Eastern District of New York
Press releases recorded for this federal judicial district.
Consultant to Iranian Mission to the United Nations Pleads Guilty to Filing False Income Tax Return and Conspiring to Violate Sanctions LawsRead the Press Release
BROOKLYN, NY – Earlier today in federal court in Brooklyn, Ahmad Sheikhzadeh, a United States citizen and resident of New York City, pled guilty to filing a false income tax return that substantially understated the amount of cash salary he received from Iran’s Permanent Mission to the United Nations (IMUN) and conspiring to facilitate the transfer of funds to Iran without the required license from the Treasury Department in violation of the International Emergency Economic Powers Act (IEEPA). Today’s plea proceeding took place before United States District Judge Pamela K. Chen.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Acting Assistant Attorney General for National Security Mary B. McCord, William F. Sweeney, Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (FBI), and Shantelle Kitchen, Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI).
According to court filings and facts presented during the plea proceeding, beginning in January 2008, Sheikhzadeh was employed as a consultant to the IMUN and received a regular salary, in cash, approximately once per month through an intermediary who was an official at the IMUN. Sheikhzadeh was not a declared IMUN official. From 2008 through 2012, Sheikhzadeh filed personal income tax returns that substantially understated the amount of income he received from his work for the IMUN. In addition, distinct from his work for the IMUN, Sheikhzadeh provided money remitting (“hawala”) services to co-conspirators in the United States to facilitate investments in Iran and to direct disbursements from Iranian bank accounts. Sheikhzadeh engaged in these money transfers without a license from the Treasury Department’s Office of Foreign Assets Control (OFAC) in violation of IEEPA.
When sentenced, Sheikhzadeh faces up to 23 years in prison. He has agreed to pay over $147,000 in restitution and forfeiture.
The government’s case is being prosecuted by Assistant United States Attorneys Tali Farhadian and Peter Baldwin from the Office’s Public Integrity and National Security and Cybercrime Sections, and Brian Morris from the Asset Forfeiture Section. Assistance was also provided by Trial Attorney David Recker of the Justice Department’s Counterintelligence and Export Control Section.
The Defendant:
AHMAD SHEIKHZADEH
Age: 60
New York, New YorkE.D.N.Y. Docket No. 15-182 (PKC)
Brooklyn Man Arrested for Attempting to Provide Material Support to ISILRead the Press Release
A criminal complaint was unsealed today in federal court in the Eastern District of New York charging Mohamed Rafik Naji with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization. Naji was arrested earlier today at his home in Brooklyn, New York, and his initial appearance is scheduled for this afternoon before U.S. Magistrate Judge Robert M. Levy at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by U.S. Attorney Robert L. Capers of the Eastern District of New York, Acting Assistant Attorney General for National Security Mary B. McCord, Assistant Director in Charge William F. Sweeney of the New York Field Office of the Federal Bureau of Investigation (FBI), and James P. O’Neill, Commissioner, New York City Police Department (NYPD).
As set forth in court documents, Naji is a 37-year-old legal permanent resident of the United States. Beginning in December 2014, through social media posts, Naji expressed his support of ISIL by, among other posts, sharing a video of an ISIL leader advocating violence against civilian targets. According to the complaint, in March 2015, Naji travelled from New York to Yemen in an effort to join ISIL’s ranks. While in Yemen, Naji persistently tried to travel to areas controlled by ISIL. In emails to an associate in the United States, Naji explained that he was on his fifth try to reach ISIL controlled territory. He also sent his associate media files with sounds of gunfire and claimed to have been almost killed by the “army.” Following these email exchanges, Naji instructed his associate to “erase all ur messages,” “even from your trash.”
While in Yemen, Naji engaged in online conversations with a confidential source. During those conversations, Naji instructed the confidential source that in order to join “dawlat islam” he should travel to Hadramout, an area in southern Yemen. In one of the online conversations with the confidential source Naji proclaimed his allegiance to ISIL stating, “I belong to Islamic state only,” according to the complaint.
Naji returned to the United States in September 2015. Since his return, he has continued to express his support for ISIL and violent jihad. Following the deadly attack in Nice, France in July 2016, Naji expressed support for a similar attack in Times Square.
“As alleged, the defendant was persistent in his efforts to join ISIL and support its terrorist objectives,” stated U.S. Attorney Capers. “We will continue to identify and prosecute individuals like Naji who seek to empower our nation’s enemies and endanger our citizens and partners around the world.” Mr. Capers extended his grateful appreciation to the FBI’s Joint Terrorism Task Force, which comprises a number of federal, state and local agencies from the region.
“As we alleged in our complaint today, Naji has shown continued support to ISIL, beginning in 2014 with social media posts and ultimately traveling to Yemen in March 2015 where he claimed his allegiance to ISIL stating, ‘I belong to Islamic state only.’ He continued to express support for ISIL and violent jihad upon his return in the US months later. Terrorism threats, like Naji, are only mitigated through the joint efforts of law enforcement to protect our communities,” said FBI Assistant Director in Charge Sweeney.
“As alleged, the defendant expressed a devotion to join ISIL through both conversation and social media, traveling to Yemen in an effort to join their ranks,” said Police Commissioner O’Neill. “Detectives and agents on the Joint Terrorism Task Force uncovered the alleged terrorist objectives of the defendant. I want to commend their work in continually protecting New York City, and our nation, from those who seek to harm us.”
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant U.S. Attorneys Melody Wells and Ian Richardson of the National Security & Cybercrime Section of the U.S Attorney’s Office, with assistance from Brian Morgan of the National Security Division’s Counterterrorism Section.
The Defendant:
MOHAMED RAFIK NAJI
Age: 37
Brooklyn, New YorkE.D.N.Y. Docket No. 16-M-1049
JPMorgan’s Investment Bank in Hong Kong Agrees to Pay $72 Million Penalty for Corrupt Hiring Scheme in ChinaRead the Press Release
JPMorgan Securities (Asia Pacific) Limited (JPMorgan APAC), a Hong Kong-based subsidiary of multinational bank JPMorgan Chase & Co. (JPMC), agreed to pay a $72 million penalty for its role in a scheme to corruptly gain advantages in winning banking deals by awarding prestigious jobs to relatives and friends of Chinese government officials.
Assistant Attorney General Leslie R. Caldwell of the Criminal Division, U.S. Attorney Robert L. Capers of the Eastern District of New York and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office made the announcement.
“The so-called Sons and Daughters Program was nothing more than bribery by another name,” said Assistant Attorney General Caldwell. “Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple. This case demonstrates the Criminal Division’s commitment to uncovering corruption no matter the form of the scheme.”
“U.S. businesses cannot lawfully seek to gain a business advantage by corruptly influencing foreign government officials,” said U.S. Attorney Capers. “The common refrain that this is simply how business is done overseas is no defense. In this case, JPMorgan employees designed a program to hire otherwise unqualified candidates for prestigious investment banking jobs solely because these candidates were referred to the bank by officials in positions to award business to the bank. In certain instances, referred candidates were hired with the understanding that the hiring was linked to the award of specific business. This is no longer business as usual; it is corruption.”
“Creating a barter system in which jobs are awarded to applicants in exchange for lucrative business deals is a corrupt scheme in and of itself,” said Assistant Director in Charge Sweeney. “But when foreign officials are among those involved in the bribe, the international free market system and our national security are among the major threats we face. Those engaging in these illegal acts abroad may think they're out of sight and out of mind, but they're wrong. The FBI has recently established three dedicated international corruption squads to combat this type of quid pro quo, and we'll use all resources at our disposal to uncover and put an end to these crimes.”
According to JPMorgan APAC’s admissions, beginning in 2006, senior Hong Kong-based investment bankers set up and used a “client referral program,” also referred to as the “Sons and Daughters Program,” to hire candidates referred by clients and government officials. The Sons and Daughters Program was used as a means to influence those same officials to award investment deals to JPMorgan APAC. By late 2009, JPMorgan APAC executives and senior bankers revamped the client referral program to improve its efficacy by prioritizing those hires linked to upcoming client transactions. In order to be hired, a referred candidate had to have a “directly attributable linkage to business opportunity.”
According to admissions made in connection with the resolution, these quid pro quo arrangements were discussed internally among JPMorgan APAC bankers. For example, in late 2009, a Chinese government official communicated to a senior JPMorgan APAC banker that hiring a referred candidate would significantly influence the role JPMorgan APAC would receive in an upcoming initial public offering (IPO) for a Chinese state-owned company. The banker communicated this message to several senior colleagues, who then spent several months trying to place the referred candidate in an investment banking position in New York. Despite learning from personnel in New York that this referred candidate was not qualified for an investment banking position, senior JPMorgan APAC bankers created a new position for the candidate in New York, and JPMorgan APAC thereafter obtained a leading role in the IPO. Further, JPMorgan APAC employees misused compliance questionnaires to justify and paper over corrupt business arrangements. Employees also used a template with pre-filled answers, including that there was “no expected benefit” from the hire, and compliance personnel drafted and modified questionnaires that failed to state the true purpose of the hire.
JPMorgan APAC further admitted that candidates hired during the scheme were typically given the same titles and paid the same amount as entry-level investment bankers, despite the fact that many of these hires performed ancillary work such as proofreading and provided little real value to any deliverable product.
The corrupt scheme netted JPMorgan APAC at least $35 million in profits from business mandates with Chinese state-owned companies.
JPMorgan APAC entered into a non-prosecution agreement and agreed to pay a criminal penalty of $72 million to resolve the matter. As part of the agreement, JPMorgan APAC has agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals, to enhance its compliance program, and to report to the department on the implementation of its enhanced compliance program.
The department reached this resolution based on a number of factors, including that JPMorgan APAC did not voluntarily and timely disclose the conduct at issue. However, JPMorgan APAC did receive full credit for its and JPMC’s cooperation with the criminal investigation, including conducting a thorough internal investigation, making foreign-based employees available for interviews in the United States and producing documents to the government from foreign countries in ways that did not implicate foreign data privacy laws. JPMorgan APAC also took significant employment action against six employees who participated in the misconduct resulting in their departure from the bank, and it disciplined an additional 23 employees who, although not involved in the misconduct, failed to effectively detect the misconduct or supervise those engaged in it. JPMorgan APAC imposed more than $18.3 million in financial sanctions on former or current employees in connection with the remediation efforts. Based on these actions and other considerations, the company received a non-prosecution agreement and an aggregate discount of 25 percent off of the bottom of the U.S. Sentencing Guidelines fine range.
In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against JPMC, whereby JPMC agreed to pay $130.5 million in disgorgement to the SEC, including prejudgment interest. The Federal Reserve System’s Board of Governors also issued a consent cease-and-desist order and assessed a $61.9 million civil penalty. Thus, the combined U.S. criminal and regulatory penalties paid by JPMC and its Hong Kong subsidiary are approximately $264.4 million.
The FBI’s New York Field Office investigated the case. The department appreciates the significant cooperation and assistance provided by the SEC and the Federal Reserve Bank of New York in this matter. Assistant Deputy Chief Leo Tsao and Trial Attorneys James P. McDonald and Derek J. Ettinger of the Criminal Division’s Fraud Section and Assistant U.S. Attorney James P. Loonam of the Eastern District of New York’s Business and Securities Fraud Section prosecuted the case.
The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
JPMorgan’s Investment Bank in Hong Kong Agrees to Pay $72 Million Penalty for Corrupt Hiring Scheme in ChinaRead the Press Release
BROOKLYN, N.Y. – JPMorgan Securities (Asia Pacific) Limited (JPMorgan APAC), a Hong-Kong based subsidiary of multinational bank JPMorgan Chase & Co. (JPMC), agreed to pay a $72 million penalty for its role in a scheme to corruptly gain advantages in winning banking deals by awarding prestigious jobs to relatives and friends of Chinese government officials.
United States Attorney Robert L. Capers of the Eastern District of New York, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, and Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office made the announcement.
“U.S. businesses cannot lawfully seek to gain a business advantage by corruptly influencing foreign government officials. The common refrain that this is simply how business is done overseas is no defense,” said United States Attorney Capers. “In this case, JPMorgan employees designed a program to hire otherwise unqualified candidates for prestigious investment banking jobs solely because these candidates were referred to the bank by officials in positions to award business to the bank. In certain instances, referred candidates were hired with the understanding that the hiring was linked to the award of specific business. This is no longer business as usual; it is corruption.”
“The so-called Sons and Daughters Program was nothing more than bribery by another name,” said Assistant Attorney General Caldwell. “Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple. This case demonstrates the Criminal Division’s commitment to uncovering corruption no matter the form of the scheme.”
“Creating a barter system in which jobs are awarded to applicants in exchange for lucrative business deals is a corrupt scheme in and of itself,” said Assistant Director in Charge Sweeney. “But when foreign officials are among those involved in the bribe, the international free market system and our national security are among the major threats we face. Those engaging in these illegal acts abroad may think they’re out of sight and out of mind, but they’re wrong. The FBI has recently established three dedicated international corruption squads to combat this type of quid pro quo, and we’ll use all resources at our disposal to uncover and put an end to these crimes.”
According to JPMorgan APAC’s admissions, beginning in 2006, senior Hong Kong-based investment bankers set up and used a “client referral program,” also referred to as the “Sons and Daughters Program,” to hire candidates referred by clients and government officials. The Sons and Daughters Program was used as a means to influence those same officials to award investment deals to JPMorgan APAC. By late 2009, JPMorgan APAC executives and senior bankers revamped the client referral program to improve its efficacy by prioritizing those hires linked to upcoming client transactions. In order to be hired, a referred candidate had to have a “directly attributable linkage to business opportunity.”
According to admissions made in connection with the resolution, these quid pro quo arrangements were discussed internally among JPMorgan APAC bankers. For example, in late 2009, a Chinese government official communicated to a senior JPMorgan APAC banker that hiring a referred candidate would significantly influence the role JPMorgan APAC would receive in an upcoming initial public offering (IPO) for a Chinese state-owned company. The banker communicated this message to several senior colleagues, who then spent several months trying to place the referred candidate in an investment banking position in New York. Despite learning from personnel in New York that this referred candidate was not qualified for an investment banking position, senior JPMorgan APAC bankers created a new position for the candidate in New York, and JPMorgan APAC thereafter obtained a leading role in the IPO. Further, JPMorgan APAC employees misused compliance questionnaires to justify and paper over corrupt business arrangements. Employees also used a template with pre-filled answers, including that there was “no expected benefit” from the hire, and compliance personnel drafted and modified questionnaires that failed to state the true purpose of the hire.
JPMorgan APAC further admitted that candidates hired during the scheme were typically given the same titles and paid the same amount as entry-level investment bankers, despite the fact that many of these hires performed ancillary work such as proofreading and provided little real value to any deliverable product.
The corrupt scheme netted JPMorgan APAC at least $35 million in profits from business mandates with Chinese state-owned companies.
JPMorgan APAC entered into a non-prosecution agreement and agreed to pay a criminal penalty of $72,000,000 to resolve the matter. As part of the agreement, JPMorgan APAC has agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals, to enhance its compliance program, and to report to the department on the implementation of its enhanced compliance program.
The department reached this resolution based on a number of factors, including that JPMorgan APAC did not voluntarily and timely disclose the conduct at issue. However, JPMorgan APAC did receive full credit for its and JPMC’s cooperation with the criminal investigation, including conducting a thorough internal investigation, making foreign-based employees available for interviews in the United States and producing documents to the government from foreign countries in ways that did not implicate foreign data privacy laws.
JPMorgan APAC also took significant employment action against six employees who participated in the misconduct resulting in their departure from the bank, and it disciplined an additional 23 employees who, although not involved in the misconduct, failed to effectively detect the misconduct or supervise those engaged in it. JPMorgan APAC imposed more than $18.3 million in financial sanctions on former or current employees in connection with the remediation efforts. Based on these actions and other considerations, the company received a non-prosecution agreement and an aggregate discount of 25 percent off of the bottom of the U.S. Sentencing Guidelines fine range.
In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against JPMC, whereby JPMC agreed to pay $130.5 million in disgorgement to the SEC, including prejudgment interest. The Federal Reserve System’s Board of Governors also issued a consent-cease-and-desist order and assessed a $61.9 million civil penalty. Thus, the combined U.S. criminal and regulatory penalties paid by JPMC and its Hong-Kong subsidiary are approximately $264.4 million.
* * *
The case is being prosecuted by Assistant U.S. Attorney James P. Loonam of the Eastern District of New York’s Business and Securities Fraud Section and Assistant Deputy Chief Leo Tsao and Trial Attorneys James P. McDonald and Derek J. Ettinger of the Criminal Division’s Fraud Section. The FBI’s New York Field Office investigated the case.
Long Island Radiology Company, Zwanger-Pesiri Inc., Pleads Guilty to Federal Health Care Fraud Charges and Agrees to Pay $2.4 Million in Criminal ForfeitureRead the Press Release
Earlier today, at the federal courthouse in Central Islip, New York, Zwanger-Pesiri Inc., a Long Island radiology company, pleaded guilty to two counts of health care fraud for illegally performing and billing for procedures that had not been ordered by treating physicians. After accepting the guilty plea, United States District Court Judge Joanna Seybert approved a settlement with the United States and the State of New York in which Zwanger-Pesiri agreed to forfeit $2.4 million in the criminal case and pay $8,153,727 million to resolve civil liability arising from its fraudulent practices.
The announcement was made by Robert L. Capers, U.S. Attorney for the Eastern District of New York, Scott J. Lampert, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, and Eric Schneiderman, New York State Attorney General.
As part of the plea agreement and criminal settlement, Zwanger-Pesiri pled guilty to a criminal information charging the company with illegally engaging in schemes to fraudulently obtain reimbursements from Medicare and Medicaid by “bundling” the tests it performed, such that when a patient’s treating physician ordered one test to be performed, Zwanger-Pesiri would automatically perform a related but unordered test. For example, between July 2009 and February 2014, when patients were referred to Zwanger-Pesiri for either a dual energy X-ray absorptiometry (DXA) bone scan or a vertebral fracture assessment (LVA), Zwanger-Pesiri would perform both tests. Similarly, between January 2008 and February 2014, when female patients were referred to Zwanger-Pesiri for either a pelvic or transvaginal ultrasound, Zwanger-Pesiri would perform both tests.
As part of the civil settlement with the United States and State of New York, Zwanger Pesiri agreed to pay $6,921,490.80 to the United States and $1,232,236.20 to New York State to resolve allegations set forth in a qui tam complaint filed by Donna Geraci and Linda Gibb. Under federal and state False Claims Act statutes, a private individual who has uncovered fraud against the government may file a suit in federal court on behalf of the United States and the State of New York. If the United States and the State are successful in resolving those claims, the individual who filed the complaint may receive a share of the recovery. In addition to resolving civil liability arising from the conduct described in the criminal information, the civil settlement resolves allegations that Zwanger-Pesiri fraudulently billed Medicare and Medicaid programs for procedures performed or supervised by physicians who were not properly credentialed with Medicare and Medicaid programs, or which were performed at an unauthorized practice location.
Finally, as part of the global settlement, Zwanger-Pesiri agreed to enter into a Corporate Integrity Agreement with HHS-OIG that will govern its future conduct and ensure careful oversight of its billing practices.
“Zwanger-Pesiri illegally pursued corporate profits at the expense of federal and state health care providers and taxpayers. Today’s guilty plea and approximate $10.5 million global settlement demonstrates our vigilance in bringing to justice those who put profits first and health care second,” said United States Attorney Capers. Mr. Capers expressed his appreciation to HHS-OIG, the FBI, and the State of New York Attorney General’s Office.
“Zwanger-Pesiri, like all health care providers, must be held to a high standard of ethical behavior,” said Special Agent in Charge Lambert of the U.S. Department of Health and Human Services, Office of Inspector General’s New York Region. “Corporate greed must never be a part of medical decision making. HHS-OIG and our law enforcement partners are committed to protecting patient care, and the federally funded health care programs intended for the nation’s most vulnerable citizens.”
“This case reminds us of a growing epidemic that exploits private and public insurers and the people they insure. Health care fraud is often mistaken for a victimless crime, but it victimizes insurers directly and the insured and others indirectly. Those who employ these schemes will most certainly be brought to justice,” said FBI Assistant Director-in-Charge Sweeney.
“These defendants knowingly overbilled Medicaid by millions, draining the program of important resources meant to help some of our most vulnerable individuals,” said Attorney General Schneiderman. “I thank our partners in law enforcement for helping us protect New York taxpayer dollars against fraud and waste. We will continue to vigilantly guard the integrity of Medicaid, and will punish those who steal from our state.”
The federal criminal case was prosecuted by Assistant United States Attorney Lara Treinis Gatz, and its civil claims were litigated by Assistant United States Attorney Robert W. Schumacher. The State of New York’s civil claims were litigated by Carolyn T. Ellis, Chief, Civil Enforcement Division, Medicaid Fraud Control Unit, Office of the Attorney General.
MS-13 Gang Member Sentenced to 40 Years in Prison for Execution-Style Double-Murder in BrentwoodRead the Press Release
Earlier today, at the federal courthouse in Central Islip, New York, Arnolvin Umanzor Velasquez, a member of the Brentwood Locos Salvatruchas (BLS) clique of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, was sentenced to 40 years in prison in connection with his involvement in the December 18, 2011, execution-style murders of two brothers, Ricardo and Enston Ceron. After committing the murders, in order to avoid apprehension, Velasquez, who is an El Salvador citizen, fled to his home country before returning to the United States and relocating to Georgia. On May 19, 2015, Velasquez was located and arrested in Flowery Branch, Georgia, by a Federal Bureau of Investigation (FBI) SWAT team and transferred to the Eastern District of New York in custody. Thereafter, on March 11, 2016, Velasquez pled guilty to the Ceron brothers’ murders.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, FBI, New York Field Office, and Timothy Sini, Commissioner, Suffolk County Police Department.
“The MS-13 is a scourge on too many communities on Long Island, across the United States, and around the world. The senseless acts of violence committed by its members cannot and will not be tolerated and will be met with resolute and unwavering enforcement by this Office and the members of the FBI’s Long Island Gang Task Force,” stated United States Attorney Capers. “Today’s sentence should serve a reminder to MS-13 members: If you engage in violence in this district, you will be prosecuted to the fullest extent of the law and justly punished.”
“This case illustrates how MS-13 maintains an ironfisted control over their turf, no life is protected, not even their own members. Their goal is to create chaos wherever they plant their flag. Our Long Island Safe Streets Task Force is working day and night, hand in hand with our partners, to get these gang members out of our communities,” stated FBI Assistant Director-in-Charge Sweeney.
“The Suffolk County Police Department is fully committed to decimating the MS-13 in the Brentwood area. We will continue our multi-pronged strategy which entails collecting intelligence and creating strategic subject lists of known gang members, intense street enforcement targeted at those individuals, and collaboration with our federal law enforcement partners, including the FBI and the United States Attorney's Office, to strategically prosecute gang members under the federal RICO statute,” stated Commissioner Sini. “This sentencing is yet another step in the right direction, but we will not stop until the job is done.”
As set forth in prior court filings, a detention letter, and the government’s sentencing memorandum, the BLS clique killed Enston Ceron because he was not attending meetings or “putting in work” for the MS-13, and the clique members were concerned that he might cooperate with law enforcement authorities if he were arrested. The BLS clique also murdered his brother, Ricardo Ceron, who belonged to the Western clique of the MS-13, because they were concerned he would retaliate if he learned that the BLS killed his brother. On December 18, 2011, Velasquez and Sergio Cerna, who had agreed to carry out the murders and were armed with .22 caliber and 9mm semi-automatic handguns, asked Enston and Ricardo Ceron for a ride home from a party. When the car stopped in the vicinity of Lincoln Avenue and Stockton Streets in Brentwood, Velasquez and Cerna executed the Ceron brothers, shooting them in the head and torso at close range. Velasquez and Cerna exited the car and when another vehicle approached the murder scene and stopped to try to help, Cerna fired multiple shots at the Good Samaritan, striking him once in the chest. Miraculously, the Good Samaritan survived the shooting.
Today’s sentence is the latest event in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent, transnational criminal organization. The MS-13’s leadership is based in El Salvador 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 30 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, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Office, and Suffolk County Police Department.
The government’s case is being prosecuted by the Office’s Long Island Criminal Section. Assistant United States Attorneys John J. Durham, Raymond A. Tierney, and Paul G. Scotti are in charge of the prosecution.
