Southern District of New York
Press releases recorded for this federal judicial district.
Pakistani National Charged for Plotting Terrorist Attack in New York City in Support of ISISRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Merrick B. Garland, the Attorney General of the United States; Christopher Wray, the Director of the Federal Bureau of Investigation (“FBI”); and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the FBI, announced today that Muhammad Shahzeb Khan, a/k/a “Shahzeb Jadoon,” was arrested on September 4, 2024 in Canada in connection with a Complaint filed in the Southern District of New York charging KHAN with attempting to provide material support and resources to a designated foreign terrorist organization, the Islamic State of Iraq and al-Sham (“ISIS”). As alleged in the Complaint, KHAN, who resided in Canada, attempted to travel from Canada to New York City, where he intended to use automatic and semi-automatic weapons to carry out a mass shooting in support of ISIS at a Jewish center in Brooklyn, New York. The U.S. Attorney’s Office for the Southern District of New York plans to seek the extradition of KHAN from Canada.
U.S. Attorney Damian Williams said: “As alleged, Khan attempted to travel to the United States to carry out a terrorist attack and murder as many Jewish people as possible, all in support of ISIS. Khan’s alleged crimes are a vivid reminder that we must remain vigilant in the fight against antisemitism and terror. Thanks to our law enforcement partners and the career prosecutors of this Office, Khan’s alleged plan was disrupted before he reached the United States. Let this be a reminder to anyone who seeks to harm our community: This Office will stop at nothing to root you out and bring you to justice.”
Attorney General Merrick B. Garland said: “The defendant is alleged to have planned a terrorist attack in New York City around October 7th of this year with the stated goal of slaughtering, in the name of ISIS, as many Jewish people as possible. Thanks to the investigative work of the FBI, and the quick action of our Canadian law enforcement partners, the defendant was taken into custody. As I said to Canada’s Minister of Public Safety yesterday, we are deeply grateful to our Canadian partners for their critical law enforcement actions in this matter. Jewish communities – like all communities in this country – should not have to fear that they will be targeted by a hate-fueled terrorist attack. The Justice Department will continue to work closely with our domestic and international partners to aggressively counter the threat posed by ISIS and other terrorist organizations and their supporters.”
FBI Director Christopher Wray said: “The defendant was allegedly determined to kill Jewish people here in the United States, nearly one year after Hamas’s horrific attack on Israel. This investigation was led by the FBI and I am proud of the terrific work by the FBI team and our partners to disrupt Khan's plan. The FBI will continue to work closely with our partners to investigate and hold accountable those who seek to commit violence in the name of ISIS or other terrorist organizations. Fighting terrorism remains the FBI’s top priority.”
Acting FBI Assistant Director in Charge Christie M. Curtis said: “Terrorism has no place in our society, and today’s arrest sends a powerful message: if you attempt to provide support to ISIS or any terrorist group, the FBI will bring you to justice. This case underscores the commitment of our Joint Terrorism Task Force in New York City, whose extraordinary and often unnoticed efforts continue to prevent deadly plots before they can be carried out. Our partners are on the front lines every day, united to protect our nation from those who threaten our safety and way of life.”
As alleged in the Complaint unsealed today:[1]
KHAN, a Pakistani national residing in Canada, began posting on social media and communicating with others on an encrypted messaging application about his support for ISIS in or about November 2023, when, among other things, KHAN distributed ISIS propaganda videos and literature. Subsequently, KHAN began communicating with two undercover law enforcement officers (collectively, the “UCs”). During those conversations, KHAN confirmed that he and a U.S.-based associate (“Associate-1”) had been planning to carry out an attack in a particular U.S. city (“City-1”). Among other things, KHAN said that he had been actively attempting to create “a real offline cell” of ISIS supporters to carry out a “coordinated assault” in City-1 using AR-style assault rifles to “target[] Israeli Jewish chabads . . . scattered all around [City-1].” During subsequent conversations, KHAN repeatedly instructed the UCs to obtain AR-style assault rifles, ammunition, and other materials to carry out the attacks, and identified the specific locations in City-1 where the attacks would take place. KHAN also provided details about how he would cross the border from Canada into the U.S. to conduct the attacks. During these conversations with the UCs, KHAN emphasized that “Oct 7th and oct 11th are the best days for targeting the jews” because “oct 7 they will surely have some protests and oct 11 is yom.kippur.”
On or about August 20, 2024, KHAN changed his target location from City-1 to New York City. After initially suggesting certain neighborhoods in New York City to the UCs, KHAN decided to target Location-1, a Jewish center located in Brooklyn, New York. KHAN told the UCs that he planned to carry out this attack on or around October 7, 2024—which KHAN recognized as the one-year anniversary of the brutal terrorist attacks in Israel by Hamas, a designated foreign terrorist organization, which, on October 7, 2023, launched a wave of violent, large-scale terrorist attacks in Israel. In support of his choice of New York City as his target location, KHAN boasted that “New york is perfect to target jews” because it has the “largest Jewish population In america” and therefore, “even if we dont attack a[n] Event[,] we could rack up easily a lot of jews.” KHAN proclaimed that “we are going to nyc to slaughter them,” and sent a photograph of the specific area inside of Location-1 where he planned to carry out the attack.
Thereafter, KHAN continued to urge the UCs to acquire AR-style assault rifles, ammunition, and other equipment for his attack, including “some good hunting [knives] so we can slit their throats.” KHAN repeatedly reiterated his desire to carry out the attack in support of ISIS, and continued planning for the attack, including by identifying rental properties close to Location-1 and paying for a human smuggler to help him reach and cross the border from Canada into the U.S. During one communication, KHAN noted that “if we succeed with our plan this would be the largest Attack on US soil since 9/11.”
On or about September 4, 2024, as KHAN said he planned to do in connection with his attack, KHAN attempted to reach the U.S-Canada border. To do so, KHAN traveled from the vicinity of Toronto, Canada towards the United States, before he was stopped in or around Ormstown, Canada, approximately 12 miles from the U.S.-Canada border.
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KHAN, 20, a Pakistani citizen residing in Canada, is charged with one count of attempting to provide material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison.
The potential maximum sentence in this case is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding efforts of the New York Joint Terrorism Task Force of the FBI, which consists of investigators and analysts from the FBI, the FBI Field Offices in Chicago and Los Angeles, the New York City Police Department, and over 50 other federal, state, and local agencies, and thanked the Counterterrorism Section of the Department of Justice’s National Security Division, the Office of International Affairs of the Department of Justice’s Criminal Division, and our law enforcement partners in Canada, including the Royal Canadian Mounted Police and Department of Justice Canada, for their assistance.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Kaylan E. Lasky and David J. Robles are in charge of the prosecution, with assistance from Trial Attorney Kevin Nunnally of the Counterterrorism Section.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint constitutes only allegations, and every fact described herein should be treated as an allegation.
Former Rockland County Diving Coach Sentenced to 220 Months in Prison for Transporting Two Minors for Illegal Sexual Activity in 2006 and 2008Read the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that VICTOR BYRNE was sentenced to 220 months in prison by U.S. District Judge Nelson S. Román for transporting two minors to engage in illegal sexual activity in 2006 and 2008. The sentencing today followed BYRNE’s guilty plea on March 14, 2024.
U.S. Attorney Damian Williams said: “Victor Byrne used his position as a diving coach to sexually exploit young athletes. Byrne’s conduct is the nightmare of every parent who entrusts their child to a coach. Today’s sentencing demonstrates that the passage of years will not prevent us from holding child predators accountable for their conduct.”
According to documents filed in this case and statements made in related court proceedings:
In or about July 2006, BYRNE transported a 16-year-old minor (“Victim-1”) from Cape Cod, Massachusetts, to Rockland County, New York, and, once in New York, engaged in illegal sexual activity with Victim-1.
In or about February 2008, BYRNE arranged for a 16-year-old minor (“Victim-2”) to be transported from New Jersey to Rockland County, New York, and, thereafter, engaged in illegal sexual activity with Victim-2.
From in or about 2001 through at least 2009, BYRNE was a diving coach for competitive youth divers. He coached several teams of youth divers in and around Rockland County, New York. BYRNE began abusing Victim-1 when she was 14 years old. For Victim-2, the abuse began when she was 16. To gain the trust of his victims and their families and others he coached, BYRNE falsely held himself out as a police officer.
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In addition to the prison term, BYRNE, 58, was sentenced to a lifetime of supervised release.
Mr. Williams praised the efforts of Homeland Security Investigations, the U.S. Marshal Service, the U.S. Attorney’s Office for the Middle District of Florida, and the New York City Police Department Special Victims Unit assigned to the HSI Human Trafficking Task Force in connection with this investigation. He added that the investigation is ongoing.
The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Marcia S. Cohen is in charge of the prosecution.
Two RT Employees Indicted for Covertly Funding and Directing U.S. Company that Published Thousands of Videos in Furtherance of Russian InterestsRead the Press Release
Note: View the indictment here.
An indictment charging Russian nationals Kostiantyn Kalashnikov, 31, also known as Kostya, and Elena Afanasyeva, 27, also known as Lena, with conspiracy to violate the Foreign Agents Registration Act (FARA) and conspiracy to commit money laundering was unsealed today in the Southern District of New York. Kalashnikov and Afanasyeva are at large.
“The Justice Department has charged two employees of RT, a Russian state-controlled media outlet, in a $10 million scheme to create and distribute content to U.S. audiences with hidden Russian government messaging,” said Attorney General Merrick B. Garland. “The Justice Department will not tolerate attempts by an authoritarian regime to exploit our country’s free exchange of ideas in order to covertly further its own propaganda efforts, and our investigation into this matter remains ongoing.”
“Our approach to combating foreign malign influence is actor-driven, exposing the hidden hand of adversaries pulling strings of influence from behind the curtain," said Deputy Attorney General Lisa Monaco. “As alleged in today’s indictment, Russian state broadcaster RT and its employees, including the charged defendants, co-opted online commentators by funneling them nearly $10 million to pump pro-Russia propaganda and disinformation across social media to U.S. audiences. The Department will not tolerate foreign efforts to illegally manipulate American public opinion by sowing discord and division.”
“Covert attempts to sow division and trick Americans into unwittingly consuming foreign propaganda represents attacks on our democracy,” said FBI Director Christopher A. Wray. “Today’s actions show that as long as foreign adversaries like Russia keep engaging in hostile influence campaigns, they are going to keep running into the FBI. We will continue to do everything we can to expose the hidden hand of foreign adversaries like Russia and disrupt their efforts to meddle in our free and open society.”
“The Russian government has long sought to sow discord and chaos in the United States through propaganda and foreign malign influence campaigns,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “As alleged, the covert operations by RT employees exploited our free and open press and targeted millions of Americans as unwitting victims of Russia’s psychological warfare.”
“As alleged, the Russian state broadcaster RT orchestrated a massive scheme to influence the American public by secretly planting and financing a content creation company on U.S. soil,” said U.S. Attorney Damian Williams for the Southern District of New York. “The instruments of the scheme were RT employees Kostiantyn Kalashnikov and Elena Afanasyeva, who managed the operation from Moscow using fake personas and shell companies, and the victims of the scheme were the American people, who received Russian messaging without knowing it. As the charges unsealed today demonstrate, this Office will work with our law enforcement partners to unmask and hold accountable all those who conduct malign influence campaigns in the United States, no matter how hard they try to hide their tracks.”
According to the court documents, RT, formerly known as Russia Today, is a state-controlled media outlet funded and directed by the Government of Russia. Over at least the past year, RT and its employees, including Kalashnikov and Afanasyeva, deployed nearly $10 million to covertly finance and direct a Tennessee-based online content creation company (U.S. Company-1). In turn, U.S. Company-1 published English-language videos on multiple social media channels, including TikTok, Instagram, X, and YouTube. Since publicly launching in or about November 2023, U.S. Company-1 has posted nearly 2,000 videos that have garnered more than 16 million views on YouTube alone. Many of the videos posted by U.S. Company-1 contain commentary on events and issues in the U.S., such as immigration, inflation, and other topics related to domestic and foreign policy. While the views expressed in the videos are not uniform, most are directed to the publicly stated goals of the Government of Russia and RT — to amplify domestic divisions in the United States.
In order to carry out RT’s secret influence campaign in the United States, Kalashnikov and Afanasyeva operated under covert identities at U.S. Company-1. Posing as an outside editor, Kalashnikov edited U.S. Company-1 content, monitored U.S. Company-1’s funding and hiring, and introduced Afanasyeva as a member of his purported editing team. Using the fake personas Helena Shudra and Victoria Pesti, Afanasyeva posted and directed the posting by U.S. Company-1 of hundreds of videos. Afanasyeva also collected information from and gave instructions to U.S. Company-1 staff. For example, after the March 22, 2024, terrorist attack on a music venue in Moscow, Afanasyeva asked one of U.S. Company-1’s founders to blame Ukraine and the United States for the attack, writing: “I think we can focus on the Ukraine/U.S. angle. . . . [T]he mainstream media spread fake news that ISIS claimed responsibility for the attack yet ISIS itself never made such statements. All terrorists are now detained while they were heading to the border with Ukraine which makes it even more suspicious why they would want to go to Ukraine to hide.”
Between in or about October 2023 and in or about August 2024, RT sent wire transfers to U.S. Company-1 totaling approximately $9.7 million, which represented nearly 90% of U.S. Company-1’s bank deposits from all sources combined. The wires were sent from shell companies in Turkey, the United Arab Emirates, and Mauritius, and were often accompanied by wire notes ascribing the payments to the purchase of electronics. For example, the wire note for a $318,800 wire payment from a shell entity in Turkey to U.S. Company-1 on March 1, read: “BUYING GOODS-INV.013-IPHONE 15 PRO MAX 512GB.”
U.S. Company-1 never disclosed to its viewers that it was funded and directed by RT. Nor did U.S. Company-1 or its two founders register with the Attorney General as an agent of a foreign principal.
Kalashnikov and Afanasyeva both of Russia, are charged with conspiracy to violate FARA, which carries a maximum sentence of five years in prison, and conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison. If convicted, a federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI is investigating the case.
Assistant U.S. Attorneys Alexander Li and Juliana Murray for the Southern District of New York and Trial Attorney Brett Reynolds of the Justice Department’s National Security Division Counterintelligence and Export Control Section are prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Two RT Employees Indicted for Covertly Funding and Directing U.S. Company That Published Thousands of Videos in Furtherance of Russian InterestsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Merrick B. Garland, the Attorney General of the United States; Lisa Monaco, the Deputy Attorney General of the United States; Matthew G. Olsen, the Assistant Attorney General for National Security; Christopher A. Wray, the Director of the Federal Bureau of Investigation (“FBI”); and Christie M. Curtis, the Acting Assistant Director in Charge of the FBI’s New York Field Office, announced today the unsealing of an Indictment charging Russian nationals KOSTIANTYN KALASHNIKOV, a/k/a “Kostya,” and ELENA AFANASYEVA, a/k/a “Lena,” with conspiracy to violate the Foreign Agents Registration Act (“FARA”) and conspiracy to commit money laundering. KALASHNIKOV and AFANASYEVA are at large.
U.S. Attorney Damian Williams said: “As alleged, the Russian state broadcaster RT orchestrated a massive scheme to influence the American public by secretly planting and financing a content creation company on U.S. soil. The instruments of the scheme were RT employees Kostiantyn Kalashnikov and Elena Afanasyeva, who managed the operation from Moscow using fake personas and shell companies, and the victims of the scheme were the American people, who received Russian messaging without knowing it. As the charges unsealed today demonstrate, this Office will work with our law enforcement partners to unmask and hold accountable all those who conduct malign influence campaigns in the United States, no matter how hard they try to hide their tracks.”
Attorney General Merrick B. Garland said: “The Justice Department has charged two employees of RT, a Russian state-controlled media outlet, in a $10 million scheme to create and distribute content to U.S. audiences with hidden Russian government messaging. The Justice Department will not tolerate attempts by an authoritarian regime to exploit our country’s free exchange of ideas in order to covertly further its own propaganda efforts, and our investigation into this matter remains ongoing.”
Deputy Attorney General Lisa Monaco said: “Our approach to combating foreign malign influence is actor-driven, exposing the hidden hand of adversaries pulling strings of influence from behind the curtain. As alleged in today’s indictment, Russian state broadcaster RT and its employees, including the charged defendants, co-opted online commentators by funneling them nearly $10 million to pump pro-Russia propaganda and disinformation across social media to U.S. audiences. The Department will not tolerate foreign efforts to illegally manipulate American public opinion by sowing discord and division.”
FBI Director Christopher A. Wray said: “Covert attempts to sow division and trick Americans into unwittingly consuming foreign propaganda represent attacks on our democracy. Today’s actions show that as long as foreign adversaries like Russia keep engaging in hostile influence campaigns, they are going to keep running into the FBI. We will continue to do everything we can to expose the hidden hand of foreign adversaries like Russia and disrupt their efforts to meddle in our free and open society.”
Assistant Attorney General Matthew G. Olsen said: “The Russian government has long sought to sow discord and chaos in the United States through propaganda and foreign malign influence campaigns. As alleged, the covert operations by RT employees exploited our free and open press and targeted millions of Americans as unwitting victims of Russia’s psychological warfare.”
FBI Acting Assistant Director Christie M. Curtis said: “As alleged in the indictment, Kostiantyn Kalashnikov and Elena Afanasyeva conspired with others to build a U.S.-based content creation company, which was secretly funded, directed, and controlled by RT – a Russian state-owned media enterprise. They concealed the true nature of the company in order to covertly influence millions of American viewers. The American public deserves to know when the online content it sees is generated and paid for by a hostile foreign government. Investigating and dismantling foreign malign influence operations attempting to manipulate public opinion is central to the FBI's work to protect the American people.”
As alleged in the Indictment:[1]
RT, formerly known as “Russia Today,” is a state-controlled media outlet funded and directed by the Government of Russia. Over at least the past year, RT and its employees, including KALASHNIKOV and AFANASYEVA, deployed nearly $10 million to covertly finance and direct a Tennessee-based online content creation company (“U.S. Company-1”). In turn, U.S. Company-1 published English-language videos on multiple social media channels, including TikTok, Instagram, X, and YouTube. Since publicly launching in or about November 2023, U.S. Company-1 has posted nearly 2,000 videos that have garnered more than 16 million views on YouTube alone. Many of the videos posted by U.S. Company-1 contain commentary on events and issues in the U.S., such as immigration, inflation, and other topics related to domestic and foreign policy. While the views expressed in the videos are not uniform, most are directed to the publicly stated goals of the Government of Russia and RT — to amplify domestic divisions in the U.S.
In order to carry out RT’s secret influence campaign in the U.S., KALASHNIKOV and AFANASYEVA operated under covert identities at U.S. Company-1. Posing as an outside editor, KALASHNIKOV edited U.S. Company-1’s content, monitored U.S. Company-1’s funding and hiring, and introduced AFANASYEVA as a member of his purported editing team. Using the fake personas “Helena Shudra” and “Victoria Pesti,” AFANASYEVA posted and directed the posting by U.S. Company-1 of hundreds of videos. AFANASYEVA also collected information from and gave instructions to U.S. Company-1 staff. For example, after the March 22, 2024, terrorist attack on a music venue in Moscow, AFANASYEVA asked one of U.S. Company-1’s founders to blame Ukraine and the U.S. for the attack, writing: “I think we can focus on the Ukraine/U.S. angle. . . . [T]he mainstream media spread fake news that ISIS claimed responsibility for the attack yet ISIS itself never made such statements. All terrorists are now detained while they were heading to the border with Ukraine which makes it even more suspicious why they would want to go to Ukraine to hide.”
Between in or about October 2023 and in or about August 2024, RT sent wire transfers to U.S. Company-1 totaling approximately $9.7 million, which represented nearly 90% of U.S. Company-1’s bank deposits from all sources combined. The wires were sent from shell companies in Turkey, the United Arab Emirates, and Mauritius, and were often accompanied by wire notes ascribing the payments to the purchase of electronics. For example, the wire note for a $318,800 wire payment from a shell entity in Turkey to U.S. Company-1 on March 1, 2024, read: “BUYING GOODS-INV.013-IPHONE 15 PRO MAX 512GB.”
Neither U.S. Company-1, nor Founder-1, nor Founder-2 has ever registered with the Attorney General as an agent of a foreign principal.
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KALASHNIKOV, 31, and AFANASYEVA, 27, both of Russia, are charged with conspiracy to violate FARA, which carries a maximum sentence of five years in prison, and conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the Counterintelligence Division of the FBI’s New York Field Office. Mr. Williams also thanked the FBI’s Memphis Field Office, the FBI’s Miami Field Office, the financial investigators of the U.S. Attorney’s Office, and the Department of Justice’s National Security Division for their assistance.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Alexander Li and Juliana Murray are in charge of the prosecution, with assistance from Trial Attorney Brett Reynolds of the Justice Department’s National Security Division Counterintelligence and Export Control Section.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
North Carolina Musician Charged with Music Streaming Fraud Aided by Artificial IntelligenceRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a three-count criminal Indictment charging MICHAEL SMITH in connection with a scheme to create hundreds of thousands of songs with artificial intelligence and use automated programs called “bots” to stream the AI-generated songs billions of times. SMITH fraudulently obtained more than $10 million in royalty payments through his scheme. SMITH was arrested today and will be presented before a U.S. Magistrate Judge in North Carolina.
U.S. Attorney Damian Williams said: “As alleged, Michael Smith fraudulently streamed songs created with artificial intelligence billions of times in order to steal royalties. Through his brazen fraud scheme, Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed. Today, thanks to the work of the FBI and the career prosecutors of this Office, it’s time for Smith to face the music.”
FBI Acting Assistant Director Christie M. Curtis said: “Michael Smith allegedly produced hundreds of thousands of songs with artificial intelligence and utilized automatic features to repeatedly stream the music to generate unlawful royalties to the tune of $10 million. The defendant’s alleged scheme played upon the integrity of the music industry by a concerted attempt to circumvent the streaming platforms’ policies. The FBI remains dedicated to plucking out those who manipulate advanced technology to receive illicit profits and infringe on the genuine artistic talent of others.”
As alleged in the Indictment:[1]
Music can be streamed through music streaming platforms such as Amazon Music, Apple Music, Spotify, and YouTube Music (the “Streaming Platforms”). Each time a song is streamed through one of the Streaming Platforms, the songwriter who composed the song, the musician who performed it, and in certain cases other rights holders, are entitled to small royalty payments. Royalty payments are made proportionately to musicians and songwriters, so that streaming fraud diverts funds from musicians and songwriters whose songs were legitimately streamed by real consumers to those who use automation to falsely create the appearance of legitimate streaming.
SMITH created thousands of accounts on the Streaming Platforms (the “Bot Accounts”) that he could use to stream songs. He then used software to cause the Bot Accounts to continuously stream songs that he owned. At a certain point in the charged time period, SMITH estimated that he could use the Bot Accounts to generate approximately 661,440 streams per day, yielding annual royalties of $1,207,128.
SMITH spread his automated streams across thousands of songs to avoid anomalous streaming as to any single song. SMITH was aware that if, for example, a single song was streamed one billion times, it would raise suspicions at the Streaming Platforms and the music distribution companies that those streams were the result of streaming manipulation. A billion fake streams spread across tens of thousands of songs, however, would be more difficult to detect, because each song would only be streamed a much smaller number of times. As a result, SMITH repeatedly identified the need for more songs as crucial for facilitating the fraud scheme. For example, on or about December 26, 2018, SMITH emailed two coconspirators that, “We need to get a TON of songs fast to make this work around the anti-fraud policies these guys are all using now.”
To obtain the necessary number of songs for his scheme to succeed, SMITH eventually turned to artificial intelligence. In or about 2018, SMITH began working with the Chief Executive Officer of an AI music company (“CC-3”) and a music promoter (“CC-4”) to create hundreds of thousands of songs using artificial intelligence that SMITH could then fraudulently stream. CC-3 soon began providing SMITH with thousands of songs each week that SMITH could upload to the Streaming Platforms and manipulate the streams for. In a 2019 email to SMITH, CC-3 wrote: “Keep in mind what we’re doing musically here... this is not ‘music,’ it’s ‘instant music’ ;).”
CC-3 ultimately provided SMITH with hundreds of thousands of AI songs for which he could manipulate the streams. CC-3’s songs were typically given file names that were a randomized list of letters and numbers, such as “n_7a2b2d74-1621-4385-895d-b1e4af78d860.mp3.”
SMITH then created randomly generated song and artist names for audio files so that they would appear to have been created by real artists rather than artificial intelligence. For example, an alphabetically consecutive selection of 25 of the names of the AI songs SMITH used is as follows: “Zygophyceae,” “Zygophyllaceae,” “Zygophyllum,” “Zygopteraceae,” “Zygopteris,” “Zygopteron,” “Zygopterous,” “Zygosporic,” “Zygotenes,” “Zygotes,” “Zygotic,” “Zygotic Lanie,” “Zygotic Washstands,” “Zyme Bedewing,” “Zymes,” “Zymite,” “Zymo Phyte,” “Zymogenes,” “Zymogenic,” “Zymologies,” “Zymoplastic,” “Zymopure,” “Zymotechnical,” “Zymotechny,” and “Zyzomys.”
