Eastern District of New York
Press releases recorded for this federal judicial district.
American Citizen Charged with Conspiring to Provide Material Support to TerroristsRead the Press Release
A complaint and arrest warrant were unsealed today in federal court in the Eastern District of New York charging Muhanad Mahmoud Al Farekh, an American citizen, with conspiracy to provide material support to terrorists. Farekh’s initial appearance is scheduled today before United States Magistrate Judge Viktor V. Pohorelsky. Farekh was deported from Pakistan to the United States and arrested pursuant to the pending warrant.
The charges were announced by Loretta E. Lynch, 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).
As alleged in the complaint, Farekh conspired with others to provide material support to terrorists and specifically to provide personnel to be used in support of efforts to kill American citizens and members of the U.S. military abroad. In approximately 2007, Farekh, an individual named Ferid Imam, and a third co-conspirator 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. According to public testimony in previous EDNY criminal trials, in approximately September 2008, Ferid Imam provided weapons and other military-type training at an al-Qaeda training camp in Pakistan to 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)).
“Today’s arrest demonstrates that there is no escape from the long reach of our law for American citizens who seek to do harm to our country on behalf of violent terrorists,” stated United States Attorney Lynch. “We will continue to use every tool at our disposal to bring such individuals to justice.”
“Muhanad Mahmoud Al Farekh is alleged to have conspired with others to provide material support to terrorists,” said Assistant Attorney General Carlin. “Counterterrorism is the highest priority of the National Security Division, and we will continue to be tireless in our pursuit of those who wish to harm the United States or its people. I would like to thank the many agents, analysts, and prosecutors who are responsible for the charges in this case.”
“Al Farekh allegedly provided material support to terrorists with every intention of becoming a martyr. Today, members of our military are safer because of the relentless investigative work by the FBI’s Manhattan-based Joint Terrorism Task Force,” said FBI Assistant Director in Charge Rodriguez.
“The NYPD will continue to work with our law enforcement partners to investigate and arrest individuals who choose to work alongside terrorist organizations and threaten the lives of Americans. We applaud the investigators and prosecutors whose efforts led to this arrest,” said Police Commissioner Bratton.
If convicted, the defendant faces a maximum sentence of fifteen years’ imprisonment.
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Zainab Ahmad and Richard M. Tucker are in charge of the prosecution, with assistance provided by Trial Attorney Bridget Behling of the Justice Department’s Counterterrorism Section.
The Defendant:
MUHANAD MAHMOUD AL FAREKH
Age:
Nationality: United States
E.D.N.Y. Docket No. 15-MJ-021
Foreign Corporation and Its Managers Plead Guilty to Export ViolationsRead the Press Release
Earlier today, AMA United Group, Malak Neseem Swares Boulos, and Amged Kamel Yonan Tawdraus pled guilty at the federal courthouse in Brooklyn, New York, to violating U.S. export regulations in connection with the attempted shipment of munitions samples from New York City to Egypt. AMA United Group, an Egyptian procurement agent, entered a guilty plea to violating the Arms Export Control Act. Boulos and Tawdraus, Egyptian Citizens and partners in AMA United Group, pled guilty to failing to file required export information relating to the international shipment of a landmine and multiple bomb bodies. According to court filings and facts presented during the plea proceeding, Boulos and Tawdraus were arrested after attempting to close a deal to acquire and export the items, which were included on the United States Munitions List and regulated by the United States Department of State.
The pleas were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; John P. Carlin, Assistant Attorney General for National Security, Raymond R. Parmer, Jr., Special Agent in Charge, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), New York; and Craig W. Rupert, Special Agent in Charge, Defense Criminal Investigative Service (DCIS), Northeast Field Office.
“These defendants failed to comply with the strict regulations that govern the export of dangerous munitions,” stated United States Attorney Lynch. “Today’s convictions should help ensure that those who refuse to follow these obligations should expect to face serious consequences, including individual and corporate penalties.” Ms. Lynch expressed her grateful appreciation to HSI, DCIS, and the U.S. Attorney’s Office for the Southern District of New York for its assistance.
“Investigating potential violations of the Arms Export Control Act is a top national security priority for HSI as it ensures military technology such as these landmines do not fall into the wrong hands” said Special Agent in Charge Parmer, HSI New York. “In this instance, our partnership with DCIS and the United States Attorney’s office sends a strong message that violating U.S. export laws will not be tolerated.”
“This investigation demonstrates the ongoing commitment that the Defense Criminal Investigative Service has to pursue individuals who are intent on acquiring and illegally exporting military grade munitions,” said Special Agent in Charge Rupert, DCIS Northeast Field Office. “DCIS will continue to work with its law enforcement partners, such as HSI and the U.S. Attorney’s Office, to methodically and successfully investigate these types of allegations and protect America’s Warfighters.”
Beginning in February 2011, the defendants began trying to obtain munitions items on behalf of AMA United Group’s client, a factory in Cairo, Egypt. The items the defendants sought included a land mine as well as bomblet bodies and “trumpet liners,” two components that are integral to manufacturing the housings for explosives in an aerial warhead. In July 2011, the defendants traveled from Cairo to New York City to inspect the items. On July 1, 2011, the three principals of AMA United Group attempted to ship samples to its client in Egypt. Defendants Boulos and Tawdraus failed to file any export information in connection with the attempted shipment. The requirement to file accurate information regarding the contents of international shipments is one layer of regulatory oversight pertaining to protecting the U.S. national security and diplomatic interests.
Today’s pleas took place before United States District Judge Eric N. Vitaliano. When sentenced, defendants Tawdraus and Boulos face up to five years in prison, as well as criminal forfeiture and fines. Each of the defendants also faces export sanctions, including the denial of export privileges by the United States Department of Commerce, the United States Department of the Treasury, and the United States Department of State.
The government’s case is being prosecuted by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Seth DuCharme and David Pitluck are in charge of the prosecution, with assistance from Trial Attorney David Recker of the Justice Department’s National Security Division.
The Defendants:
MALAK NESEEM SWARES BOULOS
Age: 43
Cairo, Egypt
AMGED KAMEL YONAN TAWDRAUS
Age: 33
Cairo, Egypt
E.D.N.Y. Docket No. 13-CR-612 (ENV)
New York City Police Officer and Customs and Border Protection Officer Sentenced to Three Years in Prison for International Arms TraffickingRead the Press Release
Former New York City Police Officer Rex Maralit and his brother Wilfredo Maralit, a Customs and Border Protection Officer assigned to Los Angeles International Airport, were sentenced earlier today at the federal courthouse in Brooklyn to three years’ imprisonment to be followed by three years of supervised release for their roles in an illegal scheme to smuggle high-powered assault rifles, sniper rifles, pistols, and firearms accessories from the United States to the Philippines. The defendants pleaded guilty on June 12, 2014, before United States District Judge Allyne R. Ross to violating the Arms Export Control Act. A third brother, Ariel Maralit, resides in the Philippines and remains a fugitive.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Assistant Attorney General John P. Carlin; Raymond R. Parmer, Jr., Special Agent in Charge, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), New York; Craig W. Rupert, Special Agent in Charge, Defense Criminal Investigative Service (DCIS), Northeast Field Office; Delano A. Read, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), New York Field Division; and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“These defendants violated their sworn duties to uphold the law, abusing their positions of trust to profit from the illegal export of extremely dangerous weapons,” stated Ms. Lynch. “Today’s sentences send a powerful message that criminal conduct by police officers, federal agents, and their confederates will not be tolerated, and that no one, least of all those entrusted to protect the communities and the country they serve, is above the law.” Ms. Lynch expressed her grateful appreciation to HSI, DCIS, ATF, and the NYPD’s Internal Affairs Bureau, which worked closely together to investigate the case, and to the U.S. Attorney’s Office for the Central District of California and the U.S. Attorney’s Office for the District of New Jersey for their assistance.
Between January 2009 and September 2013, the defendants exported a variety of military-style firearms, along with high-capacity magazines and accessories for those weapons, from the United States to the Philippines where they were sold to overseas customers. Both Rex and Wilfredo Maralit used their official credentials and status to obtain and ship the weapons without first obtaining a license from the U.S. State Department. The firearms included the Barrett .50 caliber long-range semi-automatic rifle, the FN “SCAR” assault rifle, and high-capacity FN 5.7mm semi-automatic carbines and pistols which fire a cartridge that was specifically designed to penetrate body armor.
The Arms Export Control Act requires exporters of firearms to first obtain the approval of the United States State Department before shipping weapons overseas. Similarly, dealing in firearms is regulated by the ATF, which requires gun dealers to first obtain a federal firearms license before engaging in such a business.
The government’s case is being prosecuted by Assistant United States Attorneys Seth DuCharme and Sam Nitze, with assistance from Trial Attorney David Recker of the Justice Department’s National Security Division.
The Defendants:
REX G. MARALIT
Lawrenceville, New Jersey
Age: 46
WILFREDO MARALIT
Garden Grove, California
Age: 49
Suffolk County Resident Indicted for Fraudulent Lien Scheme Perpetrated Against Suffolk County State Court JudgesRead the Press Release
An indictment was unsealed today in United States District Court for the Eastern District of New York charging Jerry Campora, Jr., a resident of Setauket, New York, with eight counts of mail fraud. Campora was arraigned this afternoon before United States District Judge Joanna Seybert at the federal courthouse in Central Islip. He was released on a $50,000 bond and ordered not to file any liens or affidavits in other jurisdictions without the prior approval of the court.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
According to the indictment and related court proceedings, beginning in 2010, Campora was named as a defendant in a foreclosure action in Suffolk County Supreme Court, due to his failure to pay the mortgage on his house located in Seatauket, New York. Campora represented himself in the foreclosure action and, after several of Campora’s pro se motions were dismissed, his house was ordered to be sold at auction. Thereafter, in October and November of 2013, in retaliation for the adverse decision in the foreclosure action, Campora filed fraudulent affidavits and liens through the mail with the Lamar County Superior Court Clerk’s Office in Barnesville, Georgia, against three Suffolk County state court judges and one private attorney appointed by the court to serve as a referee in Campora’s foreclosure action. The affidavits purported to confer legal rights upon Campora against the victims and also claimed that the victims admitted to having illegally violated Campora’s rights. Campora then cited these fraudulent affidavits as serving as a legal basis to further file false liens with the Lamar County Superior Clerk’s Office against each of the four victims in an amount in excess of $1,500,000.
“We will continue to aggressively identify and pursue those who would manipulate the judicial system through private vendettas in the hope of causing financial hardship to public servants with whom they disagree,” stated Unites States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the New York State Court System for its assistance and cooperation in this investigation.
FBI Assistant Director-in-Charge Rodriguez stated, “Mr. Campora allegedly used the legal system to retaliate against Suffolk County Court judges who had ordered a foreclosure action on his house. Vendettas against members of the judiciary have no place in our legal system.”
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Campora faces a statutory maximum sentence of 30 years in prison and a fine of up to $1,000,000 on each of the eight counts.
The government’s case is being prosecuted by Assistant United States Attorney Raymond A. Tierney.
The Defendant:
JERRY CAMPORA, JR.
Age: 46
Setauket, New York
E.D.N.Y. Docket No. 15-CR-123
Town of Oyster Bay Commissioner Frederick Ippolito Indicted for Six Years of Tax EvasionRead the Press Release
An indictment was unsealed today in United States District Court for the Eastern District of New York charging Frederick Ippolito, a resident of Syosset, New York, with six counts of tax evasion. Ippolito is the Commissioner of Planning and Development for the Town of Oyster Bay (TOB). Ippolito is scheduled to be arraigned this afternoon before United States Magistrate Judge A. Kathleen Tomlinson at the federal courthouse in Central Islip.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI).
According to the indictment, from 2008 to 2013, Ippolito received over $2 million in consulting fees from Carlo Lizza & Sons, Paving, Inc., a company located in Old Bethpage, New York, as well as from a principal of that company. Ippolito allegedly evaded taxes on that income by willfully failing to report it on his personal tax returns or the tax returns of entities he controlled. Ippolito is the President of CAI Associates, LTD, a consulting and snow removal business, and a former officer of CAI Restaurant, Inc., d/b/a Christiano’s, in Syosset, New York. If convicted, Ippolito faces a statutory maximum sentence of five years in prison and a fine of up to $250,000 on each of the six counts.
“Tax evasion victimizes every taxpaying American,” stated United States Attorney Lynch. “We and our partners in the IRS will continue to aggressively identify and pursue all individuals – including public officials – who evade their taxes. No one is above the law.”
IRS-CI Special Agent-in-Charge Kitchen stated, “The public expects their elected and appointed officials to obey the same laws as it does. IRS-Criminal Investigation is committed to ensuring that everyone pays their fair share. Public officials will be held accountable for their actions before they took office, while they serve the public, and after they leave office. They must meet their tax obligations just like the people they serve.”
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 Assistant United States Attorneys Catherine M. Mirabile and Raymond A. Tierney.
The Defendant:
FREDERICK IPPOLITO
Age: 76
Syosset, New York
E.D.N.Y. Docket No. 15-CR-129
New York Pharmacist Charged with Defrauding Medicare and Medicaid of More Than $5 Million Through Fraudulent Billing of Prescription MedicationsRead the Press Release
A twenty-four-count indictment was unsealed this morning in federal court in Brooklyn, New York, charging Andrew Barrett, a licensed pharmacist, with health care fraud, filing false claims, unlawful monetary transactions, filing false personal tax returns, and the filing of and assisting in the preparation of false corporate tax returns.1 Barrett will be arraigned at 2:00 pm today before U.S. Magistrate Judge Steven M. Gold at the U. S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Loretta E. Lynch, 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), Scott Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), and Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York (IRS-CI).
“As alleged in the indictment, instead of using his pharmacist license to provide valid relief to those in need, Andrew Barrett used it as a license to steal from publicly-funded health care programs and then lied about it on his tax returns,” stated United States Attorney Lynch. "Today’s indictment makes clear that this Office will hold accountable corrupt pharmacists who seek to enrich themselves at the expense of tax-payer funded programs."
“Defrauding Medicare and Medicaid is a serious crime that has consequences for the entire U.S. economy. As alleged, Barrett stole more than $5 million from Medicare and Medicaid for his own personal gain. As evidenced by today’s indictment, the FBI and its partners will vigorously pursue those who seek to steal from taxpayer-funded programs,” stated FBI Assistant Director-in-Charge Rodriguez.
“The alleged actions by Andrew Barrett diverted scarce taxpayer funds from the Medicare and Medicaid prescription drug programs 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.”
IRS-CI Special Agent-in-Charge Kitchen stated, “Individuals who steal from government programs often take the added risk of committing tax crimes in the process, exposing themselves to further criminal sanctions. As the federal agency responsible for investigating criminal tax violations, IRS-Criminal Investigation works with our law enforcement partners on complex financial fraud investigations, with the goals of protecting the American taxpayer and seeing that everyone pays their fair share.”
As alleged in the indictment, from January 2011 to December 2012, Barrett operated pharmacies in Bronx, Rockland, and Queens counties in New York State. From his Queens pharmacy, Barrett fraudulently billed Medicare and Medicaid more than $5 million for prescription medications that he never dispensed to patients. Barrett used more than $4 million of his ill-gotten gains to buy drugs for his pharmacies in the Bronx and Rockland counties. Barrett also siphoned off for personal expenses more than $2.5 million from the Bronx and Rockland pharmacy accounts while falsely claiming those funds as business expenses on his personal and corporate tax returns.
The government’s case is being prosecuted by Assistant United States Attorneys William P. Campos and Karin Orenstein.
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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit http://www.StopFraud.gov.
The Defendant:
ANDREW BARRETT
Age: 55
New City, New York
E.D.N.Y. Docket No. 15-CR-103 (KAM)
____________________________________________________________________________
1 The charges announced today are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The Leader and Two Members of Folk Nation Gang Operating in the Ebbets Field Houses in Brooklyn Convicted of Racketeering and MurderRead the Press Release
Yesterday, following a three-week trial, the defendants Yasser Ashburn, Jamal Laurent, and Trevelle Merritt were found guilty by a jury in Brooklyn federal court of racketeering and racketeering conspiracy, including as racketeering acts the murders of Courtney Robinson, Brent Duncan, and Dasta James, and related crimes. The defendants were members of, and committed crimes with, a violent set of the Folk Nation street gang.
The verdicts were announced by Loretta E. Lynch, 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).
“Today’s verdict is a victory for the residents of the Ebbets Field Houses and the Brooklyn community,” stated United States Attorney Lynch. “For far too long, the defendants and their fellow gang members terrorized this community, murdering innocent young men and committing other violent crimes in their attempt to control what they mistakenly believed was their turf. These defendants will now be held to account for their crimes.” Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation and the New York City Police Department, the agencies responsible for leading the government’s investigation.
“Street gangs breed dangerous allegiances that ultimately lead to turf battles, bloodshed, and other senseless acts of aggression against rival gang affiliates and innocent members of the public. The residents of the Ebbets Field Houses should not be plagued by this type of violent criminal behavior. Everyone has a right to live in a society that is free from violence, and today we are one step closer to restoring a sense of security for the residents of this community,” stated FBI Assistant Director-in-Charge Rodriguez.
For almost a decade, the defendant Yasser Ashburn led a Folk Nation set of 20 to 25 members that operated in the Ebbets Field Houses, a New York City public housing community in the Crown Heights neighborhood of Brooklyn. From approximately 2007 until their arrests in 2011 and 2012, the defendants were responsible for numerous acts of gang-related violence, including homicides, non-fatal shootings, and robberies in and around Crown Heights and Flatbush, and elsewhere in the tri-state area.
The government’s evidence at trial established that on April 20, 2008, a fight erupted at a birthday party held in an apartment at the Ebbets Field Houses. After Courtney Robinson entered the fight to protect his nephew who was being beaten by Folk Nation gang members, Ashburn left the melee and retrieved a handgun from the building stairwell where the gang typically stored weapons. Ashburn then returned to the apartment and shot Robinson at point blank range in the back, killing him.
Two years later, on June 19, 2010, the defendant Jamal Laurent shot and killed 18-year-old Brent Duncan while Duncan sat in his car outside party in Brooklyn. Laurent subsequently told a friend that he shot Duncan because Duncan was a member of the rival Crips gang, although no evidence established that Duncan actually belonged to that gang. Two days after the murder, NYPD officers responded to a shots-fired call at Laurent’s residence on Schenectady Avenue in Brooklyn. There, the officers found that a bullet had been fired from Laurent’s bedroom through an adjoining wall into the room of another tenant in the building. The officers entered Laurent’s room and recovered a 9-millimeter Smith and Wesson handgun hidden in a slit in the box-spring of Laurent’s bed. The NYPD Firearms Analysis Section subsequently determined that it was the same gun that Laurent had used to murder Duncan.
During a three-week period in January 2011, the defendant Trevelle 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 then taken to Kings County Hospital, where he died.
When sentenced, on July 10, 2015, the defendants Yasser Ashburn and Jamal Laurent face mandatory life imprisonment, and the defendant Trevelle Merritt faces ten years to life.
The government’s case is being prosecuted by Assistant United States Attorneys Darren LaVerne, M. Kristin Mace, and Margaret Lee.