The Defendant:
ARNOLVIN UMANZOR VELASQUEZ (“Momia” and “Lito”)
Age: 23
Brentwood, New York and Flowery Branch, GeorgiaE.D.N.Y. Docket No. 15-CR-087 (S-2)(JFB)
Former President of the Venezuelan Soccer Federation Pleads Guilty to Racketeering and Corruption ChargesRead the Press Release
Earlier this morning in federal court in Brooklyn, Rafael Esquivel, the former president of the Venezuelan soccer federation, pleaded guilty to racketeering conspiracy, three counts of wire fraud conspiracy, and three counts of money laundering conspiracy in connection with his participation in multiple bribery schemes related to the awarding of contracts for the media and marketing rights to international soccer tournaments. Esquivel, the president of the Venezuelan soccer federation from 1988 to 2015, was also a vice president of CONMEBOL, the South American soccer confederation, at the time of his arrest on May 27, 2015. As part of his plea, Esquivel also agreed to forfeit over $16 million. At sentencing, Esquivel faces a maximum sentence of 20 years for each count. Today’s plea proceeding took place before United States District Judge Pamela K. Chen.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director in Charge, FBI, New York Field Office; and Acting Special Agent in Charge Anthony J. Orlando, IRS Criminal Investigation, Los Angeles Field Office.
According to court filings and facts presented during the plea proceeding, Esquivel was involved in multiple criminal schemes involving the payment of and agreement to pay millions of dollars in bribes from sports marketing companies in connection with, among other things, the sale of media and marketing rights to soccer tournaments. These tournaments included the Copa Libertadores, South America’s premier club team tournament, and the Copa América, which features the men’s national teams of CONMEBOL’s 10 member associations as well as two national teams invited to participate from outside the CONMEBOL region. As part of his involvement in the criminal schemes, Esquivel used his influence as a soccer official to obtain millions of dollars in bribe payments from co-conspirators who sent the payments from overseas banks accounts into accounts Esquivel controlled at banks in the United States.
The guilty plea announced today is part of an investigation into corruption in international soccer being led by the U.S. Attorney’s Office for the Eastern District of New York, the FBI New York Field Office, and the IRS-CI Los Angeles Field Office. The prosecutors in Brooklyn are receiving considerable assistance from attorneys in various parts of the Justice Department’s Criminal Division in Washington, D.C., including the Office of International Affairs, the Organized Crime and Gang Section, the Asset Forfeiture and Money Laundering Section, and the Fraud Section, as well as from INTERPOL Washington.
Assistant U.S. Attorneys Evan M. Norris, Samuel P. Nitze, M. Kristin Mace, Tanya Hajjar, and Brian D. Morris of the Eastern District of New York are in charge of today’s prosecution.
The government’s investigation is ongoing.
The Defendant:
RAFAEL ESQUIVEL
Age: 70
Nationality: VenezuelaE.D.N.Y. Docket No. 15 CR 252 (S-1)
Former Chairman of the Village of Hempstead Housing Authority Indicted in Connection with Bid Rigging and Kickback SchemeRead the Press Release
A four-count superseding indictment was unsealed today in the United States District Court for the Eastern District of New York charging Cornell Bozier with one count of conspiracy to commit honest services wire fraud and three substantive counts of federal program bribery. From April 2011 to April 2013, Bozier served as the Chairman of the Board of Commissioners (the Board) at the Village of Hempstead Housing Authority (the VHHA). The defendant was arrested this morning and is scheduled to be arraigned this afternoon before United States District Judge Joan M. Azrack at the federal courthouse in Central Islip, New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office, and Christina Scaringi, Special Agent-in- Charge, Department of Housing and Urban Development, Office of the Inspector General (HUD-OIG), Northeast Region.
“The corruption and betrayal of the public trust detailed in the indictment was compounded by the fact that the defendant allegedly orchestrated this scheme to line his pockets with money stolen from a federal program that provides low-income families with safe and affordable housing,” stated United States Attorney Capers. “This Office and our law enforcement partners are steadfast in our resolve to uncover public corruption at every level of government and prosecute those responsible.” Mr. Capers expressed his grateful appreciation to the FBI and HUD-OIG, the agencies responsible for leading the investigation.
“Bozier created a conduit for illegal activity, one that permeated the layers of oversight put in place to protect the public from the corruption in which he’s alleged to have been engaged. Misuse of public funds in furtherance of one’s own objectives is stealing, no matter how you cut it. We won’t let this type of corruption undermine the safety and security of our communities, or erase the expectation of trust the public deserves to have in those who govern these decisions,” stated FBI Assistant Director-in-Charge Sweeney.
“Bid-rigging schemes such as those outlined in this indictment not only deprive businesses of fair competition, they damage the integrity of HUD programs established to help those in need. The charges today prove that the end result of such corruption will be both costly and extremely unpleasant to the offending party,” stated Scaringi, Special Agent-in-Charge, HUD OIG, Northeast Region.
The VHHA is responsible for providing and maintaining safe and affordable housing for low income individuals living in the Village of Hempstead. According to the VHHA’s procurement policy, when large and costly construction projects are required at one of the various properties maintained by the VHHA, a public request for bids from independent and private contractors must be published to ensure that the Board awards the contract to the most qualified lowest bidder.
Instead, as alleged in the superseding indictment, Bozier used his position as the Board Chair of the VHHA Board to recruit and direct co-conspirators to submit fraudulently inflated construction bids for repair projects on VHHA properties, bypass the required procurement process, and ensure that the construction contracts were awarded to companies owned or controlled by co-conspirators. Bozier directed the hiring of additional co-conspirators for positions within the VHHA to help facilitate the Board’s acceptance of fraudulent bids and exerted improper influence and pressure on those Board members to vote in favor of the grossly inflated bids submitted by Bozier’s co-conspirators. In exchange for these official actions, Bozier solicited and accepted numerous kickbacks during the course of the conspiracy totaling approximately $100,000.
In one case detailed in the superseding indictment, Bozier secured the awarding of a contract to replace the roof at a building operated by the VHHA for a construction company controlled by a co-conspirator. Pursuant to the fraudulent bid, the VHHA paid approximately $250,000 for the project that a co-conspirator paid a sub-contractor $23,000 to complete. More than $200,000 in proceeds from the fraudulently inflated contract were distributed between Bozier and several co-conspirators.
To date, the investigation has identified more than $500,000 that was allegedly stolen from the VHHA as a result of the charged conspiracy.
The five co-conspirators charged in the underlying indictment have previously pleaded guilty and are awaiting sentence.
If convicted, Bozier faces a term of imprisonment of up to 20 years for the conspiracy to commit honest services fraud charge and up to 10 years for each of the federal program bribery charges. The charges in the superseding 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 Long Island Criminal Section. Assistant United States Attorney Paul G. Scotti is in charge of the prosecution.
The Defendant:
CORNELL BOZIER
Age: 56
North Baldwin, NYE.D.N.Y. Docket No. 15-CR-303 (S-1) (JMA)
Nine Members of Eastern European Organized Crime Syndicate Charged with Racketeering, Extortion, Loansharking, Illegal Gambling, and Drug TraffickingRead the Press Release
Earlier today, an indictment was unsealed in the United States District Court for the Eastern District of New York charging nine defendants with crimes including racketeering, extortion, loansharking, illegal gambling, and drug trafficking. Eight of the defendants are under arrest, and one remains at large.
The defendants’ initial appearances and arraignments are scheduled this afternoon before United States Magistrate Judge Steven L. Tiscione at the federal courthouse in Brooklyn, New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA); James P. O’Neil, Commissioner, New York City Police Department (NYPD); Angel M. Melendez, Special Agent-in-Charge, Immigration and Customs Enforcement, Homeland Security Investigations (HSI); George Beach, Superintendent, New York State Police (NYSP); and Shantelle P. Kitchen, Special Agent-in-Charge, Criminal Investigation Division, Internal Revenue Service (IRS). The arrests resulted from a long-term investigation by the DEA’s New York Organized Crime Drug Enforcement Strike Force.[1]
As alleged in the indictment and other court documents filed by the government, the defendants were members of an Eastern European organized crime syndicate that operated extensively in the Brighton Beach and Coney Island neighborhoods of Brooklyn as well as overseas. Syndicate members in Brooklyn reported directly to members of organized crime — known as “thieves in law” or “Thieves”— based in various former states of the Soviet Union. The Thieves would, in turn, help the defendants extort money from individuals living abroad and authorize the use of physical force by the defendants in the United States.
All but two of the defendants are naturalized U.S. citizens who immigrated to the United States from Eastern European countries. Librado Rivera is a U.S. citizen by birth, and Aleksey Tsvetkov is a Ukrainian citizen. The defendants presently reside in New York City, predominantly in Coney Island and Brighton Beach.
Since as early as March 2016, the defendants allegedly generated profits through their criminal acts. To collect outstanding debts, worth in the aggregate millions of dollars, they regularly used threats of violence. The syndicate’s reach was international and included extorting payments in the United States and threatening victims and their family members living abroad. For example, wiretap recordings reveal that the defendants tracked down the father of an extortion victim in Russia in order to determine where his son was living. After locating the victim — whom defendants claimed owed syndicate members nearly $200,000 — defendant Gershman announced, the “Thieves have found him . . . in Israel,” and “they were at [his] place today.” Another extortion victim who struggled to repay his debt was ominously reminded that, “the person who is going to work with you [to repay the debt] … is a boxer with cauliflower ears.” The interest rate being charged this particular victim was 100% per year.
The government’s investigation revealed that the syndicate members ran high-stakes illegal poker games in various locations in Brooklyn, where a single game could involve wagers totaling as much as $150,000.
Another of the syndicate’s profitable schemes was the trafficking of a substantial quantity of marijuana, at least 100 kilograms as charged in the indictment.
Despite the fact that many of the defendants do not have legitimate employment, the government’s investigation revealed thousands of dollars flowing into their bank accounts, and the defendants were observed driving high-end luxury automobiles.
In addition to court authorized wiretaps, the government’s investigation included surveillance, confidential sources, and the controlled purchase of narcotics.
“The United States remains the land of opportunity,” stated United States Attorney Capers. “But that does not include an opportunity for international organized criminal groups to profit by victimizing individuals residing here or abroad. In keeping with my Office’s long-standing practice, we will aggressively investigate such organizations, whether they are domestic or, as in this case, have tentacles reaching to Eastern European Thieves, and we will ensure that their activities are detected and stopped at the earliest possible juncture.”
DEA Special Agent-in-Charge Hunt stated, “This drug investigation’s path uncovered an alleged Russian organized crime syndicate operating in Brighton Beach and Coney Island, NY. As history often repeats itself, racketeering, loansharking, extortion, and illegal gambling are just some of crimes the defendants are charged with committing here in Brooklyn, similar to crimes committed by the Thieves in Law in the former Soviet states. Today’s arrests exemplify the effectiveness of the DEA’s Strike Force which comprises federal, state, and local law enforcement from 15 agencies.”
“The NYPD worked diligently with its law enforcement partners to take down this alleged criminal enterprise, whose Brooklyn operation had significant ties overseas,” said Police Commissioner James P. O'Neill. “These defendants operated with impunity, threatening loansharking victims with physical violence, trafficking large quantities of narcotics and hosting high stakes poker games. I want to commend the investigators working this case for their dedication in taking down these persistent criminals.”
“The alleged members of this criminal organization operate out of Brighton Beach and Coney Island, among other neighborhoods right here in New York,” said Melendez, Special Agent-in-Charge of HSI, New York. “HSI will stay committed to these joint enforcement efforts to ensure that these criminal groups do not continue to abuse our communities with their drug trafficking, loansharking or illegal gambling.”
NYSP Superintendent Beach II stated “We simply will not tolerate this type of criminal activity in New York State. I want to thank our federal and local partners for their hard work and collaboration on this case, which has resulted in nine dangerous criminals being taken off our streets.”
IRS Criminal Investigation Special Agent-in-Charge Kitchen stated, “IRS Criminal Investigation is a dedicated partner on DEA’s New York Organized Crime Drug Enforcement Strike Force and as such, remains fully committed to its mission. This investigation provides another example of how agencies with different investigative missions can pool their respective skills toward reaching a common objective. Today, as a result of the Strike Force partnership, an ongoing criminal enterprise has been derailed.”
The charges contained in the indictments are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of all counts, defendants Leonid Gershman, Vyacheslav Malkeyev, and Librado Rivera face mandatory minimum sentences of five years and maximum sentences of 40 years, while defendants Aleksey Tsvetkov, Renat Yusufov, Igor Krugly, and Isok Aronov face maximum sentences of 20 years.
The government’s case is being prosecuted 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:
LEOIND GERSHMAN, also known as “Lenny,” “Lenny G.,” “Lyonchik” and “Lyonya”
Age: 33ALEKSEY TSVETKOV, also known as “Pelmin,” “Lesha” and “Lyosha”
Age: 38RENAT YUSUFOV, also known as “Ronnie” and “Ronik”
Age: 38IGOR KRUGLY
Age: 37VYACHESLAV MALKEYEV, also known as “Steve Bart”
Age: 32ISOK ARONOV
Age: 32YUSIF PARDILOV, also known as “Yosik”
Age: 52LIBRADO RIVERA, also known as “Macho” and “Max”
Age: 36E.D.N.Y. Docket No. 16-CR-553 (BMC)
[1] The Strike Force comprises agents and officers of the DEA, the NYPD, Immigration and Customs Enforcement, HSI, the NYSP, the IRS Criminal Investigation Division, the Federal Bureau of Investigation, the U.S. Secret Service, the U.S. Marshal Service, the New York National Guard, the New York Department of Taxation and Finance, the Clarkstown Police Department, the 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.
Former New York City Building Inspector and the Owner of A Demolition Company Indicted for ExtortionRead the Press Release
A one-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Massimo Dabusco, also known as “Max,” and Vito Menadi with conspiracy to commit extortion. The indictment was returned under seal by a federal grand jury sitting in Brooklyn on November 1, 2016, and relates to Dabusco’s alleged activities as an Inspector with the New York City Department of Buildings (DOB) and his silent partnership with Menadi in A&G Contracting Group Corp. (A&G), a demolition and excavation company. Dabusco resigned from his job as a DOB Inspector in August 2015.
The charges were announced by Robert L. Capers, 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 Mark G. Peters, Commissioner New York City Department of Investigation.
The indictment alleges that Dabusco served as a silent partner to Menadi in A&G in violation of the New York City law. Further, Dabusco used his official position to influence property owners and contractors, over whom Dabusco had regulatory authority, to hire A&G and Menadi to perform excavation and demolition jobs. As part of his efforts to secure business for A&G, Dabusco illegally warned contractors about impending DOB inspections. In exchange for his conduct, Dabusco received a share of A&G’s profits.
Additionally, Dabusco allegedly abused his position as a DOB Inspector by threatening punitive action against contractors and property owners in an effort to benefit Menadi and A&G. For instance, Dabusco threatened to use his authority as a DOB Inspector to shut down all of a contractor’s existing jobs if the contractor did not pay outstanding fines owed by Menadi and A&G.
“New York City’s Building Inspectors are entrusted with a vitally important public safety mission. Today’s indictment makes clear that public officials who place personal gain above this public trust and those who assist those officials in such corrupt practices, will be aggressively prosecuted. Maintaining safe buildings and safeguarding the health and wellbeing of New Yorkers demands no less,” stated United States Attorney.
“Public officials, whether elected, appointed, or employed, have a duty to maintain honest and faithful public service. Using your position to influence the decisions of others, and receiving something of value in return, is a direct violation of the law. As alleged, Dabusco may have tried to build up his business by engaging in corrupt activity, but now he’ll have to answer for his actions,” stated FBI Assistant Director-in-Charge Sweeney.
DOI Commissioner Peters said, “Once again, DOI, along with its law enforcement partners, has found a City building inspector corruptly abusing his power and authority, conspiring with his co-defendant to shakedown property owners by threatening them with DOB violations, and pressuring them to steer business to a preferred contracting company, according to the charges. This investigation demonstrates the importance of coordination between the United States Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation and the need for DOI to continue its enforcement efforts in the building and construction industry.”
The defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Steven L. Tiscione at the federal courthouse in Brooklyn. The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorney Martin Coffey.
The Defendants:
MASSIMO DABUSCO
Age: 54
Yorktown Heights, New YorkVito Menadi
Age: 43
Brooklyn, New York,E.D.N.Y. Docket No.16 Cr 0559(ILG)
Bushwick Drug Dealer Sentenced to Life in Prison for Orchestrating Two Contract MurdersRead the Press Release
Earlier today, Brooklyn drug trafficker Shaun Taylor, also known as “S-Dot,” was sentenced to ten life terms plus 50 years in prison. Following a three-week jury trial, Taylor was convicted on September 8, 2014, of all charges including murder for hire, drug-related murder, narcotics trafficking conspiracy, and firearms offenses. The charges arose from the defendant’s participation in a decade-long narcotics trafficking operation in the Bushwick neighborhood of Brooklyn, which was responsible for distributing kilogram quantities of heroin, cocaine, and crack cocaine in Brooklyn, Queens, and Long Island. Taylor ordered two murders during the conspiracy, one of which resulted in the death of an unintended victim, whom Taylor’s hitman shot in a case of mistaken identity.
The sentence was announced by Robert L. Capers, 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, and James P. O’Neill, Commissioner, New York City Police Department.
The evidence at trial established that Taylor frequently recruited young men to settle scores on his behalf. When another drug dealer stole the cellular telephone Taylor used to conduct his narcotics business, he recruited Timothy Pinkney to murder him. On April 29, 2005, Taylor offered Pinkney $1,500 to carry out the hit, drove Pinkney to the scene, and mistakenly directed him to shoot Terrance Barnett, who was standing in front of a school in Bushwick. Barnett just happened to be visiting Brooklyn for the weekend and had no prior relationship with Taylor or Pinkney. Pinkney shot Barnett in the head and torso at close range, killing him. Pinkney subsequently pled guilty to his role in the murder and is currently serving a 23-year prison sentence.
Two years later, Taylor and a co-conspirator stole approximately five kilograms of cocaine that was shipped to Joseph Vargas. Fearing Vargas might retaliate, Taylor hired two young men to kill him. On June 20, 2007, Taylor drove with the men to point out Vargas, who was at a car wash on DeKalb Avenue in Bushwick. Taylor provided the murder weapon and left the scene. One of the men entered the carwash and shot Vargas and his brother. Vargas’s brother survived, but Vargas was killed.
“The defendant was responsible for two murders – one, another drug dealer, the other, an innocent bystander who tragically was in the wrong place at the wrong time – once again demonstrating the inextricable link between drug trafficking and wanton violence. Taylor will now spend the rest of his life behind bars for his depraved acts,” stated United States Attorney Capers. Mr. Capers extended his grateful appreciation to the Federal Bureau of Investigation and the New York City Police Department for their outstanding work in this case.
“Shaun Taylor has shown a disregard for human life by paying others to do his dirty work for him, all so he could maintain total control over his drug trade in Brooklyn. In his desire to seek revenge, an innocent man Terrance Barnett died for no reason. The FBI and our law enforcement partners will continue to work every day to stop the corrosive effects the drug trade has on our communities,” stated FBI Assistant Director-in-Charge Sweeney.
The sentence was imposed by Chief United States District Judge Dora L. Irizarry.
The government’s case is being handled by Assistant United States Attorneys Matthew Amatruda, David Pitluck, and Tali Farhadian.
The Defendant:
SHAUN TAYLOR
Age: 32
Brooklyn, NYE.D.N.Y. Docket No. 10-CR-268
Florida Registered Broker Pleads Guilty to Securities Fraud for Participating in A $131 Million Market Manipulation SchemeRead the Press Release
BROOKLYN, NY – Earlier today, Gerald Cocuzzo, a resident of Boca Raton, Florida and a broker registered with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority, Inc. (FINRA), pleaded guilty to securities fraud in connection with the fraudulent market manipulation of ForceField Energy Inc. (ForceField), a publicly-traded company listed on the NASDAQ under the ticker symbol “FNRG.” The guilty plea was entered before United States Magistrate Judge Ramon E. Reyes, Jr. at the federal courthouse in Brooklyn, New York. When sentenced, Cocuzzo faces up to 20 years in prison, as well as restitution, criminal forfeiture, and a fine.
The guilty plea was announced by Robert L. Capers, 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 and facts presented at the plea hearings, between January 2009 and April 2015, the defendant, together with 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 through, among other means: (1) 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 appearance of genuine trading volume and interest in the stock; and (3) concealing payments to stock promoters and broker dealers who promoted and sold ForceField stock to investors and potential investors while claiming to be independent of the company. The defendants’ fraudulent scheme caused a loss of approximately $131 million to the investing public.
Between January 2015 and April 2015, a ForceField executive paid commission payments, or kickbacks, to Cocuzzo in exchange for his purchase of ForceField stock in his clients’ brokerage accounts. Cocuzzo did not disclose to his clients the kickbacks he was receiving for purchasing ForceField stock. Cocuzzo 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.
The government’s case is being prosecuted 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 charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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, please visit ww.StopFraud.gov.
The Defendant:
GERALD COCUZZO
Age: 38
Residence: Delray Beach, FloridaE.D.N.Y. Docket No. 16-CR-234 (BMC)
Eight Trey Crips Gang Members Convicted of Murder of Federal InformantRead the Press Release
Friday afternoon, Maliek Ramsey, also known as “Squinge,” and Rodney Muschette, also known as “Stitch,” were convicted of the 2008 retaliation murder of a federal informant. Ramsey and Muschette are members of the Eight Trey Crips, a set of the Crips street gang operating in and around Brooklyn, New York, and elsewhere. When sentenced, they will face mandatory life imprisonment.
The convictions were announced by Robert L. Capers, 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); James O’Neill, Commissioner, New York City Police Department (NYPD); and George N. Turner, Chief of Police, Atlanta Police Department (APD).
“The defendants’ actions tore at the fabric of our criminal justice system, a system that relies upon members of the community to notify law enforcement about criminal activity,” stated U.S. Attorney Capers. “Without the cooperation of all segments of the community – including victims, eyewitnesses, and cooperating witnesses – our system cannot work.” Mr. Capers extended his grateful appreciation to the FBI Charlotte, NC, Field Office, the FBI Raleigh, NC, Resident Agency, the FBI Atlanta, GA, Field Office and the United States Attorney’s Office for the Eastern District of North Carolina for their assistance.
“We depend on eyewitnesses for the information that isn’t revealed from forensic evidence, and many times those eyewitnesses are known to the subjects in a case. The FBI and our law enforcement partners will pursue anyone who threatens witnesses with violence because they were willing to come forward,” stated FBI Assistant Director-in-Charge Sweeney.
“In partnership with the U.S. Attorney’s Office, the Atlanta Police Department has removed another dangerous and violent criminal from Atlanta streets,” said Atlanta Police Chief Turner.” Muschette and Ramsey mercilessly took the life of Mr. Nashwad Johnson and those actions will not go unpunished. The Atlanta Police Department is committed to cracking down on criminal activity and individuals that threaten the safety and quality of life for Atlanta residents and visitors.”
On December 30, 2008, the leader of the Eight Trey Crips was sentenced in Brooklyn federal court to 110 months’ imprisonment based on his conviction for possessing a firearm as a felon in connection with a June 2005 shooting in Brooklyn, New York. Fellow gang member Nashwad Johnson, also known as “Nash,” had witnessed that shooting. At the leader’s sentencing proceeding, he stated his belief that Johnson was a federal informant, and he later made sure that the message was communicated to other gang members. The leader’s sister told him that everyone in the gang was “all messed up” about the news, and, in particular, she told him that defendant Ramsey – who was in England at that time – was crying and thought it was his fault. The afternoon of New Year’s Eve, Muschette and Ramsey spoke for 20 minutes to iron out their murder plan, and Ramsey ordered Muschette to shoot Johnson.
At or around the time of that sentencing, Muschette and other members of the gang traveled with Johnson from Raleigh, North Carolina, to Atlanta, Georgia. Shortly before midnight on New Year’s Eve in 2008 – one day after the leader was sentenced – Muschette and others carried out their plan to kill Johnson because they believed that he had provided information to federal law enforcement about their gang. Muschette and his coconspirators drove Johnson to a wooded area off an Atlanta highway. There, Muschette shot Johnson eleven times, including five shots in Johnson’s back, ending his life.
The government’s case is being prosecuted by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Elizabeth A. Geddes and Patrick T. Hein are in charge of the prosecution.
