Eastern District of New York
Press releases recorded for this federal judicial district.
Sandra Hatfield, Former Chief Operating Officer of DHB Industries, Inc., Sentenced to 7 Years in Prison for Insider Trading, Fraud, and Obstruction of JusticeRead the Press Release
Earlier today, Sandra Hatfield, the former Chief Operating Officer of DHB Industries, Inc., was sentenced to 7 years in prison, to be followed by 3 years of supervised release, and ordered to forfeit some $1.8 million in illicit profits made during her fraudulent operation of a Long Island-based supplier of body armor to the U.S. military and law enforcement agencies. The sentence was imposed by United States District Judge Joanna Seybert in at the U.S. Courthouse 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 (FBI); and Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS).
Hatfield and her co-defendant DHB founder David H. Brooks were convicted in September 2010 on nine counts of conspiracy, insider trading, securities fraud, and obstruction of justice arising out of a $200 million fraud. Subsequently, Hatfield pleaded guilty to filing a false income tax return. The district court reserved its decision on how much Hatfield will be required to pay in restitution to the victims of her fraud. A decision is expected within 90 days.
“DHB made millions from supplying body armor to protect those who serve this country in the U.S. military and our law enforcement ranks. But, rather than honor the bravery of those who donned DHB’s products, Hatfield preyed upon investors, lied to them, and looted the company, all the while wrapping herself in the American flag,” stated United States Attorney Lynch. “And her lies did not stop there. She lied on her taxes and, when the SEC investigated, she lied to them too. Today, Hatfield was held accountable. This prosecution demonstrates my Office’s unwavering commitment to exposing and prosecuting corrupt executives.” Ms. Lynch thanked the FBI and IRS for leading the investigation and the Defense Criminal Investigative Service for its assistance in the case.
FBI Assistant Director-in-Charge Venizelos stated “Hatfield took advantage of her position as Chief Operating Officer at DHB to profit at the expense of honest and unsuspecting investors. She placed greed and entitlement above the law. Hatfield’s sentence should be a warning to those who engage in financial crimes that the consequences can be severe. We will continue to work with our law enforcement partners to investigate and present for prosecution those individuals who misuse their positions within the financial market for personal gain.”
IRS Acting Special Agent-in-Charge Kitchen stated, “The real shame is that DHB Industries provided vital products to the men and women of the U.S. military and to law enforcement, but Ms. Hatfield and Mr. Brooks used their positions in the company to satisfy their own voracious greed. Corporate officials hold positions of trust and that trust is broken when they abuse their power by committing crimes of selfishness. IRS-Criminal Investigation is committed to working with our law enforcement in vigorously investigating corporate officers who engage in financial crimes such as conspiracy, insider trading, securities fraud, and obstruction of justice, as well as tax crimes.”
During an eight-month trial, the government’s evidence proved that Hatfield and others conspired to loot DHB for personal gain. Hatfield helped her co-defendant Brooks conceal the related party status of Tactical Armor Products, a company supposedly run independently of DHB by Brooks’ wife, but in fact wholly controlled by Brooks. Through this scheme, Hatfield helped Brooks siphon more than ten million dollars from DHB to support a thoroughbred horse-racing business.
Hatfield also engaged in accounting fraud schemes designed to increase the net income and profits that DHB reported in its press releases and filings with the Securities and Exchange Commission by falsely inflating the value of DHB’s existing inventory, adding non-existent inventory to the company’s books and records, and fraudulently reclassifying expenses. Knowing that DHB’s stock price of $20 per share had been artificially-inflated through her many and varied schemes, Hatfield sold more than $5 million of DHB stock in late 2004. After those insider sales, DHB stock plummeted to pennies per share and the company was de-listed from the American Stock Exchange.
Hatfield resigned from DHB in November 2005 and Brooks was removed as DHB’s CEO in July 2006. In July 2006, DHB relocated its headquarters from Westbury, New York, to Pompano Beach, Florida, and on October 1, 2007, DHB changed its name to Point Blank Solutions, Inc. DHB stock was traded on the American Stock Exchange until trading was suspended on May 26, 2006, as the defendants’ schemes came to light
The government’s case was prosecuted by Assistant United States Attorneys Christopher Ott, Christopher Caffarone, James Knapp, Laura Mantell, Bonni Perlin, and Mary Dickman.
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.
New Arrest of TSA Employee and Bklyn Resident: Vernon LythcottRead the Press Release
Lythcott Complaint
Alleged Rizzuto Organized Crime Family Associate Sentenced to 10 Years ImprisonmentRead the Press Release
Earlier today, at the United States Courthouse in Brooklyn, New York, Alessandro Taloni, an alleged associate of the Montreal-based Rizzuto organized crime family of La Cosa Nostra, was sentenced to 10 years in prison, to be followed by 5 years of supervised release. In May 2013, Taloni pled guilty to cocaine trafficking charges contained in a superseding indictment returned on April 3, 2013. As part of his sentence, Taloni will also forfeit $2,663,191 that federal agents seized from multiple locations in California that Taloni used to store narcotics and drug proceeds.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James J. Hunt, Acting Special Agent-in-Charge of the Drug Enforcement Administration, New York (DEA).
“Taloni used his connections to powerful international organized crime groups to distribute deadly narcotics, worth tens of millions of dollars, across North America. His prosecution and sentence demonstrate this Office’s unrelenting commitment to swiftly pursuing and prosecuting transnational organized crime beyond state and national borders,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Drug Enforcement Administration, the Anaheim Police Department, and the Beverly Hills Police Department for their work on the case. Ms. Lynch also expressed her appreciation to the Laval Police Service for their invaluable assistance during this multi-year international investigation.
DEA Acting Special Agent-in-Charge Hunt stated, “This sentencing is the end result of international, federal, local and state law enforcement’s collaboration. Law enforcement’s effort to thwart organized crime led to identifying Taloni and his associates’ international drug network that facilitated the Sinaloa Cartel’s cocaine distribution network in the United States.”
Taloni and ten members of a Montreal-based drug distribution organization affiliated with the Rizzuto and Bonanno crime families, the Hells Angels, and the Sinaloa Cartel were charged with narcotics and money laundering offenses in connection with trafficking over $1 billion worth of marijuana, cocaine, and ecstasy into the United States between 1998 and 2012. The organization transported tens of thousands of pounds of marijuana from outdoor growers in British Colombia to Montreal, Canada, and controlled numerous warehouses in and around Montreal for the manufacture of ecstasy and hydroponic marijuana. The drugs were smuggled into the United States using transportation networks run by the Hells Angels and Native American co-conspirators from the Akwesasne Mohawk Reservation along the U.S./Canadian border. Once the drugs were sold in the United States, much of it by distributors tied to the Bonanno crime family in New York, the organization used millions of dollars in drug proceeds to purchase more cocaine from the powerful Sinaloa Cartel in Mexico for exportation to and distribution in Canada. Taloni was personally sent from Montreal to Los Angeles, California, to receive those drug proceeds and to purchase cocaine from the Mexican sources and export cocaine to Canada.
During the course of the government's investigation, federal agents seized approximately $1 million in drug proceeds and 49 kilograms of cocaine from searches of Taloni's Mercedes Benz sedan, Beverly Hills residence, and a stash house operated by Taloni in Beverly Hills. Search warrants executed at other stash houses operated by the organization in the Los Angeles area resulted in the seizure of an additional 34 kilograms of cocaine and approximately $1,600,000. In total agents seized more than $10,000,000 in narcotics proceeds from the organization.
The government's case is being prosecuted by Assistant United States Attorneys Steven L. Tiscione, Gina M. Parlovecchio, Amir H. Toossi, and Tanisha Payne.
The Defendant:
ALESSANDRO TALONI
Age: 38
Brothers Sentenced for $2 Million FraudRead the Press Release
Earlier today, Amner A. Borukhov, also known as “Alex Amner Borukhov” and “Avner Borikhov,” was sentenced to 57 months of imprisonment to be followed by 3 years of supervised release following his plea of guilty to conspiracy to commit mail and wire fraud. Last month, his brother, Markiel Borukhov, also known as “Mark Borukhov,” was sentenced to 24 months of imprisonment to be followed by one year of supervised release following his plea guilty to conspiracy to commit mail and wire fraud. The sentences were imposed in federal court in Central Islip, New York by United States District Judge Sandra J. Feuerstein. As part of their sentences, Judge Feuerstein ordered Amner Borukhov and Markiel Borukhov to pay restitution and forfeit approximately $2.2 million and $622,000, respectively.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office.
“The defendants conned investors who were seeking to buy precious metals by using lies and deception to steal millions of their precious investment dollars,” stated United States Attorney Lynch. “When federal law enforcement began to close in on them, the defendants felt the heat and fled to Morocco, where they hid for over a year. But they soon learned what should serve as a lesson to all criminals: you can run, you can hide, but you cannot escape justice.” Ms. Lynch expressed her grateful appreciation to Moroccan authorities for Morocco’s cooperation and assistance with the extradition and successful prosecution of this case.
FBI Assistant Director-in-Charge Venizelos stated, “Instead of running a legitimate business, the defendants stole money by marketing bogus precious metals to unwitting investors. The long arm of the law stretched all the way to Morocco as the defendants found. This is the latest example of what happens when you steal and cheat from others to get ahead.”
According to court filings and facts presented during the court proceedings, between May 2009 and January 2011, the defendants induced approximately 60 investors to give them more than $2.2 million by promising to use their money to purchase palladium and other precious metals. The defendants, however, never gave those investors the metals that they promised to purchase, nor did they return any money to those individuals. Instead, the defendants used those funds to pay their personal expenses. In furtherance of their fraudulent scheme, the defendants used aliases and falsely told prospective investors that they were in a partnership with Jim Cramer, who hosts an investment program on CNBC called Mad Money.
In early 2011, the defendants learned that they were being investigated by the FBI. As a result, they bought one-way plane tickets to Casablanca, Morocco. They lived in Morocco for approximately 14 months while the U.S. Attorney’s Office, the FBI, and the Office of International Affairs worked with Moroccan authorities to locate, arrest, and return the defendants to the United States, so that they could be prosecuted for their crimes. In May 2012, Moroccan authorities located and arrested the defendants. Months later, the defendants were returned to the United States, where they have been in custody ever since. On October 9, 2013, the defendants pleaded guilty.
The government’s case was prosecuted by Assistant United States Attorney Christopher Caffarone. The Office of International Affairs in the Department of Justice’s Criminal Division provided assistance in this case.
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 Defendants:
AMNER A. BORUKHOV
Also known as “Alex Amner Borukhov” and “Avner Borikhov”
Age: 34
Residence: Great Neck, New York
MARKIEL BORUKHOV
Also known as “Mark Borukhov”
Age: 30
Residence: Brooklyn, New York
Long Island Mortgage Banker and Five Others Indicted on $30 Million Bank Fraud ConspiracyRead the Press Release
Earlier today an indictment was unsealed charging six men with carrying out a $30 million bank fraud conspiracy by fraudulently inflating the prices of homes for sale and then obtaining mortgages that far exceeded the true collateral value of properties in Nassau and Suffolk Counties. Through his mortgage banking company, defendant Aaron Wider and his co-conspirators allegedly then re-sold these “toxic” mortgages to banks and other investors in the secondary mortgage market, causing millions in losses when the loans went into foreclosure. Four of the defendants were arrested this morning and will be presented for arraignment later today at the United States Courthouse in Central Islip, New York, before United State Magistrate Judge Gary R. Brown. Of the remaining two defendants, one was taken into custody in Florida, while another is scheduled to surrender to federal agents tomorrow in Central Islip.
The indictment and arrests 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.
“The conduct charged in the indictment is a prime example of the type of corrupt mortgage-lending practices that preceded the bursting of the real estate bubble, the loss of faith in securitized mortgage obligations, and the financial collapse of 2007 and 2008,” stated United States Attorney Lynch. “Instead of using their skills in banking, the law, and investing to assist individuals pursuing the American Dream, the defendants cooked up a sophisticated scheme that defrauded lenders and then fed toxic debt to the investigating public at large in the secondary mortgage market. I would like to thank the investigators at the Nassau County District Attorney’s Office and New York State Department of Financial Services for their invaluable assistance in this investigation.”
FBI Assistant Director-in-Charge Venizelos said, “As alleged in the indictment, during the height of the real estate boom, these defendants devised a scheme to turn a profit at the expense of unsuspecting lenders, investors and members of the public. Mortgage fraud poses a threat to our financial systems and to our economy. This case should send a clear message to all individuals who try to game our financial market: you will be identified and held accountable for your criminal acts. The FBI, along with our law enforcement partners, will continue to investigate those who orchestrate and participate in various mortgage fraud schemes in order to protect the public against those who seek to damage our economy.”
According to the indictment and other court filings, between 2003 and 2008, defendant Aaron Wider operated a New York State licensed mortgage bank in Garden City, New York, called HTFC Corp., which issued residential mortgages to borrowers. HTFC did not possess assets to fund these loans, but relied on funding from other banks and financial institutions, commonly known as “warehouse lenders.” The warehouse lenders relied on Wider and HTFC to ensure that home buyers were able to pay the mortgages and that the market value of the homes fully collateralized the loans.
Instead, Wider and the co-defendants allegedly engineered a complex series of same-day sham transactions, or “flips,” to artificially-inflate the prices of homes. Then they lied to the warehouse lenders to obtain mortgage funding that was 80-percent more than the actual value of the homes. Wider and co-defendants Manjeet Bawa, John Petiton, and Joseph Ferrara contracted to buy homes in Nassau and Suffolk counties from innocent sellers at market prices. The defendants then submitted fraudulent loan applications to the warehouse lenders that nearly doubled the true sales prices of the homes. The defendants also inflated their personal assets and concealed significant liabilities to get loan approval.
At each closing, Petiton, an attorney admitted to practice in New York State, oversaw the actual sales to innocent sellers, and simultaneously created sham trusts into which title to the properties was transferred for no money. He and the coconspirators then immediately transferred title back to the co-defendants at nearly double the price to create a false paper trail documenting the artificially-inflated prices. Meanwhile, real estate appraiser Joseph Mirando prepared false appraisal reports to justify the inflated prices, while HTFC closing attorney Eric Finger concealed the far lower, true sales price for properties by lying on federal-mandated settlement forms. Finger received wire transfers of funds from the warehouse lenders, and after paying the innocent third-party sellers, disbursed the surplus money fraudulently obtained in the mortgages to his fellow co-conspirators.
HTFC sold each of its mortgages in the secondary market. On paper, the loans appeared to be attractive investments because HTFC’s mortgages carried high rates of return that were supposedly fully collateralized by the market value of homes and the assets and incomes of the borrowers, or mortgagors. Upon buying mortgages from HTFC, the secondary market bank paid off the warehouse lenders, and then either collected the principal and interest, or bundled them into mortgage-backed securities that were sold to pension funds, hedge funds, and other investors seeking relatively secure, high-yield investments. When HTFCs mortgages went into foreclosure beginning in 2007 and 2008, the secondary market investors discovered that the actual value of the collateral was 80-percent less than the amount borrowed for each home.
The charges in the indictment are merely allegations, and the defendants presumed innocent unless and until proven guilty. If convicted, the defendants face up to 30 years’ imprisonment. The indictment unsealed today also seeks to forfeit 19 residential properties traced to the bank fraud or up to $30 million in a money judgment.
The case is being prosecuted by Assistant U.S. Attorney James Miskiewicz.
The Defendants:
MANJEET BAWA
Age 46
Dix Hills, New York
JOSEPH FERRARA,
Age 70
Long Beach, New York
ERIC FINGER,
Age 48
Miami, Florida
JOSEPH MIRANDO,
Age 54
Centereach, NY
JOHN PETITON
Age 68
Garden City, New York
AARON WIDER
Age 50
Copiague, New York
Long Island Doctor Pleads Guilty to Distribution of OxycodoneRead the Press Release
Eric Jacobson, a Great Neck, New York, physician, pled guilty today in United States District Court for the Eastern District of New York, to 19 counts of the illegal distribution of the highly addictive painkiller oxycodone. When sentenced, Jacobson faces up to nine years in prison. The defendant previously relinquished his license to practice medicine.
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 Field Office, and Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York. The plea was entered before the Honorable Joseph F. Bianco at the United States Courthouse in Central Islip.
“Instead of providing needed medical services to his community, Dr. Jacobson directly contributed to the tragedy of prescription drug abuse that has swept across our district and our nation. Today’s conviction reflects our office’s continued commitment to ending the illegal distribution of prescription painkillers in our community, and should serve as a warning to those who would violate their oath as medical professionals to do no harm: if you illegally distribute prescription drugs, you will be held accountable,” stated United States Attorney Lynch. “I want to thank our partners at the DEA and the Internal Revenue Service for their outstanding work in investigating this case.”
Jacobson was arrested on June 6, 2012, as part of the Eastern District of New York’s Prescription Drug Initiative, led by the United States Attorney’s Office and the DEA, working with the Nassau County Police Department, the New York State Police, and numerous other local, state, and federal law enforcement agencies. He has been held in custody since the arrest.
The investigation revealed that, from December 2009 through June 2012, the defendant illegally distributed oxycodone to individuals he knew were either abusing or re-selling oxycodone pills to addicts. According to court filings, the defendant charged these individuals, known in the industry as “doctor-shoppers,” various amounts of money – in cash – for each prescription issued. The doctor-shoppers then either re-sold oxycodone to addicts and other users for profit or abused the pills themselves. During the execution of a federal search warrant at his office on December 1, 2011, Jacobson surrendered his DEA license authorizing him to prescribe controlled substances. Despite that surrender, Jacobson continued to engage in the illegal distribution of oxycodone by personally writing prescriptions following the surrender and then, used other healthcare professionals to continue to distribute drugs illegally. Pursuant to his plea agreement with the government, Jacobson agreed to forfeit $250,000 in money and property representing the illegal narcotics proceeds he earned as a result of his illegal distribution of oxycodone.
The Prescription Drug Initiative is a joint effort led by the United States Attorney’s Office for the Eastern District of New York, the DEA, and the five District Attorneys in Kings, Nassau, Queens, Richmond, and Suffolk Counties, working in conjunction with the New York City Police Department and the Nassau and Suffolk County Police Departments, as well as the Department of Health and Human Services, the Internal Revenue Service, New York/New Jersey HIDTA, the New York State Department of Health, and the New York State Medicaid Inspector General. The Prescription Drug Initiative is a broad and comprehensive approach to the epidemic of prescription drug trafficking and abuse, involving not only criminal investigation and prosecution at the federal, state, and local level, but also the targeted use of civil law enforcement, regulatory action, and community outreach. The Initiative has expanded information-sharing among federal and state enforcement agencies to better identify and target suspected traffickers and ensure greater use of criminal, civil, forfeiture, injunctive, and other tools.
The government’s case is being prosecuted by Assistant United States Attorneys Lara Treinis Gatz, Catherine M. Mirabile, and Kenneth Abell.
The Defendant:
ERIC JACOBSON
Age: 51
Huntington, NY
E.D.N.Y. Docket No. 12-CR-452 (S-2) (JFB)
Two Officers of Long Island Based Company Indicted for Sale of $17 Million Worth of Misbranded Prescription Drugs Including Counterfeit Cancer DrugsRead the Press Release
A 73-count indictment was unsealed this morning in federal court in Central Islip, NY, charging William Scully and Shahrad Rodi Lameh – President and Vice President, respectively, of Pharmalogical, Inc., d/b/a Medical Device King in Great Neck, New York – with multiple counts of conspiracy, mail fraud, wire fraud, distribution of misbranded and counterfeit prescription drugs, trafficking in counterfeit goods, and smuggling.1 The defendants were arrested earlier today and will appear for arraignment before U.S. Magistrate Judge William D. Wall at 2 pm at the federal courthouse in Central Islip.
The arrests were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Mark Dragonetti, Special Agent-in-Charge, Food and Drug Administration, Office of Criminal Investigation, New York Field Office (“FDA OCI”).
As alleged in the indictment, the defendants operated the illegal schemes since March, 2009, and the counterfeit cancer treatment medication was sold to an oncology practice in Iowa. The defendants sold in the United States other drugs and devices including, Mirena brand intrauterine birth control implant devices (“IUDs”) manufactured in Finland that were not approved by the United States Food and Drug Administration for use in the United States. The unapproved IUDs were sold throughout the country to women's clinics and health care providers. The defendants also sold a variety of other unapproved prescription drugs during the course of the scheme and grossed over $17 million.
