Southern District of New York
Press releases recorded for this federal judicial district.
A Leader of Gorilla Stone Sentenced to 35 Years in Prison for Murder of 15-Year-Old and Other OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that BRANDON SOTO, a/k/a “Stacks,” was sentenced today by U.S. District Judge Philip M. Halpern to 35 years in prison for racketeering, transferring a firearm to a juvenile, and conspiracy to commit arson arising out of his leadership role in the Untouchable Gorilla Stone Nation Bloods Gang (“Gorilla Stone”). As part of his participation in the racketeering conspiracy, SOTO planned out and ordered a fellow gang member, who was a teenager at the time, to murder a rival gang member. On September 21, 2020, SOTO drove the shooter to the location and provided him with the gun and directions to commit the shooting. With people, including small children, nearby, the shooter shot Jalani Jones in the head, killing him instantly. Jones was just 15 years old at the time. Following the murder, SOTO took numerous steps to avoid detection, including setting fire to the car that was used in connection with the murder and ordering the deletion of social media accounts associated with those involved. SOTO previously pled guilty on October 27, 2022, before Judge Halpern to one count of conspiring to conduct and participate in the conduct of the affairs of a criminal enterprise through a pattern of racketeering activity, one count of transferring a firearm to a juvenile, and one count of conspiracy to commit arson.
U.S. Attorney Damian Williams said: “Brandon Soto used his leadership role in the violent Gorilla Stone gang to direct a teenager to kill a 15-year-old boy, who was riding his bike down the street. This horrific act of violence was committed in broad daylight as small children looked on just feet away. Today’s sentence holds Soto accountable for the senseless murder of Jalani Jones, as well as for his yearslong participation in the wide range of crimes committed by the Gorilla Stone gang. Together with our law enforcement partners, we will continue to aggressively prosecute those who engage in such violence in our communities.”
According to the Indictment, public court filings, and statements made in court:
Since at least 2004, Gorilla Stone has been a brutally violent street gang with a national presence that was founded by SOTO’s co-defendant Dwight Reid, a/k/a “Dick Wolf.” Gorilla Stone has many members across New York State, including throughout New York City, Westchester, and the New York State Prison System, and all over the country. Gorilla Stone is comprised of various sets (or “Caves” as they are called by gang members). Gorilla Stone is a highly organized and efficient street gang with an organizational commitment to violence that strictly enforces its internal laws.
For years, SOTO participated in and was associated with the Gorilla Stone racketeering conspiracy. Over time, SOTO rose to a leadership role in the gang. SOTO took an active role in the gang’s distribution of crack cocaine, which is one of the main ways the gang made money. SOTO was also one of the gang’s more violent members. SOTO bragged about his access to firearms and directed that his reports in the gang commit retaliatory acts of violence, the most significant of which was his direction and involvement in the murder of Jalani Jones. Following the murder of Mr. Jones, SOTO got a new phone number and directed another Gorilla Stone member to delete relevant social media accounts to avoid being caught. Days after the murder, SOTO’s car, which he had used in connection with the murder, was towed. SOTO went with other Gorilla Stone members to the lot where the car was parked, stole the car from the lot, and then set it on fire in a further effort to avoid being caught.
SOTO’s violence extended beyond his involvement in the murder of Mr. Jones. SOTO violently attacked someone in the street, punching and kicking the man in the head and body as he lay defenseless on the ground and ultimately became unconscious. As SOTO beat the man unconscious, he yelled “You’re not Gorilla.” The violent incident was recorded on video, and SOTO proudly posted the video to his Instagram account.
* * *
In addition to the prison term, SOTO, 26, of the Bronx, New York, was sentenced to three years of supervised release.
All 21 defendants in the Gorilla Stone case before Judge Halpern have been convicted. With SOTO’s sentencing today, 14 defendants have been sentenced and seven defendants have been convicted and are awaiting sentencing. The 13 defendants aside from SOTO who have been sentenced by Judge Halpern to date are:
- Godfather DONAVAN GILLARD, a/k/a “Donnie Love,” who was sentenced to 248 months in prison;
- Godmother NAYA AUSTIN, a/k/a “Baby,” who was sentenced to 234 months in prison;
- Godmother BRINAE THORNTON, a/k/a “Luxury,” who was sentenced to 210 months in prison;
- JARRETT CRISLER, Jr., a/k/a “Jayecee,” who was sentenced to 207 months in prison;
- CASWELL SENIOR, a/k/a “Casanova,” who was sentenced to 188 months in prison;
- Godfather BRANDON NIEVES, a/k/a “Untouchable Dot,” who was sentenced to 110 months in prison;
- JAMAL TRENT, a/k/a “Trap Smoke,” who was sentenced to nine years in prison;
- DEZON WASHINGTON, a/k/a “Blakk,” who was sentenced to 97 months in prison;
- ROBERTA SLIGH, a/k/a “Trouble,” who was sentenced to eight years in prison;
- JORDAN INGRAM, a/k/a “Flow,” who was sentenced to eight years in prison;
- STEPHEN HUGH, a/k/a “Chino,” who was sentenced to seven years in prison;
- ISAIAH SANTOS, a/k/a “Zay,” who was sentenced to seven years in prison; and
- SHANAY OUTLAW, a/k/a “Easy,” who was sentenced to three years in prison.
Five additional defendants have pled guilty and are awaiting sentencing: Godfather DESHAWN THOMAS, a/k/a “Don,” Godfather WALTER LUSTER, a/k/a “Shells,” AHMED WALKER, a/k/a “Ammo,” NEIKO CRUDUP, a/k/a “JhitRilla,” and ROBERT WOODS, a/k/a “Blakk Rob.” Finally, DWIGHT REID a/k/a “Dick Wolf,” and CHRISTOPHER ERSKINE, a/k/a “Beagle,” were convicted following a jury trial and are awaiting sentencing.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation’s (“FBI”) Westchester County Safe Streets Task Force, which is comprised of special agents and task force officers from the FBI; U.S. Probation; New York State Police; New York State Department of Corrections and Community Supervision; New York City Police Department; Westchester County Police Department; Westchester County District Attorney’s Office; Putnam County Sheriff’s Office; Rockland District Attorney’s Office; and the Yonkers, New Rochelle, Mount Vernon, Greenburgh, White Plains, Peekskill, Ramapo, and Clarkstown Police Departments. Mr. Williams also thanked the Dutchess County District Attorney’s Office and the Poughkeepsie Police Department for their assistance.
This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Shiva H. Logarajah, David R. Felton, Courtney L. Heavey, and Kathryn Wheelock are in charge of the prosecution.
U.S. Attorney Announces Nuclear Materials Trafficking Charges Against Japanese Yakuza LeaderRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Matthew G. Olsen, the Assistant Attorney General of the Justice Department’s National Security Division; and Anne Milgram, the Administrator of the U.S. Drug Enforcement Administration (“DEA”), announced the issuance today of a Superseding Indictment charging TAKESHI EBISAWA with conspiring with a network of associates to traffic nuclear materials from Burma to other countries. In the course of this conspiracy, EBISAWA and his confederates showed samples of nuclear materials in Thailand to a DEA undercover agent (“UC-1”), who was posing as a narcotics and weapons trafficker. With the assistance of Thai authorities, the nuclear samples were seized and subsequently transferred to the custody of U.S. law enforcement. A U.S. nuclear forensic laboratory later analyzed the samples and confirmed that the samples contain uranium and weapons-grade plutonium.
EBISAWA and co-defendant SOMPHOP SINGHASIRI were previously charged in April 2022 with international narcotics trafficking and firearms offenses, and both have been ordered detained. EBISAWA and SINGHASIRI will be arraigned on the Superseding Indictment before U.S. District Judge Colleen McMahon tomorrow at noon.
U.S. Attorney Damian Williams said: “It is impossible to overstate the seriousness of the conduct alleged in today’s Indictment. As alleged, Takeshi Ebisawa brazenly trafficked material containing uranium and weapons-grade plutonium from Burma to other countries. He allegedly did so while believing that the material was going to be used in the development of a nuclear weapons program, and the weapons-grade plutonium he trafficked, if produced in sufficient quantities, could have been used for that purpose. Even as he allegedly attempted to sell nuclear materials, Ebisawa also negotiated for the purchase of deadly weapons, including surface-to-air missiles. I want to thank the career prosecutors of my Office and our law enforcement partners for their unwavering commitment to protecting our national security by ensuring that the defendant will now face justice in an American court.”
Assistant Attorney General Matthew G. Olsen said: “The defendant stands accused of conspiring to sell weapons grade nuclear material and lethal narcotics from Burma, and to purchase military weaponry on behalf of an armed insurgent group. It is chilling to imagine the consequences had these efforts succeeded, and the Justice Department will hold accountable those who traffic in these materials and threaten U.S. national security and international stability.”
DEA Administrator Anne Milgram said: “As alleged, the defendants in this case trafficked in drugs, weapons, and nuclear material — going so far as to offer uranium and weapons-grade plutonium fully expecting that Iran would use it for nuclear weapons. This is an extraordinary example of the depravity of drug traffickers who operate with total disregard for human life. I commend the men and women of DEA and this prosecution team for their tireless work to protect us from such evil.”
According to the allegations contained in the Superseding Indictment, which was unsealed today in Manhattan federal court:[1]
Beginning in early 2020, EBISAWA informed UC-1 and a DEA confidential source (“CS-1”) that EBISAWA had access to a large quantity of nuclear materials that he wanted to sell. Later that year, EBISAWA sent UC-1 a series of photographs depicting rocky substances with Geiger counters measuring radiation, as well as pages of what EBISAWA represented to be lab analyses indicating the presence of thorium and uranium in the depicted substances. In response to EBISAWA’s repeated inquiries, UC-1 agreed, as part of the DEA’s investigation, to help EBISAWA broker the sale of his nuclear materials to UC-1’s associate, who was posing as an Iranian general (the “General”), for use in a nuclear weapons program. EBISAWA then offered to supply the General with “plutonium” that would be even “better” and more “powerful” than uranium for this purpose. Examples of the photographs sent by EBISAWA are shown below:
During their discussions regarding EBISAWA’s access to nuclear materials, EBISAWA also engaged with UC-1 concerning EBISAWA’s desire to purchase military-grade weapons. To that end, in May 2021, EBISAWA sent UC-1 a list of weapons, including surface-to-air missiles, that EBISAWA wished to purchase from UC-1 on behalf of the leader of an ethnic insurgent group in Burma (“CC-1”). Together with two other co-conspirators (“CC-2” and “CC-3”), EBISAWA proposed to UC-1 that CC-1 sell uranium to the General, through EBISAWA, to fund CC-1’s weapons purchase. On a February 4, 2022 videoconference, CC-2 told UC-1 that CC-1 had available more than 2,000 kilograms of Thorium-232 and more than 100 kilograms of uranium in the compound U3O8 — referring to a compound of uranium commonly found in the uranium concentrate powder known as “yellowcake” — and that CC-1 could produce as much as five tons of nuclear materials in Burma. CC-2 also advised that CC-1 had provided samples of the uranium and thorium, which CC-2 was prepared to show to UC-1’s purported buyers. CC-2 noted that the samples should be packed “to contain . . . the radiation.”
About one week later, EBISAWA, CC-2, and CC-3 participated in a series of meetings with UC-1 and CS-1 in Southeast Asia, to discuss their ongoing weapons, narcotics, and nuclear materials transactions. During one of these meetings, CC-2 asked UC-1 to meet in CC-2’s hotel room. Inside the room, CC-2 showed UC-1 two plastic containers each holding a powdery yellow substance (the “Nuclear Samples”), which CC-2 described as “yellowcake.” CC-2 advised that one container held a sample of uranium in the compound U3O8, and the other container held Thorium-232. UC-1 photographed and video-recorded the Nuclear Samples, images of which are shown below:
With the assistance of Thai authorities, the Nuclear Samples were seized and subsequently transferred to the custody of U.S. law enforcement authorities. A U.S. nuclear forensic laboratory examined the Nuclear Samples and determined that both samples contain detectable quantities of uranium, thorium, and plutonium. In particular, the laboratory determined that the isotope composition of the plutonium found in the Nuclear Samples is weapons-grade, meaning that the plutonium, if produced in sufficient quantities, would be suitable for use in a nuclear weapon.
* * *
A table containing the charges and minimum and maximum penalties for EBISAWA, 60, of Japan, and SINGHASIRI, 61, of Thailand, 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 Judge McMahon.
Mr. Williams praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit. Mr. Williams also thanked the DEA Tokyo Country Office, DEA Bangkok Country Office, DEA Chiang Mai Resident Office, DEA Jakarta Country Office, DEA Copenhagen Country Office, DEA New York Field Office, DEA New Delhi Country Office, the Counterterrorism Section of the Department of Justice’s National Security Division, the Office of International Affairs of the Department of Justice’s Criminal Division, and our law enforcement partners in Indonesia, Japan, and the Kingdom of Thailand for their assistance.
This prosecution 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 case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Alexander Li, Kaylan E. Lasky, and Kevin T. Sullivan are in charge of the prosecution, with assistance from Trial Attorney Dmitriy Slavin of the Counterterrorism Section.
The charges contained in the Superseding Indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
COUNT
DEFENDANT(S)
MIN. AND MAX. PRISON TERM
Count One: Conspiracy to commit international trafficking of nuclear materials
EBISAWA
Maximum of 10 years in prison
Count Two: International trafficking of nuclear materials
EBISAWA
Maximum of 20 years in prison
Count Three: Narcotics importation conspiracy
EBISAWA and SINGHASIRI
Mandatory minimum of 10 years in prison; maximum of life in prison
Count Four: Conspiracy to possess firearms, including machineguns and destructive devices
SINGHASIRI
Maximum of life in prison
Count Five: Conspiracy to acquire, transfer, and possess surface-to-air missiles
EBISAWA
Mandatory minimum of 25 years in prison; maximum of life in prison
Count Six: Narcotics importation conspiracy
EBISAWA
Mandatory minimum of 10 years in prison; maximum of life in prison
Count Seven: Conspiracy to possess firearms, including machineguns and destructive devices
EBISAWA
Maximum of life in prison
Count Eight: Money laundering
EBISAWA
Maximum of 20 years in prison
[1] As the introductory phrase signifies, the entirety of the text of the Superseding Indictment and the description of the Superseding Indictment set forth herein constitute only allegations and every fact described should be treated as an allegation.
U.S. Attorney Announces Extradition of Organized Crime Leader Charged with A Murder Plot Directed from Iran Targeting A JournalistRead 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 Christopher A. Wray, the Director of the Federal Bureau of Investigation (“FBI”), announced the extradition of POLAD OMAROV, a/k/a “Araz Aliyev,” a/k/a “Polad Qaqa,” a/k/a “Haci Qaqa,” from the Czech Republic on murder-for-hire and money laundering charges contained in a Superseding Indictment. The case is pending before U.S. District Judge Colleen McMahon. OMAROV was arrested in the Czech Republic on January 4, 2023, at the request of the United States, arrived in the Southern District of New York on February 21, 2024, and will be arraigned on the charges in the Superseding Indictment before U.S. Magistrate Judge Sarah L. Cave later today.
U.S. Attorney Damian Williams said: “Polad Omarov is alleged to have brazenly attempted to murder an outspoken critic of Iran’s human rights abuses – right here on American soil. The audacious alleged plot to kidnap and murder the victim are indicative of Iran’s policies of aggressive suppression and violence against anyone who speaks against them. Today’s extradition makes clear our unwavering resolve to charge and bring to justice any individuals attempting to stifle free speech in the U.S., especially at the behest of a malign foreign regime.”
Attorney General Merrick B. Garland said: “Last year, I announced charges against three defendants for their roles in a conspiracy to murder a U.S. citizen who has long been targeted by the Government of Iran. At the time of the announcement, two of the defendants were in U.S. custody, and we said that the long arm of the law would find and bring to justice those who seek to threaten, silence, or harm American citizens. Today, we have done just that. The third defendant, Polad Omarov, was extradited to the United States to face charges for attempting to murder on U.S. soil a journalist, author, and human rights activist who is a U.S. citizen of Iranian origin. We are grateful to our Czech government counterparts for this extradition. The Department of Justice will not tolerate attempts by an authoritarian regime to undermine the rights to which every American citizen is entitled.”
FBI Director Christopher A. Wray said: “With today’s extradition of Omarov, we have taken a significant step forward to hold Iranian actors accountable for their brazen plot to assassinate a U.S. citizen on American soil. I am honored to be here in Prague today to thank our Czech law enforcement, intelligence, and prosecutor partners for their collaboration and commitment to upholding the rule of law.”
According to the allegations contained in the Superseding Indictment, other court filings, and statements made during court proceedings:[1]
OMAROV, a leader within an Eastern European organized crime group (the “Organization”), worked with other members of the Organization to attempt to murder a U.S. citizen of Iranian origin (the “Victim”) on instructions from individuals in Iran. The Victim previously has been the target of plots by the Government of Iran to intimidate, harass, and kidnap the Victim. The Victim is a journalist, author, and human rights activist who has publicized the Government of Iran’s human rights abuses and suppression of political expression, including in connection with continuing protests against the regime across Iran. As recently as 2020 and 2021, Iranian intelligence officials and assets plotted to kidnap the Victim from within the United States for rendition to Iran in an effort to silence the Victim’s criticism of the regime.
Beginning in approximately mid-July 2022, OMAROV’s co-defendant, RAFAT AMIROV, a leader within the Organization residing in Iran, sent targeting information – which AMIROV had received from other individuals in Iran – about the Victim and the Victim’s residence to OMAROV. OMAROV, in turn, communicated the targeting information to co-defendant KHALID MEHDIYEV, a leader within the Organization residing in Yonkers, New York, in order to begin conducting surveillance of the Victim and reconnaissance of the Victim’s residence and surrounding neighborhood. MEHDIYEV sent photographs and videos of the Victim’s residence to OMAROV for further sharing with AMIROV and the plot’s orchestrators in Iran.
After MEHDIYEV’s initial surveillance of the Victim’s residence, AMIROV and OMAROV arranged for the delivery of a $30,000 cash payment to MEHDIYEV in New York City in furtherance of the plot. MEHDIYEV used a portion of this cash payment to buy an AK-47-style assault rifle manufactured in China, along with two magazines for ammunition and at least 66 rounds. MEHDIYEV bragged in electronic communications that he had procured for himself a “war machine.”
Between July 20 and 28, 2022, MEHDIYEV repeatedly travelled to the Victim’s neighborhood to conduct surveillance and reconnaissance, sending reports of the Victim’s activities, photographs, and videos to OMAROV for further distribution to AMIROV. On July 24, 2022, after arriving at the Victim’s residence, MEHDIYEV reported to OMAROV that MEHDIYEV was “at the crime scene.” OMAROV encouraged MEHDIYEV, “You are a man!” MEHDIYEV described to OMAROV that “we blocked it from both sides, it will be a show once she steps out of the house.” OMAROV forwarded this report to AMIROV, who responded, “God willing.”
MEHDIYEV was unable to carry out the assassination that day and returned on several subsequent days to seek out opportunities to complete the murder mission. AMIROV, OMAROV, and MEHDIYEV schemed different strategies to attempt to draw the Victim out, including by attempting to ask the Victim for flowers from the Victim’s garden. On July 28, 2022, MEHDIYEV sent OMAROV a video taken from inside the car MEHDIYEV was driving showing the assault rifle, along with the message that “we are ready.” The Victim, after observing suspicious activity outside the residence, left the area, and MEHDIYEV drove away shortly afterwards. After MEHDIYEV drove away from the Victim’s residence, he was stopped after a traffic violation, and during a subsequent search of the car, police officers found the assault rifle, 66 rounds of ammunition, approximately $1,100 in cash, and a black ski mask.
* * *
OMAROV, 39, of Georgia, has been charged with: (i) murder-for-hire, which carries a maximum sentence of 10 years in prison; (ii) conspiracy to commit murder-for-hire, which carries a maximum sentence of 10 years in prison; and (iii) conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.
The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by Judge McMahon.
AMIROV, 45, of Iran, and MEHDIYEV, 25, of Yonkers, New York, were previously arrested on the charges contained in the Superseding Indictment.
Mr. Williams praised the outstanding investigative work of the FBI and its New York Field Office Counterintelligence Division and the New York FBI Iran Threat Task Force. Mr. Williams also thanked the New York Field Office Criminal Division, the New York City Police Department (“NYPD”) and the NYPD Intelligence Bureau, and the Department of Justice’s National Security Division for their assistance. The Department of Justice’s Office of International Affairs provided critical assistance in securing OMAROV’s arrest and extradition. Mr. Williams also appreciates the significant cooperation and assistance provided by authorities in the Czech Republic.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Jacob H. Gutwillig, Matthew J.C. Hellman, and Michael D. Lockard are in charge of the prosecution, with assistance from Trial Attorney Christopher Rigali of the National Security Division, Counterintelligence and Export Control Section.
