long Island. 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 60 murders in the Eastern District of New York, and has convicted dozens of MS-13 leaders and members in connection with those murders. These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, comprising agents and officers of the FBI, the Nassau County Police Department (NCPD), the Suffolk County Police Department (SCPD), the Nassau County Sheriff’s Department, the Suffolk County Sheriff’s Office, the Suffolk County Probation Office, the New York State Police, the Hempstead Police Department, the Rockville Centre Police Department, and the New York State Department of Corrections and Community Supervision.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys John J. Durham, Paul G. Scotti, Justina L. Geraci and Megan E. Farrell are in charge of the prosecution.
The Defendant:
EDUARDO PORTILLO (also known as “Firuli” and “Tito”)
Age: 23
San Francisco Gotera, Morazán, El Salvador; formerly of Central Islip and Brentwood, New YorkE.D.N.Y. Docket No. 16-CR-403 (JFB)
Eight Individuals Charged with Conspiring to Act as Illegal Agents of the People’s Republic of ChinaRead the Press Release
A complaint and arrest warrants were unsealed today in federal court in Brooklyn charging eight defendants with conspiring to act in the United States as illegal agents of the People’s Republic of China (PRC). Six defendants also face related charges of conspiring to commit interstate and international stalking. The defendants, allegedly acting at the direction and under the control of PRC government officials, conducted surveillance of and engaged in a campaign to harass, stalk and coerce certain residents of the United States to return to the PRC as part of a global, concerted and extralegal repatriation effort known as “Operation Fox Hunt.”
Zhu Yong, Hongru Jin and Michael McMahon were arrested today, and their initial appearances are scheduled this afternoon via teleconference before United States Magistrate Judge Peggy Kuo. Rong Jing and Zheng Congying were arrested in the Central District of California, and their initial appearances will take place in that district later today. Zhu Feng, Hu Ji and Li Minjun remain at large.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York; John C. Demers, Assistant Attorney General for National Security; Christopher Wray, Director, Federal Bureau of Investigation (FBI); George M. Crouch, Jr., Special Agent-in-Charge, FBI, Newark Field Office (FBI); Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI); and Keith Byrne, Special Agent-in-Charge, U.S. Department of State’s Diplomatic Security Service, New York Field Office, announced the arrests and charges.
“As alleged, the defendants assisted PRC officials in a scheme to coerce targeted individuals to return to the PRC against their will,” stated Acting United States Attorney DuCharme. “The United States will not tolerate the conduct of PRC carrying out state-authorized actions on U.S. soil without notice to, and coordination with, the appropriate U.S. authorities. Nor will we tolerate the unlawful harassment and stalking of U.S. residents to further PRC objectives.” Mr. DuCharme also extended his thanks and appreciation to the FBI’s Los Angeles Field Office for their work on the case.
“With these criminal charges, we have turned the PRC’s Operation Fox Hunt on its head and the hunters became the hunted, the pursuers the pursued,” stated Assistant Attorney General Demers. “Five defendants illegally doing the bidding of the Chinese government here in the United States now face the prospect of prison and our message is clear: stay out. This behavior is not welcome here.”
“The Chinese government’s brazen attempts to surveil, threaten, and harass our own citizens and lawful permanent residents, while on American soil, are part of China’s diverse campaign of theft and malign influence in our country and around the world,” stated FBI Director Wray. “The FBI will use all of its tools to investigate and defeat these outrageous actions by the Chinese government, which are an affront to America's ideals of freedom, human rights, and the rule of law.”
“Today’s announcement of these charges further highlights the FBI’s ongoing and aggressive commitment to investigate China’s efforts to illegally impose its will in the United States,” stated FBI Special Agent-in-Charge Crouch. “This case should serve as a reminder to the People’s Republic of China that when it directs criminal activity within our borders, the FBI and its law enforcement partners will make sure the perpetrators are held accountable.”
“It is alleged that the six defendants charged today were operating on American soil as illegal agents of the People’s Republic of China (PRC.) The defendants engaged in a scheme orchestrated by PRC government officials, to stalk, intimidate, coerce and threaten certain residents of the United States to return to the PRC. Despite the claims that the PRC agents were pursuing Chinese dissidents who were wanted for certain crimes in the PRC, HSI, along with its partners from the FBI, DSS and DOJ, work tirelessly every day to ensure that our rule of law and sovereignty is respected by other countries. In lieu of utilizing well established, international law enforcement channels to locate and apprehend those individuals with charges in the PRC, these illegal agents operated within our border autonomously and against U.S. law, and now they must face their own charges,” stated Special Agent-in-Charge Fitzhugh.
“The worldwide presence and investigative capabilities of the Diplomatic Security Service enables us to work with our law enforcement partners domestically and around the world to bring criminals to justice,” stated Diplomatic Security Service Special Agent-in- Charge Byrne.
According to the complaint, the defendants participated in an international campaign to threaten, harass, surveil and intimidate John Doe-1, a resident of New Jersey, and his family in order to force them to return to the PRC as part of an international effort by the PRC government known within the PRC as “Operation Fox Hunt” and “Operation Skynet.” In furtherance of the operation, the PRC government targets Chinese individuals living in foreign countries that the PRC government alleges have committed crimes under PRC law and seeks to repatriate them to the PRC to face charges. Rather than rely upon proper forms of international law enforcement cooperation, such as Interpol “red notices” and requests for information through appropriate governmental channels, the defendants allegedly engaged in clandestine, unsanctioned and illegal conduct within the United States and facilitated the travel of PRC government officials (“PRC Officials”) to U.S. soil in order to further carry out these illegal acts. Between 2016 and 2019, multiple PRC Officials directed the defendants, and several others, to engage in efforts to coerce the victims to return to the PRC, which included the following:
Surveillance and Coercion
In April 2017, defendants Zhu Feng, Hu Ji, Li Minjun, Hongru Jin, Zhu Yong and McMahon, together with others, including the PRC Officials, allegedly participated in a scheme to bring John Doe-1’s elderly father from the PRC to the United States against the father’s will and to use the surprise arrival of his elderly father to threaten and attempt to coerce John Doe-1’s return to the PRC. Zhu Feng, Hu Ji and Zhu Yong worked with McMahon, a private investigator, to gather intelligence about and locate John Doe-1 and his wife in the United States. PRC Officials coerced the father of John Doe-1 to travel from the PRC to the New York area in the company of Li Minjun, a doctor. Hongru Jin assisted with logistics of the operation when Zhu Feng, Li Minjun, John Doe-1’s elderly father and other PRC officials arrived in the U.S.
As charged in the complaint, during this phase of the scheme McMahon, whose task was to surveil John Doe-1’s father in order to locate John Doe-1 and his wife, suggested to Zhu Feng that they could “harass [John Doe-1]. Park outside his home and let him know we are there.” Later, Zhu Feng told McMahon, “[t]hey definitely grant u a nice trip if they can get [John Doe-1] back to China haha.”
The conspirators also discussed the false statements John Doe-1’s father should make to U.S. immigration authorities about the purpose of his travel to the United States. The conspirators also made efforts to destroy evidence and delete their electronic communications to avoid detection by U.S. law enforcement.
Targeting and Harassment of Victims’ Daughter
Between May 2017 and July 2018, Rong Jing and several co-conspirators allegedly targeted John Doe-1’s adult daughter for surveillance and online harassment. Specifically, Rong Jing attempted to hire a private investigator to locate John Doe-1’s adult daughter in order to photograph and video record the daughter as part of a campaign to exert pressure on John Doe-1. Around the same time, an unidentified co-conspirator sent harassing messages over social media to John Doe-1’s daughter and her friends related to the PRC’s interest in repatriating John Doe-1.
Continued Harassment of Victims
In September 2018, Zheng Congying and another unidentified co-conspirator allegedly affixed a threatening note to the door of the John Doe-1’s residence stating, “If you are willing to go back to mainland and spend 10 years in prison, your wife and children will be all right. That’s the end of this matter!” Between February 2019 and April 2019, other co-conspirators caused unsolicited packages to be sent to John Doe-1’s residence. These packages contained letters and a video with messages intended to coerce John Doe-1’s return to the PRC by threatening harm to family members still residing in the PRC.
The charges in the complaint are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of the charged conspiracy to act as an agent of the PRC, each of the eight defendants charged today faces a maximum sentence of five years in prison. Defendants Zhu Feng, Hu Ji, Li Minjun, Michael McMahon, Rong Jing and Zheng Congying also face an additional charge of conspiracy to commit interstate and international stalking, which carries a maximum sentence of five years in prison.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States Attorneys Craig R. Heeren and J. Matthew Haggans are in charge of the prosecution, with assistance from Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section.
The Defendants:
HONGRU JIN
Age: 30
Queens, New YorkHU JI
Age: 45
People’s Republic of ChinaLI MINJUN
Age: 64
People’s Republic of ChinaMICHAEL MCMAHON
Age: 53
Mahwah, New JerseyRONG JING
Age: 38
Rancho Cucamonga, CaliforniaZHENG CONGYING
Age: 24
Brooklyn, New YorkZHU FENG
Age: 33
Queens, New York; People’s Republic of ChinaZHU YONG, (also known as “Jason Zhu”)
Age: 64
Norwich, Connecticut and Flushing, New YorkE.D.N.Y. Docket No. 20-MJ-1025
NXIVM Leader Keith Raniere Sentenced to 120 Years in Prison for Racketeering and Sex Trafficking OffensesRead the Press Release
Keith Raniere, the founder and leader of Nxivm, was sentenced today to 120 years in prison by United States District Judge Nicholas G. Garaufis in federal court in Brooklyn. Raniere was convicted by a federal jury in June 2019 of racketeering, racketeering conspiracy, sex trafficking, attempted sex trafficking, sex trafficking conspiracy, forced labor conspiracy and wire fraud conspiracy. The Court also imposed a fine of $1,750,000. At the sentencing hearing, the Court heard victim impact statements from 15 individuals, including “Camila,” the victim who was sexually exploited by Raniere when she was 15 years old. A hearing on victim restitution will be held at a later date.
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 Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York Field Office (IRS-CI), announced the sentence.
“The 120-year sentence imposed on Keith Raniere today is a measure of his appalling crimes committed over a decade,” stated Acting United States Attorney DuCharme. “Raniere exploited and abused his victims emotionally, physically and sexually for his personal gratification. It is my hope that today’s sentence brings closure to the victims and their families.” Mr. DuCharme extended his grateful appreciation to the Department of Homeland Security, Homeland Security Investigations, the New York State Police and the United States Attorney’s Office for the Northern District of New York for their valuable assistance during the investigation and prosecution.
“Raniere’s reign of control over the women he scarred, both physically and emotionally, is the making of a horror story. It is inconceivable to think of the sexual exploitation, abuse, seclusion, and mind control his victims suffered—at his direction. Today the judge has given him 120 years to think about whether or not the torture he inflicted on others for more than a decade, and the distress he brought to their families, was worth it in the end,” stated FBI Assistant Director-in-Charge Sweeney.
“Sexual exploitation of children and women is among the most reprehensible and vile forms of crime,” stated IRS-CI Special Agent-in-Charge Larsen. “While Keith Raniere’s sentence cannot erase the pain his victims have endured, I hope it provides an opportunity for healing and a path forward. Today’s sentencing should be a warning for criminals around the world. Regardless of the illegal enterprise and whether the profits are tangible or not, IRS-CI will decode illicit schemes and hold criminals accountable for the pain, suffering and financial abuse of their victims.”
Raniere led a criminal racketeering enterprise and relied on an “inner circle” of co-conspirators to carry out his orders. The purpose of the enterprise was to promote Raniere and to recruit individuals into purported self-help organizations that Raniere founded, including Nxivm and DOS (“Dominus Obsequious Sororium”). Raniere and his co-conspirators committed a wide range of criminal activity, including sex trafficking, forced labor, alien smuggling, wire fraud and obstruction of justice. Specifically, Raniere sexually exploited “Camila,” then a 15-year-old child, and took photographs of his abuse. At the time, Raniere was 45 years old. Raniere and his co-conspirators also trafficked “Daniela” for labor and services and confined her to a room for nearly two years in an attempt to force Daniela to do work for him. Daniela was told that if she left the room, she would be sent to Mexico without any identification documents. Daniela went months without human contact and was denied prompt medical care. During this time, Daniela wrote hundreds of letters to Raniere pleading to be released from her confinement. Daniela testified at trial that while confined to the room, she contemplated suicide.
In late 2015, Raniere created and led DOS, a secret organization in which women were recruited under the false pretense of joining a women-only mentorship group, later discovering that they had taken “vows of obedience” to women who were “slaves” to Raniere. Prospective DOS victims were required to provide “collateral”—including damaging confessions about themselves and loved ones (truthful or not), rights to financial assets, and sexually explicit photographs and videos—to prevent them from leaving the group or disclosing its existence to others. Raniere required DOS “slaves” to take nude photographs, perform labor, and in some cases, to engage in sex acts with him. As proved at trial, the victims “Nicole” and “Jay” were among the DOS victims directed to have sex with Raniere.
Each of Raniere’s co-defendants previously pleaded guilty. On September 2020, Clare Bronfman was sentenced to 81 months’ imprisonment after having been convicted of conspiracy to conceal and harbor aliens for financial gain and fraudulent use of personal identification information. The remaining co-defendants are awaiting sentencing. On March 12, 2019, Nancy Salzman, Nxivm’s president and co-founder, pleaded guilty to racketeering conspiracy. On March 25, 2019, Lauren Salzman, a first-line “master” in DOS, pleaded guilty to racketeering and racketeering conspiracy. On April 8, 2019, Allison Mack, another first-line “master” in DOS, pleaded guilty to racketeering and racketeering conspiracy. On April 19, 2019, Kathy Russell, a bookkeeper for Nxivm, pleaded guilty to visa fraud.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Tanya Hajjar, Mark J. Lesko and Kevin Trowel are in charge of the prosecution. Assistant United States Attorney Karin Orenstein of the Office’s Civil Division is handling forfeiture matters.
The Defendant:
KEITH RANIERE (also known as “Vanguard” and “Grandmaster”)
Age: 60
Waterford, New YorkE.D.N.Y. Docket No. 18-CR-204 (S-2) (NGG)
Construction Company Executive Pleads Guilty to Defrauding the New York City School Construction AuthorityRead the Press Release
Rakesh Kumar, the owner of Orba Construction Company (Orba), a public school construction company, pleaded guilty today in federal court in Brooklyn to conspiracy to commit mail fraud for orchestrating a scheme to defraud the New York City School Construction Authority (SCA) by failing to pay the prevailing wage to Orba’s construction workers. When sentenced, Kumar faces up to 20 years’ imprisonment and, as part of the plea agreement, has agreed to pay $666,219 in restitution to six Orba employees and their unions. Kumar has already begun the process of making his victims whole. Additionally, Kumar has agreed to forfeit $510,000 and pay an additional $48,330 to the SCA. Today’s plea was entered before United States District Judge Dora L. Irizarry.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Michael Mikulka, Special Agent-in-Charge, U.S. Department of Labor, Office of the Inspector General (DOL-OIG), and Margaret Garnett, Commissioner, New York City Department of Investigation (DOI), announced the guilty plea.
As alleged in the indictment and other court filings, Kumar submitted false certified payrolls to the SCA for work performed by Orba employees on SCA-funded projects. These payroll forms falsely stated that Orba had paid its employees the prevailing wage as required by New York State labor law and labor agreements with the SCA, when, in fact, the employees had been paid far less, often in cash or by checks issued by another company that Kumar owned.
“Kumar took advantage of hard-working people, exploiting their labor for his own financial gain,” stated Acting United States Attorney DuCharme. “This Office and our law enforcement partners at the U.S. Department of Labor and the New York City Department of Investigation will continue to vigorously pursue criminals who cheat their own employees in order to enrich themselves.”
“Rakesh Kumar, through the company Orba Construction, submitted fraudulent certified payrolls on various publicly funded school projects in the New York City area. Orba Construction underpaid contributions to a union affiliated benefit plan by submitting false remittance reports. We will continue to work with our law enforcement partners to ensure workers are paid proper wages and receive benefits that they are entitled to for the work they perform,” stated DOL-OIG Special Agent-in-Charge Mikulka.
“For years the defendant cheated workers out of their rightful pay, stealing their livelihood through a series of falsified payroll records and underreported hours. DOI is proud to have worked with the U.S. Attorney for the Eastern District of New York to ensure Rakesh Kumar is held accountable for defrauding the New York City School Construction Authority and for taking advantage of the hardworking individuals on our City’s public works projects who deserve their fair prevailing wage,” stated DOI Commissioner Garnett.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorney Martin E. Coffey is in charge of the prosecution.
The Defendant:
RAKESH KUMAR (also known as “RIKKI”)
Age: 64
Basking Ridge, New JerseyE.D.N.Y. Docket No. 19-CR-101 (DLI)
Individual Charged with Cyberstalking Three VictimsRead the Press Release
A criminal complaint was unsealed today in federal court in Brooklyn charging Kenneth Kurson, also known as “Jayden Wagner” and “Eddie Train,” with stalking and harassing three individuals. Kurson surrendered to authorities earlier today in Brooklyn and will make his initial appearance this afternoon before United States Magistrate Judge Ramon E. Reyes.
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 charges.
As alleged in the complaint, between approximately November 2015 and December 2015, Kurson engaged in a pattern of stalking and harassment against three victims. As part of this pattern, Kurson used multiple aliases to file false complaints about two of the victims with their employer, post false negative reviews about one victim’s professional conduct on crowd-sourced review websites and made unsolicited contact with two of the victims. Kurson traveled on multiple occasions to the workplace of two of the victims, taking photographs and inquiring about one victim’s work schedule. During the investigation, the FBI gathered evidence that Kurson simultaneously engaged in a similar pattern of harassment against two other individuals. As a result of Kurson’s conduct, an employer of two of the victims hired a security guard.
“Kurson is alleged to have engaged in a disturbing pattern of retaliatory harassment that intimidated and alarmed several victims and their employer,” stated Acting United States Attorney DuCharme. “This Office is committed to protecting victims from malicious cyberstalking activity and apprehending criminals who try to rely on Internet anonymity to facilitate their crimes.”
“As alleged, Kurson bullied his victims by attacking their character online and attempted to intimidate them by showing up at their place of employment without a valid reason. The shadows of cyberspace may have provided him with some cover, but once his identity was revealed, he no longer had the benefit of a virtual retreat,” stated FBI Assistant Director-in-Charge Sweeney.
The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorneys Nathan D. Reilly and Ryan C. Harris are in charge of the prosecution.
The Defendant:
KENNETH KURSON
Age: 52
Maplewood, NJE.D.N.Y. Docket No. 20-MJ-990
United States Attorneys Available to Receive Election ComplaintsRead the Press Release
Seth D. DuCharme, the Acting United States Attorney for the Eastern District of New York, and Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that Assistant United States Attorneys (AUSA) will lead the efforts of their Offices in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 3, 2020 general election. AUSA Erik Paulsen has been appointed to serve as the District Election Officer (DEO) for the Eastern District of New York, and David J. Kennedy has been appointed to serve as the DEO for the Southern District of New York. In their capacity as DEOs, these AUSAs are responsible for overseeing the Districts’ handling of complaints of election fraud and voting rights concerns in consultation with Justice Department Headquarters in Washington.
Acting United States Attorneys DuCharme and Strauss stated, “Every citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud. The Department of Justice will always act appropriately to protect the integrity of the election process.”
The Department of Justice has an important role in deterring election fraud and discrimination at the polls and combating these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open through election day.
Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice (where voters need assistance because of disability or illiteracy).
The franchise is the cornerstone of American democracy. We all must ensure that those who are entitled to the franchise exercise it if they choose and that those who seek to corrupt it are brought to justice.
Acting United States Attorneys DuCharme and Strauss stated, “Ensuring free and fair elections depends in large part on the cooperation of the American electorate. It is imperative that those who have specific information about discrimination or election fraud make that information available to my Office, the FBI or the Civil Rights Division.”
In order to respond to complaints of election fraud or voting rights concerns during the voting period that ends on November 3, 2020, and to ensure that such complaints are directed to the appropriate authorities, the Acting United States Attorneys said that their Offices will be available to receive complaints at the following numbers on Tuesday, November 3, 2020:
(646) 369-4739 (for Manhattan, Bronx, Dutchess, Orange, Putnam, Rockland, Sullivan and Westchester counties) and
(718) 254-6790 (for Brooklyn, Queens, Staten Island, Nassau and Suffolk counties)
In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on Election Day. The local FBI field office can be reached by the public at (212) 384-1000.
Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division in Washington, DC by phone at 800-253-3931 or by complaint form at https://civilrights.justice.gov/ .
Please note, however, in the case of a crime of violence or intimidation, please call 911 immediately and before contacting federal authorities. State and local police have primary jurisdiction over polling places and almost always have faster reaction capacity in an emergency.
The Acting United States Attorneys also noted that the following additional telephone numbers are available on Election Day for citizens to call for routine inquiries, such as where to vote or how late the polls are open, or to register complaints that may concern violations of New York State election laws:
IN NEW YORK CITY
City Board of Elections
Main Office (866) 868-3692
TTY #: 212-487-5496
IN COUNTIES OUTSIDE NEW YORK CITY
County Boards of Elections
Dutchess (845) 486-2473
Nassau (516) 571-8683
Orange (845) 360-6500
Putnam (845) 808-1300
Rockland (845) 638-5172
Suffolk (631) 852-4500
Sullivan (845) 807-0400
Westchester (914) 995-5700
Goldman Sachs Resolves Foreign Bribery Case and Agrees to Pay over $2.9 BillionRead the Press Release
The Goldman Sachs Group, Inc. (Goldman Sachs or the Company), a global financial institution headquartered in New York, New York, and Goldman Sachs (Malaysia) Sdn. Bhd. (GS Malaysia), its Malaysian subsidiary, have admitted to conspiring to violate the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay over one billion dollars in bribes to high-ranking government officials in Malaysia and Abu Dhabi to obtain lucrative business for Goldman Sachs, underwriting approximately $6.5 billion in three bond deals for 1Malaysia Development Bhd. (1MDB), for which the bank earned hundreds of millions in fees. Goldman Sachs will pay more than $2.9 billion as part of a coordinated resolution with criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere.