“As alleged, instead of seeing an opportunity to alleviate suffering and cure disease, Scully and Lameh saw a chance to make money off the backs of those already fighting for their lives, selling counterfeit cancer medication to an unsuspecting clinic. The defendants deliberately and repeatedly flouted the laws enacted to protect our citizens, all in order to flood the market with counterfeit and unapproved drugs and medical devices just so they could line their own pockets,” stated United States Attorney Lynch. "We and our law enforcement partners will vigorously pursue and prosecute those who seek to profit from the illness of others by such fraud."
FDA OCI Special Agent-in-Charge Dragonetti stated, "The FDA will remain vigilant in our efforts against those who would threaten the integrity of the prescription drug supply chain by introducing counterfeit and unapproved products for their own financial gain. We commend the work by the U.S. Attorney's Office, and together we will continue to pursue those who jeopardize the health of the public."
If convicted, each defendant faces a maximum sentence of 20 years of imprisonment, asset forfeiture of more than $17 million, and a $250,000 fine.
The government's case is being prosecuted by Assistant United States Attorney Charles P. Kelly.
The Defendants:
Name: WILLIAM SCULLY
Age: 45
Residence: Commack, N.Y.
Name: SHAHRAD RODI LAMEH
Age: 40
Residence: Manhasset, N.Y.
___________________________________________________________________________
1 The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Investment Fund Manager Pleads Guilty in $96 Million Ponzi SchemeRead the Press Release
Earlier today, Brian R. Callahan, 44, pleaded guilty to one count of securities fraud and one count of wire fraud for operating a $96 million Ponzi scheme through his various offshore investment funds. Pursuant to his plea agreement with the government, Callahan has agreed to the forfeiture of $67.4 million, which includes proceeds from the sale of his former residence in Old Westbury, New York and a beachfront condominium in Westhampton, New York. When sentenced, Callahan faces up to 40 years in prison and the payment of approximately $96 million in restitution to the victims of his fraud.
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 (FBI); and Shantelle P. Kitchen, Acting Special Agent-in-Charge, United States Internal Revenue Service, Criminal Investigation, New York (IRS).
“Callahan used six offshore entities to perpetrate one of the largest investment frauds in Long Island history. Through lies and deceit, he misled investors and stole investor funds, including investments from a local fire department, to support a lavish lifestyle and operate a multi-million dollar Ponzi scheme. Today’s guilty plea marks the end of Callahan’s schemes and his lavish lifestyle and demonstrates this Office’s steadfast commitment to protect the investing public from fraud,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the FBI, the IRS, Securities and Exchange Commission, and the British Virgin Islands Financial Investigation Agency for their cooperation and assistance in the investigation and prosecution of this case.
According to court filings and facts presented at the plea hearing, between December 2006 and February 2012, Callahan raised more than $118 million from at least 40 investors in connection with four different investment funds that he managed. He had assured those investors that their money would be invested in mutual funds, hedge funds, and other securities. Instead of investing the money as he promised, Callahan misappropriated approximately $96 million and began to operate the investment funds as a large-scale Ponzi scheme. Among other things, Callahan diverted millions of dollars towards the Panoramic View, an unprofitable 117-unit beachfront resort and residence development in Montauk, New York, that he owned with his brother-in-law and co-defendant, Adam Manson.1 He also commingled the money from the various investment funds and used it to pay tens of millions of dollars in partial redemptions to his victim investors to keep the Ponzi scheme afloat, and to purchase luxury items such as expensive cars and homes in Old Westbury and Westhampton, New York. To avoid detection and continue the scheme, Callahan sent fake account statements to investors that falsely showed that their funds were invested and performing well, and he repeatedly lied to his investors about both the nature and status of their investments.
Today’s guilty plea took place before United States Magistrate Judge A. Kathleen Tomlinson.
The government’s case is being prosecuted by Assistant United States Attorneys Christopher C. Caffarone, Winston M. Paes, Brian D. Morris and Karin K. Orenstein.
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:
BRIAN R. CALLAHAN
Age: 44
Old Westbury, New York
E.D.N.Y. Docket No. 13-CR-453
___________________________________________________________________________
1 The charges against co-defendant Manson are merely allegations, and he is presumed innocent unless and until proven guilty.
Al-Qaeda in the Arabian Peninsula Operative Pleads Guilty in Brooklyn Federal CourtRead the Press Release
Earlier today, Lawal Olaniyi Babafemi, a Nigerian citizen, pleaded guilty to conspiring to provide and providing material support to a designated foreign terrorist organization, al-Qaeda in the Arabian Peninsula (“AQAP”). Today’s plea took place before United States District Judge John Gleeson. At sentencing, Babafemi faces a maximum of 30 years in prison.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and John P. Carlin, Assistant Attorney General for National Security.
“The defendant traveled to Yemen to put himself at the disposal of a violent terrorist organization that has repeatedly demonstrated its determination to inflict bodily and economic harm on the United States and its citizens,” stated United States Attorney Lynch. “After meeting and training the defendant, senior leaders of al Qaeda in the Arabian Peninsula dispatched him back to Nigeria with instructions and funding to recruit others to join the terrorist group. The defendant’s guilty plea to terrorism charges is a testament to the tireless work of the FBI’s Joint Terrorism Task Forces in New York and San Diego in gathering evidence around the world in order to bring the defendant to justice.” Ms. Lynch also expressed her grateful appreciation to the government of Nigeria for its assistance and cooperation in this extradition.
According to previous court filings, between approximately January 2010 and August 2011, the defendant traveled twice from Nigeria to Yemen to meet and train with leaders of AQAP, the Yemen-based branch of al-Qaeda. Babafemi assisted in AQAP’s English-language media operations, which include the publication of the magazine “Inspire.” At the direction of the now-deceased senior AQAP commander Anwar al-Aulaqi, Babafemi was provided by AQAP leadership with the equivalent of almost $9,000 in cash to recruit other English-speakers from Nigeria to join that group. While in Yemen, Babafemi also received weapons training from AQAP.
The government’s case is being prosecuted by Assistant United States Attorneys Zainab Ahmad and Hilary Jager, with assistance from Trial Attorneys William M. Narus and Annamartine Salick of the Justice Department’s Counterterrorism Section, as well as from the Justice Department’s Office of International Affairs.
The Defendant:
LAWAL OLANIYI BABAFEMI
Age: 33
Congressman Michael Grimm Indicted for Mail, Wire and Health Care Fraud, Filing False Tax Returns, Perjury, Obstruction of an Official Proceeding, Hiring and Employing Unauthorized Aliens and Related Charges, in Connection with A Manhattan Restaurant HeRead the Press Release
A 20-count indictment was unsealed this morning in federal court in Brooklyn charging Michael Grimm with five counts of mail fraud, five counts of wire fraud, three counts of aiding and assisting in the preparation of false federal tax returns, one count of conspiring to defraud the United States, one count of impeding the Internal Revenue Service, one count of health care fraud, one count of engaging in a pattern or practice of hiring and continuing to employ unauthorized aliens, two counts of perjury and one count of obstructing an official proceeding.1 Since 2011, Grimm has served as a member of the United States House of Representatives, representing New York’s 11th Congressional District, which includes the borough of Staten Island and parts of the borough of Brooklyn, in New York City. Grimm will be arraigned later today before United States Magistrate Judge James Orenstein at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
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), and Richard Weber, Chief, Internal Revenue Service-Criminal Investigation (IRS-CI).
“In 2007, Michael Grimm, former Marine, former FBI agent, accountant and attorney, was poised for success as a small business owner. Instead, as alleged, Grimm made the choice to go from upholding the law to breaking it. In so doing he turned his back on every oath he had ever taken. Even after his return to public service, when called to account for his actions and questioned under oath Grimm went for the cover up, and lied about his role in his own business,” stated United States Attorney Lynch. “The obligation to deal honestly and testify truthfully is shared by everyone in our society. We will continue to work with our law enforcement partners to enforce our laws across the board.”
“As a former FBI agent, Representative Grimm should understand the motto: fidelity, bravery, and integrity. Yet he broke our credo at nearly every turn. In this twenty-count indictment, Representative Grimm lived by a new motto: fraud, perjury, and obstruction. We demand the best from our political leaders. Yet today, we again find ourselves expecting and rightfully wanting more. And as citizens of this great nation we rightfully demand it,” stated FBI Assistant Director-in-Charge Venizelos.
“While occupying a position of trust in the community, Mr. Grimm is alleged to have committed a multitude of criminal violations,” said Chief, IRS Criminal Investigation Weber. “No matter your political position, how much power you have, how much money you make, or who you know, IRS-CI investigates all allegations of tax fraud. The American public expects and deserves the equitable enforcement of our tax laws.”
I. Background
As alleged in the indictment, Grimm was one of the owners and the managing member of “Healthalicious,” a fast food restaurant located in Manhattan. From 2007 through 2010, Grimm oversaw the day-to-day operations of the restaurant, which included the reporting and distribution of the restaurant’s payroll. Specifically, Grimm set the employees’ rates of pay, reported their pay-rates and hours worked to the companies that Healthalicious retained to manage its payroll and withhold taxes due and owing to the federal and New York State governments (the “Payroll Processing Companies”), and distributed wages to employees. When Grimm was not present at the restaurant to perform these tasks himself, he delegated those responsibilities to managers under his supervision and control.
Grimm is charged with engaging in schemes to fraudulently under-report the wages he paid his workers – many of whom did not have legal status in the United States – and fraudulently under-report the true amount of money the restaurant earned to both federal and New York State tax and insurance authorities. Specifically, Grimm paid a large portion of Healthalicious’ employees’ wages in cash and did not report those cash wages to federal and state authorities, thereby lowering the restaurant’s payroll tax costs. Grimm also under-reported the true amount of Healthalicious’ payroll to the New York State Insurance Fund (“NYSIF”), allowing him to receive lower monthly workers’ compensation premiums. In addition, Grimm substantially under-reported the amount of gross receipts Healthalicious earned to both the federal and New York State governments, thereby dramatically lowering the federal and state tax the restaurant owed and paid. In total, Grimm concealed over $1 million in Healthalicious sales and wages, fraudulently depriving the federal and state governments of sales, income, and payroll taxes. Further, when Grimm was deposed by an attorney representing a former Healthalicious employee in 2013 as part of a federal lawsuit, Grimm lied under oath about his business practices, including falsely denying that he paid workers cash wages.
II. The Scheme to Fraudulently Under-Report Healthalicious’ Payroll
As alleged in the indictment, Grimm paid a significant portion of Healthalicious’ employees’ wages in cash. Many employees received approximately half of their weekly pay in cash and the other half by check or through direct deposit into a bank account, while others received their entire weekly pay in cash. Grimm handed out cash payments to his employees on numerous occasions, and those cash payments were taken from the daily cash receipts of Healthalicious. Further, Grimm hired and continued to employ workers who did not have legal status and accordingly did not have valid authorization to work inside the United States.
To execute his scheme, Grimm lied, or directed others to lie, to the Payroll Processing Companies by concealing the cash wages paid to the Healthalicious employees. The Payroll Processing Companies had no record of those employees who received the entirety of their pay in cash, or the amounts of pay those employees had received. By under-reporting employee hours and concealing the existence of some employees, Grimm ensured that the Payroll Processing Companies – which were responsible for filing numerous state and federal tax returns on behalf of the restaurant – calculated and then reported less than half of the wages actually paid to the employees. To further his scheme, Grimm maintained electronic spreadsheets detailing the true payroll information pertaining to Healthalicious, which included cash wages paid to Healthalicious employees, and concealed them from the Payroll Processing Companies, among others.
By concealing the off-the-books wages from the Payroll Processing Companies and from an accountant Grimm retained to file other state and federal tax returns for the restaurant (the “Healthalicious Accountant”), Grimm caused a number of false filings to occur, resulting the in underpayment of state and federal taxes as well as an artificially-reduced monthly workers’ compensation insurance premium. Those false filings and misrepresentations included:
1) Federal quarterly payroll tax returns that did not report the true wages Healthalicious employees earned and that did not withhold the proper amount of Federal Insurance Contributions Act (“FICA”) taxes due and owing to the federal government;
2) Federal partnership tax returns filed with the IRS for tax years 2008, 2009, and 2010 that did not accurately report the correct total wages Grimm paid his employees; and
3) False payroll statements submitted to NYSIF by the Payroll Processing Companies and the Healthalicious Accountant during audits conducted by NYSIF that fraudulently lowered the monthly workers’ compensation premiums paid by Healthalicious.
III. The Scheme to Fraudulently Under-Report Healthalicious’ Gross Sales
Grimm also fraudulently concealed from the Healthalicious Accountant a significant amount of the cash sales that the restaurant generated from April 2007 through August 2010. As a result, Grimm filed numerous false tax returns with the federal government and the State of New York through the Healthalicious Accountant. These false filings, among other things, concealed over $1 million of income that Healthalicious earned but did not report to New York State, causing a substantial sales tax loss to the state.
Specifically, those false tax returns included:
1) New York State Form ST-100 quarterly sales tax returns filed with the New York State Tax Department from June 2007 through August 2010; and
2) Federal partnership tax returns for Healthalicious for tax years 2008, 2009, and 2010. Each false return did not report the true amount of Healthalicious’ gross receipts for each tax year. As a result of Grimm’s fraudulent concealment of the restaurant’s income, Healthalicious’ true earnings were not reported on those tax returns. Consequently, those earnings did not flow through to the partners of the business and were not reflected on the personal income tax returns of the partners, including Grimm.
IV. Perjury and Obstruction of Justice
Two former Healthalicious employees filed a federal civil lawsuit against Grimm in the Southern District of New York, alleging that he did not pay them the minimum wage or overtime pay pursuant to the Fair Labor Standards Act and the New York Labor Laws. In January 2013, an attorney representing a plaintiff deposed Grimm, who answered questions under oath relating to his ownership and operation of the restaurant. Specifically, during the deposition, Grimm was questioned concerning his ownership of Healthalicious, what duties he performed there, how he paid and set the hours and rates of pay for his employees, and whether he maintained emails or other records pertaining to those issues, among other things. To conceal his illegal actions, Grimm allegedly lied about several material matters in connection with the lawsuit such as: (a) whether he paid his employees in cash; (b) whether he had interacted with the Payroll Processing Companies; (c) whether he corresponded regarding Healthalicious business through email; and (d) whether he still had access to such an email account.
If convicted, Grimm faces a term of imprisonment of up to 20 years for each mail and wire fraud charge and for the obstruction charge, up to 10 years of imprisonment for the health care fraud charge, and up to five years of imprisonment for the charge of conspiring to defraud the United States and for each perjury charge. Grimm further faces a term of imprisonment of up to three years for each charge of aiding and assisting in the preparation of a false and fraudulent tax return and for the charge of obstructing and impeding the due administration of the Internal Revenue Laws. Finally, Grimm faces up to six months of imprisonment for engaging in a pattern or practice of hiring and continuing to employ unauthorized aliens, as well as forfeiture, restitution, and fines.
Ms. Lynch expressed her appreciation to the Public Integrity Section of Department of Justice, the Northern Criminal Enforcement Section of the Tax Division of the Department of Justice, the New York State Department of Taxation and Finance, New York State Insurance Fund and the New York State Department of Labor, for their assistance in the investigation.
The government’s case is being prosecuted by Assistant United States Attorneys Anthony M. Capozzolo, Todd D. Kaminsky, and Nathan Reilly.
The Defendant:
MICHAEL GRIMM
Age: 44
Staten Island, New York
E.D.N.Y. Criminal Docket No. 14-248
____________________________________________________________________________
1 The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Grimm Indictment 14-CR-248
Colombo Family Soldier Sentenced to 50 Years in PrisonRead the Press Release
Earlier today, Dino Saracino, a soldier in the Colombo organized crime family of La Cosa Nostra (the “Colombo Family”), was sentenced to 50 years in prison at the United States Courthouse in Brooklyn, New York. In May 2012, a jury convicted Saracino of racketeering conspiracy spanning nearly two decades including two murder conspiracies, the extortionate extension and collection of credit, and witness tampering as predicate racketeering acts. The jury also convicted Saracino of conspiring to make extortionate extensions of credit, witness tampering, and obstructing an official proceeding.1
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 (FBI), New York Field Office.
United States Attorney Lynch stated, “Dino Saracino was a member of one of the most lethal and feared crews of criminals in La Cosa Nostra. His ruthless adherence to the mafia’s code of violence may have earned him a position as a soldier in the Colombo Family but today’s sentence ensures that he will pay for his crimes with years in prison.” Ms. Lynch praised the FBI and the New York City Police Department for their partnership in the government’s investigation and prosecution and also thanked the Nassau County District Attorney’s Office, the New York County District Attorney’s Office, and the Nassau County Police Department for their assistance.
The evidence at trial established Saracino’s involvement in a racketeering conspiracy that spanned from 1991 through 2008. The jury found that between 1991 and 1993, Saracino – as part of a faction of the Colombo Family that was loyal to jailed boss Carmine Persico – conspired to kill members of a faction loyal to then acting family boss Victor Orena. The two factions were engaged in a bloody struggle, known as the Colombo Family War, for control of the criminal enterprise. The jury also found that Saracino plotted to kill Michael Burnside, who Saracino and others believed was responsible for Saracino’s brother’s death in 1998. In addition, the jury found that Saracino violently attempted to collect a loanshark debt owed by an individual known as “Peter Risk,” conspired to extend extortionate credit himself, and attempted to obstruct the government’s investigation into his activities and the other members of his criminal crew in 2008 through witness tampering, all as part of the racketeering conspiracy. The jury further convicted Saracino of substantive counts of conspiring to make extortionate extensions of credit, preventing testimony, withholding testimony and records from the grand jury, and obstructing an official proceeding, specifically, the grand jury’s investigation of Saracino and his crew.
Today’s sentencing signifies the culmination of a lengthy investigation and prosecution by the U.S. Attorney’s Office and the FBI. Since Saracino’s arrest with Colombo Family street boss Thomas Gioeli and others in June 2008, over 70 members and associates of the Colombo Family, including its leadership, have been arrested, prosecuted, and convicted.
The sentencing proceeding was held before the Honorable Brian M. Cogan, United States District Judge for the Eastern District of New York. During the sentencing proceeding, Judge Cogan found that, in addition to the crimes found proved by the trial jury, the government had proved by clear and convincing evidence that Saracino had participated in the 1995 murder of Richard Greaves, a Colombo Family associate, the 1997 murder of New York City Police Officer Ralph Dols, and the 1999 murder of Colombo Family underboss William “Wild Bill” Cutolo.
The government’s case was prosecuted by Assistant United States Attorneys Elizabeth A. Geddes, James D. Gatta and Cristina M. Posa.
The Defendant:
DINO SARACINO
Age: 41
____________________________________________________________________________
1 Saracino’s co-defendant, Colombo Family street boss Thomas Gioeli, was also convicted at trial of racketeering conspiracy, including three murder conspiracies. On March 19, 2014, Gioeli was sentenced to 224 months in prison.
Long Island Pediatrician Pleads Guilty to Child Sexual ExploitationRead the Press Release
Earlier today, Rakesh K. Punn, a licensed medical doctor and pediatrician, pleaded guilty to child sexual exploitation. Today’s plea took place before United States District Judge Joanna Seybert. At sentencing, Punn faces a mandatory minimum sentence of 15 years in prison and a maximum of 30 years in prison.
The plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
“We trust doctors – especially pediatricians – to care for our children. The defendant took advantage of that trust in the most egregious manner,” stated United States Attorney Lynch. “He took advantage of children who came to him for medical help. In doing so, he not only violated the criminal law, but betrayed his oath as a licensed physician to do no harm.” Ms. Lynch thanked the Federal Bureau of Investigation, the Nassau County District Attorney’s Office, the Nassau County Police Department, and the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section (“CEOS”) and High Technology Investigative Unit (“HTIU”) for their joint investigation leading up to this case.