The charges 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 Superseding Indictment and the description of the Superseding Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Prominent Ghanaian “Influencer” Pleads Guilty to Receiving Fraud Proceeds from Romance ScamsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced the guilty plea today of MONA FAIZ MONTRAGE for her role in laundering the proceeds of a series of romance scams. MONTRAGE pled guilty today to conspiracy to receive stolen money before U.S. Magistrate Judge Sarah L. Cave.
U.S. Attorney Damian Williams said: “Mona Faiz Montrage knowingly received money stolen from older Americans through romance scams and was arrested abroad and now faces serious consequences for her actions. Romance scams such as Montrage’s harmed her vulnerable, elderly victims not only in the cruel betrayal of trust in the realization that their online romantic connection was fiction, but by also callously stealing their money. This Office and our law enforcement partners are relentless in bringing fraudsters who target Americans to justice, no matter where they are.”
As alleged in the Indictment and statements made in public filings and public court proceedings:
From at least in or about 2013 through in or about 2019, MONTRAGE was a member of a criminal enterprise (the “Enterprise”) based in West Africa that committed a series of frauds against individuals and businesses in the U.S., including romance scams.
Many of the Enterprise’s romance scam victims were vulnerable, older men and women who lived alone. The Enterprise frequently conducted the romance scams by sending the victims emails, text messages, and social media messages that deceived the victims into believing that they were in romantic relationships with a person who was, in fact, a fake identity assumed by members of the Enterprise. Once members of the Enterprise had successfully convinced victims that they were in a romantic relationship and had gained their trust, they convinced the victims, under false pretenses, to transfer money to bank accounts the victims believed were controlled by their romantic interests, when, in fact, the bank accounts were controlled by members of the Enterprise.
MONTRAGE is a Ghanaian public figure who rose to fame as an influencer through her Instagram profile under the username “Hajia4Reall,” which at one point had approximately 3.4 million Instagram followers and was among the top 10 profiles with the most followers in Ghana.
MONTRAGE received money from several victims of romance frauds who members of the Enterprise tricked into sending money. Among the false pretenses used to induce victims to send money to MONTRAGE were payments to transport gold to the U.S. from overseas payments to resolve a fake FBI investigation, and payments to assist a fake U.S. Army officer in receiving funds from Afghanistan.
In total, MONTRAGE controlled bank accounts that received over $2 million in fraudulent funds from the Enterprise.
* * *
MONTRAGE, 31, of Accra, Ghana, pled guilty to one count of conspiring to receive stolen money, which carries a maximum sentence of five years in prison. MONTRAGE also agreed to pay forfeiture in the amount of $2,164,758.41 and make restitution in the same amount. MONTRAGE is scheduled to be sentenced by U.S. District Judge Paul A. Crotty.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Mitzi Steiner and Kevin Mead are in charge of the prosecution.
Justice Department Announces Nuclear Materials Trafficking Charges Against Japanese Yakuza LeaderRead the Press Release
A superseding indictment was unsealed in Manhattan today charging a Japanese national with conspiring with a network of associates to traffic nuclear materials from Burma to other countries.
According to court documents, Takeshi Ebisawa, 60, and co-defendant Somphop Singhasiri, 61, were previously charged in April 2022 with international narcotics trafficking and firearms offenses, and both have been ordered detained.
“The defendant stands accused of conspiring to sell weapons grade nuclear material and lethal narcotics from Burma, and to purchase military weaponry on behalf of an armed insurgent group,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “It is chilling to imagine the consequences had these efforts succeeded and the Justice Department will hold accountable those who traffic in these materials and threaten U.S. national security and international stability.”
“As alleged, the defendant brazenly trafficked material containing uranium and weapons-grade plutonium from Burma to other countries,” said U.S. Attorney Damian Williams for the Southern District of New York. “He did so while believing that the material was going to be used in the development of a nuclear weapons program, and while also negotiating for the purchase of deadly weapons. It is impossible to overstate the seriousness of this conduct. I want to thank the career prosecutors of my office and our law enforcement partners for ensuring that the defendant will now face justice in an American court.”
“As alleged, the defendants in this case trafficked in drugs, weapons, and nuclear material – going so far as to offer uranium and weapons-grade plutonium fully expecting that Iran would use it for nuclear weapons,” said Administrator Anne Milgram of the Drug Enforcement Administration (DEA). “This is an extraordinary example of the depravity of drug traffickers who operate with total disregard for human life. I commend the men and women of DEA and this prosecution team for their tireless work to protect us from such evil.”
According to the allegations contained in the indictment, beginning in early 2020, Ebisawa informed UC-1 and a DEA confidential source (CS-1) that Ebisawa had access to a large quantity of nuclear materials that he wanted to sell. Later that year, Ebisawa sent UC-1 a series of photographs depicting rocky substances with Geiger counters measuring radiation, as well as pages of what Ebisawa represented to be lab analyses indicating the presence of thorium and uranium in the depicted substances. In response to Ebisawa’s repeated inquiries, UC-1 agreed, as part of the DEA’s investigation, to help Ebisawa broker the sale of his nuclear materials to UC-1’s associate, who was posing as an Iranian general (the General), for use in a nuclear weapons program. Ebisawa then offered to supply the General with “plutonium” that would be even “better” and more “powerful” than uranium for this purpose. An example of a photograph sent by Ebisawa is shown below:
Source: Superseding Indictment, filed publicly in U.S. District Court for the Southern District of New York, case S3:22-cr-2566. Photo sent by the defendant depicting rock substances with Geiger counters measuring radiation.During their discussions regarding Ebisawa’s access to nuclear materials, Ebisawa also engaged with UC-1 concerning Ebisawa’s desire to purchase military-grade weapons. To that end, in May 2021, Ebisawa sent UC-1 a list of weapons, including surface-to-air missiles, that Ebisawa wished to purchase from UC-1 on behalf of the leader of an ethnic insurgent group in Burma (CC-1). Together with two other co-conspirators (CC-2 and CC-3), Ebisawa proposed to UC-1 that CC-1 sell uranium to the General, through Ebisawa, to fund CC-1’s weapons purchase. On a Feb.4, 2022 videoconference, CC-2 told UC-1 that CC-1 had available more than 2,000 kilograms of Thorium-232 and more than 100 kilograms of uranium in the compound U3O8 — referring to a compound of uranium commonly found in the uranium concentrate powder known as “yellowcake” — and that CC-1 could produce as much as five tons of nuclear materials in Burma. CC-2 also advised that CC-1 had provided samples of the uranium and thorium, which CC-2 was prepared to show to UC-1’s purported buyers. CC-2 noted that the samples should be packed “to contain . . . the radiation.”
About one week later, Ebisawa, CC-2 and CC-3 participated in a series of meetings with UC-1 and CS-1 in Southeast Asia to discuss their ongoing weapons, narcotics, and nuclear materials transactions. During one of these meetings, CC-2 asked UC-1 to meet in CC-2’s hotel room. Inside the room, CC-2 showed UC-1 two plastic containers, each holding a powdery yellow substance (the Nuclear Samples), which CC-2 described as “yellowcake.” CC-2 advised that one container held a sample of uranium in the compound U3O8, and the other container held Thorium-232. UC-1 photographed and video-recorded the Nuclear Samples, an example image of which is shown below:
Source: Superseding Indictment, filed publicly in U.S. District Court for the Southern District of New York, case S3:22-cr-2566. Photo of the Nuclear SamplesWith the assistance of Thai authorities, the Nuclear Samples were seized and subsequently transferred to the custody of U.S. law enforcement authorities. A U.S. nuclear forensic laboratory examined the Nuclear Samples and determined that both samples contain detectable quantities of uranium, thorium and plutonium. In particular, the laboratory determined that the isotope composition of the plutonium found in the Nuclear Samples is weapons-grade, meaning that the plutonium, if produced in sufficient quantities, would be suitable for use in a nuclear weapon.
A table containing the charges and maximum penalties for Ebisawa and Singhasiri is set forth below. 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.
Count
Defendant(s)
Maximum Penalty
Count One: conspiracy to commit international trafficking of nuclear materials
Ebisawa
20 years in prison
Count Two: international trafficking of nuclear materials
Ebisawa
10 years in prison
Count Three: narcotics importation conspiracy
Ebisawa and Singhasiri
Life in prison; mandatory minimum penalty of 10 years in prison
Count Four: conspiracy to possess firearms, including machineguns and destructive devices
Singhasiri
Life in prison
Count Five: conspiracy to acquire, transfer, and possess surface-to-air missiles.
Ebisawa
Life in prison; mandatory minimum sentence of 25 years in prison
Count Six: narcotics importation conspiracy
Ebisawa
Life in prison; mandatory minimum sentence of 10 years in prison
Count Seven: conspiracy to possess firearms, including machine guns and destructive devices
Ebisawa
Life in prison
Count Eight: money laundering
Ebisawa
20 years in prison
The DEA Special Operations Division Bilateral Investigations Unit is investigating the case, with valuable assistance provided by the DEA Tokyo Country Office, DEA Bangkok Country Office, DEA Chiang Mai Resident Office, DEA Jakarta Country Office, DEA Copenhagen Country Office, DEA New York Field Office, DEA New Delhi Country Office, the Justice Department’s Office of International Affairs and the National Security Division’s Counterterrorism Section, and law enforcement partners in Indonesia, Japan and the Kingdom of Thailand.
Trial Attorney Dmitry Slavin of the National Security Division’s Counterterrorism Section and Assistant U.S. Attorneys Alexander Li, Kaylan E. Lasky and Kevin T. Sullivan for the Southern District of New York are prosecuting the case.
This prosecution 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 www.justice.gov/OCDETF.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Ebisawa superseding indictment.First Defendant Ever Charged with Violating Anti-Doping Act Sentenced to PrisonRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that ERIC LIRA was sentenced to three months in prison by U.S. District Judge Lorna G. Schofield for his role in providing banned performance-enhancing drugs (“PEDs”) to Olympic athletes in advance of the 2020 Summer Olympic Games held in Tokyo in 2021. LIRA is the first defendant to be charged and convicted, following his guilty plea in May 2023, under the Rodchenkov Anti-Doping Act, which criminalizes the operation of doping schemes for the purpose of influencing international sports competitions, such as the Olympic Games.
U.S. Attorney Damian Williams said: “Today’s sentence sends a clear message: violating the Rodchenkov Anti-Doping Act comes with serious consequences up to and including incarceration. That message is especially important this year with the upcoming Summer Olympic Games in Paris. It is imperative that those tempted to supply performance-enhancing drugs to Olympians understand the severity of their actions. Doping not only distorts fair play but also erodes the essence of sportsmanship, tarnishing the sanctity of international sporting events and betraying the trust of athletes and spectators alike. It has no place in any community, and this Office is committed to rooting out efforts to compromise the integrity of sports and other affected events.”
According to the allegations contained in the Complaint, the Indictment, other filings in this case, and statements during court proceedings:
The charges in this case arise from an investigation of a scheme to provide Olympic athletes with PEDs, including drugs widely banned throughout competitive sports, such as human growth hormone and the “blood building” drug erythropoietin, in advance of and for the purpose of corrupting the 2020 Olympic Games, which convened in Tokyo in the summer of 2021. LIRA, who claims to be a “kinesiologist and naturopathic” doctor operating principally in and around El Paso, Texas, obtained unapproved versions of these and other prescription drugs from sources in Central and South America before bringing those drugs into the U.S. and distributing them to, among others, the two athletes referred to in the Indictment. Throughout the scheme, LIRA and an athlete competing for Nigeria communicated via encrypted electronic communications regarding the sale, shipment, and use of LIRA’s illegal drugs and specifically discussed the “testability” of those drugs by anti-doping authorities. LIRA separately communicated with an athlete competing for Switzerland via encrypted electronic communications on the use of human growth hormone and erythropoietin. Both athletes tested positive for prohibited substances, and in both cases, LIRA directly and indirectly advised that the athletes should blame the positive drug test on contaminated meat, knowing full well that the drug tests had accurately detected the presence of banned, performance-enhancing drugs.
* * *
In addition to the prison term, LIRA, 44, of El Paso, Texas, was sentenced to one year of supervised release and ordered to forfeit $16,410.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation (“FBI”) and the FBI’s Integrity in Sports and Gaming Initiative. Mr. Williams also thanked the U.S. Anti-Doping Agency for their support of this investigation.
This case is being handled by the Office’s Illicit Finance & Money Laundering Unit. Assistant U.S. Attorneys Sarah Mortazavi, Josiah Pertz, and Benjamin A. Gianforti are in charge of the prosecution.
U.S. Citizen Charged with Providing Material Support to ISIS and Receiving Military-Type Training at ISIS Fighter CampRead 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; 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 today the unsealing of a Complaint charging HARAFA HUSSEIN ABDI with providing and conspiring to provide material support to a designated foreign terrorist organization, the Islamic State of Iraq and al-Sham (“ISIS”), and receiving and conspiring to receive military-type training from ISIS. ABDI, a U.S. citizen, was recently taken into custody overseas and was transported to the United States yesterday, February 15, 2024. ABDI will be presented before U.S. Magistrate Judge Valerie Figueredo in Manhattan federal court later today.
U.S. Attorney Damian Williams said: “As alleged, Harafa Hussein Abdi, a citizen of this country, traveled from Minnesota to join a group of ISIS fighters in Somalia. While training with ISIS fighters in Somalia, Abdi allegedly carried an AK-47, threatened to attack civilians in New York City, and encouraged others to carry out such attacks. Our law enforcement partners have relentlessly pursued this investigation to ensure the disruption of Abdi’s alleged plans to wage terror on our shores and bring Abdi to an American court to face justice. No matter how long it takes, this Office is steadfast in its commitment to investigate, disrupt, and prosecute terrorist threats against Americans.”
Assistant Attorney General Matthew G. Olsen said: “As stated in the complaint, Mr. Abdi left his country to join ISIS, trained as a fighter, and actively aided the group’s propaganda efforts to spread its vile ideology. There is no higher priority for the National Security Division than to protect Americans from terrorist organizations, and we will work tirelessly to find and hold accountable those who would join these groups to do our people harm wherever they may be.”
FBI Assistant Director in Charge James Smith said: “Harafa Hussein Abdi allegedly moved overseas to join ISIS, aided in their propaganda efforts, and openly threatened violence against New York City. Abdi was arrested before his plans came to fruition. The FBI’s New York Joint Terrorism Task Force is determined to bring to justice anyone willing to carry out evil in order to protect the American people.”
NYPD Commissioner Edward A. Caban said: “As alleged, this arrest is the result of New York law enforcement’s ongoing commitment to hold accountable anyone who voices solidarity with terrorist organizations and, motivated by ideology, desires to harm Americans. I commend everyone from the NYPD, the FBI, and the dozens of other agencies on New York’s Joint Terrorism Task Force for always relying heavily on the strength of our partnerships here and around the world.”
As alleged in the Complaint:[1]
ABDI is a U.S. citizen who moved from Minnesota to Somalia in 2015. Once there, ABDI joined a group of ISIS fighters at an ISIS training camp in the Puntland region of Somalia. During his time with the ISIS group, ABDI regularly carried an AK-47 assault rifle and received training on how to use it. In addition, ABDI worked in the ISIS group’s “media” wing, where he filmed footage for distribution by a pro-ISIS media outlet.
In social media communications during his time at the ISIS camp, ABDI described how he had left the United States and joined the “Islamic state.” ABDI also stated that he had made “hijra,” an Arabic term used by ISIS supporters to refer to traveling overseas to join ISIS and engage in jihad. ABDI also sent a photograph of himself carrying an AK-47 assault rifle, as depicted below:
In or about January 2017, ABDI sent an audio clip of rap lyrics in which ABDI expressed his support for ISIS and described multiple acts of violence, including shooting and bombing individuals in New York City. Specifically, ABDI stated, “hollow tips put a hole in your Catholic vest, and chop his head off let it rest on his Catholic chest.” ABDI further stated, “We going to carry on jihad”; “Fly through America on our way to shoot New York up. They trying to shut this thing. We ain’t going. We going to come blow New York up.” ABDI sent the audio clip to at least 20 other social media users and included messages with the audio clip, such as “Fighting back the kuffar who’s at war with Muslims if [that] is not islam then I don’t know wats Islam.”
ABDI left the ISIS camp in 2017 after his relationship with the ISIS group’s leadership deteriorated. After being jailed by the ISIS group, ABDI escaped and traveled to East Africa, where he was arrested by law enforcement authorities. In subsequent Mirandized interviews with FBI personnel, ABDI admitted that he had joined the ISIS training camp in the Puntland region, which was affiliated with a known leader of ISIS fighters in Somalia. ABDI also identified himself in an ISIS propaganda video that he helped to film at the ISIS training camp in which ABDI carried an AK-47 assault rifle, promoted ISIS, and urged others to join ISIS and fight on its behalf. In the video, ABDI stated, “We thank almighty God for making us His soldiers and chose us to be among the Khilafa troops,” and “So do not stay behind, brother, and get on this caravan. . . Those who believe fight in the cause of Allah, and those who reject Faith fight in the cause of Evil.” ABDI also admitted that he was trained on and regularly carried an AK-47 assault rifle while at the ISIS camp and practiced shooting the AK-47 in the Somali wilderness outside the camp.
* * *
ABDI, 41, of Minneapolis, Minnesota, is charged with (i) conspiring to provide material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; (ii) providing material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; (iii) conspiring to receive military-type training from a designated foreign terrorist organization, which carries a maximum sentence of five years in prison; and (iv) receiving military-type training from a designated foreign terrorist organization, which carries a maximum sentence of 10 years in prison, a fine, or both.
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 efforts of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies. Mr. Williams also thanked the Counterterrorism Section of the Department of Justice’s National Security Division, the Department of Justice’s Office of International Affairs, the FBI’s Counterterrorism Division, the FBI’s International Operations Division, and the Department of Homeland Security, U.S. Customs and Border Protection for their assistance.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorney Nicholas S. Bradley is in charge of the prosecution, with assistance from Trial Attorney Kevin Nunnally of the Counterterrorism Section.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
U.S. Attorney Announces $25.5 Million Settlement with Durable Medical Equipment Supplier Lincare Inc. 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 U.S. 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”); Derek M. Holt, the Special Agent in Charge of the Office of Personnel Management, Office of the Inspector General (“OPM-OIG”); and Michael J. Waters, the Special Agent in Charge of the Eastern Field Office of the Amtrak Office of Inspector General (“Amtrak-OIG”), announced that the United States has settled a civil fraud lawsuit against LINCARE INC., a large durable medical equipment (“DME”) supplier with approximately 700 locations throughout the United States. The settlement resolves claims that LINCARE violated the False Claims Act by fraudulently continuing to bill federal health care programs for the rental of costly non-invasive ventilators (“NIVs”) when patients no longer needed or used the devices. The settlement also resolves claims that LINCARE violated the Anti-Kickback Statute by waiving coinsurance payments to induce certain Medicare and TRICARE beneficiaries to rent NIVs.
Under the settlement, which was approved yesterday by U.S. District Judge Paul G. Gardephe, LINCARE agreed to pay a total sum of $25.5 million, of which $24,228,517.96 will be paid to the United States and the remainder will be paid to various states. As part of the settlement, LINCARE also made factual admissions regarding its conduct. LINCARE admitted that it received reimbursement from federal health care programs for some NIV rental claims that did not comply with all of those programs’ billing rules and guidance. LINCARE also admitted that in some instances, it continued to seek monthly payments when it was aware that patients were not using the devices.
U.S. Attorney Damian Williams said: “When DME suppliers like Lincare knowingly seek federal funds for items that are not medically necessary and not being used, they threaten the sustainability and financial integrity of vital federal health care programs like Medicare and Medicaid. Companies will be held accountable for fraudulent billing practices that prioritize profits over legal obligations.”
HHS-OIG Special Agent in Charge Naomi Gruchacz said: “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. Our agency, working closely with our law enforcement partners, will continue to hold health care providers responsible for receiving improper payments from federal health care programs.”
DCIS Acting Special Agent in Charge Brian J. Solecki said: “This settlement makes clear that firms will pay a price for attempting to defraud the government. We, along with our federal partners, are committed to protecting taxpayers from companies that engage in deceptive practices.”
OPM-OIG Special Agent in Charge Derek M. Holt said: “I applaud the excellent work of our investigators and law enforcement partners on this case. We take all false claims seriously as the integrity of the federal health care programs relies on the submission of medically reasonable and necessary claims.”
Amtrak-OIG Special Agent in Charge Michael J. Waters said: “The favorable outcome in this case is a testament to the professionalism and teamwork displayed by our agents, our fellow investigative agencies, and the U.S. Attorney’s Office. We are very proud of this well-coordinated joint effort.”
As alleged in the Complaint filed in Manhattan federal court:
NIVs are a type of respiratory equipment designed to deliver pressurized air into the lungs of patients with respiratory failure. Patients frequently rent NIVs for regular use in their homes. During the period of January 1, 2013, through February 29, 2020 (the “Relevant Period”), Medicare and other federal health care programs reimbursed DME suppliers like LINCARE as much as $1,400 per month for supplying NIV rentals to patients.