The Defendants:
MALIEK RAMSEY, also known as “Squinge”
Age: 36RODNEY MUSCHETTE, also known as “Stitch”
Age: 35E.D.N.Y. Docket No. 15-CR-525 (ERK)
United States Attorneys Available to Receive Election ComplaintsRead the Press Release
ROBERT L. CAPERS and PREET BHARARA, the United States Attorneys for the Eastern and Southern Districts of New York, respectively, announced today that special telephone numbers have been set up to receive complaints of possible violations of federal election laws relating to the upcoming primary elections in New York City and other counties in their districts.
The United States Attorneys said that their Offices will be available to receive complaints at the following numbers on Tuesday, November 8, 2016:
(718) 254-6323 (Brooklyn, Queens, Staten Island, Nassau and Suffolk counties)
(646) 369-4739 (Manhattan, Bronx, Dutchess, Orange, Putnam, Rockland, Sullivan
and Westchester counties)
In addition, complaints of possible violations of federal election laws may be made directly to the Federal Bureau of Investigation (FBI) at (212) 384-1000.
The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur. The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on Election Day.
Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input. It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them. For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting, may violate federal voting rights law. Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.
The United States Attorneys also noted that the following additional telephone numbers are available on election day for citizens to call for routine inquiries, such as where to vote or how late the polls are open, or to register complaints that may concern violations of New York State election laws:
IN NEW YORK CITY
City Board of Elections
Main Office (866) 868-3692
TTY #: 212-487-5496
Bronx (718) 299-9017
Brooklyn (718) 797-8800
Manhattan (212) 886-2100
Queens (718) 730-6730
Staten Island (718) 876-0079
IN COUNTIES OUTSIDE NEW YORK CITY
County Boards of Elections
Dutchess (845) 486-2473
Nassau (516) 571- 8683
Orange (845) 360-6500
Putnam (845) 808-1300
Rockland (845) 638-5172
Suffolk (631) 852-4500
Sullivan (845) 807-0400
Westchester (914) 995-5700
Assistant United States Attorney CATHERINE MIRABILE is responsible for overseeing the handling of complaints of voting rights abuses and election fraud for the Eastern District of New York.
Assistant United States Attorney DAVID J. KENNEDY is responsible for overseeing the handling of complaints of voting rights abuses and election fraud for the Southern District of New York.
Investor Relations Professional and Registered Broker Plead Guilty to Securities Fraud for Participating in A $131 Million Market Manipulation SchemeRead the Press Release
Earlier today, Jared Mitchell, an investor relations professional, and Maroof Miyana, a registered broker, pleaded guilty to securities fraud in connection with the fraudulent market manipulation of ForceField Energy Inc. (ForceField), a publicly-traded company listed on the NASDAQ under the ticker symbol “FNRG.” The guilty pleas were each entered before United States Magistrate Judge Ramon E. Reyes, Jr. at the federal courthouse in Brooklyn, New York. When sentenced, Mitchell and Miyana each face up to 20 years in prison, as well as restitution, criminal forfeiture, and a fine.
The guilty pleas were announced by Robert L. Capers, 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 and facts presented at the plea hearings, between January 2009 and April 2015, the defendants, together with 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 through, among other means: (1) 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 appearance of genuine trading volume and interest in the stock; and (3) concealing payments to stock promoters and broker dealers who promoted and sold ForceField stock to investors and potential investors while claiming to be independent of the company. The defendants’ fraudulent scheme caused a loss of approximately $131 million to the investing public.
Between October 2014 and April 2015, a ForceField executive paid commission payments, or kickbacks, to Mitchell in exchange for the registered broker defendants’ purchasing ForceField stock in their clients’ brokerage accounts; Mitchell would distribute a portion of the kickbacks to the registered brokers, including Miyana, and keep a portion of the kickback for himself. The registered broker defendants did not disclose to their clients the kickbacks they were receiving for purchasing ForceField stock. Mitchell, Miyana, and their 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.
The government’s case is being prosecuted 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 charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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, please visit ww.StopFraud.gov.
The Defendants:
JARED MITCHELL
Age: 34
Residence: New York, New YorkMAROOF MIYANA
Age: 36
Residence: Boca Raton, FloridaE.D.N.Y. Docket No. 16-CR-234 (BMC)
Former Suffolk County Police Chief Sentenced to 46 Months in Prison for Assault and Obstruction of JusticeRead the Press Release
Earlier today, at the federal courthouse in Central Islip, New York, James Burke, the former Chief of Department for the Suffolk County Police Department (SCPD), was sentenced to 46 months in prison and three years of supervised release by United States District Judge Leonard D. Wexler. Previously, on February 26, 2016, Burke pleaded guilty to a civil rights violation and conspiracy to obstruct justice.
The civil rights violation related to Burke’s assault of a Smithtown man who had been arrested for breaking into Burke’s SCPD-issued vehicle and stealing his property on December 14, 2012. Following that assault, over almost three years, Burke and other Suffolk County law enforcement authorities took actions to obstruct the federal civil rights investigation into the assault. Burke was arrested and arraigned on December 9, 2015, and he has been in federal custody since that date.
The sentence was announced by Robert L. Capers, 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).
“During his tenure as the highest ranking uniformed officer in the Suffolk County Police Department, James Burke considered himself untouchable. He abused his authority by brazenly assaulting a handcuffed prisoner, he pressured subordinates to lie to cover up his criminal acts, and he attempted to thwart the civil rights investigation into his conduct,” stated United States Attorney Capers. “With today’s sentence, Burke learned that no one is above the law and that the consequences for such egregious behavior are severe.”
FBI Assistant Director-in-Charge Sweeney stated, “Burke’s abuse of power and efforts to obstruct justice not only threatened to undermine the integrity of a federal investigation, but also the reputation of all the Suffolk County police officers who value the laws they are sworn to uphold. As evidenced by today’s sentence, Burke, and others, are reminded that this type of behavior won’t go unpunished.”
On December 14, 2012, New York State Probation Department and SCPD officers arrested probationer Christopher Loeb at his mother’s home in Smithtown, New York, for a variety of probation violations. During the arrest and search of the Loeb residence, officers discovered a cache of merchandise stolen from over a dozen vehicles, including an SCPD-issued SUV operated by Burke. Among the items taken from Burke’s SUV were his gun belt, several magazines of ammunition, a box of cigars, a humidor, and a canvas bag that contained toiletries, clothing, and other items.
Burke was permitted to enter the Loeb residence and retrieve the canvas bag and several other articles, even as the search was underway. He then drove to the SCPD’s Fourth Precinct in Smithtown where detectives had begun interrogating Loeb. Burke entered the interrogation room where Loeb was handcuffed and chained to an eyebolt fastened to the floor. Burke then punched and kicked Loeb in the head and body.
Subsequently, Burke and others pressured the detectives who witnessed the assault to conceal the event. Those efforts continued even after the FBI and the U.S. Attorney’s Office opened an investigation of the assault in 2013. In one instance, Burke summoned detectives under his command to SCPD headquarters in Yaphank, New York, to persuade the detectives to agree to a false version of events that would conceal the assault. In October 2013, one of those detectives testified falsely under oath in a state pretrial hearing in the Loeb prosecution, denying that Loeb had been assaulted.
The government’s case is being prosecuted by the Office’s Long Island Criminal Section. Assistant United States Attorneys Lara Treinis Gatz and John J. Durham are in charge of the prosecution, assisted by EDNY Investigator William Hessle.
The Defendant:
JAMES BURKE
Age: 52
Smithtown, New YorkE.D.N.Y. Docket No. 15-CR-627 (LDW)
Los Angeles Investment Adviser Charged with Securities Fraud for Stealing More Than $1.5 Million from ClientsRead the Press Release
Marc Broidy, the founder, Principal, and Chief Executive Officer of Broidy Wealth Advisors, LLC, was arrested earlier today on charges of securities fraud. Broidy allegedly schemed to defraud his clients by withdrawing over $640,000 in excess management fees and then misappropriating more than $865,000 worth of stock held in trusts, over which he was trustee, to conceal his fraudulent overbilling scheme. The defendant’s initial appearance is scheduled for this afternoon before United States Magistrate Judge Frederick F. Mumm at the United States Courthouse, 312 North Spring Street, Los Angeles, California. The government will seek his removal to the Eastern District of New York.
The charges and arrest were announced by Robert L. Capers, 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 alleged in the criminal complaint, through a web of lies and fabricated documents, Marc Broidy deceived his clients and betrayed their trust by using their investment accounts as his personal slush fund. When one client unearthed his fraudulent scheme, Broidy simply stole from another client in an effort to cover up his theft. However, his days of ‘robbing Peter to pay Paul’ have now come to an end,” stated United States Attorney Capers. Mr. Capers thanked the U.S. Securities and Exchange Commission, New York Regional Office (SEC), for their invaluable cooperation and assistance during the investigation.
“As alleged, Broidy overbilled clients while underreporting the management fees he deducted for his services. Despite being caught red-handed, he cashed out on stock held in trust accounts he was appointed to oversee, all in an effort to defray personal expenses. Financial crimes have the potential to turn lives upside down and inside out. Victims of these types of crimes deserve to see justice served. We would like to thank our colleagues from the FBI's Los Angeles Field Office for their assistance with this investigation,” stated FBI Assistant Director-in-Charge Sweeney.
According to the complaint unsealed this morning, from approximately November 2010 to July 2016, Broidy had discretionary authority to buy and sell securities in brokerage accounts he set up for his clients and was permitted to deduct management fees from those accounts as compensation. For three of his clients, instead of deducting the amounts he was permitted to bill, Broidy took more than $640,000 in excess fees. To hide his theft, Broidy falsified many of those clients’ Internal Revenue Service Form 1099s so that the forms reflected far less in management fees than Broidy actually took.
One client discovered the theft and forced Broidy to repay the stolen fees in a settlement. To pay the settlement and other personal expenses, such as credit card bills and house and car payments, Broidy sold more than $865,000 worth of stock held in trust accounts that another client had established for his children, and for which he had appointed Broidy trustee.
The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Broidy faces a maximum sentence of 20 years in prison.
* * *
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Matthew Amatruda is in charge of the prosecution.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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, please visit ww.StopFraud.gov.
The Defendant:
MARC BROIDY
Age: 43
Los Angeles, CaliforniaCyber Criminal Charged in Scheme to Steal More Than $1.5 Million from A U.S. Financial InstitutionRead the Press Release
Yesterday, a complaint was unsealed charging Dwayne C. Hans, a United States citizen, with wire fraud, computer fraud, and money laundering. According to the complaint, between April 2016 and July 2016, the defendant masterminded a series of frauds against a U.S. financial institution in which he masqueraded as an authorized representative of that institution. Using that ruse, he transferred funds from the financial institution’s corporate bank accounts for his own use. The defendant also accessed a website run by the U.S. General Services Administration without authorization and then redirected money intended for the financial institution to his own bank account.
The defendant’s initial appearance was held yesterday before United States District Judge Thomas O. Rice at the U.S. Courthouse in Spokane, Washington. The court scheduled a detention hearing for Monday, October 31, to determine whether the defendant will be held in custody pending his removal to the Eastern District of New York for further proceedings.
The charges were announced by Robert L. Capers, 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 alleged in the complaint, the defendant stole $134,000 from the financial institution and attempted to steal approximately $1.5 million more. Posing as someone authorized to conduct financial transactions for the financial institution, the defendant misappropriated money from corporate bank accounts to buy shares of stock in publicly traded companies, invest in a real estate property in Brooklyn, New York, and benefit his family members. He also conducted an unauthorized intrusion into the website SAM.gov, which stores information about companies that provide services to the federal government. During this unauthorized website intrusion, the defendant changed information in entries pertaining to the financial institution, including by replacing the bank account information for the financial institution with the defendant’s personal bank account information. As a result, the Pension Benefit Guarantee Corporation sent more than $1.5 million to the defendant instead of the financial institution. These fraudulent wire transfers were reversed once they were detected.
The defendant was arrested in Richland, Washington, on October 26, 2016, pursuant to a criminal complaint issued in the Eastern District of New York.
“Cybercriminals scour the internet for information they can use to steal with impunity,” stated United States Attorney Capers. “They threaten to undermine our confidence in the internet and in the cyber world, on which we rely each and every day. The arrest announced today sends all would be cyber criminals a message – we will find you, and we will bring you to justice.”
“Criminals who exploit the internet to commit crimes think they can hide behind the virtual veil of a computer screen. But just as today’s charges remind us that everyone is at risk of becoming a victim of cybercrime, so too should the public be reminded that the FBI will continue to be a major force in confronting those who think they can evade the law,” stated FBI Assistant Director in Charge Sweeney.
The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorney David K. Kessler is in charge of the prosecution.
The Defendant:
DWAYNE C. HANS
Age: 27E.D.N.Y. Docket No. 16-MJ-951
A&L Cesspool Service Corporation Pleads Guilty to Felony Clean Water Act Violations and Pays $900,000 in Penalties to Resolve Charges Relating to Wastewater Dumping in the Gowanus Canal and ElsewhereRead the Press Release
Earlier today, A&L Cesspool Service Corporation (A&L Cesspool), a Queens-based cesspool services company, pled guilty at the federal courthouse in Brooklyn, New York, to violating the Clean Water Act by dumping waste removed from blocked sewer lines into manholes that flowed directly into the Gowanus Canal, among other locations in New York City. The guilty plea was taken by U.S. District Judge I. Leo Glasser, who immediately following the plea sentenced the company to two years’ probation and criminal financial penalties totaling $900,000, pursuant to a plea agreement entered by the company and the government.
The guilty plea and sentence were announced by Robert L. Capers, 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 Vernesa Jones-Allen, Special Agent-in-Charge, U.S. Environmental Protection Agency, Criminal Investigations Division, New York (EPA).
According to court filings and facts presented during the plea proceeding, A&L Cesspool is one of the largest cesspool service providers in New York City. Among other services, A&L Cesspool clears blocked sewer lines by pumping and removing waste. A&L Cesspool held a permit issued by the New York City Department of Environmental Protection that allowed it to dispose of liquid waste removed from sewer lines at designated wastewater treatment facilities. Rather than following the rules set forth in the permit, however, employees of A&L Cesspool repeatedly dumped liquid waste at other locations, including into various manholes at John F. Kennedy International Airport, Fort Wadsworth on Staten Island, a New York City Housing Authority housing development in Brooklyn, and into the Gowanus Canal.
Under the Clean Water Act, it is a crime for anyone to knowingly dump pollutants into a waterway of the United States without a permit or in violation of a permit. As part of the plea resolution, A&L Cesspool pleaded guilty to a criminal information charging the company with one count of conspiracy to violate the Clean Water Act, one count of unlawfully discharging pollutants into a waterway of the United States, namely, the Gowanus Canal, without a permit, and four counts of illegally dumping pumped sewer waste in violation of its permit.
The financial penalties imposed by the court include a $375,000 fine, $350,000 in criminal forfeiture, and a $175,000 community service payment to the National Fish and Wildlife Foundation to be used toward projects in or directly benefiting the Gowanus area of Brooklyn.
“Today’s felony guilty plea and sentence demonstrate that polluters face serious consequences for violating the Clean Water Act,” stated United States Attorney Capers. “The Department of Justice is committed to prosecuting businesses who ignore their obligation to keep our waterways clean.”
“Environmental laws, such as those violated by A&L Cesspool, are put in place to protect us from grossly negligent practices that threaten the cleanliness of our communities and put the public’s health at risk. Circumventing procedures to properly dispose of pollutants is a serious crime, and those who engage in this type of activity won’t get away with it,” said FBI Assistant Director-in-Charge Sweeney.
“Waste that is disposed of illegally jeopardizes the health and safety of the entire community, so it’s imperative that septic haulers adhere to the appropriate waste disposal regulations and laws,” said Special Agent-in-Charge Jones-Allen of EPA’s criminal enforcement program in New York. “EPA and its law enforcement partners will continue to pursue those who undermine our efforts to protect public health, and those who ignore the law must be held to account.”
The government’s case is being prosecuted by the Office’s Public Integrity Section. Assistant United States Attorneys Lan Nguyen and Lauren Howard Elbert are in charge of the prosecution, with assistance from Assistant U.S. Attorney Brian Morris of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The Defendant Company
A&L Cesspool Service Corporation
Queens, New YorkE.D.N.Y. Docket No. 16-CR-524 (ILG)
New York Doctor Pleads Guilty to Falsely Certifying Physical Examinations for Commercial DriversRead the Press Release
Earlier today Gerald Surya, M.D., pleaded guilty to falsely certifying physical examinations for commercial drivers. Specifically, Dr. Surya certified that he had examined applicants for commercial driver’s licenses (CDLs) and found them physically fit to drive heavy commercial vehicles when in fact he had not performed those examinations. When sentenced, Surya faces up to 15 years in prison.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Douglas Shoemaker, Regional Special Agent-in-Charge, United States Department of Transportation-Office of Inspector General (USDOT-OIG).
As set forth in court filings and facts presented at the guilty plea proceeding, drivers of certain commercial vehicles, such as school buses and heavy transportation trucks, must possess a CDL issued by the New York State Department of Motor Vehicles (DMV) pursuant to regulations set forth by the United States Department of Transportation (USDOT). Before obtaining a CDL, all applicants must pass written and road tests related to safely driving such large vehicles. In addition, the applicants must be examined and certified fit to drive those vehicles by a physician or other qualified medical personnel authorized by the USDOT to conduct such examinations. Upon receipt of the certification, the applicant must file a copy with the DMV. Further, on a monthly basis, USDOT-certified medical examiners are required to electronically transmit to USDOT copies of certifications they have executed for CDL applicants.
Dr. Surya was authorized to conduct USDOT mandated medical examinations and certifications for CDL applicants and purportedly performed such examinations at his office located at John F. Kennedy International Airport in Queens, New York. In fact, the applicants were not examined by Dr. Surya, but instead by other office staff members who had little or no medical training and were not authorized to conduct the mandated medical examinations.
Today’s guilty plea took place before United States District Judge LeShann DeArcy Hall.
The government’s case is being prosecuted by the Office’s Public Integrity Section. Assistant United States Attorney Michael H. Warren is in charge of the prosecution.
The Defendant:
GERALD SURYA
Age: 47
Residence: New Hyde Park, New YorkE.D.N.Y. Docket No. 16-CR-194 (LDH)
Nassau County Executive Edward Mangano and Town of Oyster Bay Supervisor John Venditto Indicted for Federal Program Bribery, Honest Services Wire Fraud, Conspiracy, and Related CrimesRead the Press Release
A 13-count indictment was unsealed this morning in federal court in Central Islip charging Edward Mangano and John Venditto with conspiracy to commit federal program bribery and honest services fraud, as well as the related substantive counts, and charging Mangano with extortion. The indictment also charges Edward Mangano, Linda Mangano, and Venditto with obstructing justice, and Linda Mangano and Venditto with making false statements. Since January 2010, Edward Mangano has served as the Nassau County Executive. Since January 1998, Venditto has served as the Town of Oyster Bay (the TOB or Town) Supervisor.
The defendants were arrested this morning and will be arraigned today before the Hon. Sandra J. Feuerstein, United States District Judge, at the United States Courthouse, 100 Federal Plaza, Central Islip, New York. Earlier today, federal agents also executed two search and seizure warrants at the Manganos’ residence in Bethpage, New York, and at the County Executive’s Office in Mineola, New York.
The charges were announced by Robert L. Capers, 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 Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York Field Office (IRS-CI).
“Yet again, we announce a breach of trust by two of our public officials. In 2010, Nassau County voters granted Edward Mangano the opportunity to serve by electing him their highest ranking official in the County. Similarly, in 1998, Town of Oyster Bay voters granted John Venditto the honor of electing him their chief elected official. Yet, as alleged in the indictment, both of these men undermined the very system of laws they promised to uphold by furthering their personal interests rather than the best interests of their constituents. Sadly, Mangano also enlisted the assistance of his wife in an attempt to shield his wrongdoing from public scrutiny,” stated United States Attorney Capers. “However, no one is above the law, and the defendants will now be held to account for their actions.” Mr. Capers extended his grateful appreciation to the FBI, IRS-CI, the agencies responsible for leading the government’s investigation, and thanked the Securities and Exchange Commission and the Nassau County District Attorney’s Office for their valuable assistance.
“As detailed in the indictment, Edward Mangano and John Venditto abused their positions as the highest ranking elected officials in Nassau County and the Town of Oyster Bay, respectively – at least, until today. Those involved in this scheme allegedly lied about their conduct to investigators, fanning the flames of a fire that became too large to contain. Public corruption wastes countless tax dollars every year, threatens the credibility of governmental institutions, and opens the door for further criminal activity,” stated FBI Assistant Director-in-Charge Sweeney.
“The public expects its elected officials to serve them honestly and honorably,” stated IRS-CI Special Agent-in-Charge Kitchen. “When public officials abuse the power they have been entrusted for their own personal benefit, they violate the public trust and betray their constituents. As a law enforcement agency, IRS Criminal Investigation takes allegations of public corruption very seriously, and we are always ready to contribute to an investigation when the allegation has a financial component.”
I. Background
As alleged in the indictment and other court filings, between January 2010 and February 2015, Nassau County Executive Edward Mangano, TOB Supervisor John Venditto, and others, engaged in a scheme to receive bribes and kickbacks from a businessman and restaurateur, identified in the indictment as Co-Conspirator #1, in exchange for performing official actions to benefit Co-Conspirator #1 in connection with that individual’s businesses in Nassau County and the TOB. The official actions included: (a) the TOB’s guarantee of certain loans that Co-Conspirator #1 received from a bank and lender in connection with Co-Conspirator #1’s status as a TOB concessionaire (the “TOB Loan Scheme”); and (b) Nassau County’s award of certain contracts to Co-Conspirator #1’s businesses (the “Nassau County Contracts Scheme”). In connection with these schemes, Mangano and Venditto are each charged with conspiring to commit federal program bribery and honest services wire fraud and related substantive counts, and Mangano is charged with extortion under color of official right.
II. The TOB Loan Scheme
The indictment charges that Co-Conspirator #1 paid bribes and kickbacks to Edward Mangano and John Venditto in exchange for, among other things, the officials’ assistance in obtaining the Town’s guarantee of four loans totaling approximately $20 million that two of Co-Conspirator #1’s businesses received from a bank (identified in the indictment as the Bank) and from a private corporate financing company (identified in the indictment as the Lender). As detailed in the government’s bail letter filed today, the first loan, which closed on June 9, 2010, was a $1,500,000 line of credit from the Bank. The second loan, which closed on May 25, 2011, was a $3,400,000 loan from the Bank. The third loan, which closed on November 18, 2011, was a $7,843,138 loan from the Lender. The fourth loan, which closed on June 22, 2012, was a $12,273,748 loan from the Lender. In late 2012 and 2013, Co-Conspirator #1 sought an additional loan of approximately $12 million from the Lender in connection with improvements to be made to Co-Conspirator #1’s facilities at two Town beaches – this loan was not ultimately extended.
Edward Mangano and John Venditto used their official positions to influence and reach a particular outcome, i.e., the Town’s guarantee of the loans for Co-Conspirator #1. As a result of the guarantees, were Co-Conspirator #1’s entities to default on the loans, the Town would be responsible for repaying the Bank and/or the Lender the entire amount of the loans. In or about November 2015, Co-Conspirator #1 defaulted on the repayment of the two loans with the Lender and the loans’ holder, which had previously been assigned the loans from the Lender, demanding that the TOB remit payment on the outstanding money due under the loan documents.
III. The Nassau County Contracts Scheme
As set forth in the indictment, beginning in approximately late 2011 through December 2012, Co-Conspirator #1, through certain business entities, was awarded lucrative contracts by Nassau County, including certain contracts worth hundreds of thousands of dollars to provide food services to Nassau County agencies. Specifically, as detailed in the government’s bail letter, Nassau County awarded two contracts to business entities of Co-Conspirator #1: a 2012 Nassau County contract to supply bread and rolls to the Nassau County Correctional Center (the Bread and Rolls Contract), and November/December 2012 daily purchase orders with the Nassau County Office of Emergency Management (OEM) to supply emergency food services to OEM following Hurricane Sandy (the OEM Emergency Food Services Contract). The Bread and Rolls contract was valued at approximately $200,000 and the OEM Emergency Food Services Contract was valued at approximately $237,000. Edward Mangano used his official position to effectuate a specific outcome, i.e., the award of these contracts to Co-Conspirator #1.
