Eastern District of New York
Press releases recorded for this federal judicial district.
Three Members of New York Cell of International Cybercrime Organization Sentenced for Roles in $45 Million CyberattackRead the Press Release
Earlier today in federal court in Brooklyn, New York, Elvis Rafael Rodriguez was sentenced to 34 months’ imprisonment for his participation in an international cybercrime organization responsible for two cyberattacks that inflicted $45 million in losses on the global financial system in a matter of hours. Two of Rodriguez’s co-defendants were previously sentenced for their roles in the conspiracy -- on October 27, 2014, Evan Peña was sentenced to 22 months’ incarceration, and on October 24, 2014, Saul Genao was sentenced to 15 months’ incarceration. Rodriguez, Peña and Genao were also ordered to pay $2,782,597 in restitution and $2,400,000 in forfeiture. Rodriguez, Peña, Genao and their 10 co-defendants pled guilty to charges stemming from their participation in the scheme.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Robert J. Sica, Special Agent in Charge, United States Secret Service, New York Field Office.
“The defendants and their co-conspirators participated in a massive 21st century bank heist of unprecedented scale and scope using debit cards and the Internet rather than guns and masks. While the technical intrusion was highly sophisticated and the teams of cashers highly organized, law enforcement moved with even greater expertise to solve the cybercrime and bring the perpetrators to justice,” stated United States Attorney Lynch.
Secret Service Special Agent in Charge Sica stated, “Secret Service agents utilize state-of-the-art investigative techniques to identify and pursue cyber criminals around the world. This scheme involved multiple network intrusions and data thefts for illicit financial gain. Our success in this case and other similar investigations is a result of the extraordinary work of our investigators and our close work with our network of law enforcement partners.”
Rodriguez and his co-defendants were members of the New York-based cell of an international cybercrime organization that used sophisticated intrusion techniques to hack into the systems of global financial institutions, steal prepaid debit card data and eliminate withdrawal limits. The stolen card data was then instantly disseminated worldwide and used to make fraudulent ATM withdrawals on a massive scale. The defendants acted as “cashers,” who together with co-conspirators, withdrew almost $2.8 million in cash from ATMs in New York City in a matter of hours. Rodriguez and various co-defendants also laundered the proceeds of the crime by, among other things, making large cash deposits and transporting suitcases containing hundreds of thousands of dollars in cash to co-conspirators in Florida and Romania.
The cyberattacks employed by the defendants and co-conspirators are known in the cyber underworld as “Unlimited Operations” and rely upon both highly sophisticated hackers as well as organized criminal cells whose role is to withdraw the cash as quickly as possible and then launder the proceeds and repay the organizers. The defendants and co-conspirators conducted two Unlimited Operations: the first occurred on December 22, 2012 and resulted in approximately $5 million in losses worldwide. In the New York City area, over the course of just two hours and 25 minutes, the defendants and co-conspirators withdrew approximately $400,000 in fraudulent ATM withdrawals. The second Unlimited Operation occurred on February 19-20, 2013 and resulted in nearly $40 million in losses worldwide; the defendants and their co-conspirators withdrew approximately $2.4 million in the New York City area.
Ms. Lynch thanked MasterCard, RAKBANK and the Bank of Muscat for their cooperation with this investigation and expressed her gratitude for the timely and extensive assistance of U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York; law enforcement authorities in Japan, Canada, Germany and Romania; and authorities in the United Arab Emirates, Dominican Republic, Mexico, Italy, Spain, Belgium, France, United Kingdom, Latvia, Estonia, Thailand and Malaysia.
The government’s case is being prosecuted by Assistant United States Attorneys Hilary Jager, Brian Morris, Doug Pravda and Richard Tucker.
The Defendants:
ELVIS RAFAEL RODRIGUEZ
Yonkers, New York
Age: 25
EVAN PEÑA
Yonkers, New York
Age: 37
SAUL GENAO
Yonkers, New York
Age: 25
Radiation Oncologist to Pay $2.35 Million to Settle Claims of Defrauding the Medicare ProgramRead the Press Release
Today U.S. Attorney Loretta E. Lynch announced the court approval of a settlement with Dr. Gilbert Lederman, the former Director of Radiation Oncology at Staten Island University Hospital (SIUH). Dr. Lederman has agreed to pay $2.35 million to resolve claims that he defrauded the Medicare Program when he sought reimbursement for stereotactic body radiosurgery (BRS), a procedure which Dr. Lederman claimed to have pioneered in the United States.
The United States asserted that Dr. Lederman violated the False Claims Act (FCA) by billing Medicare for BRS provided to a number of patients at SIUH during the period beginning1996 through 2003. At that time, Medicare limited coverage for stereotactic radiosurgery to the treatment of cancers above-the-neck and excluded BRS as “investigational,” or experimental. The United States further asserted that Dr. Lederman miscoded his claims to falsely indicate that he had treated patients above-the-neck in order to get paid by Medicare.
“Providers who misrepresent their services -- whether for the purpose of obtaining greater reimbursement or in an effort to conceal the fact that a treatment was deemed investigational -- continue to pose a threat to Medicare, our nation’s largest insurer. In response, we will continue to vigorously pursue those providers who place their own self-interest above their obligation to accurately report the nature of the services they provide to their Medicare patients,” stated United States Attorney Lynch.
In May 2014, U.S. District Judge John Gleeson granted the United States partial summary judgment against Dr. Lederman. The Court found, as a matter of law, that certain claims that Dr. Lederman submitted to Medicare for BRS were false because the claims were miscoded and concerned treatment below-the-neck. The Court also found Dr. Lederman liable to the United States as to claims for unjust enrichment and payment on mistake of fact. United States ex rel. Ryan v. Lederman, 2014 WL 1910096 (E.D.N.Y. May 13, 2014).
The civil action was initially filed under the qui tam provisions of the FCA by relator Elizabeth M. Ryan, the widow of a former SIUH cancer patient, against Dr. Lederman and SIUH. In September 2008, the United States and SIUH reached a court-approved settlement whereby SIUH paid the United States more than $25 million.
Assistant U.S. Attorneys Laura D. Mantell and Richard K. Hayes represented the United States. They were assisted by Emily J. Rosenthal, Affirmative Civil Enforcement Auditor; Jill Merenda, Paralegal Specialist; and Marie V. Bonkowski, Senior Trial Counsel in the Commercial Litigation Branch of the Justice Department’s Civil Division.
Manhattan and Brooklyn U.S. Attorneys Announce Guilty Plea in Manhattan Federal Court of Colombian Narcotics Kingpin to Massive Cocaine ConspiracyRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York (“SDNY”), and Loretta E. Lynch, the United States Attorney for the Eastern District of New York (“EDNY”), announced that DANIEL BARRERA BARRERA, also known as “Loco Barrera,” a citizen of Colombia, pled guilty today in the Southern District of New York before U.S. Magistrate Judge Ronald L. Ellis to conspiring to distribute and manufacture cocaine knowing that it would be imported into the United States. For decades, BARRERA manufactured hundreds of tons of cocaine annually in Colombia and trafficked it to various parts of the world, including the U.S., and laundered tens of millions of dollars in proceeds from that narcotics trafficking activity. BARRERA was previously extradited from Colombia to the United States on July 9, 2013.
In March 2010, the U.S. Department of the Treasury’s Office of Foreign Assets Control designated BARRERA as a “Special Designated Narcotics Trafficker,” pursuant to the Foreign Narcotics Kingpin Designation Act. BARRERA was arrested in Venezuela on September 18, 2012. Thereafter, he was sent to Colombia, from where the U.S. sought and obtained BARRERA’s extradition. The extradition and guilty plea of BARRERA is the result of an ongoing Organized Crime Drug Enforcement Task Forces (“OCDETF”) investigation led by the Drug Enforcement Administration (“DEA”) and Homeland Security Investigations (“HSI”). The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking, weapons trafficking, and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
U.S. Attorney Preet Bharara said: “Daniel Barrera Barrera operated at the interface of two Colombian terrorist organizations that were sworn enemies of each other but each of which benefitted from Barrera’s patronage. As he has now admitted in our courthouse, Barrera bought cocaine paste from the FARC and, under the protection of the AUC, turned it into hundreds of tons of hugely profitable product annually, some of which he knew was intended for distribution in the U.S. A drug kingpin who enriched two terrorist organizations and himself by producing and peddling poison now stands to lose his wealth, his empire, and his liberty.”
U.S. Attorney Loretta E. Lynch said: “Daniel ‘Loco’ Barrera Barrera’s reign as one of the world’s most prolific narcotics traffickers has come to an end. Barrera’s illegal empire, funded by millions of dollars of illicit proceeds and backed by some of the most lethal drug cartels and terrorist groups in the world, wreaked havoc in Colombia and around the world for decades. The amount of destruction Barrera wrought upon the world, all in pursuit of staggering profits, is truly incalculable. This plea demonstrates our government’s commitment to bringing all narcotics traffickers to justice, no matter how rich, powerful, ruthless and violent they may be.”
As alleged in the Superseding Indictment filed in the Southern District of New York (S1 07 Cr. 862 (AKH)), the Superseding Indictment filed in the Eastern District of New York (S2 10 Cr. 288 (ILG)), statements made at today’s guilty plea and other court proceedings, and other information in the public record:
From 1998 until 2010, BARRERA ran a cocaine manufacturing and trafficking syndicate out of Colombia. BARRERA purchased the raw cocaine base or paste from the designated terrorist group Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia, or the “FARC”). The FARC, which has been and is dedicated to the violent overthrow of the democratically elected Government of Colombia, has been the world’s largest supplier of cocaine and has engaged in bombings, massacres, kidnappings, and other acts of violence within Colombia.
After purchasing the raw cocaine base from the FARC, BARRERA converted the raw cocaine into powder at laboratories he owned and operated in an area of Colombia controlled by the since demobilized terrorist group, Autodefensas Unidas de Colombia (the “AUC”). For years, the AUC’s main political objective was to defeat the FARC in armed conflict, and it financed its terrorist activities through the proceeds of cocaine trafficking in AUC-controlled regions of Colombia. At the time of BARRERA’s criminal conduct, the FARC and the AUC were both designated by the U.S. Department of State as Foreign Terrorist Organizations.
After processing the cocaine powder in his laboratories, BARRERA arranged for the shipment and transportation of the cocaine powder to locations on four continents, including the United States. Although BARRERA purchased raw materials for cocaine production from the FARC, he was able to maintain his network of cocaine-processing laboratories in AUC-controlled territory, in part by paying monthly “taxes” to the AUC. The fees BARRERA paid to the AUC also allowed him to safely move the processed cocaine through and out of Colombia.
Each month, BARRERA processed approximately 30,000 kilograms of raw cocaine base into about the same amount of cocaine powder, resulting in approximately 400 tons of cocaine annually. In total, BARRERA reaped tens of millions of dollars of profits from cocaine trafficking, which he laundered through illicit means.
Earlier today, BARRERA, 47, pled guilty in the Southern District of New York to one count of conspiring to distribute and manufacture cocaine knowing it would be unlawfully imported into the U.S. On that count, BARRERA faces a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison. BARRERA is scheduled to be sentenced by U.S. District Judge Alvin K. Hellerstein on February 27, 2015.
On October 9, 2014, BARRERA pleaded guilty in the Eastern District of New York to one count of conspiring to launder money. On that count, BARRERA faces a maximum sentence of 20 years in prison. BARRERA is scheduled to be sentenced by U.S. District Judge I. Leo Glasser on January 22, 2015.
BARRERA is also charged in the Southern District of Florida with one count of conspiring to import cocaine into the U.S. and one count of conspiring to manufacture and distribute cocaine knowing that it would be unlawfully imported into the U.S. On those counts, BARRERA faces a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison. Following his prosecutions in the Southern and Eastern Districts of New York, BARRERA will be presented and arraigned in the Southern District of Florida. The charge and allegations contained in the Southern District of Florida Indictment are merely accusations and the defendant is presumed innocent of that charge unless and until proven guilty.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara and Ms. Lynch praised the outstanding work of the OCDETF, working in cooperation with HSI New York’s El Dorado Task Force, the DEA’s Bogota Country Office, the DEA’s Caracas Country Office, the DEA’s Miami Field Division, the DEA’s New York Drug Enforcement Task Force – which comprises agents and officers of the DEA, the New York City Police Department, and the New York State Police – as well as HSI Bogota. Mr. Bharara and Ms. Lynch also thanked the Colombian National Police, the U.S. Marshals Service, and the U.S. Department of Justice’s Office of International Affairs for their ongoing assistance.
The Southern District of New York case is being handled by that office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys Jenna Dabbs, Benjamin Naftalis, and Andrea Surratt are in charge of the prosecution. The Eastern District of New York case is being handled by that office’s International Narcotics and Money Laundering Section. Assistant United States Attorneys Justin Lerer, Soumya Dayananda, and Amir Toossi are in charge of the prosecution.
14-CR-340
Former Corporate Executives Charged with Securities Fraud and Tax Offenses for Wide-Ranging Commercial Bribery SchemeRead the Press Release
Two Coral Gables residents were charged today by separate informations for their participation in a scheme to obtain more than $9 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”).
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), made the announcement.
According to the charging documents:
Systemax, has its principal place of business in Port Washington, New York and sells 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, 54, was a director of Systemax and was the Chief Executive Officer of its Technology Product Group, including its subsidiary TigerDirect. Carl Fiorentino, 57, was the former president of TigerDirect, and both Fiorentino brothers worked at TigerDirect’s Miami offices before they were terminated on April 18, 2011.
As senior executives of TigerDirect, Gilbert Fiorentino and Carl Fiorentino had responsibility for purchasing and sourcing hundreds of millions of dollars-worth of computer and electronics items for Systemax and its various operations. According to the informations, 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. In the case of one Asia-based supplier of computer parts and accessories, court documents allege the brothers received more than $9 million in cash and undocumented payments in return for steering more than $230 million in business to the supplier.
As further alleged, while serving as a senior executive of TigerDirect, Carl Fiorentino received millions of dollars in payments from a TigerDirect supplier, including more than $3 million to pay for his own waterfront residence in Gables Estates, and millions of dollars-worth of luxury furnishings, including furniture, art and a high-tech security system. The information charging Carl Fiorentino additionally alleges that, in 2007, he filed a false United States Individual Income Tax Return in which he understated his taxable income by more than $4 million dollars.
According to court papers, while serving as a director of Systemax and the CEO of TigerDirect, Gilbert Fiorentino received hundreds of thousands of dollars in cash payments, including deliveries of cash in the parking lot of the Miami offices of TigerDirect, from one supplier, gold coins valued at more than $150,000 from a vendor, and deliveries of furniture and other goods and services to his waterfront home in Gables Estates. The information charging Gilbert Fiorentino further alleges that he misappropriated company merchandise for his own benefit, including by paying a third party more than $100,000 in electronics to provide upkeep for Gilbert Fiorentino’s yacht.
As a public company, Systemax was required to comply with Section 404 of the Sarbanes-Oxley Act of 2002 that requires certain management personnel to sign annual conflict of interest questionnaires, certifications of compliance with Systemax’s corporate ethics policy, and representations about transactions out of the course of ordinary business. These questionnaires include a representation as to whether the employee had “receive[d] or ma[de] any arrangements for the receipt of any compensation or other personal financial benefit from a current or potential supplier, competitor or customer” of Systemax. As alleged in the informations, from 2005 through 2011 Gilbert and Carl Fiorentino regularly signed such 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 Systemax. Gilbert Fiorentino regularly met with Systemax’s independent auditors at the offices of TigerDirect in Miami, while the auditors were conducting quarterly reviews and annual audits of the company. In written management representation letters and in direct conversations, Gilbert Fiorentino made false and misleading statements to Systemax’s auditors regarding the accuracy of the company’s books, records and accounts as they pertained to his own compensation, the compensation of his brother, Carl Fiorentino, and both defendants’ receipt of kickbacks from third parties, among other things. These false and misleading statements and omissions were material to the ability of the auditors to perform accurate reviews and audits of the company’s books, records, and accounts, and to assess Systemax’s internal controls over financial reporting.
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 information filed today against Carl Fiorentino charges him with one count of conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 1349 and one count of tax evasion, 26 U.S.C. § 7201, in connection with his efforts to conceal his illicit income from the IRS and evade paying taxes from such income. Carl Fiorentino faces a statutory maximum of 25 years in prison. The information filed today against Gilbert Fiorentino charges him with one count of conspiracy to commit securities fraud and to impair and impede the lawful functions of the IRS, in violation of 18 U.S.C. § 371. He faces a statutory maximum of five years in prison.
U.S. Attorney Ferrer stated “Gilbert and Carl Fiorentino put their financial gain and lavish lifestyle ahead of their responsibilities as corporate officers and directors. They accepted kickbacks, driving up the price of the consumer electronics and passing the price increase to customers. The Fiorentinos took advantage of their positions of trust. But they didn’t get away with it. Today’s charges demonstrate that we will hold liable heads of companies who abuse their positions and violate tax and securities laws that protect investors in financial markets.”
“As alleged, the brothers Fiorentino were supposed to choose their companies’ suppliers based on the best price they could get. Instead, they made their decisions based on the biggest kickbacks for themselves. In so doing, they abused the trust placed in them and cheated their employers, the shareholders, and the IRS,” stated U.S. Attorney Lynch. “We and our law enforcement partners will prosecute to the fullest extent of the law all those who seek to profit by such fraud.”
IRS-CI Special Agent in Charge Kelly R. Jackson stated, "These high-ranking corporate officials held positions of trust not only in their companies but also in the eyes of the public. They chose to receive kickbacks and side payments that they intended to hide from Systemax and the IRS. Their criminal actions are unacceptable to both investors and to the tax paying public. IRS Criminal Investigation, along with its law enforcement partners, will vigorously pursue corporate officers who misuse their positions of trust and violate the tax laws.”
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.
An information is only an accusation and a defendant is presumed innocent until proven guilty.
A copy of this press release may be found on the website of the United States Attorney’s Office 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.
Fiorentino, Gilbert Information
Fiorentino, Carl Second Superseding InformationRochester Woman Sentenced for Her Role in a Conspiracy to Defraud the United StatesRead the Press Release
CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX: (716) 551-3051ROCHESTER, N.Y. -- U.S. Attorney William J. Hochul, Jr. announced today that Kelly Nicole Borger, 32, of Rochester, NY, and Los Angeles, CA, was sentenced by U.S. District Judge David G. Larimer to one year in prison, and ordered to pay restitution to the Internal Revenue Service totaling $532,351.
