Eastern District of New York

Earlier today, at the federal courthouse in Brooklyn, Azizjon Rakhmatov, a citizen of Uzbekistan and a resident of New Haven, Connecticut, was sentenced to 12 ½ years’ imprisonment by United States District Judge William F. Kuntz, II, for conspiring to provide material support to a designated foreign terrorist organization, the Islamic State of Iraq and al-Sham (ISIS).  In August 2019, Rakhmatov pleaded guilty to the charge.  The U.S. government intends to seek the defendant’s removal to Uzbekistan upon completion of his sentence of imprisonment.  

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, New York City Police Department (NYPD), announced the sentence.

“Today’s sentence demonstrates that there are significant consequences for those who support terrorism.” stated Acting United States Attorney DuCharme.  “The investigation and prosecution of Rakhmatov and his co-conspirators are the result of this Office’s unwavering commitment, along with our outstanding partners on the New York Joint Terrorist Task Force, to detect, disrupt and neutralize any individual or group that is under the mistaken impression that violence is a legitimate means to effect political change, here or abroad.  Once again, we have rooted out ISIS’s supporters, methods and means, and prevented ISIS from carrying out its abhorrent extremist agenda.”

According to court filings, in 2014, Rakhmatov’s co-defendants Abdurasul Juraboev and Akhror Saidakhmetov planned to travel to Syria to fight on behalf of ISIS.  Rakhmatov and co-defendant Abror Habibov discussed providing their own money to cover Saidakhmetov’s travel expenses and to purchase a firearm for Saidakhmetov once he arrived in Syria.  Rakhmatov also agreed to collect money from others to fund Saidakhmetov’s travel.  On the day before Saidakhmetov’s scheduled departure, Rakhmatov transferred $400 into co-defendant Akmal Zakirov’s personal bank account to facilitate Saidakhmetov’s travel to and expenses in Syria.  Co-conspirator Dilkhayot Kasimov also agreed to fund Saidakhmetov’s travel and brought the group’s money to Saidakhmetov at John F. Kennedy International Airport.   

Juraboev, Saidakahmetov, Habibov and Zakirov have previously pleaded guilty, and Kasimov was convicted at trial in September 2019.  Juraboev and Saidakahmetov each were sentenced to 15 years’ imprisonment.  Kasimov, Habibov and Zakirov are awaiting sentencing.

The government’s case is being handled by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys Douglas M. Pravda, David K. Kessler, and J. Matthew Haggans are in charge of the prosecution, with assistance provided by Trial Attorney Steven Ward of the National Security Division’s Counterterrorism Section.

The Defendant:

AZIZJON RAKHMATOV
Age:  33
New Haven, Connecticut

E.D.N.Y. Docket No. 15-CR-95 (S-3)

A Nevada woman was arrested today for her alleged role in a multi-year scheme to commit visa fraud and money laundering, and to illegally bring Chinese nationals into the United States for financial gain.

Haiyan Liao, 43, of Las Vegas, is charged in an indictment obtained in the Eastern District of New York and unsealed today in the U.S. District Court for the District of Nevada. She is charged with conspiracy to commit visa fraud and to unlawfully bring aliens into the U.S. for financial gain, bringing aliens into the U.S. for financial gain, and money laundering conspiracy.

“The United States benefits from the rich diversity of culture and experience which results from lawful immigration into our country,” said David P. Burns, Acting Assistant Attorney General of the Justice Department’s Criminal Division. “This defendant, however, is charged with submitting false applications for visitor visas to the U.S. Consulate in Guangzhou and engaging in money laundering as part of a multi-year alien smuggling business that brought Chinese nationals into the United States illegally. This indictment underscores that those who seek to thwart our system of legal immigration to line their own pockets will be prosecuted.”

“As alleged in the indictment, Liao aided and abetted aliens who paid thousands of dollars for her fraudulent immigration services,” said Acting U.S. Attorney Seth D. DuCharme of the Eastern District of New York. “The defendant provided fake documents and coached her accomplices regarding how to lie during visa interviews and customs checks. Our office and our law enforcement agency partners remain vigilant and committed to protecting the integrity of the immigration process and our border security and preventing criminals from seeking profit in the subversion of the rule of law.”

“The Diplomatic Security Service (DSS) is firmly committed to protecting the integrity of all U.S. visas and travel documents,” said Jeffrey A. Thomas, Deputy Assistant Director for the Office of Investigations. “This case is the result of a strong partnership among federal law enforcement agencies and DSS’ global network of special agents working together to stop visa and passport crimes, and to stop criminals from earning illegal income by exploiting U.S. visas, passports, and foreign nationals.”

According to the indictment, Liao, with others, fraudulently obtained visitor visas by submitting applications containing false statements to the U.S. Consulate in Guangzhou, China as part of a scheme to assist aliens from China to enter the U.S. For the aliens whose applications were approved, Liao would facilitate the aliens’ travel to the U.S., including accompanying them on commercial flights to Queens and Brooklyn, New York. The aliens and their families paid thousands of dollars in exchange for the visitor visas and travel to the U.S. Liao’s co-defendant in the indictment, Ned Michael Moriearty, was recently deceased.

This case is being investigated by the DSS, Criminal Fraud Investigations Unit Branch.

The case is being prosecuted by Trial Attorneys Rami S. Badawy of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Nomi Berenson of the Eastern District of New York. 

The charges contained in the indictment are merely allegations and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

A criminal complaint was filed today in federal court in Broolyn charging Eduard Florea with being a felon in possession of ammunition.  Florea was arrested yesterday at his home in Queens, New York, and made his initial appearance this afternoon before United States Magistrate Judge Sanket J. Bulsara who ordered the defendant 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 charge.

“This Office will dutifully and responsibly enforce our nation’s gun and ammunition laws and will act swiftly and decisively where an individual who violates such laws threatens our institutions with acts of violence,” stated Acting United States Attorney DuCharme.  “Respectful of our citizens’ rights and our obligation to protect their safety and their liberties, we will ensure the orderly functioning of our country’s democratic institutions and the safety of those we are sworn to protect through our diligent investigations and, where appropriate, federal prosecution.”  Mr. DuCharme expressed his grateful appreciation to the United States Attorney’s Office for the Southern District of New York for their assistance on the case.

“As alleged, Florea, a previously convicted felon, made various social media posts about his plan to travel to Washington D.C. to engage in acts of violence. We saved him a trip and paid him a visit instead. Yesterday evening members of the FBI’s Joint Terrorism Task Force, to include our partners at the New York City Police Department, placed him under arrest for illegally possessing ammunition. For those of you out there with similar intentions, heed this warning—knock it off, or expect to see us at your door,” stated FBI Assistant Director-in-Charge Sweeney.    

According to the complaint and statements made in court, Florea operated a social media account on Parler using the name “LoneWolfWar.” Florea who was previously convicted of a New York state firearms-related felony, posted threatening statements online about killing a United States Senator-elect and about intending to travel to Washington D.C. as part of a group armed with firearms ready to engage in violence.  For example, on January 6, 2021, Florea posted “dead men can’t pass [expletive] laws” in response to a post about a United States Senator-elect.  Additionally, Florea posted on social media:

• “Let’s go . . . I will be reaching out to patriots in my area so we can come up with a game plan . . . Here in New York we are target rich[] . . . . Dead men can’t pass [expletive] law. . . . I will fight so help me god.”
• “The time for peace and civility is over . . . ./3 cars full of armed patriots are enroute from NY / 3 cars of armed patriots heading into DC from NY / Guns cleaned loaded . . . got a bunch of guys all armed and ready to deploy . . . we are just waiting for the word.”
• “Its time to unleash some violence.”

n January 12, 2021, FBI Special Agents and Task Force Officers with the New York Joint Terrorism Task Force executed a search warrant at Florea’s home in Middle Village, Queens.  Law enforcement recovered over 1,000 rounds of ammunition.

The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, Florea faces up to 10 years’ imprisonment.

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorney Francisco J. Navarro is in charge of the prosecution.

The Defendant:

EDUARD FLOREA
Age: 40
Middle Village, New York

E.D.N.Y. Docket No. 21-MJ-35

BROOKLYN, NY – Earlier today, in federal court in Brooklyn, an indictment was unsealed charging Haiyan Liao in connection with a scheme to commit visa fraud, money laundering and illegally bring Chinese nationals into the United States for financial gain.  Liao was arrested this morning in Las Vegas, Nevada and will make her initial appearance tomorrow in United States District Court, District of Nevada before U.S. Magistrate Judge Elayna Youchah.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, David P. Burns, Acting Assistant Attorney General of the Justice Department’s Criminal Division, and Jeffrey A. Thomas, Deputy Assistant Director of Investigations, U.S. Department of State’s Diplomatic Security Service, announced the arrest and charges.

“As alleged in the indictment, Liao aided and abetted aliens who paid thousands of dollars for her fraudulent immigration services,” stated Acting United States Attorney DuCharme.  “The defendant provided fake documents and coached her accomplices regarding how to lie during visa interviews and customs checks.  Our Office and our law enforcement agency partners remain vigilant and committed to protecting the integrity of the immigration process and our border security and preventing criminals from seeking profit in the subversion of the rule of law.”

The United States benefits from the rich diversity of culture and experience which results from lawful immigration into our country,” stated Acting Assistant Attorney General Burns.  “This defendant, however, is charged with submitting false applications for visitor visas to the U.S. Consulate in Guangzhou and engaging in money laundering as part of a multi-year alien smuggling business that brought Chinese nationals into the United States illegally. This indictment underscores that those who seek to thwart our system of legal immigration to line their own pockets will be prosecuted.”

“The Diplomatic Security Service (DSS) is firmly committed to protecting the integrity of all U.S. visas and travel documents,” stated DSS Deputy Assistant Director Thomas. “This case is the result of a strong partnership among federal law enforcement agencies and DSS’ global network of special agents working together to stop visa and passport crimes, and to stop criminals from earning illegal income by exploiting U.S. visas, passports, and foreign nationals.”

According to the indictment, between January 2014 and December 2015, Liao conspired with others in a scheme to fraudulently obtain visitor visas for aliens from China by submitting applications containing false statements to the U.S. Consulate in Guangzhou, China.  In addition, Liao and her co-conspirators obtained fraudulent documents for aliens to present to the Department of State Bureau of Consular Affairs, including fake birth certificates, marriage certificates, national identity cards, property deeds and employment verification purportedly to show they had strong ties to China and were likely to return to their homeland.  Liao and her co-conspirators allegedly met with alien applicants and instructed them to falsely answer questions during their visa interviews.  For the aliens whose applications were approved, Liao and her co-conspirators facilitated their travel to the United States by purchasing airline tickets, accompanying them on commercial flights and instructing them how to clear customs after they arrived in the United States.  The aliens and their families paid the defendant thousands of dollars to obtain the fraudulent visas.  Liao and her co-conspirators allegedly wired proceeds of the scheme from China to the United States.  Liao’s co-defendant in the indictment, Ned Michael Moriearty, was recently deceased.

The charges contained in the indictment are allegations and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Liao faces up to 20 years’ imprisonment. 

This case is being investigated by the Diplomatic Security Service, Criminal Fraud Investigations Unit.

The case is being prosecuted by Assistant U.S. Attorney Nomi Berenson of the Eastern District of New York and Trial Attorney Rami S. Badawy of the Criminal Division’s Human Rights and Special Prosecutions Section. 

The Defendant:

HAIYAN LIAO
Age:  43
Las Vegas Nevada

E.D.N.Y. Docket No.: 20-CR-500 (SJ)

Earlier today, in federal court in Brooklyn, Peter Tuccio pleaded guilty before United States Magistrate Judge Steven L. Tiscione to using fire to commit the felony crime of extortion.  When sentenced, Tuccio faces a mandatory sentence of 10 years’ imprisonment, as well as forfeiture, restitution and a fine of up to $250,000.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, announced the guilty plea.

“With today’s guilty plea, Tuccio has been convicted of an offense arising from his efforts to extort a local businessman by brazenly chasing him through the streets and then setting his car ablaze,” stated Acting United States Attorney DuCharme. “This Office, together with our partners at the FBI, will continue to vigorously investigate and prosecute members and associates of organized crime to eradicate the danger they pose to our community.”  Mr. DuCharme thanked the Federal Bureau of Investigation, New York Field Office, the New York City Police Department and the New York City Fire Department’s Bureau of Fire Investigation for their outstanding work on the case.

In 2015, a businessman who had been extorted by a captain in the Gambino Organized Crime Family (referred to in court filings as “Co-Conspirator 1”) for many years, began avoiding Co-Conspirator 1 in an effort to stop making the $400 annual payment.  On December 3, 2015, Tuccio, co-defendants Jonathan Gurino and Gino Gabrielli, who were charged in a separate indictment, observed the businessman leave a smoke shop in Howard Beach, New York and drive away in his 2014 Mercedes Benz.  The three men then followed the businessman at a high rate of speed through the streets of Queens and confronted him outside a pizzeria, where Tuccio mentioned Co-Conspirator 1 and commented on the businessman’s car.  Tuccio and his co-defendants schemed to set the businessman’s car on fire, sending a message that he had to continue making the extortion payments to Co-Conspirator 1.  Later that night, the businessman heard a loud noise and saw that his car was on fire outside of his residence.  The businessman’s security video system recorded Gabrielli pouring a substance on the car, the car erupting in flames, and Gabrielli running away with his pant leg on fire.  Shortly thereafter, Gabrielli and Tuccio were caught on surveillance video entering Jamaica Hospital. After the arson, the businessman paid more than $5,000 to Co-Conspirator 1. 

In August 2016, Gabrielli pleaded guilty to the arson.  In June 2020, Gurino pleaded guilty to extortionate collection of credit and extortion.  They are awaiting sentencing.

The government’s case is being handled by the Office’s Organized Crime & Gangs Section.  Assistant United States Attorneys Nadia E. Moore and Nicholas Moscow are in charge of the prosecution.

The Defendant:

PETER TUCCIO
Age:  27
Queens, New York

E.D.N.Y. Docket No. 18-CR-610 (S-1) (LDH)

Deutsche Bank Aktiengesellschaft (Deutsche Bank or the Company) has agreed to pay more than $130 million to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) and a separate investigation into a commodities fraud scheme.

The resolution includes criminal penalties of $85,186,206, criminal disgorgement of $681,480, victim compensation payments of $1,223,738, and $43,329,622 to be paid to the U.S. Securities & Exchange Commission in a coordinated resolution.

Deutsche Bank is a multi-national financial services company headquartered in Frankfurt, Germany. The charges arise out of a scheme to conceal corrupt payments and bribes made to third-party intermediaries by falsely recording them on Deutsche Bank’s books and records, as well as related internal accounting control violations, and a separate scheme to engage in fraudulent and manipulative commodities trading practices involving publicly-traded precious metals futures contracts. 

Deutsche Bank entered into a three-year deferred prosecution agreement (DPA) with the Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section (MLARS) and with the U.S. Attorney’s Office for the Eastern District of New York. The criminal information was filed today in the Eastern District of New York charging Deutsche Bank with one count of conspiracy to violate the books and records and internal accounting controls provisions of the FCPA and one count of conspiracy to commit wire fraud affecting a financial institution in relation to the commodities conduct.