Earlier today, in federal court in Brooklyn, Goldman Sachs entered into a deferred prosecution agreement with the United States Attorney’s Office for the Eastern District of New York and the Department of Justice’s Criminal Division, Fraud Section and Money Laundering and Asset Forfeiture Sections (the Department) in connection with a criminal information filed in the Eastern District of New York charging the Company with conspiracy to violate the anti-bribery provisions of the FCPA. GS Malaysia pleaded guilty in the U.S. District Court for the Eastern District of New York to a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA.
Previously, Tim Leissner, the former Southeast Asia Chairman and a Participating Managing Director of Goldman Sachs, pleaded guilty to conspiracy to violate the FCPA and conspiracy to commit money laundering. Ng Chong Hwa, also known as “Roger Ng,” former Managing Director of Goldman and Head of Investment Banking for GS Malaysia, has been charged with conspiracy to violate the FCPA and conspiracy to commit money laundering. Ng was extradited from Malaysia to face these charges and is scheduled for trial in March 2021. All four cases are assigned to U.S. District Judge Margo K. Brodie of the Eastern District of New York.
In addition to these criminal charges, the Department has recovered, or assisted in the recovery of, an additional over $1 billion in assets associated with and traceable to the 1MDB money laundering and bribery scheme.
Seth DuCharme, Acting U.S. Attorney for the Eastern District of New York, Brian C. Rabbitt, Acting Assistant Attorney General of the Justice Department’s Criminal Division, William F. Sweeney, Jr., Federal Bureau of Investigation, New York Field Office (FBI), Ryan L. Korner, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, Los Angeles Field Office (IRS-CI), made the announcement.
“Over a period of five years, Goldman Sachs participated in a sweeping international corruption scheme, conspiring to avail itself of more than $1.6 billion in bribes to multiple high-level government officials across several countries so that the company could reap hundreds of millions of dollars in fees, all to the detriment of the people of Malaysia and the reputation of American financial institutions operating abroad,” stated Acting U.S. Attorney DuCharme. “Today’s resolution, which includes a criminal guilty plea by Goldman Sachs’ subsidiary in Malaysia, demonstrates that the Department will hold accountable any institution that violates U.S. law anywhere in the world by unfairly tilting the scales through corrupt practices.”
“The conduct that Goldman Sachs admitted to today—engaging in a scheme to bribe high ranking public officials of a foreign country to obtain lucrative underwriting and other business related to 1MDB—erodes public confidence in the integrity of American business,” stated Acting Assistant Attorney General Rabbitt. “Today’s resolution demonstrates the Department’s commitment to combatting corruption and ensuring that no institution or individual is above the rule of law in the United States, no matter their business, their profits, or their profile.”
“When government officials and business executives secretly work together behind the scenes for their own illegal benefit, and not that of their citizens and shareholders, their behavior lends credibility to the narrative that businesses don't succeed based on the quality of their products, but rather their willingness to play dirty. Greed eventually exacts an immense cost on society, and unchecked corrupt behavior erodes trust in public institutions and government entities alike. This case represents the largest ever penalty paid to U.S. authorities in an FCPA case. Our investigation into the looting of funds from 1MDB remains ongoing. If anyone has information that could assist the case, call us at 1-800-CALLFBI,” stated FBI Assistant Director-in-Charge Sweeney.
“1MDB was established to drive strategic initiatives for the long-term economic development of Malaysia. Goldman Sachs admitted today that one billion dollars of the money earmarked to help the people of Malaysia was actually diverted and used to pay bribes to Malaysian and Abu Dhabi officials to obtain their business,” stated IRS-CI Special Agent-in-Charge Korner. “Today’s guilty pleas demonstrate that the law applies to everyone, including large investment banks like Goldman Sachs. IRS Criminal Investigation will work tirelessly alongside our law enforcement partners to identify and bring to justice those who engage in fraud and deceit around the globe. When the American financial system is misused for corruption, the IRS will take notice and we will take action.”
According to Goldman’s admissions and court documents, between approximately 2009 and 2014, Goldman conspired with others to violate the anti-bribery provisions of the FCPA by engaging in a scheme to pay more than $1.6 billion in bribes, directly and indirectly, to government officials in Malaysia and Abu Dhabi in order to obtain and retain business for Goldman from 1MDB, a Malaysian state-owned and state-controlled fund created to pursue investment and development projects for the economic benefit of Malaysia and its people. Specifically, Goldman admitted to engaging in the bribery scheme through certain of its employees and agents, including Leissner, Ng and a former executive who was a Participating Managing Director and held leadership positions in Asia (Employee 1), in exchange for lucrative business and other advantages and opportunities. These included, among other things, securing Goldman’s role as an advisor on energy acquisitions, as underwriter on three lucrative bond deals with a total value of $6.5 billion, and a potential role in a highly anticipated and even more lucrative initial public offering for 1MDB’s energy assets. As Goldman admitted—and as alleged in the indictment pending in the Eastern District of New York against Ng and Low—in furtherance of the scheme, Leissner, Ng, Employee 1, and others conspired to pay bribes to numerous foreign officials, including high-ranking officials in the Malaysian government, 1MDB, Abu Dhabi’s state-owned and state-controlled sovereign wealth fund, International Petroleum Investment Company (IPIC), and Abu Dhabi’s state-owned and state-controlled joint stock company, Aabar Investments PJS (Aabar).
Goldman admitted today that, in order to effectuate the scheme, Leissner, Ng, Employee 1 and others conspired with Low Taek Jho (also known as “Jho Low”) to promise and pay over $1.6 billion in bribes to Malaysian, 1MDB, IPIC and Aabar officials. The co-conspirators allegedly paid these bribes using more than $2.7 billion in funds that Low and other members of the conspiracy diverted and misappropriated from the bond offerings underwritten by Goldman. Leissner, Ng and Low also retained a portion of the misappropriated funds for themselves and other co-conspirators. Goldman, through Leissner, Ng, Employee 1 and others, used Low’s connections to advance and further the bribery scheme, ultimately ensuring that 1MDB awarded Goldman a role on three bond transactions between 2012 and 2013, known internally at Goldman as “Project Magnolia,” “Project Maximus,” and “Project Catalyze.”
Goldman also admitted that, although employees serving as part of Goldman’s control functions knew that any transaction involving Low posed a significant risk, and although they were on notice that Low was involved in the transactions, they did not take reasonable steps to ensure that Low was not involved. Goldman further admitted that there were significant red flags raised during the due diligence process and afterward—including but not limited to Low’s involvement—that either were ignored or only nominally addressed so that the transactions would be approved and Goldman could continue to do business with 1MDB. As a result of the scheme, Goldman received approximately $606 million in fees and revenue, and increased its stature and presence in Southeast Asia.
Under the terms of the agreements, Goldman will pay a criminal penalty and disgorgement of over $2.9 billion. Goldman also has reached separate parallel resolutions with foreign authorities in the United Kingdom, Singapore, Malaysia, and elsewhere, along with domestic authorities in the United States. The department will credit over $1.6 billion in payments with respect to those resolutions.
The department reached this resolution with Goldman based on a number of factors, including the Company’s failure to voluntarily disclose the conduct to the department; the nature and seriousness of the offense, which included the involvement of high-level employees within the Company’s investment bank and others who ignored significant red flags; the involvement of various Goldman subsidiaries across the world; the amount of the bribes, which totaled over $1.6 billion; the number and high-level nature of the bribe recipients, which included at least 11 foreign officials, including high-ranking officials of the Malaysian government; and the significant amount of actual loss incurred by 1MDB as a result of the co-conspirators’ conduct. Goldman received partial credit for its cooperation with the department’s investigation, but did not receive full credit for cooperation because it significantly delayed producing relevant evidence, including recorded phone calls in which the Company’s bankers, executives, and control function personnel discussed allegations of bribery and misconduct relating to the conduct in the statement of facts. Accordingly, the total criminal penalty reflects a 10 percent reduction off the bottom of the applicable U.S. sentencing guidelines fine range.
Low has also been indicted for conspiracy to commit money laundering and violate the FCPA, along with Ng, E.D.N.Y. Docket No. 18-CR-538 (MKB). Low remains a fugitive. The charges in the indictment as to Low and Ng are allegations, and those defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The investigation was conducted by the FBI’s International Corruption Unit and IRS-CI. The prosecution is being handled by the Business and Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section. Assistant U.S. Attorneys Jacquelyn M. Kasulis, Alixandra E. Smith and Drew G. Rolle of the Eastern District of New York and Trial Attorneys Katherine Nielsen, Nikhila Raj, Jennifer E. Ambuehl, Woo S. Lee, Mary Ann McCarthy, Leo Tsao and David Last of the Criminal Division are prosecuting the case. Additional Criminal Division Trial Attorneys and Assistant U.S. Attorneys within U.S. Attorney’s Offices for the Eastern District of New York and Central District of California have provided valuable assistance with various aspects of this investigation, including with civil and criminal forfeitures. The Justice Department’s Office of International Affairs of the Criminal Division provided critical assistance in this case.
The Department also appreciates the significant assistance provided by the U.S. Securities and Exchange Commission, the Board of Governors of the Federal Reserve System including the Federal Reserve Bank of New York, and the New York State Department of Financial Services, the United Kingdom Financial Conduct Authority and Prudential Regulation Authority, the Attorney General’s Chambers of Singapore, the Singapore Police Force-Commercial Affairs Division, the Monetary Authority of Singapore, the Office of the Attorney General and the Federal Office of Justice of Switzerland, the judicial investigating authority of the Grand Duchy of Luxembourg and the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg, the Attorney General’s Chambers of Malaysia, the Royal Malaysian Police, and the Malaysian Anti-Corruption Commission. The department also expresses its appreciation for the assistance provided by the Ministry of Justice of France; the Attorney General’s Chambers of the British Virgin Islands; the Attorney General’s Office of the Bailiwick of Guernsey; and the Federal Office of Justice of Germany.
The Defendants:
THE GOLDMAN SACHS GROUP, INC.
E.D.N.Y. Docket No. 20-CR-437
GOLDMAN SACHS (MALAYSIA) SDN. BHD.
E.D.N.Y. Docket No. 20-CR-438
Goldman Sachs Charged in Foreign Bribery Case and Agrees to Pay over $2.9 BillionRead the Press Release
The Goldman Sachs Group Inc. (Goldman Sachs or the Company), a global financial institution headquartered in New York, New York, and Goldman Sachs (Malaysia) Sdn. Bhd. (GS Malaysia), its Malaysian subsidiary, have admitted to conspiring to violate the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay over $1 billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business for Goldman Sachs, including its role in underwriting approximately $6.5 billion in three bond deals for 1Malaysia Development Bhd. (1MDB), for which the bank earned hundreds of millions in fees. Goldman Sachs will pay more than $2.9 billion as part of a coordinated resolution with criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere.
Goldman Sachs entered into a deferred prosecution agreement with the department in connection with a criminal information filed today in the Eastern District of New York charging the Company with conspiracy to violate the anti-bribery provisions of the FCPA. GS Malaysia pleaded guilty in the U.S. District Court for the Eastern District of New York to a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA.
Previously, Tim Leissner, the former Southeast Asia Chairman and participating managing director of Goldman Sachs, pleaded guilty to conspiring to launder money and to violate the FCPA. Ng Chong Hwa, also known as “Roger Ng,” former managing director of Goldman and head of investment banking for GS Malaysia, has been charged with conspiring to launder money and to violate the FCPA. Ng was extradited from Malaysia to face these charges and is scheduled to stand trial in March 2021. The cases are assigned to U.S. District Judge Margo K. Brodie of the Eastern District of New York.
In addition to these criminal charges, the department has recovered, or assisted in the recovery of, in excess of $1 billion in assets for Malaysia associated with and traceable to the 1MDB money laundering and bribery scheme.
“Goldman Sachs today accepted responsibility for its role in a conspiracy to bribe high-ranking foreign officials to obtain lucrative underwriting and other business relating to 1MDB,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “Today’s resolution, which requires Goldman Sachs to admit wrongdoing and pay nearly three billion dollars in penalties, fines, and disgorgement, holds the bank accountable for this criminal scheme and demonstrates the department’s continuing commitment to combatting corruption and protecting the U.S. financial system.”
“Over a period of five years, Goldman Sachs participated in a sweeping international corruption scheme, conspiring to avail itself of more than $1.6 billion in bribes to multiple high-level government officials across several countries so that the company could reap hundreds of millions of dollars in fees, all to the detriment of the people of Malaysia and the reputation of American financial institutions operating abroad,” said Acting U.S. Attorney Seth D. DuCharme of the Eastern District of New York. “Today’s resolution, which includes a criminal guilty plea by Goldman Sachs’ subsidiary in Malaysia, demonstrates that the department will hold accountable any institution that violates U.S. law anywhere in the world by unfairly tilting the scales through corrupt practices.”
“When government officials and business executives secretly work together behind the scenes for their own illegal benefit, and not that of their citizens and shareholders, their behavior lends credibility to the narrative that businesses don’t succeed based on the quality of their products, but rather their willingness to play dirty,” said Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. “Greed eventually exacts an immense cost on society, and unchecked corrupt behavior erodes trust in public institutions and government entities alike. This case represents the largest ever penalty paid to U.S. authorities in an FCPA case. Our investigation into the looting of funds from 1MDB remains ongoing. If anyone has information that could assist the case, call us at 1-800-CALLFBI.”
“1MDB was established to drive strategic initiatives for the long-term economic development of Malaysia. Goldman Sachs admitted today that one billion dollars of the money earmarked to help the people of Malaysia was actually diverted and used to pay bribes to Malaysian and Abu Dhabi officials to obtain their business,” said Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office. “Today’s guilty pleas demonstrate that the law applies to everyone, including large investment banks like Goldman Sachs. IRS Criminal Investigation will work tirelessly alongside our law enforcement partners to identify and bring to justice those who engage in fraud and deceit around the globe. When the American financial system is misused for corruption, the IRS will take notice and we will take action.”
According to Goldman’s admissions and court documents, between approximately 2009 and 2014, Goldman conspired with others to violate the FCPA by engaging in a scheme to pay more than $1.6 billion in bribes, directly and indirectly, to foreign officials in Malaysia and Abu Dhabi in order to obtain and retain business for Goldman from 1MDB, a Malaysian state-owned and state-controlled fund created to pursue investment and development projects for the economic benefit of Malaysia and its people. Specifically, the Company admitted to engaging in the bribery scheme through certain of its employees and agents, including Leissner, Ng, and a former executive who was a participating managing director and held leadership positions in Asia (Employee 1), in exchange for lucrative business and other advantages and opportunities. These included, among other things, securing Goldman’s role as an advisor on energy acquisitions, as underwriter on three lucrative bond deals with a total value of $6.5 billion, and a potential role in a highly anticipated and even more lucrative initial public offering for 1MDB’s energy assets. As Goldman admitted — and as alleged in the indictment pending in the Eastern District of New York against Ng and Low — in furtherance of the scheme, Leissner, Ng, Employee 1, and others conspired to pay bribes to numerous foreign officials, including high-ranking officials in the Malaysian government, 1MDB, Abu Dhabi’s state-owned and state-controlled sovereign wealth fund, International Petroleum Investment Company (IPIC), and Abu Dhabi’s state-owned and state-controlled joint stock company, Aabar Investments PJS (Aabar).
Goldman admitted today that, in order to effectuate the scheme, Leissner, Ng, Employee 1, and others conspired with Low Taek Jho, aka Jho Low, to promise and pay over $1.6 billion in bribes to Malaysian, 1MDB, IPIC, and Aabar officials. The co-conspirators allegedly paid these bribes using more than $2.7 billion in funds that Low, Leissner, and other members of the conspiracy diverted and misappropriated from the bond offerings underwritten by Goldman. Leissner, Ng and Low also retained a portion of the misappropriated funds for themselves and other co-conspirators. Goldman admitted that, through Leissner, Ng, Employee 1 and others, the bank used Low’s connections to advance and further the bribery scheme, ultimately ensuring that 1MDB awarded Goldman a role on three bond transactions between 2012 and 2013, known internally at Goldman as “Project Magnolia,” “Project Maximus,” and “Project Catalyze.”
Goldman also admitted that, although employees serving as part of Goldman’s control functions knew that any transaction involving Low posed a significant risk, and although they were on notice that Low was involved in the transactions, they did not take reasonable steps to ensure that Low was not involved. Goldman further admitted that there were significant red flags raised during the due diligence process and afterward — including but not limited to Low’s involvement — that either were ignored or only nominally addressed so that the transactions would be approved and Goldman could continue to do business with 1MDB. As a result of the scheme, Goldman received approximately $606 million in fees and revenue, and increased its stature and presence in Southeast Asia.
Under the terms of the agreements, Goldman will pay a criminal penalty and disgorgement of over $2.9 billion. Goldman also has reached separate parallel resolutions with foreign authorities in the United Kingdom, Singapore, Malaysia, and elsewhere, along with domestic authorities in the United States. The department will credit over $1.6 billion in payments with respect to those resolutions.
The department reached this resolution with Goldman based on a number of factors, including the Company’s failure to voluntarily disclose the conduct to the department; the nature and seriousness of the offense, which included the involvement of high-level employees within the Company’s investment bank and others who ignored significant red flags; the involvement of various Goldman subsidiaries across the world; the amount of the bribes, which totaled over $1.6 billion; the number and high-level nature of the bribe recipients, which included at least 11 foreign officials, including high-ranking officials of the Malaysian government; and the significant amount of actual loss incurred by 1MDB as a result of the co-conspirators’ conduct. Goldman received partial credit for its cooperation with the department’s investigation, but did not receive full credit for cooperation because it significantly delayed producing relevant evidence, including recorded phone calls in which the Company’s bankers, executives, and control function personnel discussed allegations of bribery and misconduct relating to the conduct in the statement of facts. Accordingly, the total criminal penalty reflects a 10 percent reduction off the bottom of the applicable U.S. sentencing guidelines fine range.
Low has also been indicted for conspiracy to commit money laundering and violate the FCPA, along with Ng, E.D.N.Y. Docket No. 18-CR-538 (MKB). Low remains a fugitive. The charges in the indictment as to Low and Ng are merely allegations, and those defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The investigation was conducted by the FBI’s International Corruption Unit and IRS-CI. The prosecution is being handled by the Criminal Division’s Fraud Section and the Money Laundering and Asset Recovery Section (MLARS), and the Business and Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York. Trial Attorneys Katherine Nielsen, Nikhila Raj, Jennifer E. Ambuehl, Woo S. Lee, Mary Ann McCarthy, Leo Tsao, and David Last of the Criminal Division, and Assistant U.S. Attorneys Jacquelyn M. Kasulis, Alixandra Smith and Drew Rolle of the Eastern District of New York are prosecuting the case. Additional Criminal Division Trial Attorneys and Assistant U.S. Attorneys within U.S. Attorney’s Offices for the Eastern District of New York and Central District of California have provided valuable assistance with various aspects of this investigation, including with civil and criminal forfeitures. The Justice Department’s Office of International Affairs of the Criminal Division provided critical assistance in this case.
The department also appreciates the significant assistance provided by the U.S. Securities and Exchange Commission; the Board of Governors of the Federal Reserve System, including the Federal Reserve Bank of New York; the New York State Department of Financial Services, the United Kingdom Financial Conduct Authority; the United Kingdom Prudential Regulation Authority; the Attorney General’s Chambers of Singapore; the Singapore Police Force-Commercial Affairs Division; the Monetary Authority of Singapore; the Office of the Attorney General and the Federal Office of Justice of Switzerland; the judicial investigating authority of the Grand Duchy of Luxembourg and the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg; the Attorney General’s Chambers of Malaysia; the Royal Malaysian Police; and the Malaysian Anti-Corruption Commission. The department also expresses its appreciation for the assistance provided by the Ministry of Justice of France; the Attorney General’s Office of the Bailiwick of Guernsey and the Guernsey Economic Crime Division.
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/foreign-corrupt-practices-act.
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.
MLARS’s Kleptocracy Asset Recovery Initiative, in partnership with federal law enforcement agencies, and often with U.S. Attorney’s Offices, seeks to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office.
Relevant court documents will be uploaded throughout the day and available at the following links: The Goldman Sachs Group Inc. and Goldman Sachs Sdn. Bhd.
36 Members, Associates and Co-Conspirators of the Bully Gang Charged with Narcotics Conspiracy, Firearms Offenses and Money LaunderingRead the Press Release
A 21-count superseding indictment was unsealed today in federal court in Brooklyn charging 36 defendants—including members, associates and co-conspirators of the New York City-based street gang known as the “Bully Gang”—with conspiring to distribute drugs, firearms trafficking and money laundering, among other crimes. Twelve defendants were arrested today in the New York area and will be arraigned today before United States Magistrate Judge Lois Bloom. Four defendants will be arraigned this afternoon in the District of Maine, and one each in the Northern District of New York and the Northern District of Georgia. Three defendants were in custody in Maine and will be arraigned at a later date. Several members of the conspiracy were previously arrested and charged in June 2020. Two defendants are expected to report to Brooklyn for arraignment next week, and three additional defendants remain at large.