According to previous court filings, between September 6, 2007 and January 21, 2008, Punn sexually exploited three minor pediatric patients, under the guise of medical treatment, at his home-office in Bethpage, New York, and recorded the activities. Punn also submitted fraudulent insurance claims for the purported treatment of those three children and three other pediatric patients, when, in fact, the purported treatments had not been conducted for any medically accepted purpose, but rather, solely for the sexual gratification of the defendant.
Nassau County law enforcement authorities initially arrested Punn on July 15, 2010, and subsequently filed an indictment that charged Punn with multiple counts of violating New York State sexual abuse and fraud laws, based on his conduct, which allegedly included recording sexually explicit activity involving his minor patients during their visits to his office, located in his home in Bethpage, New York. Those charges remain pending. On January 4, 2012, a federal indictment was filed that charged Punn with sexual exploitation of children and health care fraud. Punn has remained in custody since his initial arrest.
This prosecution is part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The government’s case is being prosecuted by Eastern District of New York Assistant United States Attorney Allen L. Bode and Department of Justice Trial Attorney Amy Larson.
The Defendant:
RAKESH K. PUNN
Age: 56
Bethpage, New York
E.D.N.Y. Docket No. 12-CR-0011(JS)
Former Chief Investment Officer of Construction Supply Company Sentenced to 37 Months in Prison for Bank Fraud SchemeRead the Press Release
BROOKLYN, NY – Rodney Watts, 42, the former Chief Investment Officer of GDC Acquisitions, LLC (“GDC”), was sentenced today in federal court in Brooklyn, New York, to 37 months in prison to be followed by 5 years of supervised release. As part of the sentence, Watts was ordered to pay more than $15 million in restitution and $18 million in forfeiture. In May 2013, the defendant was convicted, following three weeks of trial, by a federal jury on charges of bank, mail and wire fraud, conspiracy to commit bank, mail and wire fraud, and false statements. Watts also served as the Chief Financial Officer of GDC at one time. These charges arose out of the defendant’s scheme to defraud Amalgamated Bank, GDC’s asset-based lender, of $21 million in fraudulent loans. Watt’s co-defendant, Courtney Dupree, the former Chief Executive Officer of GDC, was convicted by a federal jury in December 2011 of similar charges. In June 2013, Dupree was sentenced to 84 months’ imprisonment to be followed by 5 years’ supervised release. As part of the sentence, Dupree was ordered to pay more than $15 million in restitution and $18 million in forfeiture.
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 Philip Bartlett, Inspector-In-Charge, United State Postal Inspection Service (“USPIS”), New York Division.
“Instead of building their company through hard work and drive, Watts and his cohorts created the illusion of success for GDC based on lies and deceit. Watts then spent years propping up that illusion and using it to defraud a bank out of millions of dollars,” stated United States Attorney Lynch. “Executives who play fast and loose with corporate financial information should expect to be investigated and prosecuted to the full extent of the law.” Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation and the Postal Inspection Service, the agencies responsible for leading the government’s criminal investigation.
GDC, based in Long Island City, Queens, is a holding company that owns various subsidiaries, including JDC Lighting, a lighting distributor; Unalite Electric and Lighting, a lighting maintenance company; and Hudson Bay Environments Group, a furniture distributor. The defendant helped orchestrate a scheme to defraud Amalgamated Bank and C3 Capital, a mezzanine lender based in Kansas, City, Missouri, by obtaining and attempting to obtain loans on the basis of false financial statements and other material misrepresentations. He and others gave Amalgamated Bank false financial information for GDC in which they had fraudulently inflated the company’s accounts receivable in order to obtain initially, and then maintain, credit lines totaling approximately $21 million. The defendant and his co-conspirators inflated the accounts receivable by a variety of means, including by recording in the corporate books sales that had never taken place. For example, the defendant represented to Amalgamated Bank in writing in November 2009 that GDC had $25.2 million in accounts receivable when, in fact, it had only approximately $9 million. In addition, the defendant and others defrauded Amalgamated Bank by causing GDC to acquire a company covertly, contrary to the terms of their loan agreement, and by concealing the acquisition from the bank. The scheme unraveled when one of the accountants turned himself into the FBI and cooperated in the government’s investigation in an undercover capacity for approximately two months.
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 Catherine M. Mirabile and Brian Morris.
The Defendant:
RODNEY WATTS
Age: 42
Bronxville, NY
E.D.N.Y. Docket No. 10-CR-627 (S-2) (KAM)
Brooklyn Man Charged with Murder to Obstruct Bank Fraud InvestigationRead the Press Release
A nine-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Naquan Reyes with the murder of Nicole Thompson to prevent her from communicating with federal law enforcement officials. Reyes was also charged with bank fraud, bank fraud conspiracy, aggravated identity theft and related offenses. The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York, on April 16, 2014.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Brian A. Swain, Acting Special Agent-in-Charge, United States Secret Service, New York Field Office.
As alleged in the indictment and detention memorandum, since 2008, Reyes has perpetrated a scheme to defraud various banks. As part of the scheme, Reyes created counterfeit checks and recruited others to deposit those checks into their and others’ bank accounts. Reyes and his coconspirators then attempted to withdraw the funds from the bank accounts before the banks learned the checks were counterfeit. Among those he recruited to make the deposits was Nicole Thompson. On July 16, 2010, Thompson was arrested by the New York City Police Department in connection with her role in the scheme, and she immediately decided to cooperate with law enforcement. Just eight days after her arrest, on July 24, 2010, Thompson's body, duct taped and wrapped in garbage bags, was found in a dumpster in Landover, Maryland. When Reyes learned of Thompson's plans to cooperate and thereby jeopardize his ongoing fraud scheme, Reyes murdered her and then traveled from New York to Maryland to dispose of her body. Thompson was 24 years old at the time of her murder.
“As alleged, Naquan Reyes sat atop a scheme to defraud multiple banks using counterfeit checks, recruiting others to help perpetrate the scheme. When one of his recruits began to cooperate with law enforcement, Reyes decided that her life was forfeit, and killed her to protect the flow of ill-gotten gains. Today’s arrest should send a message to those who in any way tamper with witnesses to evade detection by law enforcement,” stated United States Attorney Lynch. “We will relentlessly continue our investigation of such individuals until they are brought to justice.” Ms. Lynch expressed her grateful appreciation to the Prince George's County, Maryland Police Department, New York City Police Department, and Bronx County District Attorney’s Office for their significant cooperation and assistance in the investigation.
“Tampering with a witness is a serious crime. Murdering a witness in a vain attempt to obstruct justice is another matter altogether,” stated FBI Assistant Director-in-Charge Venizelos.
“The Secret Service works in concert with federal, state, and local law enforcement to ensure our resources are being targeted to those criminal activities that are of high concern to local communities. We worked closely with the Federal Bureau of Investigation, New York City Police Department, and the Prince George’s County, MD Police Department to bring justice in this case. This investigation is just one example that proves the power of agency partnerships at every level in combating financial crimes,” said Secret Service Acting Special Agent-in-Charge Swain.
The defendant is scheduled to be arraigned this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr., at the federal courthouse in Brooklyn. The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorneys Elizabeth Kramer, Elizabeth Geddes, Samuel Nitze, and Karin Orenstein.
The Defendant:
NAQUAN REYES
Age: 29
Brooklyn, NY
E.D.N.Y. Docket No. 14-CR-0227
Hotel Magnate Sant Singh Chatwal Pleads Guilty to Scheme to Evade Federal Election Campaign Contribution Limits, and to Witness TamperingRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, New York, Sant Singh Chatwal pleaded guilty to conspiring to violate the Federal Election Campaign Act (the “Election Act”) by making more than $180,000 in federal campaign donations to three candidates1 through straw donors who were reimbursed, and to witness tampering. When sentenced, Chatwal faces up to 25 years in prison. As part of his plea agreement with the government, Chatwal agreed to forfeit $1 million to the United States.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; David A. O’Neil, Acting Assistant Attorney General of the Criminal Division of the U.S. Department of Justice; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Richard Weber, Chief, Internal Revenue Service-Criminal Investigation.
“The Election Act’s spending limits are in place to limit financial influence in federal elections and to ensure transparency as to the identity of donors. Chatwal sought to buy access to power through unlimited and illegal campaign contributions, funneling money from the shadows through straw donors. Chatwal’s scheme sought to subvert the very purpose of the Election Act,” stated United States Attorney Lynch. “Chatwal then rolled the dice to stymie the government’s investigation, thinking he could corruptly convince witnesses to his federal election crimes to stay silent. That gamble did not pay off. Today’s conviction sends a clear message that this office is committed to vigorously investigating and prosecuting individuals who are responsible for committing crimes in connection with federal campaign donations and witness tampering.”
“Chatwal admitted that he used straw donors to secretly funnel money to political campaigns so that he could gain access to the politicians, and he coerced another person to hide his crime,” said Acting Assistant Attorney General O’Neil. “Chatwal went to great lengths to undermine both election laws and our system of justice. Today’s guilty plea shows our vigilance and determination to prosecute those who damage the integrity of elections by masking the true sources of campaign contributions.”
FBI Assistant Director-in-Charge Venizelos stated, “Attempting to buy elections through illegal campaign contributions is unacceptable. It is also illegal. Americans rightfully expect that elections will be free and fair. The FBI will continue investigating every case of abuse, wherever we find it.”
“Mr. Chatwal admitted his actions were designed to circumvent the Election Act,” said Chief Weber, IRS Criminal Investigation. “IRS-CI’s ability to adapt our financial investigative skills to cases where they are needed uniquely equips our agents to defend and uphold America’s trust in the fairness of the electoral process.”
The Election Act limits the amount and source of money that can be contributed to a federal candidate or to an individual candidate’s political campaign committee and multi-candidate political campaign committees, commonly referred to as “political action committees” (“PACs”). For example, in 2008, the Election Act limited primary and general election campaign contributions in a calendar year to $2,300 per campaign, for a total of $4,600, from any one individual to any one candidate. In 2010, the Election Act limited primary and general election campaign contributions in a calendar year to $2,400 per campaign, for a total of $4,800, from any one individual to any one candidate. The Election Act also prohibits making a campaign contribution in the name of another person, including giving funds to a “straw donor,” or a conduit, for the purpose of having the straw donor pass the funds to a federal candidate as the straw donor’s own contribution.
According to court filings and facts presented during the plea proceeding, Chatwal operated several businesses, including restaurants, hotels, and a hotel management company. From 2007 to 2011, Chatwal used his employees, business associates, and contractors who performed work on his hotels (the “Chatwal Associates”), to solicit campaign contributions on Chatwal’s behalf in support of various candidates for federal office and PACs, collect these contributions, and pay reimbursements for these contributions, in violation of the Election Act.
Chatwal and the Chatwal Associates induced straw donors to make these campaign contributions, promising them that they would be reimbursed. Chatwal orchestrated a scheme to make approximately $188,000 in campaign contributions to three candidates for federal office via straw donors, and he often arranged for the straw donors to be reimbursed through the Chatwal Associates, ultimately paying for the reimbursed contributions with funds belonging to Chatwal or one of Chatwal’s companies.
The evidence against Chatwal includes an October 2010 recorded conversation between Chatwal and a business associate who became an informant, in which Chatwal underscored his view as to the importance of political campaign contributions, stating that without campaign contributions, “nobody will even talk to you. . . . That’s the only way to buy them, get into the system. . . . What, what else is there? That’s the only thing.”
Chatwal also sought to obstruct the grand jury investigation into his Election Act scheme by tampering with a witness, a person whose business performed construction work for Chatwal and Chatwal’s companies, and who had recruited straw donors at Chatwal’s direction. In a June 2012 recorded conversation, Chatwal told that individual that if FBI and IRS agents approached him or his family, they should not speak with the agents and should instead refer them to a lawyer Chatwal would provide. During this conversation, the individual said that he would not tell agents that Chatwal gave him money to reimburse straw donors. Chatwal replied, “Never, never.”
A few days later, in a July 2012 recorded conversation, Chatwal directed the same individual to lie to agents about the Election Act scheme. Chatwal said he would pay for the individual’s legal fees in connection with the investigation, and offered to conceal the money within a payment for work the individual’s company had performed for Chatwal. During the conversation, they discussed that investigators were seeking copies of campaign checks in the individual’s possession, and they then discussed that it was helpful that some of the straw donors had been reimbursed with cash. Chatwal added, “cash has no proof.”
The guilty plea proceeding took place before United States District Judge I. Leo Glasser.
The government’s case is being prosecuted by Assistant United States Attorneys Martin Coffey, Carolyn Pokorny, Robert Capers and Brian Morris, and Trial Attorney Marquest Meeks of Public Integrity Section of the Department of Justice.
The Defendant:
SANT SINGH CHATWAL
Age: 70
Residence: New York, NY
_____________________________________________________________________________
1 There is no allegation that the candidates participated in, or were aware of, Chatwal’s scheme.
Long Island Man Sentenced to Two Terms of Life in Prison for Conspiring to Murder Federal Judge and Federal ProsecutorRead the Press Release
Western District Press Release- Joseph Romano
United States Sues Town of Oyster Bay for Housing DiscriminationRead the Press Release
Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Jocelyn Samuels, Acting Assistant Attorney General for Civil Rights, announced today that the United States has commenced an action against the Town of Oyster Bay on Long Island for violating the Fair Housing Act, 42 U.S.C. § 3601 et seq. In its complaint, the United States alleges that two housing programs to develop below-market rate housing for first time homeowners and senior citizens discriminate against African-Americans because the programs give preference to residents of the Town, which is predominantly white.
“Housing programs designed to help young families and senior citizens purchase homes should be available to people of all races, including African Americans,” stated United States Attorney Lynch. “To the extent residency preferences prevent families and senior citizens from purchasing homes because of race, ethnicity or color, the preferences violate federal law and cannot be tolerated.”
Acting Assistant Attorney General for Civil Rights Samuels, stated, “The Fair Housing Act protects the right of all individuals, regardless of their race, to choose where to live and to have equal access to affordable housing. Today’s lawsuit is a reminder that if municipalities wish to adopt residency preferences such as those imposed by the defendants, they must do so in a way that does not discriminate against people based on race.”
At issue are two Town zoning incentive programs. The “Next Generation” housing program encourages developers to build below-market rate housing for first time homebuyers, generally young families. The “Golden Age” housing program similarly offers incentives for the construction of below-market rate housing for senior citizens. Developers who build housing under the programs receive zoning variances which allow them to build housing more densely than under current zoning restrictions in exchange for lower sale prices for certain units. Both programs require developers to award units constructed under the programs to residents and children of residents of the Town.
According to the United States’ complaint, the residency preferences discriminate against African Americans because very few African Americans reside in the Town and even fewer are eligible for the program as compared to the population of African Americans in surrounding communities, which are significantly more diverse. For example, African Americans constituted less than 1% of families living in the Town of Oyster Bay who were income eligible and otherwise qualified to purchase housing under the Next Generation program. Conversely, whites made up as much as 90% of the pool of eligible families. The eligible population of Nassau County and Suffolk County residents was approximately 10% African American and between 70% and 75% white. The eligible population in the New York City metropolitan area was approximately 20.5% African-American and approximately 48% white.
Also named as defendants are John Venditto, the Oyster Bay Town Supervisor, in his official capacity, and Long Island Housing Partnership (“LIHP”), the not-for-profit organization which is responsible for administering the Next Generation housing program, including implementing the residency preferences for the Town.
The complaint was filed with an accompanying settlement between the United States and LIHP. LIHP has agreed to injunctive relief pursuant to which LIHP will ensure that residency preferences it administers are analyzed so that they do not violate fair housing laws. LIHP will also provide education and training to localities, banks and individuals on Long Island regarding the requirements of fair housing laws.
This case is being handled by Eastern District of New York Assistant U.S. Attorneys Michael J. Goldberger and Thomas A. McFarland, and Trial Attorney Neta Borshansky of the Civil Rights Division Housing and Civil Enforcement Section.
Serial Bank Robber Sentenced to 15 Years in Prison for TwoLong Island Bank RobberiesRead the Press Release
Earlier today, at the federal courthouse in Central Islip, New York, Steven Bertuglia was sentenced to 15 years in prison by United States District Judge Joseph F. Bianco. On October 3, 2012, Bertuglia pleaded guilty to committing two bank robberies in Nassau and Suffolk Counties while on release to a halfway house for convictions stemming from a string of 14 bank robberies he committed in 2007.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director-in-Charge of the Federal Bureau of Investigation (FBI), New York Field Office, Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD), and Edward Webber, Commissioner, Suffolk County Police Department (SCPD).
"Having refused to learn from his mistakes, this serial bank robber will now have the next 15 years to contemplate the consequences of his actions. We stand committed to protecting the public from dangerous repeat offenders," stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the FBI, the NCPD, and the SCPD for their participation in this case.
On June 16, 2008, United States District Judge Jack B. Weinstein, in federal court in Brooklyn, sentenced Bertuglia to five years in prison for committing 14 bank robberies in 2007 in Nassau, Suffolk, and Queens Counties, and in New Jersey and Connecticut. On May 3, 2011, Bertuglia was released from prison to live in a halfway house in Brooklyn, where he was scheduled to finish serving the remainder of the 2008 sentence, which would have ended on January 13, 2012.
During his guilty plea proceeding before Judge Bianco, Bertuglia admitted that in June 2011, he committed two bank robberies in Nassau and Suffolk Counties while on release at the Brooklyn halfway house. Specifically, on June 9, 2011, Bertuglia rented a car, drove to an Atlantic Bank branch in Hicksville, New York, presented the teller with a threatening note, and made off with cash. Nearly four years earlier in June 2007, Bertuglia had robbed that same Atlantic Bank branch while armed with a pellet gun. On June 16, 2011, Bertuglia again used a threatening note to rob a TD Bank branch in Farmingville, New York.
On January 13, 2012, Bertuglia was arrested by the FBI, with assistance from NCPD and SCPD.
The government's case was prosecuted by Assistant United States Attorney Charles N. Rose.
The Defendant:
STEVEN BERTUGLIA
Age: 41
Armed Robbery Crew Sentenced to 32 Years of ImprisonmentRead the Press Release
Earlier today, United States District Judge Raymond J. Dearie sentenced Edward Byam, Derrick Dunkley, and Akeem Montsalvatge each to serve 32 years of imprisonment for the violent armed robberies of two Queens check-cashing stores. Following a two-week trial that ended on August 9, 2013, the defendants were each found guilty of robbery conspiracy, two counts of robbery, and two counts of using a firearm in connection with those robberies.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Thomas J. Canon, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), New York.
“This armed robbery crew terrorized the hard-working employees of Queens in pursuit of a quick buck,” stated United States Attorney Lynch. “They used masks and costumes to elude law enforcement, but, as they have learned today, their disguises could not shield them from justice.” Ms. Lynch thanked the ATF, the agency that led the government’s investigation, and expressed her grateful appreciation to the New York City Police Department’s Police Impersonation Unit, which assisted in the government’s investigation at all stages, and the United States Marshals Service, for its crucial assistance in apprehending these violent criminals.
The government’s evidence at trial established that the defendants committed two armed robberies of separate Pay-O-Matic check cashing stores in Queens, New York. In 2010, the three defendants stole over $40,000 from a Pay-O-Matic after one of the defendants gained entry through the roof into the secure teller area. Wearing hooded sweatshirts and cloth masks, the defendants held the victim teller at gunpoint, handcuffed him and beat him with a metal chair before making off with the stolen cash. In 2012, the defendants robbed another Pay-O-Matic check cashing store at gunpoint, while wearing New York City Police Department jackets, badges, and life-like Hollywood-style special effects masks that concealed their identities and made them appear to be three white men. During this robbery, the defendants gained entry to the secure teller area by showing one of the tellers a picture of her own home and then forced a second teller to let the defendants into the area where the safe was located. Once inside, the defendants held the tellers at gunpoint and stole over $200,000.
The government’s witnesses included the victim tellers who were held at gunpoint during the robberies, as well as the owner of the company that manufactured the life-like special effects masks used by the defendants during the 2012 robbery. The government’s evidence also included telephone and cell site records placing the defendants at the scenes of both crimes, DNA evidence, text messages among the defendants discussing how they would spend the robbery proceeds, and records showing the defendants bought thousands of dollars of luxury items from high-end luxury boutiques with the money they had stolen.
The government’s case is being prosecuted by Assistant United States Attorneys Tyler Smith, Tiana Demas, and Maria Cruz Melendez.
