Southern District of New York
Press releases recorded for this federal judicial district.
Former NYPD Officer Sentenced to 70 Months in Prison for Assisting Gang Leader’s Flight from the U.S. After Committing A MurderRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that GINA MESTRE, a former New York City Police (“NYPD”) Officer, was sentenced to 70 months in prison in connection with her involvement in obstructing a federal grand jury investigation into the Shooting Boys gang and serving as an accessory after the fact to a murder committed by a member of the gang. MESTRE pled guilty to the charge on December 7, 2023, in Manhattan federal court before U.S. District Judge Denise L. Cote, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Gina Mestre betrayed and abused the trust placed in her by the NYPD and the people of New York. She swore to protect the public from criminal activity, but instead participated in significant crimes of her own by passing confidential information to a gang leader and helping him evade capture for the murder of a rival gang member. For violating her oath to the citizens of New York City and her fellow police officers, Mestre has been sentenced to spend more than five years in federal prison.”
According to the allegations in the Indictment and other documents filed in federal court and based on statements made in public court proceedings:
MESTRE was an NYPD Officer assigned to the 52nd Precinct’s Public Safety Unit. In the summer of 2020, a major focus of both the precinct and the Public Safety Unit was the reduction of gun violence in the area. Much of that violence was attributed to members of the Shooting Boys, a violent street gang based in the University Heights section of the Bronx.
In or about June 2020, MESTRE began communicating with Andrew Done, a/k/a “Caballo,” the leader of the Shooting Boys. MESTRE and Done communicated through secret social media accounts and phone numbers and eventually began an intimate relationship, during which MESTRE provided Done and other gang members with confidential, non-public law enforcement information about the federal grand jury investigation into the Shooting Boys.
MESTRE warned Done, and other gang members, that federal investigators were preparing to bring a federal indictment against the Shooting Boys. MESTRE also warned Done about impending law enforcement operations, which enabled Done and other gang members to dispose of weapons and conceal other criminal activity before law enforcement arrived on scene. In addition, MESTRE disclosed the identity of a cooperating witness who provided information about the gang to law enforcement. Armed with this information, Done and other Shooting Boys assaulted the witness to prevent the witness from further cooperation and to send a clear message within the gang that the punishment for cooperation would be severe.
On or about November 5, 2020, Done shot and killed a rival gang member (“Victim-1”) as Victim-1 sat in his car on Cromwell Avenue in the Bronx. NYPD Detectives investigating the murder recovered security camera video (the “Video”) capturing Done’s commission of the murder. Several members of the 52nd Precinct, including MESTRE, were tasked with identifying the shooter in the video. In fact, MESTRE was ultimately one of several officers who actually identified Done as the perpetrator.
Despite identifying Done as the shooter and ostensibly participating in the NYPD’s efforts to apprehend him, MESTRE sent Done a copy of the Video to his phone and secretly communicated with Done the day of the murder and in the weeks afterwards. Specifically, MESTRE warned Done about law enforcement’s efforts to capture him, allowing Done to eventually flee from the United States.
In March 2022, 10 members of the Shooting Boys were charged in a 15-count indictment with various federal crimes, including racketeering conspiracy and murder. Done was charged with the murder of Victim-1 and was apprehended in the Dominican Republic several months later.
On November 17, 2022, Done pled guilty to racketeering conspiracy and admitted to his role in the murder of Victim-1. On February 22, 2023, Done was sentenced to 35 years in prison.
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In addition to the prison term, MESTRE, 33, of Mohegan Lakes, New York, was sentenced to two years of supervised release.
Mr. Williams praised the outstanding investigative work of the NYPD’s Internal Affairs Bureau, Group 25, and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York.
The case is being prosecuted by the Office’s Violent & Organized Crime Unit. Assistant U.S. Attorneys Dominic A. Gentile and James Ligtenberg are in charge of the prosecution.
U.S. Attorney Announces $3.1 Million False Claims Act Settlement with Radiology Company and Its CEO for Fraudulent Billing PracticesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; 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”); Brian J. Solecki, the Acting Special Agent in Charge of the Northeast Field Office of the U.S. Department of Defense - Office of Inspector General, Defense Criminal Investigative Service (“DCIS”); and Christopher Algieri, the Special Agent in Charge of the Northeast Field Office of the Department of Veterans Affairs Office of Inspector General (“VA OIG”), announced today that the United States has settled a civil fraud lawsuit against THE RADIOLOGY GROUP LLC and its CEO, ANAND LALAJI.
THE RADIOLOGY GROUP is a teleradiology company based in Atlanta, Georgia, that provides diagnostic radiology services to hospitals, urgent care centers, and primary care physician centers located across the country. The settlement resolves claims that THE RADIOLOGY GROUP and LALAJI violated the False Claims Act by fraudulently billing federal health care programs when the U.S.-based radiologist just “rubber stamped” interpretation reports prepared by contractors in India who were not permitted to practice medicine in the United States or bill federal health care programs. The Government further alleges that THE RADIOLOGY GROUP and LALAJI misrepresented who actually rendered the radiology services when seeking payments and improperly sought reimbursement for services furnished entirely by persons located outside of the United States in violation of applicable statutes and regulations.
Under the settlement approved yesterday by U.S. District Judge Analisa Torres, THE RADIOLOGY GROUP and LALAJI will pay a total sum of $3.1 million, of which $2,678,387.21 will be paid to the United States with the remainder being paid to various states. As part of the settlement, THE RADIOLOGY GROUP and LALAJI also made extensive factual admissions regarding their conduct. Among other things, THE RADIOLOGY GROUP and LALAJI admitted that they failed to ensure that their U.S.-based radiologists were conducting a meaningful and adequate review of draft interpretations of radiology scans prepared by India-based contractors. THE RADIOLOGY GROUP and LALAJI also admitted that, on numerous occasions, they submitted claims to federal health care programs where the radiologist who reviewed and interpreted the imaging was someone other than the individual listed on the claim for reimbursement.
U.S. Attorney Damian Williams said: “The Radiology Group failed to put in place appropriate safeguards to ensure that their U.S.-licensed radiologists adequately reviewed non-credentialed contractors’ findings before transmitting the reports to physicians who relied on the findings to make patient care decisions. This Office is committed to holding healthcare providers accountable when they violate clear rules and regulations designed to ensure the integrity of taxpayer funded healthcare programs and protect patient quality of care.”
HHS-OIG Special Agent in Charge Naomi Gruchacz said: “As part of the settlement, The Radiology Group and Anand Lalaji admitted that they failed to ensure that their U.S.-based radiologists were conducting a meaningful and adequate review of draft radiology interpretation reports. Defendants potentially jeopardized patients’ health by taking shortcuts when it came to ensuring that important radiological tests were done and reviewed properly. 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.”
VA OIG Special Agent in Charge Christopher Algieri said: “The VA OIG is dedicated to ensuring veterans receive the quality health care they deserve, and we will continue to work to make certain that VA healthcare programs are not compromised by fraudulent billing practices. The VA OIG thanks the U.S. Attorney’s Office and our law enforcement partners for their efforts in this investigation.”
As alleged in the Complaint filed in Manhattan federal court:
Diagnostic radiology involves the diagnosis of diseases and injuries using imaging techniques, such as Computed Tomography scans, Magnetic Resonance Imaging, and ultrasounds. Radiologists review the generated images and prepare written reports summarizing their findings (an “Interpretation Report”). Health care providers rely on these Interpretation Reports when diagnosing patient conditions and when making important decisions regarding patient medical care.
THE RADIOLOGY GROUP is a teleradiology practice that provides diagnostic radiology services to hospitals, urgent care centers, and primary care physician offices (the “Referring Providers”) located throughout the United States. The Referring Providers transmitted imaging to THE RADIOLOGY GROUP so that THE RADIOLOGY GROUP could review the images and prepare Interpretation Reports. Using online-based teleradiology platforms, THE RADIOLOGY GROUP sent the images to contractors located outside the United States, who would conduct initial reviews of the imaging and prepare draft Interpretation Reports. After that process was complete, THE RADIOLOGY GROUP’s U.S.-based radiologists were supposed to conduct an independent and separate review of the imaging and make all necessary changes to the Interpretation Reports before transmitting them to the Referring Provider. The final Interpretation Reports were signed by the U.S.-based radiologist, who was responsible for the Interpretation Report’s content.
THE RADIOLOGY GROUP and LALAJI knew that contractors located in India who prepared draft Interpretation Reports were not permitted to practice medicine in the United States or bill federal health care programs. Nevertheless, certain radiologists at THE RADIOLOGY GROUP merely “rubber stamped” the draft reports and transmitted them to the providers without conducting a meaningful and adequate review of the findings. For instance, one radiologist (“Radiologist A”) approved, signed, and transmitted to providers over 100,000 Interpretation Reports and frequently approved draft CT scan reports in less than 30 seconds.
THE RADIOLOGY GROUP and LALAJI also understood that they were prohibited by federal health care program rules from submitting claims for reimbursement for radiology services if the radiologist listed as the rendering provider on the claim for reimbursement had not actually rendered the services. THE RADIOLOGY GROUP and LALAJI, however, consistently submitted, or caused to be submitted, claims for payment to federal health care programs that identified either LALAJI or the other owner of THE RADIOLOGY GROUP as the rendering provider, even though they had not in fact rendered the radiology services for which reimbursement was sought. Further, on numerous occasions, THE RADIOLOGY GROUP and LALAJI submitted, or caused to be submitted, claims for payment for diagnostic radiology services provided by a radiologist who resided and worked in the United Kingdom, in violation of relevant Medicare regulations.
As part of the settlement, THE RADIOLOGY GROUP and LALAJI admitted and accepted responsibility for certain conduct alleged by the United States, including the following:
- THE RADIOLOGY GROUP and LALAJI knew that they could not bill federal health care programs for the radiology services unless a U.S.-based and licensed radiologist reviewed all of the images associated with the scan, reviewed the Interpretation Report prepared by the individual in India, and made any necessary changes to the Interpretation Report. However, there were some instances when this did not occur.
- For example, THE RADIOLOGY GROUP employed a U.S.-based radiologist (“Radiologist A”) who repeatedly approved Interpretation Reports prepared by non-licensed individuals in India without reviewing relevant images associated with the scan and without conducting any meaningful review of the report or properly considering whether any changes needed to be made to it.
- THE RADIOLOGY GROUP and LALAJI failed to ensure that their U.S.-based radiologists were conducting a meaningful and adequate review of the draft interpretations of scans prepared by the non-licensed contractors in India.
- On numerous occasions, THE RADIOLOGY GROUP and LALAJI submitted claims to federal health care programs where the radiologist who reviewed and interpreted the imaging was someone other than the individual listed on the claim.
- THE RADIOLOGY GROUP and LALAJI understood that Medicare did not pay for medical services rendered by individuals located outside of the United States. Nonetheless, on numerous occasions, THE RADIOLOGY GROUP and LALAJI submitted claims to Medicare for diagnostic radiology services rendered in the United Kingdom by a radiologist employed by THE RADIOLOGY GROUP who lived there.
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, DCIS, and VA-OIG, and thanked the Wisconsin Medicaid Fraud Control and Elder Abuse Unit for their 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 Charles S. Jacob is in charge of the case.
Samuel Bankman-Fried Sentenced to 25 Years for His Orchestration of Multiple Fraudulent SchemesRead the Press Release
Samuel Bankman-Fried, also known as SBF, 32, of Stanford, California, was sentenced today to 25 years in prison, three years of supervised release, and ordered to pay $11 billion in forfeiture for his orchestration of multiple fraudulent schemes. Bankman-Fried, who was the founder of the cryptocurrency exchange FTX and the cryptocurrency trading firm Alameda Research, misappropriated billions of dollars of customer funds deposited with FTX, defrauded investors in FTX of more than $1.7 billion, and defrauded lenders to Alameda of more than $1.3 billion. Bankman-Fried was previously found guilty on two counts of wire fraud, two counts of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud, one count of conspiracy to commit commodities fraud, and one count of conspiracy to commit money laundering, following a one-month trial before U.S. District Judge Lewis A. Kaplan, who imposed today’s sentence.
“There are serious consequences for defrauding customers and investors,” said Attorney General Merrick B. Garland, “Anyone who believes they can hide their financial crimes behind wealth and power, or behind a shiny new thing they claim no one else is smart enough to understand, should think twice. I am grateful to the U.S. Attorney’s Office for the Southern District of New York and the FBI for their outstanding work in bringing Mr. Bankman-Fried to justice.”
“The FBI will aggressively investigate individuals, like Samuel Bankman-Fried, who engage in fraudulent schemes at the expense of the American public and our financial systems,” said FBI Director Christopher Wray. “We are proud of the successful collaboration that ended this massive mismanagement and misappropriation of billions of dollars. Today's sentencing should serve as a warning to others looking to use fraudulent means for personal gain — there are consequences for your actions.”
“Samuel Bankman-Fried orchestrated one of the largest financial frauds in history, stealing over $8 billion of his customers’ money,” said U.S. Attorney Damian Williams for the Southern District of New York. “His deliberate and ongoing lies demonstrated a brazen disregard for customers’ expectations and disrespect for the rule of law, all so that he could secretly use his customers’ money to expand his own power and influence. The scale of his crimes is measured not just by the amount of money that was stolen, but by the extraordinary harm caused to victims, who in some cases had their life savings wiped out overnight. As a result of his unprecedented fraud, Bankman-Fried faces 25 years in prison and forfeiture of over $11 billion dollars. Today’s sentence will prevent the defendant from ever again committing fraud and is an important message to others who might be tempted to engage in financial crimes that justice will be swift, and the consequences will be severe.”
According to the allegations contained in the indictment, the evidence offered at trial, and matters included in public filings:
Samuel Bankman-Fried was the founder and chief executive officer of FTX, an international cryptocurrency exchange. From 2019 to 2022, Bankman-Fried was the leader and mastermind of a scheme to defraud customers of FTX by misappropriating billions of dollars of those customers’ funds. Bankman-Fried took FTX customer funds for his personal use, to make investments and millions of dollars of political contributions to candidates from both parties, and to repay billions of dollars in loans owed by Alameda Research, a cryptocurrency trading fund that Bankman-Fried also founded. Bankman-Fried also defrauded lenders to Alameda and equity investors in FTX by providing them false and misleading financial information that concealed his misuse of customer deposits.
Samuel Bankman-Fried repeatedly told his customers, his investors, and the public that customer deposits into FTX were kept safe and were held in custody for the customers, that customer deposits were kept separate from company assets, and that customer deposits would not be used by FTX. He also repeatedly claimed that his trading company, Alameda, did not have any privileged access to FTX and did not receive special treatment from FTX. Those statements were false, and Bankman-Fried in fact channeled billions of dollars in customer deposits from FTX to Alameda, and then used those funds to make investments for his own benefit, to make political contributions, and to spend on real estate, among other expenditures. He employed a variety of fraudulent means to perpetrate this fraud. For instance, Bankman-Fried directed co-conspirators to alter FTX’s computer code to allow Alameda to withdraw effectively unlimited amounts of cryptocurrency from the exchange. Bankman-Fried also made false statements to financial institutions to conceal his misuse of customer dollar deposits. And he directed the creation of false financial statements for Alameda’s lenders, inflated FTX’s revenues and profits in numbers provided to investors, and backdated contracts and other documents to conceal his fraudulent conduct.
Judge Kaplan authorized the government to use the funds recovered through the forfeiture process to provide compensation to victims of Bankman-Fried’s crimes.
The FBI investigated the case.
The Southern District of New York’s Securities and Commodities Fraud Task Force, with assistance from the office’s Illicit Finance & Money Laundering and Complex Frauds and Cybercrime Units are handling the case. Assistant U.S. Attorneys Nicolas Roos, Danielle Sassoon, Samuel Raymond, Thane Rehn, and Danielle Kudla are prosecuting the case.
Samuel Bankman-Fried Sentenced to 25 Years in PrisonRead 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; and James Smith, the Assistant Director in Charge of the New York Field Office of the FBI, announced that SAMUEL BANKMAN-FRIED, a/k/a “SBF,” was sentenced today to 25 years in prison for his orchestration of multiple fraudulent schemes. The defendant, who was the founder of the cryptocurrency exchange FTX and the cryptocurrency trading firm Alameda Research, misappropriated billions of dollars of customer funds deposited with FTX, defrauded investors in FTX of more than $1.7 billion, and defrauded lenders to Alameda of more than $1.3 billion. BANKMAN-FRIED was previously found guilty on two counts of wire fraud, two counts of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud, one count of conspiracy to commit commodities fraud, and one count of conspiracy to commit money laundering following a one-month trial before U.S. District Judge Lewis A. Kaplan, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Samuel Bankman-Fried orchestrated one of the largest financial frauds in history, stealing over $8 billion of his customers’ money. His deliberate and ongoing lies demonstrated a brazen disregard for customers’ expectations and disrespect for the rule of law, all so that he could secretly use his customers’ money to expand his own power and influence. The scale of his crimes is measured not just by the amount of money that was stolen, but by the extraordinary harm caused to victims, who in some cases had their life savings wiped out overnight. As a result of his unprecedented fraud, Bankman-Fried faces 25 years in prison and forfeiture of over $11 billion. Today’s sentence will prevent the defendant from ever again committing fraud and is an important message to others who might be tempted to engage in financial crimes that justice will be swift, and the consequences will be severe.”
Attorney General Merrick B. Garland said: “There are serious consequences for defrauding customers and investors. Anyone who believes they can hide their financial crimes behind wealth and power, or behind a shiny new thing they claim no one else is smart enough to understand, should think twice. I am grateful to the U.S. Attorney’s Office for the Southern District of New York and the FBI for their outstanding work in bringing Mr. Bankman-Fried to justice.”
FBI Assistant Director in Charge James Smith said: “Sam Bankman-Fried was justly sentenced to significant time behind bars for his multibillion-dollar defrauding of FTX customers. The FBI will remain relentless in our efforts to ensure the perpetrators of fraud—no matter the nature—face appropriate punishment in the criminal justice system.”
According to the allegations contained in the Indictment, the evidence offered at trial, and matters included in public filings:
BANKMAN-FRIED was the founder and chief executive officer of FTX, an international cryptocurrency exchange. From 2019 to 2022, BANKMAN-FRIED was the leader and mastermind of a scheme to defraud customers of FTX by misappropriating billions of dollars of those customers’ funds. BANKMAN-FRIED took FTX customer funds for his personal use, to make investments and millions of dollars of political contributions to candidates from both parties, and to repay billions of dollars in loans owed by Alameda Research, a cryptocurrency trading fund that BANKMAN-FRIED also founded. BANKMAN-FRIED also defrauded lenders to Alameda and equity investors in FTX by providing them false and misleading financial information that concealed his misuse of customer deposits.
BANKMAN-FRIED repeatedly told his customers, his investors, and the public that customer deposits into FTX were kept safe and were held in custody for the customers, that customer deposits were kept separate from company assets, and that customer deposits would not be used by FTX. He also repeatedly claimed that his trading company, Alameda, did not have any privileged access to FTX and did not receive special treatment from FTX. Those statements were false, and BANKMAN-FRIED in fact channeled billions of dollars in customer deposits from FTX to Alameda, and then used those funds to make investments for his own benefit, to make political contributions, and to spend on real estate, among other expenditures. He employed a variety of fraudulent means to perpetrate this fraud. For instance, BANKMAN-FRIED directed co-conspirators to alter FTX’s computer code to allow Alameda to withdraw effectively unlimited amounts of cryptocurrency from the exchange and made false statements to financial institutions to conceal his misuse of customer dollar deposits. He also directed the creation of false financial statements for Alameda’s lenders, inflated FTX’s revenues and profits in numbers provided to investors, and backdated contracts and other documents to conceal his fraudulent conduct.
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In addition to the prison term, BANKMAN-FRIED, 32, of Stanford, California, was sentenced to three years of supervised release and over $11 billion in forfeiture. Judge Kaplan authorized the Government to use the funds recovered through the forfeiture process to provide compensation to victims of BANKMAN-FRIED’s crimes.
Mr. Williams praised the outstanding investigative work of the FBI.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force, with assistance from the Office’s Illicit Finance & Money Laundering and Complex Frauds and Cybercrime Units. Assistant U.S. Attorneys Nicolas Roos, Danielle Sassoon, Samuel Raymond, Thane Rehn, and Danielle Kudla are in charge of the prosecution.
Statement of U.S. Attorney Damian Williams on the Convictions of Three Lev Tahor Leaders of Child Exploitation and Kidnapping OffensesRead the Press Release
“Yoil Weingarten, Yakov Weingarten, and Shmiel Weingarten, leaders of Lev Tahor, an extremist Jewish sect based in Guatemala, have been found guilty of kidnapping a 12-year-old boy and a 14-year-old girl and transporting the 14-year-old girl outside the United States to continue a sexual relationship with her adult male ‘husband.’ With this verdict, all nine Lev Tahor leaders and operatives charged for these heinous crimes have been held accountable. The defendants’ conduct — which included forced child marriages, physical beatings, and family separations — is unthinkable and has caused irreparable harm to children in their formative years. Whether in the name of religion or any other belief system, subjecting children to physical, sexual, or emotional abuse will never be tolerated by this Office.”
FCI Otisville Inmate Charged with Murdering Fellow InmateRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that federal inmate DANIEL V. SMITH was charged with the murder of a fellow inmate. SMITH was presented this morning before U.S. Magistrate Judge Andrew E. Krause. The case has been assigned to U.S. District Judge Philip M. Halpern.
According to the allegations contained in the Indictment and statements made in court:[1]
On or about October 26, 2021, SMITH murdered Patrick Deck, an inmate at FCI Otisville.
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SMITH, 63, was charged with one count of murder in the first degree, which carries a maximum sentence of death.
The maximum potential sentence 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.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Jeffrey C. Coffman is 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 herein should be treated as an allegation.
Prominent Global Cryptocurrency Exchange KuCoin and Two of Its Founders Criminally Charged with Bank Secrecy Act and Unlicensed Money Transmission OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Darren McCormack, the Acting Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced today the unsealing of an Indictment against global cryptocurrency exchange KuCoin and two of its founders, CHUN GAN, a/k/a “Michael,” and KE TANG, a/k/a “Eric,” for conspiring to operate an unlicensed money transmitting business and conspiring to violate the Bank Secrecy Act by willfully failing to maintain an adequate anti-money laundering (“AML”) program designed to prevent KuCoin from being used for money laundering and terrorist financing, failing to maintain reasonable procedures for verifying the identity of customers, and failing to file any suspicious activity reports. KuCoin was also charged with operating an unlicensed money transmitting business and a substantive violation of the Bank Secrecy Act. GAN and TANG remain at large.
U.S. Attorney Damian Williams said: “As today’s Indictment alleges, KuCoin and its founders deliberately sought to conceal the fact that substantial numbers of U.S. users were trading on KuCoin’s platform. Indeed, KuCoin allegedly took advantage of its sizeable U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars of daily trades and trillions of dollars of annual trade volume. But financial institutions like KuCoin that take advantage of the unique opportunities available in the United States must also comply with U.S. law to help identify and drive out crime and corrupt financing schemes. KuCoin allegedly deliberately chose not to do so. As alleged, in failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering, with KuCoin receiving over $5 billion and sending over $4 billion of suspicious and criminal funds. Crypto exchanges like KuCoin cannot have it both ways. Today’s Indictment should send a clear message to other crypto exchanges: if you plan to serve U.S. customers, you must follow U.S. law, plain and simple.”
HSI Acting Special Agent in Charge Darren McCormack said: “Today, we exposed one of the largest global cryptocurrency exchanges for what our investigation has found it to truly be: an alleged multibillion-dollar criminal conspiracy. KuCoin grew to service over 30 million customers, despite its alleged failure to follow laws necessary to ensuring the security and stability of our world’s digital banking infrastructure. The defendants’ alleged pattern of skirting these vitally important laws has finally come to an end. I commend HSI New York’s El Dorado Task Force and our law enforcement partners for their commitment to the mission.”
According to the allegations in the Indictment and KuCoin’s statements on its website:[1]
FLASHDOT LIMITED, formerly known as “Phoenixfin Limited,” PEKEN GLOBAL LIMITED, and PHOENIXFIN PRIVATE LIMITED are three entities collectively doing business as global cryptocurrency exchange KuCoin. GAN and TANG, among others, founded KuCoin in September 2017.
KuCoin solicited business from U.S. customers through its spot trading platform and, later, its futures trading platform, which was launched in July 2019. Since its founding in 2017, KuCoin has become one of the largest global cryptocurrency exchange platforms, with more than 30 million customers and billions of dollars’ worth of cryptocurrency in daily trading volume. KuCoin’s website touts public rankings of cryptocurrency exchanges that place KuCoin in the top five worldwide. One of these public rankings listed KuCoin as the fourth largest cryptocurrency derivatives exchange and fifth largest cryptocurrency spot exchange. KuCoin, GAN, and TANG sought to serve, and have in fact served, numerous customers located in the United States and in the Southern District of New York.
As a result, at all relevant times, KuCoin has been a money transmitting business required to register with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and, since July 2019, has been a futures commission merchant required to register with the U.S. Commodity and Futures Trading Commission (“CFTC”). As a money transmitting business and a futures commission merchant, KuCoin is required to comply with the applicable Bank Secrecy Act provisions requiring maintenance of an adequate AML program, including customer identity verification, or know-your-customer (“KYC”) processes. AML and KYC programs ensure that financial institutions, such as KuCoin, are not used for illicit purposes, including money laundering.
GAN, TANG, and KuCoin were aware of their U.S. AML obligations but willfully chose to flout those requirements. KuCoin failed, for example, to implement an adequate KYC program. Indeed, until at least July 2023, KuCoin did not require customers to provide any identifying information. It was only in July 2023, after KuCoin was notified of a federal criminal investigation into its activities, that KuCoin belatedly adopted a KYC program for new customers. However, this KYC process applied to new customers only and did not apply to KuCoin’s millions of existing customers, including the substantial number of customers based in the United States. KuCoin also never filed any required suspicious activity reports, never registered with the CFTC as a futures commission merchant, and, through at least the end of 2023, never registered with FinCEN as a money transmitting business.