Assistant U.S. Attorney John J. Field, who handled the matter, stated that from April 2011 to April 2012, Borger conspired with Michael Carney of Los Angeles, CA, to prepare and submit false income tax returns. Borger emailed Carney the names and other identifying information of 40 individuals in Rochester known to Borger. Carney then prepared 50 fraudulent tax returns in the names of these individuals claiming undeserved tax refunds totaling $532,351. Borger received at least $169,000 for her role in conspiracy.
Michael Carney was convicted and sentenced to 41 months in prison.
The sentencing is the culmination of an investigation by the Internal Revenue Service, Criminal Investigation Division, under the direction of Shantelle P. Kitchen, Acting Special Agent in Charge, New York Field Office.
Justice Department Files Enforcement Actions to Shut Down “Psychic” Mail Fraud SchemesRead the Press Release
WASHINGTON - The United States filed civil complaints in U.S. District Court for the Eastern District of New York today against individuals and entities alleged to be running two related multimillion-dollar mail fraud schemes. The United States also filed a motion seeking a temporary restraining order and a preliminary injunction to immediately put a stop to the ongoing schemes.
According to the complaints, the defendants operate two mail fraud schemes in which they send solicitation letters purportedly written by world-renowned psychics to consumers through the U.S. mail. The first scheme, operated by Destiny Research Center and the Canadian company Infogest Direct Marketing, sends direct mail solicitations allegedly written by psychics Maria Duval and Patrick Guerin. The second scheme, operated by Christine Moussu through New York companies CLGE Inc. and I.D. Marketing Solutions Inc., sends direct mail solicitations allegedly written by psychics David Phild, Sandra Rochefort, Antonia Donera and Nicholas Chakan.
“The complaints filed today charge that the companies and individuals made blatant misrepresentations in order to reap financial gain by scamming thousands of Americans, many of whom were elderly and in a vulnerable financial condition,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “Our job at the Justice Department is to put a stop to fraud schemes that seek to take advantage of vulnerable Americans.”
The complaints allege that in the letters, the purported psychics state that they are contacting the recipient based on a specific vision or psychic reading revealing that the recipient has the opportunity to dramatically improve his or her financial circumstance, including claims of winning millions in the lottery. The solicitation letters appear personalized, repeatedly referring to the recipient by first name and often containing portions that appear handwritten. The solicitations urge victims to purchase various products and services in order to ensure that the foreseen good fortune comes to pass. The complaints allege that in reality, the solicitations are identical, mass- produced form letters. Victims responded to the solicitations by completing a form and submitting a payment, usually around $20 to $50, via U.S. mail. Victims often also wrote personal, handwritten letters back to the purported psychics, which were never opened, and received worthless, mass-produced trinkets and further solicitations after sending these payments.
“Relying on superstition and fear, the defendants defrauded tens of millions of dollars from thousands of vulnerable citizens,” said U.S. Attorney Loretta Lynch for the Eastern District of New York. “We have, and will continue to, use all means at our disposal to protect our citizens from such schemes to defraud.”
“These mass solicitations containing purportedly personalized messages to unsuspecting victims were blatant fraud,” said Acting Inspector in Charge Troy Raper of the U.S. Postal Inspection Service's Criminal Investigation Group. “Postal Inspectors aggressively investigate any operations that use the U.S. mail to fleece unsuspecting victims.”
Metro Data Management Inc., doing business as Data Marketing Group Ltd., a company on Long Island, New York, along with its president, Keitha Rocco, performed “caging” services on behalf of both mail fraud schemes. According to the complaint, these services consisted of processing victim payments and maintaining databases of consumers who responded to the fraudulent solicitations. The government alleges that Data Marketing Group processed as much as $500,000 in victim payments in a given two-week period for the Destiny Research Center scheme, resulting in annual gross receipts of at least $13 million. The CLGE scheme brought in annual revenue of $1.5 to $2 million. Evidence presented by the United States in support of its motion indicates that victims of the mail fraud schemes were elderly, ill and in perilous financial condition.
The government is seeking an injunction under the Anti-Fraud Injunction Statute immediately shutting down the fraudulent schemes in order to protect victims from further harm. The injunctions sought by the United States would enjoin the defendants from using the mail to distribute the fraudulent solicitations or to collect victim payments, and from selling lists of consumers who have responded to the solicitations. The injunctions would also authorize the U.S. Postal Service to detain any outgoing solicitations mailed by the defendants and any incoming responses to solicitations.
The Justice Department’s case is being handled by the Civil Division’s Consumer Protection Branch and the U.S. Postal Inspection Service, in coordination with the U.S. Attorney’s Office in the Eastern District of New York.
The claims made in the complaints are allegations only, and there has been no determination of liability.
Reward Money Offered for Information Leading to Arrest of Two Fugitives Charged with Multimillion Dollar International Cyber Fraud SchemeRead the Press Release
Earlier today, the U.S. State Department’s Transnational Organized Crime Rewards Program announced the offering of rewards for information leading to the arrest and/or conviction of Romanian fugitive Nicolae Popescu,1 the leader of an international organized crime syndicate that ran a multimillion dollar cyber fraud scheme, and Dumitru Daniel Bosogioiu,2 another Romanian fugitive charged with participating in the scheme. Up to $1 million is being offered for information on Popescu and up to $750,000 for information on Bosogioiu. Interpol has previously issued Red Notices to foreign law enforcement partners seeking assistance in the apprehension of these fugitives, and the FBI has also released “Wanted” posters to facilitate their arrests. Today, the FBI also announced the addition of Nicolae Popescu to the FBI’s Most Wanted Cyber Fugitive List (www.fbi.gov/wanted/cyber).
Defendants Nicolae Popescu and Dumitru Daniel Bosogioiu were originally charged in a criminal complaint with 11 other defendants for their participation in a cyber fraud conspiracy that targeted primarily American consumers on such U.S.-based websites as Cars.com and AutoTrader.com. The charges were brought by the office of Loretta E. Lynch, United States Attorney for the Eastern District of New York. Six of the defendants were arrested in a coordinated international takedown on December 5, 2012, and two other defendants subsequently voluntarily surrendered to the United States to face prosecution,3 but Popescu, Bosogioiu and others have remained at large.
As alleged in the complaint and subsequent indictment, the defendants participated in a long-term conspiracy to saturate Internet marketplace websites including eBay, Cars.com, AutoTrader.com, and CycleTrader.com with detailed advertisements for cars, motorcycles, boats, and other high-value items – generally priced in the $10,000 to $45,000 range – that did not actually exist. The defendants employed co-conspirators who corresponded with the victim buyers by email, sending fraudulent certificates of title and other information designed to lure the victims into parting with their money. The defendants also pretended to sell cars from nonexistent auto dealerships in the United States and created phony websites for these fictitious dealerships. As part of the scheme, the defendants produced and used high-quality fake passports to be used as identification by co-conspirators in the United States to open American bank accounts. After the “sellers” reached an agreement with the victim buyers, they would often email them invoices purporting to be from Amazon Payments, PayPal, or other online payment services, with instructions to transfer the money to the American bank accounts used by the defendants. The defendants and their co-conspirators allegedly used counterfeit service marks in designing the invoices so that they would appear identical to communications from legitimate payment services. The illicit proceeds were then withdrawn from the U.S. bank accounts and sent to the defendants in Europe by wire transfer and other methods.
The complaint and indictment describe the extent to which Popescu, in particular, led the conspiracy. Among other things, Popescu coordinated the roles of the various participants in the scheme – he hired and fired passport makers based on the quality of the fake passports they produced, supervised co-conspirators who were responsible for placing the fraudulent ads and corresponding with the victims, and ensured that the illicit proceeds transferred to the U.S. bank accounts were quickly collected and transferred to himself and others acting on his behalf in Europe. It is estimated that the defendants and their co-conspirators earned over $3 million from the fraudulent scheme.
According to the charging documents, Popescu and his close associate Bosogioiu demonstrated they were aware of the risks of prosecution in the United States. In a recorded conversation on October 23, 2011, Bosogioiu vowed to avoid the FBI. Popescu, meanwhile, predicted on July 28, 2011, “criminals will not be extradited from Romania to U.S.A. . . . [I]t will never happen.”
“As alleged, Popescu and his close associate Bosogioiu engaged in a pattern of pervasive criminal conduct, victimizing hard-working American consumers looking to purchase cars. They believed international borders would allow them to act with impunity. They were wrong. By now, Popescu and Bosogioiu have seen their co-conspirators brought here to account for their crimes. Today’s reward offered by the State Department makes clear that we are determined in our efforts to find these fugitives, no matter where they hide, and bring them to justice for the crimes they have committed against our citizens,” said United States Attorney Lynch. Ms. Lynch expressed her thanks to the U.S. State Department’s Transnational Organized Crime Rewards Program, under which the rewards are being offered.
FBI Assistant Director-in-Charge Venizelos said, “transnational organized crime is rooted in violence and corruption, undermines the integrity of our financial markets and puts the security of our nation at risk. As alleged, while hiding behind international borders, Popescu and Bosogioiu engaged in a systematic cyber fraud scheme targeting primarily American consumers through U.S.-based websites. Working in tandem, they jeopardized the personal security of online users who routinely conducted legitimate business on the internet. The sizeable reward money offered by the Department of State underscores the seriousness of these crimes and our joint commitment to putting these individuals behind bars where they can no longer target innocent victims. This case should serve as a reminder to those who camouflage their criminal acts behind the keyboard while preying upon unsuspecting consumers: we will continue to work with our domestic and international law enforcement partners to disrupt and dismantle criminal enterprises that pose a threat to our citizenry.”
The charges in the complaint and the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The State Department’s Transnational Organized Crime Rewards Program is responsible for offering rewards leading to the arrest and/or conviction of Popescu and Bosogioiu. More information about Popescu and Bosogioiu is available on the Transnational Organized Crime Rewards Program website at www.state.gov/tocrewards. Anyone with information on these individuals should contact the FBI via the Major Case Contact Center at 1-800-CALLFBI (225-5324), contact the nearest U.S. Embassy or Consulate, or submit a tip online at www.tips.gov. All information will be kept strictly confidential.
The offices of the FBI Legal Attachés in Romania, the Czech Republic, the United Kingdom, Canada, and Hungary were instrumental in coordinating efforts with the United States’ international partners, and the U.S. government thanks those partners in Romania, the Czech Republic, Hungary, the United Kingdom, Canada, and Germany for their close cooperation throughout this investigation. The Criminal Division’s Computer Crimes and Intellectual Property Section, Office of International Affairs and Asset Forfeiture and Money Laundering Section, as well as the International Organized Crime Intelligence and Operations Center, Internet Crime Complaint Center, Costa Mesa, Calif., Police Department, Orange County, Calif., District Attorney’s Office, and the New York City Police Department, also provided assistance in the investigation.
The government’s case is being prosecuted by Assistant U.S. Attorneys Nadia Shihata, Melody Wells and Claire Kedeshian of the U.S. Attorney’s Office for the Eastern District of New York.
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1 Popescu is also known as “Nae,” “Nicolae Petrache” and “Nicolae Stoichitoiu.”
2 Bosogioiu is also known as “Dmitru Bosogioiu,” “Dimitru Bosogioiu,” “Dmitru Busogioiu” and “Ioghi.”
3 Of these eight defendants, four have been convicted, three are engaged in criminal proceedings in the United States and one remains engaged in extradition proceedings in Canada.
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dumitru-daniel-bosogioiuLeader of A Long Island Chapter of the Ñetas Gang Sentenced to 37 Years’ Imprisonment in Connection with the Murders of Two 17-Year-Old Rival Gang MembersRead the Press Release
Earlier today, the leader of a Long Island chapter of the Ñetas street gang, Jason Cabral, also known as “J-Live,” was sentenced to a term of imprisonment of 37 years to be followed by five years of supervised release as a result of his guilty plea to the 2004 murders of Anthony Marcano and Fabian Mestres. The sentence was imposed in federal court in Central Islip, New York, by United States Senior District Judge Joanna Seybert.
The sentence 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, New York Field Office (FBI), and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“Ten years ago Jason Cabral ordered the robbery and murder of two 17-year-old young men. His minions carried out that order, binding the victims, wiping their bodies of forensic evidence, stuffing them into the trunk of car and driving them to their executions,” stated United States Attorney Lynch. “For eight years Cabral thought he had outsmarted law enforcement and gotten away with murder. From one slender lead, and with the tenacity of the FBI and NYPD, these horrific murders were solved and the killers brought to justice. We hope today’s proceedings bring some measure of relief to the victims’ families.” Ms. Lynch expressed her grateful appreciation to the Tampa Division of the FBI and United States Attorney’s Office, Middle District of Florida, for their cooperation and assistance in the investigation.
Police Commissioner William J. Bratton said, “This investigation illustrates the unwavering commitment of the law enforcement community who swore to protect and serve the people of this city from criminals like Jason Cabral. This common goal shared between the NYPD, FBI and the Department of Justice was the reason this criminal is now held accountable for these appalling murders. We hope that this sentence will bring some consolation to the victims’ families.”
As detailed during the plea proceeding and other court filings, Cabral targeted one of the victims, Anthony Marcano, because of his affiliation with a rival gang, the Latin Kings. On August 10, 2004, Cabral ordered his fellow gang members to rob and kill 17-year-old Marcano. As part of the plan, the defendant and his co-conspirators lured Marcano to a house in Brentwood. Marcano arrived at that house with 17-year-old Fabian Mestres, a fellow “Pee Wee” member of the Latin Kings street gang. Once inside the house, the victims were restrained with duct tape and their drugs, money and jewelry were stolen. The two victims were stuffed into the trunk of a car and driven to a warehouse in Queens where one of the defendant’s co-conspirators shot them with a shotgun. Mestres was shot once in the head, and Marcano was shot once in the head and once in the back of the neck. Marcano’s and Mestres’s dead bodies were found behind a warehouse in Queens the following day.
The government’s case was prosecuted by Assistant United States Attorneys Nicole Boeckmann and Christopher C. Caffarone.
The Defendant:
JASON CABRAL
Age: 37
Riverview, Florida
Long Island Man Sentenced for Engaging in A Multi-State Scheme to Steal Victims’ Retirement SavingsRead the Press Release
Earlier today, defendant Alexander Swanson, 49, was sentenced to 30 months of incarceration for engaging in a wire fraud scheme to steal the retirement savings of individuals in New York, New Jersey, and elsewhere. “Swanson also forfeited more than $3 million in ill-gotten gains and was preliminarily ordered to pay more than $2.8 million in restitution to his victims.” According to court filings and facts presented during the sentencing proceeding, Swanson misrepresented his job, background, and investment experience to his victims, and then provided the victims with false reports touting his investments’ performance. These misrepresentations fraudulently induced the victims to invest with Swanson, who stole and squandered their retirement savings for his own benefit, including gambling his victims’ savings on sporting events.
The sentence 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).
“Swanson gambled that a false persona, lying about his job, background, and investment expertise would be enough in order to bilk unsuspecting individuals out of their hard earned retirement savings. While the fake Swanson promised them secure investments and gambled their money away, the real Swanson today received the only payout his actions deserve: a significant jail sentence,” stated United States Attorney Lynch. “I would like to thank our partners at the FBI for their hard work on this important investigation.”
The government’s case is being prosecuted by Assistant United States Attorney Christopher A. Ott.
The sentence was imposed by the Honorable Denis R. Hurley at the federal courthouse in Central Islip, New York.
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:
ALEXANDER SWANSON
Age: 52
Smithtown, NY
E.D.N.Y. Docket No. 13-CR-221
Member of Violent Home Invasion Robbery Crew Convicted of Conspiring to Commit Drug Robberies and Conspiring to Distribute Cocaine and HeroinRead the Press Release
Earlier today, following two weeks of trial, a federal jury in Brooklyn, New York, returned a guilty verdict against Henry Fiorentino on both charges of conspiracy to commit Hobbs Act robberies and to distribute cocaine and heroin. The charges arose out of the defendant’s scheme to rob drug dealers while impersonating New York City police detectives. When sentenced by United States District Judge John Gleeson, the defendant faces a maximum sentence of life imprisonment and a minimum of ten years’ imprisonment on the most serious charge.
The verdict was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James J. Hunt, Special Agent in Charge, Drug Enforcement Administration, New York.
“Fiorentino tarnished the image of the New York City Police Department and eroded the public’s trust in our law enforcement officers by impersonating them to facilitate his drug robberies,” stated United States Attorney Lynch. “He will now be held to pay the price for his crimes.” Ms. Lynch extended her grateful appreciation to the DEA, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, New York State Police and the New York City Police Department.
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, and duct tape and often brandished firearms and physically assaulted victims. The crew members then sold the stolen drugs and shared the proceeds.
Fiorentino participated in at least 19 separate robberies and attempted robberies. During these crimes, Fiorentino personally entered the residences and, on numerous occasions, he or his fellow crew members brandished firearms and abducted or restrained victims. During all of these 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.
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)
Three Brothers Convicted of 1994 MurderRead the Press Release
Earlier today, following three weeks of trial, a federal jury in Brooklyn, New York, returned guilty verdicts against Brian Gill, David Gill and Samuel McIntosh for their participation in the drug-related murder of Michael Dawson on June 22, 1994. Brian Gill and David Gill were also convicted of a narcotics trafficking conspiracy between 2011 and 2013. The charges arose out of the defendants’ long-time control of a drug trafficking organization that operated in the Park Hill housing complex in the Clifton neighborhood of Staten Island. When sentenced by United States Chief District Judge Carol B. Amon, Brian Gill faces a mandatory minimum sentence of life imprisonment; David Gill and Samuel McIntosh each face a mandatory minimum sentence of 20 years’ imprisonment and a maximum sentence of life imprisonment.
The verdicts 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).
“For years, these defendants made drug dealing and violence a daily reality for the law-abiding residents of Park Hill,” stated United States Attorney Lynch. “Today, these three men have been held accountable for the lives they have destroyed and the harm they have done to one of our communities. As a result of the extraordinary efforts of law enforcement, Park Hill is a safer place.” Ms. Lynch extended her grateful appreciation to the FBI, New York City Police Department, and the Richmond County District Attorney for their outstanding assistance in this case.