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 (ATF), and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the charges.
“This violent drug organization endangered communities across the northeast, trafficking crack cocaine, heroin and fentanyl into towns in Maine and guns from Maine onto the streets of New York City,” stated Acting United States Attorney DuCharme. “The superseding indictment and today’s arrests are the result of our continuing efforts alongside our great partners in the ATF and NYPD to dismantle and disarm violent gangs.”
“These defendants, as alleged, not only poisoned communities throughout the east coast with dangerous narcotics, but trafficked firearms from Maine to New York City, fueling gang violence on our streets. Today’s arrests reaffirm ATF’s commitment to public safety and end the reign of a violent, multi-state, criminal organization,” stated ATF Special Agent-in-Charge DeVito.
“These alleged gang members, as outlined in the federal indictment, left a trail of crimes from Brooklyn to Maine. But working closely, our NYPD investigators and federal partners were relentless in making sure they would be brought to justice,” stated NYPD Commissioner Shea.
As set for in the superseding indictment and other court filings, the defendants were members of a drug trafficking conspiracy responsible for trafficking large quantities of cocaine base (“crack”), heroin and fentanyl through New York to Maine and elsewhere. Multiple Bully Gang members and associates from Brooklyn were sent from New York to Maine to operate “stash” houses that were used to store and sell narcotics. The organization’s drug proceeds were collected on a regular basis by runners who used vehicles with hidden “trap” compartments to conceal narcotics and drug proceeds. The proceeds were then laundered through direct cash deposits and wire transfers to co-conspirators, through intermediary bank accounts and the purchase of luxury vehicles.
Several co-conspirators allegedly purchased illegal firearms to protect the organization and its members. Facebook communications reveal that in August 2017, defendant Nicolette Tompkins purchased a Ruger firearm for co-conspirator Bermon Clarke, which was later seized by law enforcement in Brooklyn. Defendants Clarke, Keon Grant, Nadine Heath and Joanne Lydem participated in the August 2019 purchase of an illegal firearm. As part of that transaction, Grant informed Clarke that Lydem would “get the grip”—meaning purchase the firearm. Subsequently, when asked whether Lydem brought “the case the grip was in,” Grant sent Clarke a photograph of a gun box for a Glock pistol, confirming the purchase.
During the government’s investigation, stash houses and vehicles used by the defendants were searched in New York, New Jersey, Massachusetts and Maine. Law enforcement seized more than $380,000 in cash, more than 15 illegal firearms, six kilograms of cocaine, 600 grams of fentanyl, four vehicles with concealed “trap” compartments and luxury watches.
The charges in the superseding 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. Assistant United States Attorneys Drew G. Rolle, Nicholas J. Moscow and Lindsey R. Oken are in charge of the prosecution.
The Defendants:
JESSICA ALMEIDA
Age: 33
Detroit, MaineTYRONE 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 YorkMIKE GUSTAVO CONNOR (also known as “Gus”)
Age: 21
Brooklyn, New YorkRASHAAD CRAIG (also known as “Skeeno”)
Age: 25
Brooklyn, New YorkQUENTIN 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
Staten Island, New YorkROMEO GONZALES
Age: 22
Brooklyn, New YorkKEON GRANT (also known as “Keys”)
Age: 34
Brooklyn, New YorkNADINE HEATH
Age: 54
Troy, MaineTYQUAWN LANE (also known as “Bicks” and “Tah Tah”)
Age: 27
Brooklyn, New YorkJOANNE LYDEM
Age: 49
Garland, MaineTANEJIA MOORE
Age: 26
Brooklyn, New YorkCHRISHAWN 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, MaineDANIELLE WHITE
Age: 47
Swanville, MaineDEVIN-JOHN JASON WILLIAMS (also known as “Pun” and “Fat Boy”)
Age: 28
Brooklyn, New YorkDefendants Previously Indicted:
DERRICK AYERS (also known as “Dee” and “Mel”)
Age: 34
Rahway, New JerseyBERMON CLARKE (also known as “G” and “Blue”)
Age: 28
Rahway, New JerseyFRANKLIN GILLESPIE (also known as “Spazz” and “Frankie Gino”)
Age: 30
Newark, New JerseyNIA GOVAN (also known as “Cam” and “V”)
Age: 29
Boston, MassachusettsAMANDA HUARD
Age: 38
Raymond, MaineANTHONY KENNEDY (also known as “Biggie”)
Age: 34
Queens, New YorkJESSICA PELKEY
Age: 26
Presque Isle, MaineAMY SONNENBLICK
Age: 48
Brooklyn, New YorkAMANDA WALTON (also known as “A”)
Age: 32
Portland, MaineDEMETTRIUS WRIGHT (also known as “Clean” and “Meexhi Brim”)
Age: 23
Brooklyn, New YorkE.D.N.Y. Docket No. 20-CR-239 (S-2) (BMC)
Owner of Queens Acupuncture Business Pleads Guilty to Aiding and Assisting the Preparation of a False Tax ReturnRead the Press Release
The co-owner of a New York acupuncture business pleaded guilty yesterday to aiding and assisting in the preparation of a false tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
Nikki B. Yu of Queens, New York, co-owned and operated Wellife Physical Therapy and Acupuncture PLLC (Wellife), and was also involved in the operation of Welling Physical Therapy and Acupuncture PLLC (Welling), both of which had locations throughout New York City. Yu used a series of management companies in order to receive untaxed income from the businesses. She and others transferred funds from Welling and Wellife to the management companies, but did not report those funds to the IRS. Rather, Yu and others cashed approximately $3 million in checks payable to the management companies at a check cashing business, and then provided false and incomplete information to her tax return preparers by failing to disclose this check cashing activity. As part of her plea agreement, Yu admitted that she caused six false income tax returns to be filed on behalf of the management companies, understating their gross receipts.
U.S. District Judge Ann M. Donnelly set sentencing for April 21, 2021. Yu faces up to three years in prison and a $250,000 fine.
Principal Deputy Assistant Attorney General Zuckerman thanked special agents of IRS Criminal Investigation, who investigated the case, and Trial Attorneys Anahi Cortada and Thomas Koelbl of the Tax Division, who are prosecuting the case. Principal Deputy Assistant Attorney General Zuckerman also thanked the U.S. Attorney’s Office for the Eastern District of New York for their assistance in this matter.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Ten Individuals Charged in $50 Million Russian Smuggling SchemeRead the Press Release
An indictment and a complaint were unsealed today in federal court in Brooklyn variously charging 10 defendants with transportation of stolen property, failure to file export information, illegal exportation of electronic devices and conspiracy to commit these offenses. The defendants allegedly participated in the illegal smuggling of electronic devices, particularly Apple products, from the United States to Russia using couriers, many of whom were current and former employees of Aeroflot Airlines.
Akmal Asadov, Sayuz Daibagya, Anton Perevoznikov, Shohruh Saidov, Marat Shadkhin, Kirill Sokhonchuk and Zokir Iskanderov were arrested today and will be arraigned this afternoon via teleconference before United States Magistrate Judge Vera M. Scanlon. Azamat Bobomurodov was arrested in the Northern District of Illinois and will be arraigned in that district later today. Two additional defendants are fugitives.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York; Keith Byrne, Special Agent-in-Charge, U.S. Department of State’s Diplomatic Security Service, New York Field Office; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Troy Miller, Director of Field Operations, Customs and Border Protection, New York Field Office (CBP); Jonathan Carson, Special Agent-in-Charge, U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office (Commerce); 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.
“As alleged, the defendants were members of an international smuggling ring that used a network of operators here and in Russia to circumvent U.S. export laws and regulations,” stated Acting United States Attorney DuCharme. “With today’s arrests, the network has been disabled thanks to the outstanding work of the Eastern District of New York prosecutors who worked tirelessly alongside our agency partners to closely scrutinize the goods and individuals that transit our international borders.”
“If you believe it is acceptable to exploit positions with a foreign airline to smuggle millions of dollars in illegal goods back to Russia as we allege, the answer is Nyet. While this international smuggling ring’s activities demonstrate vulnerabilities exist, it also highlights that the combined efforts of federal agents, detectives, analysts and prosecutors are a powerful counter to any threat. The FBI New York office and our inter-agency partners are on watch, and we all take our obligation to enforce our laws and protect the United States seriously,” stated FBI Assistant Director-in-Charge Sweeney.
“This case represents the finest efforts of cooperative law enforcement,” stated Diplomatic Security Service Special Agent-in-Charge Byrne. “If criminal enterprises manipulate the instruments of international travel for profitable gain, then we are all at risk on the national security level. The federal agencies, police, and the United States Attorney’s Office deserve high praise for vigorously defending the interests and security of the United States of America.”
“CBP takes a comprehensive approach to border security and control, combining customs, and immigration, into one coordinated and supportive activity by leveraging our unique authorities to enhance criminal investigations. This indictment serves as a direct message that no matter how complex the criminal scheme, crimes occurring at our border will be stopped,” stated CBP Director Miller.
“Today’s action is the result of the outstanding effort and collaboration among law enforcement agencies. The illicit smuggling of goods on commercial aircraft is a serious violation of export control and public safety laws that we take very seriously. We will continue to pursue violators wherever they are, worldwide,” stated Commerce Special Agent-in-Charge Carson.
“Those charged today are alleged to have taken full advantage of their position with the airline to smuggle more than $50 million in stolen electronics to Russia,” stated HSI Special Agent-in-Charge Fitzhugh. “It is with the continued collaboration between federal, state and local law enforcement agencies that we are able to put an end to schemes like these that rob U.S. businesses of millions while funding illicit organizations overseas that threaten our national security.”
“As alleged, these defendants used commercial air travel in furtherance of their illegal smuggling scheme, a staggeringly dangerous circumstance that this investigation uncovered and grounded. I thank our dedicated NYPD detectives and all of our law enforcement partners for their work in this case,” stated NYPD Commissioner Shea.
As set forth in the government’s court filings, the defendants allegedly engaged in a scheme to export over $50 million worth of electronic devices, including Apple iPhones, iPads and Apple Watches, from the United States to Russia. The defendants allegedly carried out this scheme by smuggling cash and merchandise via airline passengers, including current and former Aeroflot Airlines employees. Upon receiving instructions from defendant Daibagya, a resident of Russia, Aeroflot Airlines crew members and others travelled to the United States to pick up the electronic devices. Defendants Asadov, Sokhonchuk, Perevoznikov and Shadkhin, together with others in the United States, had obtained the devices, many of which had been stolen, to be sent to Russia without the required export authorizations. During the investigation, searches of luggage belonging to various Aeroflot crew members and other couriers revealed millions of dollars of electronic devices. Occasionally, defendants Daibagya and Saidov smuggled the devices themselves. For example, between August 2019 and December 2019, Daibagya took four trips from the United States transporting over 1,000 Apple products valued at over $1 million, and on October 5, 2019, Saidov carried nine suitcases containing 235 Apple products with an estimated value of about $250,000.
As a result of the investigation, the Department of State has revoked approximately 113 visas of Aeroflot employees for their participation in their scheme.
Search warrants executed at the time of the defendants’ arrest revealed over $600,000 in cash, including some hidden in the crawl space of Shadkhin’s residence, and large amounts of electronic devices.
The charges in the indictment and complaint 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. Assistant United States Attorneys Keith D. Edelman, Andrey Spektor and Dana Rehnquist are in charge of the prosecution.
The Defendants:
E.D.N.Y. Docket No. 20-CR-415 (ARR)
AKMAL ASADOV
Age: 38
Brooklyn, New YorkSAYUZ DAIBAGYA
Age: 46
Moscow, RussiaANTON PEREVOZNIKOV
Age: 34
Brooklyn, New YorkSHOHRUH SAIDOV
Age: 31
Brooklyn, New YorkMARAT SHADKHIN
Age: 40
Brooklyn, New YorkKIRILL SOKHONCHUK
Age: 37
Brooklyn, New YorkE.D.N.Y. Docket No. 20-MJ-884 (LB)
AZAMAT BOBOMURODOV
Age: 31
Brooklyn, New YorkZOKIR ISKANDEROV
Age: 30
Brooklyn, New YorkLong Island Felon Sentenced to 35 Years’ Imprisonment for Armed Robbery, Shooting and Obstruction of JusticeRead the Press Release
Earlier today, in federal court in Central Islip, Spencer Jean was sentenced by United States District Judge Joanna Seybert to 35 years’ imprisonment for Hobbs Act robbery of a marijuana trafficker, discharging a firearm during a crime of violence and obstruction of justice. Jean was found guilty following a jury trial in July 2019.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, announced the sentence.
On March 20, 2018 in Middle Island, Jean robbed $1,500 worth of marijuana from a drug dealer he had met at a halfway house following his 2008 conviction for committing a series of nine armed robberies in Nassau and Suffolk Counties for which he received a sentence of 10 years’ imprisonment. During the robbery, Jean shot the victim in the leg at close range with a 9mm Glock handgun loaded with hollow-point bullets. The victim was placed on life support due to loss of blood and hospitalized for one month, but survived his injuries. After his arrest, Jean directed a former girlfriend to provide an alibi for him by lying to law enforcement and falsely testifying at trial that he was at a nursing home in Medford at the time of the shooting.
“The defendant demonstrated disregard for the life of his victim and no respect for the rule of law, even after having served a lengthy prison sentence,” stated Acting U.S. Attorney DuCharme. “It is thus appropriate and just that he now will be incapacitated in prison for more than three decades.” Mr. DuCharme expressed his grateful appreciation to the Federal Bureau of Investigation, New York Field Office, for the investigative work on the case.
This case is 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. The Department of Justice reinvigorated PSN in 2017 as part of its renewed focus on targeting violent criminals, directing all U.S. Attorneys’ Offices to work in partnership with federal, state, local and tribal law enforcement and the local community to develop effective, locally based strategies to reduce violent crime.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Anthony Bagnuola and Allen L. Bode are in charge of the prosecution.
The Defendant:
SPENCER JEAN (also known as “Cash”)
Age: 34
Westbury, New YorkE.D.N.Y. Docket No. 19-CR-123 (JS)
Leader of 18th Street Gang Arrested for Murder and Racketeering ConspiracyRead the Press Release
A superseding indictment was unsealed today in federal court in Brooklyn against Walter Fernando Alfaro Pineda, also known as “Clever,” a Houston-based national leader of the 18th Street gang. The superseding indictment, which was unsealed as to 11 co-defendants in March 2020, charges Alfaro with racketeering conspiracy, conspiracy to commit murder and murder in-aid-of racketeering for criminal activity between September 2016 and February 2018. Alfaro was arrested today by federal agents in Houston, Texas, and the government will seek his removal to the Eastern District of New York.
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.
“Today’s arrest of a national leader of the 18th Street gang is a milestone in the Department’s effort to dismantle this vicious organization and hold its members responsible for their crimes of violence,” stated Acting United States Attorney DuCharme. “We will continue working tirelessly until all gangs are eradicated in our communities so that the public can move about freely under the rule of law and without fear of harm from transnational organized crime elements.”
As alleged in the superseding indictment and detailed in other court filings, Alfaro allegedly authorized the murder of Jonathan Figueroa in October 2017. Alfaro’s order to New York-based 18th Street members set a series of events into action to effectuate the brutal murder of Figueroa, who was suspected of cooperating with law enforcement. On the night of October 24, 2017, Figueroa was lured by another 18th Street member to travel with him by bus from New York City to Kingston, New York. When they arrived in Kingston, the victim met other 18th Street members and hiked into Turkey Point State Forest, a 140-acre wooded park and swamp bordering the western bank of the Hudson River in Ulster County, New York. There, Figueroa was stabbed more than 100 times. After the murder, 18th Street members buried the victim in a make-shift grave in the forest. One gang member recorded the killing to disseminate among other 18th Street members as a warning to those who considered disrespecting the gang.
Alfaro is also charged, along with 11 co-defendants, with racketeering conspiracy for his participation in a pattern of criminal activity, including murders, attempted murders, fraudulent identification production, and extortion.
The charges in the superseding indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
If convicted, Alfaro faces a mandatory sentence of life imprisonment and is eligible for the death penalty.
The government’s case is being prosecuted by Assistant United States Attorneys Jonathan P. Lax and Erin Reid of the Office’s International Narcotics and Money Laundering Section.
The Defendant:
WALTER FERNANDO ALFARO PINEDA (also known as “Clever”)
Age: 41
Houston, TexasE.D.N.Y. Docket No. 18-139 (S-5) (LDH)
J&F Investimentos SA Pleads Guilty and Agrees to Pay More Than $256 Million in Criminal Fines to Resolve Foreign Bribery CaseRead the Press Release
Earlier today, in federal court in Brooklyn, J&F Investimentos SA (J&F), a global conglomerate holding company based in Brazil and primarily involved in the meat and agriculture businesses, pleaded guilty to conspiring to violate the Foreign Corrupt Practices Act (FCPA) and agreed to pay a criminal fine of more than $256 million. The charges arose from a scheme by J&F, through certain of its employees and agents, to pay millions of dollars in bribes to Brazilian government officials through, among other means, bank accounts based in New York. Today’s proceedings took place via video conference before United States District Judge Margo K. Brodie.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Brian C. Rabbitt, Acting Assistant Attorney General of the Justice Department’s Criminal Division, and James A. Dawson, Special Agent-in-Charge, Federal Bureau of Investigation, Washington Field Office (FBI), announced the charges and guilty plea.
“Today’s resolution and guilty plea, including a $256 million fine, demonstrates our Office’s full commitment to holding accountable those entities that seek to gain an improper advantage over competitors by bribing foreign officials and using the U.S. financial system to carry out the crimes,” stated Acting United States Attorney DuCharme. “Protecting the integrity of the financial system is a core priority of the Department of Justice.”
“With today’s guilty plea, J&F has admitted to engaging in a long-running pattern of paying bribes to corrupt officials in Brazil to obtain financing and other benefits,” stated Acting Assistant Attorney General Rabbitt. “J&F’s corrupt conduct involved executives at the highest levels of the company using New York banks and real estate to carry out a scheme to pay millions of dollars in bribes to government officials in Brazil. Today’s resolution demonstrates the department’s continuing commitment to combating international corruption and holding companies accountable for violations of the FCPA.”
“No matter where it occurs, the FBI and our global partners are committed to diligently rooting out corruption which betrays public trust and threatens a fair economy,” stated FBI Special Agent-in-Charge Dawson. “Today’s plea demonstrates the FBI’s commitment to combatting foreign corruption reaching the U.S., and today’s actions send a strong message that we will not relent in our efforts to uphold the law and hold everyone accountable to play by the same, fair rules.”
According to the Statement of Facts stipulated to by J&F in connection with its guilty plea and other court documents, between approximately 2005 and 2017, J&F, through certain of its employees and agents, paid millions of dollars in bribes to, and for the benefit of, Brazilian government officials in order to obtain financing from two Brazilian state-owned and state-controlled banks and to obtain approval for a merger from a Brazilian state-owned and state-controlled pension fund. In furtherance of the scheme, J&F used New York-based bank accounts in the name of shell companies to make hundreds of millions of dollars in corrupt payments for the benefit of Brazilian officials.
Specifically, between approximately 2005 and 2014, using bank accounts based in New York, J&F caused more than $148 million in corrupt payments to be made for the benefit of a former high-ranking executive at Banco Nacional de Desenvolvimento Econômico e Social (BNDES), a Brazilian state-owned bank. The bribe payments were made for the benefit of the former BNDES executive, who later during the bribery scheme served as a high-ranking official in the executive branch of the Brazilian government, for the purpose of ensuring that BNDES would enter into certain financing and equity transactions with J&F-related entities.
In addition, between approximately 2011 and 2017, J&F caused approximately $4.6 million in corrupt payments to be made, and items of value to be transferred, for the benefit of a high-ranking executive at Petrobras de Seguridade Social (Petros), a Brazilian state-owned pension fund. The bribes were paid through, among other things, the purchase of an apartment in New York for the high-ranking Petros executive. The bribe payments were made to ensure that Petros approved a merger involving a J&F-related entity.
Finally, between 2011 and 2014, J&F caused approximately $25 million in corrupt payments to be made for the benefit of a former high-ranking official in the legislative branch of the Brazilian government. The bribes were paid for the purpose of ensuring that Caixa Econômica Federal, a Brazilian state-owned bank, entered into certain transactions with J&F-related entities.
The government reached this resolution with J&F based on a number of factors, including J&F’s failure to voluntarily disclose the conduct to the government, and the nature, seriousness and pervasiveness of the offense, which included executives at the highest levels of the company and the payment of millions of dollars in bribes to high-level government officials in Brazil over multiple years. The criminal monetary penalty for J&F reflects a 10 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range because J&F received partial credit for its remediation and cooperation with the government’s investigation.
In a related matter with the U.S. Securities and Exchange Commission (SEC) announced today, a J&F majority-owned subsidiary, JBS S.A., agreed to pay the SEC disgorgement and prejudgment interest totaling approximately $26,866,565.
J&F previously entered into a resolution with the Ministério Público Federal (Public Prosecutor’s Office) in Brazil relating to the same conduct described in the Statement of Facts. The United States will credit approximately $128 million of the fine J&F pays to the Brazilian authorities toward payment of the criminal fine in this case.
The investigation is being conducted by the FBI’s International Corruption Unit in Washington, D.C. The government’s case is being handled by the Office’s Business and Securities Fraud Section and the Criminal Division’s Fraud Section. Assistant United States Attorney David Gopstein of the Eastern District of New York and Fraud Section Trial Attorneys Michael Culhane Harper and Joseph S. McFarlane are prosecuting the case.
The government of Brazil provided significant assistance in this matter, as did the Criminal Division’s Office of International Affairs.