When DME suppliers like LINCARE rent NIVs to federal health care program beneficiaries and seek reimbursement for such rentals, the DME suppliers must ensure that the NIVs continue to be used and that they remain medically reasonable and necessary during the rental period. For example, under Medicare, a DME supplier is required to monitor the extent to which the beneficiary is using the NIV at home and to maintain documentation to support that the device continues to be used and is medically reasonable and necessary. In addition, DME suppliers must discontinue billing federal health care programs when the NIV is no longer being used and is not medically reasonable and necessary.
LINCARE often continued to submit monthly claims for payments to federal health care programs when the NIVs were no longer medically necessary or the beneficiary had stopped using the device. LINCARE frequently did not know, or have documentation to support, that a patient continued to use or need the NIV. LINCARE nonetheless continued to seek monthly payments from federal health care programs for these NIV rentals.
LINCARE’s primary method to monitor patient usage of NIVs was by having their Respiratory Therapists (“RTs”) conduct home visits, during which RTs would evaluate the device’s settings, usage, and need for maintenance. As part of these “vent checks,” RTs were supposed to record the extent to which patients had been using the NIVs and confirm that they were using their devices as directed by their physicians. Under LINCARE’s own policy, home visits were supposed to occur at least every 60 days. However, LINCARE’s RTs frequently failed to comply with this policy; on tens of thousands of occasions during the Relevant Period, LINCARE failed to perform home visits for NIV patients as required by its policy. Further, when RTs did conduct vent checks, they often failed to record whether, and for how many hours, patients had used their NIVs. In some instances, LINCARE continued to seek monthly payments from federal health care programs when it was aware, through home visits and vent checks conducted by its RTs, that beneficiaries had stopped using their devices. LINCARE billed for NIVs in instances when the beneficiary had not used or had very rarely used the device for over a year.
Finally, in violation of the Anti-Kickback Statute, LINCARE’s Regional Vice Presidents waived, either partially or in full, the coinsurance payment due from certain Medicare and TRICARE beneficiaries in an effort to persuade them to rent NIVs from LINCARE instead of another DME supplier. These coinsurance payment waivers were not based on an individualized assessment of the beneficiaries’ financial needs.
As part of the settlement, LINCARE admitted and accepted responsibility for certain conduct alleged by the United States, including the following:
- In violation of LINCARE’s internal protocols, LINCARE’s center clinical staff frequently failed to visit NIV patients every 60 days to confirm that the patients were using their NIVs as directed by their physicians. Some centers lacked sufficient staff to adequately monitor patient progress and confirm that patients were using the devices as directed by their physicians. On many occasions, clinical staff did not perform home visits for NIV patients for several months.
- In addition to conducting patient visits, LINCARE had the ability to remotely monitor certain patients’ NIV usage for certain newer NIV models through online cloud-based platforms. However, LINCARE did not use these systems to confirm that those patients were using the devices as directed.
- LINCARE continued to seek monthly payments from federal health care programs for NIV rentals in many instances when its staff had not verified that patients were still using their NIVs or had not maintained documentation showing that the patient continued to use the devices.
- In some instances, LINCARE continued to seek monthly payments from federal health care programs when it was aware that patients were not using the devices.
- On certain occasions, LINCARE granted coinsurance payment waivers that were not based on the patient’s financial need in order to persuade patients to rent NIVs.
- As a result of the above-referenced conduct, LINCARE received reimbursements from federal health care programs for some NIV rental claims that did not comply with all of those programs’ billing rules and guidance.
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.
* * *
Mr. Williams thanked the Washington and Texas State Medicaid Fraud Control Units for their extensive collaboration in the investigation and resolution of this case, and also praised the outstanding investigative work of HHS-OIG, DCIS, OPM-OIG, and Amtrak-OIG.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorneys Charles S. Jacob, Ilan Stein, and Amanda Lee are in charge of the case.
Two Bronx Men Charged with Distributing Narcotics Out of Bronx Residence Connected to Multiple Fatal and Non-Fatal Drug OverdosesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Edward A. Caban, the Commissioner of the New York City Police Department (“NYPD”), announced today the filing of a criminal Complaint in Manhattan federal court charging RUBINSKY PADILLA and LUIS ROSARIO, a/k/a “Gallo,” with conspiracy to distribute narcotics. ROSARIO was arrested yesterday afternoon in the Hunts Point neighborhood of the Bronx. PADILLA is currently at large. ROSARIO will be presented today before U.S. Magistrate Judge Valerie Figueredo.
U.S. Attorney Damian Williams said: “Yesterday afternoon, law enforcement conducted a Court-authorized search of a residence in the Bronx at 755 Coster Street, a home that the defendants have allegedly used for years to sell lethal narcotics. The defendants’ alleged actions have plagued the neighborhood and littered the street with drugs — endangering residents, including children. As alleged, there have been 12 fatal overdoses and 30 non-fatal overdoses within a three-block radius of this residence in the last five years. The most recent suspected fatal overdose was less than a month ago and occurred inside the house. If you or anyone you know has bought drugs from 755 Coster Street, they are considered extremely hazardous, potentially fatal, and should not be ingested under any circumstance.”
NYPD Commissioner Edward A. Caban said: “These charges underscore the gravity of the illegal drug crisis plaguing New York City and our nation. For far too long, the Bronx house from which these two men allegedly distributed their poison was a locus of tragedy that diminished quality of life for everyone in the neighborhood. I commend our NYPD narcotics investigators for their perseverance in shutting down this alleged drug operation, and I thank everyone from the Office of the U.S. Attorney for the Southern District of New York for their partnership in prosecuting this important case.”
According to the allegations in the Complaint charging PADILLA and ROSARIO:[1]
From at least in or about October 2022 through on or about February 15, 2024, a group of narcotics traffickers, including PADILLA, ROSARIO, and others, illegally ran an extensive narcotics distribution operation out of a house located at the street address 755 Coster Street in the Bronx, New York. Over the course of the investigation, the NYPD has established that the group is responsible for the sale of heroin, fentanyl, para-fluorofentanyl (a fentanyl analogue), and cocaine, among other drugs, at the house. Residents in the neighborhood have called 911 on multiple occasions to report continuous narcotics activity and use at the house and drug paraphernalia found outside on the sidewalk. The group continued to operate despite repeated law enforcement actions, including multiple judicially authorized searches of the house from approximately 2015 through 2024. Each search resulted in the seizure of narcotics, including, for example, heroin, fentanyl, cocaine, and cocaine base. PADILLA and ROSARIO were both arrested in April 2023 after one such search of the house resulted in the seizure of a substantial quantity of narcotics, but both continued operating the narcotics distribution operation uninterrupted from the same location.
Between approximately in or about 2018 through 2024, there have been at least 12 fatal overdoses and 30 non-fatal overdoses reported within a three-block radius of the house at 755 Coster Street. Most recently, on or about January 19, 2024, law enforcement responded to a 911 call reporting an unresponsive male in need of medical assistance at the house located at 755 Coster Street and found an individual who appeared to have died hours earlier of an apparent overdose.
On or about February 14, 2024, law enforcement searched 755 Coster Street and found ROSARIO inside. As pictured below, during their search, law enforcement found, among other things, quantities of suspected cocaine base and heroin, as well as narcotics paraphernalia, including materials designed for use in packing narcotics for distribution.
Any member of the public who has overdosed, or has knowledge of anyone who has overdosed, as a result from narcotics purchased at 755 Coster Street should anonymously call 866-874-8900.
* * *
RUBINSKY PADILLA, 48, and LUIS ROSARIO, 67, both of the Bronx, New York, are charged with one count of conspiracy to distribute narcotics, which carries 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 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 NYPD’s Narcotics Bureau Bronx Major Case Unit as well as the Bronx County District Attorney’s Office.
The prosecution of this case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Ashley C. Nicolas and Lisa Daniels 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.
Queens Man Arrested for Bronx Kidnapping and MurderRead 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 Drug Enforcement Administration (“DEA”); and Edward A. Caban, the Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of a Complaint charging IVAN COLLADO with conspiracy to commit kidnapping and kidnapping resulting in death in connection with the kidnapping and murder of Raymond Resto, a/k/a “Sugar Hill Tone,” on November 26, 2023, in the Bronx. COLLADO is in custody and will be presented today before U.S. Magistrate Judge Valerie Figueredo.
U.S. Attorney Damian Williams said: “As alleged, Ivan Collado mapped out and participated in the brazen and incredibly brutal kidnapping of Raymond Resto in a Target parking lot in the Bronx. When Resto tried to escape, he was cruelly gunned down in front of his wife. Today’s charges show that the relentlessness with which my Office will investigate such alleged callous violence is unwavering, and our message to violent criminals has never been clearer: we won’t stop until justice is served.”
DEA Special Agent in Charge Frank A. Tarentino III said: “The brutality associated with this case exemplifies the dangers posed to our communities by criminal organizations. DEA and our law enforcement partners are committed to bringing those who cause the most harm to justice. I applaud the swift and diligent work by the U.S. Attorney’s Office for the Southern District of New York, the NYPD, NYSP and DEA.”
NYPD Police Commissioner Edward A. Caban said: “There is no place in civil society for the alleged acts of barbarism outlined in today’s charges. When grievous crimes like these are committed anywhere in New York City, NYPD detectives are relentless in their work to hold those involved to full account. A major component of those efforts is to keep bringing strong cases to our law enforcement partners, including the skilled prosecutors in the Office of the U.S. Attorney for the Southern District of New York.”
As alleged in the Complaint:[1]
From at least in or about November 23, 2023, through at least in or about November 26, 2023, COLLADO and others conspired to kidnap Raymond Resto, a/k/a “Sugar Hill Tone” (the “Victim”).
On or about November 25, 2023, COLLADO and a co-conspirator (“CC-1”) registered and activated a tracking device (the “Tracking Device”). The next day, on or about November 26, 2023, COLLADO and CC-1 conducted surveillance at the Victim’s home in the Bronx, New York, until approximately 3:00 a.m. COLLADO and CC-1 then followed the Victim as he left his home and drove to an enclosed parking lot in the Bronx (the “Parking Lot”). The Victim parked his car in the Parking Lot and left it overnight. Approximately one hour after the Victim left the Parking Lot, a BMW (the “BMW”) entered and pulled up next to the Victim’s unoccupied car. At the same time, COLLADO and CC-1 positioned a Nissan (the “Nissan”), registered to COLLADO, just outside of the Parking Lot where they could observe the driver of the BMW. An individual (“CC-2”) then exited the BMW from the driver’s side and bent down next to the Victim’s car. CC-2 then reentered the BMW and departed with the Nissan following close behind. From that moment until the Victim’s murder, location data for the Tracking Device that COLLADO and CC-1 activated was consistent with the location of the Victim’s car, demonstrating that CC-2 had installed the Tracking Device on the Victim’s car under COLLADO’s supervision.
On or about November 26, 2023, at approximately 6:01 p.m., the Victim and his wife returned to the Parking Lot, entered their car, and traveled to a location outside New York City. The Victim and his wife returned to the Parking Lot several hours later at approximately 11:45 p.m., parked their car in the same location, and began walking towards a cab that was waiting for them. As they approached the cab, at approximately 11:49 p.m., the BMW returned to the Parking Lot, and pulled in front of the Victim and his wife. Three kidnappers exited the BMW; two of them attempted to force the Victim into the BMW. Unable to get the Victim inside, one of the kidnappers began shooting the Victim at close range. The Victim struggled to escape while the other kidnappers also opened fire. The Victim was struck at least four times, including once in the face. The kidnappers then entered the BMW and fled the Parking Lot at approximately 11:53 p.m. The Victim was later pronounced dead at a local hospital.
On or about November 27, 2023, the Tracking Device was deactivated, and an email address associated with the Tracking Device was deleted.
If you have any information about this case, please call 866-874-8900.
* * *
COLLADO, 46, of Queens, New York, is charged with one count of conspiracy to commit kidnapping, which carries a maximum sentence of life in prison, and one count of kidnapping resulting in death, which carries a mandatory minimum of life in prison and a maximum sentence of death.
The minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence of the defendant will be determined by the judge.
Mr. Williams praised the outstanding work of the DEA Task Force comprised of members of the DEA, NYPD, and New York State Police, as well as members of the NYPD’s Bronx Homicide Squad.
The case is being prosecuted by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Ashley C. Nicolas, Courtney L. Heavey, and Joseph H. Rosenberg are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact descried therein should be treated as an allegation.
Former CEO and CFO of Staffing Company Plead Guilty to Scheme to Defraud Bank and Investors That Caused $75 Million in LossesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced the guilty pleas today of LOUIS LLUBERES and MOISES LLUBERES for their roles in orchestrating a years-long scheme to fraudulently boost the revenues of their staffing company (“Company-1”). The scheme allowed Company-1 to fraudulently obtain hundreds of millions of dollars on its line of credit from a U.S. bank (“Bank-1”) and supported the sale of Company-1 to a group of investors (the “Investor Group”) at a grossly inflated price. LOUIS LLUBERES and MOISES LLUBERES pled guilty today to conspiracy commit bank fraud and conspiracy to commit wire fraud before U.S. District Judge Vernon S. Broderick.
U.S. Attorney Damian Williams said: “For many years, the defendants perpetrated a massive accounting fraud scheme in order to deceive their lenders and investors. In addition to causing more than $70 million in losses to victims, the defendants’ fraud jeopardized the livelihoods of hundreds of their employees. The defendants used accounting tricks, thinking their fraud would go undetected. They were wrong. Thanks to the tireless work of the FBI and the career prosecutors from my Office, the fraud was halted, the defendants’ assets were seized, and the defendants will face tough consequences for their criminal conduct.”
According to the charging documents and other filings and statements made in court:
LOUIS LLUBERES founded Company-1 in 1995 and served as Company-1’s Chief Executive Officer until March 2020. Company-1 served as a staffing company, supplying other businesses with temporary and permanent labor. MOISES LLUBERES, LOUIS LLUBERES’s brother, served as Company-1’s Chief Financial Officer.
Company-1 had established a revolving line of credit with Bank-1. Under the terms of the line of credit, Company-1 could only borrow up to a designated ratio of Company-1’s eligible accounts receivable (the “Borrowing Base”). By its terms, invoices that had gone more than 90 or 120 days without being paid were no longer eligible to be considered as part of Company-1’s Borrowing Base. Officials at Company-1 were required to submit weekly financial reports to Bank-1, which included information on Company-1’s sales and collections, among other items, that allowed Bank-1 representatives to calculate Company-1’s Borrowing Base.
Beginning in or about 2017, after losing significant business from major clients, the defendants began creating fraudulent invoices (the “Fictitious Receivables”). The Fictitious Receivables, which were recorded on Company-1’s books, created the appearance that Company-1 was engaged in more business and would be receiving more client payments than Company-1 did in reality. All told, the defendants created more than 2,000 such fraudulent invoices.
By inflating Company-1’s Borrowing Base through the creation of Fictitious Receivables, Company-1 and the defendants were able to borrow more than $500 million from Bank-1 through a revolving line of credit. Had Company-1 not deceived Bank-1 with the Fictitious Receivables, Company-1 would not have been entitled to borrow these funds under the terms of the line of credit.
In order to perpetuate their fraud, the defendants utilized two shell to disguise the loan proceeds before transferring those funds back to Company-1 and mischaracterizing the funds as client collection payments.
Once the misappropriated funds had been returned to Company-1’s collections account, they were applied to aging accounts receivable, including the Fictitious Receivables. This allowed Company-1 to maintain its Borrowing Base and continue borrowing from Bank-1 while artificially inflating Company-1’s revenues.
Beginning in or about 2017, the Investor Group initiated negotiations to acquire Company‑1, and the Investor Group executed an agreement to purchase Company-1 in May 2018. During those negotiations, LOUIS LLUBERES and MOISES LLUBERES actively concealed the fraud scheme, knowing that the fraud grossly inflated the value of Company-1.
LOUIS LLUBERES was paid approximately $11.3 million on the day the Investor Group acquired Company-1. LOUIS LLUBERES also received an additional approximately $6.2 million based, in part, on fraudulent representations to the Investor Group and Company-1. In total, LOUIS LLUBERES made at least $17.5 million from the sale of Company-1, and he transferred approximately $716,000 of those funds to MOISES LLUBERES.
* * *
LOUIS LLUBERES, 61, of Windermere, Florida, and MOISES LLUBERES, 60, of Winter Grove, Florida, each pled guilty to one count of conspiracy to commit bank fraud, which carries a maximum sentence of five years in prison, and one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison. Both defendants agreed to pay restitution jointly and severally in the amount of $75,460,611. LOUIS LLUBERES was further ordered to forfeit $75,460,611, and MOISES LLUBERES was ordered to forfeit $1,063,342.45. In addition, the defendants were ordered to forfeit properties in the U.S. and abroad.
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 Federal Bureau of Investigation.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Nicholas W. Chiuchiolo, Daniel G. Nessim, Rushmi Bhaskaran, and Kevin Mead are in charge of the prosecution.
Bloods Gang Member Convicted at Trial for Violent and Extortionate Takeover of the New York City Fire Mitigation IndustryRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced the conviction of JATIEK SMITH, a/k/a “Tiek,” of racketeering and extortion conspiracies. The verdict was issued yesterday following a two-week bench trial before U.S. District Judge Jed S. Rakoff in December 2023.
U.S. Attorney Damian Williams said: “Jatiek Smith’s audacious takeover of the New York City fire mitigation industry with the help of his gang associates presented a new form of organized criminal activity in our community, but the experienced career prosecutors of this Office and our law enforcement partners stand ready to combat violent and organized crime, no matter how unconventional. We will not stand for gangs or any criminal groups who try to corrupt our communities and threaten our safety. Those who do should expect to find themselves in handcuffs.”
According to the Indictment, statements made in public court proceedings and filings, and the evidence at trial:
The fire restoration industry refers to the businesses that repair properties that have suffered damage from fires or exposures to fires. Within this industry, fire restoration companies (sometimes referred to as emergency mitigation services (“EMS”) companies) provide emergency mitigation services, demolition, and construction services to properties that have suffered such damages. First Response Cleaning Corp. (“First Response”) was one such EMS company.
In 2019, JATIEK SMITH joined First Response and quickly assumed control over its operations. SMITH, a member of the Bloods, a violent street gang, recruited other gang members and associates to join him at First Response. As the leader of this crew, SMITH and his associates used violence, threats of violence, and extortion to terrorize and dominate the fire restoration industry in New York City.
SMITH asserted control over the industry by first ousting First Response’s main competitor through violence, threats, and extortion. Once SMITH and his crew had established control over the industry, they imposed rules that allocated a preferential share of fires to First Response. These rules were backed by threats — including threats to kill children — and violence. Industry participants, including senior citizens, who solicited fires in violation of SMITH’s rules were assaulted in broad daylight. Through threats of violence, actual violence, and economic fear, SMITH and his crew also extorted hundreds of thousands of dollars from other industry participants. SMITH maximized his profits from this scheme by concealing illegal conditions in properties and defrauding insurance companies.
* * *
JATIEK SMITH, 39, of Staten Island, New York, was convicted of racketeering conspiracy, which carries a maximum sentence of 20 years in prison, and extortion conspiracy, which carries a maximum sentence of 20 years in prison.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the sentence of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation, Homeland Security Investigations, the New York City Police Department, and the Department of Investigation.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Rushmi Bhaskaran, Marguerite B. Colson, Elizabeth A. Espinosa, and Adam S. Hobson, are in charge of the prosecution, with assistance from Paralegal Specialists Grayson Glogoff and Ananya Sankar.
Attorney Sentenced to 78 Months in Prison for Operating $18.8 Million Ponzi Scheme, Money Laundering, Obstruction of Justice, and PerjuryRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that ROBERT WISNICKI was sentenced to 78 months in prison today by U.S. District Judge Paul G. Gardephe for operating an $18.8 million Ponzi scheme run through his New York-based law firms, Wisnicki & Associates LLP and Wisnicki Neuhauser LLP (the “Wisnicki Firms”), and a separate conspiracy to commit money laundering to conceal a healthcare fraud scheme. WISNICKI pled guilty before Judge Gardephe to conspiracy to commit wire fraud and conspiracy to commit money laundering on September 18, 2023.
U.S. Attorney Damian Williams said: “As an attorney, Robert Wisnicki was well aware that organizing a Ponzi scheme, laundering money for a healthcare fraud conspiracy, obstructing justice, and committing perjury would expose him to criminal charges and potentially land him in federal prison. Wisnicki’s sprawling schemes showed his flagrant disregard for the law, and today’s sentence should make crystal clear to anyone who believes they are above the law that this Office will not waver in our commitment to hold all offenders accountable.”
