Eastern District of New York
Press releases recorded for this federal judicial district.
Former Global Head of HSBC’s Foreign Exchange Cash-Trading Found Guilty of Orchestrating Multimillion-Dollar Front-Running SchemeRead the Press Release
BROOKLYN, N.Y. – Mark Johnson, the former head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), was found guilty today for his role in a scheme to defraud an HSBC client through a multimillion-dollar scheme commonly referred to as “front running.”
Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation (FDIC), and Assistant Director-in-Charge Andrew Vale of the FBI’s Washington Field Office made the announcement.
Johnson, a United Kingdom citizen with residences both in the U.K. and the United States, was found guilty after a four-week jury trial of one count of conspiracy to commit wire fraud and eight counts of wire fraud. A sentencing date has not been scheduled. United States District Judge Nicholas G. Garaufis of the Eastern District of New York presided over the trial. Johnson was arrested on a criminal complaint in July 2016 and indicted in August 2016.
“The jury found that former HSBC banker Mark Johnson exploited confidential information provided by a client of the bank to execute trades that were intended to generate millions of dollars in profits for him and the bank at the expense of their client,” said Acting U.S. Attorney Rohde. “This Office, together with its law enforcement partners, will continue to vigorously investigate and prosecute those who would so abuse their client relationships and, more generally, undermine public confidence in the operation of the financial markets by engaging in fraudulent schemes.”
“This verdict makes clear that the defendant corruptly manipulated the foreign exchange market for the benefit of his bank and his bonus pool, to the detriment of the bank’s client,” said Acting Assistant Attorney General Blanco. “This case demonstrates the Criminal Division’s commitment to protecting the financial system from harm, and holding corporate executives, including at the world’s largest and most sophisticated financial institutions, responsible for their crimes.”
“This case involved a complex fraud scheme to ‘front run’ a foreign exchange transaction in order to generate millions of dollars in illicit profits for HSBC, which also indirectly benefited individual traders,” said FDIC Inspector General Lerner. “Such cases are challenging, but important, to bring against bank insiders who misuse their positions and undermine the integrity of a major international financial institution,”
“Mark Johnson misused confidential information to manipulate currency prices and defrauded a client out of more than $7 million,” said FBI Assistant Director-in-Charge Vale. “The American people need to be assured that we are working vigorously to ensure integrity is upheld in financial services industries. We will continue to work with our law enforcement partners to investigate and prosecute those who engage in illegal business practices.”
As established by the evidence presented by the government at trial, HSBC was selected to execute a foreign exchange (FX) transaction related to a planned sale of one of a client’s foreign subsidiaries – which would require converting approximately $3.5 billion in sales proceeds into British Pounds Sterling. HSBC’s agreement with the client required the bank to keep the details of the planned transaction confidential. Instead, Johnson defrauded the client out of millions of dollars by misusing that confidential information.
Shortly before the transaction, which occurred in December 2011, Johnson and other traders acting under his direction purchased Pounds Sterling for their own benefit in their HSBC “proprietary” accounts. Johnson then caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to “ramp,” or drive up, the price of the Pounds Sterling, benefiting their proprietary positions and HSBC at the expense of their client.
As part of their scheme, Johnson and his co-conspirators made misrepresentations to the client about the transaction that concealed the self-serving nature of their actions. In total, Johnson and the traders he supervised generated HSBC profits of roughly $7.3 million from the execution of the FX transaction for the victim company.
The investigation was conducted by the FDIC’s Office of Inspector General and the FBI’s Washington Field Office. Assistant Chiefs Carol Sipperly and Brian Young and Trial Attorney Blake Goebel of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Lauren Elbert of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case.
The Defendant:
Mark Johnson
Age: 51
United Kingdom
E.D.N.Y. Docket No. 16-CR-457
“Rival Impact” Gang Member Charged in Brooklyn Federal Court with Double HomicideRead the Press Release
Nabiu Mansaray, a member of a Coney Island-based gang known variously as “Mermaid Boys,” “Mermaids,” “Rival Impact,” “R.I.,” and “33rd Street Crew,” will be arraigned this afternoon in federal court in Brooklyn, New York, on a superseding indictment charging him with crimes including racketeering, murder in aid of racketeering, narcotics trafficking and unlawful use of firearms. Mansaray’s co-defendant, Frank Smith, was previously arraigned on similar charges in the Eastern District of New York after his arrest on the underlying indictment on July 7, 2016, and is charged with additional racketeering acts in the superseding indictment. Mansaray will be arraigned before United States Magistrate Judge Steven L. Tiscione, following his removal from Maryland, where he was arrested by agents from the Federal Bureau of Investigation on September 15, 2017, pursuant to the superseding indictment.
The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James P. O’Neill, Commissioner, New York City Police Department (NYPD).
As detailed in the superseding indictment, between January 2000 and January 2014, to maintain Rival Impact’s power and hold in the Coney Island section of Brooklyn, the defendants and their gang engaged in widespread narcotics distribution and violence, including the October 4, 2010 murders of Terrance Serrano and Rashawn Washington, in addition to various attempted murders, robberies, assaults and acts of intimidation. Serrano and Washington, who were members of a rival gang known as “Thirty-O,” were shot and killed while sitting in their car after leaving a nightclub in Manhattan, just north of Union Square.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Maria Cruz Melendez, Jennifer M. Sasso and Josh Hafetz are in charge of the prosecution.
The Defendants:
FRANK SMITH (“Fresh,” “Freez,” and “Freezee”)
Age: 32
Staten Island, New York
NABIU MANSARAY (“Monchichi” and “Chich”)
Age: 33
Germantown, Maryland
EDNY Docket No. 16-CR-346 (FB)
CodeSmart Holdings, Inc. CEO and Attorney Plead Guilty to Participating in a $86 Million Market Manipulation SchemeRead the Press Release
Earlier today, Ira Shapiro, the former Chief Executive Officer of CodeSmart Holdings, Inc. (“CodeSmart”), a publicly-traded company, and Darren Ofsink, a Manhattan attorney and founder of Ofsink LLC, pleaded guilty to one count of conspiracy to commit securities fraud for their participation in a $86 million market manipulation scheme involving CodeSmart, which traded under the ticker symbol ITEN. The plea was entered before United States District Judge Eric N. Vitaliano at the federal courthouse in Brooklyn.
The guilty pleas were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
According to court filings, in early May 2013, the defendants, along with their charged co-conspirators, engineered a reverse merger of CodeSmart, a private company, with a public shell company. After gaining control of CodeSmart’s three million purportedly unrestricted shares, the co-conspirators on two occasions fraudulently inflated CodeSmart’s share price and trading volume and then sold their shares at a profit when the price reached desirable levels — a scheme commonly referred to as a “pump and dump.” The first pump and dump occurred between approximately May 13, 2013 and August 21, 2013. During this period, the co-conspirators manipulated CodeSmart’s stock price by raising it from $1.77 to a high of $6.94, before causing it to drop to $2.19. The second pump and dump occurred between approximately August 21, 2013 and September 20, 2013. During this period, the defendants and their co-conspirators manipulated CodeSmart’s stock price by raising it from $2.19 to a high of $4.60, before causing it drop to $2.13.
CodeSmart’s market capitalization at its highest closing price of $6.94 per share on July 12, 2013 was $86,347,800. However, that same day, CodeSmart filed with the U.S. Securities and Exchange Commission an amended Form 10-K, in which it listed only $6,000 in total assets, $7,600 in revenue, and a net loss of $103,141. By December 30, 2013, CodeSmart’s stock was trading at $0.66 per share, and on July 9, 2014, its stock closed at $0.01 per share.
When sentenced, Shapiro and Ofsink each face up to five years in prison, a fine and the forfeiture of criminal proceeds. They will also be required to make full restitution to their victims.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Shannon C. Jones, Patrick T. Hein, and Mark Bini are in charge of the prosecution with assistance provided by Assistant United States Attorney Claire Kedeshian of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The Defendants:
IRA SHAPIRO
Age: 56
Residence: Congers, New YorkDARREN OFSINK
Age: 48
Residence: Merrick, New YorkE.D.N.Y. Docket No. 14-CR-399 (S-1) (ENV)
Former Chairman of the North Hempstead Democratic Party and Nassau County Board of Elections Pleads Guilty to Tax EvasionRead the Press Release
Earlier today at the federal courthouse in Central Islip, Gerard Terry pleaded guilty to one count of tax evasion for the tax years 2000 through 2015 in the amount of $992,057. The proceeding took place before United States District Judge Joanna Seybert. When he is sentenced, Terry faces a maximum of five years’ imprisonment, a fine of up to $100,000 and mandatory restitution to the Internal Revenue Service.
The plea was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI) and James Robnett, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York Field Office (IRS-CI).
According to court filings and facts presented during the plea proceedings, Terry, an attorney licensed to practice in New York State, attempted to evade substantial income tax due and owed by him, even though he earned income from numerous government and quasi-government positions in Nassau County, including the Democratic Party in the town of North Hempstead, the Nassau County Board of Elections, the Town of North Hempstead, the Long Beach Housing Authority, the North Hempstead Housing Authority, the Freeport Community Development Agency, the Roosevelt Public Library, the Village of Port Washington, and the Village of Manorhaven. Since January 2000, despite earning over $250,000 per year, Terry has failed to pay a federal tax debt of over $1.4 million which includes additional fees, interest and penalties.
During the period charged in the indictment, Terry routinely failed to file personal Form 1040 tax returns, filing years later and only after vigorous pursuit by the IRS. Even then, Terry filed Forms 1040 that contained false information and failed to report income. Moreover, Terry has still failed to file returns for tax years 2009 and 2010. Terry also evaded the IRS’s attempts at levy collection by cashing hundreds of wage and compensation checks worth over $500,000, rather than depositing them into checking or savings accounts where they could be seized. When depositing those checks into his bank account, Terry did so in the minimum amounts necessary to cover checks and payments for his own personal expenses and luxury items, thereby making sure there were insufficient funds upon which the IRS could levy. In his communications with the IRS, Terry routinely provided false, misleading and incomplete information to obstruct internal revenue laws. For example, Terry created and utilized a checking account in the name of a corporate nominee so as to conceal income and avoid levy collection. Additionally, Terry had one of his employers make direct payments to his credit card rather than issuing him a paycheck, allegedly to avoid levy collection by the IRS.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorney Artie McConnell is in charge of the prosecution.
The Defendant:
GERARD TERRY
Age: 62
Residence: Roslyn, New YorkE.D.N.Y. Docket No. 17-CR-37 (JS)
Alleged Mafia Soldier Charged with Tax EvasionRead the Press Release
A four-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Salvatore Demeo, an alleged member of the Genovese organized crime family of La Cosa Nostra, with tax evasion and failure to file tax returns.
The charges were announced by William J. Muller, Executive Assistant United States Attorney for the Eastern District of New York, and James Robnett, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI).
As detailed in the indictment, in two separate real estate transactions in 2013 and 2014, Demeo sold his shares in valuable real estate in Downtown Brooklyn, earning him more than $2 million in capital gains. Rather than report this income, as he was required to do, Demeo took a series of measures designed to conceal the proceeds from the IRS. For example, he instructed his attorney to issue his shares to him in eight separate bank checks: three checks for the first transaction and five checks for the second transaction. In addition, even though Demeo had multiple bank accounts, he chose to not deposit the proceeds into them, and instead enlisted the assistance of others to help conceal the funds. First, he endorsed two checks, amounting to $1 million, to a plumbing business, despite the fact that he has no apparent ownership interest in it, or other business relationship with it. In addition, he endorsed another of the checks, in the amount of approximately $355,944, to an individual who operated an unlicensed check-cashing business, who then withdrew from the accounts approximately five cashier’s checks in smaller amounts, which were then cashed at licensed check-cashing establishments in exchange for a fee. As a result of Demeo’s fraud, Demeo avoided payment of federal taxes in excess of $365,000.
“Today’s arrest reflects our continued commitment to prosecuting alleged members of the mafia with every tool available to us,” stated Executive Assistant United States Attorney Muller. “Tax crimes like those charged in the indictment harm our government and every American citizen. Organized crime members are on notice that this Office and its law enforcement partners will hold them accountable for such economic crimes no less than for their traditional schemes and offenses.”
“Regardless of your occupation, we Americans all must file and pay our income taxes,” stated IRS-CI Special Agent-in-Charge Robnett. “The allegations of tax evasion spelled out in this indictment are what IRS Criminal Investigation Special Agents have been investigating for almost 100 years.”
The defendant is scheduled to be arraigned this afternoon before United States Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn. 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 Organized Crime and Gangs Section. Assistant United States Attorney Elizabeth Geddes is in charge of the prosecution.
The Defendant:
SALVATORE DEMEO
Age: 77
Brooklyn, New YorkE.D.N.Y. Docket No. 17-CR-545 (KAM)
New York Return Preparers Charged in Stolen Identity Tax Refund Fraud SchemesRead the Press Release
A federal grand jury in Brooklyn, New York, returned indictments this week separately charging two tax return preparation business owners with stolen identity tax refund fraud, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York.
The first indictment charges Hakeem Bamgbala, a Brooklyn resident and owner of Kaybamz Inc., a tax preparation business in Brooklyn; Afolabi Ajelero, a Queens resident; and Michael Campbell, a Brooklyn resident, with conspiring to commit aggravated identity theft and aggravated identity theft. Bamgbala and Ajelero also are charged with wire fraud.
The indictment alleges that Bamgbala and Ajelero used stolen IDs to file tax returns with the Internal Revenue Service (IRS) and obtain refunds to which they were not entitled. Bamgbala and Ajelero allegedly purchased tax refund products that allowed them to print client refund checks drawn on a bank account into which the IRS directly deposited the refunds. Bamgbala, Ajelero and Campbell allegedly conspired to deposit these checks into a second bank account and then withdrew the funds.
If convicted, Bamgbala, Ajelero and Campbell face a statutory maximum sentence of five years in prison on the conspiracy charge and a mandatory minimum sentence of two years in prison for the aggravated identity theft counts. Bamgbala and Ajelero also face a statutory maximum sentence of 20 years in prison on each of the wire fraud counts. The three defendants also face a period of supervised release, restitution and monetary penalties.
The second indictment charges Oyeniyi Jaiyesimi, the owner of Pace Financial Services, a tax return preparation business located in Springfield Gardens, with wire fraud, aggravated identity theft and filing fraudulent tax returns. According to the indictment, Jaiyesimi used stolen IDs to file fraudulent tax returns with the IRS and obtain refunds to which he was not entitled. The indictment also alleges that Jaiyesimi filed tax returns for clients that used stolen IDs to fraudulently claim dependents and inflate deductions.
If convicted, Jaiyesimi faces a statutory maximum sentence of 20 years in prison for each count of wire fraud, a mandatory minimum sentence of two years in prison for each count of aggravated identity theft and a statutory maximum sentence of three years in prison for each count of filing a fraudulent return. He also faces a period of supervised release, restitution and monetary penalties.
An indictment merely alleges that crimes have been committed. A defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Rohde commended special agents of IRS Criminal Investigation, who conducted the investigations, and Trial Attorneys Mark McDonald and Eric Powers of the Tax Division, who are prosecuting these cases.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
New York Businessman Charged in Telemarketing-Related Fraud and Identity Theft SchemeRead the Press Release
A New York businessman was arrested today for overseeing a scheme to forge hundreds of thousands of counterfeit documents containing improperly obtained personal information, which he allegedly sold to his clients, who then allegedly provided this information to telemarketers.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Field Office, Special Agent in Charge Christopher Combs of the FBI’s San Antonio Field Office and FBI Assistant Director in Charge William F. Sweeney, Jr. of the New York Field Office made the announcement.
William Patrick Nanry, 55, of Pearl River, New York, was charged on Tuesday, October 3, in an indictment filed in the Eastern District of New York with one count of conspiracy to commit wire and mail fraud, one count of mail fraud, one count of identity theft and one count of aggravated identity theft.
According to the indictment, Nanry operated a business selling “sweepstakes leads,” which are documents listing the phone numbers and personal information of individuals who have responded to mass mailings notifying recipients that they may have won, or were likely to win, expensive prizes and enormous cash payouts. Such information is highly valued by fraudulent telemarketers, who seek to identify individuals who may be susceptible to questionable pitches.
The indictment alleges that beginning in approximately 2009, Nanry acquired lists of names and contact information for hundreds of thousands of people—primarily senior citizens— and used this information to create fake sweepstakes leads, which he then sold to his clients as authentic. The indictment further alleges that Nanry directed a team of employees and associates to write the personal information of the victims onto the counterfeit sweepstakes forms, even though the victims had not agreed to this use, and even though many of the victims had never responded to a sweepstakes mailing. Nanry allegedly directed these employees and associates to vary their handwriting, to use a large number of pens in varying colors, and to take other actions to make the fake leads appear authentic. According to the indictment, the counterfeit sweepstakes leads were then sold to Nanry’s clients, who provided them to telemarketers, who then contacted the people named in the leads. Many of these fake sweepstakes leads allegedly ended up in the hands of telemarketers who attempted to defraud the victims. Some of the individuals who had their information misused by Nanry were ultimately defrauded by scam telemarketers.
Over the duration of the scheme, Nanry earned over $1.7 million by selling fake sweepstakes leads to his clients, the indictment alleges.
An indictment is merely an allegation and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The FBI is investigating this matter. Timothy A. Duree and Tracee Plowell of the Criminal Division’s Fraud Section are prosecuting the case
Justice Department Awards $500,000 Grant to Suffolk County Police for Violent Gang and Gun Crime Reduction ProgramRead the Press Release
CENTRAL ISLIP, NY – Today, Attorney General Jeff Sessions announced that as part of several Department of Justice actions to reduce the rising tide of violent crime in America, the Suffolk County Police Department has been awarded a $500,000 grant through the Project Safe Neighborhoods (PSN) initiative to reduce gun and gang-related violence in high crime areas. The grant will support enforcement strategies targeting individuals responsible for a disproportionate amount of violent crime as identified through evidence-based research and analysis, and expand community outreach programs for at-risk youth.
The awarding of the grant was announced by Jeff Sessions, United States Attorney General, Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and Timothy D. Sini, Commissioner, Suffolk County Police Department (SCPD).
“The Department of Justice today announces the foundation of our plan to reduce crime: prioritizing Project Safe Neighborhoods, a program that has been proven to work,” stated Attorney General Sessions. “Let me be clear – Project Safe Neighborhoods is not just one policy idea among many. This is the centerpiece of our crime reduction strategy. Taking what we have learned since the program began in 2001, we have updated it and enhanced it, emphasizing the role of our U.S. Attorneys, the promise of new technologies, and above all, partnership with local communities. With these changes, I believe that this program will be more effective than ever and help us fulfill our mission to make America safer.”
“The Project Safe Neighborhoods grant will strengthen the Suffolk County Police Department’s efforts to identify, arrest and prosecute those offenders responsible for doing the most harm in communities plagued by gang-related violence, as well as support prevention programs for youths who are at risk for gang recruitment,” stated Acting United States Attorney Rohde. “This Office is committed to helping communities develop resiliency against gang recruitment so as to diminish gangs, their number and strength, as well as to continuing our prosecutive efforts directed at those who choose the wrong path and engage in gang violence.”
“The Suffolk County Police Department and its law enforcement partners have implemented an extremely aggressive strategy to eradicate MS-13 from our communities,” stated SCPD Commissioner Sini. “This grant will further those efforts. On behalf of Suffolk County, I want to thank the Department of Justice for its continued partnership.”
Crime analysis has identified several street gangs, including MS-13, Bloods, and Crips, which have been responsible for gang and gun crime in “hot spot” communities in Suffolk County. The PSN project has three objectives: utilize “hot spot” policing to coordinate and narrow the focus of intervention strategies in communities identified by the SCPD Criminal Intelligence section including Wyandanch, North Amityville, Central Islip, Brentwood and Huntington Station; target the small number of persons responsible for a disproportionate amount of violent crime; and provide alternatives to gang and criminal activity through mentoring and truancy programs, including the Brentwood Youth Recovery Initiative that was started in response to the murders of Brentwood High School students Nisa Mickens and Kayla Cuevas on September 13, 2016 allegedly by MS-13 gang members.