Similarly, an alphabetically consecutive selection of 25 of the names of the “artists” of the AI songs SMITH used is as follows: “Calliope Bloom,” “Calliope Erratum,” “Callous,” “Callous Humane,” “Callous Post,” “Callousness,” “Calm Baseball,” “Calm Connected,” “Calm Force,” “Calm Identity,” “Calm Innovation,” “Calm Knuckles,” “Calm Market,” “Calm The Super,” “Calm Weary,” “Calms Scorching,” “Calorie Event,” “Calorie Screams,” “Calvin Mann,” “Calvinistic Dust,” “Calypso Xored,” “Camalus Disen,” “Camaxtli Minerva,” “Cambists Cagelings,” and “Camel Edible.”
SMITH made numerous misrepresentations to the Streaming Platforms in furtherance of the fraud scheme. For example, SMITH repeatedly lied to the Streaming Platforms when he used false names and other information to create the Bot Accounts and when he agreed to abide by terms and conditions that prohibited streaming manipulation. SMITH also deceived the Streaming Platforms by making it appear as if legitimate users were in control of the Bot Accounts and streaming music when, in fact, the Bot Accounts were hard coded to stream SMITH’s music billions of times. SMITH also caused the Streaming Platforms to falsely report billions of streams of his music, even though SMITH knew that those streams were in fact caused by the Bot Accounts rather than real human listeners.
SMITH’s hundreds of thousands of AI-generated songs were streamed by his Bot Accounts billions of times, which allowed him to fraudulently obtain more than $10 million in royalties.
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SMITH, 52, of Cornelius, North Carolina, is charged with wire fraud conspiracy, which carries a maximum sentence of 20 years in prison; wire fraud, which carries a maximum sentence of 20 years in prison; and money laundering conspiracy, which carries a maximum sentence of 20 years in prison.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding work of the FBI.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin Mead are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitutes only allegations, and every fact described therein should be treated as an allegation.
U.S. Attorney Announces Terrorism Charges Against Senior Leaders of HamasRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, Merrick B. Garland, the Attorney General of the United States, Lisa O. Monaco, the Deputy Attorney General of the United States, Christopher A. Wray, the Director of the Federal Bureau of Investigation (“FBI”), Matthew G. Olsen, the Assistant Attorney General for National Security, and Sanjay Virmani, Special Agent in Charge of the FBI Washington Field Office, announced today the unsealing of terrorism, murder conspiracy, and sanctions-evasion charges against six senior leaders of Hamas, a designated foreign terrorist organization. The charges relate to the defendants’ central roles in planning, supporting, and perpetrating the terrorist atrocities that Hamas committed in Israel on October 7, 2023 (the “October 7 Hamas Massacres”), involving the murders and kidnappings of countless innocent civilians, including American citizens, which was the culmination of Hamas’s decades-long campaign of terrorism and violence against Israel and its allies, including American citizens. The defendants are either deceased or remain at large.[1]
U.S. Attorney Damian Williams said: “For decades, Hamas and its leadership have dedicated themselves to the eradication of the State of Israel, and to murdering, maiming, and brutalizing anyone—including dozens of Americans—who stood in their way. The October 7 Hamas Massacres, a depraved act of savagery carried out by Hamas, has, to date, resulted in over 40 American citizens being murdered. This Office has long been dedicated to serving as a bulwark against terrorism and striking blows against its leaders. Our commitment is clear: if you hurt one member of our community, you hurt all of us—and we stand with all victims of Hamas’s reign of terror.”
Attorney General Merrick B. Garland said: “The Justice Department has charged Yahya Sinwar and other senior leaders of Hamas for financing, directing, and overseeing a decades-long campaign to murder American citizens and endanger the national security of the United States. On October 7th, Hamas terrorists, led by these defendants, murdered nearly 1200 people, including over 40 Americans, and kidnapped hundreds of civilians. This weekend, we learned that Hamas murdered an additional six people they had kidnapped and held captive for nearly a year, including Hersh Goldberg-Polin, a 23 year old Israeli American. We are investigating Hersh’s murder, and each and every one of Hamas’ brutal murders of Americans, as an act of terrorism. The charges unsealed today are just one part of our effort to target every aspect of Hamas’ operations. These actions will not be our last.”
Deputy Attorney General Lisa O. Monaco said: “Yahya Sinwar and the other senior leaders of Hamas are charged today with orchestrating this terrorist organization’s decades-long campaign of mass violence and terror—including on October 7th. On that horrible day, Hamas terrorists viciously massacred nearly 1,200 innocent men, women, and children, including over 40 Americans, kidnapped hundreds more, and used sexual violence as a weapon of brutality. Since that horrific day, we have worked to investigate and hold accountable those responsible, and we will not rest until all those who kidnapped or murdered Americans are brought to justice. Our thoughts continue to be with the families of all the victims of this barbaric terrorist attack.”
FBI Director Christopher A. Wray said: “From the moment Hamas launched its horrific attack on October 7, the FBI has been dedicated to identifying and charging those responsible for these heinous crimes. The FBI has and will continue to relentlessly investigate these attacks on civilians, including Americans. Hamas is a Foreign Terrorist Organization with a long history of violence, and the group’s actions have resulted in increased terrorism threats in the U.S. and against American interests throughout the world. Countering terrorism remains our number one priority, and our work continues.”
Assistant Attorney General Matthew G. Olsen said: “The core mission of the National Security Division is to protect Americans from violent terrorists and extremist organizations like Hamas. The atrocities committed by Hamas in Israel on October 7 are intolerable, and the Justice Department will not rest in our pursuit to hold Hamas accountable for perpetrating its campaign of terror, death, and destruction.”
FBI Special Agent in Charge Sanjay Virmani said: “Hamas’s October 7 attack on Israel was a violent massacre in the long history of Hamas’s brutal terrorist reign. The FBI Washington Field Office is determined to continue its work to dismantle Hamas and hold its senior leaders responsible for their conspiracy to plan and perpetrate these heinous acts of terror, including the murder and kidnapping of American citizens.”
According to the allegations contained in the Complaint:[2]
Harakat al-Muqawamah al-Islamiyya, commonly known as Hamas, is a terrorist organization that was founded in 1987, and has been designated as a foreign terrorist organization (“FTO”) by the United States since 1997. From its inception, Hamas’s stated purpose has been to create an Islamic Palestinian state throughout Israel by eliminating the State of Israel through violent holy war, or jihad. Hamas also promotes attacks against the United States and its citizens, and over more than two decades, Hamas has murdered and injured dozens of Americans as part of its campaign of violence and terror.
The defendants charged in the Complaint are all senior leaders of Hamas who have orchestrated, overseen, and supported Hamas’s decades-long campaign of terrorism, including the October 7 Hamas Massacres. They control all aspects of the terrorist organization, including its political and military branches, known as the Politburo and the Izz al-Din al-Qassam Brigades (“al-Qassam Brigades”).
ISMAIL HANIYEH, was the chairman of Hamas’s Politburo from 2017 until his reported death on or about July 31, 2024. Prior to 2017, HANIYEH was the deputy chairman of the Politburo and the leader of Hamas in the Gaza Strip. HANIYEH was based principally in Turkey and Qatar.
YAHYA SINWAR, a/k/a “Abu Ibrahim,” 61, is the leader of Hamas. Previously, beginning in approximately 2017, he was the leader of Hamas in the Gaza Strip, and is one of the founders of the al-Qassam Brigades. SINWAR is based principally in the Gaza Strip.
MOHAMMAD AL-MASRI, a/k/a “Mohammed Deif,” a/k/a “al Khalid al-Deif,” was the commander in chief of the al-Qassam Brigades, a position he held from in or about 2002 until his reported death on or about July 13, 2024. AL-MASRI was based principally in the Gaza Strip.
MARWAN ISSA, a/k/a “Abu Baraa,” was the deputy commander of the al-Qassam Brigades from approximately 2007 until his reported death on or about March 10, 2024. ISSA was based principally in the Gaza Strip.
KHALED MESHAAL, a/k/a “Abu al-Waleed,” 68, was the chairman of Hamas’s Politburo from approximately 2004 to 2017, and is now the head of Hamas’s diaspora office—effectively responsible for Hamas’s official presence outside of the Gaza Strip and the West Bank. MESHAAL is based principally in Qatar.
ALI BARAKA, 57, has been Hamas’s head of National Relations Abroad since approximately 2019, and was previously Hamas’s representative in Lebanon. BARAKA is based principally in Lebanon.
Hamas has pursued its objectives through innumerable acts of brutal terrorist violence, including launching thousands of rockets specifically targeting civilian populations; suicide bombings of restaurants, markets, public transportation systems, and other public spaces; and military-style attacks on towns and residential communities. Hamas’s campaign of terrorism has killed and wounded citizens of Israel, the United States, and many other countries.
On October 7, 2023, Hamas committed its most violent, large-scale terrorist attack to date—the October 7 Hamas Massacres. Hamas targeted civilian populations with a barrage of rockets, before waves of Hamas terrorists breached the border between the Gaza Strip and Israel, infiltrated Israel, and launched attacks on civilians, by land, sea, and air. Hamas sent thousands of armed fighters into southern Israel, where they carried out the massacres of over a thousand people and the kidnappings of more than 200 others. Hamas terrorists attacked civilians, firing handguns, assault rifles, and handheld rocket launchers, in small residential communities in Kfar Aza, Be’eri, Nir Oz, Nahal Oz, Re’im, Holit, Zikim, Kerem Shalom, Sufa, and others; the Israeli town of Sderot; and a music festival held near Re’im; among other places. Armed Hamas operatives attacked and shot civilians, including children, sometimes with machineguns and sometimes at point blank range, and weaponized sexual violence against Israeli women, including through rape and genital mutilation. Hundreds of civilians, including Americans, and Israeli soldiers, were killed and wounded; other victims, including Americans, were kidnapped, taken hostage, and brought into Gaza by Hamas. As of the date of the Complaint, over 40 American citizens were among those murdered, and at least eight American citizens were taken hostage or remain unaccounted for.[3] Most recently, Hamas executed a U.S. citizen who was taken hostage by Hamas during the October 7 Hamas Massacres and remained in captivity until he was murdered.
Hamas raises money to fund its terrorist activities through a variety of methods, including by soliciting and receiving cryptocurrency payments, advertising the ostensible anonymity of such transactions. Since 2019, Hamas’s military wing has used social media and other platforms to call for cryptocurrency contributions from supporters abroad, including in the United States, to Hamas-controlled virtual wallets, explicitly acknowledging that those payments would be used to fund Hamas’s campaign of violence. Through these mechanisms, Hamas has received tens of millions of dollars in cryptocurrency payments to fund its activities.
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The Complaint unsealed today charges each of the defendants with: (1) conspiring to provide material support to a foreign terrorist organization resulting in death, which carries a maximum penalty of life in prison; (2) conspiring to provide material support for acts of terrorism resulting in death, which carries a maximum penalty of life in prison; (3) conspiring to murder U.S. nationals outside the United States, which carries a maximum penalty of life in prison; (4) conspiring to bomb a place of public use resulting in death, which carries a maximum penalty of death or life in prison; (5) conspiring to use weapons of mass destruction resulting in death, which carries a maximum penalty of death or life in prison; (6) conspiring to finance terrorism, which carries a maximum penalty of 20 years in prison; and (7) conspiring to violate the International Emergency Economic Powers Act, which carries a maximum penalty of 20 years in prison.
The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants would be imposed by a judge.
Mr. Williams praised the outstanding investigative work of the FBI Washington Field Office, Counterterrorism Division, and the FBI’s New York Joint Terrorism Task Force. Mr. Williams also thanked the FBI Legal Attaché Office in Tel Aviv, Israel, the FBI Victim Services Division, and the Department of Justice’s National Security Division, Counterterrorism Section for their assistance.
This case is being handled by the Office’s National Security and International Narcotics Unit and Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Sam Adelsberg, Jacob H. Gutwillig, Sarah L. Kushner, Michael D. Lockard, Ben Arad, and Samuel L. Raymond are in charge of the prosecution, with assistance from Trial Attorneys Alicia Cook and C. Alexandria Bogle of the Counterterrorism Section.
The charges in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] Since the filing of this Complaint, three of the defendants—Ismail Haniyeh, Mohammad Al-Masri, a/k/a “Mohammed Deif,” a/k/a “al Khalid al-Deif,” and Marwan Issa, a/k/a “Abu Baraa”—are reported to have been killed.
[2] As the introductory phrase signifies, the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
[3] Since the filing of this Complaint, two of the original ten individuals believed to have been taken hostage or who otherwise were unaccounted for have been confirmed to have been murdered.
New York Bank Manager Sentenced to 114 Months for Scheme to Hire A Hitman to Murder Her Own Brother-In-LawRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that RESHMA MASSARONE, a former New York bank manager, was sentenced yesterday to 114 months in prison for plotting to hire a hitman to murder her own brother-in-law. MASSARONE previously pled guilty to murder-for-hire before U.S. District Judge Cathy Seibel, who imposed the sentence.
U.S. Attorney Damian Williams said: “The defendant devised a chilling plan to have a member of her own family murdered for the low price of ten thousand dollars. Her plan was unthinkably heartless. For this depraved crime, Reshma Massarone will spend 114 months in federal prison.”
According to the Complaint and the Indictment filed against the defendant, other documents filed in federal court, and statements made in public court proceedings:
Between July 20, 2023, and August 16, 2023, the defendant plotted with an individual (“Individual-1”) to hire a hitman to murder her own brother-in-law (the “Victim”), in exchange for $10,000. But Individual-1 was a member of a foreign police force, and he became an undercover law enforcement agent to develop evidence against MASSARONE that she was plotting to hire a hitman to have the Victim murdered.
MASSARONE exchanged with Individual-1 dozens of messages on social media and participated in numerous phone calls with Individual-1, imploring Individual-1 to murder the Victim or hire someone who would. For example, in Facebook Messenger communications, when Individual-1 told MASSARONE that the plan to murder her brother-in-law was set for the next day, MASSARONE responded that if Individual-1 “take[s] care of business,” then Individual-1 would get paid. MASSARONE also told Individual-1 that she had other “jobs” for him, and swore on her kids’ lives that Individual-1 would get paid if he “[got] rid” of the Victim for her. After that, MASSARONE told the Individual-1, “No more text.”
As part of MASSARONE’s plan, she wired $2,500 to Individual-1 to give to the hitman as a down payment for the Victim’s murder. Video surveillance at a Western Union captured MASSARONE counting 25 $100 bills, for a total amount of $2,500.
After MASSARONE wired the money to Individual-1, MASSARONE continued to plan the Victim’s murder. When Individual-1 told MASSARONE that the hitman’s plan was to shoot the Victim and that there was “no turning back,” MASSARONE replied, “Right. No turning back.”
The Victim was never murdered. As time passed and the Victim remained alive, MASSARONE grew impatient with Individual-1. MASSARONE urged Individual-1 to murder the Victim, suggesting that “rat poison can do a great job.” MASSARONE told Individual-1, “You is all talk and no action,” and “Come on do the thing and I will take care of you.” MASSARONE threatened to find someone else to murder the Victim, stating, “Either way, if I find somebody to do the job you’re going to get blame, so cut the bullshit and let’s get it done.”
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In addition to the prison sentence, MASSARONE, 40, of Pine Bush, New York, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding work of the Drug Enforcement Administration, New York City Police Department, New York State Police, Homeland Security Investigations, and Internal Revenue Service.
The case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Jared Hoffman is in charge of the prosecution.
Bronx District Leader and Board of Elections Employee Charged with Bribery, Extortion, Fraud, and Identity Theft OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”); and Jocelyn E. Strauber, the Commissioner of the New York City Department of Investigation (“DOI”), announced the unsealing of an Indictment charging NICOLE TORRES, an elected district leader in the Bronx and an employee of the New York City Board of Elections (the “NYC-BOE”), with illegally demanding payments from Bronx residents to herself and a local organization (the “Bronx Organization”) in exchange for selecting those individuals as poll workers. TORRES is also charged with falsifying documents to make it appear that certain individuals had worked as poll workers on particular dates, when, in truth and fact, they had not. TORRES and other members of the scheme then allegedly split the fraudulently obtained paychecks issued to the no‑show poll workers. TORRES was arrested yesterday morning and presented yesterday afternoon before U.S. Magistrate Judge Stewart D. Aaron. The case has been assigned to U.S. District Judge Mary Kay Vyskocil.
U.S. Attorney Damian Williams said: “As alleged, Nicole Torres, an elected official and City employee, brazenly abused her power and lined her own pockets for over five years by demanding that poll workers pay her bribes in order to work as a poll worker and by falsifying records to make it look like certain individuals worked as poll workers during an election even though they never did. This Office is committed to holding elected officials and public employees accountable if they abuse their positions of trust and break the law.”
Acting Assistant Director in Charge Christie M. Curtis said: “For at least five years, District Leader Nicole Torres allegedly abused her position within the Board of Elections by charging Bronx residents a fee to work as poll workers and misrepresenting poll workers’ presence on assigned shifts to fraudulently collect their salaries. Elected officials have a duty to act within the community’s best interests, not steal thousands of dollars from this city’s government and its citizens. The FBI will never tolerate corrupt individuals who selfishly manipulate their authority at the cost of those they are expected to serve.”
DOI Commissioner Jocelyn E. Strauber said: “As charged, this City Board of Elections employee and elected district leader abused her authority for personal profit. She allegedly demanded payments from prospective poll workers whom she was responsible for selecting, and pocketed salaries that were paid to no-show poll workers based on documents that she falsified, according to the indictment. When a City employee uses their trusted position to illegally enrich themselves, as alleged here, they undermine public trust and confidence in government and unfairly tarnish the reputations of those who do their jobs with integrity each and every day. I thank the U.S. Attorney’s Office for the Southern District of New York and the FBI for their partnership on this important investigation.”
According to the allegations contained in the Indictment:[1]
Since in or about 2019, TORRES has been a district leader for New York’s 81st Assembly District in the Bronx, New York. In addition, since at least in or about 2016, TORRES has been an employee of the NYC-BOE. While working at the NYC-BOE, TORRES has, at times, been responsible for ensuring that poll workers are paid for their work during early voting and election day. TORRES abused her power as a district leader and a NYC‑BOE employee to engage in two illegal schemes.
First, from at least in or about 2019, up to and including in or about August 2024, TORRES agreed to require and required Bronx residents to pay a sum of money, usually $150, either to her or to the Bronx Organization in exchange for TORRES selecting those individuals as poll workers for upcoming elections. Both the Bronx Organization and TORRES profited from the scheme. TORRES personally obtained at least approximately $28,000 in illegal payments. TORRES received the payments, often in the amount of $150, through mobile payment applications, money orders, and checks. In certain instances, TORRES received money orders or checks that were written out to the Bronx Organization, and TORRES altered the payee line on those money orders or checks to say “Nicole Torres” so that she could deposit that money into her personal bank account.
Second, from at least in or around 2018, up to and including in or about August 2024, TORRES agreed to falsify the Forms Booklet—which is a NYC‑BOE record in which poll workers record their attendance at a particular poll site—to make it appear that certain individuals (the “No‑Show Poll Workers”) worked as poll workers during early voting and election day when, in truth and fact and as TORRES well knew, those individuals did not work on those dates. TORRES often worked with coordinators who oversaw the Forms Booklets at specific poll sites. These coordinators signed in No-Show Poll Workers in the Forms Booklets, frequently at TORRES’s direction. TORRES and her co‑conspirators then received the salaries for the No‑Show Poll Workers—sometimes through the mail—and split the fraudulently obtained salaries among themselves. While working at the NYC‑BOE, at relevant times, TORRES was responsible for ensuring that poll workers, including the No-Show Poll Workers, were paid. In furtherance of the scheme, TORRES communicated with her co-conspirators in person, on phone calls, and through text messages. Through these communications, TORRES and her co-conspirators, among other things, shared the personal identifying information of the No-Show Poll Workers, discussed which co-conspirator should falsely sign the No-Show Poll Workers’ names in the Forms Booklets, and discussed how to split the fraudulently obtained salaries of the No-Show Poll Workers. Based on her participation in the scheme, TORRES personally obtained at least approximately $36,000 in fraud proceeds, and her co-conspirators personally obtained money as well.
From in or about March 2021 through in or about April 2021, TORRES and a co‑conspirator (“CC-1”) used, transferred, and possessed the name of a No‑Show Poll Worker when they listed that No‑Show Poll Worker as having worked as a poll worker in March 2021 even though that No‑Show Poll Worker did not work in that month. Torres and CC-1 then split the purported salary that the NYC‑BOE issued to that No‑Show Poll Worker.
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TORRES, 43, of Bronx, New York, is charged with one count of conspiracy to commit extortion under color of official right, one count of extortion under color of official right, one count of conspiracy to commit honest services wire fraud, one count of honest services wire fraud, one count of conspiracy to commit mail fraud, one count of mail fraud, and one count of aggravated identity theft. The first six counts each carry a maximum sentence of 20 years in prison, and the seventh count carries a mandatory term of imprisonment of two years.
Mr. Williams praised the outstanding investigative work of FBI and DOI.
The case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Benjamin M. Burkett and Rebecca T. Dell are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Former Town of Cortlandt Employee and Business Owner Plead Guilty to $2.4 Million Environmental Crime SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the guilty pleas of GLENN GRIFFIN, the owner, president, and principal of Griffin’s Landscaping Corporation, and ROBERT DYCKMAN, the former Assistant General Foreman for the Town of Cortlandt, in a scheme in which DYCKMAN gave GRIFFIN unauthorized access to the Town of Cortlandt’s Arlo Lane facility to dump loads of unauthorized materials. After dumping these loads, GRIFFIN received payments from the Town for hauling away the very materials that GRIFFIN had illegally dumped. GRIFFIN also pled guilty to a separate bid-rigging scheme. GRIFFIN and DYCKMAN pled guilty today before U.S. Magistrate Judge Victoria Reznik.
U.S. Attorney Damian Williams said: “Robert Dyckman, a former Town of Cortlandt employee, used his important public position to enrich himself and damage public land and fragile wetlands by allowing Glenn Griffin, a business owner and president, to illegally dump harmful, unauthorized materials on public property. Brazenly, Griffin then billed and received payments from the Town for removing and hauling away the very materials that he had illegally dumped. Today, thanks to our law enforcement partners and the dedicated prosecutors of this Office, Griffin and Dyckman have admitted to their crimes and must pay $2.4 million in restitution to their victims. Today’s pleas are a reminder that this Office will bring to justice any public official or business leader who defrauds the public and causes damage to our environment.”
According to allegations in the Indictment and Superseding Informations and statements made in public filings and court proceedings:
Illegal Dumping Scheme
From 2018 until February 2020, GRIFFIN and DYCKMAN engaged in an unauthorized dumping scheme. DYCKMAN gave GRIFFIN and his employees unauthorized access to Arlo Lane, a Cortlandt facility, to dump hundreds of large truckloads of unauthorized materials such as thick concrete, cement with rebar, tiles, bricks, large rocks, and soil. After the illegal dumping, GRIFFIN billed and received payments from the Town of Cortlandt for removing and hauling away the very materials that GRIFFIN had illegally dumped at Arlo Lane with DYCKMAN’s assistance.
DYCKMAN generally allowed GRIFFIN and his employees access to Arlo Lane on Saturdays or after working hours. To carry out the scheme, DYCKMAN would attempt to clear senior Town of Cortlandt management away from Arlo Lane around the time of the unauthorized dumping. When DYCKMAN arranged for a subordinate Town of Cortlandt worker to work overtime when GRIFFIN was dumping unauthorized loads, DYCKMAN would falsely record the worker’s overtime as having occurred during the week in order to conceal the scheme.
In exchange for access to Arlo Lane, GRIFFIN paid DYCKMAN cash bribes.
GRIFFIN and DYCKMAN have agreed to pay the Town of Cortlandt and the Westchester Land Trust, a 501(c)(3) tax-exempt organization which owns damaged wetlands abutting the Town of Cortlandt’s Arlo Lane property, a total of $2.4 million to remediate and restore their property following GRIFFIN and DYCKMAN’s criminal conduct.
Bid-Rigging Scheme
Between 2015 and 2018, GRIFFIN also engaged in a bid-rigging scheme. GRIFFIN defrauded the village of Croton-on-Hudson for work on its schools, and the hamlet of Verplanck for work at its fire department. GRIFFIN made sham, non-competitive, and inflated bids on behalf of entities that GRIFFIN did not work for or have authorization to submit bids on behalf of, so that GRIFFIN would be the low bidder in a pool of purportedly competitive bids and receive public money for work on the projects. Based on these sham, non-competitive, and inflated bids, GRIFFIN was awarded contracts with a combined value exceeding $133,000.
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GRIFFIN, 55, of Cortlandt Manor, New York pled guilty to one count of conspiracy to commit bribery and one count of conspiracy to commit wire fraud, each of which carries a maximum sentence of 5 years in prison. DYCKMAN, 52, of Verplanck, New York, pled guilty to one count of conspiracy to commit mail fraud, which carries a maximum sentence of 5 years in prison. GRIFFIN and DYCKMAN are both scheduled to be sentenced by U.S. District Judge Vincent L. Briccetti on December 5, 2024.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation and the Westchester County Police Department in this investigation. Mr. Williams also thanked the Westchester County District Attorney’s Office and the New York City Department of Investigation for their assistance in the investigation.
This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys David R. Felton and James McMahon are in charge of the prosecution.