According to public documents and statements made in court:
The Ponzi Scheme
The Wisnicki Firms specialized in real estate transactional work — namely, assisting clients with purchasing and selling property. In or about 2007, WISNICKI began a real estate investment business using the Wisnicki Firms. Existing clients of the Wisnicki Firms (“Investor Clients”) asked WISNICKI to identify potential real estate investment opportunities for them. The Investor Clients then either transferred funds to WISNICKI or asked him to retain their funds that were already held in the Wisnicki Firms’ Interest Only Lawyers Accounts (“IOLA”) accounts. WISNICKI then identified real estate investment opportunities for the Investor Clients, and the Wisnicki Firms represented the Investor Clients in the resulting investment transactions.
The Investor Clients began suffering losses in the investments that WISNICKI had arranged. Rather than notify the Investor Clients of their losses, WISNICKI used funds from the Wisnicki Firms’ clients who did not participate in the real estate investments, which were held in trust in the firm’s IOLA accounts, and transferred those funds to the Investor Clients to mask their losses. WISNICKI falsely represented to these other clients that their funds were still held in the Wisnicki Firms’ IOLA accounts when, in fact, he had transferred those funds to his Investor Clients.
WISNICKI also used funds from new Investor Clients to cover up losses suffered by prior Investor Clients. WISNICKI falsely told the new Investor Clients that their funds would be invested in real estate when, in fact, he used those funds to repay his prior Investor Clients.
WISNICKI continued the above-described fraud through at least in or about 2022. WISNICKI misappropriated approximately $18.8 million from Investor Clients, which includes approximately $6.3 million stolen from members of his own family and approximately $12.5 million stolen from non-family members.
The Money Laundering, Obstruction, and Perjury Scheme
WISNICKI engineered deceptive financial transactions, submitted fabricated documents, lied to investigators, and committed perjury in testimony before the grand jury all in an effort to conceal one of the largest no-fault insurance schemes in New York history.
New York and New Jersey no-fault insurance laws require a driver’s automobile insurance company to pay automobile insurance claims automatically for certain types of motor vehicle accidents, provided that the claim is legitimate and is below a particular monetary threshold (the “No-Fault Laws”). Pursuant to these requirements, insurance companies will often pay medical service providers directly for the treatment they provide to automobile accident victims, without the need to bill the victims themselves. This process resolves automobile claims without apportioning blame or fault for the accident, thereby avoiding protracted disputes and the costs associated with an extended investigation of the accident.
Beginning in or about 2014, a criminal organization (the “Gulkarov Conspiracy” or the “Gulkarov Conspirators”) began a scheme to exploit the No-Fault Laws. As part of the scheme, the Gulkarov Conspirators fraudulently owned and controlled more than a dozen medical professional corporations – including medical, acupuncture, and chiropractic practices – by paying licensed medical professionals to use their licenses to incorporate the professional corporations (collectively, the “Gulkarov Clinics”). The Gulkarov Conspirators further defrauded automobile insurance companies by billing insurance companies for unnecessary, harmful, and excessive medical treatments, and lying under oath to insurance company representatives.
The Gulkarov Conspirators laundered the proceeds of the healthcare fraud through, among other ways, the Wisnicki Firms. In or about 2016 and 2017, one of the Gulkarov Conspirators (“CC-1”) transferred funds from the Gulkarov Clinics to the Wisnicki Firms. WISNICKI deposited the funds into one of his IOLA accounts, despite the fact that the Wisnicki Firms did not represent the Gulkarov Clinics and had no attorney-client relationship with the Gulkarov Conspirators. The Gulkarov Conspirators then arranged for the Wisnicki Firms to use the healthcare fraud proceeds to pay for real estate on behalf of the leaders of the Gulkarov Conspiracy.
In or about April 2021, the Wisnicki Firms were served with a subpoena from a grand jury sitting in the Southern District of New York (the “Subpoena”). Among other things, the Subpoena required the Wisnicki Firms to produce documentation concerning the funds obtained from the Gulkarov Clinics.
WISNICKI, CC-1, and a second member of the Gulkarov Conspiracy (“CC-2”) agreed to respond to the Subpoena by submitting fabricated documents to the grand jury, lying in communications with the U.S. Attorney’s Office for the Southern District of New York, and committing perjury before the grand jury.
WISNICKI, CC-1, and CC-2 further agreed to re-launder the proceeds in response to the Subpoena. At the direction of CC-1, WISNICKI wrote checks, drawn on his IOLA account, purporting to return the monies that had been previously paid to his firm. The checks were made payable to physicians who purported to be owners of the Gulkarov Clinics and to family members of the Gulkarov Conspirators (together, the “Payees”). WISNICKI wrote the checks under the false pretense that the Payees were clients of the Wisnicki Firms who had previously paid money to the Wisnicki Firms for legal services. WISNICKI and others agreed that the checks to the Payees would be deposited, and the funds would then be withdrawn and returned to the Wisnicki Firms. WISNICKI delivered the checks to CC-1 for this purpose.
Thereafter, on or about April 19, 2021, WISNICKI submitted to the grand jury over a dozen fabricated retainer agreements. The same day, WISNICKI falsely stated to the U.S. Attorney’s Office that the funds paid to the Wisnicki Firms “were originally supposed to be used for a [sic] retainer fees, which is why the agreements were originally prepared,” but that the clients ultimately “instead asked us to hold the funds to be used for future investments.” WISNICKI further represented that the Wisnicki Firms decided to return the retainer fees after receiving the Subpoena.
On or about July 6, 2021, WISNICKI was called to appear before the grand jury as custodian of records for the Wisnicki Firms. WISNICKI falsely testified to the grand jury, among other things, that payments to the Wisnicki Firms had been made for the purpose of opening a “lending platform” that was never completed and that WISNICKI had not spoken to anyone outside of the Wisnicki Firms about the Subpoena.
* * *
In addition to the prison term, ROBERT WISNICKI, 45, of Woodmere, New York, was sentenced to three years of supervised release. WISNICKI was also ordered to forfeit a money judgment of $19,010,548.06 and to pay $18,800,000 in restitution.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the White Plains Division. Assistant U.S. Attorneys Mathew Andrews, Timothy Capozzi, and Ryan W. Allison are in charge of the prosecution.
Michigan Woman Arrested for Role in Fraud Scheme Involving Theft of over $800,000 in Luxury and Designer Apparel and AccessoriesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the unsealing of a Complaint charging BRANDALENE HORN with mail fraud, wire fraud, and the interstate transportation of stolen property in connection with a scheme to defraud victim clothing rental companies by opening hundreds of accounts to rent women’s apparel and accessories, stealing those rented items, and selling them on an e-commerce marketplace. HORN was arrested this morning in Freeland, Michigan, and she will be presented later today before U.S. Magistrate Judge Elizabeth Stafford in the Eastern District of Michigan.
U.S. Attorney Damian Williams said: “As alleged, Brandalene Horn perpetrated a lucrative scheme in which she defrauded at least three victim companies, stole hundreds of thousands of dollars’ worth of luxury and designer items, and then sold those stolen items online. Thanks to the work of the prosecutors and investigators of my Office, Horn now faces criminal federal charges for her alleged deceptive behavior and fraudulent activity.”
As alleged in the Complaint filed in Manhattan federal court:[1]
From at least April 2022 through at least February 2024, HORN engaged in a fraud scheme that involved opening hundreds of accounts with at least three victim companies that offer subscription-based clothing rental services. Those services enable customers to access and rent from the companies’ inventory of apparel and accessories, including luxury and designer items. After receiving rental items, including pieces worth thousands of dollars, HORN kept, instead of returned, the items from the victim companies and sold them on an e-commerce marketplace. HORN’s listings for the stolen items on the e-commerce marketplace often used the victim companies’ proprietary photographs and item descriptions that substantially matched the descriptions used by the victim companies.
An image of HORN’s listing for a stolen designer dress on an e-commerce marketplace is below:
An image of a listing by one of the victim companies for this same designer dress is below:
Although the victim companies attempted to charge HORN for the items she stole, HORN avoided those charges by disputing them with her credit union or canceling the credit and debit cards she had provided to the victim companies. HORN’s fraudulent activity caused the victim companies to flag or close her accounts, but HORN opened new accounts so she could continue stealing and selling luxury and designer goods.
During this period, HORN stole over 1,000 items, valued at over $823,000, from the victim companies and sold over $750,000 worth of stolen items.
* * *
HORN, 42, of Freeland, Michigan, is charged with one count of mail 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 interstate transportation of stolen property, which carries a maximum sentence of 10 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the exceptional investigative work of the Special Agents of the U.S. Attorney’s Office for the Southern District of New York. Mr. Williams also thanked the New York State Police and the Michigan State Police for their assistance.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Connie L. Dang and Katherine Cheng are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Queens Men Sentenced to Prison for Conspiring to Hack the Taxi Dispatch System at JFK AirportRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that DANIEL ABAYEV was sentenced to four years in prison and PETER LEYMAN was sentenced to two years in prison for their roles in a scheme to hack the electronic taxi dispatch system (the “Dispatch System”) at John F. Kennedy International Airport (“JFK”). ABAYEV and LEYMAN were both sentenced today before U.S. District Judge Paul A. Crotty. On October 4 and October 30, 2023, respectively, LEYMAN and ABAYEV each pled guilty to one count of conspiring to commit computer intrusion.
U.S. Attorney Damian Williams said: “Daniel Abayev and Peter Leyman, allegedly assisted by Russian hackers, wrought havoc on JFK's electronic taxi dispatch system, impacting fair order and creating chaos for honest taxi professionals. Their actions enabled up to 1,000 fraudulent taxi trips daily, underscoring the serious threat cyber hacking poses to critical infrastructure. Through our collaborative efforts with law enforcement partners, their scheme was dismantled, and the defendants have been rightfully sentenced.”
According to the charging documents and other filings and statements made in court:[1]
From at least September 2019 through September 2021, ABAYEV and LEYMAN, who are U.S. citizens residing in Queens, New York, and ALEKSANDR DEREBENETC, a/k/a “Sasha Novgorod,” and KIRILL SHIPULIN, a/k/a “Kirill Russia,” who are Russian nationals residing in Russia, engaged in a scheme (the “Hacking Scheme”) to hack the Dispatch System at JFK.
At all relevant times, taxi drivers who sought to pick up a fare at JFK were required to wait in a holding lot at JFK before being dispatched to a specific terminal by the Dispatch System. Taxi drivers were frequently required to wait several hours in the lot before being dispatched to a terminal and were dispatched in approximately the order in which they arrived at the holding lot.
Beginning in 2019, ABAYEV, LEYMAN, DEREBENETC, and SHIPULIN attempted various mechanisms to access the Dispatch System without authorization, including bribing someone to insert a flash drive containing malware into computers connected to the Dispatch System, obtaining unauthorized access to the Dispatch System via a Wi-Fi connection, and stealing computer tablets connected to the Dispatch System. The members of the Hacking Scheme also sent messages to each other in which they explicitly discussed their intention to hack the Dispatch System. For example, on or about November 10, 2019, ABAYEV messaged DEREBENETC in Russian: “I know that the Pentagon is being hacked[.]. So, can’t we hack the taxi industry[?]”
At various times between November 2019 and November 2020, the members of the Hacking Scheme successfully hacked the Dispatch System. They used their unauthorized access to alter the Dispatch System and move specific taxis to the front of the line, thereby allowing drivers of those taxis to skip other taxi drivers waiting in the line. ABAYEV and LEYMAN charged taxi drivers $10 each time they were advanced to the front of the line and transferred part of their profits to SHIPULIN and DEREBENETC.
ABAYEV was the leader of the Hacking Scheme and recruited the other participants. ABAYEV and LEYMAN’s scheme resulted in large numbers of taxi drivers skipping the taxi line. Over the course of the scheme, they enabled as many as 1,000 fraudulently expedited taxi trips a day.
DEREBENETC and SHIPULIN remain at large.
* * *
In addition to the prison term, ABAYEV, 47, and LEYMAN, 49, both of Queens, New York, were sentenced to three years of supervised release and each ordered to pay $161,858.26 in forfeiture and $3,456,169.50 in restitution.
Mr. Williams praised the outstanding work of the Port Authority Office of the Inspector General. Mr. Williams also thanked Homeland Security Investigations for their assistance in the investigation.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Kevin Mead and Steven J. Kochevar are in charge of the prosecution.
[1] The entirety of text of the Indictment charging DEREBENETC and SHIPULIN and the description of the Indictment set forth herein constitute only allegations, and every fact described regarding DEREBENETC and SHIPULIN should be treated as an allegation.”
Costa Rica Man Arrested for Sweepstakes Fraud and Impersonation of Federal Government OfficialsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the unsealing of a Complaint charging FEDERICO HERNANDEZ GAMBOA with conspiring to commit wire fraud, conspiring to commit bank fraud, bank fraud, and aggravated identity theft in connection with a scheme to defraud elderly victims by convincing them that they had won millions of dollars in a sweepstakes lottery that could only be collected after they paid millions of dollars’ worth of supposed taxes and fees. GAMBOA was arrested on February 10, 2024, at George Bush Intercontinental Airport in Houston, Texas. He will be presented today before U.S. Magistrate Judge Dena Hanovice Palermo in the Southern District of Texas.
U.S. Attorney Damian Williams said: “As alleged, Federico Hernandez Gamboa defrauded numerous elderly victims who were lured into thinking that they had won life-changing prizes in a sweepstakes lottery of millions of dollars. By allegedly impersonating high-ranking federal government officials, Gamboa and others convinced victims that they had to pay supposed taxes and fees in order to claim their sweepstakes winnings. Scammers who target vulnerable elderly men and women to line their own pockets, take note – you will be held accountable.”
As alleged in the Complaint filed in Manhattan federal court:[1]
From at least August 2020 through at least May 2023, GAMBOA and others contacted elderly victims while claiming to be high-ranking federal government officials, including the Chief of the Criminal Division of the U.S. Attorney’s Office for the Southern District of New York, the Deputy Director of the Financial Crimes Enforcement Network, and others, to convince victims that they had won large cash prizes as part of a sweepstakes lottery. GAMBOA and others induced the victims to wire millions of dollars in supposed taxes and fees associated with their sweepstakes winnings to bank accounts controlled by members of the fraud scheme. GAMBOA and others then wired most of the money to bank accounts in Costa Rica.
Members of the fraud scheme also induced victims to send their personal identifying information, which GAMBOA and others used to create fake identification cards. They also forged victims’ names on loan agreements that they submitted to financial institutions in order to persuade those institutions that the fraudulently obtained funds belonged to them.
The victims collectively sent approximately $4.3 million in fraud proceeds to bank accounts controlled by members of the fraud scheme, approximately $664,000 of which was sent directly to bank accounts controlled by GAMBOA.
* * *
GAMBOA, 51, of San Jose, Costa Rica, is charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison; one count of bank fraud, which carries a maximum sentence of 30 years in prison; and one count of aggravated identity theft, which carries a mandatory prison term of two years that must run consecutively to any other prison term.
The maximum and mandatory 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 exceptional investigative work of the Special Agents and Analysts of the U.S. Attorney’s Office for the Southern District of New York and thanked the U.S. Customs and Border Protection for their assistance with the investigation.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Amanda C. Weingarten 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 herein should be treated as an allegation.
U.S. Attorney Charges New Rochelle Man with Sexual Exploitation of A MinorRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the unsealing of a Complaint charging CHARUDET SMITH, a/k/a “Charles Smith,” with sexual exploitation of a minor. SMITH was arrested yesterday and presented before U.S. Magistrate Judge Victoria Resnik this afternoon in White Plains federal court.
U.S. Attorney Damian Williams said: “Charudet Smith allegedly constructed an elaborate web of lies and fabricated multiple identities in order to gain the trust of an unsuspecting minor. Today’s arrest underscores the urgent need to protect children from the dangers posed by predators who use social media to prey on children both online and in person.”
As alleged in the Complaint:[1]
From at least on or about December 21, 2019, up to and including at least on or about February 13, 2020, SMITH impersonated various individuals and created and used a series of Instagram accounts, emails, and phone numbers in order to deceive a 17-year-old minor (“Victim-1”) into creating and sending sexually explicit videos and images to SMITH and agreeing to meet SMITH to engage in sexual activity in Seattle, Washington.
SMITH posed as an established freelance photographer for a well-known international camera company (“Company-1”) and told Victim-1, an aspiring teenage photographer, that he had numerous contacts within the media industry and could act as Victim-1’s mentor. SMITH then posed as multiple employees of Company-1 who purported to offer Victim-1 a position in a sought-after youth professional development program. In fact, SMITH was never an employee of Company-1 and had never been paid by Company-1 for any services or any employment.
Anyone who may have encountered CHARUDET SMITH, a/k/a “Charles Smith,” or whose child may have had any communications with SMITH is asked to contact the FBI at 1-800-CALL-FBI (225-5324).
* * *
SMITH, 31, of New Rochelle, New York, is charged with one count of sexual exploitation of a minor, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 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 defendant will be determined by a judge.
Mr. Williams praised the efforts of the Federal Bureau of Investigation, the Connecticut U.S. Attorney’s Office, the U.S. Attorney’s Office for the District of Vermont, the Sherriff’s Office in Washington, Vermont, the Massachusetts State Police, the New Rochelle Police Department, and the Westchester County 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.
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.
Three Defendants Convicted at Trial in $7.9 Million COVID-19 Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that a jury returned a guilty verdict against JACOB CARTER, QUADRI SALAHUDDIN, and ANWAR SALAHUDDIN for conspiracy to commit wire fraud, wire fraud, and aggravated identity theft in connection with a scheme to defraud the U.S. Small Business Administration (“SBA”) that resulted in a loss to the SBA of approximately $7.9 million. The defendants were found guilty of all counts following a two-week trial before U.S. District Judge Nelson S. Román.
U.S. Attorney Damian Williams said: “As the jury’s swift verdict shows, the proof at trial was overwhelming. The defendants schemed to steal from a taxpayer-funded program that was intended to help small businesses that were in desperate need of assistance during the COVID-19 pandemic. Let this be a lesson that my Office will continue to work to bring justice to those who exploit and defraud government programs during a national emergency. We thank the FBI for their partnership in investigating and prosecuting the alleged scheme.”
According to the Indictment, statements made in public court proceedings and filings, and the evidence at trial:
The SBA is a federal agency of the Executive Branch that administers assistance to American small businesses. This assistance includes making direct loans to applicants through the Economic Injury Disaster Loan (“EIDL”) Program. In response to the COVID-19 pandemic, Congress expanded SBA’s EIDL Program to provide small businesses with low-interest loans of up to $2 million prior to in or about May 2020 and up to $150,000 beginning in or about May 2020 in order to provide vital economic support to help overcome the loss of revenue small businesses were experiencing due to COVID-19. Applicants seeking a loan under the EIDL program were also permitted to request and receive an advance of approximately $1,000 per employee, for an amount up to $10,000, which the SBA generally provided while the loan application was pending.
From March through July 2020, CARTER, QUADRI SALAHUDDIN, and ANWAR SALAHUDDIN used the identities of more than 1,000 other individuals (the “Applicants”) to submit more than 1,000 online applications to the SBA, seeking over $10 million in funds through the SBA’s EIDL Program (the “EIDL Applications”). In connection with the EIDL Applications, CARTER, QUADRI SALAHUDDIN, and ANWAR SALAHUDDIN falsely represented to the SBA that the Applicants were the owners of businesses with 10 or more employees. However, that was a lie – the individuals did not own businesses or employ people. Based on the fraudulent EIDL Applications, the SBA made advance payments of approximately $7.9 million to the Applicants, who then kicked back a portion of the advance payments to CARTER, QUADRI SALAHUDDIN, and ANWAR SALAHUDDIN. After collecting hundreds of thousands of dollars in kickback payments, CARTER, QUADRI SALAHUDDIN, and ANWAR SALAHUDDIN took photographs of their stacks of cash, purchased expensive jewelry, and CARTER leased a Lamborghini.
* * *
CARTER, 38, of Capitol Heights, Maryland, and QUADRI SALAHUDDIN, 28, and ANWAR SALAHUDDIN, 38, both of Mount Vernon, New York, were each convicted of 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 two-year consecutive sentence.
The maximum and mandatory 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 work of the Federal Bureau of Investigation.
The case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Jeffrey C. Coffman, Courtney L. Heavey, and Jared D. Hoffman are in charge of the prosecution, with the assistance of paralegal specialist Liam Ronan.
Brooklyn Woman Sentenced to Three Years in Prison for COVID-19 Fraud Scheme and Fraud on NYCHARead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that CHANETTE LEWIS was sentenced today to three years in prison for her role in two fraud schemes. LEWIS participated in a scheme to commit COVID-19 pandemic fraud by (i) defrauding New York City’s COVID-19 Hotel Room Isolation Program, and (ii) committing unemployment benefits fraud. LEWIS also committed a fraud in which she submitted fabricated documents to the New York City Housing Authority (“NYCHA”) — such as purported Orders of Protection bearing Judges’ names, purported letters from a District Attorney, and purported letters from healthcare professionals attesting to alleged medical issues — in order to secure public housing benefits for her customers. LEWIS’s sentence was imposed by U.S. District Judge Lewis A. Kaplan.