Project Safe Neighborhoods is a nationwide commitment to reduce gun and gang crime in America by networking existing local programs and providing additional tools to these programs. The United States Attorney’s Office for the Eastern District of New York has partnered with the district attorney’s offices in Queens, Brooklyn, Richmond and Nassau Counties to reduce and prevent gun violence.
The grant is part of a recommitment to PSN announced today by Attorney General Sessions in a memo directing United States Attorneys to implement an enhanced violent crime reduction program that incorporates the lessons learned since the initiative was launched in 2001.
The Attorney General also announced the following Department of Justice initiatives to help reduce violent crime nationwide:
- Additional Assistant United States Attorney Positions to Focus on Violent Crime –The Department is allocating 40 prosecutors to approximately 20 United States Attorney’s Offices to focus on violent crime reduction.
- More Cops on the Streets (COPS Hiring Grants) – As part of our continuing commitment to crime prevention efforts, increased community policing, and the preservation of vital law enforcement jobs, the Department will be awarding approximately $98 million in FY 2017 COPS Hiring Grants to state, local, and tribal law enforcement agencies.
- Organized Crime and Drug Enforcement Task Force’s (OCDETF) National Gang Strategic Initiative –The National Gang Strategic Initiative promotes creative enforcement strategies and best practices that will assist in developing investigations of violent criminal groups and gangs into enterprise-level OCDETF prosecutions. Under this initiative, OCDETF provides “seed money” to locally-focused gang investigations, giving state, local, and tribal investigators and prosecutors the resources and tools needed to identify connections between lower-level gangs and national-level drug trafficking organizations.
- Critical Training and Technical Assistance to State and Local Partners –The Department has a vast array of training and technical assistance resources available to state, local and tribal law enforcement, victims groups, and others. To ensure that agencies in need of assistance are able to find the training and materials they need, Office of Justice Programs will make available a Violence Reduction Response Center to serve as a “hot line” to connect people to these resources.
- Crime Gun Intelligence Centers (CGIC) – The Department has provided grant funding to support a comprehensive approach to identifying the most violent offenders in a jurisdiction, using new technologies such as gunshot detection systems combined with gun crime intelligence from NIBIN, eTrace, and investigative efforts. These FY 2017 grants were awarded to Phoenix, AZ, and Kansas City, MO.
- Expand ATF’s NIBIN Urgent Trace Program – The Department will expand ATF’s NIBIN Urgent Trace Program nationwide by the end of the year. Through this program, any firearm submitted for tracing that is associated with a NIBIN “hit” (which means it can be linked to a shooting incident) will be designated an “urgent” trace and the requestor will get information back about the firearm’s first retail purchaser within 24 hours, instead of five to six business days.
American Citizen Convicted of Conspiring to Murder U.S. Nationals in Bombing Attack Against Military Base in AfghanistanRead the Press Release
A federal jury in Brooklyn, New York, returned a guilty verdict today against Muhanad Mahmoud Al-Farekh on nine counts, including conspiracy to murder U.S. nationals, conspiracy to use a weapon of mass destruction, conspiracy to bomb a government facility and conspiracy to provide material support to terrorists. Farekh faces up to life in prison when he is sentenced by United States District Judge Brian M. Cogan.
The verdict was announced by Acting Assistant Attorney General for National Security Dana J. Boente, Acting United States Attorney Bridget M. Rohde 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.
“Muhanad Mahmoud Al Farekh is an al Qaeda terrorist who conspired to kill Americans overseas. The trial evidence showed that he was involved in a variety of terrorist activity, including a VBIED attack on a U.S. military installation in Afghanistan in 2009. With today’s guilty verdict, Farekh is being held accountable for his crimes,” said Acting Assistant Attorney General Boente. “Counterterrorism is the highest priority of the National Security Division, and we will continue to use all tools available across the globe to bring to justice those who seek to harm Americans, including our brave servicemen and women who risk their lives in defense of our nation.”
“Today, an American al-Qaeda member was brought to justice in a U.S. courtroom,” said Acting United States Attorney Rohde. “The jury’s verdict on all nine counts of the indictment established Farekh’s responsibility for a violent attack on members of our armed forces, his efforts to murder Americans and his commitment to one of the world’s most infamous terrorist organizations. The defendant now faces the prospect of life imprisonment for the commission of these serious federal crimes.”
“Today’s verdict is justice for the harm and destruction Al Farekh intended to cause when he conspired with others to bomb a U.S. military base in Afghanistan,” said Assistant Director inCharge Sweeney. “The FBI stands alongside our military and law enforcement partners to hold criminals accountable for their actions no matter where they are in the world.”
“The defendant in this case faces up to life in prison after being found guilty of conspiring to bomb a government facility, use a weapon of mass destruction, murder U.S. nationals and provide material support to terrorists,” said Commissioner O’Neill. “While Farekh’s crimes occurred in Pakistan and Afghanistan, the defendant’s co-conspirator trained Najibullah Zazi and others who also intended to attack New York City’s subway system. I want to thank all involved in today’s verdict, from the investigators and prosecutors to the jury and judge.”
At trial, the government presented evidence that prior to traveling overseas to join al Qaeda, Farekh was a student at the University of Manitoba in Canada. In 2007, Farekh and two fellow students traveled to Pakistan with the intention of fighting against American forces overseas. Farekh and his co-conspirators had become radicalized watching video recordings encouraging violent jihad, listened to jihadist lectures, including lectures by now-deceased al Qaeda in the Arabian Peninsula leader Anwar al-Awlaki. They 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.
One of Farekh’s co-conspirators, Ferid Imam, provided weapons and military-type training at an al Qaeda training camp in Pakistan in September 2008. Among Imam’s trainees were Najibullah Zazi, Zarein Ahmedzay and Adis Medunjanin, of Queens, New York, who intended to return to New York City to carry out a suicide attack in the subway system. During the trial, Ahmedzay testified that Imam as his weapons trainer. Zazi and Ahmedzay pleaded guilty pursuant to cooperation agreements and have yet to be sentenced. Medunjanin was convicted after trial and sentenced to life imprisonment. Imam has been indicted for his role in the plot.
The government proved Farekh’s participation in the building of a vehicle-borne improvised explosive device (VBIED) that was used in an attack against Forward Operating Base Chapman (FOB Chapman) on Jan. 19, 2009 in Khost, Afghanistan. The evidence at trial showed that two vehicles approached the fence line of FOB Chapman. The operator of the first vehicle, a pickup-sized truck, detonated a VBIED at the gate. The second vehicle, a truck carrying 7,500 pounds of explosives, became stuck in the blast crater. The driver fled without detonating the second, more powerful VBIED, and was shot and killed by local security personnel. Forensic technicians in Afghanistan recovered 18 fingerprints from the adhesive packing tape wrapped around the undetonated bomb that were matched to the defendant. A hair follicle was also recovered and analysis indicated that the follicle’s mitochondrial DNA was consistent with that of the defendant.
Assistant United States Attorneys Richard M. Tucker, Douglas M. Pravda and Saritha Komatireddy of the Eastern District of New York, and Trial Attorney Alicia Cook of the National Security Division’s Counterterrorism Section are prosecuting this case.
American Citizen Convicted of Conspiring to Murder U.S. Nationals in Bombing Attack Against Military Base in AfghanistanRead the Press Release
A federal jury in Brooklyn, New York, returned a guilty verdict today against Muhanad Mahmoud Al Farekh on nine counts, including conspiracy to murder United States nationals, conspiracy to use a weapon of mass destruction, conspiracy to bomb a government facility and conspiracy to provide material support to terrorists. Farekh faces up to life in prison when he is sentenced by United States District Judge Brian M. Cogan.
The verdict was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Dana J. Boente, Acting 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).
“Today, an American al-Qaeda member was brought to justice in a U.S. courtroom,” stated Acting United States Attorney Rohde. “The jury’s verdict on all nine counts of the indictment established Farekh’s responsibility for a violent attack on members of our armed forces, his efforts to murder Americans and his commitment to one of the world’s most infamous terrorist organizations. The defendant now faces the prospect of life imprisonment for the commission of these serious federal crimes.”
“Muhanad Mahmoud Al Farekh is an al-Qaeda terrorist who conspired to kill Americans overseas,” stated Acting Assistant Attorney General Boente. “The trial evidence showed that he was involved in a variety of terrorist activity, including a VBIED attack on a U.S. military installation in Afghanistan in 2009. With today’s guilty verdict, Farekh is being held accountable for his crimes. Counterterrorism is the highest priority of the National Security Division, and we will continue to use all tools available across the globe to bring to justice those who seek to harm Americans, including our brave servicemen and women who risk their lives in defense of our nation.”
“Today’s verdict is justice for the harm and destruction Al Farekh intended to cause when he conspired with others to bomb a U.S. military base in Afghanistan,” stated FBI Assistant Director-in-Charge Sweeney. “The FBI stands alongside our military and law enforcement partners to hold terrorists accountable for their actions no matter where they are in the world.”
“The defendant in this case faces up to life in prison after being found guilty of conspiring to bomb a government facility, use a weapon of mass destruction, murder U.S. nationals and provide material support to terrorists,” stated NYPD Commissioner O’Neill. “While Farekh’s crimes occurred in Pakistan and Afghanistan, the defendant’s co-conspirator trained Najibullah Zazi and others who also intended to attack New York City’s subway system. I want to thank all involved in today’s verdict, from the investigators and prosecutors to the jury and judge.”
At trial, the government presented evidence that prior to traveling overseas to join al-Qaeda, Farekh was a student at the University of Manitoba in Canada. In 2007, Farekh and two fellow students traveled to Pakistan with the intention of fighting against American forces overseas. Farekh and his co-conspirators had become radicalized watching video recordings encouraging violent jihad, listened to jihadist lectures, including lectures by now-deceased al-Qaeda in the Arabian Peninsula leader Anwar al-Awlaqi. They 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.
One of Farekh’s co-conspirators, Ferid Imam, provided weapons and military-type training at an al-Qaeda training camp in Pakistan in September 2008. Among Imam’s trainees were Najibullah Zazi, Zarein Ahmedzay and Adis Medunjanin, of Queens, New York, who intended to return to New York City to carry out a suicide attack in the subway system. During the trial, Ahmedzay testified that Imam was his weapons trainer. Zazi and Ahmedzay pleaded guilty pursuant to cooperation agreements and have yet to be sentenced. Medunjanin was convicted after trial and sentenced to life imprisonment. Imam has been indicted for his role in the plot.
The government proved Farekh’s participation in the building of a vehicle-borne improvised explosive device (VBIED) that was used in an attack against Forward Operating Base Chapman (FOB Chapman) on January 19, 2009 in Khost, Afghanistan. The evidence at trial showed that two vehicles approached the fence line of FOB Chapman. The operator of the first vehicle, a pickup-sized truck, detonated a VBIED at the gate. The second vehicle, a truck carrying 7,500 pounds of explosives, became stuck in the blast crater. The driver fled without detonating the second, more powerful VBIED, and was shot and killed by local security personnel. Forensic technicians in Afghanistan recovered 18 fingerprints from the adhesive packing tape wrapped around the undetonated bomb that were matched to the defendant. A hair was also recovered and analysis indicated that the hair’s mitochondrial DNA was consistent with that of the defendant.
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 are in charge of the prosecution with assistance provided by Trial Attorney Alicia Cook of the National Security Division’s Counterterrorism Section.
The Defendant:
MUHANAD MAHMOUD AL FAREKH, also known as “Abdullah al-Shami” and “Abdallah al-Shami”
Age: 31
Nationality: United States
E.D.N.Y. Docket No. 15-CR-268 (BMC)
Long Island Convenience Store Owner and Clerks Arrested for Drug TraffickingRead the Press Release
A four-count indictment was unsealed today in federal court in Central Islip, New York, charging Osman Ak, Murat Ak and Mehmet Akpinar, with drug trafficking conspiracy and substantive acts of drug trafficking in connection with their sale of controlled substances from 2013 through 2015 at Eyup Gas & Convenience Store, Inc. d/b/a VS Food Mart, in Medford, New York, owned by Osman Ak. The defendants were arrested this morning and their initial appearances are scheduled for this afternoon before United States Magistrate Judge Steven I. Locke.
The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division, and George Beach, Superintendent, New York State Police (NYSP).
“As alleged, the defendants sold K2 over the counter of a convenience store, putting the community at risk to the dangers associated with this synthetic hallucinogen and its unpredictable side-effects,” stated Acting United States Attorney Rohde. “This Office and our law enforcement partners will work tirelessly to hold traffickers like the Aks and Akpinar accountable for their actions, which threaten public safety.”
Ms. Rohde extended her grateful appreciation to the DEA and the NYSP for their assistance in this case.
“Known on the streets as K2 or synthetic marijuana, this dangerous drug can cause brain damage, hallucinations, seizures and death,” stated Special Agent-in-Charge Hunt. “Parents should be forewarned that synthetic cannabinoid traffickers package their poison to resemble legal goods, which in this case, it is alleged that the defendants brazenly peddled to users in their convenience store.”
“The strong partnership the State Police has with both federal and local law enforcement agencies is key to combatting the distribution of illegal synthetic drugs in New York State,” stated NYSP Superintendent Beach. “These drugs are lethal with unpredictable side effects, yet are marketed and sold as apparently legal substances in colorful packages that appeal to young people. As these arrests show, New York State and its law enforcement partners do not tolerate those who seek to traffic illicit and harmful synthetic drugs.”
If convicted, the defendants face up to 20 years’ imprisonment on the drug trafficking conspiracy charge, as well as on the drug trafficking charges. The United States is also pursuing forfeiture of the convenience store where the alleged activity took place.
An indictment is merely an allegation, and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Charles P. Kelly and Madeline O’Connor are in charge of the prosecution.
The Defendant:
OSMAN AK
Holbrook, New York
Age: 45MURAT AK
Holbrook, New York
Age: 35MEHMET AKPINAR
Nesconset, New York
Age: 51E.D.N.Y. Docket No. 17-CR-527 ( DRH )
International Cybercriminal Sentenced to 30 Months’ Imprisonment for “Grandparent Scams”Read the Press Release
Earlier today in federal court in Brooklyn, Hani Kabbara, a Canadian citizen, was sentenced by United States District Judge Margo K. Brodie to 30 months’ imprisonment for conspiracy to commit wire fraud. Kabbara was originally arrested and charged in August 2016, after traveling to the United States from Canada, and pleaded guilty in April 2017. In addition, as part of the sentence the court ordered Kabbara to pay $8,000 in restitution.
The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI) and James Robnett, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York Field Office (IRS-CI).
“As part of an international cybercrime scheme, Kabbara and his co-conspirators deceived elderly victims in the United States by, for example, falsely claiming that a grandchild was in jail and needed money for bail,” stated Acting United States Attorney Rohde. “Today’s sentence sends the message that predators like Kabbara, even those who hide behind the anonymity of the internet and online monikers, will be brought to justice for their criminal acts.”
“Kabbara believed he was safe from U.S. laws in Canada and devised a series of schemes using social engineering and the services of other cybercriminals to rob innocent elderly victims out of hundreds of thousands of dollars,” stated FBI Assistant Director-in-Charge Sweeney. “Today’s sentencing shows that international cybercriminals are never beyond the reach of U.S. authorities who are engaged with their international law enforcement partners.”
“Today’s announcement highlights IRS Special Agents’ intense focus on the pursuit of identity thieves and cyber criminals,” stated IRS-Criminal Investigation Special Agent-in-Charge Robnett. “Kabbara took part in an elaborate scheme driven by greed and a blatant disregard for the damage inflicted on innocent victims. Rest assured that those involved in this criminal behavior will be held fully accountable.”
As alleged in the indictment and described in court filings, between February 2014 and August 2016, the defendant ran a sophisticated scheme that used social engineering and overseas call centers to steal from unsuspecting, elderly victims in the United States. Kabbara and his co-conspirators used various threats and deceit to demand payment from his victims, for example, telling them that a grandchild had been arrested and the victim needed to send money immediately in order for the grandchild to be released from jail. Kabbara and his co-conspirators demanded money in the form of MoneyPaks, which are vouchers that can be loaded with cash and then used to fund prepaid debit cards. The defendant sold the MoneyPaks in online criminal forums and, with his co-conspirators, transferred the funds onto prepaid debit cards, which themselves were obtained using stolen identities and were later cashed at ATM machines. The defendant and his network of co-conspirators communicated with each other anonymously in cyberspace through dark web forums and encrypted chat applications, then used a crew of “workers,” in the New York area to withdraw funds from the debit cards, consolidate the cash and send it back to the defendant in Canada.
In connection with his guilty plea, the defendant also admitted to attempting to participate in a massive tax refund fraud using stolen personally identifiable information of millions of victims, and to his participation in a 2011 global cyber heist in which he and his co-conspirators used hacked account information to drain ATMs around the world of more than $10 million.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorney Una A. Dean is in charge of the prosecution.
The Defendant:
HANI KABBARA
Age: 32
Nationality: Canadian
E.D.N.Y. Docket No. 16-CR-472 (MKB)
Former NYPD Police Officer Sentenced to 66 Months in Prison for Conspiring to Engage in Sex Trafficking of A MinorRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, New York, former New York City Police Department officer Eduardo Cornejo was sentenced to 66 months in prison, five years of supervised release, and sex offender registration, following his September 21, 2016 guilty plea to conspiracy to engage in sex trafficking of a minor. Cornejo was ordered to pay $5,000 in forfeiture. The sentence was imposed by United States District Judge Brian M. Cogan.
The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), and James P. O’Neill, Commissioner, NYPD.
“Cornejo conspired to engage in the sex trafficking of a 16-year-old girl during his off-duty time, a violation of his oath to protect the community and uphold the law,” stated Acting United States Attorney Rohde. “Together with our law enforcement partners, this Office will continue to address and bring to justice those who occupy positions of trust at any level and who engage in criminal conduct.”“The subject in this case used information he knew from being a sworn member of law enforcement to elude officers who would know he was doing something illegal,” stated Assistant Director-in-Charge Sweeney. “He was aware of the laws, and continued to break them even after being arrested. We wear badges as law enforcement to serve and protect our communities, not to endanger and exploit children for financial gain.”
According to court documents, then-NYPD police officer Cornejo engaged in an interstate prostitution scheme that involved at least 10 different women. Cornejo transported the women to motels throughout the New York metropolitan area, including New Jersey and Long Island, often immediately upon completing a tour of duty with the NYPD. Judicially authorized interceptions of communications inside Cornejo’s vehicle confirmed the illegal purpose of his activities. For example, Cornejo stated, “The girls is at the [a motel] so it nice and clean, it’s picking up now it was alright last night.” Soon thereafter, he stated, “That might make it hot though, standing outside with a bunch of girls. . . . [Members of law enforcement] going to know what’s up real quick.”
In January 2016, members of law enforcement observed that at least one of the women transported by Cornejo (“Jane Doe”) appeared to be particularly young. Concerned about the possibility that Cornejo might be trafficking a minor, members of law enforcement interviewed Jane Doe shortly after members of law enforcement observed Cornejo transport her to a motel. Jane Doe presented an identification document reflecting that she had turned 18 years old approximately two months earlier. Further investigation revealed that Cornejo began transporting Jane Doe to participate in prostitution activity when she was just 16 years old and that she engaged in commercial sexual acts at Cornejo’s direction. In his post-arrest statement, Cornejo confirmed that he had transported Jane Doe for numerous months with the intent that she engage in prostitution.
Cornejo has been in custody since August 10, 2016, when Judge Cogan revoked Cornejo’s bond. After his arrest and release on bond, Cornejo had been continuing to promote prostitution by driving multiple women to motels throughout the New York metropolitan area.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant U.S. Attorney Alexander A. Solomon is in charge of the prosecution.
The Defendant:
EDUARDO CORNEJO
Age: 35
Staten Island, New YorkE.D.N.Y. Docket No. 16-CR-96 (BMC)
Amerisourcebergen Specialty Group Pleads Guilty to Distributing Misbranded Drugs and is Sentenced to Pay $260 Million to Resolve Criminal LiabilityRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, New York, AmerisourceBergen Specialty Group (ABSG), a wholly-owned subsidiary of AmerisourceBergen Corporation (NYSE: ABC), one of the nation’s largest wholesale drug companies and number 11 on the Fortune 500 list, pled guilty to illegally distributing misbranded drugs. ABSG agreed to pay a total of $260 million to resolve criminal liability for its distribution of oncology supportive-care drugs from a facility that was not registered with the Food and Drug Administration (FDA). The guilty plea and sentencing took place before United States District Judge Nina Gershon.