The Defendants:
YASSER ASHBURN, a/k/a “Indio,” “Swerve,” “Supa Swerve 6,” and “Yassen Ashburn”
Age: 31
Brooklyn, NY
JAMAL LAURENT, also known as “Tails”
Age: 25
Brooklyn, NY
TREVELLE MERRITT, also known as “Tiger”
Age: 22
Brooklyn, NY
E.D.N.Y. Docket No. 11-CR-303 (NGG)
Queens Man Pleads Guilty to Sexually Abusing Minor at Fort Hamilton Army BaseRead the Press Release
Yesterday at the federal courthouse in Brooklyn, Fausto Bonifaz pled guilty to coercing and enticing a minor to engage in sexual activity. The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
Bonifaz began to sexually abuse the victim in late 2009 when she was 12 years old. Over the course of the next year, he sexually assaulted her on a weekly basis at the victim’s home at the Fort Hamilton Army Base. At the plea proceeding, Bonifaz admitted that he sexually abused the victim. Bonifaz was a civilian who was admitted to the base as a visitor because he was friends with the victim’s mother. The defendant’s actions were uncovered years later when the victim reported the abuse to a counselor.
In announcing the guilty plea, United States Attorney Lynch expressed her grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.
The plea proceeding took place before Chief United States Magistrate Judge Steven M. Gold. When sentenced, Bonifaz faces a mandatory minimum term of at least ten years in prison and up to a maximum of life, as well as restitution, a fine of up to $250,000, and mandatory registration as a sex offender.
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 the 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: 39
Queens, New York
United States Air Force Veteran Charged with Attempting to Provide Material Support to ISILRead the Press Release
Yesterday, a federal grand jury in Brooklyn returned a two-count indictment charging Tairod Nathan Webster Pugh, an American citizen and veteran of the United States Air Force, with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization, and obstruction and attempted obstruction of justice. The defendant will be arraigned on the indictment tomorrow at 11 a.m. before Judge Nicholas G. Garaufis at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Loretta E. Lynch, 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, New York Field Office; and William J. Bratton, Commissioner, New York City Police Department.
“Born and raised in the United States, Pugh allegedly turned his back on his country and attempted to travel to Syria in order to join a terrorist organization,” stated U.S. Attorney Lynch. “We will continue to vigorously prosecute extremists, whether based here or abroad, to stop them before they are able to threaten the United States and its allies.” Ms. Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state, and local agencies from the region. Ms. Lynch also thanked the U.S. Department of State, U.S. Customs and Border Protection, the United States Attorney’s Office for the District of New Jersey, the Asbury Park, New Jersey Police Department, and the Neptune, New Jersey Police Department for their assistance.
“Pugh, an American citizen and former member of our military, allegedly abandoned his allegiance to the United States and sought to provide material support to ISIL,” said Assistant Attorney General Carlin. “Identifying and bringing to justice individuals who provide or attempt to provide material support to terrorists is a key priority of the National Security Division.”
“As alleged, Pugh, an American citizen, was willing to travel overseas and fight jihad alongside terrorists seeking to do us harm. United States citizens who offer support to terrorist organizations pose a grave threat to our national security and will face serious consequences for their actions. We will continue to work with our partners, both here and abroad, to prevent acts of terrorism. This investigation demonstrates the importance of law enforcement coordination and collaboration here and around the world,” stated FBI Assistant Director-in-Charge Rodriguez.”
“We thank the members of the NYPD Joint Terrorism Task Force and our Federal law enforcement partners for their work in this case and for their tireless efforts to identify threats of terrorism here and abroad. It is this type of collaboration that results in swift investigative work to stop individuals such as this from making any further contribution to terrorist organizations such as ISIL,” said Police Commissioner Bratton.
As alleged in the complaint, indictment, and other court filings, the defendant served in the Air Force as an avionics instrument system specialist and received training in the installation and maintenance of aircraft engine, navigation, and weapons systems. After leaving the Air Force, the defendant worked for a number of companies in the United States and Middle East as an avionics specialist and airplane mechanic. The defendant lived abroad for over a year before his arrest in this case.
Earlier this year, weeks after being fired from his last job as an airplane mechanic based in the Middle East, the defendant attempted to join ISIL. On January 10, 2015, the defendant traveled from Egypt to Turkey in an effort to cross the border into Syria to join ISIL and fight violent jihad. Turkish authorities denied the defendant entry, however, and sent him on a return flight to Egypt. Upon his arrival in Egypt, the defendant was carrying multiple electronic devices, including four USB thumb drives that had been stripped of their plastic casings and an iPod that had been wiped clean of data. The defendant also had a cellular telephone that contained, among other things, a photograph of a machinegun. The defendant was soon thereafter deported to the United States.
On January 14, 2015, JTTF agents obtained a search warrant for the defendant’s electronic devices, including his laptop computer. Subsequent exploitation of the laptop revealed, among other things, the following:
- recent Internet searches for “borders controlled by Islamic state”,
- recent Internet searches for “who controls kobani,” “kobani border crossing,” and “jarablus border crossing,” all references to Syrian cities under ISIL’s control near the Turkish border,
- a chart of crossing points between Turkey and Syria indicating the areas on the Syrian side of the border controlled by ISIL and other groups, and
- Internet searches for “Flames of War,” an ISIL propaganda video, as well as downloaded videos, including one showing ISIL members executing prisoners.
The defendant was arrested pursuant to a federal complaint on January 16, 2015, in Asbury Park, New Jersey, and he has been in custody ever since. After the defendant’s arrest, JTTF agents seized and later obtained warrants to search two backpacks that the defendant had when he was overseas. Agents recovered from the backpacks, among other things: two compasses, a solar-powered flashlight, a solar-powered power source, shards of broken USB thumb drives, a fatigue jacket, and camping clothes.
If convicted, the defendant faces a maximum sentence of 35 years in prison. 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 Assistant United States Attorneys Samuel P. Nitze and Tiana A. Demas, with assistance provided by Trial Attorneys Larry Schneider and Andrew Sigler of the Counterterrorism Section of the Department of Justice.
The Defendant:
TAIROD NATHAN WEBSTER PUGH
Age: 47
Neptune, New Jersey
E.D.N.Y. Docket Nos. 15-MJ-044 and 15-CR-116 (NGG)
New York City Police Department Auxiliary Officer Charged with Hacking into NYPD Computer and FBI DatabaseRead the Press Release
Earlier today, a criminal complaint was unsealed charging Yehuda Katz, a New York City Police Department (NYPD) Auxiliary Deputy Inspector assigned to the 70th Precinct in Brooklyn, with executing a scheme to hack into a restricted NYPD computer and other sensitive law enforcement databases. The defendant was arrested earlier this morning and will have his initial appearance this afternoon at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York, before United States Magistrate Judge James Orenstein.
The charges and arrest were announced by Loretta E. Lynch, 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 of the New York City Police Department.
“The defendant allegedly used his position as an auxiliary officer to hack into restricted computers and networks in order to obtain the personal information of thousands of citizens in a scheme to enrich himself through fraud,” stated United States Attorney Lynch. “The threat posed by those who abuse positions of trust to engage in insider attacks is serious, and we will continue to work closely with our law enforcement partners to vigorously prosecute such attacks.” Ms. Lynch expressed her grateful appreciation to the FBI and the NYPD’s Internal Affairs Bureau, which worked together closely to investigate the case.
“As alleged, Katz illegally accessed sensitive law enforcement computer systems for his own personal gain. This type of behavior betrays the public’s trust and cannot be tolerated. We entrust our public servants to safeguard confidential information and not prey upon victims, and we will continue to work with our partners to prosecute those who engage in this type of criminal activity,” stated FBI Assistant Director-in-Charge Rodriguez.
“This case is a clear example of the collaborative effort between federal prosecutors, the FBI, and the NYPD’s Internal Affairs Bureau to weed out individuals who allegedly violate the Department’s trust,” said Police Commissioner Bratton.
According to the complaint, the defendant surreptitiously installed multiple electronic devices in the Traffic Safety Office of the NYPD’s 70th Precinct that allowed him to remotely access restricted NYPD computers and law enforcement databases, including one maintained by the FBI, that he did not have permission to access. One of the electronic devices installed by the defendant contained a hidden camera that captured a live image of the Traffic Safety Office and was capable of live-streaming that image over the Internet. The second electronic device was connected to one of the computers in the Traffic Safety Office and allowed the computer to be accessed and controlled remotely.
As alleged in the complaint, investigators with the NYPD’s Internal Affairs Bureau and the FBI determined that the devices had been used to allow the defendant to remotely log onto an NYPD computer using usernames and passwords belonging to NYPD uniformed officers. Thereafter, the defendant ran thousands of queries in databases, including a restricted law enforcement database maintained by the FBI, for information, including the personal identifying information of victims, related to traffic accidents in the greater New York City area.
The complaint further alleges that, after the defendant accessed the NYPD computer and law enforcement databases, he contacted individuals who had been involved in traffic accidents and falsely claimed to be, among others, an attorney with the fictitious “Katz and Katz law firm” who could assist them with potential legal claims. Letters sent by the defendant to accident victims included claims such as “I can advise you with 100% confidence that I can resolve this claim in your favor,” and “My fee is 14% only when you collect. And I know that you will collect.” All told, according to the complaint, between May and August 2014, the defendant ran over 6,400 queries in sensitive law enforcement databases that he accessed remotely via the compromised NYPD computer for information related to traffic accidents.
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, the defendant faces a maximum sentence of 10 years.
The government’s case is being prosecuted by Assistant United States Attorneys Samuel P. Nitze and Peter W. Baldwin, with assistance provided by the Computer Crime and Intellectual Property Section of the Department of Justice.
The Defendant:
YEHUDA KATZ
Age: 45
Brooklyn, New York
E.D.N.Y. Docket No. 15-MJ-229
Chief Executive Officer and Orchestrator of $10 Million Advance Fee and Alaskan Gold Mine Investment Schemes Sentenced to More Than 20 Years’ ImprisonmentRead the Press Release
Earlier today, William C. Lange, the founder of Harbor Funding Group, Inc. (“HFGI”) and Black Sand Mine, Inc. (“BSMI”), was sentenced in federal court in Brooklyn to 262 months’ imprisonment. The defendant was remanded after sentencing. In September 2014, Lange pleaded guilty to two counts charging conspiracy to commit wire fraud and conspiracy to commit securities fraud and wire fraud for his leadership role in defrauding: (i) developers and their clients in areas devastated by Hurricane Katrina of more than $9 million through an advance fee scheme; and (ii) investors of almost $1 million through an Alaskan gold mine investment scheme. As part of the sentence, Lange was also sentenced to 3 years’ supervised release. The court will set restitution at a later date.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Philip R. Bartlett, Inspector in Charge, New York Division, U.S. Postal Inspection Service (USPIS), and Frank Montoya, Jr., Special Agent in Charge, Federal Bureau of Investigation, Seattle Field Office (FBI).
“William Lange was a con man who stole more than $9 million from people looking to rebuild areas of the country that had been ravaged by the destructive force of Hurricane Katrina. He enticed his victims by promising financing through the use of loan documents and escrow agreements that were not worth the price of the paper used to print them. Today’s sentence sends a strong message to con men like Lange that they will be brought to justice and held accountable for their crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the USPIS and the FBI for their hard work and dedication through the course of this six-year investigation and prosecution. Ms. Lynch also extended her appreciation to the United States Attorney’s Office for the Western District of Washington for their assistance in the case.
Lange, the Chief Executive Officer of HFGI and orchestrator of the advance fee scheme, told land developers and their clients seeking to rebuild areas devastated by Hurricane Katrina that HFGI had lenders and millions of dollars in funds available to provide financing for their real estate projects. As a condition for financing, HFGI required investors to place ten percent of the loan amount in an attorney escrow account. Contrary to Lange’s representations, HFGI did not have lenders or funds available to finance the loans. As soon as the money was placed in escrow, Lange and his co-conspirators stole it, at times through the use of a sham escrow agreement. Through this scheme, Lange and his co-conspirators stole more than $9 million from approximately 300 individuals. The $9 million was spent on, among other things, salaries, fishing and hunting trips for Lange and his son, remodeling and landscaping for Lange’s new house, three Harley-Davidson motorcycles, and other business ventures started by Lange.
After the $9 million was spent, Lange and his co-conspirators moved on to BSMI and the gold mine investment scheme. BSMI claimed that it would mine gold and other precious metals on Sitkinak Island in Alaska. Through the use of in-person presentations, cold calls, and “webinars,” Lange and his co-conspirators convinced investors to purchase BSMI stock by lying to them about the credentials of BSMI’s officers and directors, BSMI’s assets and liabilities, the intended use of investor funds, and by concealing their prior involvement in HFGI. Lange also concealed his own tarnished name and his leadership role in BSMI. Almost $1 million collected from investors in BSMI was spent on salaries and other personal expenses for Lange and his co-conspirators.
Today’s sentence was imposed by the Honorable Dora L. Irizarry, United States District Judge.
The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes, Alixandra E. Smith, and Melanie Hendry.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it 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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The Defendant:
WILLIAM C. LANGE
Age: 67
Gig Harbor, Washington
E.D.N.Y. Docket No. 10-CR-968 (DLI)
Former New York City Police Officer Sentenced to 18 Years’ ImprisonmentRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, former New York City Police Officer Jose Tejada was sentenced to 18 years in prison by United States District Judge John Gleeson. Tejada was convicted after a six-week jury trial in November 2013 of two counts of obstruction of justice and after a two-week jury trial in June 2014 of conspiring to commit Hobbs Act robberies and conspiring to distribute cocaine and heroin.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division, and William J. Bratton, Commissioner of the New York City Police Department (NYPD).
Tejada was a 17-year veteran of the NYPD who, at the time of the criminal conduct, was assigned to the 28th Precinct in Harlem. This prosecution arose out of Tejada’s commission of multiple robberies and attempted robberies in Queens, Manhattan, and the Bronx in 2006 and 2007, some of which he committed while on duty, in uniform, and using an NYPD undercover vehicle.
“The defendant violated his sworn oath as a New York City police officer to protect and serve the citizens of New York by conspiring to commit armed robberies and to distribute narcotics stolen during those robberies.” stated United States Attorney Lynch. “Today’s sentence will send a message that no one – especially one sworn to uphold the law – is immune from prosecution if he engages in criminal acts.” Ms. Lynch expressed her thanks to the New York Drug Enforcement Task Force – comprising DEA special agents, NYPD officers, and New York State Police investigators – and the NYPD’s Internal Affairs Division, Police Impersonation Investigation Unit, which jointly led the investigation.
The evidence presented at the two trials showed that Tejada participated in multiple armed robberies and attempted robberies, which netted thousands of dollars in cash and multiple kilograms of cocaine.
In one such attempted robbery on Schley Avenue in the Bronx, Tejada -- while on duty and in uniform -- used his status as a police officer to demand and gain access to a private residence occupied by a husband and wife and their teenaged daughter. Tejada and two other robbers impersonating police officers mistakenly believed that the residence was a stash house for narcotics. In fact, the residents had no involvement in drug dealing. While Tejada and the other robbers unsuccessfully searched the premises for drugs, Tejada attempted to handcuff the male victim and brandished his NYPD-issued firearm in an effort to intimidate the innocent family.
In a robbery near 125th Street and Broadway in Manhattan, Tejada, fellow NYPD officer Jorge Arbaje-Diaz, and NYPD auxiliary officer Yvan Tineo pulled over an SUV, handcuffed the driver, and stole five kilograms of cocaine hidden inside the car.1 In another robbery on Seaman Avenue in Upper Manhattan, Tejada and Tineo robbed a drug supplier of three kilograms of cocaine at gunpoint.
In an incident outside an arrivals terminal at John F. Kennedy International Airport in Queens, Tejada, Arbaje-Diaz, and Tineo staged the arrest of a corrupt airline employee who was part of a scheme to smuggle narcotics into the United States on board incoming commercial flights. The staged arrest permitted the corrupt airline employee and the members of the robbery crew to steal at least five kilograms of cocaine from the drug organization to whom the corrupt airline employee was to deliver the drugs.
Tejada also supplied members of the robbery crew with NYPD gear and equipment, including an NYPD jacket, utility belt, and police radio, to enable members of the robbery crew to impersonate police officers during the drug robberies.
The evidence at the two trials also showed that Tejada searched confidential law enforcement databases to determine whether there were outstanding warrants for his own arrest, as well as for the arrest of other members of the robbery crew. Tejada then shared that information with his confederates in an effort to assist them in evading arrest.
Tejada’s conviction is one of the most recent of dozens of convictions in a set of interlocking cases brought in the Eastern District of New York against the members of violent drug robbery crews who impersonated police officers and frequently committed robberies with real police officers. Tejada is the third NYPD officer to be convicted in these cases. In addition, two NYPD auxiliary officers have been convicted as well. In total, 52 defendants who participated in this robbery crew have been convicted.
The government’s case is being prosecuted by Assistant United States Attorneys Alexander A. Solomon, Douglas M. Pravda, and Kenji M. Price.
The Defendant:
JOSE FELIX TEJADA
Age: 47
Mahopac, New York
E.D.N.Y. Docket No. 08-CR-242 (JG)
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1 Arbaje-Diaz was previously convicted of robbery conspiracy and narcotics distribution conspiracy, and was sentenced to 20 years’ imprisonment. Tineo was previously convicted of robbery conspiracy, narcotics distribution conspiracy, and unlawful use of a firearm, and is awaiting sentencing.
Software Programmer Pleads Guilty to Hacking into Network of Long Island High-Voltage Power ManufacturerRead the Press Release
Earlier today in the federal courthouse in Central Islip, New York, Michael Meneses, a software programmer who formerly resided in Smithtown, Long Island, pleaded guilty to hacking into the computer network of a Long Island-based company that manufactures high-voltage power supplies. Today’s guilty plea proceeding took place before the Honorable Joseph F. Bianco, United States District Judge, Eastern District of New York.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office.
“The defendant used his programming knowledge to hack into the computer network of his former employer and launch a campaign of digital retaliation,” stated United States Attorney Lynch. “The threat posed by disgruntled and former employees is serious, and we will continue to work closely with our law enforcement and private sector partners to vigorously prosecute insider attacks.” Ms. Lynch expressed her grateful appreciation to the FBI, the agency that led the government’s investigation.
According to court filings and facts presented at the plea hearing, the defendant was employed at the victim company from May 2008 through January 2012 as a software programmer and system manager. In that capacity, he developed and customized software that the company used to run its business operations, including its purchasing, inventory control, production planning, production, accounting, and sales. The defendant’s responsibilities gave him high-level access to the company’s computer network.
In December 2011, the defendant, who had voiced displeasure at having been passed over for promotions, tendered his resignation from the victim company and gave two weeks’ notice. Prior to tendering his resignation, the defendant created an unauthorized computer program that harvested the user logins and passwords of fellow company employees. Following termination of his network access, the defendant used the login credentials to remotely access the network from his home and from a hotel located near his new employer. In the weeks that followed, the defendant used these credentials to launch a campaign to inflict damage on his former employer by gaining unauthorized access to its network and sabotaging its business. For example:
The defendant deleted a line of code in a software program that the victim company used to calculate work order costs, leading the company to incorrectly calculate these costs.
The defendant remotely accessed the victim company’s network, read an email sent by his former supervisor to one of his former colleagues about a candidate for the defendant’s former position, created the email address “[email protected],” and sent the candidate a message that stated, “Don't accept any position from [the victim company].”
The defendant gained unauthorized access to the victim company’s network and modified a database so it would appear to be March 2012 rather than February 2012. As a result, the company was unable to process routine transactions.
The defendant remotely accessed the victim company’s network and manually purged a purchase order table, which prevented the company from converting purchase requisitions to purchase orders.
The victim company incurred significant costs in investigating and remediating the damage caused by the defendant’s unauthorized access to its computer network.
When sentenced on July 7, 2015, the defendant faces up to 10 years in prison, as well as restitution and a fine.