IV. The Receipt of Bribes and Kickbacks
As set forth in the indictment and, in greater detail, in the government’s bail letter, Co-Conspirator #1 provided Linda Mangano with a “no-show” job for approximately three and one-half years, from April 2010 to August 2014, at a restaurant owned and operated by Co-Conspirator #1, identified in the indictment as Restaurant #2. The payments from Co-Conspirator #1 to Linda Mangano in connection with her “no-show” job totaled over $450,000. In addition, Co-Conspirator #1 paid for various hotel and travel expenses for the Mangano family, including vacations to Niagara Falls in 2010, Marco Island Florida in December 2011, St. Thomas in July 2012, Turks and Caicos in July 2013, and Amelia Island, Florida in July 2014, as well as an ergonomic office chair in January 2010 ($3,371.90), massage chair from Brookstone in September 2012 ($3,623.73), a Panerai Luminor watch in November 2012 ($7,304), and hardwood flooring and its installation in the Manganos’ bedroom in January 2013 ($3,701.81). Co-Conspirator #1 also provided free meals to Edward Mangano and his family and associates.
From July 2011 to December 2013, Co-Conspirator #1 additionally provided Venditto and his family members and associates with free limousine service. Co-Conspirator #1 also allowed Venditto to hold fundraisers at Co-Conspirator #1’s restaurants at a discounted rate and permitted Venditto to use a conference room in the basement of one of Co-Conspirator #1’s restaurants.
V. The Obstruction of Justice
The indictment further alleges that Edward Mangano, Linda Mangano, and Venditto engaged in obstruction of justice in connection with their attempts to cover-up their wrongdoing, and Linda Mangano and Venditto are also charged with making false statements to federal law enforcement authorities.
As alleged in the indictment, between January 2015 and the present, the Manganos engaged in a conspiracy intended to obstruct a grand jury investigation. Specifically, they repeatedly met with Co-Conspirator #1, and fabricated stories in an attempt to explain Linda Mangano’s employment by Co-Conspirator #1 and Co-Conspirator #1’s payments of gifts and vacation expenses to the Mangano family.
On January 13, 2015, FBI agents interviewed Linda Mangano at her residence. On May 20 and 24, 2015, prosecutors and FBI and IRS agents interviewed her at the U.S. Attorney’s Office in Central Islip. On all three occasions, Linda Mangano was advised that lying to federal officials was a federal crime. Nevertheless, on each occasion, when asked about her employment by Co-Conspirator #1, Linda Mangano fabricated examples of work she allegedly did for Co-Conspirator #1.
On October 23, 2016 and December 18, 2015, prosecutors and FBI and IRS agents interviewed Venditto at the U.S. Attorney’s Office in Central Islip. At the beginning of each interview, Venditto was advised that lying to federal officials constituted a federal crime. During the December 18, 2015 interview, Venditto stated that he had not received anything of value, including the payment for limousine services, from Co-Conspirator #1. Records from the limousine company, bank records for Co-Conspirator #1, and interviews with numerous witnesses, establish that Co-Conspirator #1 paid for the limousine service.
If convicted, Edward Mangano and John Venditto each face a term of imprisonment of up to 20 years for each honest services wire fraud charge, the conspiracy to commit honest services wire fraud charge, up to 10 years for the federal program bribery charge, up to five years for the conspiracy to commit federal program bribery. Edward Mangano faces a term of up to 20 years for the extortion charge. Edward Mangano, Linda Mangano, and John Venditto each face a term of imprisonment of up to 20 years for each obstruction of justice charge, and up to five years for each false statement charge. 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 prosecuted by the Office’s Long Island Criminal Section. Assistant United States Attorneys Catherine M. Mirabile, Raymond A. Tierney, and Lara Treinis Gatz are in charge of the prosecution. Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division is responsible for the forfeiture of assets.
The Defendants:
EDWARD MANGANO
Age: 54
Bethpage, NYLINDA MANGANO
Age: 54
Bethpage, NYJOHN VENDITTO
Age: 67
North Massapequa, NYE.D.N.Y. Docket No. 16-CR-540 (SJF)
American Sports Marketing Executive Pleads Guilty to Racketeering and Corruption ChargesRead the Press Release
Earlier today in federal court in Brooklyn, Aaron Davidson pleaded guilty to racketeering conspiracy and wire fraud conspiracy in connection with his involvement in schemes involving the payment of bribes to a high-ranking soccer official in exchange for media and marketing rights to international soccer tournaments and matches. Davidson agreed to and paid these bribes on behalf of Traffic Sports USA, Inc. (Traffic USA), the Miami sports marketing company for which he served as president at the time of his arrest on May 27, 2015. As part of his plea, Davidson also agreed to forfeit $507,906.84. At sentencing, Davidson faces a maximum sentence of 20 years for each count. Today’s plea proceeding took place before United States District Judge Pamela K. Chen.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director in Charge, FBI, New York Field Office; and Acting Special Agent in Charge Anthony J. Orlando, IRS Criminal Investigation, Los Angeles Field Office.
According to court filings and facts presented during the plea proceeding, Davidson, a U.S. citizen, joined Traffic USA in 2003, initially working in sales and ultimately rising to the position of president of the company. During his time at Traffic USA, Davidson was involved in multiple criminal schemes including, among others, schemes involving the agreement to pay and payment of bribes to a high-ranking official of FIFA, CONCACAF, the Caribbean Football Union, and one of FIFA’s national member associations in order to obtain lucrative media and marketing rights to international soccer tournaments and matches for Traffic USA and its business partners. Those tournaments and matches included FIFA World Cup qualifiers, the CONCACAF Gold Cup, the CONCACAF Champions League, and the Copa América Centenario, a tournament jointly organized by CONCACAF and CONMEBOL, the South American soccer confederation. In total, Davidson negotiated and agreed to bribe payments totaling more than $14 million.
The guilty plea announced today is part of an investigation into corruption in international soccer being led by the U.S. Attorney’s Office for the Eastern District of New York, the FBI New York Field Office, and the IRS-CI Los Angeles Field Office. The prosecutors in Brooklyn are receiving considerable assistance from attorneys in various parts of the Justice Department’s Criminal Division in Washington, D.C., including the Office of International Affairs, the Organized Crime and Gang Section, the Asset Forfeiture and Money Laundering Section, and the Fraud Section, as well as from INTERPOL Washington.
Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Paul Tuchmann, Nadia Shihata, Keith D. Edelman, and Brian D. Morris of the Eastern District of New York are in charge of today’s prosecution.
The government’s investigation is ongoing.
The Defendant:
AARON DAVIDSON
Age: 45
Nationality: United StatesE.D.N.Y. Docket No. 15 CR 252 (S-1)
Fugitive Gang Leader Arrested for Two MurdersRead the Press Release
Earlier today, a four-count indictment was unsealed in United States District Court for the Eastern District of New York charging Nicholas Washington, also known as “Nicholas Hayes” and “Face,” with the 2005 murder of Steven Negron and the 2006 murder of Andrell Napper. The indictment was returned under seal by a federal grand jury sitting in Brooklyn on May 7, 2014.
The charges were announced by Robert L. Capers, 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 detailed in the indictment and a detention memorandum filed by the government, Washington was a leader of the “G’z Up” gang, which operated in and around the Marcy Houses public housing development in the Bedford-Stuyvesant neighborhood of Brooklyn. G’z Up members and associates earned money by trafficking in crack-cocaine and firearms in Brooklyn, upstate New York and Pennsylvania, and committed acts of violence to protect their enterprise.
In 2005, Washington allegedly planned the murder of a rival drug supplier and directed two G’z Up members to carry out the crime. Those G’z Up members shot at the rival gang member but instead struck and killed Negron, who was standing nearby.
In 2006, Washington allegedly planned a second murder. The intended victim was a rival gang member who Washington believed was responsible for the murder of Washington’s brother. Washington and other members and associates of G’z Up located the target, and two of Washington’s associates opened fire. Napper, who was not the intended target, was instead struck and killed.
Two days after Washington was indicted he learned of the federal charges, evaded arrest, and was a fugitive for more than two years. On May 21, 2016, New York City Police Officers arrested him in connection with a non-fatal shooting that occurred in Brooklyn on May 9, 2014. Washington is currently charged in New York Supreme Court, Kings County, with attempted murder and other crimes based on that shooting. On October 19, 2016, Washington was taken into federal custody.
“Nicholas Washington’s days as a fugitive are over. He will now face charges for the two murders he ordered that tragically resulted in the deaths of two bystanders,” stated United States Attorney Capers. “The message here is clear – we will be dogged in our pursuit of violent gang members who commit senseless and cowardly acts of violence and will not let the passage of time deter us from bringing them to justice.”
FBI Assistant Director-in-Charge Sweeney stated, “When gang members start pulling the trigger on their weapons, they’re not worried about the collateral damage they inflict. In this case, two innocent people were murdered for just simply being in the wrong place at the wrong time. The suspect here thought he was smarter than law enforcement by evading arrest, but his continued alleged criminal behavior landed him in custody where he will face justice.”
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 announced today are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorneys Allon Lifshitz and Melody Wells.
The Defendant:
Nicholas Washington
Age: 32
Brooklyn, New YorkE.D.N.Y. Docket No. 14-CR-266 (ILG)
Justice Department Files Brief to Address the Use of Criminal Background Checks by Housing ProvidersRead the Press Release
The Justice Department filed a statement of interest today arguing that the Fair Housing Act (FHA) requires that landlords who consider criminal records in evaluating prospective tenants do not use overly broad generalizations that disproportionately disqualify people based on a legally protected characteristic, such as race or national origin.
The statement of interest was filed in the U.S. District Court for the Eastern District of New York in Fortune Society Inc. v. Sandcastle Towers Housing Development Fund Corp. et al. The case was brought by an organization that helps formerly incarcerated individuals find housing challenging the practices of an affordable rental apartment complex with 917 units in Far Rockaway, Queens.
In the statement of interest, the department aims to assist the court in evaluating whether a housing provider’s policy that considers criminal records in an application process produces unlawful discriminatory effects in violation of the FHA. Although the FHA does not forbid housing providers from considering applicants’ criminal records, the department states in its filing that “categorical prohibitions that do not consider when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since then run a substantial risk of having a disparate impact based on race or national origin.”
The brief explains that when a housing provider has a criminal record check policy with a disparate impact, the housing provider must “prove with evidence – and not just by invoking generalized concerns about safety – that the ban is necessary.” Even then, the policy will still violate the FHA if there is a less discriminatory alternative.
“This filing demonstrates the Justice Department’s steadfast commitment to removing discriminatory barriers that prevent formerly incarcerated individuals from restarting their lives,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “Women and men who served their time and paid their debt to society need a place to live, yet unlawful housing policies can too often prevent successful reentry to their communities. While not all criminal records policies adopted by landlords violate the Fair Housing Act, we will take action when they do."
“Landlords' categorical refusals to rent to individuals who have served their debts to society can illegally discriminate against those individuals based on their race or national origin,” said U.S. Attorney Robert L. Capers of the Eastern District of New York. “This office will continue to work to fight such discrimination.”
In this case, the plaintiff argues that the Sandcastle complex had a policy of refusing to rent to individuals with prior convictions for felonies or misdemeanors other than traffic offenses. The plaintiff argues that this policy has an unjustified disparate impact against prospective African-American and Hispanic tenants, in violation of the FHA. In the statement of interest, the department does not take a position on the factual accuracy of the plaintiff’s arguments, but instead addresses the appropriate legal framework for analyzing its claim. The legal framework set forth in the filing is consistent with the guidance released by the U.S. Department of Housing and Urban Development in April 2016 concerning how the FHA applies to the use of criminal records by providers or operators of housing and real-estate related transactions.
Fortune Society Inc. v. Sandcastle Towers Housing Development Fund Corp. et al. was filed in the Eastern District of New York in 2014. After the completion of pre-trial discovery, both parties have asked the court to enter judgment in their favor before trial. Those requests, filed in September 2016, are now pending with the court.
Sandcastle SOIPlaza Construction Charged with FraudRead the Press Release
Projects Included the Empire State Building, Brooklyn Navy Yard, Bronx Terminal Market, Federal Reserve Bank of New York, and New York University
Earlier today, the U.S. Attorney’s Office for the Eastern District of New York (the Office) filed fraud charges in Brooklyn federal court against Plaza Construction LLC, successor to Plaza Construction Corp. (Plaza Construction), one of the largest construction firms in New York City. Plaza Construction is charged with mail and wire fraud conspiracy for improperly billing its clients more than $2.2 million over a thirteen-year period for hours not worked and for inserting a hidden surcharge into its bills for the purpose of obtaining payments to offset administrative costs. As a result, Plaza Construction has entered into a deferred prosecution agreement with the Office in which it admitted to fraudulently overbilling clients and agreed to pay more than $9 million in restitution to victims, and forfeiture and penalties to the federal government. The company has additionally instituted far-reaching corporate reforms designed to eliminate future problems and enforce best industry practices.
Today’s deferred prosecution agreement marks the fourth resolution by the Office aimed at rooting out fraud in the construction industry. In April 2012, Lend Lease (US) Construction LMB Inc. (formerly Bovis Lend Lease LMB Inc.) was charged with defrauding its clients, entered into a deferred prosecution agreement, and paid $56 million in restitution and penalties for engaging in a ten-year overbilling scheme. In May 2015, Hunter Roberts Construction Group, LLC entered into a non-prosecution agreement and agreed to pay more than $7 million in restitution and penalties for engaging in an eight-year fraudulent overbilling scheme. In December 2015, Tishman Construction Corporation was charged with defrauding its clients, entered into a deferred prosecution agreement, and paid more than $20 million in restitution and penalties for engaging in a ten-year overbilling scheme.
The charges and disposition were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Michael Nestor, Inspector General, Port Authority of New York and New Jersey (PANYNJ); William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Carol Fortine Ochoa, Inspector General, General Services Administration (GSA), Office of Inspector General; Scott S. Dahl, Inspector General, U.S. Department of Labor (DOL), Office of Inspector General; and Mark G. Peters, Commissioner, New York City Department of Investigation (DOI).
“For more than a decade, Plaza Construction overbilled its clients by charging them for unworked time and by fraudulently inserting a hidden surcharge to help offset its administrative costs. By doing so, the company defrauded its clients and abused the trust placed in it to provide construction services at some of New York’s most storied sites. Today’s criminal charges and resolution, the fourth resolution in this area, demonstrate our steadfast efforts in combating and eliminating fraud in New York City’s construction industry,” stated U.S. Attorney Capers. Mr. Capers thanked the investigative agencies for their outstanding commitment and dedication over the course of this multi-year industry investigation.
“Plaza’s conduct that perpetuated an industry-wide fraud for more than a decade has come to an end. Government contracting agencies, and private clients alike, deserve to be billed strictly for what they bargained for, not duped into overpaying for gratuitous or phantom services. Responsible for overseeing one of the largest government contracting agencies in the region, the Port Authority Office of Inspector General will continue to uproot fraud and corruption within the area’s construction industry,” stated PANYNJ Inspector General Nestor. Mr. Nestor thanked his law enforcement partners for their dedication and professionalism in investigating these practices.
“Fraudulent business practices put consumers, employees, and other industry competitors at a significant disadvantage. Trust, once broken, is difficult to restore. Companies, no matter how large or small, are reminded to exercise due diligence in alerting authorities about crimes of this nature. We, along with our partners, take crimes of fraud seriously, and we will continue to seek justice to the full extent of the law,” stated FBI Assistant Director-in-Charge Sweeney.
“Plaza Construction used deceitful practices to bilk the American taxpayers. The GSA OIG is committed to working with our law enforcement partners to hold accountable contractors who defraud the United States,” said GSA Inspector General Ochoa.
“Plaza Construction defrauded their clients by charging them for work that was not performed and by charging them prohibited fees. Today’s resolution holds Plaza accountable for their actions and deters those who would contemplate similar misconduct in the future. We will continue to work with our law enforcement partners to vigorously pursue fraud in the construction industry that has a negative impact on the American workforce,” stated DOL Inspector General Dahl.
DOI Commissioner Peters said, “These fraudulent overbilling schemes involved some of the highest profile construction projects in New York City, driving up costs, exploiting overtime, and siphoning millions of dollars in unearned, ill-gotten gains. DOI will continue to work with its law enforcement partners to expose and stop this type of corruption, and ensure construction sites and companies are following the rules and operating lawfully.”
The Overbilling Scheme
As alleged in the felony information, Plaza Construction engaged in a fraudulent overbilling scheme that impacted a number of its projects for at least a thirteen-year period. These projects included the Brooklyn Navy Yard, Bronx Terminal Market, Federal Reserve Bank of New York, New York University, and Empire State Building.
Plaza Construction’s role on construction projects was typically that of a construction manager, which often required it to supply workers from certain trade unions and to supervise the work done by subcontractors or trade contractors. From at least 1999 through approximately February 2012, Plaza Construction submitted bills to clients, including government contracting and funding agencies, that contained numerous false statements and material misrepresentations and omissions. From August 2004 through February 2012, Plaza Construction systemically inserted a hidden surcharge in its bills to clients that was specifically prohibited and secretly generated additional revenue to offset certain administrative costs.
Additionally, from at least 1999 until 2009, Plaza Construction also billed its clients for hours not worked by labor foremen from Local 79 Mason Tenders’ District Council of Greater New York and carried out this fraudulent overbilling by: (a) allowing labor foremen to be absent from work for major holidays and certain vacation days; (b) providing between five and seven hours of guaranteed overtime per day, whether worked or not, for a particular senior labor foreman; and (c) adding one to two hours of unworked or unnecessary “guaranteed” overtime per day to the time sheets for certain labor foremen. In furtherance of this overbilling scheme, Plaza Construction completed and submitted time sheets to its clients as though the labor foremen had actually worked.
The Deferred Prosecution Agreement
Pursuant to the deferred prosecution agreement filed today, Plaza Construction accepted responsibility for its fraudulent billing practices and agreed to offer restitution to its clients in the amount of $2,226,270.19 and pay a penalty of $5,619,269.92 and forfeit $1,350,317.43 to the government over a two-year period. In consideration of Plaza Construction’s remedial actions to date and its commitment to, among other actions: (a) accept and acknowledge responsibility for its conduct; (b) continue its cooperation; (c) make restitution available to victims; and (d) make the payment of forfeiture and a financial penalty to the government; the government agreed to defer the prosecution for a period of 24 months and to obtain an exclusion of time to allow Plaza Construction to demonstrate good conduct and compliance with the terms of this agreement.[1] Plaza Construction’s remedial measures include the creation of the positions of General Counsel, Associate General Counsel and Compliance Director at the company; establishing a Compliance Committee; instituting annual training for all officers and non-union employees regarding its Code of Business Ethics; establishing an ethics hotline for employees to report ethics violations or concerns; and the revision of time sheet recording and client billing policies.
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The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Whitman Knapp and Jonathan P. Lax are in charge of the prosecution, with assistance from Assistant United States Attorney Brian Morris of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The Defendant:
PLAZA CONSTRUCTION LLC
New York, New YorkEDNY Docket No.: 16-CR-532 (NGG)
[1] The request for the exclusion of time is pending before the Court.
Former President of the Costa Rican Soccer Federation and Member-Elect of the FIFA Executive Committee Pleads Guilty to Racketeering and Corruption ChargesRead the Press Release
Earlier today in federal court in Brooklyn, Eduardo Li pleaded guilty to racketeering conspiracy, wire fraud, and wire fraud conspiracy in connection with his receipt of bribes in exchange for his awarding contracts for the media and marketing rights to FIFA World Cup qualifier matches and his authorization of international friendly matches played by the Costa Rican national soccer team, among other conduct. Li, the president of the Costa Rican soccer federation (FEDEDUT) from 2007 to 2015, was a member-elect of the FIFA executive committee at the time of his arrest in Zurich on May 27, 2015 and a member of the CONCACAF executive committee from 2013 to 2015. As part of his plea, Li agreed to forfeit $668,000. At sentencing, Li faces a maximum sentence of 20 years for each count. Today’s plea proceeding took place before United States District Judge Pamela K. Chen.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director in Charge, FBI, New York Field Office; and Acting Special Agent in Charge Anthony J. Orlando, IRS Criminal Investigation, Los Angeles Field Office.
According to court filings and facts presented during the plea proceeding, Li negotiated and accepted bribes totaling hundreds of thousands of dollars in exchange for exercising his influence as the president of FEDEFUT to award a Florida sports marketing company a contract for the media and marketing rights to the Costa Rican national soccer team’s home World Cup qualifier matches for the 2022 edition of the World Cup. These bribes were transmitted from U.S. bank accounts to Li using intermediaries in the United States and Costa Rica. Li also accepted tens of thousands of dollars in bribes, which were also transmitted from bank accounts in the United States, in exchange for exercising his influence as president of FEDEFUT to authorize friendly matches played by the Costa Rican national soccer team.
In addition, Li agreed to accept a $500,000 bribe from intermediaries in Panama in exchange for exercising his influence as president of FEDEFUT to award an American company the contract to serve as the uniform sponsor for the Costa Rican national soccer team. The intermediaries told Li not to tell anyone at the uniform sponsor about the bribe. Li received approximately $230,000 of the bribe money from the intermediaries in cash United States currency in 2014 and 2015 but was arrested before he could receive the balance.
Finally, Li embezzled for his own use over $90,000 of funds that FIFA sent to FEDEFUT to support the 2014 Under 17 FIFA Women’s World Cup soccer tournament, which was held in Costa Rica. Li diverted these funds through a scheme involving bogus invoices.
The guilty plea announced today is part of an investigation into corruption in international soccer being led by the U.S. Attorney’s Office for the Eastern District of New York, the FBI New York Field Office, and the IRS-CI Los Angeles Field Office. The prosecutors in Brooklyn are receiving considerable assistance from attorneys in various parts of the Justice Department’s Criminal Division in Washington, D.C., including the Office of International Affairs, the Organized Crime and Gang Section, the Asset Forfeiture and Money Laundering Section, and the Fraud Section, as well as from INTERPOL Washington.
Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Paul Tuchmann, Nadia Shihata, Keith D. Edelman, and Brian D. Morris of the Eastern District of New York are in charge of today’s prosecution.
The government’s investigation is ongoing.
The Defendant:
EDUARDO LI
Age: 57
Nationality: Costa RicaE.D.N.Y. Docket No. 15 CR 252 (S-1)
Brooklyn Resident and Two Russian Nationals Arrested in Connection with Scheme to Illegally Export Controlled Technology to RussiaRead the Press Release
Earlier today, Alexey Barysheff of Brooklyn, New York, a naturalized citizen of the United States, was arrested on federal charges of illegally exporting controlled technology from the United States to end-users in Russia. Simultaneously, two Russian nationals, Dmitrii Aleksandrovich Karpenko and Alexey Krutilin, were arrested in Denver, Colorado, on charges of conspiring with Barysheff and others in the scheme.[1] Federal agents also executed search warrants at two Brooklyn locations that were allegedly used as front companies in Barysheff’s illegal scheme.
Barysheff is scheduled to make his initial appearance today at 2:00 p.m. at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York, before Chief United States Magistrate Judge Roanne L. Mann. Karpenko and Krutilin are scheduled to make their initial appearances today at the United States Courthouse in Denver, Colorado, where the government will seek their removal in custody to the Eastern District of New York.
The arrests and charges were announced by U.S. Attorney Robert L. Capers of the Eastern District of New York; Assistant Attorney General for National Security John P. Carlin; Special Agent in Charge Angel M. Melendez, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) for New York; FBI Assistant Director in Charge William F. Sweeney, Jr., New York Field Office; Special Agent in Charge Jonathan Carson, U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office; and Craig Rupert, Special Agent in Charge of the Department of Defense, Defense Criminal Investigative Service, North East Field Office.
The complaints allege that Barysheff, Karpenko, Krutilin, and others were involved in a conspiracy to obtain technologically cutting-edge microelectronics from manufacturers and suppliers located within the United States and to export those high-tech products to Russia, while evading the government licensing system set up to control such exports. The Department of Commerce, pursuant to authority granted by the President of the United States, has placed restrictions on the export and re-export of items that it has determined could make a significant contribution to the military potential and weapons proliferation of other nations and that could be detrimental to the foreign policy and national security of the United States. The microelectronics shipped to Russia included, among other products, digital-to-analog converters and integrated circuits, which are frequently used in a wide range of military systems, including radar and surveillance systems, missile guidance systems, and satellites. These electronic devices required a license from the Department of Commerce to be exported to Russia and have been restricted for anti-terrorism and national security reasons.