The criminal resolution was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York; Mark S. McCormack, Special Agent-in-Charge, FDA Office of Criminal Investigations Metro Washington Field Office; Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS OIG), New York Region; Leigh-Alistair Barzey, Special Agent-in Charge, Defense Criminal Investigative Service (DCIS), Northeast Field Office; and Scott Rezendes, Special Agent-in-Charge, Office of Personnel Management, Office of Inspector General (OPM-OIG).
“Today’s guilty plea demonstrates our commitment to investigating and holding accountable any pharmaceutical company that fails to ensure the health and safety of the public. This Office will continue to work actively with the FDA to ensure that those responsible for America’s drug supply scrupulously comply with the law and provide safe products that doctors and patients can trust,” said Acting United States Attorney Rohde. Ms. Rohde expressed her grateful appreciation to the Department of Justice Consumer Protection Branch, the FDA Office of the Chief Counsel and the Alabama Board of Pharmacy.
“Injectable drugs prescribed for patients – especially vulnerable cancer patients – must be pure, sterile and produced in an FDA-compliant facility that is within the supply chain that FDA oversees,” stated Special Agent-in-Charge McCormack. “We will continue to pursue and bring to justice those manufacturers who would violate the public’s trust and endanger their health by attempting to avoid FDA’s oversight authority.”
“Companies that sell oncology drugs from a facility not registered with the FDA threaten the health and safety of cancer patients,” stated HHS OIG Special Agent-in-Charge Lampert. “We will continue to work closely with our law enforcement partners to protect patients from such shortcuts.”
“The illegal misbranding and distribution of drugs threatens the health and safety of U.S. military members, retirees and their dependents,” stated DCIS Special Agent-in-Charge Barzey. “Today’s guilty plea is demonstrative of DCIS’s ongoing commitment to work jointly with the USAO EDNY, FDA, HHS OIG and OPM-OIG, in order to protect members of the Armed Forces and to ensure the integrity of the Defense Department’s TRICARE healthcare system.”
“OPM-OIG agents will continue to work with our law enforcement partners to protect Federal employees, annuitants and their families from companies that would put the health of vulnerable cancer patients at risk,” stated OPM-OIG Special Agent-in-Charge Rezendes.
As set forth in court records, between 2001 and 2014, two of ABSG’s Alabama-based subsidiaries, Medical Initiatives Inc. (MII) and Oncology Supply Company (OSC), prepared millions of syringes that had been pre-filled with oncology supportive care drugs — specifically, Aloxi®, Anzemet®, generic versions of granisetron injection, Kytril®, Neupogen® and Procrit®. Those syringes were shipped to oncology centers, medical practices and physicians for administration to immunocompromised cancer patients undergoing chemotherapy treatment in all 50 states, including to approximately 37 healthcare providers located in the Eastern District of New York.
To prepare pre-filled syringes (PFS), MII removed FDA-approved drug products from their original glass vials and repackaged them into plastic syringes through a process that allowed MII to access and sell excess drug product in the vials, known as “overfill,” that MII was able to extract from the vials. As alleged in the Information, however, MII prepared PFS in an unclean, unsterile environment. Accordingly, MII’s process for creating PFS resulted in some PFS that contained particles or foreign matter, which MII employees identified and termed “floaters.” PFS were also at times not of the quality or purity that MII and OSC represented them to be to their customers.
MII’s business model was to combine the contents of multiple vials in a process known as “pooling.” However, as set forth in the Information, many of the vials used by MII to prepare PFS were designated by the drug manufacturer as “single use” vials, meaning that the manufacturer could not guarantee the sterility of the drug product if the vials were breached. However, in the pooling process, MII’s technicians frequently breached drug vials multiple times, thereby increasing the risk of contamination.
In order to avoid the FDA’s regulatory oversight, ABSG did not register MII as a re-packager or manufacturer with the FDA as required by the Federal Food, Drug and Cosmetic Act. Instead, ABSG inaccurately portrayed MII to its customers and to state agencies as a state-regulated pharmacy in the business of dispensing drugs pursuant valid prescriptions and claimed that MII was otherwise in compliance with state pharmacy laws. By holding MII out as a pharmacy, ABSG unlawfully exploited an exemption to the FDA registration requirement that is reserved for legitimate pharmacies, not for manufacturers or re-packagers.
In connection with the guilty plea, ABSG filed a Statement of Facts setting forth those facts which it is admitting.
As part of its guilty plea, ABSG has agreed to pay a $208 million criminal fine, plus $52 million in criminal forfeiture, for a total financial penalty of $260 million. In addition, ABSG has entered into an agreement with the Office and the Department of Justice’s Consumer Protection Branch to maintain a compliance and ethics program designed to increase accountability of individuals and corporate board members, to increase transparency, and to strengthen ABSG’s compliance with the FDCA. The compliance and ethics program requires corporate board members to review annually the effectiveness of the company’s compliance program and for ABSG to maintain a hotline that will receive and process complaints about any improper practices.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Alixandra E. Smith and Ameet B. Kabrawala are in charge of the prosecution. Senior Litigation Counsel Patrick Jasperse of the Department of Justice Consumer Protection Branch also provided assistance.
Owner of Two New York Medical Clinics Sentenced to 84 Months for Her Role in $55 Million Health Care Fraud SchemeRead the Press Release
The owner of two Brooklyn, New York, medical clinics was sentenced today to 84 months in prison for her role in a $55 million health care fraud scheme.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Special Agent in Charge Scott Lampert of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS OIG) Office of Investigations, Special Agent in Charge James D. Robnett of the IRS Criminal Investigation’s (IRS-CI) New York Field Office and Inspector General Dennis Rosen of the New York State Office of the Medicaid Inspector General (OMIG) made the announcement.
Valentina Kovalienko, 47, of Brooklyn, and the owner of Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C., was sentenced by U.S. District Judge Roslynn R. Mauskopf of the Eastern District of New York, who also ordered Kovalienko to forfeit $29,336,497. Kovalienko pleaded guilty in October 2015 to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.
As part of her guilty plea, Kovalienko acknowledged that her co-conspirators paid cash kickbacks to patients to induce them to attend her two clinics. Kovalienko also admitted that she submitted false and fraudulent claims to Medicare and Medicaid for services that were induced by prohibited kickback payments to patients or that were unlawfully rendered by unlicensed staff. Kovalienko also wrote checks from the clinics’ bank accounts to third-party companies, which purported to provide services to the clinics, but which in fact were not providing services, and the payments were instead used to generate the cash needed to pay the illegal kickbacks to patients, she admitted.
Twenty other individuals have pleaded guilty in connection with this case, including the former medical directors of Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C., six physical and occupational therapists, three ambulette drivers, the owner of several of the sham companies used to launder the money and a former patient who received illegal kickbacks.
HHS-OIG, IRS-CI and OMIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, under the supervision by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. Acting Assistant Chief A. Brendan Stewart of the Fraud Section and Assistant U.S. Attorney F. Turner Buford of the Eastern District of New York, formerly a Fraud Section trial attorney, are prosecuting the case.
The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Owner of Brooklyn Medical Clinics Sentenced to Seven Years’ Imprisonment for Her Role in $55 Million Health Care Fraud SchemeRead the Press Release
BROOKLYN, N.Y. – The owner of two medical clinics in Brooklyn, New York, was sentenced today to seven years in prison for her role in a $55 million health care fraud scheme.
Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Acting Assistant Attorney General Kenneth A. Blanco of the Department of Justice Criminal Division, Special Agent-in-Charge Scott Lampert of the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) Office of Investigations New York Region, Special Agent-in-Charge James D. Robnett of the IRS Criminal Investigation (IRS-CI) New York Field Office, and Inspector General Dennis Rosen of the New York State Office of the Medicaid Inspector General (OMIG) made the announcement.
Valentina Kovalienko, 47, the owner of Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C., was sentenced by U.S. District Judge Roslynn R. Mauskopf of the Eastern District of New York, who also ordered Kovalienko to pay $29,336,497.27 in restitution and to forfeit $29,336,497.27. Kovalienko pleaded guilty in October 2015 to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.
As part of her guilty plea, Kovalienko acknowledged that her co-conspirators paid cash kickbacks to patients to induce them to attend her two clinics. Kovalienko also admitted that she submitted false and fraudulent claims to Medicare and Medicaid for services that were induced by prohibited kickback payments to patients or that were unlawfully rendered by unlicensed staff. Kovalienko also wrote checks from the clinics’ bank accounts to third-party companies, which purported to provide services to the clinics, but which in fact were not providing services, and the payments were instead used to generate the cash needed to pay the illegal kickbacks to patients, she admitted.
“The defendant made stealing from Medicare and Medicaid her full time business by agreeing with others to pay cash kickbacks to patients, submit fraudulent claims to Medicare and Medicaid, and write checks to sham companies to disburse the proceeds of the illegal scheme,” stated Acting United States Attorney Rohde. “This Office and our law enforcement partners are committed to protecting precious taxpayer dollars from unscrupulous providers seeking to defraud federal health care programs.”
“The fraud scheme that Ms. Kovalienko and others engaged in was motivated by nothing more than personal greed,” said HHS OIG Special Agent-in-Charge Lampert. “This sentencing should serve as a warning to any health care provider that dares to put personal profit ahead of proper patient care. HHS OIG, along with our law enforcement partners, will continue to aggressively pursue those who seek to undermine the federally funded health care programs intended for our most vulnerable Americans.”
“Affordable Healthcare is a phrase the American people have heard over and over for the past decade,” said IRS-CI Special Agent-in-Charge Robnett. “It is schemes such as this that keep costs high for all American citizens. As Criminal Investigators for the IRS, we are happy to lend our financial expertise in uncovering fraud that hurts all of us.”
“Individuals who commit Medicaid fraud prey on the most vulnerable New Yorkers, and the impacts - fewer health care resources and waste of taxpayer dollars - affect all of us,” stated OMIG Inspector General Rosen. “My office will continue to work closely with our state and federal partners to hold wrongdoers fully accountable.”
Twenty other individuals have pleaded guilty in connection with this case, including the former medical directors of Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C., six physical and occupational therapists, three ambulette drivers, the owner of several of the sham companies used to launder the money and a former patient who received illegal kickbacks.
HHS OIG, IRS-CI and OMIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, under the supervision by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. Assistant Chief A. Brendan Stewart of the Fraud Section and Assistant U.S. Attorney F. Turner Buford of the Eastern District of New York, formerly a Fraud Section trial attorney, are prosecuting the case.
The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
The Defendant:
VALENTINA KOVALIENKO
Age: 47
Residence: Brooklyn, New YorkE.D.N.Y. Docket No. 11-CR-106 (RRM)
Long Island Investment Fund Manager Sentenced to 12 Years’ Imprisonment for $96 Million Ponzi SchemeRead the Press Release
Earlier today, at the federal courthouse in Central Islip, New York, Senior United States District Judge Arthur D. Spatt sentenced Brian R. Callahan to 12 years’ imprisonment and three years’ supervised release, and ordered that he pay approximately $67.6 million in restitution following his April 29, 2014 guilty plea to securities fraud and wire fraud.
The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“For years, Brian Callahan peddled lies to unsuspecting investors, causing some to lose their life savings, and to delay their retirements,” stated Acting United States Attorney Rohde. “Callahan has now been held to account for his deceit and the harm he caused.” Ms. Rohde expressed her grateful appreciation to the Internal Revenue Service, Securities and Exchange Commission, and the British Virgin Islands Financial Investigation Agency for their cooperation and assistance in the investigation and prosecution of this case.
“Callahan not only stole money from his investors, but their trust as well,” stated FBI Assistant Director-in-Charge Sweeney. “It’s disheartening to think there are people out there who would deliberately take from others for their own personal gain, but today’s sentence reminds us how this game plays out in the end. May it be a message to other crooks that this type of behavior won’t be tolerated.”
According to court filings and statements made in court, between December 2006 and February 2012, Callahan raised more than $118 million from at least 40 investors in connection with four different investment funds that he managed. He had assured those investors that their money would be invested in mutual funds, hedge funds, and other securities. Instead of investing the money as he promised, Callahan misappropriated approximately $96 million and began to operate the investment funds as a large-scale Ponzi scheme. Among other things, Callahan diverted millions of dollars towards the Panoramic View, an unprofitable 117-unit beachfront resort and residence development in Montauk, New York, that he owned with his brother-in-law and co-defendant, Adam Manson. He also commingled the money from the various investment funds and used it to pay tens of millions of dollars in partial redemptions to his victim investors to keep the Ponzi scheme afloat. He paid himself approximately $6 million, which he used to purchase luxury homes in Old Westbury and Westhampton, New York, and luxury cars, including a Range Rover and a BMW, and to pay large credit card bills and dues associated with his golf club. To avoid detection and continue the scheme, Callahan sent fake account statements to investors that falsely showed that their funds were invested and performing well, and he repeatedly lied to his investors about both the nature and status of their investments.
In December 2015, Judge Spatt entered a decree ordering the forfeiture of approximately $40 million in net proceeds from the sale of the Montauk property.
This prosecution was the result of efforts by the Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets, and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Christopher C. Caffarone, Brian D. Morris and Karin K. Orenstein are in charge of the prosecution.
The Defendant:
BRIAN R. CALLAHAN
Age: 48
Old Westbury, New York
E.D.N.Y. Docket No. 13-CR-453
Staten Island Couple Charged with Hurricane Sandy Relief FraudRead the Press Release
A criminal complaint was unsealed today in federal court in Brooklyn charging Nagwa Elsilimy and Ahmed Arafa with fraud by making false statements to the Federal Emergency Management Agency (FEMA) and the United States Department of Housing and Urban Development (HUD) in connection with their obtaining more than $750,000 in disaster relief from New York City’s Build It Back program (BIB) and FEMA in the aftermath of Hurricane Sandy. The defendants allegedly misrepresented that a home in Staten Island, which they had abandoned months before the storm, was their primary residence at the time the superstorm devastated New York and New Jersey. The defendants unlawfully obtained over $750,000 in aid intended for people displaced by the storm. Elsilimy was arrested this morning, and her initial appearance is scheduled for this afternoon before United States Chief Magistrate Judge Roanne L. Mann.
The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Christina Scaringi, Special Agent-in-Charge, United States Department of Housing and Urban Development Office of Inspector General (HUD OIG), Mark Tasky, Special Agent-in-Charge, Department of Homeland Security Office of Inspector General (DHS OIG), Washington Field Office, and Mark G. Peters, Commissioner, New York City Department of Investigation (DOI).
“Taking advantage of funds intended for disaster relief misappropriates taxpayer dollars, reduces monies available to true victims and erodes public confidence in relief programs,” stated Acting United States Attorney Rohde. “This Office will continue to work with our law enforcement partners to root out such alleged illegal behavior.”
“The Defendants’ alleged conduct is disturbing, especially during this time when the public is reminded of the devastation that historic storms leave with thousands of victims,” stated HUD OIG Special Agent-in-Charge Scaringi. “The taxpayer has no tolerance for those who would steal from Federal public aid – the sole goal of which is to help victims rebuild and move forward with their lives. We, along with our federal and state law enforcement and prosecution partners, will continue to aggressively pursue fraudsters who engage in such unacceptable behavior to both the public and their neighbor.”
“DHS OIG will continue to target fraudsters who seek to turn the tragedy of a natural disaster into an opportunity of personal gain at the expense of taxpayers,” stated DHS OIG Special Agent-in-Charge Tasky. “Today’s arrest is a tangible step of our commitment with our law enforcement partners who work tirelessly to identify, investigate, and pursue prosecution of fraudulent activities that undermine federal programs.”
“Hurricane Sandy ravaged shoreside communities and displaced hundreds of thousands of New Yorkers from homes made uninhabitable by the storm,” stated DOI Commissioner Peters. “While homeowners applied for aid to rehabilitate and rebuild, these defendants were capitalizing on the destruction, collecting benefits to which they were not entitled and exploiting federal funds to restore property they didn’t live in, according to the charges. DOI has monitored the City’s rebuilding effort since its inception, and will continue to investigate the programs and those dishonest homeowners who take advantage of finite disaster relief funds.”
According to the complaint, in the days and months following Hurricane Sandy, which struck New York and New Jersey on October 29, 2012, the defendants obtained and attempted to obtain federal funds appropriated for Sandy disaster relief by submitting material misrepresentations in their applications for disaster relief. Specifically, the defendants falsely represented that a home they had abandoned before the storm was their primary residence at the time Sandy hit the Eastern District of New York. The defendants had been residing at a different address since at least March 2012, and, at the time Sandy struck Staten Island, the defendants’ alleged primary residence was vacant, and had been vacant for at least seven months. Evidence obtained in the investigation suggests that the defendants fraudulently obtained federal aid totaling more than $750,000 based upon their misrepresentations in applications to FEMA, HUD and BIB, the New York City program established with federal funds to aid residents in rebuilding private homes damaged or destroyed due to Hurricane Sandy.
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 30 years’ imprisonment for major disaster relief fraud and five years’ imprisonment for making false statements to a federal agency.
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:
NAGWA ELSILIMY
Age: 59
Staten Island, NY
AHMED ARAFA
Age: 59
Staten Island, NY
E.D.N.Y. Docket No. 17-MJ-805
Queens Man Sentenced to 18 Years’ Imprisonment for Shooting Woman During CarjackingRead the Press Release
Earlier today at the federal courthouse in Brooklyn, New York, United States District Judge Ann M. Donnelly sentenced the defendant Donald Warren to 18 years’ imprisonment, to be followed by three years of supervised release, for shooting a woman during the course of a carjacking in Queens, New York, and participating in another carjacking as well. Warren and his co-defendant, John Howard, previously pleaded guilty to carjacking and related firearms charges. Howard is scheduled to be sentenced next month.
The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Ashan M. Benedict, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Division, and James P. O’Neill, Commissioner, New York City Police Department (NYPD).
According to court filings, Warren and Howard participated in a string of violent carjackings between December 2015 and January 2016 in which the victims were threatened, robbed, and forced from their vehicles at gunpoint. As part of his plea agreement, Warren admitted that he participated in a carjacking on December 28, 2015, with Howard during which they stole a Mercedes Benz in front of the Best Western hotel in Jamaica, New York. Warren had threatened the driver with a gun, stole his wallet and forced him out of his car.
On January 21, 2016, Warren and Howard participated in an armed carjacking outside the Hampton Inn located in South Ozone Park, New York, that resulted in the shooting of a 53-year-old woman. The woman’s daughter was waiting in the passenger seat of a car parked in front of the hotel when Warren, armed with a loaded gun, entered the vehicle. Warren threatened the daughter and drove the car, with the daughter trapped inside it, around the hotel parking lot. When her mother left the hotel a few minutes later, Warren exited the vehicle and demanded the mother’s purse. After the mother refused and struck Warren in the face, he shot her in the chest. Howard and Warren then fled the scene. The shooting victim survived, but her injuries required hospitalization and surgery.
“Donald Warren committed violent carjackings culminating in the callous shooting of a woman for refusing to hand over her purse,” stated Acting United States Attorney Rohde. “Today’s sentence punishes him for the disregard he showed for human life.” Ms. Rohde extended her grateful appreciation to the Nassau County Police Department, the Nassau County District Attorney’s Office and the Queens District Attorney’s Office for their assistance during the investigation.
“Donald Warren and John Howard would prowl neighborhoods in Nassau and Queens looking for unsuspecting victims to carjack or rob at gunpoint,” stated ATF Special Agent-in-Charge Benedict. “Their pattern of violent crime escalated in a short period to the shooting of an innocent 53-year-old woman seeking to protect herself while Warren brandished a handgun and threatened her. After shooting the victim, Warren and Howard used a car previously stolen at gunpoint as a getaway vehicle. Warren deserves every day of the sentence received, and we hope his lengthy imprisonment provides some solace to the victims of his crimes. I would like to extend my gratitude to the ATF Special Agents and NYPD Detectives assigned to the ATF Strategic Pattern Armed Robbery Technical Apprehension (SPARTA) Joint Robbery Task Force, and to the United States Attorney’s Office for their outstanding work in bringing a violent offender to justice.”
