Eastern District of New York
Press releases recorded for this federal judicial district.
Fugitive Wanted for the Kidnapping and Murder of a Federal Agent is Added to the FBI’s “Ten Most Wanted Fugitives” ListRead the Press Release
Federal Bureau of Investigation Deputy Director David L. Bowdich, Drug Enforcement Administration (DEA) Acting Administrator Robert W. Patterson, U.S. Department of State Deputy Assistant Secretary James Walsh, and U.S. Marshals Service Acting Associate Director Derrick Driscoll today announced the addition of fugitive Rafael Caro-Quintero to the FBI’s list of “Ten Most Wanted Fugitives.”
Fugitive Rafael Caro-Quintero marks the 518th addition to the “Ten Most Wanted Fugitives” list. Caro-Quintero is wanted for his alleged involvement in the 1985 kidnapping and murder of DEA Special Agent Enrique Camarena Salazar aka “Kiki.” This is the first time a DEA fugitive has been listed on the FBI Top Ten Most Wanted Fugitives List.
In addition, DEA and U.S. Attorney Richard P. Donoghue for the Eastern District of New York today announced the unsealing of an additional indictment against Quintero, alleging his role as leader of a continuing criminal enterprise and the individual responsible for the brutal murder of Camarena. The indictment also details his leadership role in trafficking methamphetamine, heroin, cocaine and marijuana into the United States and elsewhere and reflects his criminal activities from 1980 to 2017. (EDNY Docket No. 15-CO-208(S-2)
On July 30, 1992, a federal arrest warrant was issued by the U.S. District Court, Central District of California, charging Caro-Quintero with violent crimes in aid of racketeering; conspiracy to kidnap a federal agent; kidnapping of a federal agent; felony murder of a federal agent; aiding and abetting; and accessory after the fact.
“Together with our federal partners at the DEA, the U.S. Marshals Service, and the U.S. Department of State, we are committed to bring to justice this dangerous criminal and cartel leader responsible for the brutal murder of a DEA Agent,” said FBI Deputy Director Bowdich. “Special Agent Camarena was devoted to stopping drug trafficking and breaking the cycle of drug-related crime. He showed tremendous courage to pursue the most violent drug traffickers, and it is because of his courage, and his selflessness, that we're not going to stop looking for Caro-Quintero until we find him and put him back behind bars where he belongs.”
“The DEA is grateful for all of the federal law enforcement agencies that have committed to pursuing Rafael Caro-Quintero until the moment he is captured and returned to his rightful place in prison,” said DEA Acting Administrator Patterson. ‘Kiki’ Camarena holds a special place in our hearts and his sacrifice will always be remembered by the men and women of DEA who carry out our mission every day.”
“Our $20 million Narcotics Reward Program offer reflects the State Department’s commitment to the government-wide effort to track down Caro-Quintero,” said Deputy Assistant Secretary of State Walsh. “We’re pleased to be using the Reward Program to support this reinvigorated law enforcement effort, and at long last bring this criminal to justice.”
“The U.S. Marshals remain steadfast in the pursuit of justice for our brother, DEA Special Agent “Kiki” Camarena,” said U.S. Marshals Associate Director for Operations Derrick Driscoll. “We will continue to leverage all resources and work with our law enforcement partners here and in Mexico to develop the information that will lead to the capture of Rafael Caro Quintero.”
Caro-Quintero is widely regarded as one of the Mexican “godfathers” of drug trafficking, and helped to form the Guadalajara Cartel in the late 1970s. Allegedly, he became one of the primary suppliers of heroin, cocaine, and marijuana to the United States, and was in charge of the cartel in Costa Rica and the U.S./Mexico border.
In November of 1984, Mexican authorities raided a 2,500 acre marijuana plantation owned by Caro-Quintero. The Guadalajara Cartel blamed Special Agent Camarena for the takedown, and decided to retaliate.
Special Agent Camarena – a former Marine, fireman, police officer, and deputy sheriff – was extremely close to unlocking a million-dollar drug pipeline from Mexico to the United States in 1985. Before he was able to expose the drug-trafficking operations, he was kidnapped en route to lunch with his wife on Feb. 7, 1985, in Guadalajara, Jalisco, Mexico. Allegedly, the direct orders for the kidnapping came from Caro-Quintero. Camarena was surrounded by five armed men who threw him into a car, then sped away. It is believed that Camarena died within two to three days of his kidnapping, but his body was not found until March 5, 1985. Special Agent Camarena is survived by his wife and three sons.
The Department of State’s Narcotics Rewards Program is offering a reward of up to $20 million for information leading to the arrest and/or conviction of Rafael Caro-Quintero. Anyone with information concerning Caro-Quintero should take no action themselves, but should immediately contact the nearest U.S. Embassy or Consulate.
Caro-Quintero is described as follows:
Name: Rafael Caro-Quintero, aka “Rafa”
Dates of Birth Used: Oct. 24, 1952; October 2, 1952; Nov. 24, 1952; Oct. 24, 1955; Nov. 24, 1955; March 9, 1963
Height: 6’0”
Weight: Approximately 159 to 170 pounds
Place of Birth: Badiraguato, Sinaloa, Mexico
Rafael Caro-Quintero replaces Jesus Roberto Munguia on the “Ten Most Wanted Fugitives” list.
The FBI’s “Ten Most Wanted Fugitives” list was established in March of 1950. Since then, 484 fugitives have been apprehended or located – 162 of them as a result of citizen cooperation.
Tips may also be directed 1-800-CALL-FBI (1-800-225-5324), or can be submitted online at tips.fbi.gov.
Additional information concerning Caro-Quintero, including his Wanted poster and the FBI’s list of “Ten Most Wanted Fugitives”, can be found by visiting the FBI’s website at www.fbi.gov.Former Chief Financial Officer of “Soup Nazi” Business Sentenced to 9 Months’ Imprisonment for Tax EvasionRead the Press Release
Earlier today, in federal court in Brooklyn, Robert N. Bertrand, the Former Chief Financial Officer of Soupman, Inc. (“Soupman”), was sentenced by United States District Judge Pamela K. Chen to nine months’ imprisonment for failure to pay Medicare, Social Security and federal income taxes, to be followed by a one year term of supervised release. Soupman, which is based on Staten Island, licenses its name and recipes from Al Yeganeh, the inspiration for the “Soup Nazi” character on the television series “Seinfeld.” The Court also ordered Bertrand to pay $78,518.18 in restitution to the United States. Bertrand pleaded guilty in December 2017.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, and James D. Robnett, Special Agent in Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the sentence.
According to court filings and facts presented during court proceedings, as Soupman’s CFO, Bertrand had a corporate responsibility to collect, truthfully account for and pay Medicare, Social Security and federal income taxes for Soupman’s employees. Between 2010 and 2014, Bertrand made unreported payments to Soupman employees, and compensated certain employees in large unreported stock awards. Bertrand never reported this employee compensation to the IRS, and never paid Medicare, Social Security and federal income taxes on the side payments or the stock awards, despite a 2012 warning from an external auditor that these payments should be reported to the IRS. From 2010 through 2014, Soupman’s total approximate unreported cash and stock compensation was more than $2.85 million, and the total approximate tax loss to the United States was in excess of $593,000.
“Bertrand has been held to account for abusing his position as the CFO of a publicly traded company in a long-running scheme that cheated the nation’s treasury out of hundreds of thousands of dollars,” stated United States Attorney Donoghue. “Today’s sentencing makes clear that this Office, with our partners at the IRS, will pursue corporate gatekeepers like the defendant who fail to enforce their companies’ tax obligations.”
“Corporate executives such as Mr. Bertrand have a responsibility to collect and turn over all IRS withholding taxes,” stated IRS-CI Special Agent-in-Charge Robnett. “His failure to withhold and pay over is a clear violation that directly impacts those employees of Soupman Inc. and U.S. taxpayers now and in the future. Today justice is served, and Mr. Bertrand is being held accountable for his criminal actions.”
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Kaitlin T. Farrell is in charge of the prosecution.
The Defendant:
Robert N. Bertrand
Age: 63
Norwalk, ConnecticutE.D.N.Y. Docket No. 17-CR-186
Outlaws Gang Members Plead Guilty to Long Island Murder and ShootingRead the Press Release
Earlier today, at the federal courthouse in Central Islip, Pedro Merchant and Alton Gore, members of the Outlaws street gang, pleaded guilty to a firearm-related murder and assault in-aid-of racketeering charge and using a firearm during the commission of a crime of violence, respectively. The charges against Merchant related to his participation in the September 11, 2013 murder of Dante Quinones. The charges against Gore related to his involvement in a September 14, 2014 shooting that wounded two rival gang members. The guilty pleas were entered before United States District Judge Joseph F. Bianco.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD), announced the guilty pleas.
“Merchant’s actions violently ended one life, while Gore attempted to take several others,” stated United States Attorney Donoghue. “This type of brazen violence in the name of their gang puts entire communities in danger. Today’s guilty pleas hold these defendants accountable for their crimes and demonstrate the commitment of this Office and our law enforcement partners to remove gangs from the streets of Long Island.”
“In the midst of their declared war on a rival gang, these members of the Outlaws put innocent people’s lives in danger,” stated FBI Assistant Director-in-Charge Sweeney. “The FBI and our law enforcement partners work every day on investigations targeting these violent criminals, and we will continue until we stop the illegal activity.”
“Today’s guilty pleas are a direct result of the combined efforts of law enforcement on Long Island which are dedicated to working together to ending gang violence in our area,” stated NCPD Commissioner Ryder. “The commitment of all Law Enforcement to eradicate gang violence is extremely important and we will not stop until all gang members are behind bars, thus ensuring that our residents and communities are safe. I would also like to congratulate the other agencies and their investigators for their dedication and diligence during this intense investigation.”
According to court filings and statements made during the guilty plea proceedings, Merchant shot and killed 17-year-old Dante Quinones in Hempstead. The confrontation began when Merchant and fellow Outlaws members approached Quinones to determine whether Quinones’ allegiance was to the Outlaws gang or their rivals, the Bloods. Merchant pulled out a pistol and shot Quinones several times at close range, killing him.
In the wake of Quinones’ murder, a gang war ensued between the Outlaws and the Bloods in Hempstead. During the following year, several shootings occurred between the two gangs, including several involving Gore, who pleaded guilty to the September 14, 2014 shooting of two Bloods members in Hempstead. In that incident, Gore, along with two other Outlaw members, staked out a home where Bloods members were watching a boxing match. Gore and his co-conspirators opened fire into the home, wounding a Bloods member in the leg, while another Bloods member was shot in the head and lost an eye.
When sentenced, each defendant faces a minimum term of 10 years in prison and a maximum term of life imprisonment.
Co-defendant Everett Brown, also known as “Ev,” an associate of the Outlaws street gang, was sentenced in November 2017 to 10 years’ imprisonment following his guilty plea to discharging a firearm during a crime of violence for his role in one of the shootings of rivals’ homes committed by the gang on August 19, 2014.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Nicole Boeckmann, Christopher Caffarone and Michael Maffei are in charge of the prosecution.
The Defendants:
PEDRO MERCHANT (also known as “Dro”)
Age: 25
Valley Stream, New YorkALTON GORE (also known as “A-Murder”)
Age: 27
Hempstead, New YorkE.D.N.Y. Docket No. 16-CR-322 (S-1) (LDW)
Luchese Crime Family Soldier and Organized Crime Associate Plead Guilty to Conspiring to Illegally Distribute OxycodoneRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, Anthony Grado, a member of the Luchese organized crime family, and Lawrence Tranese, an organized crime associate, pleaded guilty to conspiracy to distribute oxycodone. The proceeding was before United States Magistrate Judge Sanket J. Bulsara.
Richard P. Donoghue, 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 James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the guilty pleas.
“Luchese family member Grado imperiled our community, threatening a doctor to force him to write prescriptions for oxycodone and then trafficking in the addictive drugs,” stated United States Attorney Donoghue. “Violent threats to a doctor by Mafia defendants, combined with their trafficking of oxycodone pills, posed an especially serious danger to our community. As demonstrated by today’s guilty pleas, this Office together with our law enforcement partners will be relentless in the prosecution of organized crime and those who contribute to the opioid epidemic.”
“Organized crime groups and other criminal entities are seizing on the outbreak of addiction plaguing our country to make money,” stated FBI Assistant Director-in-Charge Sweeney. “It shouldn’t be a shock that members of the Luchese crime family used violence to force a member of the medical community to further their criminal enterprise. The FBI Joint Organized Crime Task Force is committed to aggressively pursuing these groups to stop them from further contributing to the deadly opioid epidemic affecting our country.”
According to court documents and statements at the plea proceedings, Grado and Tranese conspired with others to distribute oxycodone that they obtained through fraudulent prescriptions written on a Brooklyn-based doctor’s prescription pad. Grado, a Luchese family member, together with Tranese and their coconspirators provided the doctor with the names of people for whom the doctor should write prescriptions. The doctor then wrote prescriptions in those names for medications containing oxycodone, usually without conducting any examination. Grado, Tranese and their coconspirators filled the prescriptions and sold the pills. At other times, Grado held the doctor’s prescription pads himself and either had the doctor write the fraudulent prescriptions at his direction, or completed the prescriptions and later advised the doctor of the details.
Members of the conspiracy used violence and threats of violence to seize control of the doctor’s prescription pads. For example, in one recorded conversation, Grado told the doctor that he would make the doctor write “a thousand scripts a day and [expletive] feed you to the [expletive] lions” if the doctor wrote prescriptions without Grado’s approval. In the same conversation, Grado also told the doctor that if the doctor’s newly ordered prescription pads “go in anybody’s hands,” besides Grado’s, “I’ll put a bullet right in your head.” During the course of the conspiracy, Grado also ordered one of his associates to stab the doctor, and the associate carried out the order. Finally, Grado called upon a higher-ranking member of the Luchese crime family to attend a “sit down,” or meeting, to resolve issues related to the pill distribution scheme.
When sentenced, the defendants each face up to 20 years in prison, as well as forfeiture and a fine of up to $1 million.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Mathew S. Miller and Matthew J. Jacobs are in charge of the prosecution.
The Defendants:
ANTHONY GRADO
Age: 54
Monroe Township, New JerseyLAWRENCE TRANESE
Age: 55
Brooklyn, New YorkE.D.N.Y. Docket No. 17-559 (S-1)
MS-13 Gang Member Pleads Guilty to Retaliation Murder on Long IslandRead the Press Release
Earlier today, at the federal courthouse in Central Islip, Edwin Amaya-Sanchez (“Strong”), a member of the Guanacos Little Cycos Salvatruchas clique of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, pleaded guilty to firearms-related murder charges in connection with his participation in the July 14, 2014 murder of Jose Lainez-Murcia, who was shot and killed while sitting in a car outside his home in Brentwood. The guilty plea was entered before United States District Judge Joseph F. Bianco.
Richard P. Donoghue, 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 Stuart J. Cameron, Acting Commissioner, Suffolk County Police Department (SCPD), announced the guilty plea.
“Amaya-Sanchez admitted that he participated in the planning and execution of a murder on Long Island in which the victim was marked for death because he was suspected of having killed MS-13 gang members in El Salvador,” stated United States Attorney Donoghue. “This Office and our partners on the FBI’s Long Island Gang Task Force will continue working tirelessly to eliminate MS-13 and the threat this transnational criminal enterprise presents to our community.”
“MS-13 believes it can operate with its own form of vigilante justice, without any repercussions,” stated FBI Assistant Director-in-Charge Sweeney. “The FBI Long Island Gang Task Force won't allow them to continue terrorizing the community, acting outside of the law.”
“The Suffolk County Police Department is committed to working with our law enforcement partners in bringing criminal gang members and their associates to justice,” stated SCPD Acting Commissioner Cameron. “This guilty plea of a murderer will send a strong message to gangs across Long Island that illegal activities will not be tolerated.”
As set forth in prior court filings and the defendant’s statements during his guilty plea, Amaya-Sanchez and other MS-13 members orchestrated the murder of Lainez-Murcia because they suspected that Lainez-Murcia was an assassin who had killed MS-13 members in El Salvador. Amaya-Sanchez knew where Lainez-Murcia lived, what car he drove, and what time he left for work in the morning, because they previously worked together. In the early morning hours of July 14, 2014, Amaya-Sanchez drove two other MS-13 members, each of whom was armed with a 9mm handgun, to Lainez-Murcia’s neighborhood and dropped them off. When Lainez-Murcia left the house and entered his car, the MS-13 members approached and fired multiple times with the 9mm handguns, killing him. The two MS-13 members ran down the block where Amaya-Sanchez picked them up and drove away.
Amaya-Sanchez, an illegal alien from El Salvador who previously was deported from the United States and illegally returned, faces a mandatory minimum sentence of 10 years’ imprisonment and a maximum sentence of life in prison when sentenced by Judge Bianco on October 17, 2018. Upon completion of his sentence, the defendant faces deportation from the United States.
Today’s conviction 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 international criminal organization. The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America. 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 45 murders in the district, and has convicted dozens of MS-13 leaders and members in connection with those murders. These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, comprising agents and officers of the FBI, SCPD, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department, Rockville Centre Police Department, the New York State Police, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
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, Michael T. Keilty and Raymond A. Tierney are in charge of the prosecution.
The Defendant:
Edwin Amaya-Sanchez (also known as “strong”)
Age: 30
Brentwood, New YorkE.D.N.Y. Docket No. 16-CR-403 (S-4)(JFB)
Con Ed Contractor Sentenced to 48 Months’ Imprisonment for Bribery and Tax Evasion ChargesRead the Press Release
Yesterday, in federal court in Brooklyn, Rodolfo Quiambao, the former President and Chief Executive Officer of the engineering and electrical design firm Rudell & Associates, Inc. (Rudell), was sentenced to 48 months’ imprisonment for federal programs bribery and tax evasion in connection with his scheme to pay bribes and kickbacks to supervisors at Consolidated Edison of New York (Con Ed) in exchange for receiving lucrative contracts and other benefits from the public utility services provider. Quiambao was also sentenced to pay a $125,000 fine and more than $4.5 million in restitution to the IRS. At the time of his guilty plea in March 2016, Quiambao agreed to forfeit $1 million in criminal proceeds. Yesterday’s sentencing took place before United States District Judge Allyne R. Ross.
Richard P. Donoghue, United States Attorney for the Eastern District of New York; James D. Robnett, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), New York; Michael Nestor, Inspector General, The Port Authority of New York and New Jersey, Office of the Inspector General; and Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Custom Enforcement (ICE), Homeland Security Investigations (HSI), in New York, announced the sentence.
According to court filings and facts presented during court proceedings, starting in approximately 2000, Quiambao surreptitiously and regularly gave Con Ed supervisors hundreds of thousands of dollars in cash and checks in exchange for securing work, including lucrative “sole source” contracts, for his company. Quiambao also engaged in tax evasion by first concealing and then deducting the bribe payments he paid to the Con Ed supervisors as business deductions on his companies’ tax returns.
Quiambao’s sentencing was the latest step in the government’s investigation of bribery and kickback schemes involving employees and contractors of Con Ed. Since 2008, 13 Con Ed supervisors and employees and three Con Ed contractors have been convicted.
The government’s case is being prosecuted by the Office’s Public Integrity Section. Assistant United States Attorneys Paul Tuchmann and Claire S. Kedeshian are in charge of the prosecution.
The Defendant:
RODOLFO QUIAMBAO
Age: 73
Residence: Queens, New YorkE.D.N.Y. Docket No. 15-CR-0515
Long Island Husband and Wife Sentenced to Prison for Bank Fraud and Medicaid FraudRead the Press Release
Earlier today, in federal court in Central Islip, defendants Joseph Atias and Sofia Atias were sentenced by United States District Judge Denis R. Hurley to 40 months’ and 28 months’ imprisonment, respectively, following their March 30, 2017 trial convictions for bank fraud and conspiracy to commit bank fraud in connection with the sale of their real property to Sacred Heart Academy in Hempstead for athletic fields. They were also convicted of Medicaid fraud. As part of their sentences, the defendants were ordered to pay $465,965 in forfeiture and $49,956 in restitution.
Richard P. Donoghue, 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 sentence.
“Joseph and Sofia Atias committed fraud schemes to try to get out from under mortgage debt and to fraudulently obtain Medicaid funds, essentially flaunting the laws to which we all must adhere,” stated United States Attorney Donoghue. “This Office and our law enforcement partners will make every effort to ensure that those who would manipulate the system are called to account.
“In a clear case of double dipping, the defendants convinced the lending institution of their eligibility to qualify for a short sale on their property, recruited a relative to serve as a straw buyer for the property, and profited from the funds of a subsequent sale of the property,” stated FBI Assistant Director-in-Charge Sweeney. “At the same time they were running this scheme, they were also found to have engaged in significant fraud against the government. May today’s sentencing remind those who exploit government programs and manipulate gaps in the mortgage and banking sectors that they will face the error of their ways.”
The Bank Fraud Scheme
At trial, the government’s evidence established that shortly before the sale of their property adjacent to Sacred Heart Academy for $925,000, the defendants sold the property in a short sale to Bank of America for $480,000 to discharge their mortgage debt. In negotiating the short sale with the bank, the defendants and their co-conspirator attorney concealed Sacred Heart Academy’s pending offer and submitted a fraudulent contract of sale and other false documents representing that they did not have funds to pay off the mortgages in full. As part of the fraudulent short sale, the defendants used a relative as a “straw buyer” of the property to create the appearance of an arms-length sale. Shortly after that sale, the defendant’s straw buyer sold the property to Sacred Heart Academy for approximately half a million dollars in profit.