“Deutsche Bank engaged in a seven-year course of conduct, during which it failed to implement a system of internal accounting controls regarding the use of company funds and falsified its books and records to conceal corrupt and improper payments,” said Acting Deputy Assistant Attorney General Robert Zink of the Justice Department’s Criminal Division. “Separately, Deutsche Bank traders on three continents sought to manipulate our public financial markets through fraud for five years. This resolution exemplifies the department’s commitment to help ensure that publicly traded companies devise and implement appropriate and proper systems of internal accounting controls and maintain accurate and truthful corporate documentation. It also stands as an example of the department’s efforts to police the public U.S. markets so that all may continue to trust, and rely upon, the integrity of our public financial systems.”

“Deutsche Bank engaged in a criminal scheme to conceal payments to so-called consultants worldwide who served as conduits for bribes to foreign officials and others so that they could unfairly obtain and retain lucrative business projects,” stated Acting U.S. Attorney Seth D. DuCharme of the Eastern District of New York. “This office will continue to hold responsible financial institutions that operate in the United States and engage in practices to facilitate criminal activity in order to increase their bottom line.”

“The U.S. Postal Inspection Service takes pride in investigating complex fraud and corruption cases that impact American investors,” said Inspector in Charge Delany De Léon-Colón of the U.S. Postal Inspection Service’s Criminal Investigations Group. “This type of deceptive activity can cause immeasurable economic losses to competitive markets around the world. The combined efforts of our partners at the FBI and Department of Justice helped to bring today’s significant action which illustrates our efforts to protect the United States and the international marketplace.”

The FCPA Case

According to admissions and court documents, between 2009 and 2016, Deutsche Bank, acting through its employees and agents, including managing directors and high-level regional executives, knowingly and willfully conspired to maintain false books, records, and accounts to conceal, among other things, payments to a business development consultant (BDC) who was acting as a proxy for a foreign official and payments to a BDC that were actually bribes paid to a decisionmaker for a client in order to obtain lucrative business for the bank. In some instances, Deutsche Bank made payments to BDCs that were not supported by invoices or evidence of any services provided. In other cases, Deutsche Bank employees created or helped BDC’s create false justifications for payments.      

In relation to a Saudi BDC, Deutsche Bank admitted that its employees conspired to contract with a company owned by the wife of a client decisionmaker to facilitate bribe payments of over $1 million to the decisionmaker. Deutsche Bank approved the BDC relationship despite Deutsche Bank employees knowing about the relationship between the Saudi BDC and the decisionmaker, and approved the corrupt payments despite Deutsche Bank employees openly discussing the need to pay the Saudi BDC in order to incentivize her husband to continue to do business with Deutsche Bank. In requesting approval of one payment, Deutsche Bank employees cautioned that the “client and [the Saudi BDC] are intimately linked and . . . any cessation of payment to the [the Saudi BDC] will certainly prompt a significant outflow of [business]” from the client.

Deutsche Bank also contracted with an Abu Dhabi BDC to obtain a lucrative transaction, despite Deutsche Bank employees knowing that the Abu Dhabi BDC lacked qualifications as a BDC, other than his family relationship with the client decisionmaker, and that the Abu Dhabi BDC was in fact acting as proxy for the client decisionmaker. Deutsche Bank paid the Abu Dhabi BDC over $3 million without invoices.

By agreeing to misrepresent the purpose of payments to BDCs and falsely characterizing payments to others as payments to BDCs, Deutsche Bank employees conspired to falsify Deutsche Bank’s books, records, and accounts, in violation of the FCPA. Additionally, Deutsche Bank employees knowingly and willfully conspired to fail to implement internal accounting controls in violation of the FCPA by, among other things, failing to conduct meaningful due diligence regarding BDCs, making payments to certain BDCs who were not under contract with Deutsche Bank at the time, and making payments to certain BDCs without invoices or adequate documentation of the services purportedly performed.

Deutsche Bank will pay a total criminal penalty of $79,561,206 in relation to the FCPA scheme. In a related matter with the U.S. Securities & Exchange Commission, Deutsche Bank will also pay $43,329,622 in disgorgement and prejudgment interest.

The Commodities Fraud Case

According to admissions and court documents, between 2008 and 2013, Deutsche Bank precious metals traders engaged in a scheme to defraud other traders on the New York Mercantile Exchange Inc. and Commodity Exchange Inc., which are commodities exchanges operated by the CME Group Inc. On numerous occasions, traders on Deutsche Bank’s precious metals desk in New York, Singapore, and London placed orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution, including in an attempt to profit by deceiving other market participants through injecting false and misleading information concerning the existence of genuine supply and demand for precious metals futures contracts.

On Sept. 25, 2020, a Chicago federal jury found two former Deutsche Bank precious metals traders, James Vorley, 42, of the United Kingdom, and Cedric Chanu, 40, of France and the United Arab Emirates, guilty of wire fraud affecting a financial institution for their respective roles in the commodities scheme. A third former Deutsche Bank trader, David Liew, 35, of Singapore, pleaded guilty on June 1, 2017, to conspiracy to commit wire fraud affecting a financial institution and spoofing. A fourth former Deutsche Bank trader, Edward Bases, 58, of New Canaan, Connecticut, was charged in a third superseding indictment on Nov. 12, 2020, and awaits trial on fraud and conspiracy charges. An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Deutsche Bank has agreed to pay a total criminal amount of $7,530,218 in relation to the commodities scheme. This amount includes criminal disgorgement of $681,480, victim compensation payments of $1,223,738, and a criminal penalty of $5,625,000, which will be fully credited against Deutsche Bank’s payment of a civil monetary penalty of $30 million to the U.S. Commodity Futures Trading Commission in January 2018 in connection with substantially the same commodities conduct.

The department reached this resolution with Deutsche Bank based on a number of factors, including the Company’s failure to voluntarily disclose the conduct to the department and the nature and seriousness of the offense, which included corrupt payments, willful violations of the FCPA accounting provisions, and commodities trading violations in three countries. Deutsche Bank received full credit for its cooperation with the department’s investigations and for its significant remediation. Penalties associated with both the FCPA and wire fraud conspiracies reflect a discount of 25 percent off the middle of the otherwise-applicable U.S. Sentencing Guidelines fine range, to account for Deutsche Bank’s 2015 resolution in connection with its manipulation of the London Interbank Offered Rate.  

The FCPA investigation is being conducted by the U.S. Postal Inspection Service, and is being prosecuted by the Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section, and the U.S. Attorney’s Office for the Eastern District of New York. Trial Attorneys Katherine Nielsen, Elizabeth S. Boison and Nikhila Raj, and Assistant U.S. Attorneys Alixandra Smith and Whitman Knapp. The Justice Department’s Office of International Affairs provided assistance in this case.

The commodities case is being investigated by the FBI’s New York Field Office, and is being prosecuted by the Fraud Section. Deputy Chief Brian R. Young, Assistant Chief Avi Perry, and Trial Attorney Leslie S. Garthwaite of the Fraud Section are prosecuting the case.

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.

Individuals who believe that they may be a victim in the commodities case should visit the Fraud Section’s Victim Witness website for more information.

BROOKLYN, NY – Deutsche Bank Aktiengesellschaft (Deutsche Bank or the Company) has agreed to pay more than $130 million to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) and a separate investigation into a commodities fraud scheme.

The resolution includes criminal penalties of $85,186,206, criminal disgorgement of $681,480, victim compensation payments of $1,223,738, and $43,329,622 to be paid to the U.S. Securities & Exchange Commission in a coordinated resolution.

Deutsche Bank is a multi-national financial services company headquartered in Frankfurt, Germany. The charges arise out of a scheme to conceal corrupt payments and bribes made to third-party intermediaries by falsely recording them on Deutsche Bank’s books and records, as well as related internal accounting control violations, and a separate scheme to engage in fraudulent and manipulative commodities trading practices involving publicly-traded precious metals futures contracts. 

Earlier today, in federal court in Brooklyn, Deutsche Bank entered into a three-year deferred prosecution agreement (DPA) with United States Attorney’s Office for the Eastern District of New York and the Department of Justice Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section (MLARS). The criminal information was filed in U.S. District Court for the Eastern District of New York charging Deutsche Bank with one count of conspiracy to violate the books and records and internal accounting controls provisions of the FCPA and one count of conspiracy to commit wire fraud affecting a financial institution in relation to the commodities conduct.  The case is assigned to U.S. District Judge Rachel P. Kovner.

Seth DuCharme, Acting United States Attorney for the Eastern District of New York, Robert Zink, Acting Deputy Assistant Attorney General of the Justice Department’s Criminal Division, and Delany De Léon-Colón, Inspector-in-Charge, United States Postal Inspection Service (USPIS), made the announcement.

"Deutsche Bank engaged in a criminal scheme to conceal payments to so-called consultants worldwide who served as conduits for bribes to foreign officials and others so that they could unfairly obtain and retain lucrative business projects,” stated Acting United States Attorney DuCharme.  “This Office will continue to hold responsible financial institutions that operate in the United States and engage in practices to facilitate criminal activity in order to increase their bottom line.”

“Deutsche Bank engaged in a seven-year course of conduct, during which it failed to implement a system of internal accounting controls regarding the use of company funds and falsified its books and records to conceal corrupt and improper payments,” stated Acting Deputy Assistant Attorney General Zink.  “Separately, Deutsche Bank traders on three continents sought to manipulate our public financial markets through fraud for five years. This resolution exemplifies the department’s commitment to help ensure that publicly traded companies devise and implement appropriate and proper systems of internal accounting controls and maintain accurate and truthful corporate documentation. It also stands as an example of the department’s efforts to police the public U.S. markets so that all may continue to trust, and rely upon, the integrity of our public financial systems.”

“The U.S. Postal Inspection Service takes pride in investigating complex fraud and corruption cases that impact American investors,” stated USPIS Inspector-in-Charge De Léon-Colón of the U.S. Postal Inspection Service’s Criminal Investigations Group.  “This type of deceptive activity can cause immeasurable economic losses to competitive markets around the world. The combined efforts of our partners at the FBI and Department of Justice helped to bring today’s significant action which illustrates our efforts to protect the United States and the international marketplace.”

The FCPA Case

According to admissions and court documents, between 2009 and 2016, Deutsche Bank, acting through its employees and agents, including managing directors and high-level regional executives, knowingly and willfully conspired to maintain false books, records, and accounts to conceal, among other things, payments to a business development consultant (BDC) who was acting as a proxy for a foreign official and payments to a BDC that were actually bribes paid to a decisionmaker for a client in order to obtain lucrative business for the bank. In some instances, Deutsche Bank made payments to BDCs that were not supported by invoices or evidence of any services provided. In other cases, Deutsche Bank employees created or helped BDC’s create false justifications for payments.      

In relation to a Saudi BDC, Deutsche Bank admitted that its employees conspired to contract with a company owned by the wife of a client decision maker to facilitate bribe payments of over $1 million to the decision maker. Deutsche Bank approved the BDC relationship despite Deutsche Bank employees knowing about the relationship between the Saudi BDC and the decision maker, and approved the corrupt payments despite Deutsche Bank employees openly discussing the need to pay the Saudi BDC in order to incentivize her husband to continue to do business with Deutsche Bank.  In requesting approval of one payment, Deutsche Bank employees cautioned that the “client and [the Saudi BDC] are intimately linked and . . . any cessation of payment to the [the Saudi BDC] will certainly prompt a significant outflow of [business]” from the client.

Deutsche Bank also contracted with an Abu Dhabi BDC to obtain a lucrative transaction, despite Deutsche Bank employees knowing that the Abu Dhabi BDC lacked qualifications as a BDC, other than his family relationship with the client decision maker, and that the Abu Dhabi BDC was in fact acting as proxy for the client decision maker. Deutsche Bank paid the Abu Dhabi BDC over $3 million without invoices.

By agreeing to misrepresent the purpose of payments to BDCs and falsely characterizing payments to others as payments to BDCs, Deutsche Bank employees conspired to falsify Deutsche Bank’s books, records, and accounts, in violation of the FCPA. Additionally, Deutsche Bank employees knowingly and willfully conspired to fail to implement internal accounting controls in violation of the FCPA by, among other things, failing to conduct meaningful due diligence regarding BDCs, making payments to certain BDCs who were not under contract with Deutsche Bank at the time, and making payments to certain BDCs without invoices or adequate documentation of the services purportedly performed.

Deutsche Bank will pay a total criminal penalty of $79,561,206 in relation to the FCPA scheme. In a related matter with the U.S. Securities & Exchange Commission, Deutsche Bank will also pay $43,329,622 in disgorgement and prejudgment interest.

The Commodities Fraud Case

According to admissions and court documents, between 2008 and 2013, Deutsche Bank precious metals traders engaged in a scheme to defraud other traders on the New York Mercantile Exchange Inc. and Commodity Exchange Inc., which are commodities exchanges operated by the CME Group Inc. On numerous occasions, traders on Deutsche Bank’s precious metals desk in New York, Singapore, and London placed orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution, including in an attempt to profit by deceiving other market participants through injecting false and misleading information concerning the existence of genuine supply and demand for precious metals futures contracts.

On Sept. 25, 2020, a Chicago federal jury found two former Deutsche Bank precious metals traders, James Vorley, of the United Kingdom, and Cedric Chanu, of France and the United Arab Emirates, guilty of wire fraud affecting a financial institution for their respective roles in the commodities scheme. A third former Deutsche Bank trader, David Liew, of Singapore, pleaded guilty on June 1, 2017, to conspiracy to commit wire fraud affecting a financial institution and spoofing. A fourth former Deutsche Bank trader, Edward Bases, of Connecticut, was charged in a third superseding indictment on Nov. 12, 2020, and awaits trial on fraud and conspiracy charges. An indictment is an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Deutsche Bank has agreed to pay a total criminal amount of $7,530,218 in relation to the commodities scheme. This amount includes criminal disgorgement of $681,480, victim compensation payments of $1,223,738, and a criminal penalty of $5,625,000, which will be fully credited against Deutsche Bank’s payment of a civil monetary penalty of $30 million to the U.S. Commodity Futures Trading Commission in January 2018 in connection with substantially the same commodities conduct.

The department reached this resolution with Deutsche Bank based on a number of factors, including the Company’s failure to voluntarily disclose the conduct to the department and the nature and seriousness of the offense, which included corrupt payments, willful violations of the FCPA accounting provisions, and commodities trading violations in three countries. Deutsche Bank received full credit for its cooperation with the department’s investigations and for its significant remediation. Penalties associated with both the FCPA and wire fraud conspiracies reflect a discount of 25 percent off the middle of the otherwise-applicable U.S. Sentencing Guidelines fine range, to account for Deutsche Bank’s 2015 resolution in connection with its manipulation of the London Interbank Offered Rate.  

The FCPA investigation is being conducted by the U.S. Postal Inspection Service and is being prosecuted by 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 Alixandra Smith and Whitman Knapp of the Eastern District of New York and Trial Attorneys Katherine Nielsen, Elizabeth S. Boison and Nikhila Raj are prosecuting the case.  The Justice Department’s Office of International Affairs provided assistance in this case.