The Defendants:
EDWARD BYAM
Age: 26
Queens, New York
DERRICK DUNKLEY
Age: 26
Queens, New York
AKEEM MONTSALVATGE
Age: 38
Queens, New York
E.D.N.Y. Docket No. 12-CR-586 (RJD)
U.S. V. Joseph Mazella Highlighted on CNBC's American GreedRead the Press Release
http://video.cnbc.com/gallery/?video=3000262923
Folk Nation Gang Member Pleads Guilty to 2008 Murder of Anthony ThomasRead the Press Release
Earlier today, Geraldo Elainor, a member of the violent Brooklyn street gang the “Six Tre Outlaw Gangsta Disciples Folk Nation,” also known as the “Folk Nation,” pleaded guilty to racketeering, including the 2008 murder of Anthony Thomas as a predicate racketeering act, and discharge of a firearm in connection with the racketeering offense. Today’s plea took place before United States District Judge Nicholas G. Garaufis. If the Court accepts the defendant’s guilty plea, the defendant will be sentenced to 25 years in prison.
The plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
“In this senseless murder, the defendant brazenly took the life of Anthony Thomas, who unwittingly made the fatal mistake of exercising in a playground controlled by Folk Nation members,” stated United States Attorney Lynch. “Acting on the gang’s mandate to kill those they believed to be rival gang members, the defendant chased the victim out of the Ebbets Field playground without provocation or justification and killed him. We hope the victim’s family can take some measure of solace in knowing that the individual responsible for their son’s murder has been brought to justice.” Ms. Lynch thanked the FBI and the New York City Police Department for their joint investigation leading up to this case.
Throughout most of its existence, the Six Tre Folk Nation was the dominant gang in the Ebbets Field Houses in the Flatbush area of Brooklyn and took threatening and violent actions to deter residents of those projects from associating with rival gangs. On August 9, 2008, Anthony Thomas was exercising in a neighborhood playground when the defendant Geraldo Elainor, believing Thomas was a rival gang member, approached and began firing at him. Elainor chased Thomas as he ran away and continued shooting at him, hitting him once in the chest. Thomas eventually reached the parking lot of a nearby McDonalds, where he collapsed and died of his wound.
Elainor is one of nine defendants charged by the United States Attorney’s Office for the Eastern District of New York for crimes they committed as members of the Folk Nation. His co-defendant, Devon Rodney, was sentenced last month to 20 years’ imprisonment for his role in directing the gang’s violent activities.
The government’s case was prosecuted by Assistant United States Attorneys Berit Berger, Zainab Ahmad and Kristin Mace.
The Defendant:
Geraldo Elainor
Brooklyn, New York
Age: 24
Former Bank CEO and President Charged with Bank Fraud, Conspiracy and PerjuryRead the Press Release
Earlier today, an indictment was unsealed charging Poppi Metaxas, the former Chief Executive Officer (“CEO”) and President of Gateway Bank, FSB (“Gateway”), with bank fraud, bank fraud conspiracy and perjury. According to the indictment, in 2009, Metaxas fraudulently caused Gateway to execute a sham “round trip” transaction in which the bank self-funded a down payment to make it appear that Gateway had sold toxic, non-performing mortgage loans. This morning, the defendant surrendered to federal agents in California and was arraigned at the federal courthouse in San Francisco, California.
The arrest 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), Christy Romero, Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), and David A. Montoya, Inspector General of the Department of Housing and Urban Development, Office of Inspector General (“HUD-OIG”).
The indictment alleges that in February and March 2009, Metaxas engaged in a scheme to defraud Gateway in connection with Gateway’s sale of non-performing mortgage loans to three entities in exchange for $15 million. Specifically, Metaxas caused Gateway to enter into a sham agreement to loan money to Ideal Mortgage Bankers Ltd. d/b/a Lend America (“Lend America”), a mortgage lender and Gateway’s largest mortgage lending client. Lend America in turn provided that money to the three entities that were planning to purchase the non-performing mortgage loans. Thus, Metaxas and others, through a series of wire transfers, used the proceeds of the sham loan to Lend America to satisfy the 25% down payment that the three entities owed to Gateway in connection with the sale of the mortgage loans, in order to deceive observers and regulators into believing that Gateway had successfully removed these toxic assets from its books. To conceal the fraudulent “round trip” of the loan funds, in October 2009, Metaxas provided false testimony to the Office of Thrift Supervision when she was asked about the source of the down payment.
“As alleged in the indictment, Poppi Metaxas placed herself above the interests of the bank, her board of directors, and the regulators, and lied to and misled those around her. She abused the trust placed in her by the bank, and committed fraud,” stated United States Attorney Lynch. “Other executives who mislead their company’s board or regulators should be on notice. Working with our law enforcements partners, both federal and local, we will find you, and we will hold you accountable in a court of law.” Ms. Lynch expressed her grateful appreciation to New York State Department of Financial Services and the Office of Comptroller of the Currency.
“As alleged, Metaxas engaged in a scheme to defraud her employer using lies and misrepresentations in connection with the sale of non-performing mortgage loans. The FBI, along with its law enforcement partners, remains committed to investigating those who prey upon our financial institutions and their customers. Those who engage in this type of financial fraud will be identified and held accountable,” stated FBI Assistant Director-in-Charge Venizelos.
“In the last number of years, we have seen enormous and damaging developments in the mortgage and housing markets. Indictments such as this set an important precedent that bad banker behavior will not be tolerated and will be aggressively pursued. We are deeply committed to working in partnership with other federal, state, and local authorities to ensure that corrupt individuals do not use their positions to enrich themselves at the expense of the government,” said HUD-OIG Inspector General Montoya.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorneys Martin Coffey, Walter Norkin, and John Nowak.
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:
POPPI METAXAS
Age: 60
Hillsborough, CA
E.D.N.Y. Docket No. 14-CR-190 (JFB)
Chief Executive Officer of ACI Capital Group Sentenced to 63 Months in Prison for Using Investment Advisory Firm to Steal Clients’ Money and Lying to the SECRead the Press Release
BROOKLYN, NY – Fredrick Douglas Scott, 29, the Chief Executive Officer of ACI Capital Group LLC (“ACI”), an investment adviser registered with the Securities and Exchange Commission (“SEC”), was sentenced today in federal court in Brooklyn, New York, to 63 months in prison to be followed by three years of supervised release. As part of the sentence, Scott was ordered to pay more than $1,388,190 in restitution to the defrauded victims. In September 2013, Scott waived indictment and pleaded guilty to engaging in a wire fraud conspiracy to steal over a million dollars from investors, and lying to officials from the SEC who were conducting a regulatory examination of ACI.
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 Filed Office (“FBI”).
“Fredrick Douglas Scott claimed to be a part of history. In reality he was a con man and a thief who fleeced unsuspecting retail investors, his so-called clients, out of more than a million dollars. Rather than help his clients invest their hard earned money, Scott stole their money for his own personal use to buy expensive dinners, clothes, and other goods and services. Scott then lied to SEC examiners who were investigating his firm. Instead of a place in the history books, Scott’s crimes bought him a room with the Bureau of Prisons for 63 months. We remain committed to protecting the retail investor from the effects of fraudsters like Scott,” stated United States Attorney Lynch. Ms. Lynch thanked the FBI, the agency responsible for leading the government’s investigation, and the SEC, Division of Enforcement in New York, for their assistance in this case.
ACI was founded by Scott in 2009 and purported to be an investment banking and advisory firm with an office located at 477 Madison Avenue, New York, New York. ACI registered as an Investment Adviser with the SEC in July 2011 and, pursuant to its most recent regulatory filing, claimed to manage $3.7 billion in assets. While Scott touted his bona fides as an investor to potential clients, including distributing the May 2010 issue of Ebony magazine, which described him as “the youngest African American hedge fund founder in history,” in reality, Scott used ACI to execute his fraudulent scheme, causing over a million dollars in losses.
In connection with his scheme, Scott worked with intermediaries or finders to locate potential victims. Once a potential victim was identified, Scott promised a high rate of return for providing short-term financing to businesses purportedly associated with ACI. Once victims wired money to ACI, Scott stole the funds for his personal use. Scott used client funds to purchase personal items at Louis Vuitton, the Apple Store, Starbucks, Fair Bail Bonds, True Religion Jeans, Tao Restaurant, the Hampton Inn SoHo, and Dizzy’s Coca-Cola Club, among others. Scott also wired stolen client funds to his personal checking account.
The sentencing proceeding was held before U.S. District Judge Roslynn R. Mauskopf.
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 government’s case is being prosecuted by Assistant United States Attorney James P. Loonam.
The Defendant:
FREDRICK DOUGLAS SCOTT
Age: 29
FBI Ten Most Wanted Fugitive Juan Elias Garcia Now in CustodyRead the Press Release
Garcia Capture Release
Six Individuals Associated with the Newspaper and Mail Deliverers’ Union ArrestedRead the Press Release
A criminal complaint was unsealed today in federal court in the Eastern District of New York charging Benjamin Castellazzo, Jr., Rocco Giangregorio, Glenn LaChance, Rocco Miraglia, also known as “Irving,” and Anthony Turzio, also known as “the Irish Guy,” with conspiring to defraud the Newspaper and Mail Deliverers’ Union (“NMDU”) and Hudson News in order to obtain a union card and employment at Hudson News for Castellazzo, Jr.
In addition, a three-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Thomas Leonessa, also known as “Tommy Stacks,” with wire fraud, wire fraud conspiracy, and theft and embezzlement from employee benefit plans, in an unrelated scheme. The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York, on March 6, 2014, and relates to Leonessa’s alleged “no show” job as a delivery driver for the New York Post.
Castellazzo, Jr., Giangregorio, LaChance, Miraglia, Turzio, and Leonessa were arrested earlier today, and their initial appearances are scheduled for this afternoon before United States Magistrate Judge Robert M. Levy 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 George C. Venizelos, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office.
As alleged in the complaint, the NMDU is an independent union that represents approximately 1,500 employees involved in the newspaper industry in New York, New Jersey, and Connecticut. NMDU members deliver newspapers for the New York Times, the Wall Street Journal, the New York Daily News, the New York Post, and El Diario.
Between June 2009 and October 2009, Miraglia, who was a foreman at the New York Daily News – as well as an alleged associate of the Colombo organized crime family of La Cosa Nostra and the son of a deceased soldier in the Colombo family – conspired with officials of the NMDU and with Turzio, who was an employee of El Diario, to get an NMDU union card for Castellazzo, Jr. and place him in a job at Hudson News. Castellazzo, Jr. is the son of Benjamin Castellazzo, the alleged underboss of the Colombo family. Giangregorio and LaChance, who were Business Agents for the NMDU, also are charged with participating in this scheme.
As alleged in the indictment, Leonessa was employed by the New York Post to deliver newspapers by truck from a New York Post warehouse in the Bronx, New York, to New Jersey. He was also a member of the NMDU, which maintained offices, including offices for its welfare and pension funds, in Queens, New York. From about December 2010 to about September 2011, Leonessa had a “no show job” at the New York Post, that is, a job for which he was paid wages and benefits, but which he did not perform. When Leonessa did not complete his required deliveries, he was nevertheless, based on his fraudulent representations, paid wages by the New York Post and accorded benefits from employee pension and welfare funds managed by the NMDU.
“Today’s arrests indicate that the NMDU and the newspaper delivery industry are, sadly, still subject to the influence of organized crime,” stated United States Attorney Lynch. “We cannot tolerate corruption in that industry, which is relied on by newspaper readers throughout New York City and beyond. We will prosecute anyone who seeks to obtain employment – or to maintain “no show” employment – in that industry by trading on the power of organized crime. Such acts not only lead to ill-gotten gains, but they also displace innocent, hard-working union members and would-be union members from jobs they have rightfully earned. We thank our partners at the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, for their tremendous efforts to identify and root out these corrupt practices.” Ms. Lynch also extended her grateful appreciation to the New York City Police Department, the New York County District Attorney’s Office, and Waterfront Commission of New York Harbor for their assistance.
“As alleged, a paycheck in exchange for a hard day’s work was a foreign concept to these defendants. Instead, they engaged in a scheme to defraud the NMDU and Hudson News for easy money and personal gain. The FBI, along with its law enforcement partners, will continue to pursue allegations of corruption and fraud all levels,” stated FBI Assistant Director-in-Charge Venizelos.
The defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn. The charges in the complaint and indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorneys Elizabeth A. Geddes and Allon Lifshitz and by Trial Attorney Joseph Wheatley of the Department of Justice’s Organized Crime and Gangs Section.
The Defendants:
BENJAMIN CASTELLAZZO, JR.
Age: 48
Manahawkin, NJ
ROCCO GIANGREGORIO
Age: 39
Dumont, NJ
GLENN LACHANCE
Age: 50
Oceanside, NY
ROCCO MIRAGLIA
Age: 43
Staten Island, NY
ANTHONY TURZIO
Age: 78
New York, NY
THOMAS LEONESSA
Age: 52
High Bridge, NJ
E.D.N.Y. Docket Nos. 14-CR-120 and 14-M-282
Man Wanted for Murder of Young Mother and Her Two-Year-Old Son Added to the FBI’S List of “Ten Most Wanted Fugitives”Read the Press Release
FBI NY - MAN WANTED FOR MURDER OF YOUNG MOTHER & HER TWO-YEAR-OLD
FBI Top Ten Most Wanted Poster- Garcia
New York Doctor Charged in Alleged Multi-Million Medicare Fraud SchemeRead the Press Release
BROOKLYN, NY - A criminal complaint was unsealed this morning in Brooklyn federal court charging Dr. Syed Imran Ahmed, 49, with healthcare fraud in connection with his submission of millions of dollars in false Medicare billings. Seizure warrants seeking millions of dollars of the defendant’s alleged ill-gotten gains, including the contents of seven bank accounts, were also unsealed. In addition, a civil forfeiture complaint was also filed today against the defendant’s residence located in Muttontown, New York, valued at approximately $4 million. Further, earlier today search warrants were executed at six locations in New York, Michigan and Nevada. The defendant’s initial appearance is scheduled this afternoon before United States Magistrate Judge Marilyn Go, 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, David O’Neil, Acting Assistant Attorney General of the Justice Department’s Criminal Division, George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office, and Thomas O’Donnell, Special Agent in Charge, Department of Health and Human Services-Office of Inspector General (HHS-OIG).
As alleged in the complaint, Ahmed engaged in a scheme to submit claims to Medicare for surgical procedures that were not in fact performed. The complaint cites multiple instances in which either patients told law enforcement officers that they never had the procedures that were billed, or hospital medical records did not contain any evidence that the procedures were actually performed. From January 2011 through mid-December 2013, Medicare was billed at least $85 million for surgical procedures by Ahmed, a sole practitioner.
“As alleged, Ahmed created phantom medical procedures to steal very real taxpayer money. The defendant sought to enrich himself and fund his lifestyle through billing Medicare for services he never performed,” stated United States Attorney Lynch. “We are committed to protecting these taxpayer-funded programs and prosecuting those who steal from them.”
“The Medicare system entrusts doctors to provide patients with the care and services they need,” said Acting Assistant Attorney General O’Neil. “The charges unsealed today allege that Dr. Ahmed billed millions of dollars to Medicare for surgical procedures that he did not actually perform. These charges are yet another example of the Department of Justice’s determination to hold accountable those who abuse the trust placed in them and steal from the system for personal gain.”
FBI Assistant Director in Charge Venizelos stated, “Fraudulently billing the government defrauds every American taxpayer. We will investigate cases of graft and greed to protect important programs for those who need them.”
“For a single physician, the alleged conduct in this case is among the most serious I’ve seen in my law enforcement career,” said SAC for HHS-OIG O’Donnell. “Being a Medicare provider is a privilege, not a right. When Dr. Ahmed allegedly billed Medicare for procedures he never performed, he violated the basic trust that taxpayers extend to healthcare providers.”
The investigation has been conducted by the FBI and HHS-OIG, brought as part of the Medicare Fraud Strike Force, and supervised by the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section. The case is being prosecuted by Trial Attorney Turner Buford of the Criminal Division’s Fraud Section and Assistant United States Attorneys William Campos and Erin Argo of the U.S. Attorney’s Office for the Eastern District of New York.
The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, the defendant faces a maximum sentence of ten years.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
The Defendant:
SYED IMRAN AHMED
Age: 49
Glen Head, New York
E.D.N.Y. Docket No. 14-274
Crips Gang Member Sentenced to 168 Months in PrisonRead the Press Release
Earlier today, at the United States Courthouse in Brooklyn, New York, Thomas Harris, a member of the Crips gang, was sentenced to 168 months in prison. On January 5, 2013, Harris pled guilty to charges of robbery conspiracy and brandishing of a firearm.1
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Thomas J. Cannon, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Office.
“Harris and his fellow gang member, Wendell Jenkins, terrorized the communities of Brooklyn and Queens by committing a spree of carjackings,” stated U.S. Attorney Lynch. “His senseless acts of violence have now earned him a home in a federal prison for the next 14 years.”
As part of his plea agreement, Harris admitted that he participated in six carjackings or attempted carjackings and two home invasion robberies between April 10, 2010 and February 28, 2011. According to the government’s sentencing memorandum, during one attempted carjacking in Jamaica, Queens, Harris and Jenkins forced a woman to give them her ATM cards and ATM PINs, and then forced the victim into the trunk of her car as they drove to nearby ATMs, where they stole $2,000 from her bank accounts. They then left her abandoned on the side of the road.
In another instance, the defendants attempted to carjack a mother and her young child in the drive-through of a McDonald’s restaurant in East Flatbush, Brooklyn. The defendants fled only after the woman panicked, took her foot off the car brake, and hit another car. Undeterred, the team then committed an armed carjacking of an elderly man a few blocks away.
After the arrest of his co-defendant Jenkins, Harris fled to Oakland, California, where he was arrested by Deputy U.S. Marshals. Harris possessed two kilograms of marijuana, 2.9 grams of methamphetamine and three firearms, including an assault-style rifle, at the time of his arrest.
The sentencing proceeding was held before the Honorable Frederic Block, United States District Judge for the Eastern District of New York.
The government’s case was prosecuted by Assistant United States Attorney Matthew Amatruda.
The Defendant:
THOMAS HARRIS
Age: 31
___________________________________________________________________________
1 On October 5, 2013, co-defendant Wendell Jenkins was sentenced to 154 months in prison following his guilty plea to charges of robbery conspiracy and possession of a firearm.
Two Associates of La Cosa Nostra Convicted on All Counts by Jury in the July 2010 Robbery and Murder of A Brooklyn BusinessmanRead the Press Release
BROOKLYN, N.Y. —U.S. Attorney Loretta E. Lynch announced today that following a two-week trial, a federal jury convicted Richard Riccardi, 41, of Manalapan, N.J., and Louis Grasso, 46, of Staten Island, N.Y., of the robbery and murder of James Donovan on July 2, 2010. The defendants face a minimum penalty of 10 years in prison, a maximum penalty of life in prison, and a fine of over $250,000 when they are sentenced in August.
“The defendants plotted this brazen robbery and took the life of James Donovan because of their unrelenting greed. After lying in wait for Donovan, the defendants coldly robbed him, shot him, and left him to die in the street. The jury saw through their attempts to shift responsibility for their actions and held them accountable for Mr. Donovan’s senseless death,” said U.S. Attorney Lynch.
According to the Government’s trial evidence, the defendants plotted to rob Donovan, who operated a check cashing business in Brooklyn, believing he would be carrying large amounts of cash. The defendants, together with several of their associates, followed Donovan in the weeks leading up to the robbery to learn his daily routines. Riccardi agreed to supply the guns that everyone in robbery team planned to carry for the robbery.
On July 2, 2010, the robbery team, armed with revolvers and semi-automatic firearms, headed to a shop in Gravesend, Brooklyn, where they expected Donovan. At approximately 2:15 p.m., James Donovan arrived at the shop, and the robbery team sprang into action. During the course of the robbery, one of the defendants’ coconspirators shot him. Donovan, who was hit in the leg, shortly thereafter collapsed in the street, where he lay slowly bleeding to death. Grasso stole a bag of cash from Donovan’s car, and the team fled. Donovan, whose femoral artery was severed by the bullet, died as a result of his wound.