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Tanya Hajjar and Moira Kim Penza are in charge of the prosecution.
The Defendants:
DONALD WARREN
Age: 55
Queens, New YorkE.D.N.Y. Docket No. 16-CR-102 (AMD)
Long Island Man Sentenced to 10 Years’ Imprisonment for Committing 40 Knife-Point RobberiesRead the Press Release
Earlier today, at the federal courthouse in Central Islip, New York, Khalif House was sentenced to 10 years’ imprisonment and three years’ supervised release by United States District Judge Joan M. Azrack, based on his guilty plea last December to conspiracy to commit armed robberies in Nassau, Suffolk and Queens Counties.
The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Patrick J. Ryder, Acting Commissioner, Nassau County Police Department (NCPD), Timothy D. Sini, Commissioner, Suffolk County Police Department (SCPD), and James P. O’Neill, Commissioner, New York City Police Department (NYPD).
According to court filings and statements made in court, beginning in February 2015, the defendant and co-conspirators committed or attempted to commit 40 separate armed robberies throughout Nassau, Queens and Suffolk Counties. The defendants exclusively targeted commercial locations, including Carvel, Dunkin Donuts, Subway and 7-Eleven stores. On almost every occasion, House robbed commercial stores wearing mismatched gloves, with his face covered, while brandishing a knife. During the April 26, 2016 robbery of a Carvel located in Commack, House chased down a fleeing employee, dragging her back into the store to prevent her escape. On February 24, 2015, House cut an employee of Evans Corner Store, located in Valley Stream, who attempted to disarm House during the robbery. House was ultimately apprehended hiding in a van on June 8, 2016 in Floral Park following a manhunt conducted by hundreds of members of law enforcement.
House’s arrest and conviction were the result of a joint investigation conducted by the FBI’s Long Island Gang Task Force, the NCPD, SCPD and the NYPD. Ms. Rohde extended her grateful appreciation to all of the participating law enforcement agencies, including the Floral Park Police Department.
“The defendant Khalif House stole from dozens of businesses in a number of our communities, terrorizing hard-working employees by threatening their lives during his crime spree,” stated Acting United States Attorney Rohde. “Thanks to the tireless work and collaboration of our federal and local law enforcement partners, House has been held accountable for his crimes,” stated Acting United States Attorney Rohde.
“The suspect in this case not only terrified business owners fearing they’d be robbed next, but assaulted and terrorized employees during the crimes,” stated FBI Assistant Director-in-Charge Sweeney. “He believed hiding his face, and covering his hands would protect his identity. But after dogged investigation by agents and detectives, his disguise didn’t prevent his getting caught. This case is a great example of law enforcement working together to stop a criminal and bring him to justice.”
“The investigation, arrest and conviction of defendant House is a testament to exceptional police and detective investigative techniques by all of the collaborating agencies and their members,” stated NCPD Acting Commissioner Ryder. “This robbery spree placed residents at risk, became one of our highest priorities and thus, this type of criminal conduct can never be accepted. A great job by all involved and I would like to thank all of the professionals who assisted with this extensive investigation.”
“Yet another dangerous criminal has been taken off our streets because of the collaboration and partnership between the Suffolk County Police Department and our fellow law enforcement agencies,” SCPD Commissioner Sini said. “I thank the United States Attorney’s Office for the Eastern District of New York for successfully prosecuting this individual and continuing to keep our residents, our businesses and our communities safe.”
The government’s case is being prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorney Mark Misorek is in charge of the prosecution.
The Defendant:
Name: KHALIF HOUSE
Age: 24
Residence: Hempstead, New York
E.D.N.Y. Docket No. 16-CR-370 (JMA)
Operator of Hospitals in Queens, NY, Agrees to Pay $4 Million to Settle Alleged False Claims Act Violations Arising from Improper Payments to PhysiciansRead the Press Release
BROOKLYN, N.Y. – MediSys Health Network, Inc., which owns and operates Jamaica Hospital Medical Center and Flushing Hospital Medical Center, two hospitals in Queens, New York, has agreed to pay $4 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Department of Justice announced today.
The settlement was announced by Bridget M. Rohde, Acting U.S. Attorney for the Eastern District of New York, Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division, and Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York Region.
The government’s investigation revealed that defendants submitted false claims to the Medicare Program for services rendered to patients referred by physicians with whom defendants had improper financial relationships. These relationships took the form of compensation and office lease arrangements that did not comply with the requirements of the Stark Law, which restricts the financial relationships that hospitals may have with doctors who refer patients to them. The allegations were brought to the government’s attention through the filing of a complaint pursuant to the qui tam provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery.
“Health care providers who enter into improper financial relations with referring physicians compromise the referral process and encourage over-utilization of services, to the potential detriment of both patients and taxpayers. We will hold health care providers accountable for their violations of federal law,” stated Acting U.S. Attorney Rohde. Ms. Rohde thanked DOJ’s Civil Division and HHS-OIG for their assistance in the investigation.
“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General Readler of the Justice Department’s Civil Division.
“When hospital operators provide financial incentives to doctors for patient referrals, individuals rightfully wonder whose best interests are being served,” said HHS-OIG Special Agent-in-Charge Lampert. “We will continue to investigate such entities who fraudulently bill government health programs.”
The United States’ case was handled by Assistant U.S. Attorney Kenneth M. Abell of the United States Attorney’s Office for the Eastern District of New York, with assistance from Senior Trial Counsel David T. Cohen from DOJ’s Civil Division’s Commercial Litigation Branch and Associate Counsel David Fuchs from HHS-OIG.
New York Hospital Operator Agrees to Pay $4 Million to Settle Alleged False Claims Act Violations Arising from Improper Payments to PhysiciansRead the Press Release
MediSys Health Network Inc., which owns and operates Jamaica Hospital Medical Center and Flushing Hospital and Medical Center, two hospitals in Queens, New York, has agreed to pay $4 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced today.
The settlement resolves allegations that the defendants submitted false claims to the Medicare program for services rendered to patients referred by physicians with whom the defendants had improper financial relationships. These relationships took the form of compensation and office lease arrangements that did not comply with the requirements of the Stark Law, which restricts the financial relationships that hospitals may have with doctors who refer patients to them.
“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.
The lawsuit was filed by Dr. Satish Deshpande under the qui tam, or whistleblower, provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. Dr. Deshpande will receive $600,000 as his share of the recovery.
“Health care providers who enter into improper financial relations with referring physicians compromise the referral process and encourage over-utilization of services, to the potential detriment of both patients and taxpayers,” said Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York. “We will hold health care providers accountable for their violations of federal law.”
“When hospital operators provide financial incentives to doctors for patient referrals, individuals rightfully wonder whose best interests are being served,” said Special Agent in Charge Scott J. Lampert for U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to investigate such entities who fraudulently bill government health programs.”
The case, United States ex rel. Deshpande, et al. v. The Jamaica Hospital Medical Center, et al., Case No. 13-cv-4030 (E.D.N.Y.), was handled by Senior Trial Counsel David T. Cohen of the Civil Division’s Commercial Litigation Branch, Assistant U.S. Attorney Kenneth M. Abell of the U.S. Attorney’s Office for the Eastern District of New York and Associate Counsel David Fuchs from HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability.
MS-13 Gang Member Sentenced to 45 Years’ Imprisonment for Murder Conspiracies and Attempted Murders on Long IslandRead the Press Release
Earlier today at the federal courthouse in Central Islip, New York, Anibel Rondolpho Rodriguez, a member of La Mara Salvatrucha, also known as MS-13, an international criminal organization, was sentenced by United States District Judge Joseph F. Bianco to 45 years’ imprisonment following the defendant’s March 30, 2017 guilty plea to racketeering charges including two murder conspiracies, two attempted murders, and threatening to commit assault.
The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD).
“The defendant, and other members of the Hempstead clique of the MS-13, unleashed a wave of violence in Nassau County that included murders and vicious assaults,” stated Acting United States Attorney Rohde. “Today’s sentence sends a strong message that this Office and our federal, state and local law enforcement partners will work together to ensure that all those who threaten our communities are brought to justice.” Ms. Rohde also extended her appreciation to the members of the FBI’s Long Island Gang Task Force for their tireless efforts during the investigation.
“It is disturbing and unsettling to investigate a group of people and keep discovering in case after case that they truly have no respect for human life,” stated FBI Assistant Director-in-Charge Sweeney. “MS-13 gang members actually revel in killing anyone who crosses them, regardless our Long Island Gang Task Force continues to work with the community to keep the gang from wreaking havoc on innocent people. We will use every tool we have to decimate MS-13 and keep them from rebuilding their ranks.”
“The arrest, conviction and sentencing of defendant Anibel Rondolpho Rodriguez is an excellent example of the professionalism and dedication of numerous law enforcement agencies that have worked tirelessly and collaborated on this case,” stated NCPD Commissioner Ryder. “Our residents and communities will be safer with defendant Rodriquez incarcerated along with his other co-conspirators. Gangs and their heinous crimes can never be tolerated in any community and we are taking a proactive approach to keep our residents and police safe.”
Conspiracy to Murder Miguel Perez
According to court documents previously filed in the case, on August 9, 2012, Rodriguez, also known as “Peluche,” agreed with two co-conspirators to kill Miguel Perez, who was associated with the Zulu Nation gang. The Zulu Nation gang had an ongoing dispute with members of the Hempstead Locos Salvatruchas clique of the MS-13. While the defendant was talking to Perez outside the victim’s house in Freeport, New York, a co-conspirator fatally shot Perez three times with a 9mm. handgun.
Conspiracy to Murder Jose Ivan Reyes-Lainez and Attempted Murder of Jane Doe
On October 6, 2013, in Hempstead, New York, the defendant and six co-conspirators confronted Jose Ivan Reyes-Lainez about his suspected membership in a rival gang. The defendant and his co-conspirators decided to kill Reyes-Lainez, as well as Jane Doe, who had accompanied Reyes-Lainez, to prevent her from being a witness to the murder. Reyes-Lainez was fatally stabbed more than two dozen times, and Jane Doe was stabbed 18 times but she survived her injuries.
Attempted Murder of John Doe No. 1
On September 14, 2013, a group of MS-13 members including the defendant confronted John Doe No. 1 and another individual who they believed to be members of the rival Bloods street gang in Roosevelt, New York. The defendant grabbed a baseball bat from the individual and struck John Doe No. 1. The defendant’s co-conspirators also struck John Doe No. 1 with a wooden board, stabbed him with a screwdriver, and punched and kicked him.
Assault of John Doe No. 2
On October 6, 2013, in Hempstead, MS-13 members including the defendant approached John Doe No. 2 and asked him whether he was a gang member, questioning him about a tattoo on his arm. John Doe No. 2 denied any gang membership and was walking away from the group when he was stabbed and kicked by the MS-13 members, including the defendant.
The conviction of Rodriguez 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 this district. A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults. Since 2010 alone, this Office has obtained indictments charging MS-13 members with carrying out more than 40 murders, 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, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Immigration and Customs Enforcement – Homeland Security Investigations, NCPD, Suffolk County Police Department, Nassau County Sheriff’s Office, Suffolk County Probation, Suffolk County Sheriff’s Department, Rockville Centre Police Department and New York State Police.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys John J. Durham, Raymond A. Tierney and Paul G. Scotti are in charge of the prosecution.
The Defendant:
ANIBEL RONDOLPHO RODRIGUEZ
Age: 29
Residence: Freeport, New York
E.D.N.Y. Docket No. 14-CR-68 (JFB)
United States Files Civil Fraud Complaint Against Former Deutsche Bank Head of Subprime Mortgage TradingRead the Press Release
BROOKLYN – The United States today filed a civil complaint in federal court in Brooklyn, New York, against Paul Mangione, former Deutsche Bank head of subprime trading. In its complaint, the United States alleges that Mangione engaged in a fraudulent scheme to misrepresent the characteristics of loans backing two residential mortgage-backed securities (RMBS) that Deutsche Bank sold to investors that resulted in hundreds of millions of dollars in losses. This suit is brought pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and seeks an appropriate civil penalty.
The filing was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division, and Rene Febles, Deputy Inspector General for Investigations for the Federal Housing Finance Agency Office of the Inspector General.
As alleged in the complaint, Mangione engaged in a fraudulent scheme to sell ACE 2007-HE4 (“HE4”) -- a $ 1 billion security -- and ACE 2007-HE5 (“HE5”) -- a $400 million security -- by misleading investors about the quality of the loans backing the securitizations. The complaint further alleges that Mangione also misled investors about the origination practices of Deutsche Bank’s wholly-owned subsidiary, DB Home Lending LLC (DB Home) (f/k/a Chapel Funding, LLC), which was the primary originator of loans included in the deals. Mangione approved offering documents for HE4 and HE5 even though he knew they misrepresented key characteristics of the loans, including compliance with lending guidelines, borrowers’ ability to pay, borrowers’ fraud and appraisal accuracy.
The HE4 and HE5 offering documents also falsely represented that DB Home had “developed internal underwriting guidelines that it believe[d] generated quality loans” and that DB Home had instituted a quality control process that “monitor[ed] loan production with the overall goal of improving the quality of loan production,” among numerous other representations designed to instill in investors trust in DB Home’s underwriting processes. As alleged in the complaint, Mangione knew that these statements were false.
“The defendant fraudulently induced investors, including pension plans, religious organizations, financial institutions and government-sponsored entities, to name only a few, to invest nearly a billion and a half dollars in HE4 and HE5 RMBS, and caused them to suffer extraordinary losses as a result,” stated Acting United States Attorney Rohde. “We will hold accountable those who seek to deceive the investing public through fraud and misrepresentation.”
“The government’s complaint alleges that Mr. Mangione knew that certain of Deutsche Bank’s RMBS contained unsound mortgages that did not meet the credit or appraisal standards that the bank represented,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “By allegedly misleading investors about the riskiness of these securities, Mr. Mangione prioritized his and his employer’s bottom line over principles of honesty and fair dealing. The Department of Justice will continue to pursue those who engage in fraud as a way to conduct business.”
“As alleged in today’s filing, this individual knowingly took steps during the lead up to the financial crisis to sell defective mortgage loans while hiding the poor quality of the loans from investors,” stated Deputy Inspector General for Investigations Febles, “This conduct was deliberately fraudulent and resulted in significant losses for the investors. We are committed to working with the U.S. Department of Justice and the U.S. Attorney’s Office for the Eastern District of New York to hold accountable those who engaged in fraud in the secondary market for mortgages.”
In January 2017, the Department of Justice settled a related RMBS matter with Deutsche Bank.
The United States’ case is being handled by Assistant United States Attorneys Edward K. Newman and Ryan M. Wilson. Ms. Rohde thanked the Office of the Inspector General for the Federal Housing Finance Administration for its assistance in conducting the investigation in this matter.
The Defendant:
PAUL MANGIONE
Residence: Scarsdale, New York
E.D.N.Y. Docket No. 17-CV-5305 (NGG)
Download Mangione Complaint
United States Files Civil Fraud Complaint Against Former Deutsche Bank Head of Subprime Mortgage TradingRead the Press Release
The United States today filed a civil complaint in federal court in Brooklyn, New York, against Paul Mangione, former Deutsche Bank head of subprime trading. In its complaint, the United States alleges that Mangione engaged in a fraudulent scheme to misrepresent the characteristics of loans backing two residential mortgage-backed securities (RMBS) that Deutsche Bank sold to investors that resulted in hundreds of millions of dollars in losses. This suit is brought pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and seeks an appropriate civil penalty.
As alleged in the complaint, Mangione engaged in a fraudulent scheme to sell ACE 2007-HE4 (HE4) -- a $ 1 billion security -- and ACE 2007-HE5 (HE5) -- a $400 million security -- by misleading investors about the quality of the loans backing the securitizations. The complaint further alleges that Mangione also misled investors about the origination practices of Deutsche Bank’s wholly-owned subsidiary, DB Home Lending LLC (DB Home) (f/k/a Chapel Funding LLC), which was the primary originator of loans included in the deals. Mangione approved offering documents for HE4 and HE5 even though he knew they misrepresented key characteristics of the loans, including compliance with lending guidelines, borrowers’ ability to pay, borrowers’ fraud and appraisal accuracy.
The HE4 and HE5 offering documents also falsely represented that DB Home had “developed internal underwriting guidelines that it believe[d] generated quality loans” and that DB Home had instituted a quality control process that “monitor[ed] loan production with the overall goal of improving the quality of loan production,” among numerous other representations designed to instill in investors trust in DB Home’s underwriting processes. As alleged in the complaint, Mangione knew that these statements were false.
“The defendant fraudulently induced investors, including pension plans, religious organizations, financial institutions and government-sponsored entities, to name only a few, to invest nearly a billion and a half dollars in HE4 and HE5 RMBS, and caused them to suffer extraordinary losses as a result,” stated Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York. “We will hold accountable those who seek to deceive the investing public through fraud and misrepresentation.”
“The government’s complaint alleges that Mr. Mangione knew that certain of Deutsche Bank’s RMBS contained unsound mortgages that did not meet the credit or appraisal standards that the bank represented,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “By allegedly misleading investors about the riskiness of these securities, Mr. Mangione prioritized his and his employer’s bottom line over principles of honesty and fair dealing. The Department of Justice will continue to pursue those who engage in fraud as a way to conduct business.”
“As alleged in today’s filing, this individual knowingly took steps during the lead up to the financial crisis to sell defective mortgage loans while hiding the poor quality of the loans from investors,” said Deputy Inspector General for Investigations Rene Febles for the Federal Housing Finance Agency Office of the Inspector General. “This conduct was deliberately fraudulent and resulted in significant losses for the investors. We are committed to working with the U.S. Department of Justice and the U.S. Attorney’s Office for the Eastern District of New York to hold accountable those who engaged in fraud in the secondary market for mortgages.”
In January 2017, the Department of Justice settled a related RMBS matter with Deutsche Bank.
The United States’ case is being handled by Assistant U.S. Attorneys Edward K. Newman and Ryan M. Wilson. Acting U.S. Attorney Bridget M. Rohde and Acting Assistant Attorney General Readler thanked the Office of the Inspector General for the Federal Housing Finance Administration for its assistance in conducting the investigation in this matter.
The Case number is E.D.N.Y. Docket No. 17-CV-5305 (NGG).
President of Long Island Aviation Parts Company Sentenced to 26 Months’ Imprisonment for Fraud in Supplying Airplane Parts to Defense Department through Shell CompaniesRead the Press Release
Earlier today, Paul Skiscim, the President of Aerospec, Inc., a company located in Kings Park, New York, was sentenced before Judge Arthur D. Spatt in U.S. District Court in Central Islip, New York, to 26 months’ imprisonment, to be followed by three years of supervised release, for his fraud in continuing to provide airplane parts to the United States Department of Defense (DoD) despite the fact that he and his company had been debarred from entering into contracts with the DoD in 2013. Skiscim was also ordered to pay restitution of $420,000 and forfeit monies and properties to the government, with a total value of approximately $1 million.
The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York and Leigh-Alistair Barzey, Special Agent-in Charge of the Defense Criminal Investigative Service (DCIS), Northeast Field Office.
"The defendant’s scheme not only violated the law but showed a disregard for the safety of military personnel. We will continue to work collaboratively with our law enforcement partners to successfully interdict schemes like this one,” stated Acting United States Attorney Rohde.
“The defendant’s sentencing earlier today is the direct result of a joint effort by DCIS and the U.S. Attorney’s Office, Eastern District of New York, to identify, investigate and prosecute individuals who engage in fraudulent activity targeting the DoD and seek to profit at the expense of taxpayers,” stated Special Agent-in-Charge Barzey. “DCIS will continue to partner with the U.S. Department of Justice to protect the integrity of the DoD procurement system and protect members of the U.S. military.”