U.S. Attorney Damian Williams said: “Chanette Lewis exploited multiple lifelines offered to New York City residents in need during the COVID-19 pandemic. Each of her schemes misappropriated identifying information of hardworking individuals, including medical professionals whose services were vital during the pandemic. For her brazen crimes, Lewis has now been sentenced to prison.”
According to the allegations contained in the Superseding Information, court filings, and statements made during court proceedings:
LEWIS’s COVID-19 Pandemic Fraud Scheme
During 2020 and 2021, LEWIS conspired to commit COVID-19 pandemic fraud in two ways.
First, LEWIS 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. In total, the Program was open to (i) healthcare workers who needed to isolate because of exposure to COVID-19; (ii) patients who had tested positive for COVID-19; (iii) individuals who believed, based on their symptoms, that they were infected with COVID-19; and (iv) individuals who lived with someone who contracted 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.
LEWIS defrauded the Program in several respects. First, she secured free Program hotel rooms for herself by falsely claiming to be a healthcare worker. Second, she sold at least approximately 1,936 nights’ worth of fraudulently obtained hotel rooms to customers who were ineligible for the Program. Third, LEWIS abused her employment, which was supposed to be in service of the Program. Specifically, LEWIS worked at a call center that handled phone calls and certain reservations for the Program for several months in 2020. As a result of her employment, LEWIS had access to legitimate healthcare workers’ identifying information. LEWIS abused her position, including by misappropriating healthcare workers’ identifying information, revealing the Program’s inner workings to co-conspirators, and making unauthorized sales of Program hotel rooms to ineligible individuals. For instance, LEWIS sold a co-defendant personal identifying information of at least five healthcare professionals, as well as certain “codes” to use when booking hotel reservations through the Program, such as an employee ID number and license number. LEWIS also advertised to potential customers that when hotels asked for a healthcare worker’s identification, LEWIS would supply a purported paystub and a letter falsely asserting that the individual was a healthcare worker.
Second, during 2020 and 2021, LEWIS committed unemployment benefits fraud in New York State by fraudulently obtaining such benefits for herself and also by stealing the identity of an incarcerated individual and conspiring to obtain unemployment benefits issued for the benefit of that individual. In total, LEWIS fraudulently obtained approximately $47,000 in unemployment benefits.
LEWIS’s Fraud on NYCHA
During 2020 and 2021, LEWIS participated in a separate conspiracy to defraud NYCHA. LEWIS submitted fabricated documents to NYCHA — such as purported Orders of Protection bearing Judges’ names, purported letters from a District Attorney, and purported letters from doctors attesting to alleged medical issues — in order to secure public housing benefits for her customers, including transfers to larger NYCHA apartments. In total, LEWIS submitted fraudulent applications to NYCHA on behalf of more than approximately 30 individuals, a number of whom in fact received the public housing benefit they requested based on fraudulent documentation submitted by LEWIS.
* * *
In addition to her prison term, LEWIS, 32, of Brooklyn, New York, was sentenced to three years of supervised release and ordered to forfeit $289,536 and to pay restitution of $360,330.
LEWIS’s three co-defendants — Tatiana Benjamin, Tatiana Daniel, and Heaven West — previously pled guilty. On February 1, 2024, 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 West was sentenced principally to time served, three years of supervised release, restitution of $59,644, and forfeiture of $23,684. Daniel’s sentencing is scheduled for March 6, 2024, at 11:30 a.m.
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.
Manhattan Man Sentenced to 27 Months in Prison for Conspiracy to Transport A Firearm InterstateRead 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 that JAMIL HAKIME was sentenced today to 27 months in prison for conspiring to transport a firearm interstate in connection with HAKIME’s sale of a firearm and 19 rounds of ammunition on November 18, 2022, to Christopher Brown and Matthew Mahrer. Brown and Mahrer planned to use the weapon to violently attack a synagogue in New York City. At the time of the sale, HAKIME was employed by New York City’s Administration for Children Services (“ACS”), where he worked with New York City youth. HAKIME previously pled guilty on March 14, 2023, before U.S. District Judge Analisa Torres, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Jamil Hakime, a City employee who was supposed to be protecting youths, instead decided to arm two men — one of whom had just declared on Twitter his plan to ‘shoot up a synagogue’ — with a powerful firearm and ammunition. But for swift action by law enforcement, Hakime’s actions could have resulted in a monumental tragedy on New York’s Jewish community and could have devastated the lives of many people who were targeted solely for their religious beliefs and their desire to worship. The sentence imposed today sends a clear message to those who would recklessly arm others with weapons that may be used to commit acts of mass violence that such conduct will not be tolerated.”
FBI Assistant Director in Charge James Smith said: “Hakime admitted that he willingly chose to provide two men with a firearm enhanced with features enabling it to harm dozens of victims. The men to whom he chose to sell that firearm planned to use it to attack a synagogue. Thankfully, the FBI’s Joint Terrorism Task Force in New York became aware of the plot. Along with our law enforcement partners, we were able to disrupt their plans before they could do any harm, but the outcome could have been far worse. The punishment handed down today shows that there are serious consequences to arming others with dangerous weapons designed to kill.”
NYPD Commissioner Edward A. Caban said: “Individuals like Hakime who enable others to carry out hate-motivated attacks must face the consequences of their actions. NYPD investigators, closely partnering with our state and federal colleagues on the FBI’s New York Joint Terrorism Task Force, likely averted tragedy through their swift and diligent work on this case. Today’s sentencing serves as a reminder of our ongoing work to hold accountable anyone who threatens the safety and security of New Yorkers.”
According to the Indictment, documents previously filed in the case, and statements made in court:
In the early morning hours of November 18, 2022, Brown posted on Twitter that he intended to “shoot up a synagogue,” emphasizing, “This time I’m really gonna do it.” That afternoon, Brown and Mahrer contacted HAKIME, a resident of Manhattan who had been employed since 2014 by ACS as a Youth Developmental Specialist, to obtain a firearm. HAKIME, Brown and Mahrer traveled together in HAKIME’s vehicle from Manhattan to HAKIME’s home in Pennsylvania. During the trip to HAKIME’s residence, law enforcement contacted Brown by phone regarding his threatening online posts. Brown then deleted the threatening messages that he had posted on Twitter.
Shortly thereafter, HAKIME, Brown, and Mahrer arrived at HAKIME’s Pennsylvania home, where HAKIME retrieved for Brown and Mahrer a Generation 5 Glock 17 pistol (the “Firearm”) as well as 19 rounds of ammunition (the “Ammunition”). The Firearm had an extended magazine, which allowed it to hold up to 30 rounds of ammunition, and a weapon-mounted light and red dot optic device that allowed the user to have better aim at his target. HAKIME taught Mahrer and Brown how to use the Firearm and further instructed the men to wipe off the Firearm to remove HAKIME’s fingerprints. Brown and Mahrer paid HAKIME approximately $650 for the Firearm and Ammunition.
HAKIME then drove Brown and Mahrer back to Manhattan with the Firearm and Ammunition. Brown and Mahrer temporarily hid the Firearm and Ammunition in Mahrer’s bedroom at his family’s residence in Manhattan and then traveled together to Penn Station, where they were arrested by law enforcement. HAKIME remained in phone contact with Mahrer until minutes before Brown’s and Mahrer’s arrests. At the time of those arrests, law enforcement recovered from a bag that Brown was carrying a large hunting knife and a Swastika arm band. Law enforcement also recovered from Mahrer’s apartment a backpack containing the Firearm and Ammunition, as depicted below:
* * *
In addition to his prison term, HAKIME, 59, of New York, New York, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding investigative work of the FBI New York Field Office, including the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies, and the FBI’s Civil Rights Squad.
This case is being handled by the Office’s National Security and International Narcotics Unit and Civil Rights Unit in the Criminal Division. Assistant U.S. Attorneys Sarah L. Kushner and Mitzi S. Steiner are in charge of the prosecution.
Bronx Man Arrested for Sweepstakes Fraud SchemeRead 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 the arrest of DONALD DILLION on wire fraud and money laundering charges arising out of a scheme to defraud victims by convincing them that they had won prizes in a sweepstakes sponsored by a well-known marketing and sweepstakes company (the “Sweepstakes Company”). DILLION was arrested on February 3, 2024, at John F. Kennedy International Airport while attempting to enter the United States from Jamaica. DILLION was presented before U.S. Magistrate Judge Barbara Moses yesterday.
U.S. Attorney Damian Williams said: “As alleged in the Complaint, Donald Dillion defrauded numerous victims, who were lured into thinking that they had won life-changing prizes in a well-known sweepstakes. Through their lies, Dillion and others allegedly convinced these victims that they would only receive their prizes if they first parted with tens of thousands of dollars in supposed taxes and fees. Dillion then allegedly laundered these funds by sending them to a foreign bank. My Office will prosecute these crimes to the fullest to demonstrate that fraud schemes like Dillion’s simply do not pay.”
FBI Assistant Director in Charge James Smith said: “Winning a significant amount of cash or a luxury car through a sweepstakes often represents a dream to many Americans. Donald Dillion turned his victims’ dream into a nightmare when he allegedly stole tens of thousands of dollars through his fraudulent scheme. The FBI will continue to investigate and bring to justice anyone attempting defraud innocent people.”
According to the allegations in the Complaint:[1]
At least in or about 2021, DILLION, working with others, perpetrated a scheme in which victims were contacted by individuals claiming to work for the Sweepstakes Company, who convinced the victims that they had won a large cash prize and a luxury car as part of the Sweepstakes Company’s sweepstakes. The perpetrators of the scheme told the victims that their prizes would be released to them upon the Sweepstakes Company’s receipt of, among other things, the taxes and fees purportedly owed on the prizes. In this way, numerous victims were induced to wire tens of thousands of dollars to bank accounts held in the name of DD Metro Solutions LLC (“DD Metro”) and controlled by DILLION. DILLION wired a significant proportion of these victim funds to a Chinese bank, including memoranda with some of these wires suggesting no connection to the Sweepstakes Company. None of the victims received the cash prizes or luxury cars promised to them.
* * *
DILLION, 57, of the Bronx, New York, has been charged with conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; wire fraud, which carries a maximum sentence of 20 years in prison; and conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the FBI.
The prosecution of this case is being handled by the Office’s Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Benjamin A. Gianforti and Jennifer Ong are in charge of the prosecution.
The charges in the Complaint are merely accusations, and DILLION 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.
70 Current and Former NYCHA Employees Charged with Bribery and Extortion 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; Jocelyn E. Strauber, the Commissioner of the New York City Department of Investigation (“DOI”); Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”); Rae Oliver Davis, the Inspector General of the U.S. Department of Housing and Urban Development, Office of Inspector General (“HUD OIG”); and Jonathan Mellone, the Special Agent in Charge of the Northeast Region of the U.S. Department of Labor, Office of Inspector General (“DOL-OIG”), announced the unsealing of bribery and extortion charges against 70 current and former employees of the New York City Housing Authority (“NYCHA”). 66 of the 70 defendants were arrested this morning in New York, New Jersey, Connecticut, and North Carolina. Defendants who were arrested in the New York area are scheduled to appear before U.S. Magistrate Judges Stewart D. Aaron, Sarah L. Cave, Valerie Figueredo, Sarah Netburn, Katharine H. Parker, Gary Stein, and Ona T. Wang in Manhattan federal court later today.
U.S. Attorney Damian Williams said: “Instead of acting in the interests of NYCHA residents, the City of New York, or taxpayers, the 70 defendants charged today allegedly used their jobs at NYCHA to line their own pockets. This action is the largest single-day bribery takedown in the history of the Justice Department. NYCHA residents deserve better. My Office is firmly committed to cleaning up the corruption that has plagued NYCHA for far too long so that its residents can be served with integrity and have the high-quality affordable homes that they deserve. The culture of corruption at NYCHA ends today."
Attorney General Merrick B. Garland said: “The Justice Department will prosecute to the fullest extent of the law those who abuse their positions in public service in order to enrich themselves. The crimes alleged in this case are serious violations of the public trust, and I am grateful to the agents and our partners across government who worked on this case, and to the prosecutors in the Southern District of New York for their tireless efforts to root out corruption.”
DOI Commissioner Jocelyn E. Strauber said: “As charged, these 70 current and former NYCHA supervisors and other staff used their positions of public trust and responsibility to pocket bribes in exchange for doling out no-bid contracts. The extensive bribery and extortion alleged here calls for significant reforms to NYCHA’s no-bid contracting process, which DOI has recommended and NYCHA has accepted. I thank the U.S. Attorney’s Office for the Southern District of New York and our federal law enforcement partners for their commitment to protect scarce public resources intended to maintain public housing, and to hold accountable public servants who abuse their authority, and NYCHA’s senior leadership for its cooperation in this important investigation.”
HSI Special Agent in Charge Ivan J. Arvelo said: “These 70 defendants are accused of demanding kickbacks and bribes for access to no-bid contracts and lucrative, under-the-table deals. Make no mistake, this alleged pervasive corruption had the biggest impact on NYCHA residents themselves, who may have been cheated out of better services and programs. I commend the outstanding work of HSI New York’s Document and Benefit Fraud Task Force for today’s historic operation. As one of the largest investigative agencies, the public can rest assured: Homeland Security Investigations will pursue all avenues of justice for the people of this great city.”
HUD OIG Inspector General Rae Oliver Davis said: “The pay-to-play bribery schemes alleged in the complaints unsealed today waste millions of dollars and risk residents staying in unacceptable living conditions. The alleged conduct identified during this investigation harms the effectiveness of housing programs that support more than 200,000 residents. It also poses a significant risk to the integrity of the HUD rental assistance programs that support housing assistance in New York City and erodes the trust of NYCHA residents in HUD’s programs. We will continue our work with the U.S. Attorney’s Office and our law enforcement partners to prevent and detect these and other schemes.”
DOL-OIG Special Agent in Charge Jonathan Mellone said: “An important part of our mission is to investigate corruption and fraud involving matters within the jurisdiction of the Office of Inspector General. We are committed to working closely with our law enforcement partners to investigate those who exploit governmental programs and the American workers.”
According to the allegations in the Complaints and publicly filed documents in these cases:[1]
NYCHA is the largest public housing authority in the country, providing housing to 1 in 17 New Yorkers in 335 developments across the City and receiving over $1.5 billion in federal funding from the U.S. Department of Housing and Urban Development every year. When repairs or construction work require the use of outside contractors, services must typically be purchased via a bidding process. However, at all times relevant to the Complaints, when the value of a contract was under a certain threshold (up to $10,000), designated staff at NYCHA developments could hire a contractor of their choosing without soliciting multiple bids. This “no-bid” process was faster than the general NYCHA procurement process, and selection of the contractor required approval of only the designated staff at the development where the work was to be performed.
The defendants, all of whom were NYCHA employees during the time of the relevant conduct, demanded and received cash in exchange for NYCHA contracts by either requiring contractors to pay up front in order to be awarded the contracts or requiring payment after the contractor finished the work and needed a NYCHA employee to sign off on the completed job so the contractor could receive payment from NYCHA. As alleged, the defendants typically demanded approximately 10% to 20% of the contract value—between $500 and $2,000 depending on the size of the contract—but some defendants demanded even higher amounts. In total, these defendants demanded over $2 million in corrupt payments from contractors in exchange for awarding over $13 million worth of no-bid contracts. The map below shows the developments affected by the alleged conduct:
If you believe you have information related to bribery, extortion, or any other illegal conduct by NYCHA employees, please contact [email protected] or (212) 306-3356. If you were involved in such conduct, please consider self-disclosing through the SDNY Whistleblower Pilot Program at [email protected].
* * *
The names of the defendants, the charges against them, their ages, and their cities and states of residence are set forth below.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the outstanding investigative work of DOI, HSI, HUD OIG, and DOL-OIG, which work together collaboratively as part of the HSI Document and Benefit Fraud Task Force, as well as the special agents and task force officers of the U.S. Attorney’s Office for the Southern District of New York. Mr. Williams thanked the New York City Police Department and the U.S. Marshals Service for their assistance with today’s arrest operations. Mr. Williams also expressed appreciation for the cooperation and support of NYCHA’s senior executive leadership and thanked NYCHA Federal Monitor Bart Schwartz for his assistance with the investigation.
These prosecutions are part of an Organized Crime Drug Enforcement Task Forces (“OCDETF”) operation. OCDETF identifies, disrupts, and dismantles criminal organizations using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
These cases are being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Jerry J. Fang, Jacob R. Fiddelman, Meredith Foster, Catherine Ghosh, and Sheb Swett are in charge of the prosecutions.
The charges contained in the Complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Defendant
Age
Residence
Charges and Potential Maximum Prison Term
James Baez
58 years
Valley Stream, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Selwyn Barley
61 years
Brooklyn, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Gwendolyn Bell
38 years
Baldwin, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Nymiah Branch
44 years
Elmont, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Marc Buckner
54 years
Stroudsburg, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Patrick Butler
58 years
Brooklyn, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Roberto Cartagena
48 years
Union City, NJ
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Vernon Chambers
45 years
Brooklyn, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Rigoberto Charriez, a/k/a “Ricky”
34 years
Toms River, NJ
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Hector Colon
45 years
Bronx, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Michael Davis
54 years
Groton, CT
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Victor De Los Santos
54 years
Bushkill, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Mauricio Escobar
55 years
East Elmhurst, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Jose Espinal
57 years
Howard Beach, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Joseph Fuller
42 years
Brooklyn, NY
Conspiracy to Solicit and Receive a Bribe: 5 years
Solicitation and Receipt of a Bribe: 10 years
Conspiracy to Commit Extortion Under Color of Official Right: 20 years
Extortion Under Color of Official Right: 20 years
Manuel Garcia
59 years
Lecanto, FL
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Tuesdai Gaskin
57 years
Staten Island, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Corey Gilmore
45 years
Garnerville, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Lateisha Harley
48 years
Bronx, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Joy Harris
48 years
Bushkill, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Jose Hernandez
57 years
New York, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Veronica Hollman
47 years
Brooklyn, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Deshon Hopkins
47 years
Bethlehem, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Nena Huntley
36 years
Bronx, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Michael Johnson
58 years
Staten Island, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
George Kemp
49 years
Irvington, NJ
Conspiracy to Solicit and Receive a Bribe: 5 years
Solicitation and Receipt of a Bribe: 10 years
Conspiracy to Commit Extortion Under Color of Official Right: 20 years
Extortion Under Color of Official Right: 20 years
Jaime Lan, a/k/a “Jimmy”
57 years
Stewartsville, NJ
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Dexter Lino
51 years
Rockaway Park, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Nirmal Lorick
58 years
South Richmond Hill, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Tara Lucas
50 years
Linden, NJ
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Vincent Machado, a/k/a Vincent Arcelay
30 years
New York, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Marlon Mackey
51 years
Jamaica, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Danny Matos
48 years
Effort, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Nakia McCoy
49 years
Brooklyn, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Erik McCreary
55 years
Far Rockaway, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Henry McPhatter
44 years
Bronx, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Joacim Mendez
47 years
Milford, CT
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Juan Mendez
52 years
Stroudsburg, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Juan Mercado
49 years
West Babylon, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
James Miller
55 years
Stroudsburg, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Daniel Muniz
64 years
Long Island City, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Denise Newby-Bovian
54 years
New York, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Alexis Nieves
41 years
Stratford, CT
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Raymond Nunez
56 years
Glendale, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Evelyn Ortiz
55 years
Freeport, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Brett Owens
49 years
New York, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Orlando Pardo
56 years
Maywood, NJ
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Jorge Perez
54 years
Bronx, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Curtis Priester
58 years
Bronx, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Eddie Quetell
57 years
Philadelphia, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Carmen Rivera
53 years
Long Pond, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Jaime Rivera
50 years
Bronx, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
John Rivera
56 years
Bronx, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Herbert Rosa
45 years
New York, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Dwarka Rupnarain
63 years
Middletown, NJ
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Chrisie Salter
46 years
Brooklyn, NY
Conspiracy to Solicit and Receive a Bribe: 5 years
Solicitation and Receipt of a Bribe: 10 years
Conspiracy to Commit Extortion Under Color of Official Right: 20 years
Extortion Under Color of Official Right: 20 years
Clarence Samuel
53 years
Irvington, NJ
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Tanisha Sands
51 years
Brooklyn, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Carolyn Scott
58 years
East Stroudsburg, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Garth Small
55 years
Mount Vernon, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Charles Starks
57 years
Elmont, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Elizabeth Tapia
54 years
Pocono Summit, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Alex Tolozano
57 years
Maywood, NJ
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Luis Torres
38 years
Bronx, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Segundo Torres
56 years
Blakeslee, PA
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Frankie Villanueva
51 years
Bronx, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Lindsay Wade
53 years
Brooklyn, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Angela Williams
64 years
Fayetteville, NC
Conspiracy to Solicit and Receive a Bribe: 5 years
Conspiracy to Commit Extortion Under Color of Official Right: 20 years
Destruction of Evidence: 20 years
False Statements: 5 years
Willie Williams
60 years
Staten Island, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
Calvin Wright
52 years
Brooklyn, NY
Solicitation and Receipt of a Bribe: 10 years
Extortion Under Color of Official Right: 20 years
[1] As the introductory phrase signifies, the entirety of the text of the Complaints and the description of the Complaints set forth herein constitute only allegations, and every fact described therein should be treated as an allegation.