The commodities case is being investigated by the FBI’s New York Field Office and is being handled by the Fraud Section.  Deputy Chief Brian R. Young, Assistant Chief Avi Perry, and Trial Attorney Leslie S. Garthwaite of the Fraud Section are prosecuting the case.

E.D.N.Y. Docket No. 20-CR-584 (RPK)

The United States has filed a civil complaint in federal court in Brooklyn seeking damages and penalties against three individuals and multiple companies alleged to have engaged in a wide-ranging mortgage fraud scheme to defraud the government.  The complaint, unsealed this afternoon by United States District Judge Margo K. Brodie, alleges that Iskyo Aronov, Ron Borovinsky, Michael Konstantinovskiy, and companies that they owned or controlled, engaged in fraudulent short sales of residential properties insured by the Federal Housing Administration (FHA) of the United States Department of Housing and Urban Development (HUD).  The suit is brought pursuant to the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). 

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Christina Scaringi, Special Agent-in-Charge, U.S. Department of Housing and Urban Development, Office of the Inspector General, Northeast Region (HUD-OIG), and Robert Manchak, Special Agent-in-Charge, Federal Housing Finance Agency, Office of Inspector General, Northeast Region (FHFA-OIG), announced the filing.   

Pursuant to HUD’s Pre-Foreclosure Sale Program, qualifying homeowners with defaulted, FHA-insured mortgages may sell their properties in a “short sale” for less than the balance of the mortgage if the sale is for the fair market value of the property.  If a homeowner obtains approval for a short sale, the lender releases the mortgage after the short sale and submits an FHA insurance claim to HUD to cover the outstanding mortgage balance net of the short sale proceeds, plus approved costs and interest.  HUD, in turn, pays the lender’s claim from federal funds.

Aronov was the founder, Chief Executive Officer and President of defendants My Ideal Property Inc., My Ideal Property Group LLC and MIP Management Inc., and also controlled other affiliated corporate entities that he allegedly established to help him fraudulently acquire residential properties.  Borovinsky identified himself as a co-founder with Aronov of My Ideal Property.  Konstantinovskiy worked as an agent for My Ideal Property where he allegedly conspired with others to fraudulently obtain properties. 

As alleged in the complaint, from at least 2013 through 2016, the defendants defrauded HUD by manipulating the short sale process to acquire residential properties from numerous distressed homeowners for below-fair market value prices in non-arm’s-length transactions.  The individual defendants used various corporate entities in furtherance of the fraudulent scheme.  In the process, defendants made a host of material misrepresentations in critical transaction documents.  As a result, defendants not only acquired the properties for below-fair market value prices, but obtained broker fees in the transactions and induced lenders to release the FHA-insured mortgages at a loss.  In turn, HUD paid the lenders’ claims for FHA insurance from federal funds.  These payments by HUD were artificially inflated as a result of the defendants’ fraudulent conduct.    

“As alleged, these defendants fraudulently obtained homes at depressed prices at the expense of a taxpayer-funded program designed to assist borrowers seeking the American Dream of home ownership,” stated Acting U.S. Attorney Seth DuCharme.  “This Office is committed to protecting the integrity of the FHA insurance program from those who try to enrich themselves through predatory mortgage fraud schemes.”

“The defendants allegedly engaged in a scheme of wholesale deception when they provided false, misleading, and incomplete information to lending institutions, homeowners, and the Federal Housing Administration (FHA) causing millions of dollars in damages to the FHA, which typically results in higher premiums being charged to future first-time homeowners.  In addition, the artificial devaluation of residential properties will slow the recovery of market values at a time of economic challenge when affordable housing is at a premium,” stated HUD-OIG Special Agent-in-Charge Scaringi.

“The Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG) is committed to holding accountable those who waste, steal, or abuse the resources of the Government-Sponsored Enterprises regulated by FHFA.  We are proud to have partnered with the U.S. Attorney’s Office for the Eastern District of New York in this case,” stated FHFA-OIG Special Agent-in-Charge Manchak.

The government’s complaint intervenes in a lawsuit originally brought by under the qui tam provisions of the FCA.  Under the FCA, private citizens with knowledge of fraud against the government can bring a lawsuit on behalf of the United States and share in the recovery.  The act also permits the government to intervene in such actions, as the government has done in this case.  The government’s case is being handled by Assistant United States Attorney Michael J. Castiglione, with assistance from Affirmative Civil Enforcement Auditor Michael Gambrell.

The Defendants:

ISKYO ARONOV (also known as “Isaac Aronov”)
Middle Village, New York

RON BOROVINSKY
Hollis Hills, New York

MICHAEL KONSTANTIOVSKI
Roslyn Heights, New York

175 VERNON AVE. INC.

308 LINDE ST. LLC

725 MANAGEMENT LLC

1021 B HOLDINGS LLC

1083 LAFAYETTE AVE. LLC

1178 GATES AVE. INC.

2320 BAEUMONT AVE UNIT 3D LLC

1S8C HOLDINGS LLC

AG2 EQUITIES, INC.

ARBIE MANAGEMENT INC.

BEDSTUY GROUP LLC

BERT HOLDINGS LLC

BNE MANAGEMENT LLC

ETUY EQUITIES LLC

IA INVESTORS LLC

IJ DEVELOPMENT LLC

LL FUND INC.

LL ORGANIZATION INC.

MI 1 HOLDINGS LLC

MIP MANAGEMENT INC.

MY IDEAL PROPERTY GROUP LLC

MY IDEAL PROPERTY ROCKAWAY BLVD. LLC

NATIONAL HOMEOWNERS ASSISTANCE INC.

PHASE 2 DEVELOPMENT LLC

PIM EQUITIES INC.

SETTLE NY CORP

ZOR EQUITIES LLC

ZT EQUITIES LLC

E.D.N.Y. Docket No. 16-CV-4853 (MKB)

Earlier today in federal court in Brooklyn, Ticketmaster L.L.C. (Ticketmaster or the Company) agreed to pay a $10 million fine to resolve charges that it repeatedly accessed without authorization the computer systems of a competitor.  The fine is part of a deferred prosecution agreement that Ticketmaster has entered with the United States Attorney’s Office for the Eastern District of New York to resolve a five-count criminal information filed today charging computer intrusion and fraud offenses.  Previously, on October 18, 2019, Zeeshan Zaidi, the former head of Ticketmaster’s Artist Services division, pled guilty in a related case to conspiring to commit computer intrusions and wire fraud based on his participation in the same scheme.  Both cases are assigned to U.S. District Judge Margo K. Brodie.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge of the Federal Bureau of Investigation’s New York Field Office, made the announcement.

“Ticketmaster employees repeatedly – and illegally – accessed a competitor’s computers without authorization using stolen passwords to unlawfully collect business intelligence,” stated Acting U.S. Attorney DuCharme.  “Further, Ticketmaster’s employees brazenly held a division-wide ‘summit’ at which the stolen passwords were used to access the victim company’s computers, as if that were an appropriate business tactic.  Today’s resolution demonstrates that any company that obtains a competitor’s confidential information for commercial advantage, without authority or permission, should expect to be held accountable in federal court.”

"When employees walk out of one company and into another, it's illegal for them to take proprietary information with them. Ticketmaster used stolen information to gain an advantage over its competition, and then promoted the employees who broke the law. This investigation is a perfect example of why these laws exist - to protect consumers from being cheated in what should be a fair market place,” stated FBI Assistant Director-in-Charge Sweeney.

The Scheme to “Choke Off” the Victim Company

According to Ticketmaster’s admissions and publicly filed court documents, Ticketmaster, a wholly owned subsidiary of Live Nation Entertainment, Inc. (Live Nation), was primarily engaged in the business of selling and distributing tickets to events and concerts.  The victim company offered artists the ability to sell presale tickets – sold in advance of general ticket sales – on an online ticketing platform.  It also offered artists an Artist Toolbox (the Toolbox), which was a password-protected app that provided real-time data about tickets sold through the victim company. 

Instrumental to the criminal scheme was Coconspirator-1, a former senior employee of the victim company, who worked in the company’s Brooklyn, New York offices from approximately May 2010 to July 2012.  In approximately July 2012, Coconspirator-1 signed a separation agreement with the victim company, in which he agreed to maintain the confidentiality of that company’s confidential information.  He then joined Live Nation in approximately August 2013.

In November 2013, while employed by Live Nation, Coconspirator-1 shared with Zaidi and another Ticketmaster employee the URLs for draft ticketing web pages that the victim company had built for an artist, but had not disseminated to the public.  In response to a Ticketmaster executive explaining that the goal was to “choke off [victim company]” and “steal back one of [victim company]’s signature clients,” Coconspirator-1 offered that Ticketmaster could “cut [victim company] off at the knees” if they could win back presale ticketing business for a second major artist that was a client of the victim company.

Ticketmaster’s Intrusions Into the Victim Company’s Password-Protected Artist Toolboxes

In January 2014, Coconspirator-1 emailed Zaidi and a second Ticketmaster executive multiple sets of usernames and passwords for Toolboxes.  Coconspirator-1 encouraged the executives to “screen-grab the hell out of the system,” but also warned, “I must stress that as this is access to a live [victim company] tool I would be careful in what you click on as it would be best not [to] giveaway that we are snooping around.”  (Emphasis in original.)  The information from the Toolboxes was then used to prepare a presentation for other senior executives that was intended to “benchmark” Ticketmaster’s offerings against those of the victim company. 

In early May 2014, a senior executive of Live Nation (Corporate Officer-1) asked Zaidi and others how Ticketmaster’s presale online offering compared with the Toolbox.  Coconspirator-1 was then asked to “do a screenshare/demo” at an upcoming “Artist Services Summit.”  Coconspirator-1 agreed to “pull together a list of the log-ins and URL’s that I still have access to for this so I can give the team as much insight as possible.”  At least 14 Live Nation and Ticketmaster employees attended the Artist Services Summit, in San Francisco.  There, in front of those employees, Coconspirator-1 used a username and password he had retained from his employment at the victim company to log in to a Toolbox, and provided a demonstration.  Coconspirator-1 later also provided Zaidi and other Ticketmaster executives with internal and confidential financial documents he had retained from his employment at the victim company.

In January 2015, Coconspirator-1 was transferred to the Artist Services division, promoted to Director of Client Relations, and given a raise.  Following the promotion, Coconspirator-1 emailed another Artist Services employee, “Now we can really start to bring down the hammer on [Victim Company].”  Ticketmaster employees continued to access password-protected victim company Toolboxes through December 2015.

Ticketmaster’s Surveillance of the Victim Company’s Draft Ticketing Web Pages

Between approximately July 2014 and June 2015, Coconspirator-1 and others monitored draft ticketing web pages created by the victim company.  Although these pages were not password-protected, they were not indexed in search engines, and therefore could not be located without determining the exact URLs, which included a series of numbers.  Until the victim company or artist publicly disseminated a URL, the victim company intended to restrict access to itself and the artist.

After joining Live Nation, Coconspirator-1 explained to Zaidi and others how the “store ID” numbers in the URLs were numbered sequentially, enabling Ticketmaster employees to monitor new pages and to learn which artists planned to use the victim company to sell tickets.  Coconspirator-1 used this information to search for new victim company ticketing web pages, and sent the URLs to Ticketmaster executives.  In or about January 2015, a Ticketmaster employee was assigned to learn about this system from Coconspirator-1, and maintained a spreadsheet listing every victim company ticketing web page that could be located, so that Ticketmaster could identify the victim company’s clients and attempt to dissuade them from selling tickets through the victim company.  Zaidi explained that “we’re not supposed to tip anyone off that we have this view into [the victim company’s] activities.” 

The Deferred Prosecution Agreement and Criminal Information

Under the terms of the deferred prosecution agreement, Ticketmaster will pay a criminal penalty of $10 million and will maintain a compliance and ethics program designed to prevent and detect violations of the Computer Fraud and Abuse Act and other applicable laws, and to prevent the unauthorized and unlawful acquisition of confidential information belonging to its competitors.  Ticketmaster will also report to the United States Attorney’s Office annually during the three-year term of the agreement regarding these compliance measures.  If the Company breaches the agreement, it will be subject to prosecution for the charges in the criminal information that was filed today, charging the Company with one count of conspiracy to commit computer intrusions, one count of computer intrusion for commercial advantage, one count of computer intrusion in furtherance of fraud, one count of wire fraud conspiracy and one count of wire fraud.

The investigation is being conducted by the FBI’s New York Field Office.  The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Allon Lifshitz, Craig R. Heeren and Ian C. Richardson are in charge of the prosecution. 

The Defendants:

TICKETMASTER L.L.C.

E.D.N.Y. Docket No.  20-CR-563 (MKB)

ZEESHAN ZAIDI
Age:  46
New York, New York

E.D.N.Y. Docket No. 19-CR-450 (MKB)

Earlier today, at the federal courthouse in Brooklyn, Gregory Altieri pleaded guilty to wire fraud for running a two-year $200 million Ponzi scheme based on false statements to investors about inflated returns for nonexistent wholesale jewelry deals.  As part of the plea, Altieri also admitted to committing securities fraud in connection with the scheme.  When sentenced, Altieri faces up to 20 years in prison.  Today’s proceeding took place before United States District Judge Brian M. Cogan.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, announced the guilty plea. 

“With today’s guilty plea, Altieri is held accountable for duping dozens of investors, including retirees living off their pensions,” stated Acting United States Attorney DuCharme.  “The defendant’s lies have caught up to him and he will now face the consequences of his fraudulent scheme.”  Mr. DuCharme expressed his grateful appreciation to the Federal Bureau of Investigation, New York Field Office, for its exemplary work on the case, and to the Securities and Exchange Commission, New York Regional Office, for their assistance.

Beginning in August 2017, Altieri solicited between $75 million to $85 million in investments in his entity, LNA Associates, from over 80 investors located in Queens, Staten Island, Long Island and elsewhere.  Altieri told investors that their money would be used to purchase jewelry at “closeout” prices, which would then be resold at a high profit yielding returns on those investments of between 30 and 70 percent in a matter of months.  While Altieri initially purchased some jewelry with investors’ money, since approximately May 2018, he used money from new investors to pay earlier investors, representing to the latter group that they were receiving returns on their investments.  These purported “returns” were used by Altieri to convince the earlier investors to keep their money with LNA Associates by “rolling over” their funds into new investments based on false promises to use this money to purchase additional jewelry.  By January 2020, when Altieri stopped making payments to investors, he owed them approximately $200 million based on the falsely inflated promised returns.   

The government’s case is being handled by the Office’s Business & Securities Fraud Section.  Assistant United States Attorneys Andrey Spektor and Lindsay K. Gerdes are in charge of the prosecution, assisted by Assistant United States Attorney Brian D. Morris of the Office’s Asset Forfeiture Unit and by a Special Agent of the Office’s Business & Securities Fraud Section. 

The Defendant:

GREGORY ALTIERI
Age:  53
Melville, New York

E.D.N.Y. Docket No. 20-CR-249 (BMC)

The owners of over a dozen New York-area pharmacies were charged in an indictment unsealed today for their roles in a $30 million health care fraud and money laundering scheme, in which they exploited emergency codes and edits in the Medicare system that went into effect due to the COVID-19 pandemic in order to submit fraudulent claims for expensive cancer drugs that were never provided, ordered, or authorized by medical professionals. 