In fact, GAN, TANG, and KuCoin affirmatively attempted to conceal the existence of KuCoin’s U.S. customers in order to make it appear as if KuCoin was exempt from U.S. AML and KYC requirements. Despite the fact that KuCoin gathered and tracked location information for its customers, KuCoin actively prevented its U.S. customers from identifying themselves as such when opening KuCoin accounts. And KuCoin lied to at least one investor, in 2022, about where its customers were located, falsely representing that it had no U.S. customers when, in truth, KuCoin had a substantial U.S. customer base. In fact, in a number of social media posts, KuCoin actively marketed itself to U.S. customers as an exchange where they could trade without having to undergo KYC. For example, KuCoin stated in an April 2022 message on Twitter that “KYC is not supported to USA users, however, it is not mandatory on KuCoin to do KYC. Usual transactions can be done using an unverified account-”
As a result of KuCoin’s willful failures to maintain the required AML and KYC programs, KuCoin has been used as a vehicle to launder large sums of criminal proceeds, including proceeds from darknet markets and malware, ransomware, and fraud schemes. Since its founding in 2017, KuCoin has received over $5 billion, and sent over $4 billion, of suspicious and criminal proceeds. Many KuCoin customers used its trading platform specifically because of the anonymity of the services it provided. In other words, KuCoin’s no-KYC policy was integral to its growth and success.
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GAN, 34, and TANG, 39, both citizens of China, are each charged with one count of conspiring to violate the Bank Secrecy Act and one count of conspiring to operate an unlicensed money transmitting business, each of which carries a maximum sentence of five years in prison.
FLASHDOT LIMITED, an entity incorporated in the Cayman Islands; PEKEN GLOBAL LIMITED, an entity incorporated in the Republic of Seychelles; and PHOENIXFIN PRIVATE LIMITED, an entity incorporated in Singapore, together d/b/a “KuCoin,” are each charged with one count of conspiring to violate the Bank Secrecy Act, which carries a maximum sentence of five years in prison; one count of conspiring to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison; one count of violating the Bank Secrecy Act, which carries a maximum sentence of 10 years in prison; and one count of operating an unlicensed money transmitting business, 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 information purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of HSI New York’s El Dorado Task Force. Mr. Williams further thanked the Commodity Futures Trading Commission, which today filed a parallel civil action against KuCoin.
This matter is being handled by the Office’s Illicit Finance & Money Laundering Unit. Assistant U.S. Attorneys Emily Deininger and David R. Felton are in charge of the prosecution.
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.
New Jersey Registered Sex Offender Sentenced to 15 Years in Prison for Attempted Enticement of MinorRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that BRIAN REED was sentenced to 15 years in prison by U.S. District Judge Phillip M. Halpern for attempted enticement of a minor. The sentencing today followed REED’s guilty plea on October 23, 2023.
U.S. Attorney Damian Williams said: “Brian Reed’s actions demonstrate the depths of depravity and danger potentially lurking in the digital realm that connects us all. Let this sentencing serve as a reminder that this Office will harness every tool at our disposal to hold accountable those who prey on and exploit our youth.”
According to documents filed in this case and statements made in related court proceedings:
On May 26, 2022, an investigator with the Rockland County’s District Attorney’s Office (“Investigator-1), who was working in an undercover capacity and posing as a 13-year-old girl on an online platform, engaged in text communications with REED. Investigator-1 told REED that she was 13 years old. During the communications, REED requested sexually explicit photos of Investigator-1 and asked her to meet with him to have sex. REED described the sexual things he wanted to do to Investigator-1 and, when she asked if he was “ok w my age,” REED responded, “Yes of course.” REED made a plan to meet Investigator-1 on the evening of May 26, 2022, in Rockland County, New York. That morning, REED told her, “Im going to make you moan so loud you are going to feel amazing” and instructed, “You should wear something thats easy to take off.”
On May 26, 2022, REED drove from New Jersey to Rockland County to have sex with the purported 13-year-old. When he arrived at the designated meeting location, he was arrested.
Previously, on October 17, 2016, REED was convicted in Morris County Superior Court in New Jersey of endangering the welfare of a child through sexual conduct. As a result of this conviction, on February 17, 2017, REED was sentenced to three years in prison and required to register as a sex offender.
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In addition to the prison term, REED, 36, of Franklin, New Jersey, was sentenced to a lifetime of supervised release.
Mr. Williams praised the efforts of the Federal Bureau of Investigation, the Rockland County Sherriff’s Office, the Rockland County District Attorney’s Office, the Clarkstown Police Department, and the Orangetown Police 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.
U.S. Attorney Charges Convicted Sex Offender Who Had Fled to Mexico with Sexual Exploitation of A Minor and Distribution of Child PornographyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that KENNEDY CARTER, a convicted sex offender who had fled to Mexico from probation in Oregon following a conviction for encouraging child sexual abuse in the first degree in that state, was arrested yesterday evening and charged with sexual exploitation of a child and other child sex offenses. Yesterday, March 21, 2024, CARTER was deported from Mexico by Mexican immigration authorities and arrived at San Francisco International Airport, where he was arrested by the FBI upon arrival. CARTER will be presented today in San Francisco federal court before U.S. Magistrate Judge Laurel Beeler.
U.S. Attorney Damian Williams said: “The charges unsealed today reflect the tenacity of the career prosecutors of this Office and our law enforcement partners who tracked down this alleged recidivist sex offender to Mexico after he fled from probation in Oregon. The defendant went to great lengths to avoid responsibility for his alleged unconscionable actions, but we relentlessly pursue justice for victims of child sexual abuse, and those responsible will face the full weight of the law, no matter where they may hide.”
FBI Assistant Director in Charge James Smith said: “Kennedy Carter, a convicted sex offender, allegedly coerced a 12-year-old girl to send him sexually explicit photos and videos of herself over the Internet. Carter’s arrest reaffirms the FBI’s commitment to protecting children from dangerous sexual predators. Crimes of this nature are inexcusable, making victims out of some of our most vulnerable members of society. We urge parents to continue having conversations with their children about safe online surfing and encourage the public to come forward with information that could help us identify other potential victims in this or any other case.”
As alleged in the Complaint:[1]
From at least on or about May 20, 2023, through at least on or about May 29, 2023, CARTER knowingly induced, enticed, and coerced a 12-year-old female minor located in Putnam County (“Victim-1”) to engage in sexually explicit conduct, to take sexually explicit photos and videos of herself engaging in such conduct, and to transmit them over the internet to CARTER. In addition, from at least on or about May 20, 2023, through at least on or about May 29, 2023, CARTER knowingly distributed material that contained child pornography, including photographs and videos of another minor female (“Victim-2”) to Victim-1 over the Internet. Finally, because CARTER is required by federal or any other law to register as a sex offender, and is so registered, and has committed a felony offense involving a minor in engaging in sexual exploitation of a minor, he is also subject to an enhanced penalty as charged in the Complaint.
Any individuals with information concerning KENNEDY CARTER and any individuals who may have encountered someone using the WhatsApp username [email protected] or the aliases “Mikey Portuguez Perez” or “Javed Montero,” please contact the FBI at 1-800-CALL-FBI or https://tips.fbi.gov.
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CARTER, 27, previously of Corvallis, Oregon, is charged with one count of sexual exploitation of a child, which, because of his prior state conviction in Oregon for encouraging child sexual abuse in the first degree, carries an enhanced mandatory minimum sentence of 25 years in prison and a maximum sentence of 50 years in prison; one count of receipt and distribution of child pornography, which, again due to his prior conviction, carries an enhanced mandatory minimum sentence of 15 years in prison and a maximum sentence of 40 years in prison; and one count of penalties for registered sex offenders, which carries a mandatory minimum sentence of 10 years in prison to run consecutive to any sentence imposed for the underlying offense of sexual exploitation of a child.
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 the judge.
Mr. Williams praised the outstanding investigative work of the FBI’s Westchester Safe Streets Task Force and the Putnam County Sheriff’s Office. Mr. Williams also thanked law enforcement partners in Mexico, the Benton County Probation Office in Benton County, Oregon, the Department of Justice’s Office of International Affairs, and the U.S. Attorney’s Office for the Northern District of California for their assistance.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Margaret N. Vasu 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.
Bronx Daycare Provider Pleads Guilty to Sexual Exploitation of A Child and Producing Child PornographyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that SILFREDO CASTILLO MARTINEZ pled guilty today before U.S. District Judge Paul A. Engelmayer to a Superseding Information charging him with sexual exploitation of a child and production of child pornography.
U.S. Attorney Damian Williams said: “Silfredo Castillo Martinez exploited the trust placed in him as a daycare provider by sexually abusing one of the minor children under his care and by forcing that child to perform sex acts on him. Additionally, Castillo Martinez had nearly 10,000 images depicting child pornography in his possession, all the while caring for children on a daily basis. Castillo Martinez’s conduct is reprehensible, and he now faces more than a decade in prison for his crimes.”
According to the allegations contained in the Superseding Information and the Complaint filed on March 10, 2023:
From in or about July 2015 through in or about at least May 3, 2022, CASTILLO MARTINEZ operated a licensed daycare facility for children at his residence in the Bronx, New York (the “Daycare Facility”).
From at least in or about May 2018 through at least in or about July 2018, CASTILLO MARTINEZ induced an 11-year-old minor (“Minor Victim-1”) who attended the Daycare Facility to engage in sexually explicit conduct with him at the Daycare Facility while CASTILLO MARTINEZ recorded that conduct on his cellphone and camera.
On or about May 3, 2022, law enforcement agents executed a search warrant at CASTILLO MARTINEZ’s residence and seized several electronic devices belonging to CASTILLO MARTINEZ. Those devices contained, among other things, several images and a video containing child pornography depicting Minor Victim-1 and approximately 9,800 other images depicting child pornography.
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CASTILLO MARTINEZ, 34, of the Bronx, New York, pled guilty to one count of production of child pornography and sexual exploitation of a child, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison. CASTILLO MARTINEZ is scheduled to be sentenced by Judge Engelmayer on June 25, 2024, at 11:00 a.m.
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 the judge.
Mr. Williams praised the outstanding investigative work of the U.S. Secret Service’s Internet Crimes Against Children Task Force, the Federal Bureau of Investigation, and the New York City Police Department. Mr. Williams also thanked the Bronx County District Attorney’s Office for its assistance.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Jackie Delligatti is in charge of the prosecution.
Five Men Charged with Murder in Connection with Failed Robbery Attempt That Left Two DeadRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”); and David Gibson, the Commissioner of the Mount Vernon Police Department, announced the arrest of ILARIO CONTRERAS, JERPI DIAZ-FELIZ, a/k/a “Jorge Diaz-Feliz,” JHOAN DIAZ-FELIZ, VICTOR JIMENEZ, and JOSEPH PEREZ. The defendants are charged with murder in connection with an attempted gunpoint robbery of a Mount Vernon warehouse that sells various unlicensed marijuana and nicotine products. Two individuals — one employee of the warehouse and one member of the robbery crew — were shot and killed during the failed robbery attempt. The defendants were arrested and will be presented later today before U.S. Magistrate Judge Victoria Reznik.
U.S. Attorney Damian Williams said: “As alleged in the Complaint, these five defendants carried out a violent armed robbery that left two dead in Mount Vernon. The dedication, bravery, and expertise of our law enforcement partners led to the swift arrest of this dangerous crew. This was an outstanding coordinated effort to uphold the law and keep the public safe. This Office is determined to ensure that these defendants now face justice.”
FBI Assistant Director in Charge James Smith said: “These five subjects allegedly orchestrated an attempted armed robbery of a warehouse that sells to smoke shops, which quickly turned deadly as a shootout ensued, culminating in the death of both an employee and one robbery crew affiliate. The defendants’ alleged brazen actions demonstrated extreme disregard for public safety and posed a significant threat to the community. The FBI will not cease its relentless pursuit of those who choose violence, especially using firearms, to further their criminal behavior. We urge the public to contact us at 1-800-Call-FBI or at tips.fbi.gov with any additional information related to this case.”
Mount Vernon Police Commissioner David Gibson said: “I would like to thank the U.S. Attorney’s Office for the Southern District of New York, the FBI’s Westchester County Safe Streets Task Force, the Westchester County District Attorney’s Office, and the New York Police Department for their partnership, assistance, and continued support in this investigation. I would also like to thank the Westchester County Police Department and the Westchester Real Time Crime Center for their vital assistance and teamwork. The Mount Vernon Police Department and the Patterson-Howard administration takes crime in our City seriously. We want to send a message to those who seek to commit heinous crimes in our community. We will partner with local, state, and federal partners to prosecute them to the fullest extent of the law. ”
As alleged in the Complaint filed today in White Plains federal court:[1]
On or about March 19, 2024, ILARIO CONTRERAS, JERPI DIAZ-FELIZ, JHOAN DIAZ-FELIZ, VICTOR JIMENEZ, JOSEPH PEREZ, and others known and unknown attempted to rob at gunpoint a warehouse in Mount Vernon that sells various unlicensed marijuana and nicotine products. As employees of the warehouse were assisting customers, approximately 10 to 15 people, including the defendants, approached the employees and customers with weapons and forced them back into the warehouse at gunpoint. A still image from video surveillance outside the warehouse is depicted below:
Shortly after the defendants and others approached the employees and customers with firearms, a gunfight between the warehouse employees and defendants broke out. As a result, one of the employees and one of the robbers were killed.
If you have any information about this case, please contact the FBI at 1-800-Call-FBI or tips.fbi.gov.
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CONTRERAS, 23; JERPI DIAZ-FELIZ, 25; JHOAN DIAZ-FELIZ, 23; JIMENEZ, 35; and PEREZ, 26, are each charged with one count of conspiracy to commit Hobbs Act Robbery, which carries a maximum sentence of 20 years in prison, one count of conspiracy to engage in drug trafficking, which carries a maximum sentence of life in prison, one count of possessing and discharging a firearm in furtherance of drug trafficking activity, which carries a maximum sentence of life in prison, and murder through the use of a firearm in furtherance of a drug trafficking crime, which carries a maximum sentence of the death penalty or life imprisonment.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as the sentencing of the defendants will be determined by a judge.
Mr. Williams praised the work of the FBI’s Westchester County Safe Streets Task Force and the Mount Vernon Police Department. Mr. Williams also thanked the Westchester County District Attorney’s Office, the Westchester County Police Department, the New York City Police Department, and the Westchester Real Time Crime Center for their invaluable assistance.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Jared D. Hoffman and Justin L. Brooke are 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.
Attorney and Former Bank Director Sentenced to 30 Months in Prison for Bank FraudRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that MENDEL ZILBERBERG was sentenced today to 30 months in prison in connection with a scheme to obtain a fraudulent $1.4 million loan from Park Avenue Bank. The defendant was a member of Park Avenue Bank’s board of directors at the time of the offense. ZILBERBERG was previously found guilty following a one-week trial before U.S. District Judge George B. Daniels, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Those entrusted with the stewardship of financial institutions must uphold their responsibilities with integrity, not exploit their positions. Mendel Zilberberg’s manipulation of his roles as a legal practitioner and a director of Park Avenue Bank exemplifies a disturbing breach: one that led to a staggering loss for the institution. Safeguarding the integrity of our financial systems is imperative, and this Office will not tire in our mission to track down those who pose threats to this vital cornerstone of stability.”
According to the allegations contained in the Indictment, the evidence offered at trial, and matters included in public filings:
In or about 2009, ZILBERBERG conspired with a co-defendant, Aron Fried, and others to obtain a fraudulent loan from Park Avenue Bank (the “Bank”). Knowing that the co-conspirators would not be able to obtain the loan directly, the co-conspirators recruited a straw borrower (the “Straw Borrower”) to make the loan application. The Straw Borrower applied for a $1.4 million loan from the Bank on the basis of numerous lies, as directed by ZILBERBERG and his co-conspirators.
ZILBERBERG used his privileged position at the Bank to ensure that the loan was processed promptly. Based on the false representations made to the Bank and ZILBERBERG’s involvement in the loan approval process, the Bank issued a $1.4 million loan to the Straw Borrower, which was quickly disbursed to ZILBERBERG and his co-conspirators through multiple bank accounts and transfers. In total, ZILBERBERG received more than approximately $500,000 of the loan proceeds. The Straw Borrower received nothing from the loan and ultimately defaulted, resulting in a loss to the Bank of over $1 million.
On November 15, 2022, Fried pled guilty to conspiracy to commit bank fraud. On April 10, 2023, Judge Daniels sentenced Fried to one year and one day in prison.
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In addition to the prison term, ZILBERBERG, 65, of Monsey, New York, was sentenced to three years of supervised release and ordered to pay $1,066,853 in restitution and $506,000 in forfeiture.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation’s Office of the Inspector General.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Dina McLeod, Daniel G. Nessim, and Kimberly Ravener, with the assistance of Paralegal Specialist Joseph Carbone, are in charge of the prosecution.
Two Defendants Convicted at Trial for Participating in Cryptocurrency Ponzi Scheme “IcomTech”Read the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict yesterday against DAVID BREND and GUSTAVO RODRIGUEZ on one count of conspiracy to commit wire fraud in connection with BREND’s and RODRIGUEZ’s participation in a large-scale cryptocurrency Ponzi scheme known as IcomTech. U.S. District Judge Jennifer L. Rochon presided over the two-week trial.
U.S. Attorney Damian Williams said: “IcomTech defrauded tens of thousands of people out of tens of millions of dollars. It offered the false promise of easy riches based on supposed cryptocurrency investments but wound up cheating working people out of their hard-earned money. Yesterday, David Brend and Gustavo Rodriguez – two individuals who were central to the IcomTech Ponzi scheme – were swiftly convicted by a unanimous jury for their role in defrauding IcomTech investors. This verdict should send a clear message to those who engage in Ponzi schemes — whether in the cryptocurrency markets or elsewhere — that this Office is committed to rooting out fraud in all its forms and holding those responsible to full account. Now, as a result of their lies to hardworking people, Brend and Rodriguez stand convicted of a federal crime and face substantial time in prison.”
According to the Indictment, public filings, public court proceedings, and the evidence presented at trial:
IcomTech launched in mid-2018, when co-defendant DAVID CARMONA hired RODRIGUEZ to build a website for the scheme. IcomTech was a purported cryptocurrency mining and trading company that promised to earn its victim-investors profits in exchange for their purchase of purported cryptocurrency-related investment products. CARMONA, BREND, and the other promoters of IcomTech falsely promised their respective victims, among other things, that profits from the companies’ cryptocurrency trading and mining would result in guaranteed daily returns on victims’ investments. In reality, IcomTech did not engage in cryptocurrency trading or mining for its Investors, and BREND and IcomTech’s other promoters used victim funds to pay other victims, to further promote the schemes, and to enrich themselves.
IcomTech promoters, including BREND, traveled throughout the United States and abroad, where they hosted lavish expos and small community presentations aimed at luring victims to invest in the schemes, including in the Southern District of New York. During larger-scale events, IcomTech promoters presented on purported investment products and the compensation plan, encouraged victims to invest as a means of achieving financial freedom, and boasted about the amount of money they were earning. IcomTech promoters often showed up at larger-scale events in expensive cars and wearing luxury clothing as a way of exhibiting their purportedly legitimate success from IcomTech. The atmosphere of these events was festive and designed to generate excitement about the schemes.
Victims invested in IcomTech by purchasing investment products from promoters using cash, checks, wire transfers, and actual cryptocurrency. Following a victim’s investment, a victim would be provided with access to an online portal where the victim could monitor the purported returns. While victims saw “profits” accumulate on the online portal, most victims were unable to withdraw any of these so-called profits and ultimately lost their entire investments. By contrast, IcomTech’s promoters, including BREND, siphoned off, in some cases, hundreds of thousands of dollars in victim funds, which they withdrew as cash, spent on IcomTech promotional expenses, and used for personal expenditures such as luxury goods and real estate.
RODRIGUEZ worked with CARMONA to run IcomTech’s website and online portal, where victims were provided with personal accounts. CARMONA and RODRIGUEZ discussed how to structure IcomTech’s compensation plan and investment products; for example, RODRIGUEZ advised CARMONA on where CARMONA should set the purported daily returns on victims’ investment packages and on the size of the investment packages that CARMONA should offer for sale.
At least as early as August 2018, victims who attempted to withdraw money from their online portal accounts had difficulty doing so, and when they complained to promoters, they were met with excuses, delays, and hidden fees, if they were able to make any withdrawals at all. Despite these complaints, IcomTech promoters, including BREND, continued to promote IcomTech and accept victims’ investments, and RODRIGUEZ continued to maintain the website. As complaints mounted, IcomTech began offering proprietary crypto-tokens for sale as a means of injecting liquidity into IcomTech. Promoters of the schemes claimed that these tokens, known as “Icoms,” would eventually be worth a significant amount of money when they were accepted by companies for payment for goods and services. This was false. In reality, “Icoms” were essentially worthless and resulted in further financial loss to victims. By in or about the end of 2019, IcomTech stopped making payments to victims, and IcomTech collapsed.
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BREND, 49, of Tampa, Florida, and RODRIGUEZ, 47, of North Hollywood, California, were each convicted of one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.
The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as the sentencing of the defendants will be determined by the judge. BREND is scheduled to be sentenced by Judge Rochon on June 27, 2024, at 10:00 a.m., and RODRIGUEZ is scheduled to be sentenced by Judge Rochon on June 28, 2024, at 10:00 a.m.
Mr. Williams praised the outstanding investigative work of Special Agents from Homeland Security Investigations’ El Dorado Task Force. Mr. Williams also thanked the Securities and Exchange Commission and the Commodity Futures Trading Commission for their assistance.
If you believe you are a victim of the IcomTech fraud, updated information regarding the case and victims’ rights, as well as contact information for the victim witness coordinator is available here.
The case is being handled by the Office’s Illicit Finance & Money Laundering Unit. Assistant U.S. Attorneys Michael D. Maimin, T. Josiah Pertz, Benjamin A. Gianforti, and Cecilia E. Vogel are in charge of the prosecution.
Citizen of India Pleads Guilty to Tech Support Fraud Scheme That Exploited the ElderlyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that VINOTH PONMARAN pled guilty today to participating in a conspiracy that for several years exploited elderly victims by remotely accessing their computers and convincing victims to pay for computer support services 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 pled guilty to conspiracy to commit wire fraud and conspiracy to intentionally damage victims’ computers before U.S. District Judge Vernon S. Broderick, to whom his case is assigned.
U.S. Attorney Damian Williams said: “As he admitted today, Vinoth Ponmaran was a leader of a sophisticated fraud scheme that preyed on thousands of 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, this prolific fraud scheme deceived victims into paying a total of more than $6 million.”
According to the allegations contained in the Superseding Information, court filings, and statements made during plea proceedings:
From approximately March 2015 through July 2018, PONMARAN was a member of a criminal fraud ring (the “Fraud Ring”) based in the United States and India that committed a technical support fraud scheme targeting elderly victims located across the United States 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 United States 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 United States.
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PONMARAN, 35, a citizen of India, pled guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to intentionally damage a protected computer, each of which carries a maximum penalty of five years in prison. Under the terms of his plea agreement, PONMARAN has agreed to forfeit $6,110,884.51 and to pay restitution of $1,851,830.18.
The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as PONMARAN’s sentence will be determined by the judge. PONMARAN’s sentencing is scheduled for June 24, 2024, at 3:00 p.m.
PONMARAN’s co-defendants, Romana Leyva and Ariful Haque, were both sentenced by U.S. District 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 Homeland Security Investigations’ 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.
Leader of “Pure Armenian Blood” Sentenced to Six Years in Prison for Racketeering and Multimillion-Dollar FraudRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that NAREK MARUTYAN and SARO MOURADIAN, a/k/a “Paul Mouradian,” were sentenced today to six years and 10 months in prison, respectively, for their participation in a multi-year, coast-to-coast credit card fraud scheme run by a racketeering enterprise referred to as “Pure Armenian Blood” or “P.A.B.” MARUTYAN, a leader of the P.A.B., previously pled guilty to participating in a racketeering conspiracy on June 12, 2023, before U.S. Magistrate Judge Ona T. Wang, and MOURADIAN, who owned and operated a Florida-based business that was used by the P.A.B. to run sham credit card charges, previously pled guilty to participating in a conspiracy to commit access device fraud on August 17, 2023, before U.S. Magistrate Judge Katherine H. Parker. U.S. District Judge Victor Marrero imposed today’s sentences.
U.S. Attorney Damian Williams said: “Pure Armenian Blood’s members enriched themselves and their criminal associates for almost a decade through fraudulent schemes that involved stealing others’ identities and spending millions of dollars of other people’s money as though there were no consequences. As a leader of the sophisticated, organized criminal enterprise, Narek Marutyan orchestrated these schemes and reaped the ill-gotten gains. He now faces years in prison for his crime. This prosecution reaffirms our unwavering commitment to combating organized crime in all its forms.”
According to the Indictment, public filings, and statements made during court proceedings:
Pure Armenian Blood was an organized criminal group operating under the direction and protection of an unindicted co-conspirator (“CC-1”), a “vor v zakone” or “vor,” which are Russian phrases translated roughly as “Thief-in-Law” or “Thief,” and which refer to an order of elite criminals from the former Soviet Union who receive tribute from other criminals, offer protection, and use their recognized status as a vor to adjudicate disputes among lower-level criminals. Members and associates of Pure Armenian Blood operated under the direction and protection of CC-1, a vor of Armenian descent previously based in Los Angeles before being deported in or about 2018. Pure Armenian Blood operated through groups of individuals, often with overlapping members or associates, dedicated to criminal aims, particularly identity theft, access device fraud, and credit card fraud, among others. While Pure Armenian Blood exploited victims and the financial system in New York City, it had operations in various locations throughout the U.S. and abroad, including through the use of purportedly legitimate business entities operating under the control and in conjunction with members of P.A.B. at various points throughout the conspiracy.