The robbery team divided up the approximately $200,000 in cash they had stolen from Donovan. Grasso took the guns used in the robbery and said he was going to have them melted down at a friend’s auto body shop. On November 3, 2011, law enforcement searched Riccardi’s car and New Jersey residence, and recovered a .38 caliber revolver and a 9 millimeter pistol.
Ms. Lynch thanked the Drug Enforcement Administration, the New York City Police Department, the Business Integrity Commission and the Kings County District Attorney’s Office for their outstanding investigative efforts. The government’s case is being prosecuted by Assistant United States Attorneys Nicole M. Argentieri and Darren LaVerne.
The Defendants:
RICHARD RICCARDI
Age: 41
LOUIS GRASSO
Age: 46
Teacher's Aide Sentenced to 50 Years’ Imprisonment for Producing and Distributing Child PornographyRead the Press Release
Earlier today, in federal court in Brooklyn, Taleek Brooks, a former teacher's aide at a public elementary school in Brooklyn, was sentenced to 50 years’ imprisonment following his conviction for the production and distribution of child pornography.
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.
“Today’s sentence stands as a strong warning to child predators, especially those who take advantage of the trust that the public and parents place in them to educate and protect our children, that we will not tolerate the victimization of our children,” stated United States Attorney Lynch. "The prevention of sexual exploitation remains a priority of this office and child predators are on notice that we will prosecute them to the fullest extent of the law." Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation.
Brooks, a former teacher’s aide at Public School 243, The Weeksville School, in Brooklyn, regularly downloaded and traded videos and images depicting child pornography over the Internet through GigaTribe, a peer-to-peer file sharing program. In December 2011, Brooks accepted a "friend" request from an undercover FBI special agent with the FBI’s Crimes Against Children Unit, which permitted the agent to observe and download several videos and images depicting child pornography that Brooks had designated for sharing with his GigaTribe "friends." During a subsequent search of the defendant’s Brooklyn residence, agents recovered computer equipment that contained nearly 2,000 videos and images depicting child pornography.
A FBI forensic examination of the equipment revealed that Brooks had produced child pornography. In a folder that Brooks had labeled "Special," investigators recovered videos of a young boy performing sexually explicit acts at Brooks' direction. Brooks can be seen and heard on the videos directing the child to masturbate, and on one of the videos the defendant himself is seen molesting the victim child. Investigators later confirmed that the young boy was a former student at Public School 243 and that Brooks produced the videos on at least seven different occasions between 2010 and 2011. All of the videos were produced in school classrooms.
The sentencing proceeding was held before United States District Judge Roslynn R. Mauskopf.
The government’s case was prosecuted by Assistant United States Attorney Robert T. Polemeni.
The Defendant:
TALEEK BROOKS
Brooklyn, New York
Age: 43
Colombo Family Leader Sentenced to 224 Months in PrisonRead the Press Release
Earlier today, Thomas Gioeli, who at the time of his arrest was the street boss of the Colombo organized crime family of La Cosa Nostra (the “Colombo Family”), was sentenced to 224 months in prison at the United States Courthouse in Brooklyn, New York. In May 2012, a jury convicted Gioeli of racketeering conspiracy spanning nearly two decades including three murder conspiracies as predicate racketeering acts.1
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 (FBI), New York Field Office.
“Thomas Gioeli rose to power in the Colombo Family by cultivating a lethal crew of criminals loyal to him and the mafia’s twisted code of honor,” stated United States Attorney Lynch. “Today’s sentence signifies the end of Gioeli’s criminal reign and also sends an important message to members and associates of organized crime. We will never stop investigating and prosecuting the violent crimes they commit, no matter how long ago they occurred, and we will hold them accountable, regardless of how long they have avoided justice.” Ms. Lynch praised the FBI and the New York City Police Department for their partnership in the government’s investigation and prosecution and also thanked the Nassau County District Attorney’s Office, the New York County District Attorney’s Office, and the Nassau County Police Department for their assistance.
The evidence at trial established Gioeli’s involvement in a racketeering conspiracy that spanned from 1991 through 2008. The jury found that Gioeli participated in murder conspiracies that culminated in the June 12, 1991 murder of Frank Marasa and the March 25, 1992 murder of John Minerva, who was killed as part of the bloody Colombo Family war that pitted two factions of the crime family against each other in a violent struggle for control of the enterprise. Also in connection with the Colombo Family war, the jury found that Gioeli conspired to kill rival Orena faction members between 1991 and 1993.
Today’s sentencing marks the culmination of a lengthy investigation and prosecution by the U.S. Attorney’s Office and the FBI. Since Gioeli’s arrest in June 2008, over 70 members and associates of the Colombo Family, including its leadership, have been arrested, prosecuted and convicted.
The sentencing proceeding was held before the Honorable Brian M. Cogan, United States District Judge for the Eastern District of New York. During the sentencing proceeding, Judge Cogan found that, in addition to the crimes found proved by the trial jury, the government had proved by a preponderance of the evidence that Gioeli had participated in the 1995 murder of Richard Greaves, a Colombo Family associate, and the 1999 murder of Colombo Family underboss William “Wild Bill” Cutolo, and that Gioeli had a leadership position in the Colombo Family. In addition, Judge Cogan entered orders of forfeiture and restitution against Gioeli, each in the amount of $360,000.
The government’s case was prosecuted by Assistant United States Attorneys Elizabeth A. Geddes, James D. Gatta, and Cristina M. Posa.
The Defendant:
THOMAS GIOELI
Age: 61
___________________________________________________________________________
1 Gioeli’s co-defendant, Colombo Family soldier Dino Saracino, was also convicted at trial of racketeering conspiracy, loansharking, witness tampering, and obstruction of justice. Saracino is scheduled to be sentenced on April 3, 2014.
Former CEO of Long Island’s Synergy Brands, Inc. Convicted of One Billion Dollar Check Kiting SchemeRead the Press Release
Mair Faibish, the former Chief Executive Officer of Synergy Brands, Inc., was convicted today by a federal jury in Brooklyn on all three counts of the indictment for defrauding Signature Bank out of $26 million through a massive check kiting scheme, for making false statements to the United States Securities and Exchange Commission (“SEC”) and for defrauding investors by overstating the value of the company. The jury’s verdict followed a three-week trial in United States District Court held before the Hon. Eric N. Vitaliano.
The guilty verdicts were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, James T. Hayes, Jr., Special Agent-in-Charge, Department of Homeland Security, Homeland Security Investigations (“HSI”), New York Field Office; and Acting Nassau County Police Commissioner Thomas Krumpter.
“Through lies and deceit, the defendant and his co-conspirators took advantage of banks, auditors and unsuspecting investors and stole millions of dollars. Their representations and assurances were not worth the paper the checks were written on. We will vigorously pursue and bring to justice those who would defraud FDIC insured banks and the investing public,” stated United States Attorney Lynch. Ms. Lynch thanked HSI and the Nassau County Police Department for their hard work and dedication through the course of the investigation and prosecution.
The evidence at trial established that Faibish was the former CEO of Synergy Brands, Inc. (“Synergy”), a publicly held food products company that traded on the NASDAQ and Over-the-Counter (“OTC”) exchanges and manufactured and distributed various food products. Together with his co-conspirators, Faibish executed a check-kiting scheme on behalf of Synergy to funnel approximately $ 1.3 billion worth of checks that were not backed by sufficient funds through Signature Bank, Capital One Bank and various Canadian banks. Faibish caused those checks to be deposited into bank accounts of associated food manufacturers and distributors in Canada. The Canadian companies then sent checks in corresponding amounts, which were also not backed by sufficient funds, back to Faibish-controlled third party companies. Because the banks made deposited funds immediately available for withdrawal, the scheme artificially inflated the companies’ account balances while the scheme was ongoing. The defendant and his co-conspirators used Synergy’s fraudulently inflated bank account balances to book millions of dollars in fictitious accounts receivable and revenue.
As a result of this fraud, FDIC insured Signature Bank lost approximately $26 million that the defendant and his co-conspirators had withdrawn before the bank uncovered the scheme. Following the scheme’s collapse, Synergy was taken into bankruptcy and its publicly traded stock became essentially worthless, causing hundreds of thousands of dollars in investor losses.
The trial evidence further established that Faibish falsely inflated the values of Synergy’s sales, cost of goods sold and pre-paid expenses in filings with the SEC for the quarter ending June 30, 2008. These material misrepresentations were breaches of the defendant’s fiduciary duties to investors.
When sentenced by Judge Vitaliano, Faibish faces a sentence of up to 30 years’ imprisonment for bank fraud and securities fraud conspiracy as a result of the check kiting scheme.
The government’s case is being prosecuted by Assistant United States Attorneys Sylvia S. Shweder and Jack Dennehy.
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:
MAIR FAIBISH
Age: 54
Residence: Huntington Station, New York
E.D.N.Y. Docket No. 12-CR-265
United States Files Suit Against Fifteen Corporations and Two Individuals for Violating Federal Leak Prevention Requirements at Four Long Island Gas StationsRead the Press Release
Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Judith A. Enck, Regional Administrator, United States Environmental Protection Agency (“EPA”) Region 2, today announced the filing of a federal civil environmental complaint against two individuals, Nedjet Yetim and Rachelann Yetim, and 15 related corporate entities for violations of the federal leak prevention requirements for underground storage tanks at four gas stations on Long Island. The violations alleged in the complaint involve underground storage tanks, which typically contain large quantities of gasoline and waste oil and can cause serious environmental damage if allowed to leak.
“As alleged, these defendants ignored their obligations under federal law to safeguard the public from gasoline and waste oil leaks at their underground storage tanks. These violations demonstrate a serious and longstanding disregard for the environment, for the health and safety of their employees, and for the health and safety of residents of Long Island,” stated United States Attorney Lynch. “We are committed to vigorous enforcement of the laws protecting the environment from hazardous wastes.”
EPA’s Regional Administrator Enck added, “The public should be assured that EPA will not stand idly by while owners and operators of underground storage tanks engage in practices that endanger public health and safety. We will continue to pursue prosecution of these and other violators to the full extent of the law.”
The Yetims are alleged to be principals of several of the named corporate entities and to have personally managed, directed, or conducted matters related to pollution and environmental compliance at the facilities. The corporate defendants, all of which are directly related to the individual defendants or were tenants at the relevant facilities, owned and/or operated the gas stations during the periods of the violations alleged in the complaint.
The complaint alleges there were releases from the tanks at all four facilities, each of which is located above a federally-designated Sole Source Aquifer. Among other criteria, a Sole Source Aquifer is an aquifer that supplies 50% of the drinking water consumed within the Sole Source Aquifer’s boundaries. The Sole Source Aquifer designation is a tool to protect drinking water supplies in areas with few or no alternative sources to the groundwater resources, and where, if contamination occurred, using an alternative source would be extremely expensive. The violations alleged in the complaint do not pose an immediate threat to the drinking water of the area’s residents. However, defendants’ compliance with the federal leak prevention requirements for underground storage tanks is vital to ensure the integrity of tanks and prevent the release of petroleum product to soil and groundwater.
According to the complaint, the defendants, as owners and/or operators of the underground storage tanks at the gas stations, have repeatedly failed to comply with numerous federal requirements under the Resource Conservation and Recovery Act (“RCRA”), including failure to (a) install and operate corrosion protection on the piping systems, (b) implement adequate release detection on the tanks and piping systems, (c) install and operate overfill prevention systems, (d) perform testing of automatic line leak detectors (“ALLDs”) for underground piping, (e) conduct required testing of corrosion protection systems, (f) maintain records regarding release detection, (g) properly cap and secure a temporarily-closed tank, and (h) cooperate with the EPA by responding to the EPA’s requests for information about the underground storage tanks that they owned and/or operated. In its complaint, the government seeks injunctive relief requiring the defendants to comply with all applicable requirements of RCRA, as well as monetary penalties of up to $16,000 per tank for each day of violation.
In enacting Subtitle I of RCRA, Congress declared it to be the national policy to regulate the management and operation of underground storage tanks so as to minimize the threat to human health and the environment. RCRA regulations protect the public from releases from underground storage systems, which typically contain petroleum products, usually waste oils and gasoline. Failure to maintain the underground storage tanks that contain petroleum can result in leaks of gasoline and waste oil, which, in turn, can contaminate groundwater.
The government’s case is being prosecuted by Assistant United States Attorney Kenneth M. Abell, with the assistance of Karen Taylor, Assistant Regional Counsel, EPA.
Individual Defendants:
NEDJET YETIM
Age: 50
Residence: Patchogue, NY
RACHELANN YETIM
Age: 29
Residence: Floral Park, NY
Corporate Defendants:
Fast Gasoline, Inc.
Black Realty, Inc.
Hempstead Gasoline Station, Inc.
Elmont Gasoline Corp.
102 Elmont Realty Corp.
TAG Gasoline, Inc.
Target Petroleum, Inc.
Liberty Petroleum, Inc., (d/b/a as Liberty Petroleum – RGV Petroleum, Inc.)
ASLI & Gizem Realty Corp.
NGRV Realty Co., Inc.
Venus Bukey Realty, Inc.
S&B Petroleum, Inc.
Gizem Realty Corp.
PDE Island Park, Inc.
T-Maxx @ Petro Gas, Inc
Gas Stations:
653 Hempstead Turnpike, Elmont NY
1278 Hempstead Turnpike Elmont, NY
725 Wyandanch Avenue North Babylon, NY
4305 Austin Boulevard, Island Park, NY
Malian National Indicted for Murder of U.S. Diplomat to Be Arraigned Today in Brooklyn Federal CourtRead the Press Release
Alhassane Ould Mohamed, also known as “Cheibani,” a Malian citizen charged with the murder and attempted murder of United States Embassy personnel stationed in Niamey, Niger, in December 2000, will be arraigned today at 2:00 p.m. in the Eastern District of New York. Mohamed was extradited to the United States by the Malian government, and today will be his first appearance on these charges in the United States.
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 (FBI), New York Field Office.
“The investigation indicates that the defendant and his confederate brazenly shot and killed U.S. diplomat William Bultemeier in Niger, and wounded U.S. Marine Christopher McNeely as he bravely risked his life to attempt to save his colleague. Today’s extradition shows that the sacrifice of Mr. Bultemeier and the courage of Staff Sergeant McNeely in service to this country have not been forgotten. The tireless efforts of the United States in bringing the defendant to face these charges demonstrate our commitment to bringing to justice those charged with harming our diplomats and embassy personnel,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the governments of Mali and Niger for their exceptional assistance and cooperation in this investigation.
“An attack on U.S. Government personnel, whether domestic or abroad, is an attack on the United States. The extradition of the defendant by the Malian Government to the United States to face charges of murdering U.S. diplomat Bultemeier and attempting to murder Staff Sergeant McNeely is a testament to the cooperative efforts of our law enforcement and international partners. The arms of our justice system are long and far-reaching, and this case should send a clear message to all fugitives: the U.S. Government will not rest until they are brought to justice for their crimes,” stated FBI Assistant Director-in-Charge Venizelos.
According to the indictment, in the early morning hours of December 23, 2000, the defendant and a co-conspirator accosted a group of employees of the United States Embassy in Niger as they left a restaurant in Niamey, Niger. Carrying a pistol and an AK-47 assault rifle, the two men approached Department of Defense official William Bultemeier as he was about to enter his car, a white sport-utility vehicle bearing diplomatic license plates clearly indicating that it belonged to the United States Embassy. The defendant demanded that Mr. Bultemeier turn over the keys to the diplomatic vehicle and shot Mr. Bultemeier with the pistol. Staff Sergeant Christopher McNeely, the Marine Detachment Commander for the United States Embassy in Niger at the time, ran to Mr. Bultemeier’s aid. The defendant’s co-conspirator then fired his AK-47 at Mr. Bultemeier and Staff Sergeant McNeely, hitting them both. After rifling through Mr. Bultemeier’s pockets to get the car keys, the defendant and his fellow assailant drove away in the United States Embassy vehicle.
Mr. Bultemeier died of the injuries inflicted by the gunshot wounds. Staff Sergeant McNeely survived the shooting, and later retired from the Marine Corps as a Master Sergeant.
On September 13, 2013, a grand jury in the Eastern District of New York returned a sealed indictment charging the defendant with one count of murdering an internationally protected person, in violation of Title 18, United States Code, Section 1116(a), and one count of attempting to murder an internationally protected person, in violation of Title 18, United States Code, Section 1116(a). At the request of the United States, the Malian government thereafter commenced extradition proceedings against the defendant in December 2013, and he was ordered extradited in January 2014 in accordance with the Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant United States Attorneys Zainab Ahmad and Celia Cohen, with assistance from Trial Attorney Jennifer Levy of the Justice Department’s Counterterrorism Section and Trial Attorney Dan E. Stigall of the Justice Department’s Office of International Affairs.
The Defendant:
ALHASSANE OULD MOHAMED
Age: 43
Former Veterans Affairs Psychiatrist Sentenced to 18 Months’ Imprisonment for Medicare FraudRead the Press Release
BROOKLYN, NY – Dr. Mikhail L. Presman, a licensed psychiatrist employed by the Department of Veterans Affairs (VA), was sentenced today by Judge I. Leo Glasser in U.S. District Court in Brooklyn, New York, to 18 months’ imprisonment, to be followed by 3 years of supervised release for Medicare fraud. As part of the sentence, Judge Glasser ordered Presman to pay restitution to Medicare and forfeit $1.2 million.
The sentence was announced by U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, and Special Agent-in-Charge Thomas O’Donnell of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG).
According to court documents, from January 1, 2006 through May 10, 2013, Dr. Presman submitted approximately $4 million in Medicare claims for home treatment of Medicare beneficiaries notwithstanding his full-time, salaried position as a psychiatrist at the VA hospital in Brooklyn. Contrary to his representations, Dr. Presman did not provide any treatment to a substantial number of the beneficiaries he claimed to have treated. For example, Dr. Presman submitted claims to Medicare for home medical visits at locations within New York City even though he was physically located in China at the time of these purported home visits. Additionally, Dr. Presman submitted claims to Medicare for 55 home medical visits to beneficiaries who were hospitalized on the date of the purported visits.
The case was investigated by the HHS-OIG, with assistance from the Department of Veterans Affairs Office of Inspector General, and brought as part of the Medicare Fraud Strike Force, under the supervision of the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section. The case was prosecuted by Assistant United States Attorney Patricia E. Notopoulos and Department of Justice Trial Attorney Bryan D. Fields.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Eight New York Residents Charged with Using Stolen Social Security Numbers to File False Tax ReturnsRead the Press Release
Six indictments and a complaint were unsealed today in federal court in Central Islip, New York, charging eight individuals, Rosa Adames, Ramon DeLosAngeles, Robert Diaz, Reyssy Duran, also known as “Tuti,” Nelson Guzman, Alex Rodriguez, Jokasta Taveras and David Turcios, each arising out of schemes to defraud the United States by using stolen Social Security numbers to file false income tax returns seeking refunds.1 Taveras will be arraigned before United States District Judge Leonard D. Wexler; Adames, Diaz, Rodriguez and Turcios will be arraigned this afternoon before United States Magistrate Judge A. Kathleen Tomlinson; DeLosAngeles will be arraigned this afternoon before United States Magistrate Judge Arlene R. Lindsay. Duran and Guzman remain at large. All arraignments will be held at the U.S. Courthouse, 100 Federal Plaza, Central Islip. The cases have been assigned to United States District Judges Leonard D. Wexler, Arthur D. Spatt and Denis R. Hurley.
The charges were 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, New York (IRS), Farrell Dolan, Resident Agent-in-Charge, United States Secret Service, Long Island Resident Office (USSS), Philip R. Bartlett, Inspector-in-Charge, New York Division, United States Postal Inspection Service (USPIS), Joseph A. D’Amico, Superintendent, New York State Police (NYSP) and Thomas Krumpter, Acting Police Commissioner, Nassau County Police Department (NCPD).
“As alleged, this collection of thieves victimized hundreds of unsuspecting Puerto Rican citizens, using their stolen identities to defraud the IRS and steal taxpayer dollars,” stated United States Attorney Lynch. “This scheme has metastasized throughout the country, which led to the formation of a special task force to combat such crimes. Since the formation of that task force, my Office has worked tirelessly to eradicate such crimes. Today’s arrests demonstrate my Office’s commitment to holding accountable those individuals who take advantage of the federal tax system for personal profit at the expense of the United States and honest taxpayers.”