Peter Khaim, 40, and Arkadiy Khaimov, 37, both of Forest Hills, New York, each were charged with one count of conspiracy to commit health care fraud and wire fraud, and one count of conspiracy to commit money laundering.  Khaim was separately charged with two counts of concealment money laundering and one count of aggravated identity theft.  Khaimov was separately charged with two counts of concealment money laundering.

“These defendants allegedly lined their own pockets by exploiting Medicare flexibilities that were designed to ensure that patients obtained access to needed medications during the COVID-19 crisis,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.  “Together with our law enforcement partners, the Criminal Division is working to aggressively identify, investigate, and prosecute scammers who seek to take advantage of the COVID-19 crisis to defraud our public health care programs.”

“As alleged in the indictment, the defendants manipulated information in over a dozen pharmacies to defraud the Medicare program, including by taking advantage of systems that were intended to assist patients during the COVID-19 pandemic, and then went to great lengths to hide their ill-gotten gains through a network of sham companies,” said Acting U.S. Attorney Set D. DuCharme of the Eastern District of New York.  “This office and our law enforcement partners are committed to holding accountable those who seek to enrich themselves at the expense of vital taxpayer-funded health care programs upon which so many rely.”

“We allege Mr. Khaim and Khaimov used the COVID-19 pandemic as cover to exploit changes in the Medicare system,” said Acting Director in Charge William F. Sweeney Jr of the FBI’s New York Field Office.  “The changes to this program, funded by taxpayers, were put in place to help fellow citizens obtain needed medications during the pandemic, not line the pockets of fraudsters.  Those who attempt to illegally profit from our public funded healthcare programs should remember taxpayers also fund courts and jails, and behavior like the type announced today will be met with swift action from the FBI and our law enforcement partners.  If you are aware of frauds like the one announced today, please contact us at 1-800-CALL-FBI.”

“Fraudsters who target the Federal health care system attempt to undermine the integrity of programs that serve millions of individuals.  When they leverage a public health emergency to perpetrate schemes, their wanton disregard for the programs and beneficiaries is glaringly clear,” said Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “We are responding aggressively with our law enforcement partners to pursue bad actors and to warn the public about these ongoing scams.”

“The defendants allegedly carried out a $30 million health care fraud and money laundering scheme, siphoning funds meant for patients during the COVID-19 pandemic,” said Special Agent in Charge Jonathan D. Larsen of IRS-Criminal Investigation (IRS-CI). “While Americans across the country are in dire need of medical and financial assistance, the defendants allegedly used the stolen proceeds to purchase real estate and luxury items. IRS-CI and our law enforcement partners will continue to work tirelessly to expose COVID-19 schemes and bring those responsible to justice.”

“This indictment describes allegations of crimes that are especially egregious and caused significant harm to the programs designed to protect the most medically vulnerable, jeopardizing the health of our Medicare system and then using our nation’s financial system to launder proceeds of the fraud,” said Special Agent in Charge Patricia Tarasca of the Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG).  “We appreciate the cooperation of our fellow law enforcement partners as we work to identify and investigate fraud of this type.”

According to the indictment, the defendants used COVID-19 emergency override billing codes in order to submit fraudulent claims to Medicare, for which they were allegedly paid over $30 million for expensive cancer medication Targretin Gel 1% that, in fact, never was purchased by the pharmacies, prescribed by physicians, or dispensed to patients, often during periods when pharmacies were non-operational, and using doctors’ names on prescriptions without their permission. 

The indictment alleges that the defendants acquired control over dozens of New York pharmacies by paying others to pose as the owners of the pharmacies and hiring pharmacists to pretend to be supervising pharmacists at the pharmacies, for the purpose of obtaining pharmacy licenses and insurance plan credentialing.  As the effects of the COVID-19 pandemic began to be felt in the United States, the defendants used the COVID-19 pandemic as an opportunity to capitalize on a national emergency for their own financial gain by using the COVID-19 “emergency override” billing codes to submit fraudulent claims for Targretin Gel 1%, which has an average wholesale price of approximately $34,000 for each 60 gram tube. 

The indictment also alleges that, with the proceeds of the fraud, the defendants engaged in a complex money laundering conspiracy where they created sham pharmacy wholesale companies, which they named after pre-existing pharmacy wholesalers, and fabricated invoices to make it appear that funds transferred from the pharmacies to the sham pharmacy wholesale companies  were for legitimate pharmaceutical drug purchases. 

In the first phase of the money laundering conspiracy, the defendants conspired with an international money launderer who arranged for funds to be wired from the sham pharmacy wholesale companies to companies in China for distribution to individuals in Uzbekistan.  In exchange, the defendants received cash provided by members of the Uzbekistani immigrant community to an unlicensed money transfer business for remittance to their relatives in Uzbekistan, minus a commission that was deducted by the money launderer. 

In the second phase of the money laundering conspiracy, when the amount of fraudulent proceeds exceeded the amount of cash available in the Uzbekistani immigrant community, the defendants directed the international money launderer to transfer funds back from the sham wholesale companies to the defendants, their relatives, or their designess, in the form of certified cashier’s checks and bags of cash that were dropped at their house in the middle of the night.  The defendants used the proceeds of the scheme to purchase real estate and other luxury items.

A federal criminal indictment is merely an accusation.  Defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

HHS-OIG’s New York Field Office; the FBI’s New York Field Office; the IRS-CI’s New York Field Office; and the FDIC-OIG investigated the case.  Assistant Chief Jacob Foster of the Criminal Division’s Fraud Section’s National Rapid Response Strike Force and Trial Attorney Andrew Estes and Assistant Chief Brendan Stewart of the Fraud Section’s Brooklyn Strike Force are prosecuting the case.  Former Fraud Section Trial Attorney Patrick Mott previously worked on the investigation. 

The Fraud Section leads the Health Care Fraud Strike Force. Since its inception in March 2007, the Health Care Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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.

BROOKLYN, NY – An indictment was unsealed in federal court in Brooklyn today charging the two owners of over a dozen pharmacies in New York City and on Long Island, for their roles in a $30 million health care fraud and money laundering scheme in which they exploited emergency codes and edits in the Medicare system that went into effect due to the COVID-19 pandemic in order to submit fraudulent claims for expensive cancer drugs that were never provided, ordered or authorized by medical professionals.  Peter Khaim and Arkadiy Khaimov are charged with one count of conspiracy to commit health care fraud and wire fraud, and one count of conspiracy to commit money laundering.  Khaim was separately charged with two counts of concealment money laundering and one count of aggravated identity theft.  Khaimov was separately charged with two counts of concealment money laundering. The defendants were arrested this morning and will be arraigned this afternoon before Magistrate Judge Vera M. Scanlon.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York; Brian 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, Health and Human Services-Office of Inspector General, New York Region (HHS-OIG); Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI); and Patricia Tarasca, Special Agent-in-Charge, Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG), announced the arrests and indictment.

“As alleged in the indictment, the defendants manipulated information in over a dozen pharmacies to defraud the Medicare program, including by taking advantage of systems that were intended to assist patients during the COVID-19 pandemic, and then went to great lengths to hide their ill-gotten gains through a network of sham companies,” stated Acting United States Attorney DuCharme.  “This Office and our law enforcement partners are committed to holding accountable those who seek to enrich themselves at the expense of vital taxpayer-funded health care programs upon which so many rely.”

“These defendants allegedly lined their own pockets by exploiting Medicare flexibilities that were designed to ensure that patients obtained access to needed medications during the COVID-19 crisis,” stated Acting Assistant Attorney General  Rabbitt.  “Together with our law enforcement partners, the Criminal Division is working to aggressively identify, investigate and prosecute scammers who seek to take advantage of the COVID-19 crisis to defraud our public health care programs.”

“We allege Mr. Khaim and Mr. Khaimov used the COVID-19 pandemic as cover to exploit changes in the Medicare system,” stated FBI Assistant Director-in-Charge Sweeney.  “The changes to this program, funded by taxpayers, were put in place to help fellow citizens obtain needed medications during the pandemic, not line the pockets of fraudsters.  Those who attempt to illegally profit from our public funded healthcare programs should remember that taxpayers also fund courts and jails, and behavior like the type announced today will be met with swift action from the FBI and our law enforcement partners.  If you are aware of frauds like the one announced today, please contact us at 1-800-CALL-FBI.”

“Fraudsters who target the Federal health care system attempt to undermine the integrity of programs that serve millions of individuals.  When they leverage a public health emergency to perpetrate schemes, their wanton disregard for the programs and beneficiaries is glaringly clear,” stated HHS-OIG Special Agent-in-Charge Lampert.  “We are responding aggressively with our law enforcement partners to pursue bad actors and to warn the public about these ongoing scams.”

“The defendants allegedly carried out a $30 million health care fraud and money laundering scheme, siphoning funds meant for patients during the COVID-19 pandemic,” stated IRS-CI Special Agent-in-Charge Larsen. “While Americans across the country are in dire need of medical and financial assistance, the defendants allegedly used the stolen proceeds to purchase real estate and luxury items. IRS-CI and our law enforcement partners will continue to work tirelessly to expose COVID-19 schemes and bring those responsible to justice.”

“This indictment describes allegations of crimes that are especially egregious and caused significant harm to the programs designed to protect the most medically vulnerable, jeopardizing the health of our Medicare system and then using our nation’s financial system to launder proceeds of the fraud,” stated FDIC-OIG Special Agent-in-Charge Tarasca.  “We appreciate the cooperation of our fellow law enforcement partners as we work to identify and investigate fraud of this type.”

According to the indictment, the defendants used COVID-19 emergency override billing codes in order to submit fraudulent claims to Medicare, for which they were paid over $30 million for cancer medication Targretin Gel 1% including for claims where the medication never was purchased by the pharmacies, prescribed by physicians or dispensed to patients – often during periods when pharmacies were non-operational – and using doctors’ names on prescriptions without their permission.  The defendants allegedly acquired control over more than a dozen New York pharmacies by paying others to pose as the owners of the pharmacies and hiring pharmacists to pretend to be supervising pharmacists at the pharmacies for the purpose of obtaining pharmacy licenses.  Targretin Gel 1% has an average wholesale price of approximately $34,000 for each 60 gram tube. 

The indictment also alleges that with the proceeds of the fraud, the defendants engaged in a money laundering conspiracy by creating sham pharmacy wholesale companies which they named after pre-existing pharmacy wholesalers, and fabricated references to invoices to make it appear that funds transferred from the pharmacies to the sham pharmacy wholesale companies were for legitimate pharmaceutical drug purchases.  In the first phase of this conspiracy, the defendants conspired with an international money launderer who arranged for funds to be wired from the sham pharmacy wholesale companies to companies in China for distribution to individuals in Uzbekistan.  In exchange, the defendants received cash from an unlicensed money transfer business, minus a commission that was deducted by the money launderer.  In the second phase of this conspiracy, when the fraudulent proceeds exceeded the amount of cash available, the defendants caused others to transfer funds back from the sham wholesale companies to the defendants, their relatives, or their designees, in the form of certified cashier’s checks and cash that was dropped off at their residences in the middle of the night.  The defendants used the proceeds of the scheme to purchase real estate and luxury items.

This case was investigated by HHS-OIG’s New York Field Office, the FBI’s New York Field Office, the IRS-CI’s New York Field Office and the FDIC.  It is being handled by the Medicare Fraud Strike Force under the supervision of the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section.  Assistant Chief Jacob Foster of the Criminal Division’s Fraud Section’s National Rapid Response Strike Force and Trial Attorney Andrew Estes of the Fraud Section’s Brooklyn Strike Force are in charge of the prosecution.  Former Fraud Section Trial Attorney Patrick Mott previously worked on the investigation.

The Fraud Section leads the Health Care Fraud Strike Force.  Since its inception in March 2007, the Health Care Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The Defendants:

PETER KHAIM
Age:  40
Forest Hills, New York

ARKADIY KHAIMOV
Age:  37
Forest Hills, New York

Eastern District Docket No.: 20-CR-580 (AMD)

A criminal complaint was unsealed today in federal court in Brooklyn charging Leon Miles with wire fraud in connection with his scheme to obtain over $1.9 million from the Paycheck Protection Program (PPP) which Congress created as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Miles 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; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Amaleka McCall-Brathwaite, Special Agent-in-Charge, Office of the Inspector General of the U.S. Small Business Administration, Eastern Region Office (SBA-OIG); and Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the arrest and charge.

“At a time when so many are suffering from the devastating economic effects of the ongoing pandemic, Miles allegedly enriched himself at the taxpayers’ expense, stealing funds that were intended by Congress to keep businesses afloat and workers on payroll,” stated Acting United States Attorney DuCharme.  “Together with our agency partners, this Office will bring to justice those who take advantage of a global crisis to commit such crimes.”

“We continue to see people taking advantage of the Paycheck Protection Program, which was created to provide emergency financial assistance to businesses who need it during the pandemic,” stated FBI Assistant Director-in-Charge Sweeney.  “ This type of criminal behavior is a slap in the face to all of those who play by the rules, especially while so many in our communities are suffering from the financial fallout of the pandemic. The FBI will continue to aggressively pursue those who are using the money from this taxpayer funded economic relief program to pad their own pockets.  If you know of similar instances of fraud, please call us at 1-800-CALL-FBI.   

“Fraudsters that have pursued personal gain at the expense of taxpayers will be brought to justice,” stated SBA OIG Special Agent-in-Charge McCall-Brathwaite.  “Greed has no place in SBA’s programs that are intended to provide assistance to the nation’s small businesses struggling with the pandemic challenges.  I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”

“While most Americans are struggling during this pandemic, we see criminals over and over again trying to live out their dreams of a lavish lifestyle,” stated IRS-CI Special Agent-in-Charge Larsen. “Miles allegedly submitted a PPP loan application for nearly $2 million while claiming false information. He allegedly used these funds, in part, to purchase luxury vehicles. These types of actions hurt our people, our government and our country. IRS Criminal Investigation and our law enforcement partners will continue collaborating until every misappropriated PPP loan is accounted for and criminals are brought to justice.”

The CARES Act is a federal law enacted on March 29, 2020 to provide emergency financial assistance in connection with economic effects of the COVID-19 pandemic.  One source of relief provided by the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP.  The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for specified expenses, including payroll costs, interest on mortgages, rent and utilities.  The PPP provided for forgiveness of the loan if recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs.

As alleged in the complaint, in May 2020, Miles submitted an application for a $1,904,593.00 PPP loan on behalf of a limited liability company he owns in Brooklyn, New York, falsely claiming that the company had 50 employees and a total average monthly payroll of $761,838.00.  In support of these claims, Miles submitted fraudulent personal and business tax returns and tax forms that were never filed with the IRS.  In fact, he reported to the IRS no taxable income during the relevant period, and his company filed no tax returns and reported no wages paid to employees.  The loan proceeds were disbursed to the defendant’s personal savings account, and within days he had withdrawn hundreds of thousands of dollars, a portion of which he used to purchase a 2020 Bentley Continental for approximately $250,000 and a 2020 Cadillac Escalade for approximately $100,000.