As a leader of the P.A.B. in New York, MARUTYAN orchestrated P.A.B’s various illicit activities, including the use of stolen personal identifying information, fraudulently opening and exhausting lines of credit, making purchases at collusive businesses with counterfeit credit cards or credit cards that were fraudulently opened, selling goods purchased with those lines of credit for profit, and the falsification of documents to “clean” the credit of account holders in whose names the lines of credit were opened.
As the owner and operator of two of the collusive businesses used by the P.A.B. to facilitate the credit card fraud scheme, MOURADIAN used credit cards that had been fraudulently obtained to run sham charges for which no legitimate goods or services were provided in exchange. He also provided personal identifying information of individuals that he knew to P.A.B. members, who used that information to fraudulently obtain additional credit cards that were used in furtherance of the fraud scheme.
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In addition to his prison term, MARUTYAN, 33, of Brooklyn, New York, was ordered to pay restitution of $4,258.999.79 and forfeiture of $4,258.999.79. MOURADIAN, 40, of Hollywood, Florida, was ordered to pay restitution of $517,502.00 and forfeiture of $50,190.00. In addition to MARUTYAN and MOURADIAN, five other co-defendants have pled guilty and been sentenced, and one other co-defendant has pled guilty but has not yet been sentenced, as set forth below.
Mr. Williams praised the outstanding work of the New York Field Office of the Federal Bureau of Investigation’s Eurasian Organized Crime Squad, as well as the FBI’s New Jersey, Los Angeles, and Miami offices, Homeland Security Investigations, the New York City Police Department, the United States Postal Inspection Service, and United States Customs and Border Protection.
This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
The prosecution of this case is being handled by the Office’s Illicit Finance & Money Laundering Unit. Assistant U.S. Attorney Emily Deininger is in charge of the prosecution.
DEFENDANT
CHARGE OF CONVICTION
SENTENCE
Narek Marutyan
Racketeering Conspiracy
6 Years
Albert Marutyan
Racketeering Conspiracy
51 Months
Davit Yeghoyan
Racketeering Conspiracy
45 Months
Mikayel Yeghoyan
Racketeering Conspiracy
41 Months
Saro Mouradian
Access Device Fraud
10 Months
Zaven Yerkaryan
Access Device Fraud
Pending
Vahe Hovhannisyan
Travel Act Money Laundering
364 Days
Gohar Illangyozyan
Making False Statements to Law Enforcement
Time Served
Florida Man Arrested for $77 Million Tender Offer FraudRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging JONATHAN MOYNAHAN LARMORE with tender offer fraud and securities fraud in connection with LARMORE’s announcement of a fake tender offer to manipulate the stock price of WeWork, Inc. (“WeWork”). LARMORE is alleged to have announced a false $77 million tender offer for WeWork stock, news of which immediately led investors to buy WeWork stock at fraudulently inflated prices during after-hours trading, in an effort to drive up the value of his WeWork call options and shares. LARMORE was arrested this morning and will be presented in federal court later today in the Middle District of Florida. The case is assigned to U.S. District Judge Paul A. Engelmayer.
U.S. Attorney Damian Williams said: “Jonathan Moynahan Larmore's alleged actions strike at the heart of market integrity and investor confidence. By allegedly orchestrating a deceptive scheme involving a counterfeit tender offer, he purportedly preyed upon investors, artificially inflating the value of WeWork stock for personal enrichment. The charges leveled against Larmore highlight the profound implications of his alleged fraudulent conduct, emphasizing the imperative of accountability and transparency in our financial systems.”
FBI Assistant Director in Charge James Smith said: “Jonathan Larmore allegedly drafted a fraudulent press release announcing a fictitious tender offer to inflate WeWork stock prices, after personally investing in the company through call options. Thankfully, Larmore was unable to widely distribute the press release before the end of the trading day, which failed to increase the share price in time and caused Larmore’s options to expire rather than making him millions. As alleged, even though his scheme did not net him his desired profits, Larmore’s conduct artificially impacted the market and caused harm to other shareholders. This indictment reaffirms the FBI’s commitment to protecting our nation’s economic integrity by holding responsible those who manipulate the system for financial gain.”
As alleged in the Indictment:[1]
In or about the fall of 2023, LARMORE perpetrated a scheme to use a false and fraudulent tender offer to manipulate the stock price of WeWork, a co-working space company that was, at all relevant times, headquartered in New York, New York, and publicly traded on the New York Stock Exchange.
LARMORE executed his scheme in three steps. First, on or about October 6, 2023, LARMORE created Cole Capital Funds LLC (“Cole Capital”), a purported a real estate investment firm that was, in fact, merely a sham company. Second, on or about November 1, 2023, and November 2, 2023, LARMORE spent more than $775,000 buying tens of thousands of cheap, short-dated, out-of-the-money WeWork call options (the vast majority of which were set to expire on November 3, 2023 at 4:00 p.m. EDT) and hundreds of thousands of shares of WeWork common stock — the latter primarily because two of LARMORE’s brokerage firms did not authorize him to trade options, but did authorize him to buy equities. Third, on or about November 3, 2023, LARMORE caused a press release to be published announcing that Cole Capital proposed to acquire 51% of all outstanding shares owned by minority shareholders of WeWork at a more-than-700% premium in an all-cash offer worth more than $77 million. At the time, WeWork was on the verge of bankruptcy.
In fact, neither LARMORE nor Cole Capital had the intent or ability to execute the announced tender offer. Instead, LARMORE intended for news of the tender offer to fraudulently inflate WeWork’s share price and, thereby, to increase the value of LARMORE’s newly acquired WeWork call options and shares.
On or about November 3, 2023, at approximately 5:12 p.m. EDT, the press release about Cole Capital’s purported tender offer was published. Within approximately one minute of publication, in after-hours trading, WeWork’s share price quickly increased more than 70% from $.85 to $1.45, and continued to rise until 5:31 p.m. EDT, when the stock reached its high of $2.14, which was a more-than-150% increase over the stock price prior to the publication of the press release.
The WeWork call options LARMORE purchased could have made LARMORE millions of dollars if the news of LARMORE’s fraudulent tender offer had caused WeWork’s share price to increase significantly prior to the expiration of LARMORE’s options. Unfortunately for LARMORE, he mistimed how long it would take to properly format his press release and have it published. As a result of these delays, LARMORE’s fraudulent press release was not published—and WeWork’s share price did not accordingly rise—until approximately 5:12 p.m. EDT on or about November 3, 2023, which was about an hour after the vast majority of LARMORE’s WeWork call options had expired worthless at 4:00 p.m. EDT that day.
On the following Monday, November 6, 2023, WeWork filed for Chapter 11 bankruptcy protection. On or about November 10, 2023, the small number of remaining WeWork options LARMORE had purchased expired out of the money and worthless.
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LARMORE, 51, of Punta Gorda, Florida, is charged with one count of tender offer fraud and one count of securities fraud, each of 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 defendant will be determined by a judge.
Mr. Williams praised the outstanding work of the FBI. Mr. Williams also thanked the U.S. Securities and Exchange Commission, which filed a civil action against LARMORE on November 28, 2023, for its assistance and cooperation in the investigation.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Justin V. Rodriguez and Alex Rossmiller 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.
Bronx Man Sentenced to 11 Years in Prison for Sex Trafficking A MinorRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that MICHAEL PASCHAL was sentenced to 11 years in prison by U.S. District Judge Vernon S. Broderick for sex trafficking a minor victim. Today’s sentencing followed PASCHAL’s conviction on all counts at trial on May 9, 2023.
U.S. Attorney Damian Williams said: “Michael Paschal trafficked a vulnerable teenager who was one third his age, promising her food and shelter and immediately turning on her. He exploited the victim for his own financial gain, and when confronted by law enforcement, he showed no remorse for his despicable actions. Thanks to the courageous testimony of the victim, our law enforcement partners, and the career prosecutors of this Office, today, he was justly sentenced to over a decade in prison for his crimes.”
According to the Indictment and statements made in court proceedings and filings:
In July 2020, PASCHAL induced a minor victim (“Minor Victim-1”) to travel from another state to PASCHAL’s Bronx residence with the intent to sex traffic Minor Victim-1. PASCHAL operated a prostitution business from that residence in the Bronx. Minor Victim-1 stayed at PASCHAL’s residence for several weeks in July 2020, during which time PASCHAL directed Minor Victim-1 to engage in commercial sex and profited from it.
Minor Victim-1 was then returned to her home state, but several weeks later, PASCHAL again began sex trafficking Minor Victim-1 from his residence in the Bronx. PASCHAL posted prostitution ads containing sexually explicit photographs of Minor Victim-1 and communicated with sex buyers to facilitate commercial sex with Minor Victim-1.
PASCHAL sex trafficked Minor Victim-1, and worked with others to ensure that Minor Victim-1 was engaging in commercial sex for his profit, for weeks until she was recovered from PASCHAL’s residence in or about December 2020. When confronted, PASCHAL told law enforcement, in sum and substance, “what’s the big deal, she’s about to turn 18 anyway.”
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In addition to the prison term, PASCHAL, 53, of the Bronx, New York, was sentenced to five years of supervised release.
Mr. Williams praised the outstanding work of Homeland Security Investigations.
The case is being prosecuted by the Office’s General Crimes Unit. Assistant U.S. Attorneys Kevin Mead, Jackie Delligatti, and Jane Kim are in charge of the prosecution.
Former FBI Agent Trainee Sentenced to 15 Months in Prison for Insider Trading SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that SETH MARKIN was sentenced by U.S. District Judge Edgardo Ramos to 15 months in prison for his participation in a scheme to trade in stock of Pandion Therapeutics (“Pandion”) based on material, non-public information that he misappropriated from his then-girlfriend and stole from her employer, a major law firm where his then-girlfriend was an attorney assigned to work on the acquisition of Pandion by Merck & Co. (“Merck”). MARKIN was arrested in July 2022 and pled guilty to securities fraud based on insider trading on December 4, 2023.
U.S. Attorney Damian Williams said: “Seth Markin betrayed the trust of his then-girlfriend when he misappropriated confidential information, traded based on that information, and tipped several friends and family members. Markin knew his actions were wrong and lied, repeatedly, to try to cover up his scheme. Markin, who had been accepted into the FBI as a new agent trainee at the time of his conduct, finds himself in a complete reversal of fortune — instead of investigating crimes, he’ll now spend time in prison. Today’s sentence should serve as a stark reminder that, no matter who you are, if you try to cheat the system by stealing and trading based on material, non-public information, you will be punished.”
As alleged in the Indictment, other public court documents, and statements made during court proceedings:
In early 2021, SETH MARKIN and BRANDON WONG together made more than $1.4 million dollars in illegal profits by trading in stock based on inside information that MARKIN stole from his then-girlfriend, who was at the time an attorney at a major law firm in Washington D.C. (the “Law Firm Associate”). At the time, MARKIN had been accepted into the Federal Bureau of Investigation (“FBI”) as a new agent trainee, and WONG was a systems analyst at an education company. In February 2021, MARKIN secretly looked through the Law Firm Associate’s confidential work documents, without her permission, and learned that, in a matter of weeks, Merck, a publicly traded pharmaceutical company, was going to acquire Pandion, a publicly traded biotechnology company, for approximately three times the value of Pandion’s share price. MARKIN immediately purchased Pandion stock on the basis of this material, non-public information and also told several family members and friends to purchase Pandion’s stock, causing WONG, another friend, and several family members to do so, including Family Member-1, Family Member-2, Family Member-3, Family Member-4, and Friend-1. In text messages, MARKIN assured WONG that he was “not uncertain” that when the “news drop[ped]” about Pandion, the price would “EXPLODE,” and they would earn “triple gains.”
WONG purchased hundreds of thousands of dollars’ worth of Pandion shares based on the material, non-public information he received from MARKIN. In addition to his purchases of Pandion stock, WONG told at least seven other people to purchase Pandion shares, causing some of the people he tipped to purchase tens or hundreds of thousands of dollars’ worth of Pandion stock, including Family Member-5, Friend-2, Friend-3, Friend-4, Friend-5, Friend-6, and Friend-7.
In total, MARKIN and WONG together caused at least 20 people to trade in Pandion stock based on the material, non-public information that MARKIN misappropriated from his girlfriend, resulting in millions of dollars of illegally obtained trading profits. To conceal their illegal insider trading scheme, MARKIN and WONG used an encrypted messaging application and deleted many of their text messages with each other. They also agreed on a cover story that they could provide to law enforcement, namely, that if they were asked how they anticipated Pandion’s stock price increase, they could say they “read it on Stocktwit,” in reference to a social media platform for sharing stock ideas, and falsely say that the news was “publicly being announced there.”
After Merck’s acquisition of Pandion was announced publicly, and the Pandion stockholdings of MARKIN and WONG, and those whom they tipped, significantly increased in value, the defendants sold their shares of Pandion for significant profits. With their illegal profits, the defendants and their tippees purchased luxury items and bought gifts for each other. For example, WONG purchased for MARKIN a Rolex watch valued at approximately $40,000, a trip to Hawaii, and a meal at a three-Michelin-starred restaurant in New York that cost more than $1,000. WONG also purchased a home in Florida.
Thereafter, MARKIN lied in order to hide his illegal insider trading. In or about June 2021, after MARKIN and the Law Firm Associate had ended their relationship and as MARKIN was preparing to begin training as a new agent at the FBI Academy in Quantico, Virginia, the Law Firm Associate called MARKIN to ask why MARKIN’s name had come up in an inquiry by the Financial Industry Regulatory Authority into trading in Pandion stock. In response, MARKIN lied to the Law Firm Associate and falsely claimed that he did not trade in Pandion stock.
MARKIN subsequently took steps to further conceal his criminal activity. On November 18, 2021, MARKIN lied to FBI agents when he was interviewed about his Pandion trading. That day, Special Agents from the FBI interviewed MARKIN in connection with an investigation they told him was being conducted by law enforcement in the Southern District of New York relating to insider trading in Pandion stock. During the interview, MARKIN adhered to the fake cover story he and WONG had concocted and falsely told the agents that he learned about Pandion on StockTwits, that he purchased the stock because of a recent earnings report and a new board member addition, and that he did not know that his former girlfriend worked on the Pandion transaction.
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In addition to the prison sentence, MARKIN, 32, of Washington Crossing, Pennsylvania, was sentenced to three years of supervised release and ordered to forfeit $82,366.
Mr. Williams praised the outstanding investigative work of the FBI and the Department of Justice’s Office of the Inspector General. Mr. Williams also thanked the U.S. Securities and Exchange Commission, which has filed parallel civil actions.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Nicolas Roos and Negar Tekeei are in charge of the prosecution.
Bronx Man Sentenced to 15 Years in Prison for Distributing Fentanyl in Exchange for Sex with A Minor and Causing the Death of A 19-Year-Old VictimRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that VIRGIL WARDLOW was sentenced today to 15 years in prison for paying for commercial sex with a minor using fentanyl-laced pills that caused the death of a 19-year-old victim. WARDLOW previously pled guilty to one count of distribution of narcotics before by U.S. District Judge Mary Kay Vyskocil, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “The consequences of the defendant’s conduct are heart-wrenching: The defendant paid for sex with a 16-year-old victim using fentanyl-laced pills, which the victim’s 19-year-old friend then ingested, poisoning her and causing her death. Today’s sentence sends a powerful message to those who traffic deadly drugs to vulnerable victims and demonstrates that this Office will seek justice for families facing the horrific tragedy of losing a loved one to fentanyl poisoning and for victims of child sexual exploitation.”
According to court filings and statements made in court proceedings:
WARDLOW engaged in a pattern of paying for commercial sex with black market pills that contained fentanyl. On or about March 25, 2023, at a hotel room in the Bronx, New York, WARDLOW provided two of those pills to a 16-year-old female (“Victim-1”) in exchange for sex with Victim-1. After WARDLOW had sex with Victim-1 and WARDLOW left the hotel room, Victim-1 and her 19-year-old female friend (“Victim-2”) ingested the pills provided by WARDLOW. Thereafter, Victim-1 became ill, and Victim-2 became unconscious and died of a drug poisoning.
Between at least on or about February 8, 2023, and on or about April 24, 2023, WARDLOW exchanged several messages with other individuals in which WARDLOW offered to provide pills in exchange for sex or money. WARDLOW sent these messages using an anonymized cellphone number that masked his identity from his intended victims.
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In addition to the prison term, WARDLOW, 31, of the Bronx, New York, was sentenced to three years of supervised release and ordered to pay restitution in the amount of $17,000 in connection with the funeral expenses of Victim-2.
Mr. Williams praised the outstanding investigative work of the New York State Police, the New York City Police Department, and Special Agents from the U.S. Attorney’s Office for the Southern District of New York.
This case is being handled by the Office’s General Crimes Unit and Narcotics Unit. Assistant U.S. Attorney Jeffrey W. Coyle is in charge of the prosecution.
Lamor Whitehead, Brooklyn Church Leader, Convicted of Fraud, Extortion, and False StatementsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict last night against LAMOR WHITEHEAD on two counts of wire fraud, one count of attempted wire fraud, one count of attempted extortion, and one count of making false statements to federal law enforcement agents. U.S. District Judge Lorna G. Schofield presided over the two-week trial.
U.S. Attorney Damian Williams said: “As a unanimous jury found, Lamor Whitehead abused the trust placed in him by a parishioner, tried to obtain a fraudulent loan using fake bank records, bullied a businessman for $5,000, tried to defraud him out of far more than that, and lied to federal agents. Whitehead’s reprehensible lies and criminal conduct have caught up with him, as he now stands convicted of five federal crimes and faces time in prison.”
According to the allegations in the Indictment and the evidence at trial:
LAMOR WHITEHEAD, who leads a church in Brooklyn, New York, stole from his own parishioners, sought to defraud and extort a businessman, and committed loan fraud. First, WHITEHEAD induced one of his parishioners to invest approximately $90,000 of her retirement savings with him by promising to use the money to help her buy a home. He then spent the money on luxury goods and other personal expenses and, when she demanded to be paid back, he continued to lie to avoid returning the money. Second, WHITEHEAD extorted a businessman for $5,000, then attempted to convince the same businessman to lend him $500,000 and give him a stake in certain real estate transactions in return for favorable actions from the Mayor of New York City, even though WHITEHEAD knew he could not obtain the favors he promised. Third, WHITEHEAD submitted a fraudulent application for a $250,000 business loan, including doctored bank statements that falsely claimed WHITEHEAD had millions of dollars in the bank and hundreds of thousands of dollars in monthly revenue. Finally, when speaking with Federal Bureau of Investigation (“FBI”) agents who were executing a search warrant outside WHITEHEAD’s mansion in New Jersey, WHITEHEAD falsely claimed that he had no cellphones other than the phone he was carrying when, in fact, WHITEHEAD had and regularly used a second cellphone, which was inside his house at the time.
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WHITEHEAD, 45, of Paramus, New Jersey, was convicted of two counts of wire fraud, one count of attempted wire fraud, and one count of attempted extortion, each of which carries a maximum sentence of 20 years in prison, and one count of making false statements, which carries a maximum sentence of five years in prison.
The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. 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 Jessica Greenwood, Jane Kim, and Derek Wikstrom, with the assistance of Paralegal Specialist Christopher De Grandpre, are in charge of the prosecution.
Mount Vernon Man Sentenced to 50 Years in Prison for His Enticement of A MinorRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that LELAND ROBINSON was sentenced to 50 years in prison by U.S. District Judge Kenneth M. Karas for his enticement of a 14-year-old minor to engage in sexual activity. ROBINSON was convicted of enticement of a minor following a week-long jury trial in July 2023.
U.S. Attorney Damian Williams said: “Leland Robinson’s crime is the nightmare of every parent of a child who uses a smartphone. Robinson met his victim on a social media application and then traveled to Connecticut, where he sexually assaulted the child outside the child’s home. I encourage parents and caregivers to have conversations with their children about the dangers of communicating online with strangers. We will continue to use every tool available to law enforcement to prosecute and punish those who seek to exploit our children.”
According to court documents and the evidence presented in the trial of ROBINSON:
In or about February 2019, ROBINSON, who was 31 years old but posing as a high school student, met a 14-year-old boy (“Victim-1”) on a social media application. ROBINSON sent Victim-1 sexually explicit images and videos of himself and requested the same from Victim-1. In the fall of 2019, ROBINSON agreed to provide Victim-1 with a JUUL if Victim-1 would engage in sex with ROBINSON. On multiple occasions in September and October 2019, ROBINSON traveled to Victim-1’s home in Connecticut. On October 24, 2019, ROBINSON returned to Victim-1’s house and sexually assaulted him in the yard outside his house.
In imposing the sentence, Judge Karas said: “People should understand that when they prey on kids, they will pay the price.”
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In addition to the prison term, ROBINSON, 35, of Mount Vernon, New York, was sentenced to 15 years of supervised release.
Mr. Williams praised the efforts of the Federal Bureau of Investigation, the New Canaan Police Department, and the Greensboro Police Department in Greensboro, North Carolina, in connection with this investigation.
The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Marcia S. Cohen and Jennifer Ong are in charge of the prosecution.
Juan Orlando Hernández, Former President of Honduras, Convicted in Manhattan Federal Court of Conspiring to Import Cocaine into the United States and Related Firearms OffensesRead the Press Release
A federal jury convicted Juan Orlando Hernández, also known as JOH, 55, of Honduras, on all three counts in the indictment, which included cocaine-importation and weapons offenses. Hernández is scheduled to be sentenced on June 26.
“Juan Orlando Hernández abused his position as President of Honduras to operate the country as a narco-state where violent drug traffickers were allowed to operate with virtual impunity, and the people of Honduras and the United States were forced to suffer the consequences,” said Attorney General Merrick B. Garland. “As today’s conviction demonstrates, the Justice Department is disrupting the entire ecosystem of drug trafficking networks that harm the American people, no matter how far or how high we must go.”
“When the leader of Honduras and the leader of the Sinaloa Cartel work hand-in-hand to send deadly drugs into American communities, both deserve to be held accountable in the United States,” said Administrator Anne Milgram of the Drug Enforcement Administration (DEA). “This case should send a clear message that no one is above the law or beyond our reach.”
“Juan Orlando Hernández had every opportunity to be a force for good in his native Honduras. Instead, he chose to abuse his office and country for his own personal gain and partnered with some of the largest and most violent drug trafficking organizations in the world to transport tons of cocaine to the United States,” said U.S. Attorney Damian Williams for the Southern District of New York. “It is my sincere hope that this conviction sends a message to all corrupt politicians who would consider a similar path: choose differently. My office will stop at nothing to investigate and prosecute those responsible for sending poison to this community, no matter their status or political power.”
According to court documents, from at least in or about 2004, up to and including in or about 2022, Hernández, the former two-term president of Honduras and former president of the Honduran National Congress, was at the center of one of the largest and most violent drug-trafficking conspiracies in the world. Hernández abused his position and authority in Honduras to facilitate the importation of tons of cocaine into the United States. In exchange, Hernández received millions of dollars in drug money from some of the largest and most violent drug-trafficking organizations in Honduras, Mexico, and elsewhere, and used those bribes to fuel his rise in Honduran politics.
Throughout his time in office, Hernández publicly promoted legislation and the efforts he purported to undertake in support of anti-narcotics measures in Honduras. At the same time, he protected and enriched the drug traffickers in his inner circle and those who provided him with cocaine-fueled bribes that allowed him to obtain and stay in power in Honduras. For example, Hernández selectively upheld extraditions by using his executive power to support extraditions to the United States of certain drug traffickers who threatened his grip on power, and promising drug traffickers who paid him and followed his instructions that they would remain in Honduras. In addition, Hernández and his co-conspirators abused Honduran institutions, including the Honduran National Police and Honduran Army, to protect and grow their conspiracy. Among other things, members of the conspiracy used heavily armed Honduran National Police officers to protect their cocaine loads as they transited through Honduras. Members of the conspiracy also turned to violence and murder to protect and grow their drug trafficking enterprise, attacking and murdering rival traffickers and those who threatened their grip on the Honduran cocaine trade.
Several of Hernández’s co-conspirators have already been convicted and sentenced in connection with this investigation. Among others, Hernández’s brother, Juan Antonio Hernández Alvarado, also known as Tony Hernández, was convicted after trial in October 2019 and sentenced to life in prison, and Geovanny Fuentes Ramirez, a violent cocaine trafficker who met with Hernández on multiple occasions to discuss their drug trafficking partnership, was convicted after trial in March 2021, and sentenced to life in prison. More recently, Juan Carlos Bonilla Valladares, also known as El Tigre, the former chief of the Honduran National Police, pleaded guilty to his participation in the cocaine importation conspiracy and is scheduled to be sentenced on June 25, and Mauricio Hernández Pineda, a former member of the Honduran National Police and Hernández’s cousin, pleaded guilty to his participation in the cocaine importation conspiracy and is scheduled to be sentenced on May 2.
In total, Hernández and his co-conspirators trafficked over more than 400 tons of U.S.-bound cocaine through Honduras during Hernández’s tenure in the Honduran government.
Hernández was convicted of three counts: (i) conspiring to import cocaine into the United States, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; (ii) using and carrying machineguns and destructive devices during, and possessing machineguns in furtherance of, the cocaine-importation conspiracy, which carries a mandatory consecutive prison term of 30 years; and (iii) conspiring to use and carry machineguns and destructive devices during, and possessing machineguns in furtherance of, the cocaine-importation conspiracy, which carries a maximum sentence of life in prison.
The DEA’s Special Operations Division Bilateral Investigations Unit, Organized Crime Drug Enforcement Task Forces (OCDETF) New York Strike Force, and Tegucigalpa Country Office are investigating the case. The Justice Department’s Office of International Affairs provided valuable assistance in securing his arrest and extradition. The Justice Department thanked the Government of Honduras for extraditing Hernández to the United States.
Assistant U.S. Attorneys Jacob H. Gutwillig, David J. Robles, Elinor L. Tarlow, and Kyle A. Wirshba for the Southern District of New York are prosecuting the case, with assistance from Paralegal Specialist Kayla A. Collins and Trial Attorneys Andrea Broach and Jessica Fender of the National Security Division’s Counterterrorism Section.