As further detailed in the complaints, in 2015 Barysheff registered the Brooklyn, New York-based companies BKLN Spectra, Inc. (Spectra) and UIP Techno Corp. (UIP Techno). Since that time, the defendants, and others have used those entities as U.S.-based front companies to purchase, attempt to purchase, and illegally export controlled technology. To induce U.S.-based manufacturers and suppliers to sell them high-tech, export-controlled microelectronics and to evade applicable controls, the defendants and their co-conspirators purported to be employees and representatives of Spectra and UIP Techno and provided false end-user information in connection with the purchase of the items, concealed the fact that they were exporters, and falsely classified the goods they exported on records submitted to the Department of Commerce. To conceal the true destination of the controlled microelectronics from the U.S. suppliers, the defendants and their co-conspirators shipped the items first to Finland and subsequently to Russia.
“U.S. export laws exist to prevent potentially dangerous technology from falling into the wrong hands,” said U.S. Attorney Capers. “Those who seek to evade the scrutiny of U.S. regulatory and law enforcement agencies by operating in the shadows present a danger to our national security and our allies abroad. We will continue to use all of our available national security options to hold such individuals and corporations accountable.”
“According to the complaints, Barysheff, Karpenko, and Krutilin conspired among themselves and with others to send sensitive U.S. technology surreptitiously to Russia in violation of U.S. export law,” said Assistant Attorney General Carlin. “These laws are in place to protect the national security, and we will spare no effort in pursuing and holding accountable those who seek to harm the national security by illegally procuring strategic commodities for foreign entities.”
“Had law enforcement not interceded, the alleged perpetrators would have exported materials that are known to be used in a wide range of military devices,” said Melendez, Special Agent in Charge for HSI New York. “HSI will continue to partner with other law enforcement agencies while focusing its efforts on national security and stopping the illegal flow of sensitive technology.”
“Export controls were established to prevent certain individuals, organizations, or nations from obtaining protected technology and information. When the laws are evaded, we become vulnerable to the many threats posed by our adversaries. The FBI will continue to protect our national security assets as we work with our partners to prevent the exportation of restricted materials,” said Sweeney, FBI Assistant Director in Charge, New York Field Office.
“Today’s arrest is a collaborative effort among law enforcement agencies. I commend our colleagues for their efforts,” said Special Agent in Charge Carson, U.S. Department of Commerce Bureau of Industry and Security, Office of Export Enforcement, New York Field Office. “The Office of Export Enforcement will continue to use our unique authorities as the regulator and enforcer of our nation's export control laws to keep the most dangerous goods out of the most dangerous hands.”
“The attempted theft of restricted U.S. technology by foreign actors severely threatens the United States’ defensive posture,” said Special Agent in Charge Craig Rupert, DCIS Northeast Field Office. “DCIS will continue to pursue these investigations with our Federal partners to shield America's investment in national defense.”
If convicted of the charges, the defendants face up to 25 years in prison and a $1 million fine.
The case is being handled by the Office’s National Security and Cybercrime Section. Assistant U.S. Attorneys Craig R. Heeren and Peter W. Baldwin are in charge of the prosecution, with assistance from Trial Attorney Matthew Walczewski of the National Security Division’s Counterintelligence and Export Control Section.
The Defendants:
ALEXEY BARYSHEFF
Age: 36
Brooklyn, New YorkDMITRII ALEKSANDROVICH KARPENKO
Age: 33
RussiaALEXEY KRUTILIN
Age: 27
RussiaE.D.N.Y. Docket Nos. 16-893-M, 16-894-M
[1] The charges contained in the complaints naming Barysheff, Karpenko, and Krutilin are allegations, and the defendants are presumed innocent unless and until proven guilty.
The United States Announces Settlement to Remedy Federal Leak Prevention Violations at Gas Stations on Long IslandRead the Press Release
Robert L. Capers, United States Attorney for the Eastern District of New York, and Judith A. Enck, Regional Administrator, United States Environmental Protection Agency (EPA) Region 2, today announced that the United States has entered into a settlement with Rachelann Yetim and five corporate entities through which she owned or operated three gas stations on Long Island that contain underground storage tanks (USTs). These USTs typically hold large quantities of gasoline and can cause significant environmental damage if allowed to leak. The settlement requires defendants to maintain strict compliance with regulations pertaining to the operation of USTs at those stations, submit reports to EPA demonstrating such compliance, and pay a civil penalty, which was calculated based on defendants’ financial condition. The settlement also provides for a series of penalties – including escalating monetary fines – if defendants engage in additional violations of the Resource Conservation and Recovery Act (RCRA). Earlier today, the Consent Judgment memorializing the settlement was approved by United States District Judge Joseph F. Bianco.
In 2014, the United States filed a federal civil environmental complaint against Ms. Yetim, her father Nedjet Yetim, and 15 related corporate entities for widespread violations of the federal leak prevention requirements for USTs at four gas stations on Long Island. As alleged in the complaint, defendants had, among other RCRA violations, failed to: monitor for leaks, provide for adequate protection against corrosion and overflows, adequately secure tanks when facilities were temporarily closed, maintain records of release detection monitoring, and provide necessary information to EPA about the tank systems. As additionally alleged in the complaint, the Yetims have been the principals of several corporate entities and have personally managed, directed, or conducted matters related to pollution and environmental compliance at the facilities. The corporate defendants, all of which are directly related to the individual defendants or were tenants at the relevant facilities, owned and/or operated the gas stations during the periods of the violations alleged in the complaint.
The evidence of public record with the New York State Department of Conservation demonstrates that there were releases from the tanks at all four facilities, each of which is located above a federally-designated Sole Source Aquifer. As set forth in the complaint, among other criteria, a Sole Source Aquifer is an aquifer that supplies 50% of the drinking water consumed within the Sole Source Aquifer’s boundaries. The Sole Source Aquifer designation is a tool to protect drinking water supplies in areas with few or no alternative sources to the groundwater resources, and where, if contamination occurred, using an alternative source would be extremely expensive. Nevertheless, defendants repeatedly failed to comply with numerous federal leak prevention requirements under RCRA.
Since the filing of the federal complaint, one of the gas stations has been permanently closed. Rachelann Yetim sought to bring the remaining three stations into compliance and cooperated with the EPA to effectuate necessary measures, which included several significant upgrades to the facilities and providing necessary information to EPA. The consent judgment with Rachelann Yetim and the five corporate entities through which she has owned and/or operated the USTs is the culmination of those efforts. Defendant Nedjet Yetim has not settled with the government and is the subject of a pending motion for summary judgment filed by the United States.
“The Consent Judgment entered by the Court is the product of a longstanding effort by the EPA and by this Office to ensure that the residents of Long Island would not be harmed by defendants’ disregard of their obligations under federal law to safeguard the public from gasoline and waste oil leaks at their underground storage tanks,” stated United States Attorney Capers. “We are committed to vigorous enforcement of the laws protecting the environment from hazardous wastes.”
“These defendants showed a disregard for underground storage tank regulations that are designed to protect against petroleum leaks,” said EPA’s Regional Administrator Enck. “Under this agreement, the residents of Long Island will be better protected from the threat of petroleum contamination to groundwater. Groundwater is the major source of drinking water for millions of residents of Long Island. It is imperative that petroleum storage tanks fully comply with all environmental regulations to ensure that drinking water is not polluted and people’s health is protected.”
The government’s case is being prosecuted by Assistant United States Attorney Kenneth M. Abell. EPA is represented by Assistant Regional Counsel Karen Taylor.
Settling Defendants:
RACHELANN YETIM
Age: 30
Residence: Floral Park, NYFast Gasoline, Inc.
Black Realty, Inc.
TAG Gasoline, Inc.
NGRV Realty Co., Inc.
Venus Bukey Realty, Inc.Other Defendants:
NEDJET YETIM
Age: 52
Residence: Patchogue, NYHempstead Gasoline Station, Inc.
Elmont Gasoline Corp.
102 Elmont Realty Corp.
Target Petroleum, Inc.
Liberty Petroleum, Inc., (d/b/a as Liberty Petroleum – RGV Petroleum, Inc.)
ASLI & Gizem Realty Corp.
S&B Petroleum, Inc.
Gizem Realty Corp.
PDE Island Park, Inc.
T-Maxx @ Petro Gas, IncGas Stations:
653 Hempstead Turnpike, Elmont NY
725 Wyandanch Avenue North Babylon, NY
4305 Austin Boulevard, Island Park, NY
1278 Hempstead Turnpike Elmont, NY (closed)Cantor Fitzgerald Affiliate to Pay More Than $16 Million in Penalties and Forfeiture for Engaging in Illegal Gambling and Money Laundering SchemesRead the Press Release
CG Technology, LP, formerly doing business as Cantor Gaming (CG Technology and Cantor Gaming),[1] one of the largest race and sports book operators in the United States, has entered into a non-prosecution agreement and agreed to pay $16.5 million in penalties and forfeiture to the federal government to resolve a criminal investigation into the company’s past involvement in illegal gambling and money laundering schemes. In addition, pursuant to the agreement, CG Technology will provide continuing cooperation and has undertaken far-reaching reforms to its business and compliance operations. Michael Colbert, a former senior executive officer at Cantor Gaming, who was the Director of Risk Management, previously pleaded guilty in the United States District Court for the Eastern District of New York to conspiring to participate in an illegal gambling business. Colbert faces up to five years’ imprisonment for his involvement in criminal activity at Cantor Gaming.
The resolution was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Daniel G. Bogden, United States Attorney for the District of Nevada; Philip Bartlett, Inspector in Charge, United States Postal Inspection Service, New York Division (USPIS); Richard Weber, Chief, Internal Revenue Service, Criminal Investigation (IRS-CI); and James P. O’Neill, Commissioner, New York City Police Department (NYPD).
“Cantor Gaming quickly grew into one of the largest race and sports book operators in the United States. Unacceptably, this growth came at the expense of compliance with the law, and as a result Cantor Gaming became a place where at least two large-scale illegal bookmakers could launder their ill-gotten proceeds. The Cantor Gaming senior officer who oversaw the illegal conduct has pleaded guilty for his involvement in this criminal activity. The non-prosecution agreement recognizes Cantor Gaming’s decision to accept full responsibility, provide complete cooperation, and take remedial measures to enforce best industry practices going forward,” stated U.S. Attorney Capers. Mr. Capers thanked the investigative agencies for their outstanding commitment and dedication over the course of this investigation. Mr. Capers also thanked the District Attorney’s Office for Queens County, the Financial Crimes Enforcement Network of the Department of the Treasury, and the Nevada Gaming Control Board, Enforcement Division for their assistance with the investigation.
“CG Technology’s admissions that it violated federal laws by accepting messenger betting, out-of-state betting, and processing large amounts of monies which were the proceeds of illegal activities, are significant victories for the government,” said U.S. Attorney Bogden.
“CG Technology, formerly Cantor Gaming, ran its enterprise with total disregard for government regulations and the penalties associated with breaking the law. As Postal Inspectors and their law enforcement partners continue to prove, greed and eagerness to ‘game’ the system will never be tolerated, and those who choose to ignore the law will be brought to justice,” said USPIS Inspector Bartlett.
“Cantor Gaming bet on never getting caught but this wager didn’t pay off,” said Chief Weber, IRS Criminal Investigation. “Financial transactions always leave a money trail and IRS-CI Special Agents relentlessly follow that trail. This large scale illegal bookmaking investigation uncovered the kind of widespread corruption that is too often associated with criminal enterprises. Working with our law enforcement partners, we will continue to pursue these types of investigations to keep the books clean for consumers and corporations who are following the law.”
“Illegal sports betting is a multi-million-dollar business often involving other illicit activity. There is good reason why this activity needs to be regulated and operated according to the law and industry standards. The illegal conduct forming the basis for this investigation was clearly motivated by greed and deliberate disregard for the rules of the gaming industry. This settlement should serve as a message to those who try to beat the system,” stated NYPD Commissioner O’Neill.
Pursuant to the non-prosecution agreement signed today, Cantor Gaming, which is now known as CG Technology, acknowledged and accepted responsibility for aiding and abetting the operation of an illegal gambling business and money laundering from approximately 2009 through 2013. Cantor Gaming, an affiliate of the financial services company Cantor Fitzgerald, LP, operates race and sports books in the following eight casinos all located in Las Vegas, Nevada: the Venetian, the Palazzo, the M Resort Spa Casino, the Hard Rock Hotel and Casino, the Tropicana, the Cosmopolitan, the Palms Casino Resort, and the Silverton Casino Hotel.
Cantor Gaming’s strategy to grow its business required it to attract and retain bettors who frequently placed large wagers on sporting contests. To do so, Cantor Gaming offered higher betting limits than other sports books and gave the important bettors preferential treatment, including direct access to Michael Colbert, whose job was to set the lines and odds for the betting contests. Important bettors interacted with Colbert and his staff rather than the “front of the house” staff that was under the supervision of Cantor Gaming’s chief operating officer, which normally handled interactions with bettors. To accommodate some of the important bettors, Colbert and his staff facilitated violations of state and federal laws, including: (a) knowingly accepting and facilitating “messenger betting”[2] in its sports books on repeated occasions; (b) knowingly accepting and facilitating out-of-state betting activity through wire communications; and (c) processing large cash deposits and withdrawals and third-party wire transfers, knowing that the property involved represented the proceeds of some form of illegal activity. As set forth in the Statement Facts, which is attached to the non-prosecution agreement, two of these important high volume bettors ran illegal bookmaking operations and were able to launder their illegal proceeds through Cantor Gaming wagering accounts.
On or about August 21, 2013, Michael Colbert pleaded guilty in the Eastern District of New York to conspiracy to conduct an illegal gambling business, in violation of Title 18, United States Code, Section 371, and faces a term of imprisonment of up to five years when sentenced.
In light of CG Technology’s complete acceptance of responsibility for the full breadth of its unlawful conduct, cooperation, and far-reaching remedial measures, the government has agreed not to prosecute CG Technology for its criminal conduct, provided that CG Technology complies for two years with all the terms of the agreement executed today.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys James P. Loonam and Matthew Amatruda are in charge of the case, with assistance from Assistant United States Attorney Brian Morris of the Office’s Civil Division, which is responsible for the forfeiture of assets, as well as Assistant United States Attorney Nicholas Dickinson of the District of Nevada.
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This resolution was the result of efforts by the President’s Financial Fraud Enforcement Task Force. The task force was established 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, please visit www.StopFraud.gov.
[1] Cantor Gaming changed its name to CG Technology, LP in January 2014. The conduct which was the subject of the criminal investigation occurred while the company was doing business as Cantor Gaming.
[2] The practice of having an agent or “runner” place a bet on behalf of a third-party in exchange for compensation is known as “messenger betting.” It is illegal for a licensed sports book in Nevada to knowingly accept wagers from compensated agents.
United States Announces Settlement of Clean Water Act Violations at Aqueduct RacetrackRead the Press Release
Robert L. Capers, United States Attorney for the Eastern District of New York, and Judith A. Enck, Regional Administrator, United States Environmental Protection Agency (EPA) Region 2, announced today the filing of a complaint against The New York Racing Association, Inc. (NYRA) as well as the lodging of a consent decree to resolve the allegations in the complaint.
The complaint alleges that NYRA, which operates the Aqueduct Racetrack where horse racing, training, and boarding of horses occur, and where up to 450 horses are housed on site during the horse racing season, violated the Clean Water Act as a result of discharging polluted wastewater, containing animal wash water and detergent, and feed waste, from Aqueduct Racetrack into New York City’s and New York State’s storm sewer systems. In 2013 and 2014 alone, NYRA generated and discharged an estimated 1.26 million gallons per year of polluted wastewater to storm sewer systems. The discharges from Aqueduct ultimately flowed to the Hawtree and Bergen Basins, tributaries located within the eastern portion of Jamaica Bay, a navigable water of the United States. Eastern Jamaica Bay and associated tributaries are currently designated by the New York State Department of Environmental Conservation as impaired due to ammonia, nitrogen, oil/grease, and pathogens.
Under the consent decree, NYRA will implement measures to eliminate discharges to the storm sewers and ensure that all polluted wastewater from Aqueduct Racetrack flows to sanitary sewers. The settlement includes interim and long term measures, including (1) designation of an employee who is responsible for ensuring that there are no discharges of polluted wastewaters into storm drains; (2) implementation of procedures applicable to employees to ensure that no polluted wastewater discharges occur; (3) installation and operation of a telemetry monitoring system in the manholes that will alert employees of any dry weather flows in the storm sewers; and (4) weekly inspections. The settlement also requires NYRA to implement horse washing procedures and to implement a public website that makes inspection results and information about NYRA’s compliance available to the public. The Consent Decree also requires NYRA to pay $150,000 as a civil penalty.
In addition, the Consent Decree requires NYRA to implement a Supplemental Environmental Project to reduce storm water runoff impacts. NYRA will plant 62 trees at the nearby NYRA Belmont Racetrack which will (1) capture storm water enabling some of it to evaporate back to the atmosphere rather than reach the ground; (2) mitigate the effect of heavy storm events (i.e., large amounts of runoff) by intercepting and slowing the rate at which storm water reaches the ground; (3) break up the soil to allow the soil to become more permeable and able to absorb greater amounts of storm water; and (4) abate soil erosion. The trees will also provide wildlife habitat and reduce urban “heat island” effects.
Aqueduct Racetrack is a concentrated animal feeding operation (CAFO). EPA defines a CAFO as a facility where animals are kept and raised in confined situations for a total of 45 days or more in any 12-month period and feed is brought to the animals rather than the animals grazing or otherwise feeding in pastures, fields, or on range land. CAFOs generate significant volumes of animal waste which, if improperly managed, can result in environmental and human health risks such as water quality impairment, fish kills, algal blooms, contamination of drinking water sources, and transmission of disease-causing bacteria and parasites associated with food and waterborne diseases. This action was brought as part of EPA’s National Enforcement Initiative that uses innovative monitoring and targeting techniques to identify areas where CAFOs impair our nation’s natural resources or adversely impact communities, and to promote technologies to address excess nutrients and reduce animal waste pollution.
“The United States brought this action to ensure that the polluted wastewater discharges that flow from Aqueduct Racetrack and through storm sewers to Jamaica Bay are eliminated. Jamaica Bay is an important habitat for fish, wildlife, migratory birds, and plants. This office will continue to vigorously enforce violations of the Clean Water Act to reduce pollution to this and other waters of the United States,” said United States Attorney Capers.
“Over a million gallons of polluted wastewater has been released every year from the Aqueduct Racetrack into Jamaica Bay, including animal wash water and detergent, and feed waste,” said EPA Regional Administrator Enck. “It is imperative that the New York Racing Association comply with the federal Clean Water Act.”
The action is entitled United States v. The New York Racing Association, Inc., Civil Action No. 1:16-CV-05442-LDH-CLP, (DeArcy Hall, J.), (Pollak, M.J.). Following a 30-day comment period and review of any comments received, the United States will determine whether to move to enter the consent decree.
Assistant United States Attorney Deborah B. Zwany is in charge of the litigation, with assistance from Phyllis Kaplan Feinmark, Chief, Water and General Law Branch, EPA Region 2, Kimberly McEathron, Physical Scientist, Water Compliance Branch, EPA Region 2, Kathryn J. Greenwald, Environmental Protection Specialist, EPA Office of Enforcement and Compliance Assurance, and Kristin Buterbaugh, Attorney-Adviser, EPA Office of Enforcement and Compliance Assurance.
Och-Ziff Capital Management Admits to Role in Africa Bribery Conspiracies and Agrees to Pay $213 Million Criminal FineRead the Press Release
Och-Ziff Enters into Three-Year Deferred Prosecution Agreement; Subsidiary Pleads Guilty to Conspiracy to Violate the Foreign Corrupt Practices Act
A New York-based alternative investment and hedge fund manager, Och-Ziff Capital Management Group LLC (Och-Ziff), and its wholly-owned subsidiary, OZ Africa Management GP LLC (OZ Africa), entered into resolutions to resolve criminal charges and agreed to pay a criminal penalty of more than $213 million in connection with a widespread scheme involving the bribery of officials in the Democratic Republic of Congo (DRC) and Libya.
Principal Deputy Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) New York Field Office made the announcement.
“This case marks the first time a hedge fund has been held to account for violating the Foreign Corrupt Practices Act,” said Principal Deputy Assistant Attorney General Bitkower. “In its pursuit of profits, Och-Ziff and its agents paid millions in bribes to high-level officials across Africa. By exposing corruption in this industry, the Criminal Division’s Fraud Section continues to root out wrongdoing of all types in the financial sector.”
“Och-Ziff, one of the largest hedge funds, positioned itself to profit from the corruption that is sadly endemic in certain parts of Africa, including in Libya, the Democratic Republic of the Congo, Chad and Niger,” said U.S. Attorney Capers. “Despite knowing that bribes were being paid to senior government officials, Och-Ziff repeatedly funded corrupt transactions. One Och-Ziff employee was so bold as to order the removal of language from their African joint venture’s internal audit report that called for an investigation of suspected bribery payments by a business partner. Today’s corporate resolutions, which include a more than $213 million criminal penalty and an independent compliance monitor, hold Och-Ziff accountable for placing profits above the law and will help ensure that the conduct brought to light here never happens again at this company.”
“Gaining the upper hand in a business venture by engaging in corrupt practices is bribery in its purest form,” said Assistant Director in Charge Sweeney. “Doing so with the intention of influencing a foreign official in his or her capacity is nothing short of corruption. In this scheme, payments of millions of dollars were paid out to senior officials within certain parts of Africa in exchange for access to profitable investment opportunities. This type of behavior can’t and won’t be tolerated. I commend the investigators and prosecutors who continue to work together at home and abroad to vigorously enforce the law within the confines of the Foreign Corrupt Practices Act.”
“Today’s plea and deferred prosecution agreement result from the unraveling of complex financial transactions orchestrated by Och-Ziff Capital Management Group LLC and its subsidiary to facilitate illegal payments to foreign government officials,” said Chief Weber. “IRS-CI will continue to investigate pervasive bribery schemes used by corporations in the pursuit of attractive international investment opportunities.”
Och-Ziff entered into a deferred prosecution agreement in connection with a criminal information charging the company with two counts of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA), one count of falsifying its books and records and one count of failing to implement adequate internal controls. Pursuant to its agreement with the department, Och-Ziff agreed to pay a total criminal penalty of $213,055,689. Och-Ziff also agreed to implement rigorous internal controls, retain a compliance monitor for a term of three years and cooperate fully with the department’s ongoing investigation, including its investigation of individuals.
OZ Africa pleaded guilty to a one-count criminal information filed today and assigned to U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York, charging the company with a conspiracy to violate the anti-bribery provisions of the FCPA. Sentencing has been scheduled for March 29, 2017.
In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Och-Ziff Capital Management Group LLC and OZ Management LP, whereby Och-Ziff agreed to pay approximately $199 million in disgorgement to the SEC, including prejudgment interest. Thus, the combined total amount of U.S. criminal and regulatory penalties paid by Och-Ziff is approximately $412 million.
The DRC Bribery Scheme
According to the companies’ admissions, in late 2007, Och-Ziff employees began discussions with a businessman operating in the DRC about entering into a partnership based on special access to lucrative investment opportunities in the DRC involving the country’s diamond and mining sectors. Och-Ziff employees learned that the businessman gained access to these attractive investment opportunities by making corrupt payments to senior government officials in the DRC, the companies admitted. According to the plea agreement, between 2008 and 2012, Och-Ziff entered into several DRC-related transactions in conjunction with the businessman, understanding that Och-Ziff’s funds would be used, in part, to pay substantial sums of money to high-ranking DRC officials to secure access to, and preference for, the investment opportunities. In late 2008, after an Och-Ziff employee was alerted that an audit of the businessman’s records revealed payments to DRC officials, that employee instructed that any references to those payments be removed from a final report of the audit, the companies admitted. According to the plea agreement, the businessman paid tens of millions of dollars in bribes to DRC officials in exchange for investment opportunities that resulted in more than $90 million in profits for Och-Ziff.
The Libya Bribery Scheme
Och-Ziff also admitted that, beginning in 2007, it engaged a third-party agent to assist the company in securing an investment from the Libyan Investment Authority (LIA), that country’s sovereign wealth fund, knowing the agent would need to pay bribes to Libyan officials. The agent was engaged without formal approval or any due diligence, according to court documents. The company admitted that, beginning in February 2007, the agent worked on behalf of Och-Ziff to obtain an asset placement from the LIA, including setting up a meeting between a senior Och-Ziff employee and the Libyan official empowered to make investment decisions for the LIA. According to court documents, in late November 2007, Och-Ziff received a $300 million investment from the LIA into the company’s hedge funds. Och-Ziff admitted that it subsequently entered into an agreement to pay the agent a “finder’s fee” of $3.75 million, knowing that all or a portion of the fees would be paid to Libyan officials in return for their assistance in obtaining the LIA’s investment. In addition, Och-Ziff admitted that it falsified its books and records and attempted to conceal and disguise the bribes paid through the agent by paying the “finder’s fee” through a sham consulting agreement.