The Defendant:
J&F INVESTIMENTOS SA
E.D.N.Y. Docket No. 20-CR-365
J&F Investimentos S.A. Pleads Guilty and Agrees to Pay over $256 Million to Resolve Criminal Foreign Bribery CaseRead the Press Release
J&F Investimentos S.A. (J&F), a Brazil-based investment company that owns and controls companies involved in multiple industries, including the meat and agriculture industry, has agreed to pay a criminal monetary penalty of $256,497,026 to resolve the department’s investigation into violations of the Foreign Corrupt Practices Act (FCPA). The resolution arises out of J&F’s scheme to pay millions of dollars in bribes to government officials in Brazil in exchange for obtaining financing and other benefits for J&F and J&F-owned entities.
J&F pleaded guilty and entered into a cooperation plea agreement with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York in connection with a criminal information filed today in the Eastern District of New York charging J&F with one count of conspiracy to violate the anti-bribery provisions of the FCPA.
“With today’s guilty plea, J&F has admitted to engaging in a long-running scheme to bribe corrupt officials in Brazil to obtain financing and other benefits for the company,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “As part of this scheme, executives at the very highest levels of the company used U.S. banks and real estate to pay tens of millions of dollars in bribes to corrupt government officials in Brazil in order to obtain hundreds of millions of dollars in financing for the company and its affiliates. Today’s resolution demonstrates the department’s continuing commitment to combating international corruption and holding companies accountable for violations of the FCPA.”
“Today’s resolution and guilty plea, including a $256 million fine, demonstrates our office’s full commitment to holding accountable those entities that seek to gain an improper advantage over competitors by bribing foreign officials and using the U.S. financial system to carry out the crimes,” said Acting U.S. Attorney Seth D. DuCharme for the Eastern District of New York. “Protecting the integrity of the financial system is a core priority of the Department of Justice.”
“No matter where it occurs, the FBI and our global partners are committed to diligently rooting out corruption which betrays public trust and threatens a fair economy,” said Special Agent in Charge James A. Dawson of the FBI Washington Field Office Criminal Division. “Today’s plea demonstrates the FBI’s commitment to combatting foreign corruption reaching the United States, and today’s actions send a strong message that we will not relent in our efforts to uphold the law and hold everyone accountable to play by the same, fair rules.”
According to admissions by J&F, between 2005 and 2017, the company conspired with others to violate the FCPA by paying bribes to government officials in Brazil in order to ensure that Brazilian state-owned and state-controlled banks would enter into debt and equity financing transactions with J&F and J&F-owned entities, as well as to obtain approval for a merger from a Brazilian state-owned and state-controlled pension fund.
Specifically, between 2005 and 2014, J&F engaged in a bribery scheme involving more than $148 million in corrupt payments that were promised and made to and for the benefit of high-level Brazilian government officials, including a then-high-ranking executive at Banco Nacional de Desenvolvimento Econômico e Social (BNDES), a Brazilian state-owned and state-controlled bank. In exchange for the bribe payments, J&F was able to obtain hundreds of millions of dollars in financing from BNDES. In addition, J&F paid bribes worth more than $4.6 million to and for the benefit of a high-ranking executive of Fundação Petrobras de Seguridade Social (Petros), a Brazilian state-controlled pension fund in exchange for obtaining Petros’s approval for a significant merger that benefited J&F. J&F also paid approximately $25 million in bribes to a high-ranking official in the legislative branch of the Brazilian government in order to secure hundreds of millions of dollars of financing from Caixa Econômica Federal (Caixa), a Brazilian state-owned and state-controlled bank.
In furtherance of the bribery scheme, among other things, J&F executives used New York-based bank accounts to facilitate the bribery scheme and to make corrupt payments, purchased and transferred a Manhattan apartment as a bribe, and met in the United States to discuss and further aspects of the illegal scheme.
As part of the plea agreement, for a three-year period, J&F agreed to continue to cooperate with the U.S. government in any ongoing or future criminal investigations concerning J&F, its executives, employees, or agents; enhance its compliance program; and report to the government on the implementation of its enhanced compliance program.
The department reached this resolution with J&F based on a number of factors, including the company’s failure to voluntarily disclose the conduct to the department and the nature, seriousness, and pervasiveness of the offense, which included executives at the highest levels of the company and the payment of tens of millions of dollars in bribes to high-level government officials in Brazil over a period of years. The criminal monetary penalty for J&F reflects a 10 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range because J&F received partial credit for its remediation and cooperation with the department’s investigation.
In a related matter with the U.S. Securities and Exchange Commission (SEC) announced today, a J&F majority-owned subsidiary, JBS S.A., agreed to pay the SEC disgorgement and prejudgment interest totaling approximately $26,866,565.
J&F previously entered into a resolution with the Ministério Público Federal (Public Prosecutor’s Office) in Brazil relating to the same conduct that forms the basis of J&F’s plea agreement announced today. Pursuant to the Brazilian resolution, J&F agreed to pay a fine of BRL 8,000,000,000 (the approximate equivalent of $1,441,505,636) and to contribute BRL 2,300,000,000 (the approximate equivalent of $414,432,870) to social projects in Brazil. Under the J&F plea agreement announced today, the Fraud Section and the Eastern District of New York will credit up to 50 percent ($128,248,513) of the criminal penalty owed to the United States to payments J&F makes pursuant to the resolution with the Brazilian authorities. The department determined that partial crediting was appropriate based on the specific facts and circumstances of this case in light of, among other things, the company’s prior efforts to coordinate with the department and Brazilian authorities.
The FBI’s Washington Field Office investigated the case. Trial Attorneys Michael Culhane Harper and Joseph McFarlane of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Gopstein of the U.S. Attorney’s Office for the Eastern District of New York are prosecuting the case. The Justice Department’s Office of International Affairs of the Department’s Criminal Division provided valuable assistance in this matter.
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/foreign-corrupt-practices-act.
Acting United States Attorney Seth D. DuCharme Announces Expansion of Strategies for Rapid Federal Response to Spikes in Gun-Related Violence in the Eastern District of New YorkRead the Press Release
RASP’s Expansion Is Part of Department of Justice’s Project Guardian Initiative to Maximize Impact of Gun Crime Prosecution Strategy
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York (EDNY), announced today strategies that are being implemented, in coordination with federal and local law enforcement partners, to address the significant spike in gun-related violence in the district. The strategies represent an expansion of the Office’s Rapid and Strategic Prosecution (RASP) Initiative to ensure rapid intake of federal prosecutions in response to gun violence. In September 2020, RASP was expanded to more effectively use crime data to identify, investigate, disrupt and prosecute violent armed criminals and organizations.
“In the middle of a global pandemic, we have also seen a local epidemic of shootings in our city, and we are responding with responsible, data-driven measures to protect our communities from armed repeat offenders and violent gang members to prevent neighborhoods and public housing from being turned into battle zones,” stated Acting U.S. Attorney DuCharme. “Our message is clear: violent criminal offenders will be arrested, detained and incapacitated in the court system.” Mr. DuCharme thanked the District Attorneys of Brooklyn, Queens and Staten Island for their cooperation and coordination, the Federal Bureau of Investigation, New York Field Office; New York City Police Department; Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Office; United States Marshal Service, EDNY; and Homeland Security Investigations for their partnership.
In October 2019, the EDNY instituted the RASP Initiative. RASP was developed to ensure a rapid federal response by the USAO-EDNY and its federal law enforcement partners to spikes in gun violence in specific areas of responsibility such as precincts, neighborhoods and housing developments. The RASP program was created in response to upticks in violent crime in various areas within the district. The goal of the expanded initiative is to support local law enforcement by rapidly deploying federal resources in order to protect communities from violent crime. The intake considerations include the individual’s prior criminal history; position, if any, in a criminal organization; any threats of witness tampering; the risk of recidivism; the likelihood of detention if charged in the state; current status, if applicable, in federal supervised release or state parole.
Since October 2019, 18 individuals have been charged with various firearms offenses as part of the RASP Initiative under the shared umbrella of the Triggerlock and Project Safe Neighborhood programs – long-standing and successful programs through which federal, state and local law enforcement agencies collaboratively address gun violence. The majority of the defendants have been detained pending trial, some of whom were found to be a danger to the community.
These arrests are in addition to the Office’s pre-existing anti-violence efforts by the General Crimes, Organized Crimes & Gangs, International Narcotics & Money Laundering, National Security & Cybercrime Sections, and the Long Island Criminal Division. For example, in February 2020, 12 members and associates of the 5-9 Brims set of the Bloods street gang were arrested and charged with multiple offenses, including racketeering conspiracy, narcotics trafficking and murder. In May 2020, 10 members and associates of La Mara Salvatrucha (“MS-13”) were arrested and charged variously with racketeering, murder, narcotics and firearms offenses. In June 2020, seven members and associates of the Elite Assassin Millas set of the Bloods street gang were arrested and charged variously with racketeering conspiracy, murder, stalking and firearms offenses. Between June and September 2020, 14 members and associates of the Bully Gang were arrested and charged variously with narcotics and firearms possession. In addition, since August 7, 2020, the Organized Crime & Gangs and General Crimes Sections have charged approximately 33 defendants with illegal firearms possession, of which 31 have been ordered detained pending trial.
In September 2020, the EDNY expanded RASP to identify individuals and groups responsible for spikes in gun violence and conduct investigations into a host of federal crimes, including Hobbs Act robbery, domestic violence with a firearm, narcotics trafficking, violent crime in aid-of-racketeering and fraud. RASP is utilizing the following strategies:
- Using data and analytics to identify trends and the drivers of gun violence.
- Aggressively using federal firearms statutes and other statutes like Hobbs Act robbery to address gun violence in the district.
- Assembling a team of more than a dozen experienced Assistant U.S. Attorneys to lead the prosecutions.
- Using three NYPD detectives to assist EDNY federal prosecutors in the investigations of fatal and non-fatal shootings.
- Partnering with two Special Assistant U.S. Attorneys designated by the Brooklyn District Attorney’s Office to facilitate the presentation of firearms and violence cases for prosecution in federal court.
RASP’s expansion is part of the Department of Justice’s Project Guardian initiative focusing on coordinated prosecutions to maximize the impact of federal resources and maintain a robust and effective gun crime prosecution strategy, utilizing crime data to guide the focus. Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs, including Project Safe Neighborhoods (PSN), to reduce gun violence; enhances coordination of federal, state, local, and tribal authorities in investigating and prosecuting gun crimes; improves information-sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensures that federal resources are directed at the criminals posing the greatest threat to our communities.
Former Long Island Liquor Distributor Sentenced to 24 Months in Prison for Defrauding Investors in Wine Product Featured on “Shark Tank” TV ShowRead the Press Release
Earlier today, in federal court in Central Islip, Joseph Falcone, who formerly operated a wine and liquor distribution business known as 3G’S VINO LLC, was sentenced by United States District Judge Sandra J. Feuerstein to 24 months’ imprisonment for wire fraud in connection with his scheme to defraud investors. As part of the sentence, Falcone was ordered to pay $1.8 million in restitution to seven of 3G’S investors. Falcone pleaded guilty in June 2019.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, announced the sentencing.
“Falcone’s victims were reeled in by his “Shark Tank” pitch, but with today’s sentence, the defendant is now squarely on the hook for his crimes,” stated Acting United States Attorney DuCharme. “This Office remains committed to prosecuting those who mislead the public and abuse the trust placed in them to engage in fraud against their own investors.” Mr. DuCharme thanked the Federal Bureau of Investigation, New York Field Office, for its outstanding investigative work on the case.
In December 2012, Falcone established 3G’S, which was based in Bethpage and Farmingdale, New York. Among other products, 3G’S distributed a single-serving wine in a sealed glass, which was featured on the television program “Shark Tank.” Between September 2014 and November 2015, Falcone solicited investments and promised potential investors that their money would be used to fund 3G’S by purchasing the single-serving wine product. Relying on those promises, investors wired money to bank accounts in Florida controlled by Falcone. Rather than invest the money as promised, Falcone used approximately $527,064 for his personal benefit – paying off the mortgage on a residence in Florida and funding his online securities trading.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Bradley T. King and Madeline M. O’Connor are in charge of the prosecution.
The Defendant:
JOSEPH FALCONE
Age: 60
Rockledge, FloridaE.D.N.Y. Docket No. 19-CR-257 (SJF)
Dominican Republic Official Extradited to the United States to Face Narcotics Trafficking ChargesRead the Press Release
Yamil Abreu Navarro was arraigned this afternoon before United States Magistrate Judge Vera M. Scanlon at the federal courthouse in Brooklyn on an indictment charging him with international heroin distribution. Abreu Navarro was arrested in the Dominican Republic on an extradition arrest warrant based on an indictment and extradition request from the Eastern District of New York. Abreu Navarro was extradited yesterday to the United States.
Seth D. DuCharme, 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), Dermot F. Shea, Commissioner, New York City Police Department (NYPD), and Keith M. Corlett, Superintendent, New York State Police (NYSP), announced the extradition and charges.
“As alleged in the indictment, Abreu Narvarro betrayed his elected office and the people he represented in the Dominican Republic by directing an international drug trafficking enterprise that imported kilogram quantities of heroin into the United States,” stated Acting United States Attorney DuCharme. “The United States will continue to work with its international partners to dismantle such organizations and prosecute its members regardless of their rank or official status.” Mr. DuCharme extended his grateful appreciation to the DEA’s offices in Santo Domingo, the United States Marshals Service, the United States Department of State, the Department of Justice’s Office of International Affairs, and the Government of the Dominican Republic.
“This is another example of the insidious way the Sinaloa cartel has infiltrated people in positions of power to further their drug trafficking networks,” stated DEA Special Agent-in-Charge Donovan. “I applaud our law enforcement partners in New York and the Dominican Republic for their stalwart efforts throughout this investigation.”
“This extradition and indictment are the result of an aggressive strategy to stop illegal drug trafficking and keep deadly drugs off our streets. This individual took advantage and abused his public office, using it to bring dangerous drugs to the New York City area. Together, with our partners, we have dismantled a dangerous trafficking operation and stopped the infiltration of a large quantity of narcotics into the United States. We will continue to work vigilantly to put dangerous individuals like this behind bars,” stated NYSP Superintendent Corlett.
According to the indictment and statements made in court, Abreu Navarro held public office as the “Sindico,” or Director, of the Municipal Board for the Padre de Las Casas municipality in the Azua province of the Dominican Republic, and was a former leader of the Modern Revolutionary Party (PRM). Between 2016 and 2017, Abreu Navarro allegedly worked directly with Sinaloa cartel members in Mexico who supplied him and his organization with heroin and fentanyl, and he assisted in coordinating the importation and distribution of over 79 kilograms of heroin in New York City and elsewhere in the United States.
The extradition of Abreu Navarro is the result of an ongoing Organized Crime Drug Enforcement Task Force (OCDETF) investigation led by the United States Attorney’s Office for the Eastern District of New York and the DEA. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Abreu Navarro faces a mandatory minimum sentence of 10 years’ imprisonment.
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 Genny Ngai are in charge of the prosecution. The Department of Justice’s Office of International Affairs handled the extradition in this matter.
The Defendant:
YAMIL ABREU NAVARRO
Age: 58
Padre de las Casas, Dominican RepublicE.D.N.Y. Docket No. 20-CR-7 (DLI)
Brooklyn Man Sentenced to 224 Months’ Imprisonment for Home Invasion Armed Robbery ConspiracyRead the Press Release
Earlier today, in federal court in Brooklyn, Devone Jefferys was sentenced by United States District Judge Kiyo A. Matsumoto to 224 months’ imprisonment for Hobbs Act robbery conspiracy, attempted Hobbs Act robbery of heroin and cash, and the unlawful use and possession of a firearm. Jefferys was found guilty at a jury trial in October 2019.
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 (ATF), and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the sentence.
On July 31, 2015, Jefferys and a co-conspirator, impersonating NYPD police officers, entered an apartment in Williamsburg, Brooklyn, to steal heroin and cash from a drug dealer. They pointed their guns at those present in the apartment – including a pregnant woman who was in labor, the drug dealer’s sister and the drug dealer’s mother – threatened them with violence, ordered them to lie on the floor, and bound them with duct tape. Jefferys ransacked the apartment searching for drugs and cash, with his and his co-conspirator’s guns aimed on the victims’ heads and the pregnant woman’s stomach. When Jefferys learned that the drug dealer’s sister had thrown a bag of heroin out a window, he forcibly took her to an outside alleyway and raped her.
“Today’s substantial sentence will protect the community by incapacitating this violent predator, who inflicted injury and terror upon his victims before he was brought to justice,” stated Acting United States Attorney DuCharme. “I commend the prosecutors and the investigators who worked tirelessly to make this case and to bring a measure of closure to the victims.”
“Thanks to the diligent work of the ATF agents and NYPD detectives of the Joint Robbery Task Force, today the victims and the community finally have justice for this horrific crime,” stated ATF Special Agent-in-Charge DeVito.
“We work tirelessly to keep people from being victims of this kind of violence and join with our law enforcement partners in embracing today’s sentencing,” stated NYPD Commissioner Shea.
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. The Department of Justice reinvigorated PSN in 2017 as part of the its renewed focus on targeting violent criminals, directing all U.S. Attorneys’ Offices to work in partnership with federal, state, local and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
The government’s case is being prosecuted by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Nathan Reilly and Ryan Harris are in charge of the prosecution.
The Defendant:
DEVONE JEFFERYS (also known as “Moneybags”)
Age: 28
Brooklyn, New YorkE.D.N.Y. Docket No. 18-CR-359 (KAM)
Brooklyn Man Charged with Covid-19 Related FraudRead the Press Release
A criminal complaint has been filed in federal court in Brooklyn charging Jeremy Trapp with wire fraud in connection with the Economic Injury Disaster Loan program. Trapp is in federal custody on other charges, and made his initial appearance on the new charge yesterday before United States Magistrate Judge Vera M. Scanlon. The defendant remains detained pending trial.
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.
“As alleged, Trapp filed an application containing outright lies in order to steal government funds intended to help small businesses and their employees survive the economic fallout of the COVID-19 pandemic,” stated Acting United States Attorney DuCharme. “The Department of Justice will ensure that taxpayer and pandemic relief funds are not misappropriated, but are used for their intended purpose and deserving recipients.”
"While small business owners around the country were scrambling to make ends meet and find ways to compensate their employees during the COVID-19 pandemic, Trapp blatantly lied on an application for economic stimulus, as alleged today,” stated FBI Assistant Director-in-Charge Sweeney. “Without a legitimate business to claim or any employees to pay, he wasn’t at all eligible for the funding he eventually received. Stealing federal aid reserved for those suffering from the pandemic's economic fallout is an easy way to rack up criminal charges. As a result, the one thing Trapp is now eligible for is the chance of spending a significant amount of time behind bars.”
The Economic Injury Disaster Loan program (EIDL) 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. As alleged in the complaint and other court documents, Trapp applied for an EIDL loan and grant in June 2020. In the application, Trapp claimed that he was the sole proprietor of a car wash business located at his home address in Brooklyn, a multi-unit residential building. Trapp further represented that he employed ten 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. On July 13, 2020, Trapp withdrew approximately $9,000 in cash from the bank account.
The government’s investigation revealed that Trapp did not operate a commercial car wash business, did not employ anyone and had no gross revenue from the purported business.
The charge in the complaint is an allegation, and the defendant is presumed innocent unless and until proven guilty. If convicted, Trapp faces up to 20 years’ imprisonment on the fraud charge.
The government’s case is being prosecuted by Assistant United States Attorney Francisco J. Navarro.
The Defendant:
JEREMY TRAPP
Age: 24
Brooklyn, New YorkE.D.N.Y. Docket No. 20-MJ-915
Alleged Narcotics Trafficker Extradited to the United States to Face International Cocaine Distribution ChargesRead the Press Release
Uldarico Narvaez Ansazoy will be arraigned this afternoon before United States Magistrate Judge Vera M. Scanlon at the federal courthouse in Brooklyn on an indictment charging him with participating in an international cocaine distribution conspiracy headed by his brother Roman Narvaez Ansazoy. The defendant was arrested in Colombia pursuant to a request for his extradition, and extradited yesterday to the United States. Roman Narvaez Ansazoy was arrested in September 2019 on charges of leading a continuing criminal enterprise and is awaiting trial in the Eastern District of New York.
Seth D. DuCharme, 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), Dermot F. Shea, Commissioner, New York City Police Department (NYPD), and Keith M. Corlett, Superintendent, New York State Police (NYSP), announced the extradition and charges.
“As alleged in the indictment, the defendant and his brother operated a substantial Colombian drug-trafficking enterprise that imported multiple tons of cocaine into the United States each month,” stated Acting United States Attorney DuCharme. “The United States stands committed to working with our international partners to dismantle the drug-trafficking organizations responsible for flooding our communities with poison and bringing the individuals who run these operations to justice.” Mr. DuCharme 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, the Judicial Attaché’s office in Bogota and the Government of Colombia.
“This extradition leads to an unpleasant reunion between brothers, Roman and Uldarico Narvaez Ansazoy, who both have been brought to New York to face U.S. rule of law,” stated DEA Special Agent-in-Charge Donovan. “The Narvaez trafficking organization threatened American lives by sending multi-ton quantities of cocaine from the jungles of Colombia to the United States, with assistance from a designated foreign terrorist organization, the FARC. This justice is long overdue, but this investigation is evident of law enforcement’s dedication to the safety and health of the American public.”
“I applaud our law enforcement officials at all levels for their strong police work in this case and for their continued dedication to preventing the trafficking of cocaine and other harmful narcotics within our communities. This indictment and the disruption of this international illegal drug trafficking operation sends a clear message that we will find and punish the people who are responsible for producing and transporting these illegal substances to our streets,” stated NYSP Superintendent Corlett.