Juan Orlando Hernandez, Former President of Honduras, Convicted in Manhattan Federal Court of Conspiring to Import Cocaine into the United States and Related Firearms OffensesRead 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; and Anne Milgram, the Administrator of the U.S. Drug Enforcement Administration (“DEA”), announced today that a jury returned a guilty verdict against JUAN ORLANDO HERNANDEZ, a/k/a “JOH,” on all three counts in the Indictment, which included cocaine-importation and weapons offenses. U.S. District Judge P. Kevin Castel presided over the trial. HERNANDEZ is scheduled to be sentenced on June 26, 2024.
U.S. Attorney Damian Williams said: “Juan Orlando Hernandez had every opportunity to be a force for good in his native Honduras. Instead, he chose to abuse his office and country for his own personal gain and partnered with some of the largest and most violent drug trafficking organizations in the world to transport tons of cocaine to the United States. It is my sincere hope that this conviction sends a message to all corrupt politicians who would consider a similar path: choose differently. My Office will stop at nothing to investigate and prosecute those responsible for sending poison to this community, no matter their status or political power.”
Attorney General Merrick B. Garland said: “Juan Orlando Hernandez abused his position as President of Honduras to operate the country as a narco-state where violent drug traffickers were allowed to operate with virtual impunity, and the people of Honduras and the United States were forced to suffer the consequences. As today’s conviction demonstrates, the Justice Department is disrupting the entire ecosystem of drug trafficking networks that harm the American people, no matter how far or how high we must go.”
DEA Administrator Anne Milgram said: “When the leader of Honduras and the leader of the Sinaloa Cartel work hand-in-hand to send deadly drugs into American communities, both deserve to be held accountable in the United States. This case should send a clear message that no one is above the law or beyond our reach.”
As reflected in the Indictment and the evidence presented at trial:
From at least in or about 2004, up to and including in or about 2022, HERNANDEZ, the former two-term president of Honduras and former president of the Honduran National Congress, was at the center of one of the largest and most violent drug-trafficking conspiracies in the world. HERNANDEZ abused his position and authority in Honduras to facilitate the importation of tons of cocaine into the United States. In exchange, HERNANDEZ received millions of dollars in drug money from some of the largest and most violent drug-trafficking organizations in Honduras, Mexico, and elsewhere, and used those bribes to fuel his rise in Honduran politics.
Throughout his time in office, HERNANDEZ publicly promoted legislation and the efforts he purported to undertake in support of anti-narcotics measures in Honduras. At the same time, he protected and enriched the drug traffickers in his inner circle and those who provided him with cocaine-fueled bribes that allowed him to obtain and stay in power in Honduras. For example, HERNANDEZ selectively upheld extraditions by using his executive power to support extraditions to the United States of certain drug traffickers who threatened his grip on power and promising drug traffickers who paid him and followed his instructions that they would remain in Honduras. In addition, HERNANDEZ and his co-conspirators abused Honduran institutions, including the Honduran National Police and Honduran Army, to protect and grow their conspiracy. Among other things, members of the conspiracy used heavily armed Honduran National Police officers to protect their cocaine loads as they transited through Honduras. Members of the conspiracy also turned to violence and murder to protect and grow their drug trafficking enterprise, attacking and murdering rival traffickers and those who threatened their grip on the Honduran cocaine trade.
Several of HERNANDEZ’s co-conspirators have already been convicted and sentenced in connection with this investigation. Among others, HERNANDEZ’s brother, Juan Antonio Hernandez Alvarado, a/k/a “Tony Hernandez,” was convicted after trial in October 2019 and sentenced to life in prison, and Geovanny Fuentes Ramirez, a violent cocaine trafficker who met with HERNANDEZ on multiple occasions to discuss their drug trafficking partnership, was convicted after trial in March 2021, and sentenced to life in prison. More recently, Juan Carlos Bonilla Valladares, a/k/a “El Tigre,” the former chief of the Honduran National Police, pled guilty to his participation in the cocaine importation conspiracy and is scheduled to be sentenced on June 25, 2024, and Mauricio Hernandez Pineda, a former member of the Honduran National Police and HERNANDEZ’s cousin, pled guilty to his participation in the cocaine importation conspiracy and is scheduled to be sentenced on May 2, 2024.
In total, HERNANDEZ and his co-conspirators trafficked more than 400 tons of U.S.-bound cocaine through Honduras during HERNANDEZ’s tenure in the Honduran government.
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HERNANDEZ, 55, of Honduras, was convicted of three counts: (i) conspiring to import cocaine into the United States, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; (ii) using and carrying machineguns and destructive devices during, and possessing machineguns in furtherance of, the cocaine-importation conspiracy, which carries a mandatory consecutive prison term of 30 years; and (iii) conspiring to use and carry machineguns and destructive devices during, and possessing machineguns in furtherance of, the cocaine-importation conspiracy, which carries a maximum sentence of life in prison.
The minimum and maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, the Organized Crime Drug Enforcement Task Forces (“OCDETF”) New York Strike Force, and Tegucigalpa Country Office, as well as the U.S. Department of Justice’s Office of International Affairs and the National Security Division’s Counterterrorism Section. Mr. Williams additionally thanked the Government of Honduras for its assistance extraditing HERNANDEZ to the United States.
The OCDETF New York Strike Force provides for the establishment of permanent multi-agency task force teams that work side-by-side in the same location. This co-located model enables agents from different agencies to collaborate on intelligence-driven, multi-jurisdictional operations to disrupt and dismantle the most significant drug traffickers, money launderers, gangs, and transnational criminal organizations. The specific mission of the New York Strike Force is to target, disrupt, and dismantle drug trafficking and money laundering organizations, reduce the illegal drug supply in the United States, and bring criminals to justice.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Jacob H. Gutwillig, David J. Robles, Elinor L. Tarlow, and Kyle A. Wirshba are in charge of the prosecution, with assistance from Paralegal Specialist Kayla A. Collins and Trial Attorneys Andrea Broach and Jessica Fender of the National Security Division’s Counterterrorism Section.
Two Men Charged for Causing the Death of A Seven-Year-Old Boy and A 48-Year-Old Woman in Hudson River Boat CapsizingRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Rear Admiral John Mauger, Commander of the First Coast Guard District, announced today the arrests of RICHARD CRUZ and JAIME PINILLA GOMEZ for causing the death of a seven-year-old boy and a 48-year-old woman after the vessel CRUZ and GOMEZ were operating in the Hudson River capsized. The two passengers drowned after being trapped underneath the vessel. CRUZ and GOMEZ were arrested today in Elizabeth, New Jersey, and will be presented later today before U.S. Magistrate Judge Ona T. Wang.
U.S. Attorney Damian Williams said: “Federal regulations and safety protocols exist to ensure that captains and operators of commercial vessels keep passengers safe. The defendants allegedly flouted those regulations, recklessly disregarded safety protocols, operated the vessel at an unsafe speed in hazardous conditions, and overloaded the vessel with too many passengers onboard. And the result was tragic — a young boy and a woman were trapped under the vessel and drowned after the vessel capsized.”
Rear Admiral John Mauger said: “This case demonstrates the deadly consequences of illegal passenger operations. Our thoughts are with the families of the victims today. Through this complaint, the Coast Guard and our partners from the U.S. Attorney’s Office affirm our steadfast commitment to preventing similar tragedies by investigating and holding violators accountable. We urge the public to assist in this detection and deterrence by notifying the Coast Guard of vessel owner and operators suspected of engaging in illegal passenger operations at the following email address: CGIS TIPS at https://www.p3tips.com/878.”
According to the allegations contained in the Complaint:[1]
On or about July 12, 2022, at approximately 2:40 p.m., the motor vessel Stimulus Money capsized in the Hudson River resulting in the death of two passengers — a seven-year-old boy (“Victim-1”) and a 48-year-old woman (“Victim-2”). At the time of the capsizing, RICHARD CRUZ was the owner and captain of the vessel and JAIME PINILLA GOMEZ was the pilot of the vessel. CRUZ had purchased the vessel approximately three months before the capsizing. CRUZ and GOMEZ conducted boat “tours” for paying customers onboard the vessel on multiple occasions in the months leading up to the capsizing, although they did not have the required United States Coast Guard (“USCG”) credentials and certifications to do so.
CRUZ’s and GOMEZ’s negligent actions and omissions caused the capsizing and the deaths of Victim-1 and Victim-2. At the time of the capsizing, among other things: (i) CRUZ and GOMEZ operated Stimulus Money with 13 people on board, exceeding the vessel’s maximum allowable capacity; (ii) CRUZ and GOMEZ operated Stimulus Money at a high rate of speed during a Small Craft Advisory in high winds and heavy seas; (iii) neither CRUZ nor GOMEZ had obtained a required USCG certification to operate the vessel with paying customers on board; (iv) CRUZ and GOMEZ operated Stimulus Money without a valid USCG Certificate of Inspection, which is required for a vessel to operate with paying customers on board; (v) GOMEZ, an insufficiently experienced mariner, piloted Stimulus Money in a dangerous manner, including by rapidly accelerating one engine of the vessel immediately before the capsizing, which contributed to the overturning of the vessel; and (vi) GOMEZ, at the time of the capsizing, failed to properly wear a safety device that should be worn around the pilot’s wrist or life vest, which contributed to the vessel’s engine continuing to operate even after GOMEZ shifted from the helm console (at which the vessel was operated).
All 13 people on board Stimulus Money were thrown overboard during the capsizing. Shortly after the capsizing, boats from the New York City Police Department’s (“NYPD”) Harbor Unit and the New York City Fire Department’s (“FDNY”) Dive Rescue Team, and ferries operating nearby, arrived at the scene of the capsizing to render emergency assistance. 10 passengers and GOMEZ were recovered conscious and in varying medical conditions. They were subsequently transferred to hospitals in Manhattan and survived the capsizing. Approximately 25 minutes after the capsizing, members of the FDNY Dive Rescue Team recovered Victim-1 and Victim-2 from the Hudson River. They were trapped underneath the capsized vessel and found unconscious. Emergency medical personnel subsequently pronounced Victim-1 and Victim-2 deceased. The cause of death was drowning. Photos of the capsized boat are below:
Please report any illegal passenger charters to the USCG at https://www.p3tips.com/878.
* * *
CRUZ, 32, and GOMEZ, 25, both of Elizabeth, New Jersey, are each charged with one count of misconduct and neglect of a ship officer resulting in death, which carries a maximum sentence of 10 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 defendants will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the USCG Investigative Service and the Special Agents and NYPD Detectives assigned to the U.S. Attorney’s Office for the Southern District of New York.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Jeffrey W. Coyle 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.
Three Defendants Arrested for Gunpoint Robberies of Sex Workers in the BronxRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Tommy Kalogiros, Assistant Special Agent in Charge of the New York Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”); and Edward A. Caban, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a Complaint charging RAMEL DECKARD, DASHAWN HAMPTON, and TALIEK PAYNE in connection with three armed robberies of women engaged in sex work at hotels in the Bronx. DECKARD, HAMPTON, and PAYNE were arrested this morning and will be presented in Manhattan federal court later today before U.S. Magistrate Judge Ona T. Wang.
U.S. Attorney Damian Williams said: “These defendants, motivated by greed, allegedly targeted individuals engaged in sex work in the Bronx. Under the pretext of setting up appointments with the victims for sexual services, the defendants allegedly met the victims at hotel rooms and proceeded to rob them at gunpoint. My Office is committed to doing everything possible to protect the people in this District from violent crime.”
ATF Assistant Special Agent in Charge Tommy Kalogiros said: “Today’s arrests should send a strong message to those targeting the most vulnerable in our communities. The ATF/NYPD Strategic Pattern Armed Robbery Technical Apprehension Group will continue working tirelessly to detect, disrupt, and prosecute the most violent offenders. We hope that these arrests demonstrate to the victims of violent crime that ATF, along with our partners, remain steadfast in our resolve to deliver justice. Thank you to the New York City Police Department and to the Southern District of New York, two of ATF’s most valued partners.”
NYPD Commissioner Edward A. Caban said: “As alleged, today’s arrests are another example of our laser-like focus on combating violent crime and holding accountable anyone who endangers people on our streets. If you carry an illegal gun in New York City, and especially if you use that gun to terrorize our communities, you will be arrested and charged accordingly. Thanks to the combined efforts of the NYPD and our partners at the ATF and the Office of the U.S. Attorney for the Southern District of New York, the defendants in this case now face the prospect of significant federal prison time.”
According to the allegations in the Complaint:[1]
On August 15, 2023, DECKARD met an individual who was engaged in sex work (“Victim-1”) at a hotel room in the Bronx for an appointment to exchange sexual services for payment. DECKARD subsequently displayed a firearm, demanded that Victim-1 go into the bathroom and sit in the shower, and then proceeded to steal personal possessions and cash from Victim-1. A still image of DECKARD at the hotel where he robbed Victim-1 is shown below:
On September 19, 2023, DECKARD and PAYNE committed another robbery of two individuals who were engaged in sex work (“Victim-2” and “Victim-3”) at a hotel room in the Bronx. Victim-2 and Victim-3 were spending time at a hotel room, when Victim-2 was notified by an individual, who advertised Victim-2 and Victim-3’s services online, that someone would meet Victim-2 at the hotel room later that day. DECKARD and PAYNE then went to the hotel room where Victim-2 and Victim-3 were located. After entering the hotel room, DECKARD displayed a firearm, and DECKARD and PAYNE stole personal items as well as cash from Victim-2 and Victim-3. During the robbery, DECKARD struck Victim-2 in the face with his elbow. Still images of DECKARD (left) and PAYNE (right) at the hotel where they robbed Victim-2 and Victim-3 are shown below:
On January 6, 2024, DECKARD and HAMPTON robbed Victim-1 at gunpoint a second time at a hotel room in the Bronx. At approximately 1:30 pm on January 6, 2024, DECKARD and HAMPTON traveled to the Bronx hotel room where Victim-1 was staying for an appointment to exchange sexual services for payment. After entering the hotel room, HAMPTON displayed a firearm, and HAMPTON and DECKARD proceeded to rob Victim-1 of her cellphone. DECKARD also demanded that Victim-1 give him the passcode to her phone, and HAMPTON asked Victim-1, in substance and in part, whether she wanted “to die over a passcode.” After Victim-1 gave them the passcode to her phone, HAMPTON used Victim-1’s cellphone to send $300 to his account using a payment application. A still image of HAMPTON (left) and DECKARD (right) at the hotel where they robbed Victim-1 is shown below:
The NYPD and ATF Strategic Patterned Armed Robbery Technical Apprehension (“SPARTA”) Task Force believes these defendants may be responsible for the robberies of other women in New York. Anyone with information about this or any other incident is asked to call the NYPD’s Crime Stoppers hotline at 1-800-577-TIPS (8477) or, for Spanish, 1-888-57-PISTA (74782). The public can also submit tips on the Crime Stoppers website at https://crimestoppers.nypdonline.org/ or by sending a direct message to @NYPDTips on X, formerly known as Twitter. All tips are strictly confidential.
* * *
DECKARD, 34, of New York, New York, is charged with one count of conspiracy to commit Hobbs Act robbery and three counts of Hobbs Act robbery, each of which carries a maximum sentence of 20 years in prison, and three counts of using, carrying, and brandishing a firearm during, in relation to, and in furtherance of, a crime of violence, each of which carries a mandatory seven-year consecutive sentence.
HAMPTON, 34, of New York, New York, is charged with one count of conspiracy to commit Hobbs Act robbery and one count of Hobbs Act robbery, each of which carries a maximum sentence of 20 years in prison, and one count of using, carrying, and brandishing a firearm during, in relation to, and in furtherance of, a crime of violence, which carries a mandatory seven-year consecutive sentence.
PAYNE, 34, of East Orange, New Jersey, is charged with one count of conspiracy to commit Hobbs Act robbery and one count of Hobbs Act robbery, each of which carries a maximum sentence of 20 years in prison, and one count of using, carrying, and brandishing a firearm during, in relation to, and in furtherance of, a crime of violence, which carries a mandatory seven-year consecutive sentence.
The mandatory minimum and 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 ATF and NYPD, in particular, the SPARTA Task Force, which is composed of agents and officers of the ATF and the NYPD.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Meredith C. Foster and Georgia V. Kostopoulos are 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 below constitute only allegations, and every fact described should be treated as an allegation.
Sixteen Members and Leaders of Armed and Violent Drug Trafficking Crew in the Bronx ChargedRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; James Smith, the 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 today of an Indictment charging EDWIN CARRASQUILLO, a/k/a “Malo,” HECTOR HERNANDEZ, a/k/a “Hec,” JOSE HERNANDEZ, a/k/a “Nene,” a/k/a “Little,” NATHANIEL MANNING, a/k/a “Tio,” DAMEL MARCUS, a/k/a “Shank,” EDWARDO MORENO, a/k/a “AR,” JASON RIVERA, a/k/a “Colombo,” JOSUE VARGAS, a/k/a “Leo,” JUAN KUANG, a/k/a “Jo Jo,” a/k/a “Jay,” a/k/a “Blanco,” STEVEN SANTIAGO, a/k/a “Swizz,” VICTOR MENDENG, a/k/a “Cali,” DELILAH CARRIEL, ROSEMARIE SANCHEZ, a/k/a “Rosie,” JUAN CALDERON, a/k/a “Jazzo,” a/k/a “Juanito,” CHRISTOPHER MEADOWS, and ANGEL VILLAFANE with engaging in a continuing criminal enterprise, distributing narcotics, and carrying and using firearms in connection with an armed drug trafficking operation based on Valentine Avenue in the Bronx, New York, for well over a decade from 2012 to the present.
CARRASQUILLO, H. HERNANDEZ, J. HERNANDEZ, MANNING, MARCUS, MORENO, VARGAS, KUANG, SANTIAGO, CARRIEL, SANCHEZ, CALDERON, and MEADOWS were arrested earlier today in an operation conducted by the FBI and NYPD, and they are expected to be presented before U.S. Magistrate Judge Sarah L. Cave or U.S. Magistrate Judge Valerie Figueredo later this afternoon. MENDENG, who is detained in the custody of the New York City Department of Correction on separate charges, will be writted into federal custody at a later date. RIVERA and VILLAFANE were previously arrested and charged in prior indictments. The case is assigned to U.S. District Judge Victor Marrero.
U.S. Attorney Damian Williams said: “Today, I am announcing that we have filed charges against 16 members of a violent drug trafficking crew that for over 10 years has held a Bronx neighborhood hostage. As alleged, day in and day out, this crew distributed fentanyl, heroin, and crack along several blocks on Valentine Avenue, effectively creating an open drug market. To protect their territory, they allegedly carried guns, extorted addicts through threats of violence and, far too often, used violence against rivals and anyone else attempting to weaken their control on their block, committing multiple shootings as they fought for control over the streets. I promise that we are not going to abandon any of our communities. Our commitment to public safety will never waver — not anywhere, and not for one moment. The people of this great city deserve nothing less.”
FBI Assistant Director in Charge James Smith said: “For over 12 years, as alleged, the defendants strategically organized themselves into the 'Valentine Avenue Crew' to freely distribute fentanyl, heroin, and cocaine within the Bronx. The Valentine Avenue Crew allegedly carried firearms and often used violence, including two non-fatal shootings, to maintain dominance in the narcotics trafficking industry. The FBI maintains its unwavering stance against all forms of violence and drug trafficking, and will continue to apprehend those who threaten our community’s safety.”
NYPD Commissioner Edward A. Caban said: “Today’s charges demonstrate the thorough and diligent efforts of NYPD investigators and our law enforcement partners in dismantling an allegedly violent drug trafficking organization operating in New York City. We will continue to identify and hold accountable anyone who peddles dangerous substances or possesses illegal weapons in our communities. And I am grateful to our colleagues at the FBI and the U.S. Attorney’s Office for their commitment to this critical public safety mission.”
As alleged in the Indictment:[1]
The defendants are charged for their involvement in an armed drug trafficking organization (the “Valentine Avenue Crew”) that took over the block of Valentine Avenue between East 194th Street and East 196th Street in the Bronx, New York (the “Block”), and its surrounding neighborhood.
Working in shifts throughout the day and night, and organized in a clear hierarchal structure, the Valentine Avenue Crew and its members, including the defendants — many of whom were typically armed with firearms and other weapons — distributed fentanyl, heroin, cocaine, and cocaine base, in a form commonly known as “crack.” These narcotics were often manufactured and packaged elsewhere and then delivered to the Block, where members and associates of the Valentine Avenue Crew sold them to a large base of end-user customers. Controlling the sidewalks and street of the Block, as well as the public spaces of multiple buildings along the Block, the Valentine Avenue Crew and its members, including the defendants, operated freely, creating an open market for drugs, in which they extorted payments from customers through violence. For well over a decade, members of the Valentine Avenue Crew also used violence — including multiple shootings — to compete with rival drug traffickers, and at times within the Valentine Avenue Crew itself, to maintain dominance over the drug trade on the Block.
In addition, ANGEL VILLAFANE is charged for his commission of two non-fatal shootings in Manhattan in July 2020 and January 2021. Specifically, in or about July 2020, VILLAFANE paid a co-conspirator (“CC-1”) to lure a victim to a location in Manhattan where VILLAFANE attempted to murder the victim over a drug debt, resulting in personal injury to the victim. Additionally, on or about January 8, 2021, VILLAFANE committed another non-fatal shooting in Manhattan.
* * *
A chart containing the names, charges, and minimum and maximum penalties for the defendants is set forth below. 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 the judge.
Mr. Williams praised the outstanding investigative work of the FBI and NYPD and thanked the Drug Enforcement Administration and the Pennsylvania State Police for their assistance in this case.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Michael R. Herman and Thomas John Wright are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
COUNT
CHARGE
DEFENDANTS
MIN. AND MAX. PENALTIES
1
Narcotics conspiracy
EDWIN CARRASQUILLO,
HECTOR HERNANDEZ,
JOSE HERNANDEZ,
NATHANIEL MANNING,
DAMEL MARCUS,
EDWARDO MORENO,
JASON RIVERA,
JOSUE VARGAS,
JUAN KUANG,
STEVEN SANTIAGO,
VICTOR MENDENG,
DELILAH CARRIEL,
ROSEMARIE SANCHEZ,
JUAN CALDERON,
CHRISTOPHER MEADOWS,
and
ANGEL VILLAFANE
Mandatory minimum sentence of 10 years in prison
Maximum sentence of life in prison
2
Continuing criminal enterprise
EDWIN CARRASQUILLO,
HECTOR HERNANDEZ,
JOSE HERNANDEZ,
NATHANIEL MANNING,
DAMEL MARCUS,
EDWARDO MORENO,
JASON RIVERA,
JOSUE VARGAS,
JUAN KUANG,
and
STEVEN SANTIAGO
Mandatory sentence of life in prison for CARRASQUILLO and HERNANDEZ
Mandatory minimum sentence of 20 years in prison for other defendants
Maximum sentence of life in prison
3
Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a drug trafficking crime
EDWIN CARRASQUILLO,
HECTOR HERNANDEZ,
JOSE HERNANDEZ,
NATHANIEL MANNING,
DAMEL MARCUS,
EDWARDO MORENO,
JASON RIVERA,
JOSUE VARGAS,
JUAN KUANG,
STEVEN SANTIAGO,
VICTOR MENDENG,
DELILAH CARRIEL,
ROSEMARIE SANCHEZ,
JUAN CALDERON,
CHRISTOPHER MEADOWS,
and
ANGEL VILLAFANE
Mandatory minimum consecutive sentence of 10 years in prison
Maximum sentence of life in prison
4
Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a drug trafficking crime
JASON RIVERA
Mandatory minimum consecutive sentence of seven years in prison
Maximum sentence of life in prison
5
Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a drug trafficking crime
ANGEL VILLAFANE
Mandatory minimum consecutive sentence of 10 years in prison
Maximum sentence of life in prison
6
Murder for hire
ANGEL VILLAFANE
Maximum sentence of 20 years in prison
7
Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a drug trafficking crime
ANGEL VILLAFANE
Mandatory minimum consecutive sentence 10 years in prison
Maximum sentence of life in prison
8
Felon in possession of ammunition
ANGEL VILLAFANE
Maximum sentence of 10 years in prison
[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.
Former CEO of Medical Device Company Convicted of Creating and Selling A Fake Component That Was Implanted into PatientsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict today against LAURA PERRYMAN on two counts of an Indictment charging her with conspiracy to commit health care fraud and wire fraud and substantive health care fraud in connection with her company’s creation and sale of a fake medical device component. U.S. District Judge Denise L. Cote presided over the 11-day trial.
U.S. Attorney Damian Williams said: “Laura Perryman brazenly created a dummy medical device component — made entirely out of plastic — to be implanted into patients. She marketed that dummy component as a means for doctors to bill Medicare and private insurance companies approximately $18,000 for each implantation of the piece of plastic. She did this so that she could entice doctors to buy her device for many thousands of dollars. Perryman recklessly used patients as tools for financial gain, and this jury’s unanimous verdict sends a resounding message that individuals who defraud health care programs will be held criminally accountable.”
According to the allegations in the Indictment and the evidence at trial:
Stimwave was a medical device company that manufactured and distributed implantable neurostimulation devices. As the founder and CEO of Stimwave, PERRYMAN oversaw the design of the StimQ PNS System (the “Device”), pictured below, a neurostimulator system designed to treat chronic pain by providing electrical currents to peripheral nerves. The Device included a component containing electrodes (the “Lead”) and a receiver component that acted as an antenna, transmitting energy from an external power source to the Lead (the “Pink Stylet”). From at least in or about 2017 up to and including 2020, PERRYMAN, as Stimwave’s CEO, engaged in a multi-year scheme to design, create, manufacture, and market an inert, non-functioning component of the Device — called the “White Stylet.” The White Stylet was marketed as a receiver of radiofrequency energy, but it was made of plastic and could not function as a receiver.
Stimwave sold the Device to doctors and medical providers for approximately $16,000. Stimwave instructed health care providers to bill medical insurance providers, including Medicare, for implanting the Device into patients through two separate reimbursement codes. One code was for implantation of the stimulator portion of the Lead, and a second was for implantation of a receiver. The billing code for implanting the Lead provided for reimbursement at a rate of between approximately $4,000 and $6,000, while the billing code for implanting a receiver provided for reimbursement at a rate of between approximately $16,000 and $18,000.