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

The government’s case is being prosecuted by Assistant United States Attorneys Robert M. Pollack with assistance from Assistant United States Attorney Brian D. Morris of the Office’s Asset Forfeiture Section.

The Defendant:

LEON MILES
Age:  51
Brooklyn, New York

E.D.N.Y. Docket No. 20-MJ-1234

A complaint and arrest warrant were unsealed today in federal court in Brooklyn charging Xinjiang Jin, also known as “Julien Jin,” with conspiracy to commit interstate harassment and unlawful conspiracy to transfer a means of identification.  Jin, an employee of a U.S.-based telecommunications company (Company-1) who was based in the People’s Republic of China (PRC), allegedly participated in a scheme to disrupt a series of meetings in May and June 2020 held to commemorate the June 4, 1989 Tiananmen Square massacre in the PRC.  The meetings were conducted using a videoconferencing program provided by Company-1, and were organized and hosted by U.S-based individuals, including individuals residing in the Eastern District of New York.  Jin is not in U.S. custody.

“No company with significant business interests in China is immune from the coercive power of the Chinese Communist Party,” said Assistant Attorney General for National Security John C. Demers.  “The Chinese Communist Party will use those within its reach to sap the tree of liberty, stifling free speech in China, the United States and elsewhere about the Party’s repression of the Chinese people.  For companies with operations in China, like that here, this reality may mean executives being coopted to further repressive activity at odds with the values that have allowed that company to flourish here.”

“The FBI remains committed to protecting the exercise of free speech for all Americans.  As this complaint alleges, that freedom was directly infringed upon by the pernicious activities of Communist China’s Intelligence Services, in support of a regime that neither reflects nor upholds our democratic values,” said FBI Director Christopher Wray. “Americans should understand that the Chinese Government will not hesitate to exploit companies operating in China to further their international agenda, including repression of free speech.” 

“The allegations in the complaint lay bare the Faustian bargain that the PRC government demands of U.S. technology companies doing business within the PRC’s borders, and the insider threat that those companies face from their own employees in the PRC,” said Acting United States Attorney Seth D. DuCharme.  “As alleged, Jin worked closely with the PRC government and members of PRC intelligence services to help the PRC government silence the political and religious speech of users of the platform of a U.S. technology company.  Jin willingly committed crimes, and sought to mislead others at the company, to help PRC authorities censor and punish U.S. users’ core political speech merely for exercising their rights to free expression.  The charges announced today make clear that employees working in the PRC for U.S. technology companies make those companies—and their users—vulnerable to the malign influence of the PRC government.  This Office will continue working tirelessly to protect against threats to the free expression of political views and religious beliefs, regardless whether those threats come from inside or outside the United States.”

Mr. DuCharme and Mr. Demers also extended their thanks and appreciation to Company-1 for its cooperation in the government’s ongoing investigation.

According to the complaint, Jin served as Company-1’s primary liaison with PRC law enforcement and intelligence services.  In that capacity, he regularly responded to requests from the PRC government for information and to terminate video meetings hosted on Company-1’s video communications platform.  Part of Jin’s duties included providing information to the PRC government about Company-1’s users and meetings, and in some cases he provided information – such as Internet Protocol addresses, names and email addresses – of users located outside of the PRC.  Jin was also responsible for proactively monitoring Company-1’s video communications platform for what the PRC government considers to be “illegal” meetings to discuss political and religious subjects unacceptable to the Chinese Communist Party (CCP) and the PRC government.

As alleged in the complaint, between January 2019 to the present, Jin and others conspired to use Company-1’s systems in the United States to censor the political and religious speech of individuals located in the United States and around the world at the direction and under the control of officials of the PRC government.  Among other actions taken at the direction of the PRC government, Jin and others terminated at least four video meetings hosted on Company-1’s networks commemorating the thirty-first anniversary of the Tiananmen Square massacre, most of which were organized and attended by U.S.-based participants, such as dissidents who had participated in and survived the 1989 protests.  Some of the participants who were unable to attend these meetings were Company-1 customers in Queens and Long Island, New York who had purchased subscriptions to Company-1’s services, and therefore entered into service agreements with Company-1 governed by its Terms of Service (TOS). 

Jin, officials from the PRC government and others allegedly collaborated to identify meeting participants and to disrupt meetings hosted on Company-1’s U.S. servers, at times creating pretextual reasons to justify their actions to other employees and executives of Company-1, as well as Company-1’s users themselves.  In particular, in May and June 2020, Jin and others acted to disrupt meetings held on the Company-1 platform to discuss politically sensitive topics unacceptable to the PRC government by infiltrating the meetings to gather evidence about purported misconduct occurring in those meetings.  In fact, there was no misconduct; Jin and his co-conspirators fabricated evidence of TOS violations to provide justification for terminating the meetings, as well as certain participants’ accounts.  Jin then tasked a high-ranking employee of Company-1 in the United States to effect the termination of meetings and the suspension and cancellation of user accounts.

As detailed in the complaint, Jin’s co-conspirators created fake email accounts and Company-1 accounts in the names of others, including PRC political dissidents, to fabricate evidence that the hosts of and participants in the meetings to commemorate the Tiananmen Square massacre were supporting terrorist organizations, inciting violence or distributing child pornography.  The fabricated evidence falsely asserted that the meetings included discussions of child abuse or exploitation, terrorism, racism or incitements to violence, and sometimes included screenshots of the purported participants’ user profiles featuring, for example, a masked person holding a flag resembling that of the Islamic State terrorist group.  Jin used the complaints as evidence to persuade Company-1 executives based in the United States to terminate meetings and suspend or terminate the user accounts of the meeting hosts. 

PRC authorities took advantage of information provided by Jin to retaliate against and intimidate participants residing in the PRC, or PRC-based family members of meeting participants.  PRC authorities temporarily detained at least one person who planned to speak during a commemoration meeting.  In another case, PRC authorities visited family members of a participant in the meetings and directed them to tell the participant to cease speaking out against the PRC government and rather to support socialism and the CCP.

The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted of both charged conspiracies, Jin faces a maximum sentence of ten years in prison. 

The investigation into this matter was conducted by the FBI’s Washington Field Office.  The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant U.S. Attorneys Alexander A. Solomon, Richard M. Tucker, David K. Kessler and Ian C. Richardson 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.

A complaint and arrest warrant were unsealed today in federal court in Brooklyn charging Xinjiang Jin, also known as “Julien Jin,” with conspiracy to commit interstate harassment and unlawful conspiracy to transfer a means of identification.  Jin, an employee of a U.S.-based telecommunications company (Company-1) who was based in the People’s Republic of China (PRC), allegedly participated in a scheme to disrupt a series of meetings in May and June 2020 held to commemorate the June 4, 1989 Tiananmen Square massacre in the PRC.  The meetings were conducted using a videoconferencing program provided by Company-1, and were organized and hosted by U.S-based individuals, including individuals residing in the Eastern District of New York.  Jin is not in U.S. custody.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York; John C. Demers, Assistant Attorney General for National Security; and Christopher Wray, Director, Federal Bureau of Investigation (FBI), announced the charges.

“The allegations in the complaint lay bare the Faustian bargain that the PRC government demands of U.S. technology companies doing business within the PRC’s borders, and the insider threat that those companies face from their own employees in the PRC,” stated Acting United States Attorney DuCharme.  “As alleged, Jin worked closely with the PRC government and members of PRC intelligence services to help the PRC government silence the political and religious speech of users of the platform of a U.S. technology company.  Jin willingly committed crimes, and sought to mislead others at the company, to help PRC authorities censor and punish U.S. users’ core political speech merely for exercising their rights to free expression.  The charges announced today make clear that employees working in the PRC for U.S. technology companies make those companies—and their users—vulnerable to the malign influence of the PRC government.  This Office will continue working tirelessly to protect against threats to the free expression of political views and religious beliefs, regardless whether those threats come from inside or outside the United States.”  Mr. DuCharme and Mr. Demers also extended their thanks and appreciation to Company-1 for its cooperation in the government’s ongoing investigation.

“No company with significant business interests in China is immune from the coercive power of the Chinese Communist Party,” stated Assistant Attorney General Demers.  “The Chinese Communist Party will use those within its reach to sap the tree of liberty, stifling free speech in China, the United States and elsewhere about the Party’s repression of the Chinese people.  For companies with operations in China, like that here, this reality may mean executives being coopted to further repressive activity at odds with the values that have allowed that company to flourish here.”   

“The FBI remains committed to protecting the exercise of free speech for all Americans.  As this complaint alleges, that freedom was directly infringed upon by the pernicious activities of Communist China’s Intelligence Services, in support of a regime that neither reflects nor upholds our democratic values,” stated FBI Director Wray. “Americans should understand that the Chinese Government will not hesitate to exploit companies operating in China to further their international agenda, including repression of free speech.” 

According to the complaint, Jin served as Company-1’s primary liaison with PRC law enforcement and intelligence services.  In that capacity, he regularly responded to requests from the PRC government for information and to terminate video meetings hosted on Company-1’s video communications platform.  Part of Jin’s duties included providing information to the PRC government about Company-1’s users and meetings, and in some cases he provided information – such as Internet Protocol addresses, names and email addresses – of users located outside of the PRC.  Jin was also responsible for proactively monitoring Company-1’s video communications platform for what the PRC government considers to be “illegal” meetings to discuss political and religious subjects unacceptable to the Chinese Communist Party (CCP) and the PRC government.

As alleged in the complaint, between January 2019 to the present, Jin and others conspired to use Company-1’s systems in the United States to censor the political and religious speech of individuals located in the United States and around the world at the direction and under the control of officials of the PRC government.  Among other actions taken at the direction of the PRC government, Jin and others terminated at least four video meetings hosted on Company-1’s networks commemorating the thirty-first anniversary of the Tiananmen Square massacre, most of which were organized and attended by U.S.-based participants, such as dissidents who had participated in and survived the 1989 protests.  Some of the participants who were unable to attend these meetings were Company-1 customers in Queens and Long Island, New York who had purchased subscriptions to Company-1’s services, and therefore entered into service agreements with Company-1 governed by its Terms of Service (TOS). 

Jin, officials from the PRC government and others allegedly collaborated to identify meeting participants and to disrupt meetings hosted on Company-1’s U.S. servers, at times creating pretextual reasons to justify their actions to other employees and executives of Company-1, as well as Company-1’s users themselves.  In particular, in May and June 2020, Jin and others acted to disrupt meetings held on the Company-1 platform to discuss politically sensitive topics unacceptable to the PRC government by infiltrating the meetings to gather evidence about purported misconduct occurring in those meetings.  In fact, there was no misconduct; Jin and his co-conspirators fabricated evidence of TOS violations to provide justification for terminating the meetings, as well as certain participants’ accounts.  Jin then tasked a high-ranking employee of Company-1 in the United States to effect the termination of meetings and the suspension and cancellation of user accounts.

As detailed in the complaint, Jin’s co-conspirators created fake email accounts and Company-1 accounts in the names of others, including PRC political dissidents, to fabricate evidence that the hosts of and participants in the meetings to commemorate the Tiananmen Square massacre were supporting terrorist organizations, inciting violence or distributing child pornography.  The fabricated evidence falsely asserted that the meetings included discussions of child abuse or exploitation, terrorism, racism or incitements to violence, and sometimes included screenshots of the purported participants’ user profiles featuring, for example, a masked person holding a flag resembling that of the Islamic State terrorist group. Jin used the complaints as evidence to persuade Company-1 executives based in the United States to terminate meetings and suspend or terminate the user accounts of the meeting hosts. 

PRC authorities took advantage of information provided by Jin to retaliate against and intimidate participants residing in the PRC, or PRC-based family members of meeting participants.  PRC authorities temporarily detained at least one person who planned to speak during a commemoration meeting.  In another case, PRC authorities visited family members of a participant in the meetings and directed them to tell the participant to cease speaking out against the PRC government and rather to support socialism and the CCP.

The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted of both charged conspiracies, Jin faces a maximum sentence of 10 years in prison. 

The investigation into this matter was conducted by the FBI’s Washington Field Office.  The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Alexander A. Solomon, Richard M. Tucker, David K. Kessler and Ian C. Richardson 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 Defendant:

XINJIANG JIN, also known as “Julien Jin”
Age:  39
Zhejiang Province, People’s Republic of China

E.D.N.Y. Docket No.  20-MJ-1103

A superseding indictment has been unsealed in federal court in Brooklyn charging John Martin, Brandon Daniels, Lamonte Johnson, Shi Zhen Lin and Corey Mobley with conspiring to commit robberies in Queens, Staten Island, Suffolk County and New Jersey, committing and threatening to commit physical violence in furtherance of a May 4, 2019 home-invasion robbery in Little Neck, Queens, and brandishing a firearm during the Queens robbery.  Mobley is also charged with five counts relating to a March 2019 robbery of a drug dealer.  Lin was arrested this afternoon and will be arraigned via videoconference tomorrow before United States District Judge Raymond J. Dearie.  Daniels was arrested on December 8, 2020 and was ordered detained pending trial.  Mobley and Martin, who are in federal custody, were previously arraigned and ordered detained.  Johnson is in state custody and will be arraigned at a later date.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, John B. DeVito, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Office (ATF), and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the charges and arrests.

“As our charges allege, the defendants targeted and terrorized numerous victims at gun point, including a family inside their home in Queens where two of the defendants sexually assaulted a woman,” stated Acting United States Attorney DuCharme.  “With this prosecution, the defendants’ crime spree has been put to an end.  This Office will continue to commit our people and our resources to bringing to justice those who participate in such brutal crimes.”  Mr. DuCharme extended his grateful appreciation to the New York State Department of Corrections and Community Supervision, Office of Special Investigations for its assistance in the investigation.

"These defendants, as alleged, terrorized communities from eastern Long Island to New Jersey. But thanks to the dedication of the men and woman of the ATF/NYPD Joint Robbery Task Force, all five now face life sentences in federal prison,”stated ATF Special Agent-in-Charge DeVito. 

As set forth in the indictment and other court filings, in May 2019 during the commission of a home invasion robbery in Little Neck, Queens, the defendants allegedly held a group of eight women and children at gunpoint.  Mobley and Daniels forced the screaming occupants into a downstairs bedroom, dragging an elderly woman who could not walk and the child she was holding across the floor.  Mobley threatened to kill all of the occupants if they did not reveal where money was in the house, and Mobley and Daniels sexually assaulted one of the victims.  Although the defendants expected to find tens of thousands of dollars in the home, they found only a few thousand dollars that one victim had set aside as a gift to her family.  Mobley and Daniels were later identified by law enforcement through DNA left at the scene.  A substantial portion of the crime was recorded on surveillance cameras located inside and outside the home. 

The Queens robbery was part of a string of robberies and attempted robberies allegedly committed by the defendants over a three-month period from March to May 2019.  Lin’s role was to identify robbery victims for Martin, Mobley and Daniels.  Johnson recruited Lin and Martin to participate in the robberies, with the expectation that he would get a share of the proceeds.