Over the course of two decades, the defendants intermittently operated a lucrative drug distribution business in Park Hill, Staten Island. On June 22, 1994, in connection with that business and in retaliation for selling crack cocaine on the defendants’ turf, the defendants brazenly murdered Michael Dawson in broad daylight in the street outside of 160 Park Hill Avenue, a profitable building for crack dealing in Park Hill. Shortly thereafter, Brian Gill fled Staten Island. In 2011, when Brian Gill returned to Park Hill after 17 years away, he launched another crack dealing business in Park Hill from his residence at 160 Park Hill Avenue. David Gill participated in and helped Brian Gill with that business.
The convictions of these defendants are the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of violent narcotics trafficking organizations operating in Brooklyn and Staten Island. This year alone, in five separate trials, this Office has obtained trial convictions for seven defendants for carrying out ten different murders.
The government’s case is being prosecuted by Assistant United States Attorneys Nadia Shihata and Alicyn Cooley.
The Defendants:
BRIAN GILL
Age: 46 years
Staten Island, New York
DAVID GILL
Age: 43 years
Staten Island, New York
SAMUEL MCINTOSH
Age: 40 years
Staten Island, New York
E.D.N.Y. Docket No. 13-CR-487
Board Member Sentenced to 10 Years’ Imprisonment for His Role in $10 Million Advance Fee and Gold Mine Investment SchemesRead the Press Release
Earlier today, Brad Russell, a member of the Board of Harbor Funding Group, Inc. (HFGI), was sentenced in federal court in Brooklyn, New York to 10 years’ imprisonment. In March 2014, following a six-week jury trial, Russell was convicted of all counts of the indictment for 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, Russell was also sentenced to 3 years’ supervised release and ordered to pay a total of $10,707,894.59 in forfeiture and restitution to the victims of the two schemes. Co-defendant Kristofor Lange, the Vice President of Black Sand Mine, Inc. (BSMI), who was also convicted following trial, was sentenced earlier today to 5 years’ probation and ordered to pay $780,000 in forfeiture and restitution for his role in the Alaskan gold mine investment scheme.1
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).
“After the devastation wrought by Hurricane Katrina, many individuals looked to help the storm-tossed area recover. Russell and his co-conspirators looked to line their own pockets, pretending to be able to finance redevelopment projects but in reality fleecing unsuspecting developers and investors of millions. After Russell and his co-conspirators spent the money they stole from their victims, they embarked on a gold mine scheme that too was built and sold on lies and deceit. Those who seek to take advantage of tragedies to line their own pockets are on notice 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 the five-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.
Russell, together with others at HFGI, executed an advance fee scheme by targeting regions affected by Hurricane Katrina. They told land developers and their clients that HFGI had lenders and funds available to provide financing for their real estate projects, but as a condition for financing, HFGI required its clients to place ten percent of the loan amount in an attorney escrow account. Contrary to their representations, HFGI did not have lenders or funds available to finance the loans and stole the deposit money placed in escrow. Russell was the loan processor at HFGI and prepared and maintained the loan documents and escrow agreements. Through this scheme, Russell and his co-conspirators stole more than $9 million from approximately 300 individuals.
At trial, the government also proved that Russell and Lange, together with others, executed an investment scheme where they induced investors to invest in BSMI through lies and deceit. BSMI claimed that it was going to mine gold and other precious metals on Sitkinak Island in Alaska. Through the use of in-person presentations, cold calls and “webinars,” Russell, Lange, and their co-conspirators, convinced investors to invest in BSMI 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.
The sentences were imposed by United States District Judge Dora L. Irizarry.
The government’s case was 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 Defendants:
BRAD A. RUSSELL
Age: 43
Residence: Gig Harbor, Washington
KRISTOFOR J. LANGE
Age: 31
Residence: Gig Harbor, Washington
E.D.N.Y. Docket No. 10-CR-968
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1 Kristofor Lange was not charged in the advance fee scheme.
Investment Fund Manager Pleads Guilty to Securities Fraud for Operating A $17 Million Ponzi SchemeRead the Press Release
On Monday, November 10, 2014, James M. Peister pleaded guilty at the federal courthouse in Central Islip, New York, to securities fraud for operating a $17.9 million Ponzi scheme. Peister deceived investors about the stability and performance of their investments in a fund that he founded and managed to prevent them from seeking to redeem their interests. Pursuant to his plea agreement with the government, Peister agreed to pay $9,657,218.65 in restitution to the victims of his fraud and consented to the forfeiture of $17.9 million, which includes his residence in St. James, New York, and his Hummer sport utility vehicle. When sentenced, Peister faces up to 20 years in prison and a fine of up to $5,000,000.
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 a decade, rather than make sound investment decisions as he had promised, James Peister fleeced dozens of investors and used their money to fund his own lavish lifestyle. When the financial crises struck in 2008 and his investor pool dried up, Peister’s carefully woven web of lies and deceit began to untangle and his scheme was revealed. Monday’s plea marks the end of Peister’s scheme and demonstrates this Office’s steadfast commitment to investigating and prosecuting fund managers who prey on the investing public,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the FBI, the agency responsible for leading this investigation, and to the United States Securities Exchange Commission and United States Commodity Futures Trading Commission for their cooperation and assistance in the investigation.
According to court filings and facts presented at the plea hearing, between January 2000 and June 2009, Peister raised more than $17 million from at least 74 investors in connection with his investment funds: Northstar International Group Inc., North American Globex Group, and North American Globex Fund, LP. Through representations in marketing materials and other disclosures to investors and potential investors, Peister promised to invest in a variety of securities, including stocks, futures and fixed income instruments. Contrary to his purported investment strategy, Peister used new investors’ money to pay out existing investors and to finance business and personal expenses, including payments on a personal residence and a Hummer luxury sport utility vehicle. To conceal the true nature of the use of his victims’ money, Peister grossly overstated the value of the assets under his management by providing bogus financial statements to investors and to auditors. As a result, investors believed that their accounts with Peister were performing satisfactorily, and they continued to invest with him. Peister’s Ponzi scheme collapsed in the wake of the financial crisis in 2008 when he could no longer keep up with demands for redemptions from nervous investors. Since Peister’s arrest this past June, the government has seized his Hummer sport utility vehicle and restrained rental payments owed to Peister in connection with the leasing of property that was purchased with proceeds of his fraud.
Monday’s plea took place before United States District Judge Joseph F. Bianco.
The government’s case is being prosecuted by Assistant United States Attorneys Jacquelyn M. Kasulis, Jonathan P. Lax and Brian D. Morris.
This prosecution was the result of efforts by President Obama's Financial Fraud Enforcement Task Force which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. 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:
JAMES M PEISTER
Age: 62
St. James, New York
E.D.N.Y. Docket No. 14-CR-328 (JFB)
Self-Described Investment Fund Manager Sentenced to 57 Months’ Imprisonment in $5 Million Fraud SchemeRead the Press Release
Earlier today, Thomas Bannon, the president of Overseas Investors LLC and Overseas Investors International, Ltd. (collectively, “Overseas Investors”), was sentenced in federal court in Brooklyn, New York to 57 months’ imprisonment and ordered to pay $5,001,949 in restitution. In June 2014, Bannon had pleaded guilty to wire fraud for defrauding an individual entrepreneur of $5 million through, among other things, false representations about his access to hedge funds and wealthy investors. Co-defendant Theodore Sweeten pleaded guilty in June 2013 to wire fraud and was sentenced to 48 months in prison in January 2014. Co-defendant Robert Bardey was convicted by a federal jury on all counts, including wire fraud and perjury, on October 28, 2014, and is scheduled to be sentenced on February 11, 2015.
The sentence 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).
“Thomas Bannon claimed to have access to the wealthy and their millions of dollars. In reality, Bannon’s only access was to other fraudsters and phony bank documents which he used to perpetrate this audacious fraud on an unsuspecting investor. We hope that this conviction and sentence serve as a warning to others engaged in such fraudulent conduct that they will be held accountable and face imprisonment for their actions,” stated United States Attorney Lynch. Ms. Lynch expressed her appreciation to the FBI, the agency responsible for the investigation.
Bannon falsely represented to the victim that Overseas Investors collaborated with hedge funds and wealthy investors who were willing, in exchange for a substantial fee, to “lease” funds and set up bank accounts in its clients’ names that contained the leased funds. Based on this and other misrepresentations, Bannon and his co-conspirators induced the victim to invest $5 million in order to “lease” a credit line of $100 million, which in turn would enable them to generate millions of dollars in profit through special investment programs. In furtherance of that scheme, Bannon and his co-conspirators falsely represented that the victim’s funds would be held in an attorney escrow account pending confirmation of the posting of $100 million in the leased-funds account. In fact, Bannon and his co-conspirators simply distributed the victim’s $5 million among themselves and falsely represented that a $100 million account had been created at HSBC by sending the victim fabricated bank documents on HSBC letterhead.
When the victim discovered that the bank documents on HSBC letterhead were phony, he requested a refund of the $5 million that he had deposited into the attorney escrow account. In response, Bannon and his co-conspirators told the victim that the money had been disbursed to the investors who created the $100 million account. In particular, Bannon concealed from the victim the fact that he had requested and received $600,000 of the escrowed funds prior to the issuance of the fabricated HSBC documents.
The sentence was imposed by United States District Judge Nicholas G. Garaufis.
The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes and Marcia M. Henry.
This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets, and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.
The Defendant:
THOMAS BANNON
Age: 82
Residence: New York, New York
E.D.N.Y. Docket No. 12-CR-471
Queens Doctor Pleads Guilty to Conspiracy to Distribute OxycodoneRead the Press Release
Gracia L. Mayard, a Queens doctor, pleaded guilty today to conspiring to illegally distribute oxycodone, a highly addictive prescription pain killer. Mayard entered his plea before United States District Judge Joseph F. Bianco at the United States Courthouse located in Central Islip, New York. At sentencing on February 27, 2015, Mayard faces a maximum of 20 years’ imprisonment and a $1 million fine.
The guilty plea 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; Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD); Joseph A. D’Amico, Superintendent, New York State Police (NYSP); and Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS).
“Dr. Mayard tried to evade prescription reporting requirements in order to provide vast quantitites of these powerful painkillers in exchange for cash. Simply put, he acted as a drug dealer, not a doctor. Even after he surrendered his DEA registration he continued to write prescriptions,” stated United States Attorney Lynch. “Health care professionals are not above the law, and those who illegally dispense prescriptions pills in violation of their oaths will be prosecuted.” Ms. Lynch extended her grateful appreciation to each of the law enforcement agencies for their assistance in this case.
During his allocution before Judge Bianco, Mayard admitted that in 2012 and 2013, he provided prescriptions to a co-conspirator for patients he had not examined in exchange for cash, and he continued to write prescriptions after surrendering his DEA registration to prescribe controlled substances on February 7, 2013.
On March 20, 2013, as part of a federal and state prescription drug abuse initiative within the Eastern District of New York, Mayard was arrested by members of the DEA’s Long Island Tactical Diversion Squad comprising agents and officers of the DEA, Nassau County Police Department, Rockville Centre Police Department and Port Washington Police Department. Mayard has been in custody since his arrest. According to court filings and records of the New York State Bureau of Narcotics Enforcement, during the first nine months of 2012, Mayard issued 2,953 oxycodone prescriptions – totaling 376,469 pills. On February 6, 2013, when members of the DEA Tactical Diversion Squad contacted Mayard, he voluntarily surrendered his DEA registration authorizing him to prescribe controlled substances. However, three weeks later, on February 28, 2013, Mayard nevertheless issued a prescription for oxycodone. On March 13, 2013, a pharmacist, in the presence of DEA agents, called Mayard about the prescription. During the call, Mayard confirmed that he had issued the prescription and provided his surrendered DEA registration number, all in an effort to persuade the pharmacist to fill the oxycodone prescription.
Oxycodone is a scheduled controlled substance that may be dispensed by medical professionals only for a legitimate medical purpose in the usual course of a doctor’s professional practice. It is a powerful and highly addictive drug and is increasingly abused because of its potency when crushed into a powder and ingested, leading to a heroin-like euphoria.
Mayard’s guilty plea is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this jurisdiction, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Prescription Drug Initiative to mount a comprehensive response to what the United States Department of Health and Human Services’ Center for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. So far, the Prescription Drug Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 15 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and a pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.
The government’s case was prosecuted by Assistant United States Attorney Allen Bode.
The Defendant:
Name: GRACIA L. MAYARD
Age: 62
Residence: Queens, NY
Two Air Traffic Controllers at JFK Arrested After Stealing Time from the Federal Aviation Administration for More Than 3 YearsRead the Press Release
A criminal complaint was unsealed today in federal court in Brooklyn charging Asif Ali and Jeffrey Evagues with stealing more than $165,000 from the Federal Aviation Administration (FAA) by modifying payroll system entries to indicate that they were working when they were not. Ali and Evagues were arrested earlier today in South Ozone Park, Queens, and Manorville, Long Island, respectively. Their initial appearance is scheduled for this afternoon before United States Magistrate Judge Viktor V. Pohorelsky at the United States 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, and Douglas Shoemaker, Special Agent in Charge, United States Department of Transportation, Office of Inspector General, New York Regional Office.
As alleged in the complaint, between September 2011 and October 2014, FAA Air Traffic Controllers Ali and Evagues modified labor distribution reports on more than 300 occasions to indicate and get paid as if they were controlling air traffic at JFK when, in fact, they were taking vacation time, sick leave, or regular days off. Security camera footage captured both defendants entering the room that contains the computer from which payroll changes occurred, just minutes prior to when modifications were implemented.
“For three years, these air traffic controllers engaged in a high flying scheme to redirect public funds into their own bank accounts. Today they were grounded,” stated United States Attorney Lynch. “This office and its law enforcement partners are committed to ensuring that government employees act with the degree of integrity that the public expects and deserves.”
“The arrest of Mr. Asif Ali and Mr. Jeffrey Evagues for allegedly stealing time from the FAA is a clear signal that Federal employees will be held responsible for maintaining the highest level of integrity,” stated Douglas Shoemaker, DOT OIG Regional Special Agent in Charge. “Working with our law enforcement peers and prosecutorial colleagues, we will continue our vigorous efforts to protect the taxpayers’ investment in our nation’s transportation system from fraud, waste, abuse, and violations of law.”
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 Special Assistant United States Attorney Jonathan P. Lax.
The Defendants:
ASIF ALI
Age: 38
South Ozone Park, New York
JEFFREY EVAGUES
Age: 54
Manorville, New York
E.D.N.Y. Docket No. 14-MC-917
Civil Complaint Filed Against Islip Terrace Doctor for Issuing Prescriptions Without Legitimate Medical NeedRead the Press Release
Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James J. Hunt, Drug Enforcement Administration Special Agent in Charge (DEA New York), today announced the filing of a civil action by the United States against Lawrence Womack, age 48, an Islip Terrace, New York, based physician.
In the civil action, the United States alleges that between January 2011 and June 2013, the defendant wrote 241 prescriptions for Schedule II controlled substances, specifically for oxycodone, methadaone and fentanyl, in the absence of any legitimate medical need. The complaint alleges that in writing these prescriptions the defendant disregarded patients’ toxicology screens that indicated potentially lethal drug interactions. In addition, the complaint alleges that the defendant conducted periodic breast examinations in exchange for continued prescriptions and/or increased amounts of opioids, including oxycodone.
Oxycodone is a scheduled controlled substance that may be dispensed by medical professionals only for a legitimate medical purpose in the usual course of a doctor’s professional practice. It is a powerful and highly addictive drug and is increasingly abused because of its potency when crushed into a powder and ingested, leading to a heroin like euphoria.
“Medical professionals who hand out prescriptions for narcotics in the absence of any legitimate medical need place the lives of their patients at risk and contribute to the scourge of prescription drug abuse in our communities. Doctors who violate their oaths in this manner will be held accountable to the fullest extent of the law,” stated United States Attorney Lynch. “I want to thank our partners at the Department of Health and Human Services, Office of the Inspector General, for their outstanding investigative efforts in this case.”
“By no means was Dr. Womack upholding his oath to do no harm when he continued to prescribe oxycodone pills to patients after being alerted of their failed drug tests,” stated DEA Acting Special Agent in Charge Hunt. “Ignoring the warning signs, Dr. Womack’s alleged actions supported the ultimate distribution of diverted oxycodone throughout Long Island communities enabling opioid addiction.”
In January 2012, this Office and the DEA’s Long Island Tactical Diversion Squad comprising agents and officers of the DEA, Nassau County Police Department, Rockville Centre Police Department and Port Washington Police Department, in conjunction with the five District Attorneys in this jurisdiction, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Prescription Drug Initiative to mount a comprehensive response to what the United States Department of Health and Human Services’ Center for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. So far, the Prescription Drug Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 15 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and a pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.
The United States’ case is being handled by Assistant United States Attorney Diane C. Leonardo.
Queens Man Arrested for Sexually Abusing Three Girls at Fort Hamilton Military BaseRead the Press Release
Federal agents arrested a Queens man earlier today on charges of coercing and enticing three minors to engage in sexual activity and sexually abusing minors. The defendant, Fausto Bonifaz, is scheduled to be arraigned later today before United States Magistrate Judge Robert M. Levy at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The arrest 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.
According to a detention memorandum filed today and an indictment returned by a grand jury yesterday, the defendant sexually abused three girls, whose ages ranged from 12 to 13, at the Fort Hamilton Army Base in Brooklyn, New York. The defendant was a civilian who had been admitted to the base because he worked with a victim’s mother and had access to her house. The defendant’s actions were uncovered when, years later, one of the victims reported the abuse to a counselor. Prior to his arrest, the defendant admitted to FBI agents that he had sexually abused one of the victims and signed a written statement detailing the abuse.
“Protecting children from sexual predators is one of our highest priorities. We will not allow people such as the defendant to prey on the families of our military, and we will investigate all allegations of abuse,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation who investigated this case.
FBI Assistant Director-in-Charge Venizelos stated, “The act of sexual abuse haunts its victims long after the crime has been committed, setting them up for a life overshadowed by despair. Today’s charges underscore our commitment to protect our children -- our nation’s greatest asset -- from this type of violence carried out by predators who seek to destroy their innocence.”
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, the defendant faces a minimum of ten years’ imprisonment.
The government’s case is being prosecuted by Assistant United States Attorney Tiana Demas.