The Medicaid Fraud Scheme
The government’s evidence at trial established that between 2009 and 2015 the defendants fraudulently obtained Medicaid funds, by concealing their self-employment income and available cash resources, including trust fund monies and the $465,000 in proceeds from the bank fraud scheme.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Charles P. Kelly and Burton T. Ryan, Jr., are in charge of the prosecution. Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division is handling matters related to forfeiture.
The Defendants:SOFIA ATIAS
Age: 48 years old
Residence: Great Neck, New YorkJOSEPH ATIAS
Age: 54 years old
Residence: Great Neck, New YorkE.D.N.Y. Docket No. 14-CR-403 (DRH)
Former Officials of Central United Talmudic Academy in Brooklyn Plead Guilty to $3 Million Fraud SchemeRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, Elozer Porges and Joel Lowy pleaded guilty to conspiracy to commit mail and wire fraud relating to their participation in a multi-million dollar fraud scheme. Porges and Lowy committed this fraud while serving in the administrative offices of Central United Talmudic Academy (“Central UTA”), a school system located in Williamsburg, Brooklyn. Porges served as Central UTA’s Executive Director, and Lowy served as Porges’s assistant. The pleas were entered before United States District Judge Nicholas G. Garaufis.
Richard P. Donoghue, 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), Mark Peters, Commissioner, New York City Department of Investigation, and Bethanne M. Dinkins, Special Agent-in-Charge, United States Department of Agriculture, Office of Inspector General, announced the guilty pleas.
According to the indictment, court filings and facts presented during the guilty plea, from between approximately 2013 and 2015, Porges and Lowy submitted documents to the New York State Department of Health (NYSDOH) specifically falsely claiming that its school children had received meals which, in fact, had never been served. The defendants fraudulently inflated the number of meals served at various Central UTA schools in order to obtain larger reimbursement payments from the federal government’s Child and Adult Care Food Program (CACFP), a program funded by the United States Department of Agriculture (USDA) and administered by the NYSDOH that is designed to assist schools and other institutions in providing meals to, among others, at-risk children. In total, Porges and Lowy, fraudulently obtained more than $3 million in reimbursement payments to CUTA.
At their guilty plea proceedings, Porges and Lowy admitted to submitting the inflated meal counts on behalf of Central UTA. As part of their plea agreements, Porges and Lowy are required to reimburse $3,256,338.68 to the USDA in restitution. Lowy is also required to pay restitution in the amount of $98,407.21 for food stamp and child care benefits he improperly obtained from New York City agencies.
When sentenced, Porges and Lowy each face a statutory maximum of 20 years’ imprisonment.
The government’s case is being prosecuted by the Office’s Public Integrity Section. Assistant United States Attorneys Erik Paulsen and Maria Cruz Melendez are in charge of the prosecution.
The Defendants:
ELOZER PORGES
Age: 43
Brooklyn, NYJOEL LOWY
Age: 29
Brooklyn, NYE.D.N.Y. Docket No. 17-CR-431
Violent Robbery Crew Member Sentenced in Brooklyn Federal Court to 18 Years’ Imprisonment for Cold Case MurderRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, Yefferson Rodriguez-Lopez, a member of a violent robbery crew that operated in the New York metropolitan area from 1998 to 2003, was sentenced by United States District Judge Raymond J. Dearie to 18 years’ imprisonment and five years’ supervised release, following his guilty plea to a murder committed in 1999 during a robbery of a narcotics stash house. Rodriguez-Lopez was arrested on the federal charges in July 2016 and pleaded guilty in March 2017.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, announced the sentence.
According to court filings, between 1998 and 2003, Rodriguez-Lopez was a member of a violent robbery crew that targeted drug dealers in and around New York City, including Brooklyn and Queens. The robbery crew typically involved between three and five participants; some members of the crew, armed with firearms, would enter an apartment to steal narcotics or currency, while other members of the crew waited outside to serve as lookouts and getaway drivers. After a robbery, members of the crew generally sold the narcotics they recovered in bulk to other drug traffickers. Over several years, the crew stole millions of dollars in cash, approximately 90 kilograms of cocaine and approximately 14 kilograms of heroin.
On March 6, 1999, the defendant participated in a robbery of a narcotics stash house in the Bronx. The defendant and a co-conspirator waited for the victim to enter the narcotics stash house, forcibly pushed themselves in and tied the victim’s hands behind his back. The defendant placed a gun to the victim’s head and when the victim jerked his head back, it caused the weapon to fire. Afterwards, the defendant drove away with other members of the robbery crew and discarded his gun. The defendant evaded arrest for several years by using different aliases and altering his fingerprints.
Mr. Donoghue extended his grateful appreciation to the DEA’s New York Drug Enforcement Task Force, who conducted the investigation. The task force is comprised of agents and officers of the DEA, New York City Police Department and the New York State Police.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Hiral D. Mehta and Soumya Dayananda are in charge of the prosecution.
The Defendant:
YEFFERSON RODRIGUEZ-LOPEZ
Age: 43
New York, New YorkE.D.N.Y. Docket No. 16-CR-275 (RJD)
Queens Man Arrested for Stealing More than $150,000 in Government Benefits Paid to His Deceased MotherRead the Press Release
Earlier today, in federal court in Brooklyn, Mark Hodge was arrested on a complaint charging him with theft of government property. Hodge allegedly stole more than $150,000 from the Social Security Administration, the Office of Personnel Management and the Department of Veterans Affairs between March 1999 and July 2017. Hodge is scheduled to make his initial appearance this afternoon before United States Magistrate Judge Vera M. Scanlon.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, and John Grasso, Special Agent-in-Charge, Social Security Administration, Office of the Inspector General (SSA-OIG), announced the charge.
“Month after month for nearly two decades, the defendant allegedly stole government funds intended for his mother, who had died in 1999,” stated United States Attorney Donoghue. “This Office will hold responsible and prosecute those fraudsters who cash government checks meant for our nation’s retirees, veterans, or the disabled.”
“Today’s arrest should serve as a warning to those who choose to selfishly defraud the Social Security Trust Fund,” stated SSA-OIG Special Agent-in-Charge Grasso. “The Social Security Office of the Inspector General vigorously pursues these cases, and we will continue to work jointly with other law enforcement partners to identify and prosecute fraud perpetrators in the future. I strongly encourage the public to report suspected instances of Social Security fraud to the OIG’s Fraud Hotline at 1-800-269-0271 or https://oig.ssa.gov/report.”
According to the complaint, the three federal agencies had been paying benefits to the defendant’s mother, who had been residing with the defendant until her death in 1999. Unaware of her death, the agencies continued making payments for her benefit. Instead of reporting the overpayments, the defendant transferred the funds from a joint bank account in his mother’s name to his own personal checking account. The defendant continued the fraud in November 2016, when he falsely represented to the Social Security Administration that his mother was alive but unable to be interviewed because she had been hospitalized.
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, the defendant faces a statutory maximum of 10 years’ imprisonment for theft of government property.
The government’s case is being handled by the Office’s General Crimes Section. Special Assistant United States Attorney Virginia Nguyen is in charge of the prosecution.
The Defendant:
MARK HODGE
Age: 60
Residence: Queens, New YorkE.D.N.Y. Docket No. 18-MJ-257
District Court Orders Long Island Company to Stop Distributing Adulterated and Misbranded Dietary SupplementsRead the Press Release
The United States District Court for the Eastern District of New York entered a consent decree today barring Riddhi USA Inc., of Ronkonoma, New York, and its owner, Mohd M. Alam, from distributing adulterated and misbranded dietary supplements pending required remedial action.
The consent decree approved by the U.S. District Judge Leonard D. Wexler requires Riddhi and Alam to destroy, within 15 days, all dietary supplements in their possession, custody or control. The injunction also requires Riddhi and Alam to implement consumer safety measures before resuming the manufacturing or distributing of dietary supplements. This includes hiring an independent expert to perform a comprehensive inspection of Riddhi’s facility and requiring the expert to certify that defendants are complying with current good manufacturing practice.
The consent decree resolves a suit filed on October 23, 2017, at the request of the U.S. Food and Drug Administration (FDA). According to the complaint, Riddhi and Alam manufactured, prepared, labeled, packed, held and distributed dietary supplements under conditions that failed to comply with current good manufacturing practice regulations.
“Today’s consent decree shows that we will make every effort to ensure that dietary supplement manufacturers comply with good manufacturing practices,” stated U.S. Attorney for the Eastern District of New York Richard Donoghue. “This Office is committed to safeguarding consumers from adulterated and misbranded dietary supplements.”
“The injunction entered today demonstrates the Department of Justice’s continuing efforts to protect consumers from adulterated and misbranded dietary supplements,” said Acting Assistant Attorney General for the Justice Department’s Civil Division Chad A. Readler. “The Department of Justice will continue to work with the FDA to ensure that dietary supplement manufacturers provide accurate information about what is in their products.”
According to the complaint, FDA documented numerous significant deviations from current Good Manufacturing Practice regulations during its 2017 inspection of Riddhi’s facilities, including failures to: establish product specifications for identity, purity, strength, and composition of their finished dietary supplements; conduct at least one appropriate test to verify the identity of a dietary ingredient; and establish and follow written procedures for quality control operations. The complaint alleged that an FDA inspection ending in early 2016 found similar violations.
In addition, the complaint alleged that Riddhi and Alam misbranded their dietary supplements by failing to comply with certain labeling requirements in the federal Food, Drug, and Cosmetic Act. For example, as noted in the complaint, the defendants’ products are fabricated from two or more ingredients but fail to list any ingredients on their product labels or labeling. The complaint also alleged that some of the defendants’ products, including Prenatal Formula, Osteo Gest, Neuroxygen, Inflam-Ease and All-Ease, are misbranded because the products’ label or labeling failed to declare the place of business of the manufacturer, packer or distributor.
Riddhi and Alam agreed to resolve the complaint and be bound by the consent decree permanent injunction.
The government is represented by Trial Attorney Monica Groat of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Edwin Cortes of the U.S. Attorney’s Office for the Eastern District of New York, with the assistance of Associate General Counsel for Enforcement Roselle Oberstein of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Eastern District of New York, visit its website at https://www.justice.gov/usao-edny.
The Defendants:
RIDDHI USA, INC.
Ronkonkoma, New YorkMOHD M. ALAM
District Court Orders Long Island Company to Stop Distributing Adulterated and Misbranded Dietary SupplementsRead the Press Release
A federal court enjoined Riddhi USA Inc., of Ronkonoma, New York, and its owner, Mohd M. Alam, from distributing adulterated and misbranded dietary supplements pending required remedial action, the Department of Justice announced today.
The injunction ordered by the U.S. District Court for the Eastern District of New York requires Riddhi and Alam to destroy, within 15 days, all dietary supplements that are in their possession, custody, or control. The injunction also orders Riddhi and Alam to implement various consumer safety measures before resuming the manufacturing or distributing of dietary supplements. This includes hiring an independent expert to perform a comprehensive inspection of Riddhi’s facility and requires the expert to certify that all current good manufacturing practice deviations brought to defendants’ attention have been corrected.
The injunction stems from a complaint the Department filed on Oct. 23, 2017, at the request of the U.S. Food and Drug Administration (FDA). According to the complaint, Riddhi and Alam manufactured, prepared, labeled, packed, held, and distributed dietary supplements under conditions that failed to comply with current good manufacturing practice regulations.
“The injunction entered today demonstrates the Department of Justice’s continuing efforts to protect consumers from adulterated and misbranded dietary supplements,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice will continue to work with FDA to ensure that dietary supplement manufacturers provide accurate information about what is in their products.”
“Today’s consent decree shows that we will make every effort to ensure that dietary supplement manufacturers comply with good manufacturing practices,” stated U.S. Attorney for the Eastern District of New York Richard Donoghue. “This Office is committed to safeguarding consumers from adulterated and misbranded dietary supplements.”
According to the filed complaint, FDA documented numerous significant deviations from current good manufacturing practice regulations during its 2017 inspection of Riddhi’s facilities, including failures to: establish product specifications for identity, purity, strength, and composition of their finished dietary supplements; conduct at least one appropriate test to verify the identity of a dietary ingredient; and establish and follow written procedures for quality control operations. The complaint alleged that an FDA inspection ending in early 2016 found deviations in current good manufacturing practice.
In addition, the complaint alleged that Riddhi and Alam misbranded their dietary supplements by failing to comply with certain labeling requirements in the federal Food, Drug, and Cosmetic Act. For example, as noted in the complaint, defendants’ products are fabricated from two or more ingredients but fail to declare any ingredients on their product labels or labeling. The complaint also alleged that some of the defendants’ products, including Prenatal Formula, Osteo Gest, Neuroxygen, Inflam-Ease, and All-Ease, are misbranded because the products’ label or labeling failed to declare the place of business of the manufacturer, packer, or distributor.
The defendants agreed to resolve the complaint and be bound by a consent decree of permanent injunction. The district court adopted the resolution and entered a permanent injunction against Riddhi and Alam.
The government is represented by Trial Attorney Monica Groat of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Edwin Cortes of the U.S. Attorney’s Office for the Eastern District of New York, with the assistance of Associate General Counsel for Enforcement Roselle Oberstein of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Eastern District of New York, visit its website at https://www.justice.gov/usao-edny.
Barclays Agrees to Pay $2 Billion in Civil Penalties to Resolve Claims for Fraud in the Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
BROOKLYN, NY – The United States has reached agreement with Barclays Capital, Inc. and several of its affiliates (together, Barclays) to settle a civil action filed in December 2016 in which the United States sought civil penalties for alleged conduct related to Barclays’ underwriting and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. Barclays will pay the United States two billion dollars ($2,000,000,000) in civil penalties in exchange for dismissal of the Amended Complaint.
Following a three-year investigation, the complaint in the action, United States v. Barclays Capital, Inc., alleged that Barclays caused billions of dollars in losses to investors by engaging in a fraudulent scheme to sell 36 RMBS deals, and that it misled investors about the quality of the mortgage loans backing those deals. It alleged violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud, wire fraud, bank fraud, and other misconduct.
Agreement has also been reached with the two former Barclays executives who were named as defendants in the suit: Paul K. Menefee, of Austin, Texas, who served as Barclays’ head banker on its subprime RMBS securitizations, and John T. Carroll, of Port Washington, New York, who served as Barclays’ head trader for subprime loan acquisitions. In exchange for dismissal of the claims against them, Menefee and Carroll agree to pay the United States the combined sum of two million dollars ($2,000,000) in civil penalties.
The settlement was announced by Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Laura S. Wertheimer, Inspector General for the Federal Housing Finance Agency (FHFA-OIG).
“This settlement reflects the ongoing commitment of the Department of Justice, and this Office, to hold banks and other entities and individuals accountable for their fraudulent conduct,” stated United States Attorney Donoghue. “The substantial penalty Barclays and its executives have agreed to pay is an important step in recognizing the harm that was caused to the national economy and to investors in RMBS.”
“The actions of Barclays and the two individual defendants resulted in enormous losses to the investors who purchased the Residential Mortgage-Backed Securities backed by defective loans,” stated FHFA Inspector General Wertheimer. “Today’s settlement holds accountable those who waste, steal or abuse funds in connection with FHFA or any of the entities it regulates. We are proud to have partnered with the U.S. Department of Justice and the U.S Attorney’s Office for the Eastern District of New York on this matter.”
The scheme alleged in the complaint involved 36 RMBS deals in which over $31 billion worth of subprime and Alt-A mortgage loans were securitized, more than half of which loans defaulted. The complaint alleged that in publicly filed offering documents and in direct communications with investors and rating agencies, Barclays systematically and intentionally misrepresented key characteristics of the loans it included in these RMBS deals. In general, the borrowers whose loans backed these deals were significantly less creditworthy than Barclays represented, and these loans defaulted at exceptionally high rates early in the life of the deals. In addition, as alleged in the complaint, the mortgaged properties were systematically worth less than what Barclays represented to investors. These are allegations only, which the Defendants dispute, and there has been no trial or adjudication or judicial finding of any issue of fact or law.
The government’s case has been handled by this Office’s Civil Division. Senior Counsel F. Franklin Amanat, and Assistant United States Attorneys Matthew R. Belz, Charles S. Kleinberg, Evan P. Lestelle, Matthew J. Modafferi, Josephine M. Vella and Alex S. Weinberg have been in charge of the litigation. Mr. Donoghue thanks the FHFA-OIG for its assistance in conducting the investigation in this matter.
E.D.N.Y. Docket No. 16-CV-7057 (KAM/JO)
Link to the original press release announcing the filing of the suit: https://www.justice.gov/usao-edny/pr/united-states-sues-barclays-bank-recover-civil-penalties-fraud-sale-residential
Barclays Agrees to Pay $2 Billion in Civil Penalties to Resolve Claims for Fraud in the Sale of Residential Mortgage-Backed SecuritiesRead the Press Release
The United States has reached agreement with Barclays Capital, Inc. and several of its affiliates (together, Barclays) to settle a civil action filed in December 2016 in which the United States sought civil penalties for alleged conduct related to Barclays’ underwriting and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. Barclays will pay the United States two billion dollars ($2,000,000,000) in civil penalties in exchange for dismissal of the Amended Complaint.
Following a three-year investigation, the complaint in the action, United States v. Barclays Capital, Inc., alleged that Barclays caused billions of dollars in losses to investors by engaging in a fraudulent scheme to sell 36 RMBS deals, and that it misled investors about the quality of the mortgage loans backing those deals. It alleged violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud, wire fraud, bank fraud, and other misconduct.
Agreement has also been reached with the two former Barclays executives who were named as defendants in the suit: Paul K. Menefee, of Austin, Texas, who served as Barclays’ head banker on its subprime RMBS securitizations, and John T. Carroll, of Port Washington, New York, who served as Barclays’ head trader for subprime loan acquisitions. In exchange for dismissal of the claims against them, Menefee and Carroll agree to pay the United States the combined sum of two million dollars ($2,000,000) in civil penalties.
The settlement was announced by Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Laura S. Wertheimer, Inspector General, of the Federal Housing Finance Agency Office of the Inspector General (FHFA-OIG).
“This settlement reflects the ongoing commitment of the Department of Justice, and this Office, to hold banks and other entities and individuals accountable for their fraudulent conduct,” stated United States Attorney Donoghue. “The substantial penalty Barclays and its executives have agreed to pay is an important step in recognizing the harm that was caused to the national economy and to investors in RMBS.”
“The actions of Barclays and the two individual defendants resulted in enormous losses to the investors who purchased the Residential Mortgage-Backed Securities backed by defective loans,” stated FHFA-OIG Inspector General Wertheimer. “Today’s settlement holds accountable those who waste, steal or abuse funds in connection with FHFA or any of the entities it regulates. We are proud to have partnered with the U.S. Department of Justice and the U.S Attorney’s Office for the Eastern District of New York on this matter.”
The scheme alleged in the complaint involved 36 RMBS deals in which over $31 billion worth of subprime and Alt-A mortgage loans were securitized, more than half of which loans defaulted. The complaint alleged that in publicly filed offering documents and in direct communications with investors and rating agencies, Barclays systematically and intentionally misrepresented key characteristics of the loans it included in these RMBS deals. In general, the borrowers whose loans backed these deals were significantly less creditworthy than Barclays represented, and these loans defaulted at exceptionally high rates early in the life of the deals. In addition, as alleged in the complaint, the mortgaged properties were systematically worth less than what Barclays represented to investors. These are allegations only, which the Defendants dispute, and there has been no trial or adjudication or judicial finding of any issue of fact or law.
The government’s case has been handled by this Office’s Civil Division. Senior Counsel F. Franklin Amanat, and Assistant United States Attorneys Matthew R. Belz, Charles S. Kleinberg, Evan P. Lestelle, Matthew J. Modafferi, Josephine M. Vella and Alex S. Weinberg have been in charge of the litigation. Mr. Donoghue thanks the FHFA-OIG for its assistance in conducting the investigation in this matter.
E.D.N.Y. Docket No. 16-CV-7057 (KAM/JO)
The press release from the Eastern District of New York orignially announcing the filing of the suit can be found here.
Two Long Island Men Plead Guilty to Filing False Tax ReturnsRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, Parviz Hakimian and Khosrow Hakimian, both of whom are Long Island residents, pleaded guilty to filing false tax returns related to the failure to disclose overseas bank accounts. Each defendant agreed as part of the guilty plea to pay $7,730,000 in civil penalties. The guilty pleas were entered before United States District Judge Nicholas G. Garaufis.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, and James D. Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the guilty pleas.
“As alleged, both Parviz and Khosrow Hakimian utilized overseas bank accounts to conceal millions of dollars in income from the United States government,” stated United States Attorney Donoghue. “This Office and our law enforcement partners will continue to work together to ensure that individuals who attempt to evade their responsibilities as taxpayers are held accountable.”
“The Hakimian brothers took extreme measures to evade paying millions in taxes, while other taxpayers paid their fair share,” stated IRS-CI Special Agent-in-Charge Robnett. “This should not and will not be tolerated. As evidenced by the Hakimian brothers pleading guilty today, those that attempt to evade their tax liabilities by hiding US earnings in secret off-shore accounts will be identified and prosecuted.”
As stated in the charging documents, between 2009 and 2011, both defendants maintained undeclared bank accounts at an Israeli private bank headquartered in Tel Aviv, Israel. The bank provided private banking services to, and maintained undeclared accounts for, United States taxpayers. Parviz and Khosrow Hakimian each failed to report these accounts, and the interest income from these accounts, in their tax filings.
At sentencing, each defendant faces a maximum of three years in prison.
Assistant United States Attorney Margaret Lee is in charge of the prosecution.