The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted of the charged offenses, the defendants face a maximum sentence of life in prison. 

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 Organized Crime and Gangs Section.  Assistant United States Attorneys Jonathan Siegel and Michael W. Gibaldi are in charge of the prosecution.

The Defendants:

JOHN MARTIN (also known as “Lil John” and “LJ”)
Age:  48
Brooklyn, New York

BRANDON DANIELS
Age:  26
Brooklyn, New York

LAMONTE JOHNSON
Age:  52
Auburn, New York

SHI ZHEN LIN (also known as “Kevin Lin” and “Kev”)
Age:  29
Maspeth, New York

COREY MOBLEY
Age:  50
Brooklyn, New York

E.D.N.Y. Docket No. 19-CR-221 (S-3)

Earlier today, in federal court in Brooklyn, Ingris Coronado pleaded guilty to a criminal information charging her with defrauding her former employer, Southern Queens Park Association (SQPA), a government-funded, Queens-based not-for-profit that provides educational and other social services to young adults.  Today’s plea took place before United States District Judge William F. Kuntz, II.  When sentenced, Coronado faces up to 20 years in prison, as well as forfeiture and a fine of up to $250,000 for submitting false invoices and cashing checks issued in the names of other individuals. 

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 Margaret Garnett, Commissioner, New York City Department of Investigation (DOI), announced the guilty plea.

Since at least 2014, Coronado worked as a Project Manager for SQPA, which received millions of dollars annually in New York City government funding.  According to court filings and facts presented during the plea proceeding, between August 2014 and September 2018, Coronado engaged in a scheme to steal money from SQPA.  Specifically, in her role as the supervisor of an after-school program run by SQPA, Coronado repeatedly falsified time sheets, collected checks issued in the names of more than ten of her supervisees and deposited those checks into her own bank account.  On multiple occasions, Coronado also created false invoices for vendors for SQPA and deposited the resulting payment checks into her personal account.  As a result of her fraudulent conduct, Coronado stole tens of thousands of dollars from SQPA.

“For years, Coronado deceived her employer and abused her position at a not-for-profit organization by stealing funds that were meant to benefit members of the community,” stated Acting United States Attorney DuCharme.  “Today’s guilty plea makes clear that individuals who engage in fraud to satisfy their own greed at the expense of the community they are supposed to be serving will be brought to justice.” 

“Coronado stole money directly from a city-funded, not-for-profit program established to provide services to young adults. Today she’s admitted to her criminal activity and faces a significant jail sentence as a result of her behavior. Let this be a message to others who are currently scamming the system—there are consequences for your actions,” stated FBI Assistant Director-in-Charge Sweeney.

“This defendant falsified timesheets and vendor invoices and pocketed checks issued to employees and vendors, amounting to tens of thousands of dollars – stealing taxpayer funds meant to help residents of southern Queens who rely on this nonprofit's programming. DOI is committed to investigating these damaging crimes that attack our City's charitable organizations and diminish the impact of the City's funding of their programs. We are proud to have partnered with the office of the United States Attorney for the Eastern District of New York and the Federal Bureau of Investigation to hold this defendant accountable for her conduct,” stated DOI Commissioner Garnett.

The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorney Nathan Reilly is in charge of the prosecution. 

The Defendant:

INGRIS CORONADO
Age:  46
Staten Island, New York

E.D.N.Y. Docket No. 20-CR-189 (WFK)

Earlier today, in federal court in Central Islip, a six-count indictment was unsealed charging Dat Tat Ho and Manh Ngoc Nguyen with conspiring to defraud U.S. government agencies and alien smuggling for financial gain, and related crimes.  The defendants were arrested this morning and arraigned this afternoon before United States Magistrate Judge Anne Y. Shields.  Both defendants were ordered detained pending trial.

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); Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI); and Michael C. Mikulka, Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General, New York Region (DOL-OIG), announced the indictment and arrests.

"As alleged, Ho and Nguyen conspired to smuggle aliens into the United States, keep them under the defendants’ control and pay them illegally low wages to work in nail and hair salons,” stated Acting United States Attorney DuCharme.  “As this case demonstrates, we take seriously our responsibility to maintain security at our borders and prosecute those who seek unlawful commercial advantage and financial profit through the exploitation of other human beings.” 

Mr. DuCharme thanked the U.S. Citizenship and Immigration Services (USCIS), U.S. Postal Inspection Service, U.S. Customs and Border Protection, U.S. Attorney’s Office for the Southern District of New York, the New York City Police Department, Nassau County Police Department and Suffolk County Police Department for their valuable assistance during the investigation.

“This case is an example of callous labor trafficking hiding in plain sight.  In what seemed to be an endless scheme, this transnational criminal organization allegedly manipulated the asylum process and profited off the plight of their nail salon employees whom they victimized,” stated HSI Special Agent-in-Charge Fitzhugh. “HSI, through collaboration with its federal, state and local partners, methodically unraveled the vast reach of this enterprise which led to the indictment of these criminals.  It is important for anyone who is a victim of human smuggling to know that these investigations prioritize ensuring the safety of the victims while bringing those responsible to justice.”

“It is reprehensible when others allegedly seek personal financial gain by smuggling persons into the United States and paying them illegally low wages,” stated IRS-CI Special Agent-in-Charge Larsen. “We will continue to work with our law enforcement partners to prevent this abuse and protect the financial integrity of our tax system.”

“Combatting labor trafficking is an important part of the mission of the Department of Labor’s Office of Inspector General. We will continue to work with our law enforcement partners to investigate all forms of labor trafficking,” stated DOL-OIG Special Agent-in-Charge Mikulka.

According to court filings, the defendants owned or managed numerous nail and hair salons in Queens, the Bronx and on Long Island.  Between January 2017 and September 2020, the defendants and others arranged for Vietnamese foreign nationals to enter the United States via illegal border crossings at the U.S. border with Mexico, as well as at other ports of entry.  After the foreign nationals crossed the border, the defendants facilitated their travel to New York to work in their salons at illegally low wages and overstay their transit visas.  The defendants also caused foreign nationals to make false statements to USCIS and submit fraudulent asylum applications to USCIS.  The foreign nationals were housed in residences that the defendants owned or controlled.  

The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, Nguyen and Ho face a minimum of five years’ imprisonment and up to 15 years’ imprisonment.

Assistant United States Attorneys Allen Bode, Charles Rose and Andrew D. Grubin are in charge of the prosecution.  Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division is handling forfeiture matters.

The Defendants:

MANH NGOC NGUYEN (also known as “Peter”)
Age:  44
Hicksville, New York

DAT TAT HO (also known as “Chris”)
Age:  33
Bronx, New York

E.D.N.Y. Docket No. 20-CR-486 (JS)

Earlier today, at the federal courthouse in Central Islip, New York, Gregory Settino pleaded guilty to theft of medical products from his employer, a drug manufacturer in Suffolk County.  When sentenced, Settino faces up to 20 years in prison, restitution to his former employer and a fine of up to $250,000.  Today’s proceeding took place before United States District Judge Joanna Seybert.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and Jeffrey Ebersole, Special Agent-in-Charge, Food and Drug Administration, Office of Criminal Investigations, New York Field Office (FDA-OCI), announced the guilty plea.

“With today’s guilty plea, Settino has been held accountable for stealing from his then-employer thousands of bottles of an injectable drug administered to horses, which he resold to trainers and vets potentially endangering the health of horses at New York racetracks because the stolen drugs were not handled properly,” stated Acting United States Attorney DuCharme.  “This Office will vigorously prosecute those who jeopardized drug safety.”  

“The FDA works to ensure that veterinary drugs are safe and effective so that animals remain healthy.  When drugs are taken out of the legitimate supply chain, there is no longer any assurance that they are safe or effective,” stated FDA-OCI Special Agent-in-Charge Ebersole.  “The FDA remains committed to investigating and bringing to justice those who endanger the health of animals.”

As set forth in court filings and facts admitted in court, Settino was the production supervisor of manufacturing at Luitpold Pharmaceuticals, Inc. in Shirley, New York.  In January 2019, Luitpold was renamed American Regent.  One of the products manufactured at Luitpold and American Regent was Adequan, an injectable equine drug administered to horses with degenerative joint disease and sold throughout the United States.  Between 2012 and January 2020, Settino stole thousands of bottles of Adequan from Luitpold and American Regent valued at over $1 million and sold those drugs to horse trainers and veterinarians at New York racetracks, including Belmont Park, for more than $600,000.  Settino’s conduct potentially endangered the health of horses because the drugs were not maintained, stored or transported in accordance with proper procedures for ensuring the safety, effectiveness and efficacy of the drugs.  At times, Settino transported the drugs in shoeboxes stored in his car.  At all times, the drugs were handled in violation of the FDA regulated supply chain. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorney Charles P. Kelly is in charge of the prosecution.

The Defendant:

GREGORY SETTINO
Age: 58
Bethpage, New York

E.D.N.Y. Docket No. 20-CR-340 (JS)

Vitol Inc. (Vitol), the U.S. affiliate of the Vitol group of companies, which together form one of the largest energy trading firms in the world, has agreed to pay a combined $135 million to resolve the Justice Department’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) and to resolve a parallel investigation in Brazil. 

The resolution arises out of Vitol schemes to pay bribes to officials in Brazil, Ecuador, and Mexico.  Vitol has also agreed to disgorge more than $12.7 million to the Commodity Futures Trading Commission (CFTC) in a related matter and to pay the CFTC a penalty of $16 million related to trading activity not covered by the deferred prosecution agreement with the department. 

“Over a period of 15 years, Vitol paid millions of dollars in bribes to numerous public officials – in three separate countries – to obtain improper competitive advantages that resulted in significant illicit profits for the company,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.  “Today’s coordinated resolution with Brazil, along with our first coordinated FCPA resolution with the CFTC, underscores the department’s resolve to hold companies accountable for their crimes while, at the same time, avoiding unnecessarily duplicative penalties.”

“Vitol paid bribes to government officials in Brazil, Ecuador and Mexico to win lucrative business contracts and obtain competitive advantages to which they were not fairly entitled,” said Acting U.S. Attorney Seth D. DuCharme of the Eastern District of New York.  “The United States Attorney’s Office for the Eastern District of New York will continue to hold accountable companies and individuals that attempt to defy U.S. law to the detriment of honest competitors.” 

“This resolution demonstrates the FBI's commitment to investigate foreign corruption and hold accountable those who circumvent laws for financial gain at the expense of American consumers,” said Assistant Director in Charge Kristi K. Johnson of the FBI’s Los Angeles Field Office. “We'll continue to work with our partners to root out corruption, whether it occurs domestically or abroad, to ensure trust on the international playing field.”

Vitol 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 two counts of conspiracy to violate the anti-bribery provisions of the FCPA.  The case is assigned to Senior U.S. District Judge Eric N. Vitaliano. 

Pursuant to its agreement with the department, Vitol’s total criminal penalty is $135 million.  The department will credit $45 million – approximately one third of the total criminal penalty – against the amount that Vitol will pay to resolve an investigation by the Brazilian Ministério Público Federal for conduct related to the company’s bribery scheme in Brazil.   

As part of the deferred prosecution agreement, Vitol Inc. and Vitol S.A., another company within the Vitol group of companies, have agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals; to enhance their compliance programs; and to report to the department on the implementation of their compliance programs.

According to the company’s admissions and court documents, between 2005 and 2014, Vitol and its co-conspirators paid bribes of more than $8 million to at least four officials at Brazil’s state-owned and controlled oil company Petróleo Brasileiro S.A. – Petrobras (Petrobras).  Vitol paid these bribes in exchange for receiving confidential Petrobras pricing and competitor information.  Vitol concealed the scheme through the use of intermediaries and a fictitious company that facilitated the payments to offshore accounts and, ultimately, to the Petrobras officials.

Vitol also admitted that from 2011 to 2014, it bribed at least five other Petrobras officials in exchange for receiving confidential pricing information that Vitol used to win fuel oil contracts with Petrobras.  During that scheme, a consultant acting on behalf of Vitol engaged in back-channel negotiations with a Houston-based Petrobras official.  The parties would then hold staged negotiations, ultimately settling on the pre-arranged price that allowed for bribes to be paid from Vitol to the Petrobras officials.  Several of the co-conspirators communicated using alias email accounts and code names, including “Batman,” “Tiger,” “Phil Collins,” “Dolphin,” “Popeye,” and “Beb.” 

Vitol also admitted to a second conspiracy to bribe officials in Ecuador and Mexico in order to obtain and retain business in connection with the purchase and sale of oil products.  Between 2015 and July 2020, Vitol agreed to offer and pay more than $2 million in bribes to officials in Ecuador and Mexico.   

In furtherance of this bribery scheme, Vitol and its co-conspirators entered into sham consulting agreements, set up shell companies, created fake invoices for purported consulting services and used alias email accounts to transfer funds to offshore companies involved in the conspiracy – all while knowing that the funds, at least in part, would be used to pay bribes to Ecuadorian and Mexican officials.

In related matters, the department recently unsealed charges against a Houston-based former Petrobras official who received bribes in association with the scheme, and who pleaded guilty to one count of conspiracy to commit money laundering on Feb. 8, 2019, in the Eastern District of New York.  In addition, the department recently unsealed charges against one of the intermediaries involved in the Brazil scheme, who pleaded guilty on Sept. 22, 2017, to one count of conspiracy to violate the FCPA in connection with a related bribery scheme.  Both individuals are awaiting sentencing.  Further, on Sept. 22, 2020, a federal grand jury in the Eastern District of New York returned an indictment against Javier Aguilar, a Vitol trader, for his alleged role in the Ecuador 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 Attorneys Derek J. Ettinger, Jonathan P. Robell, and Clayton P. Solomon, and Assistant U.S. Attorneys Mark E. Bini and Andrey Spektor are prosecuting the case.  The U.S. Marshals Service and Justice Department’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 year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

Vitol Inc. (Vitol), the U.S. affiliate of the Vitol group of companies, which together form one of the largest energy trading firms in the world, has agreed to a combined total criminal penalty of $135 million to resolve bribery charges with law enforcement authorities in the United States and Brazil.  The resolution arises out of Vitol schemes to pay bribes to officials in Brazil, Ecuador, and Mexico.  Vitol has also agreed to disgorge more than $12.7 million to the Commodity Futures Trading Commission (CFTC) in a related matter and to pay the CFTC a penalty of $16 million related to trading activity not covered by the deferred prosecution agreement with the department. The case is assigned to Senior U.S. District Judge Eric N. Vitaliano.   

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 Kristi K. Johnson, Assistant Director-in-Charge, Federal Bureau of Investigation, Los Angeles Field Office (FBI), made the announcement.

“Vitol paid bribes to government officials in Brazil, Ecuador and Mexico to win lucrative business contracts and obtain competitive advantages to which they were not fairly entitled,” stated Acting United States Attorney DuCharme.  “The United States Attorney’s Office for the Eastern District of New York will continue to hold accountable companies and individuals that attempt to defy U.S. law to the detriment of honest competitors.” 

