Eastern District of New York
Press releases recorded for this federal judicial district.
Former Suffolk County Police Chief Pleads Guilty to Civil Rights Violation and Conspiracy to Obstruct 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), 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 guilty plea 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 (FBI).
“The defendant violated his oath and responsibilities as a law enforcement officer by exacting personal vengeance, assaulting a handcuffed suspect, and abusing his authority as the highest ranking uniformed member of the Suffolk County Police Department. Despite the efforts of the defendant and his co-conspirators to obstruct the federal investigation, he has been brought to justice,” stated United States Attorney Capers. “Our investigation is ongoing, and we will seek to hold accountable anyone who violates another’s civil rights or attempts to obstruct justice.”
FBI Assistant Director-in-Charge Rodriguez stated, “An honest government, trusted by the people, is imperative to protect our freedoms. For these reasons, combating public corruption is the top criminal priority of the FBI. In his guilty plea today, Burke has taken responsibility for his illegal conduct. This begins the restoration of the public’s trust in the Suffolk County Police Department’s ability to protect their Constitutional freedoms.”
According to the indictment, court filings, and statements during today’s guilty plea proceeding, 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 large 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 was 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 4th 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 guilty plea proceeding was held before United States District Judge Leonard D. Wexler.
The government’s case is being prosecuted by the Office’s Long Island Criminal Division. 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: 51
Smithtown, New YorkE.D.N.Y. Docket No. 15-CR-627 (LDW)
Largest Grossing Broker in Agape Ponzi Scheme Sentenced to 108 Months’ ImprisonmentRead the Press Release
Earlier today, at the United States District Court in Central Islip, New York, the Hon. Denis R. Hurley sentenced Jason Keryc, a former broker of Agape World, Inc. (Agape), to 108 months’ imprisonment and ordered that he pay $179 million in restitution following his convictions on April 21, 2015, after a four-week jury trial, for securities fraud, conspiracy, mail fraud, and wire fraud. These convictions arose out of the Keryc’s participation in a Ponzi scheme, in which he took $8.9 million in commission payouts for himself, which he spent on a Long Beach condominium, a million-dollar Montauk vacation home, jewelry, designer clothing, automobiles, and other items. The defendant has been incarcerated since his conviction.
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 (FBI), and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service (USPIS).
“For years, Jason Keryc was the chief fundraiser for a Ponzi scheme that devastated the lives of thousands of middle class Americans whom Keryc and his co-conspirators deceived into investing in a scam,” stated United States Attorney Capers. “Keryc will now pay the price for his self-enrichment and deceit.” Mr. Capers expressed his grateful appreciation to the United States Securities and Exchange Commission for its assistance in the case.
“After being convicted of his crimes, Jason Keryc will now pay for his greed and deception with years of his life behind bars and restitution to the victims. It is unfortunate the destruction his actions have caused. Perhaps this sentence will serve as a warning to others that fraud and Ponzi schemes are serious offenses, not worth risking the cost to self, others, and society,” stated FBI Assistant Director-in-Charge Rodriguez.
“Today’s sentencing represents the continued commitment of United States Postal Inspectors to bring to justice all parties involved in Agape World who participated in an egregious Ponzi scheme defrauding hundreds of investors of their hard earned money,” stated Postal Inspector-in-Charge Bartlett.
Nicholas Cosmo founded Agape in August 2000, following 21 months in a federal prison for defrauding investors. Between October 2005 and January 2009, Keryc played a critical role in the scheme, soliciting and obtaining hundreds of millions of dollars from investors. To induce investments and discourage withdrawals, he misled investors by assuring them that their money would only be used to fund specific, short-term secured bridge loans to commercial borrowers, or to make short-term loans to small businesses; promising to pay investors unusually high rates of returns; and representing that investing in Agape carried little or no risk of loss. As a result of these inducements, Keryc actually raised significantly more money than was needed for the loans, and for his efforts he made approximately $8.9 million – more than twice the $4 million that Cosmo personally profited from the scheme.
Keryc and his co-conspirators paid returns to Agape investors, not from any profits earned on investments, but rather from existing investors’ deposits or money paid by new investors. They then took more than $370 million – approximately $55 million of which came from investors that Keryc or his sub-brokers convinced to invest in the Ponzi scheme – from approximately 5,000 investors. Of that $370 million, only $22 million actually went to fund bridge loans. Approximately $113 million of investors’ money was used to trade high risk futures and commodities, over 80 million dollars of which was lost in these markets.
As the fraudulent scheme began to unravel, Keryc continued to deceive investors about Agape’s financial health. On November 3, 2008, Keryc learned that all of Agape’s 2007 bridge loans were in default or on extension, but did not disclose this information to existing or new investors. Instead, he continued to solicit money from investors, obtaining an additional $13 million. Ultimately, approximately 3,800 investors sustained actual losses totaling more than $150 million.
On October 14, 2011, Cosmo was sentenced to a term of imprisonment of 25 years for his role in the scheme. In addition to the convictions of Cosmo and Keryc, the government’s investigation led to the conviction of seven other defendants in the scheme, who are awaiting sentencing before Judge Hurley.
The government’s case is being prosecuted by the Office’s Long Island Criminal and Civil Divisions. Assistant United States Attorneys Christopher C. Caffarone, Bradley T. King, Grace M. Cucchissi, and Vincent Lipari are in charge of the prosecution.
The Defendant:
JASON KERYC
Age: 38
Wantagh, New YorkE.D.N.Y. Docket No. 12-CR-357 (S-4)(DRH)
Clinic Owner and Four Medical Professionals Sentenced in A $4 Million Medicare Fraud SchemeRead the Press Release
Earlier today, Jeffrey Suh, Richelle Munoz, Sophia Lin, Kang Young Chung, and Emily Shim were sentenced in federal court in Brooklyn for conspiring to commit health care fraud in a scheme where they fraudulently billed Medicare for more than $4 million. Suh, the scheme’s organizer and leader, was sentenced to 42 months’ imprisonment. Munoz, a licensed occupational therapist, and Lin, a licensed chiropractor, were sentenced to 16 and 13 months’ imprisonment, respectively. Chung, a physical therapist assistant, was sentenced to a year and a day’s imprisonment. Shim, the clinic manager, was sentenced to 8 months’ imprisonment. As part of the sentences imposed, the defendants were ordered to pay $2,685,580 in restitution to Medicare. Additionally, the court ordered the defendants to forfeit their ill-gotten gains as follows: Suh was ordered to forfeit two properties, valued at more than $1,000,000 in total; Munoz was ordered to pay $565,594; Lin was ordered to pay $70,000; Chung was ordered to pay $985,501; and Shim was ordered to pay $115,136. The defendants were charged as part of a nationwide Medicare Fraud takedown in June 2015.
The sentences were announced by Robert L. Capers, United States 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 the Inspector General, New York Region (HHS-OIG); and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“Clinic owner Jeffrey Suh and his licensed medical professionals manipulated elderly Medicare patients by bribing them with services and induced them to receive medically unnecessary treatments and services. By doing so, they defrauded a taxpayer funded program out of millions of dollars,” stated United States Attorney Capers. “Those who defraud Medicaid and Medicare are on notice that they will be held accountable for their crimes.”
“The actions of these co-conspirators resulted in the diversion of scarce taxpayer funds from the Medicare program just for personal enrichment,” said HHS-OIG Special Agent in Charge Lampert. “The HHS Office of Inspector General, together with our law enforcement partners, will continue to vigorously pursue those who steal from government health programs in such greed-fueled schemes.”
FBI Assistant Director-in-Charge Rodriguez stated, “Today’s sentencing should serve as a warning to those who seek to defraud the government. Public health insurance programs, like Medicare, are not a personal pocketbook for criminals seeking to exploit a program designed to help. The FBI is committed to working with our law enforcement partners to bring to justice those who defraud taxpayer funded programs.”
From approximately December 2010 through June 2013, the defendants submitted more than $4 million in false claims to Medicare for physical therapy, occupational therapy, and chiropractic services that were not medically necessary, were often not provided, and otherwise did not qualify for reimbursement. Instead of evaluating and performing therapy and services on Medicare beneficiaries in the amount claimed, the defendants typically ushered them to unlicensed massage therapists for massages and other free goods and services. On some occasions, the defendants submitted claims to Medicare for services ostensibly performed by a licensed professional when that licensed professional was not even in the United States, or submitted claims to Medicare for services performed on Medicare beneficiaries who were abroad.
The scheme was carried out at a medical clinic located in Flushing, New York, owned by Suh and operated under the names Plaza Medi Group, Inc. and New Plaza Group, Inc.
The sentences were imposed by the Hon. Carol B. Amon, Chief United States District Judge.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Sylvia Shweder and Whitman Knapp are in charge of the prosecution, with assistance provided by Assistant United States Attorney Karin Orenstein of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The Defendants:
JEFFREY SUH
Age: 56
Bayside, New YorkRICHELLE MUNOZ
Age: 39
Brooklyn, New YorkSOPHIA LIN
Age: 34
Rocky Point, New YorkKANG YOUNG CHUNG
Age: 42
Woodside, New YorkEMILY SHIM
Age: 40
Flushing, New YorkE.D.N.Y. Docket No. 15-CR-300 (CBA)
President of Office Equipment Leasing Company Pleads Guilty for Engaging in Multi-Million Dollar Fraud SchemeRead the Press Release
Earlier today, Michael Conway, the President of Choice Office Solutions LLC, pleaded guilty to wire fraud in connection with a scheme where he forged numerous lease agreements to defraud an individual investor and De Lage Landen Financial Solutions Partner (DLLFSP) of more than $3.5 million. Pursuant to his plea agreement with the government, Conway has agreed that he is liable to pay restitution in the amount of $3,555,493.40 to the individual investor and $1,203,516 to DLLFSP. When sentenced, Conway faces up to 20 years in prison.
The guilty plea 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 (FBI).
“Through a web of lies, deceit and forgeries, Michael Conway induced an individual investor and a lending firm to invest millions of dollars with his company. Conway presented his unsuspecting victims with forged lease agreements and represented to them that he had entered into lucrative contracts to lease office equipment with more than 50 companies, including law firms, universities, and a major league baseball franchise, when in reality, a number of these agreements were worthless,” stated United States Attorney Capers.
“Conway swindled investors to the tune of more than $3.5 million through a series of fraudulent business agreements and lies. Today’s plea and agreement to pay restitution should serve as a warning to others who seek to profit through deception,” stated FBI Assistant Director-in-Charge Rodriguez.
According to court filings and facts presented at the plea hearing, between March 2014 to August 2015, Conway forged lease agreements with various companies in the business of leasing office equipment, and then used these fraudulent agreements to obtain financing from private investors. As part of the scheme, he induced an individual investor to become partners with him in the leasing business. Conway would then purportedly secure a lease from a company, present the signed lease and invoices to the individual investor, who would provide funds to purchase the office equipment to be leased. In this manner, Conway presented the individual investor with leases from approximately 58 companies, including law firms, universities, hospitals, and hotels, and the individual investor paid Conway approximately $3.5 million to purchase office equipment. In reality, most of the leasing agreements that Conway provided to the individual investor were fraudulent, and Conway pocketed most of the individual investor’s money.
One of the fraudulent leasing agreements was purportedly with the New York Mets. Relying on it, the individual investor wire transferred approximately $500,000 to Conway’s bank account to purchase office equipment. Conway then used the same forged lease agreement, and a forged authorization letter from the New York Mets purportedly signed by Jeffrey Wilpon, the team’s Chief Operating Officer, to obtain financing from DLLFSP. Based on these fraudulent documents, DLLFSP wire transferred a total of approximately $313,000 to Conway’s bank account. Through this and other forgeries, Conway defrauded DLLFSP of more than $1 million.
Today’s guilty plea took place before United States District Judge William F. Kuntz.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Winston Paes and David Pitluck 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:
MICHAEL CONWAY
Age: 40
Verona, New JerseyE.D.N.Y. Docket No. 16-CR-052 (WFK)
Chief Executive Officer of International Stock Transfer Sentenced to 42 Months in Prison for Operating $3 Million Securities Fraud SchemeRead the Press Release
Wednesday evening, at the federal courthouse in Brooklyn, Cecil Franklin Speight, was sentenced by the Hon. Roslynn R. Mauskopf to 42 months in prison following his guilty plea to conspiracy to commit mail and securities fraud for defrauding 72 investors of $3.3 million by operating an Internet stock scheme. As part of the sentence, Speight was ordered to pay $3.3 million in restitution to the victims of his fraud and $3.3 million in forfeiture.
Speight owned International Stock Transfer (IST), a registered transfer agent with the United States Securities and Exchange Commission (SEC). According to court filings and facts presented at the sentencing hearing, Speight stole at least $3.3 million from victim investors and used the proceeds to pay personal expenses, including purchases at Mercedes Benz, Nordstrom, Netflix and Groupon.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
“Rather than transferring capital to issuers, the defendant used the investors’ funds as his own. His victims, from the Eastern District of New York and around the world, were conned into buying bogus securities that were not worth the paper they were printed on. We will continue to pursue those who use our markets to enrich themselves through fraud,” stated United States Attorney Capers. Mr. Capers extended his grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation, and thanked the Securities and Exchange Commission for its assistance.
IST was founded by Speight in 2004 with offices in Palm Beach, Florida. Speight used cold callers and fake websites to entice victims into investing their money in allegedly high yield securities purportedly associated with IST. Investors were directed to wire funds into purportedly secure attorney escrow accounts. Once there, Speight typically stole the funds for his own use.
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 government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Jack Dennehy is in charge of the prosecution, with assistance provided by Assistant United States Attorney Brian D. Morris of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The Defendant:
CECIL FRANKLIN SPEIGHT
Age: 54
West Palm Beach, FLE.D.N.Y. Docket No. 14-CR-379
New York Investment Fund Managers Plead Guilty for Orchestrating Two Multi-Million Dollar Fraud SchemesRead the Press Release
Earlier today, John R. Lakian and Diane W. Lamm, who managed Capital L Financial Group, LLC (Capital L) and Aegis Capital Fund, LLC (Aegis Capital), each pleaded guilty to two counts of securities fraud for defrauding investors out of millions of dollars in two separate schemes. When sentenced, the defendants face a maximum sentence of 20 years’ imprisonment on each count.
Today’s guilty pleas were 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 (FBI).
“The defendants played a confidence game, stealing investors’ hard-earned money through lies and deceit to use for their own purposes” stated United States Attorney Capers. “We remain steadfast in our commitment to the investigation and prosecution of those who prey on investors and enrich themselves by means of financial fraud.”
“Lakian and Lamm misled investors, and capitalized on their misfortune, in an effort to bolster their own financial portfolios. The FBI and our partners will continue our efforts to bring to justice those who employ schemes to take advantage of unwitting victims,” stated FBI Assistant Director-in-Charge Rodriguez.
Between 2009 and 2013, the defendants were involved in two schemes to steal investors’ money. In the first, the defendants obtained more than $11 million by promising Capital L investors that their money would be used to purchase, consolidate, and sell registered investment advisory businesses. Instead, Lakian and Lamm diverted more than $3 million of it to themselves and to entities they owned and controlled. In the second scheme, the defendants perpetrated their fraud through their management of the liquidation of Aegis Capital, a North Carolina-based investment fund. Instead of returning investment proceeds to investors, Lakian and Lamm diverted more than $2 million of investors’ money to themselves and to restaurant businesses they controlled.
Today’s pleas took place before United States District Judge Frederic Block at the United States Courthouse in Brooklyn, New York.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Whitman Knapp 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 Defendants:
JOHN R. LAKIAN
Age: 73
New York, New YorkDIANE W. LAMM
Age: 55
New York, New YorkE.D.N.Y. Docket No. 15-CR-0043 (FB)
Violent Felon Charged in A String of Armed CarjackingsRead the Press Release
One Carjacking Victim Shot in the Chest
Earlier today, John Howard was arraigned before United States Chief Magistrate Judge Steven M. Gold in Brooklyn federal court. Howard faces charges for a series of gunpoint carjackings in Queens and Long Island. A criminal complaint charges the defendant with three counts of carjacking and using, carrying, brandishing, and discharging a firearm during and in relation to crimes of violence.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Delano A. Reid, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Office; and William J. Bratton, Commissioner of the New York City Police Department (NYPD).
As detailed in the complaint and a detention memorandum filed by the government, Howard, who has a history of violence, participated in a series of armed carjackings that took place beginning in December 2015.
On December 18, 2015, Howard attempted to burglarize a home in Valley Stream, New York. While fleeing the scene of the burglary, he pointed a gun at the driver of a white Volkswagen Jetta and threatened to shoot if the driver did not comply with his demands. After forcing the driver from the car, Howard stole the car.
Ten days later, on December 28, 2015, Howard struck again. This time the victim was sitting in his parked Mercedes Benz and was approached by two males. One male entered the car through the passenger side door. The second male, subsequently identified as Howard, opened the driver’s side door and told the victim, in sum and substance, “Give me your wallet or I’m going to shoot you.” Howard then hit the driver in the head, forced him out, and stole the driver’s wallet.
On January 21, 2016, Howard was involved in a third violent carjacking in which a fifty-three-year-old woman was shot in the chest. The woman’s daughter was in the passenger seat of a Hyundai parked in front of the Hampton Inn at JFK International Airport waiting for her mother to check into the hotel when a masked and armed man entered the car. The man demanded money and jewelry from the daughter and struck her in the head with his firearm. As the man began driving the car, he told the daughter, in sum and substance, “If your mother has no money, then I’m going to shoot you.” When the mother exited the hotel a few minutes later, the man demanded the mother’s purse. When the mother refused, the man shot her in the chest and drove off in a white Volkswagen Jetta – which was the same make and model, and had the same features, as the Volkswagen Jetta carjacked by Howard on December 18, 2015.
Four days after the January 21 carjacking, Howard was arrested in possession of the stolen white Volkswagen Jetta.
United States Attorney Capers stated, “As alleged in the complaint and other court filings, Howard’s targets were victims of harrowing crimes, the likes of which we have not seen in some time. This violence simply will not be tolerated, as Howard will now face the consequences of his acts in federal court.” Mr. Capers expressed his grateful appreciation to the ATF and NYPD’s Joint-Robbery Taskforce, who are responsible for leading the investigation, and thanked the Nassau County Police Department, the Nassau County District Attorney’s Office, the Queens District Attorney’s Office, the Kings County District Attorney’s Office, the NYPD’s Queens South Strategic and Tactical Command, and the 113 Precinct Detective Squad for their assistance.
ATF Special Agent in Charge Reid stated, “It is quite disturbing to think that an individual like the defendant was free to walk the streets as recently as two weeks ago. As alleged, Howard was involved in multiple carjackings where he exhibited his total disregard for human life. I am extremely grateful to the investigators and prosecutors on this case, who swiftly acted and removed such a dangerous individual from free society. It is now time for the defendant to feel the full weight of the U.S. judicial system and to know that the severity of his punishment will likely be commensurate to the depravity of his criminal behavior.”
“These series of crimes demonstrate a disturbing level of depravity and complete disregard for the safety and well-being of the victims involved in these acts of violence,” said New York City Police Commissioner Bratton. “As alleged, John Howard participated in a string of violent acts, including a carjacking where a 53 year-old mother was shot in cold blood when she refused to hand over her purse. I commend the efforts of the Queens South Strategic and Tactical Command Investigative Operations and the 113th Precinct Detective Squad who made it a priority to take this dangerous individual off the streets and into police custody.”
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 United States Attorneys Moira Kim Penza and Tanya Hajjar.
The Defendant:
Name: John Howard
Age: 49
Brooklyn, New YorkMaryland Man Sentenced to 10 Years for Transporting Child Pornography into United StatesRead the Press Release
A Maryland man was sentenced to 10 years in prison today for transporting child pornography into the United States, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Robert L. Capers of the Eastern District of New York announced.
Victor Otubu, 50, previously pleaded guilty to transporting child pornography. U.S. District Judge Dora L. Irizarry of the Eastern District of New York also ordered Otubu to serve 10 years of supervised release following his prison sentence.
In connection with his plea, Otubu admitted that when he arrived at John F. Kennedy International Airport on Sept. 6, 2014, from Nigeria, his suitcase contained an external hard drive and several DVDs containing hundreds of child exploitation files. Otubu was arrested on Sept. 10, 2014, in Houston as he attempted to flee prosecution by boarding a flight back to Lagos, Nigeria.
HSI’s Cyber Crimes Center Child Exploitation Investigations Unit and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) High Tech Investigations Unit investigated the case. CEOS Trial Attorney Amy Larson and Assistant U.S. Attorney Ameet Kabrawala of the Eastern District of New York prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, 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.justice.gov/psc.
Recently-Terminated NYPD Officer Arrested for Interstate Transportation of ProstitutesRead the Press Release
Earlier today, a complaint was unsealed in Brooklyn federal court charging Eduardo Cornejo, a former officer with the New York City Police Department (NYPD) with transporting women in interstate commerce to engage in prostitution.[1] Until his termination from the NYPD on January 15, 2016, Cornejo was an 11-year veteran of the NYPD who, at the time of the charged conduct, was on modified assignment and was, prior to that, assigned to the 79th Precinct in Brooklyn. Cornejo is scheduled to be arraigned at 2 p.m. today before United States Magistrate Judge Steven M. Gold at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation (FBI), and William J. Bratton, Commissioner, NYPD.
“As alleged, the defendant betrayed the trust of the residents of the city he swore to protect,” stated United States Attorney Capers. “Rather than seeking to eradicate crime from the streets of the city, the defendant promoted prostitution and profited from his exploitation of women.” Mr. Capers praised the joint investigative efforts of the FBI and the Internal Affairs Bureau of the NYPD.
“Throughout his alleged criminal actions, Cornejo not only abused the public trust given to him as an NYPD officer, but he showed no human decency when he facilitated the exploitation of women for profit. Police officers, like all public servants, are held to a higher standard, and should not violate the very same laws they are supposed to enforce,” said FBI Assistant Director-in-Charge Rodriguez.
“I commend our Internal Affairs Bureau which takes a proactive role in investigating serious misconduct among the ranks of the NYPD and works closely with prosecutors in building cases against those who violate the very laws that they have sworn to enforce,” said NYPD Commissioner Bratton.
As detailed in the complaint, members of law enforcement observed Cornejo transporting at least ten different prostitutes he employed to motels throughout the New York metropolitan area, including parts of Long Island and New Jersey. Cornejo often engaged in this conduct directly after leaving his work with the NYPD.
As further detailed in the complaint, pursuant to a lawfully authorized wiretap, law enforcement intercepted statements by Cornejo that showed his commission of the crime. For example, in one such statement Cornejo discussed the way he divides monetary proceeds with the prostitutes he employs and also stated that, if he were to stand outside a motel door with “a bunch of girls,” law enforcement would “know what’s up real quick.”
If convicted, Cornejo faces up to ten years of incarceration.
The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorneys Alexander A. Solomon and Kevin Trowel are in charge of the prosecution.
The Defendant:
EDUARDO CORNEJO
Age: 33
E.D.N.Y. Docket No. 16-M-69 (MDG)
[1] The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Al-Shabaab Member Sentenced to 9 Years for Conspiring to Provide Material Support to the Terrorist OrganizationRead the Press Release
Earlier today at the federal courthouse in Brooklyn, Mahdi Hashi was sentenced to nine years in prison by United States District Judge John Gleeson for conspiring to provide material support to al-Shabaab, a designated foreign terrorist organization. The defendant traveled from the United Kingdom to Somalia to join the terrorist group, which has a long history of violence against civilians and others. While in Somalia, the defendant was affiliated with the American jihadist, Omar Hamami and his band of American fighters, as well as individuals associated with al-Shabaab’s suicide bomber program.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, John P. Carlin, Assistant Attorney General for National Security, and Diego Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office.
As stated in court today and according to court documents, between approximately December 2009 and August 2012, the defendant served as a member of al-Shabaab in Somalia where he conspired to support al-Shabaab and its violent extremist agenda. In August 2012, the defendant was apprehended with others by local authorities in East Africa after he left Somalia, and then lawfully deported to the Eastern District of New York for prosecution in November 2012.
On November 14, 2012, the Federal Bureau of Investigation took custody of the defendant and brought him to the Eastern District of New York for prosecution. He, along with two codefendants, pleaded guilty on May 12, 2015.
“This defendant left his family and his adopted home in the United Kingdom behind so he could offer himself in support of al-Shabaab, a violent terrorist organization that has demonstrated its capabilities and motives in numerous terrorist attacks and that has publicly called for attacks against the United States,” stated U.S. Attorney Capers. “Today’s sentence sounds a warning to others who offer support to terrorist groups that pose a threat to the United States and our allies around the world.”
“Hashi travelled to Somalia to join and fight on behalf of al-Shabaab in their foreign terrorist fighter ranks,” said Assistant Attorney General Carlin. “The National Security Division remains committed to detecting, thwarting, and bringing to justice those who seek to provide material support to and fight on behalf of designated foreign terrorist organizations.”
FBI Assistant Director-in-Charge Rodriguez stated, “Mahdi Hashi joined a foreign terrorist organization to be part of a group utilizing violence to fulfill their agenda. He now finds himself isolated behind bars due to the criminality of his activities. Through today’s sentence, we hope he can no longer be in a position to inflict, or support those who inflict, harm on others. The FBI, in cooperation with our JTTF partners, will continue to work to identify and interrupt those engaged in terrorist activities globally and bring them to justice in the U.S.”
During the time of the charged conspiracy and thereafter, al-Shabaab successfully recruited individuals from around the world, such as the defendant, to come to Somalia and join the organization. These individuals, known within al-Shabaab as “foreign fighters,” lived, trained, and often fought alongside other native Somali fighters. The foreign fighters were especially valuable to al-Shabaab for several reasons. For example, al-Shabaab frequently made Western foreign fighters the face of its fund-raising and propaganda efforts as part of a broader strategy of emphasizing that the conflict in Somalia was part of a global jihad aimed at creating an Islamic caliphate. In addition, al-Shabaab assesses that Westerners have the potential to more easily cross certain international borders. Because al-Shabaab frequently employs suicide bombings, as it did in the Kampala, Uganda, in 2010 resulting in 74 deaths, freedom of travel was particularly crucial to al-Shabaab’s external terror operations.