The Defendants:
PARVIZ HAKIMIAN
Age: 70
Great Neck, New YorkE.D.N.Y. Docket 18-CR-70 (NGG)
KHOSROW HAKIMIAN
Age: 64
Great Neck, New YorkE.D.N.Y. Docket 18-CR-71 (NGG)
Six Additional Members of Heroin Trafficking Ring with Ties to a Mexican Cartel Indicted in Brooklyn Federal CourtRead the Press Release
Earlier today, a seven-count superseding indictment was unsealed in federal court in Brooklyn, charging Enrique LaPorte, also known as “Chiquito,” Zaida Lopez, Philippe Medina, Carlos Mateo and Clarissa Vasquez, also known as “Clari,” with conspiring to distribute heroin as members of a large-scale trafficking operation that was based in Brooklyn and Queens. A sixth defendant remains at large. Defendants Clarissa Vasquez, Peter Vasquez and Luis Lopez are also indicted for laundering narcotics proceeds. Clarissa Vasquez additionally faces charges for making false statements to law enforcement during the investigation.
The five newly charged defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Steven Gold at the federal courthouse in Brooklyn.
Richard P. Donoghue, 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 James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the charges.
“The defendants were part of a large-scale heroin trafficking organization that moved hundreds of thousands of dollars in illicit proceeds across the country from Los Angeles to New York, enriching themselves in the process,” stated United States Attorney Donoghue. “These charges demonstrate the effectiveness of the cooperation among federal, state and local law enforcement in dismantling large-scale trafficking organizations and prosecuting those responsible to the fullest extent of the law.”
Mr. Donoghue expressed his appreciation to the New York Metropolitan Safe Streets Task Force, which is comprised of detectives from the NYPD and special agents from the FBI, and additionally thanked the Ohio State Highway Patrol, Pennsylvania State Police, Indiana State Police, New Jersey State Police, the Chicago Field Divisions of the Drug Enforcement Administration and Homeland Security Investigations, Drug Enforcement Administration New York City Strike Force and Bergen County Prosecutor’s Office for their participation and assistance in the investigation.
“Each day we face another overdose, another loved one lost to the illegal drugs flooding into our communities,” stated FBI Assistant Director-in-Charge Sweeney. “The subjects in this case allegedly created a cross-country drug trade, using the money to support lavish lifestyles all on the backs of people addicted to drugs that are killing tens of thousands of people all over the country every year. This case and others we are actively investigating each day on all of our FBI Safe Streets Task Forces illustrate our determination to go after dealers and keep these deadly drugs off the streets.”
According to the charging instruments and other court documents, all of the defendants were members of a large-scale heroin trafficking organization that trafficked hundreds of kilograms of heroin into New York City and had connections to a Mexican cartel. Between December 2011 and February 2015, law enforcement seized over $800,000 in narcotics proceeds from the organization. Some of the newly added defendants were found in possession of hundreds of thousands of dollars in narcotics proceeds while transporting them across the country in furtherance of their family-run operation. For example, in 2011, Ohio State troopers seized over $311,000 from a hidden “trap” inside a vehicle driven by defendant Medina; in 2014, Pennsylvania State troopers seized over $300,000 from a “trap” inside a vehicle registered to defendant Clarissa Vasquez, and in which defendants Zaida Lopez and Enrique LaPorte were traveling; and in 2015, Ohio State troopers stopped a vehicle driven by Carlos Mateo, from which Indiana law enforcement later recovered over $48,000 secreted in a “trap.”
The proceeds of the illicit narcotics operation funded a lavish lifestyle for the Lopez and Vasquez families, their associates and co-conspirators. For example, Clarissa Vasquez spent extravagantly on luxury goods and gifts, including gold and diamond encrusted jewelry, 24 karat gold-gilded and “Versace” branded birthday cakes for her brother and fiancée, and boasted of her co-defendants’ exorbitant purchases and expensive vehicles on social media. While law enforcement seized nearly $1 million in luxury vehicles, including a Rolls Royce Ghost, Lamborghini Hurácan, Audi R8 Spyder, Mercedes CLS63 AMG and Range Rover Sport, nearly $1 million in cash and tens of thousands of dollars’ worth of high fashion shoes and handbags, additional assets of the co-conspirators remain at large. All proceeds of the narcotics trafficking conspiracy will be subject to forfeiture, according to the indictment.
The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
If convicted, all of the defendants face mandatory minimum sentences of 10 years’ imprisonment and maximum sentences of life.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Lindsay K. Gerdes, Jennifer M. Sasso and Andrey Spektor are in charge of the prosecution, with assistance provided by Assistant United States Attorney Brian D. Morris of the Office’s Asset Forfeiture Unit.
The Defendants:
ENRIQUE LAPORTE (also known as “Chiquito”)
Age: 41
Brooklyn, New YorkZAIDA LOPEZ
Age: 41
Brooklyn, New YorkPHILIPPE MEDINA
Age: 32
Brooklyn, New YorkCARLOS MATEO
Age: 42
Brooklyn, New YorkCLARISSA VASQUEZ (also known as “Clari”)
Age: 30
Brooklyn, New YorkE.D.N.Y. Docket No. 17-CR-390 (S-1) (RJD)
Former NYPD Officer Sentenced to More Than 14 Years in Prison on Extortion and Firearms ChargesRead the Press Release
Earlier today in federal court in Brooklyn, Besnik Llakatura was sentenced by United States District Judge Eric N. Vitaliano to 171 months’ imprisonment, to be followed by a term of five years’ supervised release, for his convictions on two counts of Hobbs Act extortion conspiracy and one count of brandishing a firearm in relation to a crime of violence. The charges relate to the defendant’s participation in two schemes to extort small business owners in Astoria, Queens. At the time of his crimes, Llakatura was an active-duty police officer with the New York City Police Department (NYPD) assigned to the 120th Precinct on Staten Island. Llakatura was suspended without pay upon his arrest in December 2013 and dismissed from the NYPD following his guilty plea in December 2015. The Court also imposed restitution in the amount of $10,000 and forfeiture in the amount of $10,000.
Richard P. Donoghue, 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 James P. O’Neill, Commissioner, NYPD, announced the sentence.
“In flagrant violation of his sworn duty to serve and protect the community, former police officer Llakatura, along with his criminal partners, used fear, intimidation and threats of violence to demand payment from hard-working citizens who dared to open businesses on their so-called ‘turf’ of Astoria, Queens,” stated United States Attorney Donoghue. “Today’s sentence drives home the message that no one is above the law and a police officer who commits crimes against the community he serves will be held fully accountable.” Mr. Donoghue extended his grateful appreciation to the members of the Joint Organized Crime Task Force, which includes agents of the FBI and detectives of the NYPD, which led the investigation, as well as the NYPD’s Internal Affairs Division for their cooperation and assistance in the investigation.
“Besnik Llakatura took an oath to serve and protect the citizens of New York City as an officer of the NYPD, while simultaneously pledging his allegiance to a violent organized crime group bent on shaking down local Queens business owners within the Albanian community,” stated FBI Assistant Director-in-Charge Sweeney. “He quickly discovered what happens to those who find themselves on the wrong side of the law, and after his guilty plea, was stripped of his shield of honor. Today’s sentence is a reminder that even those who enforce the rules will still be held to their highest standards.”
According to prior court filings and evidence presented at the trial of co-defendant Dervishaj, between May and November 2013, Llakatura, Dervishaj and Nikolla conspired and attempted to extort a Queens restaurant owner, demanding monthly payments in exchange for so-called “protection.” Shortly after the victim opened a restaurant in Astoria, Dervishaj demanded $4,000 per month because the victim had opened it in “our neighborhood.” The victim sought help from his friend Llakatura, at the time an NYPD officer. Unbeknownst to the victim, Llakatura was already conspiring with Dervishaj and Nikolla in the extortion scheme. Llakatura actively discouraged the victim from reporting the extortion to the police, and warned the victim that Dervishaj would hurt him and had ties to dangerous Albanian organized crime figures – including his brother Plaurent Dervishaj, at the time Albania’s most wanted fugitive. When the victim failed to make the demanded payments, Nikolla – accompanied by Dervishaj – threatened him on a public street in Queens and chased him at gunpoint, before the victim managed to escape in his car. Shortly thereafter, Dervishaj called the victim and told him that he “got lucky this time.” Over the course of five months, each of the three defendants took turns collecting monthly extortion payments totaling $24,000.
During the same time period, Llakatura and his co-defendants also conspired and attempted to extort a proprietor of two social clubs in Astoria. Accompanied by Dervishaj, Nikolla demanded payments of $1,000 per week, once again for “protection.” The victim refused to make the demanded payments and stopped going to his social clubs out of fear for his safety. Court-authorized wiretaps of the defendants’ telephones revealed that all three defendants worked together to locate the victim and force him to pay. In one instance, the defendants confronted a friend of the victim in an effort to find the victim and send him a message. Llakatura and his co-defendants threatened, punched and pulled a gun on the victim’s friend, leaving him with injuries to his face. Upon learning of this assault, the extortion victim fled to a foreign country for a period of time to avoid the defendants’ extortionate threats, and later sold his social clubs.
Co-defendant Redinel Dervishaj, who was convicted of 12 extortion and firearms counts after a three-week trial, was previously sentenced on March 24, 2017 to 57 years’ and one day of imprisonment. Co-defendant Denis Nikolla, who previously pled guilty to three extortion counts and one firearms count, was sentenced on March 10, 2017 to 18 years’ imprisonment.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Nadia Shihata, Patrick Hein and M. Kristin Mace are in charge of the prosecution.
The Defendant:
BESNIK LLAKATURA
Age: 38
Residence: Staten Island, New YorkE.D.N.Y. Docket No. 13-CR-668 (ENV)
Three Individuals Arrested for Elder Fraud ConspiracyRead the Press Release
A complaint was unsealed today, in federal court in Brooklyn, charging Kimberly Rojas Orozco, Alexander Brown, also known as “AJ Brown,” and Troy Stanley with conspiracy to commit wire and mail fraud in connection with a lottery telephone scam targeting elderly victims. The defendants and their co-conspirators allegedly received approximately $260,000 in fraudulently obtained payments from their victims through bank wires or the mail system. The defendants were arrested today and they will make their initial appearances this afternoon at the federal courthouse in Baltimore, Maryland.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York, and Gurbir S. Grewal, Attorney General of the State of New Jersey, announced the arrests.
“As alleged in the complaint, the defendants defrauded elderly and vulnerable victims by making false promises of life-changing prizes and deceiving the hopeful victims into paying upfront fees,” stated United States Attorney Donoghue. “This Office, together with our law enforcement partners, will vigorously pursue the perpetrators of these fraudulent schemes wherever they are located, and hold them accountable.”
“These alleged fraudsters preyed on senior citizens, swindling them out of more than a quarter million dollars,” said HSI Special Agent-in-Charge Melendez. “Instead of showing respect to elders, these individuals chose to cheat them out of their savings; and, now they will be held responsible for their actions.”
“Law enforcement must go the extra mile to protect the elderly, who cannot always protect themselves, and our investigators have done that in this collaborative investigation,” said New Jersey Attorney General Grewal. “These defendants allegedly placed themselves in the lowest ranks of con artists by preying on seniors and callously targeting their life savings.”
According to the complaint, between January 2014 and November 2017, the defendants and others engaged in a telephone scam through which callers convinced seniors that they had won a cash lottery or sweepstakes, and that a large fee or taxes must be paid before the senior could receive their lottery winnings. The defendants, together with others, received the purported “fees,” approximately $260,000 identified to date, in the form of bank wires, money orders mailed to Brooklyn, or personal checks, and deposited the funds into their personal bank accounts.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants face a statutory maximum of 20 years’ imprisonment for wire and mail fraud conspiracy.
The government’s case is being handled by the Office’s General Crimes Section. Assistant United States Attorney Elizabeth Losey Macchiaverna is in charge of the prosecution.
The Defendants:
KIMBERLY ROJAS OROZCO
Age: 28
Rockville, MarylandALEXANDER BROWN (also known as “AJ Brown”)
Age: 28
Rockville, MarylandTROY STANLEY
Age: 33
Randallstown, MarylandE.D.N.Y. Docket No. 18-MJ-249
The Founder of “Nxivm,” a Purported Self-Help Organization Based in Albany, N.Y., Arrested for Sex Trafficking and Forced Labor ConspiracyRead the Press Release
A complaint was unsealed today in federal court in Brooklyn charging Keith Raniere, also known as “The Vanguard,” with sex trafficking, sex trafficking conspiracy and forced labor conspiracy. Raniere was deported by Mexican authorities after he was found Sunday outside Puerto Vallarta, Mexico in a luxury villa. Raniere’s initial appearance is scheduled for tomorrow afternoon at the federal courthouse in Fort Worth, Texas.
Richard P. Donoghue, 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, Keith Raniere created a secret society of women whom he had sex with and branded with his initials, coercing them with the threat of releasing their highly personal information and taking their assets,” stated United States Attorney Donoghue. “This Office and our law enforcement partners are committed to the prosecution of those who break the law by preying upon and violating members of our community.” Mr. Donoghue expressed his grateful appreciation to the FBI for leading the investigation, and thanked the New York State Police, the FBI Albany Field Office, the FBI’s Mexican Legat, the Mexican Federal Police, the New York State Office of the Attorney General, the New York State Department of Health and the United States Attorney’s Office for the Northern District of New York for their assistance.
“As alleged, Keith Raniere displayed a disgusting abuse of power in his efforts to denigrate and manipulate women he considered his sex slaves,” FBI Assistant Director-in-Charge Sweeney stated. “He allegedly participated in horrifying acts of branding and burning them, with the cooperation of other women operating within this unorthodox pyramid scheme. These serious crimes against humanity are not only shocking, but disconcerting to say the least, and we are putting an end to this torture today.”
Defendant’s Founding of Nxivm
According to the complaint, during the past 20 years, Raniere established a series of purported self-help workshops called “Executive Success Programs” (“ESP”) within his umbrella organization “Nxivm” (pronounced NEX-i-um). Nxivm is based in Albany, New York and has operated centers in the United States, Mexico, Canada and South America. Nxivm maintains features of a pyramid scheme, as its courses cost thousands of dollars each and participants (“Nxians”) are encouraged to pay for additional classes, and to recruit others to take classes, in order to rise within the ranks of Nxivm. A number of Nxians were residents of the Eastern District of New York when they were recruited, and Nxivm has held promotional recruiting events in Brooklyn. Since Nxivm’s creation, Raniere has maintained poly-amorous relations with its members.
According to the complaint, in 2015, Raniere created a secret society within Nxivm called “DOS,” which loosely translated to “Lord/Master of the Obedient Female Companions,” or “The Vow.” DOS operated with levels of women “slaves” headed by “masters.” Slaves were expected to recruit slaves of their own (thus becoming masters themselves), who in turn owed service not only to their own masters but also to masters above them in the DOS pyramid. Raniere stood alone at the top of the pyramid. Other than the Raniere, all members of DOS were women.
Most DOS slaves were recruited from within Nxivm’s ranks. When new DOS slaves were recruited, they were explicitly told that the organization was women-only, and that the organization would empower them and eradicate weaknesses that the Nxivm curriculum taught were common in women. Raniere’s status at the top of the structure was concealed from new recruits.
As a pre-condition to joining DOS, women were required to provide “collateral,” which included highly damaging information about friends and family members, nude photographs and/or rights to the recruit’s assets. DOS slaves feared that their collateral could be released for any number of reasons, including telling anyone about DOS’s existence or leaving DOS. Many DOS slaves were branded on their pelvic areas using a cauterizing pen with a symbol which, unbeknownst to them, incorporated Raniere’s initials. During the branding ceremonies, slaves were required to be fully naked, and a master would order one slave to film the branding while the others restrained the slave being branded.
As detailed in the complaint, some DOS masters gave their slaves, including Jane Does 1 and 2 as described in the complaint, work which directly or implicitly required the slaves to have sex with Raniere. These DOS masters received financial benefits from Raniere. According to the complaint, both Jane Doe 1 and Jane Doe 2 believed that if they did not have sex with the defendant, their collateral could be released.
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
If convicted of the crimes charged, Raniere faces a mandatory minimum sentence of 15 years’ imprisonment, and up to life imprisonment.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Moira Kim Penza and Tanya Hajjar are in charge of the prosecution.
The Defendant:
KEITH RANIERE (also known as “The Vanguard”)
Age: 57
Residence: Waterford, New YorkE.D.N.Y. Docket No. 18-MJ-132
Queens Criminal Defense Attorney and Three Other Individuals Indicted for Conspiracy and Making False StatementsRead the Press Release
A two-count indictment was unsealed today in federal court in Brooklyn charging attorney Scott Brettschneider, also known as “Mighty Whitey,” Charles Gallman, also known as “T.A.,” Richard Marshall, also known as “Love,” and Reginald Shabazz-Muhammad, also known as “Reggie,” with conspiring to make false statements and making false statements to the United States Bureau of Prisons (“BOP”). Brettschneider was arrested earlier today and will be arraigned this afternoon in federal court in Brooklyn before United States Magistrate Judge Steven M. Gold. Gallman and Marshall were arrested on March 22, 2018 and ordered detained. Shabazz-Muhammad is still at large. The case has been assigned to United States District Judge Carol B. Amon.
Richard P. Donoghue, 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 Richard A. Brown, District Attorney of Queens County, announced the charges.
“The defendants, including a practicing attorney, participated in a scheme to gain a narcotics trafficker early release from prison by falsely informing the Bureau of Prisons that he was a candidate for a drug rehab program,” stated United States Attorney Donoghue. “This Office and our law enforcement partners are committed to ensuring that the resources to fight drug addiction go to the people who need them, not the drug dealers who put poison on our streets and who deserve to serve the entirety of their prison sentences.”
“Those charged today allegedly conspired to release an inmate from prison under the auspices that he was eligible to receive treatment from the BOP’s Residential Drug Abuse Program when, in fact, he was not,” stated FBI Assistant Director-in-Charge Sweeney. “Petitioning to send a known drug dealer back onto our streets before his sentence is served, and providing false documentation to prove he’s eligible for early release, is a reckless prospect that risks the well-being of society as a whole. Drug addiction is a serious issue that deserves the appropriate response from all those involved. We won’t stand for anything less.”
“Integrity is the foundation of our criminal justice system,” stated Queens District Attorney Brown. “These allegations go to the core of that foundation and are prejudicial to the administration of justice. The charges today send a strong message to those who would undermine that integrity that they will be held accountable. No one can be allowed to ‘fix’ any part of a case. I commend our federal partners in the United States Attorney’s Office for the Eastern District and the Federal Bureau of Investigation working with my Rackets, Special Victims and District Attorney’s Detective Bureaus for their vigorous pursuit of justice in this matter.”
As alleged in the indictment and detailed in court filings, a federal inmate (Marshall), his defense attorney (Brettschneider) and two other defendants (Gallman and Shabazz-Muhammad) wrote a letter to the BOP, falsely recounting Marshall’s history of substance and alcohol dependence. The letter was signed by Shabazz-Muhammad, purporting to be Marshall’s treatment provider, and was submitted to the BOP on Marshall’s behalf, for Marshall to fraudulently gain entry into the BOP’s Residential Drug Abuse Program (“RDAP”). An inmate who is accepted into and successfully completes the RDAP program is potentially eligible to receive a year off his or her sentence. Shabazz-Muhammad was not Marshall’s treatment provider; he was Brettschneider’s assistant. Intercepted communications over a court-authorized wiretap revealed the defendants talking to Marshall on a smuggled cell phone in prison, discussing what the letter should state to ensure Marshall’s acceptance into the program. Gallman predicted that it would “knock a year off his sentence,” and doubted that the BOP would be “scrutinizing it that much.” As it turned out, the BOP did scrutinize it, and requested that Marshall submit progress reports of his past treatment.
As alleged in court documents, the charges contained in the federal indictment stem from an investigation conducted by the Queens County District Attorney’s Office.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Lindsay K. Gerdes and Andrey Spektor are in charge of the prosecution.
The Defendants:
Scott Brettschneider
Age: 61
Queens, New York
Mint Hill, North CarolinaCharles Gallman
Age: 56
Queens, New YorkRICHARD MARSHALL
Age: 56
Charlotte, North CarolinaReginald Shabazz-Muhammad
Age: 62
Queens, New YorkE.D.N.Y. Docket No. 18-CR-123 (CBA)
MS-13 Gang Member Pleads Guilty to Long Island Murder and Attempted Murder ChargesRead the Press Release
Earlier today, at the federal courthouse in Central Islip, Elmer Alexander Lopez (“Smiley”), a member of the Centrales Locos Salvatruchas clique of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, pleaded guilty to racketeering charges relating to his participation in the June 3, 2016 murder of Jose Pena, and the July 3, 2016 attempted murder of a suspected rival gang member. The guilty plea was entered before United States District Judge Joseph F. Bianco.
Richard P. Donoghue, 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 Stuart J. Cameron, Acting Commissioner, Suffolk County Police Department (“SCPD”), announced the guilty plea.
“Lopez and his coconspirators took turns slashing and stabbing to death a fellow MS-13 member because the victim was suspected of violating gang rules, and merely one month later, turned a basketball court into a shooting gallery in a brazen attempt to kill a rival gang member, ” stated United States Attorney Donoghue. “The killing and attempted murder perpetrated by Lopez are typical of the violence carried out by MS-13 to instill fear within its own ranks and terrorize our community. Today’s guilty plea holds the defendant accountable for his crimes and reflects the unwavering commitment by this Office and our partners with the FBI’s Long Island Gang Task Force to eradicate the scourge that is MS-13.”