Soon after the Device was released, physicians informed Stimwave that they were having trouble implanting the Pink Stylet in certain patients because the Pink Stylet was too long. Stimwave and PERRYMAN knew that the Pink Stylet could not be cut or trimmed to shorten it without interfering with the functionality of the Pink Stylet as a receiver. And, without a receiver component for doctors to implant and seek reimbursement for, doctors would incur a substantial financial loss with every purchase of the Device, thereby making it more difficult for Stimwave to sell the Device to doctors and medical providers at the approximately $16,000 price.
However, Stimwave — at the direction of PERRYMAN — did not lower the price of the Device so that its cost to doctors and medical providers could be covered by reimbursement for the implantation of only the Lead. Nor did PERRYMAN recommend that doctors not implant the Device or its receiver component in cases where the Pink Stylet could not fit comfortably. Instead, PERRYMAN directed that Stimwave create the White Stylet — a dummy component made entirely of plastic, but which Stimwave misrepresented to doctors as a receiver alternative to the Pink Stylet. The White Stylet could be cut to size by the doctor for use in smaller anatomical spaces and was created solely so that doctors and medical providers would continue to purchase the Device for use in those scenarios and continue to bill for the implantation of a receiver component. To perpetuate the lie that the White Stylet was functional, PERRYMAN oversaw training that suggested to doctors that the White Stylet was a “receiver,” when in fact it was made entirely of plastic, contained no copper, and therefore had no conductivity. In addition, PERRYMAN directed other Stimwave employees to vouch for the efficacy of the White Stylet as a receiver, when she knew that the White Stylet could not function as a receiver.
As a result of these misrepresentations regarding the functionality of the White Stylet, PERRYMAN caused doctors and medical providers to implant the White Stylet into patients and submit reimbursement claims for implantation of the White Stylet to health insurance providers, including Medicare.
* * *
PERRYMAN, 55, of Delray Beach, Florida, was convicted of one count of health care fraud, which carries a maximum sentence of 10 years in prison, and one count of conspiracy to commit health care fraud and wire fraud, which carries a maximum sentence of 20 years in prison.
The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Jacob Bergman, Mónica Folch, Steven Kochevar, and Kimberly Ravener, with the assistance of Paralegal Specialists Joseph Carbone and Benjamin Wasserburg, are in charge of the prosecution.
Brooklyn Woman Sentenced to 33 Months in Prison for Multifaceted COVID-19 Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that TATIANA DANIEL was sentenced today to 33 months in prison for conspiracy to commit wire fraud. DANIEL participated in a scheme to commit COVID-19 pandemic fraud by defrauding New York City’s COVID-19 Hotel Room Isolation Program; committing unemployment insurance (“UI”) benefits fraud; selling fabricated COVID-19 test results, both positive and negative; and obtaining fraudulent COVID-19 loans from both the U.S. Small Business Administration’s Paycheck Protection Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”) program. DANIEL’s sentence was imposed by U.S. District Judge Lewis A. Kaplan.
U.S. Attorney Damian Williams said: “Tatiana Daniel repeatedly exploited resources offered to help people and businesses in crisis. Her misconduct included selling fabricated COVID-19 test results, which likely put members of the public at risk of contracting the deadly virus from one of her customers. Daniel’s sentence reaffirms that those who illegally exploit disaster relief programs and endanger the public should expect to go to prison.”
According to the allegations contained in the Superseding Information, court filings, and statements made during court proceedings:
From June 2020 through September 2021, DANIEL conspired to commit COVID-19 pandemic fraud through a variety of different means.
First, DANIEL defrauded the COVID-19 Hotel Room Isolation Program (the “Program”). In response to the COVID-19 pandemic, New York City created the Program. Funded by New York City and the Federal Emergency Management Agency, the Program provided free hotel rooms for qualifying individuals throughout New York City. The Program was ultimately open to healthcare workers who needed to isolate because of exposure to COVID-19; patients who had tested positive for COVID-19; individuals who believed, based on their symptoms, that they were infected with COVID-19; and individuals who lived with someone who had COVID-19. As stated on the City’s website describing the Program, such individuals “may qualify to self-isolate in a hotel, free of charge, for up to 14 days if you do not have a safe place to self-isolate.” Those who wished to book a hotel room through the Program could either call a phone number or use an online hotel booking platform.
DANIEL defrauded the Program in at least two respects. First, she secured free Program hotel rooms for herself by falsely claiming to be a healthcare worker — specifically, a respiratory therapist. Second, she sold at least approximately 144 nights’ worth of fraudulently obtained hotel rooms to customers who were ineligible for the Program. In connection with this scheme, DANIEL used Facebook to advertise the sale of Program hotel rooms, to communicate directly with potential purchasers of Program hotel rooms, and to communicate with a co-defendant who worked at a call center that handled phone calls and certain reservations for the Program for several months in 2020.
Second, DANIEL conspired to fraudulently obtain more than approximately $97,000 in expanded COVID-19 UI benefits for both herself and others. She did so by making misrepresentations about herself and by stealing the identities of more than 10 individuals and collecting unemployment benefits issued for the benefit of those individuals, including an incarcerated individual. In addition, DANIEL filed unsuccessful UI benefits applications in other states.
Third, DANIEL operated a fraudulent document mill, through which DANIEL sold, among other things, “COVID Results,” “COVID-19 Hardship Letters,” “Doctors Notes,” and more (e.g., pay stubs, W2s, work verification letters). As part of her fraudulent document mill, DANIEL sold fabricated COVID-19 test results, both positive and negative. These fabricated test results included the names of purported medical personnel.
Fourth, DANIEL submitted fraudulent applications for COVID-19 loans through both the PPP and EIDL programs, resulting in the disbursement of thousands of dollars in pandemic loan funding to DANIEL and a co-conspirator.
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In addition to her prison sentence, DANIEL, 29, of Brooklyn, New York, was sentenced to three years of supervised release and ordered to forfeit $109,655 and to pay restitution of $401,206.
DANIEL’s three co-defendants were previously sentenced by Judge Kaplan, and their sentences are as follows: Chanette Lewis was sentenced principally to three years in prison, three years of supervised release, restitution of $360,330, and forfeiture of $289,536; Tatiana Benjamin was sentenced principally to one year and one day in prison, three years of supervised release, restitution of $294,624, and forfeiture of $51,088; and Heaven West was sentenced principally to time served, three years of supervised release, restitution of $59,644, and forfeiture of $23,684.
Mr. Williams praised the outstanding efforts of agents, investigators, and analysts from the New York City Department of Investigation, the New York Regional Office of the U.S. Department of Labor – Office of Inspector General (“DOL-OIG”), and the U.S. Attorney’s Office for the Southern District of New York. Mr. Williams also thanked the New York/New Jersey High Intensity Drug Trafficking Area Intelligence Analysts for their support and assistance in this investigation. He also expressed gratitude to the New York City Police Department, the New York State Department of Labor, and the DOL-OIG Atlanta Regional Office for their assistance.
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.
President of Queens-Based Construction Company Pleads Guilty to Fraud in Connection with Homeless Shelter Contracts Worth $12 MillionRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that LIAQUAT CHEEMA pled guilty today to conspiracy to commit wire fraud for his leadership of a scheme to defraud New York City (the “City”) in connection with public contracts to perform general contracting work at City homeless shelters.
U.S. Attorney Damian Williams said: “Liaquat Cheema has admitted to leading a scheme to steal millions of dollars in public funds intended to pay for vital maintenance at homeless shelters in New York City. This Office has no tolerance for those who use public contracts intended to aid underserved members of our society to fraudulently enrich themselves. We will continue to aggressively detect and dismantle schemes such as this one.”
According to the Indictment to which CHEEMA pled guilty, the Complaint, the plea agreement, and statements made in court:
LIAQUAT CHEEMA was the President of AFL Construction Co. Inc. (“AFL”), located in Queens, New York. AFL entered into public contracts with the City worth approximately $12 million to perform general contracting work at homeless shelters located in the City, including in the Southern District of New York. Pursuant to the contracts, AFL was to perform, among other things, general maintenance, landscaping, roofing, and snow removal at shelter sites.
From at least in or about 2014 through at least in or about 2017, CHEEMA and others used the contracts to fraudulently enrich themselves and steal from the City. In furtherance of the scheme, CHEEMA and others, among other things, submitted fraudulent invoices and other documentation in support of requests for payment on the contracts, which falsely claimed that workers had performed work on certain projects and inflated amounts paid by the defendants for materials purportedly used on such projects. These fraudulent invoices and supporting documentation contained, without authorization, the identities of other persons, including the names, and in at least one case, the social security number, of purported workers who in fact had not worked on the projects specified in the requests for payment submitted by CHEEMA and others.
CHEEMA and others also obtained tens of thousands of dollars’ worth of Medicaid benefits by repeatedly submitting fraudulent certifications, which underreported their actual incomes and accordingly enabled them to obtain Medicaid benefits for which they were not eligible. In support of requests for Medicaid benefits, CHEEMA and others repeatedly submitted nearly identical employment letters, which, among other misrepresentations, contained the name and purported signature of a purported “Project Manager” who, in fact, was deceased. In connection with his guilty plea, CHEEMA agreed to pay back the money misappropriated from Medicaid.
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LIAQUAT CHEEMA, 64, of East Elmhurst, New York, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison. As part of his plea agreement, CHEEMA agreed to pay restitution and forfeiture of $3,267,811.
The maximum potential sentence in this case is prescribed by Congress and is 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 U.S. Department of Labor Office of Inspector General and the New York City Department of Investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Timothy V. Capozzi is in charge of the prosecution.
Chief Executive Officer of A Las Vegas-Based Company Convicted for Multimillion-Dollar Fraud and Money Laundering SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that MARTIN MIZRAHI, a/k/a “Marty Mizrahi,” was convicted of wire fraud, bank fraud, money laundering, aggravated identity theft, and other offenses for his participation in multiple schemes to defraud banks and credit card companies of almost $8 million and to launder more than $4 million in fraud and illegal narcotics proceeds. The verdict followed a 12-day trial before U.S. District Judge J. Paul Oetken.
U.S. Attorney Damian Williams said: “Martin Mizrahi brazenly used his company as a front to launder millions of dollars in drug and fraud proceeds and to deceive credit card companies into processing additional millions of dollars in sham charges. The jury’s unanimous verdict sends a resounding message that individuals who steal and introduce illicit funds into the U.S. financial system will be held accountable.”
According to the evidence presented in court during the trial:
From at least in or about February 2021 through at least in or about June 2021, MIZRAHI and his co-defendants participated in multiple schemes to defraud banks and credit card companies and to launder narcotics proceeds in addition to the fraud proceeds received.
Beginning in or about February 2021, MIZRAHI began accepting bulk cash narcotics proceeds, which he laundered for individuals associated with a Mexican-based cartel by converting the money into Bitcoin and then sending it to anonymous cryptocurrency wallets provided to him by co-conspirators. In addition, MIZRAHI laundered fraud proceeds sent to his company by wire transfer, which he also converted into cryptocurrency before sending it to anonymous cryptocurrency wallets. Those funds were obtained through, among other things, a business email compromise scheme in which a New York City-based non-profit organization had more than $3 million dollars stolen from it by hackers. Between February and June 2021, MIZRAHI laundered a total of more than $4 million in fraud and narcotics proceeds.
In addition, between April and June 2021, MIZRAHI participated in a credit card fraud scheme in which he ran nearly $8 million in fraudulent credit card charges through his company. Those charges were run on multiple credit cards issued in the names of third parties, some of which had been stolen, and without any legitimate work being done or services being provided. As part of the scheme, MIZRAHI prepared false invoices which he sent to banks and credit card companies to justify the charges.
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MARTIN MIZRAHI, 51, of Las Vegas, Nevada, was convicted of (i) conspiracy to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison; (ii) wire fraud, which carries a maximum sentence of 20 years in prison; (iii) bank fraud, which carries a maximum sentence of 30 years in prison; (iv) conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison; (v) money laundering, which carries a maximum sentence of 20 years in prison; (vi) aggravated identity theft, which carries a mandatory minimum sentence of two years in prison to run consecutively to any other prison terms imposed; and (vii) conspiracy to operate an unlicensed money transmitting business, which carries a maximum sentence of five 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 defendant will be determined by a judge.
Mr. Williams praised the Federal Bureau of Investigation for its outstanding work on the investigation.
The prosecution of this case is being handled by the Office’s White Plains Division and the Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Benjamin Klein and Emily Deininger are in charge of the prosecution, with the assistance of Paralegal Specialists Dean Iannuzzelli and Nerlande Pierre.
دادستان ایالات متحده اتهاماتی بر علیه تبعه ایرانی برای کارزارسایبری چند ساله هدف قرار دادن پیمانکاران دفاعی ایالات متحده وشرکت های بخش خصوصی اعلام میکندRead the Press Release
دیمین ویلیامز، دادستان ایالات متحده برای منطقه جنوبی نیویورک؛ متیو جی. اولسن، دستیار دادستان کل برای امنیت ملی؛ برایان ورندرن، دستیار مدیر بخش سایبری اداره تحقیقات فدرال («اف بی ای»)؛ و جیمز اسمیت، دستیار مدیر مسئول دفتر منطقهای نیویورک اف بی آی، امروز بازکردن کیفرخواستی را اعلام کردند که شهروند و ساکن ایران علیرضا شفیعی نسب را متهم میکند به دست داشتن در یک کارزار سایبری برای به مخاطره انداختن دولت ایالات متحده و نهادهای خصوصی، از جمله وزارتهای خزانه داری و امور خارجه ایالات متحده، پیمانکاران دفاعی، و دو شرکت مستقر در نیویورک. این پرونده به قاضی منطقه ای ایالات متحده مری کی ویسکوسیل محول شده است. شفیعی نسب هنوز آزاد است.
دیمین ویلیامز، دادستان ایالات متحده گفت: «همانطور که ادعا میشود، علیرضا شفیعی نسب در یک کارزار سایبری با به کاربردن فیشینگ نیزهای و سایر فنون هک برای آلوده کردن بیش از ۰۰۰/۲۰۰ دستگاه قربانی شرکت کرد، که بسیاری از آنها حاوی اطلاعات دفاعی حساس یا محرمانه بودهاند. طرحهای نفوذ سایبری مانند جرمی که ادعا شده است، امنیت ملی ما را تهدید میکنند و من به شرکای مجری قانونمان و دادستانهای
حرفه ای این دفتر افتخار میکنم که با به کاربردن فناوریهای نوآورانه و اقدامات تحقیقاتی، این مجرمان سایبری را مختل و ردیابی میکنند.»متیو جی. اولسن، دستیار دادستان کل برای امنیت ملی گفت: «ادعا میشود که آقای شفیعی نسب در حالی که در ظاهر به عنوان یک کارشناس امنیت سایبری برای مشتریان مستقر در ایران کار میکرد، در یک کارزار مداوم برای به مخاطره انداختن سامانههای رایانهای بخش خصوصی و دولتی ایالات متحده شرکت داشت. اتهامات امروز روشنگر بومسازگان سایبری فاسد ایران است که در آن مجرمان آزادند که سامانههای رایانهای خارج از کشور را هدف قراردهند و اطلاعات و زیرساختهای حساس ایالات متحده را تهدید کنند. قسمت سایبری امنیت ملی ما همچنان تمرکز دارد که این طرحهای هک فرامرزی را مختل، و با آنهایی که مسئول هستند برخورد کند.»
برایان ورندرن، دستیار مدیر بخش سایبری اف بی آی گفت: «اف بی آی اهرم همه تواناییهایش را در مبارزه با سازمانهای هکری ایرانی که بخش دولتی و خصوصی آمریکا را تهدید میکنند به کار خواهد برد. ما همه را تشویق میکنیم که با رعایت بهداشت سایبری احتمال آسیبپذیری از عاملان بدخواهی مثل شفیعی نسب را تعدیل کنند. همکاری نزدیک با شرکا که امروز منجر به باز کردن این کیفرخواست شد اینجا تمام نمیشود، و ما مشتاقانه در انتظار ادامه همکاری در این فضا هستیم.»
جیمز اسمیت، دستیار مدیر مسئول دفتر منطقهای نیویورک اف بی آی گفت: «مجرمان سایبری مخاصم مصمم هستند که با به کار بردن کارزار هک به ایمنی عمومی ما آسیب بزنند و امنیت ملی ما را تهدید کنند. ادعا میشود که علیرضا شفیعی نسب در طول چندین سال در یک کارزار تهاجمی برای هدف قراردادن نهادهای دولتی ایالات متحده، پیمانکاران دفاعی، و شرکتهای مستقر در نیویورک که از نزدیک با وزارت دفاع کار میکنند شرکت میکرد. این پرونده یادآور این است که لازم است همه ما در امنیت سایبری آگاه و کوشا باشیم تا قربانی عاملان بدخواه نشویم. برای مبارزه با عاملان متخاصم دولت-ملت که در تلاش به آسیب زدن به کشورمان در فصای سایبری هستند، اف بی آی همچنان به رهبری ادامه خواهد داد.»
بر پایه اتهامات موجود در کیفرخواستی که امروز در دادگاه فدرال منهتن باز شد:۱
دست کم از سال ۲۰۱۶ تا حدود آوریل ۲۰۲۱، علیرضا شفیعی نسب و دیگر توطئهگران عضو یک سازمان هکری بودند که در یک کارزار چند ساله هماهنگ برای انجام و تلاش برای انجام نفوذهای کامپیوتری شرکت داشتند. این نفوذها بیش از دوازده شرکت آمریکایی و وزارت خزانههای داریی و امور خارجه ایالات متحده را هدف قرار دادند.
قربانیان بخش خصوصی این گروه هکری در درجه اول پیمانکاران دفاعی بودهاند که شرکتهایی هستند که برنامههای وزارت دفاع ایالات متحده را حمایت میکنند. علاوه بر این، این گروه یک شرکت حسابداری مستقر در نیویورک و یک شرکت مهماننوازی مستقر در نیویورک را هدف قرار داد.
در انجام کارزار هک خود، این گروه از فیشینگ نیزهای برای آلوده کردن رایانه های قربانی با بدافزار
استفاده کرد - یعنی فریب دادن دریافت کننده یک رایانامه برای کلیک کردن روی یک پیوند مخرب. در جریان کارزار خود علیه یک قربانی، این گروه بیش از ۰۰۰/۲۰۰ هزار حساب کاربری کارکنان را به مخاطره انداخت. در یک قربانی دیگر، توطئهگران حسابهای کاربری ۰۰۰/۲ کارمند را هدف قرار دادند. به منظور مدیریت کارزار فیشینگ نیزهای خود، این گروه یک برنامه کامپیوتری خاص ساخت و به کاربرد که توطئهگران را قادر به سازماندهی و استقرار حملات فیشینگ نیزهای کرد.در جریان این حملات فیشینگ نیزهای، توطئهگران یک حساب مدیریتی رایانامه متعلق به یک پیمانکار دفاعی («پیمانکار دفاعی-۱») را هک کردند. دسترسی به این حساب مدیریتی توطئهگران را قادر به ایجاد حساب های غیر مجاز پیمانکار دفاعی-۱ کرد، که سپس توطئهگران از آنها برای فرستادن کارزار فیشینگ نیزهای به کارکنان یک پیمانکار دفاعی دیگر و یک شرکت مشاوره استفاده کردند.
علاوه بر فیشینگ نیزهای، توطئهگران مهندسی اجتماعی به کار بردند، از جمله جا زدن خود به نام دیگران، معمولا زنان، تا اعتماد قربانیان را بدست بیاورند. این تماسهای مهندسی اجتماعی شیوه دیگر توطئه برا
شفیعی نسب در این طرحها شرکت میکرد. در طول مشارکت خود در آن طرح، او در استخدام محک رایان افراز، یک شرکت مستقر در ایران که در ظاهر خدمات امنیت سایبری ارائه میداد، اما در واقع چهرهای برای عملیات توطئهگران بود. شفیعی نسب مسئول تهیه زیرساختهای مورد استفاده توطئه بود. در طول انجام این کارها شفیعی نسب با به کاربردن هویت دزدیده شده یک فرد حقیقی یک سرور و حسابهای رایانامهای ثبت کرد که در طول عملیات سایبری به کاربرده شدند.
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شفیعی نسب، ۳۹ ساله از ایران، متهم به یک فقره توطئه برای ارتکاب تقلب کامپیوتری است که حداکثر مجازات آن پنج سال زندان است؛ یک فقره توطئه برای ارتکاب کلاهبرداری سیمی، که حداکثر مجازات آن ۲۰ سال زندان است؛ یک فقره کلاهبرداری سیمی، که حداکثر مجازات آن ۲۰ سال زندان است؛ و یک فقره سرقت هویت وخیم، که مجازات آن یک دوره پیدرپی اجباری دو سال زندان است.
حداکثر مجازاتهای بالقوه در این مورد توسط کنگره مقرر میشود و در اینجا فقط برای اطلاع ارائه شده، زیرا هر گونه مجازات متهم توسط قاضی تعیین خواهد شود.
همزمان با باز کردن کیفرخواست، برنامه «پاداش برای عدالت» وزارت امور خارجه پاداشی تا
۱۰ میلیون دلار برای اطلاعاتی که منجر به شناسایی شفیعی نسب یا مکان او میشود ارائه میدهد. هر کسی که اطلاعاتی در باره شفیعی نسب و فعالیتهای سایبری بدخواهانه او دارد با «پاداش برای عدالت» از راه کانال تور آن وزارتخانه تماس بگیرد: he5dybnt7sr6cm32xt77pazmtm65flqy6irivtflruqfc5ep7eiodiad.onion(مرورگر تور نیاز دارد).
آقای ویلیامز از کار تحقیقاتی برجسته اف بی ای، از جمله کار بخش سایبری اف بی ای، ستایش کرد.
این پرونده توسط واحد تقلبها و جرایم سایبری پیچیده اجرا می شود. دستیاران دادستان ایالات متحده رایان ب. فینکل، داینا مک کلود، و دنیل جی. نسیم مسئولین پیگرد قانونی هستند، با کمک از وکیل محاکمه متیو چنگ از قسمت سایبری بخش امنیت ملی.
اتهامات مندرج در کیفرخواست صرفا اتهام هستند، و متهم بیگناه فرض می شود مگر اینکه و تا زمانی که گناهکار بودنش ثابت شود.
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۱همانگونه که سرفصل بیان میکند، تمام متن کیفرخواست و توصیفی که کیفرخواست در اینجا مطرح میکند فقط ادعا است، و هر واقعیتی که توصیف شده است فقط باید به عنوان یک ادعا تلقی شود.
استقرار بدافزار روی رایانههای قربانی و به مخاطره انداختن آن دستگاهها و حسابها بود.
United States Reaches Settlement of Law Enforcement, Tax, and Healthcare Cost Claims in Endo International Bankruptcy CaseRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Brian M. Boynton, the Principal Deputy Assistant Attorney General and head of the Department of Justice’s Civil Division; Patrizia Cavazzoni, M.D., the Director of the Center for Drug Evaluation and Research of the Food and Drug Administration (“FDA”); Michael Rogers, the Associate Commissioner for Regulatory Affairs of the FDA; Christi A. Grimm, the Inspector General of the Department of Health and Human Services (“HHS-OIG”); Robert P. Storch, the Inspector General of the Department of Defense (“DOD”); Michael J. Missal, the Inspector General of the Department of Veterans Affairs (“VA”); and Derek M. Holt, the Special Agent in Charge of the Office of Personnel Management – Office of Inspector General (“OPM OIG”), announced today that the United States has reached an agreement to resolve its monetary claims — including claims arising from criminal and civil investigations — against ENDO INTERNATIONAL PLC and its affiliates (together, “ENDO”), a large pharmaceutical company that previously manufactured Opana ER, a powerful branded opioid drug, in its Chapter 11 bankruptcy proceeding. As part of ENDO’s bankruptcy plan, a group of ENDO’s secured lenders will purchase ENDO’s assets and operate the business under a new corporate structure. The agreement provides that this new business will pay the United States $364.9 million over 10 years, which can be prepaid at $200 million on the bankruptcy plan’s effective date, plus up to an additional $100 million contingent on the business performance of the new company. The bankruptcy settlement, which is subject to court approval, resolves multiple federal claims against ENDO, including criminal and civil fraud claims, healthcare agency claims, and tax claims.
As part of the overall settlement, the Department of Justice announced that Endo Health Solutions, Inc. (“EHSI”), one of ENDO’s affiliates, has agreed to resolve criminal and civil investigations related to the company’s sales and marketing of the opioid drug Opana ER with INTAC (“Opana ER”). The payments required by the civil and criminal agreements will be paid as claims in the Chapter 11 bankruptcy proceedings.
Under the proposed global resolution, EHSI agreed to plead guilty in federal court in the Eastern District of Michigan to a one-count misdemeanor information charging it with violating the Federal Food, Drug, and Cosmetic Act (“FDCA”) by introducing misbranded drugs into interstate commerce. The criminal resolution includes the second-largest set of criminal financial penalties ever levied against a pharmaceutical company, including a criminal fine of $1.086 billion and an additional $450 million in criminal forfeiture. The proposed resolution includes a corporate criminal release regarding conduct relating to the sale, marketing, and distribution of Opana ER, but does not release any individual criminal liability.
EHSI also has agreed to a civil settlement of $475.6 million to resolve its civil liability under the False Claims Act. The civil settlement will address alleged losses to federal healthcare programs that paid for Opana ER.
When ENDO filed for bankruptcy in August 2022, it proposed to sell substantially all of its assets in a manner that contravened key requirements of the Bankruptcy Code. ENDO’s original proposal would have provided virtually no recovery to the federal government on account of its claims, while improperly paying several other creditor groups on account of their claims, even though they were entitled to lower or equal priority as the Government’s claims. This settlement was achieved after the Government objected to the proposed sale in Bankruptcy Court. Through the settlement, the Government has ensured both that it is compensated for its claims and that ENDO does not run afoul of the Bankruptcy Code by paying only certain of its creditors or violating the Bankruptcy Code’s priority scheme.