The Defendant:
Name: FAUSTO BONIFAZ
Age: 39
Queens, New York
Long Island Attorney Charged with Forging Signature of Bankruptcy JudgeRead the Press Release
An indictment was unsealed today in federal court in the Eastern District of New York charging Jeffrey I. Stark, Esq., with forgery of the signature of a judge of the United States Bankruptcy Court for the Eastern District of New York. Stark is alleged to have forged the signature of a judge on a purported order in a case in which he had been retained to file for bankruptcy. However, Stark never commenced any action with the bankruptcy court on behalf of his client. Stark was arrested and his initial appearance was held before United States Magistrate Judge Lindsay at the federal courthouse in Central Islip.
The charge and Stark’s arrest 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.
“As alleged, Stark violated his ethical obligation to his clients and committed a serious crime which strikes at the foundation of our judicial system,” stated United States Attorney Lynch. “Attorneys are expected to uphold the law, not to violate it.” Ms. Lynch extended her grateful appreciation to the FBI.
FBI Assistant Director-in-Charge Venizelos stated, “As alleged, Stark’s conduct demonstrated a lack of respect for the legal system and those who serve it. As officers of the court, attorneys are held to a higher standard and are expected to uphold the law and its ethics. The FBI is committed to investigating corrupt lawyers who commit fraudulent practices.”
If convicted, the defendant faces a maximum sentence of 5 years of imprisonment. The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorney Allen Bode.
The Defendant:
JEFFREY I. STARK
Age: 51
Levittown, New York
E.D.N.Y. Docket No. 14-CR-572 (ADS)(ARL)
Dual Kazakh-Israeli Citizen Extradited from Cyprus to United States to Face Fraud and Money Laundering ChargesRead the Press Release
BROOKLYN, NY – Genadi Yagodayev, a dual citizen of Kazakhstan and Israel, has been extradited to the United States from Cyprus to face charges related to the Rockford Group investment scheme, which defrauded investors out of millions of dollars. Yagodayev is charged in an indictment with mail and wire fraud conspiracy, securities fraud, money laundering conspiracy, and money laundering. He is scheduled to be arraigned tomorrow at 2:00 p.m. before U.S. Magistrate Judge Robert M. Levy in federal court in Brooklyn, New York. The case has been assigned to U.S. District Judge I. Leo Glasser.
The extradition was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Philip R. Bartlett, Postal Inspector in Charge, U.S. Postal Inspection Service (USPIS), New York Division; James T. Hayes, Jr., Special Agent in Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York; and Robert J. Sica, Special Agent in Charge, United States Secret Service (USSS), New York Field Office.
According to the indictment and other court documents, from approximately December 2008 to November 2009, Yagodayev and his co-conspirators participated in a fraudulent investment scheme through a company called the Rockford Group. In documents, Yagodayev described himself as the “President” and “Manager” of the Rockford Group. The Rockford Group marketed itself as a “leading private equity firm,” claimed to invest in plaintiffs’ rights to future recoveries in personal injury and other lawsuits, and promised a 15% return on their investments. The Rockford Group, however, never invested in any lawsuits. Instead, nearly all of the investors’ funds were wired to bank accounts overseas. Approximately 200 investors in the U.S. and Canada lost approximately $11 million as a result of this scheme.
“As set forth in the indictment, the defendant Yagodayev was a member of a group of fraudsters who stole the savings of hardworking individuals. Yagodayev styled himself as the president and manager of the Rockford Group, a company that existed only to scam innocent victims,” stated United States Attorney Lynch. “As the defendant’s extradition illustrates, we will pursue these crooks wherever they go.” Ms. Lynch thanked the government of Cyprus and the Department of Justice’s Office of International Affairs for their assistance in the extradition of Yagodayev.
“When the U.S. Mail is used to commit a mail fraud investment scheme, the U.S. Postal Inspection Service will commit the resources necessary to properly investigate and bring the case forward for prosecution. This is one of the many ways we ensure the public’s trust in the U.S. Mail,” said Inspector in Charge Philip R. Bartlett.
“Yagodayev’s extradition disrupts an alleged Ponzi scheme that swindled investors in the United States and Canada out of millions of dollars,” said James T. Hayes Jr., Special Agent in Charge of HSI in New York. “White collar criminals who think they can scam U.S. investors from overseas and get away with it are mistaken. HSI and its federal and international law enforcement partners will use all of its resources to locate and arrest criminals who attempt to exploit our financial systems."
“The extradition of Genadi Yagodayev is yet another example of how the Secret Service continues to successfully combat financial fraud,” said Robert J. Sica, Special Agent in Charge of the United States Secret Service New York Field Office. “Our success in this case and similar investigations is a result of our close work with our network of law enforcement partners. This case demonstrates there is no such thing as anonymity for those engaging in fraudulent schemes.”
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment on each of the charged counts.
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 government’s case is being prosecuted by Assistant United States Attorneys Daniel A. Spector and Justin D. Lerer.
The Defendant:
GENADI YAGODAYEV
Age: 36
E.D.N.Y. Docket No. 14-CR-258
New York Attorney Convicted of Fraud and Perjury in $5 Million Advance Fee SchemeRead the Press Release
Robert Bardey, an attorney in New York, was convicted yesterday by a federal jury in Brooklyn on all four counts of the indictment, including wire fraud and perjury, for defrauding an individual entrepreneur of $5 million through, among other things, false representations about the disbursement of funds placed in his purported escrow account and then lying in a federal grand jury. Co-defendant Theodore Sweeten pleaded guilty in June 2013 to wire fraud and was sentenced to 48 months in prison in January 2014. Co-defendant Thomas Bannon pleaded guilty in June 2014 to wire fraud and will be sentenced on November 7, 2014.
The guilty verdict 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).
“Robert Bardey had a license to practice law, but used it instead as a license to steal. Instead of protecting clients’ deposits placed in his attorney escrow account, he stole from that account. Bardey abused his position of trust and defrauded a sole investor of $5 million, and when questioned about it in a federal grand jury, he lied under oath. This conviction sends a strong message to attorneys in positions of trust that we will vigorously pursue them and bring them to justice if they use their positions to perpetrate fraud,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the FBI, the agency responsible for leading the government’s investigation.
Bardey, together with co-defendants Bannon and Sweeten, falsely represented to the victim, among other things, that they had access to hedge funds and wealthy investors who were willing, in exchange for a substantial fee, to “lease” funds and set up bank accounts in their clients’ names that contained the leased funds. Based on this and other misrepresentations, Bardey and his co-conspirators induced the victim to invest $5 million in order to “lease” a credit line of $100 million, which in turn would enable them to generate millions of dollars in profit through special investment programs. In furtherance of that scheme, Bardey and his co-conspirators falsely represented that the victim’s funds would be held in an attorney escrow account pending confirmation of the posting of $100 million in the leased-funds account. In fact, Bardey and his co-conspirators distributed the victim’s $5 million among themselves and falsely represented that a $100 million account had been created at HSBC by sending the victim fabricated bank documents on HSBC letterhead.
When the victim discovered that the bank documents on HSBC letterhead were phony, he requested a refund of the $5 million that he had deposited into Bardey’s attorney escrow account. In response, Bardey and his co-conspirators told the victim that the money had been disbursed to the investors who created the $100 million account. In particular, Bardey concealed from the victim the fact that he had begun withdrawing the escrowed funds for his personal use on the same day that the victim had deposited the $5 million into the escrow account.
When sentenced by United States District Judge Nina Gershon, Bardey faces a sentence of up to 20 years’ imprisonment for wire fraud conspiracy and wire fraud counts and five years’ imprisonment for the perjury count.
The government’s case is being prosecuted by Assistant United States Attorneys Jack Dennehy and Marcia M. Henry.
This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets, and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.
The Defendant:
ROBERT BARDEY
Age: 82
Residence: New York, New York
E.D.N.Y. Docket No. 12-CR-471
Gambino Crime Family Associate Gennaro Bruno Charged with the 2002 Murder of Martin BosshartRead the Press Release
Earlier today, an indictment was unsealed charging Gennaro “Jerry” Bruno of the Gambino organized crime family of La Cosa Nostra (the “Gambino crime family”) with racketeering and racketeering conspiracy, including predicate acts of murder, narcotics trafficking, extortion and obstruction of justice.1 Bruno was arrested today in Las Vegas, Nevada, where his initial appearance for removal proceedings to the Eastern District of New York is scheduled for later today at the Lloyd D. George United States Courthouse, 333 Las Vegas Boulevard South, Las Vegas, Nevada.
The charges and Bruno’s arrest 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.
“As alleged, Gennaro Bruno started his criminal career at a young age as a member of a street gang where he earned his criminal credentials. He then graduated to become an associate in the Gambino crime family, where he proved himself to be both an earner for the family and capable of murder. The arrests and charges announced today are a testament to the tireless pursuit of justice by law enforcement,” stated United States Attorney Lynch. “We will not rest until violent criminals who use their mafia ties to obstruct justice and evade the law are brought to justice.” Ms. Lynch extended her grateful appreciation to the FBI, New York City Police Department and the Queens County District Attorney for their outstanding assistance in this case.
FBI Assistant Director-in-Charge George Venizelos stated, “As alleged, Gennaro “Jerry” Bruno was originally trained as a member of the “Young Guns.” After being released from prison, Bruno was promoted to associate of the Gambino crime family. In January of 2002, Bruno executed Martin Bosshart by shooting him in the back of the head. Bruno was as ruthless as he was calculating, and after a long run of evading justice, Bruno’s gig is up.”
According to the indictment and other court filings, when Bruno was released following a term of imprisonment from approximately 1997 to 2000, he emerged as an associate of the Gambino crime family, having graduated from the local gang of young men referred to as the “Liberty Posse” or the “Young Guns.” Over the next 14 years, before his arrest today, Bruno engaged in a myriad of crimes with and on behalf of a faction of the Gambino crime family aligned with Joseph “JoJo” Corozzo, a powerful Gambino member who had risen to become the consigliere of the family. Bruno and other Gambino crime family members and associates moved large quantities of high-potency marijuana from Canada into the New York City area. In 2001, Bruno’s criminal associate Martin Bosshart began efforts to exclude one of Bruno’s coconspirators from the marijuana importation operation. In an effort to prevent Bosshart from doing so, Bruno plotted with other Gambino crime family members and associates, including Todd LaBarca, to murder Bosshart.2 On the night of January 2, 2002, Bruno and others lured Bosshart to an isolated location in Queens, New York. There, Bruno allegedly shot Bosshart in the back of the head at point-blank range, killing him immediately. The body of Martin Bosshart, who was 30 years old at the time, was recovered at the scene.
Thereafter, Bruno evaded justice for years and conspired with other Gambino associates to obstruct an official grand jury proceeding into the Bosshart murder, while continuing to participate in the core money-making activities of the Gambino crime family, including drug trafficking and extortion. As part of the alleged pattern of racketeering, Bruno, among other things, used his position in the Gambino crime family to extract extortionate payments from the owner of a waste carting company in Queens, New York.
The government’s case is being prosecuted by Assistant United States Attorney M. Kristin Mace.
The Defendant:
GENNARO BRUNO, a/k/a “Jerry”
Age: 41
Las Vegas, Nevada
E.D.N.Y. Docket No. 14-CR-556 (WFK)
___________________________________________________________________________
1 The charges announced today are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
2 On April 26, 2012, fellow Gambino associate Todd LaBarca pleaded guilty in the Southern District of New York to racketeering, with predicate acts of conspiracy to murder Martin Bosshart, narcotics trafficking, extortion and bookmaking, as well as conspiracy to commit assault in aid of racketeering.
Aubrey Lee Price, Former Bank Director Who Faked His Own Death, Sentenced to 30 Years in PrisonRead the Press Release
BROOKLYN, NY – Edward J. Tarver, United States Attorney for the Southern District of Georgia, and Loretta E. Lynch, United States Attorney for the Eastern District of New York, announced that Aubrey Lee Price, 48, was sentenced today in Statesboro federal court to 30 years in federal prison for perpetrating a Ponzi scheme that resulted in millions of dollars of losses to dozens of Price’s investors and led to the collapse of a federally insured bank. Today’s sentencing took place before the Honorable B. Avant Edenfield, United States District Judge for the Southern District of Georgia.
“Through a web of lies and deceit, Aubrey Lee Price conned his elderly investors and a federally insured bank of more than $70 million, and then attempted to further his con and avoid accountability by faking his own death. However, his life on the lam ended with a routine traffic stop. Today’s sentence sends a strong message to those who seek to defraud the investing public and our financial institutions that we will pursue them and bring them to justice,” stated United States Attorney Lynch.
“The sentence imposed today reflects the magnitude of Aubrey Lee Price’s fraud,” said United States Attorney Tarver. “Price engaged in a staggering betrayal of trust, leaving his elderly investors practically penniless, and at the same time, contributing to the collapse of a federally insured bank. For his crimes, Price richly deserves the heavy sentence handed down today by the Court.”
George Venizelos, Assistant Director in Charge, FBI New York Field Office, along with J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated, “While today’s sentencing of former banker Aubrey Lee Price concludes a lengthy investigation as well as an extensive and resource-intensive manhunt, it does not restore the financial harm done to his many victims. The FBI would like to express its gratitude to those many and varied law enforcement agencies whose efforts in the investigation and apprehension of Mr. Price made today’s sentencing possible. We are hopeful that this announcement will provide some solace to his victims.”
Jason T. Moran, Special Agent in Charge, FDIC Office of Inspector General, stated, “The Federal Deposit Insurance Corporation Office of Inspector General is pleased to have joined the United States Attorney’s Office and our law enforcement colleagues in investigating the fraud that led to the conviction of Aubrey Lee Price. It is particularly troubling when bank insiders violate the public trust and engage in activities that impact the safety and soundness of our nation’s banks.”
“Theft of employee benefit assets jeopardizes the benefits of workers. This case reaffirms the Labor Department’s commitment to protect workers’ benefits by identifying criminal activity wherever and whenever it occurs,” said Isabel Colon, Regional Director of the United States Department of Labor Employee Benefit Security Administration’s Atlanta Regional Office.
According court filings and evidence presented at the guilty plea and sentencing hearings, Price embezzled over $21 million in capital from MB&T, and lost much of it by investing in risky equity securities and options. To cover up his fraud, Price provided MB&T officials with bogus account statements and other false documents which falsely indicated the bank’s capital was safely held in an account at a financial services firm, when in truth, most of the money was gone. A further investigation of Price revealed that between June 2009 and June 2012, he also defrauded approximately 115 individual investors who had invested $51 million in two investment funds he managed. Price lost almost all of that money through speculative trading, and to cover up his losses, Price posted fake account statements on a secure web site that fraudulently reflected fictitious assets and fabricated investment returns for each investor.
In mid-June 2012, Price sent acquaintances “suicide letters” in which he admitted he had defrauded MB&T Bank and Price’s individual investors, and that he planned to kill himself by throwing himself off a high-speed ferry boat after it left Key West, Florida. As a result of the suicide claim, the United States Coast Guard searched to no avail for Price’s body. Shortly after sending the letters, Price disappeared. After more than a year of searching for Price, he was arrested on December 31, 2013, after he presented a false identification during a routine traffic stop in Brunswick, Georgia.
Price has been in custody since his arrest on December 31, 2013. In addition to being sentenced to 30 years’ imprisonment, Price was also sentenced to serve a term of 5 years of supervised release. Tarver noted that there is no parole in the federal system. As part of his sentence, Price will also be ordered to pay restitution to the victims of his crimes in an amount to be determined at a restitution hearing to be held by February 1, 2015. In addition, Price was ordered to forfeit a total of $51 million, representing the proceeds of his crimes.
U. S. Attorneys Tarver and Lynch credited the FBI in Georgia, under the direction of Special Agent in Charge Johnson, and in New York, under the direction of Assistant Director in Charge Venizelos, with the investigation leading to today’s sentencing. They also thanked the United States Attorney’s Office for the Southern District of Florida; the United States Attorney’s Office for the Northern District of Georgia; the Securities and Exchange Commission (SEC), Atlanta Regional Office; the Federal Deposit Insurance Corporation (FDIC); the Federal Reserve Board, Office of Inspector General; the United States Coast Guard; the United States Department of Labor; the Lowndes County Georgia Sheriff’s Department; the Glynn County Georgia Sheriff’s Department; the Toombs County Georgia Sheriff’s Department; and the Marion County Florida Sheriff’s Department for their cooperation and assistance in the investigation and prosecution of Price.
The government was represented by Assistant United States Attorney Brian T. Rafferty of the U. S. Attorney’s Office, Southern District of Georgia, and Assistant United States Attorneys Shannon C. Jones and Brian Morris of the U. S. Attorney’s Office, Eastern District of New York.
This prosecution was the result of efforts by President Barack 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. For more information on the task force, visit http://www.StopFraud.gov.
The Defendant:
AUBREY LEE PRICE
Age: 48
Valdosta, Georgia
S.D.G.A. Docket No. 612-CR-10
E.D.N.Y. Docket No. 13-CR-058
Leaders of Violent Gang Convicted on All Counts in Racketeering and Murder CaseRead the Press Release
Earlier today, following three weeks of trial, a federal jury in Brooklyn, New York, returned guilty verdicts against Harvey Christian, Anthony Christian and Jason Quinn, on charges of racketeering – including murder conspiracies and, against Anthony Christian, the murder of Jerome Estella as racketeering acts – as well as firearms possession and multiple counts based on their trafficking in crack cocaine. The charges arose out of the defendants’ long-time dominance of a drug crew that operated in the Park Hill housing complex in the Clifton neighborhood of Staten Island. When sentenced by United States District Judge Eric N. Vitaliano, Harvey Christian faces a mandatory minimum sentence of 40 years’ imprisonment and a maximum sentence of life imprisonment; Anthony Christian faces a mandatory sentence of life imprisonment; and Quinn faces a mandatory minimum sentence of 65 years’ imprisonment and a maximum sentence of life imprisonment.
The verdicts 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).
“For all of their adult lives, the Christian brothers and their associates terrorized the residents of Park Hill, forcing them to live in fear of violence,” stated United States Attorney Lynch. “Today, their ability to earn money through crime comes to an end, and so does their rule of the streets. This verdict sends the message that that violence and drug-dealing have no place in our communities.” Ms. Lynch extended her grateful appreciation to the FBI, New York City Police Department and the Richmond County District Attorney for their outstanding assistance in this case.