“This case is just one in our systematic and focused dismantling of MS-13 on Long Island,” stated FBI Assistant Director-in-Charge Sweeney. “Our ultimate goal is to eradicate the deadly and violent gang from the communities that have experienced murders, shooting, violence and criminal activity. The FBI Long Island Gang Task Force and our law enforcement partners have created a massive surge of pressure on MS-13, and this plea shows proof that pressure is paying off.”
“The Suffolk County Police Department thanks the Eastern District of New York for their steadfast commitment to prosecute violent MS-13 gang members,” stated SCPD Commissioner Cameron. “Today’s news is an example of the ongoing effort by the Suffolk County Police Department and our law enforcement partners to protect the residents of Suffolk County from the scourge of gang violence. Ridding our community of gangs is a long-term commitment and one that we are strongly committed to. Gang members should know that if they commit crimes in this county they will be arrested and prosecuted to the fullest extent of the law.”
As set forth in prior court filings, a detention letter, the fourth superseding indictment, and the defendant’s statements during his guilty plea, Lopez and several co-conspirators, who have been charged in the Eastern District of New York, decided to kill Pena, a member of the MS-13, because he was suspected of violating gang rules. Prior to the murder, Lopez and the other MS-13 members held meetings where they discussed killing Pena because the MS-13 suspected that Pena had cooperated with law enforcement authorities and that he might be homosexual. After consulting with MS-13 leadership in El Salvador, Lopez and the other MS-13 members agreed to murder Pena and tasks were assigned to each of the co-conspirators to carry out the plan, including obtaining weapons and a vehicle to be used in the murder. On June 3, 2016, Lopez and the other MS-13 members lured Pena into a car and drove to a secluded wooded area in Brentwood, where they attacked Pena, taking turns stabbing and slashing him with knives until he was dead. Pena’s body was not discovered until October 17, 2016, more than four months after his murder.
In addition, Lopez admitted during his guilty plea that, one month after murdering Pena, he and other MS-13 members attempted to kill a suspected rival gang member on Lukens Avenue in Brentwood. During 2016, Lopez and other members of the MS-13 had a series of conflicts with members of Goon Squad, a rival gang in Brentwood. On July 3, 2016, at approximately 7:50 p.m., a man identified as John Doe #4 in the fourth superseding indictment was playing basketball with a group of individuals in front of a house on Lukens Avenue. Lopez and two co-conspirators, who were in a Ford Mustang, saw the group, who they suspected were rival gang members, drove toward them, and one of the MS-13 members shot at the group. John Doe #4 was struck by a bullet in the shoulder. The victim received medical treatment and survived the shooting.
Lopez, an illegal alien from El Salvador, faces a maximum sentence of life in prison when sentenced by United States District Judge Joseph F. Bianco on September 13, 2018. Upon completion of his sentence, the defendant faces deportation from the United States.
The charges in the fourth superseding indictment against the other defendants remain pending and are merely allegations. Those defendants are presumed innocent unless and until proven guilty.
Today’s conviction 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 international criminal organization. The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America. 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 45 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, SCPD, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department, Rockville Centre Police Department, the New York State Police, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
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, Michael T. Keilty and Raymond A. Tierney are in charge of the prosecution.
The Defendant:
ELMER ALEXANDER LOPEZ (“Smiley”)
Age: 20
Central Islip, New YorkE.D.N.Y. Docket No. 16-CR-403 (S-4) (JFB)
Brooklyn Gang Member Sentenced to 10 Years’ Imprisonment for Firearms Offenses and Drug TraffickingRead the Press Release
Earlier today, in federal court in Brooklyn, Jason Soto, a member of the “Cypress Gangster Crips” street gang, was sentenced by United States District Judge I. Leo Glasser to 10 years’ imprisonment following his conviction at trial for selling a firearm to a convicted felon, unlawfully possessing a firearm and drug trafficking. In January 2018, following an evidentiary hearing, the Court found that Soto had killed Shakim Rivera in February 2015, and also that Soto had intended to poison an elderly woman in April 2016.
Richard P. Donoghue, 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 James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the sentence.
“With today’s sentence, Soto has been held to account for the myriad crimes he committed at the Cypress Hills Houses, including the murder of a gang rival,” stated United States Attorney Donoghue. “This Office, together with our law enforcement partners, will be relentless in protecting the residents of communities plagued by gang violence from criminals like the defendant who has demonstrated a callous disregard for human life.”
“It is truly astonishing to see how the deadly actions of a few impact a majority of members in a community,” stated FBI Assistant Director-in-Charge Sweeney. “These gang members use threats and actual violence to sow fear, creating their own turf of criminal activity in a place where people just want be safe. The FBI New York Metro Safe Streets Task Force won’t slow down or ease off our pursuit of these violent gangs.”
As proven at trial, in May 2016, Soto sold a .44 caliber Taurus Special revolver to a confidential informant whom Soto knew to be a convicted felon. Two months earlier, Soto sold the same informant 28 bags of crack cocaine. Soto, who has prior felony convictions for assault and robbery, committed the charged crimes while under investigation by the FBI and the NYPD, which conducted a long-term investigation into crime and violence plaguing the residents of the Cypress Hills Houses, a New York City Housing Authority complex in the East New York neighborhood of Brooklyn.
A court-authorized wiretap of Soto’s phone revealed evidence of other crimes, including Soto discussing the planning and commission of robberies, assaults and murders.
At a hearing held prior to sentencing, the government presented evidence that Soto lured Shakim Rivera to Canarsie where he shot him in the back of the head because he believed Rivera was responsible for the murder of another member of the Cypress Gangsta Crips, Demetrius Graham, three days earlier. The government also proved that Soto had discussed his intent to poison an elderly woman with narcotics because she asked his family about a $100 debt he owed. Soto, in his words, said he was going to “put pain on some 80-year-old chick.” Members of the FBI and the NYPD were able to prevent the planned attack.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Margaret E. Gandy, Andrey Spektor and David N. Gopstein are in charge of the prosecution.
The Defendant:
Jason Soto
Age: 29
Brooklyn, New YorkE.D.N.Y. Docket No. 16-CR-298 (S-1) (ILG)
Members and Associates of 18th Street Gang Indicted for Murder of Fellow Gang Member They Suspected of Being an InformantRead the Press Release
Earlier today, a federal grand jury in Brooklyn returned a four-count indictment charging 18th Street gang members and associates Yanki Misael Cruz-Mateo, Israel Mendiola Flores and Sergio Gerardo Herrera-Hidalgo with murder conspiracy and the October 25, 2017 murder of a fellow 18th Street gang member who was suspected of being an informant for law enforcement. A fourth defendant, Cristian Perez, was indicted for helping Cruz-Mateo to evade capture by law enforcement after the murder. Cruz-Mateo also faces firearms-related charges. Cruz-Mateo, Herrera and Perez are in federal custody. Flores is in custody in Ulster County, New York. The defendants will be arraigned on the indictment at the federal courthouse in Brooklyn on a date and time to be determined.
Richard P. Donoghue, 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 Holley Carnright, District Attorney for Ulster County, announced the charges.
“As alleged in the court filings, these defendants committed and concealed a brutal murder against one of their own members because they suspected he had been cooperating with law enforcement,” stated United States Attorney Donoghue. “Violent street gangs like 18th Street perpetuate bloodshed to maintain allegiance and increase members’ status within the gang. This Office is committed to working with our federal, state, and local law enforcement partners to eradicate these destructive gangs.” Mr. Donoghue also expressed his appreciation to the United States Attorney’s Office for the Northern District of New York, the New York State Police and the Kingston Police Department for their assistance during the investigation.
“Gang members don’t follow the same rule of law the rest of the community does, showing no hesitation to use violence and murder to further their activities,” stated FBI Assistant Director-in-Charge Sweeney. “This case proves our dogged work to get them off the streets won’t slow down or stop. These gang members will now face justice based on the incredible partnership of the FBI, the Ulster County District Attorney’s Office, the New York State Police, the Kingston Police Department and our FBI Albany Division.”
“What these gang individuals did to that young, unarmed man is very, very, disturbing,” stated Ulster County District Attorney Carnright. “My office and the entire law enforcement community of Ulster County have offered and will continue to offer every assistance to Assistant United States Attorneys Dayananda and Lax to assure that these 18th Street gang members are brought to justice.”
As alleged in the indictment and detailed in court filings, 18th Street is a violent street gang comprised primarily of immigrants from Central America and Mexico with members located throughout Queens, New York, and elsewhere, divided into local chapters or “canchas.” The defendants are members and associates of the 18th Street gang’s chapters in Jamaica, Queens and Kingston, New York.
On the night of October 24, 2017 into the earlier morning hours of October 25, Cruz-Mateo lured a fellow 18th Street gang member, who was suspected of cooperating with law enforcement, to travel with him by bus from New York City to Kingston. Once they arrived in Kingston, Cruz-Mateo and the victim met with Herrera-Hidalgo who escorted them to Turkey Point State Forest, a 140-acre wooded park and swamp bordering the western bank of the Hudson River in Ulster County. Cruz-Mateo, Herrera-Hidalgo and Flores then stabbed the victim repeatedly. After the murder, Cruz-Mateo returned to Queens and sent a video recording of the attack to another individual. The video, which was obtained by the FBI, shows Flores slashing the victim across his neck and Cruz-Mateo severing the victim’s ear.
After the murder, Cruz-Mateo, Flores and Herrera-Hidalgo buried the victim in a makeshift grave in the forest. In February 2018, after boasting in text messages about shooting a rival MS-13 gang member in Queens, Cruz-Mateo fled to Kingston, where Perez sheltered Cruz-Mateo to conceal his location from authorities.
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted Cruz-Mateo, Herrera-Hidalgo and Flores each face life imprisonment, and Perez faces up to 15 years’ imprisonment.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Jonathan P. Lax and Soumya Dayananda are in charge of the prosecution.
The Defendants:
YANKI MISAEL CRUZ-MATEO (also known as “Yankee Mateo,” “Doggy” and “Wino”)
Age: 19
Jamaica, New YorkISRAEL MEDIOLA FLORES (also known as “Chapito” and “Sinaloa”)
Age: 23
Kingston, New YorkSERGIO GERRARDO HERRERA-HIDALOG (also known as “Street Boy”)
Age: 19
Kingston, New YorkCRISTIAN PEREZ (also known as “Muletas”)
Age: 20
Kingston, New YorkE.D.N.Y. Docket No. 18-CR-139 (LDH)
Four Individuals Charged with Conspiring to Defraud the United States by Failing to Comply with Foreign Account Tax Compliance ActRead the Press Release
A grand jury in Brooklyn has returned a five-count superseding indictment charging Panayiotis Kyriacou, Arvinsingh Canaye, Adrian Baron, and Linda Bullock with conspiracies to defraud the United States by obstructing the functions of the Internal Revenue Service in its administration of the Foreign Account Tax Compliance Act (“FATCA”). FATCA is a federal law that requires foreign financial institutions to identify their U.S. customers and report information (“FATCA Information”) about financial accounts held by U.S. taxpayers either directly or through a foreign entity. FATCA’s primary aim is to prevent U.S. taxpayers from using foreign accounts to facilitate the commission of federal tax offenses.
Last month, a grand jury in Brooklyn charged Kyriacou, Canaye, Baron, Bullock, and others with conspiracy to commit securities fraud and money laundering conspiracy.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Richard E. Zuckerman, Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James D. Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the new charges.
“As alleged in the superseding indictment, Kyriacou, Canaye, Baron, and Bullock agreed to defraud the United States by opening foreign bank and brokerage accounts without collecting FATCA information to report to the IRS,” stated United States Attorney Donoghue. “The charges announced today reflect the commitment of this Office and our law enforcement partners to combat tax evasion by identifying fraudulent offshore safe havens that facilitate hiding financial assets from the IRS and to prosecute those individuals who violate U.S. tax laws.”
Mr. Donoghue thanked the U.S. Securities and Exchange Commission (SEC), both the New York Regional Office and the Washington, D.C. Office, the City of London Police, the U.K.’s Financial Conduct Authority and the Hungarian National Bureau of Investigation for their significant cooperation and assistance during the investigation.
“The Justice Department and the Internal Revenue Service are committed to investigating and prosecuting those who promote and facilitate the use of offshore bank accounts to evade U.S. tax,” said Principal Deputy Assistant Attorney General Zuckerman. “We will continue to pursue those around the globe who seek to violate the Foreign Account Tax Compliance Act and to help U.S. taxpayers conceal such accounts from the Treasury Department and the IRS.”
“Government fraud, in all its many forms, places ethical U.S. taxpayers at a significant disadvantage,” stated FBI Assistant Director-in-Charge Sweeney. “Those charged allegedly thought they could bypass federal laws in order to benefit and enrich themselves. Today, they are being held accountable.”
“Devising schemes to evade the reporting requirements of the Foreign Account Tax Compliance Act is a serious violation of the trust between registered foreign financial institutions and the Internal Revenue Service,” stated IRS-CI Special Agent-in-Charge Robnett. “Criminal Investigation and Large Business & International will continue monitoring compliance with FATCA and will seek prosecution for any registered individuals or entities suspected of willfully aiding U.S. taxpayers with evading reporting requirements.”
The Beaufort Scheme
As alleged in the superseding indictment, between August 2016 and February 2018, Kyriacou, an investment manager at Beaufort Securities, and Canaye, a general manager at Beaufort Management, together with others, conspired to defraud the United States by failing to comply with FATCA. Specifically, in the fall of 2016, an Undercover Agent contacted Kyriacou and stated that he was a U.S. citizen interested in opening brokerage accounts at Beaufort Securities from which he could execute trades in several multi-million dollar stock manipulation deals. In furtherance of the stock manipulation scheme, Kyriacou and Beaufort Securities opened six brokerage accounts for the Undercover Agent. Notwithstanding that a U.S. citizen would be the beneficial owner of each of the accounts, at no time did Kyriacou or Beaufort Securities request FATCA Information from the Undercover Agent.
In July 2017, Kyriacou introduced the Undercover Agent to Canaye and advised that Canaye could assist with the Undercover Agent’s schemes. After meeting with the Undercover Agent and discussing the stock manipulation scheme, in January 2018, Canaye and Beaufort Management opened six global business corporations for the Undercover Agent. The Undercover Agent’s name did not appear on any of the account opening documents.
The Loyal Scheme
In June 2017, the Undercover Agent met with Baron, Loyal Bank’s Chief Business Officer. During the meeting, the Undercover Agent explained that he was a U.S. citizen and was involved in stock manipulation schemes. The Undercover Agent further explained that he was interested in opening multiple corporate bank accounts at Loyal Bank. In July 2017, the Undercover Agent met with Baron and Bullock, Loyal Bank’s Chief Executive Officer. During the meeting, the Undercover Agent described how his stock manipulation deals operated, including the need to circumvent the IRS’s reporting requirements under FATCA. In July and August 2017, Loyal Bank opened multiple bank accounts for the Undercover Agent. At no time did Loyal Bank request or collect FATCA Information from the Undercover Agent.
The charges in the superseding indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Jacquelyn M. Kasulis, Michael T. Keilty and David Gopstein are in charge of the prosecution. The Criminal Division’s Office of International Affairs provided significant assistance in this matter.
The Defendants:
PANAYIOTIS KYRIACOU, also known as “Peter Kyriacou”
Age: 26
Residence: London, EnglandARVINSIGH CANAYE, also known as “Vinesh Canaye”
Age: 30
Residence: MauritiusADRIAN BARON
Age: 63
Residence: Budapest, HungaryLINDA BULLOCK
Age: 57
Residence: St. Vincent/GrenadinesE.D.N.Y. Docket No. 18-CR-102 (S-1) (KAM)
Queens Man Convicted of Enticing Minor for Sexual Acts Sentenced to 10 Years’ ImprisonmentRead the Press Release
Earlier today, in federal court in Brooklyn, Christopher Arroyo was sentenced to 10 years’ imprisonment for coercing and enticing a minor to engage in sexually explicit conduct. The sentencing proceeding was held before United States District Judge Jack B. Weinstein, who also imposed a term of five years’ supervised release to follow Arroyo’s prison sentence, during which time he must register as a sex offender, and he will not be allowed unsupervised contact with minors.
Richard P. Donoghue, 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 sentence.
“Arroyo sexually exploited a child through social media, using threats and harassment to publicly shame the victim with the explicit images he enticed her to create,” stated United States Attorney Donoghue. “Today’s sentence will serve not only to protect the public from the defendant for a significant period of time, but it will also serve as a message to other child predators using the Internet to target victims that they will be found and prosecuted to the full extent of the law.”
“The FBI New York Crimes Against Children Task Force won’t ever stop investigating and arresting every predator we can, but it is incredibly difficult to stop predators before they make initial contact,” stated FBI Assistant Director-in-Charge Sweeney. “Cell phones, computers and social media give sexual criminals easy access to your children that they’ve never had before and that we did not have to contend when we were younger. Parents, guardians, educators, and other adults can help law enforcement create a much stronger line of defense against these predators. Please talk with your children and students about their social media presence, and take the time to both learn and teach our children how to protect themselves online. You can go to https://sos.fbi.gov for ways to start that conversation.”
As set forth in the charging instruments and the defendant’s plea allocution, beginning in 2012, Arroyo, who was 21 at the time, used Facebook and other social media platforms to meet and then entice a 12-year-old victim to take sexually explicit images of herself and engage in other sexual conduct as directed by Arroyo. Arroyo continued to exploit this young victim for years, and when the victim refused to comply with Arroyo’s demands, he threatened and harassed her, stating that he would publicly post images of her across the Internet.
In 2015, Arroyo followed through on those threats, and created multiple fake social media accounts to which he posted explicit images of the victim. After tracing Arroyo’s online activity to his residence in Queens, FBI agents executed a search of his home and seized multiple computers and other electronic devices. A forensic examination of those devices revealed that Arroyo had archived images of the victim in an electronic folder bearing her name.
This prosecution is part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Assistant United States Attorneys G. Karthik Srinivasan and Drew G. Rolle are in charge of the prosecution.
The Defendant:
CHRISTOPHER ARROYO
Age: 26
Queens, New YorkE.D.N.Y. Docket No. 16-CR-376 (S-1) (JBW)
Acting Captain and Two Soldiers in the Bonanno Crime Family Plead Guilty to Racketeering Conspiracy, Agree to Pay $2.25 Million in ForfeitureRead the Press Release
Earlier today, in federal court in Brooklyn, Ronald Giallanzo, also known as “Ronnie G,” an acting captain in the Bonanno organized crime family of La Cosa Nostra (the “Bonanno family”), and Michael Palmaccio, also known as “Mike,” a soldier in the Bonanno family, pleaded guilty to racketeering conspiracy, admitting their involvement in multiple acts of loansharking over 10 years. On March 8, 2018, Nicholas Festa, also known as “Pudgie,” a soldier in the Bonanno family, also pleaded guilty to racketeering conspiracy and admitted to additional acts of loansharking. The proceedings were held before Chief United States District Judge Dora L. Irizarry.
Richard P. Donoghue, 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 Division (FBI), announced the guilty pleas.
“Through their acts of violence, Giallanzo, Palmaccio and Festa reaped substantial illicit profits at the expense of their loansharking victims,” said United States Attorney Donoghue. “With today’s guilty pleas, these defendants are being held responsible for their destructive role in perpetuating organized crime’s presence in the community.” Mr. Donoghue thanked the Queens County District Attorney’s Office, the New York City Police Department and the U.S. Probation Department of the Eastern District of New York for their assistance in the investigation.
“Mobsters are known for lending large amounts of money at exorbitant rates to individuals who they know lack the financial means of paying off their loans,” said FBI Assistant Director-in-Charge Sweeney. “They intentionally extort their victims over extended periods of time using threats of violence as a means of collecting their weekly payments. It’s one of the oldest tricks in the book for these crime families, and they’ve shown no inclination to stop harassing and intimidating communities in our area. Today’s guilty pleas demonstrate that the FBI’s New York Joint Organized Crime Task Force continues to investigate these organized crime groups to hold them accountable and to protect the public.”
According to the indictment, court filings and facts presented during the plea proceeding, Giallanzo, Palmaccio and Festa were members of a Bonanno family “crew” that operated primarily in Howard Beach, Queens. Giallanzo operated a lucrative loansharking business in which he provided money to, among others, Palmaccio and Festa, to extend and collect extortionate loans to numerous individuals. Even while incarcerated for a prior federal conviction for racketeering and extortion conspiracy, Giallanzo kept watch over his illicit loansharking business, directing his associates to commit acts of violence to ensure that the customers paid the exorbitant weekly interest rate. At one point, Giallanzo had lent over $3 million in extortionate loans to customers. Giallanzo, Palmaccio and Festa were arrested by the FBI in March 2017.
At his guilty plea, Giallanzo admitted to participating in the affairs of the Bonanno family by extending and collecting extortionate loans to five different victims, and agreed to forfeit $1.25 million. As part of his agreement with the government, Giallanzo is also required to sell the Howard Beach mansion he constructed with loansharking proceeds while he was on supervised release stemming from his prior federal conviction. Palmaccio and Festa admitted to participating in the affairs of the Bonanno family by extending and collecting extortionate loans to five victims and two victims, respectively, and each agreed to forfeit $500,000.
When sentenced, Giallanzo, Palmaccio and Festa each face a statutory maximum of 20 years’ imprisonment. Seven co-defendants have previously pleaded guilty in this case.
The government’s case is being handled by the Office’s Organized Crime & Gangs Section. Assistant United States Attorneys Nicole M. Argentieri, Lindsay K. Gerdes and Keith D. Edelman are in charge of the prosecution.