U.S. Attorney Announces Terrorism and Sanctions-Evasion Charges Against Leaders of A Billion-Dollar Oil Laundering Network Orchestrated by Iran’s Islamic Revolutionary Guard CorpsRead the Press Release
Leaders Within Iran’s IRGC, a Designated Terrorist Organization, Partnered with Iranian Officials and a Turkish Energy Group to Launder and Sell Iranian Oil to Government-Affiliated Buyers in China, Russia, and Syria, to Finance Iran’s Terror-Supporting Qods Force
In a Related Action, the U.S. Attorney Announces the Seizure of $108 Million Used as Part of the Scheme to Fund the IRGC’s Qods Force
Damian Williams, the United States Attorney for the Southern District of New York; Merrick B. Garland, the Attorney General of the United States; Lisa O. Monaco, the Deputy Attorney General of the United States; Christopher A. Wray, the Director of the Federal Bureau of Investigation (“FBI”); Matthew G. Olsen, the Assistant Attorney General for National Security; and James Smith, the Assistant Director in Charge of the New York Field Office of the FBI, announced today the unsealing of terrorism, sanctions-evasion, fraud, and money laundering charges against seven key figures in an oil-laundering network orchestrated by the Islamic Revolutionary Guard Corps (“IRGC”), a designated foreign terrorist organization, and its Qods Force. The defendants include a senior Qods Force official, the son of a former Qods Force Commander and Iranian Minister of Petroleum, an Iranian shipping official, and an agent of the Qods Force, together with three Turkish nationals who operate an energy conglomerate that acted as a Qods Force front company. The defendants, BEHNAM SHAHRIYARI, a/k/a “Seyed Aliakbar Mirvakili,” a/k/a “Husain,” a/k/a “Huseyini Hamid,” a/k/a “Seyed Hamid Reza Shahcheraghi”; MORTEZA ROSTAM GHASEMI; MOHAMMADREZA ALIAKBARI, a/k/a “Captain Aliakbari,” a/k/a “Abu Emad”; MOHAMMAD SADEGH KARIMIAN; SITKI AYAN; BAHADDIN AYAN; and KASIM OZTAS are charged in a five-count Indictment unsealed today in Manhattan federal court. The defendants remain at large.
In addition to the unsealing of the charges contained in the Indictment, the U.S. Attorney for the Southern District of New York also announced the seizure of $108 million that IRGC front companies attempted to launder through correspondent transaction accounts at U.S. financial institutions in furtherance of the scheme to fund the Qods Force’s malign activities through the illicit sale of Iranian oil, which are subject to forfeiture to the United States.
U.S. Attorney Damian Williams said: “For years, the IRGC and its Qods Force have been instrumental in the Iranian regime’s violent suppression of political dissent, targeting of Iranian dissidents living abroad, and support of international terrorism — including groups like Hamas, Hizballah, and Palestinian Islamic Jihad. Today’s charges show how, as alleged, the IRGC’s Qods force built a sprawling international network of front companies to launder sanctioned Iranian oil using lies, forgery, and threats of violence. This alleged scheme to finance the Qods Force succeeds through the complicity of wealthy businessmen in countries like Turkey who are eager to turn a corrupt profit from supporting terror groups. The Qods Force oil-laundering network allegedly delivered millions of barrels of Iranian oil to government-affiliated buyers in Russia, China, and Syria, and transferred billions of dollars through the U.S. financial system. This Office has long served at the forefront of law enforcement efforts to fight terrorism and terror finance and to protect the integrity of the U.S. banking system. I commend the tireless and outstanding efforts of our law enforcement partners in unraveling and disrupting the IRGC’s scheme.”
Attorney General Merrick B. Garland said: “Iran utilizes the proceeds of its black-market oil sales to fund its criminal activities, including its support of the IRGC, Hamas, Hizballah, and other Iranian aligned terrorist groups. The Justice Department is targeting this funding source by seizing over $108 million and 500,000 barrels of fuel that would otherwise have enabled Iran to further its destabilizing activities that threaten our national security. In addition to disrupting Iran’s unlawful funding streams, the Justice Department has also charged nine individuals for their roles in supporting Iran in violation of U.S. sanctions. The Justice Department will continue to use every authority we have to cut off the illegal financing and enabling of Iran’s malicious activities, which have become even more evident in recent months.”
Deputy Attorney General Lisa O. Monaco said: “While Iran’s Islamic Revolutionary Guard Corps and its Qods Force are the regime’s terrorist strongarms, oil is its lifeblood. Today’s enforcement actions show that the Justice Department is committed to using every tool – from criminal prosecutions to the lawful seizures of Iranian oil and oil profits – to shut down Iran’s pipeline of petroleum and profits. The charges and seizures announced today strike at the core of the global oil smuggling network that Iran has built to fund its regime of terror and repression and deny the regime millions of dollars in proceeds to further its nefarious agenda.”
FBI Director Christopher A. Wray said: “Iran presents a constant threat to the United States – trying to murder Americans right here within our borders, conducting a cyber-attack on a children’s hospital, supporting terrorists around the world, and more. All of Iran’s crimes cost money. And the FBI will remain committed to enforcing U.S. sanctions that keep money out of its coffers.”
Assistant Attorney General Matthew G. Olsen said: “Today’s cases are part of the Department’s ongoing efforts to cut off the flow of black-market Iranian oil that funds the regime’s malign activity, threatening the United States and our interests around the world. We remain focused on holding accountable those involved in these smuggling schemes, from the officials who oversee the laundering operations, to the network of shadowy businesses that enable them, to the brokers who help facilitate these unlawful transactions.”
FBI Assistant Director in Charge James Smith said: “The Government of Iran has repeatedly shown itself willing to engage in complex schemes to evade U.S. sanctions, which are imposed to protect America's national security interests. These seven individuals allegedly led an audacious effort to fund the Qods Force through the sale of sanctioned Iranian oil to our adversaries. Today's charges serve as a warning to anyone willing to ignore and evade sanctions that the FBI will use all the tools at our disposal to rigorously defend our nation.”
According to the allegations contained in the Indictment:[1]
Overview of the Scheme
Following the imposition of U.S. sanctions against Iran’s petroleum sector in 2018, the Government of Iran’s ability to finance itself through sales of crude oil and petroleum products — Iran’s most important economic sector — was severely diminished. In response, the IRGC Qods Force built a large-scale oil laundering network to give Iran’s government-owned National Iranian Oil Company (“NIOC”) illicit access to global markets to sell crude oil and petroleum products and to use the proceeds to finance the Qods Force.
The IRGC is an Iranian military and counterintelligence organization under the authority of the Supreme Leader of Iran, and the IRGC’s Qods Force is the Government of Iran’s primary arm for carrying out its policy of supporting terrorist and insurgent groups — including Hamas, Hizballah, Palestinian Islamic Jihad, and the Taliban — and insurgent forces in Iraq and Yemen, including Ansarallah, commonly referred to as the Houthis. In the years since sanctions were imposed, the Qods Force partnered with individuals and companies located in Turkey, Lebanon, Russia, Oman, Greece, India, the United Arab Emirates (“UAE”), Cyprus, and elsewhere to conceal the Iranian origin of the oil — including through the use of falsified government records, contracts, and other documents, and by manipulating oil tanker location and identification information — and to then launder the proceeds of the sales through layered transactions, bulk cash smuggling, and trade-based money laundering using agricultural commodities. Through this oil-laundering scheme, the Qods Force arranged the delivery of millions of barrels of Iranian crude oil and petroleum products to government-owned and -affiliated buyers in Syria, Russia, and China. Participants in the scheme caused billions of dollars to be illegally transferred through the U.S. banking system.
To sell NIOC crude oil to the regime of Bashar al-Assad in Syria, the network used an intermediary company in Lebanon to conceal the Government of Iran’s involvement in the oil sales and a ship management company based in India to buy, lease, and manage oil tankers to use in the scheme. The oil tanker fleet was supervised by ALIAKBARI, and the key agreements between the Government of Iran and its foreign partners were authorized and approved by Qods Force Commander Rostam Ghasemi, who previously served as Iran’s Minister of Oil, Minister of Transportation and Urban Development, and the Iranian chair of the Iranian-Syrian Economic Relations Development Committee.
To sell NIOC crude oil to government-affiliated buyers in China, the network used the ASB Group of companies in Turkey, owned by SITKI AYAN, as well as intermediary companies in Oman, Greece, and elsewhere. Commander Ghasemi again authorized and approved key agreements between the Government of Iran and its foreign partners and resolved financial disputes that arose among the participants in the scheme. Companies in the ASB Group acted as intermediaries in the oil sales to conceal the Government of Iran’s role and the Iranian origin of the oil and leased oil tankers that were operated by co-conspirators. SITKI AYAN’s son and senior ASB Group officer, BAHADDIN AYAN, assisted SITKI AYAN in the scheme and caused millions of dollars of wire transfers through the U.S. banking system for the leasing and operation of oil tankers. OZTAS, who was a manager of the ASB Group of companies, also assisted SITKI AYAN in carrying out the scheme and finalizing agreements with ASB Group’s partners. SHAHRIYARI, a senior Qods Force official; KARIMIAN, who acts as an agent of the Qods Force in oil laundering transactions; and ALIAKBARI participated in negotiations among the participants and monitored the progress of the oil sales, oil shipments, and the Qods Force’s receipt of the oil proceeds.
To sell NIOC crude oil to government-affiliated buyers in Russia, the network again used the ASB Group of companies, along with other companies in the UAE, Cyprus, Russia, and Turkey. SHAHRIYARI and KARIMIAN organized a complex web of companies, with SITKI AYAN’s ASB Group of companies at the center, to launder NIOC oil and the proceeds through layered transactions with a Cypriot company and to launder the oil sales through bulk cash smuggling and trade-based money laundering involving Russian agricultural products. Commander Ghasemi and his co-conspirators, including KARIMIAN, controlled the proceeds of the oil sales, which were collected in Russia and transferred through cash couriers, SITKI AYAN’s companies, or the Iranian Embassy in Moscow.
One of the key Qods Force front companies involved in the scheme was China Oil and Petroleum Company (“China Oil and Petroleum”), which, despite its name, was controlled from Iran by Commander Ghasemi and his associates, including KARIMIAN. China Oil and Petroleum acted as an intermediary in sales of NIOC oil, including deals involving SITKI AYAN’s ASB Group of companies, in order to facilitate the ultimate delivery to government-affiliated buyers in China. Between at least 2019 and the present, China Oil and Petroleum has been involved in the transfer of more than $2 billion through the U.S. financial system in furtherance of the scheme to finance the IRGC’s Qods Force.
The Defendants
BEHNAM SHAHRIYARI, a/k/a “Seyed Aliakbar Mirvakili,” a/k/a “Husain,” a/k/a “Huseyini Hamid,” a/k/a “Seyed Hamid Reza Shahcheraghi,” 58, an Iranian national, is a publicly identified IRGC Qods Force senior official. In 2011, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated SHAHRIYARI as a Specially Designated National (“SDN”) under national security controls related to global terrorism for acting on behalf of an IRGC-linked shipping company that provided material support, including weapons, to Hizballah on behalf of the IRGC.
MORTEZA ROSTAM GHASEMI, 32, an Iranian national, is the son of IRGC Qods Force Commander Ghasemi. In 2019, GHASEMI was designated by OFAC as an SDN under national security controls related to global terrorism.
MOHAMMADREZA ALIAKBARI, a/k/a “Captain Aliakbari,” a/k/a “Abu Emad,” 56, an Iranian national, is a senior officer with Safiran Payam Darya Shipping Company, which acts on behalf of the Government of Iran. In 2019, ALIAKBARI was designated by OFAC as an SDN under national security controls related to global terrorism, including his alleged role as an interlocutor between the IRGC Qods Force and vessel managers to help the Qods Force evade sanctions.
MOHAMMAD SADEGH KARIMIAN, 36, an Iranian national, acts as an agent of the IRGC Qods Force. KARIMIAN was designated in 2022 by OFAC as an SDN under national security controls relating to global terrorism and plays a principal role in overseeing the creation and use of intermediary companies to act on behalf of the IRGC and in organizing and supervising deals for the sale and transportation of Iranian crude oil and petroleum products.
SITKI AYAN, 61, a Turkish national, has a long history of partnering with Iranian state-owned oil and gas companies. AYAN is the chairman of the ASB Group of companies, which includes Som Petrol Ticaret A.S., Baslam Petrol Sanayi Ve Ticaret A.S., and Baslam Nakliyat Ve Dis Ticaret, Ltd. Sirketi, all of which have been designated by OFAC as SDNs along with AYAN in December 2022 under national security controls related to global terrorism.
BAHADDIN AYAN, 35, a Turkish national, is the son of SITKI AYAN and a vice president of the ASB Group of companies. In December 2022, BAHADDIN AYAN was designated by OFAC as an SDN under national security controls related to global terrorism.
KASIM OZTAS, 41, a Turkish national, has been managing director of the ASB Group of companies. In December 2022, KASIM OZTAS was designated by OFAC as an SDN under national security controls related to global terrorism.
* * *
The Indictment unsealed today charges each of the defendants with: (i) conspiring to provide material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; (ii) conspiring to violate the International Emergency Economic Powers Act and sanctions against the Governments of Iran and Syria, global terrorists and proliferators of weapons of mass destruction, which carries a maximum sentence of 20 years in prison; (iii) conspiring to commit bank and wire fraud, which carries a maximum sentence of 30 years in prison; (iv) conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison; and (v) conspiring to defraud the United States, which carries a maximum sentence of five years in prison.
The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants would be imposed by a judge.
Mr. Williams praised the outstanding investigative work of the FBI’s New York Field Office Counterintelligence Division. Mr. Williams also thanked the Department of Justice’s National Security Division, Counterintelligence and Export Control Section and Counterterrorism Section for their assistance.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Michael D. Lockard, David W. Denton, Jr., and Nicholas S. Bradley are in charge of the prosecution, with assistance from Trial Attorneys Benjamin Hawk, Beaudre Barnes, and Christopher Magnani of the Counterintelligence and Export Control Section and Trial Attorneys Joshua Champagne and Jennifer Levy of the Counterterrorism Section.
The charges in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Three Men Charged with Running Hawala Scheme Responsible for Illicitly Moving More Than $65 Million Between the United States and the Middle EastRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Thomas Fattorusso, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”); and Christopher A. Nielsen, the Inspector in Charge of the Philadelphia Division of the U.S. Postal Inspection Service (“USPIS”), announced today the unsealing of an Indictment charging MOHANAD AL-ZUBAIDI, SHAKER SALEH MOHAMMED HAUTER, and ABDULKADER NOORI HAMZA with conspiring to operate an unlicensed money transmitting business that was responsible for illicitly moving more than $65 million between the United States and countries in the Middle East, including Yemen, Turkey, Iraq, the United Arab Emirates, and Jordan.
AL-ZUBAIDI was arrested yesterday morning at his home in New Jersey and presented yesterday afternoon in Manhattan federal court before U.S. Magistrate Judge Robert W. Lehrburger. HAUTER was arrested last night at John F. Kennedy International Airport in Queens, New York, attempting to board a flight to Turkey, and will be presented today before Judge Lehrburger. HAMZA is currently at large. The case is assigned to U.S. District Judge P. Kevin Castel.
U.S. Attorney Damian Williams said: “This indictment demonstrates our continued efforts to target and disrupt alleged illicit financial networks that are used every day to criminally transfer proceeds across international borders. Our commitment remains to exposing these unlawful networks and to prosecute those who operate them to the fullest extent of the law.”
IRS-CI Special Agent in Charge Thomas Fattorusso said: “These three men are charged with moving more than $65 million in illegal proceeds to the Middle East. Hawala networks are known to facilitate money laundering and fund criminal organizations abroad, and our investigations look to shut down these networks and stop the flow of dirty money. IRS Criminal Investigation is committed to following the money to protect the United States from these threats, and we are resolute in building criminal cases against these illicit organizations.”
USPIS Inspector in Charge Christopher A. Nielsen said: “This announcement demonstrates the U.S. Postal Inspection Service’s commitment to stopping anyone from using our products in furtherance of an organized criminal scheme. As alleged, these defendants went through great lengths to circumvent and deceive financial institutions for personal enrichment while using U.S. Postal Service Money Orders to engage in international illicit financial transactions. Postal Inspectors will continue to work tirelessly with our law enforcement partners to disrupt networks perpetrating financial crimes and bring all responsible parties to justice.”
As alleged in the Indictment:[1]
Between in or about 2018 through at least in or about 2022, MOHANAD AL-ZUBAIDI, SHAKER SALEH MOHAMMED HAUTER, and ABDULKADER NOORI HAMZA operated an unlicensed money transfer business that was responsible for illicitly moving more than $65 million between the United States and countries in the Middle East. AL-ZUBAIDI, HAUTER, and HAMZA facilitated hundreds of illicit money transfers, with each transfer ranging from thousands to hundreds of thousands of dollars. For the illicit transactions they completed, HAUTER, AL-ZUBAIDI, and HAMZA typically earned a commission of between one and six percent of the total amount transferred. To facilitate these illicit transfers, AL-ZUBAIDI, HAUTER, and HAMZA worked with other members of an international network of money brokers to transfer money through an informal money transmitting system known as “hawala,” which is frequently used by money launderers and other criminals to transfer criminal proceeds abroad.
In furtherance of this scheme, AL-ZUBAIDI purported to operate at least four companies based in Texas or New Jersey: Itaqwen, LLC, Mirage Energies Inc., Mirage Auto Group Inc., and Mirage Life Style Inc. In order to open bank accounts and transfer funds through those accounts, AL-ZUBAIDI falsely represented to banks and other financial institutions at which he opened financial accounts for Mirage Energies Inc., Mirage Auto Group Inc., and Mirage Life Style Inc. (together, the “Mirage Companies”) that he used the Mirage Companies to operate an international trading and investment business or to sell cars. In truth and in fact, and as AL-ZUBAIDI knew, he was not operating a legitimate automobile business (or any other legitimate business) but was operating an unlicensed money transfer business. Throughout the period charged in the Indictment, individuals, companies, and other illicit money brokers based outside of the United States contacted AL-ZUBAIDI directly — or through other money brokers like HAUTER — to enlist AL-ZUBAIDI to transfer money to others on their behalf in exchange for a fee.
HAMZA, the father of AL-ZUBAIDI, worked directly with AL-ZUBAIDI to operate their unlicensed money transfer business. For example, HAMZA picked up cash from other members of the scheme (including HAUTER) at various locations, including in the Bronx, New York. Then, HAMZA delivered that cash to AL-ZUBAIDI directly or used it to purchase money orders that HAMZA later deposited into bank accounts in the name of the Mirage Companies, which were used to complete illicit money transfers.
HAUTER ran his own unlicensed money transfer business based in the Bronx, New York, and served as an intermediary money broker for AL-ZUBAIDI and HAMZA. HAUTER regularly coordinated unlicensed money transfers for AL-ZUBAIDI and HAMZA by directing customers to them or by enlisting them to complete transactions for HAUTER’s own customers. In addition, HAUTER regularly connected AL-ZUBAIDI with other money brokers based outside of the United States to facilitate additional illicit money transfers. Like AL-ZUBAIDI, HAUTER typically received a commission for each illicit transaction he completed.
* * *
MOHANAD AL-ZUBAIDI, 36, of Piscataway, New Jersey; SHAKER SALEH MOHAMMED HAUTER, 51, of the Bronx, New York; and ABDULKADER NOORI HAMZA, 62, of Piscataway, New Jersey, were charged with one count of conspiracy to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison, and one count of operating an unlicensed money transmitting business, which carries a maximum sentence of five years in prison. AL-ZUBAIDI was also charged with bank fraud, which carries a maximum sentence of 30 years in prison.
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.
Mr. Williams praised the outstanding investigative work of IRS-CI and USPIS. Mr. Williams also recognized the assistance of U.S. Customs and Border Protection.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Matthew J. King and Amanda C. Weingarten 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.
U.S. Attorney’s Office Collects More Than $2.2 Billion in Civil and Criminal Actions in Fiscal Year 2023Read the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that the Southern District of New York collected $2,249,716,748.68 in criminal and civil actions in Fiscal Year 2023. Of this amount, $550,594,893.86 was collected in criminal actions, $63,979,949.82 was collected in civil actions, and $1,632,141,905 was collected in asset forfeiture actions.
Additionally, the Southern District of New York worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $2,379,785.90 in cases pursued jointly by these offices. Of this amount, $81,164.56 was collected in criminal actions, and $2,298,261.34 was collected in civil actions.