The government’s case is being prosecuted by Assistant United States Attorneys Douglas M. Pravda and Charles N. Rose.
The Defendant:
MICHAEL MENESES
Age: 43
E.D.N.Y. Docket No. 13-CR-321 (JFB)
Additional Ms-13 Gang Member Indicted for Murder of 19-Year-Old Man in Long IslandRead the Press Release
Earlier today, a superseding indictment was unsealed charging the defendant, Milton Contreras, along with previously-charged co-defendants, Byron Lopez and Oscar Welman Espinoza-Merino, with conspiracy to commit murder in-aid-of racketeering, murder in-aid-of racketeering, obstruction-of-justice murder, and firearms offenses1. If convicted, the defendant will face mandatory life imprisonment. Contreras, who was arrested this morning in Kansas City, Kansas, will be presented for arraignment later today at the United States Courthouse in Kansas City, Kansas.
The charges and arrest were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Anthony Scandiffio, Deputy Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, New York Field Office (HSI); Delano A. Reid, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Explosives and Firearms, New York Field Division (ATF); and William J. Bratton, Commissioner, New York City Police Department.
“With this arrest, the Office brings another member of the MS-13 gang to justice for a brutal murder in one of our communities last year. The prosecution of these three defendants is a part of the Office’s ongoing commitment to dismantle MS-13, which for years has fomented violence and lawlessness in neighborhoods throughout Queens and Long Island.” Ms. Lynch thanked the Suffolk County Police Department for its assistance with the investigation; the United States Marshals Service Regional Fugitive Task Force for its assistance in locating Contreras; and the United States Attorney’s Office for the District of Kansas for its assistance with the arraignment.
As alleged in court documents, Contreras is a member of the Brentwood, Long Island chapter of the violent street gang La Mara Salvatrucha, also known as “MS-13.” On February 25, 2014, Contreras, Espinoza-Merino, and Lopez directed the victim, fellow gang member Sidney Valverde, to travel to Long Island under the false pretense that they needed him to assist in gang business there. In fact, the co-conspirators planned to kill Valverde because they believed that he was providing information about the gang’s activities to federal law enforcement. After Valverde traveled to Long Island, the co-conspirators shot him in the back of the head and left his body on Miller Place Beach in Suffolk County, where it was discovered by a beachcomber approximately two weeks later.
The indictment of Contreras is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international street gang comprised primarily of immigrants from El Salvador and Honduras. With numerous chapters, or “cliques,” throughout the United States, MS-13 has a significant presence in Queens and is the largest street gang in Long Island. Since 2003, more than 250 MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York. More than 150 of those MS-13 members have been convicted on federal racketeering charges. Since 2010 alone, this Office has obtained indictments charging MS-13 members with carrying out more than 20 murders in the Eastern District of New York and has convicted more than 35 MS-13 members in connection with those murders.
The government’s case is being prosecuted by Assistant United States Attorneys Darren A. LaVerne and Alixandra E. Smith.
The Defendant:
MILTON CONTRERAS, also known as “Diabolico”
Age: 19
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1 The charges contained in the indictments are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Former Corporate Executives Sentenced for Securities Fraud and Tax Offenses in Multi-Million Dollar SchemeRead the Press Release
Gilbert Fiorentino, 54, and Carl Fiorentino, 57, both of Coral Gables, Florida, were sentenced yesterday in Federal Court in the Southern District of Florida, in connection with their participation in an illegal scheme to obtain more than $11 million dollars in kickbacks and other benefits, and to conceal this illicit income from the IRS, while employed as senior executives at Systemax, Inc. (“Systemax”) and its subsidiary, TigerDirect, Inc. (“TigerDirect”). Carl Fiorentino was sentenced to 80 months’ imprisonment. Gilbert Fiorentino was sentenced to 60 months’ imprisonment. A hearing to determine the remaining amount of restitution owed to Systemax by the defendants, who are brothers, has been scheduled for April 3, 2015.
On December 2, 2014, Carl Fiorentino pleaded guilty to one count of conspiracy to commit mail and wire fraud, and one count of tax evasion, and Gilbert Fiorentino pleaded guilty to one count of conspiracy to commit securities fraud and to impair and impede the lawful functions of the Internal Revenue Service.
The sentences were announced by Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Loretta E. Lynch, 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; and Kelly R. Jackson, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office.
U.S. Attorney Wifredo A. Ferrer stated, “Gilbert and Carl Fiorentino hid their ill-gotten financial gains from the IRS and the shareholders of Systemax. They violated their positions of trust by accepting illegal kickbacks, driving up the price of the consumer electronics and passing the price increase to the consumer. Yesterday’s sentences demonstrate our commitment to root out corporate fraud and enforce the laws that protect investors in financial markets.”
“For years, the brothers Fiorentino financed their luxury lifestyles with illicit kickbacks, all the while concealing their fraudulent gains from the shareholders of Systemax and the IRS. Such illegal self-enrichment, at the expense of a publicly-traded corporation and the IRS, cannot be tolerated,” stated United States Attorney Lynch. “Yesterday’s sentences should serve as a stern reminder that those who commit corporate fraud will be held accountable.”
Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, stated, “The Fiorentinos financed their extravagant lifestyle with $11 million in kickbacks. These kickbacks paid for, among other things, a waterfront Florida mansion. But the excess ends today. This sentence should put anyone who plans to shakedown shareholders on notice.”
IRS-CI Special Agent-in-Charge Kelly R. Jackson stated, “These high-ranking corporate officials undermined the process of fair and open competition and broke the law when they obtained unlawful kickbacks. They then took steps to hide these kickbacks from Systemax and the IRS. Yesterday’s sentencing sends a clear message to other corporate officials that this type of criminal behavior will be punished. IRS Criminal Investigation will continue to work with its law enforcement partners to investigate corporate officers who misuse their positions of trust and violate the tax laws.”
Systemax had its principal place of business in Port Washington, New York, and sold personal computers and other consumer electronics through its websites, retail stores, and direct mail catalogs including TigerDirect, CompUSA, and Circuit City. In fiscal year 2010, Systemax had annual sales revenue of approximately $3.6 billion according to its public filings. Gilbert Fiorentino was a director of Systemax and was the Chief Executive Officer of its Technology Product Group, including its subsidiary TigerDirect. Carl Fiorentino was the former president of TigerDirect. Both defendants worked at TigerDirect’s Miami offices before they were terminated on April 18, 2011.
As senior executives of Systemax and TigerDirect, Gilbert Fiorentino and Carl Fiorentino had responsibility for, among other things, purchasing and sourcing hundreds of millions of dollars’ worth of computer and electronics items for Systemax and its various operations. Gilbert Fiorentino and Carl Fiorentino conspired with each other and third parties to obtain unlawful kickbacks in exchange for steering business to companies that paid the kickbacks. For example, Carl Fiorentino received millions of dollars in payments from one TigerDirect supplier, including more than $3 million to pay for his waterfront residence in Gables Estates and millions of dollars’ worth of luxury furniture, art, and high-end electronics. Gilbert Fiorentino received hundreds of thousands of dollars in payments. These included deliveries of gold coins, cash handed over in the parking lot of the Miami offices of TigerDirect, and furniture and other goods and services delivered to his Gables Estates waterfront home.
In connection with this scheme, Carl and Gilbert Fiorentino filed false United States Individual Income Tax Returns and also regularly signed conflict of interest questionnaires in which they falsely and fraudulently concealed from Systemax their receipt of cash and other remuneration from vendors who did business with the company. In doing so, they mislead Systemax’s auditors and prevented them from performing accurate reviews and audits of the company’s books, records, and accounts. Additionally, when Carl Fiorentino learned that he was under investigation by the government, he obstructed justice by instructing witnesses to lie to federal authorities to conceal his criminal conduct.
This case was originally investigated by the U.S. Attorney’s Office for the Eastern District of New York with the assistance of the FBI New York Field Office and the IRS-CI Miami Field Office. Carl Fiorentino was previously charged in the Eastern District of New York on June 18, 2013, with conspiracy to commit mail and wire fraud, multiple counts of mail and wire fraud, and money laundering. The case involving Carl Fiorentino was transferred to the Southern District of Florida by court order on January 6, 2014.
The sentence was imposed by United States District Judge Jose E. Martinez.
The matter is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy of the Southern District of Florida and Whitman G.S. Knapp of the Eastern District of New York.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement and 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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Al-Qaeda Operative Convicted for Role in International Terrorism Plot Targeting the United States and EuropeRead the Press Release
Earlier today, following a two-week trial, Abid Naseer, a Pakistani national who joined al-Qaeda and plotted to commit a terrorist attack in the United Kingdom, was found guilty by a jury in Brooklyn federal court 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 evidence at trial established that the defendant and his accomplices came within days of executing a plot to conduct an attack on a busy shopping mall located in the city center of Manchester, United Kingdom in April 2009. 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, and the fourth to be convicted, 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.
The verdicts were announced by Loretta E. Lynch, 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 to send a message to the United States and its allies,” stated United States Attorney Lynch. “Today’s verdict sends an even more powerful message in response: the United States will stop at nothing in order to hold those who plot to kill and maim on behalf of terrorist groups accountable for their grievous crimes.” Ms. Lynch extended her 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. She also sent her 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, the British Security Service, 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 reflects 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.”
FBI Assistant Director-in-Charge Rodriguez stated, “Naseer knowingly and willingly conspired with others to carry out a destructive plot on behalf of al-Qaeda. The wheels were set in motion, and he and his accomplices were prepared to execute their plan. Those who pledge allegiance to terrorists and terrorist organizations throughout the world will be brought to justice, and every effort will be made to protect Americans and our interests throughout the world. The FBI will continue to work with our local and international partners to mitigate the threat of global terrorism.”
“The Abid Naseer case demonstrates that terrorists who target the U.S. and its allies will be brought to justice, no matter where they are. This investigation involved leads from the streets of Manchester, England, to New York City, to Usama Bin Laden’s hidden lair in Pakistan. I want to thank the U.S. Attorney for the Eastern District and the members of the N.Y. FBI-NYPD Joint Terrorism Task Force for the work that led to this successful prosecution,” said Police Commissioner Bratton.
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.
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 demonstrated 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.
On January 30, 2012, three defendants were also convicted in a Norwegian court of plotting a similar terrorist attack in Denmark as part of the same overall multinational al-Qaeda conspiracy. During that trial, the United States made available to the Norwegian prosecutors three witnesses who also pleaded guilty to terrorism offenses in the Eastern District of New York: Zazi, Ahmedzay, and Bryant Neal Vinas. Zazi and Ahmedzay again testified in the trial against Naseer.
The defendant faces up to life imprisonment when he is sentenced by the Honorable Raymond J. Dearie.
The government’s case is being prosecuted by Assistant United States Attorneys Zainab Ahmad, Celia A. Cohen, and Michael P. Canty, with assistance provided by the Justice Department’s National Security Division and Office of International Affairs.
The Defendant:
ABID NASEER
Age: 28
E.D.N.Y. Docket No. 10-CR-019 (RJD)
Brooklyn Man Sentenced to 36 Years for Attempting to Drug and Sexually Abuse ChildrenRead the Press Release
On Friday, February 27, 2015, in federal court in Brooklyn, Bebars Baslan was sentenced to 36 years’ imprisonment for his attempt to drug and sexually abuse three young children: a 7-year-old, an 18-month-old, and 3-month-old infant, and for his possession of over 76,000 images and videos of child pornography. Baslan was convicted on July 24, 2014, following a two-week trial of traveling with the intent to engage in sexual acts with a child under twelve years of age, conspiracy to produce child pornography, attempted production of child pornography, and attempted coercion and enticement of a child to engage in illegal sexual conduct.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
“Today, the defendant received just punishment for his depraved actions – a lengthy prison sentence that will protect other children from him and hopefully deter others from engaging in such crimes,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation and New York City Police Department, who investigated this case.
The evidence at trial showed that in January 2013, Baslan attempted to involve a friend in a plan to sexually abuse children. That friend went to law enforcement and agreed to co-operate under the direction of the FBI. Over the course of the next two months, the friend recorded the defendant and his girlfriend discussing plans to take sexually explicit photographs and videos of children as young as 3 months old. The defendant planned to exploit his girlfriend’s history of working with children to convince parents to allow her to babysit their children so that he could drug and sexually abuse the children.
The defendant’s plan ended in the government’s sting operation. As part of the sting, the friend offered the defendant and his girlfriend the opportunity to sexually abuse the friend’s two young children and 7-year-old niece at a Jersey City hotel. On March 19, 2013, the defendant gave the friend Benadryl and instructed him to give his niece an excessive dose in order to “knock her out” so that the defendant could sexually abuse her. Later that night, Baslan and his girlfriend traveled to the Jersey City hotel with an array of cameras to photograph the planned sexual abuse. They were arrested by FBI agents as they were about to enter the room they believed contained the drugged children.
The defendant was also sentenced by lifetime supervised release to follow his sentence of imprisonment. He will also be required to register as a sex offender.
The government’s case is being prosecuted by Assistant United States Attorneys Tyler Smith, Tiana Demas, and Robert Polemeni.
The Defendant:
Name: BEBARS BASLAN
Age: 37
Brooklyn, New York
E.D.N.Y. Docket No. 13-220 (RJD)
U.S. Attorney Files Civil Action to Forfeit Stolen PicassoRead the Press Release
A civil complaint was filed today in federal court in Brooklyn to forfeit a century-old cubist painting by Pablo Picasso known as “La Coiffeuse” (in English, “The Hairdresser”). La Coiffeuse, which is owned by the French government, was reported stolen from a museum storeroom in Paris, France in 2001. When it was shipped to the United States from Belgium on December 17, 2014, the painting was falsely described as an “art craft” and “art craft toy” valued at 30 Euros. Upon its arrival in the United States, the shipment was detained by U.S. Customs and Border Protection (CBP), and the painting was subsequently seized by Homeland Security Investigations (HSI). The complaint alleges that the painting is stolen property that was smuggled into the United States contrary to law.
The complaint was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Anthony Scandiffio, Deputy Special Agent in Charge, U.S. Immigration and Customs Enforcement, HSI, New York.
“A lost treasure has been found,” stated United States Attorney Lynch. “Because of the blatant smuggling in this case, this painting is now subject to forfeiture to the United States. Forfeiture of the painting will extract it from the grasp of the black market in stolen art so that it can be returned to its rightful owner.” Ms. Lynch thanked the French government and the Centre Georges Pompidou for their assistance.
“The recovery of the La Coiffeuse sends a strong message to thieves that the market to sell stolen antiquities in the United States is drying up,” said HSI Deputy Special Agent in Charge Scandiffio. “HSI is committed to using its resources to successfully investigate and, more importantly, repatriate smuggled antiquities and other protected cultural property to their rightful owners.”
La Coiffeuse, painted by Picasso in 1911, is an oil-on-canvas painting that measures 33 by 46 centimeters. It was bequeathed to the National Museums of France by its former director, Georges Salles in 1966, and assigned to the collections of the Musée National d’Art Moderne in Paris, France. It was last publicly exhibited in Munich, Germany, where it was on loan to the Kunsthalle der Hypo-Kulturstiftung. Upon its return to Paris, La Coiffeuse was placed in the storerooms of the Centre George Pompidou. The painting was believed to be in storage until a loan request was received in 2001, and museum staff discovered that the painting was missing. In November 2001, the painting was reported as stolen to the French police. The painting’s location remained unknown until it arrived in the United States in December 2014.
The shipping label attached to the package containing La Coiffeuse described its contents as “Art Craft / 30 E / Joyeux Noel,” indicating that the package contained a low-value handicraft shipped as a holiday present. The commercial invoice shipped with the painting similarly described the contents as an “Art Craft / Toy” valued at 30 Euros, or approximately $37 U.S. dollars. The current market value of La Coiffeuse is estimated to be in the millions of dollars.
The government’s case is being handled by Assistant United States Attorney Karin Orenstein.
E.D.N.Y. Docket No. 15-CV- 1002
Three Brooklyn Residents Charged with Attempt and Conspiracy to Provide Material Support to ISILRead the Press Release
Earlier today, a criminal complaint was unsealed in federal court in Brooklyn charging Abdurasul Hasanovich Juraboev, Akhror Saidakhmetov, and Abror Habibov with attempt and conspiracy to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization. The initial appearances of Juraboev and Saidakhmetov are scheduled for later today before United States Magistrate Judge Lois Bloom at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York. Habibov’s initial appearance will be held later today at the U.S. Courthouse, 300 North Hogan Street, Jacksonville, Florida.
The charges were announced by Loretta E. Lynch, 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).
As alleged in the complaint, Juraboev first came to the attention of law enforcement in August 2014 after he made a posting on an Uzbek-language website that propagates ISIL’s ideology. The investigation subsequently revealed that Juraboev and Saidakhmetov devised a plan to travel to Turkey and then to Syria for the purpose of waging jihad on behalf of ISIL. Saidakhmetov, a resident of Brooklyn and a citizen of Kazakhstan, was arrested early this morning at John F. Kennedy International Airport, where he was attempting to board a flight to Istanbul, Turkey. Juraboev, a resident of Brooklyn and a citizen of Uzbekistan, had previously purchased a plane ticket to travel from New York to Istanbul and was scheduled to leave the United States next month. Habibov, a resident of Brooklyn and a citizen of Uzbekistan, helped fund Saidakhmetov’s efforts to join ISIL.
As alleged in the complaint, Juraboev was also prepared to engage in an act of terrorism in the United States if ordered to do so by ISIL, and Saidakhmetov intended to commit such an act if unable to travel abroad to join ISIL. In the August 2014 posting on the website that propagates ISIL’s ideology, Juraboev offered to kill the President of the United States if ordered to do so by ISIL. More recently, Saidakhmetov expressed his intent to buy a machine gun and shoot police officers and FBI agents if thwarted in his plan to join ISIL in Syria.
“The flow of foreign fighters to Syria represents an evolving threat to our country and to our allies,” stated United States Attorney Lynch. “As alleged in the complaint, two of the defendants in this case sought to travel to Syria to join ISIL but were also prepared to wage violent jihad here in the United States. A third defendant allegedly provided financial assistance and encouragement. We will vigorously prosecute those who attempt to travel to Syria to wage violent jihad on behalf of ISIL and those who support them. Anyone who threatens our citizens and our allies, here or abroad, will face the full force of American justice.” Ms. Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force, which comprises a large number of federal, state, and local agencies from the region.
“The charges against Juraboev, Saidakhmetov and Habibov reflect our commitment to finding those who wish to provide material support to ISIL, as well as those committed to fighting on behalf of ISIL, either at home or abroad, and preventing them from doing so,” said Assistant Attorney General Carlin. “The National Security Division will continue to work to stem the flow of foreign fighters and financial resources to terrorist organizations operating in Iraq and Syria. I would like to commend all those whose tireless efforts helped bring these charges.”
“As alleged, the defendants looked to join the Islamic State of Iraq and the Levant by flying to Turkey in a vain attempt to evade detection. And one of the defendants was prepared to commit acts of terror here—in America—if he could not travel, to include killing FBI agents. The defendants violated the true tenants of their faith in pursuit of their radical, violent agenda. We rely on help from the community, the public, and religious leaders to be mindful of those who could be radicalized. We cannot do this alone,” said FBI Assistant Director-in-Charge Rodriguez.
“ISIL calls on its followers to come fight for the terrorist organization in Syria,” said Police Commissioner Bratton, “and in messages to followers outside Syria, ISIL has called on them to attack police, intelligence officers, or the military in their home countries including the United States. By pledging allegiance to ISIL, these defendants allegedly conspired to fight for a designated foreign terrorist organization, either in Syria or even New York.” Commissioner Bratton commended the work of the detectives and agents of the JTTF and the guidance of the U.S. Attorney for the Eastern District of New York throughout the investigation.