U.S. Attorney Announces Consent Decree with Legacy Builders for Violating Lead Paint Safety RegulationsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Lisa F. Garcia, the Regional Administrator for Region 2 of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States filed a civil lawsuit against LEGACY BUILDERS/DEVELOPERS CORP. (“LEGACY”) alleging violations of the Toxic Substances Control Act (“TSCA”) and EPA’s Renovation, Repair, and Painting Rule (“RRP Rule”). The U.S. simultaneously entered into a Consent Decree resolving that lawsuit. The Consent Decree includes a $168,000 civil penalty and requires LEGACY to take steps to mitigate potential harms caused by its conduct.
U.S. Attorney Damian Williams said: “Legacy Builders failed to follow lead-safe work regulations designed to protect building occupants—including children—and workers from toxic lead paint dust generated during apartment renovations. This lawsuit is another example of our commitment to ensure that renovation firms are held responsible for violating these important safety rules.”
EPA Regional Administrator Lisa F. Garcia said: “Legacy Builders/Developers Corp. is being held accountable for not complying with rules that are designed to protect residents as well as workers and are a key part of protecting public health. The company’s activities put tenants, the public, and its employees at risk of exposure to lead dust hazards. Exposure to lead-based paint can have serious health impacts and remains a common source of lead poisoning in children. EPA will continue to be vigilant and ensure we reduce all risk of lead exposure.”
TSCA and the RRP Rule impose safety requirements to minimize the risk that young children, tenants, and renovation workers are exposed to toxic lead paint dust during renovations of residential buildings. Exposure to lead dust is the most common cause of lead poisoning, which can lead to severe, irreversible health problems, particularly in children. Lead poisoning can affect children’s brains and developing nervous systems, causing reduced IQ, learning disabilities, and behavioral problems.
As alleged in the U.S. Complaint filed in the district court:
LEGACY performed renovation work at hundreds of residential apartments across five building sites in Manhattan between 2016 and 2020. In September 2017, EPA inspected a LEGACY worksite and found that LEGACY had failed to contain lead dust. This was consistent with inspections in April and August 2017 of the same LEGACY worksite by the New York City Department of Health and Mental Hygiene, where inspectors observed dust and debris in hallways, common areas, and the vacant apartments being renovated, and collected dust wipe samples containing lead in excess of federal standards. Following further investigation, EPA determined that LEGACY lacked required RRP Rule certifications and, at multiple worksites, failed to train its workers on lead-safe work practices, failed to follow lead-safe work practices, failed to inform building owners and occupants of the risks of lead poisoning during that renovation, and failed to maintain records necessary to demonstrate compliance with lead-safe work practice rules. When LEGACY was informed of these issues, it provided the EPA with inaccurate information about its RRP Rule compliance.
In the Consent Decree, LEGACY admits, acknowledges, and accepts responsibility for the following conduct:
- Between 2016 and 2020, LEGACY performed renovation work at more than one hundred residential apartments at five different building sites in Manhattan. LEGACY failed to comply with requirements of the RRP Rule on numerous occasions at these renovation projects. Among other things:
- LEGACY failed to provide on-the-job lead safety training to workers, in violation of the RRP rule.
- LEGACY failed to adequately contain construction dust, including dust containing lead in excess of levels permitted under the RRP Rule, and failed to conduct the required post-renovation cleaning verification, in violation of the RRP rule.
- LEGACY failed to post signs clearly defining its work area and warning occupants and other persons not involved in renovation activities to remain outside of the work area, in violation of the RRP Rule.
- LEGACY failed to provide a lead-hazard information pamphlet to the owner or occupants of the building before commencing work, in violation of the RRP Rule.
- LEGACY failed to maintain documentation showing that it complied with lead-safe work practices, in violation of the RRP Rule.
- Additionally, between June 2016 and August 2017, LEGACY performed renovation work covered by the RRP Rule at two of these worksites without possessing the firm certification required by the RRP Rule for renovation firms performing such work and without assigning a certified renovator to oversee those projects.
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Pursuant to the Consent Decree, LEGACY will pay a penalty of $168,000, an amount based on the company’s documented inability to pay the full civil penalty for which it otherwise would be liable. The Consent Decree requires LEGACY to comply with safe work practices and other RRP Rule requirements in the future. Additionally, to mitigate the effects of the violations, among other things, LEGACY will conduct education sessions for residents of the five buildings on the hazards of lead-based paint and methods of minimizing potential exposures, and LEGACY will offer to conduct training for maintenance staff at these buildings on lead-hazard reduction and common issues pertaining to the use of lead-safe work practices in day-to-day operations. Failure to comply with the Consent Decree will give rise to significant additional penalties.
To provide public notice and afford members of the public the opportunity to comment on the Consent Decree, the Consent Decree will be lodged with the District Court for a period of at least 30 days before it is submitted for the Court’s approval.
Mr. Williams thanked the attorneys and enforcement staff at EPA Region 2 for their critical work on this matter.
This case is being handled by the Environmental Protection Unit of the Office’s Civil Division. Assistant U.S. Attorneys Ilan Stein and Samuel Dolinger are in charge of the case.
- Between 2016 and 2020, LEGACY performed renovation work at more than one hundred residential apartments at five different building sites in Manhattan. LEGACY failed to comply with requirements of the RRP Rule on numerous occasions at these renovation projects. Among other things:
Former Congressional Candidate Charged with Violating Campaign Finance LawsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment today charging MICHELLE BOND with conspiring to cause and causing unlawful campaign contributions in connection with her unsuccessful run for Congress in 2022. BOND will be presented today before U.S. Magistrate Judge Ona T. Wang.
U.S. Attorney Damian Williams said: “As alleged, Michelle Bond and her co-conspirator romantic partner attempted to fund her campaign for the U.S. House of Representatives by illegally using hundreds of thousands of dollars from corporate coffers, among other sources, and then lying to Congress and others to cover it all up. Misconduct by those campaigning for public office undermines public trust in American elections and in representative government more broadly. This Office is committed to holding elected officials and candidates accountable if they break the law.”
FBI Acting Assistant Director Christie M. Curtis said: “Michelle Bond, a former congressional candidate, allegedly financed her campaign with illicitly obtained funds then made calculated efforts to conceal her misconduct, including lying to Congress about the deposits’ origin. Attempting to start a hopeful career in our government using unlawful transactions and lies erodes the integrity and credibility of our legislative system. Investigating all forms of corruption remains a top priority of the FBI, as those seeking to hold governing positions are expected to comport themselves honestly and transparently to preserve public confidence.”
As alleged in the Indictment:[1]
In 2022, BOND—then a high-level executive at a digital assets trade group (the “Trade Group”)—ran for a seat in the U.S. House of Representatives. BOND sought to represent New York’s first congressional district, which comprises the eastern portion of Long Island.
Shortly after launching her congressional campaign in May 2022, BOND’s romantic partner (“CC-1”)—then a high-level executive at a Bahamas-based subsidiary of a now-defunct cryptocurrency exchange (the “Exchange”)—orchestrated a sham consulting agreement between BOND and the Exchange, pursuant to which BOND was paid $400,000. BOND then used that money to illegally finance her campaign. Further, between June and August 2022, CC-1 wired hundreds of thousands of dollars to BOND’s personal bank account, which BOND then used to illegally fund her campaign. CC-1 and BOND discussed how CC-1 would pay the expenses for BOND’s campaign, and CC-1 was aware that BOND was using CC-1’s money to make large loans and contributions to her campaign.
BOND and CC-1’s conduct violated federal campaign finance laws prohibiting corporate contributions, excessive contributions by an individual, and conduit (or straw) contributions. BOND attempted to conceal her and CC-1’s conduct by, among other things, making false statements to a congressional committee and the Federal Election Commission, and lying to her employer at that time. For example, in a financial disclosure form filed with the House Ethics Committee, BOND described the $400,000 Exchange Payment as consulting income. However, in talking points BOND prepared for a meeting with the board of her Trade Group, BOND acknowledged that she did not work for the Exchange and that the Exchange gave the money for her campaign.
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BOND, 45, of Potomac, Maryland, is charged with one count of conspiracy to cause unlawful campaign contributions; one count of causing and accepting excessive campaign contributions; one count of causing and receiving an unlawful corporate contribution; and one count of causing and receiving a conduit contribution. Each of the crimes charged carries a maximum sentence of five years in prison.
The statutory maximum sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the FBI.
This case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Stephanie Simon and Sheb Swett are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment constitutes only allegations, and every fact described herein should be treated as an allegation.
Queens Man Arrested for Operating as an Illegal Agent of the Chinese Government in the United StatesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a Complaint charging YUANJUN TANG, a naturalized citizen of the U.S. and resident of Flushing, Queens, with acting and conspiring to act in the U.S. as an unregistered agent of the People’s Republic of China (“PRC”) and making materially false statements to the FBI. TANG was arrested today in Flushing, Queens, and was presented this afternoon before U.S. Magistrate Judge Ona T. Wang.
U.S. Attorney Damian Williams said: “As alleged, for years, Yuanjun Tang used his position as a leader among pro-democracy activists in the U.S. to collect information for the Chinese government and to report on people critical of the PRC and events conducted in support of democracy. Today’s charges reflect this Office’s commitment to combating the repressive and illegal use of foreign agents in the U.S. to sow fear and distrust within our communities and subvert our country’s most basic freedoms.”
Acting Assistant Director in Charge Christie Curtis said: “Yuanjun Tang conspired with the PRC's Ministry of State Security, operating covertly to further the interests of a foreign power at the expense of our nation's security. This behavior is not just illegal; it is harmful to the sovereignty of the United States, and we will not stand for it. Let this serve as a clear warning: the FBI will hunt down and hold accountable those who seek to betray our country.”
As alleged in the Complaint unsealed today in Manhattan federal court:[1]
TANG is a former PRC citizen who was imprisoned in the PRC for his activities as a dissident opposing the one-party authoritarian political system controlled by the Chinese Communist Party (“CCP”), the PRC’s sole ruling party. In or about 2002, TANG defected to Taiwan; he was subsequently granted political asylum in the U.S. and has since resided in New York City, where he has regularly participated in events with fellow PRC dissidents and leads a nonprofit dedicated to promoting democracy in China.
Between at least in or about 2018 and in or about June 2023, TANG acted in the U.S. as an agent of the PRC by completing tasks at the direction of the PRC’s Ministry of State Security (“MSS”), which is the PRC’s principal civilian intelligence agency. The MSS is responsible for, among other things, the PRC’s foreign intelligence, counterintelligence, espionage, and political security functions.
Specifically, through a particular email account, encrypted chats, text messages, and audio and video calls, TANG regularly received instructions from and reported to an MSS intelligence officer regarding individuals and groups viewed by the PRC as potentially adverse to the PRC’s interests, including prominent U.S.-based Chinese democracy activists and dissidents. He also traveled at least three times for face-to-face meetings with MSS intelligence officers and helped the MSS infiltrate a group chat on an encrypted messaging application used by numerous PRC dissidents and pro-democracy activists to communicate about pro-democracy issues and express criticism of the PRC government. Law enforcement recovered instructions TANG received from the MSS and photographs, videos, and documents that he collected or created for transmission to the MSS from numerous electronic devices and accounts belonging to TANG.
TANG also made materially false statements to the FBI. He falsely claimed that he was no longer able to access an email account through which he had communicated with his MSS handler through draft emails.
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TANG, 67, of Flushing, Queens, is charged with one count of conspiring to act as an agent of a foreign government without notifying the Attorney General, which carries a maximum sentence of five years in prison; one count of acting as an agent of a foreign government without notifying the Attorney General, which carries a maximum sentence of 10 years in prison; and one count of false statements, which carries a maximum sentence of five years in prison.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and thanked the Department of Justice’s National Security Division, Counterintelligence and Export Control Section, for their assistance.
This case is being handled by the Office’s National Security and International Narcotics Trafficking Unit. Assistant U.S. Attorney Jane Yumi Chong is in charge of the prosecution, with assistance from Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint constitutes only allegations, and every fact described herein should be treated as an allegation.
New York Man Arrested for Operating as an Illegal Agent of the Chinese Government in the United StatesRead the Press Release
Yuanjun Tang, 67, a naturalized citizen of the United States and resident of Queens, New York, was charged by criminal complaint with acting and conspiring to act in the United States as an unregistered agent of the People’s Republic of China (PRC) and making materially false statements to the FBI. Tang was arrested today in Flushing, Queens, and will be presented this afternoon.
According to court documents, Tang is a former PRC citizen who was imprisoned in the PRC for his activities as a dissident opposing the one-party authoritarian political system controlled by the Chinese Communist Party (CCP), the PRC’s sole ruling party. In or about 2002, Tang defected to Taiwan; he was subsequently granted political asylum in the United States and has since resided in New York City, where he has regularly participated in events with fellow PRC dissidents and leads a nonprofit dedicated to promoting democracy in China.
Between at least in or about 2018 and in or about June 2023, Tang acted in the United States as an agent of the PRC by completing tasks at the direction of the PRC’s Ministry of State Security (MSS), which is the PRC’s principal civilian intelligence agency. The MSS is responsible for, among other things, the PRC’s foreign intelligence, counterintelligence, espionage and political security functions.
Specifically, through a particular email account, encrypted chats, text messages and audio and video calls, Tang regularly received instructions from and reported to an MSS intelligence officer regarding individuals and groups viewed by the PRC as potentially adverse to the PRC’s interests, including prominent U.S.-based Chinese democracy activists and dissidents. He also traveled at least three times for face-to-face meetings with MSS intelligence officers and helped the MSS infiltrate a group chat on an encrypted messaging application used by numerous PRC dissidents and pro-democracy activists to communicate about pro-democracy issues and express criticism of the PRC government. Law enforcement recovered instructions Tang received from the MSS and photographs, videos and documents that he collected or created for transmission to the MSS from numerous electronic devices and accounts belonging to Tang.
Tang also made materially false statements to the FBI. He falsely claimed that he was no longer able to access an email account through which he had communicated with his MSS handler through draft emails.
Tang is charged with one count of conspiring to act as an agent of a foreign government without notifying the Attorney General, which carries a maximum penalty of five years in prison; one count of acting as an agent of a foreign government without notifying the Attorney General, which carries a maximum penalty of 10 years in prison; and one count of making false statements, which carries a maximum penalty of five years in prison. If convicted, a federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Damian Williams for the Southern District of New York and Executive Assistant Director Robert Wells of the FBI’s National Security Branch made the announcement.
The FBI is investigating the case.
Assistant U.S. Attorney Jane Yumi Chong for the Southern District of New York and Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.
A criminal complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Owner of Insurance Firm Sentenced to 10 Years in Prison for $40 Million Scheme to Steal Client Healthcare Funds and Defraud LendersRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that ANTHONY RICCARDI, an owner and manager of the Connecticut insurance firm Employee Benefit Solutions LLC (“EBS”), was sentenced to 10 years in prison for conspiring to commit wire fraud and bank fraud. Between 2015 and 2019, RICCARDI and his co-conspirators used EBS as part of a widespread, $40 million scheme to misappropriate and steal client healthcare funds and defraud multiple lenders. RICCARDI previously pled guilty on February 21, 2023, before U.S. District Judge Philip M. Halpern, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “For years, Anthony Riccardi schemed to abuse his position of trust by stealing millions in fiduciary money that was meant to pay for important employee healthcare expenses. He used this stolen money to fund a lavish lifestyle that included luxury cars and a sprawling mansion. To keep the scheme going, Riccardi also defrauded lenders out of millions. Today’s sentence underscores that no matter how complex the scheme, those who use their positions defraud others and enrich themselves will answer for their crimes.
According to the Indictment, the Complaint, other court filings, and statements made during court proceedings:
From at least 2015 and continuing through 2019, RICCARDI was the 50% co-owner and Executive Vice President of EBS, which offered a variety of healthcare insurance-related services to clients. EBS, among other things, provided third party healthcare claims administration (“TPA”) services to clients that elected to “self-fund” (or self-insure) their employee healthcare plans. As a TPA, EBS would purportedly administer, process, and pay healthcare claims for its clients’ employees in exchange for an administrative fee.
Between at least 2015 and continuing through 2019, EBS represented an automobile dealership chain (“Company-1”) headquartered in Westchester County, New York. EBS served as a TPA for Company-1’s self-funded employee healthcare program and purported to process and pay claims to medical providers that treated Company-1’s employees. To do this, EBS generated bimonthly “check register” invoices for Company-1 that listed all employee healthcare expenses from healthcare providers during that two-week period. EBS also administered a bank account on Company-1’s behalf for the express purpose of paying Company-1 healthcare claims. Company-1 would fund each check register by paying the invoiced amount, expecting that EBS would promptly pay the claims to the healthcare providers. During this period, Company-1 transferred approximately $26 million to EBS for the payment of healthcare claims.
In reality, a significant number of purported checks listed on the EBS “check register” invoices were never actually deposited by the healthcare providers. Instead, approximately $17.87 million in Company-1 healthcare payments were misappropriated with the overwhelming majority simply transferred by EBS into its own operating account, where they were used for non-healthcare expenses by the managers and owners of EBS. For example, a review of bank records indicates that Company-1 healthcare funds were used by RICCARDI and his co-conspirators to pay their home mortgage expenses as well as a personal credit card account with expenses relating to boating, luxury cars, and golf.
EBS, through RICCARDI and his co-conspirators, made decisions on what few Company-1 healthcare claims they did pay based on which healthcare providers were likely to complain if they did not receive payment or if the claims were connected to Company-1 executives.
The “check registers” sent to Company-1 also contained millions of dollars in fraudulent or inflated healthcare claims that were eventually paid by Company-1. EBS routinely inflated the Company-1 check registers at the direction of RICCARDI and his co-conspirators. Such efforts were typically accomplished through RICCARDI and his co-conspirators instructing others to manually create fraudulent entries in the EBS claims processing software, including fake claims under the name of a business controlled by RICCARDI. RICCARDI and his co-conspirators also took steps to conceal their fraud from Company-1 by creating and sending manipulated and fabricated bank statements and checks to create the appearance that healthcare claims were being paid by EBS, when in reality, they were not.
By mid-2017, as EBS buckled under mounting outstanding fiduciary obligations, RICCARDI and his co-conspirators began an elaborate effort to conceal and perpetuate the ongoing fraud on Company-1 by applying for multiple fraudulent bank loans and merchant cash advances designed in part to pay various fiduciary obligations that EBS owed to Company-1. RICCARDI and his co-conspirators fraudulently applied for and received millions of dollars in loans under the auspices of financing the purchase of upgraded billing software for EBS, which included RICCARDI and his co-conspirators submitting fabricated invoices from a fake company that supposedly sold the billing software.
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In addition to the prison term, RICCARDI, 46, of New Canaan, Connecticut, was sentenced to three years of supervised release. He was additionally ordered to pay $14,870,653.36 in restitution and forfeit $2,000,000.00.
RICCARDI’s co-defendant, Patricia Riccardi, was previously sentenced to 30 months in prison following her guilty plea to one count of conspiring to commit wire fraud and bank fraud before Judge Halpern.
RICCARDI’s co-conspirator, Erin Verespy, was previously sentenced to 66 months in prison following her guilty plea to one count of conspiring to commit wire fraud and bank fraud before U.S. District Judge Cathy Seibel.
Mr. Williams praised the outstanding investigative work of the U.S. Postal Inspection Service and the Special Agents of the U.S. Attorney’s Office. Mr. Williams also thanked the U.S. Department of Labor, Employee Benefits Security Administration; the U.S. Department of Labor, Office of Inspector General; and the U.S. Secret Service, which are assisting in the investigation, as well as the U.S. Attorney’s Office for the District of Connecticut.
The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Nicholas S. Bradley is in charge of the prosecution.
U.S. Attorney Announces $600,000 False Claims Act Settlement with Medical Practice and Its Owners for Improper Medicare and Medicaid BillingRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Naomi Gruchacz, the Special Agent in Charge of the New York Regional Office of the Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced today that the United States has filed and simultaneously settled a civil fraud lawsuit against ORANGE MEDICAL CARE, P.C. (“ORANGE MEDICAL”) and its owners, ASHIKKUMAR A. RAVAL and MANISH A. RAVAL (together, the “RAVALS” and with ORANGE MEDICAL, the “Defendants”).
The RAVALS are physicians who own and operate ORANGE MEDICAL, a family medicine practice that provides primary care services to patients in Newburgh, New York. The settlement resolves claims that ORANGE MEDICAL and the RAVALS fraudulently billed Medicare and Medicaid by submitting claims for primary care services that were not rendered or supervised by the physician identified in the claim for payment and had, in fact, been rendered by non-credentialed providers.
Under the settlement approved Saturday, August 17, 2024, by U.S. District Judge Paul Gardephe, ORANGE MEDICAL and the RAVALS will pay $268,800 to the U.S. and have admitted and accepted responsibility for conduct alleged in the Complaint as further described below. ORANGE MEDICAL and the RAVALS have also agreed to pay $331,200 to the State of New York to resolve the State of New York’s claims, for a total recovery of $600,000. The settlement amount is based on the Office’s and the State of New York’s assessment of ORANGE MEDICAL’s and the RAVALS’ ability to pay based on the financial information they provided. The parties have also executed a Consent Judgment in the amount of $1,646,835, which may be enforced if the Defendants do not make the payments required under the settlement agreement.
U.S. Attorney Damian Williams said: “Orange Medical and the Ravals submitted false claims to Medicare and Medicaid, failing to accurately identify who was involved in their patients’ treatment. This Office is committed to ensuring that individuals and entities billing federal health care programs do so in an honest manner.”
HHS-OIG Special Agent in Charge Naomi Gruchacz said: “As a part of this settlement, the defendants acknowledged that Orange Medical obtained funds from the Medicare and Medicaid programs for claims that did not comply with those programs’ billing rules. Individuals and entities that participate in the federal health care system are required to obey the laws meant to preserve the integrity of program funds and the provision of appropriate, quality services to patients.”
As alleged in the Complaint filed in Manhattan federal court:
From November 2006 through December 2022, ORANGE MEDICAL and the RAVALS submitted claims to Medicare and Medicaid that listed one of the RAVALS as the rendering provider even though the services had been rendered by non-credentialed providers, without the direct supervision of the RAVALS. On many such occasions, the RAVALS were traveling outside of the U.S. at the time the patient received the treatment.
As part of the settlement, ORANGE MEDICAL and the RAVALS admitted and accepted responsibility for certain conduct alleged by the U.S., including the following:
- ORANGE MEDICAL and the RAVALS understood that they were prohibited by relevant federal healthcare program rules from submitting claims for reimbursement to Medicaid in the State of New York for primary care services if the physician listed as the rendering provider on the claim for reimbursement had not actually rendered the services and, with respect to Medicare, if the services were not, at minimum, rendered “incident to” medical services actually provided by the physician listed on the claim. ORANGE MEDICAL and the RAVALS further understood that, in order to receive reimbursement from Medicaid, a healthcare provider must be enrolled as a provider in the Medicare or Medicaid program at the time the services are rendered.
- Nonetheless, ORANGE MEDICAL and the RAVALS frequently submitted claims to Medicaid and Medicare for primary care services that listed Manish Raval or Ashikkumar Raval as the rendering provider, even though they had not rendered the services for which reimbursement had been sought. In fact, the services had been performed by providers who had not enrolled in the Medicare or Medicaid programs. Further, the providers that had rendered the services were often not physicians, but instead nurse practitioners or physician assistants. On many such occasions, the RAVALS had no personal involvement or supervision in the treatment of the patient and were traveling outside of the U.S. at the time that the services were furnished.
- ORANGE MEDICAL and the RAVALS also altered patient records to reflect falsely that one of the RAVALS had seen a patient when, in fact, the patient had been seen by a different provider.
- As a result of the conduct described above, ORANGE MEDICAL received reimbursements from Medicare and Medicaid for primary care claims that did not comply with those programs’ billing rules.
In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act.
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Mr. Williams praised the outstanding investigative work of HHS-OIG, and he thanked the Medicaid Fraud Control Unit at the New York State Attorney General’s Office for its extensive collaboration in the investigation and resolution of this case.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney David E. Farber is in charge of the case.
Manhattan Franciscan Friar Charged with Wire and Mail Fraud Related to Fake Medical Charity in Beirut, LebanonRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that, on Saturday, August 17, 2024, PAWEL BIELECKI, a/k/a “Paul Bielecki,” a/k/a “Paul HRH Saxe-Coburg-Gotha,” a/k/a “Dr. Phaakon Sonderburg-Glucksburg,” a/k/a “Father Paul,” a/k/a “Father Kowal,” was arrested on charges of wire fraud and mail fraud. BIELECKI will be presented in White Plains federal court later today before U.S. Magistrate Judge Andrew E. Krause.
U.S. Attorney Damian Williams said: “As alleged, Pawel Bielecki exploited his position as a friar to gain the trust of victims across the country and steal hundreds of thousands of dollars from them. Bielecki is now facing federal charges for allegedly illegally profiteering on the trust his victims placed in him.”