“Over a period of 15 years, Vitol paid millions of dollars in bribes to numerous public officials – in three separate countries – to obtain improper competitive advantages that resulted in significant illicit profits for the company,” said Acting Assistant Attorney General Rabbitt.  “Today’s coordinated resolution with Brazil, along with our first coordinated FCPA resolution with the CFTC, underscores the department’s resolve to hold companies accountable for their crimes while, at the same time, avoiding unnecessarily duplicative penalties.”

“This resolution demonstrates the FBI's commitment to investigate foreign corruption and hold accountable those who circumvent laws for financial gain at the expense of American consumers,” said FBI Assistant Director-in-Charge Johnson. “We'll continue to work with our partners to root out corruption, whether it occurs domestically or abroad, to ensure trust on the international playing field.”

Vitol entered into a deferred prosecution agreement with the government in connection with a criminal information filed today in the Eastern District of New York charging the company with two counts of conspiracy to violate the anti-bribery provisions of the FCPA.  Pursuant to its agreement, Vitol will pay a total criminal penalty to the United States of $135 million.  The Department of Justice will credit $45 million—approximately one third of the total criminal penalty—against the amount that Vitol will pay to resolve an investigation by the Brazilian Ministério Público Federal for conduct related to the company’s bribery scheme in Brazil.   

As part of the deferred prosecution agreement, Vitol Inc. and Vitol S.A., another company within the Vitol group of companies, have agreed to: (i) continue to cooperate with the department in any ongoing investigations and prosecutions relating to the charged conduct, including conduct of individuals, (ii) enhance their compliance programs, and (iii) report to the department on the implementation of their compliance programs.

According to the Vitol’s admissions and court documents, between 2005 and 2014, Vitol and its co-conspirators paid bribes of more than $8 million to at least four officials at Brazil’s state-owned and controlled oil company Petróleo Brasileiro S.A. – Petrobras (Petrobras).  Vitol paid these bribes in exchange for receiving confidential Petrobras pricing and competitor information.  Vitol concealed the scheme through the use of intermediaries and a fictitious company that facilitated the payments to offshore accounts and, ultimately, to the Petrobras officials.

Vitol also admitted that from 2011 to 2014, it bribed at least five additional Petrobras officials in exchange for receiving confidential pricing information that Vitol used to win fuel oil contracts with Petrobras.  During that scheme, a consultant acting on behalf of Vitol engaged in back-channel negotiations with a Houston-based Petrobras official.  The parties would then hold staged negotiations, ultimately settling on the pre-arranged price that allowed for bribes to be paid from Vitol to the Petrobras officials.  Several of the co-conspirators communicated using alias email accounts and code names, including “Batman,” “Tiger,” “Phil Collins,” “Dolphin,” “Popeye” and “Beb.” 

Finally, Vitol admitted to participating in a second conspiracy to bribe officials in Ecuador and Mexico in order to obtain and retain business in connection with the purchase and sale of oil products.  Between 2015 and July 2020, Vitol agreed to offer and pay more than $2 million in bribes to those officials.  In furtherance of this scheme, Vitol and its co-conspirators entered into sham consulting agreements, set up shell companies, created fake invoices for purported consulting services and used alias email accounts to transfer funds to offshore companies involved in the conspiracy—all while knowing that the funds, at least in part, would be used to pay bribes to Ecuadorian and Mexican officials.

In related matters, the government recently unsealed charges against Houston-based former Petrobras official Rodrigo Berkowitz, who pleaded guilty in the Eastern District of New York on February 8, 2019 to one count of conspiracy to commit money laundering.  In addition, the government recently unsealed charges against one of the intermediaries involved in the Brazil scheme, Luiz Eduardo Andrade, who pleaded guilty on September 22, 2017 to one count of conspiracy to violate the FCPA in connection with a related bribery scheme.  Both individuals are awaiting sentencing.  Further, on September 22, 2020, a federal grand jury in the Eastern District of New York returned an indictment against Javier Aguilar, a Vitol trader, for his alleged role in the Ecuador scheme.

The government’s investigation is being conducted by the FBI’s International Corruption Unit.  The government’s case is being handled by the Office’s Business and Securities Fraud Section and the Criminal Division’s Fraud Section.  Assistant U.S. Attorneys Mark E. Bini and Andrey Spektor of the Eastern District of New York, and Fraud Section Trial Attorneys Derek J. Ettinger, Jonathan P. Robell and Clayton P. Solomon, are prosecuting the case.  The Criminal Division’s Office of International Affairs provided assistance in the investigation.

The Defendants:

VITOL INC.

RODRIGO BERKOWITZ
Age: 41
Country of Origin: Brazil

JAVIER AGUILAR
Age: 46
Country of Origin: Mexico

LUIZ EDUARDO ANDRADE
Age: 61
Country of Origin: Brazil

Earlier today, at the federal courthouse in Central Islip, an indictment was unsealed charging Ibrahim Aksakal, Indicted Co-conspirator #1, Enes Burak Cakiroglu and Sarah Kaplan with conspiring to commit visa fraud, health care fraud, wire fraud and money laundering, and Fiordalisa Marte and Edgar Rodriguez with conspiring to commit health care fraud, wire fraud and money laundering, for their participation in a so-called “birth tourism” scheme in Suffolk County between approximately 2017 and 2020. The scheme facilitated pregnant Turkish women fraudulently entering the United States using tourist and business visas to give birth so that their children would obtain birthright citizenship and medical benefits.

Five of the defendants were arrested this morning and will be arraigned this afternoon before Magistrate Judge Steven I. Locke. One defendant remains at large.

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York; Timothy D. Sini, District Attorney for Suffolk County; Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations (HSI), and Geraldine Hart, Commissioner, Suffolk County Police Department (SCPD), announced the arrests and the indictment.

As alleged in the Indictment, from at least January 2017 to the September 2020, the defendants advertised a birth tourism scheme on two Turkish-language Facebook pages, www.facebook.com/ bebegimamerikadadogsun and www.facebook.com/amerikadadogum.org, and a Turkish-language website https://amerikadadogum.org. Translated into English, “bebegimamerikadadogsun” means “My baby should be born in America,” and “amerikadadogum” means “Giving Birth in America.” As translated, some of the defendants’ advertisements stated, “If you believe your baby should be born in the USA and become a U.S. citizen then you are at the right place. . . . [W]e at ‘Bebegim Amerika Dogsun’ . . . will provide future mothers and fathers this opportunity, with minimal costs . . . .” The advertisements further stated that fees paid by pregnant women – approximately $7,500 nearly all in cash – would include transportation, “insurance” to cover the costs of pre-natal, delivery and post-natal medical care, assistance with the process for applying for United States citizenship on behalf of children born in connection with the scheme and consultation in Turkish concerning health care issues. The defendants also allegedly instructed the women to conceal their pregnancies.

As alleged in the indictment and court filings, the pregnant women were housed in one of seven “birth houses” that the defendants maintained in Center Moriches, Dix Hills, East Northport, East Patchogue, Smithtown and West Babylon, New York. Defendants Aksakal, Indicted Co-conspirator #1, Cakiroglu and Kaplan facilitated the lodging and transportation of the pregnant women. Marte and Rodriguez, who were professionally trained and certified to assist individuals to apply for health coverage, obtained the purported “insurance” which was actually Medicaid benefits, by submitting fraudulent Medicaid applications on behalf of the pregnant women.

As a result of the defendants’ scheme, the indictment alleges that Medicaid disbursed more than $2.1 million in fraudulently-obtained benefits, and estimates that the defendants’ received approximately $750,000 in fees from the pregnant women, a portion of which was funneled to one or more bank accounts in Turkey.

“Using Internet ads, the defendants perpetrated an international fraud that relied upon a parade of women who paid them thousands of dollars in fees in order to enter the United States under false pretenses, to give birth here. The defendants cashed in on the desire for birthright citizenship, and the American taxpayer ultimately got stuck with the $2.1 million bill,” stated Acting United States Attorney DuCharme. “The indictment unsealed today reinforces the principle that American citizenship is not for sale, and that our benefits programs are not piggy banks for criminals to plunder.”

Mr. DuCharme expressed his grateful appreciation to the United States Department of Health and Human Services, United States Department of State, Diplomatic Security Service, New York State Department of Health and the Office of the Medicaid Inspector General for their assistance during the investigation.

“This is a brazen birth tourism scheme in which the defendants not only violated our nation's immigration laws, but went a step further, sticking the taxpayers of Suffolk County with the bill for their scam by stealing millions of dollars from the Medicaid program,” stated District Attorney Sini. “Medicaid is designed to help people in need – not to be used as a slush fund for criminals to subsidize their fraudulent schemes, which is precisely what these defendants did. Let the message be clear: federal and local law enforcement will continue to work together to protect the residents of Suffolk County.”

“This international criminal organization operated a fraud scheme to exploit women and their newborns” stated HSI Special Agent-in-Charge Fitzhugh. “Birth tourism is dangerous, inhumane and diverts precious community resources to the coffers of criminals. HSI’s collaborative efforts and extraordinary partnership with the Suffolk County District Attorney’s Office and the U.S. Attorney’s Office, Eastern District of New York, has led to multiple criminal arrests around the county today. Those arrested today are charged with fraud and money laundering, and now may instead find themselves touring the inside of a federal prison.”

“Our Suffolk County Police Department detectives uncovered a birth tourism scheme and thanks to their tenacity and the countless hours dedicated to investigating the intricacies of the scheme, a case came together and six individuals are now being held responsible for their roles in this conspiracy,” stated SCPD Commissioner Hart. “This indictment should send a message to others exploiting birth tourism—bilking the system and swindling our residents is not tolerated here in Suffolk. Together, with the Eastern District of New York, the Suffolk County District Attorney’s Office, and Homeland Security Investigations along with assistance from other state agencies, this operation has been halted and those responsible are being held accountable.”

The charges announced today are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants face a maximum sentence of 20 years’ imprisonment.

The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Bradley T. King and Oren Gleich and Special Assistant United States Attorneys Jeremy Glicksman and Joseph Conley are in charge of the prosecution.

The Defendants:

IBRAHIM AKSAKAL (also known as “Dennis”)
Age: 48
East Patchogue, New York

ENES BURAK CAKIROGLU
Age: 24
East Patchogue, New York

SARAH KAPLAN (also known as “Hatun Kaplan” and “Hatin Kaplan)
Age: 46
Center Moriches, New York

FIORDALISA MARTE (also known as “Lisa”)
Age: 41
Lindenhurst, New York

EDGAR RODRIGUEZ (also known as “Eddie”)
Age: 48
Farmingville, New York

E.D.N.Y. Docket No. 20-CR-400 (JS)

Earlier today, at the federal courthouse in Central Islip, Jose Suarez, an associate of the Sailors Locos Salvatruchas Westside (Sailors) clique of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, was sentenced to life in prison by United States Circuit Judge Joseph F. Bianco.  In May 2019, Suarez was convicted following a three-week jury trial of murder, racketeering and assault charges in connection with the January 30, 2017 murder of Esteban Alvarado-Bonilla and the shooting of a female employee at a deli in Central Islip, and the December 18, 2016 assault of a man outside a restaurant in Brentwood. 

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), Geraldine Hart, Commissioner, Suffolk County Police Department (SCPD), and Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD), announced the sentence.

“Suarez will deservedly spend the rest of his life in a federal prison for the brutal murder and mayhem he committed in the name of the MS-13 gang,” stated Acting United States Attorney DuCharme.  “The investigation and trial of this case is the result of the unyielding commitment of the Office and our partners on the FBI’s Long Island Gang Task Force to eradicate the MS-13 in this district.” 

“Mr. Suarez' life sentence in federal prison is simply another brick in the wall we've built around MS-13 to stop this violent gang from terrorizing people on Long Island. Agents and detectives assigned to the FBI's Long Island Gang Task Force, whose work continues to this day, have put in a tremendous amount of time and effort to dismantle this gang.  The results of their labor, as well as the community's commitment to working with us to prevent a resurgence in gang activity, is commendable,” stated FBI Assistant Director-in-Charge Sweeney.   

“The relentless efforts of the FBI’s Long Island Gang Task Force and the Eastern District of New York have never wavered in holding MS-13 gang members accountable for their violent, senseless crimes,” stated SCPD Commissioner Hart.  “Thanks to their dedication, Suarez will spend the rest of his life behind bars for the murder and assaults that he committed. This sentence sends a message that our department along with our local and federal law enforcement partners remain determined to dismantle this transnational gang.”  

“The continued efforts of the Long Island Gang Task Force continues to show positive results in their commitment to eradicate criminal gang activity.  The conviction of MS-13 Gang Member Jose Suarez on charges of Murder, Racketeering and Assault charges is a clear example that this multi-agency approach is working.  I would like to acknowledge the continued efforts of the dedicated investigators and their agencies for keeping residents and our communities safe,” stated NCPD Commissioner Ryder. 

On January 30, 2017, a member of the Sailors clique saw Alvarado-Bonilla inside El Campesino Deli in Central Islip.  Believing that Alvarado-Bonilla was a rival gang member, several members of the Sailors clique plotted to kill him.  Suarez drove MS-13 member Mario Aguilar-Lopez and an MS-13 associate to a street near the deli.  Aguilar-Lopez entered the deli, approached the victim from behind and shot him multiple times, killing him.  One of the bullets traveled through Alvarado-Bonilla’s head and struck a female employee of the deli standing directly in front of him.  Aguilar-Lopez ran out of the deli and to the car where Suarez was waiting, and the two fled the scene.  The store employee survived a gunshot wound to the chest.  In November 2018, Aguilar-Lopez pleaded guilty to causing Alvarado’s death and shooting the store clerk.  He is awaiting sentencing.

On December 18, 2016, Suarez and several MS-13 members and associates assaulted two men outside the Super Taco facility in Brentwood, seriously injuring one of the men.  The victims were attacked because one of them had disrespected the MS-13. 

Today’s sentencing 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.  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 district, and has convicted dozens of MS-13 leaders and members in connection with those murders.  These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, comprising agents and officers of the FBI, NCPD, 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, Michael T. Keilty, Paul G. Scotti and Justina L. Geraci are in charge of the prosecution.  

The Defendant:

JOSE SUAREZ (also known as “Chompira”)
Age:  26
Central Islip, New York

E.D.N.Y. Docket No. 16-CR-403 (JFB)

A New York City restaurateur was sentenced to prison for a tax evasion scheme.

Adel Kellel, 63, of New Hyde Park, New York, the owner of Raffles Bistro, formerly a restaurant located in New York City, was sentenced to 24 months in prison for tax evasion by U.S. District Court Judge Paul G. Gardephe.

“All taxpayers have an obligation to honestly report their income and pay their share of taxes,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. “For those who attempt to avoid these obligations and cheat the IRS, as this sentence shows, there are serious consequences.”

“Adel Kellel cooked his books to conceal income from the IRS and his own accountants,” said Acting U.S. Attorney Audrey Strauss for the Southern District of New York. “He spent the ill-gotten gains on personal luxuries like a Mercedes, a Porsche, and a Maserati. Now he will spend two years in federal prison.”

“The accurate reporting of income is an important responsibility of all business professionals,” said IRS-Criminal Investigation Special Agent in Charge Jonathan D. Larsen. “In this case, Adel Kellel attempted to evade his taxes by diverting funds for personal use and failing to report substantial gross receipts. IRS-Criminal Investigation will continue to serve the American taxpayer by investigating individuals who hide their true income from the IRS.”