For over two decades, Harvey Christian, also known as “Black,” and his brother, Anthony Christian, also known as “Nitty,” led a violent narcotics distribution ring. Jason Quinn was one of their most trusted associates. In the mid-1990s, the Christian brothers and their associates, including Quinn, sought to take control of more drug territory in Park Hill. To achieve this, the defendants engaged in massive gun battles for months. During one of the battles, in May 1995, law enforcement recovered 77 shell casings inside a residential building, outside on the street, and on the roof. In 1999, Anthony Christian ordered another member of the enterprise to murder a rival drug dealer named Corey Brooker. In the course of looking for Brooker, the enterprise member had a dispute with Brooker’s associate Jerome Estella. Anthony Christian then authorized the other enterprise member to murder Estella, and provided him with the 9 millimeter handgun he used to then murder Estella.
In the year before their arrests in 2011, multiple search warrants and arrests related to members of the organization and their associates were executed in and around Park Hill and elsewhere in New York. These searches and arrests resulted in the seizure of firearms and ammunition, including a Mac-11 pistol, as well as large quantities of crack and powder cocaine. During a search of the Christian brothers' apartment in the Park Hill housing complex in February 2010, the NYPD recovered multiple bullet-proof vests, crack-cocaine and marijuana.
The government’s case is being prosecuted by Assistant United States Attorneys Allon Lifshitz, Richard Tucker and Kevin Trowel.
The Defendants:
HARVEY CHRISTIAN
Age: 42 years
Staten Island, New York
ANTHONY CHRISTIAN
Age: 41 years
Staten Island, New York
JASON QUINN
Age: 40 years
Staten Island, New York
E.D.N.Y. Docket No. 11-CR-425
Dix Hills Man Sentenced to Twenty-Five Years’ Imprisonment for Child ExploitationRead the Press Release
Earlier today, Thomas J. Carey, Jr., a 36-year-old Dix Hills resident, was sentenced to a term of imprisonment of twenty-five years and lifetime supervised release following his conviction for sexual exploitation of a child. The proceeding was held before United States District Judge Denis R. Hurley at the United States Courthouse in Central Islip, New York.
The sentence 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 (ICE), Homeland Security Investigations (HSI), New York.
Carey was arrested in June 2009, after HSI agents obtained a search warrant for his residence based upon a lead from the Swiss National Police and Interpol. Computer equipment and digital cameras belonging to Carey which were seized pursuant to that warrant contained 161 images of Carey molesting the minor victim between 2007 and 2009, when the victim was 8 to 10 years old.
“This sentence is fitting for a predator who destroyed the innocence of an eight-year-old child,” stated United States Attorney Lynch. “This sentence stands as a strong warning to those who would abuse children that we will prosecute them to the full extent of the law.” Ms. Lynch expressed her grateful appreciation to Homeland Security Investigations for its assistance in this case.
The government’s case was prosecuted by Assistant United States Attorney Allen Bode.
The Defendant:
THOMAS J. CAREY, JR.
Dix Hills, New York
Age: 36
International Money Broker Sentenced to 92 Months in PrisonRead the Press Release
Luis Anibal Salazar Garcia, the primary money broker for a Colombian-based international money laundering organization, was sentenced today to 92 months in prison at the federal courthouse in Brooklyn. Ten co-defendants were sentenced last month to sentences ranging from 28 to 64 months’ imprisonment. Two other co-defendants remain to be sentenced. All 13 defendants, who were extradited from Colombia, pleaded guilty to conspiring to launder narcotics proceeds. Together, the defendants were responsible for laundering tens of millions of dollars of narcotics proceeds from the United States to Colombia between 2006 and 2013 on behalf of Colombian drug cartels.
The sentences 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 (ICE), Homeland Security Investigations (HSI), New York. The sentence was imposed by Chief United States District Court Judge Carol B. Amon.
“Salazar Garcia and his cohorts in crime operated a sophisticated network of shipments and transfers that went to the heart of the deadly narcotics trade – the money. The defendants’ money laundering activities allowed narcotics traffickers in Colombia to reap enormous profits from sending drugs to the United States,” stated United States Attorney Lynch. “These sentences will send a message to narcotics traffickers that we are committed to shutting down their ability to profit from selling their illegal drugs in the United States.”
“The incarceration of this defendant and his cohorts disrupts a money laundering organization that contributed to the flow of millions of dollars in illicit drug proceeds,” said HSI New York Special Agent in Charge Hayes. “The prosecution of these money launderers is a testament to the expertise of the members of the El Dorado Task Force and our international law enforcement partners, whose investigative prowess enables them to find international criminals and bring them to justice.”
Salazar Garcia and his twelve co-defendants were money brokers operating out of the El Diamante, Gran Centro Commercial, San Andresito, and Atlantis retail shopping malls in Cali, Colombia, and assisted drug trafficking organizations in Colombia by laundering the proceeds of sales of narcotics in the United States. The defendants also oversaw a network of confederates who operated in the United States taking the proceeds from narcotics sales here and passing the money to others, who ultimately repatriated millions of dollars in drug proceeds to suppliers in Colombia. The drug money was transported in amounts ranging from thousands to hundreds of thousands of dollars, often bundled and heat sealed, and concealed in vehicles, gasoline containers, duffel bags, and shoeboxes. Twenty-four of the U.S.-based confederates have also pleaded guilty to their participation in the money laundering conspiracy.
As part of this investigation, law enforcement officers have seized more than $6.5 million in United States currency as well as 52.5 kilograms of heroin, 32 kilograms of cocaine, 63 pounds of marijuana, eight vehicles, and three firearms.
The investigation was led by agents from the HSI New York Office’s El Dorado Task Force, comprising over 260 members from more than 55 law enforcement agencies in New York and New Jersey – including special agents, state and local police investigators, intelligence analysts, and federal prosecutors – with the assistance of the task force’s High Intensity Financial Crimes Area (HIFCA)/Intelligence Unit.
Ms. Lynch extended her grateful appreciation to HSI New York, the Colombian National Police, particularly the Investigative Directorate, and members of the HSI Transnational Criminal Investigations Unit, for their hard work and dedication throughout the investigation, and thanked the Department of Justice’s Office of International Affairs for its assistance in this investigation and prosecution.
The government’s case was prosecuted by Assistant United States Attorneys Douglas M. Pravda and Tiana A. Demas.
The Defendants:
FABER ENRIQUE BERMUDEZ ARCINIEGAS
AGE: 35
HARBI CAICEDO
AGE: 51
ALEXANDER HENAO CHAMORRO
AGE: 37
EDWIN ARENAS CHAMORRO
AGE: 39
LUIS ANIBAL SALAZAR GARCIA
AGE: 51
JOSE LEONIDAS SALAZAR GARCIA
AGE: 55
JUAN CARLOS MEJIA GONZALEZ
AGE: 50
JAVIER ORLANDO ALVAREZ JARAMILLO
AGE: 51
JOSE LISANDRO ABADIA JIMENEZ
AGE: 60
JUAN FERNANDO MOLINA JIMENEZ
AGE: 56
MANUEL ANTONIO CAMPO JIMENEZ
AGE: 53
OSCAR GARCIA LONDONO
AGE: 39
NUBIA ABADIA SARRIA
AGE: 35
E.D.N.Y. Docket No. 12 CR 623
Former FBI Ten Most Wanted Fugitive Pleads Guilty to MurderRead the Press Release
Earlier today at the federal courthouse in Central Islip, New York, Juan Garcia, also known as “Cruzito,” a member of La Mara Salvatrucha, also known as the MS-13 street gang, pled guilty to murder in aid of racketeering. During the guilty plea allocution, Garcia admitted that he and another MS-13 member shot and killed 19-year-old Vanessa Argueta, and a third MS-13 member executed her two-year-old son, Diego Torres, in Central Islip, New York, on February 5, 2010. As detailed in prior court proceedings and filings, after committing the murders, Garcia and his co-conspirators, Adalberto Ariel Guzman (“Gringo”) and Rene Mendez Mejia (“Zorro”), fled to El Salvador. Garcia was a fugitive for over four years until March 2014, when, after being placed on the FBI’s Ten Most Wanted Fugitives List, he surrendered to law enforcement authorities in Nicaragua, waived extradition, and was returned to the United States for prosecution.
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, New York Field Office; and Thomas C. Krumpter, Acting Commissioner of the Nassau County Police Department.
“After cold-bloodedly executing a young mother and her two-year-old child, Garcia and his fellow MS-13 members fled to El Salvador. For over four years, Garcia was able to evade justice, hiding out in different parts of Central America. However, thanks to the tenacious efforts of the FBI’s Long Island Gang Task Force and FBI components around the world, Garcia was captured, returned to the United States, and held accountable for his reprehensible acts. He will now be held accountable for his allegiance to the killing machine known as MS-13,” stated United States Attorney Lynch. Ms. Lynch expressed her sincere gratitude to the members of the FBI’s Long Island Gang Task Force, the FBI’s Violent Criminal Threat Section, and the FBI’s Legal Attaches for El Salvador and Panama, for their unwavering commitment to bring Garcia and his co-conspirators to justice for the Argueta and Torres murders.
FBI Assistant Director-in-Charge Venizelos stated, “The MS-13 street gang is infamous for its senseless and depraved acts of violence, but even for the MS-13, these vicious crimes demonstrated exceptional immorality. Stopping at nothing to seek retribution, Garcia and other gang members lured Argueta and her two-year-old son into a secluded wooded area where retribution took the form of murder. After more than four years on the run, Garcia finally faces the justice he couldn’t escape. Today’s guilty plea should remind these exceedingly violent criminals that we remain committed to working with our local, state, national, and international partners to disrupt and dismantle this violent gang.”
As established at prior court proceedings, Garcia and other MS-13 members, including MS-13 leader, Heriberto Martinez, also known as “Boxer,” Guzman, and Mejia plotted to kill Argueta because they believed she had disrespected the MS-13 by sending rival gang members to attack Garcia. On February 4, 2010, when Garcia, Guzman, and Mejia planned to kill Argueta, she was with her son, and the MS-13 members decided to murder him as well. Garcia, Guzman, and Mejia lured Argueta and Torres into a secluded wooded area in Central Islip, where they executed the mother and child, shooting Argueta in the head and chest, and Torres twice in the head. Specifically, the evidence establishes that Garcia and Mejia shot and killed Argueta, while Guzman fired the two fatal shots to Torres’s head. After they murdered Argueta and Torres, Garcia, Guzman, and Mejia fled to El Salvador.
Garcia’s three co-conspirators, Martinez, Guzman, and Mejia were also arrested and indicted in connection with the Argueta and Torres murders. Martinez was convicted in March 2013, following a six-week trial, and later sentenced to life in prison, plus 60 years. Guzman was convicted in September 2013, following a three-week trial, and later sentenced to life in prison, plus 35 years. Mejia pled guilty to the murders and is pending sentence.
The convictions of Garcia and his codefendants are the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international street gang comprised primarily of immigrants from El Salvador and Honduras. With numerous branches, or “cliques,” the MS-13 is the largest street gang on 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. These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, comprising agents and officers of the FBI, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department, Rockville Centre Police Department, and Suffolk County Police Department.
When Garcia is sentenced by United States District Judge Joseph F. Bianco, which is currently scheduled for February 6, 2015, he faces a sentence of up to life in prison.
The government’s case is being prosecuted by Assistant United States Attorneys John J. Durham and Raymond A. Tierney.
The Defendant:
JUAN GARCIA, also known as “Cruzito”
Baldwin and Inwood, New York
Age: 21
Former Union Delegate Sentenced to 20 Months in Prison for Extortion Conspiracy Involving Christmastime Tribute PaymentsRead the Press Release
NEWARK, N.J. - A former delegate of the International Longshoremen’s Association (ILA) Local 1235 was sentenced today to 20 months in prison for conspiring to extort 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.
Robert Ruiz, 55, of Watchung, New Jersey – the delegate of the union from approximately 2007 through 2010 – previously pleaded guilty before U.S. District Judge Claire C. Cecchi to one count of an 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:
Ruiz and two other former ILA officers – Vincent Aulisi, 82, of West Orange, New Jersey, the president of ILA Local 1235 from 2006 through 2007; and Thomas Leonardis, 57, of Glen Gardner, New Jersey, the president of the union from approximately 2008 through 2011 – admitted that they 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. Leonardis and Ruiz were suspended from their positions following their arrests in January 2011. Aulisi had already retired from his employment on the New Jersey piers at the time of his arrest.
Aulisi was sentenced to 18 months in prison on Oct. 8, 2014. Leonardis still awaits sentencing.
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.
Two other Genovese family associates charged in the case are former union officials: Albert Cernadas, 79, of Union, New Jersey, the president of ILA Local 1235 from approximately 1981 to 2006 and former ILA executive vice president; and Nunzio LaGrasso, 63, of Florham Park, New Jersey, the former vice president of ILA Local 1478 and former ILA representative.
In addition to the prison term, Judge Cecchi sentenced Ruiz to serve two years of supervised release.
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 Special Agent in Charge Cheryl Garcia of the New York Regional Office, with the investigation.
The government is represented by Assistant U.S. Attorneys Anthony Mahajan of the U.S. Attorney’s Office, District of New Jersey, and Jacquelyn M. Kasulis of the U.S. Attorney’s Office, Eastern District of New York.
The charges and allegations against the remaining defendants are merely accusations and they are considered innocent unless and until proven guilty.
14-CR-372
Defense counsel: Marc Agnifilo Esq., New York
Merrick Doctor Arrested for the Illegal Distribution of Oxycodone to an Undercover Police OfficerRead the Press Release
Michael Belfiore, an Merrick, New York, doctor, was charged this morning pursuant to a criminal complaint1 with illegally distributing oxycodone, a highly addictive prescription pain medication. The defendant is scheduled to be arraigned this afternoon before United States Magistrate Judge Gary R. Brown at the United States Courthouse located in Central Islip, New York.
The charge was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, James J. Hunt, Acting Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York, and Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD).
This morning, as part of a federal and state Prescription Drug Initiative in the Eastern District of New York, Belfiore surrendered to members of a DEA Tactical Diversion Squad, comprising DEA agents and officers of the Nassau County Police Department, Rockville Centre Police Department, and Port Washington Police Department, on charges of illegally distributing oxycodone between March 15, 2013 and August 12, 2013. According to the complaint, over the course of six months, Belfiore issued six prescriptions for oxycodone to an undercover Nassau County Police Officer without a legitimate medical purpose in exchange for thousands of dollars.
United State Attorney Lynch stated, “Dr. Belfiore used his prescription-writing privileges not to help patients as was his duty but to pad his bank account. Doctors who issue prescriptions without a legitimate medical need are violating the law and will be held accountable.” Ms. Lynch extended her grateful appreciation to each of the law enforcement agencies for their assistance in this case.
DEA Acting Special Agent in Charge stated, “There is no excuse for doctors to write unnecessary prescriptions in exchange for cash, nor has there ever been. Dr. Belfiore has been added to the list of those who perpetuate the spread of opioid addiction by allegedly facilitating the distribution of over half a million of oxycodone throughout the streets of Long Island. I commend the men and women of the Long Island Tactical Diversion Squad and the US Attorney’s Office Eastern District of New York for their tenacious work on this investigation.”
Oxycodone is a scheduled controlled substance that may be dispensed by medical professionals only for a legitimate medical purpose in the usual course of a doctor’s professional practice. It is a powerful and highly addictive drug and is increasingly abused because of its potency when crushed into a powder and ingested, leading to a heroin-like euphoria.
If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment and a $1 million fine.
This case is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this jurisdiction, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Prescription Drug Initiative to mount a comprehensive response to what the United States Department of Health and Human Services’ Center for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. So far, the Prescription Drug Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 15 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and a pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.
The government’s case is being prosecuted by Assistant United States Attorney Lara Treinis Gatz.
The Defendant:
Name: MICHAEL BELFIORE
Age: 51
Residence: Westbury, New York
___________________________________________________________________________
1 The charge announced today is merely an allegation, and the defendant is presumed innocent unless and until proven guilty.
Belfiore Complaint
Former Union President Sentenced to 18 Months in Prison for Extortion Conspiracy Involving Christmastime Tribute PaymentsRead the Press Release
NEWARK, N.J. B The former president of the International Longshoremen’s Association (ILA) Local 1235 was sentenced today to 18 months in prison for conspiring to extort 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.
Vincent Aulisi, 82, of West Orange, New Jersey – the president of ILA Local 1235 from 2006 through 2007 – previously pleaded guilty before U.S. District Judge Claire C. Cecchi to one count of an 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:
Aulisi and two other former ILA officers – Thomas Leonardis, 57, of Glen Gardner, New Jersey, the president of the union from approximately 2008 through 2011; and Robert Ruiz, 55, of Watchung, New Jersey, the delegate of the union from approximately 2007 through 2010 – admitted that they 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. Leonardis and Ruiz were suspended from their positions following their arrests 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.
Two other Genovese family associates charged in the case are former union officials: Albert Cernadas, 79, of Union, New Jersey, the president of ILA Local 1235 from approximately 1981 to 2006 and former ILA executive vice president; and Nunzio LaGrasso, 63, of Florham Park, New Jersey, the former vice president of ILA Local 1478 and former ILA representative.
In addition to the prison term, Judge Cecchi sentenced Aulisi to serve one year of supervised release and fined him $10,000.
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 Special Agent in Charge Cheryl Garcia of the New York Regional Office, with the investigation.
The government is represented by Assistant U.S. Attorneys Anthony Mahajan of the U.S. Attorney’s Office, District of New Jersey, and Jacquelyn M. Kasulis of the U.S. Attorney’s Office, Eastern District of New York.
The charges and allegations against the remaining defendants are merely accusations and they are considered innocent unless and until proven guilty.
14-367
Defense counsel: Joseph Fusella Esq., Bloomfield, New Jersey
Shooter Sentenced to 43 Years for 1997 Livery Cab HomicideRead the Press Release
Elvin Hill was sentenced today to 43 years in prison at the federal courthouse in Brooklyn. In January 2014, following a jury trial, Hill was convicted of murdering Fredy Cuenca, a livery cab driver, during the course of a robbery on June 29, 1997, in Bushwick, Brooklyn.
The sentence 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. The sentence was imposed by United States District Court Judge Kiyo A. Matsumoto.
“Almost 20 years ago, in a crime both senseless and brutal, Hill murdered an innocent man on a public street in broad daylight,” stated United States Attorney Lynch. “Now, thanks to the dogged efforts of federal investigators, he has been brought to justice for this brutal crime.”