According to court documents, Aerospec, Inc. had been a supplier of airplane parts to the DoD from 2003 until 2013, when the company and Skiscim were debarred after supplying the government with defective airplane parts. As Skiscim admitted in pleading guilty on September 7, 2016, to Count One of an indictment which charged fraud involving aircraft parts, he nevertheless continued to bid, contract, and supply airplane parts to the federal government following this debarment through a series of shell companies using the names of relatives and fictitious people to mask his involvement from the DoD’s Defense Logistics Agency. Since 2013, the shell companies received over $2.8 million for the supply of airplane parts.
The government’s case was prosecuted by Assistant United States Attorneys Charles P. Kelly and Robert Schumacher.
The Defendant
Name: PAUL SKISCIM
Age: 63
Residence: East Northport, NY
E.D.N.Y. Docket No. CR-16-190 (ADS)
Chief Executive Officer of International Metallurgical Company Sentenced to 57 Months for Conspiring to Export Specialty Metals to IranRead the Press Release
Erdal Kuyumcu, 45, of Woodside, N.Y., and the chief executive officer of the Woodside-based Global Metallurgy, LLC, was sentenced to 57 months in prison following his June 14, 2016 guilty plea to conspiracy to violate the International Emergency Economic Powers Act (IEEPA) by exporting specialty metals from the U.S. to Iran.
Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Division and Special Agent in Charge Jonathan Carson of the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement’s New York Field Office made the announcement.
“With this sentence, the defendant is being held accountable for conspiring with others to send specialized U.S. technology – over a thousand pounds of metallic powder with nuclear and missile applications – to Iran via Turkey,” said Acting Assistant Attorney General Boente. “The National Security Division will aggressively prosecute those who seek to unlawfully provide dangerous material and technology to Iran, a state sponsor of terrorism.”
“This Office, together with our law enforcement partners, will continue to use every tool available, including U.S. export laws, to prevent goods with potentially dangerous uses from falling into the wrong hands and jeopardizing our national security,” said Acting U.S. Attorney Rohde. “Here, the defendant exported a metallic powder that has potential military and nuclear applications to Iran, a state sponsor of terrorism.”
“Laws exist to keep groups and governments from buying materials in support of doing harm. Iran has demonstrated in this case it is willing to use whatever means necessary to hide the end user of the materials, to include utilizing a U.S. citizen to carry out their proliferating activities,” stated Assistant Director in Charge Sweeney. “The FBI New York and its foreign and domestic partners work every day to investigate and interdict adversaries from procuring these items and materials to build nuclear and other weapons of mass destruction, which could end up in dangerous hands.”
“Today's sentencing is the result of outstanding collaborative work by the Justice Department, the Commerce Department and the FBI to break up a network whose aim was to illegally ship sophisticated U.S.-origin technology to Iran,” said Special Agent in Charge Carson. “We will continue to pursue violators wherever they may be.”
According court documents, Kuyumcu, a U.S. citizen, conspired to export from the U.S. to Iran a metallic powder primarily composed of cobalt and nickel, without having obtained the required license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). As established during a two-day presentencing evidentiary hearing, the metallic powder has potential military and nuclear applications. Such specialized metals are regulated by the U.S. Department of Commerce to combat nuclear proliferation and terrorism, and exporting them without the required license is illegal.
In furtherance of the illegal scheme, Kuyumcu and others plotted to obtain more than one thousand pounds of the metallic powder from a U.S.-based supplier. To hide the true destination of the goods from the supplier, Kuyumcu arranged for the metallic powder to be shipped first to Turkey and then to Iran. Kuyumcu used coded language when discussing shipment of the powder with a Turkey-based co-conspirator, such as referring to Iran as the “neighbor.” Shortly after one of the shipments was sent from Turkey to Iran, a steel company in Iran sent a letter-sized package to Kuyumcu’s Turkey-based co-conspirator. The Iranian steel company had the same address as an OFAC-designated Iranian entity under the Weapons of Mass Destruction proliferators sanctions program that was associated with Iran’s nuclear and ballistic missile programs.
Assistant U.S. Attorneys Tiana A. Demas and Ameet B. Kabrawala and Trial Attorney David Recker from the National Security Division’s Counterintelligence and Export Control Section are prosecuting this case.
CEO of International Metallurgical Company Sentenced to 57 Months in Prison for Conspiring to Export Specialty Metals to IranRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, New York, Erdal Kuyumcu, the chief executive officer of Global Metallurgy, LLC, based in Woodside, New York, was sentenced to 57 months in prison following his June 14, 2016 guilty plea to conspiracy to violate the International Emergency Economic Powers Act by exporting specialty metals from the United States to Iran. The sentencing proceeding was held before Chief United States District Judge Dora L. Irizarry.
The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Dana J. Boente, Acting Assistant Attorney General for National Security, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), and Jonathan Carson, Special Agent-in-Charge of the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement’s New York Field Office.
“This Office, together with our law enforcement partners, will continue to use every tool available, including U.S. export laws, to prevent goods with potentially dangerous uses from falling into the wrong hands and jeopardizing our national security,” stated Acting United States Attorney Rohde. “Here, the defendant exported a metallic powder that has potential military and nuclear applications to Iran, a state sponsor of terrorism.”
“With this sentence, the defendant is being held accountable for conspiring with others to send specialized U.S. technology – over a thousand pounds of metallic powder with nuclear and missile applications – to Iran via Turkey,” stated Acting Assistant Attorney General Boente. “The National Security Division will aggressively prosecute those who seek to unlawfully provide dangerous material and technology to Iran, a state sponsor of terrorism.”
“Laws exist to keep groups and governments from buying materials in support of doing harm. Iran has demonstrated in this case it is willing to use whatever means necessary to hide the end user of the materials, to include utilizing a U.S. citizen to carry out their proliferating activities,” stated Assistant Director-in-Charge Sweeney. “The FBI New York and its foreign and domestic partners work every day to investigate and interdict adversaries from procuring these items and materials to build nuclear and other weapons of mass destruction, which could end up in dangerous hands.”
“Today's sentencing is the result of outstanding collaborative work by the Justice Department, the Commerce Department and the FBI to break up a network whose aim was to illegally ship sophisticated U.S.-origin technology to Iran,” said Special Agent-in-Charge Carson. “We will continue to pursue violators wherever they may be.”
According to court documents, Kuyumcu, a U.S. citizen, conspired to export from the United States to Iran a metallic powder primarily composed of cobalt and nickel, without having obtained the required license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). As established during a two-day presentencing evidentiary hearing, the metallic powder has potential military and nuclear applications. Such specialized metals are regulated by the U.S. Department of Commerce to combat nuclear proliferation and terrorism, and exporting them without the required license is illegal.
In furtherance of the illegal scheme, Kuyumcu and others plotted to obtain more than 1,000 pounds of the metallic powder from a U.S.-based supplier. To hide the true destination of the goods from the supplier, Kuyumcu arranged for the metallic powder to be shipped first to Turkey and then to Iran. Kuyumcu used coded language when discussing shipment of the powder with a Turkey-based co-conspirator, such as referring to Iran as the “neighbor.” Shortly after one of the shipments was sent from Turkey to Iran, a steel company in Iran sent a letter-sized package to Kuyumcu’s Turkey-based co-conspirator. The Iranian steel company had the same address as an OFAC-designated Iranian entity under the Weapons of Mass Destruction proliferators sanctions program that was associated with Iran’s nuclear and ballistic missile programs.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant U.S. Attorneys Tiana A. Demas and Ameet B. Kabrawala, and Trial Attorney David Recker from the National Security Division’s Counterintelligence and Export Control Section, are in charge of the prosecution.
The Defendant:
ERDAL KUYUMCU
Age: 45
Woodside, New York
E.D.N.Y. Docket No. 16-CR-308 (DLI)
Members of Eastern European Organized Crime Syndicate Charged with Arson of Occupied Building in BrooklynRead the Press Release
A 33-count superseding indictment was unsealed today in United States District Court for the Eastern District of New York charging six defendants with new racketeering predicate acts including assault in aid of racketeering, arson, extortion and unlawful firearms dealing. Five of the defendants are in custody and one—Viktor Zelinger—remains at large. Defendant Artiom Pocinoc was arrested yesterday and will be arraigned this afternoon before United States Magistrate Judge James Orenstein in federal court in Brooklyn. Defendant Vyacheslav Malkeyev, who previously pled guilty to marijuana distribution conspiracy as charged in the original indictment, was rearrested yesterday on new charges and will be also be arraigned before Judge Orenstein.
The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), Angel M. Melendez, Special Agent-in-Charge, Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI), James D. Robnett, Special Agent-in-Charge, Criminal Investigation Division, Internal Revenue Service (IRS-CID), James P. O’Neill, Commissioner, New York City Police Department (NYPD) and George Beach, Superintendent, New York State Police (NYSP). The arrests resulted from a long-term investigation by the DEA’s New York Organized Crime Drug Enforcement Strike Force.[1] Ms. Rohde also thanked the New York City Fire Department for its investigation of the arson and its heroic efforts in rescuing the residents.
As alleged in the superseding indictment and other court documents filed by the government, the defendants were members of an Eastern European organized crime syndicate that operated in the Brighton Beach and Coney Island neighborhoods of Brooklyn, as well as overseas. Syndicate members in Brooklyn were linked to high-level members of organized crime, known as “thieves in law” or “Thieves,” based in various former states of the Soviet Union and Israel. The Thieves helped the defendants extort money from individuals living abroad and authorized the use of physical force by the defendants in the United States.
Defendants Zelinger, Malkeyev, Leonid Gershman and Aleksey Tsvetkov are charged with crimes related to the arson of a residential building at 2220 Voorhies Avenue in Brooklyn. The defendants—who allegedly operated an illegal high-stakes poker game at 2663 Coney Island Avenue—conspired to burn down the Voorhies building because it housed a rival poker game on the ground floor. The second and third floors of the building contained residences.
As alleged, shortly after 1:00 a.m. on May 2, 2016, members of the Syndicate broke into the building and set fire to it. The building quickly went up in flames, leaving two residents trapped in a third-floor apartment. Their rescue by New York City Fire Department firefighters was recorded on amateur video. The footage shows a firefighter climbing a ladder through dense smoke to pull the trapped teens out of a window and down the ladder to safety. Both residents and five firefighters were injured in the fire, with one firefighter suffering burns to his face. The building, and every apartment inside it, were destroyed.
Gershman, Tsvetkov and Malkeyev are charged with other crimes of violence, including the pistol-whipping and beating of an individual suspected of stealing from a narcotics “stash” house operated by members of the Syndicate. Violence and threats of violence were also a key feature of the extortion-related crimes committed by Gershman, Tsvetkov and Pocinoc. Court filings quote Gershman on a recorded telephone call describing Pocinoc to a victim as a “boxer with cauliflower ears” who would be collecting the victim’s payments. Pocinoc is also charged with participating in the beating of a victim and with extorting two others. Gershman is also charged with illegally selling one or more firearms to two buyers between 2008 and 2013.
Three of the defendants—Zelinger, Gershman and Malkeyev—are naturalized U.S. citizens who immigrated to the United States from Eastern European countries. Tsvetkov is a citizen of Ukraine, Pocinoc is a citizen of Moldova, and Rivera is a U.S. citizen by birth.
The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of all counts, Zelinger faces a mandatory minimum sentence of 17 years’ imprisonment and a maximum sentence of 40 years; Gershman, Tsvetkov and Malkeyev face a mandatory minimum sentence of 27 years’ imprisonment and a maximum term of life; Librado Rivera faces a mandatory minimum of five years’ imprisonment and a maximum term of 40 years; and Pocinoc faces a maximum sentence of 20 years’ imprisonment.
Five other defendants charged previously in this case have entered pleas of guilty to racketeering and related crimes.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Matthew J. Jacobs and Andrey Spektor are in charge of the prosecution.
The Defendants:
VIKTOR ZELINGER, also known as “Vitya” and “Vityok”
Age: 38
Residence: Brooklyn, New York
LEONID GERSHMAN, also known as “Lenny,” “Lenny G.,” “Lyonchik” and “Lyonya”
Age: 34
Residence: Brooklyn, New York
ALEKSEY TSVETKOV, also known as “Pelmin,” “Lesha” and “Lyosha”
Age: 39
Residence: Brooklyn, New York
VYACHESLAV MALKEYEV, also known as “Steve Bart”
Age: 33
Residence: Manhattan, New York
ARTIOM POCINOC
Age: 28
Residence: Brooklyn, New York
LIBRADO RIVERA, also known as “Macho” and “Max”
Age: 36
Residence: Brooklyn, New York
E.D.N.Y. Docket No. 16-CR-553 (BMC)
[1] The DEA’s New York Organized Crime Drug Enforcement Strike Force is comprised of agents and officers of the DEA, NYPD, ICE-HSI, NYSP, IRS, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Secret Service, U.S. Marshals Service, New York National Guard, Clarkstown Police Department, U.S. Coast Guard, Port Washington Police Department and New York State Department of Corrections and Community Supervision. The Strike Force is partially funded by the New York/New Jersey High Intensity Drug Trafficking Area, which is a federally funded crime fighting initiative and part of the Organized Crime Drug Enforcement Task Force program.
Former Federal Correctional Officer Pleads Guilty to Bribery ChargeRead the Press Release
Earlier today, Jonathan Galicia, pled guilty at the federal courthouse in Brooklyn, New York, to one count of soliciting and accepting a bribe as a public official. The proceeding took place before United States District Judge Eric N. Vitaliano. At the time of the offense, Galicia was a correctional officer at the Metropolitan Detention Center in Brooklyn, New York (MDC), and has since resigned from his position.
The plea was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and Ronald G. Gardella, Special Agent-in-Charge, United States Department of Justice, Office of the Inspector General, New York Field Office (DOJ OIG).
According to court filings and facts presented during the plea proceeding, in June 2016, while a correctional officer at the MDC, Galicia accepted a $3,700 bribe payment to smuggle an Apple iPhone into the MDC and provided the contraband phone to an inmate, who thereafter used the phone while incarcerated at the MDC.
“Motivated by greed, Galicia abused his position of trust within the federal correctional system,” stated Acting United States Attorney Rohde. “Introducing a smart phone into a federal detention center is a serious dereliction of duty, as it provides an opportunity for inmates to communicate with others on an unmonitored device in order to potentially continue criminal activity, obstruct justice and intimidate witnesses.”
“When prison staff smuggles a cell phone into prison, they put their colleagues, inmates, and the community at risk,” stated DOJ OIG Special Agent-in-Charge Gardella. “The OIG will continue to assist the Federal Bureau of Prisons in its efforts to stop contraband from entering federal prisons, and to catch and bring to justice any Justice Department employee involved in a smuggling scheme.”
At sentencing, Galicia faces up to 15 years in prison, as well as forfeiture of $3,700 and a fine.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorneys Marisa Seifan and Nadia Shihata are in charge of the prosecution.
The Defendant:
JONATHAN GALICIA
Age: 34
Bronx, New York
E.D.N.Y. Docket No. 17-CR-321 (ENV)
Former Queens, N.Y., Resident Arrested for Smuggling Millions of Dollars Worth of Counterfeit Brand Name Apparel from China into the United StatesRead the Press Release
A complaint was unsealed today in federal court in Brooklyn, New York, charging former Queens, New York, resident Su Ming Ling with smuggling and conspiracy to traffic in counterfeit goods for his participation in a sophisticated scheme to import approximately 200 shipping containers of counterfeit brand-name apparel from the People’s Republic of China.
Ling was arrested last night in California as he attempted to board a flight from San Francisco to Taiwan. Ling made his initial appearance today at the Phillip Burton Federal Building and United States Courthouse in San Francisco, California, before United States Magistrate Judge Sallie Kim. Ling was ordered detained pending a detention hearing scheduled for Wednesday, September 6, 2017.
The arrest was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Debra Parker, Acting Special-Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI) Newark Division, and Leon Hayward, Acting Director, New York Field Office, U.S. Customs and Border Protection (CBP).
“Using a combination of internet savvy and old-fashioned counterfeit distribution techniques, defendant Ling perpetrated a lucrative counterfeiting scheme involving fake name-brand items,” stated Acting United States Attorney Rohde. “This Office, together with our law enforcement partners, remains committed to protecting the intellectual property of U.S. brands, on which the economic integrity of U.S. markets depend.”
“Homeland Security Investigations has seized counterfeit goods from Mr. Ling’s criminal organization,” stated Acting Special Agent-in-Charge Parker. “HSI and our local, state, and federal law enforcement partners are committed to dismantling transnational counterfeiting that significantly impacts local economies. These arrests and seizures embody our commitment to disrupting the importation and sale of counterfeit goods.”
“U.S. Customs and Border Protection enforcement actions provided a critical link in an ongoing investigation that resulted in the takedown of an elaborate criminal enterprise,” stated CBP Acting Director Hayward. “It is through our interagency partnerships, and collaborative approaches like the one leading to today’s arrests, that law enforcement successfully combats modern criminal organizations.”
According to the complaint unsealed this morning, between May 2013 and January 2017, Ling used aliases to register and create numerous Internet domain names and email addresses that resembled the Internet domain names of real U.S. businesses. The defendant then used the fraudulently obtained email addresses to pose as a representative of the real businesses, and hired CBP-licensed customs brokers for file customs entry forms on behalf of the businesses whose identities he had stolen. Ling provided those customs brokers with falsified shipping documents for numerous shipments of counterfeit brand-name apparel that misrepresented the true contents of the shipping containers. Working with co-conspirators, Ling then arranged for the shipping containers of counterfeit goods to be distributed to, among other places, warehouses and storage facilities in Brooklyn and Queens, New York, and in New Jersey.
The shipping containers inspected by HSI and CBP were found to contain purported brand-name merchandise including purported Nike brand sneakers, UGG brand boots, National Football League-brand athletic jerseys, and True Religion brand jeans which CBP import specialists later determined to be counterfeit.
As detailed in the complaint, after searching the defendant’s cellular telephones in December 2015, HSI agents found photographs and notes of names and email addresses the defendant kept in an apparent effort to keep track of his fraudulent identities. Among other things, HSI agents found messages between Ling and his coconspirators with delivery instructions and photographs of delivery orders for shipping containers that HSI and CBP had inspected and found to contain counterfeit apparel.
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 20 years’ imprisonment for smuggling, and 10 years’ imprisonment for conspiracy to traffic in counterfeit goods.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States Attorneys Ian C. Richardson and Alexander Mindlin are in charge of the prosecution.
The Defendants:
SU MING LING
Age: 50
Former Residence: Middle Village, Queens
E.D.N.Y. Docket No. 17-MJ-774
Defendant Charged with Conspiring and Attempting to Provide Material Support to ISIS and Al-Nusrah FrontRead the Press Release
An indictment was unsealed today charging Dilshod Khusanov, 31, a citizen of Uzbekistan, with conspiring and attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS) and al-Nusrah Front, both designated foreign terrorist organizations. The defendant, arrested earlier this morning in Villa Park, Ill., is scheduled to be arraigned this afternoon before U.S. Magistrate Judge M. David Weisman in Chicago.
Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office, Special Agent in Charge Michael J. Anderson of the FBI’s Chicago Field Office and Commissioner James P. O’Neill of the NYPD made the announcement.
As alleged in the indictment and other court filings, Khusanov belonged to a group of likeminded individuals who provided financial support for persons in the U.S. travel to Syria to join ISIS or al-Nusrah Front. Four other members of this support group and two persons who attempted to travel to Syria to join ISIS have been indicted in a separate related case. The investigation began when Abdurasul Juraboev, one of Khusanov’s co-conspirators, came to the attention of law enforcement. Juraboev posted on an Uzbek-language website that propagates ISIS’s ideology his offer to engage in an act of martyrdom on U.S. soil on behalf of ISIS, such as killing the then President of the U.S. Barack Obama. The investigation subsequently revealed that Juraboev and another co-conspirator, Akhror Saidakhmetov, planned to travel to Turkey and then to Syria for the purpose of waging violent jihad on behalf of ISIS.
Saidakhmetov was arrested on Feb. 25, 2015, at John F. Kennedy International Airport where he was attempting to board a flight to Istanbul, Turkey. Juraboev previously purchased a plane ticket to travel from New York to Istanbul and was scheduled to leave the U.S. in March 2015. Abror Habibov, Dilkhayot Kasimov, Azizjon Rakhmatov and Akmal Zakirov – were charged in the related case with funding Saidakhmetov’s efforts to join ISIS. Juraboev pleaded guilty on Aug. 14, 2015, while Saidakhmetov pleaded guilty on January 19 and Abror Habibov on August 29 – all to charges of conspiring to provide material support to ISIS.