According to the indictment, Narvaez and his brother were founders and principal leaders of the Narvaez drug trafficking organization 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 organization was one of the top producers of cocaine in Colombia. The cocaine was transported to Colombian port cities on the Pacific Ocean through jungle area routes protected by paramilitary groups paid by the Narvaez for safe passage. One of the paramilitary groups was the Revolutionary Armed Forces of Colombia (FARC), a designated Foreign Terrorist Organization. The vast majority of the cocaine the organization delivered was destined for the United States.
The extradition of Narvaez is the result of an ongoing Organized Crime Drug Enforcement Task Forces (OCDETF) investigation led by the United States Attorney’s Office for the Eastern District of New York and the DEA. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations and those primarily responsible for the nation’s illegal drug supply.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorney Francisco J. Navarro is in charge of the prosecution. The Justice Department’s Office of International Affairs handled the extradition in this case.
The Defendant:
ULDARICO NARVAEZ ANSAZOY
Age: 41
Antioquia, ColombiaDefendant Previously Indicted:
ROMAN NARVAEZ ANSAZOY
Age: 45
Antioquia, ColombiaE.D.N.Y. Docket No. 14-CR-048 (S-1) (BMC)
Long Island Chiropractor Charged with Health Care FraudRead the Press Release
A complaint was unsealed today in federal court in Brooklyn charging Joseph Stephan, a chiropractor licensed by New York State, with health care fraud for submitting false claims to the U.S. Department of Labor’s (DOL) Office of Workers Compensation Programs (OWCP) for services that were not actually rendered. Stephan was arrested this morning and will make his initial appearance this afternoon before United States Magistrate Judge Vera M. Scanlon.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Michael Mikulka, Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General (DOL-OIG), and Matthew Modafferi, Special Agent-in-Charge, United States Postal Service, Office of the Inspector General (USPS-OIG), announced the arrest and charges.
“As alleged, Stephan abused the trust of an important federal benefit program for employees injured on the job by billing for numerous fraudulent claims, including those for an undercover Special Agent investigating the defendant,” stated Acting United States Attorney DuCharme. “This Office will continue working closely with our law enforcement partners to hold healthcare providers accountable for fraud and abuse.”
“Medical providers who submit false claims to DOL’s OWCP and other federal health care programs for medically unnecessary services are putting illegal profits above patients’ safety. We will continue to work with our law enforcement partners and OWCP to protect the integrity of DOL’s benefit programs,” stated DOL-OIG Special Agent-in-Charge Mikulka.
“The U.S. Postal Service Office of Inspector General is dedicated to protecting the public’s safety and the U.S. Postal Service,” stated USPIS-OIG Special Agent-in-Charge Modafferi. “The Special Agents of the USPS OIG will tirelessly investigate and seek justice against those who choose to defraud federal benefit programs and put profits above the safety of their patients. The USPS OIG is thankful for the great longstanding relationships we have developed with our law enforcement partners and the U.S. Attorney’s Office to combat healthcare frauds.”
Stephan has been enrolled in OWCP since 2008. Certain federal employees, including employees of the United States Postal Service, who become disabled due to occupational injuries sustained during the performance of their official duties qualify for OWCP benefits. As charged in the criminal complaint, Stephan fraudulently billed OWCP for services (i) provided to patients on dates when the patients did not visit him, and (ii) that were not in fact provided during patient visits. The complaint also alleges that Stephan fraudulently billed OWCP for services purportedly provided to a USPS-OIG special agent posing as a postal employee on 23 dates when, in fact, the undercover agent did not have an appointment or meet with him.
The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Stephan faces a statutory maximum of 10 years’ imprisonment.
The case is being investigated by DOL-OIG and USPS-OIG, and was brought by the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the United States Attorney’s Office for the Eastern District of New York. Trial Attorney Sarah Wilson Rocha of the Criminal Division’s Fraud Section is prosecuting the case.
The Defendant:
JOSEPH STEPHAN
Age: 50
Farmingdale, New YorkE.D.N.Y. Docket No. 20-MJ-855
Suffolk County Attorney Pleads Guilty to Conspiracy to Commit Mail and Wire FraudRead the Press Release
Earlier today, in federal court in Central Islip, New York, Vincent J. Trimarco, Jr., an attorney licensed to practice in the state of New York since 1997, pleaded guilty to conspiracy to commit mail and wire fraud in connection with a scheme to defraud the beneficiary of an estate from her inheritance from a wrongful death suit. Today’s plea took place before United States District Judge Joan M. Azrack. When sentenced, Trimarco faces up to 20 years in prison, as well as forfeiture, restitution and a fine of up to $250,000 or twice the gross gain or loss as a result of his crime, whichever is greater. As a part of his plea agreement with the government, Trimarco agreed to pay more than $1 million in restitution.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, announced the guilty plea.
“Trimarco defrauded a young girl of her inheritance violating the law as well as the trust placed in him as an attorney,” stated Acting United States Attorney Seth DuCharme. “Protecting the public from those who, for personal gain, abuse that trust and betray the oath they have sworn to uphold is a priority of this Office.” Mr. DuCharme thanked the Federal Bureau of Investigation, New York Field Office, for its investigative work on the case.
As set forth in court filings and today’s proceeding, from April 2012 through August 2017, Trimarco and a co-conspirator executed a scheme to defraud a minor, who was the co-conspirator’s grandchild, of settlement proceeds stemming from a wrongful death action. Using the settlement proceeds, Trimarco and the co-conspirator purchased luxury vehicles, including a Ferrari F430 Spider for $200,000 and a Jaguar XKR convertible for $57,000, as well as numerous properties in Suffolk County for over $600,000, and invested approximately $800,000 in the Emporium, a nightclub and music venue in Patchogue, New York, in which Trimarco was, at times, a part owner. Despite orders from the Suffolk County Surrogate’s Court in April 2012, June 2012 and August 2012 restraining the disbursement of the settlement proceeds and ultimately directing the return of the settlement proceeds, Trimarco and his co-conspirator sold the assets obtained with the settlement funds but failed to return the proceeds to the rightful heir.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Catherine M. Mirabile and Michael J. Bushwack are in charge of the prosecution, with the assistance of Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The Defendant:
VINCENT J. TRIMARCO, JR.
Age: 51
Smithtown, NYE.D.N.Y. Docket No. 17-CR-583 (S-1) (JMA)
Former Stony Brook University Professor Sentenced to Prison for Stealing Cancer Research FundsRead the Press Release
Geoffrey Girnun, a former Associate Professor and cancer researcher at Stony Brook University’s Department of Pathology of Medicine, was sentenced today by United States District Judge Denis R. Hurley via videoconference to one year and a day in prison for theft of government funds related to a grant he received to research the effect of certain molecules on cancer. Girnun pleaded guilty in January 2020 and pursuant to his plea agreement agreed to forfeit $225,000 and resign from his position at Stony Brook University. The Court also ordered restitution to be paid to the National Institutes of Health (NIH) and Stony Brook University in the amount of $225,000.
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 Scott J. Lampert, Special Agent-in-Charge, Department of Health and Human Services, Office of Inspector General (HHS-OIG), announced the sentence.
“The defendant’s theft of cancer research funds undermined the important mission of the National Institute of Health, Stony Brook University and his fellow researchers, who are dedicated to curing this deadly illness,” stated Acting United States Attorney DuCharme. “In connection with today’s sentence, which provides punishment for his offense, the defendant also will be required to pay back every penny he diverted from the fight against cancer.”
“Stealing cancer research funds solely to line your own pockets is an outrageous crime. Today’s sentence demonstrates that society will not tolerate fraudsters like Dr. Girnun, who will pay for his greed-fueled scheme,” stated HHS-OIG Special Agent-in-Charge Lampert. “We will continue to work with our law enforcement partners to investigate such fraud and bring perpetrators to justice.”
In approximately 2013 and 2017, respectively, Girnun formed two sham companies, Atlas Metabolomics, LLC (Atlas) and Empyrean Biosciences, LLC (Empyrean) that purportedly provided research items and equipment for the defendant’s cancer-related research projects. From approximately December 2013 to approximately September 2019, Girnun submitted fraudulent electronic invoices to Stony Brook University for payment to the sham companies for equipment, goods and services that were never received or provided. Stony Brook University then used NIH and the university’s grant and foundation funds to pay the sham companies over $200,000. Girnun withdrew the fraudulently obtained grant funds from Atlas and Empyrean’s bank accounts and used the money for personal expenses, including payments toward the mortgage on his residence and tuition for his children.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorney Erin E. Argo is in charge of the prosecution. Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division is handling forfeiture matters.
The Defendant:
GEOFFREY GIRNUN
Age: 49
Woodmere, New YorkE.D.N.Y. Docket No. 19-CR-416 (DRH)
Long Island Man Sentenced to 20 Years’ Imprisonment for RacketeeringRead the Press Release
Earlier today, in federal court in Central Islip, Terrill Latney, an associate of the “Red Stone Gorilla” subset of the Bloods, a violent criminal enterprise based in Riverhead, New York, was sentenced by United States District Judge Joanna Seybert to 20 years’ imprisonment for racketeering, including the predicate acts of conspiring to distribute narcotics and participating in the murder of Thomas Lacolla while attempting to kill a rival of the gang. Latney pled guilty in February 2020.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, announced the sentence.
“With today’s sentence, justice has been served for years of drug dealing, violence and murder, which wreaked havoc in Riverhead and the surrounding area,” stated Acting United States Attorney DuCharme. “This outcome brings a measure of closure to the victims and stands for the principle that we remain ever-committed to dismantling violent street gangs on Long Island and restoring safety and the rule of law to every community.” Mr. DuCharme expressed his grateful appreciation to the Federal Bureau of Investigation, New York Field Office, and the Suffolk County East End Drug Task Force.
As detailed in the government’s court filings and admitted at the guilty plea proceeding, Latney participated in the distribution of large quantities of crack cocaine, cocaine and heroin in and around Riverhead over the course of nearly a decade. In addition, on November 17, 2015, Latney assisted members of the Bloods in their attempt to kill a rival gang member which resulted in the shooting death of that rival’s friend, Thomas Lacolla. Latney drove three Bloods members to a location in Riverhead where they fired more than 39 shots into a vehicle they believed was occupied by their intended target, but instead shot Lacolla, instantly killing him.
This case is 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. The Department of Justice reinvigorated PSN in 2017 as part of its renewed focus on targeting violent criminals, directing all U.S. Attorneys’ Offices to work in partnership with federal, state, local and tribal law enforcement and the local community to develop effective, locally based strategies to reduce violent crime.
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.
Defendant:
TERRILL LATNEY (also known as “Motis” and “Mo”)
Age: 40
Mastic Beach, New YorkE.D.N.Y. Docket No. 18-CR-606 (S-2) (JS)
Former Investment Advisor Sentenced to 17 Years in Prison in Multi-Million Dollar Investment Fraud Scheme that Victimized Professional Hockey Players and Long Island InvestorsRead the Press Release
Earlier today, in federal court in Central Islip, Phillip A. Kenner was sentenced by United States Circuit Judge Joseph F. Bianco to 17 years’ imprisonment for stealing millions of dollars in funds raised from Long Island residents and professional athletes that were intended for investment in land developments in Hawaii and a start-up business in Arizona, among other purposes. Kenner and co-defendant Tommy Constantine were convicted at trial in July 2015 of one count of conspiracy to commit wire fraud, four substantive counts of wire fraud, and one count of conspiracy to commit money laundering. The amount of restitution will be determined by the Court at a later date. Previously, the Court entered a forfeiture money judgment in the amount of approximately $17 million and ordered Kenner to forfeit all his right, title and interest in an oceanfront resort in Mexico, real property in Hawaii and a Falcon 10 jet airplane, among other assets. Kenner has been in the custody of the Bureau of Prisons since his arrest in 2013. Constantine is awaiting sentencing.
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 Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Services—Criminal Investigation (IRS), announced the sentence.
“Today’s substantial sentence provides just punishment for the defendant’s victimization of clients, as well as his attempts to shift blame and scapegoat others as his scheme unraveled,” stated Acting United States Attorney DuCharme. “As Kenner has now learned, fraud may seem like easy money in the short run, but when justice catches up with you, the consequences can be significant.” Mr. DuCharme expressed his grateful appreciation to the FBI and IRS, the agencies responsible for leading the government’s investigation.
“Time and again, Kenner and his co-conspirator stole money from multiple investors and dumped millions in ill-gotten gains into entities that benefitted them rather than their victims. Kenner has received a significant sentence today, and the 17 years behind bars should give him ample time to think about his crimes and the consequences of his actions,” stated FBI Assistant Director-in-Charge Sweeney.
“Greed knows no boundaries, and anyone may fall victim to its promise of major returns on investment,” stated IRS-CI Special Agent in Charge Larsen. “IRS-CI special agents deal with perpetrators of fraud motivated by their desire for personal financial enrichment on a daily basis. “This sentence is just for Mr. Kenner who deserves his time in the ‘penalty box.’”
Kenner began his career as a Boston-based financial advisor and developed a roster of clients, including former New York Islander Michael Peca, former New York Islander and New York Ranger Brian Berard, and Darryl Sydor and Bill Ranford – both two-time Stanley Cup champions – and other NHL players.
At trial, the government presented testimony from nearly 40 witnesses and introduced more than 1,000 exhibits, including audio recordings made by several victim investors and proved that the defendants siphoned millions of investor dollars into a labyrinth of holding companies, diverting those dollars from their approved uses into companies, real estate and other ventures – including Constantine’s car racing endeavor – that solely benefited the defendants.
The Hawaii Real Estate Investment Scheme
Beginning in 2003, Kenner convinced Peca, Berard and several others to invest $100,000 each for the development of land in Hawaii into luxury estates and to open personal lines of credit at a bank, collateralized by their personal stock, bond and savings accounts worth at least $10 million. Kenner assured the investors that the lines of credit would be used only to pay for initial development costs associated with the Hawaii project, and would be fully replenished after Lehman Brothers Holdings, Inc. agreed to loan the project up to $105 million in August 2006. In fact, Kenner borrowed nearly all of investors’ lines of credit to acquire his personal interest in unrelated real estate projects in Hawaii and Mexico and to cover his own and Constantine’s personal expenses.
In an offshoot of the scheme, Constantine brokered a $3.5 million loan from an Arizona businessman ostensibly to close on a Hawaii parcel of land. Constantine put up no money of his own, but walked away from the transaction – funded with assets diverted from Peca, Berard and others – with approximately $2 million.
The Eufora LLC Scheme
In 2002, Constantine founded Eufora LLC, a prepaid debit card business. Between February 2008 and May 2009, Eufora was operating in the red, and as Constantine testified in civil depositions, the company was nearly worthless. Notwithstanding, Kenner persuaded clients to invest in Eufora. While representing that he was investing his clients’ funds in Eufora, Kenner instead wired $725,000 of his clients’ funds to Constantine’s personal account. Kenner also directed the wiring of an additional $700,000 of his clients’ funds to Eufora’s account, and promptly re-wired those funds to a co-conspirator’s personal account. The diverted funds were used to cover the costs of Kenner’s and Constantine’s home mortgages, credit card bills and other debts.
The Global Settlement Fund Scheme
In early 2009, Kenner’s clients who had opened lines of credit for the Hawaii venture received notices that their credit lines were in default. For years, Kenner concealed that he had wiped out most of his clients’ funds by borrowing against one line of credit to pay monthly interest charges for other another account. By late 2008, the concealment scheme collapsed. Notwithstanding, Kenner and Constantine persuaded their clients to invest additional funds to a “Global Settlement Fund.” The clients contributed more than $2.9 million toward the fund, but the vast majority of the money was diverted to the defendants’ personal use, which included Constantine buying his personal home out of foreclosure, Kenner and Constantine paying legal bills related to Kenner’s personal investment in a tequila company in Mexico, defending Constantine in Florida litigation over his race car sponsorship activities, and an exploratory and unsuccessful effort by Constantine to buy Playboy Enterprises.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Saritha Komatireddy and J. Matthew Haggans are in charge of the prosecution. Assistant United States Attorneys Diane Leonardo and Madeline O’Connor are handling the forfeiture of assets.
The Defendant:
PHILLIP A. KENNER
Age: 51
Scottsdale, ArizonaDefendant To Be Sentenced:
TOMMY CONSTANTINE
Age: 54
Scottsdale, ArizonaE.D.N.Y. Docket No. 13-CR-607 (JFB)
New York Physical Therapy Providers Settle Civil Healthcare Fraud AllegationsRead the Press Release
Williamsburg Physical Therapy, P.C. and Euro Physical Therapy, P.C. have agreed to pay the United States and the State of New York $4 million to resolve civil allegations that they falsely billed Medicare, Medicaid, the Federal Employees’ Compensation Act Program (FECA) and the Federal Employees’ Health Benefits Program (FEHBP) for physical therapy services from 2008 to 2018. The settlement also resolves claims against the owners of the two physical therapy practices, Alex Klurfeld and Diana Klurfeld, and First Plus Services, Inc., a management company associated with the practices.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York; Matthew Modafferi, Special Agent-in-Charge, United States Postal Service, Office of the Inspector General (USPIS-OIG); Michael Mikulka, Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General, New York Regional Office (DOL-OIG); and Norbert E. Vint, Deputy Inspector General Performing the Duties of the Inspector General, Office of Personnel Management (OPM OIG), announced the settlement. Mr. DuCharme thanked the Office of the Inspector General for Health and Human Services and Office of the New York State Attorney General for their assistance in the investigation.
Williamsburg Physical Therapy and Euro Physical Therapy are New York professional corporations owned and operated by Alex Klurfeld, a physical therapist, and Diana Klurfeld, his wife, that provide physical therapy to the public, including to Medicare, FECA, FEHBP, and Medicaid beneficiaries in the New York City. Williamsburg Physical Therapy and Euro Physical Therapy have operated under those names and others at the following addresses:
* 240 South 3rd Street, Brooklyn
* 182 Havermayer Street, Brooklyn
* 705 Manhattan Avenue, Brooklyn
* 37-49 91st Street, Queens
* 452 Fort Washington Avenue, Manhattan
* 601 West 182nd Street, Manhattan
* 3224 Grand Concourse, Bronx
First Plus Service, Inc. is a New York corporation owned and operated by Diana Klurfeld that conducts administrative services for Williamsburg Physical Therapy and Euro Physical Therapy, including medical billing and payroll.
The settlement resolves allegations that the defendants submitted false claims to federal healthcare programs for physical therapy services provided or supervised by someone other than the licensed physical therapist identified on the claim, including unlicensed aides. The settlement also resolves claims that the defendants wrongfully backdated services after treatment authorizations had expired.
“Physical therapy performed by persons who are neither licensed nor supervised by licensed therapists may jeopardize patient health. The knowing submission of claims for payment for such services to federally-funded health programs also defrauds taxpayers. This settlement reaffirms this Office’s commitment to rooting out health care fraud and practices that may cause harm to patients,” stated Acting U.S. Attorney DuCharme.
“This settlement sends a clear message that the government is dedicated to protecting the rights of patients and ridding corruption from federal benefit programs. The U.S. Postal Service Office of Inspector General would like to thank our law enforcement partners for their commitment and efforts in this investigation. The USPS OIG will continue to vigorously investigate those who engage in activities to defraud federal benefit programs and the U.S. Postal Service,” stated USPIS-OIG Special Agent-in-Charge Modafferi.
“Ensuring the integrity of the Department’s Workers Compensation Programs is an important part of the mission of the Office of Inspector General. We will continue to work with our law enforcement partners to vigorously pursue those that engage in fraud involving programs administered by the U.S. Department of Labor,” stated DOL-OIG Special Agent-in-Charge Mikulka.
“The OPM OIG is committed to holding providers accountable for fraudulent claims,” stated OPM Deputy Inspector General Vint. “This settlement is a result of the hard work of our investigative staff and our partners at the Department of Justice.”
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. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. The claims resolved by the settlement are allegations only; there has been no determination of liability.
The United States’ case was handled by Assistant United States Attorney Lisa Kutlin of the Office’s Civil Division, with assistance from Affirmative Civil Enforcement Auditor Michael Gambrell.
E.D.N.Y. Docket No.: 16-CV-4819 (WFK)
United States Files Injunction Action Against Nassau County for Environmental Violations at 48 FacilitiesRead the Press Release
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and Peter D. Lopez, Regional Administrator of the U.S. Environmental Protection Agency (EPA), Region 2, announced today that the United States has filed a Consent Judgment resolving its claims against the County of Nassau (Nassau) for violating the Resource Conservation and Recovery Act (RCRA). The settlement addresses Nassau’s failure to comply with federal underground storage tank (UST) regulations and with an EPA administrative order at 48 of Nassau’s facilities. The Consent Judgment requires Nassau to install equipment to assure adequate leak detection across all county facilities. The settlement also requires Nassau to pay a civil penalty of $427,500.
The lawsuit and Consent Judgment were filed in United States District Court for the Eastern District of New York, in Central Islip, New York. Following a 30-day public comment period, the United States will review any comments and, if appropriate, request the District Court to enter and approve the Consent Judgment.
“The United States is pleased to announce this settlement with Nassau County that will help protect the health and safety of county residents and our groundwater, which may be jeopardized when underground storage tanks are not properly monitored,” stated Acting United States Attorney DuCharme. “The settlement enforces RCRA’s underground storage tank regulations at Nassau’s facilities, which are critical to mitigate the risk of spills and leaks. This Office will vigorously enforce RCRA against parties who illegally operate underground storage tanks and compromise the safety of our community.”