On the afternoon of June 29, 1997, Hill and another individual were passengers in a livery cab driven by Cuenca. After directing Cuenca to park near a schoolyard on Eldert Street in Bushwick, Brooklyn, Hill bickered with Cuenca over the fare. Hill then drew a .380 caliber pistol that had been concealed on his person, and pointed it at Cuenca’s head. Cuenca, who spoke only broken English, pleaded for his life, pointing at a photo of his two young sons that he kept on the dashboard of his vehicle. Despite his pleas, Hill shot Cuenca in the head, and both he and his companion fled the scene. Cuenca’s brother-in-law, who was also a cab driver, found Cuenca bleeding in his cab a few minutes later and took him to a nearby hospital, where he died.
Although investigators identified the suspects shortly after the crime, there was insufficient evidence to charge them in 1997. Years later, a federal investigator who had previously been assigned to the case as a New York City Police Department detective obtained additional evidence. In March 2012, a federal grand jury returned an indictment against Hill.
Ms. Lynch extended her grateful appreciation to the FBI and to the New York City Police Department for their assistance in this prosecution.
The government’s case was prosecuted by Assistant United States Attorneys Daniel Silver and Seth DuCharme.
The Defendants:
ELVIN HILL
Age: 35
E.D.N.Y. Docket No. 12 CR 214
Bloods Street Gang Leader Sentenced to 30 Years of Imprisonment for Racketeering, Murder, Drug Distribution and Firearms UseRead the Press Release
Today in Brooklyn federal court, Laron Spicer, also known as “Face,” a leader of the “Nine-Trey Gangsters” set of the Bloods street gang in Crown Heights, Brooklyn, was sentenced to a 30-year prison term for charges related to the set’s control of illegal activity on Sterling Place between Buffalo and Rochester Avenues for over 12 years. Throughout the period of Spicer’s leadership of the set, Sterling Place was beset by gang-related drive-by shootings, regular gunfire, slashings and drug dealing. As the set’s primary enforcer, Spicer was responsible for numerous acts of violence, including shootings and slashings, and held neighborhood residents in fear of violent retribution for questioning his authority or cooperating with law enforcement.
The sentencing 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, New York Field Office, and William J. Bratton, Commissioner, New York City Police Department.
“For over a decade, Spicer used violence and brutality to terrorize the streets of Crown Heights. Let today’s lengthy sentence be a message to other gang members victimizing their own communities – we will not tolerate violence and gang-related crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the FBI, the NYPD, and the Kings County District Attorney’s Office for their assistance in this case.
In 2010, an investigation by the Federal Bureau of Investigation and the New York City Police Department led to the indictment and arrest of Spicer and 11 of the gang’s members and associates on charges including racketeering, drug distribution, murder and attempted murder. Among other acts, Spicer was charged with four non-fatal shootings and the 2008 murder of rival drug dealer William Singletary, who had set up a competing drug operation in the gang’s territory. During the period charged in the indictment, Spicer was arrested 30 times by New York City police officers and was convicted of, among other offenses, illegal gun possession on five occasions and witness tampering for threatening to kill a police officer who was testifying against him at a state court proceeding. On December 19, 2013, Spicer pled guilty to federal charges of racketeering, narcotics distribution conspiracy, and ordering the murder of Singletary.
The government’s case was prosecuted by Assistant United States Attorneys Matthew Amatruda, Nadia Shihata and Erik Paulsen.
The Defendant:
LARON A. SPICER
Alias: “Face”
Age: 34
MS-13 Gang Member Sentenced to Life for Murdering Two-Year-Old Child and MotherRead the Press Release
Earlier today at the federal courthouse in Central Islip, New York, Adalberto Ariel Guzman, also known as “Gringo,” a member of La Mara Salvatrucha, also known as the MS-13 street gang, was sentenced to multiple terms of life in prison plus 35 years. Guzman was convicted, on September 9, 2013, following a three-week trial, on all counts, including two counts of murder in aid of racketeering, conspiracy to commit murders in aid of racketeering, and related firearms offenses, in connection with the February 5, 2010 slayings of 19-year-old Vanessa Argueta and her two-year-old son Diego Torres in Central Islip, New York.
The sentence 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, New York Field Office; and Thomas C. Krumpter, Acting Commissioner of the Nassau County Police Department.
“The MS-13 has become infamous for unleashing ruthless violence on the streets of Long Island. However, even for the MS-13, the execution-style murders of a young mother and an innocent child, carried out by Guzman and his fellow gang members, were particularly senseless and cold-blooded crimes,” stated United States Attorney Lynch. “The tenacious investigation and prosecution by the FBI’s Long Island Gang Task Force and my Office, the jury’s guilty verdict last September, and today’s sentence send the unequivocal message that anyone who engages in such brutal and heinous crimes will spend the rest of his life in federal prison.” United States Attorney Lynch expressed her sincere gratitude to the FBI’s Long Island Gang Task Force for its tireless efforts to bring Guzman and his co-conspirators to justice.
At trial, the government proved that Guzman and other MS-13 members, including MS- 13 leader, Heriberto Martinez, also known as “Boxer,” Juan Garcia, also known as “Cruzito,” and Rene Mendez Mejia, also known as “Zorro,” plotted to kill Argueta because they believed she had disrespected the MS-13. On February 4, 2010, when Guzman, Garcia, and Mejia planned to kill Argueta, she was with her son, and the MS-13 members decided to murder him as well. Guzman, Garcia, and Mejia lured Argueta and Torres into a secluded wooded area in Central Islip, where they executed the mother and child, shooting Argueta in the head and chest, and Torres twice in the head. Specifically, the evidence at trial established that Guzman fired the fatal shots to Torres’s head. After they murdered Argueta and Torres, Guzman, Garcia, and Mejia fled to El Salvador, but Guzman was arrested on May 17, 2010, in Miami, Florida, when he attempted to return to the United States from El Salvador. Thereafter, Guzman was indicted and found guilty on all counts relating to the Argueta and Torres murders following a trial in August and September 2013.
Guzman’s three co-conspirators, Martinez, Garcia, and Mejia were also arrested and indicted in connection with the Argueta and Torres murders. Martinez was convicted in March 2013, following a six-week trial, and later sentenced to life in prison, plus 60 years. Mejia pled guilty to the murders and is pending sentence. Garcia, who surrendered to law enforcement authorities in Nicaragua, waived extradition, and was returned to the United States after being placed on the FBI’s Ten Most Wanted list in March 2014, is pending trial in the Eastern District.1
The convictions of Guzman and his codefendants are the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international street gang comprised primarily of immigrants from El Salvador and Honduras. With numerous branches, or “cliques,” the MS-13 is the largest street gang on 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. These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, comprising agents and officers of the FBI, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department, Rockville Centre Police Department, and Suffolk County Police Department.
The sentence was imposed by United States District Judge Joseph F. Bianco.
The government’s case is being prosecuted by Assistant United States Attorneys John J.
Durham and Raymond A. Tierney.
The Defendant:
ADALBERTO ARIEL GUZMAN, also known as “Gringo”
Central Islip, New York
Age: 22
__________________________________________________________________________
1 The charges contained in the indictment against Garcia are merely allegations, and he is
presumed innocent unless and until proven guilty.
Long Island Doctor Sentenced to Eight Years of Imprisonment for Conspiracy to Distribute Oxycodone and Distribution of OxycodoneRead the Press Release
William Conway, a medical doctor who formerly ran a practice in Baldwin, New York, was sentenced today to a term of eight years’ imprisonment for conspiring to illegally distribute the highly-addictive narcotic oxycodone, to be followed by three years of supervised release. The sentence was pronounced by United States District Judge Leonard D. Wexler, who ruled last month that the defendant was esponsible for the overdose death of a patient to whom he prescribed oxycodone for no legitimate medical purpose.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James J. Hunt, Acting Special Agent-in-Charge, Drug nforcement Administration (DEA), New York, and Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD).
Conway was arrested in June 2012 following a state and federal investigation into the defendant’s practice of issuing oxycodone prescriptions at an average of 163 per month between 2009 and 2011 -- a rate that equated to the distribution of over 782,000 pills. Conway’s office files revealed only cursory, incomplete examinations of patients, overlapping prescriptions to the same patients, and as one government witness put it, no effort to “try and fix the patient’s condition rather than perpetuate the use of the narcotics.”
During a hearing before Judge Wexler in May, the government presented evidence that the defendant prescribed large quantities of oxycodone to a patient, Giovanni Manzella, for no legitimate medical purpose and that the illegal distribution caused Manzella’s overdose death on April 23, 2011. Records showed that Conway issued Manzella five
oxycodone prescriptions, totaling over 800 pills, over a six month period with little or no examination or diagnostic testing, such as an MRI, or any effort to ensure that the patient was not abusing the narcotic. Evidence also showed that Conway prescribed 180 oxycodone pills to Manzella on April 21, 2011, and then 24 hours later, prescribed Manzella an additional 270oxycodone pills without performing any medical evaluation. Manzella died the next day.
In an August 2014 writen opinion, Judge Wexler noted, “Incredibly, Dr. Conway wants this Court to find that, when Manzella was under his medical supervision, somehow he was practicing medicine and prescribing oxycodone for a legitimate medical purpose.” Instead, Judge Wexler found that the government’s evidence “amply demonstrates that he prescribed oxycodone to Manzella for no legitimate medical purpose, and that Manzella died as a result of using the oxycodone prescribed by him.”
In announcing today’s sentence, United States Attorney Lynch stated, “Instead of using his skills as a physician to ‘do no harm,’ Conway perpetuated pain and suffering, inundating our communities with a highly addictive narcotic and causing the death of a young man struggling with substance abuse. This case should serve as a warning that health care professionals engaged in such conduct face not merely the loss of their privilege to practice medicine, but their liberty as well.” Ms. Lynch extended her grateful appreciation to each of the law enforcement agencies for their assistance in this case.
Oxycodone is a scheduled controlled substance that may be dispensed by medical professionals only for a legitimate medical purpose in the usual course of a doctor’s professional practice. It is a powerful and highly addictive drug and is increasingly abused because of its potency when crushed into a powder and ingested, leading to a heroin like euphoria.
Conway’s conviction is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this jurisdiction, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Prescription Drug Initiative to mount a comprehensive response to what the United States Department of Health and Human Services’ Center for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. So far, the Prescription Drug Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 15 health care professionals, taken civil
enforcement actions against a hospital, a pharmacy, and a pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.
The government’s case was prosecuted by Assistant United States Attorney Michael P. Canty.
The Defendant:
Name: William Conway
Age: 71
Residence: Baldwin, NY
Mastermind of Multi-Million Dollar Advance Fee and Alaskan Gold Mine Investment Schemes Pleads GuiltyRead the Press Release
Earlier today, William C. Lange, 66, a resident of Gig Harbor, Washington, 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 two separate schemes. In the first scheme, Lange, the founder and President of Harbor Funding Group, Inc. (“HFGI”), defrauded developers and their clients seeking to rebuild regions of the South devastated by Hurricane Katrina of more than $9 million through false representations, including that HFGI had the funds to provide millions of dollars in private financing in exchange for a ten percent down payment.
In the second scheme, Lange, the founder and secret controller of Black Sand Mine, Inc. (“BSMI”), induced investors to purchase stock in BSMI by lies about, among other things, the qualifications and experience of BSMI’s officers and directors, and by concealing, among other things, his leadership role with BSMI.
Pursuant to his plea agreement with the government, Lange has agreed to a forfeiture money judgment of $10 million and to forfeit his claim to three Harley Davidson motorcycles purchased using proceeds from the fraud. When sentenced, Lange faces up to 20 years in prison and the payment of approximately $10 million in restitution to the victims of his frauds. In March 2014, co-defendants Brad Russell and Kristofor Lange were convicted by a federal jury in Brooklyn, following a six-week trial, on all charged counts. The trial of co- defendant Frank Perkins is scheduled to begin on September 22, 2014.1
The guilty verdicts 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).
Lange, the orchestrator of the advance fee scheme, 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 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, 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.
“Lange exploited the demand for housing caused by the destructive force of Hurricane Katrina to execute his devious advance fee scheme. Hiding behind his Brooklyn- based attorney, Lange deceived investors to the tune of $9 million with false representations and assurances that were not worth the price of the paper used to print the phony documentation. His voracious appetite for easy money then led him to bilk another million dollars from investors in the gold mine scheme. He will now be held to account for his 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 five-year investigation and prosecution. Ms. Lynch also extended her grateful appreciation to the United States Attorney’s Office for the Western District of Washington for its assistance in the case.
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 (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. 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: 66
Residence: Gig Harbor, Washington
E.D.N.Y. Docket No. 10-CR-968 (DLI)
___________________________________________________________________________
1 The charges against Frank Perkins are merely allegations, and he is presumed innocent unless and until proven guilty.
Brooklyn Man Charged with Facilitating $6 Million Food Stamp Fraud in New YorkRead the Press Release
A criminal complaint was unsealed earlier this week in federal court in the Eastern District of New York charging Fowzi Naji Tareb with misappropriating government permits from the United States Department of Agriculture, Food and Nutrition Service and facilitating more than $6 million in unauthorized food stamp transactions. Tareb was arrested on Tuesday and his initial appearance was held before United States Magistrate Judge Vera Scanlon at the federal courthouse in Brooklyn.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and William Squires, Special Agent-in-Charge, Northeastern Region, United States Department of Agriculture, Office of Inspector General.
The federal government, through the United States Department of Agriculture, Food and Nutrition Service (FNS), administers the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program. SNAP utilizes federal tax dollars to subsidize low-income households, affording such households the opportunity to achieve a more nutritious diet by increasing their food-purchasing power.
In New York, individuals who receive SNAP benefits (recipients) no longer redeem their benefits by using paper food stamp coupons, but rather redeem them electronically through the use of an Electronic Benefits Transfer (EBT) card, which operates much like ATM cards used by banks. The EBT cards may be used by recipients to purchase eligible food items at retail food stores that are authorized by FNS to participate in SNAP and have EBT terminals located in the stores. As a purchase is made, the retailer runs the EBT card through the terminal, and the amount of the purchase is deducted from the recipient’s EBT card. The purchase amount is then electronically credited to the retail food store owner’s bank account.
SNAP benefits may be accepted by authorized retailers only in exchange for eligible food items. Items such as beer, cigarettes, paper goods, and soaps are not eligible for purchase. SNAP benefits may not lawfully be exchanged for cash under any circumstances and may not lawfully be used to pay off credit accounts. SNAP benefits may be accepted only by retailers authorized to participate in SNAP by FNS.
The defendant Tareb allegedly used his position as an agent at Century Payments, a third-party vendor and distributor of EBT terminals, to provide EBT terminals capable of processing SNAP benefits and authorization codes to more than 25 retailers that were not authorized by FNS to accept SNAP benefits. In doing so, the defendant facilitated more than $6 million in unauthorized SNAP transactions. A number of the retail locations, which were searched by law enforcement over the past two days, are also alleged to have been involved in the unlawful exchange of SNAP benefits for cash.
“The government’s food stamp program enables law-abiding retailers to provide food and other essentials to low-income households and receive compensation from the government,” stated United States Attorney Lynch. “The defendant manipulated that program by misappropriating EBT terminals and codes of authorized retailers and giving them to unauthorized retailers -- allowing them to profit by engaging in millions of dollars in under-thetable transactions.” Ms. Lynch also thanked the New York City Police Department for assisting in the investigation.
If convicted, the defendant faces a maximum sentence of 10 years of 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 Attorney Saritha Komatireddy.
The Defendant:
FOWZI NAJI TAREB
Age: 43
Brooklyn, New York
E.D.N.Y. Docket No. 14-M-806
Fugitive Captured After Shootout with U.S. Marshals Indicted for Assault with A Deadly Weapon and Related Firearms OffensesRead the Press Release
Earlier today, a five-count indictment was returned by a federal grand jury sitting in Brooklyn, New York, charging Oswald Lewis, also known as “Alexander Louis,” “Junior,” “Andrew Jackson,” “Andre Bernard Jackson,” “John Green,” “Leslie Howard” and “Dre,” with assault on a federal officer by use of a deadly weapon and related firearms offenses. Lewis was arrested on August 26, 2014, and has remained in custody since then. The case has been assigned to United States District Judge I. Leo Glasser.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Charles G. Dunne, United States Marshal for the Eastern District of New York; William J. Bratton, Commissioner, New York City Police Department (NYPD), and James S. Higgins, Acting Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Division.
As alleged in court documents, Lewis has been wanted since 1991 on numerous drug charges by the United States District Court for the Eastern District of Virginia. On August 26, 2014, the United States Marshals Service located Lewis in an apartment in the Springfield Gardens section of Queens, New York. Later that evening, Deputy U.S. Marshals and officers of the New York City Police Department went to the apartment to arrest him. When Deputy U.S. Marshals entered the apartment, Lewis, who was wearing body armor, yelled that he was holding a hostage and began shooting. In the midst of his shooting spree, Lewis fired shots out his apartment window at members of the NYPD, who had surrounded the premises. During an exchange of gunfire, Lewis was shot in the arm. He eventually surrendered and was taken into custody. No law enforcement officers were injured.
“As alleged, Oswald Lewis sought to extend his life on the lam by shooting his way out of a confrontation with law enforcement, endangering officers and civilians alike. As this case illustrates, the apprehension of armed fugitives like Lewis is a dangerous task,” stated United States Attorney Lynch. “We owe a great deal of gratitude to the United States Marshals Service, the New York City Police Department, and our other law enforcement partners, for their valiant and courageous efforts that, at long last brought Lewis to justice, and for safeguarding the communities that we call home. I also express thanks to the ATF for its participation in this investigation.”
“As alleged in the indictment, this incident shows just how dangerous fugitive work can be for the U.S. Marshals. This fugitive was wearing body armor, and he was armed with two illegal semi-automatic pistols when he opened fire without warning. Fortunately, no law enforcement officers were injured. This could have ended much differently,” stated United States Marshal Dunne.
ATF Acting Special Agent-in-Charge Higgins stated, “Although the defendant was able to enjoy his freedom for a substantial period of time, he quickly learned to appreciate the relentlessness of law enforcement. The ATF is grateful that no officers or innocent civilians were injured during Lewis’s capture and are determined - alongside the U.S. Attorney’s Office and our law enforcement partners - to see this investigation to its end. Society deserves nothing less.”