Assistant Attorney General Carlin joined U.S. Attorney Capers in thanking the federal, state, and local law enforcement agencies who participate in the FBI’s Joint Terrorism Task Force in New York.
The government’s case is being handled by Assistant U.S. Attorneys Shreve Ariail, Seth D. DuCharme, and Richard M. Tucker of the Eastern District of New York, along with Trial Attorney Annamartine Salick of the National Security Division’s Counterterrorism Section. The Department of Justice’s Office of International Affairs also provided invaluable assistance.
The Defendant:
MADHI HASHI
Age: 26
Nationality: SomaliNew York State Court Officer Arrested for Robbery ConspiracyRead the Press Release
Earlier today, Nicholas Giovatto, a New York State Court Officer, who had been assigned to the Bronx County Supreme Court, was arrested and charged with robbery conspiracy and related firearm charges by members of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the New York City Police Department’s (NYPD) Police Impersonation Investigation Unit.[1] The defendant’s initial appearance is scheduled this afternoon before United States Magistrate Judge Steven I. Locke, at the United States Courthouse, 100 Federal Plaza, Central Islip, New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Delano A. Reid, Special Agent in Charge, New York Field Division, ATF, and William J. Bratton, Commissioner, NYPD.
“Law enforcement officers who violate their oath to protect the public, whether inside or outside the courthouse, will be held accountable for their actions. No one is above the law,” stated United States Attorney Capers.
“As alleged, the defendant - on more than one occasion - misused his position of trust when he posed as a law enforcement officer to commit home invasion robberies. The defendant apparently believes that a life of crime would be more beneficial than one of protecting and serving. I suspect that now that he has been indoctrinated into the federal judicial system, he will quickly realize he made the wrong choice,” stated ATF Special Agent in Charge Reid.
“This arrest demonstrates that there is no tolerance for corruption at any level. I commend the work of the members of the NYPD Police Impersonation Investigation Unit, the agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the prosecutors of the United States Eastern District who are involved in this investigation,” said Police Commissioner Bratton.
According to the complaint, between December 2011 and March 2012, Giovatto was a member of a robbery crew that conspired to commit armed home invasion robberies of narcotics dealers on Long Island and in Queens. On December 20, 2011, Giovatto and another member of his crew entered a residence in Queens, New York, by falsely identifying themselves as police officers and claiming they had a search warrant for the premises. Upon entering the residence, Giovatto brandished a firearm, while his co-conspirator handcuffed the victim. They then ransacked the premises and stole more than $30,000 and several pieces of jewelry. Giovatto and his co-conspirator targeted this location for robbery because one of the residents was believed to be a narcotics trafficker.
Similarly, the complaint charges that, on March 10, 2012, Giovatto and another member of the robbery crew attempted to enter a residence in Queens, New York, in order to rob the occupants who they believed were involved in marijuana trafficking. Giovatto and his co-conspirator falsely identified themselves as police officers but were denied access to the residence by the intended robbery victims.
The government’s case is being prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorneys Lara Treinis Gatz and Grace M. Cucchissi are in charge of the prosecution.
The Defendant:
NICHOLAS GIOVATTO
Age: 37
New York, New YorkE.D.N.Y. Docket No. 16-MJ-51 (AKT)
[1] The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Former NYPD Detective Sentenced to 72 MonthsRead the Press Release
Earlier today, Rafael Astacio, a former detective with the New York City Police Department, was sentenced to 72 months of imprisonment by United States District Judge Joseph F. Bianco, to be followed by three years of supervised release. As part of the sentence, the court entered a $200,000 forfeiture money judgment and restitution in the amount of $1.8 million. Previously, Astacio pleaded guilty to conspiracy to commit interstate transportation of stolen property and filing a fraudulent tax return.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
According to court filings and statements at today’s court proceeding, between 2010 and 2012, Astacio was a member of a burglary crew that committed approximately three dozen commercial burglaries and ten residential burglaries in the Eastern District of New York stealing approximately $8,000,000 in cash and property. Astacio personally participated in six of the commercial burglaries and five residential burglaries stealing more than $5.3 million in cash and property. The crew used traditional burglary tools, such as blow torches, crowbars, wire cutters, and sledge hammers, as well as cell phone jammers, police scanners, and an automobile tracking device to commit these crimes. Astacio also used his position with the NYPD to locate potential burglary targets’ home addresses.
“For years, Astacio and his crew invaded Long Island homes and businesses and stole money and property. By victimizing the very same people he took an oath to serve and protect, the defendant compounded his criminal acts,” stated United States Attorney Capers. Mr. Capers extended his grateful appreciation to the Nassau County District Attorney’s Office; the Federal Bureau of Investigation, New York Field Office; the Nassau County Police Department; the Internal Revenue Service-Criminal Investigation, New York; and New York City Police Department for their assistance in this case.
The government’s case is being prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorney Christopher C. Caffarone and Special Assistant United States Attorney Rick Whelan are in charge of the prosecution.
The Defendant:
RAFAEL ASTACIO
Age: 43
Copiague, New YorkE.D.N.Y. Docket No. 13-CR-640 (JFB)
Yemeni National Pleads Guilty to Conspiring to Kill U.S. Soldiers in AfghanistanRead the Press Release
Defendant Received Military-Type Training from al-Qaeda and then Went to Afghanistan with the Taliban to Fight against U.S. Forces
Ali Alvi al-Hamidi, 31, a Yemeni national, pleaded guilty today to conspiring to murder U.S. nationals abroad, conspiring to provide material support to al-Qaeda and receiving military-type training from al-Qaeda. The guilty plea took place before U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York. At sentencing, al-Hamidi faces a maximum of life imprisonment.
The guilty plea was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York and Assistant
Director in Charge Paul M. Abbate of the FBI’s Washington, D.C., Field Office.
“Ali Alvi al-Hamidi went to the FATA to join al-Qaeda, received training from the terrorist organization, and later fought alongside the Taliban against coalition forces in Afghanistan,” said Assistant Attorney General Carlin. “With this plea, he will be held accountable for his terrorist activity, including conspiring to kill members of our military. The highest priority of the National Security Division is countering terrorist threats, and we will continue to use all tools available to bring justice to those who seek to harm American servicemen and women who bravely risk their lives in defense of our nation.”
“Today’s significant guilty plea demonstrates this office’s unwavering commitment to bring to justice those who fight against U.S. forces or assist al-Qaeda and others in their efforts to kill Americans at home or abroad,” said U.S. Attorney Capers.
“As we witnessed today, those who support designated foreign terrorist organizations like al Qaeda and seek to harm people will be held fully accountable under the law,” said Assistant Director in Charge Abbate. “On a daily basis, the FBI and its partners face the challenge of an ever evolving threat environment. Through our partnerships, both international and domestic, the FBI continues to track down those who aid and abet terrorist groups and ensure that they are brought to justice.”
In early 2008, al-Hamidi traveled to the Federally Administered Tribal Areas (FATA) of Pakistan to join al-Qaeda. Once there, he received training from al-Qaeda in the use of weapons, explosives and detonators. During late spring and summer of 2008, al-Hamidi moved on to Afghanistan with Taliban forces for the purpose of fighting members of the U.S. military and coalition forces stationed there.
The defendant also aided Bryant Neal Vinas, a U.S. citizen, in joining al-Qaeda. Vinas traveled to Pakistan from Long Island, New York, hoping to join al-Qaeda and fight U.S. military forces in Afghanistan. After participating in al-Qaeda’s military training program, Vinas and senior al-Qaeda external operations leadership devised a plan to conduct an attack on the Long Island Railroad in New York. Vinas was arrested in 2008 before he could carry out this attack, and pleaded guilty in 2009 to conspiracy to murder U.S. nationals, providing material support to a foreign terrorist organization and receiving military-type training from a foreign terrorist organization. Vinas is currently incarcerated pending sentence.
Assistant Attorney General Carlin joined U.S. Attorney Capers in extending his grateful appreciation to the FBI’s Washington Field Office. The case is being prosecuted by Assistant U.S. Attorneys Zainab Ahmad, Michael P. Canty and Douglas M. Pravda of the Eastern District of New York, with assistance provided by Trial Attorney Josh Parecki of the National Security Division’s Counterterrorism Section.
Yemeni National Pleads Guilty to Conspiring to Kill U.S. Soldiers in AfghanistanRead the Press Release
Earlier today, Ali Alvi al-Hamidi, a Yemeni national, pleaded guilty to conspiring to murder U.S. nationals abroad, conspiring to provide material support to al-Qaeda, and receiving military-type training from al-Qaeda. Today’s guilty plea took place before United States District Judge Nicholas G. Garaufis. At sentencing, al-Hamidi faces a maximum of life imprisonment.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, John P. Carlin, Assistant Attorney General for National Security, and Paul M. Abbate, Assistant Director in Charge, Federal Bureau of Investigation, Washington Field Office.
“Today’s significant guilty plea demonstrates this office’s unwavering commitment to bring to justice those who fight against U.S. forces or assist al-Qaeda and others in their efforts to kill Americans at home or abroad,” stated United States Attorney Capers. Mr. Capers extended his grateful appreciation to the FBI’s Washington Field Office for their efforts.
“Ali Alvi al-Hamidi went to the FATA to join al-Qaeda, received training from the terrorist organization, and later fought alongside the Taliban against coalition forces in Afghanistan. With this plea, he will be held accountable for his terrorist activity, including conspiring to kill members of our military,” said Assistant Attorney General Carlin. “The highest priority of the National Security Division is countering terrorist threats, and we will continue to use all tools available to bring justice to those who seek to harm American servicemen and women who bravely risk their lives in defense of our nation,” said Assistant Attorney General Carlin.
“As we witnessed today, those who support designated foreign terrorist organizations like al Qaeda and seek to harm people will be held fully accountable under the law,” said FBI Assistant Director in Charge, Abbate. “On a daily basis, the FBI and its partners face the challenge of an ever evolving threat environment. Through our partnerships, both international and domestic, the FBI continues to track down those who aid and abet terrorist groups and ensure that they are brought to justice.”
In early 2008, al-Hamidi traveled to the Federally Administered Tribal Areas (FATA) of Pakistan to join al-Qaeda. Once there, he received training from al-Qaeda in the use of weapons, explosives, and detonators. During late spring and summer 2008, al-Hamidi moved on to Afghanistan with Taliban forces for the purpose of fighting members of the United States military and coalition forces stationed there.
Alvi also aided U.S. citizen Bryant Neal Vinas entry into al-Qaeda. Vinas had traveled to Pakistan from Long Island hoping to join al-Qaeda and fight U.S. military forces in Afghanistan. After participating in al-Qaeda’s military training program, Vinas and senior al-Qaeda external operations leadership devised a plan to conduct an attack on the Long Island Railroad in New York. Vinas was arrested in 2008 before he could carry out this attack. Vinas pleaded guilty in 2009 to conspiracy to murder U.S. nationals, providing material support to a foreign terrorist organization, and receiving military type training from a foreign terrorist organization. He is currently incarcerated pending sentence.
The government’s case is being prosecuted by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Zainab Ahmad, Michael P. Canty, and Douglas M. Pravda are in charge of the prosecution, with assistance provided by Trial Attorney Josh Parecki of the National Security Division’s Counterterrorism Section.
The Defendant:
ALI ALVI AL-HAMIDI
Age: 31
Nationality: YemeniE.D.N.Y. Docket No. 15-CR-56
Executives of Panamanian Corporation and Aviation Company Plead Guilty in Multi Million Dollar Money Laundering StingRead the Press Release
BROOKLYN, N.Y. – Earlier today, Michael J. Dodd and James Robert Shipman, Jr. pleaded guilty to charges that they conspired to launder more than two million dollars, which they believed to be proceeds of a penny stock fraud scheme. The money was, in fact, provided to the defendants by an undercover law enforcement agent who posed as a criminal stock promoter as part of an FBI sting operation. A third defendant, Kenneth Landgaard, pleaded guilty to the same charges on January 15, 2016. Defendants Landgaard and Shipman were arrested after flying to an airport in New York on a private jet to take possession of $2,200,000 in cash, which they had agreed to launder through banks in Panama and Belize. Dodd was arrested a few hours later at a Manhattan restaurant where he had expected to meet with the undercover agent. Prior to their arrests, the defendants had already laundered $400,000 in cash previously provided by the undercover agent.
The guilty pleas were announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
“The defendants agreed to transport millions of dollars represented to be stock fraud proceeds on private jets to Panama and then engage in a series of financial transactions designed to conceal the illegal source of the funds. They did so with the intention of lining their own pockets without regard for the law,” stated United States Attorney Capers. “We are committed to stopping the laundering of money through offshore safe havens and prosecuting those who would abuse the financial markets to enrich themselves.” Mr. Capers thanked the Federal Bureau of Investigation (FBI), the Internal Revenue Service, Criminal Investigation (IRS-CI) and the U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI) for their hard work and dedication through the course of the investigation and prosecution.
In his dealings with the defendants, the undercover agent represented himself to be a middleman working with corrupt stock brokers who artificially inflated prices for worthless stocks in exchange for high commissions. Despite being made aware this, the defendants agreed to launder $2,600,000 in exchange for a 13% to 15% fee. Immediately prior to their arrest, Landgaard and Shipman accepted $2,200,000 from the undercover agent, which they believed to be proceeds from the penny stock fraud. In conversations which were recorded by the FBI, the defendants explained in detail the measures they took to avoid detection of their money laundering scheme by law enforcement – Dodd insisted that the undercover agent download and use encryption software for online chats and voice communications, Landgaard insisted that the cash be provided in expensive Louis Vuitton duffel bags, and Shipman explained their reasoning, “You know why they do that? Because cops can’t get the authority to buy a Louis Vuitton bag, it’s too expensive ….” Landgaard and Shipman also insisted that the undercover agent buy a “throwaway” or “burner” phone on which to speak to them about the scheme.
The guilty pleas took place before United States District Judge John Gleeson at the United States Courthouse in Brooklyn, New York. When sentenced, the defendants each face a maximum sentence of 20 years’ imprisonment.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Jack Dennehy is in charge of the prosecution. Assistant United States Attorneys Brian Morris and Karin Orenstein of the Office’s Civil Division are 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 (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 Defendants:
Name: Michael Dodd, also known as "Michael Stanley"
Age: 65
Panama City, PanamaName: Kenneth Landgaard
Age: 46
Alexandria, MinnesotaName: James Robert Shipman, Jr.
Age: 64
Hollywood, FloridaE.D.N.Y. Docket No. 15-CR-552 (JG)
Two Members of Al-Shabaab Sentenced for Conspiring to Provide Material Support to the Terrorist OrganizationRead the Press Release
Ali Yasin Ahmed, aka Ismail, 31, and Mohamed Yusuf, aka Abu Zaid, Hudeyfa and Mohammed Abdulkadir, 33, were each sentenced to 11 years in prison by U.S. District Judge John Gleeson of the Eastern District of New York for conspiring to provide material support to al-Shabaab, a designated foreign terrorist organization.
The sentences were announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York and Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office.
As stated in court today and according to court documents, between approximately December 2008 and August 2012, the defendants served as members of al-Shabaab in Somalia, where they supported al-Shabaab and its extremist agenda. In early August 2012, the defendants were apprehended in East Africa by local authorities while on their way to Yemen. On Nov. 14, 2012, the FBI took custody of the defendants and brought them to the Eastern District of New York for prosecution. They pleaded guilty on May 12, 2015.
“Ahmed and Yusuf travelled to Somalia to fight on behalf al-Shabaab as part of the terrorist organization's cadre of foreign fighters,” said Assistant Attorney General Carlin. “The National Security Division remains committed to identifying, disrupting and holding accountable all who seek to provide material support to and fight on behalf of designated foreign terrorist organizations.”
“These defendants left their adopted European homes to support al-Shabaab, a violent terrorist organization that has demonstrated its capabilities and motives in numerous terrorist attacks overseas and has publicly called for attacks against the United States,” said U.S. Attorney Capers. “Today’s significant sentences reflect the seriousness of the defendants’ criminal conduct and will serve as a strong deterrent to others considering the path to violence.”
“The guilty plea and sentencing of these men for providing material support to al-Shabaab, demonstrates the U.S. government’s commitment and leadership in prosecuting persons whose intention is to violently assault societies different than their own,” said Assistant Director in Charge Rodriguez. “We remain steadfast in identifying and stopping such attacks. We will continue to work within the framework of the U.S. justice system to hold terrorists accountable for their malicious intentions and criminal actions. Special thanks to all our law enforcement and intelligence community partners on the JTTF, whose joint efforts keep us safe. We are also grateful for the international cooperation we received to bring these terrorism subjects to justice.”
The defendants, both naturalized Swedish citizens, traveled to Somalia intending to wage violent jihad on the U.N.-sanctioned African Union Mission in Somalia (AMISOM) and Somali government forces that were attempting to bring stability to that war-torn country. Once in Somalia, the defendants participated in numerous attacks on government forces. Yusuf is featured in an al-Shabaab propaganda video in which he encourages young men to travel to Somalia and join al-Shabaab and threatened a cartoonist who had depicted the prophet Mohammad. A third defendant, Madhi Hashi, is scheduled to be sentenced on Jan. 29, 2016.
Assistant Attorney General Carlin joined U.S. Attorney Capers in thanking the federal, state and local law enforcement agencies who participate in the FBI’s Joint Terrorism Task Force in New York.
The prosecution is being handled by Assistant U.S. Attorneys Shreve Ariail, Seth D. DuCharme and Richard M. Tucker of the Eastern District of New York, along with Trial Attorney Annamartine Salick of the National Security Division’s Counterterrorism Section. Trial Attorney Shanna Batten of the Department of Justice’s Office of International Affairs and Dan Stigall of the National Security Division also provided invaluable assistance.
Two Members of Al-Shabaab Sentenced to 11 Years for Conspiring to Provide Material Support to the Terrorist OrganizationRead the Press Release
Earlier today at the federal courthouse in Brooklyn, Ali Yasin Ahmed and Mohamed Yusuf were sentenced to 11 years in prison by United States District Judge John Gleeson for conspiring to provide material support to al-Shabaab, a designated foreign terrorist organization. The defendants, both naturalized Swedish citizens, traveled to Somalia intending to wage violent jihad on the U.N.-sanctioned AMISOM and Somali government forces that were attempting to bring stability to that war-torn country. Once in Somalia, the defendants participated in numerous attacks on government forces, and Yusuf appeared in an al-Shabaab recruiting video aimed at inducing young Muslim men in Western countries to leave their homes and join the terrorist organization.
The sentences were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, John P. Carlin, Assistant Attorney General for National Security, and Diego Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office.
As stated in court today and according to court documents, between approximately December 2008 and August 2012, the defendants served as members of al-Shabaab in Somalia, where they agreed with others to support al-Shabaab and its extremist agenda. In early August 2012, the defendants were apprehended in East Africa by local authorities while on their way to Yemen. On November 14, 2012, the Federal Bureau of Investigation took custody of the defendants and brought them to the Eastern District of New York for prosecution. They pleaded guilty on May 12, 2015.
“These defendants left their adopted European homes to support al-Shabaab, a violent terrorist organization that has demonstrated its capabilities and motives in numerous terrorist attacks overseas and has publicly called for attacks against the United States,” stated U.S. Attorney Capers. “Today’s significant sentences reflect the seriousness of the defendants’ criminal conduct and will serve as a strong deterrent to others considering the path to violence.”
“Ahmed and Yusuf travelled to Somalia to fight on behalf al Shabaab as part of the terrorist organization's cadre of foreign fighters,” said Assistant Attorney General Carlin. “The National Security Division remains committed to identifying, disrupting, and holding accountable all who seek to provide material support to and fight on behalf of designated foreign terrorist organizations.”
FBI Assistant Director-in-Charge Rodriguez stated, “The guilty pleas and sentencing of these men for providing material support to al-Shabaab demonstrates the U.S. government’s commitment and leadership in prosecuting persons whose intention is to violently assault societies different than their own. We remain steadfast in identifying and stopping such attacks. We will continue to work within the framework of the U.S. justice system to hold terrorists accountable for their malicious intentions and criminal actions. Special thanks to all our law enforcement and intelligence community partners on the JTTF, whose joint efforts keep us safe. We are also grateful for the international cooperation we received to bring these terrorism subjects to justice.”
During the time of the charged conspiracy (and thereafter), al-Shabaab successfully recruited individuals from around the world, such as the defendants, to come to Somalia and join the organization. These individuals, known within al-Shabaab as “foreign fighters,” lived, trained, and often fought alongside other native Somali fighters. The foreign fighters were especially valuable to al-Shabaab for several reasons. For example, al-Shabaab frequently made Western foreign fighters the face of its fund-raising and propaganda efforts as part of a broader strategy of emphasizing that the conflict in Somalia was part of a global jihad aimed at creating an Islamic caliphate. Indeed, one of the defendants, Yusuf, is featured in an al-Shabaab propaganda video in which he encouraged young men to travel to Somalia and join al-Shabaab and threatened a cartoonist who had depicted the prophet Mohammad. In addition, Yusuf and Ahmed fought in battles in Somalia against African Union forces. A third defendant, Madhi Hashi, is scheduled to be sentenced on January 29, 2016.
Assistant Attorney General Carlin joined U.S. Attorney Capers in thanking the federal, state, and local law enforcement agencies who participate in the FBI’s Joint Terrorism Task Force in New York.
The government’s case is being handled by the Office’s National Security and Cybercrime Section. Assistant United States Attorneys Shreve Ariail, Seth D. DuCharme, and Richard M. Tucker, along with Trial Attorney Annamartine Salick of the Department of Justice’s Counterterrorism Section, are in charge of the prosecution. Trial Attorney Shanna Batten of the Department of Justice’s Office of International Affairs, and Dan Stigall, Counsel to the Assistant Attorney General for the National Security Division, also provided invaluable assistance.
The Defendants:
ALI YASIN AHMED, also known as “Ismail”
Age: 31
Nationality: SwedishMOHAMED YUSUF, also known as “Abu Zaid,” “Hudeyfa” and “Mohammed Abdulkadir”
Age: 33
Nationality: SwedishAmerican Citizen Charged with Conspiring to Murder U.S. Nationals and Conspiring to Use a Weapon of Mass Destruction in Attack Against U.S. Military Base in AfghanistanRead the Press Release
Defendant Allegedly Responsible for a Vehicle-Borne Improvised Explosive Device Attack against U.S. Military Base in Afghanistan in January 2009
A superseding indictment was obtained today in federal court in the Eastern District of New York, adding charges against Muhanad Mahmoud Al Farekh, 30, an American citizen, for conspiracy to murder U.S. nationals, use of explosives, conspiracy to use a weapon of mass destruction and conspiracy to bomb a government facility. These new charges arise out of Farekh’s participation in an attack on a U.S. military base in Afghanistan in January 2009. As set forth in the superseding indictment and in other publicly available information, Farekh assisted in the preparation of a vehicle-borne improvised explosive device (VBIED) for use in the attack. On or about Jan. 19, 2009, two co-conspirators drove vehicles to the U.S. military base in Afghanistan. The first co-conspirator detonated the VBIED in his vehicle during the attack on the military base. The second co-conspirator drove a truck containing a second VBIED to the military base, but did not detonate that device. Farekh’s fingerprints were subsequently recovered from packing tape on the VBIED that did not detonate.
The superseding indictment also charges that, between December 2006 and September 2009, Farekh provided, attempted to provide and conspired to provide material support to al-Qaeda. The superseding indictment includes the charges from the original indictment, unsealed on May 28, 2015, that Farekh provided, attempted to provide and conspired to provide material support to terrorists. The defendant is scheduled to be arraigned on the new charges on Jan. 7, 2016, at 12 p.m. EST at the U.S. District Court for the Eastern District of New York, before U.S. District Judge Brian M. Cogan of the Eastern District of New York.
The superseding indictment was announced today by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York City Police Department (NYPD).
“Muhanad Mahmoud Al Farekh is charged with conspiring to kill Americans overseas for his role in a VBIED attack on a U.S. military installation in Afghanistan,” said Assistant Attorney General Carlin. “Counterterrorism is the highest priority of the National Security Division, and we will continue to use all tools available to bring to justice those who seek to harm American servicemen and women who bravely risk their lives in defense of our nation.”
“Farekh, a citizen of the United States, allegedly turned his back on our country and tried to kill U.S. soldiers in the course of executing their sworn duty to keep us safe,” said U.S. Attorney Capers. “Today’s charges demonstrate that the patriotism and service of the members of our armed forces will never be forgotten and that we will make every effort to prosecute those who would harm our country and our armed forces to the full extent of the law.”
“This indictment demonstrates justice has no bounds and the United States government will seek to investigate and prosecute crimes against Americans, no matter where they take place,” said Assistant Director in Charge Rodriguez. “The FBI stands alongside our military and law enforcement partners to hold criminals accountable for their actions. Special thanks to the FBI agents and NYPD detectives on our JTTF, who have conducted a thorough global investigation.”
“This superseding indictment demonstrates the NYPD and FBI's commitment to arrest those who commit acts of terror--from Arthur Avenue to Afghanistan,” said Commissioner Bratton. “This thwarted plot is strikingly familiar to the attack that killed Detective Lemm last week in Afghanistan. We will continue working on every corner of the globe to arrest and charge those who attack our men and women in uniform.”