The Defendants:
RONALD GIALLANZO (also known as “Ronnie G”)
Age: 47
Queens, New YorkMICHAEL PALMACCIO (also known as “Mike”)
Age: 46
Queens, New YorkNICHOLAS FESTA (also known as “Pudgie”)
Age: 37
Oceanside, New YorkE.D.N.Y. Docket No. 17-CR-155 (S-1) (DLI)
Former Federal Correctional Officer Pleads Guilty in Brooklyn Federal Court to Solicitation to Commit a Crime of ViolenceRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, George Gonzalez, a former officer with the United States Bureau of Prisons, pleaded guilty to solicitation to commit a crime of violence, and possession of a firearm while subject to a protective order. The proceeding was held before United States District Judge Roslynn R. Mauskopf.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Ashan M. Benedict, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Division, announced the guilty plea.
“With today’s guilty plea, George Gonzalez will go from supervising inmates to being one himself,” stated United States Attorney Donoghue. “While he attempted to hire gang members to brutally assault his wife and another individual, the defendant’s plan was thwarted thanks to the swift reaction of our law enforcement partners, including the outstanding work of ATF undercover agents.” Mr. Donoghue expressed his grateful appreciation to the Federal Bureau of Prisons and the United States Department of Justice, Office of the Inspector General, New York Field Office, for their assistance in the investigation.
“ATF remains committed to protecting the public from individuals that seek to spread violence in their community. George Gonzalez hatched a dastardly plan that could have resulted in serious harm and or death to his estranged wife and her new partner but for the valiant efforts of law enforcement spearheaded by ATF Agents and NYPD Detectives,” stated ATF Special Agent-in-Charge Benedict. “I would like to thank the Special Agents and Task Force Officers of the NYPD/ ATF Joint Robbery Task Force, the Federal Bureau of Prisons and the Office of the Inspector General for their coordination and diligent efforts on this case. I would also like to extend my gratitude to the United States Attorney’s Office for their work in prosecuting the case.”
According to court filings and facts presented during the plea proceeding, on or about and between December 2016 and January 2017, Gonzalez engaged in multiple recorded meetings and conversations with individuals he believed to be gang members, but who were actually undercover ATF agents. During these meetings, the defendant offered to pay to have his estranged wife and her new domestic partner assaulted and tortured. Specifically, Gonzalez instructed the undercover agents that they should make it “look like a robbery” and that they could keep whatever valuable items were in the home as partial payment. The defendant suggested that the undercover agents “take a hammer to the spine” so that the victims would be paralyzed and “suffer…for the rest of their lives.” The defendant opined that he would “do it himself,” but that he had previously travelled to Florida to confront the intended targets, and the police were called. The investigation revealed that the defendant, who was assigned at the time to the Metropolitan Detention Center in Brooklyn, was subject to an Order of Protection issued in Family Court, prohibiting him from having any contact with his spouse and requiring him to surrender any firearms in his possession.
As part of the scheme, Gonzalez provided the undercover agents with photographs and pedigree information of the intended victims and offered to pay to have the undercover agents procure firearms and travel from New York to Florida. During the execution of a search warrant at the defendant's home in Staten Island, two loaded, unlicensed firearms were recovered.
When sentenced, the defendant faces a statutory maximum sentence of 12 ½ years’ imprisonment.
The government’s case is being prosecuted by Assistant U.S. Attorney Artie McConnell.
The Defendant:
George Gonzalez
Age: 55
Staten Island, New YorkE.D.N.Y. Docket No. 17-CR-51 (RRM)
Long Island Man Charged with Possession with Intent to Distribute over Two Kilograms of HeroinRead the Press Release
A complaint was filed earlier today, in federal court in Central Islip, New York, charging Juan Jimenez, also known as “Jason,” with possession with intent to distribute over two kilograms of heroin in Brentwood. Jiminez was arrested Wednesday night and ordered detained after his initial appearance this afternoon before United States Magistrate Judge Gary R. Brown.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division, Errol D. Toulon, Jr., Suffolk County Sheriff, and Michael McGowan, Chief, Hempstead Village Police Department, announced the charges.
“As alleged in the complaint, Jiminez was involved in the wholesale trafficking of heroin, contributing to the opioid plague that has caused great suffering on Long Island,” stated United States Attorney Donoghue. “This arrest demonstrates this Office’s commitment to marshalling all available resources necessary to find and prosecute those who peddle these highly addictive narcotics in our communities.”
“DEA worldwide is working together to target opioid traffickers at all levels,” stated DEA Special Agent-in-Charge Hunt. “This investigation demonstrates our commitment to arrest dealers who push heroin onto our local streets and into the hands of users.”
“This case highlights the importance of our investigators partnering with federal authorities to disrupt the international flow of heroin into the local illicit drug market,” stated Suffolk County Sheriff Toulon.
“Hempstead Police Department is proud to be part of a highly motivated and professional task force that has made a substantial impact on the war on drugs in our community,” stated Hempstead Village Police Department Chief McGowan.
According to court papers, DEA agents uncovered a wholesale heroin distribution ring involving Jimenez, involving plans to ship multiple kilograms of heroin from Colombia for distribution on Long Island. As part of those negotiations, Jimenez delivered 2.3 kilograms of Mexican “black tar” heroin.
The arrest was the result of a continuing long-term investigation by the U.S. Drug Enforcement Administration’s Long Island District Office, with the assistance of members of the Suffolk County Sheriffs’ Office and Hempstead Village Police.
The charge in the complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty. If convicted of the crime charged, the defendant faces a mandatory minimum sentence of 10 years’ imprisonment, and up to life imprisonment.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorney Burton T. Ryan, Jr., is in charge of the prosecution.
The Defendant:
JUAN JIMENEZ (also known as “Jason”)
Age: 37
North Babylon, New YorkE.D.N.Y. Docket No. 18-MJ-225
American Citizen Sentenced to 45 Years’ Imprisonment for Conspiring to Murder U.S. Nationals and Providing Material Support to Al-QaedaRead the Press Release
Earlier today, in federal court in Brooklyn, Muhanad Mahmoud al Farekh, an American citizen born in Houston, Texas, was sentenced to 45 years’ imprisonment by United States District Judge Brian M. Cogan following his September 29, 2017 trial conviction of multiple offenses covering seven years of terrorist conduct, including conspiracy to murder American military personnel in Afghanistan, conspiracy to use a weapon of mass destruction, conspiracy to bomb a government facility, and providing material support to al-Qaeda.
Richard P. Donoghue, United States Attorney for the Eastern District of New York; John C. Demers, Assistant Attorney General for the National Security Division; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the sentence.
“Farekh, a citizen of this country, turned his back on America by joining al-Qaeda and trying to kill American soldiers in a bomb attack on a U.S. military base in Afghanistan.” stated United States Attorney Donoghue. “This case demonstrates that we will do everything in our power to ensure that those who seek to harm our country and our armed forces will be brought to justice.” Mr. Donoghue extended his grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state, and local agencies from the region.
“With the sentence handed down today, al Qaeda terrorist Muhanad Mahmoud Al Farekh is being held accountable for his crimes. Farekh – an American citizen – traveled overseas, joined al Qaeda, and conspired to kill Americans, including through an attack using explosive devices on a U.S. military installation in Afghanistan in 2009,” said Assistant Attorney General Demers. “Across the globe, the National Security Division will continue to relentlessly pursue and bring to justice those who seek to harm Americans, including our brave servicemen and women who risk their lives in defense of our nation. I applaud the efforts of the many agents, analysts, and prosecutors who are responsible for this successful result.”
“Today’s sentencing shows that justice prevails even when terrorist acts are committed in distant foreign locales yet impact American citizens and interests,” stated FBI Assistant Director-in-Charge Sweeney. “The FBI New York Joint Terrorism Task Force remains dedicated to investigating and bringing terrorists to justice wherever they are. I would like to thank all of our partner agencies for their continued cooperation and dedication.”
As proven at trial, in March 2007, Farekh and two co-conspirators, all of whom were students at the University of Manitoba, departed Canada for Pakistan with the intention of fighting against American forces overseas. Before traveling overseas, Farekh and his co-conspirators watched video recordings encouraging violent jihad, listened to jihadist lectures by now-deceased al-Qaeda in the Arabian Peninsula leader Anwar al-Awlaqi, and came to embrace a violent, extremist view of Islam.
Farekh and his co-conspirators traveled to the Federally Administered Tribal Areas of Pakistan, an area in the northern part of Pakistan that borders Afghanistan and is home to al-Qaeda’s base of operations, where they joined and received training from al-Qaeda. Taking advantage of his familiarity with the West, Farekh became a member of, and ultimately ascended to, a leadership role within al-Qaeda’s external operations group, which specialized in planning and executing attacks against the United States and its Western allies.
In January 2009, Farekh helped to build a vehicle-borne, improvised explosive device (VBIED) that was used in an attack on Forward Operating Base Chapman (FOB Chapman), a U.S. military installation that served as the base for the U.S. Provincial Reconstruction Team in Khost, Afghanistan. On January 19, 2009, two explosives-laden vehicles approached the fence line of FOB Chapman. At the gate, the first vehicle, a pickup-sized truck, exploded after its operator detonated the VBIED. The second vehicle, a truck that was carrying approximately 7,500 pounds of explosives, became stuck in the blast crater caused by the first explosion. The driver abandoned his vehicle without detonating the VBIED, and was shot and killed by local security personnel. The initial detonation of the first vehicle injured one U.S. serviceman and numerous Afghan nationals. Forensic technicians recovered 18 latent fingerprints that were determined to be a match to Farekh from adhesive packing tape used to bind together the explosive materials of the second, undetonated VBIED.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Richard M. Tucker, Douglas M. Pravda and Saritha Komatireddy, along with Trial Attorney Alicia Cook of the National Security Division’s Counterterrorism Section, are in charge of the prosecution.
The Defendant:
MUHANAD MAHMOUD AL FAREKH
Age: 32
Nationality: United StatesE.D.N.Y. Docket No. 15-CR-268 (S-2)
American Citizen Sentenced to 45 Years for Conspiring to Murder U.S. Nationals and Providing Material Support to Al-QaedaRead the Press Release
Muhanad Mahmoud al Farekh, 32, of Houston, was sentenced today to 45 years following his Sept. 29, 2017 trial conviction of multiple offenses covering seven years of terrorist conduct, including conspiracy to murder American military personnel in Afghanistan, conspiracy to use a weapon of mass destruction, conspiracy to bomb a government facility and providing material support to al-Qaeda.
Assistant Attorney General for the National Security John C. Demers, U.S. Attorney Richard P. Donoghue for the Eastern District of New York, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office and Commissioner James P. O’Neill of the NYPD announced the sentence issued by U.S. District Judge Brian M. Cogan.
“With the sentence handed down today, al Qaeda terrorist Muhanad Mahmoud Al Farekh is being held accountable for his crimes. Farekh – an American citizen – traveled overseas, joined al Qaeda, and conspired to kill Americans, including through an attack using explosive devices on a U.S. military installation in Afghanistan in 2009,” said Assistant Attorney General Demers. “Across the globe, the National Security Division will continue to relentlessly pursue and bring to justice those who seek to harm Americans, including our brave servicemen and women who risk their lives in defense of our nation. I applaud the efforts of the many agents, analysts, and prosecutors who are responsible for this successful result.”
“Farekh, a citizen of this country, turned his back on America by joining al-Qaeda and trying to kill American soldiers in a bomb attack on a U.S. military base in Afghanistan.” stated United States Attorney Donoghue. “This case demonstrates that we will do everything in our power to ensure that those who seek to harm our country and our armed forces will be brought to justice.” Mr. Donoghue extended his grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state, and local agencies from the region.
“Today’s sentencing shows that justice prevails even when terrorist acts are committed in distant foreign locales yet impact American citizens and interests,” stated FBI Assistant Director-in-Charge Sweeney. “The FBI New York Joint Terrorism Task Force remains dedicated to investigating and bringing terrorists to justice wherever they are. I would like to thank all of our partner agencies for their continued cooperation and dedication.”
As proven at trial, in March 2007, Farekh and two co-conspirators, all of whom were students at the University of Manitoba, departed Canada for Pakistan with the intention of fighting against American forces overseas. Before traveling overseas, Farekh and his co-conspirators watched video recordings encouraging violent jihad, listened to jihadist lectures by now-deceased al-Qaeda in the Arabian Peninsula leader Anwar al-Awlaqi, and came to embrace a violent, extremist view of Islam.
Farekh and his co-conspirators traveled to the Federally Administered Tribal Areas of Pakistan, an area in the northern part of Pakistan that borders Afghanistan and is home to al-Qaeda’s base of operations, where they joined and received training from al-Qaeda. Taking advantage of his familiarity with the West, Farekh became a member of, and ultimately ascended to, a leadership role within al-Qaeda’s external operations group, which specialized in planning and executing attacks against the U.S. and its Western allies.
In January 2009, Farekh helped to build a vehicle-borne, improvised explosive device (VBIED) that was used in an attack on Forward Operating Base Chapman (FOB Chapman), a U.S. military installation that served as the base for the U.S. Provincial Reconstruction Team in Khost, Afghanistan. On January 19, 2009, two explosives-laden vehicles approached the fence line of FOB Chapman. At the gate, the first vehicle, a pickup-sized truck, exploded after its operator detonated the VBIED. The second vehicle, a truck that was carrying approximately 7,500 pounds of explosives, became stuck in the blast crater caused by the first explosion. The driver abandoned his vehicle without detonating the VBIED, and was shot and killed by local security personnel. The initial detonation of the first vehicle injured one U.S. serviceman and numerous Afghan nationals. Forensic technicians recovered 18 latent fingerprints that were determined to be a match to Farekh from adhesive packing tape used to bind together the explosive materials of the second, undetonated VBIED.
Assistant U.S. Attorneys Richard M. Tucker, Douglas M. Pravda and Saritha Komatireddy of the Eastern District of New York, along with Trial Attorney Alicia Cook of the National Security Division’s Counterterrorism Section, are in charge of the prosecution.
Defendant Indicted in Brooklyn Federal Court for Transnational Cyber ScamRead the Press Release
Earlier today, in federal court in Brooklyn, an indictment was unsealed charging Joshua Philips, also known as “Erick Ayo Kalu,” “Anthony Abongile Baker” and “Johnson Foday Brown,” with conspiring to commit wire and bank fraud and conspiring to commit money laundering, in connection with several business email compromise and confidence fraud scams. Philips was arrested on March 7, 2018, in the Northern District of Georgia and was arraigned this afternoon before United States Magistrate Judge Linda T. Walker at the federal courthouse in Atlanta, Georgia.
Richard P. Donoghue, 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 indictment, Philips stole hundreds of thousands of dollars from his victims, then laundered the proceeds of his scam,” stated United States Attorney Donoghue. “The rule of law applies in cyberspace just as it does on the street, and this Office, together with our law enforcement partners, is committed to investigating and prosecuting cybercriminals like the defendants who engage in illegal conduct.” Mr. Donoghue expressed his appreciation to the FBI Field Office in Atlanta and the United States Attorney’s Office for the Northern District of Georgia for their assistance in the case.
“As we alleged, Joshua Philips, together with others, was able to swindle more than $800,000 from unsuspecting victims as a result of schemes of deception known as business email compromise and confidence fraud,” stated FBI Assistant Director-in-Charge Sweeney. “Philips, together with others, tricked victims into sending funds to accounts they thought were part of a legitimate business deal. The defendant then transferred his ill-gotten gains to overseas accounts. I commend the work of the Cyber Task Force who worked dutifully to bring this case to justice.”
Business email compromise is a form of cyber-enabled financial fraud. In a typical business email compromise scheme, a malicious actor compromises legitimate business email accounts through computer intrusion techniques or social engineering and uses those accounts to cause the unauthorized transfer of funds. Techniques for perpetrating these schemes include spear phishing, identity theft, spoofing of emails and websites, and the use of malware.
Confidence fraud is another form of cyber-enabled financial fraud. In a typical confidence fraud, a malicious actor befriends, and gains the confidence of, another individual through online communications and uses that confidence to cause the transfer of funds for unauthorized purposes.
As alleged in court documents, individuals in the Eastern District of New York and around the United States were defrauded – through business email compromise and confidence fraud scams – into sending more than $800,000 to the defendant. For example, in or about July 2017 and August 2017, the defendant and others targeted an individual on Long Island (“John Doe 1”) who was engaged in a real estate transaction involving the purchase of property in Massapequa, New York, and his real estate attorney (“John Doe 2”), who facilitated the purchase. On or about August 23, 2017, John Doe 1 received an email from John Doe 2’s email account asking, “With regards to the closing funds, is it currently available?” After responding that the funds were available, John Doe 1 received an email on August 24, 2017 from John Doe 2’s email account instructing him to “to go to your local branch within the day and initiate a wire transfer of the funds to my attorney escrow account.” The email provided information for a bank account that was, in fact, in the control of one of the defendant’s co-conspirators. On August 28, 2017, John Doe 1 sent a wire transfer in the amount of $84,000 to the bank account. The co-conspirator received the money and transferred a portion of it to Philips, who then wired a portion of it overseas. John Doe 2 has informed law enforcement officers that he did not send the August 24 email and that the bank account details did not pertain to any account within his control.
As part of the broader cyber-enabled schemes, Philips unlawfully transferred the fraudulently obtained money overseas, including to various foreign bank accounts and to purchase used cars for an import/export company in Nigeria.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
According to the FBI’s Internet Crime Complaint Center (IC3), business email compromise and confidence fraud scams have continued to rise over the past few years and were the top two types of internet crimes (by reported loss) reported to the FBI in 2016. Such scams have victimized large and small companies, as well as individuals, in every U.S. state and in more than 100 countries around the world.
If you or your company has been victimized by a business email compromise scam or confidence fraud, it is important to act quickly. The FBI’s Internet Crime Complaint Center (IC3) provides the public with a reporting mechanism to submit information concerning suspected Internet-facilitated criminal activity. Individuals and companies who have been victims of Internet crimes are encouraged to file a complaint online at www.ic3.gov. In addition, victims can take steps to mitigate further loss such as contacting banks, credit card companies, and/or credit bureaus to block accounts, freeze accounts, dispute charges, and attempt recovery of lost funds.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorney Saritha Komatireddy is in charge of the prosecution.
The Defendant:
JOSHUA PHILIPS (also known as “Erick Ayo Kalu,” “Anthony Abongile Baker” and “Johnson Foday Brown”)
Age: 33
Ellenwood, GeorgiaE.D.N.Y. Docket No. 18-CR-121
Attorney General Sessions Appoints Six Additional Members to U.S. Attorney Advisory CommitteeRead the Press Release
WASHINGTON - Attorney General Jeff Sessions announced the appointment of six new U.S. Attorneys to serve two-year terms on the Attorney General’s Advisory Committee of U.S. Attorneys (AGAC), joining the nine members announced on November 13, 2017. The AGAC was created in 1973 and reports to the Attorney General through the Deputy Attorney General. It represents the U.S. Attorneys and provides advice and counsel to the Attorney General on matters of policy, procedure, and management affecting the Offices of the U.S. Attorneys.
The new appointees are U.S. Attorney for the Northern District of Texas Erin Nealy Cox; U.S. Attorney for the Eastern District of New York Richard P. Donoghue; U.S. Attorney for the Middle District of Alabama Louis V. Franklin, Sr.; U.S. Attorney for the Northern District of Illinois John R. Lausch, Jr.; U.S. Attorney for the District of Massachusetts Andrew E. Lelling; and U.S. Attorney for the District of Delaware David C. Weiss.
“I am pleased to announce these new members of the Attorney General’s Advisory Committee. The Advisory Committee plays an important role in helping us achieve the Department of Justice’s goals, including to reduce violent crime, combat transnational criminal organizations, secure our southern border, end the devastating opioid crisis, and enforce the rule of law,” said Attorney General Sessions.
A brief biography of each new member is below:
Erin Nealy Cox
The Senate confirmed Erin Nealy Cox’s appointment as United States Attorney for the Northern District of Texas in November 2017. Prior to this appointment, Ms. Nealy Cox was a Senior Advisor at McKinsey & Co in the cybersecurity and risk practice and on the Board of Directors of Sally Beauty Holdings, a large retailer on the NYSE. From 1999 to 2008, Ms. Nealy Cox served as an Assistant United States Attorney in the Northern District of Texas, where she prosecuted cyber crimes, white collar crimes, and general crimes. In 2004 and 2005, she served at Main Justice as Chief of Staff and Senior Counsel to the Assistant Attorney General in the Office of Legal Policy. Ms. Nealy Cox also previously worked at Stroz Friedberg, a cybersecurity and investigations consulting firm. Ms. Nealy Cox clerked for the Honorable Henry A. Politz, when he served as Chief Judge of the Fifth Circuit Court of Appeals, and the Honorable Barefoot Sanders, United States District Judge in the Northern District of Texas. She received a B.B.A in Finance from the McCombs School of Business at the University of Texas at Austin and her J.D., magna cum laude, from Southern Methodist University Dedman School of Law.
Richard P. Donoghue
On January 5, 2018, the Attorney General appointed Richard P. Donoghue to be interim United States Attorney for the Eastern District of New York. Prior to this appointment, Mr. Donoghue served as the Senior Vice President and Chief Counsel for CA Technologies based in New York. From 2000 to 2011, Mr. Donoghue worked in the United States Attorney’s Office for the Eastern District of New York in various roles, including Criminal Chief and Deputy Criminal Chief. Mr. Donoghue received his B.A., cum laude, from Hofstra University and his J.D., from St. John’s University School of Law.