U.S. Attorney Damian Williams said: “As advocates for the victims of criminal and civil wrongdoing, this Office has perennially been the nation’s leader in securing forfeiture, restitution, and other financial penalties – this year collecting over $2.2 billion. I could not be prouder of the career prosecutors of this Office who work tirelessly to hold bad actors accountable and return property to those who have been victimized.”
A highlight of the Office’s work this year includes the July 2023 sentencing of Allianz Global Investors U.S. (“AGI”). AGI was sentenced in connection with a multibillion-dollar fraud scheme involving a series of private investment funds managed by AGI after pleading guilty to securities fraud. AGI was sentenced to financial penalties comprised of over $463 million in forfeiture, over $2.32 billion in restitution, and over $2.33 billion in fines.
The U.S. Attorney’s Offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the Department’s Crime Victims Fund, which distributes the funds collected to federal and state compensation and victim assistance programs. In addition, forfeited assets deposited into the Department of Justice Asset Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
Former CIA Officer Joshua Adam Shulte Sentenced to 40 Years in Prison for Espionage and Child Pornography ChargesRead the Press Release
Joshua Adam Schulte, 35, of New York, New York, was sentenced today to 480 months in prison for crimes of espionage, computer hacking, contempt of court, making false statements to the FBI, and child pornography. Schulte’s theft is the largest data breach in the history of the CIA, and his transmission of that stolen information to WikiLeaks is one of the largest unauthorized disclosures of classified information in the history of the United States.
Today’s sentencing followed Schulte’s convictions at trials that concluded on March 9, 2020, July 13, 2022, and Sept. 13, 2023.
“Mr. Schulte severely harmed U.S. national security and directly risked the lives of CIA personnel, persisting in his efforts even after his arrest,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “As today’s sentence reaffirms, the Department of Justice is committed to investigating, prosecuting, and holding accountable those who would violate their constitutional oath and betray the trust of the American people they pledged to protect.”
“Joshua Schulte betrayed his country by committing some of the most brazen, heinous crimes of espionage in American history," said U.S. Attorney Damian Williams for the Southern District of New York. "He caused untold damage to our national security in his quest for revenge against the CIA for its response to Schulte’s security breaches while employed there. When the FBI caught him, Schulte doubled down and tried to cause even more harm to this nation by waging what he described as an ‘information war’ of publishing top secret information from behind bars. And all the while, Schulte collected thousands upon thousands of videos and images of children being subjected to sickening abuse for his own personal gratification. The outstanding investigative work of the FBI and the career prosecutors in this office unmasked Schulte for the traitor and predator that he is and made sure that he will spend 40 years behind bars – right where he belongs.”
“Joshua Schulte caused grave harm to U.S. national security and contributed to the abuse of scores of innocent children,” said Executive Assistant Director Larissa L. Knapp of the FBI’s National Security Branch. “Using his expertise, Schulte stole and exposed classified national security information including some of the U.S. government’s most sensitive techniques and personnel, but he didn’t only exploit the U.S. government – he also exploited vulnerable children by collecting images and videos capturing their horrific abuse for his own pleasure. Together with our partners, the FBI will remain steadfast in our pursuit of those who put the security of the American people and its most vulnerable citizens at risk.”
According to court documents, from 2012 to 2016, Schulte was employed as a software developer in the Center for Cyber Intelligence (CCI), which conducts offensive cyber operations: cyber espionage relating to terrorist organizations and foreign governments. Schulte and other CCI developers worked on tools that were used in, among other things, human-enabled operations: cyber operations that involved a person with access to the computer network being targeted by the cyber tool. In addition to being a developer, Schulte was also temporarily one of the administrators of one of the servers and suite of development programs used to build cyber tools.
In March 2016, Schulte was moved within branches of CCI as a result of personnel disputes between Schulte and another developer. Following that transfer, in April 2016, Schulte abused his administrator powers to grant himself administrator privileges over a development project from which he had been removed as a result of the branch change. Schulte’s abuse of administrator privileges was detected, and CCI leadership directed that administrator privileges would immediately be transferred from developers, including Schulte, to another division. Schulte was also given a warning about self-granting administrator privileges that had previously been revoked.
Schulte had, however, secretly opened an administrator session on one of the servers before his privileges were removed. On April 20, 2016, after other developers had left the CCI office, Schulte used his secret server administrator session to execute a series of cyber-maneuvers on the CIA network to restore his revoked privileges, break in to the backups, steal copies of the entire CCI tool development archives (the Stolen CIA Files), revert the network back to its prior state, and delete hundreds of log files in an attempt to cover his tracks. Schulte’s theft of the Stolen CIA Files is the largest data breach in CIA history.
From his home computer, Schulte then transmitted the Stolen CIA Files to WikiLeaks, using anonymizing tools recommended by WikiLeaks to potential leakers, such as the Tails operating system and the Tor browser. On May 5, 2016, having transmitted the Stolen CIA Files to WikiLeaks, Schulte wiped and reformatted his home computer’s internal hard drives.
On March 7, 2017, WikiLeaks began publishing classified data from the Stolen CIA Files. Between March and November 2017, there were a total of 26 disclosures of classified data from the Stolen CIA Files that WikiLeaks denominated as Vault 7 and Vault 8 (the WikiLeaks Disclosures). The WikiLeaks Disclosures were one of the largest unauthorized disclosures of classified information in the history of the United States, and Schulte’s theft and disclosure immediately and profoundly damaged the CIA’s ability to collect foreign intelligence against America’s adversaries; placed CIA personnel, programs, and assets directly at risk; and cost the CIA hundreds of millions of dollars. The effect was described at trial by the former CIA Deputy Director of Digital Innovation as a “digital Pearl Harbor,” and the disclosure caused exceptionally grave harm to the national security of the United States.
Following the WikiLeaks Disclosures, Schulte was voluntarily interviewed on multiple occasions by the FBI in March 2017. During those interviews, Schulte repeatedly lied, including denying being responsible for the theft of the Stolen CIA Files or for the WikiLeaks Disclosures, and spinning fake narratives about ways the Stolen CIA Files could have been obtained from CIA computers, in the hope of deflecting suspicion away from Schulte and diverting law enforcement resources to false leads.
In March 2017, the FBI searched Schulte’s apartment in New York pursuant to a search warrant and recovered, among other things, multiple computers, servers, and other electronic storage devices, including Schulte’s personal desktop computer (the Desktop Computer), which Schulte built while living in Virginia and then transported to New York in November 2016. On the Desktop Computer, FBI agents found layers of encryption hiding tens of thousands of videos and images of child sexual abuse materials, including approximately 3,400 images and videos of disturbing and horrific child pornography and the rape and sexual abuse of children as young as two years old, as well as images of bestiality and sadomasochism. Schulte collected some of these files during his employment with the CIA and continued to stockpile child pornography from the dark web and Russian websites after moving to New York.
While detained pending trial, in approximately April 2018, Schulte sent a copy of the affidavit in support of the warrant to search his apartment, which a protective order entered by the court prohibiting Schulte from disseminating, to reporters from two different newspapers, and Schulte acknowledged in recorded phone calls that he knew he was prohibited from sharing protected material like the affidavit.
Despite being warned by the court not to violate the protective order further, in the summer and fall of 2018, Schulte made plans to wage what he proclaimed to be an “information war” against the U.S. government. To pursue these ends, Schulte obtained access to contraband cellphones while in jail that he used to create anonymous, encrypted email and social media accounts. Schulte also attempted to use the contraband cellphones to transmit protected discovery materials to WikiLeaks and planned to use the anonymous email and social media accounts to publish a manifesto and various other postings containing classified information about CIA cyber techniques and cyber tools. In a journal, Schulte wrote that he planned to “breakup diplomatic relationships, close embassies, [and] end U.S. occupation across the world[.]” Schulte successfully sent emails containing classified information about the CCI development network and the number of employees in particular CIA cyber intelligence groups to a reporter.
As a result of this conduct, on March 9, 2020, Schulte was found guilty at trial of contempt of court and making material false statements. On July 13, 2022, Schulte was found guilty at trial of eight counts: illegal gathering and transmission of national defense information in connection with his theft and dissemination of the Stolen CIA Files, illegal transmission and attempted transmission of national defense information, unauthorized access to a computer to obtain classified information and information from a department or agency of the U.S. in connection with his theft of the Stolen CIA Files, and two counts of causing transmission of harmful computer commands in connection with his theft of the Stolen CIA Files. Finally, on Sept. 13, 2023, Schulte was found guilty at trial on charges of receiving, possessing, and transporting child pornography.
The FBI Counterintelligence Division and Child Exploitation and Human Trafficking Task Force of the FBI New York Field Office investigated the case, with the extraordinary assistance of FBI computer scientists from the Cyber Action Team. The FBI Washington Field Office, CIA Office of General Counsel, and National Security Division’s Counterintelligence and Export Control Section provided significant assistance.
Assistant U.S. Attorneys David W. Denton Jr., Michael D. Lockard, and Nicholas S. Bradley for the Southern District of New York prosecuted the case.
Former CIA Officer Joshua Adam Schulte Sentenced to 40 Years in Prison for Espionage and Child Pornography CrimesRead 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; and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that JOSHUA ADAM SCHULTE was sentenced to 40 years in prison by U.S. District Judge Jesse M. Furman for crimes of espionage, computer hacking, contempt of Court, making false statements to the FBI, and child pornography. SCHULTE’s theft is the largest data breach in the history of the CIA, and his transmission of that stolen information to WikiLeaks is one of the largest unauthorized disclosures of classified information in the history of the U.S. Today’s sentencing followed SCHULTE’s convictions at trials that concluded on March 9, 2020, July 13, 2022, and September 13, 2023.
U.S. Attorney Damian Williams said: “Joshua Schulte betrayed his country by committing some of the most brazen, heinous crimes of espionage in American history. He caused untold damage to our national security in his quest for revenge against the CIA for its response to Schulte’s security breaches while employed there. When the FBI caught him, Schulte doubled down and tried to cause even more harm to this nation by waging what he described as an ‘information war’ of publishing top secret information from behind bars. And all the while, Schulte collected thousands upon thousands of videos and images of children being subjected to sickening abuse for his own personal gratification. The outstanding investigative work of the FBI and the career prosecutors in this Office unmasked Schulte for the traitor and predator that he is and made sure that he will spend 40 years behind bars – right where he belongs.”
Assistant Attorney General Matthew G. Olsen said: “Mr. Schulte severely harmed U.S. national security and directly risked the lives of CIA personnel, persisting in his efforts even after his arrest. As today’s sentence reaffirms, the Department of Justice is committed to investigating, prosecuting, and holding accountable those who would violate their constitutional oath and betray the trust of the American people they pledged to protect.”
FBI Assistant Director in Charge James Smith said: “Today, Joshua Schulte was rightly punished not only for his betrayal of our country, but for his substantial possession of horrific child pornographic material. The severity of his actions is evident, and the sentence imposed reflects the magnitude of the disturbing and harmful threat posed by his criminal conduct. The FBI will not yield in our efforts to bring to justice anyone who endangers innocent children or threatens our national security.”
According to court documents and evidence at trial:
From 2012 to 2016, SCHULTE was employed as a software developer in the Center for Cyber Intelligence (“CCI”), which conducts offensive cyber operations: cyber espionage relating to terrorist organizations and foreign governments. SCHULTE and other CCI developers worked on tools that were used in, among other things, human-enabled operations: cyber operations that involved a person with access to the computer network being targeted by the cyber tool. In addition to being a developer, SCHULTE was also temporarily one of the administrators of one of the servers and suite of development programs used to build cyber tools.
In March 2016, SCHULTE was moved within branches of CCI as a result of personnel disputes between SCHULTE and another developer. Following that transfer, in April 2016, SCHULTE abused his administrator powers to grant himself administrator privileges over a development project from which he had been removed as a result of the branch change. SCHULTE’s abuse of administrator privileges was detected, and CCI leadership directed that administrator privileges would immediately be transferred from developers, including SCHULTE, to another division. SCHULTE was also given a warning about self-granting administrator privileges that had previously been revoked.
SCHULTE had, however, secretly opened an administrator session on one of the servers before his privileges were removed. On April 20, 2016, after other developers had left the CCI office, SCHULTE used his secret server administrator session to execute a series of cyber-maneuvers on the CIA network to restore his revoked privileges, break in to the backups, steal copies of the entire CCI tool development archives (the “Stolen CIA Files”), revert the network back to its prior state, and delete hundreds of log files in an attempt to cover his tracks. SCHULTE’s theft of the Stolen CIA Files is the largest data breach in CIA history.
From his home computer, SCHULTE then transmitted the Stolen CIA Files to WikiLeaks, using anonymizing tools recommended by WikiLeaks to potential leakers, such as the Tails operating system and the Tor browser. On May 5, 2016, having transmitted the Stolen CIA Files to WikiLeaks, SCHULTE wiped and reformatted his home computer’s internal hard drives.
On March 7, 2017, WikiLeaks began publishing classified data from the Stolen CIA Files. Between March and November 2017, there were a total of 26 disclosures of classified data from the Stolen CIA Files that WikiLeaks denominated as Vault 7 and Vault 8 (the “WikiLeaks Disclosures”). The WikiLeaks Disclosures were one of the largest unauthorized disclosures of classified information in the history of the U.S., and SCHULTE’s theft and disclosure immediately and profoundly damaged the CIA’s ability to collect foreign intelligence against America’s adversaries; placed CIA personnel, programs, and assets directly at risk; and cost the CIA hundreds of millions of dollars. The effect was described at trial by the former CIA Deputy Director of Digital Innovation as a “digital Pearl Harbor,” and the disclosure caused exceptionally grave harm to the national security of the U.S.
Following the WikiLeaks Disclosures, SCHULTE was voluntarily interviewed on multiple occasions by the FBI in March 2017. During those interviews, SCHULTE repeatedly lied, including denying being responsible for the theft of the Stolen CIA Files or for the WikiLeaks Disclosures and spinning fake narratives about ways the Stolen CIA Files could have been obtained from CIA computers, in the hope of deflecting suspicion away from SCHULTE and diverting law enforcement resources to false leads.
In March 2017, the FBI searched SCHULTE’s apartment in New York pursuant to a search warrant and recovered, among other things, multiple computers, servers, and other electronic storage devices, including SCHULTE’s personal desktop computer (the “Desktop Computer”), which SCHULTE built while living in Virginia and then transported to New York in November 2016. On the Desktop Computer, FBI agents found layers of encryption hiding tens of thousands of videos and images of child sexual abuse materials, including approximately 3,400 images and videos of disturbing and horrific child pornography and the rape and sexual abuse of children as young as two years old, as well as images of bestiality and sadomasochism. SCHULTE collected some of these files during his employment with the CIA and continued to stockpile child pornography from the dark web and Russian websites after moving to New York.
While detained pending trial, in approximately April 2018, SCHULTE sent a copy of the affidavit in support of the warrant to search his apartment, which a protective order entered by the Court prohibiting SCHULTE from disseminating, to reporters from two different newspapers, and SCHULTE acknowledged in recorded phone calls that he knew he was prohibited from sharing protected material like the affidavit.
Despite being warned by the Court not to violate the protective order further, in the summer and fall of 2018, SCHULTE made plans to wage what he proclaimed to be an “information war” against the U.S. government. To pursue these ends, SCHULTE obtained access to contraband cellphones while in jail that he used to create anonymous, encrypted email and social media accounts. SCHULTE also attempted to use the contraband cellphones to transmit protected discovery materials to WikiLeaks and planned to use the anonymous email and social media accounts to publish a manifesto and various other postings containing classified information about CIA cyber techniques and cyber tools. In a journal, SCHULTE wrote that he planned to “breakup diplomatic relationships, close embassies, [and] end U.S. occupation across the world[.]” SCHULTE successfully sent emails containing classified information about the CCI development network and the number of employees in particular CIA cyber intelligence groups to a reporter.
As a result of this conduct, on March 9, 2020, SCHULTE was found guilty at trial of contempt of court and making material false statements. On July 13, 2022, SCHULTE was found guilty at trial of eight counts: illegal gathering and transmission of national defense information in connection with his theft and dissemination of the Stolen CIA Files, illegal transmission and attempted transmission of national defense information, unauthorized access to a computer to obtain classified information and information from a department or agency of the U.S. in connection with his theft of the Stolen CIA Files, and two counts of causing transmission of harmful computer commands in connection with his theft of the Stolen CIA Files. Finally, on September 13, 2023, SCHULTE was found guilty at trial on charges of receiving, possessing, and transporting child pornography.
* * *
In addition to the prison term, SCHULTE, 35, of New York, New York, was sentenced to a lifetime of supervised release.
Mr. Williams praised the outstanding efforts of the Counterintelligence Division and the Child Exploitation and Human Trafficking Task Force of the FBI’s New York Field Office, as well as the extraordinary work of FBI computer scientists from the Cyber Action Team. Mr. Williams also thanked the FBI Washington Field Office, the CIA Office of General Counsel, and the National Security Division’s Counterintelligence and Export Control Section for their assistance.
This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys David W. Denton Jr., Michael D. Lockard, and Nicholas S. Bradley are in charge of the prosecution.
Wisconsin Man Sentenced to Prison for Hacking Fantasy Sports and Betting WebsiteRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that JOSEPH GARRISON was sentenced to 18 months in prison for his role in a scheme to hack user accounts on a fantasy sports and betting website (the “Betting Website”) and sell access to those accounts, resulting in losses of hundreds of thousands of dollars to the users. GARRISON was sentenced today before U.S. District Judge Lewis A. Kaplan. On November 15, 2023, GARRISON pled guilty to one count of conspiring to commit computer intrusion.
U.S. Attorney Damian Williams said: “Joseph Garrison and his co-conspirators orchestrated a bold credential stuffing attack – collecting stolen usernames and password pairs from other large-scale data breaches – by exploiting vulnerabilities to siphon approximately $600,000 from unsuspecting victims. Such attacks not only breach personal security but erode trust in online platforms. Today’s sentencing underscores the urgent need for vigilance and the critical importance of our collective efforts in combatting cyber threats and safeguarding digital integrity.”
According to the charging documents and other filings and statements made in court:
On or about November 18, 2022, GARRISON launched a “credential stuffing attack” on the Betting Website. During a credential stuffing attack, a cyber threat actor collects stolen credentials, or username and password pairs, obtained from other large-scale data breaches, which can be purchased on the dark web. The threat actor then systematically attempts to use those stolen credentials to obtain unauthorized access to accounts held by the same user with other companies and providers in order to compromise accounts where the user has maintained the same password. Here, in connection with the attack on the Betting Website, there was a series of attempts to log into the Betting Website accounts using a large list of stolen credentials.
GARRISON and others successfully accessed approximately 60,000 accounts on the Betting Website (the “Victim Accounts”) through the credential stuffing attack. In some instances, the individuals who unlawfully accessed the Victim Accounts were able to add a new payment method on the account, deposit $5 into that account through the new payment method to verify that method, and then withdraw all the existing funds in the Victim Account through the new payment method (i.e., to a newly added financial account belonging to the hacker), thus stealing the funds in the Victim Accounts. Using this method, GARRISON and others stole approximately $600,000 from approximately 1,600 Victim Accounts on the Betting Website.
Law enforcement executed a search on GARRISON’s home in February 2023. In that search, they located programs typically used for credential stuffing attacks. Those programs require individualized “config” files for a target website to launch credential stuffing attacks, and law enforcement located approximately 700 such config files for dozens of different corporate websites on GARRISON’s computer. Law enforcement also located files containing nearly 40 million username and password pairs on GARRISON’s computer, which are also used in credential stuffing attacks.
On GARRISON’s cellphone, law enforcement also located conversations between GARRISON and his co-conspirators, including discussions about how to hack the Betting Website and how to profit from the hack of the Betting Website by extracting funds from the Victim Accounts directly or by selling access to the Victim Accounts. In one particular conversation, GARRISON discussed, in substance and in part, how successful he was at credential stuffing attacks, how much he enjoyed credential stuffing attacks, and how GARRISON believed that law enforcement would not catch or prosecute him. Specifically, GARRISON messaged the following, in substance and in part: “fraud is fun . . . im addicted to see money in my account . . . im like obsessed with bypassing shit.”
* * *
In addition to the prison term, GARRISON, 19, of Madison, Wisconsin, was sentenced to 3 years of supervised release and ordered to pay $175,019.11 in forfeiture and $1,327,061 in restitution.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation. Mr. Williams also thanked the New York City Police Department for its assistance in the investigation.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Kevin Mead and Micah Fergenson are in charge of the prosecution.
Three Defendants Charged in Interstate Gun Trafficking SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, Erin Keegan, the Acting Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”); 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 today the unsealing of a Complaint charging CHRISTEN CHEN, a/k/a “Nauti,” SHAQOYA HALL, a/k/a “Q,” and ZACHARY HAMPTON, a/k/a “J,” with conspiracy to engage in the unlicensed dealing of firearms, firearms trafficking, and interstate transportation of firearms, in connection with their involvement in a scheme to illegally transport firearms from Georgia to New York, among other places, for resale.