As alleged in other publicly-filed documents, in approximately 2007, Farekh and two co-conspirators departed Canada for Pakistan with the intention of fighting against American forces. They did not inform their families of their plan before departing, but called a friend in Canada upon arrival to let him know that he should not expect to hear from them again because they intended to become martyrs. One of Farekh’s co-conspirators – Ferid Imam – subsequently provided weapons and other military-type training at an al-Qaeda training camp in Pakistan in approximately September 2008, according to public testimony in previous EDNY criminal trials. Among Imam’s trainees were three individuals – Najibullah Zazi, Zarein Ahmedzay and Adis Medunjanin – who intended to return to the United States to conduct a suicide attack on the New York City subway system. Zazi and Ahmedzay pleaded guilty pursuant to cooperation agreements and have yet to be sentenced; Medunjanin was convicted after trial and sentenced to life in prison. Ferid Imam has also been indicted for his role in the plot.
If convicted, the defendant faces a mandatory minimum sentence of seven years in prison and a maximum sentence of life imprisonment. Any potential sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal history, if any, the defendant’s role in the offense and the characteristics of the violation.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Assistant Attorney General Carlin joined U.S. Attorney Capers in extending his grateful appreciation to the FBI’s Joint Terrorism Task Force. The case is being prosecuted by Assistant U.S. Attorneys Zainab Ahmad, Richard M. Tucker and Douglas M. Pravda of the Eastern District of New York, with assistance provided by Trial Attorney Kiersten Korczynski of the National Security Division’s Counterterrorism Section.
Farekh Superseding Indictment
American Citizen Charged with Conspiring to Murder U.S. Nationals and Conspiring to Use A Weapon of Mass Destruction in Attack Against U.S. Military Base in AfghanistanRead the Press Release
A superseding indictment was obtained today in federal court in the Eastern District of New York, adding charges against Muhanad Mahmoud Al Farekh, an American citizen, for conspiracy to murder United States nationals, use of explosives, conspiracy to use a weapon of mass destruction, and conspiracy to bomb a government facility. These new charges arise out of Farekh’s participation in an attack on a U.S. military base in Afghanistan in January 2009. As set forth in the superseding indictment and in other publicly available information, Farekh assisted in the preparation of a vehicle-borne improvised explosive device (“VBIED”) for use in the attack. On or about January 19, 2009, two co-conspirators drove vehicles to the U.S. military base in Afghanistan. The first co-conspirator detonated the VBIED in his vehicle during the attack on the military base. The second co-conspirator drove a truck containing a second VBIED to the military base, but did not detonate that device. Farekh’s fingerprints were subsequently recovered from packing tape on the VBIED that did not detonate.
The superseding indictment also charges that, between December 2006 and September 2009, Farekh provided, attempted to provide, and conspired to provide material support to al-Qaeda. The superseding indictment includes the charges from the original indictment, unsealed on May 28, 2015, that Farekh provided, attempted to provide, and conspired to provide material support to terrorists.
The defendant is scheduled to be arraigned on the new charges on January 7, 2016, at 12 p.m. at the United States District Court for the Eastern District of New York, before United States District Judge Brian M. Cogan.
The superseding indictment was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; John P. Carlin, Assistant Attorney General for National Security; Diego G. Rodriguez, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office; and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“Farekh, a citizen of the United States, allegedly turned his back on our country and tried to kill U.S. soldiers in the course of their executing their sworn duty to keep us safe,” stated United States Attorney Capers. “Today’s charges demonstrate that the patriotism and service of the members of our armed forces will never be forgotten and that we will make every effort to prosecute those who would harm our country and our armed forces to the full extent of the law.” Mr. Capers extended his grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state, and local agencies from the region.
“Muhanad Mahmoud Al Farekh is charged with conspiring to kill Americans overseas for his role in a VBIED attack on a U.S. military installation in Afghanistan,” said Assistant Attorney General Carlin. “Counterterrorism is the highest priority of the National Security Division, and we will continue to use all tools available to bring to justice those who seek to harm American servicemen and women who bravely risk their lives in defense of our nation.”
“This indictment demonstrates justice has no bounds and the United States government will seek to investigate and prosecute crimes against Americans, no matter where they take place. The FBI stands alongside our military and law enforcement partners to hold criminals accountable for their actions. Special thanks to the FBI agents and NYPD detectives on our JTTF, who have conducted a thorough global investigation,” said FBI Assistant Director in Charge Rodriguez.
“This superseding indictment demonstrates the NYPD and FBI's commitment to arrest those who commit acts of terror – from Arthur Avenue to Afghanistan. This thwarted plot is strikingly familiar to the attack that killed Detective Lemm in Afghanistan. We will continue working on every corner of the globe to arrest and charge those who attack our men and women in uniform,” said Police Commissioner William J. Bratton.
As alleged in other publicly filed documents, in approximately 2007, Farekh and two co-conspirators departed Canada for Pakistan with the intention of fighting against American forces. They did not inform their families of their plan before departing, but called a friend in Canada upon arrival to let him know that he should not expect to hear from them again because they intended to become martyrs. One of Farekh’s co-conspirators – Ferid Imam – subsequently provided weapons and other military-type training at an al-Qaeda training camp in Pakistan in approximately September 2008, according to public testimony in previous EDNY criminal trials. Among Imam’s trainees were three individuals – Najibullah Zazi, Zarein Ahmedzay, and Adis Medunjanin – who intended to return to the United States to conduct a suicide attack on the New York City subway system. Zazi and Ahmedzay pleaded guilty pursuant to cooperation agreements and have yet to be sentenced; Medunjanin was convicted after trial and sentenced to life imprisonment. Ferid Imam has also been indicted for his role in the plot (see EDNY Docket Number 10-CR-019 (S-4) (RJD)).
If convicted, the defendant faces a statutory mandatory minimum sentence of 7 years’ imprisonment and a maximum sentence of life imprisonment.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Zainab Ahmad, Richard M. Tucker, and Douglas M. Pravda are in charge of the prosecution, with assistance provided by Trial Attorney Kiersten Korczynski of the Justice Department’s Counterterrorism Section.
The Defendant:
MUHANAD MAHMOUD AL FAREKH
Age: 30
Nationality: United StatesE.D.N.Y. Docket No. 15-CR-268 (S-1)
United States Files Suit Against Brooklyn Cooperative Apartment Building Trump Village for Fair Housing Act ViolationsRead the Press Release
Robert L. Capers, United States Attorney for the Eastern District of New York, and Vanita Gupta, Principal Deputy Assistant Attorney General for Civil Rights, announced the filing today of a federal Fair Housing Act complaint against Coney Island, New York cooperative Trump Village Section IV Inc. and Igor Oberman, a former President of its Board of Directors, for violation of the Fair Housing Act, 42 U.S.C. §§ 3604(f) and 3617. Trump Village Section IV Inc. is a 1,144-unit cooperative apartment complex in Brooklyn, New York. The owners of the complex are shareholders in the cooperative, and have proprietary leases for their residential units. The complaint alleges that between May 2012 and March 2015, defendants engaged in a pattern or practice of discrimination by denying Trump Village residents with disabilities emotional support animals.
According to the government’s complaint, defendants refused to allow four residents of the cooperative to live with emotional support dogs and commenced eviction proceedings against three of them when they refused to give up their animals. As further set forth in the complaint, defendants took some of these actions even after they entered into a conciliation agreement with the United States Department of Housing and Urban Development in which they agreed that Trump Village would permit individuals to live with emotional support animals. The complaint seeks monetary damages for the victims of the discrimination as well as injunctive relief barring defendants from discriminating against individuals with disabilities.
“The law is clear that reasonable accommodations must be granted to individuals with disabilities when those accommodations are necessary to afford them the equal opportunity to use and enjoy their homes. This includes the right to live with an emotional support animal. Those responsible for refusing to grant such accommodations or retaliating against individuals with disabilities who try to enforce their rights under the Fair Housing Act will be held accountable,” stated United States Attorney Capers. Mr. Capers extended his appreciation to the United States Department of Housing and Urban Development Office of Fair Housing and Equal Opportunity for its assistance with the investigation.
“Emotional support animals provide critical care and therapeutic aid for people with disabilities,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “The department will continue to enforce fair housing laws to ensure that housing providers make reasonable accommodations for individuals who rely on assistance animals in their homes.”
The government’s case is being handled by Assistant United States Attorney Melanie D. Hendry.
E.D.N.Y. Docket No: 15-cv-7306 (NGG)(PK)
Cartel Leader Extradited from Mexico to the Eastern District of New York to Face International Cocaine Trafficking ChargesRead the Press Release
Later today, Tirso Martinez-Sanchez will be arraigned at the federal courthouse in Brooklyn, New York, on charges that he was the head of an international drug cartel that imported tens of thousands of kilograms of cocaine into the United States from Mexico. Martinez-Sanchez was arrested in Mexico on February 2, 2014, based on a provisional arrest warrant issued from the Eastern District of New York. He was extradited from Mexico to the United States on December 17, 2015.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York and Acting Special Agent in Charge, Glenn Sorge, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), New York.
As alleged in the indictment and other court documents, Martinez-Sanchez was the leader of an extensive transnational narcotics importation, distribution, and transportation organization that is responsible for the importation and distribution of tens of thousands of kilograms of cocaine. In particular, the organization obtained multi-ton shipments of cocaine from Colombian sources of supply. Martinez-Sanchez then organized the importation of that cocaine from outside of the United States, into the United States, by using an elaborate transportation network of trains, tractor trailers, and other vehicles. Once the cocaine was in the United States, Martinez-Sanchez directed organization members to transport the cocaine overland to large distribution centers, including some areas located in the Los Angeles, New York, and Chicago metropolitan areas. Martinez-Sanchez directed organization members to coordinate the logistics of storing the cocaine in the organization’s stash warehouses and transporting the cocaine to the organization’s distributors and customers throughout New York and elsewhere in the United States, including California and Illinois.
The investigation further revealed that Martinez-Sanchez used a network of large warehouses to store and distribute the cocaine in the United States. Martinez-Sanchez directed members of the organization to establish and maintain numerous front companies to purchase or lease these stash warehouses and vehicles to transport cocaine, and to purchase “cover loads,” or legitimate goods that were stored and transported with the cocaine to mask the cocaine shipment.
Martinez-Sanchez also oversaw the collection of the organization’s proceeds from the sale of cocaine in the United States. After the cocaine was sold, the proceeds were collected and stored in the organization’s stash warehouses. At Martinez-Sanchez’s direction, the organization’s couriers smuggled some of the drug proceeds to organization members outside of the United States using the same transportation network of tractor trailers and trains that had been used to smuggle the cocaine into the United States. The investigation further revealed that Martinez-Sanchez invested a considerable amount of narcotics proceeds in money laundering ventures, such as the purchase of professional soccer teams, and a chain of high-end clothing boutiques. Martinez-Sanchez also invested the narcotics proceeds back into the instrumentalities of the organization itself, such as purchasing or leasing stash warehouses, vehicles, and front businesses.
Martinez-Sanchez had been designated a Consolidated Priority Organization Target or CPOT by the Organized Crime Drug Enforcement Task Force (OCDETF). In addition to coordinating the distribution of his own organization’s cocaine, Martinez-Sanchez also transported and distributed narcotics for members of other Mexican Drug Cartels, including the Sinaloa Cartel, led by CPOTs Joaquin “El Chapo” Guzman and Ismael “Mayo” Zambada; the Juarez Cartel, led by CPOT Vicente Carillo-Fuentes and the Beltran-Leyva Cartel, led by brothers Arturo, Hector and Alfredo Beltran-Leyva.
During the course of the investigation, law enforcement agents seized approximately 500 kilograms of cocaine from a residence in Deer Park, New York; approximately 2,000 kilograms of cocaine from a warehouse in Brooklyn, New York; approximately 2,000 kilograms of cocaine hidden inside a railroad car in Queens, New York; approximately 1,100 kilograms of cocaine from a warehouse in El Paso, Texas; and approximately 1,900 kilograms of cocaine from a warehouse in Chicago, Illinois.
“The charges announced today reflect our ongoing efforts to target and dismantle the largest drug trafficking organizations in the world, whose multi-billion dollar criminal networks funnel drugs onto our streets and spread violence into our communities,” said U.S. Attorney Capers. “We will continue to work together with our law enforcement partners in Mexico to root out the leaders of these insidious cartels wherever they may be found and bring them to justice.” Mr. Capers extended his grateful appreciation to the Department of Homeland Security, Homeland Security Investigations (HSI) New York Office, the agency responsible for leading the investigation, and to the invaluable assistance provided by the HSI Mexico Country Office, the Drug Enforcement Administration Task Force, the DEA Mexico Country Office and the Department of Justice’s Office of International Affairs.
“This is yet another example of HSI and its partners relentlessly pursuing and dismantling drug trafficking organizations from top to bottom,” said Glenn Sorge, acting special agent in charge HSI New York. “This team of agents and prosecutors are committed to stopping the flow of prohibited drugs into the United States, and accomplishing one of HSI's priorities to ensure public safety.”
The government’s case is being prosecuted by the Office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Steven L. Tiscione and Erik D. Paulsen are in charge of the prosecution.
The Defendants:
TIRSO MARTINEZ-SANCHEZ
Age: 51
MexicoE.D.N.Y. Docket No. 04-CR-874 (ERK)
United States Forfeits $40 Million Through Court-Ordered Sale of Montauk ResortRead the Press Release
Yesterday, United States Judge Arthur D. Spatt of the Eastern District of New York entered a decree ordering the forfeiture of approximately $40 million in net proceeds from the sale of a Montauk beachfront property. The sale of approximately 9,606 shares of 93 Old Montauk Owners, Inc., the sole owner of the Panoramic View Resort & Residences, a 117-unit resort and residence development in Montauk, New York, closed on December 7, 2015. The shares were sold to Panoramic Partners LLC, an affiliate of BLDG Management Co., Inc., for $63.9 million.
Distinctive Ventures, LLC had purchased the Panoramic View in 2007 using proceeds of a $96 million Ponzi scheme orchestrated by former investment fund manager Brian R. Callahan. Distinctive Ventures is wholly owned by Distinctive Investments, which in turn is owned by Callahan’s brother in-law, Adam Manson. After Callahan fraudulently diverted money from investment funds he managed to the Panoramic View, Manson helped Callahan hide the fraud from the funds’ independent auditors.
In April 2012, the United States filed a civil forfeiture action against Distinctive Venture’s shares in the Panoramic View and other assets traceable to Callahan and Manson’s fraud. Judge Spatt directed the sale of the Panoramic View shares to preserve their potential value for the government and, in turn, for the victims of the fraud.
The sale of the Panoramic View and forfeiture of the net proceeds 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 Shantelle P. Kitchen, Special Agent-in Charge, Internal Revenue Service, New York Field Office.
“Brian Callahan, assisted by Adam Manson, orchestrated one of the largest Ponzi schemes in Long Island history. Today we announce the liquidation of the proceeds of that scheme,” stated United States Attorney Capers. “This unprecedented sale exemplifies the importance of using civil forfeiture to ensure that assets will be available to repay fraud victims. Due to the hard work of prosecutors in this Office, assisted by the investigating agencies and the U.S. Marshals Service, we were able to maximize the pool of funds potentially available for distribution to victims of this fraud.” Mr. Capers thanked the Securities and Exchange Commission and the British Virgin Islands Financial Investigation Agency for their cooperation and assistance in the investigation and prosecution of this case.
“Instead of investing victim funds as intended, Callahan and Manson entered into a quid-pro-quo arrangement that served to advance each other’s interests. We have a responsibility to uphold the public’s confidence in the integrity of our financial markets. Today’s court order brings us one step closer to restoring assets to the victims of this fraud,” said FBI Assistant Director-in-Charge Rodriguez.
“Victims of Ponzi schemes are seldom made whole, both emotionally and financially,” said IRS Special Agent-in-Charge Kitchen. “It is our hope, however, that the proceeds from this forfeiture bring some financial relief to the victims, along with a measure of closure.”
In January 2007, Distinctive Ventures purchased the Panoramic View for $38 million. To acquire the resort, Callahan diverted more than $12.1 million from investment funds he operated to Distinctive Investments. In addition, Distinctive obtained a $35 million acquisition loan and $10 million construction loan from a commercial lender secured by Distinctive’s shares and proprietary leases on unsold units (together, “Loan #1”). From May 2008 through November 2011, Callahan diverted at least $17 million of investors’ money to make payments on Loan #1.
In March 2011, Callahan and his wife acquired shares from Distinctive Ventures in connection with entering into a proprietary lease for a newly renovated Panoramic View unit (the “Callahan Shares”). To complete the purchase, Callahan used approximately $450,000 of investors’ money as a downpayment on the Callahan Shares and obtained a $2.3 million mortgage from a second lender (“Loan #2”).
On April 17, 2012, the United States filed a civil forfeiture action against Distinctive Venture’s shares and the Callahan Shares and other assets traceable to Callahan and Manson’s fraud, ensuring that these assets would be available for forfeiture. In July 2012, however, Distinctive Ventures defaulted on Loan #1 and began accruing interest in the amount of over $2.2 million annually. On February 22, 2014, Judge Spatt granted the government’s motion to sell Distinctive’s shares, ruling that a sale on commercially reasonable terms was necessary and appropriate to preserve the value of the Panoramic View. On March 27, 2014, Judge Spatt accepted the government’s proposal to maximize the sale price of Distinctive’s shares through a bidding process. Pursuant to the government’s proposal, a bid package and contract of sale was distributed to interested parties. The final bid deadline was August 12, 2015. After review of the bids received, Panoramic Partners, LLC was selected as the winning bid.
Callahan and Manson, who were charged in July 2013 with securities fraud and wire fraud offenses, consented to the forfeiture of the Panoramic View as part of their guilty pleas in April and May 2014, respectively. Pursuant to his plea, Callahan conveyed the Callahan Shares back to Distinctive Ventures so they could be included in the interlocutory sale.
The sale of Distinctive’s shares to Panoramic Partners, LLC closed on Monday, December 7, 2015. At the closing, the lenders for Loan #1 and Loan #2 were paid pursuant to the terms of a court-ordered stipulation. Pursuant to the decree of forfeiture issued by Judge Spatt today, the net proceeds of the sale, or approximately $40.3 million, were forfeited to the government, ensuring their availability to repay victims of Callahan and Manson’s fraud through the Department of Justice’s remission procedures.
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 government’s case is being prosecuted by Assistant United States Attorneys Brian D. Morris, Karin K. Orenstein, Christopher C. Caffarone, and Winston M. Paes.
The Defendants:
BRIAN R. CALLAHAN
Age: 45
Old Westbury, New YorkADAM J. MANSON
Age: 43
Old Westbury, New YorkE.D.N.Y. Docket Nos: 12-CV-1880 (ADS) and 13-CR-453(ADS)
Former Hedge Fund Manager and New York Attorney Indicted in Multimillion Dollar Fraud SchemeRead the Press Release
BROOKLYN, N.Y. – A seven-count indictment was unsealed this morning in federal court in Brooklyn, New York, charging Martin Shkreli, the founder and managing member of hedge funds MSMB Capital Management LP (MSMB Capital) and MSMB Healthcare Management LP (MSMB Healthcare) and former Chief Executive Officer of Retrophin Inc. (Retrophin), a biopharmaceutical company that trades under the ticker symbol RTRX; and Evan Greebel, a former partner at the New York office of Katten Muchin Rosenman LLP who served as outside counsel to Retrophin.[1] Shkreli is charged with securities fraud, securities fraud conspiracy, and wire fraud conspiracy for orchestrating three interrelated schemes: schemes to defraud investors in MSMB Capital and MSMB Healthcare and a scheme to misappropriate Retrophin’s assets. Greebel is charged with wire fraud conspiracy for his role in the Retrophin scheme. Shkreli and Greebel will be arraigned later today before United States Magistrate Judge Robert M. Levy, at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were 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 (FBI).
“As alleged, Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit. His plots were matched only by efforts to conceal the fraud, which led him to operate his companies, including a publicly traded company, as a Ponzi scheme, where he used the assets of the new entity to pay off debts from the old entity. When regulators and auditors questioned Shkreli’s decisions, he joined forces with Evan Greebel, who used his law license and training to conceal and further the scheme,” stated United States Attorney Capers. “The charges and arrests announced today reflect our commitment to hold accountable corporate executives and licensed professionals who betray their positions of trust in order to fraudulently enrich themselves.” Mr. Capers thanked the Securities and Exchange Commission, New York Regional Office (SEC), and the Financial Industry Regulatory Authority, Inc., Criminal Prosecution Assistance Group (FINRA CPAG), for their significant cooperation and assistance during the investigation.
“The charges announced today describe a securities fraud trifecta of lies, deceit, and greed. As charged, Martin Shkreli targeted investors and retained their business by making several misrepresentations and omissions about key facts of the funds he managed. He continued to lie about the success of the investments and used assets from Retrophin to payoff MSMB investors. In the end, Shkreli and Greebel used a series of settlement and sham consulting agreements that resulted in Retrophin and its investors suffering a loss in excess of $11 million. While the charges announced today are significant, they are but one example of what’s left to come as the FBI continues this investigation,” stated FBI Assistant Director-in-Charge Rodriguez.
As detailed in the indictment and below, between September 2009 and September 2014, Shkreli, together with others, orchestrated three interrelated fraudulent schemes: (i) a scheme to defraud investors and potential investors in MSMB Capital, (ii) a scheme to defraud investors and potential investors in MSMB Healthcare, and (iii) a scheme to defraud Retrophin.
The MSMB Capital Hedge Fund Scheme
Between September 2009 and January 2011, Shkreli and his co-conspirators falsely represented to potential investors, among other things, that: (i) MSMB Capital was a transparent investment vehicle for sophisticated investors with monthly liquidity; (ii) Shkreli would only receive a one percent management fee per year based on net assets of the partnership; (iii) Shkreli was entitled to receive twenty percent of the limited partners’ net profits for the year; and (iv) MSMB Capital had retained independent certified public accountants as auditors who would issue an audit report on the annual financial statements. Shkreli also failed to disclose to investors that he had lost all the money he managed in Elea Capital, his prior hedge fund, and that Lehman Brothers had a $2.3 million default judgment against him. Finally, Shkreli lied to his biggest investor telling him that MSMB Capital had $35 million in assets under management, when in fact MSMB Capital had less than $700 in its bank and brokerage accounts. Based on these and other false representations, Shkreli and his co-conspirators induced approximately $3 million in investments from eight investors.
In February 2011, MSMB Capital failed to settle a short position of more than 11 million shares of Orexigen Therapeutics, Inc. (OREX) that Merrill Lynch ultimately closed at a loss of over $7 million. At this time, MSMB Capital also suffered more than $1 million in other trading losses. Based on these trading losses, the value of assets in MSMB Capital’s bank and brokerage accounts, not including the OREX losses at Merrill Lynch, declined from more than $1.12 million on January 31, 2011 to $58,500 at the end of February 2011. MSMB Capital did not engage in any trading after February 2011.
For months following the complete loss of the investments in MSMB Capital and the end of trading activity, Shkreli continued to send fabricated performance updates to investors that touted profits of as high as forty percent since inception. In September 2012, more than eighteen months after MSMB Capital had lost all its assets, Shkreli sent an email to MSMB Capital investors informing them that he was winding down the fund and that “original MSMB investors (2009) have just about doubled their money net of fees.” Shkreli also misappropriated funds from MSMB Capital by withdrawing more than $200,000 from MSMB Capital, which was far in excess of the one percent management fee and the twenty percent net profit incentive allocation permitted by the partnership agreement.
The MSMB Healthcare Hedge Fund Scheme
Following the collapse of MSMB Capital after the failed OREX trades, from approximately February 2011 to November 2012, Shkreli solicited investments in MSMB Healthcare from potential investors while concealing from them his disastrous past performance as a portfolio manager for MSMB Capital and Elea Capital and the $7 million liability that Shkreli owed Merrill Lynch for the February 2011 OREX trades. Shkreli also falsely represented that MSMB Healthcare had $55 million in assets under management. Based on these and other false representations, Shkreli and his co-conspirators induced approximately $5 million in investments from thirteen investors.
As with MSMB Capital, Shkreli provided MSMB Healthcare investors with performance updates that were based, in large part, on an internal inflated valuation of Retrophin, his private biopharmaceutical company that had received investments from MSMB Healthcare. Here again, Shkreli misappropriated funds by withdrawing money from MSMB Healthcare that was far in excess of the one percent management fee and the twenty percent net profit incentive allocation permitted by the partnership agreement. Additionally, without the investors’ knowledge or consent, Shkreli improperly used MSMB Healthcare assets to pay for obligations that were not the responsibility of MSMB Healthcare, including using at least $900,000 to settle claims brought by Merrill Lynch in connection with the failed OREX trades.
The Retrophin Misappropriation Scheme
Between March 2011 and September 2014, Shkreli and Greebel, together with others, engaged in a scheme to defraud Retrophin by misappropriating Retrophin’s assets in an effort to pay off Shkreli’s personal and unrelated professional debts and obligations. Specifically, Shkreli and Greebel defrauded Retrophin by causing it to: (i) transfer Retrophin shares to MSMB Capital even though MSMB Capital never invested in Retrophin; (ii) enter into settlement agreements with defrauded MSMB Capital and MSMB Healthcare investors to settle liabilities owed by Shkreli and the funds; and (iii) enter into sham consulting agreements with other defrauded MSMB Capital, MSMB Healthcare, and Elea Capital investors as an alternative means to settle liabilities owed by Shkreli and his hedge funds.
In December 2012, despite the fact that Retrophin’s books and records did not reflect any investments by MSMB Capital, Shkreli and Greebel engaged in a series of fraudulent and backdated transactions to create the appearance of an investment by MSMB Capital in Retrophin. They orchestrated these transactions, in part, to support Shkreli’s false representations to the U.S. Securities and Exchange Commission in November 2012 that MSMB Capital was still in operation and had $2.6 million in assets under management.