As alleged in the indictment and other court filings, Khusanov, a legal permanent resident of the U.S., helped to fund the efforts of Saidakhmetov and others to join ISIS or al-Nusrah Front. In particular, Khusanov and Zakirov discussed providing their own money to cover Saidakhmetov’s travel expenses. Khusanov also agreed to raise money from others to fund Saidakhmetov’s travel. In the week leading up to Saidakhmetov’s scheduled departure, Khusanov transferred money into Zakirov’s personal bank account, which funds were intended to facilitate Saidakhmetov’s travel to join ISIS. Khusanov and others also provided financial assistance for other persons from the U.S. to join either ISIS or al-Nusrah Front.
If convicted, Khusanov faces a maximum sentence of 30 years in prison. The charges in the superseding indictment are allegations, 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 after considering the advisory Sentencing Guidelines and other statutory factors.
Assistant U.S. Attorneys Alexander A. Solomon, Douglas M. Pravda, Peter W. Baldwin and David K. Kessler of the Eastern District of New York and Trial Attorney Steven Ward of the Counterterrorism Section of the National Security Division are prosecuting the case, with assistance from Assistant U.S. Attorney Barry Jonas of the Northern District of Illinois.
Defendant Charged with Conspiring and Attempting to Provide Material Support to ISISRead the Press Release
Earlier today, an indictment was unsealed in federal court in Brooklyn, New York, charging Dilshod Khusanov with conspiring and attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS) and al-Nusrah Front, both designated foreign terrorist organizations. The defendant, arrested earlier this morning in Villa Park, Illinois, is scheduled to be arraigned this afternoon before United States Magistrate Judge M. David Weisman at the U.S. Courthouse, 219 South Dearborn Street, Chicago, Illinois.
The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Dana J. Boente, Acting Assistant Attorney General for National Security, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office, Michael J. Anderson, Special Agent-in-Charge, Federal Bureau of Investigation, Chicago Field Office, and James P. O’Neill, Commissioner, New York City Police Department (NYPD).
“Those who seek to fight for foreign terrorist organizations like ISIS and al-Nusrah Front cannot accomplish their goal without financial support,” stated Acting U.S. Attorney Bridget M. Rohde. “This Office, together with our law enforcement partners, will work tirelessly to identify and hold accountable individuals like the defendant who provide such financial support, as well as to eliminate such support.” Ms. Rohde expressed her gratitude to the Chicago FBI Joint Terrorism Task Force, the U.S. Immigration and Customs Enforcement-Homeland Security Investigations, U.S. Customs and Border Protection, the Chicago Police Department, and the Illinois State Police for their assistance during the investigation.
“As alleged, Khusanov conspired to provide funding enabling multiple terrorists to attempt travel to Syria to join groups like ISIS or al-Nusrah. The FBI has a long history of successfully targeting not only the associates of criminal groups, but also group leadership,” stated FBI Assistant Director-in-Charge Sweeney. “This case is no different. It demonstrates the Joint Terrorism Task Force’s unwavering commitment to arresting and convicting both those seeking to join terrorist groups and those who conspire to support their efforts.”
“This is the latest example of the work the Joint Terrorism Task Force does every day in New York City to protect us from those seeking to join terrorist organizations or fund their operations,” said Police Commissioner O’Neill. “I’m thankful to the work by the detectives, agents, and prosecutors whose work on this case—and many like it—led to today’s arrest.”
As alleged in the indictment and other court filings, Khusanov belonged to a group of like-minded individuals who provided financial support for persons in the United States to travel to Syria to join ISIS or al-Nusrah Front. Four other members of this support group and two persons who attempted to travel to Syria to join ISIS have been indicted in a separate related case. The investigation began when Abdurasul Juraboev, one of Khusanov’s co-conspirators, came to the attention of law enforcement. Juraboev posted on an Uzbek-language website that propagates ISIS’s ideology his offer to engage in an act of martyrdom on U.S. soil on behalf of ISIS, such as killing then-President of the United States Barack Obama. The investigation subsequently revealed that Juraboev and another co-conspirator, Akhror Saidakhmetov, planned to travel to Turkey and then to Syria for the purpose of waging violent jihad on behalf of ISIS. Saidakhmetov was arrested on February 25, 2015, at John F. Kennedy International Airport where he was attempting to board a flight to Istanbul, Turkey. Juraboev had previously purchased a plane ticket to travel from New York to Istanbul and was scheduled to leave the United States in March 2015. Abror Habibov, Dilkhayot Kasimov, Azizjon Rakhmatov, and Akmal Zakirov were charged in the related case with funding Saidakhmetov’s efforts to join ISIS. Juraboev pleaded guilty on August 14, 2015; Saidakhmetov pleaded guilty on January 19, 2017; and Habibov pleaded guilty on August 29, 2017 – all to charges of conspiring to provide material support to ISIS.As alleged in the indictment and other court filings, Khusanov helped to fund the efforts of Saidakhmetov and others to join ISIS or al-Nusrah Front. In particular, Khusanov and Zakirov discussed providing their own money to cover Saidakhmetov’s travel expenses. Khusanov also agreed to raise money from others to fund Saidakhmetov’s travel. In the week leading up to Saidakhmetov’s scheduled departure, Khusanov transferred money into Zakirov’s personal bank account, which funds were intended to facilitate Saidakhmetov’s travel to join ISIS. Khusanov and others also provided financial assistance for other persons from the United States to join either ISIS or al-Nusrah Front.
If convicted, Khusanov faces a maximum sentence of 30 years in prison. The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Alexander A. Solomon, Douglas M. Pravda, Peter W. Baldwin, and David K. Kessler are in charge of the prosecution, with assistance provided by Assistant United States Attorneys Barry Jonas and Peter Flanagan of the United States Attorney’s Office for the Northern District of Illinois, and Trial Attorney Steven Ward of the Counterterrorism Section of the National Security Division of the Department of Justice.
The Defendant:
DILSHOD KHUSANOVAge: 31
Nationality: Uzbekistan
E.D.N.Y. Docket No. 17-CR-475 (WFK)
Vice Lords Leader Sentenced for Gang-Related Shooting in DetroitRead the Press Release
A leader of the Vice Lords street gang was sentenced today to 146 months for his role in various criminal gang-related activities, including the May 7, 2015, shooting of four people with an AK-47 assault rifle.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Daniel L. Lemisch of the Eastern District of Michigan, Acting Special Agent in Charge Thomas L. Chittum of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Detroit Field Division, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division and Chief James Craig of the Detroit Police Department made the announcement.
Kenneth Smith, 36, of Detroit, pleaded guilty on Feb. 22, 2016, before U.S. District Judge David M. Lawson of the Eastern District of Michigan, to one count of RICO conspiracy and one count of failure to appear in court.
In connection with his plea, Smith admitted that the Vice Lords is a national gang broken down into various “sets,” “decks,” or “branches,” which includes the Detroit-based Traveling Vice Lords (TVL), and that these sets operate in a hierarchical chain of command, answering to the gang’s leaders in Chicago, Illinois and Detroit. Vice Lords members engage in a variety of racketeering crimes in furtherance of the gang’s activities, including shootings of rivals, armed robberies and narcotics trafficking. In addition, gang members impose punishment on members for violations of the gang’s rules, including for attempts to leave or withdraw from the gang, which often result in a physical beating or a “green light” order to kill.
Pursuant to his plea agreement, Smith admitted that he was a leader of the TVL, and that, in May 2015, he directed other members of the TVL to search for two individuals who had attempted to leave the gang in order to harm them. Smith further admitted that on May 7, 2015, members of the TVL traveled in multiple cars to the intended victims’ house, including a car owned by Smith’s girlfriend, where TVL members shot four victims with an AK-47.
As part of his plea, Smith also admitted that, while on pretrial release for a prior indictment in this case, he sent numerous text messages threatening harm to a potential witness and that witness’s children if the witness continued “telling” on the Vice Lords. Smith also admitted that, when the government filed a motion to revoke his pretrial release, he removed the GPS tether he had been ordered to wear as a condition of pretrial release and willfully failed to appear in court.
Smith is the last of nine defendants charged in connection with the May 7, 2015, shooting to be sentenced. Eight other members and leaders of the TVL previously pleaded guilty to charges related to the shooting and received sentences ranging from 36 to 240 months in prison for their respective roles. In addition, a tenth defendant previously pleaded guilty and was sentenced to 48 months in prison for witness tampering stemming from his role in accessing the shooting victims’ medical records to provide identifying information to Vice Lords gang members who wished to prevent the victims from cooperating in the investigation.
The arrests and convictions in this case are, in part, the result of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit. Through the lead efforts of the Comprehensive Violence Reduction Partnership Task Force, which consists of representatives of the ATF, Detroit Police Department, Michigan State Police, Michigan Department of Corrections and FBI, law enforcement authorities linked various acts of violence in Detroit to the Vice Lords street gang and identified the leaders and key members of the gang, who now have been held accountable.
The ATF, FBI and Detroit Police Department are investigating the case. Assistant U.S. Attorneys Christopher Graveline and Mark Bilkovic of the Eastern District of Michigan and Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section are prosecuting the case.
Queens Man Charged with Attempting to Provide Material Support to ISISRead the Press Release
Yesterday, Parveg Ahmed of Queens, New York, a United States citizen, was arrested on charges of attempting to provide material support to the Islamic State of Iraq and al Sham (ISIS), 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 James Orenstein.
The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Dana J. Boente, Acting Assistant Attorney General for National Security, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office, Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), and James P. O'Neill, Commissioner, New York City Police Department (NYPD).
“As alleged, Ahmed sought to take up arms with violent terrorists who have killed numerous innocent victims, including Americans,” stated Acting U.S. Attorney Rohde. “This Office and our law enforcement partners will continue to work tirelessly to arrest and prosecute extremists before they are able to threaten the United States and its allies.” Ms. Rohde extended her 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. Ms. Rohde also thanked the U.S. Department of State and the U.S. Customs and Border Protection for their assistance.
“As we allege, Parveg Ahmed attempted to travel to Syria aligning himself with ISIS instead of his fellow Americans. Like others before him who chartered a similar path to join this violent terror group, Ahmed now finds his journey ends the same way - in a New York courtroom answering for his actions,” stated FBI Assistant Director-in-Charge Sweeney. “The FBI New York Joint Terrorism Task Force has a global reach and remains vigilant to the type of threat we allege was posed by Ahmed. I would like to thank all of our partner agencies for their continued vigilance. I would also encourage the community to notify law enforcement when they spot suspicious activity and behavior which helps the JTTF disrupt individuals aiming to conduct violence.”
“This man betrayed his own country to allegedly take up arms against it in the name of ISIS,” stated HSI Special Agent-in-Charge Melendez. “The JTTF’s proactive identification of individuals, like the defendant before any harm could be done against our nation, highlights the very principles on which the task force was founded.”
“As alleged, the defendant traveled to the Middle East in an effort to join ISIS. Mr. Ahmed also took extraordinary measures to destroy the electronic foot print he created,” said Police Commissioner James P. O’Neill. “This type of work goes on every day at the nation’s first Joint Terrorism Task Force here in Manhattan. My thanks to the detectives, agents, and prosecutors whose investigation resulted in today’s arrest and charges.”
As alleged in the complaint, the defendant traveled to Saudi Arabia in June 2017, purportedly to celebrate an Islamic religious holiday. Upon his arrival in Saudi Arabia, the defendant attempted to travel to Syria to enter ISIS-controlled territory. The defendant was detained in a Middle Eastern country bordering Syria.
Previously, the defendant had repeatedly expressed support on social media for ISIS and for individuals who provided support to the foreign terrorist organization’s mission of violent extremism. On July 17, 2017, JTTF agents obtained a search warrant for the defendant’s personal computer, and learned, among other things, that the defendant had viewed or listened to recordings of radical Islamic clerics Anwar al-Awlaki, a United States-born cleric and prominent leader of the foreign terrorist organization al Qaeda in the Arabian Peninsula, who was killed on or about September 30, 2011, and Abdullah el-Faisal, a Jamaican-born cleric, who was found guilty in the United Kingdom of, among other things, solicitation to commit murder, for preaching to followers to kill individuals, including Americans, because he deemed them to be enemies of Islam. On August 28, 2017, JTTF agents obtained a search warrant for electronic devices found in the defendant’s possession when he was detained attempting to travel to Syria. Examination of the devices revealed, among other things, the following:
- Messages sent to third parties expressing a desire to travel to ISIS-controlled territories.
- A message explaining that the defendant planned to join ISIS in Syria to wage violent jihad stating, “[W]e have made it to Dawlatul Islam [ISIS] in Syria. In sha Allah [God willing] we will join the Jihad very soon and in Sha Allah [God willing] we will then join the ranks of the Shuhuda [martyrs]. The West has invaded the land of the Muslims and is constantly attacking it.”[1]
- An internet browser history that indicates the defendant was researching maps of ISIS-controlled locations.
The defendant was deported to the United States on August 28, 2017, and he was arrested at John F. Kennedy International Airport.
If convicted, the defendant 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 Attorneys Alexander A. Solomon and Craig R. Heeren are in charge of the prosecution, with assistance provided by Trial Attorney Joshua D. Champagne of the Counterterrorism Section of the National Security Division of the Department of Justice.
The Defendant:
PARVEG AHMED
Age: 22
Queens, New York
E.D.N.Y. Docket No. 17-MJ-766
[1] Spelling is in original, and bracketed words and letters are added for clarity.
New York Man Charged with Attempting to Provide Material Support to ISISRead the Press Release
Yesterday, Parveg Ahmed, 22, a U.S. citizen of Queens, New York, was arrested on charges of attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a foreign terrorist organization. The defendant is scheduled to make his initial appearance this afternoon at 2 p.m. at the federal courthouse in Brooklyn, New York before U.S. Magistrate Judge James Orenstein.
The charges were announced by Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Bridget M. Rohde 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.
As alleged in the complaint, the defendant traveled to Saudi Arabia in June 2017, purportedly to celebrate an Islamic religious holiday. Upon his arrival in Saudi Arabia, the defendant attempted to travel to Syria to enter ISIS-controlled territory.
The defendant was deported back to the U.S. on August 28, where he was arrested at John F. Kennedy International Airport in Queens, New York.
If convicted, the defendant faces a maximum sentence of 20 years in prison. The charge in the federal complaint are merely allegations, 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 after considering the advisory Sentencing Guidelines and other statutory factors.
The government’s case is being handled by the Office’s National Security & Cybercrime Section and the Justice Department’s National Security Division. Assistant U.S. Attorneys Alexander A. Solomon and Craig R. Heeren are in charge of the prosecution, with assistance provided by Trial Attorney Joshua D. Champagne of the Counterterrorism Section of the National Security Division.
Operator of Global Cybercrime Marketplace Pleads Guilty to Access Device Fraud and Aggravated Identity TheftRead the Press Release
Earlier today, Djevair Ametovski, a Macedonian citizen also known as “xhevo,” “sindrom” and “sindromx,” pleaded guilty to access device fraud and aggravated identity theft, crimes related to his operation of “Codeshop,” a website he created for the sole purpose of selling stolen credit and debit card data, bank account credentials and personal identification information — obtained through illegal hacking and phishing schemes — for financial gain. The plea was entered before United States Magistrate Judge Steven L. Tiscione at the federal courthouse in Brooklyn.
The guilty plea was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and David E. Beach, Special Agent-in-Charge, United States Secret Service, New York Field Office (USSS).
“Cybercriminals such as the defendant profit directly from the mass hacking of online businesses and theft of personal and financial information, and provide a platform for others to do the same,” stated Acting United States Attorney Rohde. “This Office, together with our law enforcement partners, will work tirelessly to shut down these illegal businesses and hold their operators accountable for their crimes.” Ms. Rohde praised the extraordinary efforts of the Secret Service, the agency responsible for leading the government’s investigation, and also thanked the Slovenian Ministry of the Interior and Ministry of Justice, for their assistance in the investigation and effecting the defendant’s extradition, the United States Marshals Service, for their assistance in transporting the defendant to the United States, the U.S. Department of State’s Diplomatic Security Service in Slovenia and the Netherlands, for their assistance in facilitating the defendant’s extradition, and the Justice Department’s Office of International Affairs, for their assistance with multiple international requests for legal assistance during the investigation and with the defendant’s extradition.
“Technology has essentially erased geographic boundaries and changed the way criminals do business,” said USSS Special Agent-in-Charge Beach. “The Secret Service continues to develop innovative ways to combat emerging cyber threats. The success in this case demonstrates the collaborative efforts of our worldwide network of law enforcement partners and the transnational investigative capabilities of the United States Secret Service.”
As detailed in court papers, Ametovski ran a sophisticated online global marketplace for selling the stolen credit and debit card data, bank account credentials and personal identification information of victims around the world. As part of his operation, Ametovski worked with co-conspirators to steal victim account data both by hacking into the computer databases of financial institutions and other businesses, and by perpetrating “phishing” scams wherein the conspirators sent forged emails to unwitting accountholders that fraudulently induced the accountholders to surrender private information.[1] Ametovski and his co-conspirators then packaged this stolen victim account data for sale and posted the data on the Codeshop website, a fully indexed and searchable website that allowed users to search through databases of stolen data by bank identification number, financial institution, country, state and card brand to find the precise data that they wished to buy. Users of the Codeshop website who bought stolen data from the website could use it to make online purchases and to encode plastic cards with the data and use the cards to withdraw cash at ATMs. Ametovski used a network of online money exchangers and anonymous digital currencies (like Bitcoin) to reap revenues from the Codeshop website and to conceal all participants’ identities, including his own. Over the course of the scheme, Ametovski obtained and sold stolen credit and debit card data for more than 1.3 million cards.Ametovski was arrested in Ljubljana, Slovenia, in January 2014, and was extradited to the United States in May 2016.
When he is sentenced by United States District Judge Eric N. Vitaliano, Ametovski faces up to 15 years in prison for access device fraud, and an additional mandatory sentence of two years’ imprisonment for aggravated identity theft. He is also subject to restitution, criminal forfeiture, and fines.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Saritha Komatireddy, Tiana A. Demas and David K. Kessler are in charge of the prosecution. Additional assistance was provided by Marcus Busch of the Justice Department’s Office of International Affairs.
The Defendant:
DJEVAIR AMETOVSKI, also known as “xhevo,” “sindrom” and “sindromx”
Age: 30
Nationality: Macedonian
E.D.N.Y. Docket No. 16-CR-409 (ENV)
[1] “Phishing” is a common cyber fraud tactic that involves sending an email to a user falsely claiming to be an established legitimate enterprise in an attempt to deceive the user into surrendering private information. In this case, such emails commonly directed users to visit a bogus website where they were asked to update personal information, such as their password, social security number, and bank account number previously provided to a legitimate organization.
Two International Bank Managers Charged in Libor Interest Rate Manipulation SchemeRead the Press Release
Two French bank managers were indicted today for participating in a scheme to transmit false and misleading information related to the London Interbank Offered Rate (LIBOR), a global benchmark interest rate to which trillions of dollars of financial transactions are tied.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York and Assistant Director in Charge Andrew Vale of the FBI’s Washington Field Office made the announcement.
“The allegations in today’s indictment suggest complete and total disregard for the integrity of the financial markets and for innocent consumers and everyday people whose personal finances hinge on the interest rates they pay on various loans,” said Acting Assistant Attorney General Blanco. “Cases like this demonstrate the crucial role of the Department in protecting people and their hard earned money, securing our financial markets for economic growth and prosperity, and for fighting white collar crime to protect our nation from bad actors, wherever they may reside.”
“The integrity of our global financial markets relies upon each of its participants providing complete and accurate information,” said Acting U.S. Attorney Rohde. “As alleged, the defendants acted in contravention of this principle and the laws designed to uphold it by causing their employer, Société Générale, to submit falsified USD LIBOR rates, which in turn effected financial transactions across markets worldwide. We will continue to vigorously root out and prosecute such crimes.”