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 Special Assistant United States Attorney Jonathan P. Lax.
The Defendant:
OSWALD LEWIS
Age: 44
Queens, New York
E.D.N.Y. Docket No. 14-CR-523 (ILG)
Former Chief Financial Officer Indicted for $30 Million Bank FraudRead the Press Release
Thomas Torre, the former Chief Financial Officer of Metro Fuel Oil Corp. (“Metro Fuel”), located in Greenpoint, New York, has been charged in a two-count indictment with bank fraud and conspiracy for his participation in a scheme to overstate Metro Fuel’s accounts receivable in order to draw from a revolving line of credit issued by New York Commercial Bank. Metro Fuel later filed for bankruptcy after allegedly stealing over $30 million from the bank. The defendant is scheduled to be arraigned on Friday, September 26, 2014, at 11:00 a.m. before United States Magistrate Judge Vera M. Scanlon at the federal courthouse in Brooklyn.
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).
According to court filings, from approximately July 2007 to July 2012, the defendant and others falsely overstated the company’s accounts receivable on certificates submitted to the bank at least once per month. The bank used the information in the certificates to determine the amount Metro Fuel could borrow from the bank on its revolving line of credit. The defendant and others misrepresented the true accounts receivable by deliberately failing to account for the cash payments received from customers and by creating fictitious invoice amounts. By September 2012, the fuel company could no longer pay its bills and filed a voluntary petition for bankruptcy. At the time of the bankruptcy, the fuel oil company owed the bank more than $30 million.
“The defendant and his co-conspirators obtained tens of millions of dollars in loans from New York Commercial Bank under false pretenses, claiming both that they had real collateral and that they intended to pay the money back. Neither claim was true, and when Metro Fuel collapsed the bank was left holding the over $30 million bag. Those who perpetrate fraud against our financial institutions will be met with the full force of law enforcement,” 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.
If convicted, the defendant faces up to 30 years’ imprisonment on each count. The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
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 government’s case is being prosecuted by Assistant United States Attorney William P. Campos.
The Defendant:
THOMAS TORRE
Age: 63
Albertson, New York
E.D.N.Y. Docket No. 14-CR-514 (PKC)
Enzo Biochem, Inc. and Enzo Clinical Laboratories Pay $3.5 Million to Resolve Civil Fraud AllegationsRead the Press Release
U.S. Attorney Loretta E. Lynch today announced that the United States and New York State have entered into a settlement agreement with Enzo Biochem, Inc., and one of its subsidiaries, Enzo Clinical Laboratories (collectively, “Enzo”), to resolve a case brought under the federal False Claims Act and the New York False Claims Act. The matter involves allegations that Enzo wrongfully input diagnosis codes into claim forms that it submitted for payment to the Centers for Medicare & Medicaid Services (“CMS”). Under the terms of the Settlement Agreement, Enzo will pay a total of $3,510,245.94 to resolve the investigation.
The investigation established that, from at least January 1, 2004 through the present, Enzo unlawfully input diagnosis codes into claims forms it submitted to CMS. Specifically, when a physician ordered tests to be performed at Enzo but did not submit a diagnosis code to go along with the order, Enzo employees would select and assign codes which they believed would be most likely to lead to reimbursement from CMS. Enzo did not – as it was required to do – go back to the physician to obtain the missing code. Through this unlawful practice, Enzo wrongfully obtained reimbursement from CMS.
The settlement followed a joint investigation by the United States Attorney’s Office for the Eastern District of New York and the New York Attorney General’s Medicaid Fraud Control Unit, who worked in partnership to uncover the wrongdoing and reach a resolution. U.S. Attorney Lynch thanked Attorney General Schneiderman and his staff for their cooperation in this case.
“The investigation uncovered evidence that Enzo was falsifying information in the claim submission process in order to inflate and secure reimbursements from CMS,” stated United States Attorney Lynch. “The Medicare and Medicaid systems serve our most vulnerable citizens, and those who seek to maximize their own profits at the expense of these critically important programs will be pursued to the fullest extent of the law.”
The investigation commenced with the filing of a qui tam complaint by Relator O and U 2011 Partnership LLP. Under the federal and state False Claims Act statutes, a private individual who has uncovered fraud against the government may file a suit in federal court on behalf of the United States and the State of New York. If the United States and the State are successful in resolving those claims, the individual who filed the complaint may receive a share
of the recovery.
The United States’ investigation was handled by Assistant U.S. Attorney Kenneth M. Abell and Trial Attorney David M. Finkelstein of the Commercial Litigation Branch, United States Department of Justice, with assistance from Affirmative Civil Enforcement Auditor Emily Rosenthal and Special Agent Jason S. Villeco of the Department of Health and Human Service’s Office of Inspector General. The state investigation was handled by Special Assistant Attorney General Carolyn Ellis.
Chief Financial Officer Pleads Guilty in Multi-Million Dollar Advance Fee and Alaskan Gold Mine Investment SchemesRead the Press Release
Earlier today, Frank E. Perkins, 54, a resident of La Grange, Kentucky, 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 two separate schemes. In the first scheme, Perkins, the Chief Financial Officer (“CFO”) of Harbor Funding Group, Inc. (“HFGI”), defrauded developers and their clients seeking to rebuild regions of the South devastated by Hurricane Katrina of more than $9 million through false representations, including that HFGI had the funds to provide millions of dollars in private financing in exchange for a ten percent down payment. In the second scheme, Perkins, the CFO, Secretary and Treasurer of Black Sand Mine, Inc. (“BSMI”), induced investors to purchase stock in BSMI by telling lies about, among other things, the qualifications and experience of BSMI’s officers and directors, and by concealing, among other things, his prior employment at HFGI. When sentenced, Perkins faces up to 20 years in prison and the payment of approximately $10 million in restitution to the victims of his frauds. In March 2014, co-defendants Brad Russell and Kristofor Lange were convicted by a federal jury in Brooklyn, following a six-week trial, on all charged counts. On September 19, 2014, co-defendant William Lange, the mastermind of both schemes, pleaded guilty to the same two counts as Perkins.
The guilty verdicts 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-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.
“Most Americans saw the devastation wrought by Hurricane Katrina and looked for ways to help the victims. Perkins and his co-defendants looked for ways to help themselves, devoting their energies not to rebuilding but to swindling millions of dollars from victims through their advance fee scheme. Instead of doing his duty as a CFO and ensuring the financial integrity of HFGI and BSMI, Perkins used his accounting experience to transfer almost $10 million of stolen money between various accounts, including the escrow account of a Brooklyn-based attorney. He will now be held to account for his crimes and for breaching his responsibilities to the victims,” stated United States Attorney Lynch. Ms. Lynch thanked the USPIS and the FBI for their hard work and dedication through the course of this five-year investigation and prosecution. Ms. Lynch also extended her grateful appreciation to the United States Attorney’s Office for the Western District of Washington for its assistance in the case.
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 (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. 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: 54
Residence: La Grange, Washington
E.D.N.Y. Docket No. 10-CR-968 (DLI)
Five 7-Eleven Franchisees and Operators Plead Guilty to Multi-State Scheme Involving the Employment and Victimization of Alien EmployeesRead the Press Release
BROOKLYN, NY – Earlier today, Farrukh Baig, Malik Yousaf, Bushra Baig, Shahnawaz Baig, and Zahid Baig pleaded guilty at the federal courthouse in Central Islip, New York, to committing wire fraud and concealing and harboring illegal aliens employed at 7-Eleven, Inc. (7-Eleven) franchise stores located throughout Long Island and Virginia. When sentenced, Farrukh Baig and Malik Yousaf face up to 20 years’ imprisonment, and Bushra Baig, Shahnawaz Baig, and Zahid Baig face up to 10 years’ imprisonment.
The pleas were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James T. Hayes, Jr., Special Agent-in-Charge, Homeland Security Investigations, New York Field Office (HSI); Joseph A. D’Amico, Superintendent, New York State Police; Edward Webber, Commissioner, Suffolk County Police; and Irv Miljoner, District Director, United States Department of Labor.
“Using the 7-Eleven brand, the defendants dispensed wire fraud and identity theft, along with Big Gulps and candy bars. In our backyards, the defendants not only systematically employed illegal aliens, but concealed their employment by stealing the identities of children and even the dead. The defendants also exploited their alien employees, stealing their wages and requiring them to live in unregulated boarding houses,” stated United States Attorney Lynch. “We are committed to preserving the rule of law and protecting our communities from the abuses of corrupt businesses seeking to gain illegal advantage. I would like to thank our partners at HSI, New York State Police, Suffolk County Police and the United States Department of Labor for their hard work on this important and ongoing investigation.”
“These defendants knowingly hired illegal aliens to feed their greed, stole the identities of unsuspecting U.S. citizens, and swindled more than 2.6 million dollars in wages from their enslaved workers,” said HSI Special Agent-in-Charge Hayes. As a result of this investigation, HSI and its law enforcement partners have recorded the largest worksite enforcement forfeiture in the United States. This case serves notice to employers – that they will be severely punished
if they seek to profit on the back of an illegal workforce.”
According to court filings and facts presented in court, the defendants, who owned, managed, and controlled fourteen 7-Eleven franchise stores during the course of the conspiracies, allegedly hired dozens of illegal aliens, equipped them with more than 20 identities stolen from United States citizens, housed them at residences owned by the defendants, and stole substantial portions of their wages. During the scheme, the defendants generated over $182 million in proceeds from the 7-Eleven franchise stores. Profits from those stores were shared by the defendants and 7-Eleven.
These are the first convictions in the government’s ongoing inquiry, which is already one of the largest criminal alien employment investigations ever conducted by the Department of Justice and the Department of Homeland Security. The defendants have agreed to forfeit the franchise rights to ten 7-Eleven stores in New York and four 7-Eleven stores in Virginia, as well as five houses in New York worth over $1.3 million. According to the Department of Homeland
Security, the case announced today constitutes the largest criminal immigration forfeiture in its history. In addition, the defendants agreed to pay $2,621,114.97 in restitution for the back wages that they stole from their workers. Two additional defendants in this case have previously pleaded guilty.
The sentencing proceedings for these defendants have not yet been scheduled but will be held before United States District Judge Sandra J. Feuerstein, at the federal courthouse in Central Islip, New York. The pleas were taken by United States Magistrate Judge Steven I. Locke.
The government’s case is being prosecuted by Assistant United States Attorneys Christopher A. Ott, Brian Morris and Elliot M. Schachner.
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.
Tips and Information
For questions or concerns about immigrant workers and job seekers, contact the New York State Department of Labor Division Policies and Affairs (DIPA) at its toll-free worker hotline (1-877-466-9757).
E.D.N.Y. Docket No. 14-CR-351(SJF)
The Defendants:
FARRUKH BAIG
Citizenship: Naturalized United States Citizen
Age: 58
Head of Harbor, New York
BUSHRA BAIG
Citizenship: Naturalized United States Citizen
Age: 50
Head of Harbor, New York
MALIK YOUSAF
Citizenship: Naturalized United States Citizen
Age: 52
South Setauket, New York
ZAHID BAIG
Citizenship: Naturalized United States Citizen
Age: 53
Chesapeake, Virginia
SHANNAWAZ BAIG
Citizenship: Naturalized United States Citizen
Age: 63
Virginia Beach, Virginia
East Islip Doctor Pleads Guilty to the Illegal Distribution of OxycodoneRead the Press Release
Carmine G. Mandarano, a medical doctor whose practice is located in East Islip, New York, pleaded guilty today to the illegal distribution of oxycodone, a highly addictive prescription pain killer. Mandarano entered his plea before United States Magistrate Judge Gary R. Brown at the United States Courthouse located in Central Islip, New York. At sentencing, Mandarano faces a maximum of 20 years’ imprisonment and a $1 million fine. Mandarano has agreed to forfeit $150,000 in criminally-derived proceeds to the government.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James J. Hunt, Acting Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York; and Tom F. O’Donnell, Special Agent-in- Charge, Health and Human Services, Office of the Inspector General (HHS/OIG), New York Regional Office.
“Medical professionals who hand out prescriptions for narcotics when there is no legimate medical need to do so are drug dealers, pure and simple. Doctors who violate their oaths to do no harm, and the law, will continue to be held accountable,” Ms. Lynch said, extending her grateful appreciation to each of the law enforcement agencies for their assistance in this case.
During his plea, Mandarano admitted that in 2011 he issued a prescription for oxycodone to a patient that he knew was using illegal narcotics, had obtained multiple narcotics prescriptions from other medical professionals, and was abusing painkillers.
Oxycodone is a scheduled controlled substance that may be dispensed by medical professionals only for a legitimate medical purpose in the usual course of a doctor’s professional practice. It is a powerful and highly addictive drug and is increasingly abused because of its potency when crushed into a powder and ingested, leading to a heroin-like euphoria.
Mandarano’s guilty plea is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this jurisdiction, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Prescription Drug Initiative to mount a comprehensive response to what the United States Department of Health and Human Services’ Center for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. So far, the Prescription Drug Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 15 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and a pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.
The government’s case was prosecuted by Assistant United States Attorney Lara Treinis Gatz.
The Defendant:
Name: CARMINE G. MANDARANO
Age: 62
Residence: Northport, NY
Individual Posing as Investment Adviser Sentenced to 46 Months for Operating A Million Dollar Investment Fraud SchemeRead the Press Release
Earlier today, a Brooklyn man who was convicted of wire fraud after defrauding a Hawaiian investor of $1 million was sentenced to 46 months of imprisonment to be followed by three years of supervised release and was ordered to pay $1 million in restitution. Telson Okhio, the vice president of Ohio Group Holdings, Inc. (“OGH”), an alleged investment firm, was sentenced by United States District Judge Roslynn R. Mauskopf at the federal courthouse in Brooklyn, New York. Okhio pleaded guilty to wire fraud in March 2012.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
Between February and April 2009, Okhio, posing as an investment adviser, solicited $5 million from an investor in Hawaii. Okhio assured the investor that he would invest his money in a $100 million trading platform in the foreign currency exchange market. Okhio also assured the investor that his investment would earn a 200 percent profit in four weeks and that his investment would never be at risk.
Almost immediately after the victim wired $5 million from a bank account in Hawaii to OGH’s bank account at a branch of Bank of America in Queens, New York, Okhio wire-transferred $1 million of the investment to his personal account at JPMorgan Chase in Queens, New York. From there, Okhio withdrew the $1 million through a series of cash and ATM withdrawals and wire transfers to third parties. The scheme resulted in approximately $1,000,000 in losses to the investor.
Soon after Okhio pleaded guilty, he attempted to withdraw his guilty plea. Following a hearing that spanned several months, Judge Mauskopf found that Okhio had lied several times during his testimony and denied his request to withdraw his guilty plea.
“Outwardly, Okhio wore the persona of a trusted investment adviser. In reality his image was a fraud and his promises part of the web of lies he used to ensnare his victim. Okhio sought to continue the con even after his guilty plea, as he attempted to deceive the court with his repeated lies. He viewed the court as just another ‘mark.’ He was wrong. Those who exploit investors for financial gain will be held accountable for their crimes and will face significant prison sentences,” stated United States Attorney Lynch.
Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation, which led the government’s criminal investigation.
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 government’s case is being prosecuted by Assistant United States Attorney Sylvia Shweder.
The Defendant:
TELSON OKHIO
Age: 52
Brooklyn, NY
E.D.N.Y. Docket No. 12-CR-179 (RRM)
Wisconsin Pharmacist and Nevada Pharmacologist Charged with Smuggling Counterfeit Pharmaceuticals Using A Costa Rican Internet PharmacyRead the Press Release
WASHINGTON – A Wisconsin pharmacist and a Nevada pharmacologist were arraigned on an indictment today in federal court in Central Islip, New York, before United States Magistrate Judge Gary Brown. The defendants are charged with conspiring to supply at least four million misbranded and counterfeit pharmaceuticals to an illegal Internet pharmacy based in Costa Rica that catered to U.S. customers.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; United States Attorney Loretta E. Lynch of the Eastern District of New York; Assistant Director in Charge George C. Venizelos of the FBI’s New York Field Office; Acting Special Agent in Charge James Royal of the U.S. Food and Drug Administration (FDA), Office of Criminal Investigations’ New York Field Office and Special Agent in Charge James T. Hayes Jr. of Homeland Security Investigations’ (HSI) New York Field Office made the announcement.
The 10-count indictment charges Marla Ahlgrimm, 59, of Madison, Wisconsin, and Balbir Bhogal, 67, of Las Vegas, Nevada, with importing and distributing controlled substances and misbranded drugs, trafficking in counterfeit drugs, mail and wire fraud, smuggling and money laundering.
According to the indictment and information presented at the arraignment, from June 2007 through May 2010, Ahlgrimm and Bhogal, who is a dual U.S. and Indian citizen, allegedly arranged for the manufacture in India of millions of tablets of controlled substances, including alprazolam and phentermine, and prescription drugs, including carisoprodol and counterfeit Viagra. Although they did not hold an importer’s license from the Drug Enforcement Administration, the defendants allegedly arranged for the importation of the same drugs into the United States. Neither the incoming packages nor the tablets themselves were labeled or identified as controlled substances or prescription drugs.
The drugs were allegedly intended to supply an Internet pharmacy based in Costa Rica that catered to customers within the United States, including Brooklyn and Queens, New York. The Internet pharmacy used call centers and websites based outside the United States, but filled the orders from inside the United States using individuals who were not licensed pharmacists to bottle, label and drop-ship the drugs. To facilitate the operation, the defendants allegedly wired money from Costa Rica to the United States and then to India.
An indictment is merely an accusation, and the defendants are presumed innocent unless and until proven guilty.
The case was jointly investigated by the FBI, FDA’s Office of Criminal Investigations, and HSI. The case is being prosecuted by Senior Counsel Evan C. Williams of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney William P. Campos of the Eastern District of New York.
Importing Company’s Founder Pleads Guilty to Securities FraudRead the Press Release
On September 12, 2014, Eric Aronson, the founder and head of Permapave Industries LLC and Permapave USA Corporation (“Permapave”), pleaded guilty to securities fraud for soliciting over $30 million from more than 200 investors for fraudulent Permapave promissory notes. Permapave marketed porous paving stones in the United States that were manufactured in Australia.
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).