“Nassau County and EPA have worked out an agreement that will help ensure that underground storage tanks (USTs) will be properly monitored and regulated to protect human health and the environment,” said EPA Regional Administrator Lopez. “The judicial settlement requires the county to take multiple steps including implementing a centralized monitoring system. This judicial action settles the County’s non-compliance with a prior administrative settlement. Nassau County has cooperated with EPA and is now taking action to protect the integrity of the aquifer that provides drinking water to the county’s residents.”
Congress enacted RCRA in 1976 to address problems associated with municipal and industrial waste. One of RCRA’s primary goals is to protect the health and safety of the community and the environment from the potential hazards of waste disposal. The UST program was created under RCRA to help achieve RCRA’s goals by regulating USTs that contain hazardous substances and petroleum products. When USTs are properly operated and monitored, they are a safe and effective way to store petroleum products. However, when tanks are not properly safeguarded, they can endanger the health of the public and the environment by leaking petroleum or hazardous substances into the groundwater, contaminating soil and potentially triggering fires or explosions.
Prior to the present lawsuit, the EPA filed an administrative complaint against Nassau alleging that the county repeatedly failed to comply with UST safety requirements at 33 facilities between 2008 and 2010. The EPA and Nassau reached a settlement of these claims in a September 2012 administrative Consent Agreement and Final Order (CA/FO). However, Nassau failed to complete the injunctive work requirements in the CA/FO, leading to this judicial action.
Further, after entering into the CA/FO, from 2012 to 2017, Nassau continued to violate the UST regulations. Specifically, it did not: (i) conduct pipe tightness testing at 12 facilities, (ii) upgrade or close a steel UST at one facility, (iii) add secondary containment (or permanently close) the hazardous substance USTs at two facilities, (iv) install release detection equipment for the USTs at 17 facilities, (v) install release detection equipment for the USTs at 11 emergency generator facilities, (vi) install overfill prevention equipment for the USTs at 12 facilities and (vii) permanently close a UST that had been temporarily closed.
The Consent Judgment requires Nassau to fully comply with RCRA’s UST regulations. Specifically, the settlement requires Nassau to install and operate release detection equipment and overfill and spill prevention equipment, upgrade certain USTs and close certain USTs. The settlement also requires Nassau to install and operate a centralized monitoring system, which will enable Nassau to centrally monitor its USTs so that it can promptly detect and respond to any leaks or spills across its facilities.
The case is being handled by Assistant U.S. Attorneys Diane C. Leonardo and Matthew Silverman of the U.S. Attorney’s Office for the Eastern District of New York, working with Bruce Aber and William Sawyer of the Office of Regional Counsel, U.S. EPA Region 2, Claudia Gutierrez, UST Compliance Team Leader, Paul Sacker, Senior Enforcement Officer and Leonard Voo, RCRA Compliance Branch Chief, of the Enforcement and Compliance Assurance Division, U.S. EPA Region 2.
United States Files Housing Discrimination Lawsuit Against Staten Island Rental Agent and Real Estate AgencyRead the Press Release
WASHINGTON - The Department of Justice announced today that it has filed a lawsuit against Village Realty of Staten Island Ltd. and Denis Donovan, a sales and former rental agent at Village Realty, alleging discrimination against African Americans in violation of the Fair Housing Act when offering housing units for rent. The lawsuit is 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.
The complaint, filed in the U.S. District Court for the Eastern District of New York, alleges that Donovan discriminated against prospective renters on the basis of race by treating African Americans who inquired about available rental units differently and less favorably than similarly-situated white persons. 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, primarily offered African-American testers units in more integrated neighborhoods while offering white testers units in both overwhelmingly white and more integrated neighborhoods and made more encouraging comments to white testers about available rental units. The lawsuit alleges that Village Realty is legally responsible for Donovan’s alleged discrimination because Donovan worked as Village Realty’s rental agent.
“The U.S. Attorney’s Office has been, and always will be, dedicated to protecting the rights established by the Fair Housing Act, which demands that individuals and families of all races, colors and nationalities are treated fairly when they want to buy or rent a home. Today’s lawsuit reinforces this Office’s commitment to eliminating discrimination in housing,” stated Acting U.S. Attorney Seth D. DuCharme for the Eastern District of New York.
“Freedom for Americans means that people can live peacefully in our nation without regard to their race, ancestry, sex, and other protected traits. The United States and its laws forbid segregation in which people are judged, divided, and harmed because of the color of their skin. Race never should be a factor that determines where someone can live,” stated Assistant Attorney General Eric Dreiband of the Justice Department’s Civil Rights Division. “No one should have their housing choices limited, whether by explicit refusals to rent on the basis of race, or more subtle differences in the way home seekers are treated when they ask about available properties. Whether obvious or less apparent, race discrimination in the rental housing market is intolerable. The Department of Justice is committed to enforcement of the Fair Housing Act to ensure that people have equal access to rental housing, and equal treatment when seeking rental housing, regardless of race, including by uncovering hidden discrimination through our Fair Housing Testing Program.”
The lawsuit seeks monetary damages to compensate victims, civil penalties against the defendants to vindicate the public interest, and a court order barring future discrimination.
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, or believe they may have information relevant to this case should contact the Department of Justice toll-free at 1-800-896-7743, by email at [email protected], or by submitting a report online.
The Justice Department’s 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 Doctors, Two Licensed Physical Therapists, a Pharmacist, and Four Pharmacy Owners and Operators Among Those Charged in Brooklyn as Part of National Health Care Fraud TakedownRead the Press Release
Fifteen individuals, including two doctors, two licensed physical therapists, a licensed clinical social worker, a pharmacist and four pharmacy owners and operators, have been charged for their participation in schemes that fraudulently billed the Medicare and Medicaid programs for more than $15 million. The charges filed in federal court in Brooklyn, New York are part of a nationwide health care fraud takedown led by the Medicare Fraud Strike Force, which resulted in criminal charges against more than 300 individuals for their alleged participation in health care fraud schemes involving approximately $6 billion in fraudulent claims.
The charges were announced by Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York; Brian C. Rabbitt, 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); Scott Lampert, Special Agent-in- Charge, U.S. Department of Health and Human Services - Office of Inspector General, Office of Investigations, New York Regional Office (HHS-OIG); 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, New York (IRS-CI), Acting Medicaid Inspector General Erin E. Ives of New York State Office of the Medicaid Inspector General (OMIG) and Dermot F. Shea, Commissioner New York City Police Department (NYPD).
The results of the nationwide takedown were announced today Acting Assistant Attorney General Rabbitt; Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division; Deputy Inspector General Gary Cantrell of HHS-OIG; and Assistant Administrator Tim McDermott of the DEA.
“The defendants, many of them healthcare professionals, abused their positions by engaging in fraud in order to steal precious benefit funds that were meant to help the most vulnerable among us,” stated Acting United States Attorney DuCharme. “The U.S. Attorney’s Office for the Eastern District of New York is working arm-in-arm with our federal and local law enforcement partners to protect our community and our taxpayer-funded programs from the potential harm posed by corrupt healthcare professionals and those who aid them.”
“This nationwide enforcement operation is historic in both its size and scope, alleging billions of dollars in healthcare fraud across the country,” stated Acting Assistant Attorney General Rabbitt. “These cases hold accountable those medical professionals and others who have exploited health care benefit programs and patients for personal gain. The cooperative law enforcement actions announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of health care benefit programs, even amid a national health emergency.”
“As alleged today, the defendants took advantage of programs established for the benefit of those less fortunate, illegally profiting by ripping off the rest of the law abiding public,” stated FBI Assistant Director-in-Charge Sweeney. “This is not a victimless crime - health care fraud is a theft against all of us who contribute hard earned income and taxes into the system. While today’s charges are a victory for the public at large, and those who play by the rules, they also highlight a constant glaring problem. It is easy to illegally profit in the health care field, and the FBI’s New York office will continue to investigate and hold accountable those who break federal law while lining their own pockets.”
“Medical professionals who scheme to enrich themselves through health care fraud – such as Dr. Kalepu’s participation in a telefraud durable medical equipment scam -- undermine taxpayer-funded programs and drive up health care costs for everyone,” stated HHS-OIG Special Agent-in-Charge Lampert. “This takedown shows our commitment to collaborate with our law enforcement partners and effectively investigate such corrosive fraud schemes.”
“It is our duty to weed out those health care professionals who manipulate their position for profit,” stated DEA Special Agent-in-Charge Donovan. “DEA, and our law enforcement partners, are committed to safeguarding the integrity of our healthcare system and keeping Americans safe. I applaud all of our partners for their significant work in these investigations.”
“IRS-CI is proud to lend our financial expertise in this effort to uncover a wide web of criminal behavior that impacts our financial system and public trust,” stated IRS-CI Special Agent-in-Charge Larsen. “Both Diler and Hussnain are guilty of conspiring to participate in this broad scheme to steal from the United States taxpayers through both Medicare and Tax Fraud.”
“These arrests serve notice to those who attempt to exploit the Medicaid program for personal gain,” stated Acting Medicaid Inspector General Ives. “My office will continue to work closely with our law enforcement partners to root out fraud and hold wrongdoers fully accountable.”
“This sweeping set of federal charges highlights law enforcement’s combined efforts to protect innocent citizens and ensure integrity across our vital health systems,” stated NYPD Commissioner Shea. “I commend our NYPD investigators, and all of our partners, for their important work in these cases.”
Schemes charged in the Eastern District of New York, detailed in three indictments, five complaints and three criminal information, include the following:
United States v. Dalmacio Francisco and Michael Othman: The complaint charges Dr. Delmacio Francisco and Michael Othman with oxycodone distribution. The complaint alleges that Dr. Francisco, who operated two medical offices in Queens, provided large-quantity oxycodone scripts to “patients” – individuals he never actually evaluated – who were recruited by Othman in exchange for cash. Dr. Francisco also prescribed oxycodone in the names of two individuals who were incarcerated when the prescriptions were issued. During a search of Francisco’s home, DEA agents found $150,000 in bundled cash in a hidden lock box. Both defendants made their initial appearance by video before United States Magistrate Judge Steven M. Gold on May 20, 2020. The case is being prosecuted by Assistant United States Attorneys James McDonald and Elizabeth Macchiaverna of the U.S. Attorney’s Office for the Eastern District of New York.
United States v. Anand Kalepu: The information charges Anand Kalepu, a medical doctor, with conspiracy to commit health care fraud. The charges stem from Dr. Kalepu’s work with a telemedicine company through which he allegedly caused the submission of false and fraudulent claims for durable medical equipment (“DME”) to Medicare. Between 2018 and 2019 the amount billed to Medicare for Dr. Kalepu’s DME prescriptions was in excess of $1.3 million. Dr. Kalepu pleaded guilty to the information before United States District Judge Ann M. Donnelly at the federal courthouse in Brooklyn, and the guilty plea was unsealed on September 30, 2020. The case is being prosecuted by Trial Attorney Miriam Glaser Dauermann of the Criminal Division’s Fraud Section.
United States v. Mahmoud Elsanaa and Olga Popovych: The indictment charges Mahmoud Elsanaa, a licensed physical therapist and clinic owner, and Olga Popovych, the office manager of several physical therapy clinics controlled by Elsanaa, with one count of conspiracy to commit health care fraud (Elsanaa only) and one count of conspiracy to falsify medical records (Elsanaa and Popovych). The charges stem from the defendants’ alleged role in the operation of physical therapy clinics that billed Medicare and Medicaid for services that were unnecessary, procured by kickbacks, provided by unlicensed practitioners, or otherwise not provided as billed. Elsanaa and Popovych were arrested and arraigned before United States Magistrate Judge Lois Bloom on September 17, 2020. The case is being prosecuted by Trial Attorney Miriam Glaser Dauermann of the Criminal Division’s Fraud Section.
United States v. Mazen Abdel Magid: The complaint charges Mazen Abdel Magid, a licensed physical therapist and clinic owner and a business partner of Mahmoud Elsanaa, with one count of submitting false claims to Medicare. The charges stem from Abdel Magid’s alleged submission of claims to Medicare for physical therapy services purportedly provided at his physical therapy clinic when, in fact, he was overseas and could not have provided the services. Abdel Magid was arrested and made an initial appearance before United States Magistrate Judge Lois Bloom on September 17, 2020. The case is being prosecuted by Trial Attorney Miriam Glaser Dauermann of the Criminal Division’s Fraud Section.
United States v. Vladimir Geykhman: The indictment charges Vladimir Geykhman with one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering. The charges stem from the defendant’s alleged role in falsifying physical evaluation records in support of claims submitted through no-fault automobile insurance policies and laundering the proceeds therefrom. Between March 2019 and August 2019, Geykhman was paid by New York State automobile insurance providers a total of approximately $1 million for claims that were based upon falsified patient records. Geykhman was arrested and arraigned before United States Magistrate Judge Lois Bloom on September 17, 2020. The case is being prosecuted by Miriam Glaser Dauermann of the Criminal Division’s Fraud Section.
United States v. Xuan Di Huang: The complaint charges Xuan Di Huang, also known as “Wendy Huang,” an owner and operator of Zhiqing Social Adult Day Care in Flushing, Queens, with aiding and abetting and a substantive violation of the Anti-Kickback Statute. The charges stem from a scheme in which Huang allegedly paid and offered to pay kickbacks to Medicaid beneficiaries for their attendance at Zhiqing Social Adult Day Care. Between August 2019 and March 2020, Huang, through Zhiqing Social Adult Day Care, billed approximately $3.2 million dollars to long term managed care plans for Medicaid beneficiaries. Huang was arrested and arraigned on August 27, 2020 before United States Magistrate Judge Lois Bloom. The case is being prosecuted by Assistant United States Attorney Elizabeth Macchiaverna of the U.S. Attorney’s Office for the Eastern District of New York.
United States v. Nisha Diler: The information charges Nisha Diler, a licensed pharmacist, with conspiracy to commit health care fraud and subscribing a false tax return. The charges stem from Diler’s role in a scheme to hold herself out as the supervising pharmacist at New Moon Pharmacy, when in fact she did not work at the pharmacy. Diler was paid kickbacks by Hussnain for her role in the scheme, which she then under-reported on her taxes. Between 2016 and 2019, Medicare and Medicaid reimbursed the pharmacy approximately $3 million for pharmaceutical claims submitted through New Moon Pharmacy. Diler pleaded guilty to the information before United States District Judge Rachel Kovner at the federal courthouse in Brooklyn on September 16, 2020. The case is being prosecuted by Trial Attorney Miriam Glaser Dauermann of the Criminal Division’s Fraud Section.
United States v. Harris Hussnain: The information charges Harris Hussnain with conspiracy to commit health care fraud, narcotics distribution and unlawful financial transactions. The charges stem from Hussnain’s ownership of a Queens pharmacy, New Moon Pharmacy, and dispensing of prescription medications, including large amounts of Oxycodone, when the pharmacy did not employ a full-time licensed pharmacist. Instead, Hussnain paid a co-conspirator, Nisha Diler, a licensed pharmacist, to hold herself out as the full-time pharmacist despite the fact that she visited the pharmacy only sporadically. Between 2016 and 2019 Medicare and Medicaid reimbursed New Moon Pharmacy approximately $3 million for pharmaceutical claims. Hussnain pleaded guilty to the information before United States District Judge Rachel Kovner at the federal courthouse in Brooklyn on September 29, 2020. The case is being prosecuted by Trial Attorney Miriam Glaser Dauermann of the Criminal Division’s Fraud Section.
United States v. Aleah Mohammed, Aripha Mohammed and Shejer El Maliki: A criminal complaint charges Aleah Mohammed, Aripha Mohammed and Shejer El Maliki, the owners and operators of the pharmacy Village Stardrugs Inc. in Queens, New York, with conspiracy to commit health care fraud. Additionally, Aleah Mohammed was charged with health care fraud and aggravated identity theft, and Aripha Mohammed and Shejer El Maliki were each charged with money laundering. The charges stem from their alleged roles in a scheme to submit claims through the pharmacy for medications that were not in fact prescribed as claimed, including claims for purportedly dispensing medications when the pharmacy was no longer licensed by the State of New York. From March 2019 to March 2020, Medicare Part D plans reimbursed the pharmacy approximately $1.5 million for pharmaceutical claims, $1.4 million of which was reimbursed when the pharmacy was no longer licensed. Aleah Mohammed, Aripha Mohammed and Shejer El Maliki were arrested and arraigned before United States Magistrate Judge Roanne L. Mann on September 23, 2020. The case is being prosecuted by Trial Attorney Andrew Estes of the Criminal Division’s Fraud Section.
United States v. Gorgi Naumovski: The indictment charges Naumovski, the owner and operator of a durable medical equipment company Life Source Medical, Inc., in Greensboro, North Carolina, with one count of conspiracy to commit health care fraud. The charge stems from Naumovski’s alleged role in a scheme in which claims were submitted to Medicare for durable medical equipment, including orthotic braces, where the defendant and his co-conspirators paid bribes and kickbacks by purchasing doctors’ orders for the equipment, including equipment that was not medically necessary. Between April 2016 and December 2018, Life Source Medical billed Medicare approximately $4.1 million for claims for orthotics-related equipment and was paid approximately $1.8 million on those claims. Naumovski was arrested and arraigned before United States Magistrate Judge Reona J. Daly by video in Benton, Illinois on September 29, 2020. The case is being prosecuted by Trial Attorney Andrew Estes of the Criminal Division’s Fraud Section.
The charges are allegations and the defendants are presumed innocent unless and until proven guilty.
The Defendants:
NISHA DILER
Age: 40
Hicksville, NYE.D.N.Y. Docket No.: 20-CR-279 (RPK)
HARRIS HUSSNAIN
Age: 40
Queens, NYE.D.N.Y. Docket No. 20-CR-280 (RPK)
VLADIMIR GEYKHMAN
Age: 43
BROOKLYN, NYE.D.N.Y. Docket No.: 20-CR-371 (AMD)
MAHMOUD ELSANAA
Age: 36
Wayne, NJPOPOVYCH, OLGA
Age: 37
Brooklyn, NYE.D.N.Y. Docket No.: 20-CR-373 (LDH)
MAGID, MAZEN ABDEL
Age: 37
Brooklyn, NYE.D.N.Y. Docket No.: 20-MJ- 812
DR. ANAND KALEPU
Age: 70
Cleveland, OHE.D.N.Y. Docket No. 19-CR-602
DR. DALMACIO FRANCISCO
Age: 75
Queens, NYMICHAEL OTHMAN
Age: 48
Queens, NYE.D.N.Y. Docket No.: 20-MJ-380
XUAN DI HUANG
Age: 59
Queens, NYE.D.N.Y. Docket No. 20-MJ-733
GORGI NAUMOVSKI
Age: 52
DuQuoin, IL.E.D.N.Y. Docket No.: 20-CR-384 (WFK)
ALEAH MOHAMMED (also known as “Abby”)
Age: 35
Queens, NYARIPHA MOHAMMED
Age: 33
Queens, NYSHEJER EL MALIKI (also known as “Shaggy”)
Age: 33
Queens, NYE.D.N.Y. Docket No. 20-MJ-851
NXIVM Executive Board Member Clare Bronfman Sentenced to 81 Months in Prison for Identity Theft and Immigration OffensesRead the Press Release
Clare Bronfman, a high-ranking member of Nxivm’s Executive Board, was sentenced by United States District Judge Nicholas G. Garaufis today in federal court in Brooklyn to 81 months’ imprisonment for conspiracy to conceal and harbor aliens for financial gain and fraudulent use of personal identification information. Bronfman pleaded guilty in April 2019 and pursuant to her plea agreement forfeited $6 million. The Court also imposed a fine of $500,000 and restitution to be paid to victim “Jane Doe 12” in the amount of $96,605.
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 Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the sentence.
“Defendant Bronfman twisted our immigration system to serve a reprehensible agenda, and engaged in flagrant fraud to the detriment of her victims and in the service of a corrupt endeavor,” stated Acting United States Attorney DuCharme. “With today’s sentence, she has been held accountable for her crimes.”
Mr. DuCharme extended his appreciation to the Department of Homeland Security, Homeland Security Investigations, the New York State Police and the United States Attorney’s Office for the Northern District of New York for their assistance during the investigation and prosecution.
“Today, Clare Bronfman is the first of many to be sentenced for the crimes she committed in furtherance of Nxivm’s objectives. While her fate in no way removes the trauma Nxivm’s victims will likely continue to suffer, it does highlight the government’s efforts to bring to justice all of those involved in a series of illegal acts carried out for the benefit of this organization. She recently wrote to the judge telling him that Nxivm and Keith Raniere had changed her life for the better. She will now have more than six years behind bars to contemplate that sentiment, and decide once and for all if it’s as easy to accept as she once believed it to be,” stated FBI Assistant Director-in-Charge Sweeney.
“IRS-CI specializes in financial investigations where following the money much of the time is a result of greed,” stated IRS-CI Special Agent-in-Charge Larsen. “Defendant Bronfman is now paying the price for her behavior that reached a depraved level beyond just financial greed.”
Between October 2015 and January 2018, Bronfman recruited individuals into Nxivm-affiliated organizations and then sought to obtain visas or other immigration status for them based on false or fraudulent representations. Bronfman recruited one woman from Mexico (“Jane Doe 12”) to work for a fitness-related Nxivm-affiliated company. Bronfman then submitted documents purporting to hire Jane Doe 12 as a management consultant with a salary of $3,600 per month in order to secure a work visa for her, but Bronfman paid Jane Doe 12 only approximately $4,000 over the course of more than a year for her work. In response to Jane Doe 12’s pleas to be paid a living wage, Bronfman told Jane Doe 12 she would have to “earn” her visa by doing additional uncompensated work.
After the death of one of Raniere’s partners, Bronfman participated in a scheme to assist Raniere in fraudulently using the partner’s credit card information to keep money and assets out of Raniere’s name to evade paying income tax and his creditors or their judgments against him.