As alleged in the Complaint:[1]
BIELECKI is a friar in the Capuchin Order, a Catholic order of priests and brothers. BIELECKI is a brother in a Province based in White Plains (the “Province”), which operates friaries in, among other places, New York City. To become a Capuchin friar, BIELECKI took a vow of poverty that requires him to renounce and not to hold any property or bank accounts in his name for his personal benefit. The Province provides friars, including BIELECKI, with a monthly stipend of approximately $250 for personal expenses, as well as a credit card, paid for by the Province, for friary-related expenses.[2]
BIELECKI has engaged in an ongoing fraudulent scheme related to fake medical clinics he claims to operate in Lebanon. As described further in the Complaint, through appearances and advertisements on radio programs and online podcasts, as well as various other media, including campaigns on various crowdfunding websites, BIELECKI has fraudulently obtained donations from victims by claiming, among other misrepresentations, to run medical clinics in Beirut, Lebanon, when in fact BIELECKI was keeping victims’ donations for his personal use.
For example, from at least in or about June 2015 through at least in or about December 2023, BIELECKI repeatedly appeared as a guest or through advertisements on a particular local New York radio show (“Radio Program‑1”). During these appearances and advertisements, BIELECKI repeatedly represented that he was a Catholic priest and physician living in Lebanon and running medical clinics there, with the goal of assisting Christians living in the Middle East. BIELECKI also made similar appearances on other radio programs and electronic media. For example, on or about April 1, 2023, BIELECKI appeared on a second radio show (“Radio Program-2”) to tell his “story” and to solicit donations for his purported medical clinics. Radio Program-2 continued to solicit donations on behalf of BIELECKI on numerous occasions from at least in or around June 2023 through at least in or around August 2024.
In these radio and media appearances, BIELECKI falsely represented, in sum and substance, among other things, the following:
- BIELECKI is a physician, vascular surgeon, cardiac surgeon, and/or general surgeon, and he has also earned multiple Ph.D. degrees;
- BIELECKI runs two medical clinics in Lebanon and is raising money for medicine, medical equipment, baby incubators, food, and an ambulance for his clinics in Lebanon;
- And BIELECKI, at the time of recording certain shows, was physically present in Lebanon, and he was badly injured and his clinics badly damaged by a widely reported August 2020 explosion in Beirut, Lebanon.
These representations were false. In fact, BIELECKI is not a physician or surgeon of any kind, he has not also earned multiple Ph.D. degrees, and he does not operate any medical clinics in Lebanon. In fact, travel records show that BIELECKI was in the U.S. continuously from in or around December 2019 through in or around April 2022, and on specific dates when he claimed during media appearances to be in Lebanon working on behalf of his medical clinics, BIELECKI was actually present in New York. Indeed, on and around the date of the explosion in Beirut in which BIELECKI told victims he was injured, BIELECKI made several purchases at coffee shops, restaurants, and other businesses in New York, New York.
BIELECKI has caused victims of his fraud scheme to send him donations through various means. Between approximately 2016 and 2019, BIELECKI directed victims from New York, New Jersey, Connecticut, Georgia, and Florida, among other locations, to send checks to the Province with “Fr. Paul Bielecki’s Mission” or a similar endorsement in the memo line. From at least April 2021, BIELECKI directed victims to send donations by mail to “St. Francis in Beirut Inc.”—a non-profit entity established in or about March 2021—at the address of a particular Capuchin Order friary in New York, New York, where BIELECKI resides. At various times during the fraudulent scheme, BIELECKI also obtained donations through crowdfunding websites and directly provided his bank account and Zell payment information to victims via email and other means of communication.
Despite his vow of poverty, BIELECKI maintained multiple credit or debit card accounts and multiple bank accounts. Dozens of victims have cumulatively provided BIELECKI with at least hundreds of thousands of dollars in donations as a result of BIELECKI’s fraudulent misrepresentations. Between approximately December 2017 and approximately February 2024, BIELECKI withdrew almost $50,000 in cash from his bank accounts; transferred more than $600,000 to two credit card companies to pay for personal expenses, including spending up to $334.40 per month for a membership at a luxury gym chain, and paying for multiple trips to the Hamptons and numerous meals at high-end restaurants; spent thousands of dollars on an aesthetic plastic surgery procedure at a liposuction clinic; and paid for numerous other personal expenses through debit card payments and other means.
There may be more victims of this alleged conduct. If you have information to report, contact Special Agent Sean Smyth, U.S. Attorney’s Office for the Southern District of New York, at (914) 993-1900 or by following the instructions available at https://www.justice.gov/usao-sdny/report-crime.
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BIELECKI, 48, of New York, New York, is charged with one count of wire fraud and one count of mail fraud, each of which carries a maximum potential sentence of 20 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as the sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the Special Agents of the U.S. Attorney’s Office for the Southern District of New York and of the Internal Revenue Service – Criminal Division. Mr. Williams also thanked the New York Field Office of U.S. Customs and Border Protection for their assistance in the investigation.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Benjamin Levander and Ryan W. Allison are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
[2] The Province conducted an internal investigation of BIELECKI’s fraudulent scheme, referred the matter to law enforcement, and has since provided assistance in the law enforcement’s investigation.
U.S. Attorney’s Office Obtains Settlement of Fair Housing Act Case Compensating Discrimination Victim Threatened with Eviction for Maintaining Support AnimalsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced the entry today of a Consent Decree with the RUTHERFORD TENANTS CORP. (“RUTHERFORD”) resolving the United States’ lawsuit against RUTHERFORD and its former Board President James Ramadei under the Fair Housing Act (“FHA”). The lawsuit alleged that RUTHERFORD discriminated against a shareholder (the “Complainant”) in its co-operative building by refusing to permit her to live with emotional support animals to accommodate her disability and by retaliating against the Complainant when she filed a Complaint with the U.S. Department of Housing and Urban Development (“HUD”). U.S. District Judge Jennifer H. Rearden approved the Consent Decree on August 16, 2024.
U.S. Attorney Damian Williams said: “This is the largest recovery the Department of Justice has ever obtained for a person with disabilities whose housing provider denied them their right to have an assistance animal. This outcome should prompt all housing providers to consider carefully whether their policies and procedures comply with federal law. We greatly appreciate our partners at HUD who provided invaluable assistance in the investigation and resolution of this matter.”
According to documents filed by the Government in federal court:
The Rutherford is a residential cooperative apartment building that contains 175 units and is located at 230 East 15th Street in New York, New York. Defendant RUTHERFORD is the shareholder cooperative association. The Complainant moved into the building in 1999. At the time, RUTHERFORD did not have a reasonable accommodation policy of any kind, whether for people with disabilities generally or for assistance animals specifically.
The Complainant maintained parrots in her home as emotional support animals to assist her with her disabilities and did so without incident until March 2015, when one of her neighbors began complaining about alleged noise. In response, the New York City Department of Environmental Protection (“DEP”) visited the building and/or the Complainant’s apartment on 15 occasions over the course of a year and conducted inspections of these noise complaints. DEP issued zero notices of noise violations. RUTHERFORD never conducted any decibel testing or other objective evaluation of the alleged noise complaints. Similarly, RUTHERFORD never retained the services of a noise prevention consultant, architect, engineer, or anyone with qualifications or experience in soundproofing to address the neighbor’s complaints.
In March 2016, the Complainant asked RUTHERFORD to allow her to maintain her parrots as support animals as a reasonable accommodation under the FHA, supporting her request with a letter from her treating psychiatrist.
The FHA makes it unlawful to discriminate in the terms and conditions of the sale or rental of, or to otherwise make unavailable or deny, a dwelling based on the prospective buyer or renter’s disability. The FHA also mandates that reasonable accommodations in rules, policies, practices, and services be provided when necessary to afford equal housing opportunities to persons with disabilities. The assistance animals that must be allowed in private dwellings under the FHA are different from those that must be allowed in places of public accommodation under the Americans with Disabilities Act, which is limited to dogs and miniature horses. Under the FHA and its applicable regulations, persons with disabilities may maintain in their homes a wide array of animals as support animals, provided the animal does not pose a direct threat to the health or safety of others, and does not physically damage the property.
Despite being aware that the Complainant was a person with a disability who needed the parrots as support animals, RUTHERFORD commenced eviction proceedings against the Complainant in May 2016. The Complainant began to suffer severe emotional harm because of the eviction proceedings and left her apartment in July 2016. Despite the fact that the Complainant left the building in 2016, RUTHERFORD continued to maintain the eviction proceeding against her well into 2024.
In May 2018, the Complainant filed a Complaint with HUD, alleging that the eviction proceeding interfered with her fair housing rights. While HUD was investigating the Complaint, the Complainant obtained an offer to purchase the shares appurtenant to her unit for $467,500, but RUTHERFORD rejected the application from the proposed purchaser, thereby prolonging the dispute and, as alleged by the Government, engaging in retaliation against the Complainant for asserting her rights.
HUD completed its investigation and, in January 2021, found probable cause to believe that RUTHERFORD violated the FHA, at which juncture the parties had the opportunity to settle the matter, or, failing that, either the Complainant or RUTHERFORD could elect to proceed to federal court with the dispute. RUTHERFORD chose to proceed to federal court, thereby triggering the statutory requirement that the Department of Justice file suit against it to resolve the matter in federal court.
Under the consent decree approved by Judge Rearden, RUTHERFORD must:
• Pay the Complainant $165,000 in damages, upon receipt of a release from the Complainant;
• Offer $585,000 to purchase the Complainant’s shares in the co-operative at a time when similarly situated units in the building are valued at approximately $500,000;
• In the event that the closing of the sale of the Complainant’s unit does not occur, provide the Complainant with additional accommodations, including a right to sublet the unit for 10 years;
• Adopt a reasonable accommodation policy regarding requests for assistance animals;
• Comply with certain notice, training, and recordkeeping requirements to ensure that its
agents and officers are knowledgeable about and comply with the requirements of the FHA;
• Allow the U.S. to monitor compliance with the Consent Decree;
• Dismiss the eviction proceedings against the Complainant in Housing Court.
This is the tenth case brought in recent years by the Southern District of New York to vindicate the rights of tenants and co-operative shareholders to maintain support animals in their homes, and the tenth case to end with an agreement compensating the victims of the alleged discriminatory acts and requiring the adoption of reasonable accommodation policies to protect future residents and co-operative shareholders from discrimination. The monetary recovery for the Complainant in this case, above and beyond the value of her shares, is the largest recovery by the Government for a victim of housing discrimination denied the right to an assistance animal.
Individuals who believe they have been victims of housing discrimination may submit a report online at www.civilrights.justice.gov, by email to [email protected], or may contact the Department of Housing and Urban Development at 1-800-669-9777 or www.hud.gov.
The case is being handled by the Office’s Civil Rights Unit in the Civil Division. Assistant U.S. Attorney David J. Kennedy is in charge of the case.
White Plains Man Sentenced to 35 Years in Prison for Sexual Exploitation of A Child, Production of Child Pornography, and Distribution of Child Sex Abuse MaterialRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that FRED MASTROIANNI was sentenced to 35 years in prison by U.S. District Judge Philip M. Halpern for sexual exploitation of a child and distribution and possession of child sex abuse material. MASTROIANNI previously pled guilty to one count of receiving and distributing child sex abuse material and one count of sexual exploitation of a child.
U.S. Attorney Damian Williams said: “The sentencing of Fred Mastroianni holds him accountable for years of horrific sexual abuse of children and for distributing and possessing a massive collection of child sex abuse material. Mastroianni is being punished for the devastating harm and trauma he inflicted on his minor victims and their families. This Office will do everything in its power to protect children and bring those who sexually exploit them to justice.”
According to the Information, plea agreement, other public court filings, and statements made in court:
MASTROIANNI repeatedly victimized a young child (“Victim-1”) for his own sexual gratification. MASTROIANNI’s sexual abuse of Victim-1 began when Victim-1 was just 10 years old and continued until MASTROIANNI’s arrest. On multiple occasions until Victim-1 turned 14 years old, MASTROIANNI directed ISMET KORAC to coerce Victim-1 to engage in sexual activities on live video calls with MASTROIANNI. MASTROIANNI recorded that abuse and kept the recordings, as well as other nude photographs of Victim-1, for years. MASTROIANNI broke Victim-1’s will and spirit to resist the abuse through a combination of threats and promises of gifts.
When Victim-1 was 17 years old, MASTROIANNI continued offering Victim-1 money and clothes in exchange for more photos and videos of Victim-1 engaging in sex acts. After years of victimizing and grooming Victim-1, as soon as Victim-1 turned 18, MASTROIANNI, who was 48 years old at the time, began paying Victim-1 to have sex with himself and other men, which continued until MASTROIANNI’s arrest.
In addition, for more than a decade, MASTROIANNI amassed and maintained an extensive collection of child sex abuse material, which he shared with others online. These videos involved rape, incest, and unspeakable abuse to very young children.
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In addition to the prison term, MASTROIANNI, 53, of White Plains, New York, was sentenced to a lifetime of supervised release and ordered to pay a total of $10,000 in assessments and restitution in an amount to be determined.
Co-defendant ISMET KORAC, 49, of White Plains, New York, previously pled guilty to enticing a minor to engage in sexual activity and was sentenced to 25 years in prison by U.S. District Judge Kenneth M. Karas on April 16, 2024.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Courtney Heavey and Ryan W. Allison are in charge of the prosecution.
Bronx Resident Arrested for Possessing Automatic Weapons and Machinegun Conversion DevicesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Edward A. Caban, the Commissioner of the New York City Police Department (“NYPD”), announced today the arrest of FAREED DABIDAH for possessing numerous fully automatic firearms, semi-automatic firearms, silencers, and dozens of machinegun conversion devices in the Bronx. DABIDAH was arrested this morning and will be presented later today in front of U.S. Magistrate Judge Sarah L. Cave.
U.S. Attorney Damian Williams said: “As alleged, Fareed Dabidah built dozens of ghost guns – some by using 3D printing – at his apartment in the Bronx. He allegedly converted many of the ghost guns into fully automatic weapons and had everything he needed to convert many more. Machinegun conversion devices, like the 39 the defendant possessed, are particularly dangerous gun accessories that turn ordinary firearms into fully automatic weapons. Removing these extraordinarily dangerous devices from our streets is an important law enforcement goal, and this Office will keep working diligently with our law enforcement partners to keep these devices and other illegal guns out of New York City.”
NYPD Commissioner Edward A. Caban said: “NYPD investigators’ meticulous work in this case underscores our efforts to eradicate gun violence by stopping homemade, untraceable ghost guns and other illegal firearms from ever reaching New York City streets. I thank our federal colleagues for their partnership and their continued dedication to our shared public safety mission.”
According to the allegations in the Complaint:1
Beginning as early as October 2022, DABIDAH ordered from various online retailers the components needed to 3D print and assemble numerous privately made firearms, which are commonly referred to as “ghost guns.” On August 15, 2024, law enforcement agents conducted a search of DABIDAH’s apartment, pursuant to a judicially authorized search warrant. During the execution of the warrant, law enforcement officers found, among other things, approximately 39 machinegun conversion devices; 14 completed ghost guns, including six with machinegun conversion devices installed; five partially assembled, 3D printed assault rifles, including two with machinegun conversion devices installed; two firearms silencers; two 3D printers; and various magazines and ammunition for use in the recovered firearms.
A “machinegun conversion device” is an item that converts a semi-automatic firearm into a fully automatic weapon by circumventing the weapon’s intended cycle. Colloquially, machinegun conversion devices for handguns are frequently referred to as “Glock switches” and ones for assault rifles are referred to as “auto sears.” Federal law prohibits the unlicensed possession of machineguns, a term that includes machinegun conversion devices.
The photographs below show many of the firearms recovered during the search of DABIDAH’s residence this morning, including 3D printed handguns and assault rifles, and a handgun and assault rifle with machinegun conversion devices installed.
3D Printed Handguns and Assault Rifles
9mm Ghost Gun with Glock Switch
Assault Rifle with Auto Sear
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DABIDAH, 22, of the Bronx, New York, is charged with one count of possession of a machinegun, which carries a maximum potential sentence of 10 years in prison.
The maximum potential sentence is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding work the NYPD and further thanked the Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Postal Inspection Service; U.S. Customs and Border Protection; and Homeland Security Investigations for their assistance in the investigation.
The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorney Andrew Jones is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
1 As the introductory phrase signifies, the entirety of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Four Flight Attendants Plead Guilty to Smuggling Drug Money to the Dominican RepublicRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that four flight attendants charged in connection with smuggling drug money to the Dominican Republic have pled guilty to operating an unlicensed money transmission business. SARAH VALERIO PUJOLS pled guilty before U.S. District Judge Naomi Reice Buchwald on July 23, 2024; CHARLIE HERNANDEZ pled guilty before U.S. District Judge Ronnie Abrams on July 25, 2024; EMMANUEL TORRES pled guilty before U.S. Magistrate Judge Sarah Cave on August 12, 2024; and JAROL FABIO pled guilty before U.S. District Judge Arun Subramanian on August 13, 2024.
U.S. Attorney Damian Williams said: “These four flight attendants abused their privileges as flight attendants to move money for drug traffickers. My Office is committed to staunching the illicit flow of narcotics proceeds in all of its forms. These guilty pleas show that the sky is not the limit when it comes to law enforcement’s reach.”
According to the allegations in the Complaints, the Informations, court filings, and statements made in Court:
During the relevant period, all of the defendants were employed as flight attendants with different international airlines that operated routes between New York City and the Dominican Republic. All of the defendants had “Known Crewmember” (“KCM”) status with the Transportation Security Administration, which allowed them to pass through a special security lane at John F. Kennedy International Airport and other airports with less scrutiny than normal passengers.
Before or in about October 2021, a cooperating witness (“CW-1”) operated a significant money laundering organization (“MLO”) in New York City, specializing in the movement of cash proceeds from narcotics sales from New York City to the Dominican Republic. One method that CW-1 used in furtherance of their MLO was corrupting flight attendants, like the defendants, who worked routes between New York City and the Dominican Republic. In exchange for a fee – which generally amounted to a small percentage of the amount of money that they would be smuggling – the defendants accepted bulk cash from CW-1 in New York City, got it past airport security via the KCM lane, and passed it off to other members of CW-1’s MLO in the Dominican Republic, including another cooperating witness (“CW-2”). After CW-1 and CW-2 began cooperating with law enforcement, Homeland Security Investigations (“HSI”) and the New York City Police Department (“NYPD”) orchestrated a number of sting operations in which CW-1 provided law enforcement funds represented to be narcotics proceeds to the defendants, who then smuggled it down to the Dominican Republic and handed it off to CW-2, who returned the funds to law enforcement.
* * *
PUJOLS, 42, of the Bronx, New York; HERNANDEZ, 42, of West New York, New Jersey; EMMANUEL TORRES, 34, of Brooklyn, New York; and JAROL FABIO, 35, of New York, New York, each respectively pled guilty to one count of operation of an unlicensed money transmission business, which carries a maximum sentence of five years in prison. PUJOLS will be sentenced by Judge Buchwald on November 14, 2024; HERNANDEZ will be sentenced by Judge Abrams on November 15, 2024; TORRES will be sentenced by U.S. District Judge Colleen McMahon on January 6, 2025; and FABIO will be sentenced by Judge Subramanian on November 15, 2024. As part of their guilty pleas, PUJOLS, HERNANDEZ, TORRES, and FABIO each agreed to forfeit property involved in their commission of the offense.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the investigative work of HSI and the NYPD.
This case is being handled by the Office’s Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Benjamin A. Gianforti and Jaclyn Delligatti are in charge of the prosecution.
Bronx Man Charged with Possession of Child PornographyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Erin Keegan, the Acting Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced that JUAN TOMAS DIAZ was arrested yesterday and charged with one count of possessing child pornography. DIAZ will be presented later today before U.S. Magistrate Judge Sarah L. Cave.
U.S. Attorney Damian Williams said: “As alleged, Juan Tomas Diaz, who had access to and lived in the same building as a daycare run by a family member, possessed at least one hundred images of child pornography. Among those were graphic videos and images of children, ranging from infants to young teenagers, being raped and engaging in other sexual conduct. Our investigation into Diaz is ongoing, and we urge anyone with information about Diaz’s conduct to call HSI at 1-877-4-HSI-TIP. We will continue to tirelessly work together with our law enforcement partners to detect predators and protect our community’s children.”
Acting Special Agent in Charge Erin Keegan said: “As alleged, Juan Tomas Diaz was found to have been in possession of over 100 images and videos of child pornography at his home mere steps from a daycare. Every parent's worst nightmare, the defendant had access to a childcare facility where toddlers' and young adolescents' loved ones expected they would be safe. This arrest underscores the urgency of our commitment to collaborate with our partners in the relentless fight of safeguarding our communities. I commend HSI New York's Child Exploitation Investigations Team and the U.S. Attorney's Office for the Southern District of New York for confronting this alarming reality directly.”
According to the allegations contained in the Complaint:[1]
DIAZ lives in a basement apartment in the Bronx, located below a daycare. 11 children are currently enrolled at the daycare. DIAZ has access to the daycare, which is run by a family member of DIAZ.
On or about August 13, 2024, federal agents executed a judicially authorized search warrant of DIAZ’s apartment. Pursuant to that warrant, federal agents seized and searched DIAZ’s phone, which was found to contain what appears to be over 100 images of child pornography. DIAZ, after waving his Miranda rights and signing a written Miranda consent form, voluntarily spoke to law enforcement and admitted to having viewed videos and images of minors engaged in sexual activity.
* * *
DIAZ, 46, of the Bronx, New York, is charged with one count of possession of child pornography, which carries a maximum sentence of 10 years in prison.
The maximum potential sentence in this case is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of HSI.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Lauren E. Phillips is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
Russian-German National Extradited for Illegally Exporting to Russia Sensitive U.S.-Sourced Microelectronics with Military Applications in Violation of U.S. Export ControlsRead the Press Release
Arthur Petrov Allegedly Participated in a Russia-Based Illicit Procurement Network That, Subsequent to Russia’s Invasion of Ukraine, Illegally Procured Large Quantities of Sensitive Microelectronics for a Russian Company That Supplies Manufacturers for the Russian Military
Arthur Petrov, 33, a dual Russian and German national, made his initial appearance in federal court today, following his extradition from the Republic of Cyprus for criminal offenses related to export control violations, smuggling, wire fraud and money laundering. Petrov allegedly participated in a scheme to procure U.S.-sourced microelectronics subject to U.S. export controls on behalf of a Russia-based supplier of critical electronics components for manufacturers supplying weaponry and other equipment to the Russian military. Petrov was arrested on Aug. 26, 2023, in the Republic of Cyprus at the request of the United States.
“Today’s extradition demonstrates the Justice Department’s enduring commitment to cutting Russia off from the western technologies that fuel President Putin’s war machine,” said Deputy Attorney General Lisa Monaco. “Together with global partners, the Department’s Disruptive Technology Strike Force and Task Force KleptoCapture will vigorously investigate and prosecute efforts to evade the global sanctions and export controls imposed to counter Russia’s brutal war in Ukraine. The defendant’s extradition is a vital step towards holding Russia accountable, and I am grateful to our Cypriot partners for their assistance in this matter.”
“Our charges allege that, after Russia’s full-scale invasion of Ukraine, the defendant and his co-conspirators formed an elaborate tech-trafficking syndicate to supply microelectronics to Russia’s military-industrial complex,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Together with our international law enforcement partners, the Justice Department will now hold Petrov to account in a U.S. courtroom and continue dismantling criminal networks that threaten our collective security.”
“As demonstrated by today’s extradition, just because you’re located overseas doesn’t mean we won’t find you,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod of the Commerce Department’s Bureau of Industry and Security (BIS). “If you procure sensitive U.S. microelectronics with military applications for Russia, you risk the very real threat of facing justice in a U.S. courtroom.”
“Arthur Petrov is alleged to have conspired to smuggle shipments from U.S. distributors of microelectronics with military applications through intermediary countries to Russia as part of an illicit Russian-based procurement network,” said U.S. Attorney Damian Williams for the Southern District of New York. “As alleged, he concealed the ultimate destination of these sensitive materials, and he knew that these transactions and shipments were in violation of U.S. export controls relating to Russia. Thanks to the efforts of our law enforcement partners here and abroad, Petrov is now in U.S. custody and will face justice in a U.S. courtroom. This case demonstrates that we will work tirelessly with our law enforcement partners to protect national security and disrupt and prosecute the illicit supply of U.S.-sourced military technology to Russia.”
“The extradition of Arthur Petrov and the allegations laid out in a criminal complaint send a strong message about the resolve and commitment of the FBI and its partners to stop the illegal transfer of sensitive, military-use technology,” said Executive Assistant Director Robert Wells of the FBI’s National Security Branch. “In the hands of hostile nations, such technology presents a significant threat to U.S. national security. Today’s actions demonstrate the power and reach of law enforcement partnerships to dismantle even the most elaborate schemes while keeping Americans safe in the process.”
According to court documents, Petrov worked for LLC Electrocom VPK (Electrocom), a Russia-based supplier of critical electronics components for manufacturers supplying weaponry and other equipment to the Russian military. Petrov and two co-conspirators (CC-1 and CC-2), who are Russian nationals also working for Electrocom, operated an illicit procurement network in Russia and elsewhere overseas. They fraudulently procured from U.S. distributors large quantities of microelectronics subject to U.S. export controls on behalf of Electrocom. To carry out the scheme, Petrov, CC-1, and CC-2 used shell companies and other deceptive means to conceal that the electronics components were destined for Russia. The technology that Petrov and his co-conspirators have procured in contravention of export controls during the course of the conspiracy have significant military applications and include various types of electronics components of the sort that have been recovered in Russian military hardware on the battlefield in Ukraine, such as Russian guided missiles, drones and electronic warfare and communications devices.