Internal Controls Failures and Falsified Books and Records
Och-Ziff also failed to implement and maintain adequate internal accounting controls, which allowed its employees, agents and business partners to misappropriate assets, the company admitted. As a result of its failure to conduct due diligence on its partners and the lack of financial controls, Och-Ziff failed to prevent bribe payments from being made in the DRC, Libya, as well as in Chad and Niger, where an Och-Ziff joint venture made mining-related investments, according to admissions in court documents.
The Corporate Resolutions
The department entered into this resolution in part due to Och-Ziff’s failure to voluntarily self-disclose the companies’ misconduct to the department. The resolution also reflects the seriousness of the companies’ conduct, including the high value of the bribes paid to foreign officials and the involvement of a high level employee within Och-Ziff. Notwithstanding, the criminal penalty reflects a 20 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range because of Och-Ziff’s cooperation with the government’s investigation.
* * *
In connection with the government’s investigation, Samuel Mebiame, 43, a Gabonese national, was charged on Aug. 16, 2016, with conspiring to bribe foreign government officials to obtain mining rights in Chad, Niger and Guinea. According to the criminal complaint, Mebiame allegedly worked as a “fixer” for a mining company owned by a joint venture between Och-Ziff and an entity incorporated in Turks and Caicos. The complaint alleges that Mebiame paid bribes to high-ranking government officials in Niger and Chad to obtain mining rights for the joint venture. The charges against Mebiame are merely allegations, and he is presumed innocent unless and until proven guilty.
The FBI’s New York Field Office and IRS-CI’s New York office are investigating the case. The department appreciates the significant cooperation and assistance provided by the SEC in this matter. The Swiss Federal Office of Justice, the British Virgin Islands Central Authority, the Maltese judicial authorities and authorities in Jersey and Guernsey also provided assistance.
Assistant Deputy Chief Leo Tsao and Trial Attorney James P. McDonald of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys James P. Loonam, Jonathan P. Lax and David Pitluck of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case. The Criminal Division’s Office of International Affairs also provided significant assistance.
The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Och-Ziff Capital Management Admits to Role in Africa Bribery Conspiracies and Agrees to Pay $213 Million Criminal FineRead the Press Release
BROOKLYN, NY – The U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division, Fraud Section are prosecuting a New-York alternative investment and hedge fund manager, Och-Ziff Capital Management Group, LLC (Och-Ziff), which has agreed to pay a $213 million criminal penalty and enter into multiple criminal resolutions with the Department of Justice to resolve charges related to widespread bribery of officials in Libya and the Democratic Republic of Congo. As part of the resolution, Och-Ziff, the publicly traded parent company, entered into a three-year deferred prosecution agreement (DPA) with the Department of Justice. An Och-Ziff subsidiary, OZ Africa Management GP, LLC (OZ Africa), pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA). Today’s guilty plea and proceedings in connection with the DPA took place before United States District Judge Nicholas G. Garaufis in the U.S. District Court for the Eastern District of New York. Sentencing for OZ Africa has been scheduled for March 29, 2017, at 2:00pm.
U.S. Attorney Robert L. Capers of the Eastern District of New York, Principal Deputy Assistant Attorney David Bitkower of the Justice Department’s Criminal Division, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Richard Weber, Chief, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.
“Och-Ziff, one of the largest hedge funds, positioned itself to profit from the corruption that is sadly endemic in certain parts of Africa, including in Libya, the Democratic Republic of the Congo, Chad, and Niger. Despite knowing that bribes were being paid to senior government officials, Och-Ziff repeatedly funded corrupt transactions. One Och-Ziff employee was so bold as to order the removal of language from their African joint venture’s internal audit report that called for an investigation of suspected bribery payments by a business partner. Today’s corporate resolutions, which include a more than $213 million criminal penalty and an independent compliance monitor, hold Och-Ziff accountable for placing profits above the law and will help ensure that the conduct brought to light here never happens again at this company,” stated United States Attorney Capers.
“This case marks the first time a hedge fund has been held to account for violating the Foreign Corrupt Practices Act,” said Principal Deputy Assistant Attorney General Bitkower. “In its pursuit of profits, Och-Ziff and its agents paid millions in bribes to high-level officials across Africa. By exposing corruption in this industry, the Criminal Division’s Fraud Section continues to root out wrongdoing of all types in the financial sector.”
“Gaining the upper hand in a business venture by engaging in corrupt practices is bribery in its purest form,” said FBI Assistant Director in Charge Sweeney. “Doing so with the intention of influencing a foreign official in his or her capacity is nothing short of corruption. In this scheme, payments of millions of dollars were paid out to senior officials within certain parts of Africa in exchange for access to profitable investment opportunities. This type of behavior can’t and won’t be tolerated. I commend the investigators and prosecutors who continue to work together at home and abroad to vigorously enforce the law within the confines of the Foreign Corrupt Practices Act.”
“Today’s plea and deferred prosecution agreement result from the unraveling of complex financial transactions orchestrated by Och-Ziff Capital Management Group, LLC and its subsidiary to facilitate illegal payments to foreign government officials,” said IRS-CI Chief Weber. “IRS-CI will continue to investigate pervasive bribery schemes used by corporations in the pursuit of attractive international investment opportunities.”
Under the DPA, Och-Ziff admitted to multiple conspiracy charges in a four-count criminal information, including two counts of conspiracy to violate the anti-bribery provisions of the FCPA, one count of falsifying its books and records and one count of failing to implement adequate internal controls. Additionally, OZ Africa pleaded guilty to conspiring to bribe senior officials in the Democratic Republic of Congo in connection with obtaining valuable mining concessions. Collectively, Och-Ziff and OZ Africa agreed to pay a criminal penalty of $213,055,689, and Och-Ziff agreed to retain an independent compliance monitor for a period of three years.
The DRC Bribery Scheme
Between 2005 and 2012, a businessman operating in the DRC with significant interests in the diamond and mining sectors in the DRC paid more than one-hundred million dollars in bribes to DRC officials for special access to attractive investment opportunities. In late 2007, Och-Ziff employees began discussions to partner with the businessman based upon his special access to these investment opportunities. Between 2008 and 2011, Och-Ziff entered into several DRC-related transactions with this businessman despite the fact that at least two Och-Ziff employees knew, and a senior Och-Ziff employee believed it was likely, that the businessman gained access to these attractive investment opportunities by making corrupt payments to government officials. Och-Ziff personnel funded these transactions understanding that Och-Ziff’s funds would be used in part to pay substantial sums of money to high ranking DRC officials to secure access to and preferential treatment for the investment opportunities. In late 2008, after an Och-Ziff employee was alerted that an audit of the businessman’s records revealed payments for DRC officials, that employee instructed that any references to those payments be removed from a final report of the audit. The businessman did, in fact, make corrupt payments to and for the benefit of DRC officials to secure the investment opportunities.
The Libya Bribery Scheme
Separately, but also beginning in 2007, a senior Och-Ziff employee engaged a third-party agent to assist the company in securing an investment from the Libyan sovereign wealth fund, the Libyan Investment Authority (LIA). At the time of the engagement, the senior Och-Ziff employee knew that the agent would need to make corrupt payments to Libyan officials to secure that investment. The agent was engaged without formal approval by Och-Ziff and without any due diligence conducted on the agent by Och-Ziff. From February 2007, the agent worked on behalf of Och-Ziff to obtain an asset placement from the LIA, including setting up a meeting between the senior Och-Ziff employee and the Libyan official who was empowered to make investment decisions for the LIA. In late November 2007, Och-Ziff received a $300 million investment from the LIA into Och-Ziff hedge funds. Shortly thereafter, Och-Ziff entered into a consulting agreement to pay a sham “finder’s fee” of $3.75 million, knowing that all or a portion of the fee would be paid to Libyan officials in return for their assistance in obtaining the LIA’s investment. The agent did in fact make corrupt payments to and for the benefit of Libyan officials to influence the LIA’s investment.
Internal Controls Failures and Falsified Books and Records
Further, Och-Ziff admitted that it knowingly and willfully falsified and caused to be falsified records related to its retention and payment of the agent in Libya. The falsified records concealed the true purpose of the payments, which purported to be for consulting purposes, but which actually would be used for corrupt payments to Libyan officials in return for their assistance in obtaining the LIA’s investment. Och-Ziff also failed to implement and maintain an adequate system of internal accounting controls designed to detect and prevent the misappropriation of assets by its employees, agents, and business partners. As a result, the company failed to prevent bribe payments from being made in the DRC, Libya, as well as in Chad and Niger, where an Och-Ziff joint venture made mining-related investments. For all the criminal conduct included in these resolutions, Och-Ziff reaped more than $210 million in illegal profits.
The Corporate Resolutions
The Department entered into this resolution, in part, due to Och-Ziff’s failure to voluntarily self-disclose the offense conduct and the seriousness of the conduct including the high-dollar amount of bribes paid to foreign officials and involvement by a high level employee within Och-Ziff. Notwithstanding, Och-Ziff received a 20 percent reduction off the bottom of the U.S. Sentencing Guidelines range for its cooperation with the government’s investigation. Och-Ziff also committed to continue to enhance its compliance program and internal controls, to cooperate with the Department in ongoing investigations, and to retain an independent compliance monitor pursuant to the terms outlined in the DPA.
* * *
In connection with the government’s investigation, Samuel Mebiame, a Gabonese national, was charged on August 16, 2016, by criminal complaint with conspiring to bribe foreign government officials to obtain mining rights in Chad and Niger, as well as Guinea.[1] According to documents filed in court, Mebiame worked as a “fixer” for a mining company that was owned by a joint venture between Och-Ziff and a Turks & Caicos incorporated entity. In that capacity, Mebiame paid bribes to high-ranking government officials in Niger and Chad to obtain the mining rights. During the charged conspiracy, Mebiame repeatedly traveled to the United States to further the scheme, including to meet with coconspirators at the Plaza Hotel in New York and to start companies and open bank accounts through which he could receive international wire transfers from coconspirators.
* * *
In a parallel proceeding announced today, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Och-Ziff Capital Management Group LLC and OZ Management LP, whereby Och-Ziff agreed to pay approximately $199 million in disgorgement to the SEC, including prejudgment interest. The total amount of the global resolution is thus approximately $412 million.
The FBI’s New York Field Office and IRS-CI’s New York office are investigating the case. The department appreciates the significant cooperation and assistance provided by the SEC in this matter. The Swiss Federal Office of Justice, the British Virgin Islands Central Authority, the Maltese judicial authorities and authorities in Jersey and Guernsey also provided assistance.
* * *
The case is being prosecuted by Assistant U.S. Attorneys James P. Loonam, Jonathan P. Lax, and David Pitluck of the Business and Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York, and Assistant Deputy Chief Leo Tsao and Trial Attorney James P. McDonald of the Criminal Division’s Fraud Section. The Criminal Division’s Office of International Affairs provided significant assistance in this matter.
[1] The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
United States Settles Claim Against Summer Camp That Revoked Admission for Young Camper with Insulin-Dependent DiabetesRead the Press Release
Robert L. Capers, United States Attorney for the Eastern District of New York, announced today a settlement with Camp Treetops, a residential summer camp in Lake Placid, New York, under title III of the Americans With Disabilities Act, 42 U.S.C. §§ 12181- 12189 (ADA). Title III prohibits discrimination against people with disabilities in places of public accommodation, including summer camps. Individuals with insulin-dependent diabetes fall within the protection of the ADA.
The settlement resolves claims made by Wenda Celidon, a resident of Valley Stream, New York, that Camp Treetops revoked its acceptance of her minor daughter, L.F., into its summer camp program and revoked a scholarship it had granted L.F. because she had insulin-dependent diabetes. Ms. Celidon alleged that Camp Treetops initially accepted L.F. into the summer program, but one day before she was scheduled to leave for Camp Treetops, the Camp’s director revoked her admission and scholarship due to her insulin-dependent diabetes.
Under the settlement, Camp Treetops will pay $13,500 to L.F., and adopt a written policy that prohibits discrimination on the basis of disability and creates a process for evaluating requests for reasonable modifications. The Camp will also train its employees and staff regarding the disability discrimination provisions of federal, state, and local civil rights laws, including title III of the ADA.
Under the terms of the settlement, Camp Treetops denies violating L.F.’s rights under the ADA.
“Discrimination against individuals, especially children with disabilities, is unacceptable,” stated United States Attorney Capers. “The ADA requires that such children be given an equal opportunity to attend summer camps, an opportunity that was taken away from the child in this case.”
The matter was handled by Assistant U.S. Attorney Rukhsanah Singh.
Town of Oyster Bay Commissioner Sentenced to 27 Months in Prison for Tax EvasionRead the Press Release
Earlier today in Central Islip, New York, Frederick Ippolito, former Town of Oyster Bay Commissioner of Planning and Development, was sentenced to 27 months’ imprisonment, three years of supervised release, and $548,487.00 in restitution, following his guilty plea on January 26, 2016, to tax evasion. The sentencing proceeding was held before U.S. District Judge Leonard D. Wexler.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS).
In announcing the sentence, United States Attorney Capers stated, “Today’s sentence reinforces that no one is immune from the laws of the United States. The defendant’s position as an influential official within a local municipality did not exempt him from paying his fair share of taxes, just like any other citizen. He has now been held accountable for his actions.” Mr. Capers extended his grateful appreciation to IRS-Criminal Investigation, the agency responsible for leading the government’s investigation.
From 2008 to 2013, Ippolito received over $2 million in consulting fees from Carlo Lizza & Sons Paving, Inc., a company located in Old Bethpage, New York, as well as from a principal of that company. Ippolito evaded taxes on that income by willfully failing to report it on his personal tax returns or the returns of entities he controlled. Ippolito is the President of CAI Associates, LTD, a consulting and snow removal business, and a former officer of CAI Restaurant, Inc., d/b/a Christiano’s, in Syosset, New York.
From 2009 through January 2016, Ippolito served as the Commissioner of Planning and Development for the Town of Oyster Bay (TOB), a municipality in Nassau County, New York. The TOB’s Department of Planning and Development was responsible for the enforcement of all codes, rules, and ordinances pertaining to building and zoning, and supervised the issuance of permits for construction within the TOB. As Commissioner, Ippolito oversaw the TOB Department of Planning and Development’s several divisions, which included, among others, the Building Division, the Code Compliance Bureau, the Division of Administration of Board of Appeals, and the Planning Division. Ippolito’s resignation as a Commissioner was accepted by the TOB following his guilty plea.
The government’s case is being handled by the Office’s Long Island Criminal Section. Assistant United States Attorneys Catherine M. Mirabile and Raymond A. Tierney are in charge of the prosecution.
The Defendant:
FREDERICK IPPOLITO
Age: 77
Syosset, New YorkE.D.N.Y. Docket No. 15-CR-129 (LDW)
Importing Company’s Founder Sentenced to 124 Months’ for His Role in $26 Million Ponzi SchemeRead the Press Release
CENTRAL ISLIP, NY – Earlier today, Eric Aronson, the founder and head of Permapave Industries LLC and Permapave USA Corporation (Permapave), was sentenced to 124 months’ imprisonment to be followed by three years’ supervised release, and ordered to forfeit $26 million in criminal proceeds. Restitution amount to be determined. Aronson pleaded guilty to securities fraud on September 12, 2014.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York. Mr. Capers expressed his grateful appreciation to the Federal Bureau of Investigation, New York Field Office, which led the government’s investigation in this case.
Aronson was charged with securities fraud for orchestrating a multi-million dollar Ponzi scheme which, from approximately August 2006 to December 2010, defrauded more than 200 investors out of approximately $26 million. He and his coconspirators issued promissory notes to investors and promised to use the proceeds to finance shipments of Permapave paving stones from Australia to the United States. In reality, they operated a Ponzi scheme whereby some investors were paid returns on their investment from the funds Aronson obtained from other defrauded investors. Aronson converted millions of dollars of investor funds for personal expenditures, including vacations, watches, jewelry, and automobiles.
Today’s sentencing took place before Senior United States District Judge Arthur D. Spatt.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorney William P. Campos is in charge of the prosecution, with assistance provided by Assistant United States Attorney Brian Morris of the Office’s Civil Division, which is responsible for the forfeiture of assets.
This prosecution was the result of efforts by President Obama’s 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’s 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 Defendant:
ERIC ARONSON
Age: 48
Syosset, New YorkE.D.N.Y. Docket No. 12 - CR - 245 (ADS)
Justice Department and Law Enforcement Partners Announce Civil and Criminal Actions to Dismantle Global Network of Mass Mailing Fraud Schemes Targeting Elderly and Vulnerable VictimsRead the Press Release
WASHINGTON – The Justice Department, in coordination with the U.S. Postal Inspection Service (USPIS), the Department of the Treasury’s Office of Foreign Assets Control (OFAC), and other law enforcement partners, today announced wide-ranging enforcement actions – including criminal charges, economic sanctions, seizure of criminal proceeds, and civil injunction lawsuits – along with the execution of search warrants to combat a global network of mass mailing fraud schemes that collectively have defrauded millions of elderly and vulnerable victims across the United States out of hundreds of millions of dollars. Simultaneously, a consortium of government agencies and non-profit groups led by the Department’s Consumer Protection Branch and Elder Justice Initiative announced a public education campaign to heighten public awareness and educate potential victims and their families about these schemes.
The actions announced today are part of a broader effort by the Department and its international law enforcement partners to attack fraud schemes targeting older Americans and other vulnerable populations that involve individuals and entities across the globe, including Canada, France, India, the Netherlands, Singapore, Switzerland, Turkey, and the United States.
“Every year, fraudulent mail fraud schemes target millions of Americans with false promises of wealth and riches, swindling hundreds of thousands of our fellow citizens,” said Attorney General Loretta E. Lynch. “Today’s actions send a clear message that the Department of Justice is determined to hold the perpetrators of these harmful schemes accountable. And they make unmistakably clear that we are committed to protecting our people from exploitation – especially our older citizens, who are so often the focus of shameful ruses. I want to thank our partners across the federal government for their assistance in bringing these actions, and I pledge the department’s ongoing dedication to ending mail fraud.”
“The defendants targeted the elderly and vulnerable by selling false promises of cash and lavish prizes,” said U.S. Attorney Robert L. Capers for the Eastern District of New York. “Not surprisingly, the only good fortune befell the defendants. We will employ every available means, including educating consumers, to protect the public from these schemes.”
“The law enforcement and civil injunction efforts announced today are just a part of our initiative,” said Postal Service’s Chief Postal Inspector Guy Cottrell. “We believe that consumer education is the best defense against these scammers. We can’t arrest all of these con artists, so preventing the crime is critical.”
The mail schemes involve a complicated web of actors located across the world and each scheme follows a similar pattern. Fraudulent direct mailers create letters falsely claiming that the recipient has won, or will soon win, cash or valuable prizes, or otherwise will come into good fortune. In order to collect these benefits, the letters say that the recipients need only send in a small amount of money for a processing fee or taxes. The letters appear to come from legitimate sources, typically on official-looking letterhead, and – even though they are in reality identical form letters – the letters appear to be personally addressed. Some solicitations even use fonts that appear to be handwritten.
Today’s actions include both criminal and civil cases against multiple direct mailers who, collectively, are responsible for dozens of schemes involving tens of millions of dollars every year. In addition, today’s actions also seek to shut down several other actors who work with the mailers to carry out these schemes: an India-based printer that manufactures the solicitations and arranges for bulk shipment to U.S. victims; list brokers who buy, sell, or rent lists of victims from one mailer to another so that once a victim has fallen prey to one scheme, others are able to target this victim; and a Canadian payment processor that, for more than 20 years, has helped dozens of international fraudsters gain access to U.S. banks and take money from victims.
“The Civil Division’s Consumer Protection Branch is working with international and domestic law enforcement through the International Mass-Marketing Fraud Working Group to dismantle these complex frauds through both civil and criminal actions,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “And we will continue to work with federal partners and non-governmental organizations to educate the public about this threat to vulnerable consumers.”
Actions against Canadian Payment Processor
The Justice Department, OFAC, and USPIS took simultaneous actions today against PacNet Services Ltd. (PacNet), an international payments processor and money services business based in Vancouver, Canada, along with affiliate companies and their operators. Today OFAC designated the PacNet Group as a significant transnational criminal organization (TCO) pursuant to Executive Order (E.O.) 13581, “Blocking Property of Transnational Criminal Organizations.” OFAC is also designating a global network of 12 individuals and 24 entities across 18 countries. As a result of today’s action, all property and interests in property of the designated persons subject to U.S. jurisdiction are blocked, and U.S. persons are prohibited from engaging in transactions with them.
In addition, USPIS has sought and obtained a seizure warrant in the U.S. District Court for the Eastern District of New York for the funds in a PacNet U.S. bank account that is used to process payments received through fraudulent mailings. The matter is being investigated by the USPIS team assigned to the Consumer Protection Branch, in conjunction with the USPIS’s Newark Division, Internal Revenue Service-Criminal Investigation’s Newark Field Office, and Homeland Security Investigation’s El Dorado Money Laundering Task Force. The seizure is being handled by Assistant U.S. Attorney Tanisha Payne of the U.S. Attorney’s Office for the Eastern District of New York and Assistant Director Richard Goldberg of the Civil Division’s Consumer Protection Branch.
According to court filings made public today, PacNet has a 20-year history of engaging in money laundering and mail fraud, by knowingly processing payments on behalf of a wide range of mail fraud schemes that target victims in the United States and throughout the world. According to these records, in 2016 alone, PacNet has processed payments for the perpetrators of more than 100 different mail fraud campaigns, collectively involving tens of millions of dollars. In doing so, PacNet provides fraudsters in other countries with unfettered access to U.S. banks. The records also identify PacNet as the processor for each of the defendants named in the cases announced by the Department today.
“PacNet has knowingly facilitated the fraudulent activities of its customers for many years, and today’s designations are aimed at shielding Americans and the nation’s financial system from the large-scale, illicit money flows that are generated by these scams against vulnerable individuals,” said OFAC Acting Director John E. Smith. “Treasury will continue to use its authorities to respond to the evolving nature of transnational organized crime.”
Criminal Charges and Civil Injunction Action Filed against Turkish Direct Mailer
In a criminal complaint filed in the U.S. District Court for the Eastern District of New York, the government charged Ercan Barka, 34, a resident of Turkey, with conspiracy to commit mail fraud. According to the criminal complaint, Barka arranged for fraudulent solicitations to be mass mailed to victims across the United States. The fraudulent solicitations told recipients that they had won cash awards or lavish prize items and needed to pay a fee to claim their winnings. Victims allegedly received nothing in return for their fees. Barka was arrested by U.S. Postal Inspectors at JFK International Airport in New York on Sept. 3, as he was about to board a plane bound for Turkey.
The government also brought a civil injunction action under the Anti-Fraud Injunction Statute against Barka and True Vision LLC, a Delaware-based corporation through which he operates. The civil complaint seeks to preliminarily and permanently ban Barka from participating in mail fraud schemes. The complaint alleges that Barka sends millions of fraudulent mailings to potential U.S. victims each year and that, since 2012, U.S. victims have paid more than $29 million to Barka’s mailing campaigns.
The United States’ civil injunction action is being handled by Assistant U.S. Attorneys Jessica Sklarsky and John Vagelatos of the U.S. Attorney’s Office for the Eastern District of New York, and Trial Attorney Ann F. Entwistle of the Civil Division’s Consumer Protection Branch.
Civil Action under the Anti-Fraud Injunction Statute against Swiss/Singaporean Direct Mailer, Indian Printer, and Connecticut “List Broker”
In a separate civil action, the United States brought suit to shut down entities and individuals, some of whom have engaged in numerous predatory mail fraud schemes for more than a decade, targeting primarily the elderly and vulnerable. First, the complaint names BDK Mailing GmbH, Mailing Force Pte. Ltd., and Only Three Pte. Ltd. (collectively BDK). These entities, under common ownership, are based in Switzerland and Singapore. The complaint also names BDK’s principals, Chantal Seguy, 58, and Marion Elchlepp, 25, both of Paris, and Aurore Jouffroy, of Zurich. BDK acts as a direct mailer responsible for mailing millions of multi-piece solicitations to potential victims throughout the United States that profess to come from financial entities, scholars, and world-renowned psychics, with contrived names like “Harrison Institute,” “Dr. Grant,” “Finkelstein & Partner,” and “Marie de Fortune,” among others. The solicitations are written to give the impression that they are personalized and inform recipients that they will receive large sums of money, guaranteed money-making methods, and/or powerful talismans in return for payment of a fee of $50 to $55. In reality, the complaint alleges, the purported senders and the promised winnings are fictitious. Although victims send in the requested fees by cash, check, or credit card, they receive nothing in return. The complaint alleges that tens of thousands of victims send approximately $50 to $60 million annually in response to the defendants’ fraudulent solicitation packets.