Between February 2013 and August 2013, Shkreli and Greebel, together with others, caused Retrophin to enter into settlement agreements with MSMB Capital and MSMB Healthcare investors to resolve their claims and threats of claims which were based on Shkreli’s false representations about the exceptional performance of the funds. Notably, Shkreli and Greebel did not seek authorization from the Board prior to entering into these fraudulent settlements. Shkreli and Greebel caused Retrophin to pay more than $3.4 million in cash and RTRX stock to settle claims with seven MSMB Capital and MSMB Healthcare investors.
In August 2013, when Retrophin’s external auditor questioned the settlement agreements and determined that Retrophin was not responsible for the claims resolved in the settlement agreements, Shkreli and Greebel caused MSMB Capital and MSMB Healthcare to execute indemnification agreements and promissory notes for the benefit of Retrophin even though they knew that the funds had no assets. Shkreli and Greebel, together with others, then devised an alternative approach to settle with the remaining defrauded hedge fund investors, namely, settlement agreements under the guise of consulting agreements. On October 16, 2013, when Shkreli initially questioned this new approach, Greebel explained, “We can call it a settlement agreement, but given [the auditor’s] recent behavior they may require it to be disclosed in the financials. I was trying to prevent that issue.” Between September 2013 and March 2014, Shkreli and Greebel caused Retrophin to enter into four sham consulting agreements with defrauded investors from the funds. Retrophin did not receive any legitimate consulting services based on these sham agreements, but paid more than $7.6 million in cash and RTRX stock to settle claims that the auditors had previously determined were not the responsibility of Retrophin.
* * *
The criminal case has been assigned to United States District Judge Kiyo A. Matsumoto. If convicted, Shkreli and Greebel each face a maximum sentence of 20 years’ imprisonment.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Winston Paes, Alixandra Smith, and David Kessler 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 www.StopFraud.gov.
The Defendants:
MARTIN SHKRELI
Age: 32
Residence: New York, New YorkEVAN GREEBEL
Age: 42
Residence: Scarsdale, New YorkE.D.N.Y. Docket No. 15-CR-637 (KAM)
[1] The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Pediatrician Sentenced to 30 Years in Prison for Sexual Exploitation of ChildrenRead the Press Release
A pediatrician was sentenced to 30 years in prison to be followed by lifetime supervised release for sexual exploitation of minors, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Robert L. Capers of the Eastern District of New York announced today.
In April 2014, Rakesh K. Punn, 57, of Bethpage, New York, pleaded guilty to producing child pornography. In connection with his plea, Punn admitted that in September 2007, he sexually exploited a minor pediatric patient during a medical appointment at his home-office in Bethpage. Punn falsely diagnosed the child with an illness so that he could obtain unfettered access to her without her parents being present and then drugged and secretly photographed the girl. At sentencing, the court found that Punn engaged in a pattern of similar conduct with other patients and enhanced his sentence accordingly.
Punn awaits sentencing on state charges also related to this conduct.
Trial Attorney Amy Larson of the Justice Department’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Allen L. Bode of the Eastern District of New York prosecuted this case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, 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.justice.gov/psc.
Long Island Pediatrician Sentenced to 30 Years’ Imprisonment for Sexual Exploitation of ChildrenRead the Press Release
Earlier today, Rakesh K. Punn, a licensed medical doctor and pediatrician, was sentenced to thirty years’ incarceration, lifetime supervised release, and sex offender registration for sexual exploitation of children. Today’s sentencing took place before United States District Judge Joanna Seybert.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
“Doctor Punn abused the trust of the community, parents, and his patients. He betrayed his oath as a licensed physician to do no harm and instead victimized children for his own sexual purposes.” Mr. Capers thanked the Federal Bureau of Investigation, the Nassau County District Attorney’s Office, the Nassau County Police Department, and the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section (“CEOS”) and High Technology Investigative Unit for their joint investigation leading up to this case.
“Doctors swear an oath to do no harm, but this defendant perverted his job as a physician in the most despicable ways by drugging and then sexually abusing young girls while they were unconscious. Thanks to the efforts of our federal partners and Nassau prosecutors, this defendant will spend decades behind bars,” stated Acting DA Madeline Singas.
Between September 6, 2007 and January 21, 2008, Punn sexually exploited three minor pediatric patients, under the guise of medical treatment, at his home-office in Bethpage, New York, and recorded the activities. Punn lied about diagnoses for these children so he could have access to them without their parents being present, drugged them, and secretly photographed them. Punn also submitted fraudulent insurance claims for the purported treatment of the three children and three other pediatric patients, when, in fact, the purported treatments had not been conducted for any medically accepted purpose, but rather, solely for the sexual gratification of the defendant.
Nassau County law enforcement authorities initially arrested Punn on July 15, 2010, and subsequently filed an indictment that charged Punn with multiple counts of violating New York State sexual abuse and fraud laws based on his conduct, which allegedly included recording sexually explicit activity involving his minor patients during their visits to his office. On September 5, 2014, Punn pleaded guilty in Nassau County Court to two counts of criminal sale of a prescription for a controlled substance and one count of first-degree sexual abuse. He awaits sentencing on those charges. On January 4, 2012, a federal indictment was filed that charged Punn with sexual exploitation of children and health care fraud. Punn has remained in custody since his initial arrest.
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 and CEOS, 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 government’s case was prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorney Allen L. Bode and Department of Justice Trial Attorney Amy Larson are in charge of the case.
The Defendant:
RAKESH K. PUNN
Age: 57
Bethpage, New YorkE.D.N.Y. Docket No. 12-CR-0011(JS)
Three Mexican Brothers Sentenced for Sex TraffickingRead the Press Release
Earlier today, in federal court in Brooklyn, New York, three brothers were sentenced to prison terms following their pleas of guilty to sex trafficking charges. Jorge Estrada-Tepal and Victor Leonel Estrada-Tepal were each sentenced to 17½ years of imprisonment to be followed by five years of supervised release, and Ricardo Estrada-Tepal was sentenced to 15 years of imprisonment to be followed by five years of supervised release. The defendants were also ordered to pay, jointly and severally, $1,033,336 in restitution to the victims.
The defendants, who are Mexican nationals, transported Mexican females from Mexico to the United States illegally, forcing them to work as prostitutes in New York City and elsewhere. They were arrested in Queens, New York, in January 2014 and pled guilty to trafficking charges in January 2015. Today’s sentences are the latest in the Office’s comprehensive anti-trafficking program, which has to date indicted over 65 defendants in sex trafficking cases and provided assistance to over 130 victims, including 36 minors.
The sentences were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Glenn Sorge, Acting Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York.
“The lengthy sentences imposed today reflect the seriousness of the defendants’ crimes and underscore our Office’s resolve to seek justice for their victims,” stated United States Attorney Capers. “The defendants have now been held to account for the daily horrors they inflicted on their victims for years. We hope that these sentences bring some measure of closure to the victims and their families.” Mr. Capers thanked HSI and other entities that assisted with the successful prosecution of this case.
“The defendants received sentences commensurate with their heinous crimes, abusing and exploiting innocent victims to satisfy their own greed,” said Glenn Sorge, acting special agent in charge of HSI New York. “It is a priority of HSI to rescue and assist victims of human trafficking while making every effort to destroy these international criminal syndicates that show little respect for basic human rights.”
The sex trafficking involved at least five victims (identified as Jane Does 1 through 5), and the defendants used various means to cause these women to work in prostitution, including threats of violence, assaults, and psychological coercion. During the guilty plea proceedings in January 2015, defendant Jorge Estrada-Tepal admitted that, starting in 2007, he and his brothers entered into a conspiracy to transport women from Mexico to Queens to engage in prostitution and that threats of force were used against the victims. Ricardo Estrada-Tepal admitted that he and his brothers did not tell the women the truth about why they were coming to the United States. Victor Leonel Estrada-Tepal admitted that he agreed with his brothers to force women to work in prostitution, including Victor’s wife, Jane Doe 4, who was 17 years old at the time he brought her from Mexico to Queens.
Jane Doe 1 was primarily trafficked by her husband, the defendant Jorge Estrada-Tepal (“Jorge”). After marrying in Mexico, Jorge forced Jane Doe 1 to work in prostitution in Mexico. After being smuggled into the United States, Jane Doe 1 was required to work in prostitution almost daily for a period of approximately four years. Jorge used a variety of means to force Jane Doe 1 to work, including physical assaults and threats. Jane Doe 1 was required to give Jorge all of the money she earned. In addition, Jorge forced Jane Doe 1 to take pills to induce abortions on two occasions even though she wanted to keep her children.
Jane Doe 2 was recruited by the defendant Ricardo Estrada-Tepal (“Ricardo”), who engaged in a romantic relationship with her, despite already being in a relationship with another victim in the case, Jane Doe 3. After becoming involved with Ricardo in Mexico, Jane Doe 2 was forced into prostitution and then smuggled into the United States. In Queens, Jane Doe 2 resided with defendant Victor Leonel Estrada-Tepal, who also pressured her to work in prostitution by demanding repayment of Jane Doe 2’s smuggling debt. Ricardo also threatened to harm Jane Doe 2’s family if she did not work in prostitution. Jane Doe 2 worked in prostitution for approximately two months before she was able to escape. During that time, Ricardo raped Jane Doe 2, threatened her, and forced her to give him all of her earnings.
Jane Doe 3 was recruited by the defendant Ricardo Estrada-Tepal (“Ricardo”), who was engaged in a romantic relationship with her. Ricardo pressured her into working in prostitution, in part by verbally abusing and physically assaulting her. She worked in prostitution in Mexico for several years before becoming pregnant with Ricardo’s child in 2011. After the birth of her child, Ricardo pressured Jane Doe 3 to move to the United States, assuring her that she would be able to work in a restaurant. She was smuggled into the United States in April 2013 and lived in Queens with Ricardo. Shortly after her arrival, Ricardo informed Jane Doe 3 that she had to start working in prostitution. When she balked, Ricardo threatened to hit her. Out of fear, Jane Doe 3 began working in prostitution until she was located by HSI agents at the time of the defendants’ arrests in January 2014. During the periods of time Jane Doe 3 worked in prostitution, Ricardo took virtually all of the money that she earned.
Jane Doe 4 was a minor when she was trafficked to the United States by her husband, Victor Leonel Estrada-Tepal. After her arrival in the United States, Jane Doe 4 worked as a prostitute and also provided information about how to work as a prostitute to other victims of the Estrada-Tepal brothers.
Jane Doe 5 was recruited in Mexico to work in prostitution by the defendants’ brother, Juan Carlos Estrada-Tepal (“Juan Carlos”), with whom Jane Doe 5 became romantically involved in approximately 2009, when Jane Doe 5 was 19. Subsequently, Juan Carlos told Jane Doe 5 that she had to start working in prostitution, telling her that his brothers’ women worked as prostitutes, and they made more money than she did. Jane Doe 5 felt that she had no choice because Juan Carlos was violent. She then worked in prostitution for a period of time in Mexico prior to coming to the United States with Jane Doe 2 in the summer of 2011, at which time she left her son with Juan Carlos in Mexico. After Jane Doe 5’s arrival in the United States, she worked in prostitution for approximately two years. During this time, she gave birth to Juan Carlos’s daughter, after which she was instructed to send her daughter to Mexico to live with Juan Carlos. She ultimately sent her daughter to Mexico out of fear that refusing to do so would cause her never to see her son again. Thereafter, Juan Carlos threatened Jane Doe 5 that she would not be able to see her children again if she did not continue working in prostitution and sending him money.
Since 2009, the Department of Justice and ICE’s Homeland Security Investigations (HSI) have collaborated with Mexican law enforcement counterparts in a Bilateral Human Trafficking Enforcement Initiative aimed at strengthening high-impact prosecutions under both U.S. and Mexican law. The initiative is aimed at dismantling human trafficking networks operating across the U.S.-Mexico border, bringing human traffickers to justice, reuniting victims with their children, and restoring the rights and dignity of human trafficking victims held under the trafficking networks’ control. These efforts have resulted in successful prosecutions in both Mexico and the United States, including U.S. federal prosecutions of over 50 defendants in multiple cases in New York, Georgia, Florida, and Texas since 2009, and numerous Mexican federal and state prosecutions of associated sex traffickers.
United States Attorney Capers extended his grateful appreciation to the Department of Justice’s Office of International Affairs for its assistance in the investigation of the case and the Government of Mexico for its assistance in locating and rescuing Jane Doe 5’s children, with whom she was reunited as a result of law enforcement’s efforts in this case. Mr. Capers also thanked the many victim service providers and advocates for their dedicated efforts to restore and improve the lives of survivors of trafficking, in particular, Sanctuary for Families, the Urban Justice Center, Safe Horizon, LifeWay Network, the New York City Bar Justice Center, RestoreNYC, New York Presbyterian - Weill Cornell Medical Center, the law firm of Simpson Thacher & Bartlett LLP and the Law Offices of Anthony Scarpati.
The sentences were imposed by United States District Judge Margo K. Brodie.
The government’s case was prosecuted by Assistant United States Attorneys Taryn A. Merkl and Melody Wells.
The Defendants:
RICARDO ESTRADA-TEPAL
Age: 34
Queens, NYVICTOR LEONEL ESTRADA-TEPAL
Age: 30
Queens, NYJORGE ESTRADA-TEPAL
Age: 38
Queens, NYE.D.N.Y. Docket No. CR-14-105 (MKB)
New York City Police Officer Pleads Guilty to Extortion and Firearms ChargesRead the Press Release
Earlier today, Besnik Llakatura pled guilty at the federal courthouse in Brooklyn, New York, to two counts of Hobbs Act extortion conspiracy and one count of brandishing a firearm in relation to an extortion conspiracy. The proceeding took place before United States District Judge Eric N. Vitaliano. At the time of the offenses, Llakatura was an active-duty police officer with the New York City Police Department (NYPD) assigned to the 120th Precinct in Staten Island, New York. He was suspended without pay upon his arrest in December 2013. When sentenced, Llakatura faces up to life in prison and a mandatory minimum sentence of seven years. As part of his plea agreement with the government, Llakatura agreed to a $24,000 money judgment payable to the United States to be paid in part through forfeiture of $11,123 in cash seized during a search of his residence following his arrest.
The plea 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 (FBI), and William J. Bratton, Commissioner, NYPD.
According to court filings and facts presented during the plea proceeding, between May and November 2013, Llakatura and co-defendants Redinel Dervishaj and Denis Nikolla conspired and attempted to extort a Queens restaurant owner and a Queens social club proprietor, demanding regular payments from each of these victims in exchange for so-called “protection.” The extortion of the restaurant owner began shortly after the victim opened a restaurant in Astoria when he was visited by Dervishaj and told that he had opened a business in “our neighborhood” and, as a result, “you have to pay us” $4,000 per month. The restaurant owner sought help from his friend Llakatura. Unbeknownst to him, Llakatura, an NYPD officer in Staten Island since 2006, was conspiring with Dervishaj in the extortion. Llakatura actively discouraged the restaurant owner from going to the police and sought to leverage his position of trust as a friend and a police officer to persuade the victim that he had no choice but to make the demanded payments, warning the victim that Dervishaj and his associates would physically harm him if he did not pay. When the victim resisted, he was threatened with physical violence and chased at gunpoint down the street in Queens by Nikolla. Over the course of five months, each of the three defendants took turns collecting monthly payments from the Astoria restaurant owner, ultimately collecting $24,000 in so-called protection money. Throughout the conspiracy, Llakatura presented an outward façade of friendship to the restaurant owner, all the while secretly working with Dervishaj and Nikolla to convey threats of violence and intimidation to ensure the conspiracy’s success.
During the same time period, Llakatura and his co-defendants also conspired and attempted to extort a proprietor of two social clubs in Astoria, where gambling occurred. Nikolla, accompanied by Dervishaj, made the initial extortion demand, seeking payments of $1,000 per week from the proprietor for so-called “protection.” The proprietor refused to make the demanded payments and ceased going to his social clubs out of fear for his safety. Court-authorized wiretaps of the defendants’ telephones revealed evidence of Llakatura’s participation in this extortion conspiracy with Dervishaj and Nikolla, and their attempts to locate the victim. In one instance, Llakatura and his co-defendants threatened, punched, and pulled a gun on a friend of the victim in an effort to have the friend locate the victim for them. The victim ultimately fled to a foreign country for a period of time to avoid the defendants’ extortionate threats.
“Through his participation in these extortion schemes, Besnik Llakatura turned his back on his badge and his community, choosing instead to break the laws he was sworn to uphold, rather than enforce them, and to thereafter extort members of the community he was sworn to protect,” stated United States Attorney Robert L. Capers. “Today’s guilty plea should serve as a reminder that no one is above the law. Those who use threats, intimidation, and violence to instill fear in our communities will be vigorously prosecuted.” Mr. Capers expressed his thanks to members of the Joint Organized Crime Task Force, which includes agents of the FBI and detectives of the NYPD, which led the investigation, as well as the NYPD’s Internal Affairs Division and the FBI’s Public Corruption squad for their cooperation and assistance in the investigation.
“Besnik Llakatura abused his powers and conspired with co-conspirators to extort innocent business owners in Queens. Not only did he not honor the oath he took to serve and protect, but he violated the public trust, especially of the victim who came to him as a police officer to report a crime. Today's guilty plea shows that public trust is not to be abused,” stated Assistant Director-in-Charge, Diego Rodriguez.
“I have no tolerance for corruption at any level in this department. Any member of the NYPD who violates the law, which we are explicitly charged with upholding, will be held fully responsible for their actions,” said Police Commissioner William J. Bratton.
The charges in the indictment against co-defendants Redinel Dervishaj and Denis Nikolla are merely allegations, and these defendants are presumed innocent unless and until proven guilty. Dervishaj and Nikolla are scheduled to commence trial in March 2016.
The government’s case is being prosecuted by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Nadia Shihata, M. Kristin Mace, and Patrick Hein are in charge of the prosecution.
The Defendant:
Besnik Llakatura, a/k/a “Besi” and “Nick”
Age: 36
Staten Island, New YorkE.D.N.Y. Docket No. 13-CR-668 (ENV)
Eight Arrested as Federal Authorities Dismantle Violent GangRead the Press Release
A 13-count indictment was unsealed today in United States District Court for the Eastern District of New York charging eight members and associates of the Zheng Organization with crimes including racketeering, narcotics trafficking, extortion offenses, illegal gambling, and soliciting assaults. The defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn.
The charges 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 (FBI), William J. Bratton, Commissioner, New York City Police Department (NYPD), and Christopher Shanahan, Field Office Director, U.S. Immigration and Customs Enforcement (ICE), Enforcement and Removal Operations (ERO).
“For years, Zheng and his associates committed violent acts to make money, protect their territory, and as retribution for perceived slights. Violent gangs are a blight on our neighborhoods, and we will do all in our power to prevent them from casting a shadow of violence over our streets,” stated United States Attorney Capers. “The arrests and charges announced today are a testament to our commitment to dismantling violent criminal organizations and making our communities safe.” Mr. Capers thanked the Joint Asian Organized Crime Taskforce, which is comprised of members of the FBI, NYPD, and ERO, for their help with the government’s investigation.
“The Zheng Organization used violence and an array of criminal activities to enhance their power and protect their territory. It’s gang related activity like this that infects our communities with an illness that kills our neighborhoods’ safety and growth. However, there is an antidote to this that is made of law enforcement working at both the federal and local level to get gangs like this off the street,” said Assistant Director-in-Charge, Diego Rodriguez.
“These arrests demonstrate our dedication to protecting our communities from the shake downs and intimidation this gang carried out across the city,” said Police Commissioner William J. Bratton. “This case is the latest example of the utility of the task force model in rooting out violence in all of its forms. I applaud the work of the prosecutors from the US Attorney’s Office in the Eastern District and the FBI agents and NYPD detectives on the Joint Eurasian Organized Crime Task Force for their dedication on this case and the many others.”
The Zheng Organization was based in and around the Sunset Park neighborhood of Brooklyn and the Flushing neighborhood of Queens. As alleged in the indictment and the government’s detention memorandum, the defendants participated in the affairs of the Zheng Organization through a variety of crimes. The charged crimes of violence included extortions and assaults for hire:
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In or about August 2013, Qian Zheng hired two individuals to assault victims identified in the indictment as John Doe 3 and Jane Doe.Zheng sought to have one of the victim’s leg broken and the other victim’s face scarred.
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In or about October 2013, Billy Chen and Jiang extorted a victim identified in the indictment as John Doe 1.In or about December 2013, Zheng conspired with Chen to further extort John Doe 1.Zheng hired two individuals to carry out the extortion and instructed them to beat John Doe 1 and fire shots into his restaurant so that he would pay an alleged debt.
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In or about October 2014, Zheng and Guifu Gao solicited the assault of a victim identified in the indictment as John Doe 4.Gao made clear that John Doe 4 needed to be crippled and that he should be beaten until he was half dead. Zheng similarly instructed those hired to carry out the beating to beat John Doe 4 severely.
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On May 28, 2015, Zheng sent his underlings, including Xin Lin, Kai Huan Huang, and Xue Jiang Gao, to collect money from a victim identified in the indictment as John Doe 2 at his gambling parlor.When John Doe 2 insisted that he did not owe any money, Lin, Huang, and Jiang Gao beat him with their fists and wooden stools, breaking a bone in John Doe 2’s hand.
The members and associates of the Zheng Organization also profited by narcotics trafficking and illegal gambling.
If convicted of the charges in the indictment, Zheng faces a maximum sentence of 164 years’ imprisonment; Hui Chen, Lin, Huang, and Jiang Gao each face a maximum sentence of 40 years’ imprisonment; Billy Chen and Jiang face a maximum sentence of 20 years’ imprisonment; and Gao faces a maximum sentence of 16 years’ imprisonment.
The government’s case is being prosecuted by the office’s Organized Crime and Gangs Section. Assistant United States Attorney Nadia E. Moore is in charge of the prosecution.
The Defendants:
QIAN ZHENG, also known as “Cash”
Age: 44GUIFU GAO, also known as “Chicken Feather”
Age: 35XIN LIN, also known as “Blackie”
Age: 33ALLEN HUI CHEN, also known as “Yi Hui”
Age: 43KAI HUAN HUANG, also known as “Shen Shen”
Age: 25BILLY CHEN, also known as “Lo Di”
Age: 42JIAYO JIANG, also known as “Yi Qiang”
Age: 45XUE JIANG GAO, also known as “Xue Zhang”
Age: 30-
Tishman Construction Charged with Fraud; To Pay More Than $20 Million in Restitution and Penalties for Defrauding Clients in A Ten-Year Overbilling SchemeRead the Press Release
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 Tishman Construction Corporation (“Tishman Construction”), one of the largest construction companies in New York City. Tishman Construction is charged with mail and wire fraud conspiracy for improperly billing its clients more than $5 million over a ten-year period for hours not worked and at rates that were in excess of the agreed upon contract rate. Also, Tishman Construction entered into a deferred prosecution agreement with the Office in which Tishman Construction admitted to fraudulently overbilling clients and agreed to pay more than $20 million in restitution to victims 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 third 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. More recently, 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.
The charge 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; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; Carol Fortine Ochoa, Inspector General, General Services Administration, Office of the Inspector General; Cheryl Garcia, Special Agent-in-Charge, Department of Labor, Office of Inspector General; and Mark G. Peters, Commissioner, New York City Department of Investigation.
“Through a systemic practice, Tishman Construction bilked its clients by charging them for unworked time and at rates higher than those bargained for by their clients. By doing so, Tishman Construction defrauded its clients and abused the trust placed in it to provide construction services on some of New York’s most storied buildings. Today’s criminal action and resolution is another example of 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.
“Tishman’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 Inspector General Nestor. Mr. Nestor thanked his law enforcement partners for their dedication and professionalism in investigating these practices.
“Over ten years, Tishman Construction improperly billed millions from its clients representing both public and private projects across the New York City area. Today’s restitution settlement of more than $20 million should help make right on a practice so wrong. The FBI is committed to working with our law enforcement partners to investigate and bring justice to those who seek to profit from fraudulent schemes, especially those in the city’s construction industry,” stated Assistant Director-in-Charge Rodriguez.
“Tishman Construction is being held responsible for defrauding the United States and others,” said Inspector General Ochoa. “I appreciate the hard work of our GSA OIG agents and law enforcement partners on this important construction fraud case that uncovered deceitful billing practices.”
“Fraudulent billing practices threaten to stymie the growth and development of New York City’s construction industry. Integrity in public and private contracting ensures a level playing field for employment opportunities. We will continue to work with our investigative partners to identify corrupt practices affecting the American workforce,” stated Special Agent-in-Charge Garcia of the New York Regional Office, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.
“This overbilling scheme padded daily work logs and falsified overtime - all at a cost to taxpayers and the public. This type of fraud needlessly drives up construction costs and undermines integrity at these sites. DOI thanks the hard work of our law enforcement partners on this investigation, and we will continue to work together to root out and stop this type of corruption,” stated Commissioner Peters.
The Overbilling Scheme
As alleged in the felony information filed today, Tishman Construction, a New York based construction firm, engaged in a fraudulent overbilling scheme that impacted its projects for at least a ten-year period. These projects included the World Trade Center Towers One (the “Freedom Tower”), Three, Four and Seven; the World Trade Center PATH Transportation Hub; the Plaza Hotel renovation; the Javits Convention Center Expansion and Renovation Project; the Aqueduct Casino in Queens, and scores of other projects.
Tishman Construction’s role on construction projects was typically that of a construction manager, which often required it to supervise the work done by subcontractors or trade contractors. From at least 1999 through approximately October 2009, Tishman Construction billed clients, including government contracting and funding agencies, for hours that were not worked by labor foremen from Local 79 Mason Tenders’ District Council of Greater New York. Tishman Construction carried out this fraudulent overbilling by: (a) adding one to two hours of unworked or unnecessary “guaranteed” overtime per day to the time sheets for the labor foremen; (b) providing five hours of guaranteed overtime per day, whether worked or not, for a particular senior labor foreman; and (c) allowing labor foremen to be absent from work for sick days, major holidays, and one or two weeks of vacation per year. In furtherance of this overbilling scheme, Tishman Construction completed and submitted time sheets to its clients as though the labor foremen had worked those days. Additionally, from approximately 2005 through 2009, without seeking advance approval from its clients, Tishman Construction paid a particularly senior labor foreman, and billed its clients, at wage rates that exceeded those specified in Tishman Construction’s contracts with its clients.