Louis V. Franklin, Sr.
The Senate confirmed Louis V. Franklin, Sr. to be United States Attorney for the Middle District of Alabama in September 2017. Mr. Franklin has served in the United States Attorney’s Office for the Middle District of Alabama for nearly 27 years, including as Criminal Chief for almost 16 years. Mr. Franklin served as an Assistant United States Attorney from 1990 to 1996 and from 1998 to 2001. From 1996 to 1998, Mr. Franklin was an associate at Sirote and Permutt. Mr. Franklin began his career as a staff attorney at the Legal Services Corporation of Alabama from 1987 to 1990. Mr. Franklin received his B.A. from the University of Alabama, an M.S. from Auburn University at Montgomery, and his J.D. from Howard University School of Law.
John R. Lausch, Jr.
The Senate confirmed John R. Lausch, Jr.’s appointment as United States Attorney for the Northern District of Illinois in November 2017. Prior to his appointment, Mr. Lausch was a partner at Kirkland & Ellis LLP. Previously, he served as an Assistant United States Attorney in the Northern District of Illinois from 1999 to 2010. During his time in the U.S. Attorney’s Office, Mr. Lausch served as a Deputy Chief in the Narcotics and Gangs Section for several years, where he helped lead the District’s Anti-Gang and Project Safe Neighborhoods programs. Mr. Lausch clerked for the Honorable Michael S. Kanne of the United States Court of Appeals for the Seventh Circuit. He received his A.B., cum laude, from Harvard University and his J.D., cum laude, from Northwestern University School of Law.
Andrew E. Lelling
The Senate confirmed Andrew E. Lelling’s appointment as United States Attorney for the District of Massachusetts in December 2017. Prior to this appointment, Mr. Lelling was the senior litigation counsel for the United States Attorney’s Office for the District of Massachusetts and has worked in that office for 12 years, prosecuting white collar crime and international drug trafficking, among other offenses. Mr. Lelling also served as an Assistant United States Attorney in the Eastern District of Virginia. He previously served as counsel to the Assistant Attorney General at the Department of Justice Civil Rights Division. Mr. Lelling clerked for the Honorable B. Avant Edenfield of the United States District Court for the Southern District of Georgia. He received his B.A., magna cum laude, from the State University of New York at Binghamton and his J.D., cum laude, from the University of Pennsylvania Law School.
David C. Weiss
David C. Weiss’s nomination to be United States Attorney for the District of Delaware was confirmed in February. Mr. Weiss previously served as the Acting United States Attorney for the District of Delaware from 2009 to 2011 and 2017 to 2018, and as the First Assistant United States Attorney from 2007 to 2017. Prior to serving in these positions, Mr. Weiss was an Assistant United States Attorney from 1986 to 1989. Mr. Weiss clerked for the Honorable Andrew D. Christie of the Delaware Supreme Court. Mr. Weiss received his B.S. from Washington University and his J.D. from Widener University School of Law.Martin Shkreli Sentenced to Seven Years’ Imprisonment for Multi-Million Dollar Fraud SchemeRead the Press Release
Earlier today, in federal court in Brooklyn, Martin Shkreli was sentenced by United States District Judge Kiyo A. Matsumoto of the Eastern District of New York to seven years’ imprisonment for committing securities fraud and securities fraud conspiracy, to be followed by three years’ supervised release. The Court also ordered Shkreli to pay a $75,000 fine and $7.3 million in forfeiture. Earlier this week, the Court signed a Preliminary Order of Forfeiture, which will allow the government to seize substitute assets to satisfy the forfeiture judgment if necessary, including $5 million held in an account that had been used to secure Shkreli’s bail, the “Once Upon A Time in Shaolin” album by the Wu Tang Clan, the “Tha Carter V” album by Lil Wayne, and a Picasso painting.
Shkreli was the founder and managing member of hedge funds MSMB Capital Management LP (MSMB Capital) and MSMB Healthcare Management LP (MSMB Healthcare) and the former Chief Executive Officer of Retrophin Inc. (Retrophin), a biopharmaceutical company that trades under the ticker symbol RTRX. He was convicted by a federal jury in August 2017, following a six-week trial, of two counts of securities fraud and one count of securities fraud conspiracy. In September 2017, the Court found that Shkreli had violated his bail conditions by making online threats against former U.S. Secretary of State Hillary Clinton, and remanded him into custody at the Metropolitan Detention Center, where he is currently incarcerated.
Richard P. Donoghue, 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 sentence.
“For years, Shkreli told lie after lie in order to steal his investors’ money, manipulate the stock market and enrich himself,” stated United States Attorney Donoghue. “He will now pay the price for repeatedly violating the trust placed in him by his investors, his employees and the public. It remains a priority of this Office, together with our law enforcement partners, to identify, investigate and bring to justice criminals like Shkreli.” Mr. Donoghue thanked the Securities and Exchange Commission, New York Regional Office (SEC), and the Financial Industry Regulatory Authority, Inc., Criminal Prosecution Assistance Group (FINRA CPAG), for their significant cooperation and assistance in this case.
“Martin Shkreli was notoriously ambitious, seeking to enrich himself at the expense of those who unwittingly invested in his lies,” stated FBI Assistant Director-in-Charge Sweeney. “His crimes have been laid bare for all to see, and his intentions, which have been proven true beyond a reasonable doubt, resulted in this sentencing today. While we can now close this chapter of our investigation, our efforts continue to uncover and expose all crimes of this nature that claim innocent victims and defraud our financial markets.”
The evidence at trial established that Shkreli, who was convicted on three counts of the superseding indictment, alleging securities fraud (Counts Three and Six) and securities fraud conspiracy (Count Eight), executed three schemes to defraud investors:
As charged in Count Three, between 2009 and 2014, Shkreli used false representations and omissions to induce investors to invest more than $3 million in MSMB Capital, a hedge fund he founded in 2009. Subsequently, following trading losses, Shkreli sent fabricated performance updates to investors, boasting that the fund had made big profits when, in fact, it had sustained substantial losses. In addition, Shkreli withdrew more than $200,000 from MSMB Capital, far more than the one percent management fee and the 20 percent net profit incentive allocation permitted by the fund’s partnership agreement.
As charged in Count Six, between 2011 and 2014, Shkreli used false representations and omissions to induce investors to invest more than $5 million in MSMB Healthcare, a hedge fund founded by Shkreli after the implosion of MSMB Capital. Additionally, Shkreli used MSMB Healthcare assets to pay obligations that were not MSMB Healthcare’s responsibility. As with the MSMB Capital scheme, Shkreli withdrew more from MSMB Healthcare than the one percent management fee and the 20 percent net profit incentive allocation permitted by the fund’s partnership agreement.
As charged in Count Eight, between 2012 and 2014, Shkreli and his co-defendant Evan Greebel, an attorney who served as outside counsel to Retrophin, engaged in a scheme to defraud investors and potential investors in Retrophin by attempting to illegally control the price and trading volume of Retrophin’s stock. Greebel and Shkreli executed this scheme by, among other things, concealing Shkreli’s beneficial ownership and control of the majority of Retrophin’s free-trading shares. Greebel and Shkreli recruited associates of Shkreli to be nominee shareholders for the majority of Retrophin’s free-trading shares, and they also filed a false document with government regulators to hide the fact that Shkreli controlled those shares. Greebel and Shkreli prevented the nominee shareholders from selling these shares, and also directed that some of the shares be used to settle liabilities owed by the MSMB hedge funds and Shkreli.
In addition, Judge Matsumoto ruled in a decision issued on February 26, 2018 in connection with the sentencing, that the government had also proven by a preponderance of the evidence that Shkreli had engaged in a fourth fraud scheme, the wire fraud conspiracy charged in Count Seven of the superseding indictment. Specifically, the evidence at trial established by a preponderance that between 2011 and 2014, Shkreli conspired with Greebel and others in a scheme to misappropriate Retrophin’s assets in order to pay off defrauded investors in MSMB Capital and MSMB Healthcare. As part of this scheme, Shkreli and Greebel caused Retrophin to enter into so-called “settlement” agreements with certain defrauded MSMB Capital and MSMB Healthcare investors, which caused Retrophin to reimburse those investors more than $2 million in cash and stock for their lost investments in Shkreli’s hedge funds even though Retrophin was not responsible for those losses. Shkreli and Greebel also arranged for certain other defrauded investors to enter into sham consulting agreements with Retrophin as a means to settle liabilities owed by Shkreli and the hedge funds. In total, the settlement and sham consulting agreements caused losses to Retrophin of over $10 million.
In a separate trial in December 2017, Greebel was convicted of wire fraud conspiracy (Count Seven) and securities fraud conspiracy (Count Eight), following an 11-week trial. He is awaiting sentencing.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Jacquelyn M. Kasulis, Alixandra E. Smith and G. Karthik Srinivasan are in charge of the prosecution, with assistance from Assistant United States Attorneys Laura Mantell and Claire Kedeshian of the Office’s Asset Forfeiture Section.
The Defendants:
MARTIN SHKRELI
Age: 34
Manhattan, New YorkEVAN GREEBEL
Age: 44
Scarsdale, New YorkE.D.N.Y. Docket No. 15-CR-637 (KAM)
Chemist for Mexican Drug Cartel Sentenced in Brooklyn Federal Court to 10 Years’ Imprisonment for Conspiring to Distribute Thousands of Kilograms of Illegal NarcoticsRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, Jose Dagoberto Cortez-Perez, also known as “D.C.P.,” a “chemist” or “cook” of illegal narcotics for a violent Mexican drug trafficking organization, was sentenced by United States District Judge Carol Bagley Amon to 10 years’ imprisonment for his involvement in a large-scale international narcotics distribution conspiracy. Cortez-Perez was apprehended in Minnesota and pled guilty on September 25, 2017 to conspiring to import more than 500 grams of methamphetamine, more than one kilogram of heroin, more than five kilograms of cocaine and more than 1,000 kilograms of marijuana. After serving his sentence, the defendant will face deportation from the United States.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, announced the sentence.
“A Mexican cartel employed Jose Dagoberto Cortez-Perez for his specialized skill improving the quality and purity of illegal and addictive narcotics, in particular methamphetamine,” stated United States Attorney Donoghue. “Cortez-Perez travelled around the country on behalf of the cartel and enhanced the addictive nature of its narcotics, which ultimately increased demand and price for them. Today, drug trafficking organizations are on notice that we will bring the full weight of the law to bear on those activities that destabilize our communities.” Mr. Donoghue extended his grateful appreciation to the United States Attorney’s Office for the District of Minnesota, as well as the Chicago Division of the U.S. Drug Enforcement Administration, for their assistance in the investigation and prosecution.
According to court filings and facts presented during court proceedings, the defendant was a member of a Mexican-based drug trafficking organization, which was responsible for the manufacture, importation and distribution of multi-ton quantities of heroin, methamphetamine, cocaine, and marijuana into the United States, including to locations in the Eastern District of New York. The defendant was a “chemist” or “cook” for the organization, and was sent to the United States to repair (or “clean”) methamphetamine that was not sufficiently pure or had otherwise been contaminated. The defendant created a more desirable product that was then distributed across the United States, including Brooklyn and Queens. In May 2016, DEA agents searched two homes in Minnesota and discovered more than 140 pounds of methamphetamine, more than $130,000 in United States currency, evidence of an ongoing methamphetamine cleaning operation and drug paraphernalia. This seizure demonstrated a highly organized drug network responsible for the distribution of large-scale quantities narcotics.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Craig R. Heeren, Ryan C. Harris, Alicia N. Washington, G. Karthik Srinivasan and Michael P. Robotti are in charge of the prosecution.
The Defendant:
Jose Dagoberto Cortez-Perez
Age: 28
Residence: Sinaloa, MexicoEDNY Docket No. 16-CR-241 (CBA)
Investment Adviser Convicted of Defrauding InvestorsRead the Press Release
Earlier today, following a four-day trial, Louis F. Petrossi, the founder and president of the Wealth Research Institute, a purported investment research firm, was convicted by a federal jury in the Middle District of Pennsylvania, of securities fraud, investment adviser fraud and wire fraud for his role in a scheme to defraud investors. Petrossi falsely claimed to investors that money they had invested in purported investment funds called Chadwicke would be used to invest in startup companies. Instead, the defendant used the investors’ money to pay for personal expenses, and he issued fraudulent statements that overstated both the cost and value of the securities held by Chadwicke.
Richard P. Donoghue, 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 Division (FBI), announced the verdict. Mr. Donoghue expressed his appreciation to the United States Attorney’s Office for the Middle District of Pennsylvania for their assistance with the case.
The evidence at trial established that between January 2015 and January 2017, Petrossi solicited more than $1.8 million in investments in one of the Chadwicke funds from more than 25 investors, including one who resides in the Middle District of Pennsylvania. Petrossi promoted Chadwicke as providing the opportunity to invest in high-profile startup companies such as Lyft, Inc., Maplebear Inc., Pinterest Inc., Spotify Technology SA and Palantir Technologies, Inc., among others. Petrossi invested approximately $665,400 in privately held startup companies but used more than $1.1 million in investor funds to pay for personal expenses, including payments to BMW, renovations to his home and payment of his personal legal fees. In or around August 2016, Petrossi sent emails to Chadwicke investors attaching a spreadsheet that contained false and misleading statements about the purchase price and value of the securities held by the Chadwicke funds in order to conceal his misappropriation of investor money.
On May 3, 2016, Petrossi was arrested in Nevada pursuant to an indictment returned by a federal grand jury sitting in the Eastern District of New York for his role in a securities fraud scheme involving the securities of ForceField Energy Inc. Under the terms of Petrossi’s pre-trial release, the defendant was prohibited from employment “directly involving the handling of investors.” Between May 3, 2016 and approximately January 2017, Petrossi continued to engage in the Chadwicke scheme by emailing the August 2016 spreadsheet and soliciting $210,000 in investor funds.
Petrossi faces a maximum of 20 years’ imprisonment when he is sentenced by United States Chief District Judge Christopher C. Conner of the Middle District of Pennsylvania.
Petrossi was convicted in May 2017 by a federal jury in Brooklyn for his role in the ForceField Energy Inc. market manipulation scheme. He faces a maximum sentence of 20 years’ imprisonment when he is sentenced by United States District Judge Brian M. Cogan of the Eastern District of New York.
The government’s case is being prosecuted by Assistant United States Attorney Mark E. Bini of the Eastern District of New York and Special Assistant United States Attorney John O. Enright of the United States Securities and Exchange Commission’s Enforcement Division.
The Defendant:
LOUIS F. PETROSSI
Age: 77
Residence: Reno, NevadaM.D.P.A. Docket No. 17-CR-192 (CCC)
Defendants Indicted for Murder and Extortion of Queens Business OwnerRead the Press Release
A four-count indictment was unsealed earlier today in federal court in Brooklyn, charging Ppassim Elder, Dwayne Ling and Frederick McCoy with the October 23, 2017 murder of a Queens business owner in front of his son, as well as the extortion of that father and son. A fourth defendant, Mahdi Abdel-Rahim, was also indicted for his role in the extortion. He was arrested on March 1, 2018 and released on a secured bond. Ling was arrested on March 1, 2018, and ordered detained. Elder was arrested in Cleveland, Ohio on March 2, 2018, was presented in that district on March 5, 2018, and is being transferred in custody to the Eastern District of New York. McCoy was arrested yesterday and will be arraigned this afternoon in federal court in Brooklyn before United States Magistrate Judge Robert M. Levy.
Richard P. Donoghue, 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 James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the charges.
“As alleged in the court filings, defendant Ppassim Elder exploited a business owner’s need for a loan and sent his enforcers to try to collect it, ultimately leading to a senseless and tragic murder,” stated United States Attorney Donoghue. “No son should ever watch his father be killed. This Office and our law enforcement partners are committed to protecting businesses in our community from violent criminals.” Mr. Donoghue also expressed his appreciation to the Queens County District Attorney’s Office for their assistance during the investigation.
“When criminals loan money to business owners, they know they’re never going to get repaid, it’s why they loan out the money. Once they have the victim on the hook, they use threats, intimidation and violence to harass their victims. In this case, the victim died allegedly at the hands of his debtors,” stated FBI Assistant Director-in-Charge Sweeney. “No one should have to pay criminals with their life, and the FBI New York Joint Organized Crime Task Force won’t let these violent offenders get away with it.”
As alleged in the indictment and detailed in court filings, on the morning of October 23, 2017, three perpetrators wearing blazers—Ling, McCoy and another coconspirator—walked into Garden Valley Distributors, a family-owned grocery distribution center located in Ozone Park. The perpetrators said that “Sam” or “Big Sam” had sent them to collect his money. Elder, who was known as “Sam” and “Big Sam,” had given the murder victim’s son a loan, which the son used to support the business. By March 2017, Elder demanded full repayment of the loan, but the son could not afford to repay it because much of the money had been used to purchase merchandise for Garden Valley.
In response, Elder began a campaign of intimidation against the son and his family. Among other things, Elder paid the defendant Mahdi Abdel-Rahim to throw a rock through a window of the home of the son and his father. When the rock did not lead to repayment of the loan, Elder sent Ling, McCoy and a third coconspirator into Garden Valley, where the perpetrators brandished a firearm, pistol-whipped the son across his head, and fatally shot the father in the face.
All four defendants are charged with extortionate collection of credit conspiracy and extortionate collection of credit. Elder, Ling and McCoy are also charged with brandishing a firearm in furtherance of those crimes of violence and causing the death of another through use of a firearm. The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of the murder charge or firearm charge, Elder, McCoy and Ling face a maximum sentence of life imprisonment. If convicted of the extortion charge, Abdel-Rahim faces a maximum of 20 years’ imprisonment.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Andrey Spektor and Keith D. Edelman are in charge of the prosecution.
The Defendants:
PPASSIM ELDER (also known as “Sam” and “Big Sam”)
Age: 38
Staten Island, New YorkMAHDI ABDEL-RAHIM
Age: 24
Brooklyn, New YorkDWAYNE LING
Age: 55
Brooklyn, New YorkFREDERICK MCCOY
Age: 52
Brooklyn, New YorkE.D.N.Y. Docket No. 18-CR-92 (WFK)
New York City Correction Department Investigator Convicted of Transporting, Receiving and Possessing Child PornographyRead the Press Release
A federal jury in Central Islip, New York, returned a guilty verdict today against Fernando Clarke, an investigator with the New York City Department of Correction, on child pornography trafficking offenses.
Clarke, 63, of East Meadow, New York, was found guilty of two counts of transportation of child pornography, four counts of receipt of child pornography, and one count of possession of child pornography. He is scheduled to be sentenced on April 13, by U.S. District Judge Arthur D. Spatt. Clarke remains in custody following the jury’s verdict.
The verdict was announced by Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Richard P. Donoghue for the Eastern District of New York and Special Agent-in-Charge Angel M. Melendez of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) New York.
“By trafficking in images depicting the sexual abuse and exploitation of numerous children, Fernando Clarke added to the demand that fuels the creation and dissemination of these horrific images,” said Acting Assistant Attorney General Cronan. “The diligent efforts of our investigative partners helped ensure that this former corrections investigator, who violated the public’s trust in law enforcement, was brought to justice.”
“As a sworn law enforcement officer, Clarke had a mandatory obligation to report child abuse,” said U.S. Attorney Donoghue. “Instead, he downloaded images of the rape and abuse of children for his personal use. We will be vigilant in holding accountable law enforcement officers who violate their oaths.”
“Clarke downloaded videos of children being sexually abused,” said Special Agent-in-Charge Melendez. “It is unfathomable that anyone, especially someone working in law enforcement, could be capable of such an act. Clarke will face the consequences of his reprehensible actions, and it is because of individuals like him that HSI will continue to work tirelessly, dedicating extensive resources, to investigating child exploitation cases in New York and around the country.”
According to court filings and evidence introduced at trial, Clarke downloaded video files of the sexual abuse of preteen children, which he kept on computer equipment in his home. During a court-ordered search of his home on July 28, 2015, Clarke initially claimed that he was downloading child pornography in connection with his employment as a Department of Correction investigator. Clarke admitted at the time of the search, however, that he had not been authorized to access or download child pornography for his employment. Clarke was arrested at the time of the search and subsequently suspended from the Corrections Department.
The investigation was conducted by HSI; the New York City Department of Investigation, Inspector General, Board of Correction and the High Technology Investigative Unit (HTIU) of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). The case is being prosecuted by Trial Attorney Lauren Kupersmith of the Criminal Division’s CEOS and Assistant U.S. Attorney Allen L. Bode of the U.S. Attorney’s Office’s Long Island Criminal Division.
New York City Correction Department Investigator Convicted of Transporting, Receiving and Possessing Child PornographyRead the Press Release
A federal jury in Central Islip returned a guilty verdict today against Fernando Clarke, an investigator with the New York City Correction Department, on seven counts of transportation, receipt and possession of child pornography. Clarke faces a minimum penalty of five years in prison and a fine of $250,000, when he is sentenced by United States District Judge Arthur D. Spatt on April 13, 2018. Clarke remains in custody.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, and Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York, announced the verdict.
“As a sworn law enforcement officer, Clarke had a mandatory obligation to report child abuse,” stated United States Attorney Donoghue. “Instead, he downloaded images of the rape and abuse of children for his personal use. We will be vigilant in holding accountable law enforcement officers who violate their oaths.” Mr. Donoghue extended his grateful appreciation to HSI; the New York City Department of Investigation, Inspector General, Board of Correction; the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section (“CEOS”) and High Technology Investigative Unit (“HTIU”), for their assistance in this case.