To perpetrate the scheme, Petrov first acquired the controlled microelectronics from U.S.-based electronics exporters using a Cyprus-based shell company, Astrafteros Technokosmos LTD (Astrafteros), which he operates. Petrov procured these sensitive electronics components by falsely representing to the U.S. exporters that Astrafteros was purchasing the items for fire security systems, among other commercial uses, and that the ultimate end-users and destinations of the electronics are companies in Cyprus or other third countries — when in fact, the components are destined for Electrocom in Russia, which supplies manufacturers for the Russian military. The microelectronics that Petrov has procured as part of the conspiracy include, among other things, microcontrollers and integrated circuits that are on the Commerce Control List maintained by the Commerce Department and cannot lawfully be exported or reexported to Russia without a license from the Commerce Department. Invoices provided to Petrov by the U.S. distributors expressly noted that these microcontrollers and integrated circuits are subject to U.S. export controls.
To evade these controls, Petrov, CC-1, and CC-2 worked together to transship the controlled items procured by Petrov using pass-through entities operated by CC-1 and CC-2 in third countries. CC-1 and CC-2 then caused the items to be shipped, sometimes through yet another country, to the ultimate destination: Electrocom in Saint Petersburg, Russia. At all times, Petrov, CC-1, and CC-2 concealed from the U.S. distributors that they were procuring the controlled electronics components on behalf of Electrocom and that the items were destined for Russia. During the course of the conspiracy, Petrov, CC-1, and CC-2 procured from U.S. distributors and shipped to Russia more than $225,000 worth of controlled electronics components with military applications.
On Aug. 26, 2023, Petrov was arrested and detained by the Cypriot authorities at the request of the United States. The United States thereafter submitted a formal extradition request. On July 18, after extradition proceedings in the Cypriot courts concluded with extradition being approved, the Cypriot Minister of Justice and Public Order issued the extradition order.
Petrov is charged with one count of conspiracy to defraud the United States, which carries a maximum penalty of five years in prison; one count of conspiracy to violate the Export Control Reform Act (ECRA), which carries a maximum penalty of 20 years in prison; three counts of violating the ECRA, each of which carries a maximum penalty of 20 years in prison; one count of conspiracy to smuggle goods from the United States, which carries a maximum penalty of five years in prison; three counts of smuggling goods from the United States, which each carry a maximum penalty of 10 years in prison; one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant U.S. Attorney Kevin Sullivan for the Southern District of New York and Trial Attorney Maria Fedor of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.
Today’s actions were coordinated through the Justice Department’s Task Force KleptoCapture and the Justice and Commerce Departments’ Disruptive Technology Strike Force. Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains and prevent critical technology from being acquired by authoritarian regimes and hostile nation states.
A criminal complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Russian-German National Extradited for Illegally Exporting to Russia Sensitive U.S.-Sourced Microelectronics with Military Applications in Violation of U.S. Export ControlsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Lisa Monaco, the Deputy Attorney General of the United States; Matthew G. Olsen, the Assistant Attorney General of the Justice Department’s National Security Division; Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”); and Matthew S. Axelrod, the Assistant Secretary for Export Enforcement of the Commerce Department, announced today that ARTHUR PETROV, a dual Russian and German national, was extradited from the Republic of Cyprus after having been charged with export control violations, smuggling, wire fraud, and money laundering offenses in connection with his alleged participation in a scheme to procure U.S.-sourced microelectronics subject to U.S. export controls on behalf of a Russia-based supplier of critical electronics components for manufacturers supplying weaponry and other equipment to the Russian military. PETROV was arrested on August 26, 2023, in the Republic of Cyprus at the request of the U.S. He arrived in the Southern District of New York yesterday and will be presented later today before U.S. Magistrate Judge Jennifer E. Willis.
U.S. Attorney Damian Williams said: “Arthur Petrov is charged with conspiring to smuggle microelectronics with military applications from U.S. distributors to Russia as part of an illicit Russian-based procurement network that supplies manufacturers for the Russian military. As alleged, he concealed the ultimate destination of these sensitive materials, and he knew that these transactions and shipments were in violation of U.S. export controls relating to Russia. Thanks to the efforts of our law enforcement partners here and abroad, Petrov is now in U.S. custody and will face justice in a U.S. courtroom. This case demonstrates that we will work tirelessly with our law enforcement partners to protect national security and disrupt and prosecute the illicit supply of U.S.-sourced military technology to Russia.”
Deputy Attorney General Lisa Monaco said: “Today’s extradition demonstrates the Justice Department’s enduring commitment to cutting Russia off from the western technologies that fuel President Putin’s war machine. Together with global partners, the Department’s Disruptive Technology Strike Force and Task Force KleptoCapture will vigorously investigate and prosecute efforts to evade the global sanctions and export controls imposed to counter Russia’s brutal war in Ukraine. The defendant’s extradition is a vital step towards holding Russia accountable, and I am grateful to our Cypriot partners for their assistance in this matter.”
Assistant Attorney General Matthew G. Olsen said: “Our charges allege that, after Russia’s full-scale invasion of Ukraine, the defendant and his co-conspirators formed an elaborate tech-trafficking syndicate to supply microelectronics to Russia’s military-industrial complex. Together with our international law enforcement partners, the Justice Department will now hold Petrov to account in a U.S. courtroom and continue dismantling criminal networks that threaten our collective security.”
Acting Assistant Director in Charge Christie M. Curtis said: “Arthur Petrov was brought to the United States to answer for allegedly participating in a global procurement scheme which secretly supplied Russia’s military industrial complex with critical U.S. technology, including the same types of microelectronics recovered from Russian weapons on Ukrainian battlefields. This extradition underscores the dedication of the FBI and our international partners to maintaining the rule of law and holding accountable anyone attempting to evade international sanctions. The FBI is committed to protecting our national security and bringing to justice anyone who attempts to undermine it, no matter where they are in the world.”
Assistant Secretary for Export Enforcement Matthew S. Axelrod said: “As demonstrated by today’s extradition, just because you’re located overseas doesn’t mean we won’t find you. If you procure sensitive U.S. microelectronics with military applications for Russia, you risk the very real threat of facing justice in a U.S. courtroom.”
According to the allegations contained in the Complaint and statements made during Court proceedings:[1]
PETROV is a dual Russian-German national who resided in Russia and Cyprus and worked for LLC Electrocom VPK (“Electrocom”), a Russia-based supplier of critical electronics components for manufacturers supplying weaponry and other equipment to the Russian military. PETROV and two co-conspirators (“CC-1” and “CC-2”), who are Russian nationals also working for Electrocom, operated an illicit procurement network in Russia and elsewhere overseas. They have fraudulently procured from U.S. distributors large quantities of microelectronics subject to U.S. export controls on behalf of Electrocom. To carry out the scheme, PETROV, CC-1, and CC-2 used shell companies and other deceptive means to conceal that the electronics components were destined for Russia. The technology that PETROV and his co-conspirators have procured in contravention of export controls during the course of the conspiracy have significant military applications and include various types of electronics components of the sort that have been recovered in Russian military hardware on the battlefield in Ukraine, such as Russian guided missiles, drones, and electronic warfare and communications devices.
To perpetrate the scheme, PETROV first acquired the controlled microelectronics from U.S.-based electronics exporters using a Cyprus-based shell company, Astrafteros Technokosmos LTD (“Astrafteros”), which he operates. PETROV procured these sensitive electronics components by falsely representing to the U.S. exporters that Astrafteros was purchasing the items for fire security systems, among other commercial uses, and that the ultimate end-users and destinations of the electronics are companies in Cyprus or other third countries — when in fact the components are destined for Electrocom in Russia, which supplies manufacturers for the Russian military. The microelectronics that PETROV has procured as part of the conspiracy include, among other things, microcontrollers and integrated circuits that are on the Commerce Control List maintained by the Commerce Department and cannot lawfully be exported or reexported to Russia without a license from the Commerce Department. Invoices provided to PETROV by the U.S. distributors expressly noted that these microcontrollers and integrated circuits are subject to U.S. export controls.
To evade these controls, PETROV, CC-1, and CC-2 worked together to transship the controlled items procured by PETROV using pass-through entities operated by CC-1 and CC-2 in third countries. CC-1 and CC-2 then caused the items to be shipped, sometimes through yet another country, to the ultimate destination: Electrocom in Saint Petersburg, Russia. At all times, PETROV, CC-1, and CC-2 concealed from the U.S. distributors that they were procuring the controlled electronics components on behalf of Electrocom and that the items were destined for Russia. During the course of the conspiracy, PETROV, CC-1, and CC-2 procured from U.S. distributors and shipped to Russia more than $225,000 worth of controlled electronics components with military applications.
On August 26, 2023, PETROV was arrested and detained by the Cypriot authorities at the request of the U.S. The U.S. thereafter submitted a formal extradition request. On July 18, 2024, after extradition proceedings in the Cypriot courts concluded with extradition being approved, the Cypriot Minister of Justice and Public Order issued the extradition order.
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PETROV, 33, a dual Russian-German citizen who has resided in Russia and Cyprus, is charged with one count of conspiracy to defraud the U.S., which carries a maximum sentence of five years in prison; one count of conspiracy to violate the Export Control Reform Act (“ECRA”), which carries a maximum sentence of 20 years in prison; three counts of violating the ECRA, each of which carries a maximum sentence of 20 years in prison; one count of conspiracy to smuggle goods from the U.S., which carries a maximum sentence of five years in prison; three counts of smuggling goods from the U.S., which each carry a maximum sentence of 10 years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.
Mr. Williams praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division and the New York Field Office of the Bureau of Industry and Security of the Department of Commerce. Mr. Williams also thanked the FBI’s Legal Attaché offices in Poland, Germany, and Athens, Greece; the Department of Justice’s National Security Division, Counterintelligence and Export Control Section; the Department of Justice’s Office of International Affairs; the Republic of Cyprus Ministry of Justice and Public Order; and the Law Office of the Republic for their assistance. The Republic of Cyprus National Police also provided critical assistance in effecting the defendant’s arrest and detention at the request of the U.S.
This prosecution is coordinated through the Justice Department’s Task Force KleptoCapture and the Justice and Commerce Departments’ Disruptive Technology Strike Force. Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the U.S. has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorney Kevin Sullivan is in charge of the prosecution, with assistance from Trial Attorney Maria Fedor of the Counterintelligence and Export Control Section.
The charges in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Rockland County Man Who Distributed Fentanyl That Resulted in Six Poisonings, Including Multiple Deaths, Pleads GuiltyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that JUSTIN TURNICK pled guilty to conspiring to distribute fentanyl. TURNICK distributed fentanyl that resulted in three fatal fentanyl poisonings and three non-fatal fentanyl poisonings between February 2020 and April 2022 in Rockland County, New York. TURNICK pled guilty earlier today before U.S. District Judge Philip M. Halpern.
U.S. Attorney Damian Williams said: “Justin Turnick’s actions didn’t just facilitate addiction—they fueled a crisis that claimed lives and inflicted unimaginable suffering. As we move forward, this Office remains resolute in its mission to combat the fentanyl epidemic and seek justice for the families and individuals affected by these deadly substances.”
According to the allegations in the Indictment, court filings, and statements made in Court:
TURNICK engaged in the regular distribution of narcotics to members of his community in Rockland County, New York, including his friends, partners, and acquaintances. TURNICK knowingly distributed fentanyl — a deadly and highly potent opioid — in various forms, including fentanyl that had been packaged into pills, pure fentanyl, and fentanyl-laced powder.
TURNICK distributed fentanyl to Gustaf Olsen, resulting in his death, on or about February 3, 2020; to Jonathan Shashoua, resulting in his death, on or about July 11, 2020; to a female victim, resulting in her poisoning and serious bodily injury, on or about January 5, 2021; to Ione Koenig, resulting in her poisoning and serious bodily injury, on or about July 30, 2021; to Ione Koenig, resulting in her death, on or about July 31, 2021; and to a male victim, resulting in his poisoning and serious bodily injury, on or about on or about April 19, 2022.
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TURNICK, 25, of Congers, New York, pled guilty to one count of conspiracy to distribute and possess with intent to distribute fentanyl, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 40 years in prison. As part of his guilty plea, TURNICK stipulated that the substances he conspired to distribute and possess with intent to distribute resulted in the fatal fentanyl poisonings of Gustaf Olsen, Jonathan Shashoua, and Ione Koenig, and the non-fatal fentanyl poisonings of a female victim, a male victim, and Ione Koenig.
The minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding work of the Drug Enforcement Administration, the Clarkstown Police Department, and the Rockland County Sheriff’s Office. He also thanked the Ramapo Police Department, the Westchester County Police Department, the Yonkers Police Department, the Putnam County Sherriff’s Department, and the Rockland County District Attorney’s Office for their support and assistance in this matter.
The case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Ryan W. Allison and Kathryn Wheelock are in charge of the prosecution.
Non-Profit Executive Convicted of Conspiring to Defraud Federal Government and to Obstruct Federal Administrative ProceedingRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that on Friday, August 2, 2024, a jury found ARIE RANGOTT guilty of conspiring to defraud the federal Head Start program, to submit a false document to the federal government, and to obstruct a federal administrative proceeding. RANGOTT was found guilty following a two-week trial before U.S. District Judge Jennifer H. Rearden and is scheduled to be sentenced on December 10, 2024.
U.S. Attorney Damian Williams said: “By secretly exploiting a non-profit entity for personal gain, Arie Rangott defrauded the federal government and undermined the public’s trust in the Head Start program. This Office is committed to pursuing justice against those who place greed above their responsibility to be stewards of federal funds, and I commend our law enforcement partners and the dedicated team of career prosecutors of this Office for their outstanding work.”
According to the Indictment, public court filings, and the evidence presented at trial:
Between 2021 and January 2023, RANGOTT was the shadow executive director of a non-profit entity, Project Social Care Head Start Inc. (“PSCHS”), that operated in the New York City area. The U.S. Department of Health and Human Services (“HHS”), which administers the federal Head Start program, annually granted to PSCHS millions of dollars that were to be overseen by an independent board of directors, to be used exclusively on the Head Start program, and from which earning a profit is prohibited by law. RANGOTT and others conspired to submit numerous fictitious documents to HHS that fraudulently asserted PSCHS had an independent board of directors and had in place controls to guard against fraud, waste, and abuse. In truth, PSCHS had neither an independent board nor sufficient controls in place. RANGOTT and his co-conspirators used their control over PSCHS to impermissibly direct PSCHS’s Head Start funding to for-profit companies owned by co-conspirators through rampant undisclosed self-dealing.
In December 2021, HHS sent a letter to PSCHS detailing several complaints about self-dealing at PSCHS, among other things. In response, RANGOTT and his co-conspirators prepared and submitted a report to HHS that falsely denied the self-dealing and made other misstatements. Then, in August and September 2022, the HHS Office of the Inspector General opened an investigation into related issues at PSCHS. RANGOTT and his co-conspirators agreed to obstruct that investigation by lying to the investigators, coordinating stories, and submitting false documents.
Several of RANGOTT’s co-conspirators have pled guilty. Among others, Martin Handler and Menachem Lieberman, each of whom secretly controlled PSCHS and directed PSCHS to steer federal funds to their own for-profit companies, pled guilty in March 2024. Isidore Handler, who played a significant role in falsifying documents submitted to HHS, pled guilty in September 2023. All three await sentencing.
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RANGOTT, 54, of Toms River, New Jersey, was convicted of conspiracy to defraud the U.S., conspiracy to falsify documents and records, and conspiracy to obstruct an agency proceeding. Each of the three offenses carries a maximum sentence of five years in prison.
The maximum sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation, Internal Revenue Service – Criminal Investigation, and the HHS Office of the Inspector General. Mr. Williams also thanked the U.S. Department of Agriculture Office of the Inspector General and the New York City Department of Investigation for their assistance.
The prosecution of this case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Jacob R. Fiddelman, Catherine Ghosh, Stephanie Simon, and Daniel H. Wolf are in charge of the prosecution, with the assistance of Paralegal Specialist Jayda Foote.
Statement of U.S. Attorney Damian Williams on the Conviction of Haji Abdul Satar Abdul ManafRead the Press Release
“Haji Abdul Satar Abdul Manaf, an international drug trafficker with deep ties to terrorist organizations, attempted to import large quantities of heroin into the United States while paying the Taliban and attempting to provide financial support to the Haqqani Network, another terrorist organization responsible for acts of terrorism against this country. After he was arrested and extradited to the United States, Manaf worked with others in Afghanistan to kidnap and intimidate a witness at gunpoint. Today, Manaf has been found guilty on all counts, and now faces significant time in prison for his attempts to exploit the heroin trade, fuel terrorism, and kidnap and threaten a witness. This verdict brings justice to the countless lives endangered by Manaf’s actions and hope to the many others under threat of terrorist organizations. It is thanks to the exceptional work of the career national security prosecutors of this Office, the DEA, and our international partners that Manaf has been brought to justice. This Office remains resolute in its mission to dismantle such dangerous networks and protect those fighting against terrorism.”
U.S. Attorney Charges Haverstraw Man with Sexual Exploitation and Enticement of Three MinorsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the unsealing of a Complaint charging OSCAR LEMUS with sexual exploitation and enticement of a minor to engage in unlawful sexual activity. LEMUS was presented before U.S. Magistrate Judge Judith C. McCarthy in White Plains federal court and detained.
U.S. Attorney Damian Williams said: “This case underlines the urgent need for law enforcement to continue its efforts to protect children from those who prey on them. As today’s arrest shows, we will use every tool available to law enforcement to investigate and prosecute those alleged to have sexually exploited children.”
As alleged in the Complaint:[1]
From at least on or about April 20, 2024, up to and including April 23, 2024, LEMUS, who used the screen name “lemus.xp,” met a 14-year-old minor on social media and persuaded her to meet him in Rockland County, New York, to engage in sexual activity.
On or about March 16, 2024, LEMUS engaged in sexual activity with a 14-year-old minor in the Bronx, New York, and video-recorded the sexual activity using a cellphone.
On or about August 20, 2023, LEMUS persuaded a 16-year-old minor in Mississippi to engage in sexual activity during a live video chat with LEMUS.
Anyone who may have encountered LEMUS or whose child may have had any communications with LEMUS is asked to contact the FBI at 1-800-CALL-FBI (225-5324).
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LEMUS, 23, of Haverstraw, New York, is charged with one count of enticing a minor to engage in unlawful sexual activity, which carries a maximum sentence of life in prison. He is also charged with two counts of sexual exploitation of a minor, each of which carries a maximum sentence of 30 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the efforts of the Federal Bureau of Investigation, the Ramapo Police Department, the Rockland County District Attorney’s Office, and the Rockland County Sheriff’s Department in connection with this investigation.
The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Marcia S. Cohen is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Leader of Tech Support Fraud Scheme Sentenced to Seven Years in PrisonRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that VINOTH PONMARAN was sentenced to seven years in prison for participating in a fraud conspiracy that exploited elderly victims by remotely accessing their computers and convincing victims to pay for computer support services that they did not need and which were never actually provided. In total, the conspiracy generated more than $6 million in criminal proceeds from at least approximately 6,500 victims. PONMARAN previously pled guilty before U.S. District Judge Vernon S. Broderick, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Vinoth Ponmaran was a leader of a sophisticated fraud scheme that preyed on over 6,000 victims, including the elderly. This conspiracy caused pop-up windows to appear on victims’ computers—pop-up windows which claimed, falsely, that a virus had infected the victim’s computer. Through this and other misrepresentations, Ponmaran's fraud scheme deceived his many victims, including some of society’s most vulnerable members, into paying a total of more than $6 million. Today’s sentence sends a clear message: those who exploit the vulnerable for financial gain will pay a heavy price.”
According to the allegations contained in the Superseding Information, court filings, and statements made in court, including during PONMARAN’s plea proceeding and sentencing:
From approximately March 2015 through July 2018, PONMARAN was a member of a criminal fraud ring (the “Fraud Ring”) based in the U.S. and India that committed a technical support fraud scheme targeting elderly victims located across the U.S. and Canada, including in the Southern District of New York. The Fraud Ring’s primary objective was to trick victims into believing that their computers were infected with malware in order to deceive them into paying hundreds or thousands of dollars for phony computer repair services. Over the course of the conspiracy, the Fraud Ring generated more than $6 million in proceeds from at least 6,500 victims.
The scheme generally worked as follows. First, the Fraud Ring caused pop-up windows to appear on victims’ computers. The pop-up windows claimed, falsely, that a virus had infected the victims’ computers. The pop-up windows directed the victims to call a particular telephone number to obtain technical support. In at least some instances, the pop-up windows threatened victims that, if they restarted or shut down their computer, it could “cause serious damage to the system,” including “complete data loss.” In an attempt to give the false appearance of legitimacy, in some instances the pop-up windows included, without authorization, the corporate logo of a well-known, legitimate technology company. In fact, no virus had infected victims’ computers, and the technical support phone numbers in the pop-up windows were not associated with the legitimate technology company. Rather, these representations were false and were designed to trick victims into paying the Fraud Ring to “fix” a problem that did not exist. And while the purported “virus” was a hoax, the pop-up windows themselves did cause various victims’ computers to completely “freeze,” thereby preventing these victims from accessing the data and files in their computer—which caused some victims to call the phone number listed in the pop-up windows. In exchange for victims’ payment of several hundred or thousand dollars (depending on the precise “service” victims purchased), the purported technicians remotely accessed the victim’s computers and ran an anti-virus tool, which is free and available on the Internet.
PONMARAN was an India-based leader of the Fraud Ring. Among other things, PONMARAN managed a call center in India that was used to provide purported computer repair services to victims of the scheme. PONMARAN also recruited co-conspirators in the U.S. to register fraudulent corporate entities and open bank accounts that were used to receive fraud proceeds from victims of the scheme. PONMARAN also laundered fraud proceeds in multiple ways, including by directing co-conspirators to wire fraud proceeds to accounts in India and the U.S.
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In addition to his prison sentence, PONMARAN, 36, a citizen of India, was sentenced to three years of supervised release and forfeiture of $6,110,884.51.
PONMARAN’s co-defendants, Romana Leyva and Ariful Haque, were both sentenced by Judge Paul A. Crotty in 2022, following their respective guilty pleas. Leyva was sentenced to 100 months in prison and three years of supervised release, and she was ordered to forfeit $4,679,586.93 and to pay restitution of $2,707,882.91. Haque was sentenced to one year and one day in prison and three years of supervised release, and he was ordered to forfeit $38,886.32 and to pay restitution of $470,672.16.
Mr. Williams praised the outstanding work of the New York Office of the Homeland Security Investigations’s El Dorado Task Force, Cyber Intrusion/Cyber Fraud Group. Mr. Williams also thanked the New York City Police Department for its assistance on this case.
This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Michael D. Neff is in charge of the prosecution.
U.S. Attorney Files Lawsuit Against Liberty Central School District for Violating the Uniformed Services Employment and Reemployment Rights ActRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that the United States has filed a lawsuit on behalf of teacher and U.S. Army National Guard member John Chewens against LIBERTY CENTRAL SCHOOL DISTRICT (“LIBERTY”) under the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”). The Complaint alleges that LIBERTY, which is in Sullivan County, New York, willfully violated USERRA by refusing to compensate Chewens at the proper rate because of his absence from the school during a military deployment.
U.S. Attorney Damian Williams said: “Federal law ensures that our brave soldiers, who sacrifice so much to keep us safe, are not punished by employers when they return to the workforce after completing their military service. This Office is dedicated to giving full force to USERRA’s protections to ensure that service members like Captain John Chewens receive all the benefits to which they are legally entitled.”
According to the pleadings filed in Manhattan federal court:
LIBERTY pays teachers according to a salary schedule by which a teacher’s base annual salary is determined by the teacher’s step. Teachers typically progress one step per school year, which results in an increase in the teacher’s compensation.
Chewens began teaching at LIBERTY in the 2016–17 school year, and he was paid at step 1. At the start of the 2017–18 year, he progressed to step 2. Subsequently, he was ordered to report for active duty starting in March 2018, in support of Operation Enduring Freedom. As a result of his deployment, he did not return to teaching until April 2019.
Because of his absence during his deployment, when Chewens returned to teaching, LIBERTY denied him the step increase that he would have otherwise received. As a result, his annual base salary was repeatedly less than it would have been but for his military service.
USERRA guarantees that service members whose employment is interrupted by more than 90 days of military service are, upon their return to the employer, paid at the same rate that they would have earned absent their military service.
The Complaint seeks, among other things, compensation for Chewens’s lost wages and liquidated damages.
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This case is being handled by the Office’s Civil Rights Unit in the Civil Division. Assistant U.S. Attorney Mark Osmond is in charge of the case.
Founder of “BitClout” Digital Asset Charged with Fraud in Connection with Sale of “BitClout” TokensRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of NADER AL-NAJI, the founder and promoter of the “BitClout” token. AL-NAJI was charged with defrauding a “BitClout” purchaser by making false and misleading representations disclaiming control over the use of the investment funds. AL-NAJI was taken into custody on Saturday, July 27, 2024, and was presented yesterday before a U.S. Magistrate Judge in California.