The Deferred Prosecution Agreement
Pursuant to the deferred prosecution agreement filed today, Tishman Construction accepted responsibility for its fraudulent billing practices and agreed to offer restitution to its clients in the amount of $5,650,917.97 and pay a penalty of $14,580,000.00 to the government over a two-year period. In consideration of Tishman Construction’s remedial actions to date and its commitment to, among others: (a) accept and acknowledge responsibility for its conduct; (b) continue its cooperation; (c) make restitution available to victims; and (d) make the payment of 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 Tishman Construction to demonstrate good conduct and compliance with the terms of this agreement.[1] Tishman’s remedial measures include the creation of the position of Compliance Director at the company, the adoption of a new Code of Conduct, and the revision of time sheet recording and client billing policies.
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The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Whitman Knapp and Special Assistant United States Attorney Jonathan P. Lax are in charge of the prosecution.
The Defendant:
TISHMAN CONSTRUCTION CORPORATION
New York, New YorkEDNY Docket No.: 15-CR-617 (CBA)
[1] The request for the exclusion of time is pending before the Honorable Carol B. Amon.
Former Suffolk County Police Chief Indicted on Civil Rights Violation and Obstruction ConspiracyRead the Press Release
A two-count indictment was unsealed today in United States District Court for the Eastern District of New York charging former Suffolk County Police Chief of Department James Burke with assaulting and thereby violating the civil rights of a Smithtown man arrested for breaking into Burke’s department-issued vehicle and stealing his property on December 14, 2012. Burke is also charged with conspiracy to obstruct a federal civil rights investigation into the assault. The indictment was returned by a federal grand jury sitting in Central Islip, New York, on December 8, 2015. The defendant was arrested this morning.
The indictment 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 (FBI).
According to the indictment and court filings, on December 14, 2012, New York State Probation Department and Suffolk County Police Department (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 large 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 was 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 allegedly punched and kicked Loeb in the head and body.
Subsequently, Burke and others allegedly 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 May 2013. In one instance, Burke summoned detectives under his command to SCPD headquarters in Yaphank, New York, to persuade the detectives to agree on a false version of events that would conceal the assault. In October 2013, one of those detectives allegedly testified falsely under oath in a state pretrial hearing in the Loeb prosecution, denying that Loeb had been assaulted.
“We entrust our law enforcement officials with the tremendous responsibility to uphold the Constitution and protect the communities they serve as they enforce the law. Wearing a badge is a privilege and honor – not a license to exact retribution and corrupt the administration of justice,” stated United States Attorney Capers. “We will protect the rights of all no matter where the evidence may lead, and those who break the law will be held to account regardless of their rank and status.”
“Today, former Suffolk County Police Chief James Burke finds himself on the opposite end of the very laws he was sworn to uphold. When caught at a crossroads between right and wrong, Burke took a shortcut on the path to justice. When an officer’s actions threaten to obstruct the integrity of an investigation, they unjustly call into question the reputation of those among them who respectfully adhere to the code of ethics so valued by the law enforcement community. We vow never to forget our obligation to remove from the criminal justice system those who don’t uphold the tenets of the legal system,” stated FBI Assistant Director-in-Charge Rodriguez.
The defendant is scheduled to be arraigned this afternoon before United States District Judge Leonard D. Wexler at the federal courthouse in Central Islip. The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorneys James Miskiewicz and Lara Treinis Gatz are in charge of the prosecution, assisted by EDNY Investigators William Hessle, Michael Cassidy, and Steven Kaplan.
The Defendant:
JAMES BURKE
Age: 51
Smithtown, New YorkE.D.N.Y. Docket No. 15-CR-627(LDW)
Sixteen Additional FIFA Officials Indicted for Racketeering Conspiracy and CorruptionRead the Press Release
The New Defendants Include Five Current or Former FIFA Executive Committee Members and the Current Presidents of CONCACAF and CONMEBOL; Guilty Pleas for Eight Others, Including Jeffrey Webb and the Former Presidents of the Colombian and Chilean Soccer Federations, also Announced
A 92-count superseding indictment was unsealed earlier today in federal court in Brooklyn, New York, charging an additional 16 defendants with racketeering, wire fraud and money laundering conspiracies, among other offenses, in connection with their participation in a 24-year scheme to enrich themselves through the corruption of international soccer. The superseding indictment also includes additional charges for seven of the defendants still pending extradition following the return of the original indictment last May. The guilty pleas of eight defendants – including Jeffrey Webb, Alejandro Burzaco and José Margulies, three of the defendants indicted last May – were also announced today.
The new defendants charged in the superseding indictment include high-ranking officials of FIFA, the organization responsible for the regulation and promotion of soccer worldwide, as well as high-ranking officials of other soccer governing bodies that operate under the FIFA umbrella. The defendants Alfredo Hawit and Juan Ángel Napout – the current presidents of CONCACAF and CONMEBOL, respectively, as well as current FIFA vice presidents and Executive Committee members – are among the 16 additional soccer officials charged with racketeering and bribery offenses. CONCACAF and CONMEBOL are two of FIFA’s six continental confederations. The new defendants also include Marco Polo del Nero and Ricardo Teixeira, the current and former presidents of the Brazilian soccer federation, both of whom are also former members of the FIFA Executive Committee, as well as José Luís Meiszner and Eduardo Deluca, the current and former general secretaries of CONMEBOL. Within UNCAF, the Central American regional soccer union operating within CONCACAF, the charges in the superseding indictment name the current and/or former presidents of nearly every country in the region: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. Taken together, the 27 defendants in the superseding indictment are alleged to have engaged in a number of schemes all designed to solicit and receive well over $200 million in bribes and kickbacks to sell lucrative media and marketing rights to international soccer tournaments and matches, among other valuable rights and properties.
The charges were announced by Attorney General Loretta E. Lynch, FBI Director James B. Comey, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Erick Martinez of the IRS-CI Los Angeles Field Office.
Early this morning, Swiss authorities in Zurich arrested two of the defendants charged in the superseding indictment – Hawit and Napout – at the request of the United States. Also this morning, a search warrant was executed at Media World, a sports marketing company based in Miami.
The new charges unsealed today bring the total number of individuals and entities charged to date to 41. Of those, 12 individuals and two sports marketing companies have already been convicted as a result of the ongoing investigation. The convicted defendants have agreed to pay more than $190 million in forfeiture. In addition, more than $100 million has been restrained in the United States and abroad in connection with the alleged criminal activity. The United States has issued mutual legal assistance requests seeking the restraint of assets located in 13 countries around the world.
“The Department of Justice is committed to ending the rampant corruption we have alleged amidst the leadership of international soccer – not only because of the scale of the schemes, or the brazenness and breadth of the operation required to sustain such corruption, but also because of the affront to international principles that this behavior represents,” said Attorney General Lynch. “The message from this announcement should be clear to every culpable individual who remains in the shadows, hoping to evade our investigation: You will not wait us out. You will not escape our focus.” Attorney General Lynch extended her grateful appreciation to the authorities of the government of Switzerland for their continuing outstanding assistance and collaboration in this investigation, and to the authorities in a number of other countries, including Brazil and Colombia, for their assistance as well.
“For decades, these defendants used their power as the leaders of soccer federations throughout the world to create a web of corruption and greed that compromises the integrity of the beautiful game,” said Director Comey. “I want to thank all the agencies for their hard work and for showing the world that we do not tolerate this criminal activity.”
“The charges unsealed today send a clear message to those who corrupted a sport beloved by millions to satisfy their own greed: We are determined to put a stop to bribery and corruption in international soccer and to make room for a new era of integrity and reform,” said U.S. Attorney Capers. “This indictment is the latest step in that effort, but our work is not done. While our investigation continues at home, we also look forward to continuing our collaboration with our international partners, including in particular the Swiss authorities, because there is so much yet to be done.” Mr. Capers extended his thanks to the agents, analysts and other investigative personnel with the FBI New York Eurasian Joint Organized Crime Squad and the IRS-CI Los Angeles Field Office, as well as their colleagues in the United States and abroad, for their continuing tremendous effort in this case. Mr. Capers also thanked the U.S. Marshals Service for its continuing assistance.
“The brazenness with which the individuals indicted today breached the integrity of the U.S. financial system to promote and conceal their criminal schemes is quite alarming,” said Chief Weber. “While it is one of the most complex worldwide financial investigations ever conducted, it is also an eye opener to everyone that such greed and corruption could be hiding in plain sight within the world’s most popular sport. By conspiring to enrich themselves through bribery and kickback schemes relating to media and marketing rights, the defendants undermined the process of fair and open competition, corrupting the beautiful game for their own personal gain.”
The charges in the superseding indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Overview of the Superseding Indictment
As alleged in the superseding indictment, FIFA and its six continental confederations – including CONCACAF, headquartered in the United States, and CONMEBOL, the confederation headquartered in South America – together with affiliated regional federations, national member associations and sports marketing companies, constitute an enterprise of legal entities associated in fact for purposes of violating the federal racketeering laws. The principal – and entirely legitimate – purpose of the enterprise is to regulate and promote the sport of soccer worldwide.
Like the original indictment, the superseding indictment alleges that between 1991 and the present, the defendants and their co-conspirators corrupted the enterprise by engaging in various criminal activities, including fraud, bribery and money laundering. Two generations of soccer officials abused their positions of trust for personal gain, frequently through an alliance with unscrupulous sports marketing executives who shut out competitors and kept highly lucrative contracts for themselves through the systematic payment of bribes and kickbacks. All told, the soccer officials are charged with conspiring to solicit and receive more than $200 million in bribes and kickbacks in exchange for their official support of the sports marketing executives who agreed to make the unlawful payments.
The schemes alleged in the original indictment related to the solicitation and receipt of bribes and kickbacks by soccer officials from sports marketing executives in connection with the commercialization of the media and marketing rights associated with various soccer matches and tournaments, as well as schemes related to the payment and receipt of bribes and kickbacks in connection with the sponsorship of the Brazilian soccer federation by a major U.S. sportswear company, the selection of the host country for the 2010 World Cup and the 2011 FIFA presidential election.
The new allegations in the superseding indictment relate to a series of bribery schemes in connection with multiple cycles of FIFA World Cup qualifiers and international friendly matches involving six Central American member associations within UNCAF; a bribery scheme implicating many top CONMEBOL officials relating to the sale of broadcasting rights to the CONMEBOL Copa Libertadores over an extended period; and a scheme by an Argentinian sports marketing company to obtain various rights properties from CONCACAF by paying bribes to three Central American soccer officials to cause them to exert their influence in favor of the company.
The 16 New Defendants
As set forth in the superseding indictment, the 16 newly-indicted defendants are all current or former soccer officials who acted at various times in a fiduciary capacity within FIFA and one or more of its constituent organizations:
CONCACAF Region Officials
- Alfredo Hawit: Current FIFA vice president and Executive Committee member and CONCACAF president. Former CONCACAF vice president and Honduran soccer federation president.
- Ariel Alvarado: Current member of the FIFA Disciplinary Committee. Former CONCACAF Executive Committee member and Panamanian soccer federation president.
- Rafael Callejas: Current member of the FIFA Television and Marketing Committee. Former Honduran soccer federation president and former president of the Republic of Honduras.
- Brayan Jiménez: Current Guatemalan soccer federation president and member of the FIFA Committee for Fair Play and Social Responsibility.
- Rafael Salguero: Former FIFA Executive Committee member and Guatemalan soccer federation president.
- Héctor Trujillo: Current Guatemalan soccer federation general secretary and judge on the Constitutional Court of Guatemala.
- Reynaldo Vasquez: Former Salvadoran soccer federation president.
CONMEBOL Region Officials
- Juan Ángel Napout: Current FIFA vice president and Executive Committee member and CONMEBOL president. Former Paraguayan soccer federation president.
- Manuel Burga: Current member of the FIFA Development Committee. Former Peruvian soccer federation president.
- Carlos Chávez: Current CONMEBOL treasurer. Former Bolivian soccer federation president.
- Luís Chiriboga: Current Ecuadorian soccer federation president and member of the CONMEBOL Executive Committee.
- Marco Polo del Nero: Current president of the Brazilian soccer federation. Announced resignation from FIFA Executive Committee on Nov. 26, 2015.
- Eduardo Deluca: Former CONMEBOL general secretary.
- José Luis Meiszner: Current CONMEBOL general secretary.
- Romer Osuna: Current member of the FIFA Audit and Compliance Committee. Former CONMEBOL treasurer.
- Ricardo Teixeira: Former Brazilian soccer federation president and FIFA Executive Committee member.
The Convicted Defendants
The following defendants previously pleaded guilty under seal and agreed to forfeit more than $40 million:
On May 26, 2015, Zorana Danis, the co-founder and owner of International Soccer Marketing Inc., a New Jersey-based sports marketing company, waived indictment and pleaded guilty to a two-count information charging her with wire fraud conspiracy and filing false tax returns. As part of her plea, Danis agreed to forfeit $2 million.
On Nov. 9, 2015, Fabio Tordin, the former CEO of Traffic Sports USA Inc. and currently an executive with Media World LLC, a Miami-based sports marketing company, waived indictment and pleaded guilty to a four-count information charging him with three counts of wire fraud conspiracy and one count of tax evasion. As part of his plea, Tordin agreed to forfeit more than $600,000.
On Nov. 12, 2015, Luis Bedoya, a member of the FIFA Executive Committee, a CONMEBOL vice president and, until last month, the president of the Federación Colombiana de Fútbol, the Colombian soccer federation, waived indictment and pleaded guilty to a two-count information charging him with racketeering conspiracy and wire fraud conspiracy. As part of his plea, Bedoya agreed to forfeit all funds on deposit in his Swiss bank account, among other funds.
On Nov. 16, 2015, Alejandro Burzaco, the former general manager and chairman of the board of Torneos y Competencias S.A., an Argentinian sports marketing company, pleaded guilty to racketeering conspiracy, wire fraud conspiracy and money laundering conspiracy. As part of his plea, Burzaco agreed to forfeit more than $21.6 million.
On Nov. 17, 2015, Roger Huguet, the CEO of Media World and its parent company, waived indictment and pleaded guilty to a three-count information charging him with two counts of wire fraud conspiracy and one count of money laundering conspiracy. As part of his plea, Huguet agreed to forfeit more than $600,000.
On Nov. 23, 2015, Jeffrey Webb, a former FIFA vice president and Executive Committee member, CONCACAF president, Caribbean Football Union Executive Committee member and Cayman Islands Football Association president, pleaded guilty to racketeering conspiracy, three counts of wire fraud conspiracy and three counts of money laundering conspiracy. As part of his plea, Webb agreed to forfeit more than $6.7 million.
On Nov. 23, 2015, Sergio Jadue, a vice president of CONMEBOL and, until last month, the president of the Asociación Nacional de Fútbol Profesional de Chile, the Chilean soccer federation, waived indictment and pleaded guilty to a two-count information charging him with racketeering conspiracy and wire fraud conspiracy. As part of his plea, Jadue agreed to forfeit all funds on deposit in his U.S. bank account, among other funds.
On Nov. 25, 2015, José Margulies, the controlling principal of Valente Corp. and Somerton Ltd, who served as an intermediary who facilitated illicit payments between sports marketing executives and soccer officials, pleaded guilty to racketeering conspiracy, wire fraud conspiracy, and two counts of money laundering conspiracy. As part of his plea, Margulies agreed to forfeit more than $9.2 million.
As previously announced last May, all money forfeited by the defendants is being held in reserve to ensure its availability to satisfy any order of restitution entered at sentencing for the benefit of any individuals or entities that qualify as victims of the defendants’ crimes under federal law.
* * * *
The indicted and convicted defendants face maximum terms of incarceration of 20 years for the Racketeer Influenced and Corrupt Organizations Act (RICO) conspiracy, wire fraud conspiracy, wire fraud, money laundering conspiracy, money laundering and obstruction of justice charges. In addition, Tordin and Danis face maximum terms of five and three years in prison, respectively, for the tax charges. Each defendant also faces mandatory restitution, forfeiture and a fine.
The superseding indictment and guilty pleas unsealed today are assigned to the U.S. District Judge Raymond J. Dearie of the Eastern District of New York.
The government’s investigation is ongoing.
The charges and guilty pleas announced today are part of an investigation into corruption in international soccer being led by the U.S. Attorney’s Office of the Eastern District of New York, the FBI’s New York Field Office and the IRS-CI Los Angeles Field Office. The work in the U.S. Attorney’s Office involves prosecutors from the National Security and Cybercrime Section, the Organized Crime and Gang Section, the Business and Securities Fraud Section and the Public Integrity Section. 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.
The charges and guilty pleas announced today are being prosecuted by Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Darren A. LaVerne, Samuel P. Nitze, M. Kristin Mace, Paul Tuchmann, Keith D. Edelman, Tanya Hajjar and Brian D. Morris of the Eastern District of New York.
The Newly-Indicted Defendants:
ARIEL ALVARADO
Age: 56
Nationality: Panama
MANUEL BURGA
Age: 58
Nationality: Peru
RAFAEL CALLEJAS
Age: 72
Nationality: Honduras
CARLOS CHÁVEZ
Age: 57
Nationality: Bolivia
LUÍS CHIRIBOGA
Age: 69
Nationality: Ecuador
MARCO POLO DEL NERO
Age: 74
Nationality: Brazil
EDUARDO DELUCA
Age: 75
Nationality: ARGENTINA
ALFREDO HAWIT
Age: 64
Nationality: Honduras
BRAYAN JIMÉNEZ
Age: 61
Nationality: Guatemala
JOSÉ LUÍS MEISZNER
Age: 69
Nationality: Argentina
JUAN ÁNGEL NAPOUT
Age: 57
Nationality: Paraguay
ROMER OSUNA
Age: 72
Nationality: Bolivia
RAFAEL SALGUERO
Age: 70
Nationality: Guatemala
RICARDO TEIXEIRA
Age: 68
Nationality: Brazil
HÉCTOR TRUJILLO
Age: 62
Nationality: Guatemala
REYNALDO VASQUEZ
Age: 59
Nationality: El Salvador
The Convicted Defendants:
LUIS BEDOYA
Age: 56
Nationality: Colombia
ALEJANDRO BURZACO
Age: 51
Nationality: Argentina
ZORANA DANIS
Age: 52
Nationality: Belgium
ROGER HUGUET
Age: 52
Nationality: USA, Spain
SERGIO JADUE
Age: 36
Nationality: Chile
JOSÉ MARGULIES
Age: 76
Nationality: Brazil
FABIO TORDIN
Age: 50
Nationality: Brazil
JEFFREY WEBB
Age: 51
Nationality: Cayman Islands
E.D.N.Y. Docket Numbers:
United States v. Zorana Danis, 15 Cr. 240 (RJD)
United States v. Jeffrey Webb et al., 15 Cr. 252 (RJD)
United States v. Fabio Tordin, 15 Cr. 564 (RJD)
United States v. Luis Bedoya, 15 Cr. 569 (RJD)
United States v. Sergio Jadue, 15 Cr. 570 (RJD)
United States v. Roger Huguet, 15 Cr. 585 (RJD)
Sixteen Additional FIFA Officials Indicted for Racketeering Conspiracy and CorruptionRead the Press Release
Guilty Pleas for Eight Others, Including Jeffrey Webb and the Former Presidents of the Colombian and Chilean Soccer Federations, also Announced
A 92-count superseding indictment was unsealed earlier today in federal court in Brooklyn, New York, charging an additional 16 defendants with racketeering, wire fraud and money laundering conspiracies, among other offenses, in connection with their participation in a 24-year scheme to enrich themselves through the corruption of international soccer. The superseding indictment also includes additional charges for seven of the defendants still pending extradition following the return of the original indictment last May. The guilty pleas of eight defendants – including Jeffrey Webb, Alejandro Burzaco and José Margulies, three of the defendants indicted last May – were also announced today.
The new defendants charged in the superseding indictment include high-ranking officials of FIFA, the organization responsible for the regulation and promotion of soccer worldwide, as well as high-ranking officials of other soccer governing bodies that operate under the FIFA umbrella. The defendants Alfredo Hawit and Juan Ángel Napout – the current presidents of CONCACAF and CONMEBOL, respectively, as well as current FIFA vice presidents and Executive Committee members – are among the 16 additional soccer officials charged with racketeering and bribery offenses. CONCACAF and CONMEBOL are two of FIFA’s six continental confederations. The new defendants also include Marco Polo del Nero and Ricardo Teixeira, the current and former presidents of the Brazilian soccer federation, both of whom are also former members of the FIFA Executive Committee, as well as José Luís Meiszner and Eduardo Deluca, the current and former general secretaries of CONMEBOL. Within UNCAF, the Central American regional soccer union operating within CONCACAF, the charges in the superseding indictment name the current and/or former presidents of nearly every country in the region: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. Taken together, the 27 defendants in the superseding indictment are alleged to have engaged in a number of schemes all designed to solicit and receive well over $200 million in bribes and kickbacks to sell lucrative media and marketing rights to international soccer tournaments and matches, among other valuable rights and properties.
The charges were announced by Attorney General Loretta E. Lynch, FBI Director James B. Comey, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Erick Martinez of the IRS-CI Los Angeles Field Office.
Early this morning, Swiss authorities in Zurich arrested two of the defendants charged in the superseding indictment – Hawit and Napout – at the request of the United States. Also this morning, a search warrant was executed at Media World, a sports marketing company based in Miami.
The new charges unsealed today bring the total number of individuals and entities charged to date to 41. Of those, 12 individuals and two sports marketing companies have already been convicted as a result of the ongoing investigation. The convicted defendants have agreed to pay more than $190 million in forfeiture. In addition, more than $100 million has been restrained in the United States and abroad in connection with the alleged criminal activity. The United States has issued mutual legal assistance requests seeking the restraint of assets located in 13 countries around the world.
“The Department of Justice is committed to ending the rampant corruption we have alleged amidst the leadership of international soccer – not only because of the scale of the schemes, or the brazenness and breadth of the operation required to sustain such corruption, but also because of the affront to international principles that this behavior represents,” said Attorney General Lynch. “The message from this announcement should be clear to every culpable individual who remains in the shadows, hoping to evade our investigation: You will not wait us out. You will not escape our focus.” Attorney General Lynch extended her grateful appreciation to the authorities of the government of Switzerland for their continuing outstanding assistance and collaboration in this investigation, and to the authorities in a number of other countries, including Brazil and Colombia, for their assistance as well.
“For decades, these defendants used their power as the leaders of soccer federations throughout the world to create a web of corruption and greed that compromises the integrity of the beautiful game,” said Director Comey. “I want to thank all the agencies for their hard work and for showing the world that we do not tolerate this criminal activity.”
“The charges unsealed today send a clear message to those who corrupted a sport beloved by millions to satisfy their own greed: We are determined to put a stop to bribery and corruption in international soccer and to make room for a new era of integrity and reform,” said U.S. Attorney Capers. “This indictment is the latest step in that effort, but our work is not done. While our investigation continues at home, we also look forward to continuing our collaboration with our international partners, including in particular the Swiss authorities, because there is so much yet to be done.” Mr. Capers extended his thanks to the agents, analysts and other investigative personnel with the FBI New York Eurasian Joint Organized Crime Squad and the IRS-CI Los Angeles Field Office, as well as their colleagues in the United States and abroad, for their continuing tremendous effort in this case. Mr. Capers also thanked the U.S. Marshals Service for its continuing assistance.
“The brazenness with which the individuals indicted today breached the integrity of the U.S. financial system to promote and conceal their criminal schemes is quite alarming,” said Chief Weber. “While it is one of the most complex worldwide financial investigations ever conducted, it is also an eye opener to everyone that such greed and corruption could be hiding in plain sight within the world’s most popular sport. By conspiring to enrich themselves through bribery and kickback schemes relating to media and marketing rights, the defendants undermined the process of fair and open competition, corrupting the beautiful game for their own personal gain.”
The charges in the superseding indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Overview of the Superseding Indictment
As alleged in the superseding indictment, FIFA and its six continental confederations – including CONCACAF, headquartered in the United States, and CONMEBOL, the confederation headquartered in South America – together with affiliated regional federations, national member associations and sports marketing companies, constitute an enterprise of legal entities associated in fact for purposes of violating the federal racketeering laws. The principal – and entirely legitimate – purpose of the enterprise is to regulate and promote the sport of soccer worldwide.
Like the original indictment, the superseding indictment alleges that between 1991 and the present, the defendants and their co-conspirators corrupted the enterprise by engaging in various criminal activities, including fraud, bribery and money laundering. Two generations of soccer officials abused their positions of trust for personal gain, frequently through an alliance with unscrupulous sports marketing executives who shut out competitors and kept highly lucrative contracts for themselves through the systematic payment of bribes and kickbacks. All told, the soccer officials are charged with conspiring to solicit and receive more than $200 million in bribes and kickbacks in exchange for their official support of the sports marketing executives who agreed to make the unlawful payments.
The schemes alleged in the original indictment related to the solicitation and receipt of bribes and kickbacks by soccer officials from sports marketing executives in connection with the commercialization of the media and marketing rights associated with various soccer matches and tournaments, as well as schemes related to the payment and receipt of bribes and kickbacks in connection with the sponsorship of the Brazilian soccer federation by a major U.S. sportswear company, the selection of the host country for the 2010 World Cup and the 2011 FIFA presidential election.
The new allegations in the superseding indictment relate to a series of bribery schemes in connection with multiple cycles of FIFA World Cup qualifiers and international friendly matches involving six Central American member associations within UNCAF; a bribery scheme implicating many top CONMEBOL officials relating to the sale of broadcasting rights to the CONMEBOL Copa Libertadores over an extended period; and a scheme by an Argentinian sports marketing company to obtain various rights properties from CONCACAF by paying bribes to three Central American soccer officials to cause them to exert their influence in favor of the company.