If convicted, each defendant faces a maximum sentence of 15 years in prison. The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorneys Alexander Solomon, Douglas M. Pravda, and Amanda Hector, with assistance provided by Trial Attorney Danya Atiyeh of the Justice Department’s Counterterrorism Section and the United States Attorney’s Office for the Middle District of Florida.
The Defendants:
ABDURASUL HASANOVICH JURABOEV
Age: 24
Nationality: Uzbeki
AKHROR SAIDAKHMETOV
Age: 19
Nationality: Kazakh
ABROR HABIBOV
Age: 30
Nationality: Uzbeki
E.D.N.Y. Docket No. 15-M-0172
Medical Drug Re-Packager and Company’s Senior Executives Indicted on Fraud Charges and Criminal Violations of the Food, Drug and Cosmetic ActRead the Press Release
Earlier today, a 37-count indictment was unsealed in Brooklyn federal court charging Med Prep Consulting, Inc. (“Med Prep”), a Tinton Falls, New Jersey, medical drug re-packager and processer, together with its president and owner Gerald Tighe and pharmacist-in- charge Stephen Kalinoski, with wire fraud and violations of the Federal Food, Drug and Cosmetic Act (“FDCA”) for introducing adulterated and misbranded drugs into interstate commerce with the intent to defraud and mislead the U.S. Food and Drug Administration (“FDA”) and Med Prep’s customers, who consisted of hospitals and other healthcare providers.1
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Margaret A. Hamburg, M.D., Commissioner of the FDA.
According to the indictment, Med Prep processed numerous drugs, including oncology and dialysis drugs, pain medications, anesthesia drugs, and operating room drugs, in purportedly sterile conditions. In an effort to gain market share, Med Prep repeatedly misrepresented to its healthcare provider customers that it adhered to, and in some areas exceeded, industry standards and laws applicable to sterile drug preparation. In fact, the defendants produced drugs in a facility that fell far short of basic industry standards of cleanliness, creating a risk to the health of already ill patients, and lied to healthcare providers about their failures to comply with basic sterility practices.
“As detailed in the indictment, Med Prep and its two most senior executives engaged in a disturbing pattern of dangerous practices in order to save money and line their pockets,” said U.S. Attorney Lynch. “Instead of working to extend and enhance human lives, the defendants illegally pursued corporate profits while putting at risk the health and safety of vulnerable patients suffering from disease. This indictment should send a strong message to those who would seek to put their bottom line before the health and safety of the public – those we entrust with preparing the medications that save lives must clean up their acts or face prosecution.” In announcing the indictment today, Ms. Lynch gratefully acknowledged the assistance and cooperation of the FDA’s Office of Criminal Investigations; the United States Department of Health and Human Services, Office of the Inspector General, Office of Investigations; the United States Office of Personnel Management, Office of the Inspector General; the Department of Justice, Civil Division, Consumer Protection Branch and Commercial Litigation Branch; the FDA’s Office of the Chief Counsel; the Office of the Attorney General of New Jersey; and the New Jersey Board of Pharmacy.
“The production of unsafe and contaminated drug products poses a serious threat to the health of the American public and cannot be tolerated,” said FDA Commissioner Hamburg. “We continue to use all our authorities and to work with the Department of Justice and the states to ensure such practices are quickly identified and stopped. Americans deserve nothing less.”
According to the indictment, Med Prep halted its production of drug products in the summer of 2013 following an incident in which it had distributed intravenous drugs containing visible mold to a Connecticut hospital. Soon after mold was discovered, the FDA inspected Med Prep’s facility and documented numerous incidents of microbiological contamination in the company’s finished drug products. Notably, the investigators found that the same species of mold present in drugs sent to the Connecticut hospital was also present in Med Prep’s warehouse, where an unsterilized cart was regularly wheeled into a purportedly sterile “cleanroom” in which drugs were prepared by Med Prep employees. FDA investigators also found that Med Prep shipped drug products to healthcare providers in some instances that were mislabeled with incorrect drug strengths and in other instances were labeled as the wrong drugs altogether.
Prior to 2013, the FDA had conducted several inspections of Med Prep’s facilities and repeatedly warned the defendants that their practices and the conditions in their facility were unacceptable. Tighe and Kalinoski both allegedly misrepresented to FDA investigators that Med Prep’s complied with industry standards designed to prevent harm to patients that could result from non-sterility, yet they continued to handle sterile drugs in conditions far below any acceptable industry standards. As early as May 2007, Kalinoski learned that a Med Prep employee responsible for repacking and processing drugs in Med Prep’s “cleanroom” failed to treat an eczema skin condition for approximately five to six months while working in that room. The defendants never disclosed the employee’s skin condition to the FDA, nor did they take steps to prevent the delivery to, or issue a recall from, healthcare providers of any of the drug products with which the employee had come into contact.
If convicted, the individual defendants face maximum prison sentences of 20 years on each wire fraud charge, five years on the charge of conspiracy to violate the FDCA, and three years on each charge of violations of the FDCA.
The government’s case is being prosecuted by Assistant U.S. Attorneys Justin D. Lerer, Ameet B. Kabrawala, and Erin E. Argo.
1 The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The Defendants:
MED PREP CONSULTING, INC.
Tinton Falls, New Jersey
GERALD TIGHE
Age: 57
West Long Branch, New Jersey
STEPHEN KALINOSKI
Age: 51
Middletown, New Jersey
Chief Financial Officer Sentenced to 9 Years’ Imprisonment for Defrauding Investors of More Than $10 MillionIn Two Separate Fraud SchemesRead the Press Release
Earlier today, Frank E. Perkins, the Chief Financial Officer (“CFO”) of Harbor Funding Group, Inc. (“HFGI”) and Black Sand Mine, Inc. (“BSMI”), was sentenced in federal court in Brooklyn to 9 years’ imprisonment. In September 2014, Perkins pleaded guilty to two counts charging conspiracy to commit wire fraud and conspiracy to commit securities fraud and wire fraud for his role in defrauding: (i) developers and their clients in areas devastated by Hurricane Katrina of more than $9 million through an advance fee scheme; and (ii) investors of almost $1 million through an Alaskan gold mine investment scheme. As part of the sentence, Perkins was also sentenced to 3 years’ supervised release and ordered to pay a total of $10,707,894.59 in restitution to the victims of the two schemes. The sentencing for lead defendant William C. Lange is scheduled for March 12, 2015.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Philip R. Bartlett, Inspector in Charge, New York Division, U.S. Postal Inspection Service (USPIS), and Frank Montoya, Jr., Special Agent in Charge, Federal Bureau of Investigation, Seattle Field Office (FBI).
“Perkins and his co-defendants preyed upon investors seeking to rebuild areas devastated by Hurricane Katrina and stole their victims’ deposit money through an intricate web of lies and deceit. After they spent the more than $9 million they stole from their victims, Perkins and his co-defendants embarked on a gold mine investment scheme that was built and sold on lies. Today’s sentence sends a strong message that those who exploit tragedies to line their own pockets will be held accountable for their crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the USPIS and the FBI for their hard work and dedication through the course of this six-year investigation and prosecution. Ms. Lynch also extended her appreciation to the United States Attorney’s Office for the Western District of Washington for their assistance in the case.
Perkins and his co-conspirators told land developers and their clients that HFGI had lenders and millions of dollars in funds available to provide financing for their real estate projects. As a condition for financing, HFGI required investors to place ten percent of the loan amount in an attorney escrow account. Contrary to Perkins’ representations, HFGI did not have lenders or funds available to finance the loans. As soon as the money was placed in escrow, Perkins and his co-conspirators stole it, at times through the use of a sham escrow agreement. Through this scheme, Perkins and his co-conspirators stole more than $9 million from approximately 300 individuals. As CFO, Perkins authorized the $9 million to be spent on, among other things, salaries, fishing and hunting trips for co-defendants William and Kristofor Lange, remodeling and landscaping for co-defendant William Lange’s new house, and other business ventures started by Perkins and his co-conspirators.
After the $9 million was spent, Perkins and his co-conspirators moved on to BSMI and the gold mine investment scheme. BSMI claimed that it would mine gold and other precious metals on Sitkinak Island in Alaska. Through the use of in-person presentations, cold calls, and “webinars,” Perkins and his co-conspirators convinced investors to purchase BSMI stock by lying to them about the credentials of BSMI’s officers and directors, BSMI’s assets and liabilities, the intended use of investor funds, and by concealing their prior involvement in HFGI. Perkins also concealed his prior involvement in HFGI. Almost $1 million collected from investors in BSMI was spent on salaries and other personal expenses for Perkins and his co-conspirators.
The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes, Alixandra E. Smith, and Melanie Hendry.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement and 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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The Defendant:
FRANK E. PERKINS
Age: 55
La Grange, Kentucky
E.D.N.Y. Docket No. 10-CR-968 (DLI)
Vice President Biden and Attorney General Holder Honor Fallen Senior Special Agent John Francis Capano and Former Chief John Curly with Medal of ValorRead the Press Release
At a ceremony earlier this week in Washington, Vice President Joe Biden and Attorney General Eric Holder awarded the Public Safety Officer Medal of Valor to several individuals, including fallen Senior Special Agent John Francis Capano, Bureau of Alcohol, Tobacco, Firearms and Explosives, and former Chief John Curly, Bellmore Fire Department, who exhibited exceptional courage in saving and protecting others and whose heroic actions were above and beyond the call of duty.
Agent Capano received the award for his heroic actions Dec. 31, 2011, during an armed robbery attempt at Charlie’s Family Pharmacy in Seaford, N.Y., by a convicted felon who had recently been released from prison. Agent Capano, who was off duty at the time, confronted the suspect, chased him outside, and engaged in a physical struggle for his gun. An off-duty New York City police officer and a retired Nassau County police officer also responded to the scene. Special Agent Capano was struck by a bullet to his chest and was later pronounced dead at an area hospital. The suspect was also shot and died at the scene.
On Nov. 12, 2012, the Bellmore Fire Department was alerted to a house fire with a victim trapped inside. Former Chief Curley (who remains a member of the Bellmore Fire Department) and his son, in a fire department pick-up truck nearby, heard the call and were first on the scene. A man in the driveway said his elderly mother was trapped in a second-floor bedroom. With no fire vehicles on the scene, former Chief Curley used a file cabinet topped by an old broken wooden ladder to climb to the bedroom window, breaking it with his bare hands, which exposed him to heavy black smoke billowing from the room. Because the first responders had not yet arrived, he was without the protection of a hose line, breathing apparatus, or protective gear. Nevertheless, former Chief Curley entered the room knowing that he had only a few seconds before it would be totally engulfed in fire. Once inside, he found the woman lying unconscious inside the room. Former Chief Curley moved the woman to the window, lifted her out onto the wooden ladder, carried her, and passed her down to his waiting son, who began to give her medical attention. During the rescue, former Chief Curley suffered lacerations to his hands and face, taking actions at extreme risks to his personal safety, which directly resulted in saving the life of the trapped woman.
United States Attorney Lynch stated, “Agent Capano and former Chief Curly are shining examples of the selflessness and dedication of all our public safety officers, who risk all every day to protect us. They stand shoulder to shoulder with the other heroes honored in this ceremony. We honor them and we thank them.”
Attorney General Holder added, “These are all exceptional individuals. Every one of them deserves our deepest gratitude and boundless respect. Yet even among the outstanding field of public servants who perform these critical responsibilities, day in and day out – in communities across the country – there are some who stand out. And, with these prestigious medals, we recognize these exceptional few for extraordinary valor – above and beyond the call of duty.”
The Public Safety Officer Medal of Valor, authorized by the Public Safety Officer Medal of Valor Act of 2001, is the highest national award for valor presented to a public safety officer. The medal is awarded to public safety officers who have exhibited exceptional courage, regardless of personal safety, in the attempt to save or protect human life. A total of 95 medals have been presented since the first recipients were honored in 2003.
The Medal of Valor is awarded by the President of the United States, or his designee, to public safety officers cited by the Attorney General. Public safety officers are nominated by the chiefs or directors of their employing agencies and recommended by the Medal of Valor Review Board. The Attorney General has designated the U.S. Department of Justice’s Office of Justice Programs (OJP) to serve as the federal point of contact for the Public Safety Medal of Valor.
More information about the award, the Medal of Valor Review Board members, and the nomination process is available at www.ojp.usdoj.gov/medalofvalor.
Member of Violent Home Invasion Robbery Crew Sentenced to 22 Years for Conspiring to Commit Drug Robberies and Conspiring to Distribute Cocaine and HeroinRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, Henry Fiorentino was sentenced to 22 years in prison by United States District Judge John Gleeson. Fiorentino was convicted after a two-week jury trial in November 2014 of conspiring to commit Hobbs Act robberies and conspiring to distribute cocaine and heroin.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
Fiorentino was a leading member of a violent robbery crew responsible for more than 100 robberies of narcotics traffickers in the New York metropolitan area and elsewhere that netted more than 250 kilograms of cocaine and $1 million in drug proceeds. Beginning in approximately January 2001, crew members posed as law enforcement officers, staged fake arrests of the traffickers, and then forcibly seized the traffickers’ contraband. Members of the robbery crew restrained victims with handcuffs, rope, or duct tape and often brandished firearms and physically assaulted the victims. The Crew members then sold the stolen drugs and divided the proceeds among themselves.
Fiorentino participated in at least 19 separate robberies and attempted robberies. During these crimes, he personally entered the residences and, on numerous occasions, he or fellow crew members brandished firearms and abducted or restrained victims. During all of the robberies and attempted robberies, Fiorentino posed as a police officer. The robberies and attempted robberies in which Fiorentino directly participated involved at least 230 kilograms of cocaine and approximately $66,000 in drug proceeds.
Ms. Lynch extended her grateful appreciation to the Drug Enforcement Administration, New York, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, and the New York City Police Department.
The government’s case is being prosecuted by Assistant United States Attorneys Alexander Solomon and Sylvia Shweder.
The Defendant:
HENRY FIORENTINO
Age: 46
Bronx, NY
E.D.N.Y. Docket No. 08-CR-242 (S-8)(JG)
Additional Ms-13 Gang Member Indicted for Murder of 19-Year-Old Man in Long IslandRead the Press Release
Yesterday, a superseding indictment was unsealed charging the defendant, Oscar Wellman Espinoza-Merino, along with a previously-charged co-defendant, Byron Lopez, with conspiracy to commit murder in-aid-of racketeering, murder in-aid-of racketeering, obstruction-of-justice murder, and firearms offenses.1 If convicted, the defendant will face mandatory life imprisonment. Espinoza-Merino, who was arrested yesterday morning, was presented for arraignment yesterday afternoon at the United States Courthouse in Brooklyn, New York.
The charges and arrest were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Anthony Scandiffio, Deputy Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, New York Field Office (HSI); Delano A. Reid, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Explosives and Firearms, New York Field Division (ATF); and William J. Bratton, Commissioner, New York City Police Department.
“This Office has a long history of prosecuting and convicting members of the MS-13 gang, which for years has pursued its particularly brutal brand of violence and lawlessness in neighborhoods throughout Queens and Long Island,” stated U.S. Attorney Lynch. “This prosecution, which brings another alleged member of the gang to justice for a murder that disrupted one of our communities earlier this year, is part of our ongoing mission to dismantle MS-13 wherever and whenever it rears its head in this District.” Ms. Lynch thanked the Suffolk County Police Department for its assistance with the investigation and the United States Marshals Service Regional Fugitive Task Force for its assistance in locating Espinoza-Merino.
“The indictment of two alleged members of the violent MS-13 street gang related to the brutal murder of a fellow gang member is another step in dismantling this transnational gang that has wreaked havoc on our neighborhoods,” said HSI Deputy Special Agent-in-Charge Scandiffio. “HSI will continue to aggressively work with our local, state, and federal law enforcement partners in New York to target MS-13 and other transnational gangs that threaten the safety of our communities.”
ATF Special Agent-in-Charge Reid stated, “As part of our Frontline strategy, the ATF has placed one of its highest priorities in the fight to combat violent crime. As alleged, this gang investigation involved depraved individuals who had no regard for human life. We are happy that yesterday’s arrest can now bring some consolation to the victim’s family, and we look forward to working with our law enforcement partners to swiftly locate and arrest any others who participated in this criminal enterprise.”
“Violent gangs such as MS-13 show complete disdain for life by carrying out heinous acts, such as the murder charged in this indictment, only to instill fear in our communities,” said Police Commissioner Bratton. “The NYPD along with our federal law enforcement partners will continue to aggressively pursue these gang members and bring them to justice.”
As alleged in court documents, Espinoza-Merino is a member of the Brentwood, Long Island chapter of the violent street gang La Mara Salvatrucha, also known as “MS-13.” On February 25, 2014, Espinoza-Merino, Lopez, and other members of the gang directed the victim, fellow gang member Sidney Valverde, to travel to Long Island under the false pretense that they needed him to assist in gang business there. In fact, the co-conspirators planned to kill Valverde because they believed that he was providing information about the gang’s activities to federal law enforcement. After Valverde traveled to Long Island, the conspirators shot him in the back of the head and left his body on Miller Place Beach in Suffolk County, where it was discovered by a beachcomber approximately two weeks later.
The indictment of Espinoza-Merino is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international street gang comprised primarily of immigrants from El Salvador and Honduras. With numerous chapters, or “cliques,” through the United States, MS-13 has a significant presence in Queens and is the largest street gang in Long Island. Since 2003, more than 250 MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York. More than 150 of those MS-13 members have been convicted on federal racketeering charges. Since 2010 alone, this Office has obtained indictments charging MS-13 members with carrying out more than 20 murders in the Eastern District of New York and has convicted more than 35 MS-13 members in connection with those murders.
The government’s case is being prosecuted by Assistant United States Attorneys Darren A. LaVerne and Alixandra E. Smith.
_______________________
1 The charges contained in the indictments are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The Defendant:
OSCAR WELLMAN ESPINOZA-MERINO, also known as “Speedy” and “Petey”
Age: 32
Lawyer Arrested in Multi-Million Dollar World Trade Center Reconstruction Insurance Fraud ScamRead the Press Release
Darius X. Johnson has been arrested on a criminal complaint alleging wire fraud and money laundering in connection with his sale of phony insurance bonds for construction of the World Trade Center PATH transportation hub (“WTC Hub”). His initial appearance is scheduled later today at the federal courthouse in Atlanta, Georgia. The government will seek his removal to the Eastern District of New York for prosecution.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Anthony Scandiffio, Deputy Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI); and Michael Nestor, Inspector General, Port Authority of New York and New Jersey.
According to the complaint, between September 2010 and June 2013, the defendant took part in a scheme to steal money by selling fake insurance bonds to contractors working on large construction projects in New York and elsewhere. Specifically, Johnson, an attorney, sold fraudulent bonds provided by a company called Diamond Indemnity Trust, to a construction subcontractor which had a $6.2 million subcontract to supply and install glasswork at the WTC Hub. To prove that the bonds were backed by assets that could be used if the subcontractor defaulted on the project, Johnson provided, among other things, a phony letter of credit falsely indicating more than $6 million was held in Johnson’s attorney/client trust account in Brooklyn, New York. In 2011, after the subcontractor paid its premium for the fraudulent bonds, Johnson used multiple transactions and bank accounts to wire a substantial portion of the premium payment to himself and a co-conspirator. In 2012, when the subcontractor filed for bankruptcy and defaulted on the WTC Hub project, Johnson and Diamond Indemnity Trust failed to honor the bonds. As a result, the WTC Hub general contractor was forced to pay an additional amount of approximately $2 million to complete the job.