U.S. Attorney Damian Williams said: “Chapter 11 is an important tool for businesses to preserve value for their stakeholders. Bankruptcy protections are not a free pass to evade responsibility for criminal misconduct, civil fraud, or taxes. Today’s settlement ensures that Endo takes responsibility for its past misconduct, pays its federal debts, helps abate the nation’s opioid crisis by funding evidence-based treatment programs at the state and local level, and distributes payments to individuals harmed by the opioid epidemic.”
Principal Deputy Assistant Attorney General Brian M. Boynton said: “Companies that profit from the opioid abuse epidemic by misrepresenting the safety of their opioid products and using reckless marketing tactics to increase sales threaten the health and safety of Americans. With today’s announcement of a criminal guilty plea and a substantial civil settlement, the Department of Justice re-affirms its commitment to holding accountable those whose illegal conduct contributed to the opioid crisis.”
FDA Director Patrizia Cavazzoni, M.D. said: “Combatting the opioid epidemic remains a top public health priority for the FDA. This case demonstrates FDA and DOJ’s commitment to work collaboratively to hold drug manufacturers accountable if they fail to share accurate information with health care professionals about the risks and benefits of opioids.”
FDA Associate Commissioner Michael Rogers said: “The metrics of the opioid crisis are staggering. When companies do not provide accurate information about the safety and abuse potential of their products, they put patients at risk of abuse and addiction. Such conduct will not be tolerated, and we will aggressively pursue and bring to justice those who endanger the public health in this manner.”
HHS-OIG Inspector General Christi A. Grimm said: “The opioid crisis remains a public health emergency nationwide, and those impacted are at the forefront of our work. HHS-OIG is staunchly committed to protecting the millions of people served by federal healthcare programs from schemes such as this, while also striving to ensure they have access to necessary treatment.”
DOD Inspector General Robert P. Storch said: “The misbranding of opioids negatively impacts the integrity of TRICARE, the military’s healthcare system relied on by more than nine million service members, retirees, and their families. Today’s settlement demonstrates the ongoing commitment of the Defense Criminal Investigative Service and its law enforcement partners to promote accountability and transparency throughout the pharmaceutical industry and prosecute those who put profits ahead of patient welfare. The delivery of quality healthcare is too important to let a single dollar go to waste.”
VA Inspector General Michael J. Missal said: “Veterans and their families expect and deserve the highest quality health care delivered in a safe and accountable setting. False or misleading claims about potentially dangerous drugs put veterans’ care at risk. The VA Office of Inspector General is committed to working with our law enforcement partners to ensure the safety of those who entrust their health care to the providers and staff at VA’s 1,300 medical facilities.”
OPM OIG Special Agent in Charge Derek M. Holt said: “Protecting the health and safety of Federal employees, annuitants, and their families is a top priority for OPM OIG. Today’s criminal and civil resolutions demonstrate the exemplary work of our investigative staff, law enforcement partners, and colleagues at the Department of Justice in holding manufacturers accountable for actions that contribute to the opioid epidemic.”
The Bankruptcy Resolution
As part of ENDO’s bankruptcy plan, a group of ENDO’s secured lenders will purchase ENDO’s assets and operate the business under a new corporate structure. The agreement provides that this new business will pay the United States $364.9 million over 10 years, which can be prepaid at $200 million on the bankruptcy plan’s effective date, plus up to an additional $100 million contingent on the business performance of the new company. The bankruptcy settlement resolves multiple federal claims against ENDO, including the criminal and civil fraud claims, as well as additional healthcare agency claims and tax claims.
In addition to the Justice Department’s criminal and civil claims, the HHS Centers for Medicare and Medicaid Services (“CMS”), HHS’s Indian Health Service, and the VA have asserted claims against ENDO for the costs these programs incurred in providing medical care to treat individuals who suffer from opioid-use disorder as a result of their use of Opana ER and other opioids manufactured and sold by ENDO. CMS has also filed a claim to recover costs it incurred based on Medicare beneficiaries’ use of other ENDO products, including transvaginal mesh and ranitidine.
Finally, the Internal Revenue Service (“IRS”) filed substantial tax claims against ENDO based on ongoing audits. These audits concerned, among other things, ENDO’s valuation of assets it transferred to foreign affiliates and its payment of a large loan pre-payment penalty to a foreign affiliate for which it sought a tax deduction. A substantial majority of these payments were entitled to priority in bankruptcy over ENDO’s other unsecured claims. The health care agency and IRS claims have also been resolved though the bankruptcy settlement.
In the settlement agreement, the Government will receive up to a total of $464.9 million to satisfy all of these categories of claims in the bankruptcy. First, the Government will receive $364.9 million in 10 annual payments that can be prepaid at either party’s request. If prepaid on the effective date of the bankruptcy plan, the Government will receive $200 million. The Government will also receive up to an additional $100 million if the new company substantially exceeds its revenue projections in the next several years. The settlement agreement further precludes the new company from acquiring any unused tax credits or other beneficial tax attributes of ENDO.
Besides paying government claims, the bankruptcy plan has other significant features. Earlier in the bankruptcy case, ENDO agreed to stop promoting opioids to prescribers and to turn over millions of documents related to its role in the opioid crisis for publication in a public online archive. The new ENDO business will also make significant payments to state, local, and tribal governments to fund programs to help abate the opioid crisis. The Government has agreed to credit these payments, which will support programs to treat and prevent opioid-use disorder, against ENDO’s criminal forfeiture judgment.
In addition, one important condition in the resolution is that ENDO would cease to operate in its current form and would not emerge from the bankruptcy. Moreover, as part of its resolution with bankruptcy opioid claimants, ENDO’s affiliates have agreed to a Voluntary Operating Injunction that restrains opioid marketing and sales and requires ENDO to turn over millions of documents related to its role in the opioid crisis for publication in a public online archive.
The settlement is contingent on Bankruptcy Court approval of ENDO’s Chapter 11 plan. U.S. Bankruptcy Judge James M. Garrity has scheduled a hearing on March 19, 2024, to consider approving this plan.
The Criminal Plea
As part of the criminal plea, EHSI will admit that from April 2012 through May 2013, certain EHSI sales representatives marketed Opana ER to prescribers by touting Opana ER’s purported abuse deterrence, tamper resistance, and/or crush resistance, despite a lack of clinical data supporting those claims. According to the plea agreement, certain EHSI sales managers were aware that the sales representatives were making claims of purported abuse deterrence, tamper resistance, and/or crush resistance during sales calls, including hitting demonstration “blister packs” of non-medicated sample pills with hammers and conducting other demonstrations to convey the message that Opana ER was, in fact, crush proof and tamper resistant. The approved labeling for Opana ER did not provide adequate information for healthcare providers to safely prescribe Opana ER for use as an opioid that is abuse deterrent. According to the plea agreement, EHSI was responsible for the misbranding of Opana ER by marketing the drug with a label that failed to include adequate directions for its claimed abuse deterrence use, in violation of the FDCA.
EHSI voluntarily withdrew Opana ER from the market in 2017.
The Civil Settlement
The civil settlement announced today resolves allegations that, from 2011 to 2017, EHSI used a marketing scheme that targeted healthcare providers that EHSI knew were prescribing Opana ER for non-medically accepted indications. Aware that fewer than 10% of Opana ER prescribers wrote more than half of all Opana ER prescriptions, EHSI allegedly sought to increase its revenue from Opana ER prescriptions by focusing its marketing on those healthcare providers who prescribed the highest levels of opioids in general and Opana ER in particular. When EHSI employees raised concerns about prescribers believed to be engaged in abuse, diversion, or pill mill prescribing, EHSI allegedly ignored or minimized such concerns and continued to directly market Opana ER to such prescribers.
The allegations resolved by the civil settlement relating to EHSI’s marketing activities include that in 2015, after marketing the reformulated Opana ER for years, EHSI sought to further increase prescriptions by partnering with a consulting company to “pull[] all the levers” it could “to drive incremental growth” of Opana ER prescriptions. In what it termed a “sales force blitz,” EHSI allegedly added 3,000 priority targets to its sales representatives’ call lists, with nearly all of these priority targets chosen because they prescribed a high volume of opioids in general or Opana ER in particular. EHSI allegedly used sales goals and contests to ensure that its sales representatives targeted these outlier prescribers, including prescribers who previously had been excluded from EHSI’s call lists as posing risks of abuse and diversion.
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Mr. Williams thanked the U.S. Department of Justice’s Tax Division and Civil Division’s Commercial Litigation Branch, Corporate/Financial Litigation and Civil Fraud Sections, and Consumer Protection Branch; the U.S. Attorney’s Office for the Southern District of Florida; the IRS; the Office of the U.S. Trustee for Region 2; the HHS Office of General Counsel, CMS, and Indian Health Service; and the VA for their assistance in achieving this settlement agreement.
This bankruptcy case is being handled by the Office’s Tax & Bankruptcy Unit. Assistant U.S. Attorneys Jean-David Barnea, Peter Aronoff, and Tara Schwartz are in charge of the case.
Except to the extent that EHSI’s admissions are part of its criminal resolution, the claims resolved by the civil settlement are allegations only and there has been no determination of liability.
U.S. Attorney Announces Charges Against Iranian National for Multi-Year Cyber Campaign Targeting U.S. Defense Contractors and Private Sector CompaniesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Matthew G. Olsen, the Assistant Attorney General for National Security; Bryan Vorndran, the Assistant Director of the Cyber Division of the Federal Bureau of Investigation (“FBI”); and James Smith, the Assistant Director in Charge of the New York Field Office of the FBI, announced today the unsealing of an Indictment charging Iranian citizen and resident ALIREZA SHAFIE NASAB for his involvement in a cyber-enabled campaign to compromise U.S. government and private entities, including the U.S. Departments of the Treasury and State, defense contractors, and two New York-based companies. The case has been assigned to U.S. District Judge Mary Kay Vyskocil. NASAB remains at large.
U.S. Attorney Damian Williams said: “As alleged, Alireza Shafie Nasab participated in a cyber campaign using spearphishing and other hacking techniques to infect more than 200,000 victim devices, many of which contained sensitive or classified defense information. Cyber intrusion schemes such as the one alleged threaten our national security, and I’m proud of our law enforcement partners and the career prosecutors of this Office for using innovative technologies and investigative measures to disrupt and track down these cybercriminals.”
Assistant Attorney General for National Security Matthew G. Olsen said: “While purporting to work as a cybersecurity specialist for Iran-based clients, Mr. Nasab allegedly participated in a persistent campaign to compromise U.S. private sector and government computer systems. Today’s charges highlight Iran’s corrupt cyber ecosystem, in which criminals are given free rein to target computer systems abroad and threaten U.S. sensitive information and critical infrastructure. Our National Security Cyber Section remains focused on disputing these cross-border hacking schemes and holding those responsible to account.”
FBI Cyber Division Assistant Director Bryan Vorndran said: “The FBI will leverage all of our capabilities in combatting the threat waged by Iranian hacker organizations against America’s public and private sector. We encourage everyone to practice proper cyber hygiene to mitigate the risk of becoming vulnerable to malicious actors like Nasab. The close collaboration with partners that led to today’s unsealed indictment does not end there, and we are looking forward to continued teamwork in this space.”
FBI New York Assistant Director in Charge James Smith said: “Hostile cybercriminals are determined to use hacking campaigns to harm public safety and threaten our national security. Alireza Nasab, over an extended number of years, allegedly participated in an aggressive campaign of cyberattacks targeting U.S. government agencies, defense contractors, and New York-based companies working closely with the Department of Defense. This case is a reminder that we all need to maintain proper cybersecurity and awareness to avoid falling victim to malicious cyber actors. The FBI will continue to lead the fight against hostile nation state actors attempting to harm our country in cyberspace.”
According to the allegations contained in the Indictment unsealed today in Manhattan federal court:[1]
From at least in or about 2016 through at least in or about April 2021, ALIREZA SHAFIE NASAB and other conspirators were members of a hacking organization that participated in a coordinated multi-year campaign to conduct and attempt to conduct computer intrusions. These intrusions targeted more than a dozen U.S. companies and the U.S. Departments of the Treasury and State.
The hacking group’s private sector victims were primarily cleared defense contractors, which are companies that support U.S. Department of Defense programs. In addition, the group targeted a New York-based accounting firm and a New York-based hospitality company.
In conducting their hacking campaigns, the group used spearphishing — that is, tricking an email recipient into clicking on a malicious link — to infect victim computers with malware. In the course of their campaigns against one victim, the group compromised more than 200,000 employee accounts. At another victim, the conspirators targeted 2,000 employee accounts. In order to manage their spearphishing campaigns, the group created and used a particular computer application, which enabled the conspirators to organize and deploy their spearphishing attacks.
In the course of these spearphishing attacks, the conspirators compromised an administrator email account belonging to a defense contractor (“Defense Contractor-1”). Access to this administrator account empowered the conspirators to create unauthorized Defense Contractor-1 accounts, which the conspirators then used to send spearphishing campaigns to employees of a different defense contractor and a consulting firm.
In addition to spearphishing, the conspirators utilized social engineering, which involved impersonating others, generally women, in order to obtain the confidence of victims. These social engineering contacts were another means the conspiracy used to deploy malware onto victim computers and compromise those devices and accounts.
NASAB took part in these schemes. During his participation in the scheme, he was employed by Mahak Rayan Afraz, an Iran-based company that purported to provide cybersecurity services, but which was, in fact, a front for the conspirators’ operations. NASAB was responsible for procuring infrastructure used by the conspiracy. During the course of this conduct, NASAB used the stolen identity of a real person in order to register a server and email accounts used in the course of the cyber campaigns.
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NASAB, 39, of Iran, is charged with one count of conspiracy to commit computer fraud, which carries a maximum sentence of five years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory consecutive term of two 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 assigned judge.
Concurrent with the unsealing of the Indictment, the Department of State’s Rewards for Justice Program is offering a reward of up to $10 million for information leading to the identification or location of NASAB. Anyone with information on NASAB and his malicious cyberactivity should contact Rewards for Justice via their Tor-based tips-reporting channel at: he5dybnt7sr6cm32xt77pazmtm65flqy6irivtflruqfc5ep7eiodiad.onion (the Tor browser is required).
Mr. Williams praised the outstanding investigative work of the FBI, including the work of the FBI Cyber Division.
The case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Ryan B. Finkel, Dina McLeod, and Daniel G. Nessim are in charge of the prosecution, with assistance from Trial Attorney Matthew Chang of the National Security Division’s Cyber 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.
U.S. Attorney Announces Capture of Fugitive Charged in Connection with Shooting of Five-Year-Old GirlRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Ralph Sozio, the U.S. Marshal 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 AUSTIN MORRISHOW, who was charged with possessing ammunition after conviction of a felony. MORRISHOW and a co-defendant, CURTIS WHITE, were congregated outside on a busy sidewalk in the Bronx the Friday before the July Fourth holiday weekend last year when they fired multiple shots at three cars in the Bronx, New York, hitting and seriously injuring a five-year-old child sitting in the backseat of one of the cars. MORRISHOW, who had been on the run since June 30, 2023, following the shooting, was arrested yesterday afternoon in the Bronx, New York. MORRISHOW’s and WHITE’s cases are assigned to District Judge Loretta A. Preska. MORRISHOW was presented and arraigned before U.S. Magistrate Judge Jennifer E. Willis today, and WHITE was previously arrested and arraigned before District Judge Paul A. Crotty.
U.S. Attorney Damian Williams said: “As alleged, Austin Morrishow recklessly fired multiple rounds of illegally possessed ammunition at innocent New Yorkers, striking and injuring a young child and endangering the lives of other bystanders. Instead of turning himself in, Morrishow fled for over seven months. Today’s arrest keeps our promise to work relentlessly with our law enforcement partners to track down and capture fugitives—whether it takes seven days, seven weeks, or seven months—and bring them to justice.”
U.S. Marshal Ralph Sozio said: “This was another successful takedown of an alleged dangerous fugitive, who was involved in the shooting of an innocent 5-year-old girl. I want to thank the Southern District of New York Warrant Squad, the NY/NJ Regional Fugitive Task Force and the NYPD for their relentless pursuit in apprehending him without incident. This is a true testament that we will be relentless in our pursuit to bring you to justice, making our city streets safe.”
NYPD Commissioner Edward A. Caban said: “This arrest is about intelligence-driven crime-fighting and, above all else, consequences. If you commit a violent felony in New York City, we will find you, we will arrest you, and we will build a case to prosecute you to the fullest extent of the law. I thank our unremitting NYPD detectives, and all the members of the U.S. Marshals Service Regional Fugitive Task Force, for taking another alleged criminal off our streets.”
As alleged in the Indictment and the Complaint:[1]
On June 30, 2023, MORRISHOW and WHITE were gathered outside at a makeshift memorial for an individual who had been shot and killed the day before. A tan sedan was parked nearby with a five-year-old girl in the backseat and her father in the front seat, waiting for two friends to arrive so that they could attend a car show. After the two friends arrived in a silver sedan and red minivan, the driver of the silver sedan pulled next to the tan sedan, revving his engine and causing it to backfire. The sound of the backfire caused MORRISHOW, WHITE, and others to scatter.
MORRISHOW took cover behind a parked vehicle and fired a .40 caliber pistol multiple times at the three cars, which began fleeing from the gunfire. A still image from surveillance video footage is below with MORRISHOW circled in red.
WHITE ran down the street after the fleeing cars, firing a .380 caliber pistol. A still image from surveillance video footage is below with WHITE circled in red.
After the victim’s father drove his daughter to safety a couple blocks away, he got out of his car to check on his daughter. Realizing that she had been shot in the back, he held her in his arms and yelled for somebody to call an ambulance. The driver of the silver car called 911. Minutes later, NYPD officers arrived and transported the victim to the hospital.
The NYPD subsequently recovered seven .40 caliber shell casings from the vicinity of the parked car near where MORRISHOW fired his gun, two .380 caliber shell casings from the street near where WHITE fired his gun, and a .380 caliber firearm from an apartment that WHITE was seen entering immediately after the shooting. MORRISHOW was not permitted to possess a firearm or ammunition because of his prior federal conviction for using and carrying a firearm during and in relation to a narcotics conspiracy, and WHITE was not permitted to possess a firearm or ammunition because of his prior state conviction for attempted first-degree assault with intent to cause serious injury with a weapon.
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MORRISHOW, 26, and WHITE, 26, both of the Bronx, New York, are each charged with one count of possession of ammunition after a felony conviction, which carries a maximum sentence of 15 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 defendants will be determined by a judge.
Mr. Williams praised the outstanding work by the U.S. Marshals Service and the NYPD to apprehend MORRISHOW. Mr. Williams also thanked the Bureau of Alcohol, Tobacco, Firearms, and Explosives for their participation in the investigation.
The prosecution of this case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Jerry J. Fang is in charge of the prosecution.
The charges contained in the Complaint and 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 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 Pleads Guilty to Illicitly Procuring Large Quantities of U.S.-Manufactured Dual-Use, Military Grade Microelectronics for Russian EntitiesRead the Press Release
Maxim Marchenko, 51, a Russian citizen who has resided in Hong Kong, pleaded guilty today to charges of money laundering and smuggling goods from the United States. Marchenko was arrested in September 2023.
According to court documents, Marchenko operated 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 googles, thermal optics and other weapon systems.
“By his own admission, Mr. Marchenko conspired to smuggle military-grade technology to Russia, using a complex network of front companies to hide his illicit activity,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Today, once again, the Justice Department is holding accountable those who would enable the Kremlin and its unjust war of aggression against Ukraine.”
“Today, Maxim Marchenko admitted in court that he illicitly sought to procure U.S.-manufactured, military grade microelectronics to deliver to end users in Russia,” said U.S. Attorney Damian Williams for the Southern District of New York. “Marchenko concealed his scheme to funnel these microelectronics – which had application for use in rifle scopes, night-vision goggles, thermal optics and other weapons systems – by using shell companies and other elaborate money laundering techniques. Today’s guilty plea should send a strong message to those who attempt to break the law by supplying Russia with U.S. military technology that this office will vigorously pursue such smuggling schemes and hold those involved to full account.”
“Today’s guilty plea demonstrates the FBI’s relentless pursuit of justice as we put yet another individual who tried to illegally transport military-grade U.S. technology to Russia behind bars,” said Executive Assistant Director of the FBI's National Security Branch Larissa L. Knapp. “We will continue to collaborate with our partners to protect our national security and prevent the smuggling of such goods which could benefit authoritarian adversaries.”
“The Russian military relies on illicit procurement networks, including the one Marchenko operated here, to perpetrate their brutal war against the Ukrainian people,” said Matthew Axelrod, Assistant Secretary of Commerce for Export Enforcement. “We will continue to leverage all of our authorities to combat the transshipment of U.S. parts through third countries, like the People’s Republic of China, to the Russian military.”
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. 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 a total of 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.
Marchenko pleaded guilty to one count of money laundering, which carries a maximum penalty of 20 years in prison, and one count of smuggling goods from the United States which carries a maximum penalty of up to 10 years in prison. He is scheduled to be sentenced on May 29 in Manhattan. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI and Commerce Department’s Bureau of Industry and Security are investigating the case.
Assistant U.S. Attorneys Jennifer N. Ong and Shiva H. Logarajah for the Southern District of New York 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.
Russian International Money Launderer Pleads Guilty to 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, and Matthew G. Olsen, the Assistant Attorney General of the Justice Department’s National Security Division, announced today that MAXIM MARCHENKO pled guilty to charges of money laundering and smuggling goods from the U.S. MARCHENKO was arrested in September 2023 and pled guilty earlier today before U.S. Magistrate Judge Victoria Reznik.
U.S. Attorney Damian Williams said: “Today, Maxim Marchenko admitted in court that he illicitly sought to procure U.S.-manufactured, military grade microelectronics to deliver to end users in Russia. Marchenko concealed his scheme to funnel these microelectronics – which had application for use in rifle scopes, night-vision goggles, thermal optics, and other weapons systems – by using shell companies and other elaborate money laundering techniques. Today’s guilty plea should send a strong message to those who attempt to break the law by supplying Russia with U.S. military technology that this Office will vigorously pursue such smuggling schemes and hold those involved to full account.”
Assistant Attorney General Matthew G. Olsen said: “By his own admission, Mr. Marchenko conspired to smuggle military-grade technology to Russia, using a complex network of front companies to hide his illicit activity. Today, once again, the Justice Department is holding accountable those who would enable the Kremlin and its unjust war of aggression against Ukraine.”
According to the allegations contained in the Information, the allegations in the Complaint, and other filings and statements made in public court proceedings:
At all relevant times, MARCHENKO was a Russian national who resided in Hong Kong and operated several Hong Kong-based shell companies. MARCHENKO and two co-conspirators (“CC-1” and “CC-2”), who are also Russian nationals, operated an illicit procurement network in Russia, Hong Kong, and elsewhere overseas. This procurement network 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 had significant military applications, such as in rifle scopes, night-vision googles, 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. 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 the Hong Kong shell entity 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. In reality, the OLED micro-displays were destined for end users in Russia. MARCHENKO and other members of the conspiracy concealed the true 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.
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MARCHENKO, 51, a Russian citizen who resided in Hong Kong, pled guilty to one count of money laundering, which carries a maximum sentence of 20 years in prison, and one count of smuggling goods from the U.S., which carries a maximum sentence of 10 years in prison. MARCHENKO is scheduled to be sentenced on June 6, 2024, before the Honorable Nelson S. Román.
The maximum potential sentences in this case are 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 investigative work of the Federal Bureau of Investigation (“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 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 Illicit Finance & Money Laundering Unit and White Plains Division. 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 National Security Division’s Counterintelligence and Export Control Section.
This case was coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls and economic countermeasures that the U.S., along with its foreign allies and partners, has imposed in response to Russia’s unprovoked military invasion of Ukraine. Announced by the Attorney General on March 2, 2022, and under the leadership of the Office of the Deputy Attorney General, the task force will continue to leverage all of the department’s tools and authorities to combat efforts to evade or undermine the collective actions taken by the U.S. government in response to Russian military aggression.
Recidivist Drug Trafficker Sentenced to 175 Months in Prison for Causing Overdose Death of 26-Year-Old VictimRead 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 that ROY ESCOBAR was sentenced today to 175 months in prison by U.S. District Judge Andrew L. Carter Jr. for his years of fentanyl trafficking, which caused the overdose death of a 26-year-old man (the “Victim”) in Brooklyn, New York. ESCOBAR, who previously pled guilty to one count of conspiracy to distribute narcotics, operated his drug trafficking business alongside his two adult sons, Pablo Escobar and Roy Escobar Jr., who have also pled guilty and are awaiting sentencing.
U.S. Attorney Damian Williams said: “Roy Escobar’s actions have left a path of ruin in their wake. He contributed to the flood of fentanyl plaguing our communities, causing the death of a young man with a bright future ahead of him. He did all of this despite repeated prior drug trafficking charges and convictions, and he involved his own sons in this criminal activity. Escobar’s sentence is an important step toward bringing justice to his victims, and it reaffirms our unwavering commitment to combating this ongoing fentanyl crisis by holding drug traffickers like Escobar accountable.”
NYPD Commissioner Edward A. Caban said: “This meaningful prison sentence assures New Yorkers that the NYPD and our law enforcement partners refuse to tolerate the illegal distribution of these poisons in our neighborhoods. I commend our courageous undercover officer in this case, and I thank our colleagues at the Office of the U.S. Attorney for the Southern District of New York, for continuing to be highly effective partners in our public safety mission.”
According to the sentencing papers and the Court’s determinations at the sentencing hearing:
On May 13, 2022, ROY ESCOBAR texted with the Victim to arrange a sale of what the Victim understood to be heroin. The Victim confided to ESCOBAR that he was “scared about the fent,” i.e., fentanyl, but ESCOBAR reassured the Victim that he understood the concern, and that he had heroin for sale. At approximately 10:30 p.m. that night, ESCOBAR arrived outside the Victim’s apartment and sold the Victim the drugs. Three days later, the Victim was found dead in his apartment, having overdosed the day prior on the drugs sold to him by ESCOBAR. Unbeknownst to the Victim, the drugs that he purchased from ESCOBAR in fact contained no heroin, but rather fentanyl and fentanyl analogue — far more potent, and deadly, substances — and the Victim died as a result of having consumed them.