According to court filings and facts presented at the plea hearing, the defendant and his coconspirators issued promissory notes to investors and promised to use the proceeds to finance shipments of Permapave paving stones from Australia to the United States. In reality, the defendant, together with his coconspirators, operated a Ponzi scheme whereby some investors were paid returns on their investment from the funds the defendant obtained from other defrauded investors. From approximately August 2006 to December 2010, the defendant defrauded investors out of approximately $30 million through this scheme. The defendant and his coconspirators converted millions of dollars of investor funds for personal expenditures, including vacations, watches, jewelry, and automobiles.
“The defendant used the promise of sound securities investments to steal investor funds. He pretended to be a legitimate businessmen but he was no more than a common thief. Through his actions, the defendant caused the financial ruin of many, all the while enriching himself. This office will vigorously investigate and prosecute those who lie to, cheat, and steal from the investing public,” stated Unites States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.
Today’s guilty plea took place before Magistrate Judge Gary Brown at the federal courthouse in Central Islip, N.Y. Aronson faces a maximum sentence of 20 years’ incarceration.
The case is being prosecuted by Assistant United States Attorney William P. Campos.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The Task Force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The Defendant:
ERIC ARONSON
Age: 46
Syosset, New York
E.D.N.Y. Docket No. 12-CR-245
Six Corporate Executives and Six Corporate Entities Indicted for Orchestrating A $500 Million Offshore Asset Protection, Securities Fraud, and Money Laundering SchemeRead the Press Release
A multi-count indictment was unsealed this morning in federal court in Brooklyn, New York, against six individual defendants: Robert Bandfield, a U.S. citizen; Andrew Godfrey, a citizen of Belize; Kelvin Leach, a citizen of the Bahamas; Rohn Knowles, a citizen of the Bahamas; Brian De Wit, a citizen of Canada; and Cem Can, a citizen of Canada; and six corporate defendants: IPC Management Services, LLC; IPC Corporate Services Inc.; IPC Corporate Services LLC (collectively, IPC Corp); Titan International Securities, Inc. (Titan); Legacy Global Markets S.A. (Legacy); and Unicorn International Securities LLC (Unicorn).1 The charges include conspiracy to commit securities fraud, tax fraud, and money laundering. Bandfield’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for tomorrow at the Wilkie D. Ferguson Jr. United States Courthouse, 400 North Miami Avenue, Miami, Florida. The government will seek extradition for the other individual defendants.
The indictment 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, New York Field Office (FBI); Shantelle P. Kitchen, Acting Special Agent-in-Charge, United States Internal Revenue Service, Criminal Investigation, New York (IRS-CI); and James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York.
“As alleged, Bandfield and his co-conspirators devised not only a fraudulent scheme but an elaborate corporate structure based on lies and deceit designed to enable U.S. citizens to evade and circumvent our securities and tax laws. They set up sham companies with figureheads at the helm in an attempt to deceive U.S. law enforcement and regulators and bragged about their scheme to their clients,” stated United States Attorney Lynch. “Today’s sweeping indictment, charging the individuals and companies responsible for this $500 million scheme, closes this fraudulent offshore safe haven and sends a strong message to those who seek to abuse the financial markets in order to enrich themselves that we will investigate and prosecute them no matter where they set up shop.” Ms. Lynch expressed her grateful appreciation to the United States Securities and Exchange Commission (SEC) for its significant cooperation and assistance in the investigation. The SEC has filed a civil complaint in this case as well.
“As alleged, the defendants concocted an intricate scheme using sham companies to make money while repeatedly evading and violating U.S. securities and tax laws. The indictment of these defendants should serve as a stern reminder that such greed-based behavior comes at a cost. The FBI will continue to use its investigative expertise in working with law enforcement partners to identify, disrupt, and dismantle sophisticated fraud schemes to ensure the integrity and transparency of our financial markets,” stated FBI Assistant Director-in-Charge Venizelos.
“The investigation of offshore tax evasion and money laundering are top priorities for IRS-Criminal Investigation, and we are committed to using all of our enforcement tools to stop this abuse. The enactment of the Foreign Account Tax Compliance Act (FATCA) is yet another example of how it is becoming more and more risky for U.S. taxpayers to hide their money globally. Moreover, this partnership of IRS-CI, the FBI, HSI, and the U.S. Attorney’s Office demonstrates the government’s resolve to combat international crime,” stated IRS-CI Acting Special Agent-in-Charge Kitchen.
“Today’s arrests and charges disrupt an illicit offshore operation that was allegedly laundering money for corrupt clients and cheating the U.S. government out of half a billion dollars in tax revenue,” said HSI New York Special Agent-in-Charge Hayes. “The collaboration between HSI and its federal law enforcement partners serves as an example of law enforcement’s global reach to dismantle criminal organizations.”
As alleged in the indictment, between January 2009 and September 2014, this group of conspirators, masquerading as financial professionals, concocted three interrelated schemes to: (a) defraud new investors in various U.S. publicly traded companies through, among other things, fraudulent concealment of the defendants’ corrupt clients’ ownership interests in the U.S. publicly traded companies and their fraudulent manipulation of artificial price movements and trading volume in the stocks of those companies; (b) aid the corrupt clients to circumvent the IRS’s reporting requirements under, among other statutes, the Foreign Account Tax Compliance Act (FATCA); and (c) launder money for the corrupt clients through financial transactions to and from the United States involving proceeds of fraud in the sale of securities. As part of this fraudulent offshore scheme, the defendants laundered approximately $500 million for the corrupt clients – who included more than 100 U.S. citizens and residents.
To facilitate these interrelated schemes, the defendants created shell companies in Belize and Nevis, West Indies, for the corrupt clients and placed nominees at the helm of these companies. This structure was designed to conceal the corrupt clients’ ownership interest in the stock of U.S. public companies, in violation of U.S. securities laws, and enable the corrupt investors to engage in trading under the nominee’s names through brokerage firms also set up in Belize. For example, this structure enabled the defendant De Wit and a U.S. corrupt client to manipulate the stock of Cannabis-Rx, Inc., a microcap or penny stock company which traded under the ticker symbol CANA, through a series of orchestrated transactions between March 27, 2014 and April 16, 2014. On March 28, 2014 alone, De Wit received at least five telephone calls from the corrupt client with specific instructions to fraudulently orchestrate the trading of CANA’s stock. That day, CANA’s stock, which had not traded since July 2, 2013, had a trading volume of 189,800 shares. Ultimately, CANA’s stock price plummeted from $13.77 per share on March 27, 2014 to $0.50 per share on April 16, 2014.
The defendants’ scheme also enabled the U.S. corrupt clients evade reporting requirements to the IRS by concealing the proceeds generated by the manipulated stock transactions through the shell companies and their nominees. For example, in response to a request received by a U.S. corrupt client from a U.S. transfer agent who had to determine whether the proceeds from manipulative stock trading transaction were taxable under U.S. law, the defendant Bandfield forwarded an IRS Form signed by co-defendant Godfrey as the nominee for the shell company which had been set up at the request of the client. At one point during the government’s investigation, Bandfield boasted to an undercover law enforcement agent that he had specifically designed this “slick” corporate structure to counter President Barack Obama’s new laws, a reference to FATCA.
An example of how the defendants’ scheme enabled U.S. corrupt clients to launder the proceeds from their fraudulent trading in U.S. public companies was the production of unidentifiable debit cards for the clients allowing them to freely transfer their proceeds back into the United States.
The government’s case is being prosecuted by Assistant United States Attorneys Jacquelyn M. Kasulis, Winston M. Paes, and Brian D. Morris.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit www.stopfraud.gov.
The Individual Defendants:
ROBERT BANDFIELD, also known as “Bob Bandfield”
Age: 70
Residence: Belize City, Belize
ANDREW GODFREY
Age: 51
Residence: Belize City, Belize
KELVIN LEACH
Age: 34
Residence: Belize City, Belize
ROHN KNOWLES
Age: 29
Residence: Belize City, Belize
BRIAN DE WIT
Age: 45
Residence: Belize City, Belize
CEM CAN, also known as “Jim Can”
Age: 44
Residence: Belize City, Belize
E.D.N.Y. Docket No. 14-CR-476 (ILG)
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1 The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Long Island Resident Sentenced to 78 Months in Prison for Using Stolen Social Security Numbers to File Thousands of False Tax ReturnsRead the Press Release
Earlier today, Michael Figat was sentenced to 78 months’ imprisonment by United States District Judge Sandra J. Feuerstein in District Court in Central Islip, New York, for participating in a scheme to defraud the United States. As part of that sentence, the court also sentenced Figat to 3 years of supervised release and ordered him to forfeit $250,000. Restitution remains to be determined.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation (IRS), New York; Farrell Dolan, Resident Agent-in-Charge, United States Secret Service (USSS), Long Island Resident Office; Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service (USPIS), New York Division; and Rafael Medina, Special Agent-in-Charge, USPIS, Office of Inspector General (USPIS OIG), Northeast Area Field Office.
“Figat and his coconspirators stole the personal information of thousands of unsuspecting Puerto Rican citizens to enrich themselves at the expense of the United States and the tax-paying public,” stated United States Attorney Lynch. “We are committed to prosecuting those who take advantage of the federal tax system for personal profit. I want to commend my law enforcement partners for their outstanding efforts in leading this investigation.”
Natural born residents of the Commonwealth of Puerto Rico are, upon birth, automatically granted United States citizenship and are issued United States Social Security numbers upon application. Figat exploited tax laws that exempt Puerto Rican citizens from filing federal income tax returns provided they derive their incomes solely from sources within Puerto Rico. The defendant and his coconspirators illegally obtained identification information for Puerto Rican citizens, including names, dates of birth, and social security numbers. Then, between January 2011 and April 2012, they used that information to file thousands of fraudulent tax returns and obtained more than $16,000,000 in United States Treasury refund checks. As part of the scheme, Figat and his coconspirators bribed Postal Service employees to intercept tax refund checks from the mail. They also removed tax refund checks from the addressees’ mail boxes. Many of the checks in this scheme were sent to addresses in Shirley, Patchogue, Lindenhurst, and West Babylon, New York. The schemes were uncovered, in part, by a law enforcement officer working in an undercover capacity.
Today’s announcement is part of an on-going effort by the Identity Theft Task Force (ITTF), which the IRS created in mid-2012, to address the growing issue of identity theft in New York. The ITTF combines the resources of several agencies to investigate identity theft,including investigating the use of stolen identities to file fraudulent tax returns. The agencies currently participating in the ITTF include the IRS; the Federal Bureau of Investigation; USSS; USPIS; New York City Police Department; Bureau of Diplomatic Security, Department of State; Federal Deposit Insurance Corporation, Office of Inspector General; Federal Reserve Board, Office of Inspector General; USPIS OIG; Homeland Security Investigations, Immigration and Customs Enforcement; Social Security Administration, Office of Inspector General; Treasury Inspector General for Tax Administration, Department of Treasury, Office of Inspector General; and Department of Labor, Office of Inspector General.
The government’s case was prosecuted by Assistant United States Attorney
Christopher Caffarone.
The Defendant:
MICHAEL FIGAT
Age: 36
Shirley, New York
Long Island Man Pleads Guilty to Attempting to Join Al-Qaeda in the Arabian Peninsula and Obstruction of JusticeRead the Press Release
Earlier today at the federal courthouse in Central Islip, New York, Marcos Alonso Zea, also known as “Ali Zea,” an American citizen and resident of Brentwood, New York, pled guilty to attempting to provide material support to al-Qaeda in the Arabian Peninsula, also known as Ansar al-Sharia (collectively “AQAP”), and obstruction of justice.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; John Carlin, Assistant Attorney General, National Security Division; George Venizelos, 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 set forth in the indictment and other court filings, beginning in the fall of 2011, Zea planned to travel overseas in order to wage violent jihad against the perceived enemies of Islam, which included the government of Yemen and its allies. In furtherance of his plot, on January 4, 2012, Zea boarded a flight at John F. Kennedy Airport (“JFK”) in Queens, New York to London, England, en route to Yemen. Zea was not permitted to transit onward from London, however, and was returned to the United States by British authorities. Zea was interviewed and closely surveilled by investigators following his return. Despite being prevented from traveling to Yemen, Zea continued to plot, including by encouraging and supporting his co-conspirator, Justin Kaliebe, who also was planning to travel to fight jihad. In January 2013, Kaliebe was arrested at JFK while attempting to travel to Yemen to join AQAP. Months later, after learning that he too was under investigation, Zea caused electronic media on his computer to be destroyed in an effort to obstruct the investigation. Despite his efforts, a forensic examination of Zea’s electronic media subsequently conducted by investigators revealed an assortment of violent Islamic extremist materials, including issues of Inspire magazine, part of AQAP’s English-language media operations.
“American citizens who offer support to terrorist organizations pose a grave threat to our national security and the security of our allies around the world,” stated U.S. Attorney Lynch. “In this case, the defendant not only attempted to join al-Qaeda in the Arabian Peninsula, but also tried to thwart an investigation by destroying evidence. We will continue our relentless efforts against terrorists, whether they hail from overseas or from our own homeland.” Ms. Lynch expressed her grateful appreciation to the Immigration and Customs Enforcement/Homeland Security Investigations (HSI), the New York City Police Department, the Nassau County Police Department, the Suffolk County Police Department, the New York State Police, and the Port Authority of New York & New Jersey Police Department for their work on the investigation.
“One of our highest priorities is to protect our nation by identifying, disrupting, and holding accountable those who provide or attempt to provide material support to foreign terrorist organizations,” said Assistant Attorney General for National Security Carlin. “This case serves unambiguous notice that attempting to travel abroad to engage in such conduct has significant consequences.”
FBI Assistant Director-in-Charge Venizelos stated, “As we are far too familiar, Zea attempted to travel to Yemen in support of a radical terrorist agenda. When he couldn’t get there to join al-Qaeda, he went to work recruiting others to go in his stead. And when Zea learned he was under investigation he made every attempt to destroy the incriminating evidence.”
“The Marcos Zea investigation is another clear example of those who are willing to travel overseas to follow al-Qaeda's narrative of violence," said Police Commissioner William J. Bratton. “This case is another example of the close cooperation between the NYPD's Intelligence Bureau and the FBI's JTTF to uncover these individuals and stop them before they pose a threat to US interests overseas, or at home when they return.”
Zea is scheduled to be sentenced by United States District Judge Sandra J. Feuerstein on January 14, 2015. He faces a sentence of up to 25 years in prison.
The government’s case is being prosecuted by Assistant United States Attorneys Seth D. DuCharme, John J. Durham, and Michael P. Canty, with assistance provided by Trial Attorney Kelli Andrews of the Counterterrorism Section of the Department of Justice.
The Defendant:
MARCOS ALONSO ZEA (a/k/a “Ali Zea”)
Age: 26
Brentwood, New York
Bushwick Drug Dealer Convicted of Orchestrating Two Contract MurdersRead the Press Release
Earlier today, following three weeks of trial, a federal jury in Brooklyn, New York, returned a guilty verdict against Shaun Taylor, also known as “S-Dot,” on charges of murder and narcotics trafficking. These charges arose from the defendant’s participation in a decade-long narcotics trafficking conspiracy in the Bushwick neighborhood of Brooklyn, in connection with which the defendant orchestrated two contract murders. When sentenced by United States District Judge Dora L. Irizarry, the defendant faces a mandatory life term of imprisonment. Taylor’s co-defendant, Timothy Pinkney, pleaded guilty on August 6, 2014, to the murder of Terrance Barnett, and is also awaiting sentencing.
The verdict 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).
The evidence at trial showed that Taylor hired Pinkney to murder a man who had stolen Taylor’s “drug phone,” the cellular telephone Taylor used to conduct his lucrative narcotics business. Taylor paid Pinkney $1,500 to carry out the murder and mistakenly directed him to Terrance Barnett, who was visiting Brooklyn for the weekend and had no prior relationship with Taylor or Pinkney. On April 29, 2005, just before 10 p.m., Barnett was fatally shot as he stood with a friend on Putnam Avenue in Bushwick, Brooklyn. Two years later, Taylor hired two other men to kill Joseph Vargas. Taylor and his coconspirators targeted Vargas because they feared Vargas might turn against them after they stole a shipment of narcotics destined for Vargas. On June 20, 2007, at 6:20 p.m., at the direction of Taylor, one of the men hired by Taylor shot at Vargas and his brother on DeKalb Avenue in Bushwick. Vargas’s brother survived, but Vargas died at the scene.
“The defendant attempted to insulate himself by hiring young men to carry out brazen acts of violence at his behest, including the murders of Barnett and Vargas. We hope the victims’ families can take some measure of solace in knowing that the individual responsible for their sons’ murders has been brought to justice,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation; Drug
Enforcement Administration, Organized Crime Drug Enforcement Task Force Strike Force; and the New York City Police Department for their outstanding work in this case.
The government’s case is being prosecuted by Assistant United States Attorneys
Matthew Amatruda, David Pitluck, and Tali Farhadian.
The Defendant:
SHAUN TAYLOR
Age:
Brooklyn, NY
E.D.N.Y. Docket No. 10-CR-268
U.S. Attorney Files Civil Action to Forfeit Dinosaur FossilRead the Press Release
A civil complaint was filed yesterday in federal court in the Eastern District of New York to forfeit 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., (“Geofossiles”) 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). When Geofossiles petitioned for the Dinosaur Skull’s release, it conceded that the Dinosaur Skull was a genuine Mongolian fossil but attached forged Mongolian export documents. The complaint alleges that the Dinosaur Skull is the property of Mongolia and that it was imported 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 James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, HSI, New York.
“The extraordinary fossils that continue to be unearthed in Mongolia are not only a source of national pride for the Mongolian people, they are the property of the Mongolian people,” stated United States Attorney Lynch. “Property of cultural and historic significance that has been stolen from other countries will not find safe harbor in our ports. We are proud of our ongoing role in the repatriation of stolen and smuggled cultural property to its rightful owners.” Ms. Lynch thanked the Mongolian government and the Central Museum of Mongolian Dinosaurs for their assistance.
“Because of the diligent work of CBP officers and HSI special agents, this prehistoric fossilized skull from Mongolia was intercepted and removed from the stream of commerce,” said HSI Special Agent in Charge Hayes. “HSI works with its law enforcement partners to combat the smuggling of cultural property and return seized items to their rightful owners.”
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.
The government’s case is being handled by Assistant United States Attorney Karin Orenstein.
E.D.N.Y. Docket No. 14-CV-5198(BMC)