According to the allegations contained in the information to which Kellel pled guilty, documents filed in court, and statements made in court:

In 2011, Kellel was the President and a 45 percent owner of K&H Restaurant Inc. (K&H), which operated Raffles Bistro (Raffles), a coffee-shop and full service restaurant then located in a Manhattan hotel (the Hotel). From 2012 through 2015, Kellel was the 100 percent owner of K&H. From 2011 to 2015, Kellel filed false personal returns and corporate returns for K&H, and evaded his taxes by diverting and failing to report substantial gross receipts to the IRS.

For example, as part of his tax evasion scheme, Kellel diverted over 150 hotel checks, totaling over $2.1 million or approximately 43 percent of the Hotel payments K&H received by check, and then hid the gross receipts from his accountants and the IRS by depositing the checks into more than a dozen undisclosed bank accounts. These included personal accounts that Kellel held either individually or jointly with his wife, as well as accounts held in the name of K&H, some of which were opened solely to have an additional place to deposit diverted checks. Kellel also diverted substantial cash income received from Raffles’ customers, a portion of which he deposited into personal bank accounts or spent directly on personal expenses, again, without disclosing to his accountants or paying taxes.

Kellel used the diverted income for personal expenses, including overseas transfers; condominium fees; rent for a high-end Manhattan apartment; college tuition payments for his children; luxury retailers, such as Hugo Boss and Saks Fifth Avenue; Mercedes, Porsche, and Maserati vehicles; and domestic and international travel.

On Jan. 24, 2020, Kellel pled guilty to one count of tax evasion relating to the 2011 to 2015 tax years.

In total, Kellel caused a combined tax loss of at least approximately $771,195 to the IRS and the New York State Department of Taxation and Finance (NYSDTF). In addition to the sentence of imprisonment, the court ordered Kellel to pay restitution of $613,478 to the IRS and $157,717 to NYSDTF. Kellel was also ordered to serve three years of supervised release after completing his jail sentence.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Strauss praised the efforts of IRS-CI in the investigation. Trial Attorney Jorge Almonte of the Tax Division and Assistant U.S. Attorney Olga I. Zverovich are in charge of the prosecution.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

A criminal complaint was unsealed today in federal court in Central Islip charging Mark Lisser with wire fraud for lying to investors and potential investors to induce them to invest in what they believed were shares of several companies prior to the companies’ initial public offerings.  Lisser was arrested this morning and will make his initial appearance this afternoon before United States Magistrate Judge Lois Bloom.

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, Lisser convinced investors to trust him with their money by lying about what he was selling and how much of it he would keep for himself,” stated Acting United States Attorney DuCharme.  “We and our law enforcement partners will continue to vigorously investigate and prosecute those who abuse the trust of investors in order to enrich themselves.”  Mr. DuCharme thanked the New York Regional Office of the Securities and Exchange Commission for its assistance in this investigation. 

“As an investment firm partner, Lisser encouraged his victims to purchase pre-IPO shares of companies that weren’t his to sell, as we allege today.  He purportedly used this money to make illegitimate payments, fund salaries, and satisfy his monthly mortgage payments. Padding one’s pockets at the expense of others isn’t only a bad way to do business, it’s a federal crime,” stated FBI Assistant Director-in-Charge Sweeney. 

According to the complaint, between October 2018 and January 2019, Lisser was a partner in Knightsbridge Private Partners LLC (“Knightsbridge”), which operated a series of websites and call centers used to solicit investments in purported pre-IPO shares of companies.  Lisser and employees of Knightsbridge solicited these investments by telling investors and potential investors that Knightsbridge owned the shares it was selling, that Knightsbridge was on the capitalization table of the pre-IPO companies and that Knightsbridge and its employees did not earn any commissions or fees until after the shares were issued to the public and the investor made money.  In fact, as Lisser knew, Knightsbridge did not directly own any of these pre-IPO shares, was not on the capitalization table of any of the pre-IPO companies, and Lisser and Knightsbridge employees received money and commissions from the investments at the time they were made.  As a result of this fraud scheme, Lisser misappropriated more than $700,000 in investors’ funds which he used to make payments to companies controlled by Knightsbridge employees, pay salaries and sales commissions, pay his personal credit card bill and make payments on a mortgage.

The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, Lisser 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 Mathew S. Miller and David Gopstein are in charge of the prosecution.  Assistant United States Attorney Karin Orenstein is assisting with forfeiture matters.

The Defendant:

MARK ALAN LISSER
Age:  40
Massapequa, New York

E.D.N.Y. Docket No. 20-MJ-1128

Earlier today, in federal court in Central Islip, Ajay Sharma, a citizen of India and the director and owner of APS Technology, a telemarketing call center located in New Delhi, pleaded guilty via videoconference to conspiracy to commit wire fraud in connection with a fraudulent scheme directed at thousands of individuals in the United States.  Today’s proceeding took place before United States Magistrate Judge A. Kathleen Tomlinson.  When sentenced, Sharma faces up to 20 years in prison, as well as forfeiture of $1,005,421 and a fine of up to $2,500,000.  Sharma has been detained since his arrest in October 2018. 

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, announced the guilty plea.

“Ajay Sharma and his crew perpetrated a sprawling, transnational fraud scheme that preyed on unsuspecting victims’ fears that they were running afoul of the law,” stated Acting United States Attorney DuCharme.  “This case makes clear that U.S. law enforcement will not stop at our borders to locate and vigorously prosecute criminals, whether foreign or domestic, who cause financial harm to others in the United States.”

Mr. DuCharme thanked the Internal Revenue Service-Criminal Investigation, Treasury Inspector General for Tax Administration, New York City Police Department and Garden City Police Department for their invaluable assistance with the case.

As alleged in the indictment and other court filings and proceedings, Sharma was a leader and organizer of the fraud scheme.  Between January 2018 and September 2018, operating from call centers in India, the defendants targeted victims in the United States and falsely claimed to be employees of the Internal Revenue Service, the Social Security Administration or the Drug Enforcement Administration.  The victims were informed that they owed a sum of money to the United States government or one of its agencies and that they would be arrested if the debts were not promptly paid.  After the victims wired payments to bank accounts that the defendants had opened in the names of inactive and shell corporations to receive the fraud proceeds, the funds were withdrawn and laundered through additional bank accounts.  The scheme is estimated to have netted over $2 million from victims across the United States.

Four of Sharma’s co-conspirators previously pleaded guilty, and two are scheduled for trial in February 2021 before United States District Judge Sandra J. Feuerstein.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Charles P. Kelly and Diane Leonardo are in charge of the prosecution.

The Defendant:

AJAY SHARMA
Age: 44
Mumbai, India

E.D.N.Y. Docket No. 19-CR-024

Defendants Who Have Previously Pleaded Guilty:

ANKUR SHARMA
Age:  25
Bellerose, New York

HARPREET SINGH
Age:  33
Queens Village, New York

E.D.N.Y. Docket No. 19-CR-024

JAMAL ZAFAR
Age:  48
Huntington, New York

ARMUGHANUL ASAR
Age:  68
College Point, New York

E.D.N.Y. Docket No. 19-CR-385 (SJF)

Earlier today, at the federal courthouse in Central Islip, Etienne Allonce, the former co-owner of Medical Solutions Management, Inc. (MSM), a durable medical equipment supplier in Hicksville, New York, was sentenced by United States Circuit Judge Joseph F. Bianco to 36 months’ imprisonment for health care fraud.  The Court also ordered Allonce to pay $4,444,468 in restitution.  Allonce pleaded guilty in April 2019.  In September 2018, Allonce was expelled from Haiti where he had fled 11 years earlier shortly before his indictment in the Eastern District of New York.  Prior to his return to the United States, Allonce was placed on the Most Wanted List of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG).   

Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Scott Lampert, Special Agent-in-Charge, Health and Human Services-Office of Inspector General, New York Region (HHS-OIG), and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.

“Allonce ran, but ultimately could not hide from the consequences of fleecing Medicare and Medicaid out of millions of dollars at taxpayers’ expense,” stated Acting United States Attorney DuCharme.  “The defendant may have delayed the inevitable, but he has now faced justice for breaking the law.” 

“Our watchdog agency is dedicated to investigating those responsible for health care fraud, including this former Most Wanted health care fugitive, who stole taxpayer money meant to pay for legitimate patient care,” stated HHS-OIG Special Agent-in-Charge Lampert. “Working closely with our law enforcement partners, our agents will continue to hold such fraudsters accountable for their crimes.”

Between April 2003 and March 2007, Allonce, and his wife and MSM co-owner Michel Allonce, submitted approximately $10 million in false claims to Medicare and Medicaid, seeking payment for medical supplies never ordered by MSM and never delivered to patients at nursing homes.  Etienne Allonce fled the United States just hours before federal agents arrested his wife in 2007. 

Michel Allonce was tried and convicted by a jury in August 2012.  She was sentenced in April 2013 to 12 years’ imprisonment, and ordered to forfeit $1.3 million seized by the government. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Charles P. Kelly, Burton T. Ryan, Jr. and Madeline O’Connor are in charge of the prosecution.

The Defendant:

ETIENNE ALLONCE
Age:  56
Port au Prince, Haiti

E.D.N.Y. Docket No. 07-CR-889 (JFB)

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)

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 York

E.D.N.Y. Docket No.: 20-MJ-1072

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 York

ZHEN WU
Age:  35
Flushing, New York

E.D.N.Y. Docket No. 20-MJ-1054

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, Guyana

E.D.N.Y. Docket No. 16-CR-317 (PKC)

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, Arizona

TOMMY CONSTANTINE
Age: 54
Scottsdale, Arizona

E.D.N.Y. Docket No. 13-CR-607 (JFB)

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 York

JULIO BAUTISTA
Age:  35
Roosevelt, New York

CESAR DIAZ-BAUTISTA
Age:  43
Roosevelt, New York

GUSTAVO VALERIO
Age:  38
South Ozone Park, New York

E.D.N.Y. Docket No. 20-CR-433 (RRM)

JUNIOR ORTIZ
Age:  29
Uniondale, New York

E.D.N.Y. Docket No. 20-MJ-243

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.

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 York

E.D.N.Y. Docket No. 20-481 (JMA)

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 York

E.D.N.Y. Docket No. 16-CR-403 (JFB)

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 York

HU JI
Age:  45
People’s Republic of China

LI MINJUN
Age:  64
People’s Republic of China

MICHAEL MCMAHON
Age:  53
Mahwah, New Jersey

RONG JING
Age:  38
Rancho Cucamonga, California

ZHENG CONGYING
Age:  24
Brooklyn, New York

ZHU FENG
Age:  33
Queens, New York; People’s Republic of China

ZHU YONG, (also known as “Jason Zhu”)
Age:  64
Norwich, Connecticut and Flushing, New York

E.D.N.Y. Docket No.  20-MJ-1025

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 York

E.D.N.Y. Docket No. 18-CR-204 (S-2) (NGG)

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 Jersey

E.D.N.Y. Docket No. 19-CR-101 (DLI)

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, NJ

E.D.N.Y. Docket No. 20-MJ-990

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

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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

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.

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, Maine

TYRONE BANKS (also known as “Ty Hitta”)
Age: 23
Brooklyn, New York

JANET BLOOD
Age: 47
Troy, Maine

DAYVON BOSTICK-SAMUELS (also known as “Daytoe”)
Age:  22
Brooklyn, New York

MIKE GUSTAVO CONNOR (also known as “Gus”)
Age:  21
Brooklyn, New York

RASHAAD CRAIG (also known as “Skeeno”)
Age:  25
Brooklyn, New York

QUENTIN DELVALLE (also known as “Q”)
Age:  24
Brooklyn, New York

ELIZABETH DUECASTER
Age: 35
Searsport, Maine

CHRISTINA ESTEVEZ
Age: 31
Queens, New York

ERICA FAGGIOLE
Age: 44
Maine

ANTONIO FULTON (also known as “Tone”)
Age: 23
Staten Island, New York

ROMEO GONZALES
Age:  22
Brooklyn, New York

KEON GRANT (also known as “Keys”)
Age: 34
Brooklyn, New York

NADINE HEATH
Age:  54
Troy, Maine

TYQUAWN LANE (also known as “Bicks” and “Tah Tah”)
Age: 27
Brooklyn, New York

JOANNE LYDEM
Age:  49
Garland, Maine

TANEJIA MOORE
Age: 26
Brooklyn, New York

CHRISHAWN PENN (also known as “Prince”)
Age: 26
Brooklyn, New York

MICHAEL PEREZ (also known as “White Mike”)
Age: 29
Brooklyn, New York

JOELLE POCHE (also known as “Rico”)
Age: 21
Brooklyn, New York

MICHAEL REID (also known as “Half”)
Age:  39
Brooklyn, New York

ISAIAH TERRY SANDIFORD
Age: 21
Brooklyn, New York

CHINASA STRACHAN
Age:  33
Brooklyn, New York

NICOLETTE TOMPKINS
Age: 22
Westfield, Maine

DANIELLE WHITE
Age:  47
Swanville, Maine

DEVIN-JOHN JASON WILLIAMS (also known as “Pun” and “Fat Boy”)
Age: 28
Brooklyn, New York

Defendants Previously Indicted:

DERRICK AYERS (also known as “Dee” and “Mel”)
Age: 34
Rahway, New Jersey

BERMON CLARKE (also known as “G” and “Blue”)
Age: 28
Rahway, New Jersey

FRANKLIN GILLESPIE (also known as “Spazz” and “Frankie Gino”)
Age: 30
Newark, New Jersey

NIA GOVAN (also known as “Cam” and “V”)
Age: 29
Boston, Massachusetts

AMANDA HUARD
Age: 38
Raymond, Maine

ANTHONY KENNEDY (also known as “Biggie”)
Age: 34
Queens, New York

JESSICA PELKEY
Age: 26
Presque Isle, Maine

AMY SONNENBLICK
Age: 48
Brooklyn, New York

AMANDA WALTON (also known as “A”)
Age: 32
Portland, Maine

DEMETTRIUS WRIGHT (also known as “Clean” and “Meexhi Brim”)
Age: 23
Brooklyn, New York

E.D.N.Y. Docket No. 20-CR-239 (S-2) (BMC)

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.

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 York

SAYUZ DAIBAGYA
Age: 46
Moscow, Russia

ANTON PEREVOZNIKOV
Age: 34
Brooklyn, New York

SHOHRUH SAIDOV
Age: 31
Brooklyn, New York

MARAT SHADKHIN
Age: 40
Brooklyn, New York

KIRILL SOKHONCHUK
Age: 37
Brooklyn, New York

E.D.N.Y. Docket No. 20-MJ-884 (LB)

AZAMAT BOBOMURODOV
Age: 31
Brooklyn, New York

ZOKIR ISKANDEROV
Age: 30
Brooklyn, New York

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 York

E.D.N.Y. Docket No. 19-CR-123 (JS)

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, Texas

E.D.N.Y. Docket No. 18-139 (S-5) (LDH)

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. (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.