“Fraudulently manipulating the LIBOR and deceiving the financial market to affect world-wide financial transactions have far reaching consequences, and such criminal activity will not be tolerated,” said Assistant Director in Charge Vale. “Today’s indictment should stand as a warning that the FBI remains committed to holding those accountable who flout the law in their attempts to take advantage of international financial markets. The FBI Washington Field Office has dedicated significant time and resources, to include the expertise of special agents, forensic accountants, and analysts, to investigating these complex financial schemes, and I want to thank the tireless investigative team as well as our colleagues at the Department of Justice Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York for their hard work.”
Danielle Sindzingre, 54, and Muriel Bescond, 49, both of France, were charged in the Eastern District of New York with one count of conspiring to transmit false reports concerning market information that tends to affect a commodity and four counts of transmitting such false reports. Sindzingre and Bescond were, respectively, the Global Head of Treasury and the Head Treasury Paris at French financial institution Société Générale, S.A.
According to the indictment, LIBOR was a benchmark interest rate that was calculated for various currencies and maturities. The U.S. Dollar LIBOR was constructed by compiling submissions from leading banks around the world (“contributor panel banks”), excluding the four highest and lowest submissions, and averaging the remainder to obtain each day’s LIBOR “fix.” Each contributor panel bank was required under the rules of the British Bankers’ Association (BBA) to submit the rate at which it believed it would be charged if it sought offers to borrow money from other banks in the London interbank market. LIBOR was used to price futures contracts, interest rate swaps and other financial products worldwide. It was also used to calculate some consumer interest rates, including certain home mortgage and credit card interest rates. In February 2009, Société Générale joined the contributor panel for U.S. Dollar LIBOR.
As alleged in the indictment, between approximately May 2010 and approximately October 2011, Sindzingre and Bescond knowingly instructed their subordinate employees at Société Générale’s Paris treasury desk to submit inaccurately low LIBOR contributions in an effort to make it appear that Société Générale was able to borrow money at more favorable rates than it actually was. This was allegedly done with knowledge that the true rates at which Société Générale was borrowing money were higher than the rates it was submitting as part of the LIBOR calculation. On numerous occasions, the false information submitted at the direction of Sindzingre and Bescond altered the day’s final U.S. Dollar LIBOR calculation, thus affecting all financial transactions tied to U.S. Dollar LIBOR on that day, the indictment alleges. Among the allegedly affected financial products were Eurodollar futures, a commodity that was traded on the Chicago Mercantile Exchange. In total, it is estimated that the defendants’ misconduct caused over $170 million in harm to the global financial markets, according to the indictment.
An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The FBI is investigating this matter. Assistant Chief Carol Sipperly and Trial Attorneys Gary A. Winters and Timothy A. Duree of the Fraud Section of the Justice Department’s Criminal Division, and Assistant U.S. Attorney Matthew Amatruda of the U.S. Attorney’s Office for the Eastern District of New York are prosecuting the case.
Two International Bank Managers Charged in Interest Rate Manipulation SchemeRead the Press Release
BROOKLYN, N.Y. – Two French bank managers were indicted today for participating in a scheme to transmit false and misleading information related to the London Interbank Offered Rate (LIBOR), a global benchmark interest rate to which trillions of dollars of financial transactions are tied.
Acting United States Attorney Bridget M. Rohde of the Eastern District of New York, Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, and Assistant Director-in-Charge Andrew Vale of the Federal Bureau of Investigation’s (FBI) Washington Field Office made the announcement.
“The integrity of our global financial markets relies upon each of its participants providing complete and accurate information,” stated Acting United States Attorney Rohde. “As alleged, the defendants acted in contravention of this principle and the laws designed to uphold it by causing their employer, Société Générale, to submit falsified USD LIBOR rates, which in turn effected financial transactions across markets worldwide. We will continue to vigorously root out and prosecute such crimes.”"The allegations in today’s indictment suggest complete and total disregard for the integrity of the financial markets and for innocent consumers and everyday people whose personal finances hinge on the interest rates they pay on various loans,” said Acting Assistant Attorney General Blanco. “Cases like this demonstrate the crucial role of the Department in protecting people and their hard earned money, securing our financial markets for economic growth and prosperity, and for fighting white collar crime to protect our nation from bad actors, wherever they may reside.”
“Fraudulently manipulating the LIBOR and deceiving the financial market to affect world-wide financial transactions have far reaching consequences, and such criminal activity will not be tolerated,” said Assistant Director in Charge Vale. “Today’s indictment should stand as a warning that the FBI remains committed to holding those accountable who flout the law in their attempts to take advantage of international financial markets. The FBI Washington Field Office has dedicated significant time and resources, to include the expertise of special agents, forensic accountants and analysts, to investigating these complex financial schemes, and I want to thank the tireless investigative team as well as our colleagues at the Department of Justice Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York for their hard work.”
Danielle Sindzingre, and Muriel Bescond, both of France, were charged in the Eastern District of New York with one count of conspiring to transmit false reports concerning market information that tends to affect a commodity and four counts of transmitting such false reports. Sindzingre and Bescond were, respectively, the global head of treasury and the head of the Paris treasury desk at French financial institution Société Générale, S.A.
According to the indictment, LIBOR was a benchmark interest rate that was calculated for various currencies and maturities. The U.S. Dollar LIBOR was constructed by compiling submissions from leading banks around the world (“contributor panel banks”), excluding the four highest and lowest submissions, and averaging the remainder to obtain each day’s LIBOR “fix.” Each contributor panel bank was required under the rules of the British Bankers’ Association (BBA) to submit the rate at which it believed it would be charged if it sought offers to borrow money from other banks in the London interbank market. LIBOR was used to price futures contracts, interest rate swaps and other financial products worldwide. It was also used to calculate some consumer interest rates, like certain home mortgage and credit card interest rates. In February 2009, Société Générale joined the contributor panel for U.S. Dollar LIBOR.
As alleged in the indictment, between approximately May 2010 and approximately October 2011, Sindzingre and Bescond knowingly instructed their subordinate employees at Société Générale’s Paris treasury desk to submit inaccurately low LIBOR contributions in an effort to make it appear that Société Générale was able to borrow money at more favorable rates than it actually was. This was allegedly done with knowledge that the true rates at which Société Générale was borrowing money were higher than the rates it was submitting as part of the LIBOR calculation. On numerous occasions, the false information submitted at the direction of Sindzingre and Bescond altered the day’s final U.S. Dollar LIBOR calculation, thus affecting all financial transactions tied to U.S. Dollar LIBOR on that day, the indictment alleges. Among the affected financial products were Eurodollar futures, a commodity that was traded on the Chicago Mercantile Exchange. In total, it is estimated that the defendants’ misconduct caused over $170 million in harm to the global financial markets, according to the indictment.
An indictment is merely an allegation, and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.The FBI is investigating this matter. Assistant Chief Carol Sipperly and Trial Attorneys Gary A. Winters and Timothy A. Duree of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Matthew Amatruda of the United States Attorney’s Office for the Eastern District of New York are prosecuting the case.
The Defendants:
DANIELLE SINDZINGRE
Age: 54
Country: FranceMURIEL BESCOND
Age: 49
Country: France
E.D.N.Y. Docket No. 17-CR-464 (JS)Top Executives at Long Island Mortgage Lender Arrested for Engaging in $8.9 Million FraudRead the Press Release
A complaint was unsealed today in federal court in Central Islip, New York, charging Edward E. Bohm, Edward J. Sypher, Jr., and Matthew T. Voss, senior executives at Long Island mortgage lender Vanguard Funding, LLC (Vanguard), with conspiracy to commit wire and bank fraud in connection with their obtaining more than $8.9 million of warehouse loans for Vanguard to fund mortgages. The defendants allegedly misused the loans to pay personal expenses and compensation, as well as to repay earlier fraudulently obtained loans. Bohm, Sypher and Voss were arrested this morning, and their initial appearances are scheduled for this afternoon before United States Magistrate Judge Arlene R. Lindsay.
The arrests were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Maria T. Vullo, Superintendent, New York State Department of Financial Services.
“As alleged, the defendants – executives of a mortgage lender – defrauded banks into lending them money by stating that the money would fund new mortgages or refinance existing ones,” stated Acting United States Attorney Rohde. “We will continue to address dishonesty in the mortgage industry whether the victims are financial institutions, investors, or homeowners, as it ultimately hurts all of us as a community.”
“As alleged, the defendants sought short-term loans from financial institutions that served as a repository for lenders,” stated FBI Assistant Director-in-Charge Sweeney. “They then allegedly took the money, which is typically intended for borrowers looking to purchase a home, and used it for their own personal gain. Today’s charges are proof of our continued determination to root out those whose business practices attempt to harm the financial integrity of banks and financial institutions that facilitate homeownership.”“These defendants, for their own gain, allegedly defrauded the financial institutions that provide funding for individuals to buy homes, and they must be held accountable,” said Financial Services Superintendent Vullo. “As the regulator and protector of financial services companies in New York, the Department of Financial Services is proud to have assisted the Acting United States Attorney in bringing these defendants to justice.”
According to the complaint unsealed this morning, between August 2016 and March 2017, Voss, Vanguard’s Chief Operating Officer, Sypher, the Chief Financial Officer, and Bohm, the President of Sales, engaged in a scheme in which they obtained warehouse loans, or short-term loans, for Vanguard by falsely representing that Vanguard would use the proceeds of those loans to fund mortgages or mortgage refinancing for Vanguard’s clients. Once Vanguard received the loans, however, the defendants used the monies to pay personal expenses and compensation and to pay off loans they had previously obtained with fraudulent loan submissions for improper purposes. Nearly $9 million of fraudulently obtained, and subsequently misused, loans have been identified so far.
In a recorded conversation with a co-conspirator in 2017, Bohm expressed confidence that they would evade criminal liability because the victims of their fraudulent scheme were financial institutions. “At the end of the day, the s--- we did wasn’t to the public,” Bohm stated in part, according to the complaint.
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants face a statutory maximum of 30 years’ imprisonment for bank fraud conspiracy and 20 years’ imprisonment for wire fraud conspiracy.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Whitman G.S. Knapp and Elizabeth Losey Macchiaverna are in charge of the prosecution.
The Defendants:
EDWARD E. BOHM
Age: 39
Residence: Nissequogue, New YorkEDWARD J. SYPHER, JR.
Age: 40
Residence: Scarsdale, New YorkMATTHEW T. VOSS
Age: 42
Residence: Northport, New YorkE.D.N.Y. Docket No. 17-MJ-742
15 Defendants Arrested for Trafficking Heroin, Fentanyl and Crystal Methamphetamine in Brooklyn and CaliforniaRead the Press Release
Earlier today, 13 defendants were arrested in Brooklyn, New York and two were arrested in Harrisburg, Pennsylvania, in a coordinated federal and state takedown of a large-scale opioid and crystal methamphetamine distribution ring. Eight federal defendants are scheduled to make their initial appearances this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr., at the federal courthouse in Brooklyn. The two defendants arrested in Pennsylvania will make their initial appearance later today in federal court in Harrisburg, Pennsylvania for removal proceedings to the Eastern District of New York. Two additional federal defendants remain fugitives. Five defendants were arrested on related drug trafficking charges by the New York City Police Department, and they will be arraigned on state charges this afternoon in Brooklyn Criminal Court.
The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Eric Gonzalez, Acting District Attorney, Kings County District Attorney’s Office (KCDA), and James P. O’Neill, Commissioner, New York City Police Department (NYPD).
As alleged in the complaint, the defendants were members of a large-scale drug distribution operation in Brooklyn. Between at least September 2016 and July 2017, the defendants regularly transported, repackaged and distributed heroin, cocaine, methamphetamine and prescription pills, which they referred to in coded language such as “doggy food.” On at least two occasions, members of the conspiracy also sold pure fentanyl, which they represented to the buyer as potent heroin. The conspiracy involved the distribution of over 100 grams of heroin. Co-conspirators also distributed at least 50 grams of crystal methamphetamine, which they shipped from California to Brooklyn for sale.
“As alleged, the defendants trafficked in dangerous narcotics, including heroin, fentanyl and crystal methamphetamine to line their pockets with cash, despite the potentially lethal consequences to those using the drugs and to our community at large,” stated Acting United States Attorney Rohde. “This Office and our partners at the FBI and NYPD will continue to investigate and prosecute those who contribute to the tragic opioid crisis by trafficking these deadly drugs.”
“The details laid out in this case prove dealers pushing their wares aren’t honest about what they’re selling to an unsuspecting public,” stated Assistant Director-in-Charge Sweeney. “Pure fentanyl and drugs laced with the drug have proven deadly in hundreds of cases all over the country. Users buying the drugs are playing a dangerous game of chance with their lives because they don’t know what they’re putting in their bodies. The FBI and our law enforcement partners are aggressively targeting pushers and their supply chains to stop the epidemic wreaking havoc in communities all over our area.”
“These defendants allegedly peddled heroin on the streets of Brooklyn, concerned only with their lucrative profits, despite the devastation they cause in the communities where they operate,” said Acting Brooklyn District Attorney Gonzalez. “I am committed to continuing to fight this scourge and work with our federal law enforcement partners to do so.”
“The defendants in this case are accused of operating a large-scale drug operation that distributed heroin, fentanyl and other deadly drugs in Brooklyn,” said Police Commissioner O’Neill. “While the opioid crisis cannot be solved with arrests alone, the NYPD remains committed to holding accountable those who engage in the trade in deadly drugs, ensuring they are prosecuted to the fullest extent of the law. I commend the local and federal authorities who collectively brought this case to its successful outcome.”
The charges announced today are allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorney Jennifer M. Sasso is in charge of the prosecution.
The Defendants:
TIMOTHY GREENE
Age: 44
Brooklyn, New York
MATTHEW GREENE
Age: 23
Brooklyn, New York
SAMUEL LIRIANO
Age: 33
Brooklyn, New York
CARLOS BERMUDEZ, also known as “Carlito”
Age: 55
Brooklyn, New York
TANIA AGUILAR
Age: 41
Brooklyn, New York
DONALD LNU, also known as “Dot”
Brooklyn, New York
FNU LNU #2, also known as “Ray Banger”
Brooklyn, New York
PALAYOTIS LAMPRINOS, also known as “Peter”
Age: 30
Brooklyn, New York
KYLE SAMMUT
Age: 30
Brooklyn, New York
GEORGE ECONOMOS
Age: 52
Brooklyn, New York
E.D.N.Y. Docket No. 17-M-735
Former Officials of Central United Talmudic Academy Indicted in $3 Million Fraud SchemeRead the Press Release
A five-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Elozer Porges and Joel Lowy, the former Executive Director and former Assistant Director, respectively, of the school system known as Central United Talmudic Academy (CUTA) in Brooklyn, New York, with one count of conspiracy to commit mail and wire fraud and four counts of mail fraud. The defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Viktor V. Pohorelsky at the Brooklyn federal courthouse.
The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Mark Peters, Commissioner, New York City Department of Investigation, and Special Agent-in-Charge, Bethanne M. Dinkins, United States Department of Agriculture, Office of Inspector General.
As alleged in the indictment, between 2013 and 2015, Porges and Lowy submitted documents to the New York State Department of Health (NYSDOH) that falsely claimed that school children had received meals which, in fact, they had never been served. The defendants fraudulently inflated the number of meals served at various CUTA schools in order to obtain larger reimbursement payments pursuant to the federal government’s Child and Adult Care Food Program (CACFP). The CACFP is a program designed to assist schools and other institutions in providing meals to, among others, at-risk children. In total, Porges and Lowy, based on their false representations, fraudulently obtained approximately $3 million in reimbursement payments to CUTA.
“Former CUTA Executive Director Porges and Assistant Director Lowy allegedly obtained $3 million from a federal program designed to fund meals for needy children by claiming to have served meals they did not serve, thus undermining a program designed to assist the most vulnerable members of our community,” stated Acting United States Attorney Rohde. “We will continue to work closely with our law enforcement partners to root out fraudulent schemes that misuse public funds.”
“The Child and Adult Care Food Program strives to provide for at-risk children, and as school officials, Porges and Lowy should have strived to do the same,” stated Assistant Director-in-Charge Sweeney. “Instead, they allegedly falsified documents to gain approximately $3 million in reimbursement for meals that were never served. To defraud programs designed to help those in need is simply inexcusable, and we will work relentlessly with our law enforcement partners to thoroughly investigate these frauds.”
“As charged, these defendants stole food from children in need by diverting millions of dollars in public funds intended to pay for their dinners,” stated DOI Commissioner Peters. “Public funds must be spent for public purposes and, when they are not, DOI will expose the fraud and arrest the wrongdoers. DOI thanks our dedicated law enforcement partners on this case: the United States Attorney’s Office for the Eastern District of New York, the Federal Bureau of Investigation, and the Office of the Inspector General for the United States Department of Agriculture.”
“The Child and Adult Care Food Program (CACFP) was created to provide nutrition assistance to children and adults who are truly in need,” stated Special Agent-in-Charge Dinkins. “Those involved in fraud and abuse of USDA feeding programs will be investigated by our office to the fullest extent. In this joint investigation with the Federal Bureau of Investigation and the New York City Department of Investigation, we worked together to identify and hold accountable those who sought to profit from the CACFP through illegal schemes. The USDA, Office of Inspector General will continue to dedicate investigative resources, working with our law enforcement and prosecutorial partners, to protect the integrity of these programs and bring to justice those who commit fraud.”
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants face up to 20 years’ imprisonment on the conspiracy to commit wire fraud and mail fraud count, as well as on each of the mail fraud counts.
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: 43Brooklyn, NY
JOEL LOWY
Age: 29
Brooklyn, NY
E.D.N.Y. Docket No. 17-CR-431 (NGG)
Bloods Gang Members Indicted for Racketeering, Attempted Murder, Assault and Drug TraffickingRead the Press Release
A 14-count superseding indictment was unsealed today in the United States District Court for the Eastern District of New York, charging members and associates of the Bloods street gang based in Roosevelt, Long Island with racketeering, conspiracy to murder rival gang members, conspiracy to distribute controlled substances, three gang-related attempted murders, attempted robbery and related firearms counts. The indictment was returned under seal by a federal grand jury sitting in Central Islip, New York on August 8, 2017, and relates to the gang’s activities in and around Roosevelt beginning in 2008. The superseding indictment adds three new defendants, Jermaine Green, Johnny Green and Tysaan Robinson. Jermaine Green and Johnny Green, who are brothers, were arrested this morning in Roosevelt. Tysaan Robinson was already in state custody. The defendant Tyshawn Jackson is a fugitive.
The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Madeline Singas, Nassau County District Attorney, and Patrick J. Ryder, Acting Commissioner, Nassau County Police Department (NCPD).
According to court filings, between 2008 and 2016, the defendants, along with other members and associates of the Bloods street gang, carried on a violent gang war against the Crips within Roosevelt, New York. Armed with an arsenal of weapons, including AK-47s, rifles and handguns, the Bloods engaged in dozens of shootings, targeting members of the rival Crips on the residential streets of Roosevelt. The indictment charges the defendants with several of the shootings, including three attempted murders on residential streets in broad daylight. To fund their activities, the defendants engaged in robberies and widespread narcotics trafficking, including dealing crack cocaine, heroin and marijuana, throughout Nassau County.
In a related investigation, between 2014 and 2017, the Office successfully prosecuted 20 members of the Rollin’ 60s Crips, the chief rival of the Bloods in Roosevelt, for offenses including racketeering, murder, robbery, witness tampering, drug trafficking and related firearm offenses. The leader and founder of the Rollin’ 60s Crips, Raphael Osborne, received three life sentences plus 135 years following his conviction after a five-week trial in 2016.
“As alleged, the actions of these gang members jeopardized the safety of the Roosevelt community, putting dozens of lives at risk. We will continue to work diligently to dismantle criminal organizations like the Bloods to provide safe communities for the people on Long Island,” stated Acting United States Attorney Rohde. Ms. Rohde thanked the FBI Long Island Gang Task Force, NCPD Gang Investigations Squad and Nassau County District Attorney’s Office Special Operations Bureau for their assistance in the ongoing investigation. The FBI Long Island Gang Task Force also includes the Nassau County Sheriff’s Department, Suffolk County Police Department, Suffolk County Sheriff’s Department, Rockville Center Police Department, Suffolk County Probation Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives, Hempstead Police Department, New York State Police and Homeland Security Investigations.