U.S. Attorney Damian Williams said: “BitClout may have been a new token, but Nader Al-Naji’s alleged fraud was nothing new. He allegedly lied to get access to millions of dollars, then gave the money away to family and friends. Today’s arrest signifies this Office’s commitment to holding to account people who use deception to enrich themselves.”
FBI Acting Assistant Director in Charge Christie M. Curtis said: “Nader Al-Naji, founder of the BitClout protocol, allegedly lied to investors and misappropriated investments in the protocol for personal expenses and gifts. Failing to properly disclose the use of invested funds disrupts the integrity vital to investing and can breed distrust for future opportunities. The FBI does not tolerate individuals who use false promises and half-truths to exploit well-intended investors of their funds.
According to the allegations contained in the Complaint:[1]
AL-NAJI is the founder of BitClout, a social media and cryptocurrency trading platform that purportedly allowed users to purchase BitClout tokens using Bitcoin, ostensibly through a decentralized protocol without any centralized issuer, for the purpose of trading BitClout tokens in connection with the social media profiles of other BitClout users.
BitClout held itself out as a “cross between a financial app and a social app.” Specifically, BitClout was touted as “a social network built from the ground up as its own custom blockchain. It’s not a company, it has no employees—it’s just code and coins . . . . [W]e refer to BitClout as a ‘protocol’—it is ultimately nothing more than an open-source piece of code running on machines all over the world. No company, just code and coins.”
In or about January 2021, AL-NAJI contacted representatives of a prospective investor (“Investor-1”) to discuss the BitClout project and provided Investor-1 with BitClout’s marketing material. On or about January 18, 2021, AL-NAJI met with representatives of Investor-1 and stated, in substance and in part, his intent to use the Bitcoin raised from selling BitClout to develop the BitClout protocol. As part of negotiations with Investor-1, AL-NAJI claimed, in substance, that the role played by his entity was merely to purchase BitClout tokens from the protocol, and that he did not have any control over the funds after the purchase was complete.
In fact, contrary to AL-NAJI’s representations to Investor-1, AL-NAJI did maintain control over the proceeds provided by Investor-1 and used them for, among other things, personal expenses and gifts to AL-NAJI’s family members. After inducing Investor-1 to invest approximately $3 million, AL-NAJI routed the funds through multiple accounts for the ultimate benefit of himself and family members.
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Al-NAJI, 32, of Los Angeles, California, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the investigative work of the FBI and also thanked the Securities and Exchange Commission, which has filed a civil enforcement action against the defendant, for its assistance in the investigation.
The case is being overseen by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Sarah Mortazavi and Nicholas Folly are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Two Men Plead Guilty to Acting as Illegal Agents of Chinese Government and BriberyRead the Press Release
John Chen, 71, of the People's Republic of China (PRC) and Los Angeles, California, and Lin Feng, 44, a PRC citizen and resident of Los Angeles, California, pleaded guilty to acting as unregistered agents of the PRC and bribing an IRS agent in connection with a plot to target U.S.-based practitioners of Falun Gong — a spiritual practice banned in the PRC.
According to court documents, from at least approximately January 2023 to May 2023, Chen and Feng worked inside the United States at the direction of the PRC government, including PRC government official identified as PRC Official-1, to further the PRC's campaign to repress and harass Falun Gong practitioners. The PRC designated the Falun Gong as one of the “Five Poisons,” or one of the top five threats to its rule. In China, Falun Gong adherents face a range of repressive and punitive measures from the Chinese government, including imprisonment.
As part of the PRC's campaign against the Falun Gong, Chen and Feng engaged in a PRC government-directed scheme to manipulate the IRS’s Whistleblower Program in an effort to strip the tax-exempt status of an entity run and maintained by Falun Gong practitioners (Entity-1). After Chen filed a defective whistleblower complaint with the IRS, Chen and Feng paid $5,000 in cash bribes and promised to pay substantially more to a purported IRS agent (Agent-1) who was, in fact, an undercover officer, in exchange for Agent-1’s assistance in advancing the complaint. Neither Chen nor Feng notified the Attorney General that they were acting as agents of the PRC in the United States.
In the course of the scheme, Chen, on a recorded call, explicitly noted that the purpose of paying these bribes, which were directed and funded by the PRC, was to carry out the PRC government’s aim of “toppl[ing] . . . the Falun Gong.” During a call intercepted pursuant to a judicially authorized wiretap, Chen and Feng discussed receiving “direction” on the bribery scheme from PRC Official-1, deleting instructions received from PRC Official-1 in order to evade detection, and “alert[ing]” and “sound[ing] the alarm” to PRC Official-1 if Chen and Feng’s meetings to bribe Agent-1 did not go as planned. Chen and Feng also discussed that PRC Official-1 was the PRC government official “in charge” of the bribery scheme targeting the Falun Gong.
As part of this scheme, Chen and Feng met with Agent-1 in Newburgh, New York, on May 14, 2023. During the meeting, Chen gave Agent-1 a $1,000 cash bribe as an initial, partial bribe payment. Chen further offered to pay Agent-1 a total of $50,000 for opening an audit of Entity-1, as well as 60% of any whistleblower award from the IRS if the Chen whistleblower complaint were successful. On May 18, 2023, Feng paid Agent-1 a $4,000 cash bribe at John F. Kennedy International Airport as an additional partial bribe payment in furtherance of the scheme.
Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Damian Williams for the Southern District of New York and Executive Assistant Director Robert R. Wells of the FBI’s National Security Branch made the announcement.
Chen and Feng each pleaded guilty to one count of acting as an unregistered agent of a foreign government and one count of bribing a public official. Chen pleaded guilty yesterday and is scheduled to be sentenced on Oct. 30. Feng pleaded guilty today and is scheduled to be sentenced on Oct. 31. Chen and Feng each face a maximum penalty of 25 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI and the Office of the Treasury Inspector General for Tax Administration are investigating the case.
Assistant U.S. Attorneys Qais Ghafary, Michael D. Lockard and Kathryn Wheelock for the Southern District of New York and Trial Attorney Christina Clark of the Counterintelligence and Export Control Section are prosecuting the case.
Two Men Plead Guilty to Acting as Illegal Agents of the PRC Government and BriberyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that JOHN CHEN and LIN FENG pled guilty to acting as unregistered agents of the government of the People’s Republic of China (“PRC”) and bribing an Internal Revenue Service (“IRS”) agent in connection with a plot to target U.S.-based practitioners of Falun Gong — a spiritual practice banned in the PRC. CHEN pled guilty yesterday before U.S. Magistrate Judge Andrew E. Krause and is scheduled to be sentenced on October 30, 2024, before U.S. District Judge Nelson S. Román. FENG pled guilty today before Judge Krause and will be sentenced on October 31, 2024, before Judge Román.
U.S. Attorney Damian Williams said: “John Chen and Lin Feng brazenly attempted to bribe an undercover agent they believed to be an IRS agent here in the United States on behalf of the PRC Government in order to harass and intimidate the Falun Gong, a target of PRC repression. Efforts such as this to repress free speech by targeting critics of the PRC in the United States will not be tolerated. This Office remains committed to thwarting malicious transnational repression attempts by foreign influences on American soil.”
According to Indictment and other court documents:
From at least approximately January 2023 to May 2023, CHEN and FENG worked inside the United States at the direction of the PRC Government, including an identified PRC Government official (“PRC Official-1”), to further the PRC Government’s campaign to repress and harass Falun Gong practitioners. The PRC Government has designated the Falun Gong as one of the “Five Poisons,” or one of the top five threats to its rule. In China, Falun Gong adherents face a range of repressive and punitive measures from the PRC Government, including imprisonment.
As part of the PRC Government’s campaign against the Falun Gong, CHEN and FENG engaged in a PRC Government-directed scheme to manipulate the IRS’s Whistleblower Program in an effort to strip the tax-exempt status of an entity run and maintained by Falun Gong practitioners (“Entity-1”). After CHEN filed a defective whistleblower complaint with the IRS (the “Chen Whistleblower Complaint”), CHEN and FENG paid $5,000 in cash bribes, and promised to pay substantially more, to a purported IRS agent who was, in fact, an undercover officer (“Agent-1”) in exchange for Agent-1’s assistance in advancing the complaint. Neither CHEN nor FENG notified the Attorney General that they were acting as agents of the PRC Government in the United States.
In the course of the scheme, CHEN, on a recorded call, explicitly noted that the purpose of paying these bribes, which were directed and funded by the PRC Government, was to carry out the PRC Government’s aim of “toppl[ing] . . . the Falun Gong.” During a call intercepted pursuant to a judicially authorized wiretap, CHEN and FENG discussed receiving “direction” on the bribery scheme from PRC Official-1, deleting instructions received from PRC Official-1 in order to evade detection, and “alert[ing]” and “sound[ing] the alarm” to PRC Official-1 if CHEN and FENG’s meetings to bribe Agent-1 did not go as planned. CHEN and FENG also discussed that PRC Official-1 was the PRC Government official “in charge” of the bribery scheme targeting the Falun Gong.
As part of this scheme, CHEN and FENG met with Agent-1 in Newburgh, New York, on May 14, 2023. During the meeting, CHEN gave Agent-1 a $1,000 cash bribe as an initial, partial bribe payment. CHEN further offered to pay Agent-1 a total of $50,000 for opening an audit of Entity-1, as well as 60% of any whistleblower award from the IRS if the Chen Whistleblower Complaint were successful. On May 18, 2023, FENG paid Agent-1 a $4,000 cash bribe at John F. Kennedy International Airport as an additional partial bribe payment in furtherance of the scheme.
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CHEN, 71, of Chino, California, and FENG, 44, a PRC citizen and resident of Los Angeles, California, each pled guilty to one count of acting as an unregistered agent of a foreign government, which carries a maximum sentence of 10 years in prison, and one count of bribing a public official, which carries a maximum sentence of 15 years in prison.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation’s New York and Los Angeles Field Offices and Counterintelligence Division and the Office of the U.S. Treasury Inspector General for Tax Administration. Mr. Williams also thanked the Department of Justice’s National Security Division, Counterintelligence and Export Control Section for their assistance.
The case is being handled by the Office’s White Plains Division and National Security and International Narcotics Unit. Assistant U.S. Attorneys Qais Ghafary, Michael D. Lockard, and Kathryn Wheelock are in charge of the case, with assistance from Trial Attorney Christina Clark of the Counterintelligence and Export Control Section.
Tennessee Woman Sentenced to 41 Months in Prison for Violating the Freedom of Access to Clinic Entrances ActRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that BEVELYN BEATTY WILLIAMS was sentenced to 41 months in prison for violating the Freedom of Access to Clinic Entrances Act (the “FACE Act”) in June 2020 in connection with her interference, including by threats and force, with individuals seeking to obtain and provide lawful reproductive health services at a reproductive health center in Manhattan. On February 22, 2024, WILLIAMS was convicted after a nine-day jury trial of one count of violating the FACE Act before U.S. District Judge Jennifer L. Rochon, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Bevelyn Beatty Williams repeatedly intimidated and interfered with individuals seeking and providing critical reproductive health services. She did so by physically blocking access to clinics, threatening staff, and by force. This Office and our law enforcement partners are committed to ensuring that patients exercising their legal right to obtain reproductive health services, and healthcare facilities and their staff providing those services, can do so without unlawful interference or fear of threats or violence.”
According to evidence admitted at trial and other public filings and statements made in Court:
On June 19, 2020, and June 20, 2020, WILLIAMS threatened and used force against patients and staff members at a reproductive health center located in lower Manhattan (the “Health Center”) and blocked patients and staff members from accessing the Health Center. In one instance, and as captured on video, WILLIAMS pressed her body against the door of the Health Center’s patient entrance and refused to move, preventing a Health Center volunteer from entering the Health Center. As a Health Center staff member (“Victim-1”) attempted to open the door for the volunteer, WILLIAMS purposefully leaned against the door, crushing Victim-1’s hand. Victim-1 yelled, “She’s crushing my hand,” but WILLIAMS remained against the door, trapping Victim-1’s hand and injuring it.
At various times on June 19 and 20, 2020, WILLIAMS stood directly in front of the Health Center entrances. WILLIAMS initially blocked the main entrance used by patients, causing the Health Center to have to divert patients to enter through the staff entrance. WILLIAMS responded by moving to block the staff entrance and directing others to do the same.
WILLIAMS livestreamed some of her conduct on June 19 and 20, 2020, on a social media account. On the livestream on June 19, 2020, WILLIAMS stood within inches of the Health Center’s chief administrative officer and threatened to “terrorize this place” and warned that “we’re gonna terrorize you so good, your business is gonna be over mama.” Similarly, WILLIAMS stood within inches of a Health Center security officer and threatened “war.” WILLIAMS also stated that she would act by “any means necessary.”
In addition to WILLIAMS’s conduct in Manhattan, on multiple other occasions from at least 2019 to 2022, WILLIAMS and others intimidated and interfered with individuals seeking to obtain or provide reproductive health services at other health clinics across the country, including in Florida, Tennessee, Georgia, and Brooklyn, New York. For example, in January 2022, WILLIAMS travelled to a health center in Fort Myers, Florida, where she directed other individuals to block health center entrances. As a result of the blockade, medical staff was delayed in treating at least a dozen patients, three of whom were scheduled for time-sensitive procedures that could have resulted in bleeding, infection, or significant pain without timely treatment. In addition, in July 2022, WILLIAMS invaded a health center in Atlanta, Georgia, where she screamed through the door at patients attempting to enter the facility until they were forced to leave. Among other things, WILLIAMS shouted that she’d go to jail before letting patients enter the facility for an abortion and that she was “not afraid to get arrested.”
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In addition to the prison term, WILLIAMS, 33, of Ooltewah, Tennessee, was sentenced to two years of supervised release.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation.
The prosecution of this case is being handled by the Office’s Civil Rights Unit in the Criminal Division. Assistant U.S. Attorneys Emily A. Johnson, Mitzi Steiner, and Jamie Bagliebter, with the assistance of Paralegal Specialist Isabel Loftus, are in charge of the prosecution.
U.S. Attorney Announces Non-Prosecution Agreement with International Bus Parts Supplier CBMRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Christopher A. Scharf, the Special Agent in Charge of the Northeast Region of the U.S. Department of Transportation, Office of the Inspector General (“DOT-OIG”); and Daniel Cort, the Inspector General of the Metropolitan Transportation Authority (“MTA-IG”), announced that international bus parts supplier CBM entered into a non-prosecution agreement (the “NPA”) with the U.S. Attorney’s Office. Under the NPA, CBM agreed to pay significant monetary penalties for engaging in a scheme to defraud U.S. transit authority customers through false and misleading statements about the sources of contracted-for bus parts during the period from approximately 2010 to April 2021. Specifically, the NPA requires CBM to forfeit $463,243.41 to the United States, representing its profits from the scheme, and pay a fine of $1,500,000. In addition, CBM has agreed to pay restitution to victims who submit claims and to revert unclaimed funds up to $438,859.52 to the Crime Victims Fund, administered by the Department of Justice’s Office for Victims of Crime. The NPA also requires that for at least two years from the date of the agreement, CBM will further cooperate with the United States, self-report any future violations of U.S. law, and continue its ongoing efforts to implement and maintain an adequate compliance program. In the event that CBM violates the NPA, the U.S. Attorney’s Office may prosecute CBM for any newly discovered criminal activity and for the conduct that gives rise to the NPA.
This corporate action reflects a careful weighing of factors relevant to the appropriate corporate resolution. The NPA recognizes that, although CBM’s serious misconduct was reported to the U.S. Attorney’s Office before CBM self-disclosed it, (i) CBM US cooperated extensively with the U.S. Attorney’s Office, including through detailed disclosures and accountings of conduct not already known when CBM’s cooperation began; (ii) the most serious wrongdoing at CBM was limited to two individuals, though they were at the highest levels of the company; (iii) CBM has no history of criminal conduct, including any resolved through prior NPAs or deferred prosecution agreements; (iv) CBM has undertaken extensive remedial measures to ensure that similar conduct does not occur or go undetected in the future; and (v) CBM has taken full responsibility and agreed to make full restitution to all victims that seek compensation.
U.S. Attorney Damian Williams said: “CBM, primarily through the actions of a limited number of managers outside of the United States, represented to U.S. transit authorities that CBM was providing bus parts from specific suppliers and under specific brand names. Fortunately, none of the transactions at issue involved parts that bear on the safety of any affected buses. Since this Office’s investigation came to CBM’s attention, the company has cooperated fully and taken significant and commendable steps to remediate the institutional failures that allowed this situation to occur in the first place. But this NPA also ensures that CBM is held financially accountable for its conduct and that victims will be made whole. It should serve as a reminder to all companies that it will lose its profits, and then some, when this Office becomes aware of business practices like CBM’s in this case.”
DOT-OIG Special Agent in Charge Christopher A. Scharf said: “This NPA is an important step in remedying the harm caused by CBM when it misled U.S. transit authority customers. DOT OIG remains committed to holding transportation industry suppliers accountable for their actions that compromise the integrity of contracted goods and services.”
MTA Inspector General Daniel Cort said: "The MTA must have faith in the integrity of its supply chain, and any breach of that trust is unacceptable. I thank our federal partners for holding vendors accountable for deceptive behavior."
As part of the NPA, CBM agreed to a statement of facts describing its conduct and the remedial measures that it took in response to learning of that conduct.
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Mr. Williams praised the outstanding investigative work of the DOT-OIG and thanked the MTA-IG for its assistance.
This matter is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorney Frank Balsamello is in charge of the matter.
Self-Proclaimed “Wolf of Airbnb” Sentenced to 51 Months in Prison in Connection with Ppp and Real Estate Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that KONRAD BICHER was sentenced today by U.S. District Judge Lorna G. Schofield to 51 months in prison in connection with his fraudulent operation of real estate businesses, including by entering into lease agreements for residential apartment units in Manhattan on false and fraudulent pretenses and by making false statements to obtain loans guaranteed by the U.S. government. BICHER previously pled guilty to one count of wire fraud in connection with the scheme.
U.S. Attorney Damian Williams said: “For years, Bicher schemed to defraud New York City landlords and the U.S. Government. Bicher enriched himself by abusing Government programs and tenant protections intended to benefit people and businesses in need during one of the worst economic and public health crises in history. He bragged about his schemes to his friends and the media, proudly referring to himself as the ‘Wolf of Airbnb,’ but as today’s sentence underscores, those who partake in such callous and fraudulent conduct will answer for their crimes, no matter their self-given title.”
According to the allegations in the Complaint, Indictment, other court documents, and statements made in Court:
Beginning in at least February 2019, BICHER and/or individuals working in concert with BICHER, began renting apartment units (the “Units”) in Manhattan. The Units were leased pursuant to lease agreements which required that the lessee make monthly rental payments and also included clauses that prohibited the lessee from renting the Units to third parties on a short-term basis and/or included clauses that prohibited the lessee from subletting the Units to third parties without written consent of the owner. Despite the requirement to make monthly rental payments, BICHER failed to make payments as required by the lease agreements. For many of the Units, BICHER also refused to vacate the Units after the expiration of the lease agreements. During the period of time that BICHER failed to make required rental payments, including the period of time after a lease agreement expired and the premises had not been vacated, BICHER derived income by renting the Units on a short-term basis, including by posting the Units for rent on various online marketplaces, including Airbnb, Inc. (“Airbnb”).
Between in or about July 2019, and in or about April 2022, BICHER and his associates failed to make more than $1,000,000 in payments pursuant to the Lease Agreements or, for the period of time after the expiration of the Lease Agreements, based on the estimated fair market value for the Units. During this period, BICHER caused the Units to be listed for short-term rent on Airbnb and at least one other online marketplace for short-term rentals, resulting in at least $1,170,000 in rental income to BICHER and his associates.
Throughout the course of this scheme, the lessors of the Units made numerous efforts to recover rental payments from BICHER and/or to stop BICHER from continuing to rent the Units on a short-term basis, including by initiating civil litigation against BICHER. BICHER relied on legal protections intended to benefit tenants, including tenant protections adopted in connection with the COVID-19 pandemic, in order to oppose the lawsuits. Despite relying on tenant protections for New Yorkers in need, BICHER continued to generate revenue by renting certain Units on a short-term basis.
In addition, between at least in or about April 2021, until in or about July 2021, BICHER obtained Government-guaranteed loans through a loan program of the U.S. Small Business Administration designed to provide relief to small businesses during the COVID-19 pandemic, namely the Paycheck Protection Program (“PPP”). In furtherance of this scheme, BICHER submitted at least four applications for PPP loans on behalf of at least three entities and obtained over $565,000 in loan proceeds. These PPP applications contained fraudulent documents and false information. For example, in connection with the PPP applications, BICHER submitted tax documents which were purportedly filed with the Internal Revenue Service (“IRS”). These documents were falsified, in that the entities seeking PPP loans had not actually filed the purported tax returns with the IRS, and BICHER had not otherwise reported the purported income to the IRS.
During the course of the scheme, BICHER referred to himself as the “Wolf of Airbnb” and explained to media outlets that this nickname referred to the fact that he was “hungry and ruthless enough to get on top of the financial ladder” and had the “ferocity…of a wolf, because wolves are territorial, vicious, and show no mercy when provoked.”
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In addition to the prison term, BICHER, 32, of Hialeah, Florida, was sentenced to three years of supervised release. He was additionally ordered to forfeit $1,740,407.12 and pay restitution in the amount of $2,227,371.58.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Matthew Weinberg is in charge of the prosecution.
Ossining Man Arrested for Threatening to Kill USPS Employees and Burn Down U.S. Post OfficesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Daniel B. Brubaker, the Inspector in Charge of the New York Division of the U.S. Postal Inspection Service (“USPIS”), announced today that ANTHONY ALFANO was arrested after he made a series of graphic and violent threats to kill U.S. Postal Service (“USPS”) employees and burn down U.S. post offices in Ossining, New York. ALFANO was arrested in Yorktown Heights, New York, this morning and is expected to appear this afternoon in White Plains federal court before U.S. Magistrate Judge Victoria Reznik.
U.S. Attorney Damian Williams said: “The charges against the defendant underscore this Office’s unwavering commitment to swiftly collaborate with our law enforcement partners to neutralize threats against the U.S. mail system. Any individual who dares to cross the line and threaten our postal employees and facilities with violence and destruction will be stopped in their tracks, and we will ensure they are held accountable for their actions.”
USPIS Inspector in Charge Daniel B. Brubaker said: “The U.S. Postal Inspection Service does not take lightly any threats of violence against USPS employees. This behavior will never be tolerated, and we will work with our local and federal law enforcement partners to maintain a safe working environment for the postal employees we protect. That is our mission, and that is our unwavering commitment to the people we serve.”
As alleged in the Complaint:[1]
On Saturday, June 22, 2024, ANTHONY ALFANO was awaiting the delivery of a parcel that had been mailed out via USPS from Florida the evening before. According to ALFANO, the parcel contained cremated remains. In a series of phone calls with USPS call center representatives before the package was scheduled to arrive, ALFANO threatened to kill USPS employees and burn down U.S. post offices because he apparently believed the parcel was not going to arrive when he wanted it to. ALFANO’s threats included the following:
- ALFANO threatened, “I am gonna start killing you guys one by one.” He also said, “people are going to die,” and that there would be “a lot of dead bodies,” “hurt people,” and people who would “not be returning home.” ALFANO also swore to kill his local mail carrier, stating that he would “walk up to him” and “blow his brains out.” Referencing a notorious “massacre,” ALFANO warned that it would not “have shit on what I’m about to do” and that his actions would go down “in history.”
- ALFANO also made threats to kill members of the postal police by using incendiary ammunition, as well as threats to burn down U.S. post offices. For example, he welcomed the arrival of the postal police and said, “as soon as they show up at my door they’re gonna catch a hot one,” referring to shooting them with a “napalm round” from his 12-gauge shotgun. “I’m going to kill every one of those motherfuckers,” he said. He further threatened, “I’m gonna burn all the post offices down to the ground” and said he would go to his local post office and “burn it down to the fucking ground.”
Underscoring his commitment to carry out his threats, ALFANO said several times, “I don’t make threats, I make promises.” He also expressly swore to carry out his threats and said, “I really don’t care if I go to jail or not.”
On Monday, June 24, 2024, ALFANO received his parcel on the next business day after it had been mailed out on the Friday before.
ALFANO has a history of encounters with law enforcement because of prior threats he has made against others, including local police officers, delivery persons, and customer service representatives.
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ANTHONY ALFANO, 46, of Ossining, New York, is charged with threatening interstate communications, which carries a maximum sentence of five years in prison, and willfully making a threat involving fire, which carries a maximum sentence of 10 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding work of the USPIS in investigating the threats charged in the Complaint and undertaking security measures to protect USPS employees and facilities. Mr. Williams also thanked the Village of Ossining Police Department and City of Peekskill Police Department for their assistance in this case.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Reyhan Watson is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Two Charged with Distribution of Protonitazene, A Novel Synthetic Opioid More Potent Than FentanylRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Frank A. Tarentino III, the Special Agent in Charge of the New York Division of the Drug Enforcement Administration (“DEA”), announced today the unsealing of a Complaint charging MIGUEL DE JESUS REYES MEDINA a/k/a “Azua,” and ERIK ALBERTO LOPEZ VALDEZ with conspiracy to distribute fentanyl and distribution of protonitazene, a novel synthetic opioid that is up to three times more potent than fentanyl. REYES MEDINA and LOPEZ VALDEZ were arrested today. LOPEZ VALDEZ will be presented later today before U.S. Magistrate Judge Robert W. Lehrburger, and REYES MEDINA will be presented before Judge Lehrburger tomorrow, July 19, 2024.