The 16 New Defendants
As set forth in the superseding indictment, the 16 newly-indicted defendants are all current or former soccer officials who acted at various times in a fiduciary capacity within FIFA and one or more of its constituent organizations:
CONCACAF Region Officials
-
Alfredo Hawit: Current FIFA vice president and Executive Committee member and CONCACAF president. Former CONCACAF vice president and Honduran soccer federation president.
-
Ariel Alvarado: Current member of the FIFA Disciplinary Committee. Former CONCACAF Executive Committee member and Panamanian soccer federation president.
-
Rafael Callejas: Current member of the FIFA Television and Marketing Committee. Former Honduran soccer federation president and former president of the Republic of Honduras.
-
Brayan Jiménez: Current Guatemalan soccer federation president and member of the FIFA Committee for Fair Play and Social Responsibility.
-
Rafael Salguero: Former FIFA Executive Committee member and Guatemalan soccer federation president.
-
Héctor Trujillo: Current Guatemalan soccer federation general secretary and judge on the Constitutional Court of Guatemala.
-
Reynaldo Vasquez: Former Salvadoran soccer federation president.
CONMEBOL Region Officials
-
Juan Ángel Napout: Current FIFA vice president and Executive Committee member and CONMEBOL president. Former Paraguayan soccer federation president.
-
Manuel Burga: Current member of the FIFA Development Committee. Former Peruvian soccer federation president.
-
Carlos Chávez: Current CONMEBOL treasurer. Former Bolivian soccer federation president.
-
Luís Chiriboga: Current Ecuadorian soccer federation president and member of the CONMEBOL Executive Committee.
-
Marco Polo del Nero: Current president of the Brazilian soccer federation. Announced resignation from FIFA Executive Committee on Nov. 26, 2015.
-
Eduardo Deluca: Former CONMEBOL general secretary.
-
José Luis Meiszner: Current CONMEBOL general secretary.
-
Romer Osuna: Current member of the FIFA Audit and Compliance Committee. Former CONMEBOL treasurer.
-
Ricardo Teixeira: Former Brazilian soccer federation president and FIFA Executive Committee member.
The Convicted Defendants
The following defendants previously pleaded guilty under seal and agreed to forfeit more than $40 million:
On May 26, 2015, Zorana Danis, the co-founder and owner of International Soccer Marketing Inc., a New Jersey-based sports marketing company, waived indictment and pleaded guilty to a two-count information charging her with wire fraud conspiracy and filing false tax returns. As part of her plea, Danis agreed to forfeit $2 million.
On Nov. 9, 2015, Fabio Tordin, the former CEO of Traffic Sports USA Inc. and currently an executive with Media World LLC, a Miami-based sports marketing company, waived indictment and pleaded guilty to a four-count information charging him with three counts of wire fraud conspiracy and one count of tax evasion. As part of his plea, Tordin agreed to forfeit more than $600,000.
On Nov. 12, 2015, Luis Bedoya, a member of the FIFA Executive Committee, a CONMEBOL vice president and, until last month, the president of the Federación Colombiana de Fútbol, the Colombian soccer federation, waived indictment and pleaded guilty to a two-count information charging him with racketeering conspiracy and wire fraud conspiracy. As part of his plea, Bedoya agreed to forfeit all funds on deposit in his Swiss bank account, among other funds.
On Nov. 16, 2015, Alejandro Burzaco, the former general manager and chairman of the board of Torneos y Competencias S.A., an Argentinian sports marketing company, pleaded guilty to racketeering conspiracy, wire fraud conspiracy and money laundering conspiracy. As part of his plea, Burzaco agreed to forfeit more than $21.6 million.
On Nov. 17, 2015, Roger Huguet, the CEO of Media World and its parent company, waived indictment and pleaded guilty to a three-count information charging him with two counts of wire fraud conspiracy and one count of money laundering conspiracy. As part of his plea, Huguet agreed to forfeit more than $600,000.
On Nov. 23, 2015, Jeffrey Webb, a former FIFA vice president and Executive Committee member, CONCACAF president, Caribbean Football Union Executive Committee member and Cayman Islands Football Association president, pleaded guilty to racketeering conspiracy, three counts of wire fraud conspiracy and three counts of money laundering conspiracy. As part of his plea, Webb agreed to forfeit more than $6.7 million.
On Nov. 23, 2015, Sergio Jadue, a vice president of CONMEBOL and, until last month, the president of the Asociación Nacional de Fútbol Profesional de Chile, the Chilean soccer federation, waived indictment and pleaded guilty to a two-count information charging him with racketeering conspiracy and wire fraud conspiracy. As part of his plea, Jadue agreed to forfeit all funds on deposit in his U.S. bank account, among other funds.
On Nov. 25, 2015, José Margulies, the controlling principal of Valente Corp. and Somerton Ltd, who served as an intermediary who facilitated illicit payments between sports marketing executives and soccer officials, pleaded guilty to racketeering conspiracy, wire fraud conspiracy, and two counts of money laundering conspiracy. As part of his plea, Margulies agreed to forfeit more than $9.2 million.
As previously announced last May, all money forfeited by the defendants is being held in reserve to ensure its availability to satisfy any order of restitution entered at sentencing for the benefit of any individuals or entities that qualify as victims of the defendants’ crimes under federal law.
The indicted and convicted defendants face maximum terms of incarceration of 20 years for the Racketeer Influenced and Corrupt Organizations Act (RICO) conspiracy, wire fraud conspiracy, wire fraud, money laundering conspiracy, money laundering and obstruction of justice charges. In addition, Tordin and Danis face maximum terms of five and three years in prison, respectively, for the tax charges. Each defendant also faces mandatory restitution, forfeiture and a fine.
The superseding indictment and guilty pleas unsealed today are assigned to the U.S. District Judge Raymond J. Dearie of the Eastern District of New York.
The government’s investigation is ongoing.
The charges and guilty pleas announced today are part of an investigation into corruption in international soccer being led by the U.S. Attorney’s Office of the Eastern District of New York, the FBI’s New York Field Office and the IRS-CI Los Angeles Field Office. The work in the U.S. Attorney’s Office involves prosecutors from the National Security and Cybercrime Section, the Organized Crime and Gang Section, the Business and Securities Fraud Section and the Public Integrity Section. 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.
The charges and guilty pleas announced today are being prosecuted by Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Darren A. LaVerne, Samuel P. Nitze, M. Kristin Mace, Paul Tuchmann, Keith D. Edelman, Tanya Hajjar and Brian D. Morris of the Eastern District of New York.
The Newly-Indicted Defendants:
ARIEL ALVARADO
Age: 56
Nationality: PanamaMANUEL BURGA
Age: 58
Nationality: PeruRAFAEL CALLEJAS
Age: 72
Nationality: HondurasCARLOS CHÁVEZ
Age: 57
Nationality: BoliviaLUÍS CHIRIBOGA
Age: 69
Nationality: EcuadorMARCO POLO DEL NERO
Age: 74
Nationality: BrazilEDUARDO DELUCA
Age: 75
Nationality: ARGENTINAALFREDO HAWIT
Age: 64
Nationality: HondurasBRAYAN JIMÉNEZ
Age: 61
Nationality: GuatemalaJOSÉ LUÍS MEISZNER
Age: 69
Nationality: ArgentinaJUAN ÁNGEL NAPOUT
Age: 57
Nationality: ParaguayROMER OSUNA
Age: 72
Nationality: BoliviaRAFAEL SALGUERO
Age: 70
Nationality: GuatemalaRICARDO TEIXEIRA
Age: 68
Nationality: BrazilHÉCTOR TRUJILLO
Age: 62
Nationality: GuatemalaREYNALDO VASQUEZ
Age: 59
Nationality: El SalvadorThe Convicted Defendants:
LUIS BEDOYA
Age: 56
Nationality: ColombiaALEJANDRO BURZACO
Age: 51
Nationality: ArgentinaZORANA DANIS
Age: 52
Nationality: BelgiumROGER HUGUET
Age: 52
Nationality: USA, SpainSERGIO JADUE
Age: 36
Nationality: ChileJOSÉ MARGULIES
Age: 76
Nationality: BrazilFABIO TORDIN
Age: 50
Nationality: BrazilJEFFREY WEBB
Age: 51
Nationality: Cayman IslandsE.D.N.Y. Docket Numbers:
United States v. Zorana Danis, 15 Cr. 240 (RJD)
United States v. Jeffrey Webb et al., 15 Cr. 252 (RJD)
United States v. Fabio Tordin, 15 Cr. 564 (RJD)
United States v. Luis Bedoya, 15 Cr. 569 (RJD)
United States v. Sergio Jadue, 15 Cr. 570 (RJD)
United States v. Roger Huguet, 15 Cr. 585 (RJD)
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Southampton Town Councilman Pleads Guilty to Conspiring to Illegally Distribute OxycodoneRead the Press Release
Bradley Bender, Southampton Town Councilman, pleaded guilty today to conspiring to illegally distribute oxycodone. The plea was entered before U.S. Magistrate Judge Anne Y. Shields at the federal courthouse in Central Islip.
Today’s guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and James J. Hunt, Special Agent in Charge, Drug Enforcement Administration (DEA), New York.
According to court filings and statements made in court at the time he entered the guilty plea, between July 2012 and June 2015, Bender received phony prescriptions for oxycodone from a Riverhead physician assistant, Michael Troyan, filled those prescriptions, and illegally exchanged the oxycodone pills for cash and steroids with another co-conspirator. The oxycodone pills were then re-sold to drug abusers. Troyan was arrested on November 4, 2015, pursuant to an indictment which is currently pending before United States District Judge Denis R. Hurley.
The goverenment’s investigation was led by the DEA’s Long Island Tactical Diversion Squad which is comprised of agents and officers of the DEA, Nassau County Police Department, Rockville Centre Police Department, and Port Washington Police Department. The Diversion Squad was also assisted by agents and officers of the Department of Health & Human Services, the Southampton Town Police Department, and the Suffolk County District Attorney’s East End Drug Taskforce.
“Abuse of oxycodone on Long Island has reached epidemic proportions,” stated United States Attorney Capers. “Councilman Bender’s actions in this oxycodone distribution conspiracy victimized the very community he was entrusted to represent. Today’s guilty plea should serve as a reminder that no one is above the law, including those entrusted with passing our laws.” Mr. Capers extended his grateful appreciation to each of the participating law enforcement agencies for their assistance in this case.
DEA Special Agent in Charge Hunt stated, “Diverted prescription pill distributors are a new breed of drug dealer because many hide in plain view. In this case, Southampton Town Councilman Bradley Bender allegedly distributed diverted pain medication behind the backs of his constituents. By allegedly filling fraudulent oxycodone prescriptions for street sales, he was adding fuel to the fire for the opioid problem that is running rampant throughout American cities, unlike other community representatives who are looking for ways to contain it.”
At sentencing, Bender faces a maximum sentence of 20 years of imprisonment and a $1 million fine.
This case is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this district, 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 so-called 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 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 the Office’s Long Island Criminal Division. Assistant United States Attorney Allen Bode is in charge of the prosecution.
The Defendant:
Name: BRADLEY BENDER
Age: 52
Residence: Northampton, New YorkE.D.N.Y. Docket No. 15-CR-593(ADS)
Granite Construction to Pay More Than $8 Million in Forfeiture and Penalties for Engaging in A Scheme to Fraudulently Claim Credit for Work Performed by A Minority Owned BusinessRead the Press Release
Granite Construction, Incorporated (Granite), a nationwide construction and public works company that is publicly traded on the New York Stock Exchange, has entered into a non-prosecution agreement and agreed to pay more than $8 million to the federal government and the Metropolitan Transportation Authority Office of Inspector General (MTA-IG) to resolve a criminal investigation into a disadvantaged business enterprise (DBE) fraud scheme perpetrated by Granite’s wholly-owned subsidiary, Granite Construction Northeast, Incorporated (GCN), previously known as Granite Halmar Construction Company, Incorporated. In addition, Granite will provide continuing cooperation to the government and maintain far-reaching corporate reforms.
The resolution was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Doug Shoemaker, Regional Special Agent-in-Charge, U.S. Department of Transportation, Office of Inspector General; Barry Kluger, Inspector General, Metropolitan Transportation Authority; Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation; and Cheryl Garcia, Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations in New York. U.S. Attorney Capers also thanked the Federal Transit Administration, a division of the U.S. Department of Transportation, for its assistance.
Pursuant to the non-prosecution agreement signed today, Granite acknowledged and accepted responsibility for a DBE fraud scheme related to GCN’s work on a contract for the MTA that involved the construction of a bus depot in Maspeth, Queens, NY (the Project). The Project was largely federally funded.
The investigation revealed that GCN served as the prime contractor on the Project after being awarded the prime contract for the job by the MTA, a contract for which GCN was ultimately paid approximately $222 million. The contract required GCN to comply with the Disadvantaged Business Enterprise Program (the DBE program). Pursuant to that program, as the prime contractor, GCN was obligated to make good faith efforts to subcontract a specified percentage of work on the prime contract to certain disadvantaged business enterprises (DBE companies).
GCN, certain other non-DBE companies (the actual companies), and a DBE company that acted solely as a front company in connection with the Project (the front company) conspired to arrange the following scheme to avoid compliance with the DBE program:
(a) the front company would be awarded a subcontract worth approximately $22 million, to perform certain construction work (the specified work) on the Project;
(b) the actual companies would perform the specified work, but payroll would be “run through” the front fompany, with paperwork arranged to make it appear as if the front company was performing the specified work; and
(c) GCN would pay the front company a $500,000 “DBE fee,” although the front company would not perform a “commercially useful function” on the specified work, as required by state and federal regulations.
As the front companies performed the specified work, GCN submitted to officials from the MTA, as required, periodic progress reports that purported to represent the percentage of work performed by DBE companies on the prime contract. From 2004 through approximately 2008, GCN falsely represented in those reports that the front company had performed a “commercially useful function” in performing the specified work, when in fact, the specified work had actually been performed by the actual companies, and the front company had not performed any such commercially useful function.[1] As a result, GCN deprived the MTA of its rights under the prime contract and deprived legitimate DBE companies of the opportunity to perform the specified work and be paid for it.
In light of a comprehensive internal investigation conducted by Granite, Granite’s complete acceptance of responsibility for GCN’s unlawful conduct, Granite’s cooperation with the government, the fact that the GCN employees most responsible for GCN’s unlawful conduct were separated from GCN and Granite years before the government’s investigation began, and Granite’s far-reaching remedial measures, including site visits by compliance program staff and mandatory training for appropriate Granite managers and employees, the government has agreed not to prosecute Granite or GCN for GCN’s criminal conduct provided that Granite complies for two years with all the terms of the agreement executed today. Significantly, this agreement also secures civil forfeiture to the federal government of $7.25 million in connection with this fraud, as well as a payment of $1 million to the MTA-IG.
“GCN defrauded the MTA by falsely claiming that millions of dollars worth of construction work was performed by a DBE company. Today’s resolution marks a significant step in our continued effort to eliminate DBE fraud in New York’s construction industry and also recognizes Granite’s decision to timely accept full responsibility, provide complete cooperation, and take remedial measures to enforce best industry practices,” stated U.S. Attorney Capers. Mr. Capers thanked the investigative agencies for their outstanding commitment and dedication over the course of this investigation.
“As evidenced by the non-prosecution agreement entered into by Granite Construction, Inc., we remain steadfast in our commitment to maintaining the integrity of the U.S. Department of Transportation’s (USDOT) Disadvantaged Business Enterprise program,” said Regional Special Agent-in-Charge Shoemaker, USDOT Office of Inspector General. “Working with the Secretary of Transportation and other DOT leaders, and our law enforcement and prosecutorial colleagues, we will continue to protect the taxpayers’ investment in our nation’s infrastructure from fraud, waste, abuse, and violations of law.”
“This investigation uncovered a scheme that exploited a program designed to encourage disadvantaged businesses to participate in Metropolitan Transportation Authority projects,” stated IRS-Criminal Investigation Special Agent-in-Charge Kitchen. “IRS-Criminal Investigation is proud to be part of the collective law enforcement effort on this investigation; it demonstrates the government’s resolve to protect public funds and its commitment to ensure the public’s trust. The fact that GCN has entered into an agreement with the government will further serve and protect the public’s best interest.”
“Today’s announcement clearly reflects the firm commitment by our Office and our investigative and prosecutorial partners to utilize all avenues to ensure compliance with DBE requirements and to create and maintain a level playing field on which all qualified DBEs have a fair and equal opportunity to bid for and participate in all MTA projects. We will continue to direct our energies and share of settlement proceeds to support the MTA Small Business Development Program and other productive efforts to expand opportunities for disadvantaged business enterprises,” stated Inspector General Kluger.
“Reporting that work was performed by a DBE company involved manipulating American workers and processing their pay through a front company in order to conceal the fraud. We will continue to work with our law enforcement partners to protect contract opportunities for legitimate disadvantaged businesses,” stated Special Agent-in-Charge Garcia of the New York Regional Office, U.S. Department of Labor - Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.
The government’s case is being prosecuted by the Office’s Public Integrity Section. Assistant United States Attorneys Paul Tuchmann and Burton Ryan are in charge of the prosecution. Assistant United States Attorney Brian Morris of the Office’s Civil Division is responsible for the forfeiture of the funds.
[1] In August 2013, one of the actual companies, A.J. McNulty & Company, also entered into a non-prosecution agreement with the United States Attorney’s Office for the Eastern District of New York to resolve a criminal investigation into the same scheme. Under the terms of that agreement, A.J. McNulty agreed to forfeit $850,000 to the federal government and pay $100,000 to the MTA-IG.
Al-Qaeda Operative Sentenced to 40 Years in Prison for Role in International Terrorism Plot that Targeted the United States and EuropeRead the Press Release
Defendant Led Plan to Carry Out Bombing of Crowded Shopping Center in Manchester, England, During Easter Holiday as Part of Global Terrorism Plot by al-Qaeda
Earlier today at the federal courthouse in Brooklyn, New York, Abid Naseer, 29, was sentenced to 40 years in prison by U.S. District Judge Raymond J. Dearie of the Eastern District of New York for multiple terrorism offenses. The defendant and his accomplices came within days of executing a plot to conduct a bombing at a crowded shopping mall in Manchester, England, as directed by senior al-Qaeda leaders in Pakistan.
The planned attack, which also targeted the New York City subway system and a newspaper office in Copenhagen, had been directed by and coordinated with senior al-Qaeda leaders in Pakistan. Naseer is the eighth defendant to face charges in federal court related to the al-Qaeda plot, which also involved Adis Medunjanin, Najibullah Zazi and Zarein Ahmedzay, the three members of the cell that targeted New York City. Naseer was convicted in March 2015 after a three-week jury trial of providing material support to al-Qaeda, conspiring to provide material support to al-Qaeda and conspiring to use a destructive device in relation to a crime of violence.
The sentence was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York City Police Department (NYPD).
“Abid Naseer was part of an al Qaeda conspiracy that targeted Western countries, including the United States and the United Kingdom, for terrorist attack,” said Assistant Attorney General Carlin. “His conviction and sentence reflect our dedication to identifying and holding accountable those who seek to target the United States and its allies. I want to thank the many agents, analysts and prosecutors who are responsible for this successful result.”
“This al-Qaeda plot was intended by the group’s leaders and Naseer to send a message to the United States and its allies,” said U.S. Attorney Capers. “Today’s sentence sends an even more powerful message in response: terrorists who target the U.S. and its allies will be held accountable for their violent crimes to the full extent of the law.”
“Dispatched by al-Qaeda to the U.K. in 2006, Abid Naseer exploited the educational visa system not to improve his own life, but to take away the lives of many others ‘in large numbers,’” said Assistant Director in Charge Rodriguez. “Trained in weapons and explosives, he communicated in code to hide his evil intentions. Found guilty in a court of law, he has been spared the fate of death he wished upon others and will spend considerable time incarcerated in a country he and his co-conspirators failed to take down.”
“This case demonstrates the importance of a closely coordinated international law enforcement approach to an established terrorist network that knows no borders,” said Commissioner Bratton. “The manner in which these defendants communicated their deadly plans reinforces the need to allow law enforcement the necessary authority and tools to prevent these plots from succeeding in their objectives of mass destruction and death. I commend our local and international partners in preventing these acts and securing convictions of those responsible for plotting them.”
In approximately September 2008, al-Qaeda leaders in Pakistan recruited Medunjanin, Zazi and Ahmedzay, three friends from New York City, to conduct a suicide bombing attack in New York City. Those al-Qaeda leaders, including Adnan El-Shukrijumah and Saleh al-Somali, communicated with Zazi about the plot through an al-Qaeda facilitator named “Ahmad,” who was located in Peshawar, Pakistan. In early September 2009, after Medunjanin, Zazi and Ahmedzay had selected the New York City subway system as their target, Zazi emailed with “Ahmad” in Pakistan about the proper ingredients for the main charge explosive, which included flour and oil. Zazi pleaded guilty to his role in the plot on Feb. 22, 2010; Ahmedzay pleaded guilty on April 23, 2010; and Medunjanin was convicted after trial on May 1, 2012, and was sentenced to life in prison. Zazi and Ahmedzay are awaiting sentencing.
The investigation by authorities in the United States and United Kingdom revealed that “Ahmad” had also been communicating with Naseer earlier in 2009. The evidence at trial established that Naseer and his Pakistani accomplices had been dispatched by al-Qaeda to the United Kingdom in 2006 in order to begin preparations for an attack in that country. The defendant and his co-conspirators entered the United Kingdom on student visas but then immediately dropped out of the university in which they had enrolled. The defendant, like Zazi, returned briefly to Peshawar in November 2008, at the same time Zazi and his co-conspirators were receiving weapons and explosives training from al-Qaeda in that region. After returning to the United Kingdom, the defendant sent messages back and forth to the same email account that “Ahmad” was also using to communicate with the American-based al-Qaeda cell on behalf of Saleh al-Somali, al-Qaeda’s then-head of external operations. In the messages, the defendant used coded language to refer to different types of explosives. At the culmination of the plot, in early April 2009, Naseer told “Ahmad” that he was planning a large “wedding” for numerous guests during the upcoming Easter weekend and that “Ahmad” – whom he called “Sohaib” – should be ready. Notably, Zazi testified that “Ahmad” had instructed him to use the same code of “marriage” to refer to the planned attack on the New York City subway and that Zazi emailed “Ahmad” that “the marriage is ready” just before he drove to New York in early September 2009 to conduct the attack.
On April 8, 2009, Naseer and several associates were arrested in the United Kingdom. In connection with these arrests, U.K. authorities conducted searches of the plotters’ homes as well as an internet café used by the defendant to send his messages to “Ahmad,” where they seized a large volume of electronic media. As demonstrated at trial, a forensic review of the electronic media revealed that Naseer had downloaded several jihadi nasheeds, or anthems, calling for “death in large numbers.” A document recovered from the raid on Usama bin Laden’s compound in May 2011 contained a letter from Saleh al-Somali to Bin Laden, written on April 16, 2009, that discussed the defendant and his accomplices’ arrests in the United Kingdom.
The case was investigated by the FBI’s Joint Terrorism Task Force. The Justice Department’s Office of International Affairs, Internal Revenue Service–Criminal Investigation in New York, the U.S. Marshals Service in Brooklyn and the law enforcement authorities in the United Kingdom and Norway, including the Greater Manchester Police and the Norwegian Police Security Service, also provided significant assistance.
The case was prosecuted by Assistant U.S. Attorneys Zainab Ahmad and Michael P. Canty of the Eastern District of New York, and Trial Attorney Josh Parecki the National Security Division’s Counterterrorism Section.
Al-Qaeda Operative Sentenced to 40 Years for Role in International Terrorism Plot That Targeted the United States and EuropeRead the Press Release
Earlier today at the federal courthouse in Brooklyn, New York, Abid Naseer was sentenced to 40 years by United States District Judge Raymond J. Dearie for multiple terrorism offenses. The defendant and his accomplices came within days of executing a plot to conduct a bombing at a crowded shopping mall in Manchester, United Kingdom, as directed by senior al-Qaeda leaders in Pakistan. The planned attack, which also targeted the New York City subway system and a newspaper office in Copenhagen, Denmark, had been directed by and coordinated with senior al-Qaeda leaders in Pakistan. Naseer is the eighth defendant to face charges in Brooklyn federal court related to the al-Qaeda plot, which also involved Adis Medunjanin, Najibullah Zazi, and Zarein Ahmedzay, the three members of the cell that targeted New York City. Naseer was convicted in March 2015 after a three week jury trial of providing material support to al-Qaeda, conspiring to provide material support to al-Qaeda, and conspiring to use a destructive device in relation to a crime of violence.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; John P. Carlin, Assistant Attorney General for National Security; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office; and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“This al-Qaeda plot was intended by the group’s leaders and Naseer to send a message to the United States and its allies,” United States Attorney Capers stated. “Today’s sentence sends an even more powerful message in response: terrorists who target the U.S. and its allies will be held accountable for their violent crimes to the full extent of the law.” Mr. Capers extended his grateful appreciation to the FBI’s Joint Terrorism Task Force, which led the investigation and comprises a large number of federal, state, and local agencies from the region. He also sent his appreciation to the Internal Revenue Service–Criminal Investigation, New York, the U.S. Marshal Service, Brooklyn, and the law enforcement authorities in the United Kingdom and Norway, including the Greater Manchester Police and the Norwegian Police Security Service, for their outstanding assistance with the case.
“Abid Naseer was part of an al Qaeda conspiracy that targeted Western countries, including the United States and the United Kingdom, for terrorist attack,” said Assistant Attorney General Carlin. “His conviction and sentence reflect our dedication to identifying and holding accountable those who seek to target the United States and its allies. I want to thank the many agents, analysts and prosecutors who are responsible for this successful result,” said Assistant Attorney General Carlin.