Following the Victim’s death, officers with the NYPD recovered the Victim’s phone and discovered his communications with ESCOBAR. An undercover NYPD officer (the “UC”) subsequently contacted ESCOBAR and began discussions concerning the purchase of narcotics.
ESCOBAR sold fentanyl to the UC eight times over the next several months. Each time, the UC requested heroin and was led to believe that he was buying heroin, but the drugs that ESCOBAR sold in fact contained fentanyl and fentanyl analogue — the same fatal drugs that ESCOBAR sold to the Victim.
Although ESCOBAR was the primary point of contact for the UC, ESCOBAR also involved his young adult sons, co-defendants Pablo Escobar and Roy Escobar Jr., in the narcotics trafficking. ESCOBAR explained to the UC that if ESCOBAR was ever unavailable, Pablo Escobar would be available to sell narcotics to the UC on ESCOBAR’s behalf. And, on two separate occasions, ESCOBAR sent Roy Escobar Jr. to deliver the drugs to the UC in ESCOBAR’s place.
On October 18, 2022, ESCOBAR and his sons were arrested in connection with this investigation. Later that day, NYPD officers conducted searches of ESCOBAR’s residence in East Rockaway, New York, and a nearby storage unit rented in Roy Escobar Jr.’s name. During their searches, the officers recovered approximately 4.5 kilograms of cocaine, 198 grams of fentanyl analogue, five grams of crack cocaine, 163 grams of methamphetamine, and drug trafficking paraphernalia, including drug packaging materials that matched packaging recovered from the Victim’s apartment, near the Victim’s body.
The investigation further revealed that ESCOBAR had been significantly involved in this pattern of narcotics trafficking since at least as early as April 2018. Specifically, the evidence showed that beginning in April 2018, a Venmo account used by ESCOBAR for drug sales received more than 2,000 separate payments, with an average transaction amount of $168.74 and a total amount of $347,772.25.
ESCOBAR engaged in much of this conduct, including the sale of fatal drugs to the Victim, while he was already facing pending drug charges in New York state court. ESCOBAR had also previously been convicted for narcotics offenses in 2015 and 2002.
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In addition to the prison term, ESCOBAR, 46, a Bolivian national residing in East Rockaway, New York, was sentenced to five years of supervised release, ordered to forfeit $55,803, and ordered to pay a $100 mandatory special assessment.
Mr. Williams praised the outstanding investigative work of the NYPD, as well as the Special Agents and Task Force Officers from the U.S. Attorney’s Office for the Southern District of New York involved in this investigation.
This case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Jonathan L. Bodansky and Andrew Jones are in charge of the prosecution.
Iranian National Charged for Multi-Year Hacking Campaign Targeting U.S. Defense Contractors and Private Sector CompaniesRead the Press Release
The Justice Department unsealed an indictment charging an Iranian national with involvement in a cyber-enabled campaign to compromise U.S. governmental and private entities, including the U.S. Departments of the Treasury and State, defense contractors, and two New York-based companies.
According to court documents, from at least in or about 2016 through in or about April 2021, Alireza Shafie Nasab, 39, of Iran, and other co-conspirators were members of a hacking organization that participated in a coordinated multi-year campaign to conduct and attempt to conduct computer intrusions. These intrusions targeted more than a dozen U.S. companies and the U.S. Departments of the Treasury and State. Nasab remains at large.
“While purporting to work as a cybersecurity specialist for Iran-based clients, Mr. Nasab allegedly participated in a persistent campaign to compromise U.S. private sector and government computer systems,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Today’s charges highlight Iran’s corrupt cyber ecosystem, in which criminals are given free rein to target computer systems abroad and threaten U.S. sensitive information and critical infrastructure. Our National Security Cyber Section remains focused on disputing these cross-border hacking schemes and holding those responsible to account.”
“As alleged, Alireza Shafie Nasab participated in a cyber campaign using spear phishing and other hacking techniques to infect more than 200,000 victim devices, many of which contained sensitive or classified defense information,” said U.S. Attorney Damian Williams for the Southern District of New York. “Cyber intrusion schemes such as the one alleged threaten our national security, and I’m proud of our law enforcement partners and the career prosecutors of this office for using innovative technologies and investigative measures to disrupt and track down these cybercriminals.”
“The FBI will leverage all of its capabilities in combating the threat posed by Iranian hacker organizations to America’s public and private sectors,” said Assistant Director Bryan Vorndran of the FBI’s Cyber Division. “The close collaboration with partners that led to today’s unsealed indictment of Alireza Shafie Nasab will continue to keep the pressure on cyber adversaries.”
The hacking group’s private sector victims were primarily cleared defense contractors, which are companies that support U.S. Department of Defense programs. In addition, the group targeted a New York-based accounting firm and a New York-based hospitality company.
According to the indictment, in conducting their hacking campaigns, the group used spear phishing — that is, tricking an email recipient into clicking on a malicious link — to infect victim computers with malware. In the course of their campaigns against one victim, the group compromised more than 200,000 victim employee accounts. At another victim, the conspirators targeted 2,000 employee accounts. In order to manage their spearphishing campaigns, the group created and used a particular computer application, which enabled the conspirators to organize and deploy their spear phishing attacks.
In the course of these spear phishing attacks, the conspirators compromised an administrator email account belonging to a defense contractor (Defense Contractor-1). Access to this administrator account empowered the conspirators to create unauthorized Defense Contractor-1 accounts, which the conspirators then used to send spear phishing campaigns to employees of a different defense contractor and a consulting firm.
In addition to spearphishing, the conspirators utilized social engineering, which involved impersonating others, generally women, in order to obtain the confidence of victims. These social engineering contacts were another means the conspiracy used to deploy malware onto victim computers and compromise those devices and accounts.
Nasab took part in these schemes. During his participation in the scheme, he was employed by Mahak Rayan Afraz, an Iran-based company that purported to provide cybersecurity services, but which was, in fact, a front for the conspirators’ operations. Nasab was responsible for procuring infrastructure used by the conspiracy. During the course of this conduct, Nasab used the stolen identity of a real person in order to register a server and email accounts used in the course of the cyber campaigns.
Nasab is charged with one count of conspiracy to commit computer fraud, which carries a maximum penalty of five years in prison; one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison; one count of wire fraud, which carries a maximum penalty of 20 years in prison and one count of aggravated identity theft, which carries a mandatory consecutive term of two years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Concurrent with the unsealing of the indictment, the U.S. Department of State’s Rewards for Justice Program is offering a reward of up to $10 million for information leading to the identification or location of Nasab.
Anyone with information on Nasab and his malicious cyberactivity should contact Rewards for Justice via their Tor-based tips-reporting channel at:
he5dybnt7sr6cm32xt77pazmtm65flqy6irivtflruqfc5ep7eiodiad.onion (the Tor browser is required).
The FBI New York Field Office and Cyber Division are investigating the case.
Assistant U.S. Attorneys Ryan B. Finkel, Dina McLeod and Daniel G. Nessim for the Southern District of New York’s Complex Frauds and Cybercrime Unit are prosecuting the case, with valuable assistance from Trial Attorney Matthew Chang of the National Security Division’s National Security Cyber Section.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Chief Operating Officer and Vice President of International Cargo Airline Plead Guilty to Defrauding Their EmployerRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced the guilty pleas today of LARS WINKELBAUER and ABILASH KURIEN in connection with a massive scheme to defraud Polar Air Cargo Worldwide, Inc. (“Polar”), a leading cargo airline, of tens of millions of dollars in revenue. WINKELBAUER pled guilty today to conspiracy to commit wire fraud and money laundering before U.S. District Judge Jesse M. Furman, and KURIEN pled guilty yesterday to the same offense.
U.S. Attorney Damian Williams said: “In April 2023, this Office charged 10 defendants for their involvement in a widespread scheme that permeated nearly every facet of Polar Air Cargo Worldwide. To date, nine individuals have pled guilty, including Lars Winkelbauer and Abilash Kurien, two top executives who have confessed today and are poised to face time in prison for their betrayal of the company’s trust and that of the wider community. Wire fraud and money laundering are not merely financial crimes; they erode faith in institutions, undermine economic stability, and harm innocent individuals and businesses. This Office and our partners recognize that profound impact and we will not falter in our work to uphold the rule of the law.”
According to the allegations contained in the Indictment and statements made in public filings and in public court proceedings:
From at least in or about 2009 through in or about July 2021, WINKELBAUER, KURIEN, and at least eight other individuals participated in a massive scheme to defraud Polar. At all relevant times, WINKELBAUER, KURIEN, and two co-defendants were senior executives of Polar (the “Executive Defendants”), and six co-defendants (the “Vendor Defendants”) owned and operated various Polar vendors and customers.
WINKELBAUER was Polar’s Chief Operating Officer and Executive Vice President and is the most senior of the Executive Defendants. KURIEN was the Vice President of Marketing, Revenue Management, and Network Planning.
The Executive Defendants agreed to accept millions of dollars in kickbacks from the Vendor Defendants and also reaped substantial financial benefits as a result of their secret ownership interests in certain Polar vendors, in exchange for ensuring that those vendors received favorable business arrangements with Polar. The fraud they perpetrated — which involved a substantial portion of Polar’s senior management and at least 10 customers and vendors of Polar — led to pervasive corruption of Polar’s business, touching nearly every aspect of the company’s operations for over a decade.
As a result of the scheme, the Executive Defendants, along with two co-conspirators who also worked as senior executives at Polar, received unlawful payments, either directly or through various limited liability companies they controlled, in excess of approximately $23 million in kickback payments or disbursements as a result of their ownership of conflicted companies.
WINKELBAUER and KURIEN are the eighth and ninth defendants to plead guilty in the case thus far.
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WINKELBAUER, 48, of Bangkok, Thailand, and KURIEN, 46, of Wilton, Connecticut, each pled guilty to one count of conspiracy to commit wire fraud and money laundering, which carries a maximum sentence of five years in prison. WINKELBAUER agreed to pay forfeiture in the amount of $6,774,039.30 and to make restitution to Polar in the amount of $33,539,396. KURIEN agreed to pay forfeiture in the amount of $7,192,064.41 and to make restitution to Polar in the amount of $22,956,341. WINKELBAUER is scheduled to be sentenced by Judge Furman on May 30, 2024, and KURIEN is scheduled to be sentenced by Judge Furman on July 23, 2024.
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 the judge.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Katherine Reilly, Danielle Kudla, Kevin Mead, and Qais Ghafary are in charge of the prosecution.
Founder of New York Narcotics Delivery Service Sentenced to 150 Months in Prison for Causing Three Overdose DeathsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that JOSE LUIS TEJADA AYBAR was sentenced yesterday to 150 months in prison for operating the Cab Louie Delivery Service, an on-demand drug courier service that delivered fentanyl-tainted cocaine to customers in September 2019. The deadly mix caused the overdose deaths of Marsha Clarke of the Bronx, New York, and Martin Banks and Edward Lynch of Yonkers, New York, as well as the hospitalization of Clarke’s husband. TEJADA was sentenced before U.S. District Judge Andrew L. Carter, Jr. Co-defendants ALLEN ALEXIS ABISADA GUZMAN and MARTIN PEREZ were previously sentenced to 98 months and 70 months in prison, respectively.
U.S. Attorney Damian Williams said: “The sentencing of Jose Luis Tejada Aybar marks a crucial step in bringing justice to the victims not only of the Cab Louie Delivery Service but also those victims of fentanyl and other lethal drugs. The devastating consequences of Tejada’s operation underscore the importance of dismantling criminal enterprises like this, and this prosecution reaffirms our unwavering commitment to combating organized crime and protecting our communities from the dangers of drug trafficking.”
According to the sentencing papers and the Court’s determinations at the sentencing hearing:
In March 2018, JOSE LUIS TEJADA AYBAR (“TEJADA”) started the Cab Louie Delivery Service, which delivered cocaine to customers in the Bronx and Westchester County. Customers would call or text one of the business’s rotating dispatch lines to place an order, and the Cab Louie Delivery Service would send a driver to deliver cocaine to the customer. During its operation from March 2018 to September 2021, the Cab Louie Delivery Service sold, in total, more than 15 kilograms of cocaine — equivalent to nearly 24,000 bags of cocaine.
As his business expanded, TEJADA hired employees for the Cab Louie Delivery Service. Two of those employees were ALLEN ALEXIS ABISADA GUZMAN (“ABISADA”) and PEREZ, both of whom delivered cocaine for the business. In addition to hiring employees, TEJADA led the Cab Louie Delivery Service by sourcing its cocaine, obtaining and operating the dispatch phones, and providing ABISADA with a car to deliver cocaine. TEJADA profited from the business throughout its three-plus years of operation.
On September 19, 2019, ABISADA delivered cocaine on behalf of the Cab Louie Delivery Service to three different customers: Clarke, Banks, and Lynch. The cocaine was tainted with fentanyl. Within two days, Clarke, Banks, and Lynch were found dead, and Clarke’s husband was found unresponsive. Medical examiners determined that Clarke, Banks, and Lynch all died from acute intoxication by the combined effects of cocaine and fentanyl, among other drugs. Clarke’s husband was hospitalized for a fentanyl overdose and in a coma for a period. When he emerged from the coma, Clarke’s husband had to relearn how to speak, how to feed himself, how to use the restroom, and how to walk.
Despite learning of the overdose deaths of Banks and Lynch through a local news article, which he saved on his phone, TEJADA continued operating the Cab Louie Delivery Service. Between November 6, 2019, and February 13, 2020, a New York Police Department (“NYPD”) undercover officer made six controlled purchases of cocaine from the Cab Louie Delivery Service. TEJADA personally made two of the deliveries, ABISADA made three, and PEREZ made one.
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In addition to the prison term, TEJADA, 41, of Miami, Florida, was sentenced to five years of supervised release and a $100 mandatory special assessment.
Mr. Williams praised the outstanding investigative work of the NYPD, the Organized Crime Drug Enforcement Task Force (“OCDETF”) New York Strike Force, and the Complex Analytical and Social Media Enhancement Team at the New York/New Jersey High Intensity Drug Trafficking Area. Mr. Williams also thanked the Yonkers Police Department and the Westchester County District Attorney’s Office for their assistance in the case.
The OCDETF New York Strike Force provides for the establishment of permanent multi-agency task force teams that work side-by-side in the same location. This co-located model enables agents from different agencies to collaborate on intelligence-driven, multi-jurisdictional operations to disrupt and dismantle the most significant drug traffickers, money launderers, gangs, and transnational criminal organizations. The specific mission of the New York Strike Force is to target, disrupt, and dismantle drug trafficking and money laundering organizations, reduce the illegal drug supply in the United States, and bring criminals to justice. The Strike Force is affiliated with the DEA’s New York Division and includes agents and officers of the DEA; NYPD; New York State Police; Homeland Security Investigations; U.S. Internal Revenue Service, Criminal Investigation; U.S. Customs and Border Protection; New York National Guard; U.S. Coast Guard; New York State Department of Corrections and Community Supervision; Bergen County Prosecutor’s Office; Fort Lee Police Department; Palisades Interstate Parkway Police; Teaneck Police Department; Hillsdale Police Department; Closter Police Department; Northvale Police Department; River Vale Police Department; Englewood Police Department; Saddle River Police Department; Bergen County Sheriff’s Department; Hawthorne Police Department; and Hackensack Police Department.
The case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorney Alexander Li is in charge of the prosecution.
Two Charged in Connection with Search of Bronx Drug Mail Order Distribution Center Containing Approximately 100,000 Pills of Suspected Fentanyl and MethamphetamineRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Frank A. Tarentino III, the Special Agent in Charge of the New York Division of the Drug Enforcement Administration (“DEA”); and Erin Keegan, the Acting Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced today the filing of a Complaint in Manhattan federal court charging EDWARD EUSTATE JIMENEZ, a/k/a “Chino,” and WILIANYI ALMANZAR POLANCO with conspiracy to distribute narcotics and distribution of narcotics. JIMENEZ and POLANCO were arrested yesterday afternoon in the Washington Heights neighborhood of Manhattan. They were presented earlier today before U.S. Magistrate Judge Gary Stein.
U.S. Attorney Damian Williams said: “This seizure removed substantial quantities of narcotics from the streets and helped to disrupt an alleged mail order business that promised legitimate prescriptions drugs but was really distributing deadly narcotics, like fentanyl. I express deep gratitude to the efforts of our law enforcement partners and the career prosecutors of this Office as we remain committed to saving lives by keeping fentanyl off the streets of our community.”
DEA Special Agent in Charge Frank A. Tarentino III said: “Simply put, this alleged fentanyl pill distribution organization was delivering deadly fentanyl to doorstops across America. This emerging trend of mail order fentanyl pill delivery services elevates the danger of ordering pills from rogue online platforms and social media. Fentanyl is the greatest threat to Americans ages 18-45, and DEA lab analysis has found that 7 out of 10 fentanyl pills contain a potential lethal dose; therefore, tens of thousands of potential lethal doses were removed from circulation today. I commend our law enforcement partners for their collaboration and focus on arresting drug traffickers bringing the most harm to our communities and taking deadly poison off our streets.”
HSI Acting Special Agent in Charge Erin Keegan said: “Fentanyl contributed to more than 100,000 overdose fatalities in 2023 — with a large number of cases tragically stemming from individuals unknowingly ingesting fentanyl in seemingly legitimate pharmaceuticals purchased via the Internet and delivered through the mail. The goal of the HSI New York El Dorado Task Force is to leverage every tool at the state, local, and federal level to disrupt fentanyl production, transportation, and distribution both locally and globally. Working with our law enforcement partners and the U.S. Attorney’s Office, we will continue to conduct cross border investigations that degrade the ability of drug traffickers to operate in the New York City area and beyond, ultimately making a profound impact in the fight against the opioid crisis and saving innocent lives.”
As alleged in the Complaint filed today in Manhattan federal court:[1]
Since at least in or about September 2023, law enforcement has been investigating a network of drug traffickers (the “Drug Traffickers”) who, among other things, have been distributing large quantities of counterfeit prescription drugs using a mail-order system. The drugs distributed include pills colored and pressed to look like, among other things, prescription oxycodone and Adderall, but that are, in fact, counterfeit pills laced with fentanyl.
On multiple occasions, an undercover law enforcement officer purchased pills from the Drug Traffickers which tested positive for, among other things, fentanyl. Postal records show that at least two of the packages of pills were mailed by someone who appears to be JIMENEZ from a post office (the “Post Office”) located in the Bronx. Since in or about January 20, 2024, JIMENEZ appears to have sent approximately 188 U.S. Postal Service (“USPS”) packages, including approximately 80 packages that were sent from the Post Office. On at least one occasion, he was joined by an individual who appears to be POLANCO.
On or about February 26, 2024, law enforcement agents arrested JIMENEZ and POLANCO. At the time of his arrest, JIMENEZ was scanning parcels for mailing. Around the same time, law enforcement arrested POLANCO, who was waiting in a vehicle near the Post Office. Inside the vehicle was a black trash bag containing additional mail packages.
In total, law enforcement encountered more than 35 priority mail packages, each of which contained a quantity of what appeared to be counterfeit prescription pills. The contents of two of the priority mail packages, containing what appears to be counterfeit oxycodone and counterfeit Adderall, are pictured below:
Also on or about February 26, 2024, law enforcement searched an apartment (the “Apartment”) that was rented or lived in by JIMENEZ and POLANCO and used to package and distribute narcotics for mailing. During the course of that search, law enforcement officers recovered approximately 100,000 counterfeit pills that appear to be colored and pressed to imitate, among other things, prescription oxycodone, Adderall, and Xanax; a “kilo press,” or device used to press powdered narcotics into kilogram-weight bricks; over 2,000 USPS priority mail envelopes that appear to be unused; and bags containing what appear to be shipping receipts. A photograph of the narcotics and some of the other material recovered from the Apartment is below:
Although lab testing is pending, preliminary field tests reveal that almost all of the narcotics recovered have tested positive for fentanyl and methamphetamine.
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EDWARD EUSTATE JIMENEZ, 23, and WILIANYI ALMANZAR POLANCO, 32, both of the Bronx, New York, are each charged with one count of conspiracy to distribute narcotics and one count of narcotics distribution, both of which carry a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.
The statutory minimum and maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the El Dorado Task Force International Narcotics and Money Laundering Unit, which is comprised of law enforcement officers and investigators from the DEA, HSI, the New York City Police Department, the New York State Police, the USPS, the Kings County District Attorney’s Office, and the New York High Intensity Drug Trafficking Area Task Force, in connection with this investigation. Mr. Williams also thanked the New York Strike Force Tactical Diversion Squad for their assistance.
This case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Maggie Lynaugh and Adam Sowlati are 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.
Own Every Dollar Gang Member Pleads Guilty to 2022 MurderRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced the guilty plea today of MAYOVANEX RODRIGUEZ, a/k/a “Menorcito,” in connection with his criminal activities as a member of the violent gang Own Every Dollar (“OED”), including the 2022 murder of Anthony Savarese. RODRIGUEZ pled guilty today to several charges, including murder through use of a firearm, before U.S. Magistrate Judge Jennifer E. Willis.
U.S. Attorney Damian Williams said: “On February 7, 2022, Mayovanex Rodriguez shot and killed Anthony Savarese in the head at point-blank range in the Bronx. That murder is just one of the many acts of violence that members and associates of OED have committed that have terrorized Washington Heights and surrounding communities. This plea is a reminder that this Office will relentlessly pursue any gangs who threaten the safety of New Yorkers and that gang members who commit violent crimes will be apprehended and prosecuted to the fullest extent of the law.”
As alleged in the Indictment and statements made in public filings and public court proceedings:
RODRIGUEZ is a member of the violent gang OED, a subset of the Trinitarios gang based in and around the Washington Heights area of Manhattan. The indictments in this case charge 24 members and associates of OED with numerous violent crimes, including five murders and 15 attempted murders.
On February 7, 2022, shortly after midnight, RODRIGUEZ attempted to commit a gunpoint robbery of 41-year-old Anthony Savarese on Andrews Avenue between West 183rd Street and West Fordham Road in the Bronx. During the attempted robbery, RODRIGUEZ shot Savarese in the head from point-blank range, killing him.
Nine other defendants previously pled guilty in the case.
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RODRIGUEZ, 29, of the Bronx, New York, pled guilty to one count of racketeering conspiracy, which carries a maximum sentence of life in prison; one count of murder through the use of a firearm, which carries a maximum sentence of life in prison; and one count of narcotics conspiracy, which carries a mandatory minimum term of 10 years in prison and a maximum sentence of life in prison. RODRIGUEZ is scheduled to be sentenced by U.S. District Judge J. Paul Oetken on May 30, 2024.
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 the judge.
Mr. Williams praised the outstanding work of the New York City Police Department and the Drug Enforcement Administration.
This case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Sarah L. Kushner, Kevin Mead, and Ashley C. Nicolas are in charge of the prosecution.
Manhattan Man Convicted at Trial of Fentanyl, Methamphetamine, and Cocaine Trafficking ConspiracyRead 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 the conviction of NELSON OLIVO on charges of narcotics trafficking conspiracy. The defendant was found guilty yesterday following a one-week trial before U.S. District Judge Valerie E. Caproni. OLIVO will be sentenced on June 27, 2024, by Judge Caproni.
U.S. Attorney Damian Williams said: “Yesterday, a unanimous jury found that Nelson Olivo agreed with others to sell large amounts of deadly drugs, including fentanyl, in New York City. Olivo posed a danger to the community through his involvement in the distribution of dangerous narcotics, including fentanyl—the deadliest drug our nation has ever encountered. Together with our law enforcement partners, this Office will continue to be hyper-focused on combatting the fentanyl crisis by holding narcotics traffickers, such as Nelson Olivo, responsible for their actions.”
HSI Acting Special Agent in Charge Erin Keegan said: “Nelson Olivo’s conviction signals the public’s understanding not only of the brazen severity of his crimes, but also of the continued, deadly impacts of the drug epidemic, especially fentanyl, on our country. HSI, in conjunction with our law enforcement partners, seized over 5,500 pounds of fentanyl in the first two months of fiscal year 2024 – with more than 3,000 pounds seized in November alone. I commend HSI New York and our law enforcement partners within the El Dorado Task Force for their continued efforts toward securing justice and, in turn, saving lives.”
According to the Indictment, public filings, and evidence presented at trial:
From about July 2022 to about October 12, 2022, OLIVO operated a stash house in the Bronx where he worked with co-conspirators to distribute wholesale and retail quantities of counterfeit pills containing fentanyl and methamphetamine, as well as powder cocaine, crack cocaine, and other narcotics.
On October 12, 2022, a search warrant was executed on OLIVO’s Bronx stash house after he and his co-conspirators were seen attempting to empty the house of evidence of their drug conspiracy. The search of the house and cars outside it recovered approximately one kilogram of pills containing methamphetamine; fentanyl in pill and powder form, including fentanyl mixed with the dangerous animal tranquilizer xylazine; additional narcotics; two kilo presses and a kilo stamp; and other narcotics paraphernalia and ammunition. At trial, text messages, photographs, video evidence, and wiretap recordings of the defendant’s phone, established that the defendant had returned to the U.S. in June 2022 to set up the stash house after having spent the prior 18 months in Colombia, where he participated in manufacturing large amounts of cocaine in a jungle laboratory. Below are photographs of some of the evidence recovered in this case.
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OLIVO, 46, of New York, New York, was convicted by a jury of one count of conspiracy to distribute and possess with intent to distribute methamphetamine, cocaine, and fentanyl. The charges carry a mandatory minimum sentence of 10 years in prison and a maximum sentence of life 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 defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the El Dorado Task Force, which is comprised of law enforcement officers from HSI, the New York State Police, the Inspector General for the New York City Housing Authority, the Nassau County Sherriff’s Department, and the Fort Lee Police Department.