In addition, the complaint names Macromark Inc., a Connecticut-based list broker that has marketed BDK’s lead lists to third-party direct mailers, and Mary Ellen Meyer, 45, of Mahopac, New York, a Macromark client service manager. The complaint alleges that Macromark and Meyer have rented lead lists to BDK and other fraudulent direct mailers who Macromark and Meyer knew would use the lists to personalize and address hundreds of thousands of solicitation packets to potential victims across the United States. Macromark marketed the lead lists as containing the demographic information of individuals likely to send money in response to the solicitations. The lists collectively contained approximately 750,000 potential victim names and addresses, according to the complaint.
Finally, the complaint names Mail Order Solutions India Pvt. Ltd. (MOSI), an India-based printer and distributor, and its principals, Dharti Desai, 49, of New York County and Mumbai, India, and Mehul Desai, also of Mumbai. As alleged in the complaint, MOSI and its principals have served as one of BDK’s printer/distributors since at least 2005. MOSI designs, edits, and proofreads BDK’s solicitations, then lettershops them (folds, inserts, and seals the various printed elements of the solicitations into mailing envelopes). MOSI prepares the letters for entry into the U.S. mail either as air freight to JFK (or another international airport) for delivery to a domestic mailing house, or by shipping the letters to Singapore, Fiji, or Hungary for introduction via the foreign post. The complaint alleges that since 2013, MOSI has shipped at least 24.5 million solicitation packets to the United States.
The United States’ action is being handled by Assistant U.S. Attorneys Thomas Price and John Vagelatos of the U.S. Attorney’s Office for the Eastern District of New York, and Trial Attorney Gabriel H. Scannapieco of the Civil Division’s Consumer Protection Branch.
Civil Action under the Anti-Fraud Injunction Statute against New York Direct Mailer
In another civil injunction action, the Department seeks to stop a collection of businesses and individuals who have operated a direct mailing scheme based out of Long Island, New York, since at least 2012. The complaint alleges that DMCS Inc., Direct Marketing Consulting Services Inc., Horizon Marketing Services Inc. (Horizon), Quantum Marketing Inc. (Quantum), and their principals, Sean Novis, 46; Gary Denkberg, 53; and Cathy Johnson, 34, all of Nassau County, New York, committed mail fraud in connection with their scheme. The complaint alleges that the defendants send fraudulent solicitations styled as notifications that the recipient has won a large cash prize, typically worth more than $1 million. The complaint alleges that the defendants mail hundreds of thousands of solicitations to potential victims throughout the United States every year and have grossed roughly $30.4 million since 2012.
The United States’ action is being handled by Assistant U.S. Attorneys Sean Greene and John Vagelatos of the U.S. Attorney’s Office for the Eastern District of New York, and Trial Attorney Ann F. Entwistle of the Civil Division’s Consumer Protection Branch.
Consent Decree Entered against Dutch “Caging Service”
Also today, the Department announced that the U.S. District Court for the Eastern District of New York entered a consent decree of permanent injunction against two Dutch caging businesses and their principal, Erik Dekker, 54, of Langbroek, the Netherlands, to prevent them from assisting mass mailing fraud schemes. The businesses – Kommunikatie Service Buitenland B.V. (KSB) and Trends Service in Kommunikatie B.V. – are known collectively as Trends. The complaint, which was filed June 1, alleged that Trends and Dekker used P.O. boxes in the Netherlands from which they collected tens of millions of dollars in victim payments for multiple international mail fraud schemes, tracked victims’ information and forwarded proceeds to PacNet for processing.
Also on June 1, Dutch law enforcement agents executed search warrants on the business address used by both companies and on Dekker’s home address. The Dutch authorities also took control of the Dutch P.O. boxes used by the defendants to receive victim funds. The coordinated U.S. and Dutch enforcement actions immediately stopped the use of Dutch P.O. boxes to receive payments from fraud victims. Further investigation revealed that Trends was providing caging services for the Barka and BDK schemes targeted in today’s actions.
Trends and Dekker agreed to settle the litigation and be bound by a consent decree of permanent injunction that prohibits them from performing caging services for prize or psychic mailing campaigns, or any other mailing campaign that misrepresents itself to consumers. The injunction also allows USPIS to intercept U.S. mail headed to the defendants, and to return that mail – along with any money being sent to the defendants – to U.S. victims.
The United States’ action was handled by Assistant U.S. Attorney John Vagelatos of the U.S. Attorney’s Office for the Eastern District of New York and Trial Attorney Kerala Thie Cowart of the Civil Division’s Consumer Protection Branch.
Criminal Charges against Nevada Mass Mailer
On Sept. 20, pursuant to a 24-count indictment unsealed that day, Glen Burke, 56, of Las Vegas, was arrested on charges related to operating fraudulent schemes including a mass mailing prize campaign that violated a federal court order. According to the charges, Burke’s business mailed solicitations designed to fool recipients into believing that they had won thousands or millions of dollars. The solicitations allegedly used fictitious names and in many cases looked like they came from law firms or financial institutions. The indictment alleges that the solicitations advised consumers to pay a fee – usually $20 to $30 – in order to claim their winnings. Once consumers paid, however, Burke allegedly failed to send anyone their promised winnings of thousands or millions of dollars.
The indictment also charges Burke and a co-defendant, Michael Rossi, 51, of Las Vegas, with running a fraudulent telemarketing campaign that mirrored the mass mailing campaign. Rossi was also arrested on Sept. 20. According to the indictment, telemarketers hired by Burke and Rossi falsely told consumers that they had been selected to receive a valuable prize worth thousands of dollars, and that they would receive the prize if they bought certain products. Burke and Rossi are charged with conspiracy, mail fraud, and wire fraud in connection with telephone promotions.
The indictment includes criminal contempt charges against Burke, which stem from a court order entered as part of a Federal Trade Commission (FTC) case brought in 1997, in which the FTC successfully obtained an order that barred Burke from misrepresenting material information to consumers. Criminal contempt of court has no statutory maximum penalty.
In addition to the contempt charges, Burke and Rossi are each charged with 16 counts of wire fraud, five counts of mail fraud, and one count of conspiracy. Each of these counts carries a statutory maximum penalty of 20 years in prison. The indictment also seeks forfeiture of criminal proceeds.
FTC Action against California Mailer, Florida Printer, and Florida List Broker
The FTC filed a case today in U.S. District Court for the Central District of California against Terry Somenzi, 74, of Los Angeles, who did business through a company called International Advisory Services Inc.; David Raff, 54, of Weston, Florida, and his company, Millennium Direct Inc., also doing business as MDI Lists; and Ian Gamberg, 37, also of Weston, doing business through Printmail Corporate Solutions Inc. As alleged in the FTC’s complaint, since at least 2013, the defendants participated in mailing hundreds of thousands of cash prize notifications from fictitious companies, including Paulson Independent Distributors, International Procurement Center, Keller, Sloan & Associates, and Phelps Ingram Distributors, informing mostly elderly consumers that they won a substantial cash prize of nearly $1 million or more. The notifications instruct consumers to pay a fee of approximately $25 to collect their prizes, but those who paid received nothing in return. According to the complaint, Somenzi and Raff, directly and through third-parties, provided the cash prize notifications and mailing lists of consumers’ names and addresses to Gamberg, who then arranged to have the notifications printed and mailed. Many consumers who paid the fees later received numerous other deceptive personalized cash prize notifications from the defendants and other companies who purchased lists containing the consumers’ personal information.
“In the 21st century, the scam in your mailbox just as likely comes from the other side of the world as from the other side of town,” said Director Jessica Rich of the FTC’s Bureau of Consumer Protection. “The FTC’s efforts to protect consumers don’t stop at our borders; we work with partners around the world against the perpetrators of mass mailing fraud. Regardless of where the fraud comes from, we encourage consumers to let us know if they have been scam victims; we share complaint information with our law enforcement partners in the United States and abroad. Report your complaint at www.ftc.gov, or, for international scams, at the 36-agency joint website www.econsumer.gov.”
Iowa Attorney General Actions against List Broker and Direct Mailers
The Iowa State Attorney General took action today against fraudulent mass mailers and others facilitating their schemes. It negotiated an Assurance of Voluntary Compliance (AVC) with list broker Macromark to resolve allegations that the company facilitated fraudulent activities on the part of operations that mailed deceptive solicitations relating to sweepstakes and psychics. The AVC with Macromark requires it to refrain from any further facilitation of such fraudulent activities affecting Iowa residents and to pay $30,000 into a fund that protects elderly Iowans against consumer fraud.
The Iowa Attorney General also brought an action under the Iowa Consumer Fraud Act seeking an injunction, restitution, and other relief against Waverly Direct Inc., and its owner, Gordon Shearer, a New York-based direct mailer. Shearer and his company allegedly sent out deceptive mailings from the so-called “Numerological Resource Center.” These defendants maintain lists of vulnerable people who fell prey to their schemes, according to Iowa’s lawsuit, and market these lists to other mass mailers through a list broker.
Finally, the Iowa Attorney General brought a lawsuit under the Iowa Consumer Fraud Act against Nicholas Valenti of Nevada. Valenti has allegedly been involved in marketing the rights to send out deceptive mailings regarding techniques for winning lotteries and other chance-dominated gaming activities.
* * *
The charges and allegations in the indictments and criminal complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty. The claims made in the civil complaints are allegations only, and there has been no determination of liability.
Public Education
Reflecting the government’s unified effort to combat elder financial exploitation, the Consumer Protection Branch and Elder Justice Initiative have spearheaded a multi-agency education campaign to inform the public about mass mailing fraud and how it can be avoided. Agency partners include the USPIS, the FTC, the Consumer Financial Protection Bureau, the Social Security Administration, the Securities and Exchange Commission, the Commodities Futures Trading Commission, and USA.gov. As described in detail in the fact sheet, each agency is using its means of public outreach to broadcast information about the prevalence of mass mailing fraud. The outreach includes messages to caregivers – such as friends, relatives, social workers, and others in contact with older individuals – about the need to be vigilant against prize or psychic letters being sent to those under their care.
In addition, and as described in detail in the fact sheet, the government has also joined forces with non-governmental organizations in the elder justice and consumer protection arena, each of which will contribute to the public education campaign. These groups include AARP, Consumers Union, Consumer Federation of America, the Elder Justice Coalition, Meals on Wheels Association of America, National Adult Protection Services Association, National Association of Area Agencies on Aging (n4a), National Association of States United for Aging and Disabilities, National Center for Victims of Crime, and National Consumers League. Using their vast networks and communication tools, these organizations will alert their members and the public to the scourge of mass mailing fraud schemes and offer tips to combat financial exploitation. Their tools include websites, newsletters, social media channels, training and outreach events, and other means.
U.S. law enforcement’s actions against mass mailing fraud arise out of a larger worldwide effort. Mass mailing fraud has been identified as a major financial threat by the International Mass-Marketing Fraud Working Group (IMMFWG), a network of civil and criminal law enforcement agencies from Australia, Belgium, Canada, Europol, the Netherlands, Nigeria, Norway, Spain, the United Kingdom, and the United States. The IMMFWG is co-chaired by the U.S. Department of Justice and FTC, and law enforcement in the United Kingdom. Recent actions have been taken by law enforcement agencies from several working group countries, including Belgium, Canada, the Netherlands, and the United Kingdom, to disrupt mass mailing fraud schemes and gather evidence for prosecution of criminal participants. Through these efforts, the working group serves as a model for international cooperation against specific threats that endanger the financial well-being of each country’s residents.
More information on fraud against the elderly is available at https://www.justice.gov/elderjustice/. For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch.
Long Island Educator and Coach Is Sentenced to Five Years in Prison for Receiving Child PornographyRead the Press Release
CENTRAL ISLIP, NY – Earlier today, Kevin Barry O’Connell, a Long Island educator and coach, was sentenced at the federal courthouse in Central Islip, New York, to five years in prison following his July 2015 guilty plea to receiving child pornography at his residence in Patchogue, New York. The sentencing proceeding was held before United States District Judge Leonard D. Wexler. O’Connell was also sentenced to five years’ supervised release to follow his prison sentence, during which time he must register as a sex offender and he will not be allowed unsupervised contact with minors.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
“Keeping our children safe is a priority for law enforcement and this Office,” stated United States Attorney Capers. “This crime was particularly egregious in that O’Connell, as an educator, a former high school principal and a coach was entrusted with ensuring the safety and wellbeing of children while he at the same time was victimizing children by receiving images of children being sexually abused.” Mr. Capers thanked the U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), for its assistance in the investigation.
According to court filings and facts presented at the guilty plea and sentencing proceedings, O’Connell downloaded video files of the rape and abuse of children as young as eight years’ old which he kept on thumb drives in his Patchogue home. During a court-ordered search of his residence on October 15, 2012, O’Connell initially lied to HSI agents and denied that he possessed child pornography until agents found three thumb drives in the pocket of a jacket at the house. O’Connell then admitted that he had hidden the drives in the jacket.
Following his arrest, O’Connell was suspended from his employment as an Assistant Superintendent for Secondary Education in the Roosevelt Union Free School District. O’Connell had previously served as the Principal of Bellport Senior High School in the South Country Central School District and an Assistant Principal at Walter G. O’Connell Copiague High School. O’Connell was the Varsity Baseball Coach from 1990 to 2001 at William Floyd High School.
The government’s case is being prosecuted by the Office’s Long Island Criminal Section. Assistant United States Attorney Allen Bode is in charge of the prosecution.
This prosecution is part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The Defendant:
KEVIN BARRY O’CONNELL
Age: 55
Patchogue, New York
E.D.N.Y. Docket No. 12-CR-715 (LDW)
IRS Revenue Officer Pleads Guilty to Mail and Wire Fraud, Filing and Preparing False Tax Returns, and PerjuryRead the Press Release
This afternoon, at the federal courthouse in Brooklyn, James C. Brewer, a Revenue Officer of the Internal Revenue Service (IRS) who had been assigned to the Edison, New Jersey, IRS office before his arrest, pled guilty to 12 counts of filing or preparing false tax returns, 12 counts of wire fraud, and one count of mail fraud, all in connection with a multi-year scheme to falsify his tax returns and the tax returns of others and to enrich himself with inflated refunds. Brewer also pled guilty to committing perjury in United States Tax Court in 2012.
At sentencing, Brewer faces a maximum term of 20 years’ imprisonment on each wire fraud and mail fraud count, a maximum of three years’ imprisonment on each tax fraud count, and a maximum of five years’ imprisonment on the perjury count. As part of his plea agreement, Brewer agreed to make restitution to the IRS of over $70,000, plus interest and penalties, and he is subject to fines as well.
The plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation (IRS-CI), Newark Field Office, and Rodney A. Davis, Special Agent-in-Charge, Treasury Inspector General for Tax Administration (TIGTA), Washington Field Division. In announcing the guilty plea, Mr. Capers expressed his grateful appreciation to the United States Attorney’s Office for the District of New Jersey, the United States Attorney’s Office for the District of Nevada, IRS-CI, Las Vegas Field Office, and the Treasury Inspector General for TIGTA, Denver Field Division, for their assistance in this case.
According to court filings and statements made during the guilty plea, as part of a scheme to fraudulently reduce his taxable income and increase his tax refunds, Brewer failed to report any income he received for an unauthorized tax preparation business, underreported the gross receipts earned from an Internet retail business, and claimed false dependents on federal tax returns he prepared and filed on his behalf for three tax years. Brewer also engaged in a multi-year scheme in which he prepared and filed false tax returns for others. Brewer listed false dependents and false deductions on these returns, among other materially false information, in order to cause his clients to receive refunds to which they were otherwise not entitled or fraudulently inflate their refunds. In doing so, Brewer listed the names and social security numbers of various individuals on those tax returns as dependents without those individuals’ authorization. Brewer also diverted a portion of those clients’ refunds to himself, in some cases without the clients’ authorization or knowledge. Finally, in an effort to fraudulently obtain for himself a tax credit for first time homebuyers, Brewer lied under oath about his residency when he testified in a matter in the United States Tax Court in New York, New York.
The guilty plea was entered before the Hon. Pamela K. Chen at the United States District Court for the Eastern District of New York.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorneys Tali Farhadian and Moira Kim Penza are in charge of the prosecution.
The Defendant:
JAMES C. BREWER
Age: 39
Staten Island, New YorkE.D.N.Y. Docket No. 15 CR 209 (PKC)
New York Pharmacist Sentenced to 43 Months for Medicare and Tax FraudRead the Press Release
Earlier today, Andrew Barrett, a New York pharmacist who operated pharmacies in Bronx, Queens, and Rockland counties, was sentenced to 43 months’ imprisonment to be followed by three years of supervised release. As part of the sentence, he was ordered to forfeit $2.7 million in criminal proceeds, pay $2.7 million in restitution to Medicare and Medicaid, and pay $736,000 in restitution to the Internal Revenue Service.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York. Mr. Capers expressed his grateful appreciation to the agencies that led the government’s investigation: the Federal Bureau of Investigation, New York Field Office; the Department of Health and Human Services, Office of the Inspector General, New York Office (HHS-OIG); and the Internal Revenue Service, Criminal Investigation, New York (IRS-CI). Mr. Capers also thanked the New York Office of the Medicaid Inspector General (OMIG) for its cooperation and assistance in the case.
On May 25, 2016, Barrett pleaded guilty to committing a health care fraud scheme and filing false tax returns. From January 2011 to December 2012, he fraudulently billed Medicare and Medicaid approximately $2.7 million for prescription medications that he never dispensed to patients. Barrett used some of these proceeds to buy pharmaceutical products for his pharmacies. He also falsely claimed over $2 million in personal expenses as business expenses on his tax returns. Through this scheme, he caused a tax loss of $736,192.80.
The sentencing proceeding was held before United States District Judge Kiyo A. Matsumoto.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys William P. Campos and Erin E. Argo are in charge of the prosecution, with assistance from Assistant United States Attorney Karin Orenstein of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The Defendant:
ANDREW BARRETT
Age: 57E.D.N.Y. Docket No. 15-CR-103
Long Island Attorney Is Sentenced to 28 Months in Prison for Stealing $1.3 Million from Trust Fund ClientsRead the Press Release
CENTRAL ISLIP, NY – Earlier today, David Bodian, a Long Island attorney, was sentenced at the federal courthouse in Central Islip, New York, to 28 months in prison following his March 2016 guilty plea to wire fraud for stealing more than $1.3 million from a trust fund for which he was the trustee. The sentencing proceeding was held before United States District Judge Arthur D. Spatt. As part of the sentence, Bodian was ordered to pay restitution in the amount of $1.3 million to the Lou Bacon Trust.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service (USPIS).
According to court filings and facts presented at the guilty plea and sentencing proceedings, in approximately 2000, Bodian was appointed trustee of the Lou Bacon Trust, a trust fund that benefitted a number of individuals and charities. At the time of his appointment, the trust held over $1 million in total assets. In approximately 2005, Bodian began looting the fund of its assets to pay for his personal expenses, including a car, high-end audio equipment, home renovations, and international vacations. From approximately 2005 to 2015, he stole almost the entirety of the trust’s funds, leaving the trust with only $10,000 in cash. To perpetuate the scheme, Bodian lied to the beneficiaries about the amount of money in the trust bank accounts. For example, when a beneficiary asked for a copy of a trust bank statement, Bodian borrowed $150,000 from a friend to deposit in the trust’s account to inflate the trust’s assets. After providing a bank statement to the beneficiary that reflected the $150,000 Bodian had borrowed, he transferred the money back to his friend.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Tyler Smith is in charge of the prosecution.
This prosecution was the result of efforts by President Obama’s 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’s 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 Defendant:
David Bodian
Age: 59
Dix Hills, New YorkE.D.N.Y. Docket No. 16-CR-91 (ADS)
Former Station Chief for International Air Carrier Charged with Smuggling, Obstruction of Justice, and Wire FraudRead the Press Release
Earlier today, a grand jury in Brooklyn returned a superseding indictment adding charges against Ying Lin, a former station chief for an international air carrier (the Air Carrier), for smuggling, obstruction of justice and wire fraud. An earlier indictment charged the defendant with structuring financial transactions, which is included in the superseding indictment as well. The defendant worked as a counter agent for the Air Carrier at John F. Kennedy International Airport and later as station chief for the Air Carrier at Newark Liberty International Airport. The defendant’s initial appearance on the superseding indictment is scheduled for Tuesday, September 6, 2016, at 12 noon, before Chief United States District Judge Dora L. Irizarry at the United States Courthouse in Brooklyn.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Acting Assistant Director in Charge, George J. Ennis, Jr., Federal Bureau of Investigation, New York Field Office, and Special Agent in Charge, Angel M. Melendez, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI).
As alleged in the superseding indictment and other court documents filed by the government, the defendant received certain packages from military officers of the People’s Republic of China (PRC) who were stationed at the Permanent Mission of the People’s Republic of China to the United Nations (the PRC Mission) and from other employees of the PRC Consulate in New York. The defendant then smuggled these packages onto Air Carrier flights departing JFK Airport for the PRC, in violation of applicable Transportation Security Administration (TSA) rules and regulations and Air Carrier policies, which require that checked baggage be accepted only from ticketed passengers. In return, the defendant received various benefits from PRC employees, including discounted liquor purchased from diplomatic duty-free shops and tax-exempt purchases of electronic devices, as well as free contracting work at her personal residence performed by PRC construction workers. The defendant continued to engage in smuggling activities after her initial arrest in August 2015. In addition, the defendant also helped a PRC national that she believed was a target of a federal inquiry escape to the PRC aboard an Air Carrier flight from JFK Airport.
“The defendant repeatedly acted in direct contravention of rules and regulations providing for the safety of flights in the United States in order to reap personal benefits such as free contracting work and tax-free liquor and electronics,” stated United States Attorney Capers. “The defendant also engaged in obstructive conduct even after she had been arrested in this case. She will now be held to account.” Mr. Capers extended his thanks to the TSA for their assistance and support in the investigation.
“The laws and practices in place in this country are meant to protect everyone’s security and safety, and no one is above them. Ms. Lin abused a position of trust within the system to circumvent those laws for personal gain. This case should serve as a reminder and warning to anyone trying to bypass our laws. It is unacceptable and we will hold them accountable,” stated Acting Assistant Director in Charge Ennis.
“Lin allegedly used her position at an international air carrier to smuggle packages onto planes headed to China in return for favors such as discounted liquor and electronics. These illicit actions created a potential safety issue to the planes and passengers onboard,” said HSI Special Agent in Charge Melendez. “HSI will remain steadfast in its commitment to ensuring the integrity of our international airports so they are not used for criminal activities.”
The charges in the superseding 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 National Security & Cybercrime Section. Assistant United States Attorneys Alexander A. Solomon, Douglas M. Pravda, and Ian C. Richardson are in charge of the prosecution, with assistance provided by the Department’s Counterintelligence and Export Control Section.
The Defendant:
YING LIN
Age: 46
Queens, New YorkE.D.N.Y. Docket No. 15-CR-601 (DLI)
Long Island Doctor Pleads Guilty to Conspiracy to Illegally Prescribe OxycodoneRead the Press Release
Noel Blackman, a medical doctor and the former Health Minister of Guyana, who operated from “pain management” clinics in Elmhurst in Queens County, Franklin Square in Nassau County, and Cypress Hills in Brooklyn, today pleaded guilty to conspiring to illegally distribute oxycodone, a highly addictive prescription pain medication. The guilty plea was entered before United States District Judge Joanna Seybert at the U.S. Courthouse in Central Islip. When sentenced, Blackman faces a maximum sentence of 20 years’ imprisonment and a $1 million fine.
In announcing the guilty plea, United States Attorney Robert L. Capers expressed his grateful appreciation to the U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) and the United States Department of Justice, Drug Enforcement Administration (DEA), Long Island Tactical Diversion Squad, which led the government’s investigation in this case, and thanked the U.S. Customs & Border Protection (CBP) for its assistance.