U.S. Attorney Damian Williams said: “As alleged, Miguel de Jesus Reyes Medina and Erik Alberto Lopez Valdez engaged in a scheme to sell dangerous narcotics to New Yorkers, including a novel, and potentially lethal, synthetic opioid. As part of that scheme, the defendants sold protonitazene, which, as alleged, is as much as three times more deadly than fentanyl. This prosecution underscores my Office’s unwavering commitment to protecting our communities from the deadly opioid crisis, including from emergent synthetic opioids that pose even greater threats than fentanyl. We will not allow drug dealers to hide behind novel changes to the chemical structure of drugs to avoid prosecution.”
DEA Special Agent in Charge Frank A. Tarentino III said: “Today’s arrests show the commitment the DEA and our law enforcement partners have in targeting those poisoning our communities. As alleged, these individuals are not only responsible for the distribution of the lethal drug fentanyl, but the distribution of protonitazene, a novel synthetic opioid that is up to three times more potent than fentanyl. It is safe to say that the removal of these individuals, and the distribution of these illicit drugs from our streets, saved another family from having to bury their loved one. The DEA and members of our NYDETF remain committed to doing everything we can to bring those responsible to justice.”
As alleged in the Complaint:[1]
In or about April 2024, REYES MEDINA agreed to sell fentanyl to a confidential source (the “Source”) working with law enforcement. REYES MEDINA negotiated the price and quantity of fentanyl to be provided, requesting $2,000 for 74 grams of fentanyl. On or about April 10, 2024, REYES MEDINA met with the Source and provided a 74-gram package of narcotics. During the meeting, REYES MEDINA emphasized that the narcotics were high quality and strong. Then, on or about April 16, 2024, REYES MEDINA arranged to have LOPEZ VALDEZ deliver a further 420-gram package of narcotics to the Source for the price of $12,250, which LOPEZ VALDEZ did. Following the arrest of REYES MEDINA and LOPEZ VALDEZ, laboratory testing determined that the packages of narcotics provided to the Source by REYES MEDINA and LOPEZ VALDEZ consisted of nearly 500 grams of protonitazene, a synthetic opioid that is up to three times more potent than fentanyl.
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REYES MEDINA, 49, of Yonkers, New York, is charged with one count of conspiracy to distribute fentanyl, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison, and two counts of distribution of protonitazene, each of which carry a maximum sentence of 20 years in prison.
LOPEZ VALDEZ, 38, of Camden, New Jersey, is charged with one count of conspiracy to distribute fentanyl, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison, and one count of distribution of protonitazene, which carries a maximum sentence of 20 years in prison.
The minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the outstanding work of the DEA, the New York City Police Department, and the New York State Police in connection with this investigation.
The prosecution is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorney William C. Kinder is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Russian International Money Launderer Sentenced to 36 Months in Prison for Illicitly Procuring Large Quantities of U.S.-Manufactured Dual-Use, Military Grade Microelectronics for Russian EntitiesRead the Press Release
Maxim Marchenko, 52, was sentenced today to three years in prison followed by three years of supervised release for his role in procuring dual-use, military grade OLED micro-displays for Russian end users.
“Today’s sentence holds Mr. Marchenko accountable for his role in a procurement syndicate that funneled U.S.-manufactured military-grade microelectronics to end users in Russia, illegally delivering controlled technologies worth hundreds of thousands of dollars,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Justice Department remains relentlessly focused on dismantling illicit procurement networks led by individuals like the defendant, who use their business skills and connections to advance the Russian war agenda.”
“The transshipment of military-grade microelectronics through Hong Kong to Russia helps fuel the engine of Russia’s war machine,” said Assistant Secretary of Commerce Matthew S. Axelrod for Export Enforcement. “Today’s sentencing is just the latest example of our unceasing efforts to target and disrupt illegal Russian procurement networks.”
“This office will stop at nothing to hold accountable those who seek to circumvent our laws to gain access to some of our most sensitive technologies,” said U.S. Attorney Damian Williams for the Southern District of New York. “Today’s sentence should be a reminder that no number of shell companies or obfuscation will stop this office in its pursuit of those who seek to illicitly gain access to controlled technologies.”
“Marchenko and his co-conspirators operated an international smuggling network of sensitive microelectronics used in military gear and other weapons systems,” said Executive Assistant Director Robert Wells of the FBI National Security Branch. “Today’s sentencing demonstrates the FBI’s resolve in doing our part to protect national security and prevent American military technology from being diverted to foreign adversaries and hostile nation states.”
According to court documents, Marchenko is a Russian national who resides in Hong Kong and operates several Hong Kong-based shell companies, including Alice Components Co. Ltd. (Alice Components), Neway Technologies Limited (Neway) and RG Solutions Limited (RG Solutions). Marchenko and two co-conspirators, who are also Russian nationals, operate an illicit procurement network in Russia, Hong Kong and elsewhere overseas. This procurement network has fraudulently obtained from U.S. distributors large quantities of dual-use, military grade microelectronics, specifically OLED micro-displays, on behalf of Russia-based end users. To carry out this scheme, Marchenko and his co-conspirators used shell companies based in Hong Kong and other deceptive means to conceal from U.S. government agencies and U.S. distributors that the OLED micro-displays were destined for Russia. The technology that Marchenko and his co-conspirators fraudulently procured have significant military applications, such as in rifle scopes, night vision goggles, thermal optics and other weapon systems.
To perpetrate the scheme, Marchenko and other members of the conspiracy acquired the dual-use OLED micro-displays from U.S.-based distributors using Marchenko’s Hong Kong-based shell companies, including Alice Components, Neway and RG Solutions. Members of the conspiracy, including Marchenko, procured these sensitive microelectronics by falsely representing to the U.S. distributors (who, in turn, are required to report to U.S. agencies) that Alice Components was sending the shipments to end users located in China, Hong Kong and other countries outside of Russia for use in electron microscopes for medical research or hunting rifles. In reality, the OLED micro-displays were destined for end users in Russia. Marchenko and other members of the conspiracy concealed the true final destination (Russia) from U.S. distributors for the purpose of causing false statements to the U.S. agencies.
To conceal the fact that these OLED micro-displays were destined for Russia, Marchenko and other members of the conspiracy worked together to transship the illicitly procured OLED micro-displays by using pass-through entities principally operated by Marchenko in third countries, such as Hong Kong. Marchenko then caused the OLED micro-displays to be shipped to the ultimate destination in Russia using, among other entities, a freight forwarder known to provide freight forwarding services to Russia. In addition, Marchenko and other members of the conspiracy used Hong Kong-based shell companies, principally operated by Marchenko, to conceal the fact that payments for the OLED micro-displays were coming from Russia. In total, between in or about May 2022 and in or about August 2023, Marchenko’s shell companies funneled more than $1.6 million to the United States in support of the procurement network’s efforts to smuggle the OLED micro-displays to Russia.
The FBI, Commerce Department’s Bureau of Industry and Security and Department of State’s Diplomatic Security Service investigated the case with assistance from the Justice Department’s Office of International Affairs.
Assistant U.S. Attorneys Jennifer N. Ong and Shiva H. Logarajah for the Southern District of New York prosecuted the case, with assistance from Trial Attorney Garrett Coyle of the National Security Division’s Counterintelligence and Export Control Section.
Today’s actions were coordinated through the Justice Department’s Task Force KleptoCapture and the Justice and Commerce Departments’ Disruptive Technology Strike Force. Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains and prevent critical technology from being acquired by authoritarian regimes and hostile nation states.
Russian International Money Launderer Sentenced to Three Years in Prison for Illicitly Procuring Large Quantities of U.S.-Manufactured Dual-Use, Military Grade Microelectronics for Russian EntitiesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Matthew G. Olsen, the Assistant Attorney General of the Justice Department’s National Security Division; Matthew S. Axelrod, the Assistant Secretary of Export Enforcement for Department of Commerce’s the Bureau of Industry and Security (“BIS”); and Robert Wells, the Executive Assistant Director of the National Security Branch of the Federal Bureau of Investigation (“FBI”), announced that MAXIM MARCHENKO was sentenced today by U.S. District Judge Nelson S. Román to three years in prison for his role in procuring dual-use, military grade OLED micro-displays for Russian end users. MARCHENKO previously pled guilty to money laundering and smuggling charges before U.S. Magistrate Judge Victoria Reznik on February 29, 2024.
U.S. Attorney Damian Williams said: “This Office will stop at nothing to hold accountable those who seek to circumvent our laws to gain access to some of our most sensitive technologies. Today’s sentence should be a reminder that no number of shell companies or obfuscation will stop this Office in its pursuit of those who seek to illicitly gain access to controlled technologies.”
Assistant Attorney General Matthew G. Olsen said: “Today’s sentence holds Mr. Marchenko accountable for his role in a procurement syndicate that funneled U.S.-manufactured military-grade microelectronics to end users in Russia, illegally delivering controlled technologies worth hundreds of thousands of dollars. The Justice Department remains relentlessly focused on dismantling illicit procurement networks led by individuals like the defendant, who use their business skills and connections to advance the Russian war agenda.”
BIS Assistant Secretary of Export Enforcement Matthew S. Axelrod said: “The transshipment of military-grade microelectronics through Hong Kong to Russia helps fuel the engine of Russia’s war machine. Today’s sentencing is just the latest example of our unceasing efforts to target and disrupt illegal Russian procurement networks.”
FBI Executive Assistant Director Robert Wells said: “Marchenko and his co-conspirators operated an international smuggling network of sensitive microelectronics used in military gear and other weapons systems. Today’s sentencing demonstrates the FBI’s resolve in doing our part to protect national security and prevent American military technology from being diverted to foreign adversaries and hostile nation states.”
According to the allegations contained in the Information and other filings and statements made in court:
MAXIM MARCHENKO is a Russian national who resides in Hong Kong and operates several Hong Kong-based shell companies, including Alice Components Co. Ltd. (“Alice Components”), Neway Technologies Limited (“Neway”), and RG Solutions Limited (“RG Solutions”). MARCHENKO and two co-conspirators (“CC-1” and “CC-2”), who are also Russian nationals, operate an illicit procurement network in Russia, Hong Kong, and elsewhere overseas. This procurement network has fraudulently obtained from U.S. distributors large quantities of dual-use, military grade microelectronics, specifically OLED micro-displays, on behalf of Russia-based end users. To carry out this scheme, MARCHENKO, CC-1, and CC-2 used shell companies based in Hong Kong and other deceptive means to conceal from U.S. Government agencies and U.S. distributors that the OLED micro-displays were destined for Russia. The technology that MARCHENKO and his co-conspirators fraudulently procured have significant military applications, such as in rifle scopes, night vision goggles, thermal optics, and other weapon systems.
To perpetrate the scheme, MARCHENKO and other members of the conspiracy acquired the dual-use OLED micro-displays from U.S.-based distributors using MARCHENKO’s Hong Kong-based shell companies, including Alice Components, Neway, and RG Solutions. Members of the conspiracy, including MARCHENKO, procured these sensitive microelectronics by falsely representing to the U.S. distributors (who, in turn, are required to report to U.S. agencies) that Alice Components was sending the shipments to end users located in China, Hong Kong, and other countries outside of Russia for use in electron microscopes for medical research or hunting rifles. In reality, the OLED micro-displays were destined for end users in Russia. MARCHENKO and other members of the conspiracy concealed the true final destination (Russia) from U.S. distributors for the purpose of causing false statements to the U.S. agencies.
To conceal the fact that these OLED micro-displays were destined for Russia, MARCHENKO and other members of the conspiracy worked together to transship the illicitly procured OLED micro-displays by using pass-through entities principally operated by MARCHENKO in third countries, such as Hong Kong. MARCHENKO then caused the OLED micro-displays to be shipped to the ultimate destination in Russia using, among other entities, a freight forwarder known to provide freight forwarding services to Russia. In addition, MARCHENKO and other members of the conspiracy used Hong Kong-based shell companies, principally operated by MARCHENKO, to conceal the fact that payments for the OLED micro-displays were coming from Russia. In total, between in or about May 2022 and in or about August 2023, MARCHENKO’s shell companies funneled more than $1.6 million to the U.S. in support of the procurement network’s efforts to smuggle the OLED micro-displays to Russia.
* * *
In addition to the prison term, MARCHENKO, 52, a Russian citizen who resided in Hong Kong, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division and the New York Field Office of the BIS. Mr. Williams also thanked the FBI’s Legal Attaché office in Australia; the U.S. Department of State’s Diplomatic Security Service; the Department of Justice’s National Security Division, Counterintelligence and Export Control Section; and the Office of International Affairs of the Department of Justice’s Criminal Division for their assistance.
This case is being handled by the Office’s White Plains Division and the Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Jennifer N. Ong and Shiva H. Logarajah are in charge of the prosecution, with assistance from Trial Attorney Garrett Coyle of the Counterintelligence and Export Control Section.
Today’s actions were coordinated through the Justice Department’s Task Force KleptoCapture and the Justice and Commerce Departments’ Disruptive Technology Strike Force. Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states.
New Jersey Man Sentenced to 26 Months in Prison for Mailing Threatening CommunicationsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that NIKOLAY LEVINSON was sentenced today to 26 months in prison for mailing threatening communications. LEVINSON previously pled guilty before U.S. District Judge Edgardo Ramos, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Nikolay Levinson sent vile racist, anti-Semitic, and anti-Muslim threats for the sole purpose of instilling fear in innocent members of our community. This sentence should serve as a reminder that we will never stop protecting the community from such disturbing, hateful conduct.”
According to the Indictment, other public filings, and statements made in court:
From June through November 2022, shortly after his release from prison for similar offenses, LEVINSON mailed six threatening letters to five victims in the Bronx, Manhattan, and Brooklyn, New York, and at least 35 other anonymous, threatening, hateful, racist, anti-Semitic, and anti-Muslim letters to victims in the greater New York City area. LEVINSON sent the letters, which often contained racial epithets and Nazi imagery, to businesses, schools, synagogues, and individuals.
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In addition to the prison term, LEVINSON, 41, of Palisades Park, New Jersey, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation and the New York City Police Department.
The case is being prosecuted by the Office’s White Plains Division and Civil Rights Unit in the Criminal Division. Assistant U.S. Attorney Jeffrey C. Coffman is in charge of the prosecution.
Former Government Official Arrested for Acting as Unregistered Agent of South Korean GovernmentRead the Press Release
Note: View the indictment here.
Sue Mi Terry, 54, of New York, New York, was arrested yesterday and presented on criminal charges related to offenses under the Foreign Agents Registration Act (FARA).
According to court documents, after leaving U.S. government service and for more than a decade, Terry worked as an agent of the government of the Republic of Korea (ROK), commonly known as South Korea, without registering as a foreign agent with the Attorney General, as required by law. As covertly directed by ROK government officials, Terry publicly advocated ROK policy positions, disclosed non-public U.S. government information to ROK intelligence officers and enabled ROK officials to gain access to U.S. government officials. In exchange for these actions, ROK intelligence officers provided Terry with luxury goods, expensive dinners and more than $37,000 in funding for a public policy program focusing on Korean affairs that Terry controlled.
From in or about 2001 to in or about 2011, Terry served in a series of positions in the U.S. government, including as an analyst on East Asian issues for the Central Intelligence Agency, as the Director for Korea, Japan and Oceanic Affairs for the White House National Security Council and as the Deputy National Intelligence Officer for East Asia at the National Intelligence Council. Since leaving government service in or about 2011, Terry has worked at academic institutions and think tanks in New York City and Washington, D.C. Terry has made media appearances, published articles and hosted conferences as a policy expert specializing in, among other things, South Korea, North Korea and various regional issues impacting Asia. Terry has also testified before Congress on at least three occasions regarding the U.S. government’s policy toward Korea.
As she admitted in a voluntary interview with the FBI in 2023, Terry served as a valuable “source” of information for the ROK National Intelligence Service (ROK NIS), the primary intelligence agency for the ROK. For example, in or about June 2022, Terry participated in a private, off-the-record group meeting with a U.S. Secretary level official regarding the U.S. Government’s policy toward North Korea. Immediately after the meeting, Terry’s primary ROK NIS point of contact, or handler, picked up Terry in a car with ROK Embassy diplomatic plates. While in the car, Terry passed her handler detailed handwritten notes of her meeting, which were written on the letterhead of a think tank where Terry had recently worked. Terry’s handler then photographed the notes while still sitting in the car with Terry.
Weeks later, at the request of her ROK NIS handler, Terry hosted a happy hour for Congressional staff. Although the happy hour was ostensibly on behalf of the think tank where Terry worked, the ROK NIS paid for it with Terry’s knowledge. Terry’s handler attended the event and posed as a diplomat, mingling with Congressional staff without disclosing that he was, in fact, an ROK intelligence officer.
ROK government rewarded Terry for her services. For example, Terry’s ROK NIS handlers gifted her a $2,950 Bottega Veneta handbag and a $3,450 Louis Vuitton handbag, both of which Terry selected during shopping trips with her handlers. One of Terry’s ROK NIS handlers also gifted her a $2,845 Dolce & Gabbana coat. In addition to luxury goods, Terry’s ROK NIS handlers provided her expensive meals, including at Michelin-starred restaurants. Terry’s ROK NIS handlers also deposited approximately $37,000 into an unrestricted “gift” account that Terry controlled at the think tank where she worked. In addition, ROK government officials paid Terry to write articles in both the U.S. and Korean press conveying positions and phrases dictated by the ROK government.
Terry is charged with one count of conspiracy to violate FARA and one count of failure to register under FARA. If convicted, she faces a maximum penalty of 10 years in prison. If convicted, a federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Damian Williams for the Southern District of New York and Executive Assistant Director Robert R. Wells of the FBI’s National Security Branch made the announcement.
The FBI’s Counterintelligence Division and New York Field Office are investigating the case with assistance from the FBI Washington Field Office.
Assistant U.S. Attorneys Kyle A. Wirshba, Alexander Li and Sam Adelsberg for the Southern District of New York are prosecuting the case, with assistance from Trial Attorney Christopher M. Rigali of the National Security Division’s Counterintelligence and Export Control Section.
A criminal complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Former Government Official Arrested for Acting as Unregistered Agent of South Korean GovernmentRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment yesterday charging SUE MI TERRY with offenses under the Foreign Agents Registration Act (“FARA”). TERRY was arrested on July 16, 2024, in New York, New York, and presented before U.S. Magistrate Judge Robert W. Lehrburger. The case is assigned to U.S. District Judge Lorna G. Schofield.
U.S. Attorney Damian Williams said: “As alleged, Sue Mi Terry, a former CIA and White House employee, subverted foreign agent registration laws in order to provide South Korean intelligence officers with access, information, and advocacy. Terry allegedly sold out her positions and influence to the South Korean government in return for luxury handbags, expensive meals, and thousands of dollars of funding for her public policy program. The charges brought should send a clear message to those in public policy who may be tempted to sell their expertise to a foreign government to think twice and ensure you are in accordance with the law.”
FBI Acting Assistant Director in Charge Christie M. Curtis said: “Compromising national security endangers every American by weakening our defenses and putting lives at risk. Sue Mi Terry, a former CIA and White House official, was arrested for allegedly acting as an unregistered agent for South Korea. For over a decade, despite repeated warnings, Terry allegedly exploited her think tank roles to advance a foreign agenda. As alleged, she disclosed sensitive U.S. government information to South Korean intelligence and used her position to influence U.S. policy in favor of South Korea… for money and luxury gifts. Her alleged actions posed a severe threat to national security. This arrest sends a clear message: the FBI will pursue and arrest anyone who endangers our nation’s security by collaborating with foreign spies.”
As alleged in the Indictment:[1]
After leaving U.S. government service and for more than a decade, TERRY worked as an agent of the government of the Republic of Korea (“ROK”), commonly known as South Korea, without registering as a foreign agent with the Attorney General, as required by law. As covertly directed by ROK government officials, TERRY publicly advocated ROK policy positions, disclosed non-public U.S. government information to ROK intelligence officers, and enabled ROK officials to gain access to U.S. government officials. In return for these actions, ROK intelligence officers provided TERRY with luxury goods, expensive dinners, and more than $37,000 in funding for a public policy program focusing on Korean affairs that TERRY controlled.
From in or about 2001 to in or about 2011, TERRY served in a series of positions in the U.S. government, including as an analyst on East Asian issues for the Central Intelligence Agency, as the Director for Korea, Japan, and Oceanic Affairs for the White House National Security Council, and as the Deputy National Intelligence Officer for East Asia at the National Intelligence Council. Since leaving government service in or about 2011, TERRY has worked at academic institutions and think tanks in New York City and Washington, D.C. TERRY has made media appearances, published articles, and hosted conferences as a policy expert specializing in, among other things, South Korea, North Korea, and various regional issues impacting Asia. TERRY has also testified before Congress on at least three occasions regarding the U.S. government’s policy toward Korea.
Since leaving U.S. government service, TERRY served as a valuable source of information for the ROK National Intelligence Service (“ROK NIS”), the ROK’s primary intelligence agency. For example, in or about June 2022, TERRY participated in a private, off-the-record group meeting with the U.S. Secretary of State regarding the U.S. government’s policy toward North Korea. Immediately after the meeting, TERRY’s primary ROK NIS point of contact, or “handler,” picked up TERRY in a car bearing ROK Embassy diplomatic license plates. While in the car, TERRY provided her handler detailed handwritten notes of her meeting with the U.S. Secretary of State. TERRY’s handler photographed the notes while sitting in the car with TERRY.
Weeks later, at the request of her ROK NIS handler, TERRY hosted a happy hour for Congressional staff. Although the happy hour was under the auspices of the think tank where TERRY worked, the ROK NIS paid for it with TERRY’s knowledge. TERRY’s handler attended the event and posed as a diplomat, mingling with Congressional staff without disclosing that he was, in fact, an ROK intelligence officer.
The ROK government rewarded TERRY for her services. For example, TERRY’s ROK NIS handlers gifted her a $2,950 Bottega Veneta handbag and a $3,450 Louis Vuitton handbag, both of which TERRY selected during shopping trips with her handlers. One of TERRY’s ROK NIS handlers also gifted her a $2,845 Dolce & Gabbana coat.
In addition to luxury goods, TERRY’s ROK NIS handlers provided her with expensive meals, including at Michelin-starred restaurants. TERRY’s ROK NIS handlers also deposited approximately $37,000 into an unrestricted “gift” account that TERRY controlled at the think tank where she worked. In addition, ROK government officials paid TERRY to write articles in both the U.S. and Korean press conveying positions and phrases provided by the ROK government.
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TERRY, 54, of New York, New York, has been charged with one count of conspiracy to violate FARA, which carries a maximum sentence of five years in prison, and one count of failure to register under FARA, which carries a maximum sentence of five years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the Counterintelligence Division of the FBI’s New York Field Office. Mr. Williams also thanked the Counterintelligence Division and Foreign Influence Task Force of FBI Headquarters, the Mission Services and Counterintelligence Divisions of the FBI’s Washington Field Office, the Amtrak Police Department, and the Department of Justice’s National Security Division for their assistance.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Sam Adelsberg, Alexander Li, and Kyle A. Wirshba are in charge of the prosecution, with assistance from Trial Attorney Christopher M. Rigali of the National Security Division’s Counterintelligence and Export Control Section.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Statement of U.S. Attorney Damian Williams on the Convictions of U.S. Senator Robert Menendez and Two New Jersey BusinessmenRead the Press Release
U.S. Attorney Damian Williams said: “Moments ago, a jury convicted Senator Robert Menendez of corruption offenses. This case has always been about shocking levels of corruption. Hundreds of thousands of dollars of bribes, including gold, cash, and a Mercedes-Benz. This wasn’t politics as usual; this was politics for profit. Because Senator Menendez has now been found guilty, his years of selling his office to the highest bidder have finally come to an end. Corruption isn’t costless: it erodes public trust, and it undermines the rule of law. That’s why we’re so committed to fighting it, regardless of political party. I want to thank the career prosecutors and law enforcement agents who meticulously investigated and prosecuted this case. Their work brought this egregious corruption to light. They are the best of the best, and I am enormously proud to serve with them.”
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ROBERT MENENDEZ, 70, of Englewood Cliffs, New Jersey; WAEL HANA, 40, of Edgewater, New Jersey, and originally of Egypt; and FRED DAIBES, 66, of Edgewater, New Jersey, were convicted of the charges listed in the chart below.
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as the sentencing of the defendants will be determined by Judge Stein. Sentencing for MENENDEZ, HANA, and DAIBES has been scheduled for October 29, 2024.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation. Mr. Williams also thanked the Internal Revenue Service, Criminal Investigation for its invaluable assistance on the investigation and the Department of Justice’s National Security Division, Counterintelligence and Export Control Section for its support of the case.
This case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Eli J. Mark, Paul Monteleoni, Lara Pomerantz, Daniel C. Richenthal, and Catherine Ghosh, and Special Assistant U.S. Attorney Christina Clark, are in charge of the prosecution, with the assistance of Paralegal Specialists Connor Hamill, Rachel Wechsler, and Braden Florczyk.