“Dispatched by al-Qaeda to the U.K. in 2006, Abid Naseer exploited the educational visa system not to improve his own life, but to take away the lives of many others ‘in large numbers.’ Trained in weapons and explosives, he communicated in code to hide his evil intentions. Found guilty in a court of law, he has been spared the fate of death he wished upon others and will spend considerable time incarcerated in a country he and his co-conspirators failed to take down,” stated FBI Assistant Director-in-Charge Rodriguez.
“This case demonstrates the importance of a closely coordinated international law enforcement approach to an established terrorist network that knows no borders. The manner in which these defendants communicated their deadly plans reinforces the need to allow law enforcement the necessary authority and tools to prevent these plots from succeeding in their objectives of mass destruction and death. I commend our local and international partners in preventing these acts and securing convictions of those responsible for plotting them,” said Police Commissioner Bratton.
During trial the government introduced evidence that in approximately September 2008, al-Qaeda leaders in Pakistan recruited Medunjanin, Zazi, and Ahmedzay, three friends from New York City, to conduct a suicide bombing attack in New York City. Those al-Qaeda leaders, including Adnan El-Shukrijumah and Saleh al-Somali, communicated with Zazi about the plot through an al-Qaeda facilitator named “Ahmad,” who was located in Peshawar, Pakistan. In early September 2009, after Medunjanin, Zazi, and Ahmedzay had selected the New York City subway system as their target, Zazi emailed with Ahmad in Pakistan about the proper ingredients for the main charge explosive, which included flour and oil. Zazi pleaded guilty to his role in the plot on February 22, 2010; Ahmedzay pleaded guilty on April 23, 2010; and Medunjanin was convicted after trial on May 1, 2012 and was sentenced to life in prison. Zazi and Ahmedzay are awaiting sentence.
The investigation by authorities in the United States and United Kingdom revealed that Ahmad had also been communicating with the defendant earlier in 2009. The evidence at trial established that the defendant and his Pakistani accomplices had been dispatched by al-Qaeda to the U.K. in 2006 in order to begin preparations for an attack in that country. The defendant and his co-conspirators entered the U.K. on student visas but then immediately dropped out of the university in which they had enrolled. The defendant, like Zazi, returned briefly to Peshawar in November 2008, at the same time Zazi and his co-conspirators were receiving weapons and explosives training from al-Qaeda in that region. After returning to the U.K., the defendant sent messages back and forth to the same email account that Ahmad was also using to communicate with the American-based al-Qaeda cell on behalf of Saleh al-Somali, al-Qaeda’s then-head of external operations. In the messages, the defendant used coded language to refer to different types of explosives. At the culmination of the plot, in early April 2009, the defendant told Ahmad that he was planning a large “wedding” for numerous guests during the upcoming Easter weekend, and that Ahmad – whom he called “Sohaib” – should be ready. Notably, Zazi testified that Ahmad had instructed him to use the same code of “marriage” to refer to the planned attack on the New York City subway and that Zazi emailed Ahmad that “the marriage is ready” just before he drove to New York in early September 2009 to conduct the attack.
On April 8, 2009, the defendant and several associates were arrested in the United Kingdom. In connection with these arrests, U.K. authorities conducted searches of the plotters’ homes as well as an internet café used by the defendant to send his messages to Ahmad, where they seized a large volume of electronic media. As demonstrated at trial, a forensic review of that electronic media revealed that the defendant had downloaded several jihadi nasheeds, or anthems, calling for “death in large numbers.” A document recovered from the raid on Usama bin Laden’s compound in May 2011 contained a letter from Saleh al-Somali to Bin Laden, written on April 16, 2009, that discussed the defendant and his accomplices’ arrests in the U.K.
The government’s case is being prosecuted by the Office’s National Security & Cyber Crime Section. Assistant United States Attorneys Zainab Ahmad and Michael P. Canty are in charge of the prosecution, with assistance provided by the Justice Department’s National Security Division and Office of International Affairs.
The Defendant:
ABID NASEER
AGE: 29E.D.N.Y. Docket No. 10-CR-019 (RJD)
Former FBI Ten Most Wanted Murder Fugitive Sentenced to LifeRead the Press Release
Earlier today at the federal courthouse in Central Islip, New York, Juan Garcia, also known as “Cruzito,” a member of La Mara Salvatrucha, also known as the MS-13 street gang, was sentenced to life by United States District Judge Joseph F. Bianco. Garcia and two other MS-13 members, Adalberto Ariel Guzman and Rene Mendez Mejia, shot and killed 19-year-old Vanessa Argueta and her two-year-old son, Diego Torres, in Central Islip, New York, on February 5, 2010. Garcia and Mejia shot Argueta in the chest and head, respectively, and Guzman shot Torres twice in the head. After committing the murders, Garcia and his co-conspirators fled to El Salvador. Guzman and Mejia were arrested in May 2010, but Garcia remained a fugitive for four years until March 2014, when, after being placed on the FBI’s Ten Most Wanted Fugitives List, he surrendered to law enforcement authorities in Nicaragua, waived extradition, and was returned to the United States for prosecution. He pled guilty on October 15, 2014.
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 MS-13 is infamous for committing senseless and brutal acts of violence, but, even for the MS-13, the murders of Vanessa Argueta and Diego Torres were particularly depraved and callous,” United States Attorney Capers stated. “However, as a result of the tenacious investigation and prosecution jointly conducted by this Office and our law enforcement partners, Garcia and his co-conspirators have been captured, convicted, and justly sentenced for cold-bloodedly executing a young mother and her two-year-old child.” United States Attorney Capers expressed his sincere gratitude to the members of the FBI’s Long Island Gang Task Force, the FBI’s Violent Criminal Threat Section, and the FBI’s Legal Attaches for El Salvador and Panama, for their unwavering commitment to bring Garcia and his co-conspirators to justice for the Argueta and Torres murders.
“Today’s sentencing is the final chapter in the government’s commitment to get justice for the victims. Garcia and his fellow MS-13 members senselessly and callously murdered a young mother and her toddler five years ago. The FBI is committed to working with our partners to not only root-out gangs in our communities but also bring their crimes to justice,” stated FBI Assistant Director-in-Charge Rodriguez.
Garcia and other MS-13 members, including MS-13 leader, Heriberto Martinez, Guzman, and Mejia plotted to kill Argueta because they believed she had disrespected the MS-13 by sending rival gang members to attack Garcia.
Martinez was convicted in March 2013, following a six-week trial, in connection with the Argueta murder, as well as the March 6, 2010 murder of Nestor Moreno in Hempstead, New York, and the March 17, 2010 murder of Mario Alberto Canton Quijada in Far Rockaway, New York, and later sentenced to life in prison, plus 60 years. Guzman was convicted on charges relating to the Argueta and Torres murders in September 2013, following a three-week trial, and later sentenced to life in prison, plus 35 years. Mejia pled guilty to the Argueta and Torres murders and is pending sentence.
The convictions of Garcia and his codefendants are the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international criminal organization. The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America. With numerous branches, or “cliques,” the MS-13 is the largest and most violent street gang on Long Island. Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York. A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults. Since 2010 alone, this Office has obtained indictments charging MS-13 members with carrying out more than 25 murders in the Eastern District of New York, and has convicted dozens of MS-13 leaders and members in connection with those murders. These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, comprising agents and officers of the FBI, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department, Rockville Centre Police Department, and Suffolk County Police Department.
The government’s case is being prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorneys John J. Durham and Raymond A. Tierney are in charge of the prosecution.
The Defendant:
Juan Garcia
Age: 22
Baldwin/Inwood, New YorkE.D.N.Y. Docket No. 10-CR-471 (JFB)
New York Dentist Arrested for Narcotics Trafficking and Distribution of Child PornographyRead the Press Release
A criminal complaint was unsealed today in federal court in the Eastern District of New York charging John Wolf with conspiring to possess methamphetamine with intent to distribute and possession and distribution of child pornography. The defendant was arrested earlier today at his residence, and his initial appearance is scheduled for this afternoon before United States Magistrate Judge Robert M. Levy at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges 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 James J. Hunt, Special Agent in Charge, Drug Enforcement Administration, New York.
As set forth in the complaint, the defendant, a Manhattan dentist, provided dental services to a drug dealer in exchange for methamphetamine, some of which the defendant would use personally and some of which he would distribute to others.
The defendant also used his dental office as a place to view and distribute child pornography. In recorded conversations with an FBI undercover agent, the defendant admitted that he possessed child pornography and provided the undercover agent with a flash drive containing files depicting child pornography, including videos of children as young as toddlers being raped by adult men.
United States Attorney Capers expressed his grateful appreciation to the Federal Bureau of Investigation and the Drug Enforcement Administration, the agencies responsible for leading the investigation, and thanked the New York City Police Department and the New York State Police for their assistance.
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 United States Attorney Moira Kim Penza.
The Defendant:
Name: John Wolf
Age: 59
New York, New YorkIf you have information regarding this case, or you believe you or a family member may have been a victim, please contact the FBI at 212/384-5000.
Attorney General Loretta E. Lynch Announces Indictment of Eight Defendants in United States and Mexico on Sex Trafficking and Related ChargesRead the Press Release
Charged Offenses Include Sex Trafficking, Interstate Prostitution, Alien Smuggling, Money Laundering, Racketeering and Racketeering Conspiracy in Connection with Scheme to Compel Mexican Women and Girls into Prostitution in the United States
A 27-count indictment was unsealed yesterday in the U.S. District Court for the Eastern District of New York charging eight defendants with racketeering and racketeering conspiracy involving predicate acts of sex trafficking by force, fraud and coercion, sex trafficking of minors, interstate prostitution, alien smuggling, money laundering and related offenses.
Over the past two days, five defendants were arrested in Mexico and two in Queens, New York, as part of a coordinated bilateral law enforcement action. A third U.S. defendant is currently in federal custody in West Virginia. The eight defendants are Jovan Rendon-Reyes, aka Jovani, 32, of Mexico; Saul Rendon-Reyes, aka Satanico, 37, of Queens; Guillermina Rendon-Reyes, 44, of Mexico; Francisco Rendon-Reyes, aka Pancho, 27, of Queens; Jose Rendon-Garcia, aka Gusano, 32, of Mexico; Felix Rojas, 45, of Mexico; Odilon Martinez-Rojas, aka Chino or Saul, 44, currently of Brucetown Mills, West Virginia; and Severiano Martinez-Rojas, 50, of Mexico.
The charges were announced by Attorney General Loretta E. Lynch; Director Sarah R. Saldaña of U.S. Immigration and Customs Enforcement (ICE); Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division; and U.S. Attorney Robert L. Capers of the Eastern District of New York.
“This case demonstrates the Justice Department’s steadfast commitment to ending human trafficking,” said Attorney General Lynch. “As set forth in the indictment, these defendants used force, fraud, and coercion to lure young women and girls into their control, smuggle them into the United States, and exploit them for profit – an abhorrent violation of both the law and basic human dignity. In the days ahead, the Department of Justice will continue to act decisively to hold traffickers accountable, protect vulnerable individuals, and assist survivors of this heinous crime. I want to thank the prosecutors and law enforcement officers who worked tirelessly on this case, and our partners in the government of Mexico for their invaluable assistance.”
“Today’s joint operation reflects our commitment to working with Mexico to bring to justice human traffickers who have no regard for human life,” said Director Saldaña. “We are resolute in our efforts to not only arrest the human traffickers behind this vile crime, but also to rescue the victims whose lives have tragically been forever changed.”
“Vindicating the rights of vulnerable individuals is among the highest priorities of the Department of Justice and the Civil Rights Division,” said Principal Deputy Assistant Attorney General Gupta. “The defendants are charged with operating a scheme across international borders to exploit young women and girls by prostituting them for the benefit of the defendants. We will work tirelessly to pursue justice for those held in modern-day slavery.”
“Human trafficking in any form will not be tolerated,” said U.S. Attorney Capers. “We remain steadfast in our commitment to prosecute sex traffickers and those who would enslave women and children for monetary gain. We will not rest until international trafficking organizations are eliminated.”
The indictment alleges that the defendants were members of an international criminal organization, identified in the indictment as the Rendon-Reyes Trafficking Organization, which engaged in sex trafficking and related criminal activity between December 2004 and June 2014 in Queens, Atlanta and Jemison, Alabama, among other locations. The defendants used force, threats of force, fraud and coercion to cause young women and girls from Mexico and Latin America to engage in prostitution in the United States.
Since 2009, the Department of Justice and ICE’s Homeland Security Investigations (HSI) have collaborated with Mexican law enforcement counterparts in a Bilateral Human Trafficking Enforcement Initiative aimed at strengthening high-impact prosecutions under both U.S. and Mexican law. The initiative is aimed at dismantling human trafficking networks operating across the U.S.-Mexico border, bringing human traffickers to justice, reuniting victims with their children and restoring the rights and dignity of human trafficking victims, held under the trafficking networks’ control. These efforts have resulted in successful prosecutions in both Mexico and the United States, including U.S. federal prosecutions of over 50 defendants in multiple cases in New York, Georgia, Florida and Texas since 2009, and numerous Mexican federal and state prosecutions of associated sex traffickers. The charges unsealed yesterday are the latest development in the Eastern District of New York’s comprehensive anti-trafficking program, which has to date indicted over 65 defendants in sex trafficking cases and provided assistance to over 130 victims, including 36 minors. In addition, through the Eastern District of New York’s anti-trafficking program, 18 children have been reunited with their victim-mothers.
The U.S.-based defendants were arraigned yesterday before U.S. Magistrate Judge James Orenstein of the Eastern District of New York at the federal courthouse in Brooklyn.
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
In announcing the indictment, Attorney General Lynch, Director Saldaña, Principal Deputy Assistant Attorney General Gupta and U.S. Attorney Capers commended the HSI’s New York Office, the HSI Mexico Attaché Office, the FBI’s Atlanta Division, the U.S. Attorney’s Office of the Northern District of Georgia, the Department of Justice’s Office of International Affairs, the State Department and the New York City Police Department for their assistance, and praised the government of Mexico for its role in this bilateral enforcement action. The Justice Department also acknowledged the non-governmental victim service providers and advocates for their dedicated efforts to restore and improve the lives of survivors of trafficking and their families in connection with this case and others.
The case is being prosecuted by Assistant U.S. Attorneys Taryn A. Merkl and Margaret Lee of the Eastern District of New York and Trial Attorney Benjamin Hawk of the Civil Rights Division’s Human Trafficking Prosecution Unit.
Rendon-Reyes et al Indictment
Seven Defendants Arrested for Narcotics Trafficking in the Far Rockaway Neighborhood of Queens, New YorkRead the Press Release
A twelve-count indictment was unsealed today in the United States District Court in Brooklyn charging seven defendants with crimes including conspiracy to distribute of heroin, crack cocaine, powder cocaine and marijuana, use and possession of firearms in furtherance of a drug crime, and firearms trafficking. The defendants were arraigned today before United States Magistrate Judge Robert M. Levy, at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges and arrests were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Delano A. Reid, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Division (ATF); William J. Bratton, Commissioner, New York City Police Department (NYPD) and Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD).
In response to rising violence in the area, the FBI, ATF, NYPD and NCPD conducted a joint investigation resulting in today’s charges against members of a Far Rockaway-based narcotics and firearms trafficking organization. As detailed in the detention memorandum filed today by the government, during the course of the investigation law enforcement agents monitored a court-ordered wiretap on a cellular telephone used by a leader of the organization which documented the defendants’ distribution of heroin and other narcotics. In one call, organization members discussed packaging a quantity of heroin for resale representing more than 1,500 individual doses with a retail value of more than $15,000. As part of the investigation, law enforcement agents and officers purchased from the defendants heroin representing some 2,500 individual doses and more than a dozen firearms, including two assault rifles. Today, in conjunction with the arrests, agents executed search warrants at three locations in Far Rockaway resulting in the seizure of heroin, firearms, scales and other narcotics paraphernalia.
The intercepted telephone calls also demonstrate the organization’s possession and sale of firearms and willingness to resort to violence to resolve drug disputes. For example, in a call intercepted on September 29, 2015, between a coconspirator and a narcotics customer, the customer recounted a previous incident in which the defendant Jose Perez threatened to shoot the customer over money owed to the organization. The coconspirator told the customer “I know he pulled a gun, but you played yourself, that’s why. . . . He did that because you owed me money. That’s why I told him not to shoot you.” In a call intercepted on September 30, 2015, in which defendant Jose Crespo and a coconspirator discussed their concerns about law enforcement activity in the area, Crespo confirmed that defendant Jermaine Stephenson was holding the organization’s firearms. Stephenson’s role as the holder of the organization’s firearms was corroborated in a separate recording made by a cooperating witness on September 11, 2015, in which a coconspirator described Stephenson as the organization’s “holster.” Most recently, in a recording made by a cooperating witness on November 11, 2015, a coconspirator informed the cooperating witness that he keeps a firearm “on standby” at his house and would be willing to use it to resolve a dispute the cooperating witness claimed to be having.
“This prosecution deals a fatal blow to a group allegedly responsible for funneling illegal guns and drugs into Far Rockaway,” stated United States Attorney Capers. “We are committed to dismantling such criminal organizations and removing the scourge of illegal guns and drugs – and the violence that ensues – from our neighborhoods and making our communities safe for their residents.”
FBI Assistant Director-in-Charge Rodriguez stated, “Engaging in the illegal distribution of firearms and drugs is an extremely dangerous combination, one that promotes violent activity and degrades the core of our communities. The defendants’ alleged actions highlight the looming danger that’s imminent when criminals bring guns and drugs into our neighborhoods. The FBI will continue to aggressively investigate these cases, work with our partners to disrupt and dismantle such activity, and minimize the threat these criminals pose to the innocent members of our community.”
ATF Special Agent-in-Charge Reid stated, “Just as important as making these arrests and virtually dismantling this alleged criminal organization is the fact that the ATF and its law enforcement partners have drastically improved the quality of life in the Far Rockaway area. I am extremely thankful for the inter agency cooperation during the course of this investigation and am confident that the prosecution of these defendants will be swift and comprehensive. This group’s days of illegally dealing in heroin have come to an end.”
“Today’s arrests and indictments are the result of the coordinated efforts of law enforcement to stop the flow of illegal firearms and narcotics into Far Rockaway. I commend the hard work of the investigators involved in the case whose efforts resulted in these individuals being brought to justice,” said NYPD Commissioner Bratton.
“Crime has no boundaries and this case is an example of how partners in law enforcement utilized talented personnel and resources to bring these seven defendants to justice,” said Acting NCPD Police Commissioner Krumpter. “Today’s arrests should serve as a deterrent to criminals as we at the Nassau County Police Department are committed to working with our fellow law enforcement partners to ensure public safety.”
The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of the most serious offense, six of the defendants face maximum sentences of life imprisonment, and one defendant faces up to 20 years of imprisonment.
The government’s case is being prosecuted by The Office’s Organized Crime & Gangs Section. Assistant United States Attorney Kevin Trowel is in charge of the prosecution.
The Defendants:
JOSE CRESPO, also known as “Santana” and “San”
Age: 54
Bronx, NYRAY JOHNSON, also known as “Moreno” and “Spoon”
Age: 30
Queens, NYJERMAINE STEPHENSON, also known as “Half”
Age: 34
Queens, NYJOSE PEREZ
Age: 39
Queens, NYISMAEL DEVALLE, also known as “Ish”
Age: 40
Queens, NYMIRIAM GAITHER
Age: 34
Queens, NYGRACE JAEN, also known as “Gracie” and “Graciela”
Age: 31
Queens, NYUnited States Settles Pregnancy Discrimination Action Against Triborough Bridge and Tunnel AuthorityRead the Press Release
Robert L. Capers, United States Attorney for the Eastern District of New York, today announced the filing of a Complaint and Settlement Agreement in United States v. Triborough Bridge and Tunnel Authority a/k/a MTA Bridges and Tunnels, Civil Action No. CV-15-6417 to settle violations of Title VII of the Civil Rights Act of 1964 ("Title VII").
In its Complaint, the United States alleges that the Triborough Bridge and Tunnel Authority ("TBTA") routinely required pregnant Bridge and Tunnel Operating Force Officers, whose duties include protecting the safety and security of many of the major bridges and tunnels in the New York City area, to surrender their guns and work in less than full duty status regardless of their physical condition or ability to perform the requirements of the job. In one case, Officer Lori Ann DiPalo, then early in her pregnancy, provided a written opinion from her personal physician certifying that she could perform the full range of her duties. Nonetheless, without examining her, the TBTA determined that simply because DiPalo was pregnant, she could not perform her full duties or safeguard a firearm. The TBTA stripped DiPalo of her firearm privileges and forced her to choose between toll booth duty or disability leave for the remainder of her pregnancy.
Under the terms of the settlement, the TBTA will revise its EEO policy to reflect Title VII’s requirements, as well as create a new policy addressing fitness for duty status and workplace accommodations for Bridge and Tunnel Officers. The TBTA will also train all its employees on Title VII and the protection that Title VII affords pregnant employees. The TBTA will pay Officer DiPalo $100,000 in damages and $106,500 in damages collectively to a group of twelve other officers affected by the TBTA’s discriminatory practice.
"Title VII prohibits discrimination against pregnant employees" stated U.S. Attorney Capers. "This Settlement Agreement ensures that pregnant Bridge and Tunnel Operating Force Officers able to perform their duties will not be forced to accept lesser roles simply because they are pregnant."
The United States’ claims were litigated by Assistant United States Attorney Kelly Horan Florio. The United States Equal Employment Opportunity Commission also participated in the settlement process.
Two Convicted for Participating in A $95 Million International Market Manipulation SchemeRead the Press Release
BROOKLYN, NY – Late yesterday, defendants Gary Kershner, an Arizona business owner, and Songkram Roy Sahachaisere, a California stock promoter, were convicted by a federal jury in Brooklyn on all counts for their role in a $95 million international market manipulation scheme. The jury’s verdict followed a five week trial before United States District Judge Eric N. Vitaliano. The defendants were convicted of conspiracy to commit securities fraud, conspiracy to commit wire fraud, two counts of securities fraud, four counts of wire fraud, and two counts of making false statements to federal agents. Kershner and Sahachaisere are the eighth and ninth defendants convicted in this case.
The guilty verdicts were 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 (FBI).
“Through lies and deceit, the defendants took advantage of the investing public and sold them worthless stock of shell companies that were propped up by false press releases. We and our partners in law enforcement are committed to rooting out fraud in the financial markets,” stated United States Attorney Capers. Mr. Capers extended his appreciation to the FBI, which led the government’s investigation, and thanked the Internal Revenue Service, Criminal Investigation, New York; Homeland Security Investigations, Department of Homeland Security, Buffalo; Treasury Inspector General for Tax Administration; the Royal Canadian Mounted Police; and law enforcement authorities in England, Thailand, and China for their assistance in this case.
The evidence at trial established that Kershner and Sahachaisere, together with others, engaged in an international “pump and dump” operation, fraudulently inflating the share price of worthless penny stocks, and then dumping billions of shares on unsuspecting victim investors across the globe. Kershner was responsible for drafting the false press releases and Sahachaisere was responsible for promoting the worthless companies based on the false press releases.
When sentenced by United States District Judge Eric N. Vitaliano, Kershner and Sahachaisere face a sentence of up to 20 years in prison.
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 government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Christopher A. Ott, Tyler Smith, and Mark Bini 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.
The Defendants:
Gary Kershner
Age: 75
Tucson, ArizonaSONGKRAM ROY SAHACHAISERE
Age: 45
Newport Beach, CaliforniaE.D.N.Y. Docket No. 13-CR-452 (S-2) (ENV)
Folk Nation Gang Member Sentenced to Five Consecutive Terms of Life ImprisonmentRead the Press Release
Earlier today, Jamal Laurent, a member of a set of the violent street gang Folk Nation operating primarily in the Crown Heights and East Flatbush neighborhoods of Brooklyn, was sentenced to five consecutive terms of life imprisonment at the federal courthouse in Brooklyn, New York. Last week, on November 6, 2015, one of Laurent’s co-defendants, Trevelle Merritt, was sentenced to 40 years of imprisonment. On March 18, 2015, both defendants, along with a third defendant, Yasser Ashburn, were convicted, following a jury trial, of racketeering and racketeering conspiracy, including as racketeering acts the murders of Courtney Robinson, Brent Duncan, and Dasta James, and related crimes. Ashburn is scheduled to be sentenced on January 8, 2016, and faces a mandatory term of life imprisonment.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office; and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“The defendants committed a string of shootings, robberies, and other senseless acts of violence that for years terrorized the law-abiding members of their community,” stated United States Attorney Capers. “We hope that the sentences imposed give a measure of comfort and closure to the victims and their families, and serve as a warning and deterrent to those who would continue to commit crimes in the name of this violent gang.” Mr. Capers expressed his grateful appreciation to the FBI and the NYPD, the agencies that led the government’s investigation.
From approximately 2007 until their arrests, the defendants, all members of the Folk Nation gang, were responsible for numerous acts of gang-related violence, including homicides, non-fatal shootings, and robberies in and around Crown Heights and East Flatbush, as well as elsewhere in the tri-state area.
During the course of the summer of 2010, Laurent committed seven armed robberies and three shootings. On June 19, 2010, Laurent shot and killed 18-year-old Brent Duncan while Duncan sat in his car outside a party in Brooklyn. Laurent subsequently told a friend that he shot Duncan because Duncan was a member of the rival Crips gang, but no evidence ever established that Duncan belonged to, or was even associated with, that gang.
On July 7, 2010, the same day that Laurent robbed three individuals at gunpoint, Laurent also attempted to murder Louis Ivies, who Laurent believed to be a member of the Crips. After greeting Ivies on the street, Laurent removed a gun from his waistband and fired at him eight times, hitting him five times. Ivies was seriously injured but ultimately survived.