Five of Bronfman’s co-defendants were previously convicted on various charges and are awaiting sentencing. On June 19, 2019, Keith Raniere was convicted after a jury trial of racketeering and racketeering conspiracy, sex trafficking, attempted sex trafficking and sex trafficking conspiracy, forced labor conspiracy and wire fraud conspiracy. On March 12, 2019, Nancy Salzman, Nxivm’s president and co-founder, pleaded guilty to racketeering conspiracy. On March 25, 2019, Lauren Salzman, a first-line “master” in DOS, a secret society within Nxivm with levels of women “slaves” headed by “masters,” pleaded guilty to racketeering and racketeering conspiracy. On April 8, 2019, Allison Mack, another first-line “master” in DOS, pleaded guilty to racketeering and racketeering conspiracy. On April 19, 2019, Kathy Russell, a bookkeeper for Nxivm, pleaded guilty to visa fraud.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Tanya Hajjar and Mark J. Lesko are in charge of the prosecution. Assistant United States Attorney Karin Orenstein of the Office’s Civil Division is handling forfeiture matters.
The Defendant:
CLARE BRONFMAN
Age: 41
Clifton Park, New YorkE.D.N.Y. Docket No. 18-CR-204 (S-2) (NGG)
Justice Department Files Housing Discrimination Lawsuit Against Staten Island, New York Rental Agent and Real Estate AgencyRead the Press Release
The Department of Justice announced today that it has filed a lawsuit against Village Realty of Staten Island Ltd. and Denis Donovan, a sales and former rental agent at Village Realty, alleging discrimination against African Americans in violation of the Fair Housing Act when offering housing units for rent. The lawsuit is 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.
The complaint, filed in the U.S. District Court for the Eastern District of New York, alleges that Donovan discriminated against prospective renters on the basis of race by treating African Americans who inquired about available rental units differently and less favorably than similarly-situated white persons. According to the complaint, Donovan 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. The lawsuit alleges that Village Realty is legally responsible for Donovan’s alleged discrimination because Donovan worked as Village Realty’s rental agent.
“Freedom for Americans means that people can live peacefully in our nation without regard to their race, ancestry, sex, and other protected traits,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The United States and its laws forbid segregation in which people are judged, divided, and harmed because of the color of their skin. Race never should be a factor that determines where someone can live. No one should have their housing choices limited, whether by explicit refusals to rent on the basis of race, or more subtle differences in the way home seekers are treated when they ask about available properties. Whether obvious or less apparent, race discrimination in the rental housing market is intolerable. The Department of Justice is committed to enforcement of the Fair Housing Act to ensure that people have equal access to rental housing, and equal treatment when seeking rental housing, regardless of race, including by uncovering hidden discrimination through our Fair Housing Testing Program.”
“The U.S. Attorney’s Office has been, and always will be, dedicated to protecting the rights established by the Fair Housing Act, which demands that individuals and families of all races, colors and nationalities are treated fairly when they want to buy or rent a home,” said Acting U.S. Attorney Seth D. DuCharme. “Today’s lawsuit reinforces this Office’s commitment to eliminating discrimination in housing.”
The lawsuit seeks monetary damages to compensate victims, civil penalties against the defendants to vindicate the public interest, and a court order barring future discrimination.
Individuals who believe they may have experienced discrimination at Village Realty or believe they may have information relevant to this case should contact the Department of Justice toll-free at 1-800-896-7743, by email at [email protected], or by submitting a report online.
The Justice Department’s 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.
Former Registered Broker Pleads Guilty to Participating in a Multi-Million Dollar Securities Fraud SchemeRead the Press Release
Earlier today, in federal court in Brooklyn, Joshua Turney, formerly a registered broker at Global Arena Capital Corp. (“Global”), a now defunct brokerage firm located in New York City, pleaded guilty before United States District Judge Eric N. Vitaliano to conspiracy to commit securities fraud for engaging in unauthorized trading in his customers’ accounts. When sentenced, Turney faces up to five years in prison, as well as restitution, criminal forfeiture and a fine.
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 guilty plea.
“With today’s guilty plea, Turney has been held accountable for abusing the trust of his customers and for engaging in unauthorized trades to unjustly enrich himself,” stated Acting United States Attorney DuCharme. “This Office will continue to work vigilantly alongside our law enforcement partners to protect the integrity of financial markets.” Mr. DuCharme expressed his grateful appreciation to the Securities and Exchange Commission, New York Regional Office (SEC), for its significant cooperation and assistance during the investigation.
“The scheme Turney and his co-conspirators are accused of today is fairly straightforward. As alleged, they pushed through more than $100 million in customer trades, most of which were unauthorized, for the sole purpose of generating commission for themselves. In Turney’s case, reaping the benefits of his proceeds, however, won’t be quite as simple now that he’s been charged with a federal crime,” stated FBI Assistant Director-in-Charge Sweeney.
According to court filings and facts presented at the plea hearing, between April 2015 and June 2015, shortly before Global ceased operations, Turney and his co-conspirators engaged in a scheme to defraud Global customers by purchasing and selling securities without the customers’ prior authorization or knowledge. Approximately 4,500 trades were executed in approximately 360 customer accounts during this time period, most of which were unauthorized. The principal value of these transactions was approximately $106 million, and the trades generated over $2.44 million in commissions and fees for Global.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Shannon C. Jones is in charge of the prosecution.
The Defendant:
JOSHUA TURNEY
Age: 41
San Diego, CaliforniaE.D.N.Y. Docket No.-20 CR-359 (ENV)
Long Island Man Agrees to Donate Personal Protective Equipment Valued at More Than $450,000 to Resolve Price-Gouging CaseRead the Press Release
CENTRAL ISLIP, NY – An agreement was filed today in federal court in Central Islip resolving the criminal case against Amardeep Singh, who was charged in April 2020 with violating the Defense Production Act of 1950 by hoarding personal protective equipment (PPE) amid the COVID-19 pandemic and price-gouging customers of his retail store. Under the terms of his Deferred Prosecution Agreement with the Government, Singh will donate PPE valued at more than $450,000 to hospitals, health care providers, first responders and other essential workers involved with addressing the needs of those affected by the pandemic and working to prevent the spread of COVID-19.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Craig Carpenito, head of the Department of Justice’s nationwide COVID-19 Hoarding and Price Gouging Task Force, and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the disposition.
“The defendant has accepted responsibility for taking advantage of a public health emergency for personal profit,” stated Acting United States Attorney DuCharme. “Today’s deferred prosecution agreement is a victory for heroic healthcare workers and first-responders who will benefit from the personal protective equipment relinquished by the defendant in their continuing battle against the COVID-19 virus.”
“This defendant’s attempt to charge unnecessarily high prices for badly needed and vitally important protective gear was an early example of how some people will try to unscrupulously profit from a national health care emergency,” stated head of the Department of Justice’s nationwide COVID-19 Hoarding and Price Gouging Task Force Carpenito. “Today’s agreement thwarts that attempt, and resolves the matter by getting this personal protective equipment to the people who need it.”
“Mr. Singh took advantage of being the ‘only game in town’ with PPE during the height of the coronavirus pandemic, by jacking up the prices on life-saving equipment needed by first responders, medical personnel and the general public. Singh held himself out as a local hero but we now know this was totally untrue,” stated USPIS Inspector-in-Charge Bartlett.
On March 18, 2020, in response to the COVID-19 pandemic, President Donald Trump issued Executive Order 13909 invoking the Act making it illegal to acquire medical supplies and devices designated by the Secretary of Health and Human Services as scarce in order to hoard them or sell them for excessive prices.
On April 14, 2020, Postal Inspectors executed a search warrant at Singh’s retail store and a consensual search of the warehouse and seized 23 pallets containing more than 100,000 face masks, 10,000 surgical gowns, nearly 2,500 full-body isolation suits and more than 500,000 pairs of disposable gloves.
On April 24, 2020, Singh became the first person in the nation charged with violating the Act after accumulating merchandise, some of which had been officially designated as scarce, at his retail store in Plainview, and at a warehouse in Brentwood, including 40 shipments of disposable face masks weighing more than 1.6 tons, 14 shipments of disposable surgical gowns weighing more than 2.2 tons, six shipments of hand sanitizer weighing more than 1.8 tons and seven shipments of digital thermometers weighing approximately 253 pounds. Singh then sold those items to the public at inflated prices.
Attorney General William P. Barr created the COVID-19 Hoarding and Price Gouging Task Force, led by Craig Carpenito, United States Attorney for District of New Jersey, who is coordinating efforts with the Antitrust Division and U.S. Attorneys across the country wherever illegal activity involving protective personal equipment occurs. The Secretary of Health and Human Services has issued a Notice designating categories of health and medical supplies that must not be hoarded or sold for exorbitant prices.
Please report COVID-19 fraud, hoarding or price-gouging to the National Center for Disaster Fraud’s National Hotline at (866) 720-5721, or e-mail: [email protected].
The government’s case is being prosecuted by the Office’s Long Island Criminal Division, with assistance from the Department of Justice’s Hoarding and Price-Gouging Task Force. Assistant United States Attorney Anthony Bagnuola is in charge of the prosecution.
The Defendant:
AMARDEEP SINGH (also known as “Bobby Singh” and “Bobby Sidana”)
Age: 45
Woodbury, New YorkE.D.N.Y. Docket No. 20-MJ-326
Town of Brookhaven Agrees to Settle Federal Complaint by Complying with Clean Air Act RequirementsRead the Press Release
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and Pete D. Lopez, Regional Administrator of the United States Environmental Protection Agency, Region 2 (EPA), announced today that the United States filed suit under the Clean Air Act (CAA) against the Town of Brookhaven (the Town) to address its longstanding failure to properly monitor and control noxious landfill gas emissions. The parties agreed to enter into a Consent Judgment, also filed today with the court, which requires the Town to perform injunctive relief that will bring its landfill into compliance with the CAA. Under the agreement, the Town will install and operate systems that reduce and monitor landfill gases, including sulfur dioxide, hydrogen sulfide and methane. The settlement also requires the Town to pay a civil penalty of $249,166.
The lawsuit and Consent Judgment were filed in the United States District Court for the Eastern District of New York, in Central Islip, New York. Following a 30-day public comment period, the United States will review any comments and, if appropriate, ask the court to enter the Consent Judgment.
“The United States brought this action to ensure that the Town of Brookhaven meets its obligation to protect air quality by properly operating systems that reduce potentially harmful landfill gas emissions. The resolution in this case protects air quality by preventing excess emissions of sulfur dioxide, hydrogen sulfide and methane. This Office will vigorously and faithfully enforce the rule of law to protect our community and our precious natural environment,” stated Acting United States Attorney DuCharme.
“The Town of Brookhaven, EPA and the Department of Justice have worked out an agreement that will ensure that hydrogen sulfide and other landfill gas emissions emanating from the Brookhaven landfill are properly monitored, detected, and controlled,” stated EPA Regional Administrator Lopez. “Putting these safeguards in place is essential to protecting human health and the environment. We look forward to our continued engagement on this issue.”
The CAA was passed by Congress in 1970 to protect public health and the environment through the regulation of air emissions from both stationary and mobile sources. The law requires the EPA to establish national ambient air quality standards (NAAQS) and imposes limitations on air pollutant emissions. State and local governments are required to adopt federally enforceable plans to meet these standards.
The Town of Brookhaven, the largest town in Suffolk County, owns and operates the Brookhaven Landfill and the Brookhaven Landfill Gas Recovery Facility. The landfill accepts municipal waste from the Town as well as other municipalities throughout Long Island. Waste is deposited at the Landfill into various Cells, which are equipped with gas collection and control systems (GCCS). Gas generated from Cells 5 and 6 contain high levels of hydrogen sulfide, which is combusted by an enclosed flare and oxidized into sulfur dioxide. The Town also operates a system called the SulfaTreat System, to reduce hydrogen sulfide concentration in the gas upstream of the flare, thereby reducing the sulfur dioxide emissions from the flare.
Since 2005, the Town’s facilities have violated the CAA and its implementing regulations related to landfill air pollutant emissions, as well as the Town’s Title V operating permit for its landfill. For example, the Town failed to: maintain proper temperatures in the landfill (which poses a risk for underground fires); properly monitor surface methane emissions; and continuously operate the SulfaTreat system, which reduces sulfur dioxide emissions from its flare. Some of these violations contributed to excessive sulfur dioxide in the ambient air surrounding the facility. In addition to its foul odor, sulfur dioxide can pose a danger to human, animal and plant health.
The settlement requires the Town to perform injunctive relief to bring its landfill facilities back into compliance with CAA. As such, the Town must maintain and operate the facilities and associated air pollution control equipment in a manner consistent with sound practices for minimizing emissions. Compliance with the CAA will require the Town to: properly operate the GCCS system, continuously operate the SulfaTreat system to reduce hydrogen sulfide concentrations from the landfill gas which will result in lower levels of sulfur dioxide emissions, install and operate a continuous hydrogen sulfide monitoring system, design and install a new taller flare to better disperse emissions, conduct monthly methane surface monitoring, and survey and correct any areas of high temperature in the landfill. The Town has also agreed to install 350 solar panels, expected to generate 129 kilowatts of electricity, as a means to further reduce the Town’s air emissions profile.
The civil negotiations and settlement were handled by Assistant U.S. Attorneys Diane C. Leonardo and Matthew Silverman, working with Liliana Villatora and Damaris Urdaz, Regional Counsel’s Office, U.S. EPA Region 2, and Gaetano LaVigna, Chief, Stationary Source Compliance Section, Air Compliance Branch, U.S. EPA Region 2.
Sargeant Marine Inc. Pleads Guilty and Agrees to Pay over $16 Million in Criminal Fines to Resolve Foreign Bribery CaseRead the Press Release
Earlier today, in federal court in Brooklyn, Sargeant Marine Inc., an asphalt company incorporated and formerly headquartered in Boca Raton, Florida, pleaded guilty and agreed to pay $16.6 million to resolve foreign bribery charges stemming from conduct by the company and its employees and agents in Brazil, Venezuela and Ecuador. In each one of the countries, the company paid bribes to government officials to obtain contracts to purchase or sell asphalt to the countries’ state-owned companies in violation of the Foreign Corrupt Practices Act (FCPA). Today’s proceedings took place by video before the United States District Judge Eric N. Vitaliano. Previously, a corporate executive for Sargeant Marine, Daniel Sargeant; two Sargeant Marine traders who were active in Brazil, Venezuela and Ecuador, Roberto Finocchi and Jose Tomas Meneses; an agent and a consultant who acted as bribe intermediaries in Brazil and Venezuela, Luiz Eduardo Andrade and David Diaz; and a former Venezuelan government official, Hector Nunez Troyano, who received some of the bribes, pled guilty. In addition, on September 10, 2020, a criminal complaint was unsealed in federal court in Brooklyn charging another former Venezuelan official with conspiracy to commit money laundering, in part for his alleged role in the Sargeant Marine Venezuela scheme.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Brian C. Rabbitt, Acting Assistant Attorney General of the Justice Department’s Criminal Division, and Calvin A. Shivers, Assistant Director, Federal Bureau of Investigtion, Criminal Investigative Division (FBI), announced the guilty pleas and resolution.
“Today’s resolution is the result of a multi-year, multi-national, collaborative effort to root out corruption perpetrated by an American company in three countries,” stated Acting U.S. Attorney DuCharme. “We will continue to investigate and prosecute any company that corrupts foreign government officials in order to gain a competitive edge, as well as any of their executives and employees who participate in those efforts.”
“With today’s guilty plea, Sargeant Marine has admitted to engaging in a long-running pattern of paying bribes to corrupt officials in three South American countries to obtain lucrative business,” stated Acting Assistant Attorney General Rabbitt. “Today’s resolution, together with charges the department has brought against individuals involved in Sargeant Marine’s illegal schemes, demonstrates the department’s continuing commitment to holding companies and their executives responsible for international corruption.”
“The FBI is dedicated to rooting corruption out of our market, keeping the United States fair for vendors and consumers alike," stated FBI Assistant Director Shivers. “Sargeant Marine, Inc. attempted to get ahead of competitors by paying bribes to foreign officials in violation of the Foreign Corrupt Practices Act. As today's guilty pleas demonstrate, the FBI will relentlessly investigate those attempting to cheat the market, and we will bring them to justice.”
According to the Statement of Facts stipulated to by Sargeant Marine in connection with its guilty plea and other court documents, between approximately 2010 and 2018, Sargeant Marine, through its employees and agents, conspired to pay bribes to foreign officials in Brazil, Venezuela and Ecuador to secure lucrative contracts. As a result of these bribes, Sargeant Marine and its affiliated companies earned profits of over $38 million.
In Brazil, Sargeant Marine and its related companies bribed officials at the state-owned oil company, Petróleo Brasileiro S.A. - Petrobras (Petrobras), to obtain contracts to sell asphalt to Petrobras. From approximately 2010 to 2015, Sargeant Marine and its affiliates, through its employees and agents, concealed bribe payments to Brazilian government officials by creating fake consulting contracts and fake invoices by using cash payments and by wiring millions of dollars from the United States to offshore bank accounts held in the name of shell companies of bribe middlemen. As a result of the Brazilian bribery scheme, Sargeant Marine and its affiliated companies earned profits of approximately $26.5 million.
The conduct in Brazil began when a Sargeant Marine senior executive officer traveled to Brazil in January 2010 in an effort to identify an agent with connections to a government official who could help the company obtain business from Petrobras. Eventually, the company began paying bribes to a “lobbyist” who was known to receive payments for his connections to Petrobras officials. At a dinner arranged by the Sargeant Marine intermediary with a Petrobras official and a Brazilian politician, the intermediary promised bribes in return for securing contracts between Petrobras and Sargeant Marine. After a company affiliated with Sargeant Marine completed shipments of asphalt to Petrobras in August 2010, the affiliate’s executive emailed Daniel Sargeant stating, “Wow guess last Brazil trip with crooks paid off. Should go again before contract next year gets hot and heavy.”
Between approximately 2012 and 2018, Sargeant Marine engaged in similar conduct in Venezuela, this time to purchase asphalt from the state-controlled oil company, Petroleos de Venezuela S.A. (PDVSA). Sargeant Marine and its affiliates—which had been blacklisted by PDVSA—used a Swiss company that would resell the asphalt to Sargeant Marine at a small premium. As it did in Brazil, Sargeant Marine concealed the bribes by creating fake consulting contracts and fake invoices and by making payments to offshore bank accounts held by a bribe middleman. The bribe middleman then paid bribes to a PDVSA official. Sargeant Marine’s bribe payments also gave it access to non-public information from PDVSA officials to give Sargeant Marine a corrupt edge on its competition. As a result of the Venezuela bribery scheme, Sargeant Marine earned about $8.2 million in profits.
Sargeant Marine paid bribes to an official working for Empresa Publica de Hidrocarburos del Ecuador (Petroecuador), a state-owned oil company of Ecuador that needed asphalt to supply the country. Sargeant Marine and its affiliates used the same tactics as in Brazil and Venezuela to conceal bribe payments, made through an intermediary to a Petroecuador official, which were made to secure a contract with Petroecuador. As a result of this scheme, Sargeant Marine earned profits of approximately $3.2 million.
In September 2017, Andrade pleaded guilty to conspiring to violate the FCPA. In November 2017, Finocchi pleaded guilty to conspiracy to defraud the United States. In March 2018, Diaz pleaded guilty to two counts of conspiring to violate the FCPA. In August 2018, Meneses pleaded guilty to conspiring to violate the FCPA. In March 2019, Troyano pleaded guilty to money laundering conspiracy. In December 2019, Daniel Sargeant pleaded guilty to conspiracy to violate the FCPA and conspiracy to commit money laundering. The defendants are awaiting sentencing.
The investigation is being conducted by FBI's International Corruption squad in Miami. The government’s case is being handled by the Office’s Business and Securities Fraud Section and the Criminal Division’s Fraud Section. Assistant United States Attorneys Whitman Knapp, Mark E. Bini and Andrey Spektor of the Eastern District of New York and Fraud Section Trial Attorney Derek J. Ettinger are prosecuting the case.
The government of Brazil provided significant assistance in this matter, as did the Criminal Division’s Office of International Affairs.
The Defendant:
SARGEANT MARINE, INC.
E.D.N.Y. Docket No.: 20-CR-363 (ENV)
DANIEL SARGEANT
Age: 53
Florida, United StatesE.D.N.Y. Docket No.: 19-CR-319 (ENV)
ROBERTO FINOCCHI
Age: 58
Country of Origin: VenezuelaE.D.N.Y. Docket No.: 17-CR-600 (ENV)
JOSE TOMAS MENESES
Age: 65
Country of Origin: VenezuelaE.D.N.Y. Docket No.: 18-CR-358 (ENV)
LUIZ EDUARDO ANDRADE
Age: 61
Country of Origin: BrazilE.D.N.Y. Docket No. 17-CR-497 (ENV)
DAVID DIAZ
Age: 56
Country of Origin: VenezuelaE.D.N.Y. Docket No.: 18-CR-140 (ENV)
Hector Nunez Troyano
Age: 43
Country of Origin: VenezuelaE.D.N.Y. Docket No. 19-CR-135 (ENV)
Sargeant Marine Inc. Pleads Guilty and Agrees to Pay $16.6 Million to Resolve Charges Related to Foreign Bribery Schemes in Brazil, Venezuela, and EcuadorRead the Press Release
Sargeant Marine Inc., an asphalt company formerly based in Boca Raton, Florida, pleaded guilty today to conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and agreed to pay a criminal fine of $16.6 million to resolve charges stemming from a scheme to pay bribes to foreign officials in three South American countries.