Count
Defendant(s)
Charge
Potential Maximum Prison Term
1
MENENDEZ
HANA
DAIBES
Conspiracy to commit bribery
Five years
2
MENENDEZ
HANA
DAIBES
Conspiracy to commit honest services wire fraud
20 years
3
MENENDEZ
Conspiracy to commit extortion under color of official right
20 years
4
MENENDEZ
DAIBES
Conspiracy to commit obstruction of justice
5 years
5
MENENDEZ
Bribery – actions to benefit Wael Hana and Egypt
15 years
6
HANA
DAIBES
Bribery – actions to benefit Wael Hana and Egypt
15 years
7
MENENDEZ
HANA
DAIBES
Honest services wire fraud - actions to benefit Wael Hana and Egypt
20 years
8
MENENDEZ
Extortion under color of official right – actions to benefit Wael Hana and Egypt
20 years
9
MENENDEZ
HANA
Honest services wire fraud - actions to benefit Jose Uribe and Uribe’s Associates
20 years
10
MENENDEZ
Extortion under color of official right – actions to benefit Jose Uribe and Uribe’s Associates
20 years
11
MENENDEZ
Bribery – actions to benefit Fred Daibes and Qatar
15 years
12
DAIBES
Bribery – actions to benefit Fred Daibes and Qatar
15 years
13
MENENDEZ
DAIBES
Honest services wire fraud – actions to benefit Fred Daibes and Qatar
20 years
14
MENENDEZ
Extortion under color of official right – actions to benefit Fred Daibes and Qatar
20 years
15
MENENDEZ
HANA
Conspiracy for a public official to act as a foreign agent
Five years
16
MENENDEZ
Public official acting as a foreign agent
Two years
17
MENENDEZ
Conspiracy to commit obstruction of justice
Five years
18
MENENDEZ
Obstruction of justice
10 years
Statement of U.S. Attorney Damian Williams on the Conviction of Miles GuoRead the Press Release
“Miles Guo, an exiled Chinese businessman and purported billionaire, brazenly operated several interrelated fraud schemes, all designed to fleece his loyal followers out of their hard-earned money so that Guo could spend his days in his 50,000 square foot mansion, driving his $1 million Lamborghini, or lounging on his $37 million yacht. Thousands of Guo’s online followers were victimized so that Guo could live of a life of excess. Today, Guo’s schemes have been put to an end. Moments ago, a unanimous jury found Miles Guo guilty of racketeering conspiracy and various securities fraud, wire fraud, and money laundering charges. He faces decades in prison. I commend the career prosecutors of this Office and our law enforcement partners for bringing this case and seizing hundreds of millions of dollars’ worth of fraud proceeds so that justice can be brought to Guo’s victims. This Office will not waver in our dedication to prosecuting malicious and harmful fraud schemes.”
Two New Jersey Men Sentenced for Scheme to Defraud Investors in Hemp CompanyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that VITALY FARGESEN and IGOR PALATNIK were sentenced to 4 years and 78 months in prison, respectively, by U.S. District Judge Loretta A. Preska for participating in a fraudulent scheme to defraud investors in CanaFarma Corp. and, later, CanaFarma Hemp Products Corp. (together, “CanaFarma”), by soliciting funds based upon false and misleading representations, failing to invest investor’s funds as promised, and secretly misappropriating millions of dollars of CanaFarma funds. PALATNIK was sentenced on January 11, 2024, and FARGESEN was sentenced today.
U.S. Attorney Damian Williams said: “Vitaly Fargesen and Igor Palatnik orchestrated a sophisticated scheme to obtain millions of dollars from investors by falsely pledging to spend their funds building a legitimate business. Instead, Fargesen and Palatnik deceived investors about the nature of their business and kept millions of dollars of investor funds for their own personal use. After they were charged, Fargesen and Palatnik attempted to escape accountability by obstructing this Office’s investigation of their crimes. Today’s sentence should serve as a reminder that if you steal from investors and cover up your crimes, you will pay a steep price.”
According to the allegations contained in the Indictment and statements made in public filings and public court proceedings:
From in or about March 2019 to in or about March 2020, CanaFarma was a privately held Delaware corporation with offices in New York, New York. Beginning on or about March 19, 2020, CanaFarma was listed on the Canadian Stock Exchange, and beginning on or about March 23, 2020, CanaFarma was listed on the Frankfurt Stock Exchange. CanaFarma marketed itself to the investors as a “fully integrated cannabis company addressing the entire cannabis spectrum from seed to delivery of consumer products.” To the public, FARGESEN was held out as Senior Vice President of Strategic Planning and PALATNIK as Senior Vice President of Product Acquisition at CanaFarma. In truth, the two men exercised full control of CanaFarma but hid their control from the investing public by, among other things, convincing an experienced businessman to falsely present himself to the market as the CEO of the company.
Using their control of CanaFarma, FARGESEN and PALATNIK devised and carried out a scheme to defraud CanaFarma’s investors by soliciting approximately $14 million in funds, including investments in private shares of CanaFarma, with false and misleading representations concerning the company’s management, products, and financials; failing to invest investor’s funds as promised; and secretly misappropriating at least $4 million of CanaFarma funds for their own benefit. FARGESEN and PALATNIK effectuated the scheme by, among other things, controlling CanaFarma through a nominal CEO who reported to FARGESEN and PALATNIK, lying to investors regarding CanaFarma’s actual and anticipated operations, attempting to artificially inflate CanaFarma’s reported revenue, making false statements to CanaFarma’s auditors, and misappropriating millions of dollars of investor funds.
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In addition to the prison sentence, FARGESEN, 54, of Manalapan, New Jersey, and PALATNIK, 49, of Morganville, New Jersey, were each ordered to forfeit $1,733,000 and to pay restitution in the amount of $4,703,915.26.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation. Mr. Williams also thanked the U.S. Securities and Exchange Commission, which has filed a parallel civil action.
The case is being overseen by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Margaret Graham, Adam Hobson, and Sarah Mortazavi are in charge of the prosecution.
Statement of U.S. Attorney Damian Williams on the Convictions of Bill Hwang and Patrick HalliganRead the Press Release
“Moments ago, a unanimous jury found Sung Kook ‘Bill’ Hwang and Patrick Halligan guilty of a massive market manipulation scheme via the private investment firm Archegos. As the evidence at trial has shown, Hwang, founder and owner of Archegos, and Halligan, Archegos’s Chief Financial Officer, made false assurances and lied to Wall Street investment banks to induce them to provide capital to Archegos, which Hwang and Halligan then used to inflate the stock prices of several publicly traded companies. Hwang and Halligan lied about Archegos’s positions in these companies and just about every other materially important metric investment banks would use in determining the firm’s creditworthiness. In doing so, Hwang and Halligan were able to fraudulently inflate a $1.5 billion portfolio into a $36 billion portfolio. This verdict should send a resounding message that this Office will continue to police the financial markets with an eagle eye and swiftly hold accountable those who think they can cheat the system.”
Senior Leaders of Lev Tahor Sect Sentenced to 14 and 12 Years in Prison for Kidnapping and Sex Trafficking CrimesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that YAKOV WEINGARTEN, SHMIEL WEINGARTEN, and YOIL WEINGARTEN were sentenced yesterday to 14 years, 14 years, and 12 years in prison, respectively, for child sexual exploitation and kidnapping offenses. The defendants, leaders of an extremist religious sect called Lev Tahor, masterminded a scheme to kidnap a 14-year-old girl (“Minor-1”) and a 12-year-old boy (“Minor-2”) from their mother in Woodridge, New York. The defendants then smuggled the children across the U.S. border to Mexico, where they reunited Minor-1 with her adult “husband” to allow him to continue his illegal sexual relationship with Minor-1. The defendants were convicted in March 2024 following a five-week jury trial before U.S. District Judge Nelson S. Román.
U.S. Attorney Damian Williams said: “The sentencing of the Weingarten brothers holds them accountable for kidnapping children from their mother in the middle of the night, including for the purpose of coercing a child into a sexual relationship with an adult. This Office will do everything in its power to protect children and use every available tool to investigate and prosecute those who sexually exploit them.”
According to the allegations contained in the Superseding Indictment, other court filings, and the evidence presented at trial:
The WEINGARTEN brothers—YAKOV, SHMIEL, and YOIL—are U.S. citizens and senior leaders of Lev Tahor, an extremist religious sect that has been located in several different jurisdictions, including New York, Israel, Canada, Mexico, and Guatemala. Lev Tahor leaders, including the WEINGARTENs, embraced several extreme practices, including forced family separations, child marriages, and underage sex.
In or about 2017, Lev Tahor leaders arranged for a 12-year-old girl, Minor-1, to be “married” to a then-18-year-old man. Though they were never legally married, they were religiously “married” the following year, when Minor-1 was 13 and her “husband” was 19. Lev Tahor leadership, including the WEINGARTENs, required young brides such as Minor-1 to have sex with their husbands, to tell people outside Lev Tahor that they were not married, and to lie about their ages. For example, Lev Tahor leaders instructed child brides to deliver babies inside their homes instead of at a hospital to conceal the mothers’ young ages from outsiders.
In or about October 2018, the mother of Minor-1 determined that it was no longer safe for her children to remain in the Lev Tahor community, which was then living in Guatemala. The mother escaped from the group’s compound, arrived in the U.S. in early November 2018, and was eventually joined by all six of her children, including Minor-1. Also in November 2018, a Brooklyn family court granted her sole custody of the children and prohibited the children’s father, a leader within Lev Tahor, from communicating with the children.
After the mother fled and settled in New York with her children, the WEINGARTENs and their co-conspirators devised a plan to kidnap Minor-1, then 14 years old, to return her to Guatemala and to her then-20-year-old “husband.” In December 2018, they kidnapped Minor-1 and her brother in the middle of the night from a home in upstate New York and transported them through various states and, eventually, to Mexico. In order to carry out the kidnapping, the defendants used disguises, aliases, drop phones, fake travel documents, and an encrypted application. At the time of the kidnapping, Lev Tahor leaders were seeking asylum for the entire Lev Tahor community in the Islamic Republic of Iran.
Following a three-week search involving hundreds of local, federal, and international law enforcement entities, Minor-1 and Minor-2 were recovered in Mexico and returned to New York. In or about March 2019 and March 2021, members of Lev Tahor again tried to kidnap the children but were unsuccessful.
* * *
In addition to the prison terms, YAKOV WEINGARTEN, 34, SHMIEL WEINGARTEN, 28, and YOIL WEINGARTEN, 36, each of Guatemala, were sentenced to five years of supervised release.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation, the New York State Police, the Sullivan County District Attorney’s Office, U.S. Customs and Border Protection, the Rockland County Sheriff’s Department, the Village of Spring Valley Police Department, Special Agents with the U.S. Attorney’s Office for the Southern District of New York, the Department of State, the Transportation Security Administration, and our law enforcement partners in Mexico, Guatemala, Canada, and Israel.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Sam Adelsberg, Jamie Bagliebter, and Jim Ligtenberg, and paralegal specialist Shannon Becker, are in charge of the prosecution.
Manhattan Man Charged with Enticing and Engaging in Unlawful Sexual Activity with Teenage Girls and Using Them to Sell Drugs for HimRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”); and Edward A. Caban, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment charging SHYMELL EPHRON, a/k/a “Shy,” with two counts of coercion and enticement of minors to engage in unlawful sexual activity and five drug-trafficking counts, including two counts of using a minor to distribute narcotics and two counts of distributing narcotics to a minor. EPHRON was arrested today and will be presented in Manhattan federal court before U.S. Magistrate Judge Sarah Netburn. The case is assigned to U.S. District Judge Margaret M. Garnett.
U.S. Attorney Damian Williams said: “As alleged, Shymell Ephron raped and sexually abused two teenagers he found in Times Square, plied them with drugs and alcohol, and directed them to sell his drugs on the streets of New York City. This Office is committed to keeping New York City safe from sexual predators, and thanks to the hard work of our law enforcement partners and the career prosecutors of this Office, Ephron has now been arrested and charged for his egregious conduct.”
FBI Acting Assistant Director in Charge Christie M. Curtis said: “Shymell Ephron allegedly targeted two minor female victims for repeated sexual abuse, using illicit substances to encourage cooperation. He directed them to participate in his unlawful drug trafficking operation by exploiting their innocence for nefarious purposes, as alleged. Along with our law enforcement partners, the FBI remains committed to apprehending sexual predators and eliminating sources of illegal narcotics in our city.”
NYPD Commissioner Edward A. Caban said: “The charges leveled against this alleged predator are the result of NYPD investigators and our local, state, and federal law enforcement partners working together to protect everyone in our community, especially young victims. I commend the members of the FBI’s Westchester Safe Streets Task Force and the prosecutors at the office of the U.S. Attorney for the Southern District of New York for their continued focus on holding accountable individuals who allegedly target children.”
As alleged in public court filings, statements at public court proceedings, and the Indictment:[1]
EPHRON and his co-conspirators have distributed narcotics, including ecstasy and crack cocaine, since at least in or about May 2024 in Times Square and other locations in New York City. EPHRON has also offered and provided narcotics, including ecstasy and cocaine, to others in an effort to have sex with them. On or about May 17, 2024, EPHRON approached two teenage girls in Times Square while he and a co-conspirator were selling drugs. EPHRON convinced the two girls to follow him to his residence in Harlem, where they stayed with EPHRON for several days.
EPHRON engaged in multiple acts of forcible rape, forcible touching, sexual abuse, and sex with a minor while the girls were staying in EPHRON’s apartment. EPHRON repeatedly provided the girls with ecstasy, marijuana, and alcohol, and EPHRON also directed the girls to sell his drugs on the streets of New York City. EPHRON provided a cellphone to the girls to monitor their whereabouts, direct them to sell narcotics, and to persuade, induce, and entice them to return to his apartment each night so he could engage in unlawful sexual conduct with them. Law enforcement agents with the FBI and NYPD eventually rescued the two girls.
There may be more victims of this alleged conduct. If you have information to report, contact the FBI through its toll-free Tip Line at 1-800-CALL-FBI (225-5324) or https://tips.fbi.gov.
* * *
EPHRON, 35, of New York, New York, is charged with two counts of coercion and enticement of a minor, each of which carries a mandatory minimum sentence of 10 years in prison and a maximum potential sentence of life in prison; one count of narcotics conspiracy, which carries a maximum potential sentence of 20 years in prison; two counts of distributing narcotics using a minor, each of which carries a mandatory minimum sentence of one year in prison and a maximum potential sentence of 45 years in prison; and two counts of distributing narcotics to a minor, each of which carries a mandatory minimum sentence of one year in prison and a maximum potential sentence of 40 years in prison.
The mandatory minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as the sentencing of the defendant will be determined by a judge.
Mr. Williams praised the work of the FBI’s Westchester Safe Streets Task Force and the NYPD. Mr. Williams also thanked the New York State Police and the Yorktown Police Department for their assistance in the investigation.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Ryan W. Allison and Michael R. Herman are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Global Cryptocurrency Exchange BitMEX Pleads Guilty to Bank Secrecy Act OffenseRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that HDR GLOBAL TRADING LIMITED, a/k/a “Bitcoin Mercantile Exchange” or “BitMEX” (“BITMEX”), pled guilty today to violating the Bank Secrecy Act by willfully failing to establish, implement, and maintain an adequate anti-money laundering (“AML”) program. The case is assigned to U.S. District Judge John G. Koeltl.
U.S. Attorney Damian Williams said: “As BitMEX’s founders and long-time employee admitted in federal court in 2022, the company, one of the leading cryptocurrency derivatives platforms in the world from 2015 to 2020, operated in the United States without any meaningful anti-money laundering program, as required by federal law. As a result, BitMEX opened itself up as a vehicle for large-scale money laundering and sanctions evasion schemes, posing a serious threat to the integrity of the financial system. Today’s guilty plea indicates again the need for cryptocurrency companies to comply with U.S. law if they take advantage of the U.S. market.”
FBI Acting Assistant Director in Charge Christie M. Curtis said: “By only mandating lax service access credentials, BitMEX not only failed to comply with nationally required anti-money laundering procedures designed to protect the US financial markets from illicit actors and transactions, but knowingly did so to increase the business’s revenue. Today’s plea represents the FBI’s steadfast dedication to ensuring adherence to all U.S. financial laws, protecting the U.S. financial system, and holding accountable those who attempt to establish a workaround for profits.”
According to the allegations in the Information and other filings and statements made in court:
Arthur Hayes, Benjamin Delo, and Samuel Reed founded BITMEX in or about 2014, and Gregory Dwyer became BITMEX’s first employee in 2015 and later its Head of Business Development. BITMEX, which has long serviced and solicited business from U.S. traders and also operated through U.S. offices, was required to register with the Commodity Futures Trading Commission (“CFTC”) and to establish and maintain an adequate AML program. AML programs ensure that financial institutions, such as BITMEX, are not exploited for illicit purposes and serve to protect the integrity of the U.S. financial system and national security, more broadly.
The company and its executives knew that because BITMEX operated in the United States, including by serving U.S. customers, it was required to implement an AML program that included a “know your customer” (“KYC”) component but chose to flaunt those requirements, requiring only that customers provide an email address to use BITMEX’s services. Indeed, senior executives each knew that customers residing in the United States continued to access BITMEX’s trading platform through at least in or about 2018 and that BITMEX policies nominally in place to prevent such trading were toothless or easily overridden to serve BITMEX’s bottom line goal of obtaining revenue through the U.S. market without regard to U.S. criminal laws. Corporate executives took affirmative steps purportedly designed to exempt BITMEX from the application of U.S. laws like AML and KYC requirements, despite knowing of BITMEX’s obligation to implement such programs by operating in the United States. As part of BITMEX’s willful evasion of U.S. AML laws, the company lied to a bank about the purpose and nature of a subsidiary to allow the company to pump millions of dollars through the U.S. financial system.
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HDR GLOBAL TRADING LIMITED, an entity incorporated in the Republic of Seychelles, pled guilty to one count of violating the Bank Secrecy Act, which carries a maximum sentence of five years in prison and a fine.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the FBI’s New York Money Laundering Investigation Squad and thanked the attorneys and investigators at the CFTC whose expertise and diligence were integral to the development of this investigation.
The prosecution is being handled by the Office’s Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Jessica Greenwood, Samuel Raymond, and Thane Rehn are in charge of the prosecution.
U.S. Compounding, Inc. Pleads Guilty to Multiple Fraud Offenses and Company Vice President Indicted in Scheme to Distribute Drugs Nationally Using False PrescriptionsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that U.S. COMPOUNDING, INC. (“USC”), a subsidiary of DMK Pharmaceuticals Corporation, pled guilty to multiple fraud offenses before U.S. District Judge Arun Subramanian, and a former USC executive, SAM GLOVER, was charged in an Indictment with conspiring to violate the Food, Drug, and Cosmetic Act (“FDCA”). GLOVER was arrested this morning and is expected to be presented today before a U.S. Magistrate Judge in the Eastern District of Arkansas.
U.S. Attorney Damian Williams said: “Distributing prescription drugs with sham prescriptions is wrong and illegal. The corporate resolution entered into today, and the indictment of Sam Glover, an executive who oversaw and allegedly perpetuated that scheme, reflects this Office’s commitment to holding accountable those who seek to violate laws designed to ensure that the drugs distributed across the United States are safe, necessary, and legal.”
FBI Acting Assistant Director in Charge Christie M. Curtis said: “U.S. Compounding, Inc. and its former executive, Sam Glover, allegedly committed various frauds and violated the Food Drug and Cosmetic Act by falsifying prescription orders. Despite scrutiny by members of the company who suspected the orders were unverified, the company’s leadership continued to allow the requests and collect profits as a result. This investigation is part of the FBI’s larger effort to ensure that both individuals and organizations who devise complex fraud schemes are prevented from furthering their illegitimate arrangements and making money off mistruths.”
According to admissions and court documents, as well as the allegations in the Indictment:[1]
Beginning in approximately 2015, while USC was still a privately-held corporation, a USC sales representative (“Sales Rep 1”) entered into an illegal arrangement with a veterinarian (the “Veterinarian”), wherein Sales Rep 1 would use the Veterinarian’s state veterinary licenses to generate false prescriptions in order to justify shipping prescription drugs directly to consumers, including to consumers in the Southern District of New York, in violation of the FDCA. Those consumers otherwise lacked bona fide prescriptions for those drugs. The Veterinarian was promised a 10% commission of all such sales generated using his credentials, even though Sales Rep 1 and his supervisor, GLOVER, the Vice President of Sales at USC, knew that the prescriptions issued in the Veterinarian’s name were a sham. GLOVER, Sales Rep 1, and the sales team working under them generated approximately $1 million in sales annually because of the false prescription scheme, which comprised approximately one-third of Sales Rep 1’s total sales of USC drugs.
On or about March 28, 2016, USC was acquired by Adamis Pharmaceuticals Corporation (“Adamis”), a publicly traded company that has since changed its name to DMK Pharmaceuticals Corporation (“DMK”). USC retained its essential functions, operating as a wholly owned subsidiary of Adamis, and much of its staff remained employed, including GLOVER. Following the acquisition, an executive at Adamis (the “Adamis Executive”) was made aware of the scheme and the Veterinarian’s role in it. GLOVER, in conjunction with the Adamis Executive and Sales Rep 1, continued the false prescription scheme and attempted to enter into a sham consulting agreement with the Veterinarian that purported to pay the Veterinarian an hourly rate for consultations. In actuality, the consulting agreement was a means to cover up the commission payments the Veterinarian was receiving as part of the scheme. GLOVER and others intended to claim the Veterinarian was a USC consultant if the commission payments to the Veterinarian were ever questioned.
In or about December 2019, the head of the USC pharmacy responsible for fulfilling prescription drug orders (“Pharmacist-1”) resigned due to USC’s failure to halt the practice of fulfilling drug orders submitted by USC’s sales representatives based on unverified prescriptions. Pharmacist-1’s replacement (“Pharmacist-2”) refused to fulfill any further orders for prescription drugs predicated on unverified prescriptions submitted by USC’s sales representatives. Pharmacist-2 raised concerns regarding USC’s prescription practices with GLOVER and the Adamis Executive. Pharmacist-2’s concerns were initially dismissed, but they ultimately convinced Adamis to implement a new veterinary software platform that was intended to eliminate the involvement of USC’s sales representatives in the creation or submission of prescriptions in connection with drug orders. Nonetheless, GLOVER, the Adamis Executive, and Sales Rep 1 allowed sales representatives to submit false prescriptions through the new software, circumventing the control that Pharmacist-2 had insisted on implementing. Consequently, in or about September 2020, Pharmacist-2 and two other pharmacists employed at USC resigned. A fourth pharmacist employed at USC resigned the following week. USC sales representatives continued to falsely indicate through the new software that drug orders were accompanied by valid prescriptions when they were not.
In or about July 2020, in response to increased perceived scrutiny of USC’s operations, USC sales representatives ceased submitting false prescriptions in the name of the Veterinarian. Instead, USC sales representatives falsely classified direct-to-consumer sales of prescription drugs as sales of office stock to the Veterinarian, on the pretext that the Veterinarian was prescribing these drugs to USC’s customers. According to USC’s internal sales data, sales of a particular prescription drug to the Veterinarian’s practice increased proportionally as direct-to-consumer sales of that drug declined.
In or about April 2021, the Arkansas State Board of Pharmacy issued an Order and Notice of Hearing directed to the pharmacist who replaced Pharmacist-2. Prior to any hearing, USC entered into a consent order wherein USC agreed to cease all operations in Arkansas, and USC agreed to relinquish its Arkansas State licenses as a pharmacy and wholesale distributor. USC also entered into a resolution in which they made the following factual admissions: USC “failed to ensure prescribing veterinarians were licensed in the state into which product was ordered and/or shipped”; USC “allowed for issuance of veterinary legend products directly to consumers without receipt of a legal prescription”; USC “provided remuneration directly to a veterinarian in connection with a veterinary prescription”; USC “provided veterinary prescriptions drugs to animal owners without the authorization of a licensed veterinarian and a prescription”; and USC “filled veterinary prescriptions for patients that did not have a valid practitioner-patient relationship.”
The U.S. Attorney’s Office for the Southern District of New York reached its resolution with USC based on a number of factors, including the nature, seriousness, and pervasiveness of the offense conduct. The U.S. Attorney’s Office also considered USC and its parent company’s efforts to cooperate with the federal criminal investigation. After learning of the federal criminal investigation in May 2021, Adamis, through its Audit Committee, cooperated in the investigation, which included making presentations to, and addressing questions posed by, the U.S. Attorney’s Office after conducting an internal investigation. Moreover, since learning of the investigation, Adamis, on behalf of USC, made remedial efforts, including ceasing all USC’s operations; terminating all employees and severing its relationships with all individuals involved in the criminal conduct, including senior personnel; and engaging a third party to conduct a cross-company enterprise risk assessment evaluating governance, product services, internal audit, risk management, compliance, and operations and implementing and effectuating the resulting recommendations.
Pursuant to the plea agreement, USC agreed that it is subject to an approximately $4.2 million forfeiture payment and a criminal fine of up to $16.9 million.
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GLOVER, 45, of Arkansas, is charged with one count of conspiring to violate the FDCA, which carries a maximum sentence of five years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the FBI. Mr. Williams also thanked the Food and Drug Administration and the Customs and Border Protection for their support of this investigation.
This case is being handled by the Office’s Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Sarah Mortazavi and David Felton are in charge of the prosecution.
The charges contained in the Indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.