“As alleged, Johnson used deception to personally benefit from the reconstruction of the World Trade Center site while adding significant cost to the project and jeopardizing its timely completion,” stated United States Attorney Lynch. “This Office will investigate and prosecute to the fullest extent those who use important infrastructure projects as vehicles for fraud, deceit, and personal gain.”
“Surety bonds on capital construction projects serve the critical purpose of insuring that the project gets completed in a timely manner, within projected costs, and that the subcontractors and suppliers are paid properly. Fraudulent surety bonds create a dual problem for the construction project and the owner. The premiums are paid out for the surety bonds, and no resulting benefit or protection is obtained. The defendant allegedly victimized a World Trade Center project that was being rebuilt after the terrorist attacks to line his pockets. The Port Authority of NY & NJ, Office of Inspector General will continue to work with our law enforcement partners to prevent and detect all types of construction fraud,” stated Port Authority Inspector General Nestor.
“The World Trade Center reconstruction site is sacred ground, so using its rebuilding to steal money by selling false insurance bonds as alleged in the complaint is a particularly disturbing crime,” said HSI Deputy Special Agent-in-Charge Scandiffio. “HSI is committed to leveraging its unique statutory authorities and investigative expertise to bring down individuals involved in these types of criminal activities.”
The charges contained in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, the defendant faces a maximum sentence of 30 years’ imprisonment on the wire fraud count and 10 years on the money laundering count. Additionally, if convicted, Johnson may be fined up to $1 million for the wire fraud count and $250,000, or up to twice the amount of criminally derived property involved in the transaction, for the money laundering count.
The government’s case is being prosecuted by Assistant United States Attorneys Whitman G.S. Knapp and Brian D. Morris, and Special Assistant United States Attorney Jonathan P. Lax.
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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit http://www.StopFraud.gov.
The Defendant:
DARIUS X. JOHNSON
Age: 48
Atlanta, Georgia
E.D.N.Y. Docket No. 15-M-120
Investment Managers Arrested and Charged in $11 Million Investment and $8 Million Bank Fraud SchemesRead the Press Release
John R. Lakian and Diane W. Lamm have been charged in a five-count indictment alleging conspiracy to commit securities, wire and bank fraud, and two counts of substantive securities fraud in connection with schemes to defraud investors and banks of millions of dollars. The defendants will be arraigned later today at the federal courthouse in Brooklyn, New York.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York and Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
According to the indictment, between February 2009 and July 2013, the defendants were involved in two schemes to steal investors’ money. In the first, the defendants obtained more than $11 million by promising investors that their money would be used to purchase, consolidate and sell registered investment advisory businesses. Instead of investing
the money as promised, the defendants diverted a significant amount of it into their own pockets, to restaurant businesses they controlled, and to pay Lakian’s home mortgage. In the second scheme, the defendants perpetrated fraud through their management of the liquidation of a North Carolina-based investment fund with more than 100 investors. Instead of returning the fund’s proceeds to investors, Lakian and Lamm diverted investors’ money to themselves and to restaurant businesses they controlled. In addition, the indictment alleges a third scheme in which, between 2009 and 2012, Lakian and Lamm submitted fake tax returns, bank statements, and other false documents to banks in Brooklyn, Long Island, and elsewhere in applications to obtain more than $8 million in loans. These forged documents overstated Lakian’s income and assets by millions of dollars.
“As alleged, Lakian and Lamm preyed upon more than 100 investors, in multiple schemes, stealing their hard-earned money to use for their own purposes. They similarly disregarded the interests of lending institutions by submitting forged documents to banks in an attempt to fraudulently secure more than $8 million in loans” stated United States Attorney Lynch. “This Office will investigate and prosecute to the fullest extent those who victimize investors and commit financial fraud.”
“As charged, instead of carefully investing their clients’ money, one defendant paid off his mortgage, and in another instance the defendants diverted cash to a restaurant venture. They lied, cheated, and stole. This type of behavior is unacceptable. It’s also illegal. And it should be a stark reminder to anyone who is driven by greed. These insidious investment schemes will be identified and disrupted,” stated FBI Assistant Director-in-Charge Rodriguez.
The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants face a maximum sentence of 30 years’ imprisonment on the bank fraud count, 20 years on each of the securities fraud counts, and 5 years on the securities and wire fraud conspiracy counts. Additionally, if convicted, Lakian and Lamm may be fined up to $5 million for the securities fraud counts and $1 million for the bank fraud count.
The government’s case is being prosecuted by Assistant United States Attorney Whitman G.S. Knapp and Brian D. Morris.
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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit http://www.StopFraud.gov.
The Defendants:
JOHN R. LAKIAN
Age: 72
Highlands, North Carolina
DIANE W. LAMM
Age: 54
Highlands, North Carolina
E.D.N.Y. Docket No. 15-CR-0043 (FB)
Brooklyn Man Pleads Guilty to Murder to Obstruct Bank Fraud InvestigationRead the Press Release
Yesterday, Naquan Reyes pled guilty at the federal courthouse in Brooklyn, New York, to murdering Nicole Thompson to prevent her from communicating with federal law enforcement officials who were investigating a bank fraud conspiracy. According to court filings and facts presented during the plea proceeding, Reyes paid another individual to murder Ms. Thompson to prevent her from cooperating with law enforcement and undermining a lucrative and long-standing scheme to defraud banks in the New York area. During yesterday’s proceeding, Reyes also pled guilty to bank fraud conspiracy.
The plea was announced by Loretta E. Lynch, 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); and Robert J. Sica, Special Agent-in-Charge, United States Secret Service, New York Field Office.
“The murder of Nicole Thompson was the result of a truly shocking combination of greed and violence,” stated United States Attorney Lynch. “We hope her family can take some measure of solace in knowing that the individual who is responsible for their daughter’s murder has been brought to justice. This Office and our law enforcement partners will do anything in our power to hold accountable those who use violence to silence witnesses or otherwise obstruct justice.” Ms. Lynch expressed her grateful appreciation to the Prince George’s County, Maryland Police Department, New York City Police Department, and Bronx County District Attorney’s Office for their significant cooperation and assistance in the investigation.
As alleged in the detention memorandum and during a detention hearing, between 2008 and his arrest in 2014, Reyes perpetrated a scheme to defraud various banks. As part of the scheme, Reyes secured employment at more than half a dozen banks and, relying in part on knowledge he acquired from his employment, Reyes created counterfeit checks and recruited others to deposit those checks into their and others’ bank accounts. Reyes and his coconspirators then attempted to withdraw the funds from the bank accounts before the banks learned the checks were counterfeit. Among those he recruited to make the deposits was Nicole Thompson. On July 16, 2010, Thompson was arrested by the New York City Police Department in connection with her role in the scheme, and she immediately decided to cooperate with law enforcement. When Reyes learned of Thompson’s plans to cooperate and thereby jeopardize his ongoing fraud scheme, Reyes paid another individual to murder her and then traveled from New York to Maryland to dispose of her body. On July 24, 2010, Thompson’s body, duct taped and wrapped in garbage bags, was found in a dumpster in Landover, Maryland. Thompson was 24 years old at the time of her murder.
Yesterday’s plea took place before United States District Judge Sandra L. Townes. When sentenced, Reyes faces up to life in prison, as well as forfeiture and a fine of up to $1,000,000.
The government’s case is being prosecuted by Assistant United States Attorneys Elizabeth Kramer, Elizabeth Geddes, Samuel Nitze, and Karin Orenstein.
The Defendant:
NAQUAN REYES
Age: 29
Brooklyn, NY
E.D.N.Y. Docket No. 14-CR-0227
Army National Guard Official Pleads Guilty for Accepting $30,000 BribeRead the Press Release
WASHINGTON – An Army National Guard official pleaded guilty today for accepting a $30,000 bribe in exchange for steering a $3.6 million contract to a retired sergeant major of the Minnesota Army National Guard and his consulting company. Today’s guilty plea is the eighth in connection with an investigation into corruption within the National Guard Bureau related to the awarding of millions of dollars of Army National Guard marketing, retention and recruitment contracts.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge Andrew McCabe of the FBI’s Washington Field Office, Special Agent in Charge Robert E. Craig Jr. of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office and Director Frank Robey of the U.S. Army Criminal Investigative Command’s Major Procurement Fraud Unit (Army-CID) made the announcement.
Jason Rappoccio, 39, of Hampton, South Carolina, pleaded guilty before U.S. District Judge Liam O’Grady of the Eastern District of Virginia to one count of conspiracy to commit bribery and one count of bribery. Rappoccio was indicted on Sept. 25, 2014, and will be sentenced on May 22, 2015.
According to plea documents, Rappoccio, who was an active duty sergeant first class in the Army National Guard, admitted to accepting a $30,000 bribe from Timothy Bebus, a retired sergeant major of the Minnesota Army National Guard and owner of Mil-Team Consulting and Solutions LLC (Mil-Team). In exchange, Rappoccio agreed to recommend the award of a $3.6 million contract to Mil-Team, and to steer the contract to a Small Business Administration (SBA) 8(a) certified company, chosen by Bebus, that would sub-contract the work to Mil-Team.
Rappoccio admitted that he received the $30,000 bribe in installments to conceal the payment. Bebus gave $6,000 in cash directly to Rappoccio at a meeting in Arlington, Virginia. The remaining $24,000 was paid in a cashier’s check in the name of Rappoccio’s wife.
Rappoccio also admitted that days after receiving the $30,000 bribe, he solicited and received airline tickets for two of his family members from Bebus. Three months later, Rappoccio also received NFL football tickets worth $1,328 from another co-conspirator. At the time that he accepted these additional benefits, Rappoccio agreed to steer an additional $4 million contract to Bebus and his company.
The case is being investigated by the FBI’s Washington Field Office, with assistance from DCIS’s Mid-Atlantic Field Office and Army-CID’s Expeditionary Fraud Resident Agency’s Major Procurement Fraud Unit. The case is being prosecuted by Trial Attorney Alison L. Anderson of the Criminal Division’s Fraud Section, Assistant U.S. Attorney Jonathan Fahey of the Eastern District of Virginia and Assistant U.S. Attorneys Marisa Seifan and Martin Coffey of the Eastern District of New York.
Alleged Terrorist, Charged with Murder of Five American Soldiers, Extradited to United StatesRead the Press Release
Tomorrow, January 24, 2015, Faruq Khalil Muhammed ‘Isa, also known as “Faruq Khalil Muhammad ‘Isa,” “Sayfildin Tahir Sharif,” and “Tahir Sharif Sayfildin,” will have his initial appearance at the federal courthouse in Brooklyn, New York, on charges of conspiring to kill Americans abroad, murdering Americans abroad, and providing material support to a terrorist conspiracy to kill Americans abroad. ‘Isa was extradited to the United States from Canada.
The extradition was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; John P. Carlin, Assistant Attorney General for National Security; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI); and William J. Bratton, Commissioner, New York City Police Department (NYPD).
According to court documents, the defendant is charged in connection with his support for a multinational terrorist network that conducted multiple suicide bombings in Iraq. According to the complaint, filed on January 14, 2011 in the Eastern District of New York, the defendant assisted in orchestrating an attack on the United States Military’s Forward Operating Base Marez (“FOB Marez”) in Mosul, Iraq, on April 10, 2009. A truck laden with explosives drove to the gate of FOB Marez and exchanged fire with Iraqi police officers guarding the base and then with an American convoy exiting the base. The truck detonated alongside the last vehicle in the U.S. convoy, leaving a 60-foot crater in the ground. Five American soldiers were killed in the blast. They are: Staff Sergeant Gary L. Woods, 24, of Lebanon Junction, Kentucky; Sergeant First Class Bryan E. Hall, 32, of Elk Grove, California; Sergeant Edward W. Forrest Jr., 25, of St. Louis, Missouri; Corporal Jason G. Pautsch, 20, of Davenport, Iowa; and Army Private First Class Bryce E. Gaultier, 22, from Cyprus, California.
“Today’s extradition demonstrates to those who orchestrate violence against our citizens and our soldiers that there is no corner of the globe from which they can hide from the long reach of the law,” stated United States Attorney Lynch. “We will continue to use every available means to bring to justice those who are responsible for the deaths of American servicemen and women who paid the ultimate price in their defense of this nation.” Ms. Lynch extended her grateful appreciation to the Canadian government for its assistance and cooperation in the extradition.
“Faruq Khalil Muhammed ‘Isa is alleged to have helped orchestrate an attack that killed five U.S. soldiers at the Forward Operating Base Marez in Mosul, Iraq in 2009,” said Assistant Attorney General Carlin. “The families of these five Americans and all who have lost loved-ones to acts of terrorism should know that we will never cease seeking to hold terrorists accountable for their acts. I want to thank the many agents, analysts, and prosecutors who are responsible for this matter.”
“As alleged, Faruq Khalil Muhammad ‘Isa was involved in the most callous act: a suicide bombing murdering U.S. soldiers in Iraq,” said FBI Assistant Director in Charge Venizelos. “Our memory is long, and our reach is longer. Today we hope to bring some measure of justice to the families of those five servicemen who sacrificed their lives in defense of this nation.”
“I want to commend the United States Attorney Loretta Lynch and her team for working closely with the NYPD and the FBI to extradite this individual who is allegedly responsible for the death of soldiers sworn to protect and serve. We hope today’s extradition will bring some closure to the families,” stated NYPD Commissioner Bratton.
If convicted, the defendant faces a maximum sentence of life imprisonment. 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 Zainab Ahmad, Alexander Solomon, and Peter Baldwin, with assistance provided by the Justice Department’s Counterterrorism Section and Office of International Affairs.
The Defendant:
FARUQ KHALIL MUHAMMAD ‘ISA
Age: 36
Nationality: Canadian
E.D.N.Y. Docket No. 11-CR-819
Brooklyn Man Pleads Guilty to Enticing A Minor to Engage in Sexual ConductRead the Press Release
Earlier today at the federal courthouse in Brooklyn, Andrew Goodman pled guilty to soliciting and enticing a minor victim to engage in sexual conduct. The victim was between 12 and 15 years of age during the time of the abuse.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
Goodman began his sexual abuse in 2006 when the victim was 12 years old. Over the next several years, Goodman sexually assaulted the victim multiple times a week. At the plea proceeding, Goodman admitted that he communicated with the victim by telephone regarding his intention to engage in sexual activity. Previously, Goodman had been convicted in New York State court of 48 counts of sexually abusing the same minor, as well as second victim, and for those crimes served two years in prison.
“The defendant Goodman systematically and deliberately stole the victim’s childhood through repeated sexual assaults over the course of several years. He will now be held to account for this violation,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation, the agency that led the government’s investigation, and thanked the Kings County District Attorney’s Office for its assistance in this case.
Today’s plea proceeding took place before United States District Judge Margo K. Brodie. When sentenced, Goodman faces a mandatory term of at least ten years in prison, as well as forfeiture, restitution, a fine of up to $250,000, and mandatory registration as a sex offender. Sentencing has been scheduled for April 24, 2015. Goodman has been in federal custody since his arrest on the federal charges in July 2012.
The government’s case is being prosecuted by Assistant United States Attorneys Tyler J. Smith and Ameet Kabrawala.
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 the 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:
ANDREW GOODMAN
Age: 30
Brooklyn, New York
E.D.N.Y. Docket No. 12-CR-614 (MKB)
Long Island Legislator Pleads Guilty to Stealing More Than $2 Million from Client of His Former Law FirmRead the Press Release
David Denenberg, a practicing New York attorney and Nassau County Legislator, pleaded guilty today to defrauding a former client of over $2 million. The plea was entered before U.S. District Judge Joanna Seybert at the federal courthouse in Central Islip.
Today’s guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
According to court filings and statements made in court at the time he entered the plea, between November 2006 and June 2014, Denenberg was a partner in the Garden City law firm Davidoff Hutcher & Citron LLP (“DHC”), formerly Davidoff Malito & Hutcher LLP (“DMH”). During that time period, Denenberg sent fraudulent bills to a client for legal services that he never rendered. The client, a corporation based in Port Washington, New York, relied on Denenberg’s false billings and paid DHC/DHM $2,265,004.46. During the same time period, Denenberg also sent fraudulent expense bills to the client for purported expenses incurred in furtherance of his legal representation, which expenses were never incurred, totaling $126,071.43. In all, the client paid DHC/DHM $2,342,607.64 for legal service never rendered and expenses never incurred.
“Denenberg used his license to practice law as a license to steal, billing for phantom work to steal real money from a client who trusted him. Today’s conviction should serve as a reminder that no one is above the law. The defendant has admitted his criminal conduct and will now face the consequences,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation for its work on the investigation.
FBI Assistant Director-in-Charge Venizelos stated, “Lawyers are expected to act in the best interest of their clients while upholding the tenants of the legal system. Denenberg did just the opposite by taking advantage of a trusting client and benefitting from illegitimate profits. Those who practice law are not above the law, and Denenberg will be held to face the consequences of his actions.”
At sentencing, Denenberg faces up to 20 years in prison and a fine of more than $250,000. Denenberg has already made full restitution to the former client.
The government’s case is being prosecuted by Assistant United States Attorney Lara Treinis Gatz.
The Defendant:
DAVID DENENBERG
Age: 51
Merrick, New York
E.D.N.Y. Docket No. 14-CR-594 (JS)
Two Yemeni Nationals Charged with Conspiring to Murder United States Nationals Abroad and Providing Material Support to Al-QaedaRead the Press Release
A complaint and arrest warrant were unsealed today in federal court in the Eastern District of New York charging Saddiq Al-Abbadi, also known as “Sufiyan al-Yemeni” and “Sufwan,” and Ali Alvi, also known as “Issa al-Yemeni,” with conspiracy to murder United States nationals abroad and providing material support to al-Qaeda. Alvi’s initial appearance was held before United States Magistrate Judge Steven I. Locke on January 18, 2015, and Al-Abbadi’s initial appearance is scheduled today before United States Magistrate Judge Lois Bloom. Al-Abbadi and Alvi were arrested in Saudi Arabia pursuant to the pending warrants in this case and lawfully expelled to the United States.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; John P. Carlin, Assistant Attorney General for National Security; and Andrew G. McCabe, Assistant Director in Charge, Federal Bureau of Investigation, Washington Field Office.
As alleged in the complaint, Al-Abbadi and Alvi are both members of al-Qaeda who engaged in attacks against United States military forces stationed in Afghanistan. Between 2003 and 2007, Al-Abbadi also fought against United States military forces in Iraq. In approximately March 2008, Al-Abbadi and Alvi traveled to the Federally Administered Tribal Areas of Pakistan for the purpose of training with and fighting for al-Qaeda. During that time period, both defendants helped an American citizen gain entry into al-Qaeda so that he could fight against U.S. troops in Afghanistan and U.S. citizens in the homeland.
In approximately late spring and summer 2008, Al-Abbadi and Alvi traveled from Pakistan to Afghanistan to conduct attacks against United States military personnel stationed there. Al-Abbadi led a battle against U.S. forces in Paktya Province in May 2008 during which one U.S. Army Ranger was killed and several others were seriously wounded.
“There is no escape from the reach of our law for violent terrorists, especially if they target our military,” stated United States Attorney Lynch. “Al-Abbadi and Alvi may have operated in the mountains of Afghanistan, but now they face justice in a courtroom in Brooklyn.” Ms. Lynch extended her grateful appreciation to the FBI.