The prosecution of this case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Jane Y. Chong and Matthew R. Shahabian are in charge of the prosecution, with the assistance of Paralegal Specialists Owen Foley and Jayda Foote.
Roofing Company Principal Pleads Guilty for Failing to Protect an Employee Who Fell to His DeathRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that JOSE LEMA, a/k/a “Jose Lema Mizhirumbay,” the founder and principal of ALJ Home Improvement, Inc., a New York roofing company, pled guilty to willfully violating Occupational Safety and Health Administration (“OSHA”) regulations, resulting in the death of an employee in New Square, New York, on or about February 8, 2022. LEMA pled guilty before U.S. Magistrate Judge Judith C. McCarthy, to whom the case is assigned. The defendant is scheduled to be sentenced on May 22, 2024.
U.S. Attorney Damian Williams said: “Jose Lema endangered the safety of his workers by disregarding regulations and failing to ensure his employees used fall protection systems. This conduct led to the tragically avoidable death of a roof worker at a construction site. Failure of small businesses to comply with safety regulations endangers workers and can lead to unnecessary and preventable tragedy, and this Office will hold them accountable.”
According to statements and filings made in court:
On the morning of February 8, 2022, LEMA sent an ALJ employee (“Victim-1”) and three other employees to install a roof on a three-story multi-family apartment building under construction in New Square, New York. LEMA failed to protect his employees from fall hazards by having them work on the roof at the worksite without fall protection. After ascending a ladder to the roof, Victim-1 fell to the ground and died from his injuries.
Victim-1’s deadly fall was not the first time an employee of LEMA and ALJ fell to their death at one of ALJ’s worksites or were exposed to fall hazards. The first death, on or about February 27, 2019, involved an ALJ employee who slipped off the roof of a newly constructed three-story home in Kiamesha Lake, New York. OSHA investigated and issued citations to ALJ numerous times for failing to ensure employes were using fall protection systems following the 2019 death and once after Victim-1’s death.
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LEMA, 41, of Nanuet, New York, is charged with one count of willful violation of OSHA regulations resulting in death, which carries a maximum sentence of six months in prison and a maximum fine of $250,000.
The maximum potential penalties 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 OSHA, the Department of Labor, Office of the Inspector General, and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York for their assistance.
The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Margery Feinzig is in charge of the prosecution.
Personal Pilot to Billionaire Investor Joseph Lewis Pleads Guilty to Insider Trading SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the guilty plea of PATRICK O’CONNOR to charges of committing securities fraud and conspiring to commit securities fraud through insider trading. O’CONNOR was arrested in July 2023 and pled guilty before U.S. District Judge Jessica G.L. Clarke today.
U.S. Attorney Damian Williams said: “As the private pilot for billionaire Joe Lewis — previously convicted by this Office of insider trading — Patrick O’Connor was in the orbit of Lewis’s high-flying lifestyle, and a criminal beneficiary of non-public information provided by Lewis. O’Connor accepted and criminally traded on what he knew to be inside information from his well-connected boss, for his own personal gain. O’Connor has now accepted responsibility and awaits sentencing for his federal crimes.”
According to the allegations contained in the Indictments and other filings and statements made in court:
PATRICK O’CONNOR worked as a personal pilot to his co-defendant in this case, JOSEPH LEWIS, for several years. LEWIS is a billionaire businessman and investor who is the principal owner of the Tavistock Group, an international private investment organization. At relevant times, by virtue of LEWIS’s investments in certain companies, he controlled one or more board of director seats at those companies and deputized employees to serve on various company boards. In turn, through these employees, LEWIS received material, non-public information about these companies.
During the course of his employment for LEWIS, on multiple occasions, O’CONNOR received material, non-public information from LEWIS and then traded on the basis of that information. On one occasion, after receiving inside information from LEWIS concerning Mirati Therapeutics, O’CONNOR wrote in a WhatsApp message to a friend that he had “talked with Mr. Lewis,” “we will make much more within the next 6 weeks with Mirati,” and “think we have people who know.” Days later, O’CONNOR wrote to the same friend to buy Mirati and that the “Boss[i.e., LEWIS] is helping us out and told us to get ASAP.” O’CONNOR added that “All conversations on app is encrypted so all good. No one can ever see.” A day later, O’CONNOR added in the same text thread that LEWIS said to buy Mirati stock, that Mirati “should only be short term,” and that the “Boss mentioned around 6 to 8 weeks for [Mirati] to take profit.” Within days, LEWIS wired $500,000 to O’CONNOR, and O’CONNOR then used the $500,000 to purchase Mirati stock. On or about October 22, 2019, O’CONNOR texted his same friend that October 28, 2019, was the “big day for MRTX.” O’CONNOR then added that he thought “the Boss has inside info” and “knows the outcome” because “otherwise why would he make us invest.”
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O’CONNOR, 67, of Preston Hollow, New York, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison, and one count of securities fraud, which carries a maximum potential sentence of 20 years in prison.
LEWIS, 87, a British national, pled guilty on January 24, 2024, to one count of conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison, and two counts of securities fraud, which each carry a maximum potential sentence 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 will be determined by the judge. O’CONNOR is sentenced to be scheduled on May 29, 2024.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation. He also expressed appreciation for the Securities Exchange Commission, which previously initiated civil proceedings against O’CONNOR.
This prosecution is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Nicolas Roos and Jason A. Richman are in charge of the prosecution.
Statement of U.S. Attorney Damian Williams on the Conviction of A Tennessee Individual for Violating the Freedom of Access to Clinic Entrances ActRead the Press Release
“As a unanimous jury found moments ago, Bevelyn Beatty Williams unlawfully interfered with patients seeking, and medical professionals providing, reproductive health services at a Manhattan health clinic. Over two days in June 2020, the defendant used threats and physical force and repeatedly blocked doors to prevent individuals from gaining access to the health clinic. Williams went so far as to crush a staff member’s hand in the clinic door as the staff member was attempting to open the door. Regardless of one’s personal views, bullying and depriving other citizens of their right to healthcare is not a legitimate form of protest, and I’m proud of the career prosecutors of the Civil Rights Unit in the Criminal Division for enforcing our nation’s laws — without fear or favor — in this case.”
Singapore Resident Pleads Guilty in Manhattan Federal Court to Soliciting Millions of Dollars in Pre-IPO Stock SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced the guilty plea today of SHAMOON RAFIQ, a/k/a “Shamoon Omer Rafiq,” a/k/a “Omar Rafiq,” a/k/a “Omer Rafiq,” a resident of Singapore, for engaging in a scheme in which RAFIQ solicited millions of dollars of investors’ money by falsely representing that he was offering investments in shares of stock in privately held companies that had not yet conducted an initial public offering (“pre-IPO stock”), even though in fact he did not actually have those shares to offer, by impersonating senior officials of a reputable family office investment firm, and by engaging in other acts of deception.
U.S. Attorney Damian Williams said: “Shamoon Rafiq ran a brazen scheme from Singapore to defraud U.S. investors who wished to invest in well-known private companies before they went public. This prosecution demonstrates the continued efforts of this Office and our law enforcement partners to pursue those who defraud American investors no matter where the perpetrators are located.”
According to the charging documents and other filings and statements made in court:
SHAMOON RAFIQ was born in the Netherlands and resided in Singapore. RAFIQ was convicted in 2004 in the U.S. District Court for the Eastern District of New York for carrying out a wire fraud scheme in which he purported to sell pre-IPO stock in a privately held company that had not yet conducted its initial public offering when, in fact, RAFIQ did not own or have access to such stock. After serving a 41-month federal prison sentence for that crime, RAFIQ was deported from the United States and eventually relocated to Singapore.
In or about 2020, RAFIQ engaged in a new scheme from Singapore to defraud victims into paying him millions of dollars for alleged investment interests in various pre-IPO stocks that he did not actually own or control.
In connection with his new fraud scheme, RAFIQ fraudulently impersonated two senior officials (“Victim-1” and “Victim-2”) of a prominent family office investment firm (“FamCap”) that manages and invests assets of members of a prominent billionaire family (the “Family”). In July 2020, RAFIQ caused the creation of a fake FamCap website (the “Fake FamCap Website”), which automatically routed users to the official FamCap website, and the creation of fake FamCap email addresses for Victim-1 and Victim-2 that closely resemble, but are slightly different from, their genuine FamCap email addresses (the “Fake FamCap Email Addresses”). The Fake FamCap Website and Fake FamCap Email Addresses for Victim-1 and Victim-2 were created without their or FamCap’s consent. The Fake FamCap Email Addresses also included the names of Victim-1 and Victim-2 without their authorization.
In July 2020, RAFIQ began soliciting millions of dollars from investment firms in New York and elsewhere based on false claims that in exchange for their funds, he would sell them investment interests in a purported special purpose investment vehicle called “[Fam] Capital Technology Fund, LLC” that was supposedly managed by FamCap and allegedly owned pre-IPO stock in Airbnb, Inc., among other companies. For example, as part of this fraudulent scheme, RAFIQ deceived an investment firm based in New York, New York (the “New York Firm”), and one of the firm’s foreign institutional clients (the “Foreign Client”) into making agreements under which the Foreign Client wired about $9 million in mid-August 2020 into an escrow account in New York for anticipated release to a bank account in Singapore to pay RAFIQ for his purported sale of investment interests in the LLC.
In soliciting this $9 million investment, RAFIQ made a variety of false representations, including the following:
- RAFIQ falsely claimed that the LLC was managed by FamCap. In fact, the LLC never existed.
- RAFIQ falsely claimed that the LLC owned pre-IPO shares of Airbnb. In fact, the LLC did not own and could not have owned such stock because the LLC never existed.
- RAFIQ falsely claimed that Victim-1 and Victim-2 had approved of his sale of his alleged interests in the LLC. In fact, Victim-1 and Victim-2 do not know RAFIQ and have confirmed that FamCap was never involved in or approved of any such transaction.
During and to further the goals of this fraudulent scheme, RAFIQ also caused the creation and transmission of emails from the Fake FamCap Email Addresses and fake contracts and deal documents purporting to have been signed by Victim-1 or Victim-2 on behalf of FamCap that neither of them approved. For example, in August 2020, during the course of email communications with the New York Firm and Foreign Client concerning RAFIQ’s alleged sale to them of his purported interests in an alleged FamCap-managed LLC that supposedly held Airbnb shares, RAFIQ copied into the email chain the Fake FamCap Email Addresses to create the false impression that FamCap was involved in and approved of the alleged transaction.
Also pursuant to the fraudulent scheme, RAFIQ solicited over $1 million from an investment group located in California (the “California Group”) in late 2020 by yet again purporting to be a representative of FamCap offering pre-IPO stock for sale. As a result, the California Group wired RAFIQ a total of approximately $1,002,615 in November and December 2020.
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RAFIQ, 50, a resident of Singapore and a citizen of the Netherlands, pled guilty to a one-count Information charging him with conspiring to commit securities fraud and wire fraud, which carries a maximum potential sentence of five years in prison. RAFIQ agreed to pay restitution and forfeiture in the amount of $1,002,615 in connection with his guilty plea.
The maximum potential prison 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 investigative work of Homeland Security Investigations, the U.S. Postal Inspection Service, the New York City Police Department, and the New York City Sheriff’s Office, and he also thanked the U.S. Securities and Exchange Commission, which conducted a separate parallel investigation, for its assistance, and the Department of Justice’s Office of International Affairs, Interpol, Singapore Police Force, and the Attorney-General’s Chambers of Singapore for their assistance in the extradition of the defendant.
This case is being handled by this Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Jared Lenow is in charge of the prosecution.
Sanctioned Russian Oligarch and Others Indicted for Sanctions Violations and Money LaunderingRead 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”); and David J. Scott, the Special Agent in Charge of the Washington Field Office (“WFO”) of the FBI, announced the unsealing of an Indictment charging sanctioned Russian oligarch and the President and Chairman of a Russian state-owned bank, ANDREY KOSTIN, with participating in two separate schemes that violated U.S. sanctions. In one scheme, KOSTIN and others conspired to evade sanctions and launder funds by using a series of shell companies and strawmen in order to access the U.S. financial system to operate, maintain, and improve KOSTIN’s two superyachts, collectively worth over $135 million. The other scheme charges KOSTIN and two U.S. persons, VADIM WOLFSON and GANNON BOND, for their roles in providing goods, funds, and services to KOSTIN related to a luxury home in Aspen, Colorado, including wiring KOSTIN approximately $12 million after he was sanctioned. WOLFSON and BOND were arrested this morning in Austin, Texas, and Edgewater, New Jersey, respectively, and will be presented in federal courts in Texas and New York today. KOSTIN remains at large and is believed to be in Russia. The case is assigned to U.S. District Judge Gregory H. Woods.
U.S. Attorney Damian Williams said: "As alleged, sanctioned oligarch Andrey Kostin and his co-defendants flouted U.S. sanctions to support his exceptionally lavish lifestyle. Through complex schemes involving shell companies and illicit transactions, Kostin and his associates allegedly laundered funds and illegally made transactions with U.S. currency for the maintenance and enhancement of Kostin’s superyachts and luxury Aspen home, blatantly disregarding U.S. law. This investigation highlights the collaborative efforts of this Office and our law enforcement partners around the globe to uphold critical sanctions put in place to support our national security goals and hold accountable those who seek to undermine them."
Attorney General Merrick B. Garland said: “The Justice Department is more committed than ever to cutting off the flow of illegal funds that are fueling Putin’s war and to holding accountable those who continue to enable it. That is why today we are announcing several additional enforcement actions that the Justice Department has taken to bring prosecutions against and seize assets of sanctioned enablers of the Kremlin and Russian military.”
Deputy Attorney General Lisa O. Monaco said: “Since the onset of Russia’s brutal and unprovoked invasion of Ukraine, the Justice Department has used every tool in our arsenal – including our international partnerships – to target the criminal actors and activity propping up Vladimir Putin, his henchmen, and his illegal war. Over the last two years, our Task Force KleptoCapture has restrained, seized, and obtained judgments to forfeit nearly $700 million in assets from Russian enablers and charged more than 70 individuals for violating international sanctions and export controls levied against Russia. The charges we announce today against oligarchs, facilitators, and money launderers are the next chapter: so long as Russia's aggression continues, so too will our resolve to hold its enablers accountable. We stand firmly with the people of Ukraine.”
FBI Director Christopher A. Wray said: “It has been two years since Russia's unprovoked invasion of Ukraine and the FBI continues to go after the Russian criminals who finance and enable Russia’s war. To the people of Ukraine fighting for their freedom: The FBI remains steadfast in our efforts to disrupt and hold accountable the criminals supporting the Russian War, and we will continue to stand with you to fend off Russian aggression for as long as it takes.”
FBI WFO Special Agent in Charge David J. Scott said: "As alleged, Kostin conspired with the defendants and others to violate U.S. sanctions. Today's indictment demonstrates that the FBI will work with our partners to hold sanctioned oligarchs and their co-conspirators responsible for their crimes and ensure that they cannot use U.S. financial institutions to harbor illicit funds and goods."
As alleged in the Indictment:[1]
KOSTIN is a Russian oligarch who was sanctioned and designated a Specially Designated National (“SDN”) by U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) on April 6, 2018, pursuant to the International Emergency Economic Powers Act (“IEEPA”). From at least on or about April 6, 2018, through at least on or about March 2, 2022, KOSTIN and others, including at times WOLFSON and BOND, participated in schemes to violate IEEPA through the provision of funds, goods, and services, including U.S. financial services and U.S. dollar transactions, to and for KOSTIN’s benefit. KOSTIN also engaged in a scheme to commit money laundering to promote IEEPA violations.
Before and after OFAC sanctioned KOSTIN, he beneficially owned and controlled, through various shell companies, several assets worth tens of millions of dollars, including two superyachts identified as the Sea Rhapsody and Sea & Us. The Sea Rhapsody, valued at approximately $65 million, is a 216-foot superyacht and has six staterooms, including two luxurious master cabins identical in size. This superyacht is equipped with amenities including water toys, gym equipment, an infinity pool, a jacuzzi, a cinema and club area, and customized stationery. The Sea & Us, valued at approximately $70 million, is a 205-foot superyacht that was custom-built for KOSTIN.
KOSTIN and others violated IEEPA on numerous occasions, including by causing U.S. dollar payments to be made for the maintenance, operation, and/or improvement of the Sea Rhapsody and Sea & Us for the benefit of KOSTIN and without an OFAC license, which is required to transact with an SDN. In causing these U.S. dollar payments to be made, KOSTIN and others also committed international money laundering.
KOSTIN also owned a luxury home in Aspen, Colorado, that he purchased for $12.5 million in 2010. From at least on or about April 6, 2018, through at least in or about September 2019, KOSTIN, WOLFSON, BOND, and others participated in a scheme to violate IEEPA by providing funds, goods, and services for the benefit of KOSTIN, whose property and interests in property, including the Aspen home, were blocked as a result of his SDN designation. Specifically, notwithstanding having been designated an SDN by OFAC, KOSTIN and his conspirators schemed to operate, maintain, and improve KOSTIN’s Aspen residence in a manner designed to conceal KOSTIN’s continued ownership of this luxury asset. In addition, in or about September 2019, KOSTIN, WOLFSON, BOND, and others committed additional sanctions violations by dealing in and transferring KOSTIN's blocked property. Specifically, the conspirators arranged to sell the Aspen home and provide KOSTIN with approximately $12 million resulting from the sale.
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KOSTIN, 67, of Russia, is charged with two counts of conspiracy to violate IEEPA, two counts of violating IEEPA, and one count of conspiracy to commit international money laundering, each of which carries a maximum sentence of 20 years in prison.
WOLFSON, 56, of Austin, Texas, a legal permanent resident of the U.S., is charged with one count of conspiracy to violate IEEPA and two counts of violating IEEPA, each of which carries a maximum sentence of 20 years in prison.
BOND, 49, of Edgewater, New Jersey, a U.S. citizen, is charged with one count of conspiracy to violate IEEPA and two counts of violating IEEPA, each of 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 work of the FBI and its Washington Field Office. Mr. Williams further thanked the Department of Justice (“DOJ”)’s National Security Division, Counterintelligence and Export Control Section, and DOJ’s Criminal Division, Money Laundering and Asset Recovery Section for their work on this matter.
Assistant U.S. Attorneys Emily Deininger and David Felton for the Southern District of New York’s Illicit Finance and Money Laundering Unit, and Trial Attorneys Derek Shugert of the National Security Division’s Counterintelligence and Export Control Section and Oleksandra Johnson of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
This case was coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls and economic countermeasures that the United States, along with its foreign allies and partners, has imposed in response to Russia’s unprovoked military invasion of Ukraine. Announced by the Attorney General on March 2, 2022, and under the leadership of the Office of the Deputy Attorney General, the task force will continue to leverage all of the department’s tools and authorities to combat efforts to evade or undermine the collective actions taken by the U.S. government in response to Russian military aggression.
[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.
Four Indicted for Narcotics and Firearms Offenses Following the Seizure of over 30 Firearms in Monticello, New YorkRead the Press Release
Damian Williams, United States Attorney for the Southern District of New York, announced today the unsealing of a Superseding Indictment charging multiple defendants with narcotics and firearm offenses in and around Monticello, New York, following the recovery of body armor, ammunition, and approximately 30 firearms from the residence of DWAYNE JOHNSON. JOHNSON, who was previously arrested on May 24, 2023, is charged with conspiracy to engage in narcotics trafficking, possession of short-barreled rifles in furtherance of the narcotics conspiracy, unlawful possession of firearms and ammunition, unlawful possession of body armor, aiding and abetting the unlawful interstate transfer of firearms, and aiding and abetting firearms trafficking. JESSICA FRANCIS, who was previously arrested on September 14, 2023, is charged with engaging in the narcotics conspiracy with JOHNSON. LORI COONEY was arrested earlier today in Scranton, Pennsylvania, and is charged with the unlawful interstate transfer of firearms to JOHNSON. TERESA SANTINI was arrested earlier today in Milford, Pennsylvania, and is charged with trafficking firearms to JOHNSON and the unlawful interstate transfer of firearms to JOHNSON.
SANTINI and COONEY were presented in federal court earlier today before U.S. Magistrate Judge Judith C. McCarthy. JOHNSON and FRANCIS will be arraigned before U.S. District Court Judge Vincent Briccetti on March 13, 2024.
U.S. Attorney Damian Williams said: “As alleged, the sheer number of firearms recovered from Johnson’s residence — which include assault weapons, short-barreled rifles, and an untraceable “ghost gun” — underscores the harsh reality of violence that accompanies drug trafficking and the danger its poses to communities. Today’s Superseding Indictment sends a clear message that those who engage in violent and illegal enterprises and those who offer their support will face federal criminal charges.”
As alleged in the Complaint previously filed in this case and the Superseding Indictment unsealed today:[1]
Between at least October 2016 through May 2023, JOHNSON, FRANCIS, and others known and unknown conspired to possess with the intent to distribute over 1,000 kilograms of marijuana. In 2023, law enforcement secured a warrant to search JOHNSON’s known Gmail Account, which contained multiple photos and videos associated with JOHNSON’s marijuana trafficking business, including videos of JOHNSON counting large quantities of cash in a particular room within his residence, photographs of marijuana in its retail packaging, and pounds of marijuana stored on tables and in a safe within the house. In one video, JOHNSON can be seen holding stacks of United States currency, counting a stack of bills, and saying, in sum and substance, that it’s “hard work” to accrue that amount of currency. JOHNSON then pans to the walls of guns and states, “you have to protect it, though.” JOHNSON also can be heard in a video saying, “Just in case you think you can fuck with my money, you come and I’ll spread you with a 12-gauge, you run and I’ll catch you with the 30 aught 6 or the 308.”
Screenshots taken from videos and photos taken from the Gmail Account are depicted below:
During the pendency of the conspiracy, COONEY and SANTINI separately and unlawfully transferred, sold, traded, gave, transported, or otherwise delivered to JOHNSON multiple firearms from Pennsylvania, including five pistols, the lower receiver of a short-barreled rifle, and the upper receiver of a second short-barreled rifle.
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JOHNSON, 44, of Monticello, New York, is charged with conspiracy to distribute and possess with intent to distribute over 1,000 kilograms of marijuana, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; possession of a short-barreled rifle in furtherance of the narcotics conspiracy, which carries a mandatory minimum sentence of 10 years in prison to be served consecutively to any sentence for the underlying conspiracy and a maximum sentence of life in prison; unlawful possession of firearms, which carries a maximum sentence of 15 years in prison; unlawful possession of ammunition, which carries a maximum sentence of 15 years in prison; firearms trafficking, which carries a maximum sentence of 15 years in prison; unlawful interstate transfer of firearms, which carries a maximum sentence of five years in prison; and unlawful possession of body armor, which carries a maximum sentence of three years in prison.
FRANCIS, 35, of Monticello, New York, is charged with conspiracy to distribute and possess with intent to distribute over 1,000 kilograms of marijuana, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.
COONEY, 57, of Scranton, Pennsylvania, is charged with unlawful interstate transfer of firearms, which carries a maximum sentence of five years in prison.
SANTINI, 45, of Milford, Pennsylvania, is charged with firearms trafficking, which carries a maximum sentence of 15 years in prison, and unlawful interstate transfer of firearms, which carries a maximum sentence of five years in prison.
The minimum and 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 FBI Hudson Valley Safe Streets Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Sullivan County District Attorney’s Office, the New York State Police, and the Hudson Valley White Collar Crime Task Force.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Kaiya Arroyo is in charge of the prosecution.
The charges contained in the Superseding 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 Complaint and the Superseding Indictment and the description of the Complaint and the Superseding Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Former DEA Task Force Officer Sentenced to Prison for Unlawfully Assaulting Individual During ArrestRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that DUSTIN GENCO, a former investigator with the Nassau County District Attorney’s Office and Task Force Officer with the U.S. Drug Enforcement Administration (“DEA”), was sentenced by U.S. Magistrate Judge James L. Cott to three months in prison for depriving an individual (the “Victim”) of his constitutional right to be free from excessive force. On October 20, 2022, GENCO assaulted the Victim while the Victim was restrained in handcuffs. GENCO pled guilty on August 2, 2023, before Judge Cott to deprivation of rights under color of law.
U.S. Attorney Damian Williams said: “Today, former DEA Task Force Officer Dustin Genco was sentenced to prison for depriving a restrained individual of his constitutional right to be free from excessive force. Genco abused his authority as a law enforcement officer two-fold: First, he broke a bright-line rule when he kicked in the chest a handcuffed and restrained man. Then, he lied repeatedly to his supervisor about his conduct and falsified an official report about the arrest. When an officer acts outside the law, he must be held to account in order to protect the rule of law and the public trust in the countless law-abiding officers and agents who put their own safety on the line every day. I commend the hard work of the career prosecutors of my Office and our law enforcement partners at the DOJ Office of the Inspector General for their commitment to upholding the rule of law and ensuring justice in this case.”
According to public documents and statements made in court:
On or about October 20, 2022, GENCO was employed as a Task Force Officer with the DEA. GENCO was assigned to assist with the arrest of the Victim. During the arrest, GENCO assaulted the Victim by forcefully kicking the Victim in the chest and stomach area while the Victim was restrained in handcuffs, resulting in injury to the Victim. After the assault, GENCO intentionally misled a federal law enforcement agent about the assault, claiming that the Victim had continued to resist arrest after he was handcuffed. GENCO also failed to truthfully disclose in an official report that he had kicked the Victim in the chest and stomach area while the Victim was restrained in handcuffs.
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In addition to the prison term, DUSTIN GENCO, 51, of Seaford, New York, was sentenced to one year of supervised release and a $10,000 fine. The judgment also included GENCO’s agreement to permanently cease and refrain from seeking or obtaining law enforcement employment on behalf of any federal, state, or local entity.
Mr. Williams praised the outstanding investigative work of the Department of Justice, Office of the Inspector General.
The prosecution is being handled by the Office’s Civil Rights Unit in the Criminal Division. Assistant U.S. Attorney Mitzi Steiner is in charge of the prosecution.