“By trafficking in images depicting the sexual abuse and exploitation of numerous children, Fernando Clarke added to the demand that fuels the creation and dissemination of these horrific images,” said Acting Assistant Attorney General Cronan. “The diligent efforts of our investigative partners helped ensure that this former corrections investigator, who violated the public’s trust in law enforcement, was brought to justice.”
“Clarke downloaded videos of children being sexually abused,” stated HSI Special Agent-in-Charge Melendez. “It is unfathomable that anyone, especially someone working in law enforcement, could be capable of such an act. Clarke will face the consequences of his reprehensible actions, and it is because of individuals like him that HSI will continue to work tirelessly, dedicating extensive resources, to investigating child exploitation cases in New York and around the country.”
According to court filings and evidence introduced at trial, Clarke downloaded video files of the sexual abuse of preteen children, which he kept on computer equipment in his home. During a court-ordered search of his home on July 28, 2015, Clarke initially claimed that he was downloading child pornography in connection with his employment as a Correction Department investigator. Clarke admitted at the time of the search, however, that he had not been authorized to access or download child pornography for his employment. Clarke was arrested at the time of the search and subsequently suspended from the Corrections Department.
The government’s case is being prosecuted by Assistant United States Attorney Allen L. Bode of the Long Island Criminal Division and Department of Justice Trial Attorney Lauren Kupersmith.
The Defendant:
FERNANDO CLARKE
Age: 64
East Meadow, New YorkE.D.N.Y. Docket No. 15-CR-426(S-1) (ADS)(AKT)
Two Executives Arrested for Pump and Dump Securities Fraud SchemeRead the Press Release
Dennis Mancino, the President and Chief Executive Officer of HD View 360, Inc. (“HDVW”) and William Hirschy, the Chief Executive Officer of WT Consulting Group, LLC, were arrested yesterday on charges that they conspired to commit securities fraud by manipulating the price and trading volume of HDVW, a publicly-traded company that purported to distribute and install security surveillance systems. The defendants are scheduled to make their initial appearances this afternoon in the Southern District of Florida at the federal courthouse in Miami.
Richard P. Donoghue, 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 James D. Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the charges.
“As alleged in the complaint, the defendants engaged in a classic pump and dump designed to defraud the investing public and make millions of dollars for themselves by manipulating the price and volume of a publicly traded stock,” stated United States Attorney Donoghue. “The charges announced today demonstrate the commitment of this Office, together with our law enforcement partners, to protecting the investing public by prosecuting pump and dump fraudsters.” Mr. Donoghue thanked the Securities and Exchange Commission, both the New York Regional Office and the Washington, D.C. Office, for their significant cooperation and assistance during the investigation.
“As alleged, Mancino and Hirschy tricked their victims into investing in HDVW under false pretenses, profiting from an orchestrated loss to those who unwittingly participated in this scheme,” stated FBI Assistant Director-in-Charge Sweeney. “People have the right to trade in an uncorrupted market, and today’s charges are proof of the FBI’s continued determination to root out those who unlawfully interfere with this process.”
According to court filings, between July 2017 and February 2018, Mancino and Hirschy engaged in a scheme in which they agreed to artificially control the price and trading volume of shares in Mancino’s company, HDVW. As part of the scheme, the defendants conspired to “pump” HDVW’s stock price by executing fraudulent trades and having HDVW issue weekly press releases and then, once HDVW’s stock price had increased, to “dump” the stock for a multi-million dollar profit. The defendants further agreed to pay kickbacks to stock brokers who would execute manipulative trades designed to increase the price and trading volume of HDVW’s stock. In furtherance of the scheme, the defendants executed numerous fraudulent matched trades designed to create the false appearance that HDVW’s stock price had risen as a result of genuine market demand.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Jacquelyn M. Kasulis, Michael T. Keilty and David Gopstein are in charge of the prosecution.
The Defendants:
DENNIS MANCINO
Age: 46
Residence: Miami, FloridaWILLIAM HIRSCHY
Age: 41
Residence: Ocala, FloridaE.D.N.Y. Docket No. 18-MJ-184
Six Individuals and Four Corporate Defendants Indicted in $50 Million International Securities Fraud and Money Laundering SchemesRead the Press Release
A multi-count indictment was unsealed yesterday, in federal court in Brooklyn, against Panayiotis Kyriacou, Arvinsingh Canaye, Adrian Baron, Linda Bullock, Matthew Green, and Aristos Aristodemou; Beaufort Securities Ltd (“Beaufort Securities”), a brokerage firm located in London, United Kingdom; Beaufort Management Services Ltd (“Beaufort Management”), an off-shore management company located in Mauritius; Loyal Bank Ltd (“Loyal Bank”), an off-shore bank with offices in Budapest, Hungary and Saint Vincent and the Grenadines; and Loyal Agency and Trust Corp. (“Loyal Agency”), an off-shore management company located in Saint Vincent and the Grenadines.
The charges include conspiracy to commit securities fraud and money laundering conspiracy. Canaye was arrested yesterday and is scheduled to be arraigned this afternoon before United States Magistrate Judge Vera M. Scanlon at the federal courthouse in Brooklyn.
Richard P. Donoghue, 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 James D. Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the charges.
“As alleged in the indictment, the defendants engaged in an elaborate multi-year scheme to defraud the investing public of millions of dollars through deceit and manipulative stock trading, and then worked to launder the fraudulent proceeds through off-shore bank accounts and the art world, including the proposed purchase of a Picasso painting,” stated United States Attorney Donoghue. “The charges announced today reflect that this Office, together with our law enforcement partners, is committed to holding accountable those who defraud investors, regardless of the complex schemes they use to hide their ill-gotten gains.” Mr. Donoghue thanked the U.S. Securities and Exchange Commission (SEC), both the New York Regional Office and the Washington, D.C. Office, the City of London Police, the U.K.’s Financial Conduct Authority and the Hungarian National Bureau of Investigation for their significant cooperation and assistance during the investigation.
“As alleged, in a series of unscrupulous and illegal trading practices, the defendants contrived a scheme to defraud investors of U.S. publicly traded companies by manipulating stock prices and masking the true ownership of their clients’ financial interests,” stated Assistant Director-in-Charge Sweeney. “In order to discreetly receive their illegal proceeds, the defendants focused their efforts on laundering the money through a variety of means, including the art world, which they believed was a market free from direct regulation. Bringing to justice securities fraudsters and money laundering facilitators who engage in these types of schemes is and will remain a priority for the FBI and our law enforcement partners worldwide.”
“Since the Foreign Account Tax Compliance Act has been enacted, the financial expertise of our criminal investigators is needed now more than ever in this global economy,” stated IRS-CI Special Agent-in-Charge Robnett. “These allegations outline an intricate scheme to obscure beneficial ownership and launder illicit proceeds. This behavior harms the financial world abroad and here at home.”
Securities Fraud and Money Laundering Scheme
As alleged in the indictment, between March 2014 and February 2018, Beaufort Securities, Beaufort Management, and managers Kyriacou and Canaye, collectively the “Beaufort Defendants,” together with their co-conspirators, engaged in a scheme to defraud investors and potential investors in various U.S. publicly traded companies by concealing the true ownership of various U.S. publicly traded companies and manipulating the price and trading volume in the stocks of those companies.
Beginning in or about October 2016, an Undercover Agent contacted Kyriacou and stated that he was interested in opening brokerage accounts at Beaufort Securities from which he could execute trades in several multi-million dollar stock manipulation deals.
In furtherance of the scheme, the Beaufort Defendants opened brokerage accounts for their clients in the names of off-shore shell companies with nominee shareholders and directors, and then conducted manipulative trading of stocks of U.S. publicly traded companies listed on U.S. over-the-counter exchanges. Beaufort Securities facilitated at least ten “pump and dump” schemes involving U.S. publicly traded stocks, generating over $50 million in proceeds for its clients. Notably, Beaufort Securities had affirmed to the Financial Conduct Authority (“FCA”) in the United Kingdom in July 2016 that it had taken remedial measures to correct deficiencies in the firm’s financial crime controls and anti-money laundering processes.
Additionally, between January 2011 and February 2018, the Beaufort Defendants; Loyal Bank; Loyal Agency; Baron, the Chief Business Officer of Loyal Bank and a Director of Loyal Agency; and Bullock, the Chief Executive Officer of Loyal Bank and a Director of Loyal Agency, together with their co-conspirators, devised and engaged in a scheme to launder securities fraud proceeds for their clients. To facilitate this scheme, Beaufort Securities transferred funds to corporate bank accounts at Loyal Bank opened in the names of off-shore shell companies that were controlled by the bank’s clients. Loyal Bank then provided debit cards to its clients to withdraw funds from those accounts in an untraceable manner to hide the source of the money and facilitate ongoing securities fraud.
Money Laundering Through Purchase and Sale of Art
Separately, between October 2017 and February 2018, Kyriacou; Aristodemou, the uncle of Kyriacou; and Green, the owner of an art gallery in London, United Kingdom, together with their co-conspirators, agreed to launder £6.7 million, the equivalent of over $9 million dollars, which the Undercover Agent represented to be the proceeds of securities fraud. After initially proposing the use of real estate investments to launder the funds, the co-conspirators devised a scheme to “clean up the money” through the purchase and subsequent sale of art. Aristodemou described the art business as the “only market that is unregulated,” and that art was a profitable investment because of “money laundering.” The defendants proposed the Undercover Agent could purchase from Green a painting by Pablo Picasso entitled “Personnages, Painted 11 April 1965,” and provided paperwork for the painting’s purchase. The money laundering scheme was halted prior to the transfer of ownership of the painting.
The FCA also took regulatory action yesterday against Beaufort Securities and a related clearing firm, including halting all regulated activities and initiating insolvency proceedings against both firms. The SEC filed a civil complaint today against Beaufort Securities and Kyriacou
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Jacquelyn M. Kasulis, Michael T. Keilty and David Gopstein are in charge of the prosecution. The Criminal Division’s Office of International Affairs provided significant assistance in this matter.
The Defendants:
PANAYIOTIS KYRIACOU, also known as “Peter Kyriacou”
Age: 26
Residence: London, EnglandARVINSIGH CANAYE, also known as “Vinesh Canaye”
Age: 30
Residence: MauritiusADRIAN BARON
Age: 63
Residence: Budapest, HungaryLINDA BULLOCK
Age: 57
Residence: St. Vincent/GrenadinesARISTOS ARISTODEMOU
Age: 49
Residence: London, EnglandMATTHEW GREEN
Age: 50
Residence: London, EnglandBEAUFORT SECURITIES LTD
London, EnglandBEAUFORT MANAGEMENT SERVICES LTD
MauritiusLOYAL BANK LTD
Budapest, Hungary and St. Vincent/GrenadinesLOYAL AGENCY AND TRUST CORP.
St. Vincent/GrenadinesE.D.N.Y. Docket No. 18-CR-102 (ENV)
Brooklyn Man Arrested for Using a Weapon of Mass DestructionRead the Press Release
Earlier today, in federal court in Brooklyn, a complaint was unsealed charging Victor Kingsley, a Brooklyn resident, with using a weapon of mass destruction that resulted in the death of a Queens resident in July 2017, and with the unlawful transportation of explosive materials. Kingsley used the explosive device in an apparent effort to target New York City Police Department (NYPD) officers. Kingsley is scheduled to make his initial appearance tomorrow afternoon at the federal courthouse in Brooklyn before United States Magistrate Judge Vera M. Scanlon.
Richard P. Donoghue, United States Attorney for the Eastern District of New York; John C. Demers, Assistant Attorney General for the National Security Division; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and James P. O’Neill, Commissioner, NYPD, announced the charges.
“As alleged in the complaint, Kingsley used an improvised explosive device in an attempt to target an NYPD officer, and he killed an innocent civilian in the process,” stated United States Attorney Donoghue. “This Office and our law enforcement partners will use every tool at our disposal to bring to justice those who endanger the community through acts of senseless violence.” Mr. Donoghue extended his grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state and local agencies from the region, the NYPD and the Queen’s County District Attorney’s Office.
“There is no place in civil society for the spreading of fear through intimidation, violence and destruction,” stated FBI Assistant Director-in-Charge Sweeney. “I commend the work of the joint FBI-NYPD investigative team for its determination and complete collaboration in bringing this accused criminal to justice.”
“Kingsley’s cowardly act was meant to target a New York City Police Officer for doing his job and resulted in the tragic death of an unintended victim,” said Police Commissioner O’Neill. “This was a case where the NYPD Detective Bureau, Intelligence Bureau, and FBI/NYPD Joint Terrorist Task Force combined their expertise and unique talents to find a needle in a haystack—the clues that would lead to the identification of a bomber who went to great lengths to remain hidden.”
As alleged in the complaint, Kingsley built the explosive device used in the July 28, 2017 murder as part of his broader effort to retaliate violently against several police officers who were part of an NYPD unit that had arrested him in January 2014. Despite the case against him having eventually been dismissed, Kingsley methodically sought revenge against the officers. He conducted internet searches and made telephone calls to determine the locations of the officers’ residences. He also accumulated explosive device components via online purchases made through Amazon, which he had delivered to his house in Brooklyn. Ultimately, he arranged for the explosive device to be placed outside of the Queens residence where Kingsley mistakenly believed one of his target officers resided. The building owner inadvertently detonated the device when he tried to open it, and he died as a result of his injuries.
Thereafter, Kingsley continued to acquire explosive device parts. According to Amazon purchase records, he placed additional orders for explosive device components as recently as earlier this month.
If convicted, Kingsley could face a maximum sentence of life in prison. The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by the office’s National Security & Cybercrime Section. Assistant United States Attorney Margaret Lee is in charge of the prosecution with assistance from Trial Attorney Jacqueline L. Barkett of the Counterterrorism Section of the National Security Division.
The Defendant:
Victor C. Kingsley
Age: 37
Brooklyn, New YorkU.S. Citizen Charged in Brooklyn Federal Court with Attempting to Provide Material Support to ISILRead the Press Release
Earlier today, a complaint was unsealed charging Bernard Augustine, a United States citizen, with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization. The defendant is scheduled to make his initial appearance this afternoon at the federal courthouse in Brooklyn before United States Magistrate Judge Vera M. Scanlon.
Richard P. Donoghue, United States Attorney for the Eastern District of New York; John C. Demers, Assistant Attorney General for National Security; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office; and James P. O'Neill, Commissioner, New York City Police Department (NYPD), announced the charges.
“As alleged in the complaint, Augustine sought to travel to Libya to join a violent terrorist organization,” stated United States Attorney Donoghue. “This Office and our law enforcement partners will continue to work tirelessly to arrest and prosecute aspiring terrorists before they are able to threaten the United States and its allies.” Mr. Donoghue extended his grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state and local agencies from the region.
“Augustine, a U.S. citizen, traveled halfway around the world with the intent of joining ISIS. Today, that journey ends in a US courtroom to face the justice system for his alleged support for a terrorist organization,” stated FBI Assistant Director-in-Charge Sweeney. “The FBI New York Joint Terrorism Task Force remains dedicated to bringing terrorists to justice wherever they are. I would like to thank all of our partner agencies for their continued vigilance.”
“Today, as is too often the case, another person was arrested for attempting to provide material support to ISIS,” stated NYPD Commissioner O’Neill. “Terrorism, violence, and murder is not a pathway to martyrdom. We will continue to arrest anyone who attempts to join or help a terrorist organization. My thanks to the many detectives, agents, and prosecutors whose work on the original Joint Terrorism Task Force here in Manhattan made today’s arrest and charges possible.”
As alleged in the complaint, the defendant traveled to Tunisia in February 2016. Upon his arrival in Tunisia, the defendant attempted to travel to Libya to enter ISIL-controlled territory. The defendant was arrested in Tunisia before he was able to travel into Libya.
After Augustine completed his term of imprisonment in Tunisia, he was subject to expulsion and Tunisian authorities transferred the defendant to the custody of the FBI.
Prior to his departure from the United States, Augustine repeatedly expressed support for ISIL and for individuals who provided support to the foreign terrorist organization’s mission of violent extremism. In March 2016, JTTF agents obtained a search warrant for the defendant’s laptop computer. In reviewing the contents of the defendant’s laptop, agents found evidence that, in the months prior to his departure, the defendant had viewed numerous videos that depicted ISIL leaders and fighters, including fighters engaged in acts of violence. There was also evidence on the laptop that, during the same period, the defendant viewed videos depicting well-known figures who were public supporters of ISIL, or of engaging in violent acts against Westerners, including, among others, Usama Bin Laden and Anwar al-Awlaki. In addition, the defendant’s Internet search history information revealed that, in the months leading up to his departure from the United States, the defendant actively searched for information on ISIL, how to join ISIL, radical jihadist propaganda and firearms. Finally, the investigation revealed that, in the weeks leading up to his travel from the United States, the defendant made numerous postings in online forums expressing support for ISIL and violent jihad.
If convicted, Augustine faces a maximum sentence of 20 years in prison. The charge in the federal complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s National Security & Cybercrime Section and the Justice Department’s National Security Division. Assistant United States Attorney Peter Baldwin and Raj Parekh of the Counterterrorism Section of the National Security Division are in charge of the prosecution.
The Defendant:
BERNARD AUGUSTINE
Age: 21
Keyes, CaliforniaE.D.N.Y. Docket No. 16-MJ-1107
U.S. Citizen Charged with Attempting to Provide Material Support to ISISRead the Press Release
Earlier today, a complaint was unsealed charging Bernard Augustine, 21, of Keyes, California, with attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS or ISIL), a designated foreign terrorist organization.
Assistant Attorney General for National Security John C. Demers, U.S. Attorney Richard P. Donoghue for the Eastern District of New York, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office and Commissioner James P. O'Neill of the NYPD announced the charges. The defendant is scheduled to make his initial appearance today at the federal courthouse in Brooklyn, New York before U.S. Magistrate Judge Vera M. Scanlon.
As alleged in the complaint, the defendant traveled to Tunisia in February 2016. Upon his arrival in Tunisia, the defendant attempted to travel to Libya to enter ISIS-controlled territory. The defendant was arrested in Tunisia before he was able to travel into Libya.
Prior to his departure from the United States, Augustine repeatedly expressed support for ISIS and for individuals who provided support to the foreign terrorist organization’s mission of violent extremism. In March 2016, JTTF agents obtained a search warrant for the defendant’s laptop computer. In reviewing the contents of the defendant’s laptop, agents found evidence that, in the months prior to his departure, the defendant had viewed numerous videos that depicted ISIS leaders and fighters, including fighters engaged in acts of violence. There was also evidence on the laptop that, during the same period, the defendant viewed videos depicting well-known figures who were public supporters of ISIS or of engaging in violent acts against Westerners, including, among others, Usama Bin Laden and Anwar al-Awlaki. In addition, the defendant’s Internet search history information revealed that, in the months leading up to his departure from the United States, the defendant actively searched for information on ISIS, how to join ISIS, radical jihadist propaganda and firearms. Finally, the investigation revealed that, in the weeks leading up to his travel from the United States, the defendant made numerous postings in online forums expressing support for ISIS and violent jihad.
After Augustine completed his term of imprisonment in Tunisia, he was subject to expulsion and Tunisian authorities transferred the defendant to the custody of the FBI.
If convicted, Augustine faces a maximum sentence of 20 years in prison. The charge in the federal complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
Mr. Demers and Mr. Donoghue extended their grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state and local agencies from the region.
Assistant U.S. Attorney Peter Baldwin of the Eastern District of New York and Trial Attorney Raj Parekh of the National Security Division’s Counterterrorism Section are in charge of the prosecution.
Queens Man Indicted for Distributing Fentanyl from His Residence in QueensRead the Press Release
A two-count indictment was unsealed today in federal court in Brooklyn, charging David Wickham with conspiring to distribute and distributing more than 40 grams of fentanyl in Queens, New York. The defendant was arrested earlier today and is scheduled to be arraigned this afternoon before United States Magistrate Judge Vera M. Scanlon.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Angel M. Melendez, Special Agent-in-Charge, United States Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York, and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the charges.
“As alleged in court filings, David Wickham sold fentanyl, a powerful opioid with potentially lethal consequences, which he represented to buyers on numerous occasions to be heroin,” stated United States Attorney Donoghue. “This Office will continue to work tirelessly with our law enforcement partners to prosecute those who contribute to the opioid epidemic plaguing the communities in our District, and to save lives by reducing the availability of the deadly drug.”
“Fentanyl is a killer, and drug pushers have been taking advantage of selling this highly addictive drug, preying on the vulnerabilities of people,” stated HSI Special Agent-in-Charge Melendez. “Combatting the smuggling and trafficking of fentanyl and opioids is a priority for HSI, and we are committed to work alongside our law enforcement partners to address this problem.”
According to court documents, between August and December 2017, the defendant sold almost 100 grams of fentanyl to an undercover officer. On several occasions, Wickham represented the narcotics to be heroin—a much less potent narcotic—when it was actually distributing fentanyl. Also according to court documents, the fentanyl sold by Wickham is linked to two fatal overdoses and one near-fatal overdose based on phone records and a witness’ statements. During the execution of Wickham’s arrest and the search of his residence and vehicle, pursuant to a search warrant, agents recovered a firearm from under the defendant’s bed, as well as suspected narcotics and drug paraphernalia, including a scale, baggies and hypodermic needles.