IRS Acting Special Agent-in-Charge Kitchen stated, “The Internal Revenue Service takes identify theft very seriously. Vigorous criminal investigations and prosecutions are important components of the fight against stolen identity tax refund fraud. Although it has only been in existence for a short time, the “Identify Theft Task Force” has proven to be innovative and effective in these investigations. IRS-Criminal Investigation is proud of its leadership role on this task force and is most appreciative of the spirit of cooperation among its law enforcement partners.”
“Fraudulent schemes such as this have evolved significantly over the last several years,” said Farrell Dolan, Resident Agent-in-Charge of the U.S. Secret Service Long Island Resident Office. “Cooperation between law enforcement has allowed us to focus our resources and respond quickly to uncover criminal activity that exploits tax laws and financial institutions at the expense of US taxpayers.”
USPIS Inspector-in-Charge Bartlett stated, “The arrest of these individuals for participating in a scheme to defraud the IRS and victimize Puerto Rican residents, is an example of the commitment of Postal Inspectors and the law enforcement community to stamp out crime wherever it exists; keeping the mail safe and secure for the public.”
"Identity theft is a rapidly growing crime that causes its victims serious, far-reaching problems," State Police Superintendent Joseph A. D'Amico said. "As alleged, these eight people not only stole Social Security numbers from unsuspecting citizens, but used them to try to defraud the Federal Government. I am pleased that the New York State Police was once again able to partner with the United States Attorney's Office to help bring this important case to a successful conclusion."
According to the indictments, complaint and other court filings by the government, in each scheme, the defendants 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 defendants, and coconspirators, illegally obtained identification information for Puerto Rican citizens, including names, dates of birth, and social security numbers, and used that information to file false returns claiming large refunds with the IRS. Once filed, the defendants, and their coconspirators, allegedly bribed Postal Service employees to intercept mailed tax refund checks, which the defendants then negotiated at check-cashing services and banks. The schemes were uncovered in part by a law enforcement officer working in an undercover capacity. If convicted, the defendants face a range of imprisonment between 10 and 35 years.
In mid-2012, the IRS created a task force called the Identity Theft Task Force (ITTF) 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-Criminal Investigation; the Federal Bureau of Investigation; USSS; USPIS; New York City Police Department; Department of Social Security; Federal Deposit Insurance Corporation, Office of Inspector General; Federal Reserve Board, Office of Inspector General; USPIS, Office of Inspector General; 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. Since the creation of the ITTF, the United States Attorney’s Office for the Eastern District of New York has arrested 25 defendants, including today’s cases, which are summarized below, for their roles in such identity theft schemes.
United States v. Rosa Adames, 14-CR-135 (ADS)
Between April 2011 and October 2011, Adames and her coconspirators allegedly cashed more than 100 fraudulently obtained tax refund checks worth approximately $600,000. The checks were cashed at a bank in Amityville.
United States v. Ramon DeLosAngeles, 14-MJ-240
On October 4, 2011, DeLosAngeles was in possession of more than 100 fraudulently obtained tax refund checks worth approximately $900,000.
United States v. Robert Diaz and Alex Rodriguez, 14-CR-133 (ADS)
Between June 2012 and June 2013, Diaz, Rodriguez and their coconspirators allegedly cashed more than 30 fraudulently obtained tax refund checks worth approximately $200,000. The checks were cashed at banks in Elmont, Freeport and Hempstead. Rodriguez and Diaz allegedly bribed a bank teller to cash those checks.
United States v. Reyssy Duran, 14-CR-132 (ADS)
Between June 2012 and June 2013, Duran and his coconspirators allegedly cashed more than 30 fraudulently obtained tax refund checks worth approximately $200,000. The checks were cashed at banks in Elmont, Freeport and Hempstead. Duran allegedly bribed a bank teller to cash those checks.
United States v. Nelson Guzman, 14-CR-134 (JS)
Between August 2011 and November 2013, Guzman and his coconspirators allegedly cashed more than 65 fraudulently obtained tax refund checks worth approximately $430,000. The checks were cashed at a check cashing service in Lindenhurst and Roosevelt. Guzman and his coconspirators allegedly bribed an employee of a check cashing service to cash the refund checks.
United States v. Jokasta Taveras, 14-CR-136 (LDW)
Between December 2011 and March 2012, Taveras and her coconspirators allegedly cashed approximately 14 fraudulently obtained tax refund checks worth approximately $105,000. Taveras worked at a bank in Farmingdale, which is where she allegedly cashed the checks.
United States v. David Turcios, 14-CR-137 (ADS)
Between June 2012 and June 2013, Turcios and his coconspirators allegedly cashed more than 40 fraudulently obtained tax refund checks worth approximately $280,000. The checks were cashed at banks in Elmont, Freeport and Hempstead. Turcios allegedly bribed a bank teller to cash those checks.
The government’s cases are being prosecuted by Assistant United States Attorney Christopher Caffarone.
The Defendants:
ROSA ADAMES
Age: 42
Valley Stream, New York
RAMON DELOSANGELES
Age: 62
Cairo, New York
ROBERT DIAZ
Age: 29
Copiague, New York
REYSSY DURAN
Age: 30
Freeport, New York
NELSON GUZMAN
Age: 44
Copiague, New York
ALEX RODRIGUEZ
Age: 37
Freeport, New York
JOKASTA TAVERAS
Age: 28
Lindenhurst, New York
DAVID TURCIOS
Age: 32
Roosevelt, New York
____________________________________________________________
1 The charges contained in the indictments and complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Folk Nation Gang Leader Sentenced to 20 Years in PrisonRead the Press Release
Earlier today, Devon Rodney, also known as “D-Bloc,” a former leader of the violent Brooklyn street gang “Six Tre Outlaw Gangsta Disciples Folk Nation,” also known as the “Folk Nation,” was sentenced to 20 years in prison at the federal courthouse in Brooklyn, New York. Rodney pled guilty on November 15, 2013 to charges of racketeering, including attempted murder and robbery conspiracy as predicate racketeering acts, and brandishing a firearm.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
“The defendant led the Folk Nation gang in committing senseless acts of violence, including shootings and robberies, which terrorized the residents of the Ebbets Field Houses in Brooklyn. The gang shooting of an innocent 10-year old girl attending a neighborhood block party highlights the moral depravity of the gang life,” stated United States Attorney Lynch. “Every community, including the Ebbets Field Houses community, deserves the opportunity to raise its children without the specter of gang violence.”
The Folk Nation is a nationwide gang active in numerous cities and prisons across the United States. The Six Tre set of the Folk Nation operated out of the Ebbets Field Houses in the Flatbush area of Brooklyn for years. In order to fund its illegal activities, the defendant and other members of the gang committed violent robberies of individuals and commercial establishments, including the Lee Perla jewelry store at the Riverside Square Mall in Hackensack, New Jersey, where they made off with hundreds of thousands of dollars’ worth of luxury watches. In his role as the leader of the Folk Nation, Rodney ordered his subordinates in the gang to commit numerous acts of violence, which often missed their intended targets – perceived rivals or enemies of the gang – and severely injured innocent bystanders. In the attempted murder to which the defendant pled guilty, Rodney ordered the killing of a rival Crips member upon learning that the rival had been spotted near the Ebbets Field projects. In the chaos that ensued when gang members rushed to implement the orders of their leader, an innocent 10-year old girl attending a block party was shot in the neck.
Rodney is one of nine defendants charged in connection with this case by the United States Attorney’s Office for the Eastern District of New York for crimes they committed as members of the Folk Nation. Ms. Lynch thanked the FBI and the New York City Police Department for their outstanding investigative efforts.
The sentence was imposed by United States District Judge Nicholas G. Garaufis.
The government’s case was prosecuted by Assistant United States Attorneys Zainab Ahmad, Berit Berger and Kristin Mace.
The Defendant:
DEVON RODNEY, also known as “D-Bloc”
Brooklyn, New York
Age: 26
TweetMember of the Granados-Hernandez Sex Trafficking Organization, Eleuterio Granados-Hernandez, Sentenced to 22 Years in PrisonRead the Press Release
Earlier today, Eleuterio Granados-Hernandez was sentenced before Judge Kiyo A. Matsumoto in U.S. District Court in Brooklyn, New York, to 22 years’ imprisonment, to be followed by five years of supervised release, for the sex trafficking of five victims and restitution in the amount of approximately $3 million for three victims.
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, Homeland Security Investigations (HSI), New York.
“This defendant preyed on young women with the intent to force them into a degrading life of sexual slavery. He targeted the women, disregarding their dignity, solely to line his pockets in proceeds from the prostitution business,” stated United States Attorney Lynch. “This sentence sends a message to other would-be traffickers that we are committed to eradicating the sex trafficking of young girls.” Ms. Lynch extended her grateful appreciation to the organizations that provided services and advocacy to the victims in this case, including Sanctuary for Families, Safe Horizon, My Sister’s Place and the law firm of King and Spalding.
On August 1, 2012, Granados-Hernandez pled guilty to a superseding information charging that between October 2000 and April 2011, he smuggled five victims, including one minor, from Mexico illegally into the United States and forced each of them to engage in prostitution. Granados-Hernandez, who kept the prostitution proceeds earned by the victims, engaged in a pattern of abuse for over a decade.
According to court documents, Granados-Hernandez smuggled each of the victims with the intent to force then into prostitution. For example, soon after he smuggled the victim identified as Jane Doe #2 to New York, Granados-Hernandez insisted that she work as a prostitute where she provided sexual services for as many as 15 to 18 clients per day.
Similarly, in 2003, Granados-Hernandez smuggled the victim identified as Jane Doe #3 into the United States and soon after forced her into prostitution. Jane Doe #3 worked for Granados-Hernandez for approximately six years and during that period, he beat her and threatened her frequently.
In 2009, Granados-Hernandez met the 17 year-old victim known as Jane Doe #5 in Puebla, Mexico and smuggled her to New York shortly after she turned 18 years old. Three months after her arrival in New York, Granados-Hernandez insisted that Jane Doe #5 work as a prostitute. When Jane Doe #5 refused, Granados-Hernandez physically assaulted her several times. Fearing more violence, Jane Doe #5 worked for Granados-Hernandez as a prostitute until 2010.
In 2005, Granados-Hernandez became romantically involved with the victim identified as Jane Doe #11 when she was 15 years old. Soon after their initial meeting, Granados-Hernandez smuggled her into the United States. Once in the United States, Granados-Hernandez told Jane Doe #11 that she had to work as a prostitute to repay the smuggling debt. Although she initially refused, Jane Doe #11, age 16 at the time, feared physical abuse and relented to working as a prostitute for Granados-Hernandez.
At the sentencing, Jane Doe #11 spoke about her victimization by Granados-Hernandez over a four-year period. She stated that, “When I was just 15 years old he took advantage of my innocence and lied to me so I could be under his control. He promised me a happy life next to him but instead I lived the worst nightmare.” Jane Doe #11 further stated that, “Granados-Hernandez never cared about how much I suffered. To him, I was just an object that brought him money.”
As set forth in court filings, Granados-Hernandez’s brother Samuel Granados-Hernandez and his cousins, Angel Cortez-Granados and Antonio Lira-Robles, also smuggled young women from Mexico illegally into the United States, forced them to work as prostitutes in New York City and elsewhere, and collected profits from their activities. Cortez-Granados, Samuel Granados-Hernandez and Lira-Robles all pleaded guilty to sex trafficking. In September 2013, Cortez-Granados was sentenced to 15 years in prison, in a separate case. At the time of their sentencings, Samuel Granados-Hernandez and Lira-Robles likewise face a 15-year mandatory minimum sentence.
The government’s case was prosecuted by Assistant United States Attorney Soumya Dayananda.
The Defendant:
ELEUTERIO GRANADOS-HERNANDEZ
Age: 31
Mexico
E.D.N.Y. Docket No. CR-11-297 (S-5) (KAM)
Investment Manager Who Fled During Trial Sentenced to 210 Months for Foreign Currency Fraud SchemeRead the Press Release
Earlier today, Thomas Qualls, the President of International Foreign Currency, Inc., was sentenced to a term of imprisonment of 210 months following his convictions for mail fraud, wire fraud, conspiracy and obstruction of justice. The proceeding was held before the Hon. Dora L. Irizarry, United States District Judge, at the United States Courthouse in Brooklyn. Judge Irizarry also imposed restitution of approximately $817,000.
During the fourth week of his trial, Qualls failed to appear in court on the day closing arguments were scheduled to begin. After determining that Qualls had fled, the court resumed the trial in the defendant’s absence, and the jury returned a verdict of guilty on all counts. Approximately six months later, Canadian authorities apprehended Qualls, and he remained in Canadian custody until he was extradited to the United States.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, U.S. Postal Inspector-in-Charge, New York Division.
“The defendant bilked his clients by stealing their hard-earned money, and when faced with the overwhelming evidence of his misdeeds presented to a jury of his peers, he fled the country,” said United States Attorney Lynch. “This case shows, once again, that you can run, but you cannot hide – we will continue to safeguard the markets by zealously prosecuting fund managers who betray the trust of investors.” Ms. Lynch expressed her grateful appreciation to the United States Marshals Service and the Postal Inspection Service, as well as law enforcement authorities in Canada, for their assistance.
Qualls operated a fraudulent investment firm known as International Foreign Currency, Inc. (“IFC”) in Garden City, New York. Qualls and his co-conspirators purported to invest funds in foreign currency. Instead, Qualls stole investors’ funds and spent them on business and personal expenses, including a Caribbean cruise, expenses for his pets, and payments on a Jaguar automobile. At the trial, multiple former IFC employees testified that the defendant was the head of the company, controlled all the trading and all the company’s funds, and instructed them to provide false and misleading information to prospective investors. The defendant also created falsified account statements to conceal the fraud from investors. Ultimately, investors lost approximately $1 million as a result of the defendant’s scheme. The evidence at trial also established that Qualls participated in multiple prior fraudulent schemes.
The government's case was prosecuted by Assistant United States Attorney Daniel Spector.
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:
THOMAS QUALLS
Age: 45
Two Convicted in Multi-Million Dollar Advance Fee and Alaskan Gold Mine Investment SchemesRead the Press Release
Brad Russell was convicted today by a federal jury in Brooklyn on all three counts of the indictment for defrauding developers and their clients of more than $9 million through an advance fee scheme and for defrauding investors through an Alaskan gold mine investment scheme. Kristofor Lange, the Vice President of Black Sand Mine, Inc. (“BSMI”), was also convicted on both counts charging him for his role in the gold mine investment scheme.1 The jury’s verdict followed a six-week trial in United States District Court held before the Honorable Dora L. Irizarry. The trials of co-defendants William Lange and Frank Perkins are scheduled to take place on September 22, 2014.2
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 W. Jay Abbott, Acting Special Agent in Charge, Federal Bureau of Investigation, Seattle Field Office (FBI).
“Through lies and deceit, the defendants took advantage of a national tragedy and unsuspecting investors and stole millions of dollars so they could line their own pockets. Their representations and assurances were not worth the price of the paper used to print the loan documents and stock certificates. We will vigorously pursue and bring to justice those who would defraud the investing public,” stated United States Attorney Lynch. Ms. Lynch thanked the USPIS and the FBI for their hard work and dedication through the course of the investigation and prosecution. Ms. Lynch also extended her grateful appreciation to the United States Attorney’s Office for the Western District of Washington for their assistance in the case.
The evidence at trial established that Russell, together with others at Harbor Funding Group Inc. (“HFGI”), executed an advance fee scheme by targeting regions affected by Hurricane Katrina. Russell and his co-conspirators told land developers and their clients that HFGI had lenders and funds available to provide financing for their real estate projects. 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 fraudulent scheme, Russell and his co-conspirators stole more than $9 million from approximately 300 individuals.
At trial, the government also proved that Russell and Kristofor Lange, together with others, also executed an investment scheme and 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.
When sentenced by Judge Irizarry, Russell faces a sentence of up to 20 years’ imprisonment for wire fraud conspiracy for the HFGI scheme. Russell and Lange also face a sentence of up to 20 years’ imprisonment for securities fraud and a sentence of up to five years’ imprisonment for conspiracy for the BSMI scheme.
The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes, David C. Woll, Jr. and Alixandra E. Smith.
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 Defendants:
BRAD A. RUSSELL
Age: 42
Residence: Gig Harbor, Washington
KRISTOFOR J. LANGE
Age: 30
Residence: Gig Harbor, Washington
E.D.N.Y. Docket No. 10-CR-968
__________________________________________________________________________
1 Kristofor Lange was not charged in the advance fee scheme.
2 The charges against the co-defendants William Lange and Frank Perkins are merely allegations, and they are presumed innocent unless and until proven guilty.
New York State Assemblyman William F. Boyland, Jr. Convicted of Bribery, Fraud, Extortion, Conspiracy and TheftRead the Press Release
Earlier today, sitting New York State Assemblyman William F. Boyland, Jr. was convicted by a jury at the federal courthouse in Brooklyn, New York, of twenty-one felony counts, including federal programs bribery, conspiracy to commit federal programs bribery, conspiracy to violate the Travel Act and commit federal programs bribery, extortion, extortion conspiracy, honest services wire fraud, conspiracy to commit honest services wire fraud, federal programs theft and conspiracy to commit mail fraud. Boyland committed each of these offenses by corruptly exploiting his public position representing the 55th Assembly District in Brooklyn, which is comprised of Ocean Hill, Brownsville, Bedford-Stuyvesant, Crown Heights and Bushwick. Upon his convictions, Boyland was automatically expelled from the Assembly. When sentenced, Boyland faces prison terms of up to 20 years on each of the extortion, extortion conspiracy, honest services wire fraud, honest services wire fraud conspiracy and mail fraud conspiracy counts, up to 10 years on each of the federal programs bribery and federal programs theft counts and up to five years on each of the other conspiracy counts. Following his convictions, the Honorable Sandra L. Townes, who presided over the trial, ordered Boyland remanded into custody pending his sentencing on June 30, 2014. Boyland is also subject to up to at least $250,000 in fines on each of the counts of conviction, as well as criminal forfeiture and mandatory restitution.
The convictions 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.
“The breadth and pervasiveness of the corruption exposed by this prosecution is staggering. Wherever there was an opportunity for William Boyland to corruptly line his own pockets, he took it. By soliciting bribes, by stealing funds intended to help the elderly, and by defrauding New York State and the Assembly, Boyland cravenly pursued his own interest at the expense of his constituents. In doing so, Boyland not only broke the law, but broke faith with the public he was elected to serve. Today’s verdict ensures that Boyland will be held accountable for his corrupt actions,” stated United States Attorney Lynch. “When our elected officials engage in self-dealing, when they abdicate their responsibilities, when they succumb to greed, the average citizen pays for it dearly, and our democratic system suffers on so many levels. The verdict sends a clear message that we and our partners in the FBI will vigorously investigate and prosecute any public official who trades on a position of power to line his own pocket.” United States Attorney Lynch praised the hard work and dedication of the FBI agents who investigated the case and expressed her thanks to the New York State Comptroller’s Office, the New York State Office of the Aging, the Internal Revenue Service Criminal Investigation Division, the New York State Assembly Department of Finance and the New York City Department of Investigation for their assistance with the investigation.
The evidence admitted at trial proved that, beginning in January 2007 and continuing through December 2011, Boyland engaged in four separate corrupt schemes, ranging from soliciting and accepting over $250,000 in bribe payments, to submitting false travel vouchers to New York State, to stealing state funds intended for the elderly:
1. Carnival Scheme: Boyland extorted and accepted over $14,000 in bribes, in exchange for undertaking official action to benefit a carnival promoter (the “Promoter”) and an undercover FBI agent. Specifically, in August 2010, Boyland met with the Promoter and this undercover FBI agent (“UC1”) on multiple occasions in New York City and discussed the desire of the Promoter and UC1 to hold carnivals in Boyland’s district, for which they needed government approvals. During those meetings, Boyland requested payments in exchange for assisting the Promoter and UC1, and the Promoter and UC1 agreed. Boyland also described various ways in which the bribes could be disguised to hide their true purpose. After these meetings, Boyland directed his Assembly staff to assist the Promoter and UC1 in their efforts to gain government approvals. Boyland then represented to the Promoter and UC1 that he and his staff (i) engaged in discussions with government agencies to assist the Promoter in obtaining carnival-related leases and permits, and (ii) arranged for a non-profit organization to sponsor the Promoter’s carnivals. Boyland also directed his staff to give the Promoter letters of support, on Boyland’s Assembly letterhead, that the Promoter needed in order to operate carnivals in Boyland’s district. In exchange, UC1 paid Boyland three separate bribes: $7,000 in cash; a $3,000 check with the “payee” line left blank; and $3,800 worth of money orders that were deposited into Boyland’s campaign bank account. As was shown to the jury during the trial, Boyland was captured on videotape personally accepting the $7,000 cash bribe at his district office.