“Blackman violated his professional oath to put his patients’ legitimate medical needs first and instead chose to line his pockets with the proceeds from the sale of illegal prescriptions for oxycodone, a highly addictive drug that has been linked to the rise in heroin trafficking and other social ills in our communities,” stated U.S. Attorney Capers. “Together with our law enforcement partners, we will continue to vigorously prosecute illegal prescription drug distribution.”
According to court filings and statements made in court during the guilty plea, between 2015 and February 2016, Blackman wrote prescriptions for more than 365,000 oxycodone pills. Around midnight on February 7, 2016, HSI agents removed Blackman from a plane at John F. Kennedy International Airport en route to Guyana and arrested him in connection with the conspiracy to illegally distribute oxycodone. At the time of his arrest, more than $30,000 was found concealed in Blackman’s luggage. At his guilty plea, Blackman admitted that he wrote oxycodone prescriptions for persons whom he knew had no legitimate medical need for them in exchange for cash. As part of his guilty plea, Blackman also agreed to forfeit $503,200 attributable to illegal prescription sales.
This case is but one in a series of federal prosecutions by the United States Attorney’s Office as part of the Prescription Drug Initiative. In January 2012, this Office, in conjunction with the five District Attorneys in the Eastern District of New York, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Initiative to mount a comprehensive response to what the United States Department of Health and Human Services Center for Disease Control and Prevention has called an epidemic increase in the abuse of opioid analgesics. To date, the Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 19 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and a pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.
The government’s case is being prosecuted by Assistant United States Attorneys Bradley T. King and Madeline O’Connor.
The Defendant:
NOEL BLACKMAN
Age: 68
Valley Stream, New YorkE.D.N.Y. Docket No. 16-CR-89 (JS)
Jacob “Kobi” Alexander Pleads Guilty to Securities FraudRead the Press Release
BROOKLYN, N.Y. – Jacob Alexander, also known as “Kobi Alexander,” an Israeli national, pleaded guilty today to one count of securities fraud for his role in a stock options backdating scheme involving Comverse Technologies Inc. (Comverse). Following a bail hearing, the court entered a permanent order of detention.
Alexander was a founder, former Chief Executive Officer, and member of the Board of Directors of Comverse, which was traded on the NASDAQ stock market. Comverse was a component stock of the S&P 500 and the NASDAQ 100 at the time of the offense. Alexander was ordered extradited from Namibia on Monday, August 22, 2016, after having been indicted in the Eastern District of New York more than ten years ago. Alexander arrived at John F. Kennedy International Airport in Queens, New York, this morning in the custody of special agents of the Federal Bureau of Investigation. When sentenced, Alexander faces up to 10 years in prison. Sentencing is set for 12:00PM on December 16, 2016.
The extradition and guilty plea were announced by U.S. Attorney Robert L. Capers of the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“By fraudulently backdating Comverse stock options, the defendant personally gained millions of dollars in paper profits. He then compounded his crime by attempting to bribe a witness to make false statements to government investigators. For more than ten years, law enforcement pursued Kobi Alexander, and now he will be held to account for his role in a securities fraud scheme,” stated United States Attorney Capers. “The guilty plea announced today demonstrates our steadfast commitment to enforce the law against corporate executives who defraud the investing public.”
“The wheels of justice turn slowly but they keep moving; this is especially true in the case against Jacob “Kobi” Alexander. Today, Alexander pled guilty to a charge that was brought forth by the FBI more than 10 years ago for his role in a securities fraud scheme. Alexander and his coconspirators backdated the issuance of Comverse stock options, awarded them to themselves, and then lied to investors in public filings. The scheme profited Alexander millions of dollars. Ensuring that all investors have factual information and our markets are fair is exactly why the FBI continues to investigate and bring those to justice who perpetrate securities fraud schemes,” stated FBI Assistant Director-in-Charge Rodriguez.
U.S. Attorney Capers and FBI Assistant Director-in-Charge Rodriguez thanked the Department of Justice’s Office of International Affairs (OIA), the National Police for the Republic of Namibia, Interpol, and FBI Legat Pretoria for their invaluable assistance during the extradition proceedings. They also thanked the Securities and Exchange Commission (SEC) for their cooperation and assistance in the investigation and prosecution.
According to charging documents, the guilty plea proceeding, and other documents filed by the government in this case, Comverse was a communications software company with offices in Woodbury, New York. Between 1998 and 2006, the defendant and his coconspirators engaged in a fraudulent backdating scheme using hindsight to select the issuance date of Comverse stock options, which they awarded to themselves and Comverse employees, and then lied about this practice to investors in public filings and elsewhere. In doing so, the defendant and his coconspirators were able to select issuance dates when Comverse stock was trading lower, thereby awarding themselves and Comverse employees “in-the-money” options without properly accounting for these options in Comverse’s financial disclosures to investors. By backdating options, the defendant and his coconspirators violated accounting rules and caused Comverse to overstate its profits. Additionally, the backdated options also violated the terms of Comverse’s stock option plans that were approved by its shareholders. As the top recipient of stock options in every company-wide grant, the defendant gained millions of dollars in paper profits from the scheme. Ultimately, the defendant forfeited $60 million, which was applied as restitution to compensate Comverse shareholders.
When the defendant’s conduct came to light, he attempted to obstruct justice by offering to bribe a witness to make false statements to federal investigators. Shortly before being charged in connection with his scheme, and after he was aware of the government’s investigation, the defendant moved to Namibia, where he relocated with his family. The government promptly sought the defendant’s extradition.
Today’s guilty plea took place before United States District Judge Nicholas G. Garaufis.
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The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney James P. Loonam is in charge of the prosecution and led the Office’s efforts to secure Alexander’s extradition from Namibia, with assistance from the Department of Justice’s Office of International Affairs.
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The charges in this case were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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, please visit www.StopFraud.gov.
The Defendant:
JACOB ALEXANDER, also known as “Kobi Alexander”
Age: 64E.D.N.Y. Docket No. 06-CR-628 (NGG)
Brookyln Sex Trafficker Sentenced to 30 Years for Prostituting Minors and Producing Child PornographyRead the Press Release
Today, defendant Alvaun Thompson, also known as “Love Pimpin,” was principally sentenced to 30 years’ imprisonment for forcibly sex trafficking minors—including a 13-year-old girl—and producing child pornography. A federal jury convicted Thompson of all nine counts with which he was charged, following a jury trial in November 2015.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and William J. Bratton, Commissioner, New York City Police Department.
The evidence at trial established that from 2013 to 2015, the defendant used physical violence and emotional manipulation to force two minor girls to engage in prostitution. The defendant’s victims were 13 and 15 years old when he began exploiting them. The defendant prostituted the minor victims on the streets of Brooklyn and advertised them as prostitutes on the internet, posting explicit photographs. He impregnated the minor victims and continued to prostitute them while they were pregnant with his children. The defendant beat the minor victims, and he forced them to get brand-like tattoos of his name. The defendant personally tattooed the letters “LP”—an abbreviation of his alias “Love Pimpin”—on the face of one of the minor victims. On at least two occasions, he transported his victims across state lines to engage in prostitution. In addition to the minor victims, the defendant prostituted other girls and women and had sexual relationships with them. He frequently filmed his own sex acts with the prostitutes, and created a pornographic video of himself and one of the minor victims, who was then 15 years old.
The Hon. I. Leo Glasser conducted an evidentiary hearing on June 29, 2016, to evaluate the defendant’s conduct relevant to sentencing. At that hearing, the Court made factual findings that the defendant murdered Johnny Moses Robinson—a rival Brooklyn pimp—on September 9, 2013, over a dispute involving one of the defendant’s minor victims. The government established, by a preponderance of the evidence, that Thompson shot Robinson four times, including once in the face.
“For years, the defendant preyed on defenseless children by repeatedly subjecting them to acts of physical and psychological abuse and used them to line his pockets by prostituting them on the streets of our city,” stated United States Attorney Capers. “The sentence announced today reflects the heinous nature of the defendant’s crimes and serves as a warning to others who would seek to exploit the most vulnerable members of our society.”
FBI Assistant Director-in-Charge Rodriguez stated, “It’s hard to comprehend anyone using and abusing children to make money, but this case shows some subjects do it for much more than profit. This subject took sadistic pleasure in torturing girls who had no ability to defend themselves. It is unbelievably frustrating to know we open more cases every day, but the FBI and our law enforcement partners know with each arrest we are saving a child from real life monsters.”
“There is no place in our city for sex trafficking, a truly abhorrent crime. I commend the work of the investigators and prosecutors involved in the case who brought to justice this individual and the deplorable acts he committed on society’s most venerable members, children,” said Police Commissioner Bratton.
The government’s case is being prosecuted by the Office’s Civil Rights Section. Assistant United States Attorneys Matthew J. Jacobs and Jennifer M. Sasso are in charge of the prosecution.
The Defendant:
Alvaun Thompson
Age: 29E.D.N.Y. Docket No. 15-CR-80 (ILG)
Long Island Man Pleads Guilty to Foreign Currency Fraud SchemeRead the Press Release
CENTRAL ISLIP, NY – Earlier today, Daniel Winston LaMarco pleaded guilty to a felony information charging him with wire fraud and commodities fraud causing losses of more than $862,000 to 13 investors. Today’s plea took place before United States Magistrate Judge Gary R. Brown at the United States Courthouse in Central Islip, New York. When sentenced, the defendant faces a maximum sentence of 30 years’ imprisonment.
Today’s guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
“LaMarco misled investors regarding his investment performance on a monthly basis for years and encouraged them to invest their money in risky and volatile markets,” stated United States Attorney Capers. “The message of this prosecution is clear – if you defraud investors for personal gain you will be investigated and prosecuted to the full extent of the law.” Mr. Capers thanked the criminal investigators in the United States Attorney’s Office for their excellent work on this investigation.
Beginning in or about January 2011, LaMarco began to solicit investors to fund a commodity pool he ran which invested in the Foreign Exchange Market. LaMarco made false claims regarding his investment performance, and touted the safety of his investment strategy. Among his victims, LaMarco encouraged two individuals to invest proceeds from a home equity loan with him. As part of his fraud scheme, LaMarco sent false monthly statements to investors representing that their investments were growing, inducing new investments from the investors, and discouraging them from withdrawing their investments with him. The monthly statements claimed the investments had more than doubled in value and were worth as much as $1,796,126.22. In truth, LaMarco had lost almost all of the investors’ money, which totaled more than $862,000, in the Foreign Exchange Market.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Christopher A. Ott and Mark Bini are in charge of the prosecution.
This prosecution was the result of efforts by President Obama's 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 Defendant:
DANIEL WINSTON LAMARCO
Age: 51
Huntington, New YorkE.D.N.Y. Docket No. 16-CR-433 (ADS)
Canadian Citizen Sentenced to 78 Months in Prison for Leading an International Multimillion Dollar Fraud SchemeRead the Press Release
Earlier today, Sandy Winick, a Canadian citizen who was extradited from Thailand, was sentenced at the federal courthouse in Brooklyn, New York, to 78 months in prison following his July 2015 guilty plea to conspiring to commit wire fraud for running an international advance fee scheme. The sentencing proceeding was held before United States District Judge Eric N. Vitaliano. As part of the sentence, Winick was ordered to pay $2,431,038.32 in restitution and $5,000,000 in forfeiture.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York. Mr. Capers thanked the Federal Bureau of Investigation, New York Field Office (FBI); the Internal Revenue Service, Criminal Investigation, New York (IRS); U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), Buffalo; Treasury Inspector General for Tax Administration (TIGTA); the Justice Department’s Office of International Affairs (OIA); the Royal Canadian Mounted Police (RCMP); the United Kingdom’s National Crime Agency (NCA); and law enforcement authorities in Thailand and China for their significant cooperation and assistance in this complex global investigation.
According to the indictment and other court filings, between 2008 and 2013, Winick was the leader of two multi-million dollar fraud schemes that used call centers around the world to defraud unsuspecting investors. In the first scheme, Winick, together with other defendants, was charged with engaging in an international “pump and dump” operation. Specifically, Winick and his co-defendants secretly controlled and fraudulently inflated the share price of worthless penny stocks through false and misleading press releases and manipulative trading and then sold billions of the fraudulently-inflated shares to investors across the globe. In the second scheme, Winick, together with other defendants, was charged with operating boiler rooms in four countries to induce investments in penny stocks, including investments by many of the victims in the first scheme, to pay advance fees that the defendants promised would enable them to sell the stocks and recover any losses they incurred. In reality, Winick and his co-defendants stole more than $5 million from the duped investors and never provided any services. Winick established and operated boiler rooms or call centers in various locations around the world, including Canada, Thailand, and China, to solicit fees from the victims. Winick also planned to open a call center in Brooklyn.
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The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Christopher A. Ott and Sylvia Shweder are in charge of the prosecution, with assistance provided by Assistant United States Attorney Melanie Hendry of the Office’s Civil Division, which is responsible for the forfeiture of assets.
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This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force 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’s 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 Defendant:
SANDY WINICK
Citizenship: Canada
Age: 58
Ontario, CanadaE.D.N.Y. Docket No. 13-CR-452 (S-2) (ENV)
Member and Associates of the Lucchese Crime Family Plead Guilty to Extortion ConspiracyRead the Press Release
On Friday, August 12, 2016, at the federal courthouse in Brooklyn, New York, Carmine Avellino, a member of the Lucchese organized crime family of La Cosa Nostra, pleaded guilty to an extortionate collection of credit conspiracy. The proceeding took place before United States Magistrate Judge Marilyn D. Go. United States District Judge Ann M. Donnelly accepted the guilty plea earlier today. Avellino’s co-defendants, Lucchese crime family associates Michael Capra and Daniel Capra pleaded guilty to the extortion conspiracy in July and August of this year. When sentenced, the defendants each face up to 20 years in prison.
The guilty pleas were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Timothy D. Sini, Commissioner, Suffolk County Police Department. Mr. Capers extended his grateful appreciation to the Suffolk County District Attorney’s Office and the City of New York Business Integrity Commission for their assistance with the case.
“Avellino, relying on his reputation as a member of the Lucchese crime family, and Lucchese associates Michael Capra and Daniel Capra, used intimidation and threats of violence to obtain payment from victims on an outstanding debt,” stated United States Attorney Capers. “These convictions make clear that we hold accountable members of La Cosa Nostra and their associates who use extortion as a tool of their trade.”
“As this case illustrates, members of La Cosa Nostra are still doing business as usual and continue to threaten victims with violence when a loan is not repaid. The FBI, working with our law enforcement partners, stand committed to rooting out organized crime enterprises in our communities,” stated FBI Assistant Director-in-Charge Rodriguez.
“We will not tolerate organized crime operating in our communities. It has no place in a civilized society. This case makes clear that law enforcement is committed more than ever to bringing criminals such as Carmine Avellino to justice,” stated Suffolk County Police Commissioner Sini.
According to prior court filings and facts presented during the guilty plea proceedings, between January and July 2010, the defendants conspired and attempted to collect a loan through the use of threats. Avellino had previously loaned one of the victims $100,000. After making the majority of the payments on the loan, the victim had difficulty repaying the remainder. The defendants then used force and coercive means, including threats of physical violence, in an attempt to collect the outstanding loan amount.
The government’s case is being prosecuted by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Maria Cruz Melendez and Nadia Moore are in charge of the prosecution.
The Defendants:
CARMINE AVELLINO
Age: 72
Stony Brook, New YorkDANIEL CAPRA
Age: 58
Hauppauge, New YorkMICHAEL CAPRA
Age: 52
Smithtown, New YorkE.D.N.Y. Docket No. 13-CR-632 (AMD)
United States Announces Superfund Settlement to Protect Vital Drinking Water Source at the Fulton Avenue Superfund Site Located in Central Nassau County, New YorkRead the Press Release
Robert L. Capers, United States Attorney for the Eastern District of New York, and Judith A. Enck, Regional Administrator, United States Environmental Protection Agency (EPA) Region 2, today announced that Genesco Inc. has agreed to clean up contaminated drinking water at the Fulton Avenue Superfund Site (the Site) in the Towns of Hempstead and North Hempstead, New York. The settlement, which is valued at no less than $5.25 million, requires Genesco to ensure the operation and maintenance of water treatment and indoor air treatment systems at the Site, and to monitor groundwater and indoor air contamination at the Site. Genesco will also reimburse EPA for costs incurred in overseeing the work required by the settlement.
The settlement, which was entered on August 15, 2016 by the United States District Court for the Eastern District of New York, in an action brought against Genesco pursuant to the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as the Superfund statute. The Superfund law protects human health and the environment while safeguarding taxpayer dollars by holding parties that contributed to contamination responsible for cleaning it up. Since 1980, EPA’s Superfund program has managed the cleanup of the nation’s high-priority hazardous sites and has responded to environmental emergencies, oil spills, and natural disasters.
The Site in this case includes a 0.8-acre commercial facility at 150 Fulton Avenue in Garden City Park, New York (the Fulton Property), which from approximately 1965 to 1974, contained a fabric-cutting mill that was owned or operated by Genesco. The mill cut and processed knitted fabrics, which were then dry-cleaned with tetrachloroethylene (commonly known as perc), which was disposed of into the environment during the mill’s operations. As a result of these past disposal practices, perc contaminated soil, air and groundwater at the Site. EPA has classified perc as likely to be carcinogenic to humans by all routes of exposure. Chronic (or long-term) exposure to perc can also cause adverse neurological effects, including impaired cognitive and motor neurobehavioral performance, and may also cause adverse effects in the kidney, liver, immune system, hematologic system, and on development and reproduction.
Groundwater contamination at the site and has impacted two public water supply wells, known as Garden City Water District wells 13 and 14. Currently, the groundwater entering those wells is treated using an air stripper installed and operated by the Village of Garden City, which forces air through groundwater to remove harmful chemicals, such as perc. The settlement requires, among other things, that Genesco continue the operation and maintenance of the existing treatment systems for the two wells until remedial goals are met. The settlement also requires Genesco to monitor contaminant levels in groundwater at the Site, and to pay EPA’s costs of evaluating chemical vapors that may enter buildings near the Fulton Property. The operation and maintenance of an existing sub-slab ventilation system at the Fulton Property will continue. EPA will oversee Genesco’s work, which implements the cleanup remedy selected in the agency’s 2015 Record of Decision Amendment for the Fulton Avenue Superfund Site.
“This settlement reinforces this Office’s firm commitment to eliminating the hazards posed by sites that threaten public health and safety,@ stated United States Attorney Capers. “We will continue to hold accountable those responsible for causing or contributing to hazardous substance sites.”
“Residents of Long Island rely on groundwater as their source of drinking water, so it is critical that groundwater resources be protected from toxic contamination,” said EPA Regional Administrator Enck. “The EPA will keep working to protect residents of Long Island from the threats of polluted groundwater.”
The settlement was subject to a 30-day public comment period during which no comments were received.
The lead government attorneys for this settlement are Assistant United States Attorney Robert B. Kambic and Assistant Regional Counsel Douglas L. Fischer of EPA.
Defendant:
GENESCO INC.
1415 Murfreesboro Pike, Nashville, TennesseeE.D.N.Y. Docket No. 09-CV-3917
Perpetrator of Sexual Assault Aboard International Flight Sentenced to Statutory Maximum 24 Months in PrisonRead the Press Release
Earlier today, at the United States District Court in Brooklyn, New York, Nadeem Mehmood Quraishi was sentenced to two years’ imprisonment following his April 21, 2016, conviction following a jury trial for sexual assault aboard an international flight.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.
The evidence at trial established that Quraishi sexually assaulted a woman aboard an international flight bound for John F. Kennedy International Airport from Dubai, United Arab Emirates. He did this after the victim had taken prescription medication and while she slept. When confronted by flight attendants shortly after the assault, the defendant admitted that he had applied the victim’s lotion to her genital area as she was sleeping.
“The defendant’s assault of this victim was an outrageous affront to what should have been a safe and peaceful passage on an international flight,” stated United States Attorney Capers. “To anyone who would commit such a crime be on notice – you will be prosecuted to the full extent of the law.”
“Being on an airplane for an extended period of time can be stressful because passengers are told they can relax, even while surrounded by complete strangers in a confined space. The victim in this case was at her most vulnerable being asleep, and Quraishi took full advantage. It’s unfair to ask passengers to keep their wits about them for more than half a day in the air, which is why we take crimes aboard aircraft so seriously,” stated FBI Assistant Director-in-Charge Rodriguez.
The sentencing proceeding took place before United States District Judge Carol B. Amon.
The government’s case was prosecuted by Assistant United States Attorney Nomi D. Berenson.
The Defendant:
NADEEM MEHMOOD QURAISHI
Age: 43
Staten Island, New YorkE.D.N.Y. Docket No. 16-CR-596 (CBA)
Long Island Investment Advisor and Law Firm Attorney Indicted in Insider Trading SchemeRead the Press Release
A two-count indictment was unsealed this morning in federal court in Central Islip, New York, charging Tibor Klein, the founder and president of investment advisory firm Klein Financial Services (Klein Financial); and Robert Schulman, a former partner in a Richmond-based global law firm (the law firm), with securities fraud and securities fraud conspiracy.[1] Schulman tipped Klein about the pending merger between Pfizer, Inc. (Pfizer) and King Pharmaceuticals, Inc. (King) that Schulman had learned through his representation of King, and Klein used that material non-public information to engage in securities transactions ahead of the merger announcement. Klein will be arraigned later today before United States Magistrate Judge Gary Brown at the U.S. Courthouse, 100 Federal Plaza, Central Islip, New York. Schulman’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the Albert V. Bryan U.S. Courthouse, 401 Courthouse Square, Alexandria, Virginia.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service (USPIS).
“As alleged, Robert Schulman and Tibor Klein were licensed professionals who used their positions of trust to fraudulently enrich themselves. Schulman, an attorney, violated the trust and confidence of his client for personal gain by passing along his client’s sensitive and economically valuable information to Klein, his investment advisor, and Klein exacerbated this crime by using the fraudulently-obtained information to trade in a number of his clients’ accounts,” stated United States Attorney Capers. “The charges and arrests announced today reflect our steadfast commitment to hold accountable licensed professionals who use their positions to defraud the financial markets.” Mr. Capers thanked the Securities and Exchange Commission (SEC) for their cooperation and assistance during the investigation.
“These individuals allegedly used proprietary information available solely through their trusted positions for an unfair advantage in the financial market to satisfy their appetite for money. The arrest of Robert Schulman and Tibor Klein exemplifies the commitment of the United States Postal Inspection Service and its law enforcement partners to maintain a fair trading environment for all investors,” stated Inspector-in-Charge Bartlett.
As detailed in the indictment, in May 2009, Schulman began representing King, a pharmaceutical company then based in Bristol, Tennessee, in a patent litigation in the Western District of Virginia on behalf of the law firm. Between July 12, 2010 and August 4, 2010, through his representation of King, Schulman learned of a pending merger between King and Pfizer. On the weekend of August 13, 2010, Klein traveled to Schulman’s residence in McLean, Virginia, to discuss Schulman’s investment portfolio. During that trip, Schulman revealed to Klein that there was a pending merger between King and Pfizer. The following Monday, August 16, 2010, Klein began purchasing King stock for himself, Schulman, and other clients of Klein Financial. Over the next month, Klein purchased more than $585,000 of King stock for himself and his clients.
In addition, on August 16, 2010, Klein informed a registered broker in Florida that he had obtained inside information regarding the King-Pfizer merger and directed the broker to purchase King stock and call options.[2] Between August 16, 2010 and August 23, 2010, the registered broker purchased both King stock and call options. On October 12, 2010, Pfizer’s acquisition of King was publicly announced. The same day, Klein sold all of the King shares he had acquired and generated a profit of more than $300,000 for himself, Schulman, and Klein Financial clients. Also, on October 12, 2010, at Klein’s direction, the broker exercised all of the unexpired call options and sold all of the King stock the broker had purchased, generating a profit of more than $100,000, which the broker split with Klein.
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If convicted, Klein and Schulman each face a maximum sentence of twenty years’ imprisonment.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney David Pitluck is in charge of the prosecution.
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The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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, please visit www.StopFraud.gov.
The Defendants:
TIBOR KLEIN
Age: 43
Residence: Melville, New YorkROBERT SCHULMAN
Age: 58
Residence: McLean, VirginiaE.D.N.Y. Docket No. 16-CR-442
[1] The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
[2] A call option is the right to purchase 100 shares of a stock at a predetermined price before a deadline in exchange for a premium.