“With the charges announced today, these defendants will face justice for conspiring to kill Americans overseas and providing material support to al-Qaeda,” said Assistant Attorney General Carlin. “Seeking to identify, thwart, and hold accountable those who target U.S. citizens and interests around the world will remain a top priority of the National Security Division. I want to thank the many agents, analysts, and prosecutors who are responsible for this matter.”
“The arrest and prosecution of these two individuals, who allegedly directly supported the mission of a designated terrorist organization, is a major step in the international cooperation to combat terrorism,” said FBI Assistant Director in Charge McCabe. “On a daily basis, the FBI is faced with a complex threat environment that is always evolving and changing. Through international partnerships, the FBI will continue to pursue those who provide support to terrorist groups and ensure that they are brought to justice.”
If convicted, each defendant faces a maximum sentence of life imprisonment. The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorneys Zainab Ahmad, Michael P. Canty and Douglas M. Pravda, with assistance provided by Trial attorney Josh Parecki of the Justice Department’s Counterterrorism Section and by the Office of International Affairs.
The Defendants:
SADDIQ AL-ABBADI
Age: 36
Nationality: Yemeni
ALI ALVI
Age: 30
Nationality: Yemeni
E.D.N.Y. Docket No. 09-MJ-372
Three Mexican Brothers Plead Guilty to Sex Trafficking and Sex Trafficking ConspiracyRead the Press Release
Earlier this week and today, in federal court in Brooklyn, New York, three brothers pled guilty to sex trafficking charges. 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. At the time of sentencing, defendants Jorge Estrada-Tepal and Ricardo Estrada-Tepal, who pled guilty to sex trafficking conspiracy and sex trafficking involving force, fraud and coercion, face a mandatory term of imprisonment of 15 years, with a maximum possible sentence of up to life in prison. Defendant Victor Leonel Estrada-Tepal, who pled guilty to sex trafficking conspiracy and sex trafficking of a minor, faces a mandatory term of imprisonment of ten years, with a maximum possible sentence of up to life in prison. The defendants were arrested in January 2014. These guilty pleas are the latest in the Office’s comprehensive anti-trafficking program, which has to date indicted over 55 defendants in sex trafficking cases and rescued over 115 victims, including over 25 minors.
The guilty pleas were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York.
“The defendants are classic predators: they targeted women and a young girl in Mexico, and pushed them into a life of sexual slavery in Mexico and the United States. As our trafficking cases have repeatedly shown, we will not relent against those who choose to subject victims to modern-day slavery in an effort to line their own pockets,” stated United States Attorney Lynch. Ms. Lynch thanked the Mexican authorities and other entities that assisted with the investigation and successful prosecution of this case.
“These men preyed on innocent women, luring them into the United States under false pretenses and then cruelly enslaving them to satisfy their own greed in a ruthless prostitution scheme,” said HSI Special Agent-in-Charge Hayes. “Prosecuting human traffickers and rescuing human trafficking victims is a priority of this office and the Department of Homeland Security. These guilty pleas highlight that commitment and serve as a warning to other predators that law enforcement at all levels is determined to dismantle these heartless human trafficking organizations.”
As set forth in court documents, and discussed during the guilty plea proceedings, the sex trafficking involved at least four victims, and the defendants used various methods to force these women to work in prostitution, ranging from threats of violence, assault and psychological coercion. One minor victim, identified at the guilty plea proceedings as Jane Doe 4, was under the age of 18 when she was trafficked to the United States. During the guilty plea held today, 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. Likewise, yesterday, Ricardo Estrada-Tepal admitted that he and his brothers brought women from Mexico to the United States, where they were forced to work in prostitution, and that he and his brothers did not tell the women the “real truth about why they were coming to the United States.” On Tuesday, defendant Victor Leonel Estrada-Tepal admitted that he agreed with his brothers to force women to work in prostitution, including his wife, Jane Doe 4, who was 17 years old at the time, who he brought from Mexico to Queens to have her engage in prostitution.
Since 2009, the Departments of Justice and Homeland Security have collaborated with Mexican law enforcement counterparts in the Procuraduría General de la República (PGR), the Secretaría de Seguridad Pública (SSP), Procuraduría Social de Atención a las Víctimas de Delitos (PROVICTIMA), and non-governmental partners in the United States and Mexico in a Bilateral Human Trafficking Enforcement Initiative. Through this Initiative, the United States and Mexico have worked together to bring high-impact prosecutions under both U.S. and Mexican law to more effectively dismantle human trafficking networks operating across the U.S.-Mexico border, prosecute human traffickers, rescue human trafficking victims, and reunite victims with their families. Other significant bilateral cases have been prosecuted in Atlanta, Georgia, and Miami, Florida.
The government’s case was prosecuted by Assistant United States Attorneys Taryn A. Merkl and Melody Wells.
The Defendants:
RICARDO ESTRADA-TEPAL
Age: 33
Queens, NY
VICTOR LEONEL ESTRADA-TEPAL
Age: 29
Queens, NY
JORGE ESTRADA-TEPAL
Age: 37
Queens, NY
E.D.N.Y. Docket No. CR-14-105 (MKB)
Leaders of Violent Gang Sentenced to Life in Racketeering and Murder CaseRead the Press Release
Earlier today, Antoine Mayes was sentenced before Judge Allyne Ross in U.S. District Court in Brooklyn, New York, to 110 years in prison, and on December 23, 2014, Anthony Mayes, Jr. was sentenced before Judge Ross to life plus 30 years in prison, for charges of racketeering, murder (against Anthony Mayes, Jr.), attempted murder (against Antoine Mayes), murder conspiracy, and firearm- and narcotics-related offenses. The defendants were convicted after trial in May 2014.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“The Mayes brothers led a violent and lucrative drug organization that instilled fear and destroyed lives in the East New York community for more than a decade. They expanded their operation to the State of North Carolina and came to dominate the drug trade in a community there as well. Violence was the organization’s calling card – led by the defendants, the organization killed or sought to kill those who threatened their income or their reputation on the street,” stated United States Attorney Lynch. “The sentences imposed appropriately reflect the seriousness of the crimes of conviction, which include murder and attempted murder, the defendants’ long histories of crime, and their complete disregard for human life.” Ms. Lynch extended her grateful appreciation to the FBI’s New York Field Office, the New York City Police Department, and the North Carolina State Bureau of Investigation for their outstanding work in this case.
Between 1998 and 2010, the Mayes brothers led a group of violent drug dealers that sold crack cocaine and was based on Ashford Street in East New York. The criminal enterprise used violence and the threat of violence to maintain its source of income. Specifically, on June 18, 1999, Anthony Mayes, Jr. shot and killed Dave Martin at a party in East New York, in retaliation for Martin having previously stabbed Mayes. This, and other acts of violence, were well known in the community and allowed the enterprise to dominate the local drug trade. After the Martin murder, Anthony Mayes, Jr. moved to Williamston, North Carolina, where, using the alias Gus Rascoe Jr., he quickly came to dominate the drug trade in that area, selling crack cocaine that he transported from New York and elsewhere. On January 27, 2003, Anthony Mayes, Jr. murdered Eric Rayshawn Keel, and on February 29, 2004, he murdered Keith Cofield, both in North Carolina. Keel was murdered for purportedly stealing drugs belonging to the Mayes brothers’ criminal enterprise. Cofield was murdered because he owed a drug-related debt to the enterprise. His corpse was dumped into a river.
Antoine Mayes was convicted of three separate counts of attempted murder based on the enterprise’s drug and turf-related disputes in Brooklyn.
The government’s case was prosecuted by Assistant United States Attorneys Berit W. Berger, Richard M. Tucker, and Alicyn Cooley.
The Defendants:
ANTHONY MAYES, JR.
Age: 34
Brooklyn, New York
ANTOINE MAYES
Age: 31
Brooklyn, New York
E.D.N.Y. Docket No. 12 CR 385 (ARR)
Suffolk County Conservative Party Chairman Edward Walsh Charged with Scheme to Defraud the Suffolk County Sheriff’s OfficeRead the Press Release
Suffolk County Conservative Party Chairman Edward M. Walsh, Jr. was arrested today on charges that he engaged in a scheme to steal wages for regular and overtime hours in connection with his employment with the Suffolk County Sheriff’s Office (“SCSO”). He was arraigned today before United States Magistrate Judge A. Kathleen Tomlinson at the federal courthouse in Central Islip.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
As alleged in the criminal complaint unsealed today, from January 2011 to April 2014, Walsh, a SCSO Correction Officer III Investigator, falsely represented to the SCSO that he had worked certain regular and overtime hours when, in fact, he did not. Contrary to his representations, Walsh was, among other things, playing golf, gambling at Foxwoods Casino, or performing work on behalf of the Suffolk County Conservative Party. In reliance on Walsh’s false representations, the SCSO paid Walsh approximately $80,000 in wages for regular and overtime hours he did not work. To conceal his scheme, Walsh allegedly lied to FBI agents, claiming that he worked flex time or was on the telephone regarding his work at the SCSO even while at the golf course.
“Instead of upholding the law, Edward Walsh abused his position and authority and robbed from taxpayers to fund his personal and political activities,” stated United States Attorney Lynch. “We and our partners in the FBI will continue to root out government fraud wherever we find it.”
FBI Assistant Director-in-Charge Venizelos stated, “Mr. Walsh shook down county government for hours he never worked. In reality, he was often on the ninth hole practicing his putting, among other things. Mr. Walsh today finds himself in serious trouble with the law for allegedly defrauding Suffolk County.”
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 Catherine M. Mirabile and Raymond A. Tierney.
The Defendant:
EDWARD M. WALSH, JR.
Age: 48
East Islip, New York
E.D.N.Y. Docket No. 15-MJ-0002 (AKT)
Used Motor Vehicle Dealers Indicted for Odometer Tampering and Money LaunderingRead the Press Release
A Queens, New York, man and his Israeli brother were charged in indictments unsealed today in federal courts in Philadelphia and Brooklyn, New York, with offenses related to a long-running odometer tampering and money laundering scheme, the Justice Department and the U.S. Attorney’s Office for the Eastern District of New York announced.
Chaim Gali aka Mike Gali and John Triculy, 40, of Queens Village, New York, and Shmuel Gali aka Sam Gali, 42, of Israel, are charged in a 15-count indictment in the Eastern District of Pennsylvania (EDPA) with conspiracy, securities fraud and false odometer statements. The Galis are also charged in a related two-count indictment in the Eastern District of New York (EDNY) with mail and wire fraud conspiracy, and money laundering conspiracy. If convicted of the charges in the EDPA indictment, the defendants face a statutory maximum of five years in prison on the conspiracy charge; a statutory maximum of 10 years in prison for each securities fraud charge and up to three years in prison for each false odometer statement charge. If convicted of the charges in the EDNY indictment, they face a statutory maximum of 20 years in prison for each of the charges.
“Mileage is one of the most important factors in a consumer’s decision to purchase a used car,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “Misrepresenting the mileage on a used car fraudulently induces a consumer to pay more money for less value, and it hides necessary information that will affect how a consumer maintains and repairs that vehicle.”
“As alleged, the defendants created an elaborate odometer tampering and money laundering scheme to con would-be buyers into purchasing used cars at inflated prices,” said U.S. Attorney Loretta E. Lynch for the EDNY. “They then used the proceeds of their crimes to continue their fraud against additional unsuspecting consumers. This case demonstrates our commitment to protect consumers from fraud.”
The indictments allege that the Galis devised a scheme to defraud buyers of used motor vehicles by misrepresenting the mileage of approximately 690 vehicles they sold beginning as early as 2006 and through at least 2011. The indictments charge that the Galis used fictitious dealer names to purchase high-mileage, used motor vehicles from a national vehicle leasing company. The defendants are charged with conspiring to alter the odometers in these vehicles, which they purchased in Florida, Maryland, Missouri and elsewhere, to reflect false lower mileages. The indictments allege that the Galis then fraudulently altered the motor vehicle titles to reflect the false lower mileages and as a result, the commonwealth of Pennsylvania issued motor vehicle titles reflecting the altered mileages.
The defendants subsequently sold the vehicles at wholesale automobile auctions in Pennsylvania and New Jersey using various dealerships, including Chase Auto Center and Conestoga City Autos. At the auctions, the Galis provided the buyers with Pennsylvania vehicle titles bearing the false lower mileages. The EDPA indictment alleges that in some instances, the title indicated mileage more than 100,000 miles less than the true mileage of the vehicle and as a result, the defendants received inflated sales prices for the vehicles they sold.
The defendants deposited the proceeds of the sales of the rolled-back vehicles into various bank accounts, mainly in Brooklyn. Among other things, the defendants then used this money to purchase additional used vehicles and continue their fraud scheme.
Acting Assistant Attorney General Branda and U.S. Attorney Lynch commended the investigative efforts of the Internal Revenue Service-Criminal Investigation and the U.S. Department of Transportation National Highway Traffic Safety Administration’s (NHTSA) Office of Odometer Fraud Investigation.
Chaim Gali was arrested today in New York, and his arraignment is scheduled for 2:00 pm this afternoon before U.S. Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn. Shmuel Gali is in Israel and the government will seek his extradition.
The case is being prosecuted by Trial Attorney Kathryn Drenning and Senior Litigation Counsel Linda I. Marks of the Civil Division’s Consumer Protection Branch, and Assistant U.S. Attorney Catherine M. Mirabile of the Eastern District of New York.
NHTSA has established a special hotline to handle odometer fraud complaints. Individuals who have information relating to odometer tampering should call (800) 424-9393 or (202) 366-4761.
An update on the status of the case is available on the Consumer Protection Branch’s website. More information on odometer fraud is available on NHTSA’s website, and tips on detecting and avoiding odometer fraud are also available on the NHTSA website.
The charges in the indictments are merely allegations, and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
United States Congressman Michael Grimm Pleads Guilty to Causing the Filing of a False and Fraudulent Tax ReturnRead the Press Release
Earlier today, United States Congressman Michael Grimm pleaded guilty at the federal courthouse in Brooklyn, New York, to aiding and assisting the preparation of a false tax return. Since 2011, Grimm has served as a member of the United States House of Representatives representing New York’s 11th Congressional District, which includes the borough of Staten Island and parts of the borough of Brooklyn, in New York City. When sentenced, Grimm faces a prison term of up to three years. In connection with his guilty plea, Grimm also agreed to pay restitution to the Internal Revenue Service (IRS), the New York State Department of Taxation and Finance, and the New York State Insurance Fund (NYSIF). Today’s guilty plea proceeding took place before the Honorable Pamela K. Chen, United States District Judge, Eastern District of New York.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office, and Richard Weber, Chief, IRS- Criminal Investigation.
“With today’s guilty plea, Michael Grimm has admitted that while running his business he chose lies and deception over honest dealings with federal and state authorities as well as his own employees. In addition to pleading guilty to causing the filing of a false tax return for his restaurant, Grimm has signed a statement admitting to the conduct underlying every charge filed against him. Michael Grimm has now publicly admitted that he hired unauthorized workers whom he paid “off the books” in cash, took deliberate steps to obstruct the federal and state governments from collecting taxes he properly owed, cheated New York State out of workers’ compensation insurance premiums, caused numerous false business and personal tax returns to be filed for several years, and lied under oath to cover up his crimes. He will now be held to account for all of his actions that led to those charges,” said U.S. Attorney Lynch. “This guilty plea makes clear that we and our partners in the FBI and the IRS will vigorously investigate and prosecute fraud wherever we find it, and that no one is above the law.” Ms. Lynch expressed her appreciation to the Public Integrity Section of Department of Justice, the Northern Criminal Enforcement Section of the Tax Division of the Department of Justice, the New York State Insurance Fund, the New York State Department of Taxation and Finance, and the New York State Department of Labor for their assistance in the investigation.
FBI Assistant Director-in-Charge Venizelos stated, “As an elected official, Grimm was responsible for deciding how taxpayers' money should be spent, yet he chose not to pay his fair share of taxes while operating his business. Adding insult to injury, while serving as a Member of Congress, Grimm lied under oath in an effort to conceal his criminal activity. The public expects their elected officials at all levels of government to behave honorably, or at a minimum, lawfully. As his guilty plea demonstrates, Grimm put self-interest above public service.”
Richard Weber, Chief, IRS-Criminal Investigation stated, “The public expects their elected officials to meet their tax obligations before they take office, while they hold office and when they leave office. Today, Mr. Grimm admitted to breaching the public's trust by fraudulently underreporting $900,000 in restaurant gross receipts and lowering payroll taxes through 'off-the-book' payments. As the only law enforcement agency with the authority to investigate federal tax crimes, IRS-Criminal Investigation is committed to ensuring that everyone pays their fair share. In the eyes of the law, public officials are not above the citizens they serve.”
In connection with his guilty plea, Grimm entered into a stipulation of facts, filed with the Court today, that acknowledged the scope of his criminal conduct. As part of that stipulation of facts, Grimm admitted that:
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From 2007 through 2009, Grimm was a member in Healthalicious, a restaurant located in Manhattan.During that time period, Grimm oversaw the day-to-day operations of the restaurant, which included the reporting and distribution of the restaurant’s payroll.
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Grimm under-reported the true amount that Healthalicious earned, using a portion of those unreported receipts to pay the restaurant’s workers “off the books” in cash.With Grimm’s knowledge, the restaurant employed those who were not lawfully admitted to the United States and who were not authorized to work in this country.
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In total, Grimm concealed over $900,000 in Healthalicious’ gross receipts from the accountant who prepared and filed the restaurant’s tax returns.That accountant used the false information provided by Grimm to prepare and file false federal and state tax returns for Healthalicious.
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Grimm also failed to report the “off the books” cash wages he was paying to Healthalicious workers, which resulted in the restaurant paying lower federal and state payroll taxes.Some Healthalicious employees received at least half of their wages in cash, while other workers were paid entirely in cash.Grimm tracked these payments in electronic spreadsheets, but failed to provide accurate information about the restaurant’s payroll to the payroll processing companies employed by the restaurant.As a result, Grimm caused the payroll processing companies to report to the IRS and the NYS Tax Department less than half of the wages Healthalicious actually paid its employees.
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Additionally, Grimm under-reported Healthalicious’ payroll to the New York State Insurance Fund (“NYSIF”), lowering the monthly workers’ compensation premium the restaurant paid to NYSIF.
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As part of his scheme, Grimm caused numerous false documents to be filed with federal and state tax authorities between 2007 and 2010, including: (1) Form 941 Employer’s Quarterly Federal Tax Returns for Healthalicious; (2) Form 1065 U.S. Return of Partnership Income tax returns for Healthalicious; (3) Forms W-2 reported annual wages of Healthalicious employees; (4) his Form 1040 U.S. Individual Income Tax Returns and Form IT-201 Resident Income Tax Returns; and (5) New York State Form ST-100 Quarterly Sales and Use Tax Returns.
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In total, Grimm’s conduct caused federal and New York State tax and NYSIF premium losses between $80,000 and $200,000.
Moreover, while a Member of Congress in January 2013, Grimm was deposed under oath by the attorney of a former employee in connection with a civil lawsuit relating to the labor practices at Healthalicious in which Grimm was a defendant. The lawsuit was pending in the United States District Court for the Southern District of New York. Today, as part of the stipulation of facts, Grimm admitted to testifying during the deposition to things that, at the time, he knew to be false. Specifically, Grimm testified during the deposition that Healthalicious employees had not been paid in cash, when he knew that restaurant employees had in fact been paid “off the books” in cash. Similarly, Grimm testified that, to the extent he used email in operating Healthalicious, he used a Yahoo account to which he no longer had access. Today, Grimm admitted that, at the time of the deposition, he in fact had access to an AOL account which he had used for Healthalicious related business and which contained many emails related to the restaurant.