2. Real Estate Scheme: Boyland also accepted the $7,000 cash bribe described above in exchange for undertaking official action to benefit UC1 and a second undercover FBI agent (“UC2”) in a purported real estate venture in Boyland’s district. Specifically, Boyland proposed a brazen scheme in which UC1 and UC2 would purchase the former St. Mary’s Hospital in Boyland’s district for $8 million, obtain state grant money to renovate the hospital, and resell it for $15 million to a non-profit organization that Boyland claimed to control. Boyland assured UC1 and UC2 that he would use his influence as an Assemblyman to secure state grant money for the project and handle any zoning issues that arose. After accepting the $7,000 cash bribe described above, Boyland was later recorded demanding an additional $250,000 bribe payment from UC1 and UC2 as a condition of using his official position to realize the real estate scheme he had proposed.
Recordings of meetings in hotel rooms in Atlantic City and New York City where Boyland discussed the real estate scheme revealed that he recognized the scheme’s corrupt and illegal nature and sought to conceal his own involvement. At the meeting in the hotel in Atlantic City, Boyland stated, “I got a middle guy by the way . . . I gotta stay clean . . . I got a bag man . . . .” Boyland further explained that he did not want to talk on the telephone and preferred in-person meetings: “I stopped talking on the phone a while ago . . . I’m just saying there is no real conversation that you can have . . . especially with what we’re talking about.”
At the meeting in the hotel room in New York City, Boyland reiterated that he wanted UC1 and UC2 to pay him a $250,000 bribe in exchange for the St. Mary’s Hospital project. When UC2 instead countered Boyland’s demand by offering to pay Boyland $5,000 for introductions to other government officials who would be involved in the project, Boyland rejected the counter-proposal, stating that the people whom Boyland could introduce to UC1 and UC2 were worth more than $5,000: “I’m not talking about $5,000 folks. I’m talking about . . . people that can actually get these projects done . . . .”
3. False Voucher Scheme: From January 2007 to December 2011, Boyland stole New York State funds by submitting false New York State Assembly Member Travel Vouchers (“Vouchers”). Boyland submitted over two hundred fraudulent vouchers where he falsely claimed to be in Albany on legislative business when he in fact was not in Albany, including days when Boyland was in New York City meeting with the undercover FBI agents and demanding $250,000 in bribes; days when he was in North Carolina and Virginia visiting with family and friends; and for days when he was in Istanbul, Turkey. In reliance on Boyland’s false Vouchers, New York State paid Boyland over $70,000 in fraudulent mileage expense reimbursements and per diem payments.
4. Theft of State Funds for the Elderly: From July 2007 to September 2010, Boyland conspired to defraud New York State and the New York State Office of the Aging (“NYSOA”). Boyland, a member of the Assembly’s Committee on the Aging, steered $200,000 of New York State “member item” funds to a Brooklyn-based non-profit organization whose mission, as described on its website, was to provide a “social setting that enable[s] elderly individuals to maintain their independence and remain at home in the community.” Notwithstanding his certification, in writing, to the NYSOA that these state funds would not be used for any partisan or political purpose, Boyland directed that the majority of these $200,000 in state funds be used for the benefit of Boyland and his political campaigns by paying for community events that promoted Boyland such as a Senior Lunch Cruise on the Spirit of New York Cruise Line, a fireworks show, and a large end of the summer picnic held at a park in his district, as well as goods that promoted Boyland, such as “Team Boyland” t-shirts distributed at those community events.
The government’s case is being prosecuted by Assistant United States Attorneys Christina B. Dugger, Robert L. Capers and Lan X. Nguyen.
The Defendant:
WILLIAM F. BOYLAND, JR.
Age: 43
Residence: Brooklyn, New York
Oceanside Woman Pleads Guilty to Defrauding Investors of $6.9 Million in A Real Estate Ponzi SchemeRead the Press Release
Earlier today, Laurie Schneider pleaded guilty at the federal courthouse in Central Islip, New York, to wire fraud. The proceeding took place before United States District Judge Dennis R. Hurley. When sentenced, Schneider faces up to 20 years in prison. As part of her plea agreement with the government, Schneider agreed to a $1 million money judgment payable to the United States.
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.
“Laurie Schneider played the part of a successful entrepreneur, willing to help others invest in equipment and machinery deals as well as Long Island real estate. In reality she was a con artist, using lies and false assurances to bilk unsuspecting investors out of millions of dollars. Schneider ran a classic Ponzi scheme, using investor money for her own selfish purposes,” stated United States Attorney Lynch. “This office is committed to vigorously investigating and prosecuting individuals who are responsible for perpetrating financial crimes on the residents of our communities.”
FBI Assistant Director-in-Charge Venizelos stated, “By creating two different fraudulent shell companies and falsifying her connections with foreign companies to potential investors, Schneider was unfortunately able to swindle millions out of innocent investors promising big returns for their backing. Today’s guilty plea also promises a big return for Schneider’s criminal actions -- a million dollar judgment and a possible sentence of 20 years in prison. The FBI remains committed to protecting the investing public from perpetrators who seek to commit financial crimes.”
According to court filings and facts presented during the plea proceeding, Schneider used two shell corporations to operate a $6.9 million Ponzi scheme and steal money from unsuspecting investors. Schneider began accepting money in September 2006 from individuals seeking to earn profits on investments in overseas machinery and equipment deals and real estate on Long Island.
In the first scheme Schneider operated a shell corporation called Janitorial Close-Out City Corp. (“Janitorial Close-Out”). Schneider falsely represented to investors that Janitorial Close-Out bought industrial equipment and machinery manufactured by companies in China for resale in the United States. In order to lure investors, Schneider, among other things, falsely represented that, (1) she personally guaranteed varying high rates of return on investments of up to 60 percent, (2) she had a business contact with strong ties to companies in China that manufactured industrial equipment and machinery and, (3) she would be able to buy the Chinese-made industrial equipment and machinery at wholesale prices which Janitorial Close-Out would later resell in the United States at a 15 to 60 percent profit over a short period of time.
In a subsequent scheme, Schneider operated a shell company incorporated as Eager Beaver Realty LLC (“Eager Beaver”). Schneider touted Eager Beaver’s ability to purchase and sell real property on Long Island that was in foreclosure proceedings or otherwise available to Eager Beaver at significantly low prices. Schneider provided investors with written investment agreements in which she falsely represented and guaranteed that 100 percent of the invested funds would be used by Eager Beaver to purchase foreclosed real property for resale at prices that would enable Eager Beaver to pay as much as a 20 percent return on investment along with a 100 percent return of principal. To further the scheme Schneider used a portion of the money that she obtained from Eager Beaver investors to pay returns to early investors in the China Deals. In reality, Eager Beaver earned no profits. In fact, Schneider was operating a Ponzi scheme, paying returns to early investors using money that she fraudulently obtained from later investors. In addition, Schneider diverted some of the investors’ money to pay personal expenses, including car payments on luxury automobiles and country club dues.
The government’s case is being prosecuted by Assistant United States Attorney Michael P. Canty.
The Defendant:
LAURIE SCHNEIDER
Age: 39
United States Attorney Files Suit to Forfeit Ancient Italian Sarcophagus LidRead the Press Release
A civil complaint was filed today in federal court in the Eastern District of New York seeking forfeiture of an ancient Roman marble sarcophagus lid featuring a high-relief sculpture of a sleeping woman. According to Italian authorities, the piece matches photographs found in the files of convicted antiquities dealer Gianfranco Becchina. As alleged in the complaint, the antiquity is the property of Italy and is therefore forfeitable as stolen property that was unlawfully introduced into the United States.
The filing of 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. Department of Homeland Security, Homeland Security Investigations (“HSI”), New York.
Becchina, an Italian citizen, operated an antiquities gallery in Basel, Switzerland. In February 2011, he was convicted in an Italian court of illicitly dealing in antiquities. During the investigation that led to his conviction, Swiss and Italian authorities searched Becchina’s Swiss gallery and warehouse and seized Italian archeological artifacts, commercial documents and photographs of thousands of artifacts that Becchina had sold. Among the documents in Becchina’s archive were photographs, commercial records and customs paperwork pertaining to the marble sarcophagus lid. According to these records, Becchina purchased the marble sarcophagus lid in Italy and shipped it to his gallery in Switzerland in 1981. Thirty years later, the marble sarcophagus lid, now restored, reappeared at a public exhibition in New York. On February 20, 2014, HSI agents located the antiquity in a storage facility in Long Island City, New York.
“Whether looted cultural property enters our ports today or decades ago, it is our responsibility to see that it is returned to its rightful owners, in this case, the Italian people,” stated United States Attorney Lynch. “We will continue to use all legal tools available to us to seize, forfeit and repatriate stolen cultural property.” Ms. Lynch thanked the Italian Ministry of Cultural Heritage and the Italian Carabinieri Protection of Cultural Heritage Command for their assistance.
“The forfeiture of this sarcophagus lid brings us one step closer to returning this stolen treasure to its rightful owner, the Italian people,” said James T. Hayes Jr. special agent in charge of HSI in New York. “HSI is committed to intercepting and recovering stolen cultural artifacts and repatriating them to their rightful owners.”
The government’s case is being handled by Assistant United States Attorney Karin Orenstein.
E.D.N.Y. Docket No. 14-CV-1318
Sleeping.Beauty.Exhibits A-B
Boiler Room Operator Sentenced to 20 Years in Prison for Scamming Millions of Dollars from Elderly Coin Collectors in All Fifty StatesRead the Press Release
Michael Romano, 47, the leader of a telemarketing scheme that defrauded elderly investors across the country, was sentenced today in federal court in Brooklyn, New York, to 20 years in prison to be followed by five years of supervised release. As part of the sentence, Romano was ordered to pay $9,139,727.10 in restitution to the defrauded victims and forfeit $32,220,617, the illegal gains of the eleven-year fraud scheme. In June 2011, after a five-week trial, Romano was convicted of mail and wire and money laundering conspiracy.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.
“Michael Romano and those acting at his direction stole millions of dollars from the Greatest Generation. Romano took advantage of the trusting nature of hundreds of senior citizens across the United States by promising to sell them rare collectible coins, when in fact he was selling them near worthless change. Many of the victims purchased the coins in order to leave a legacy for their children and grandchildren. We remain committed to protecting all members of our communities from these illegal telemarketing schemes and will insure that fraudsters are stripped of their ill-gotten gains,” stated United States Attorney Lynch. Ms. Lynch thanked the United States Postal Inspection Service, the agency responsible for leading the government’s investigation, for its assistance in this case.
Between 1997 and 2008, Romano successively ran three coin companies, Wall Street Rare Coins, Atlantic Coin Company and Northeast Gold and Silver, located in Massapequa and Lindenhurst, New York. From these locations, the defendant and others defrauded elderly victims from all 50 states over an 11-year period. Romano falsely represented to his victims that the coins he sold were of a collectible grade. He then induced victims to buy even more coins using high-pressure tactics aimed at convincing investors that their coins would be more valuable if they purchased complete sets.
The sentencing proceeding was held before U.S. District Judge Sterling Johnson, Jr.
The government’s case is being prosecuted by Assistant United States Attorneys Lara Treinis Gatz, Christopher Ott and Diane Leonardo.
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:
MICHAEL ROMANO
Age: 47
Leader and A Member of an International Ethnic-Albanian Organized Crime Syndicate Sentenced to 120 Months and 110 Months Respectively for Drug TraffickingRead the Press Release
Earlier today, at the federal courthouse in Brooklyn, Gjavit Thaqi, one of the leaders of an international drug trafficking syndicate run by ethnic Albanians located in the United States, Canada and Europe (the “syndicate”), and Robert Rudaj, a member of the syndicate, were sentenced to 120 months and 110 months, respectively. Thaqi, whose 22-year criminal history includes prior convictions for cocaine trafficking and illegal gun trafficking, previously pled guilty to trafficking more than a thousand pounds of marijuana from Canada and Mexico, and large quantities of diverted prescription pills, such as oxycodone. Rudaj, a Career Offender whose criminal career includes multiple prior convictions for assault and burglary, previously pled guilty to trafficking hundreds of pounds of marijuana and to assault. The sentences also included terms of supervised release of five years for both defendants.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James Hunt, Acting Special Agent-in-Charge of the Drug Enforcement Administration, New York; and James T. Hayes, Jr., Special Agent-in-Charge, Homeland Security Investigations (HSI), New York.
“The sentences announced today hold to account two of the most prolific drug traffickers and violent members of an international criminal syndicate that smuggled narcotics throughout North America and the world. For over a decade, the defendants ran a global clearinghouse for illegal narcotics, with America’s streets and youth their ultimate end point,” stated United States Attorney Lynch. “We will continue to vigorously prosecute those who would poison the streets of our communities with drugs and violence.”
The syndicate operated by Thaqi was comprised of inter-related ethnic Albanian family clans (also known as “fis”) with hundreds of associated members, workers and customers spanning three continents. In operation for more than a decade, the syndicate was responsible for organizing the importation and distribution of tens of thousands of kilograms of hydroponic marijuana from Canada and Mexico, substantial quantities of MDMA from the Netherlands and Canada, hundreds of kilograms of cocaine from Mexico, Colombia, Venezuela and Peru, and large quantities of diverted prescription pills, such as oxycodone. The drugs were distributed in various locations in the United States, including New York, California, Georgia, Colorado and Florida, as well as in Canada and Europe.
The four-year investigation revealed that most of the marijuana smuggled from Canada and Mexico was concealed in tractor trailers, typically in hundred pound quantities, with some shipments weighing as much as 1,200 pounds. The marijuana shipments were stored in warehouses and stash locations throughout Brooklyn, Queens and the Bronx, before distribution. Kilogram quantities of cocaine were obtained from sources in the United States and exported to Albania and other locations in Europe concealed in hidden compartments inside luxury automobiles – ostensibly under the auspices of legitimate car dealerships which were actually controlled by syndicate members. Until the arrests of its members in July 2011, members of the syndicate, including Thaqi, were involved in negotiations to obtain hundreds of kilograms of cocaine from sources in South America for transport through the United States to Canada and Europe. Thaqi and other members of the syndicate were also involved in obtaining large shipments of oxycodone, and distributed thousands of oxycodone pills in New York which had been diverted from pain clinics in Florida.
Members of the syndicate were undeterred from committing further violence even after their arrest. For example, defendant Rudaj, who was often used by the syndicate to intimidate drug trafficking associates who owed the syndicate drug proceeds, was involved in the brutal assault of a fellow inmate at the Metropolitan Detention Center in Brooklyn, New York.
During the course of the investigation, federal agents seized more than 1,200 pounds of marijuana, approximately $2,000,000 in suspected drug proceeds, 22 handguns, a military/police-issue assault rifle and hundreds of rounds of ammunition. In total, 49 members and associates of the syndicate have been convicted in the case.
U.S. Attorney Lynch expressed her grateful appreciation to the DEA Special Operations Division, the Department of Justice Office of International Affairs, DEA Newark Division, DEA Denver Division, DEA Miami Division, DEA Albany District Office, DEA Rome Country Office, the HSI Attache in Vienna, HSI Attache in Toronto, HSI Albany Office, HSI Denver Office, HSI Newark Office, HSI Miami Office, the United States Bureau of Alcohol, Tobacco, Firearms and Explosives, the Monmouth County (New Jersey) Prosecutor’s Office, the Westchester District Attorney’s Office and the New York Attorney General’s Office for their assistance.
The sentencing proceedings were held before by U.S. District Judge Dora L. Irizarry.
The government’s case is being prosecuted by Assistant United States Attorneys Steven Tiscione, Gina Parlovecchio and Claire Kedeshian.
The Defendants:
GJAVIT THAQI
Age: 43
ROBERT RUDAJ
Age: 40
Independent Contractor in Afghanistan Pleads Guilty for His Role in Offering $54,000 in Bribes to A U.S. Government OfficialRead the Press Release
Earlier today at the federal courthouse in Brooklyn, Akbar Ahmad Sherzai, an independent contractor for a trucking company operating in Afghanistan that was responsible for delivering fuel to U.S. Army installations, pleaded guilty to his role in offering a U.S. Army serviceman $54,000 in bribes to falsify documents to reflect the successful delivery of fuel shipments that Army records indicate were never delivered. When sentenced, he faces a maximum of 15 years imprisonment and a $250,000 fine.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.
“The defendant sought to use deception, corruption and greed to enrich his company at the risk of jeopardizing the U.S. Army’s supply lines in Afghanistan. Attempts to corrupt American officials will not be tolerated, either at home or abroad,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Special Inspector General for the Afghanistan Reconstruction, Homeland Security Investigations, and the Federal Bureau of Investigation for their assistance in this case.
The U.S. Army regularly contracts with local Afghan trucking companies to transport U.S. military equipment, fuel, and other supplies throughout Afghanistan. To ensure the companies fulfilled these requests, the U.S. Army used transportation movement requests (TMRs), which, when properly completed, verified that the shipments were successfully completed, before approving payments to the trucking companies.
In April 2013, Sherzai approached a U.S. military serviceman to discuss fuel delivery missions that had been classified by the U.S. Army as “no-shows,” meaning that the fuel had not been delivered. Sherzai offered the serviceman a bribe to falsify the TMRs to reflect successful deliveries so that Sherzai’s company would receive payment and avoid penalties for failed fuel deliveries. The serviceman, under the supervision of law enforcement, continued to meet with Sherzai to discuss payments for the falsification of records. On two separate occasions, Sherzai paid the serviceman bribes in cash on American military bases in Afghanistan. On another occasion, Sherzai arranged for the serviceman’s bribe to be transferred to the United States through a hawala, an informal money transfer system. In total, Sherzai paid the serviceman $54,000 in cash to falsify fourteen TMRs. Each “no show” delivery mission, absent the fraudulent TMRs, would have resulted in a fine of the company by the U.S. government of $75,000.
Sherzai was arrested on a criminal complaint on September 24, 2013. The guilty plea proceeding was held before U.S. Magistrate Judge Robert M. Levy.
The government’s case is being prosecuted by Assistant U. S. Attorney Amir H. Toossi and Trial Attorney Daniel Butler of the Fraud Section, Criminal Division, U.S. Department of Justice.
The Defendant:
AKBAR AHMAD SHERZAI
Age: 49
Centerville, Virginia
Citizenship: Dual United States and Afghanistan
E.D.N.Y. Docket No. 14-Cr-60 (MKB)
Three Defendants Indicted on Racketeering Charges, Including Six MurdersRead the Press Release
A superseding indictment was returned last Friday charging defendants Christian Keston John, Marvin Johnson and Shaquan Jones, who were members of a violent criminal enterprise, with racketeering, consisting of 23 predicate acts, including six murders, two attempted murders, three armed robberies, kidnapping, murder-for-hire, and gambling on dog fighting, among other crimes, all of which occurred in the Bushwick, Bedford-Stuyvesant and East New York areas of Brooklyn.1 Johnson was arraigned earlier today at federal court in Brooklyn before U.S. Magistrate Judge Robert M. Levy, and the defendants Christian John and Shaquan Jones will be arraigned on Friday, also before Magistrate Judge Levy.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and William J. Bratton, Commissioner, New York City Police Department.
According to court papers, the enterprise, known as the “Hull Street Crew,” began its violent conduct in 2000 with the murder of Charlemagne Lormand, followed by the 2005 murder of Shamell Etienne and the 2008 murder of Daquane Shelton. In 2006, the defendants allegedly murdered Earle Kevin Obermuller when they bound his entire head with duct tape, dragged him down to a basement, tied him to a chair on a bed of charcoals, and then set him on fire. The indictment also charges the 2011 murders of Jason Bostic and Aaron Formey, who were murdered in a similar manner when they were bound with duct tape, pushed down the stairs to a basement, and shot multiple times. The Hull Street Crew enriched its members through drug trafficking and gambling on dog fights, and committed these violent acts to enhance the enterprise’s prestige and to protect it from rival criminal organizations.