According to the Centers for Disease Control and Prevention (CDC) and the Department of Justice, drug overdoses have become the leading cause of death for Americans under the age of 50. The increase in overdose deaths has been driven in large part by fentanyl—a drug that has been described as 50 to 100 times more potent than morphine. In New York, from 2014 to 2015, fentanyl overdose deaths rose 135 percent, while heroin overdose deaths rose 28 percent. According to the CDC’s latest report analyzing overdose deaths nationally, in 2016 synthetic opioid deaths—which includes fentanyl—more than doubled from 9,580 in 2015 to 19,413 in 2016.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, the defendant faces a mandatory minimum sentence of five years’ imprisonment and up to 40 years’ imprisonment.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorney Nomi D. Berenson is in charge of the prosecution.
The Defendant:
DAVID WICKHAM (also known as “Wick” and “Dogg”)
Age: 35
Queens, New YorkE.D.N.Y. Docket No. 18-CR-72 (ARR)
NYPD Detective Charged with Perjury and Obstruction of JusticeRead the Press Release
A three-count indictment was unsealed earlier today in federal court in Brooklyn charging Michael Foder, a detective with the New York City Police Department (NYPD), with perjury and obstructing an official proceeding in connection with false sworn testimony that Foder gave in a proceeding in United States District Court on December 29, 2016. The defendant will be arraigned later today before United States Magistrate Judge Vera M. Scanlon.
Richard P. Donoghue, 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 James P. O’Neill, Commissioner, NYPD, announced the charges.
According to the indictment and court filings, Foder falsely testified under oath about when and how he showed photographs of two robbery suspects to a victim of the robbery. Following the hearing, the government identified several discrepancies in the photo array identifications. Handwritten notations indicated that the photo arrays had been completed on November 27, 2015 and February 14, 2016, as Foder had testified. However, the photographs of fillers depicted in the photo arrays had been taken on dates subsequent to the dates Foder claimed he had shown them to the victim witness. Foder is alleged to have falsified documentation relating to the purported identifications made by the victim.
“As alleged in the indictment, this defendant provided false testimony in a federal criminal proceeding,” stated United States Attorney Donoghue. “Our justice system relies upon the absolute integrity of our law enforcement officers and, while the vast majority of officers uphold that standard, we will not hesitate to act when one does not.”
“As alleged, Foder committed a serious crime by lying while under oath. In doing so, he threatened the reputation of the honest men and women of law enforcement who work selflessly to weed out crime and keep their communities safe,” stated FBI Assistant Director-in-Charge Sweeney. “We hold all officers to the highest standards, and we’ll be quick to respond whenever these ideals are challenged–there are no exceptions.”
“The NYPD and all the people we serve expect the highest levels of integrity and truthfulness from our police officers, who swore an oath to uphold the fundamental principles of our city, state, and nation,” Police Commissioner O’Neill said. “The detective charged today broke that oath by willfully giving false testimony, an act that makes the job of every other police officer more difficult. The NYPD goes to enormous lengths to detect those who break the law or do not follow policies and procedures – from integrity testing by our Internal Affairs Bureau; to auditing of crime and other reports; to regular collaboration with local and federal prosecutors; to proactive training for all police officers, new investigators, and supervisors.”
The charges in the indictment are merely 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 Attorney Nathan Reilly is in charge of the prosecution.
The Defendant:
MICHAEL FODER
Age: 41
Staten Island, NYE.D.N.Y. Docket No. 18-CR-97 (PKC)
Stock Promoter Sentenced to 27 Months in Prison for His Role in International Pump and Dump SchemeRead the Press Release
Earlier today, in federal court in Brooklyn, stock promoter Songkram Roy Sahachaisere was sentenced by United States District Judge Eric N. Vitaliano to 27 months’ imprisonment for participating in a multi-million dollar international market manipulation scheme. Sahachaisere was convicted in November 2015, following more than five weeks of trial, of conspiring to commit securities fraud, conspiring to commit wire fraud, two counts of wire fraud and one count of securities fraud.
Richard P. Donoghue, 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 sentence.
According to court documents and trial testimony, Sahachaisere participated in an international “pump and dump” operation, which fraudulently pumped up the share price of worthless penny stocks, and then dumped billions of shares on unsuspecting victim investors across the globe. They “pumped up” the share prices of the companies’ stock by engaging in fraudulent and illegal sales campaigns, which included distributing false press releases, announcing non-existent business ventures and fake mergers, posting false information on Internet message boards and bribing stock promoters. These schemes fraudulently inflated the value of the shares by approximately $100 million. Sahachaisere’s role in the scheme was to arrange promoters to “pump” the stocks to potential victims. Sahachaisere also conspired with other members of the conspiracy to artificially affect the trading price and volume of stocks so that they appeared legitimate to investors. In addition, the conspiracy used brokerage houses to manipulate transfers of shares, effectuating matched and wash trades in their targeted securities. Six co-defendants of Sahachaisere were previously convicted and sentenced. Two co-defendants are awaiting sentencing.
“Songkram Roy Sahachaisere, a licensed broker, defrauded investors across the globe through an international pump and dump scheme,” stated United States Attorney Donoghue. “His sentence should serve as a warning to those who would consider manipulating the securities markets for their own personal gain.” Mr. Donoghue extended his grateful appreciation to the FBI, which led the government’s investigation, and thanked the Internal Revenue Service, Criminal Investigation, New York; Homeland Security Investigations, Department of Homeland Security, Buffalo; Treasury Inspector General for Tax Administration; and the Royal Canadian Mounted Police and law enforcement authorities in England, Thailand and China for their assistance in this case.
“Sahachaisere promoted a scheme to overstate the value of stocks and sell them to unwitting investors worldwide,” stated FBI Assistant Director-in-Charge Sweeney. “This elaborate plan had but one simple intention, which was to profit from the misfortune of others. Today’s sentencing holds him accountable for his crimes.”
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Tyler Smith and Mark Bini are in charge of the prosecution, with assistance provided by Assistant United States Attorney Karin Orenstein of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The Defendant:
SONGKRAM ROY SAHACHAISERE
Age: 48
Newport Beach, California
Defendants Previously Sentenced:
SANDY WINNICK
Bangkok, ThailandGREGORY CURRY
Bangkok, Thailand
GREGORY ELLIS
Ontario, CanadaCORT POYNER
Boca Raton, FloridaWILLIAM SEALS
Fallbrook, CaliforniaKOLT CURRY
Ontario, CanadaDefendants Awaiting Sentencing:
GREGORY KERSHNER
Tucson, ArizonaJOSEPH MANFREDONIA
Tom’s River, New JerseyE.D.N.Y. Docket No. 13-CR-452 (ENV)
Former MTA Manager Sentenced to 46 Months’ Imprisonment for Soliciting and Accepting Bribes from Construction ContractorsRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, Talib Lokhandwala, a former Construction Project Administrator with the Metropolitan Transit Authority (MTA), was sentenced by Chief United States District Judge Dora L. Irizarry to 46 months’ imprisonment, to be followed by three years of supervised release, after pleading guilty in October 2017 to having solicited and received bribes from two contractors working on two New York City Transit Authority (NYCTA) projects. The Court also imposed a fine of $20,000.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Douglas Shoemaker, Special Agent-In-Charge, U.S. Department of Transportation Office of Inspector General (DOT OIG), and Barry L. Kluger, Inspector General, Metropolitan Transportation Authority, announced the sentence.
According to court filings and facts presented at the sentencing, from March 2009 through May 2015, Lokhandwala, who was employed in various positions charged with overseeing MTA construction projects, solicited and received bribes totaling $152,420 from two contractors performing construction projects on NYCTA subway lines. Lokhandwala concealed his receipt of the bribe payments by having the contractors issue checks to shell bank accounts he controlled. In exchange for the bribes, Lokhandwala promised to steer future work to the contractors and to expedite bureaucratic paperwork for their benefit. Lokhandwala threatened to bar the contractors from future projects if they did not continue to pay him.
“Motivated by greed, Lokhandwala abused his position of trust by soliciting and accepting bribes from contractors performing work on NYCTA projects,” stated United States Attorney Donoghue. “The public has the right to expect that contractors performing work on their behalf are selected on merit, not their willingness to line the pockets of government employees with bribe payments. Our Office is committed to ensuring that public officials who accept bribes are held accountable.” Mr. Donoghue expressed his appreciation to the United States Department of Transportation and to the MTA Inspector General for their assistance during the investigation.
“This sentencing demonstrates that those entrusted with the stewardship of taxpayer dollars and oversight of transportation infrastructure projects will be held accountable for maintaining the highest level of integrity,” said DOT OIG Special Agent-in-Charge Shoemaker. “Working with our law enforcement and prosecutorial partners, we will continue our vigorous efforts in preventing, detecting and prosecuting fraud involving DOT programs and funds.”
“I thank the United States Attorney’s Office for having moved aggressively and effectively to prosecute these criminal acts that undermine the integrity of the public contracting process,” stated MTA Inspector General Kluger. “I will continue to refer such misconduct to my law enforcement partners for vigorous investigation and prosecution. I also want to remind those who do business with the MTA of their obligations, to both the MTA and the public, to report any solicitations or requested bribes.”
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorney Michael Warren is in charge of the prosecution.
The Defendant:
TALIB LOKHANDWALA
Age: 64
Residence: Fair Lawn, New JerseyE.D.N.Y. Docket No. 17-CR-517 (DLI)
Justice Department Coordinates Nationwide Elder Fraud Sweep of More Than 250 DefendantsRead the Press Release
WASHINGTON – Attorney General Jeff Sessions and law enforcement partners announced today the largest coordinated sweep of elder fraud cases in history. The cases involve more than two hundred and fifty defendants from around the globe who victimized more than a million Americans, most of whom were elderly. The cases include criminal, civil, and forfeiture actions across more than 50 federal districts. Of the defendants, 200 were charged criminally. In each case, offenders engaged in financial schemes that targeted or largely affected seniors. In total, the charged elder fraud schemes caused losses of more than half a billion dollars. The Department coordinated its announcement with the FTC and state Attorneys General, who independently filed numerous cases targeting elder frauds within the sweep period.
Attorney General Sessions was joined in the announcement by FBI Acting Deputy Director David Bowdich; Chief Postal Inspector Guy Cottrell; FTC Acting Chairman Maureen Ohlhausen; and Kansas Attorney General and President of the National Association of Attorneys General Derek Schmidt.
“The Justice Department and its partners are taking unprecedented, coordinated action to protect elderly Americans from financial threats, both foreign and domestic,” said Attorney General Sessions. “Today’s actions send a clear message: we will hold perpetrators of elder fraud schemes accountable wherever they are. When criminals steal the hard-earned life savings of older Americans, we will respond with all the tools at the Department’s disposal – criminal prosecutions to punish offenders, civil injunctions to shut the schemes down, and asset forfeiture to take back ill-gotten gains. Today is only the beginning. I have directed Department prosecutors to coordinate with both domestic law enforcement partners and foreign counterparts to stop these criminals from exploiting our seniors.”
The actions charged a variety of fraud schemes, ranging from mass mailing, telemarketing and investment frauds to individual incidences of identity theft and theft by guardians. A number of cases involved transnational criminal organizations that defrauded hundreds of thousands of elderly victims, while others involved a single relative or fiduciary who took advantage of an individual victim. The schemes charged in these cases caused losses to more than a million victims.
“Winners. That’s what so many of the people who received these solicitations in the mail thought they were. But they’re not. They are victims of scams that Postal Inspectors have seen and investigated for decades. In fact, some of the same operators we encountered 20 years ago are back. But so are we. Yesterday, Postal Inspectors around the country executed search warrants on 12 locations that some of these same operators used to run their scams. We’re letting the American public know – and especially our vulnerable older Americans – that Postal Inspectors are working hard to protect them and ensure their confidence in the U.S. Mail,” said Chief Postal Inspector Cottrell.
“Over the last year, the FBI has initiated more than 200 financial crimes cases involving elderly victims who were devastated financially, emotionally, mentally and physically. Picking up the pieces of these fraud schemes can be equally as traumatizing for the caregivers of these elderly victims,” said Acting Deputy Director Bowdich. “The FBI reminds seniors and their caregivers to be vigilant. If any person believes they are the victim of, or have knowledge of fraud involving an elderly person, regardless of the loss amount, they should report it to the FBI.”
Actions against mass-mailing fraud industry
As part of the initiative, the Department’s Consumer Protection Branch, working with the U.S. Attorney’s Office for the Eastern District of New York and others, brought numerous cases this past week in a coordinated strike against more than 43 mass-mailing fraud operators, including criminal charges against six individuals. In addition, law enforcement agents executed 14 premises search warrants from Las Vegas to south Florida, served numerous asset seizure warrants, and coordinated with the Vancouver Police in Canada, who executed over 20 warrants, including search warrants on business premises.
“The defendants targeted elderly and vulnerable consumers both in the United States and abroad, using U.S. addresses and the U.S. mails to try to legitimize their fraudulent schemes,” said U.S. Attorney for the Eastern District of New York Richard P. Donoghue. “They sold false promises of life-changing prizes that never came true. We will pursue the perpetrators of these mail schemes wherever they are located, and hold them accountable.”
These recently filed cases particularly targeted transnational criminal actors who collectively defrauded at least a million victims out of hundreds of millions of dollars. Indeed, just one of the schemes prosecuted criminally by the Consumer Protection Branch operated from 14 foreign countries to cost American victims more than $30 million. Click here for map showing a transnational, single fraud scheme.
Mass-mailing fraud inflicts hundreds of millions of dollars in losses to elderly U.S. victims each year. Department prosecutors and U.S. Postal Inspectors have taken a comprehensive approach to combatting this fraud, disrupting and prosecuting individuals who manage the schemes, artists who draft the fraudulent solicitations, list brokers who supply victim lists, and individuals who collect victim payments. Click here for fact-sheet with cases on mass-mailing fraud.
Actions against other elder fraud schemes
Prosecutors across the country from the Criminal Division’s Fraud Section, the Consumer Protection Branch and the U.S. Attorney’s Offices have heeded the call to focus resources on elder fraud cases. Over 50 U.S. Attorney’s Offices and Department Components filed elder fraud cases in the last year. Some examples of the elder financial exploitation prosecuted by the Department include:- “Lottery phone scams,” in which callers convince seniors that a large fee or taxes must be paid before one can receive lottery winnings;
- “Grandparent scams,” which convince seniors that their grandchildren have been arrested and need bail money;
- “Romance scams,” which lull victims to believe that their online paramour needs funds for a U.S. visit or some other purpose;
- “IRS imposter schemes,” which defraud victims by posing as IRS agents and claiming that victims owe back taxes;
- “Guardianship schemes,” which siphon seniors’ financial resources into the bank accounts of deceitful relatives or guardians.
Many of these cases illustrate how an elderly American can lose his or her life savings to a duplicitous relative, guardian, or stranger who gains the victim’s trust. The devastating effects these cases have on victims and their families, both financially and psychologically, make prosecuting elder fraud a key Department priority.
Public education
The Department has partnered with Senior Corps, a national service program administered by the federal agency the Corporation for National and Community Service, to educate seniors and prevent further victimization. The Senior Corps program engages more than 245,000 older adults in intensive service each year, who in turn, serve more than 840,000 additional seniors, including 332,000 veterans.
Using its vast network operating in more than 30,000 locations, Senior Corps volunteers will communicate about elder fraud to potential victims across the country and will use their skills, knowledge and experience to educate their peers and caregivers about the most prolific types of schemes and how to avoid them. Click here for information on Senior Corps’ efforts to reduce elder fraud.
Coordination with state officialsKansas Attorney General Schmidt highlighted the cases filed by state Attorneys General targeting elder frauds within in the sweep period, and he emphasized efforts at the state level to combat elder abuse and protect seniors from fraud and exploitation. He encouraged all of the state Attorneys General to devote enforcement and public education resources to preventing financial exploitation of senior citizens.
Coordination with foreign law enforcement
Exceptional assistance from foreign law enforcement partners amplified the effectiveness of the Department’s initiative. The sweep announced today benefited greatly from the work of the International Mass-Marketing Fraud Working Group (IMMFWG), a network of civil and criminal law enforcement agencies from Australia, Belgium, Canada, Europol, the Netherlands, Nigeria, Norway, Spain, the United Kingdom and the United States. The IMMFWG is co-chaired by the U.S. Department of Justice and FTC, and law enforcement in the United Kingdom, and serves as a model for international cooperation against specific threats that endanger the financial well-being of each member country’s residents. Attorney General Sessions expressed gratitude for the outstanding efforts of the working group, including law enforcement action taken as part of the sweep by the Vancouver Police Department in Canada to halt mass mailing schemes that defrauded hundreds of thousands of elderly victims worldwide.
Elder fraud complaints
Elder fraud complaints may be filed with the FTC at www.ftccomplaintassistant.gov or at 877-FTC-HELP. The Department of Justice provides a variety of resources relating to elder fraud victimization through its Office of Victims of Crime, which can be reached at www.ovc.gov.Italian National Sentenced to 11 Months in Prison for Illegally Exporting and Attempting to Export Military TechnologyRead the Press Release
Earlier today, in federal court in Brooklyn, Giovanni Zannoni, an Italian national and member of the Italian armed services, was sentenced by United States District Judge Pamela K. Chen to 11 months’ imprisonment for illegally exporting and attempting to export controlled military technology from the United States to Italy. Zannoni previously pled guilty to the sole count of the information on December 21, 2017. Zannoni was also ordered to forfeit gun parts, night vision goggles and thermal imaging devices, including an Army/Navy PVS-7D night vision goggle, a mini thermal monocular, numerous parts and magazines for AR-15 and M4 semi-automatic assault rifles and image intensifiers. As part of his plea agreement, Zannoni also agreed to forfeit $436,673.73.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, announced the sentencing. Mr. Donoghue thanked the Department of Defense, Defense Criminal Investigative Service, Northeast Field Office (DCIS), and U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York, for their hard work and dedication over the course of this investigation and prosecution.
According to court filings, between June 2013 and May 2017, Zannoni illegally exported and attempted to export night vision goggles and assault rifle components that have been designated as defense articles on the United States Munitions List. To lawfully export these devices, the United States Department of State requires the obtaining of a license because these items make a significant contribution to the military potential and weapons proliferation by other nations, which could be detrimental to the foreign policy and national security of the United States.
To carry out this scheme, the defendant purchased export-controlled devices from U.S.-based manufacturers or distributors or through Internet-based marketplaces like eBay.com. Zannoni then directed the sellers of the export-controlled products to ship them to freight forwarders in the United States, and made false statements to the freight forwarders about the contents and values of the packages, so that the packages would be exported to Italy without the required licenses. Records show that the defendant purchased approximately 2,700 night vision or thermal imaging devices, image intensifiers and pieces of body armor, and that he paid approximately $530,000 for these export-controlled devices between June 2013 and May 2017.
The government’s case is being handled by the Office’s General Crimes Section. Assistant United States Attorney Nomi D. Berenson is in charge of the prosecution, with assistance from Trial Attorney Matthew Walczewski of the National Security Division’s Counterintelligence and Export Control Section.
The Defendant:
GIOVANNI ZANNONI
Age: 35
Residence: Gavorrano, ItalyE.D.N.Y. Docket No. 17-CR-565 (PKC)
Former Nassau County Chief Deputy County Executive Indicted for Obstruction of Justice and Lying to the FBIRead the Press Release
Earlier today, a two-count indictment was unsealed in federal court in Central Islip, New York, charging Richard “Rob” Walker, the former Chief Deputy County Executive under Nassau County Executive Edward Mangano, with obstruction of justice and making false statements. Walker’s arraignment on the indictment will take place at 12:00 p.m. this afternoon before United States Magistrate Judge Anne Y. Shields in Courtroom 830.
Richard P. Donoghue, 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 indictment, the defendant Walker, while holding public office, attempted to obstruct a grand jury investigation and then lied to the FBI,” stated U.S. Attorney Donoghue. “Lying and obstructing justice by those who are sworn to serve the public will never be tolerated. This Office, together with our law enforcement partners, is committed to holding officials who violate the public trust accountable for such crimes.” Mr. Donoghue expressed his thanks to Internal Revenue Service Criminal Investigation for its help during the investigation.
“As alleged, Rob Walker, while serving as a public official, accepted money from a contractor who was performing work for Nassau County. When he found out the FBI was hot on his trail, he tried to cover up his corrupt behavior, even going so far as to attempt to convince the contractor to lie to a grand jury,” stated FBI Assistant Director-in-Charge Sweeney. “Walker and others who engage in similar schemes are reminded today that there’s no way to undo what’s already been done.”
As alleged in the indictment and other court papers, in 2014, the defendant, who was the Chief Deputy Nassau County Executive at the time, accepted a $5,000 cash payment from a Nassau County contractor who was performing work for Nassau County pursuant to a county contract. In 2017, once the defendant learned that the United States Attorney’s Office for the Eastern District of New York and the FBI had opened a grand jury investigation of potential corruption in Nassau County government, including the circumstances surrounding the $5,000 payment made by the contractor to the defendant, the defendant spoke with the contractor on several occasions in an attempt to convince the contractor to conceal the existence of the $5,000 payment from the grand jury. Further, the defendant urged the contractor to provide a false explanation to the grand jury concerning the reasons for the payment. Finally, the defendant arranged to meet the contractor in a park in Hicksville, New York in order to return the $5,000. The FBI surveilled the meeting, and at that meeting, the defendant gave the contractor an envelope containing $5,000, which was then turned over to law enforcement. Thereafter, the defendant, when interviewed by the FBI concerning the payment, denied ever having received any cash payments from the contractor.
The charges announced today are merely allegations and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Catherine M. Mirabile, Raymond A. Tierney and Lara Treinis Gatz are in charge of the prosecution.
The Defendant:
Richard Walker (also known as “Rob” Walker)
Age: 43
Hicksville, New YorkE.D.N.Y. Docket No. 18-CR-087 (JMA)