The government’s case is being prosecuted by Assistant United States Attorneys Anthony M. Capozzolo, James D. Gatta, and Nathan Reilly.
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United States Congressman Michael Grimm Pleads Guilty to Causing the Filing of A False and Fraudulent Tax ReturnRead the Press Release
Earlier today, United States Congressman Michael Grimm pleaded guilty at the federal courthouse in Brooklyn, New York, to aiding and assisting the preparation of a false tax return. Since 2011, Grimm has served as a member of the United States House of Representatives representing New York’s 11th Congressional District, which includes the borough of Staten Island and parts of the borough of Brooklyn, in New York City. When sentenced, Grimm faces a prison term of up to three years. In connection with his guilty plea, Grimm also agreed to pay restitution to the Internal Revenue Service (IRS), the New York State Department of Taxation and Finance, and the New York State Insurance Fund (NYSIF). Today’s guilty plea proceeding took place before the Honorable Pamela K. Chen, United States District Judge, Eastern District of New York.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office, and Richard Weber, Chief, IRS- Criminal Investigation..
“With today’s guilty plea, Michael Grimm has admitted that while running his business he chose lies and deception over honest dealings with federal and state authorities as well as his own employees. In addition to pleading guilty to causing the filing of a false tax return for his restaurant, Grimm has signed a statement admitting to the conduct underlying every charge filed against him. Michael Grimm has now publicly admitted that he hired unauthorized workers whom he paid “off the books” in cash, took deliberate steps to obstruct the federal and state governments from collecting taxes he properly owed, cheated New York State out of workers’ compensation insurance premiums, caused numerous false business and personal tax returns to be filed for several years, and lied under oath to cover up his crimes. He will now be held to account for all of his actions that led to those charges,” said U.S. Attorney Lynch. “This guilty plea makes clear that we and our partners in the FBI and the IRS will vigorously investigate and prosecute fraud wherever we find it, and that no one is above the law.” Ms. Lynch expressed her appreciation to the Public Integrity Section of Department of Justice, the Northern Criminal Enforcement Section of the Tax Division of the Department of Justice, the New York State Insurance Fund, the New York State Department of Taxation and Finance, and the New York State Department of Labor for their assistance in the investigation.
FBI Assistant Director-in-Charge Venizelos stated, “As an elected official, Grimm was responsible for deciding how taxpayers' money should be spent, yet he chose not to pay his fair share of taxes while operating his business. Adding insult to injury, while serving as a Member of Congress, Grimm lied under oath in an effort to conceal his criminal activity. The public expects their elected officials at all levels of government to behave honorably, or at a minimum, lawfully. As his guilty plea demonstrates, Grimm put self-interest above public service.”
Richard Weber, Chief, IRS-Criminal Investigation stated, “The public expects their elected officials to meet their tax obligations before they take office, while they hold office and when they leave office. Today, Mr. Grimm admitted to breaching the public's trust by fraudulently underreporting $900,000 in restaurant gross receipts and lowering payroll taxes through 'off-the-book' payments. As the only law enforcement agency with the authority to investigate federal tax crimes, IRS-Criminal Investigation is committed to ensuring that everyone pays their fair share. In the eyes of the law, public officials are not above the citizens they serve.”
In connection with his guilty plea, Grimm entered into a stipulation of facts, filed with the Court today, that acknowledged the scope of his criminal conduct. As part of that stipulation of facts, Grimm admitted that:
- From 2007 through 2009, Grimm was a member in Healthalicious, a restaurant located in Manhattan. During that time period, Grimm oversaw the day-to-day operations of the restaurant, which included the reporting and distribution of the restaurant’s payroll.
- Grimm under-reported the true amount that Healthalicious earned, using a portion of those unreported receipts to pay the restaurant’s workers “off the books” in cash. With Grimm’s knowledge, the restaurant employed those who were not lawfully admitted to the United States and who were not authorized to work in this country.
- In total, Grimm concealed over $900,000 in Healthalicious’ gross receipts from the accountant who prepared and filed the restaurant’s tax returns. That accountant used the false information provided by Grimm to prepare and file false federal and state tax returns for Healthalicious.
- Grimm also failed to report the “off the books” cash wages he was paying to Healthalicious workers, which resulted in the restaurant paying lower federal and state payroll taxes. Some Healthalicious employees received at least half of their wages in cash, while other workers were paid entirely in cash. Grimm tracked these payments in electronic spreadsheets, but failed to provide accurate information about the restaurant’s payroll to the payroll processing companies employed by the restaurant. As a result, Grimm caused the payroll processing companies to report to the IRS and the NYS Tax Department less than half of the wages Healthalicious actually paid its employees.
- Additionally, Grimm under-reported Healthalicious’ payroll to the New York State Insurance Fund (“NYSIF”), lowering the monthly workers’ compensation premium the restaurant paid to NYSIF.
- As part of his scheme, Grimm caused numerous false documents to be filed with federal and state tax authorities between 2007 and 2010, including: (1) Form 941 Employer’s Quarterly Federal Tax Returns for Healthalicious; (2) Form 1065 U.S. Return of Partnership Income tax returns for Healthalicious; (3) Forms W-2 reported annual wages of Healthalicious employees; (4) his Form 1040 U.S. Individual Income Tax Returns and Form IT-201 Resident Income Tax Returns; and (5) New York State Form ST-100 Quarterly Sales and Use Tax Returns.
- In total, Grimm’s conduct caused federal and New York State tax and NYSIF premium losses between $80,000 and $200,000.
Moreover, while a Member of Congress in January 2013, Grimm was deposed under oath by the attorney of a former employee in connection with a civil lawsuit relating to the labor practices at Healthalicious in which Grimm was a defendant. The lawsuit was pending in the United States District Court for the Southern District of New York. Today, as part of the stipulation of facts, Grimm admitted to testifying during the deposition to things that, at the time, he knew to be false. Specifically, Grimm testified during the deposition that Healthalicious employees had not been paid in cash, when he knew that restaurant employees had in fact been paid “off the books” in cash. Similarly, Grimm testified that, to the extent he used email in operating Healthalicious, he used a Yahoo account to which he no longer had access. Today, Grimm admitted that, at the time of the deposition, he in fact had access to an AOL account which he had used for Healthalicious related business and which contained many emails related to the restaurant.
The government’s case is being prosecuted by Assistant United States Attorneys Anthony M. Capozzolo, James D. Gatta, and Nathan Reilly.
The Defendant:
MICHAEL GRIMM
Age: 44
Staten Island, New York
E.D.N.Y. Docket No. 14-CR-248 (PKC)
Genovese Organized Crime Family Soldier and Two Crime Family Associates Admit Racketeering ConspiracyRead the Press Release
NEWARK, N.J. – Three North Jersey men today admitted conspiring to conduct or participate in the affairs of the Genovese organized crime family of La Cosa Nostra (the “Genovese family”) through a pattern of racketeering activity, including a conspiracy to extort members of the International Longshoremen’s Association (ILA) for Christmastime tribute payments, New Jersey U.S. Attorney Paul J. Fishman and Eastern District of New York U.S. Attorney Loretta E. Lynch announced.
Stephen Depiro, 59, of Kenilworth, New Jersey, a Genovese family soldier, and two other Genovese family associates – Albert Cernadas, 79, of Union, New Jersey, former president of ILA Local 1235 and former ILA executive vice president; and Nunzio LaGrasso, 64, of Florham Park, New Jersey, former vice president of ILA Local 1478 and ILA representative – pleaded guilty today before U.S. District Judge Claire C. Cecchi in Newark federal court. All three pleaded guilty to Count One of the second superseding indictment charging them with racketeering conspiracy. Depiro admitted to predicate acts involving conspiracy to commit extortion and bookmaking. Cernadas and LaGrasso admitted to predicate acts involving conspiracy to commit extortion and multiple extortions.
According to documents filed in this case and statements made in court:
Since at least 2005, Depiro has managed the Genovese family’s control over the New Jersey waterfront – including the nearly three-decades-long extortion of port workers in ILA Local 1, ILA Local 1235 and ILA Local 1478. Members of the Genovese family, including Depiro, are charged with conspiring to collect tribute payments from New Jersey port workers at Christmastime each year through their corrupt influence over union officials, including the last three presidents of Local 1235 and vice president of ILA Local 1478. Depiro also controlled a sports betting package that was managed by several others, through the use of an overseas sports betting operation.
During their guilty plea proceedings, Depiro, Cernadas and LaGrasso admitted their involvement in the Genovese family, including conspiring to compel tribute payments from ILA union members, who made the payments based on actual and threatened force, violence and fear. Cernadas and LaGrasso admitted to carrying out multiple extortions of dockworkers. The timing of the extortions typically coincided with the receipt by certain ILA members of “Container Royalty Fund” checks, a form of year-end compensation.
The racketeering charge to which Depiro, Cernadas and LaGrasso pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled as follows: Cernadas, Jan. 16, 2015; LaGrasso, March 9, 2015; and Depiro, March 10, 2015.
U.S. Attorneys Fishman and Lynch credited the FBI in New Jersey, under the direction of Special Agent in Charge Aaron T. Ford, and in New York, under the direction of Assistant Director in Charge George Venizelos, as well as the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Acting Special Agent in Charge Cheryl Garcia, with the investigation leading to today’s guilty pleas. They also thanked the Waterfront Commission of New York Harbor for its cooperation and assistance in the investigation.
The government is represented by Assistant U.S. Attorney Jacquelyn M. Kasulis of the U.S. Attorney’s Office, Eastern District of New York, and Assistant U.S. Attorney Anthony Mahajan, of the U.S. Attorney’s Office, District of New Jersey.
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Defense counsel:
Depiro: Alyssa Cimino Esq., Fairfield, New Jersey
Cernadas: Joseph Hayden Esq., Roseland, New Jersey
LaGrasso: Michael Critchley, Sr., Esq., Roseland
Five Employees, Including the Former President of Premier Links, Inc. Charged with Alleged $9 Million Microcap Stock FraudRead the Press Release
New York residents Margaret Amatulli, Frederick Anderson, Darnell Jackson, and Nicholas Spinelli were arrested today on charges that they engaged in a wire and mail fraud conspiracy to steal over nine million dollars from over 300 investors. A fifth charged defendant, Christopher Damon, is being sought for arrest by the Federal Bureau of Investigation. The five defendants worked at Premier Links, Inc., a Staten Island-based company that operated as an unregistered broker-dealer between 2006 and 2012. As alleged in the criminal complaint unsealed today in federal court in Brooklyn, the defendants targeted elderly investors to steal their money through a fraudulent microcap stock scheme and then used the investors’ money for personal expenses. To date, investigators have identified at least $9.3 million in investor losses from the scheme. If convicted, each defendant faces up to 20 years’ imprisonment, as well as a fine equal to double the investors’ losses, and mandatory restitution to the victims.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“As alleged, the defendants conned elderly investors to steal their savings to fund their own personal expenses. Now, their day of reckoning has arrived. We are committed to protecting the investing public from the acts of fraudsters,” stated United States Attorney Lynch. Ms. Lynch extended her 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.
FBI Assistant Director-in-Charge Venizelos stated, “What was intended as a get-rich-quick scheme was, in fact, a cowardly plan to deceive some of society’s most vulnerable victims, luring them into a false sense of security by promising unrealistic returns on their investments. Unlike those arrested today, the FBI and our partners intend to keep the promises we make to those who invest their faith in us. Those who employ schemes to capitalize on the pain and suffering of others will most certainly be brought to justice.”
According to the complaint unsealed this morning, Premier Links operated from a Staten Island office purportedly to sell stock to investors. However, the defendants and others at Premier Links were never registered as broker-dealers with the Securities and Exchange Commission. Instead, Premier Links operated as a “boiler room,” using “cold callers” and other means to entice victims into investing their money in securities with promises of outsized returns. The defendants located their victims by using a printed list, which one of the defendants referred to as “the suckers list.” Once the victims wired or mailed money to Premier Links, the defendants and other co-conspirators typically stole the funds for their personal use. Bank records show that the defendants converted the investors’ money into cash through over 900 ATM and teller withdrawals. They also wrote checks to themselves and made purchases at Bloomingdales, the Gap, Macy’s, various restaurants, gas stations, and Party City, among other places.
Three defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Roanne L. Mann at the federal courthouse in Brooklyn. Darnell Jackson is expected to be presented before a United States Magistrate Judge in the Northern District of New York later today for removal proceedings to the Eastern District of New York.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorney Jack Dennehy.
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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit http://www.StopFraud.gov.
The Defendants:
MARGARET AMATULLI
Age: 45
Brooklyn, New York
FREDERICK ANDERSON
Age: 28
Far Rockaway, New York
CHRISTOPHER DAMON
Age: 45
Queens, New York
DARNELL JACKSON
Age: 48
Hudson, New York
NICHOLAS SPINELLI
Age: 30
Staten Island, New York
E.D.N.Y. Docket No. 2014 M 1082
Eastern District of New York U.S. Attorney’s Office Joins in Collections of over $5.3 Billion in Civil and Criminal Actions and Asset Forfeiture in Fiscal Year 2014Read the Press Release
U.S. Attorney Loretta E. Lynch announced today that the Eastern District of New York, working collaboratively with other offices as well as on its own, collected over $5.3 billion in criminal and civil actions in Fiscal Year 2014. Of this total amount, $5,311,230,858.40 resulted from cases handled in conjunction with other U.S. Attorneys’ Offices and components of the Department of Justice. Collections from criminal and civil actions filed solely by the Eastern District of New York totaled $42,505,272.81.
In addition, working with partner agencies and divisions within the Department of Justice, the Eastern District forfeited another $39,521,538.00 in assets tainted by crime. Of this amount, $28,475,720 was forfeited in criminal cases and matters, and $11,045,818 was forfeited in civil cases and matters. Forfeited assets are deposited into the Department of Justice Assets Forfeiture and the Treasury Forfeiture Fund and are used to restore funds to crime victims and for a variety of law enforcement purposes. The combined joint collections and asset forfeiture recoveries for the Eastern District total over $5.35 billion, which exceeds the $2.91 billion operating budget for U.S. Attorney’s Office nationwide.
Attorney General Eric Holder announced on November 19, 2014, that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorneys’ Offices and the main litigating divisions in that same period.
“The Eastern District of New York, in partnership with its colleagues in offices throughout the nation, is privileged to be part of a sweeping effort to address the harms caused by the financial crisis of 2008 and a multi-billion dollar resolution that includes provisions for relief to struggling and underwater homeowners as they seek to rebuild their lives and communities,” stated U.S. Attorney Lynch. “We stand firm in our ongoing collection and asset forfeiture efforts to protecting the public and recovering funds for the federal treasury and victims of crime and financial frauds.”
FY 2014 Collection Highlights
Financial Fraud
This past year, as part of President Obama’s Financial Fraud Residential Mortgage Backed Securities (RMBS) Working Group, and working with colleagues in the District of Colorado, the Eastern District of New York collected $ 4.2 billion in civil penalties from Citigroup, Inc., the largest penalty ever under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), to resolve claims related to Citigroup’s conduct in the packaging, securitization, marketing, sale and issuance of RMBS prior to January 2009. Citigroup acknowledged it made serious misrepresentations to the public, including the investing public, about the mortgage loans it securitized in RMBS. In addition to paying the historic penalty of $4.2 billion, Citigroup agreed to pay out $2.5 billion to provide relief to consumers in the form of loan modifications for underwater homeowners, refinancing for distressed borrowers, down payment and closing cost assistance to homebuyers, donations to organizations assisting communities in redevelopment and affordable rental housing for low-income families in high-cost areas.
Health Care Fraud
Working with the Department’s Civil Frauds Branch, the Eastern District of New York recovered $3,510,245.94 to resolve claims under the federal False Claims Act and New York False Claims Act against Enzo Biochem., Inc., and one of its subsidiaries, Enzo Clinical Laboratories. The settlement resolves allegations that Enzo was falsifying information in the claim submission process in order to inflate and secure reimbursements from the Centers for Medicare & Medicaid Services (“CMS”).
Collections Overview
The U.S. Attorneys’ Offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the Department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
In the Eastern District of New York as well as nationwide, the largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Long Island Man Pleads Guilty in Connection with $5 Million Ponzi SchemeRead the Press Release
Long Island resident Robert Rocco, 49, pleaded guilty today before U.S. District Judge Leonard D. Wexler at the federal courthouse in Central Islip, NY, to wire fraud in connection with a series of fraudulent investment schemes that he created. Rocco faces a maximum penalty of 20 years in prison, a fine of over $250,000, and restitution of up to $3,498,940.13. Sentencing will be scheduled when the Presentence Investigation Report is completed.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“For nearly seven years, rather than make sound investment decisions as he had promised, Robert Rocco fleeced friends, neighbors, and colleagues and used their money to fund his own lavish lifestyle. His lies caught up to him and his scheme was revealed. Today, through his plea of guilty, Rocco has finally admitted to his criminal conduct,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation for its work on the investigation.
Rocco, while acting as the president of the Dix Hills Soccer Club, solicited club members and volunteers, friends, and neighbors to invest money in a series of businesses that he formed including, Limestone Capital Services (“Limestone”), Advent Merchant Services, LLC and Advent Equity Partners, LLC, that Rocco claimed would earn high rates of return on investments. Rocco told investors that they would receive returns of up to 18% of their principal investment annually through the companies’ investments in ventures that purportedly included providing loans to finance wholesale cigarette purchases and a credit card processing venture. Rocco solicited and received approximately $5 million in investor money between 2006 and 2013, which was not invested as promised. Instead, he misappropriated the money and solicited money from new investors which he used to pay purported profits to earlier investors, thus concealing the earlier misappropriation. Rocco also sent account statements to investors that falsely showed that investors’ accounts had earned high rates of return. Between January and March 2010, Rocco deposited $66,915 in checks from the soccer club into Limestone and later distributed the proceeds of the checks to early investors in Limestone, leaving the soccer club with no funds to operate. In April 2010, Rocco sought and received donations to allow the club to continue operations.
The government’s case is being prosecuted by Assistant United States Attorney Allen Bode.
The Defendant:
ROBERT ROCCO
Age: 49
Dix Hills, New York
E.D.N.Y. Docket No. 13-CR-664 (LDW)
Former Union President Sentenced to 22 Months in Prison for Extortion Conspiracy Involving Christmastime Tribute PaymentsRead the Press Release
NEWARK, N.J. - The former president of International Longshoremen’s Association (ILA) was sentenced today to 22 months in prison for conspiring to extort ILA Local 1235 longshoremen on the New Jersey piers for Christmastime tribute payments, New Jersey U.S. Attorney Paul J. Fishman and Eastern District of New York U.S. Attorney Loretta E. Lynch announced.
Thomas Leonardis, 57, of Glen Gardner, New Jersey, the president of the union from 2008 through 2011, previously pleaded guilty before U.S. District Judge Claire C. Cecchi to Count Three of a second superseding indictment charging him with conspiring to extort Christmastime tributes from ILA Local 1235 members. Judge Cecchi imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
During their guilty plea proceedings, Leonardis – along with Vincent Aulisi, 82, of West Orange, New Jersey, the president of ILA Local 1235 from approximately 2006 through 2007; and Robert Ruiz, 56, of Watchung, New Jersey, the delegate of the union from approximately 2007 through 2010 and former ILA representative – admitted that they conspired with each other and others to compel tribute payments from ILA union members, who made the payments based on actual and threatened force, violence and fear. The timing of the extortions typically coincided with the receipt by certain ILA members of “Container Royalty Fund” checks, a form of year-end compensation. Leonardis and Ruiz were suspended from their positions following their arrest in January 2011. Aulisi had already retired from his employment on the New Jersey piers at the time of his arrest.