“As set forth in the indictment, the Hull Street Crew rained down brutal violence onto the streets of Brooklyn for over a decade. The defendants pledged their allegiance to the Crew and its violent methods, committing a brutal murder and other senseless acts of violence. This indictment brings to a halt the Hull Street Crew’s reign of terror over the streets of Brooklyn,” stated United States Attorney Lynch. “Working together with the FBI and the NYPD, we stand committed to ending the scourge of violence in our communities and bringing to justice those who commit such violent acts. We hope that this prosecution will bring some measure of closure to the families of the victims who have suffered not only because of the loss of loved ones, but also by not knowing who was responsible for these crimes.”
FBI Assistant Director-in-Charge Venizelos stated, “Violence is the rule, not the exception, in the Hull Street Crew. As alleged, this criminal enterprise used illegal means, including murder and kidnapping, to intimidate rivals and instill fear in the innocent public. Today’s indictment illustrates the FBI’s continued effort to work with our law enforcement partners to disrupt and dismantle violent criminal enterprises that terrorize our communities.”
Police Commissioner Bratton stated, “Members of this violent and vicious crew operated on the streets of Brooklyn for more than a decade, but with this investigation and indictment we send a message to those who choose to operate within a ruthless criminal operation – you will be brought to justice and eradicated from our communities. The Hull Street Crew was shut down thanks to the tireless efforts of the investigators from the NYPD Detective Bureau, the Federal Bureau of Investigation, and the United States Attorney’s Office, Eastern District of New York.”
The case has been assigned to U.S. District Judge Frederic Block. If convicted of murder, the defendants face a maximum sentence of life imprisonment, or possibly the death penalty.
The government’s case is being prosecuted by Celia A. Cohen, Gina M. Parlovecchio, and Robert T. Polemeni.
The Defendants:
CHRISTIAN KESTON JOHN
Age: 30
Brooklyn, N.Y.
MARVIN JOHNSON
Age: 30
Brooklyn, N.Y.
SHAQUAN JONES
Age: 31
Brooklyn, N.Y.
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1 The charges contained in the superseding indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Former Attorney Indicted for Lying to Federal Investigators About His Role in A Million-Dollar Fraud SchemeRead the Press Release
Earlier today, an indictment was unsealed charging disbarred New York attorney Barry Stephen Zornberg with lying to federal investigators about his role in a foreclosure rescue fraud scheme.1 The scheme ensnared at least ten families, defrauding them of approximately $1.3 million in home equity and causing some of them to lose their homes. If convicted, Zornberg faces up to five years’ of imprisonment.
The charges, arrests and seizures were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the United States Postal Inspection Service (USPIS).
“As set forth in the indictment, the defendant, a disbarred attorney, lied to federal investigators about the role that he played in this fraud scheme, which took advantage of people who were looking to save their homes from foreclosure. A law license is not a license to steal or lie,” stated United States Attorney Lynch. “We are committed to protecting our communities from the abuses of fraud.”
FBI Assistant Director-in-Charge Venizelos stated, “All too often, desperate homeowners fall prey to dishonest foreclosure specialists, many of whom use their experience in mortgage-related industries to carry out their fraudulent schemes. Just as legitimate programs exist to assist distressed homeowners facing this dilemma, so too do con artists who make it their goal to capitalize on the misfortune of others. As alleged, the defendant knowingly exploited vulnerabilities in the foreclosure process, caused serious damage to a number of families, and lied to investigators about his role in the scheme. The FBI continues to support partnerships within the mortgage industry and law enforcement as we work together to combat this serious crime.”
USPIS Inspector-in-Charge Bartlett stated, “The defendant used the dream of home ownership and a fragile economy to lie and steal from trusting individuals. Postal Inspectors and their law enforcement partners used their investigative power and the justice system to ensure he is held accountable for his involvement in this illegal scheme.”
As alleged, the foreclosure rescue fraud was carried out from Empire Property Solutions, LLC ("Empire") in Bethpage, New York. Zornberg and two principals of Empire encouraged distressed homeowners to “refinance” their residences with Empire, when, in reality, the victims were tricked into transferring title to their homes to straw buyers and paying large fees to Empire. As part of this scheme, the victims lost title to their homes, valued in the aggregate at $4.3 million. Zornberg and his partners in the scheme extracted more than $1.3 million in equity from the victim families’ homes, leaving the victim families significantly worse off than when they asked for help. The straw buyers made no payments on the homes, causing the victims’ homes to go into default. Almost all of the victim homeowners face foreclosure due to the scheme and a number have been dispossessed.
As detailed in the indictment, when interviewed by federal investigators, Zornberg, the alleged architect of the scheme, falsely stated that he advised the victims to not continue with the scheme. In fact, he advised the opposite, thereby generating large fees for himself.
The defendant is scheduled to be arraigned on Wednesday, February 12, 2014, at 3:00 p.m., before United States Magistrate Judge A. Kathleen Tomlinson, at the federal courthouse in Central Islip, New York.
The government’s case is being prosecuted by Assistant United States Attorney Christopher A. Ott.
The Defendant:
BARRY STEPHEN ZORNBERG
Age: 54
Hauppauge, New York
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1 The charge in the indictment is merely an allegation, and the defendant is presumed innocent unless and until proven guilty.
24 Defendants with Ties to Powerful Italian Organized Crime Syndicate Known as the ‘Ndrangheta Arrested in Coordinated U.S.-Italian TakedownRead the Press Release
BROOKLYN, NY- A fifteen-count indictment was unsealed this morning in federal court in the Eastern District of New York charging seven defendants with narcotics trafficking, money laundering and firearms offenses based, in part, on their participation in a transnational heroin and cocaine trafficking conspiracy involving the ‘Ndrangheta, one of Italy’s most powerful organized crime syndicates.1 The defendants – ‘Ndrangheta member Raffaele Valente, also known as “Lello,” Gambino associate Franco Lupoi, Bonanno associate Charles Centaro, also known as “Charlie Pepsi,” Dominic Ali, Alexander Chan, Christos Fasarakis, and Jose Alfredo Garcia, also known as “Freddy” – were arrested earlier today. In a coordinated operation, Italian law enforcement authorities arrested 17 members and associates of the ‘Ndrangheta in Calabria, Italy who were involved in the narcotics trafficking conspiracy, among other crimes.
The seven defendants arrested in the United States are scheduled to be arraigned this afternoon before Chief United States Magistrate Judge Steven M. Gold, at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York. The case has been assigned to United States District Judge Sterling Johnson, Jr.
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).
“The ‘Ndrangheta is an exceptionally dangerous, sophisticated and insidious criminal organization, with tentacles stretching from Italy to countries around the world,” stated United States Attorney Lynch. . “The defendant Lupoi sought to use his connections with both ‘Ndrangheta and the Gambino crime family to extend his own criminal reach literally around the globe. Today, thanks to the vigilance and sustained cooperation of the Department of Justice and its law enforcement partners in Italy, the ‘Ndrangheta’s efforts to gain a foothold in New York have been dealt a lasting blow.” Ms. Lynch praised the outstanding investigative efforts of the Federal Bureau of Investigation and expressed her thanks to law enforcement partners in Italy, including the Prosecutor of the Republic of Reggio Calabria; the Italian National Police (INP) and, in particular, the Squadra Mobile of Reggio Calabria and the Servizio Centrale Operativo; the Direzione Centrale per i Servizi Antidroga; and the Direzione Nazionale Antimafia. Ms. Lynch also expressed gratitude to the U.S. Department of Justice Attaché and the Office of the FBI Legal Attaché at the U.S. Embassy in Rome, who coordinated extensive evidence-sharing and coordinated undercover operations.
“As alleged, ‘Ndrangheta’s clan members conspired with members of the Gambino organized crime family in New York in an attempt to infiltrate our area with their illegal activities. Under the auspices of legitimate shipping businesses, the two criminal groups worked together to establish a plan of moving cocaine and heroin between the United States and Italy. Little did they know, there was an ongoing collaboration between the FBI and the Italian National Police to investigate and identify their scheme. This international cooperation between our great law enforcement agencies is one that was established at the beginning of our investigation, and it remains in place today. With every arrest made, both here and in Italy, FBI agents and Italian National Police officers closely coordinated their operations and share the success of this operation,” said FBI Assistant Director-in-Charge Venizelos.
As detailed in the indictment and detention letter filed today, defendant Franco Lupoi, a Brooklyn resident who has lived in Calabria, used his close criminal ties to both the Gambino organized crime family and the ‘Ndrangheta, an Italian criminal organization akin to the Mafia in Sicily and the Camorra in Naples, to pursue criminal activity that stretched across the globe. The Italian charges unsealed today reveal how the ‘Ndrangheta has operated for decades in Calabria in localized clans – known as ‘ndrine – based primarily on close family ties. In this case, Lupoi’s father-in-law, Italian defendant Nicola Antonio Simonetta, is a member of the Ursino clan of the ‘Ndrangheta. In 2012, Simonetta traveled to Brooklyn and met with Lupoi and an undercover FBI agent, who recorded Simonetta and Lupoi discussing plans to ship narcotics between the U.S. and Italy via the port of Gioia Tauro in Calabria, an infamous hub of ‘Ndrangheta activity. Simonetta revealed that his ‘Ndrangheta associates at the port would guarantee the safe arrival of container ships containing contraband.
As alleged in court documents, Lupoi exploited these underworld connections to link his criminal associates in New York with those in Calabria, forming conspiracies to traffic heroin and cocaine. On the Italian side, he allegedly engaged Italian defendant and ‘Ndrangheta leader Francesco Ursino and others as suppliers of heroin and buyers of cocaine. During two joint FBI-INP operations in Italy, Lupoi and Ursino sold over 1.3 kilograms of heroin to an FBI undercover agent for what they believed was eventual distribution in the United States. In New York, Lupoi, Chan and Garcia sold the undercover agent more than a kilogram of heroin.
As alleged, Lupoi also set into motion a plot to transport 500 kilograms of cocaine, concealed in frozen food, in shipping containers from Guyana to Calabria. In the course of these conspiracies, Lupoi assured his confederates of his relationship with a corrupt port official in Gioia Tauro, indicating that in return for €200,000, the official could guarantee passage of unlimited containers of contraband. In New York, Lupoi joined forces with defendants Alexander Chan and Garcia to orchestrate the Guyana-Italy cocaine conspiracy. In conversations recorded by the undercover agent, the conspirators discussed their connections to Mexican drug cartels operating in Guyana, South America, and plotted to transport 500 kilograms of cocaine internationally, hidden in shipments of frozen fish or pineapples. On the Italian side, Ursino and his coconspirators planned to use a fish importation company to receive the shipment. As set forth in Italian court documents, the conspiracy slowed when shipping containers originating from the same Guyanese shipping company were seized in Malaysia and found to contain over $7 million in cocaine hidden in pineapples and coconut milk.
As set forth in court documents, Lupoi also worked closely with U.S. defendant and ‘Ndrangheta member Raffaele Valente, who sold an illegal silencer and sawed-off shotgun to the FBI undercover agent at the Royal Crown Bakery in Brooklyn. In conversations intercepted on Italian wiretaps, Valente revealed that he had assembled a group of well-armed men in New York and that their base of operations was as secure as “Fort Knox.” Valente also discussed his devotion to St. Michael the Archangel as the purported “patron saint” of the ‘Ndrangheta and exhorted Italian defendant Andrea Memmolo to wear a special ring as a sign of pride and mutual recognition. Valente and Lupoi are charged with conspiracy to transfer a firearm, and Valente is charged with two counts of illegal possession of a silencer. Valente is also charged in Italy with the crime of mafia association based on his role in establishing an ‘Ndrangheta cell in New York.
As alleged, Lupoi further maintained a network of money laundering associates in New York. He and his codefendants Dominic Ali, Charles “Charlie Pepsi” Centaro, and Christos Fasarakis, an employee of Alma Bank in Brooklyn, laundered more than $500,000 in funds that they believed were the proceeds of narcotics and illegal weapons trafficking. Centaro was recorded describing his access to bank accounts with millions of dollars through which he could launder and conceal criminal proceeds.
If convicted, Lupoi, Chan and Garcia face a maximum sentence of life imprisonment; Ali, Centaro and Fasarakis face a maximum sentence of twenty years’ imprisonment on each money laundering charge; and Valente faces a maximum sentence of ten years’ imprisonment on each firearms charge.
The government’s case is being prosecuted by Assistant United States Attorneys Cristina Posa, Kristin Mace and Kevin Trowel.
The Defendants:
FRANCO LUPOI
Age: 44
Brooklyn, NY
DOMINIC ALI
Age: 55
Brooklyn, NY
CHARLES CENTARO, a.k.a. “Charlie Pepsi”
Age: 50
Brooklyn, NY
ALEXANDER CHAN
Age: 46
New York, NY
CHRISTOS FASARAKIS
Age: 42
Brooklyn, NY
RAFFAELE VALENTE, a.k.a. “Lello”
Age: 42
Brooklyn, NY
JOSE ALFREDO GARCIA, a.k.a. “Freddy”
Age: 47
New York, NY
E.D.N.Y. Docket No. 14-CR-042 (SJ)
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1 The charges contained in the indictment and complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Three Mexican Brothers Sentenced for Sex TraffickingRead the Press Release
Earlier today, in federal court in Brooklyn, New York, three brothers were sentenced to lengthy prison terms following their pleas of guilty to sex trafficking charges. Benito Lopez-Perez and Anastasio Romero-Perez were sentenced to 18 years of imprisonment to be followed by 5 years of supervised release, and Jose Gabino Barrientos-Perez, was sentenced to 10 years and one month of imprisonment, to be followed by 5 years of supervised release. The defendants, who are Mexican nationals, transported Mexican females from Mexico to the United States illegally, forcing them to work as prostitutes in New York City and elsewhere. The defendants were arrested in Mexico in October 2011 and extradited to the United States in December 2012. Today’s sentences are the latest in the Office’s comprehensive anti-trafficking program, which has to date indicted over 55 defendants in sex trafficking cases and rescued over 100 victims, including over 17 minors.
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, Homeland Security Investigations (HSI), New York.
“The defendants preyed upon the young and vulnerable, abducting one of their victims at age 14, and forcing them into a life of sexual slavery in Mexico and the United States. Working together with our law enforcement partners at home and abroad, we stand firm in our resolve to vigorously investigate and prosecute those who would subject others to modern-day slavery,” stated United States Attorney Lynch. “These sex traffickers have now been held to account for the horror and violence that they inflicted on their victims. We hope that these sentences bring some measure of closure to the victims as they attempt to heal from the mental and physical abuse inflicted by the defendants.” Ms. Lynch thanked the Mexican authorities and other entities that assisted with the extradition and successful prosecution of this case.
“The individuals sentenced today exploited and enslaved women for personal profit while terrifying and traumatizing them through rape, violence, and intimidation,” stated HSI Special Agent-in-Charge Hayes. “No prison sentence can ever do justice for the pain and suffering experienced by these victims, but knowing that justice has been served on their tormentors will hopefully allow for the beginning of a healing process that these women so justly deserve.”
The sex trafficking involved at least four victims, and the defendants used various methods to force these women and girls to work in prostitution, ranging from abduction, rape, assault and threats of violence, to psychological coercion. One minor victim, identified in court papers as Jane Doe 1, was primarily trafficked by the defendant Benito Lopez-Perez. Jane Doe 1 met Lopez-Perez in 2005 in Mexico when she was 14 years old. After attending a movie with a group that included Lopez-Perez, he took Jane Doe 1 to his family home and raped her. Lopez-Perez then forced Jane Doe 1 into prostitution, first in Mexico and later, after arranging to smuggle her across the border, in the United States, where Jose Gabino Barrientos-Perez also participated in the victim’s sex trafficking. Jane Doe 1 was required to service 10 to 40 clients per day, on threat of physical abuse, and was kept under the defendants’ control for five years until she escaped in 2010.
At age 14, the victim identified as Jane Doe 2 met the defendant Romero-Perez while she was living with her sister (also a victim and identified in court papers as Jane Doe 3), who was married to Jose Gabino Barrientos-Perez. Jane Doe 2 began a romantic relationship with Romero-Perez, who subsequently persuaded the victim to work as a prostitute to pay off a debt. Romero-Perez brought Jane Doe 2 to a bar where she was closely monitored to ensure she kept none of the money she earned. When she refused to work, or did not earn enough money, Romero-Perez beat her. In approximately October 2008, Romero-Perez and Lopez-Perez arranged to smuggle Jane Doe 2 into the United States where she was forced to work as a prostitute in New York, New Jersey, and Connecticut, servicing approximately 12 to 15 clients per day. While she was in the United States, Romero-Perez raped and beat Jane Doe 2 on several occasions.
Jane Doe 3 was primarily trafficked by her husband, the defendant Jose Gabino Barrientos-Perez. Approximately one year after the birth of their son, Barrientos-Perez persuaded Jane Doe 3 to work as a prostitute, telling her he needed the money pay off debts and to provide for their baby. Barrientos-Perez brought Jane Doe 3 to Tijuana and Mexico City to work in prostitution, beating her on several occasions in order to force her to work. In 2006, Barrientos-Perez arranged to smuggle Jane Doe 3 into the United States and ultimately to New York City to work as a prostitute under the defendant’s threats of violence. Jane Doe 3 paid Barrientos-Perez approximately $700-$1,000 per week from her prostitution earnings – when she paid less, the defendant threatened that he would not let her see her children.
Jane Doe 4 was trafficked by the defendant Romero-Perez beginning at the age of 20, after she was pressured into a romantic relationship with him. After approximately three months of working as a prostitute in Mexico, Jane Doe 4 was smuggled into the United States. Romero-Perez promised his victim that they would get jobs and have an apartment together, but after they arrived, Romero-Perez told her that she needed to prostitute herself to support them. Like the other victims, Jane Doe 4 gave the majority of the prostitution proceeds to Romero-Perez and his family members.
Since 2009, the Departments of Justice and Homeland Security have collaborated with Mexican law enforcement counterparts in the Procuraduría General de la República (PGR), the Secretaría de Seguridad Pública (SSP), Procuraduría Social de Atención a las Víctimas de Delitos (PROVICTIMA), and non-governmental partners in the United States and Mexico in a Bilateral Human Trafficking Enforcement Initiative. Through this Initiative, the United States and Mexico have worked together to bring high-impact prosecutions under both U.S. and Mexican law to more effectively dismantle human trafficking networks operating across the U.S.-Mexico border, prosecute human traffickers, rescue human trafficking victims, and reunite victims with their families. Other significant bilateral cases have been prosecuted in Atlanta, Georgia, and Miami, Florida.
United States Attorney Lynch extended her grateful appreciation to the Department of Justice’s Office of International Affairs for its assistance in obtaining the extraditions of the defendants, and the New York City Police Department for its longstanding partnership in the Office’s coordinated anti-trafficking program. Ms. Lynch also thanked the many victim service providers and advocates for their dedicated efforts to restore and improve the lives of survivors of trafficking, in particular, Safe Horizon; Sanctuary for Families; Restore NYC; LifeWay Network; the New York City Bar Justice Center; The Legal Aid Society, Civil Division (Bronx); My Sister’s Place; the Mt. Sinai Sexual Assault and Violence Intervention Program; Bellevue Hospital Center, and the law firms of Skadden, Arps, Slate, Meagher & Flom LLP and Wilmer Cutler Pickering Hale and Dorr LLP.
The sentences were imposed by Chief United States District Judge Carol B. Amon.
The government’s case was prosecuted by Assistant United States Attorneys Taryn A. Merkl, Elizabeth Geddes, and Erik Paulsen.
The Defendants:
Name: BENITO LOPEZ-PEREZ
Age: 35
Name: ANASTASIO ROMERO-PEREZ
Age: 40
Name: JOSE GABINO BARRIENTOS-PEREZ
Age: 52
E.D.N.Y. Docket No. CR-11-199 (CBA)