During a three-week period in January 2011, Merritt and fellow gang members participated in a robbery spree that culminated in murder. In the first two robberies, Merritt and others robbed two residents of the Ebbets Field Houses of their cell phones. On January 28, 2011, Merritt, Laurent, and another man attempted to rob Dasta James at his residence on McKeever Place in Brooklyn. During the course of the robbery, James was shot in the back and head. He was taken to Kings County Hospital, where he died.
The government’s case is being prosecuted by the Office’s Organized Crime & Gangs Section. Assistant United States Attorneys Darren LaVerne, M. Kristin Mace, and Margaret Lee are in charge of the prosecution.
The Defendants:
JAMAL LAURENT, also known as “Tails”
Age: 25
Brooklyn, NYTREVELLE MERRITT, also known as “Tiger”
Age: 22
Brooklyn, NYE.D.N.Y. Docket No. 11-CR-303 (NGG)
Riverhead Physician Assistant Arrested for Conspiracy to Illegally Prescribe OxycodoneRead the Press Release
Michael Troyan, a physician assistant who operated two urgent care clinics on the east end of Long Island was arrested this morning pursuant to a grand jury indictment[1] with conspiring to illegally distribute oxycodone, a highly addictive prescription pain medication. Also this morning, a search warrant was executed at the East End Urgent and Primary Care in Riverhead by the DEA’s Long Island Tactical Diversion Squad which is comprised of agents and officers of the DEA, Nassau County Police Department, Rockville Centre Police Department, and Port Washington Police Department. The Long Island Tactical Diversion Squad was also assisted by agents and officers of the Department of Health & Human Services, the Southampton Town Police Department, and the Suffolk County District Attorney’s East End Drug Taskforce. The defendant is scheduled to be arraigned this afternoon before United States Magistrate Judge Gary R. Brown at the United States Courthouse in Central Islip, New York.
The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and James J. Hunt, Special Agent in Charge, Drug Enforcement Administration (DEA), New York.
The indictment and public filings allege that between November 2011 and October 2015, Troyan, a physician assistant with authority to prescribe controlled substances, issued prescriptions for thousands of oxycodone pills to co-conspirators for the purpose of illegally re-selling the pills for cash. Troyan was captured on video in an undercover operation writing phony prescriptions for oxycodone and receiving large quantities of cash at his Riverhead medical office for prior illegal sales. Troyan was receiving half of the profit from the sale of the oxycodone pills.
United States Attorney Capers stated, “As alleged, Troyan abused his authority to prescribe controlled substances and his position of trust as a physician assistant to illegally sell oxycodone in exchange for cash. Such abuse by health care professionalswill not be tolerated.” Mr. Capers extended his grateful appreciation to each of theparticipating law enforcement agencies for their assistance in this case.
DEA Special Agent in Charge James J. Hunt stated, “People who are addicted to opioid painkillers are forty times more likely to be addicted to heroin. Cashing in on heroin’s hold over American communities, it is alleged that Michael Troyan wrote prescriptions to oxycodone dealers on the East End in exchange for half the cash profits from the resulting drug sales. DEA and our law enforcement partners will continue to identify the diverted painkiller suppliers, be it an oxy street dealer, a rogue doctor, or a greedy physician’s assistant.”
If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment and a $1 million fine.
This case is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this jurisdiction, 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 Prescription Drug 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 so-called opioid analgesics. To date, the Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 18 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 the Office’s Long Island Criminal Division. Assistant United States Attorney Allen Bode is in charge of the prosecution.
The Defendant:
Name: MICHAEL TROYAN
Age: 37
Residence: Riverhead, New York
[1] The charges announced today are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
New York Attorney and Two Registered Brokers Arrested for Engaging in A $300 Million Market Manipulation SchemeRead the Press Release
BROOKLYN, NY -- Darren Ofsink, a Manhattan attorney and founder of Ofsink LLC; Michael Morris, a registered broker and managing director of Halcyon Cabot Partners, Ltd. (Halcyon); and Darren Goodrich, a registered broker; were arrested earlier today on charges of securities fraud, wire fraud, and conspiracy to commit securities fraud, mail fraud, and wire fraud in connection with a $300 million market manipulation scheme. In addition to the three defendants arrested today, the eleven-count superseding indictment unsealed this morning charges four additional defendants who were arrested in July 2014: Abraxas J. Discala, also known as “AJ Discala,” the Chief Executive Officer of OmniView Capital Advisors LLC; Ira Shapiro, the Chief Executive Officer of CodeSmart Holdings, Inc., a publicly traded company; Craig Josephberg, a registered broker; and Kyleen Cane, a Las Vegas attorney and managing partner of Cane Clark LLP.[1] Three defendants, Marc Wexler, Matthew Bell, and Victor Azrak, who were charged in the underlying indictment, have pleaded guilty and are awaiting sentencing.
Ofsink and Morris will be arraigned later today before Magistrate Judge Viktor V. Pohorelsky, at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York. Goodrich’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the United States Courthouse, 312 North Spring Street, Los Angeles, California. Discala, Shapiro, Josephberg, and Cane will be arraigned on the superseding indictment at a later date.
The charges were 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 (FBI).
“As alleged, licensed professionals such as Ofsink, Morris, and Goodrich abused their positions of trust and became part of an elaborate scheme designed to defraud the securities markets and the investing public through false and misleading press releases and manipulated trading activity. The three were entrusted to be gatekeepers to the securities markets but instead perpetrated one of the largest market manipulation schemes ever, and by doing so, preyed upon unsuspecting and elderly investors,” stated United States Attorney Capers. “Today’s three arrests and the seven arrests last year, reflect the scope of this fraud and our commitment to bring to justice those who abuse our financial markets in order to fraudulently enrich themselves.” Mr. Capers expressed his appreciation to the FBI for its tireless efforts in leading the investigation and thanked the United States Securities and Exchange Commission, New York Regional Office, for their significant cooperation and assistance.
“Using investment schemes like ‘pump and dump,’ ‘wash trades,’ and ‘match trades,’ the defendants were able to manipulate stock prices to profit themselves while defrauding unsuspecting investors. The FBI is committed to investigating and bringing to justice those who prey upon trusting individuals for their own personal gain.” stated FBI Assistant Director-in-Charge Rodriguez.
As alleged in the indictment and other court filings, between October 2012 and July 2014, the defendants agreed to defraud investors and potential investors in four public companies: CodeSmart Holdings, Inc. (CodeSmart), trading under the ticker symbol ITEN; Cubed, Inc. (Cubed), trading under the ticker symbol CRPT; StarStream Entertainment Inc. (StarStream), trading under the ticker symbol SSET; and The Staffing Group, Ltd. (Staffing Group), trading under the ticker symbol TSGL (collectively, the Manipulated Public Companies) by artificially controlling the price and volume of traded shares in the Manipulated Public Companies through false and misleading press releases, false and misleading SEC filings, fraudulent concealment of the defendants’ and their co-conspirators’ ownership interests, engineering price movements and trading volume in the stocks, and unauthorized purchases of stock in accounts of unwitting investors.
The CodeSmart Manipulation Scheme
In early May 2013, the defendants engineered a reverse merger of CodeSmart, a private company, with a shell public company. After gaining control of CodeSmart’s three million purportedly unrestricted shares, the defendants, including Ofsink and Morris, on two occasions fraudulently inflated CodeSmart’s share price and trading volume and then sold their shares at a profit when the price reached desirable levels -- a scheme commonly referred to as a “pump and dump.” The first pump and dump occurred between approximately May 13, 2013 and August 21, 2013. During this period, the defendants manipulated CodeSmart’s stock price by raising it from $1.77 to a high of $6.94, before causing it to drop to $2.19. The second pump and dump occurred between approximately August 21, 2013 and September 20, 2013. During this period, the defendants manipulated CodeSmart’s stock price by raising it from $2.19 to a high of $4.60, before causing it drop to $2.13.
CodeSmart’s market capitalization at its highest closing price of $6.94 per share on July 12, 2013 was $86,347,800. However, that same day, CodeSmart filed with the SEC an amended Form 10-K, in which it listed only $6,000 in total assets, $7,600 in revenue, and a net loss of $103,141. By December 30, 2013, CodeSmart’s stock was trading at $0.66 per share, and on July 9, 2014, its stock closed at $0.01 per share.
The defendants profited by selling CodeSmart stock, issued to them at pennies, to unsuspecting investors, often without the investors’ knowledge and consent. Additionally, the defendants, including investment advisers and brokers, were selling CodeSmart shares in their personal trading accounts at the same time that they were purchasing that stock in their clients’ and customers’ accounts. During the first pump and dump, the defendants and their co-conspirators sold approximately 800,000 shares of CodeSmart in their personal accounts while they purchased virtually the identical amount in unsuspecting investors’ accounts.
The Cubed Manipulation Scheme
In March 2014, the defendants took Cubed public through an asset purchase agreement. Between April 22, 2014 and April 30, 2014, they concocted trading volume in this stock by purchasing more than 50% of the total number of Cubed shares purchased during this period.
A judicially-authorized wiretap of Discala’s cellular telephone revealed that the defendants and their co-conspirators fraudulently manipulated Cubed’s stock by artificially controlling the price and volume of that stock through, among other things, wash trades and matched trades.[2] Rather than generating significant market interest and causing a quick pump and dump that would elicit regulators’ scrutiny this time, the defendants gradually increased the price of Cubed’s stock to give it the appearance of a legitimate company with genuine and steady market demand for the security. The defendants used an escrow account maintained by Cane to successfully control the price and volume of Cubed’s stock. For example, on May 20, 2014, during a telephone call between Discala and Azrak, Discala emphasized his control over Cubed’s share price through the use of the escrow account, stating, “I’m the [expletive] brake and the gas, [expletive]. If I take my foot off the brake it’s 55 [dollars] tomorrow (laughter).”
On June 23, 2014, Cubed reached its highest closing price of $6.75 per share, resulting in a market capitalization of approximately $200 million. Previously, Cubed filed with the SEC a Form 10-Q and reported less than $1,500 in cash, zero revenue, negative stockholders’ equity, a net loss of $15,000, and accrued professional fees of $131,824.
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 government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Walter M. Norkin, Shannon C. Jones, Winston M. Paes and Patrick Hein are in charge of the prosecution, with assistance provided by Assistant United States Attorney Claire Kedeshian of the Office’s Civil Division, which is responsible for the forfeiture of assets.
The Defendants:
ABRAXAS J. DISCALA, also known as “AJ Discala”
Age: 44
Residence: Norwalk, ConnecticutIRA SHAPIRO
Age: 54
Residence: Congers, New YorkCRAIG JOSEPHBERG
Age: 42
Residence: New York, New YorkKYLEEN CANE
Age: 60
Residence: Las Vegas, NevadaDARREN GOODRICH
Age: 37
Residence: Manhattan Beach, CaliforniaDARREN OFSINK
Age: 46
Residence: Merrick, New YorkMICHAEL MORRIS
Age: 63
Residence: Merrick, New YorkE.D.N.Y. Docket No. 14-CR-399 (S-1) (ENV)
[1] The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
[2] Wash trades are purchases and sales of securities that match each other in price, volume, and time of execution, and involve no change in beneficial ownership. For example, a wash trade occurs when Investor A buys 100 shares at $5.00 of Company A through Broker A while simultaneously selling 100 shares at $5.00 of Company A through Broker B. Matched trades are similar to wash trades but involve a related third person or party who places one side of the trade. For example, a matched trade occurs when Investor A buys 100 shares at $5.00 of Company A through a broker, while Investor B, who coordinates with Investor A, simultaneously sells 100 shares at $5.00 of Company A through a broker. Both wash trades and matched trades are used to create the appearance that the stock price rose as a result of genuine market demand for the securities.
Queens Man Sentenced to 12.5 Years for Sexually Abusing 3 Minor Girls at Fort Hamilton Army BaseRead the Press Release
Earlier today, in federal court in Brooklyn, Fausto Bonifaz was sentenced to 151 months’ imprisonment, to be followed by 20 years of supervised release, for coercing and enticing three minors, ages 12 and 13, to engage in sexual activity. As part of the sentence, the defendant will be required to register as a sex offender. Bonifaz pled guilty in March 2015.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
Bonifaz began to sexually abuse the victims in 2009, when they were 12 and 13 years old. Over the course of the next year, he sexually assaulted one of the victims on a weekly basis at her home at the Fort Hamilton Army base, which he admitted at the time of his guilty plea and at sentencing. At sentencing, the government presented evidence that Bonifaz also abused two other minor victims, again at the Fort Hamilton Army base.
In announcing the sentence, Mr. Capers expressed his grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.
The sentencing proceeding took place before Sr. United States District Judge Raymond J. Dearie.
The government’s case is being prosecuted by Assistant United States Attorney Tiana Demas.
This case was brought as part of Project Safe Childhood, a nationwide initiative to protect children by combatting the sexual exploitation and abuse of minors. Led by United States Attorneys’ Offices around the country, Project Safe Childhood marshals federal, state, and local resources to apprehend and prosecute individuals who exploit children and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc.
The Defendant:
Name: FAUSTO BONIFAZ
Age: 40
Queens, New YorkE.D.N.Y. Docket No. 14-575 (RJD)
Long Island Registered Sex Offender Pleads Guilty to Downloading Child PornographyRead the Press Release
Earlier today, William D. Gulick, Jr., a registered sex offender from Commack, Long Island, pled guilty at the federal courthouse in Central Islip, New York, to receiving child pornography in interstate commerce. The proceeding took place before United States Magistrate Judge Steven I. Locke. At sentencing, Gulick faces a mandatory minimum sentence of 15 years in prison and a maximum of 40 years in prison.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.
“Registered Sex Offenders such as the defendant are on notice that we are committed to protecting children and will vigorously prosecute those who victimize them,” stated United States Attorney Capers. “The penalties for repeated child exploitation offenses under federal law are deservedly severe.” Mr. Capers thanked the U.S. Immigrations Customs Enforcement’s (ICE), Homeland Security Investigations (HSI) and the Suffolk County Police Department (SCPD) for their assistance in the investigation.
As detailed in the indictment and court filings, in the fall of 2014, HSI agents, as part of an ongoing effort to locate individuals sharing child pornography, traced child pornography observed via peer-to-peer online trading software back to the defendant’s Commack residence. The images and videos he downloaded involved the rape of children as young as toddlers. During execution of a search warrant on the residence, SCPD Emergency Services officers were forced to use a Taser device to disarm and apprehend the defendant.
Gulick, Jr. is a registered sex offender based upon a prior child abuse conviction in Suffolk County in 1998 for Sexual Abuse in the 1st Degree and a 2013 conviction for Possessing a Sexual Performance of a Child under 16. At the time of his arrest in this case, the defendant was on probation for the 2013 conviction and had recently been released from custody.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorney Allen Bode is in charge of the prosecution.
The Defendant:
William D. Gulick, Jr.
Age: 36
Commack, New YorkE.D.N.Y. Docket No. 14 CR 608 (ADS)
Three Defendants Convicted of Conspiring to Illegally Export Controlled Technology to the Russian MilitaryRead the Press Release
Earlier today, after a month-long trial, Alexander Posobilov, Shavkat Abdullaev and Anastasia Diatlova were convicted of all counts, including conspiring to export, and illegally exporting, controlled microelectronics to Russia. Posobilov was also convicted of money laundering conspiracy. These defendants, all of whom worked at Arc Electronics Inc. (Arc), a Houston-based corporation, and eight other individuals were originally charged in October 2012. Five members of the conspiracy, including Arc owner Alexander Fishenko, previously pleaded guilty to related charges.
The convictions were announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director Randall C. Coleman of the FBI's Counterintelligence Division and Director Douglas Hassebrock of the Department of Commerce’s Office of Export Enforcement.
“Alexander Posobilov, Shavkat Abdullaev and Anastasia Diatlova evaded U.S. export laws to illegally send sophisticated microelectronics to Russia,” said Assistant Attorney General Carlin. “By purposefully circumventing U.S. law, including the International Emergency Economic Powers Act and the Arms Export Control Act, the defendants jeopardized our national security.”
“These defendants were key players in a sprawling scheme to illegally export sophisticated technology to Russia,” said U.S. Attorney Capers. “Through lies and deceit, the defendants and their co-conspirators sold over $30 million of microchips, much of which was destined for Russian military and intelligence agencies.”
“By putting a halt to this conspiracy, and stopping the flow of these dual-use components to the Russian military and intelligence services, this verdict represents a clear victory for our national security,” said Assistant Director Coleman.
“Today's convictions send a strong message to those who willfully evade export control laws and jeopardize the national security of the United States,” said Director Hassebrock. “This case is the result of outstanding collaborative investigative work by the Justice Department, the Commerce Department and the FBI to break up a network whose aim was to illegally ship sophisticated U.S.-origin technology to Russia.”
The evidence at trial established that between approximately October 2008 and October 2012, these defendants and their co-conspirators obtained advanced, technologically cutting-edge microelectronics from manufacturers and suppliers located within the United States and exported those high-tech goods to Russia, while carefully evading the government licensing system set up to control such exports. The microelectronics shipped to Russia included analog-to-digital converters, static random access memory chips, microcontrollers and microprocessors. These commodities have applications, and are frequently used, in a wide range of military systems, including radar and surveillance systems, missile guidance systems and detonation triggers. Russia does not produce many of these sophisticated goods domestically.
Posobilov was the Procurement Director of Arc, Abduallev was the Shipping Manager and Diatlova was a salesperson. To induce manufacturers and suppliers to sell them these high-tech goods, and to evade applicable export controls, the defendants and their co-conspirators often provided false end user information in connection with the purchase of the goods, concealed the fact that they were resellers and falsely classified the goods they exported on export records submitted to the Department of Commerce. For example, Arc falsely claimed to be a traffic light manufacturer on its website. In fact, Arc manufactured no goods and operated exclusively as an exporter.
Despite this subterfuge, the evidence established that the defendants were supplying Russian government agencies with sophisticated microelectronics. For example, the investigation uncovered a letter sent by a specialized electronics laboratory of Russia’s Federal Security Service (FSB), Russia’s primary domestic intelligence agency, to an Arc customer regarding certain microchips obtained for the FSB by Arc. The letter stated that the microchips were faulty and demanded that the defendants supply replacement parts.
Shortly before trial, Arc President Alexander Fishenko pleaded guilty to all charges against him, including acting as an agent of the Russian government without prior notification to the Attorney General, as well as conspiring to export, and illegally exporting, microelectronics to Russia, money laundering conspiracy and obstruction of justice. Fishenko is currently awaiting sentencing.
When sentenced by U.S. District Judge Sterling Johnson Jr. of the Eastern District of New York, defendants Posobilov, Abdullaev and Diatlova face up to five years in prison for the conspiracy conviction, and up to 20 years in prison for each violation of the International Emergency Economic Powers Act (IEEPA) and the Arms Export Control Act (AECA). Posobilov also faces up to 20 years in prison for money laundering conspiracy.
The case is being prosecuted by Assistant U.S. Attorneys Daniel Silver, Una Dean, Richard Tucker and Claire Kedeshian of the Eastern District of New York, as well as Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section.
Three Defendants Convicted of Conspiring to Illegally Export Controlled Technology to the Russian MilitaryRead the Press Release
Earlier today, after a month-long trial, Alexander Posobilov, Shavkat Abdullaev and Anastasia Diatlova were convicted of all counts, including conspiring to export, and illegally exporting, controlled microelectronics to Russia. Posobilov was also convicted of money laundering conspiracy. These defendants, all of whom worked at Arc Electronics, Inc. (Arc), a Houston, Texas-based corporation, and eight other individuals were originally charged in October 2012. Five members of the conspiracy, including Arc owner Alexander Fishenko, previously pled guilty to related charges.
The convictions were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, John P. Carlin, Assistant Attorney General for National Security, Randall C. Coleman, Assistant Director of the FBI's Counterintelligence Division, and Douglas Hassebrock, Director of the Commerce Department Office of Export Enforcement.
“These defendants were key players in a sprawling scheme to illegally export sophisticated technology to Russia,” stated United States Attorney Capers. “Through lies and deceit, the defendants and their co-conspirators sold over $30 million of microchips, much of which was destined for Russian military and intelligence agencies.”
“Alexander Posobilov, Shavkat Abdullaev and Anastasia Diatlova evaded U.S. export laws to illegally send sophisticated microelectronics to Russia,” said Assistant Attorney General Carlin. “By purposefully circumventing U.S. law, including the International Emergency Economic Powers Act and the Arms Export Control Act, the defendants jeopardized our national security.”
“By putting a halt to this conspiracy, and stopping the flow of these dual-use components to the Russian military and intelligence services, this verdict represents a clear victory for our national security,” said Assistant Director Coleman of the FBI’s Counterintelligence Division.
“Today’s convictions send a strong message to those who willfully evade export control laws and jeopardize the national security of the United States. This case is the result of outstanding collaborative investigative work by the Justice Department, the Commerce Department and the FBI to break up a network whose aim was to illegally ship sophisticated U.S.-origin technology to Russia,” said Director of the Commerce Department Office of Export Enforcement Hassebrock.
The evidence at trial established that between approximately October 2008 and October 2012, these defendants and their co-conspirators obtained advanced, technologically cutting-edge microelectronics from manufacturers and suppliers located within the United States and exported those high-tech goods to Russia, while carefully evading the government licensing system set up to control such exports. The microelectronics shipped to Russia included analog-to-digital converters, static random access memory chips, microcontrollers and microprocessors. These commodities have applications, and are frequently used, in a wide range of military systems, including radar and surveillance systems, missile guidance systems and detonation triggers. Russia does not produce many of these sophisticated goods domestically.
Posobilov was the Procurement Director of Arc, Abduallev was the Shipping Manager and Diatlova was a salesperson. To induce manufacturers and suppliers to sell them these high-tech goods, and to evade applicable export controls, the defendants and their co-conspirators often provided false end user information in connection with the purchase of the goods, concealed the fact that they were resellers and falsely classified the goods they exported on export records submitted to the Department of Commerce. For example, Arc falsely claimed to be a traffic light manufacturer on its website. In fact, Arc manufactured no goods and operated exclusively as an exporter.
Despite this subterfuge, the evidence established that the defendants were supplying Russian government agencies with sophisticated microelectronics. For example, the investigation uncovered a letter sent by a specialized electronics laboratory of Russia’s Federal Security Service (FSB), Russia’s primary domestic intelligence agency, to an Arc customer regarding certain microchips obtained for the FSB by Arc. The letter stated that the microchips were faulty and demanded that the defendants supply replacement parts.
Shortly before trial, Arc President Alexander Fishenko pled guilty to all charges against him, including acting as an agent of the Russian government without prior notification to the Attorney General, as well as conspiring to export, and illegally exporting, microelectronics to Russia, money laundering conspiracy and obstruction of justice. Fishenko is currently awaiting sentencing.
When sentenced by United States District Judge Sterling Johnson, Jr., defendants Posobilov, Abdullaev and Diatlova face up to five years in prison for the conspiracy conviction, and up to 20 years in prison for each violation of the International Emergency Economic Powers Act (IEEPA) and the Arms Export Control Act (AECA). Posobilov also faces up to 20 years in prison for money laundering conspiracy.
The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Daniel S. Silver, Una A. Dean, Richard M. Tucker and Claire Kedeshian, as well as Trial Attorney David C. Recker from the Department of Justice’s Counterintelligence and Export Control Section, are in charge of the prosecution.
The Defendants:
Alexander Posobilov
Age: 61Shavkat Abdullaev
Age: 37Anastasia Diatlova
Age: 41E.D.N.Y. Docket No. 12 CR 626 (SJ)
Eight Trey Crips Gang Member Arrested for Murder of Brooklyn, New York, ManRead the Press Release
Earlier today, an indictment was unsealed charging Rodney Muschette, also known as “Stitch,” with the retaliation murder of a federal informant in Atlanta, Georgia, on December 31, 2008.[1] Muschette is a member of the Eight Trey Crips gang, a Crips set operating in and around Brooklyn, New York. If convicted, Muschette will face mandatory life imprisonment. Muschette, who was arrested this morning, was presented for arraignment earlier today at the United States Courthouse in Raleigh, North Carolina.
The charge and arrest 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 (FBI); William J. Bratton, Commissioner, New York City Police Department (NYPD); and George N. Turner, Chief of Police, Atlanta Police Department (APD).
“This Office has a long history of prosecuting and convicting Crips gang members who have pursued violence and lawlessness in neighborhoods throughout Brooklyn,” stated U.S. Attorney Capers. “The charged retaliation murder is among the most vicious crimes its members have committed. This prosecution should serve as a reminder that this Office and our law enforcement partners will do everything in our power to hold accountable those who use violence to silence witnesses or otherwise obstruct justice.” Mr. Capers extended his grateful appreciation to the FBI Charlotte, NC, Field Office, the FBI Raleigh, NC, Resident Agency, and the FBI Atlanta, GA, Field Office for their assistance.
“Today’s arrest of Rodney Muschette, also known as ‘Stitch,’ shows that justice has no time limit. Muschette is charged with the retaliation murder of a federal informant in December 2008. The FBI will continue to work with our law enforcement partners to bring to justice all those involved in gang related activity, especially those who seek to obstruct justice through murder,” stated FBI Assistant Director-in-Charge Rodriguez.
“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. “As alleged, Mr. Muschette 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.”
NYPD Commissioner Bratton stated, “Today’s arrest and indictment demonstrate the NYPD’s commitment to bringing justice in the senseless execution of this witness,” said Police Commissioner William J. Bratton. “Thanks to the continued efforts of the investigators and prosecutors who aggressively pursued this case, Rodney Muschette will be held accountable for this murder, as alleged.”
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 repeated this belief in a telephone conversation with his sister that night and confirmed that his fellow gang members also knew about Johnson’s status as an informant.
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 of 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 Defendant:
RODNEY MUSCHETTE, also known as “Stitch”
Age: 34
[1] The charge contained in the indictment is merely an allegation, and the defendant is presumed innocent unless and until proven guilty.