Charges are still pending against three defendants in the superseding indictment, including a racketeering conspiracy charge against Stephen Depiro, 59, of Kenilworth, New Jersey – a soldier in the Genovese organized crime family of La Cosa Nostra. Since at least 2005, Depiro has managed the Genovese family’s control over the New Jersey waterfront – including the nearly three-decades-long extortion of port workers in ILA Local 1, ILA Local 1235, and ILA Local 1478. Members of the Genovese family, including Depiro, are charged with conspiring to collect tribute payments from New Jersey port workers at Christmastime each year through their corrupt influence over union officials, including the last three presidents of Local 1235.
In addition to the prison term Judge Cecchi sentenced Leonardis to serve three years of supervised release.
Aulisi and Ruiz previously pleaded guilty before Judge Cecchi to conspiring to extort Christmastime tributes from ILA Local 1235 members. In October 2014, Aulisi and Ruiz were sentenced to 18 months and 20 months in prison, respectively.
U.S. Attorneys Fishman and Lynch credited the FBI in New Jersey, under the direction of Special Agent in Charge Aaron T. Ford, and in New York, under the direction of Assistant Director in Charge George Venizelos, as well as the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Acting Special Agent in Charge Cheryl Garcia, with the investigation leading to today’s sentencing. They also thanked the Waterfront Commission of New York Harbor for its cooperation and assistance in the investigation.
The government is represented by Assistant U.S. Attorney Jacquelyn M. Kasulis of the U.S. Attorney’s Office, Eastern District of New York, and Assistant U.S. Attorney Anthony Mahajan, of the U.S. Attorney’s Office, District of New Jersey.
The charges and allegations against the remaining defendants are merely accusations and they are considered innocent unless and until proven guilty.
14-431
Defense counsel: Michael N. Pedicini Esq., Chatham, New Jersey
Statement by U.S. Attorney Loretta E. Lynch on Federal Investigation into Death of Eric GarnerRead the Press Release
BROOKLYN, NY – United States Attorney for the Eastern District of New York Loretta E. Lynch released the following statement regarding the federal investigation into the July death of Eric Garner of New York:
“Since the death of Eric Garner in July, our office has monitored this case closely. At the outset, informed by prior experience and in keeping with the standard practice in these types of cases in New York, the local investigation proceeded first. As the Attorney General explained earlier tonight, because the local investigation has come to a close, the Justice Department will now move forward with its own independent inquiry to determine whether federal civil rights laws have been violated. The investigation will be conducted by the U.S. Attorney’s Office and the Justice Department’s Civil Rights Division. The investigation will be fair and thorough, and it will be conducted as expeditiously as possible.”
Leader of A Violent Crew Convicted of Racketeering and Six MurdersRead the Press Release
Earlier today, following five weeks of trial, a federal jury in Brooklyn, New York, returned guilty verdicts against Christian John and Marvin Johnson. John was the leader of a violent criminal enterprise called the “Hull Street Crew,” that was found to be responsible for six murders, two attempted murder, armed robberies, murder-for-hire, narcotics distribution, and gambling on dog fighting, all of which occurred in the Bushwick, Bedford-Stuyvesant, and East New York areas of Brooklyn. Johnson committed a brutal murder with John that the jury found to have aided the criminal enterprise. When sentenced by United States Senior District Judge Frederic Block, both defendants face mandatory life sentences.
The verdicts were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and William J. Bratton, Commissioner, New York City Police Department.
United States Attorney Lynch extended her grateful appreciation to the FBI and the New York City Police Department for their outstanding assistance in this case.
Christian John was found guilty of the 2000 murder of Charlemagne Lormand, the 2008 murder of Barry Haynes, the 2008 murder of Daquane Shelton and the 2011 murders of Jason Bostic and Aaron Formey. Both defendants were found guilty of the 2006 murder of Earle Kevin Obermuller. During the Obermuller murder, the defendants lured the victim to an abandoned building where they duct taped his entire head and watched him suffocate to death. The defendants then set him on fire. During the 2011 murders of Jason Bostic and Aaron Formey, the defendant Christian John ordered his crew members to bind the victims with duct tape and to kill them. Among his many other crimes, Christian John was also found guilty of assaulting a crew member by tying him up and pouring scalding water over his body.
The government’s case was prosecuted by Celia A. Cohen, Soumya Dayananda, and Robert T. Polemeni.
The Defendants:
CHRISTIAN KESTON JOHN
Age: 30
Brooklyn, N.Y.
MARVIN JOHNSON
Age: 30
Brooklyn, N.Y.
Eight United States Postal Workers Arrested on Long Island for Mail Theft and Marijuana Distribution ConspiracyRead the Press Release
Eight United States Postal Service employees at the Logistical and Distribution Priority Mail Processing Center in Bethpage, Long Island (“Bethpage L&DC”) were arrested last night and charged with theft of mail and conspiracy to distribute and possess with intent to distribute more than 129 pounds of marijuana over a six-month period. The criminal complaint was unsealed today in federal court in Central Islip charging Kempleton Nash, Jr., Eugene Williams, Timothy Marshall, Jerrod Rollerson, Tanicha Grenald-Allen, Sherwin Parkes, Lloyd Johnson and Jose Hurtado. The defendants are scheduled to appear this afternoon before United States Magistrate Judge Gary Brown at the United States Courthouse, 100 Federal Plaza, Central Islip, New York.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Rafael Medina, Special Agent-in-Charge, United States Postal Service, Office of Inspector General, and James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration, New York. The investigation was conducted by the USPS-OIG and the DEA’s Long Island District Office Task Force, which is comprised of agents and officers from the DEA, the Nassau County District Attorney’s Office, the Suffolk County District Attorney’s Office, the Suffolk County Sheriff’s Office and the Hempstead Police Department.
As detailed in the criminal complaint, U.S. Priority Mail shipping is increasingly becoming a method of transporting and delivering controlled substances across the United States. In this case, rather than alerting law enforcement agents to the presence of suspicious packages, the defendants allegedly stole the parcels from the processing line and placed them in a corridor outside the Bethpage L&DC accessed by a fire exit door whose alarm had been disabled. The defendants then retrieved the parcels from the corridor and carried the packages out of the building through the lobby of the adjacent business park. The defendants were also observed removing parcels from the processing line, and then attaching new labels re-directing delivery to alternative addresses. After “overlabeling” the parcels, the defendants allegedly reinserted the parcels into the normal line for delivery to the new destination. Between September and November, federal agents obtained search warrants for 12 of the “overlabeled” parcels, which resulted in the seizure of some 129 pounds of marijuana, with an estimated street value ranging from $100,000 to $930,000.
“Abusing their positions of trust as postal employees, the defendants allegedly stole hundreds of packages to further their drug dealing efforts,” stated United States Attorney Lynch. “We and our partners in law enforcement are committed to ensuring that government employees act with the degree of integrity that the public expects and deserves.” Ms. Lynch also thanked the United States Postal Inspection Service, the New York State Police and the Suffolk County Police Department for their assistance in the investigation.
“The conduct alleged in the criminal complaint is beyond disgraceful and our office will continue to tirelessly investigate those postal service employees who violate the public’s trust,” stated USPS-OIG Special Agent-in-Charge Medina. “The dedicated work of the hundreds of thousands of postal service employees should never be overshadowed by those who compromise their integrity for personal gain.”
“By allegedly targeting and stealing suspiciously shaped priority packages sent from the West Coast to further their drug trafficking network, the defendants became targets of investigation themselves. Not only did the defendants allegedly abuse their positions as Postal Service employees, but in doing so they endangered the security of the postal service facility and their coworkers,” stated DEA Special Agent-in-Charge Hunt. “I applaud the work of the USPS-OIG and the federal, state and local law enforcement partners who worked on this investigation.”
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorney Charles N. Rose.
The Defendants:
KEMPLETON NASH, JR.
Age: 29
Cambria Heights, New York
EUGENE WILLIAMS
Age: 37
Brentwood, New York
TIMOTHY MARSHALL
Age: 28
Far Rockaway, New York
JERROD ROLLERSON
Age: 25
Hempstead, New York
TANICHA GRENALD-ALLEN
Age: 36
Brooklyn, New York
SHERWIN PARKES
Age: 36
Brooklyn, New York
LLOYD JOHNSON
Age: 34
St. Albans, New York
JOSE HURTADO
Age: 43
North Bellmore, New York
E.D.N.Y. Docket No. 14-MJ-1014
Mongolian Dinosaur Fossil ForfeitedRead the Press Release
A decree of forfeiture was issued today by the Honorable Brian M. Cogan in federal court in the Eastern District of New York forfeiting the fossilized skull and vertebrae of an Alioramus dinosaur (the “Dinosaur Skull”). The Alioramus was a dinosaur that lived in the late Cretaceous period, approximately 65 to 70 million years ago. It is related to the Tyrannosaurus Rex and Tarbosaurus. The Dinosaur Skull was falsely described as a French replica in January 2014, when it was shipped to the United States by Geofossiles, Inc., a French fossil dealer. Upon its arrival in the United States from France, the Dinosaur Skull was seized by U.S. Customs and Border Protection (CBP) with the assistance of Homeland Security Investigations (HSI). On September 4, 2014, the United States filed a civil action to forfeit the Dinosaur Skull, alleging that it was stolen Mongolian property that was smuggled into the United States using false declarations. As Geofossiles did not contest the allegations in the United States’ complaint, the court ordered the forfeiture of the Dinosaur Skull.
The forfeiture was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, HSI, New York.
“This case highlights the effectiveness of civil forfeiture tools in removing stolen cultural property from the stream of commerce so that it can be returned to its rightful owners,” stated United States Attorney Lynch. “Lies and forgeries are no match for the vigilance of our partners at CBP and HSI. Together, we are determined to expose and halt the flow of stolen cultural property entering our ports.” Ms. Lynch thanked the Mongolian government and the Central Museum of Mongolian Dinosaurs for their assistance.
“This case articulates the level of importance placed in identifying the provenance of cultural artifacts and acknowledging patrimony laws. Smugglers will falsify documents and lie about the origin and value of a cultural artifact just to get it across our borders to sell to the highest bidder,” said HSI Special Agent-in-Charge Hayes. “The forfeiture of this pre-historic fossil highlights HSI’s commitment along with our partners at CBP to assist foreign governments in detecting, deterring and disrupting the flow of priceless stolen foreign art, relics and fossils into the United States.”
When Geofossiles shipped the Dinosaur Skull to the United States, it falsely described the shipment as a low-value replica made in France. After the Dinosaur Skull was seized, Geofossiles petitioned CBP for its release. In the petition, Geofossiles conceded that the Dinosaur Skull was a genuine fossil, comprised of 70% original material and 30% cast to complete the skull. Geofossiles further admitted that the Dinosaur Skull’s country of origin was Mongolia, not France, and attached a contract to sell the piece for $250,000.
Under Mongolian law, significant fossil finds like the Dinosaur Skull are national property and, even if privately owned, cannot be sold to non-Mongolians or permanently exported. Nonetheless, Geofossiles attached to the petition several documents that purported to be Mongolian records authorizing the sale and export of the Dinosaur Skull from Mongolia to a Korean company in 2006. The records supplied by Geofossiles described the shipment as containing an incongruous combination of fossils and traditional Mongolian structures called “gers.” When Mongolian authorities located the original records for this shipment, they confirmed that only the gers were declared. Thus, the records supplied by Geofossiles were falsified to include fossils.
Pursuant to applicable law and Department of Justice guidelines, Mongolia will now have an opportunity to submit a petition to the United States for the return of the Dinosaur Skull.
The government’s case is being handled by Assistant United States Attorney Karin Orenstein.
E.D.N.Y. Docket No. 14-CV-5198(BMC)
Former Longshoreman Sentenced to 12 Months in Prison for Extortion Conspiracy Involving Christmastime Tribute PaymentsRead the Press Release
NEWARK, N.J. - A former longshoreman was sentenced to 12 months in prison today for conspiring to extort others in Local 1235 of the International Longshoremen’s Association (ILA) for Christmastime tribute payments, New Jersey U.S. Attorney Paul J. Fishman and Eastern District of New York U.S. Attorney Loretta E. Lynch announced.
Salvatore LaGrasso, 58, of Edison, New Jersey, a former supervisor on the New Jersey piers – previously pleaded guilty before U.S. District Judge Claire C. Cecchi to conspiring to extort Christmastime tributes from the union members – count three of the second superseding indictment against him. Judge Cecchi imposed the sentence today in Newark federal court.
According to documents filed in this case and statements made in court:
LaGrasso admitted that he and others conspired to compel tribute payments from ILA union members, who made the payments based on actual and threatened force, violence and fear. The timing of the extortions typically coincided with the receipt by certain ILA members of “Container Royalty Fund” checks, a form of year-end compensation.
Charges are still pending against three defendants in the superseding indictment, including a racketeering conspiracy charge against Stephen Depiro, 59, of Kenilworth, New Jersey – a soldier in the Genovese organized crime family of La Cosa Nostra (Genovese family). Since at least 2005, Depiro has managed the Genovese family’s control over the New Jersey waterfront – including the nearly three-decades-long extortion of port workers in ILA Local 1, ILA Local 1235 and ILA Local 1478. Members of the Genovese family, including Depiro, are charged with conspiring to collect tribute payments from New Jersey port workers at Christmastime each year through their corrupt influence over union officials, including the last three presidents of Local 1235.
Former Corporate Executives Plead Guilty to Securities Fraud and Tax Offenses for Wide-Ranging Commercial Bribery SchemeRead the Press Release
Two Coral Gables residents pled guilty today before U.S. District Judge Jose J. Martinez to their participation in a scheme to obtain more than $9.5 million in kickbacks and other benefits, and to conceal this illicit income from the IRS, while employed as senior executives at Systemax, Inc. (“Systemax”) and its subsidiary, TigerDirect, Inc. (“TigerDirect”).
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office, and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office, made the announcement.
Carl Fiorentino, 57, pled guilty to one count of conspiracy to commit mail and wire fraud, and one count of tax evasion. According to his plea agreement, Carl Fiorentino has also agreed to forfeit, among other things, $1,961,049.90 which represents proceeds traceable to his criminal conduct.
Gilbert Fiorentino, 54, pled guilty to one count of conspiracy to commit securities fraud and to impair and impede the lawful functions of the Internal Revenue Service. According to his plea agreement, Gilbert Fiorentino has also agreed to forfeit, among other things, 99 gold coins that he received as a part of the kickback scheme.
According to admissions in the defendants’ plea agreements and made in court at the time they entered their pleas, Gilbert Fiorentino served until 2011 as a director of Systemax, was the Chief Executive Officer of the company’s Technology Product Group, and worked at Systemax’s Miami offices; Carl Fiorentino served until 2011 as the president of TigerDirect and worked at Systemax’s Miami offices as a senior executive responsible for sourcing and purchasing computer and electronics peripherals from third party vendors, some of them located in Asia.
Between 2003 and 2011, the defendants received kickbacks from, among others, among others, a Taiwan-based supplier, RICI International and its affiliates. Carl Fiorentino received in excess of $9.5 million in kickbacks; Gilbert Fiorentino received more than $600,000 in kickbacks including, among other things, approximately $200,000 in gold coins. In addition, as a part of the scheme, both misappropriated Systemax merchandise. Carl Fiorentino used the proceeds of his illegal activity to obtain, among other things, a Coral Gables luxury waterfront property, artwork, home furnishings and high-end electronics. Both defendants admitted that, as a result of their kickback scheme, they caused Systemax to pay more for goods and services than it would have in the absence of the schemes. Additionally, both men failed to disclose to the IRS, and pay taxes upon, the income they received as a part of their criminal conduct.
Both defendants concealed from Systemax and its auditors the payments they received pursuant to the kickback scheme. Accordingly, Systemax, unaware that the defendants had received payments and engaged in fraudulent activities, filed inaccurate statements with the U.S. Securities and Exchange Commission as a result.
When Carl Fiorentino learned that federal agents were investigating his conduct, he illegally instructed certain witnesses to conceal the truth from the agents.
This case was originally investigated by the U.S. Attorney’s Office for the Eastern District of New York with the assistance of the FBI New York Field Office and the IRS-CI Miami Field Office. Carl Fiorentino was previously charged in the Eastern District of New York on June 18, 2013, with conspiracy to commit mail and wire fraud, multiple counts of mail and wire fraud, and money laundering. The case involving Carl Fiorentino was transferred to the Southern District of Florida by court order on January 6, 2014. Both Carl and Gilbert Fiorentino are scheduled to be sentenced on February 10, 2015, at 1:30 p.m.
Mr. Ferrer and Ms. Lynch commended the investigative efforts of the FBI and IRS-CI. The matter is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy of the Southern District of Florida and Whitman G.S. Knapp of the Eastern District of New York.
A copy of this press release may be found on the website of the United States Attorney’s for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
“No-Show” Doctor Pleads Guilty in Connection with $13 Million Health Care Fraud SchemeRead the Press Release
BROOKLYN, NY – Connecticut resident Dr. Okon Umana, 67, pleaded guilty today in federal court in the Eastern District of New York to conspiring to defraud the United States in connection with his role as a “no show” doctor in a $13 million health care fraud scheme. Dr. Umana is the last of nine defendants charged to plead guilty in connection with the scheme at the Cropsey Medical Care PLLC clinic in Bensonhurst, Brooklyn.
Today’s guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office; and Thomas O’Donnell, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG).
“Dr. Umana dishonored his medical license when he fraudulently billed Medicare and Medicaid at the taxpayers’ expense,” stated United States Attorney Lynch. “Dr. Umana is the final defendant to be convicted in connection with the government’s investigation of the Cropsey Medical Care clinic, which submitted more than $13 million in fraudulent claims to Medicare and Medicaid. We will continue to investigate and prosecute fraud to protect the integrity of these vital health care programs.” U.S. Attorney Lynch extended her grateful appreciation the Federal Bureau of Investigation and the Department of Health and Human Services, Office of Inspector General, for their outstanding work on the investigation.
According to court documents, from 2009 to 2012, Umana was the medical director of the Cropsey Medical Care clinic. Patients at Cropsey Medical received medically unnecessary physical therapy, diagnostic testing and other services, which were provided by a physician assistant who was acting without supervision. Such purported medical services were then fraudulently billed by Cropsey Medical to Medicare and Medicaid under Dr. Umana’s provider number. From approximately November 2009 to October 2012, Cropsey Medical submitted more than $13 million in claims to Medicare and Medicaid, seeking reimbursement for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests that were not medically necessary and often did not even occur.
Dr. Umana pleaded guilty before U.S. District Judge John Gleeson. At sentencing on April 15, 2015, Dr. Umana faces a maximum penalty of five years in prison, a fine of over $250,000, restitution of up to $6,429,330 and forfeiture of $6,550,036.
The case was investigated by the FBI and HHS-OIG, brought as part of the Medicare Fraud Strike Force, and supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The case is being prosecuted by Assistant U.S. Attorney Shannon C. Jones of the Eastern District of New York and Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section.
The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to prevent and deter fraud and enforce anti-fraud laws around the country. Since its inception in March 2007, the Strike Force, now operating in nine cities, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov
The Defendant:
OKON UMANA
Age: 67
West Haven, Connecticut
E.D.N.Y. Docket No. 12 CR 617 (S-1)