According to its admissions, between 2010 and 2018, the company paid millions of dollars in bribes to foreign officials in Brazil, Venezuela, and Ecuador to obtain contracts to purchase or sell asphalt to the countries’ state-owned and state-controlled oil companies, in violation of the FCPA.
“With today’s guilty plea, Sargeant Marine has admitted to engaging in a long-running pattern of paying bribes to corrupt officials in three South American countries to obtain lucrative business,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “Today’s resolution, together with charges the department has brought against individuals involved in Sargeant Marine’s illegal schemes, demonstrates the department’s continuing commitment to holding companies and their executives responsible for international corruption.”
“Today’s resolution is the result of a multi-year, multi-national, collaborative effort to root out corruption perpetrated by an American company in three countries,” said Acting U.S. Attorney Seth DuCharme of the Eastern District of New York. “We will continue to investigate and prosecute any company that corrupts foreign government officials in order to gain a competitive edge, as well as any of their executives and employees who participate in those efforts.”
“The FBI is dedicated to rooting corruption out of our market, keeping the United States fair for vendors and consumers alike,” said Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division. “Sargeant Marine Inc. attempted to get ahead of competitors by paying bribes to foreign officials in violation of the Foreign Corrupt Practices Act. As today's guilty pleas demonstrate, the FBI will relentlessly investigate those attempting to cheat the market, and we will bring them to justice.”
According to the company’s admissions, Sargeant Marine Inc. and its affiliated companies (Sargeant Marine) engaged in an eight-year scheme to bribe foreign officials in Brazil, Venezuela, and Ecuador. In Brazil, Sargeant Marine admitted to bribing a Minister in the Brazilian government, a high-ranking member of the Brazilian Congress, and senior executives at Petróleo Brasileiro S.A.-Petrobras to obtain valuable contracts to sell asphalt. To execute the scheme and conceal the bribe payments, Sargeant Marine entered into fake consulting agreements with bribe intermediaries. After receiving fake invoices, it then sent international wires from Sargeant Marine bank accounts to offshore bank accounts held in the names of shell companies controlled by the bribe intermediaries. The bribe intermediaries used a portion of the commissions to pay bribes to Brazilian government officials on Sargeant Marine’s behalf, either by wire to the officials’ offshore shell companies, or in cash in Brazil.
Sargeant Marine also admitted that between approximately 2012 and 2018, it bribed four Petróleos de Venezuela, S.A. (PDVSA) officials in Venezuela in exchange for inside information, and for their assistance in steering contracts to purchase asphalt from PDVSA to a Sargeant Marine nominee. The Sargeant Marine co-conspirators used code names to hide the identities of some of the PDVSA officials receiving the bribes, referring to them simply as “Oiltrader,” “Tony,” and “Tony 2” in emails and texts. The inside information was called “Chocolates.” Similar to Brazil, Sargeant Marine covered up the bribes by entering into fake consulting agreements with a bribe intermediary and wiring commission payments into U.S. and offshore bank accounts he controlled. The bribe intermediary then paid the PDVSA officials on behalf of Sargeant Marine.
Sargeant Marine also admitted that it bribed an official at Ecuador’s state-owned oil company EP Petroecuador (Petroecuador) to secure a 2014 contract to supply asphalt. The company used the same tactics as in Brazil and Venezuela to conceal the bribe payments. In particular, it engaged a bribe intermediary with close ties to a decisionmaker at Petroecuador and then paid commissions to the bribe intermediary pursuant to a sham consulting agreement. The intermediary used the commission payments to pay the bribes to the Petroecuador official on Sargeant Marine’s behalf.
The department recently unsealed charges against, and the guilty pleas of, five of the individuals who played a major role in the bribery scheme, including Daniel Sargeant, a senior executive of the company; Jose Tomas Meneses, a Sargeant Marine trader; Luiz Eduardo Andrade and David Diaz, consultants who acted as bribe intermediaries in Brazil and Venezuela, respectively; and Hector Nuñez Troyano, a former PDVSA official who received bribes in connection with the Venezuela contracts. A sixth individual, Roberto Finocchi, also a Sargeant Marine trader, pleaded guilty in November 2017 for his role in the Brazil scheme.
On Sept. 10, 2020, a criminal complaint was unsealed in federal court in Brooklyn charging another former PDVSA official with conspiracy to commit money laundering, in part, for his alleged role in the Sargeant Marine Venezuela scheme.
The investigation is being conducted by the FBI’s International Corruption Unit. The government’s case is being handled by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. Fraud Section Trial Attorney Derek J. Ettinger and Assistant U.S. Attorneys Whitman Knapp, Mark E. Bini, and Andrey Spektor are prosecuting the case.
The Justice Department’s Office of International Affairs provided substantial assistance. The Ministerio Publico Federal in Brazil provided significant cooperation.
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.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Oil Trader Indicted in International Bribery and Money Laundering Conspiracy Involving Corrupt Payments to Ecuadorian OfficialsRead the Press Release
A federal grand jury in the Eastern District of New York returned an indictment today against a trader at the U.S. subsidiary of a multinational oil distributor and trading company (Trading Company), for his alleged participation in a five-year international bribery and money laundering scheme involving corrupt payments to Ecuadorian officials.
Acting Attorney General Brian C. Rabbitt, Acting U.S. Attorney Seth D. DuCharme for the Eastern District of New York, and Special Agent in Charge George L. Piro of the FBI’s Miami Field Office made the announcement.
The two-count indictment charges Javier Aguilar, 46, a citizen of Mexico and resident of the United States, with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and conspiracy to commit money laundering.
As alleged in court documents, including the criminal complaint that was unsealed today, between approximately 2015 and July 2020, Aguilar and others participated in a conspiracy to pay and conceal bribes to then-Ecuadorian officials, including at Empresa Publica de Hidrocarburos del Ecuador (Petroecuador) in order to obtain and retain business for Trading Company, in particular, a $300 million contract to purchase fuel oil that was awarded to a state-owned entity for the benefit of Trading Company.
To promote the bribery scheme and conceal its proceeds, Aguilar and his co-conspirators allegedly agreed to use sham consulting agreements between bribe paying intermediaries and offshore shell companies, into whose accounts Trading Company paid funds while knowing that they would be used to pay bribes to the Ecuadorian government officials.
According to the allegations, during the scheme, Aguilar and his co-conspirators caused the payment of approximately $870,000 in bribes that they had promised to then-Ecuadorian officials on behalf of Trading Company.
The charges in the indictment and in the original complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.
The investigation is being conducted by FBI's International Corruption squad in Miami. The government’s case is being handled by the Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section (MLARS) and the U.S. Attorney’s Office for the Eastern District of New York. Fraud Section Trial Attorneys Derek J. Ettinger, Jonathan P. Robell, and Clayton P. Solomon, MLARS Trial Attorneys Ann Brickley and Adam Schwartz, and Assistant U.S. Attorneys Mark E. Bini and Andrey Spektor are prosecuting the case. The Department of Justice’s Office of International Affairs provided assistance in the investigation.
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.
The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office. In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected] (link sends e-mail) or https://tips.fbi.gov/.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Former Manager of Oil Trading Firm Charged in Money Laundering and Bribery SchemeRead the Press Release
An indictment was unsealed today in federal court in Brooklyn charging Javier Aguilar with conspiring to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and money laundering conspiracy for his involvement in a scheme to pay approximately $870,000 in bribes to Ecuadorian government officials in exchange their assistance to help Aguilar’s employer secure a $300 million contract for fuel oil from Ecuador’s state-owned oil company. Aguilar was previously arrested in Houston, Texas, and will be arraigned in the Eastern District of New York at a later date.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Brian C. Rabbitt, Acting Assistant Attorney General of the Justice Department’s Criminal Division, and George L. Piro, Special Agent-in-Charge, Federal Bureau of Investigation, Miami Field Office (FBI), announced the charges.
As alleged in the indictment and other court documents, Aguilar worked as a manager and oil trader in Houston for a United States subsidiary of a European energy trading company (the “Trading Company”). Beginning in mid-2015 and continuing into 2020, Aguilar and others allegedly caused approximately $870,000 in bribes to be paid to Ecuadorian government officials for their assistance in obtaining and retaining business for the Trading Company. Specifically, the Trading Company paid two intermediaries $1.4 million for their efforts to secretly bribe the government officials using bank accounts located in the United States and offshore, and $870,000 of those funds were used to pay the bribes to the Ecuadorian officials. In exchange for the bribes, the Trading Company secured contracts to purchase approximately $300 million in fuel oil from Petroecuador. To conceal the proceeds of the bribery scheme, Aguilar caused fake and fraudulent consulting agreements to be executed with so-called consultants located in the United States who were actually bribe intermediaries.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Aguilar faces a maximum sentence of 20 years in prison.
The government’s investigation is being conducted by the FBI’s International Corruption Unit, Miami Field Office. The is case is being handled by the Office’s Business and Securities Fraud Section, the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and the Fraud Section. Assistant United States Attorneys Mark E. Bini and Andrey Spektor, MLARS Trial Attorneys Ann Brickley and Adam Schwartz, and Fraud Section Trial Attorney Derek Ettinger are prosecuting the case.
The Defendant:
JAVIER AGUILAR
Age: 46
Houston, TexasE.D.N.Y. Docket No. 20-CR-390 (ENV)
Queens Man Charged in Insider Trading SchemeRead the Press Release
A criminal complaint was unsealed earlier today in federal court in Brooklyn charging Yinghang Yang with securities fraud for his role in an insider trading scheme. Yang and a co-conspirator allegedly executed a series of securities transactions based on nonpublic information stolen from Yang’s employer, which resulted in profits of more than $900,000. Yang was arrested this afternoon and is scheduled to make his initial appearance tomorrow via videoconference before United States Magistrate Judge Roanne L. Mann.
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 and arrest.
“Yang abused the trust placed in him by his employer and allegedly broke the law by trading on, and profiting from, nonpublic information that he stole from his employer,” stated Acting United States Attorney DuCharme. “As today’s arrest demonstrates, we are committed to protecting the integrity of our financial markets from dishonest profiteers.” Mr. DuCharme thanked the Securities and Exchange Commission, New York Regional Office (SEC), for their significant cooperation and assistance during the investigation.
“It’s a plain and simple fact—those who base trading decisions on proprietary information they shouldn’t have access to are not only engaging in unfair business practices, they’re breaking the law. As we allege, Yinghang Yang did just that. His arrest today once again highlights the FBI’s ongoing efforts to uphold the integrity of our financial markets,” stated FBI Assistant Director-in-Charge Sweeney.
According to the complaint, since September 2018, Yang has been employed by a publicly traded company (“the Company”) that specializes in financial information and analytics. The Company publishes several market indices, including American stock market indices based on the market capitalizations of groups of companies with shares listed on the New York Stock Exchange (NYSE) or the NASDAQ Stock Market (NASDAQ). Yang’s job at the Company includes managing American stock market indices with more than $60 billion in asset value tracking.
Between April 2019 and October 2019, Yang and a co-conspirator allegedly executed securities transactions in the co-conspirator’s brokerage account based, in whole or in part, on nonpublic information obtained by Yang through his employment at the Company, about issuers that were to be added or subtracted from market indexes published by the Company. For example, on October 2, 2019, beginning at 2:47 p.m., the co-conspirator’s brokerage account entered orders to buy call options of Cleveland Cliffs (CLF), a publicly traded mining company. The same day, at 5:15 p.m., the Company announced the addition of CLF to one of its indices effective prior to the open of trading on October 8, 2019. The co-conspirator’s brokerage account subsequently sold the CLF call options on October 3, 2019, realizing a gain of approximately $155,029. This sequence was followed in 13 additional transactions in the co-conspirator’s brokerage account during the charged conspiracy.
In total, the securities transactions engaged in by the co-conspirator’s brokerage account during the relevant time period generated more than $900,000 in profits, some of which were transferred to three different bank accounts held by Yang. Funds from those accounts were then used by Yang for personal expenses, including credit card payments, repayment of student loans and trading activity in Yang’s own brokerage account.
The charge in the complaint is an allegation, and the defendant is presumed innocent unless and until proven guilty. If convicted, Yang 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 Attorneys Alixandra Smith and Lindsay K. Gerdes are in charge of the prosecution, with assistance from Assistant United States Attorney Brian Morris of the Office’s Asset Forfeiture Section.
The Defendant:
YINGHANG YANG (also known as “James Yang”)
Age: 27
Flushing, QueensE.D.N.Y. Docket No. 20-MJ-820
New York City Police Department Officer Charged with Acting as an Illegal Agent of the People’s Republic of ChinaRead the Press Release
UPDATE
The charges described in the press release below were dismissed by the Court on January 19, 2023. See No. 20-CR-442 (EK), ECF No. 140.
BROOKLYN, NY – A criminal complaint was unsealed today in federal court in Brooklyn charging Baimadajie Angwang, a New York City Police Department officer and United States Army reservist, with acting as an illegal agent of the People’s Republic of China (PRC) as well as committing wire fraud, making false statements and obstructing an official proceeding. Angwang was arrested today and will make his initial appearance this afternoon before United States Magistrate Judge Roanne L. Mann.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York; John C. Demers, Assistant Attorney General for National Security; Alan E. Kohler, Jr., Assistant Director of the Federal Bureau of Investigation (FBI) Counterintelligence Division; 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 arrest and charges.
“The defendant allegedly violated his sworn oath to serve the New York City community and defend the Constitution against all enemies by reporting to PRC government officials about the activities of Chinese citizens in the New York area and developing intelligence sources within the Tibetan community in the United States,” stated Acting United States Attorney DuCharme. “This Office, together with our law enforcement partners, remains vigilant in rooting out any attempts at foreign influence though criminal activity taken on behalf of a foreign power in whatever form they may take.”
“State and local officials should be aware that they are not immune to the threat of Chinese espionage,” said Assistant Attorney General for National Security John C. Demers. “According to the allegations, the Chinese government recruited and directed a U.S. citizen and member of our nation’s largest law enforcement department to further its intelligence gathering and repression of Chinese abroad. Our police departments provide for our public safety and are often the first line of defense against the national security threats our country faces. We will continue to work with our state and local partners to protect our nation’s great police departments.”
“The defendant allegedly violated the trust of his community and the New York City Police Department on behalf of a foreign power, the People’s Republic of China. This type of conduct simply cannot be tolerated,” stated FBI Assistant Director Kohler. “This case serves as yet another reminder that China represents the biggest counterintelligence threat to the United States and that the FBI and our partners will be aggressive in investigating and stopping such activities within our nation.”
“This is the definition of an insider threat - as alleged, Mr. Angwang operated on behalf of a foreign government; lied to gain his clearance, and used his position as an NYPD police officer to aid the Chinese government's subversive and illegal attempts to recruit intelligence sources,” stated FBI Assistant Director-in-Charge Sweeney. “The FBI is committed to stopping hostile foreign governments from infiltrating our institutions, and we will we not tolerate the behavior of those who willingly violate their oath to the United States, and covertly work against their fellow citizens. We want to thank the NYPD for its extraordinary partnership on this investigation.”
“As alleged in this federal complaint, Baimadajie Angwang violated every oath he took in this country. One to the United States, another to the U.S. Army, and a third to this Police Department,” stated NYPD Commissioner Shea. “From the earliest stages of this investigation, the NYPD’s Intelligence and Internal Affairs bureaus worked closely with the FBI’s Counterintelligence Division to make sure this individual would be brought to justice.”
According to the publicly filed complaint and the government’s detention memorandum, Angwang, an ethnic Tibetan native of the PRC and naturalized U.S. citizen, is assigned to the NYPD’s community affairs unit where he serves as a liaison to the community served by the 111th Precinct.
Since at least 2014, Angwang allegedly acted at the direction and control of officials at the PRC Consulate in New York City. Specifically, Angwang reported on the activities of Chinese citizens in the New York area, spotted and assessed potential intelligence sources within the Tibetan community in New York and elsewhere, and provided PRC officials with access to senior NYPD officials through invitations to official events. One of the PRC Consular officials at whose direction Angwang acted worked for the China Association for Preservation and Development of Tibetan Culture, a division of the PRC’s United Front Work Department. This Department is responsible for, among other things, neutralizing potential opponents of the PRC and co-opting ethnic Chinese individuals living outside the PRC.
Angwang is also charged with committing wire fraud, making material false statements and obstructing an official proceeding. As part of his employment with the U.S. Army Reserve, Angwang maintained a “SECRET”-level security clearance. According to court documents, in 2019, Angwang completed and electronically submitted an SF-86C form for a background investigation. On the form, Angwang lied by denying that he had contacts with a foreign government or its consulate and by denying that he had close and continuing contacts with foreign nationals, including his family members who live in the PRC, some of whom are affiliated with the People’s Liberation Army.
The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Angwang faces a maximum sentence of 55 years’ imprisonment.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States Attorney Michael T. Keilty is in charge of the prosecution, with assistance from Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section.
The Defendant:
BAIMADAJIE ANGWANG
Age: 33
Williston Park, New YorkE.D.N.Y. Docket No. 20-MJ-837
New York City Police Department Officer Charged with Acting as an Illegal Agent of the People’s Republic of ChinaRead the Press Release
A criminal complaint was unsealed today in federal court in the Eastern District of New York charging Baimadajie Angwang, 33, a New York City Police Department officer and United States Army reservist, with acting as an illegal agent of the People’s Republic of China (PRC) as well as committing wire fraud, making false statements and obstructing an official proceeding. Angwang was arrested earlier today in Williston Park, New York, and his initial appearance is scheduled for this afternoon before United States Magistrate Judge Peggy Kuo at the United States Courthouse in Brooklyn, New York.
“State and local officials should be aware that they are not immune to the threat of Chinese espionage,” said Assistant Attorney General for National Security John C. Demers. “According to the allegations, the Chinese government recruited and directed a U.S. citizen and member of our nation’s largest law enforcement department to further its intelligence gathering and repression of Chinese abroad. Our police departments provide for our public safety and are often the first line of defense against the national security threats our country faces. We will continue to work with our state and local partners to protect our nation’s great police departments.”
“The defendant is charged with violating his sworn oath as a New York City police officer to protect and serve the citizens of New York by instead reporting to PRC government officials about the activities of Chinese citizens in the New York area and developing intelligence sources within the Tibetan community in the United States,” stated Acting United States Attorney Seth D. DuCharme. “Today’s arrest shows that no one – especially one sworn to uphold the law – is immune from prosecution for illegal acts on behalf of foreign governments.”
“The defendant allegedly violated the trust of his community and the New York City Police Department on behalf of a foreign power, the People’s Republic of China. This type of conduct simply cannot be tolerated,” said Alan E. Kohler, Jr., Assistant Director of the FBI’s Counterintelligence Division. “This case serves as yet another reminder that China represents the biggest counterintelligence threat to the United States and that the FBI and our partners will be aggressive in investigating and stopping such activities within our nation.”
“This is the definition of an insider threat - as alleged, Angwang operated on behalf of a foreign government; lied to gain his clearance, and used his position as an NYPD police officer to aid the Chinese government's subversive and illegal attempts to recruit intelligence sources,” stated FBI Assistant Director-in-Charge of the New York Field Office William F. Sweeney. “The FBI is committed to stopping hostile foreign governments from infiltrating our institutions, and we will we not tolerate the behavior of those who willingly violate their oath to the United States, and covertly work against their fellow citizens. We want to thank the NYPD for its extraordinary partnership on this investigation.”
“As alleged in this federal complaint, Baimadajie Angwang violated every oath he took in this country. One to the United States, another to the U.S. Army, and a third to this Police Department,” stated NYPD Commissioner Dermot F. Shea. “From the earliest stages of this investigation, the NYPD’s Intelligence and Internal Affairs bureaus worked closely with the FBI’s Counterintelligence Division to make sure this individual would be brought to justice.”
According to the publicly filed complaint and detention memorandum, Angwang, an ethnic Tibetan native of the PRC and naturalized U.S. citizen who resides in Williston Park, New York, is assigned to NYPD’s community affairs unit where, among other things, he serves as a liaison to the community served by the 111th Precinct.
Since at least 2014, Angwang acted at the direction and control of officials at the PRC Consulate in New York City. Specifically, Angwang reported on the activities of Chinese citizens in the New York area, spotted and assessed potential intelligence sources within the Tibetan community in New York and elsewhere, and provided PRC officials with access to senior NYPD officials through invitations to official events. One of the PRC Consular officials at whose direction Angwang acted worked for the “China Association for Preservation and Development of Tibetan Culture,” a division of the PRC’s United Front Work Department. This Department is responsible for, among other things, neutralizing potential opponents of the PRC and co-opting ethnic Chinese individuals living outside the PRC.
According to court documents, Angwang was explicit about his motivations, telling his PRC official handler that was wanted to get promoted within the NYPD so that he could assist the PRC and bring “glory to China.” In addition, Angwang told his handler that the handler’s superiors in Beijing “should be happy . . . because you have stretched your reach into the police.”
In addition to acting as an illegal agent of the PRC, Angwang is also charged with committing wire fraud, making material false statements and obstructing an official proceeding. As part of his employment with the U.S. Army Reserve, Angwang maintained a “SECRET”-level security clearance. According to court documents, in 2019, Angwang completed and electronically submitted an SF-86C form for a background investigation. On the form, Angwang lied by denying that he had contacts with a foreign government or its consulate and by denying that he had close and continuing contacts with foreign nationals, including his family members who live in the PRC, some of whom were affiliated with the People’s Liberation Army.
The charges in the complaint are merely allegations and the defendant is presumed innocent unless and until proven guilty. If convicted, Angwang faces a maximum sentence of 55 years’ imprisonment.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant U.S. Attorney Michael T. Keilty is in charge of the prosecution, with assistance from Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section.