“Gangs and their turf wars do more than just impact the gang members, their actions degrade and demoralize the communities where they operate,” stated FBI Assistant Director-in-Charge Sweeney. “No one deserves to live in a world where they fear the drug dealers on the corner, and anticipate the next barrage of bullets flying by their windows at night. The FBI Long Island Gang Task Force and our law enforcement partners have had a long standing commitment to eradicating these dangerous criminals and their associates since 2003, and we won’t stop even when they attempt to rebuild after we take out their leadership.”
“For nearly a decade these alleged Bloods members terrorized the residents of Roosevelt as they fought a violent gang war against their rivals,” DA Singas said. “With this indictment, and continued focus and cooperation in law enforcement, we will break up these gangs and make our streets safer. I thank the U.S Attorney's Office, the FBI and Nassau County Police Department for their hard work in this investigation.”
“The recent indictments of these Blood gang members sends a direct message that there will be zero tolerance of their activities that place our residents at risk and create their criminal enterprise,” stated NCPD Acting Commissioner Ryder. “I would like to congratulate all of the agencies and personnel involved with this multi-jurisdictional investigation for a job well done."
The defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Gary R. Brown at the federal courthouse in Central Islip. The charges in the indictment are merely allegations, and the defendants are 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 Nicole Boeckmann and Michael Maffei are in charge of the prosecution.
The Defendants:
ALLAZEEM CARTER
Age: 29
Hempstead, New York
JERMAINE GREEN
Age: 26
Roosevelt, New York
JOHNNY GREEN
Age: 23
Roosevelt, New York
TYSHAWN JACKSON
Age: 25
Roosevelt, New York
DONALDSON JOSEPH
Age: 27
Hempstead, New York
TYSAAN ROBINSON
Age: 26
Freeport, New York
DAQUAN WAGNER
Age: 29
Roosevelt, New York
E.D.N.Y. Docket No. 16-106 (S-1) (JFB)
Brooklyn Man Sentenced to 10 Years’ Imprisonment for 11 Robberies of Cell Phone Stores in Brooklyn and QueensRead the Press Release
Earlier today at the federal courthouse in Brooklyn, United States District Judge LaShann DeArcy Hall sentenced the defendant Arthur Sam to 10 years’ imprisonment for his role in 11 robberies of cell phone stores in Brooklyn and Queens. Sam, also known as “16,” had previously pled to Hobbs Act robbery conspiracy. The sentence also included a term of three years of supervised release and $304,179 in restitution.
The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Ashan M. Benedict, Special Agent-in-Charge, New York Field Division, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and James P. O’Neill, Commissioner, New York City Police Department (NYPD).
According to court filings, between April 15, 2015 and December 8, 2015, members of Sam’s robbery crew restrained and threatened store employees and customers by pretending to have a firearm or brandishing an imitation firearm. The co-conspirators then fled on foot or to a waiting vehicle, which on one occasion resulted in a high-speed chase and a car crash. Sam used, among others, teenage minors to commit these robberies while he watched nearby from inside his BMW sedan. During the commission of some of the robberies, Sam maintained telephone contact with the participants so he could monitor what was occurring inside the store. Sam and his co-conspirators stole cell telephones and other merchandise with a total value of more than $300,000 from the stores. Four other members of Sam’s crew who pled guilty in this matter remain to be sentenced.
“As charged, Arthur Sam and his co-conspirators committed numerous robberies of cell phone stores in Brooklyn and Queens, terrifying employees and customers alike,” stated Acting United States Attorney Rohde. “Through the cooperative efforts of federal and local law enforcement, we have brought Sam to justice and will be vigilant in pursuing others who would place our community in fear.”
“Arthur Sam ran an organized robbery crew responsible for the theft of approximately $300,000 in cell phones and other electronics from nearly a dozen stores over a four-month period in 2015,” stated ATF Special Agent-in-Charge Benedict. “The stolen items would be sold to an intermediary who would send them overseas. These thefts all occurred under the threat of force while crew members brandished imitation firearms, and with Sam carefully monitoring and orchestrating the brazen robberies as they occurred. All members of the conspiracy have pled guilty and Sam is the first to be sentenced. His sentence today sends a powerful message that violent crime and threats of force will not be tolerated. I would like to extend my gratitude to the ATF special agents, NYPD detectives, and prosecutors for their hard work on this investigation.”
“The defendant in this case recruited teenage accomplices and committed about a dozen robberies in Brooklyn and Queens in 2015,” stated NYPD Commissioner O’Neill. “Numerous victims were made to fear for their lives as the cellphone stores where they worked were held up by these perpetrators, who simulated firearms or displayed imitation pistols. I want to thank the members of the NYPD and its partners who worked to make the arrests and secure the guilty pleas in order to bring today’s sentencing.”
The government’s case is being handled by the Office’s General Crimes Section. Assistant United States Attorneys Nomi D. Berenson and David Gopstein are in charge of the prosecution.
The Defendant:
ARTHUR SAM (“16”)
Age: 37
Residence: Brooklyn, New York
E.D.N.Y. Docket No. 16-CR-21 (S-1) (LDH)
New York Tax Return Preparer Indicted for Filing Fraudulent Tax ReturnsRead the Press Release
A federal grand jury returned an indictment, which was unsealed today, charging the owner of a Uniondale, New York tax preparation business with filing fraudulent tax returns, wire fraud and aggravated identity theft, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
According to the indictment, Mariano Exantus ran Latrex Multi Service, a tax return preparation business. The indictment charges that from 2011 through 2017, Exantus prepared and filed fraudulent income tax returns with the Internal Revenue Service (IRS) that included fake business losses and education expenses and sought refunds to which his clients were not entitled. The indictment further charges that Exantus filed fraudulent tax returns in the name of an individual whose identity had been stolen.
If convicted, Exantus faces a statutory maximum sentence of three years in prison on each of the fraudulent return counts, 20 years in prison on the wire fraud counts and a mandatory minimum sentence of two years in prison on the aggravated identity theft counts. Exantus also faces a period of supervised release, restitution and monetary penalties.
An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent until proven guilty beyond a reasonable doubt.
Acting Deputy Assistant Attorney General Goldberg thanked special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorneys Carl F. Brooker, IV and Sarah C. Ranney of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Former Registered Broker Sentenced to 15 Months in Prison for Securities Fraud in A $131 Million Market Manipulation SchemeRead the Press Release
Herschel C. Knippa III, also known as “Tres,” a former registered broker and owner of a commodities trading firm who regularly appeared on television news networks to discuss investment strategies, was sentenced earlier today at the federal courthouse in Brooklyn, New York, to 15 months in prison, three years of supervised release, $3,570,000 in restitution, and $120,000 in forfeiture. Knippa had previously pled guilty to securities fraud conspiracy for his role in the fraudulent market manipulation of ForceField Energy Inc. (ForceField), a publicly traded company previously listed on the NASDAQ under the ticker symbol “FNRG.”
The sentencing was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
According to court filings and facts presented at the sentencing hearing, between 2009 and 2015, the defendant and others engaged in a scheme to defraud investors in ForceField, a purported worldwide distributor and provider of LED lighting products and solutions, by artificially controlling the price and volume of traded shares of ForceField. Knippa and others committed this crime by, among other means: (1) secretly using nominees to purchase and sell ForceField stock without disclosing this information to investors and potential investors; (2) orchestrating the trading of ForceField stock to create the misleading appearance of genuine trading volume and interest in the stock; and (3) concealing secret payments to stock promoters and broker dealers who promoted and sold ForceField stock to investors and potential investors while falsely claiming to be independent of the company. The fraudulent scheme caused a loss of approximately $131 million to the investing public.
Between July 2014 and March 2015, Knippa received kickbacks from a ForceField executive for promoting the purchase of ForceField stock to investors, including by recommending the purchase of ForceField stock at investor conferences and during television appearances on the Fox Business and Business News Network channels. Knippa did not disclose his secret compensation during those conferences and television appearances, and falsely claimed that he owned ForceField stock when he did not. For example, in one television appearance at which he urged viewers to purchase them, Knippa was asked if he personally owned ForceField shares. In response, he falsely stated, “You bet I do. I put my money where my mouth is.” Knippa and his co-conspirators took pains to conceal their participation in the fraudulent scheme by using prepaid, disposable cellular telephones and encrypted, content-expiring messaging applications to communicate with each other, and by paying kickbacks in cash during in-person meetings.
Today’s proceeding, which took place before United States District Court Judge Brian M. Cogan, is the fifth sentencing to take place in connection with the ForceField securities fraud. Three other defendants who pleaded guilty in this matter, and one defendant convicted after trial, remain to be sentenced.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Mark E. Bini and Lauren H. Elbert are in charge of the prosecution.The Defendant:
HERSCHEL C. KNIPPA III
Age: 47
Residence: Dallas, Texas
E.D.N.Y. Docket No. 16-CR-234 (S-1) (BMC)
Cybercriminal Convicted of Computer Hacking and Sentenced to Statutory MaximumRead the Press Release
Earlier today, Fabio Gasperini, an Italian citizen, was sentenced by United States District Judge Nicholas G. Garaufis following his conviction by a federal jury in Brooklyn of one count of computer intrusion. The defendant was sentenced to the statutory maximum sentence of one year of imprisonment, a $100,000 fine, and one year of supervised release following incarceration. The Court also directed the forfeiture of the defendant’s botnet, the infrastructure used to manage and run the botnet (including computers, command-and-control servers, and domains), and the backdoor that the defendant installed on victim computers worldwide.
The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
As proven at trial, Gasperini spread malicious software onto computer servers in the United States and around the world and thereby covertly hacked into them. Gasperini’s scheme specifically targeted a type of computer server that companies and individuals typically use for large-scale data storage and transfer. Gasperini obtained control over the servers and the sensitive data and files they contained. Gasperini also created an exclusive backdoor that enabled him to access the data and computing power of those servers in perpetuity. In so doing, Gasperini created a botnet. A botnet is a network of computers (such as servers) infected with malicious software without the true owners’ knowledge or permission; a hacker can remotely control and use a botnet for malicious purposes.
Gasperini used the servers in his botnet to scan the internet, identify additional vulnerable servers for infection, and expand his botnet. ’s botnet encompassed over 100,000 computers around the world. Gasperini used specialized command-and-control servers in the United States to manage the botnet and to provide instructions and resources to the servers in the botnet.
In announcing the sentencing, Acting United States Attorney Rohde expressed her grateful appreciation to the Netherlands Ministry of Security and Justice, for their assistance in effecting the defendant’s arrest and extradition; the Italian Postal and Telecommunications Service, for their assistance in the investigation; the United States Marshals Service, for their assistance in transporting the defendant to the United States; and the U.S. Department of State Regional Security Officer in the Netherlands, for their assistance in facilitating the defendant’s extradition.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Saritha Komatireddy and Melody Wells are in charge of the prosecution, and Assistant United States Attorney Brian D. Morris is in charge of forfeiture in the case.
The Defendant:
FABIO GASPERINI
Age: 35
Residence: Rome, Italy
E.D.N.Y. Docket No. 16-CR-441
Local Union Official Pleads Guilty to Extorting Business Owner into Hiring Union MembersRead the Press Release
Earlier today, Roland Bedwell, the business manager of United Plant and Production Workers Local 175, pleaded guilty at the federal courthouse in Brooklyn, New York, to extorting a construction business owner. Bedwell implicitly threatened both physical and economic harm against the business owner who, as a result, hired union members and paid wages and employee benefits.
The plea was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Michael C. Mikulka, Special Agent-in-Charge, New York Region, U.S. Department of Labor, Office of Inspector General.
“With references to organized crime and tough guys, Bedwell used his position as a labor union official to threaten business owners into hiring union members and paying them wages and benefits,” stated Acting United States Attorney Rohde. “Today’s guilty plea holds Bedwell accountable for his actions and demonstrates the resolve of this Office, and our law enforcement partners, to ensure that businesses are able to make reasonable business decisions without fear of harm.” Ms. Rohde expressed her grateful appreciation to the New York City Police Department for its assistance during the investigation.
“The subject in this case bragged he should be in prison for his crimes, now that’s exactly where he’s headed,” stated FBI Assistant Director-in-Charge Sweeney. “The subject named-dropped a well-known crime family, and threatened organized crime-like violence to get business owners in line, only to pad his bank account. Meanwhile, his direct victims weren’t the only ones hurt by his illegal tactics, he created important project delays that impacted many New Yorkers. The FBI and our law enforcement partners won’t allow threats and violence to be the norm of doing business in the city.”
“Bedwell’s guilty plea affirms the U.S. Department of Labor Office of Inspector General’s commitment to protecting innocent businesses and their owners from union officials who use the threat of physical harm to pursue illegitimate union purposes. We will continue to work with our law enforcement partners to ensure businesses can operate in a fair and just environment and unions function within the confines of federal law,” stated Special Agent-in-Charge Mikulka.
The extortion to which Bedwell pleaded guilty was partly captured during a recorded meeting between Bedwell and the victim business owner in a restaurant in Queens. According to court filings, Bedwell warned the victim that if the victim did not to employ Local 175 members, Bedwell would use an organization of fifteen “ex-military” men, who were undeterred by the prospect of spending time in jail, to interfere with the victim’s business, and that the victim stood to lose a “tremendous amount of money.” Bedwell told the victim, “Either you’re gonna sign the contract . . . or these boys are gonna do it again.” Bedwell explained to the victim the financial pain he had inflicted on other contractors: blocking one delivery truck that was transporting trees (causing the trees to die) and stopping another one, loaded with asphalt that, according to Bedwell, caused the shutdown of Long Island Expressway.
In addition, as part of his plea, Bedwell admitted that he attempted to extort another construction business owner. As described in court filings, Bedwell and his co-conspirators told the victim that he would not get asphalt delivered to a LaGuardia Airport job site if the victim did not agree to employ Local 175 members. When the victim refused to sign an agreement with Local 175, Bedwell and his co-conspirators proceeded to stop the asphalt-delivery trucks, harass the drivers and slash their tires.
As further described in court filings, this extortion and attempted extortion were part of a pattern that included Bedwell referring to his ties to a member and then-associate of the Gambino organized crime family of La Cosa Nostra, and to Bedwell’s own reputation as a “muscle man,” to intimidate businesses into signing labor contracts with Local 175. Court filings further indicate that Bedwell’s co-conspirators have physically assaulted workers associated with contractors that had not agreed to sign with Local 175. Based on his history of extortions, Bedwell observed in a recorded conversation that he should have gone to “jail immediately,” and stated, “I don’t know how I don’t have any felonies against me.”
Bedwell’s plea was entered before United States District Judge Nicholas G. Garaufis, who has scheduled sentencing for November 2, 2017. Bedwell faces up to 20 years’ imprisonment at sentencing.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Nadia Shihata, Andrey Spektor and Nicholas J. Moscow are in charge of the prosecution.
The Defendant:
ROLAND BEDWELL
Age: 57
Residence: Freeport, New York
E.D.N.Y. Docket No. 16-CR-608 (S-2) (NGG)Long Island Investment Adviser Pleads Guilty to Stealing $3 Million from Investors in Wire Fraud SchemeRead the Press Release
Eric Erb, a former investment adviser, pleaded guilty earlier today to wire fraud in connection with a scheme to defraud investors utilizing his Babylon, New York-based investment advising business. Erb entered his guilty plea before United States Magistrate Judge Anne Y. Shields at the federal courthouse in Central Islip, New York. When sentenced, Erb faces up to 20 years in prison. In connection with his guilty plea, Erb has agreed to pay approximately $5.3 million in restitution to victims of his crime. Erb has also agreed to forfeit $215,000 in proceeds that he earned from the sale of his former residence in Bay Shore, New York, as well as the net proceeds from the sale of his 2004 Porsche 911 (with vanity license plate “HEDGER”) and the net proceeds from the sale of his 25-foot Regulator boat.
The guilty plea was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“With his investors relying on him to act with professionalism and integrity, Erb instead took millions of dollars from them,” stated Acting United States Attorney Rohde. “We will continue to work closely with our law enforcement partners to vigorously prosecute unscrupulous investment professionals and divest them of their ill-gotten gains.”
“Erb deliberately deceived investors by causing them to believe they were making money, when in reality, he was making millions off their losses,” stated FBI Assistant Director-in-Charge Sweeney. “Aiming to eliminate the prevalence of fraud, we will continue to diligently investigate unlawful schemes of this manner.”
According to court filings and facts presented at the plea hearing, between approximately January 2016 and February 2017, Erb solicited approximately $5.4 million from investors under the promise that he would follow investors’ instructions when making various investments, including in Individual Retirement Accounts, annuities, real estate investment trusts, hedge funds and an initial public offering, but instead he chose the investment vehicles. Erb also emailed investors false earnings statements showing that their investments were earning profits when, in fact, they were generating losses; made wire transfers between banks in Long Island and Florida to fund investments that investors did not authorize him to make; and falsified payee information on checks that investors wrote to fund investments so that Erb could use investors’ monies to benefit himself and his companies. During his plea allocution, Erb admitted to stealing approximately $3 million from 38 investors.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Bradley T. King and Madeline M. O’Connor are in charge of the prosecution.
The Defendant:
ERIC ERB
Age: 39
Residence: Levittown, New York
E.D.N.Y. Docket No. 17-CR-413 (ADS)
Former Hedge Fund Manager Convicted in Multi-Million Dollar Fraud SchemeRead the Press Release
Martin Shkreli was convicted today by a federal jury in Brooklyn of three counts of a superseding indictment charging him with securities fraud and securities fraud conspiracy. The verdict followed a six-week trial before United States District Judge Kiyo A. Matsumoto. 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.
The guilty verdicts were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“As the jury found today, Martin Shkreli violated the law by deceiving investors into entrusting their money with his hedge funds and lying to them about the funds’ performance, as well as by engaging in a multi-million dollar fraud scheme involving publicly traded Retrophin. Together with our partners at the FBI, we remain steadfast in our commitment to protecting the investing public and our markets from such fraud and abuse and will continue to hold accountable those who defraud the market.” Ms. Rohde 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.
“Shkreli misled investors in his self-indulgent scheme. Today’s conviction shows that those who corrupt the market will ultimately be brought to justice,” stated FBI Assistant Director-in-Charge Sweeney. “I want to thank our FBI special agents and the prosecutors from the Eastern District of New York; our partners from the Securities and Exchange Commission (SEC), New York Regional Office; and the Financial Industry Regulatory Authority, Criminal Prosecution Assistance Group (FINRA CPAG) for their dedication and focus, which resulted in justice. The FBI considers securities fraud a priority, and we will continue to work with our partners to pursue these types of cases to ensure our financial markets are protected from fraud.”
The evidence at trial established that Shkreli, who was convicted on Counts Three, Six and Eight 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 of the superseding indictment, between 2009 and 2014, Shkreli used false representations and omissions to induce investors to invest more than $3 million in MSMB Capital. 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 disastrous 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 partnership agreement.
As charged in Count Six, between 2011 and 2014, Shkreli used false representations and omissions to induce investors to make more than $5 million in investments in MSMB Healthcare. 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 partnership agreement.
As charged in Count Eight, between 2012 and 2014, Shkreli and others conspired to engage in a scheme whereby they recruited individuals, including Retrophin employees and contractors, to be nominee shareholders for the majority of Retrophin’s free trading shares. Shkreli and his co-conspirators did this to obtain beneficial ownership over these shares for Shkreli while avoiding requirements that would otherwise have required Shkreli to report his control over these shares, in an attempt to control the trading volume and share price of Retrophin. At times, Shkreli and others not only prevented nominee employees from selling these shares, but also directed that some of these shares be used to settle liabilities owed by the MSMB Funds and Shkreli.
When sentenced by Judge Matsumoto, Shkreli faces a maximum of 20 years in prison on each of the two counts of securities fraud and up to five years in prison on the securities fraud conspiracy count.
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.
The Defendant:
MARTIN SHKRELI
Age: 34
Residence: Manhattan, New York
E.D.N.Y. Docket No. 15-CR-637 (KAM)