SHAQOYA HALL and ZACHARY HAMPTON were arrested on January 30, 2024, in New York, New York. CHRISTEN CHEN was arrested on January 30, 2024, in Staten Island, New York. HALL and HAMPTON were presented before U.S. Magistrate Judge Robert W. Lehrburger and detained. CHEN will be presented later today before Judge Lehrburger.
U.S. Attorney Damian Williams said: “As alleged, these defendants directly contributed to the flow of illegal guns into New York City, endangering communities in this District for little more than financial gain. To anyone who is thinking about illegally selling guns to New Yorkers or illegally bringing guns to New York: we and our law enforcement partners are watching.”
HSI Acting Special Agent in Charge Erin Keegan said: “HSI New York’s Violent Gang Task Force worked collaboratively with the ATF and the NYPD to disrupt the alleged iron pipeline of firearms flooding New York neighborhoods. I commend all agencies involved in this vital partnership, which prevented 13 illegal firearms from potentially making their way into the hands of criminals and gang members.”
ATF Assistant Special Agent in Charge Tommy Kalogiros said: “The unchecked flow of weapons onto our streets is a threat to every single person in NYC. These arrests serve as a notice to those who think they are above the law and can illegally traffic guns into our communities. The men and women of ATF NY will never waiver on our commitment to protect the public and to aggressively target firearms traffickers. The proliferation of illegal guns may be continuous, but law enforcement is united and strong. I thank all the members of the ATF NY Joint Firearms Task Force, HSI, NYPD, and SDNY for their diligent work and tireless dedication to our shared public safety mission.”
NYPD Commissioner Edward A. Caban said: “When investigating the gun violence that plagues our city, the NYPD and our law enforcement partners always look at how the illegal firearms arrived in the five boroughs and who is selling them here – then we devise and execute a strategy to dismantle those schemes. These latest arrests are a prime example of a great plan coming together. I commend everyone involved in this multi-agency effort, from our NYPD investigators to all of our colleagues at the ATF, HSI, and the Office of the U.S. Attorney for the Southern District of New York.”
According to the allegations in the Complaint unsealed today in Manhattan federal court:[1]
From at least in or around September 2023, up to and including January 2024, the defendants worked together to obtain firearms in southern states — primarily Georgia —, transport the firearms to New York via car or bus, and resell the firearms in, among other places, New York City (the “Gun Trafficking Scheme”). Over the course of the Gun Trafficking Scheme, the defendants discussed the sale of approximately 40 firearms and successfully sold at least 13 firearms to a confidential informant (the “CI”).
Over the course of the Gun Trafficking Scheme, HAMPTON and CHEN communicated directly with the CI and discussed the potential sale of a variety of firearms including, among other things and as depicted below, semi-automatic handguns, handguns with extended magazines, at least one assault style handgun, and at least one rifle:
On three occasions, CHEN, HAMPTON, and HALL met with the CI to sell firearms. On or about October 16, 2023, CHEN, HAMPTON, and HALL sold one firearm to the CI in Staten Island. On or about October 22, 2023, CHEN and HALL sold the CI four firearms in Staten Island. And, on or about January 30, 2024, HAMPTON and HALL were arrested in New York, New York, while attempting to sell the CI eight firearms.
October 15, 2023, Sale
October 22, 2023, Sale
January 30, 2024, Attempted Sale
* * *
CHEN, 28, of Staten Island, New York; HALL, 24, of Staten Island, New York; and HAMPTON 28, of Augusta, Georgia, are each charged with one count of conspiracy to commit gun trafficking, which carries a maximum sentence of five years in prison, and one count of gun trafficking, which carries a maximum sentence of five years in prison. CHEN and HALL are additionally charged with one count of interstate travel with intent to engage in gun trafficking, which carries a maximum sentence of 10 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of HSI, ATF, and the NYPD.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorney Ashley C. Nicolas is in charge of the prosecution.
The charges contained in the Complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Florida Man Arrested for Role in Multimillion-Dollar Medicare Scheme Based on Fraudulent Billing for Durable Medical EquipmentRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the arrest of ALAN SWISS on charges of health care fraud and conspiracy to violate the Anti-Kickback Statute. SWISS is the third defendant charged, following the arrests in December of co-defendants ERIN FOLEY and TED ALBIN. As alleged in a four-count Indictment unsealed today, SWISS ran two medical supply companies that illegally submitted more than $17 million in claims to Medicare, submitting those claims through a Medicare billing company run by FOLEY and ALBIN. FOLEY and ALBIN are charged with using that billing company to bill Medicare for more than $25 million in fraudulent claims for durable medical equipment (“DME”), on which Medicare and related private insurers paid out more than $9 million.
SWISS was presented this morning before U.S. Magistrate Judge William Matthewman in West Palm Beach, Florida, and ordered to appear again in the West Palm Beach federal courthouse on February 5 for a removal hearing. In Manhattan, the case is assigned to U.S. District Judge John G. Koeltl.
U.S. Attorney Damian Williams said: “As alleged, the defendants devised a scheme to get rich quick by fraudulently billing Medicare, a taxpayer-funded service, for medical equipment. Their alleged scheme bilked taxpayers of millions of dollars, and fraudulent practices such as this can drive up the cost of health care for everyone. Close watch for fraud must be paid to our taxpayer-funded programs to ensure fairness for all Americans who rely on these critical systems for medical care.”
According to statements made in court and publicly filed documents in this case:[1]
From approximately 2016 through April 2019, SWISS operated Tropical Medical Marketing, Inc., a call center which cold-called Medicare beneficiaries and used their personal and medical information without the beneficiaries’ knowledge or consent to prepare orders for DME. SWISS then sold these DME orders to co-conspirators who illegally obtained purported signatures or “authorizations” of health care providers so that fraudulent claims could be submitted to Medicare for reimbursement.
From approximately 2017 through April 2019, SWISS also operated two DME supply companies: Modern Medical Equipment, Inc., which SWISS used primarily to bill Medicare directly under Medicare Part B, and A&E Medical, Inc., which SWISS used primarily to bill private insurance companies under Medicare Part C, also known as “Medicare Advantage.” To obtain the DME orders that SWISS used to support his unlawful claims to Medicare, SWISS used two unlawful methods: (i) purchasing such orders outright, and (ii) using patient information that SWISS had generated through his call center and purchasing the purported signatures or authorizations of health care providers. SWISS caused the two DME supply companies that he controlled to submit claims to Medicare for more than $17 million — through the billing company operated by FOLEY and SWISS — on which Medicare paid out nearly $5 million.
FOLEY and ALBIN owned and controlled Grapevine Professional Services, Inc. (“Grapevine”), a billing company that they used to bill Medicare for more than $25 million, and to collect more than $9 million, through claims based on orders for DME that had been unlawfully sold and bought. Most of these unlawful purchases of DME orders were by Grapevine customers that were registered with Medicare as DME supply companies. Additional unlawful purchases were made directly by FOLEY and ALBIN through three DME supply companies that they themselves owned and controlled. Once these DME orders were unlawfully purchased, FOLEY and ALBIN used those orders as the basis for fraudulent claims to Medicare and to private insurers covered by Medicare Part C. Approximately 70% of the fraudulent billing submitted by Grapevine came from the two DME supply companies controlled by SWISS.
In addition, FOLEY and ALBIN acted as brokers of DME orders, introducing Grapevine customers who wished illegally to buy DME orders to co-conspirators who illegally sold them orders. In return for such introductions of buyers to sellers, FOLEY and ALBIN received additional kickbacks, both in the form of cash and in the form of additional DME orders. FOLEY and ALBIN also profited through these introductions by gaining additional illegal billing business for Grapevine. Following these introductions, FOLEY and ALBIN continued to oversee the relations between buyers and sellers of DME orders, for example by tracking how many orders particular sellers owed to particular buyers.
* * *
SWISS, 51, of West Palm Beach County, Florida, is charged with conspiracy to commit health care fraud and wire fraud, which carries a maximum sentence of 20 years in prison; health care fraud, which carries a maximum sentence of 10 years in prison; wire fraud, which carries a maximum sentence of 20 years in prison; and conspiracy to violate the Anti-Kickback Statute, which carries a maximum sentence of five years in prison.
The maximum potential penalties 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 U.S. Department of Health and Human Services, Office of the Inspector General.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys David Raymond Lewis and Rushmi Bhaskaran are in charge of the prosecution.
The charges contained in the Indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
[1] The Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Citizen of Dominican Republic Sentenced to 79 Months in Prison for $16 Million COVID-19 Unemployment Benefits Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that YOHAURIS RODRIGUEZ HERNANDEZ was sentenced to 79 months in prison in connection with her participation in a fraudulent scheme to obtain over $16 million in Government benefits intended to provide relief to individuals without employment during the COVID-19 pandemic. RODRIGUEZ HERNANDEZ previously pled guilty to conspiracy to commit wire fraud, theft of government funds, and aggravated identity theft before U.S. District Judge Philip M. Halpern, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Yohauris Rodriguez Hernandez participated in a scheme that systematically targeted Government funds established as a safety net for millions of people across the United States struggling to make ends meet during the COVID-19 pandemic. Today’s sentence demonstrates that this Office and our law enforcement partners continue to work tirelessly to prosecute those who sought to commit pandemic relief fraud.”
According to court documents and statements made during court proceedings:
The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of hundreds of billions of dollars in unemployment insurance benefits payable to eligible, lawful workers and administered through state agencies, such as the New York State Department of Labor (“NYS DOL”) in New York, in accordance with federal laws and regulations.
From February 2020 through December 2020, RODRIGUEZ HERNANDEZ and her co-defendant, Henry Fermin, along with others, participated in a scheme to obtain COVID-19 unemployment benefits through the fraudulent filing and verification of hundreds of benefit applications using the names and social security numbers of numerous other individuals. Law enforcement agencies were first alerted to the scheme after RODIRGUEZ HERNANDEZ and Fermin fled a Yonkers hotel in December 2020, leaving behind in their previously occupied room approximately 747 pieces of mail from the NYS DOL. Those pieces of mail contained, among other unemployment benefit-related materials, NYS DOL-issued prepaid debit cards for numerous other individuals linked to approximately 568 New York State unemployment insurance benefit accounts. Over the course of the relevant time period, RODRIGUEZ HERNANDEZ and Fermin exchanged numerous text messages, images, and other communications that included personal identifying information — such as names, social security numbers, and dates of birth — that were used in connection with the filing and verification of numerous fraudulent applications for unemployment benefits primarily in New York as well as other states. RODRIGUEZ HERNANDEZ also recruited and bribed a letter carrier of the U.S. Postal Service, who in turn enlisted two other postal workers, to collectively intercept NYS DOL mail that RODRIGUEZ and her co-conspirators directed to addresses on each of the postal workers’ respective postal routes.
Overall, the fraudulent scheme resulted in at least approximately $16.1 million in unemployment insurance benefit payments authorized across hundreds of accounts and at least approximately $3.2 million in actual benefit payments disbursed.
* * *
In addition to the prison term, RODRIGUEZ HERNANDEZ, 42, of the Dominican Republic, was sentenced to three years of supervised release and ordered to forfeit $3,294,368.50 and to pay $3,294,368.50 in restitution.
Mr. Williams praised the outstanding investigative work of the Department of Labor Office of Inspector General, the U.S. Postal Inspection Service, the Social Security Administration Office of Inspector General, and the U.S. Postal Service Office of Inspector General. Mr. Williams also thanked the City of Yonkers Police Department, the NYS DOL, Homeland Security Investigations, Immigrations and Customs Enforcement, and the New York City Police Department for their assistance with the investigation.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Kevin Sullivan is in charge of the prosecution.
Two More Men Charged with Hacking Fantasy Sports and Betting WebsiteRead 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 the unsealing of a six-count criminal Complaint charging NATHAN AUSTAD, a/k/a “Snoopy,” and KAMERIN STOKES, a/k/a “TheMFNPlug,” in connection with a scheme to hack user accounts at a fantasy sports and betting website (the “Betting Website”) and sell access to those accounts in order to steal hundreds of thousands of dollars from them. AUSTAD was arrested today in Farmington, Minnesota, and is expected to be presented later today before U.S. Magistrate Judge David T. Schultz in the District of Minnesota. STOKES was arrested today in Memphis, Tennessee, and is expected to be presented later today before U.S. Magistrate Judge Annie T. Christoff in the Western District of Tennessee.
U.S. Attorney Damian Williams said: “As alleged, Nathan Austad and Kamerin Stokes were involved a scheme to hack into the accounts of tens of thousands of victims and then to sell access to those stolen accounts online. Our office is relentless in tracking down the perpetrators of cybercrime. Earlier this month, we announced an SDNY Whistleblower Pilot Program to encourage early and voluntary self-disclosure of criminal activity. To all cybercriminals: call us before we call you.”
FBI Assistant Director in Charge James Smith said: “Cyberattacks are growing increasingly more sophisticated, targeting all manner of businesses and posing a great risk to economic security. Nathan Austad and Kamerin Stokes were allegedly part of a cyber intrusion that resulted in hundreds of thousands of dollars being stolen from victims’ accounts. As these defendants found out, if you conduct a cyberattack for profit, you can bet the FBI can and will bring you to justice.”
As alleged in the Complaint:[1]
On or about November 18, 2022, AUSTAD, Joseph Garrison, and others launched a “credential stuffing attack” on the Betting Website. During a credential stuffing attack, a cyber threat actor collects stolen credentials, or username and password pairs, obtained from other large-scale data breaches of other companies, which can be purchased on the darkweb. The threat actor then systematically attempts to use those stolen credentials to obtain unauthorized access to accounts held by the same user with other companies and providers, in order to compromise accounts where the user has maintained the same password. Here, in connection with the attack on the Betting Website, there was a series of attempts to log into the Betting Website accounts using a large list of stolen credentials.
AUSTAD and Garrison successfully accessed approximately 60,000 accounts at the Betting Website (the “Victim Accounts”) through the credential stuffing attack. In some instances, the individuals who unlawfully accessed the Victim Accounts were able to add a new payment method on the account, deposit $5 into that account through the new payment method to verify that method, and then withdraw all the existing funds in the Victim Account through the new payment method (i.e., to a newly added financial account belonging to the hacker), thus stealing the funds in the Victim Account.
Access to the Victim Accounts were sold on various websites that traffic in stolen accounts, which are frequently referred to as “Shops.” AUSTAD and Garrison sold some of the Victim Accounts on shops that they each directly controlled, and AUSTAD’s shop was named after the character Snoopy from the Peanuts comic strip. A photo of AUSTAD’s Shop website with victim companies redacted is below:
As to other of the Victim Accounts, AUSTAD and Garrison sold them in bulk to co-conspirators, who in turn sold them on their own Shops. STOKES controlled his own Shop, used the alias “TheMFNPlug,” and purchased Victim Accounts in bulk from Garrison. Garrison and STOKES messaged each other as to what prices STOKES should charge and what Garrison’s cut of the sales should be. Garrison provided STOKES with Victim Accounts with a total listed account value of over $125,000.
Photos from STOKES’s Instagram account advertising the availability of Victim Accounts for purchase on his Shop are below, with the name of the Betting Website redacted:
On or about December 2, 2022, AUSTAD messaged about the existence of this investigation, “everyone 3hould’ve been prepared for this before cashing out lol,” and a co-conspirator replied, “lol fbi can’t do shit.” On or about May 19, 2023, AUSTAD messaged about the existence of this investigation, “like we I know the risk when we started lol . . . everyone knows their committing fraud.”
In order to advertise the success of his Shop that sold stolen accounts, AUSTAD used artificial intelligence image generation tools to create images using the following prompts: “8k hyper-realistic digital art snoopy hacking into 8k hyper-realistic computer with hacker stuff on the screen,” “8k hyper realistic snoopy designed jet but instead of smoke trails it has money trails,” and, “100 bill hyper realistic but instead of the president its snoopy.” AUSTAD also controlled cryptocurrency accounts that received cryptocurrency worth approximately $465,000, and those accounts appear to be proceeds of his credential stuffing attacks and sale of stolen accounts.
Ultimately, AUSTAD, STOKES, Garrison, and others stole approximately $600,000 from approximately 1,600 Victim Accounts.
Garrison was previously arrested in connection with the attack on the Betting Website, and, on November 15, 2023, he pled guilty to conspiracy to commit computer intrusion in connection with that attack. Garrison’s sentencing is scheduled for February 1, 2024, at 4:00 p.m. before U.S. District Judge Lewis A. Kaplan.
* * *
AUSTAD, 19, of Farmington, Minnesota, and STOKES, 21, of Memphis, Tennessee, are each charged with (i) conspiracy to commit computer intrusions, which carries a maximum sentence of five years in prison; (ii) unauthorized access to a protected computer to further intended fraud, which carries a maximum sentence of five years in prison; (iii) unauthorized access to a protected computer, which carries a maximum sentence of five years in prison; (iv) wire fraud conspiracy, which carries a maximum sentence of 20 years in prison; (v) wire fraud, which carries a maximum sentence of 20 years in prison; and (vi) aggravated identity theft, which carries a mandatory minimum sentence of two 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 work of the FBI. Mr. Williams also thanked the New York City Police Department, U.S. Secret Service, and the U.S. Attorney’s Offices for the District of Minnesota and the Western District of Tennessee for their assistance in the investigation.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Kevin Mead and Micah Fergenson 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 therein should be treated as an allegation.
U.S. Attorney Charges NYPD Officer with Sexual Exploitation of A Minor and Possession of Child PornographyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Erin Keegan, the Acting Special Agent in Charge of the U.S. Department of Homeland Security, Homeland Security Investigations (“HSI”); and Edward A. Caban, the Commissioner of the New York City Police Department (“NYPD”), announced that ANGAD BEHARRY, an NYPD officer, and GISAINET CRISTINA CHIRINOS VILORIA were arrested yesterday and each charged with one count of sexual exploitation of a child. BEHARRY was also charged with an additional count of possession of child pornography.
The Complaint charges that from at least on or about August 31, 2022, through at least on or about September 3, 2022, the defendants conspired to induce a female minor (the “Victim”) to engage in sexually explicit conduct, to take sexually explicit photographs and videos of the Victim, and to transmit them over the Internet to BEHARRY. In addition, the Complaint charges that from at least in or about April 23, 2022, to June 20, 2023, BEHARRY knowingly possessed sexually explicit video and images of minors, including prepubescent minors and minors under the age of 12. BEHARRY was presented yesterday before U.S. Magistrate Judge Judith C. McCarthy and detained without bail. VILORIA was also presented yesterday in the Southern District of Indiana, where she was arrested, and detained without bail.
U.S. Attorney Damian Williams said: “The alleged actions of Angad Beharry and Gisainet Cristina Chirinos Viloria are unconscionable and despicable. Moreover, Beharry, as New York City Police officer, is trusted in this community to protect us and stand up for what is right, but he now stands accused of victimizing a child to satisfy his own alleged repulsive desires. We encourage anyone with additional information pertaining to this case to contact HSI at 1-866-DHS-2423.”
HSI Acting Special Agent in Charge Erin Keegan said: “Angad Beharry took an oath to protect the people of this great city. As alleged, he betrayed his duty, chose to serve his vile desires, and, in turn, is accused of the same heinous crimes he once swore to combat. Whether here or elsewhere around the world, HSI New York and our law enforcement partners remain steadfast in our commitment to ensuring the safety of all individuals, especially those victims who are too young or vulnerable to do so themselves.”
As alleged in the Criminal Complaint:[1]
Between on or about August 31, 2022, and September 3, 2022, BEHARRY — using the alias “Gad” — asked VILORIA to take sexually explicit photographs of a nine-year-old child with whom VILORIA appeared to be acquainted, which VILORIA did and then transmitted the photographs to BEHARRY via WhatsApp. BEHARRY asked VILORIA the price “for everything” — and stated that he transmitted money to her.
In or about October 2022, members of the Colombian National Police rescued a one-year-old female from Medellin, Colombia, whose mother took sexually explicit photographs of her and distributed them via social media. The mother was arrested and reported to Colombian law enforcement that she had communicated with BEHARRY via Facebook, and that BEHARRY had asked her for sexually explicit material depicting sexual acts between the mother’s infant and the mother, among other requests. The mother also told law enforcement that she had a friend in Venezuela — i.e., VILORIA — who she believed was also in communication with BEHARRY.
In addition, between on or about April 23, 2022, and June 20, 2023, BEHARRY possessed multiple photographs and videos containing child sexual abuse imagery, including material depicting males engaged in sexual acts with young female children.
* * *
ANGAD BEHARRY, 46, of, Yonkers, New York, and GISAINET CRISTINA CHIRINOS VILORIA, 23, a citizen of Venezuela residing in Goshen, Indiana, are each charged with one count of sexual exploitation of a minor, which carries a minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison. BEHARRY is additionally charged with one count of possession of child pornography depicting prepubescent minors or minors under the age of 12, which carries a maximum sentence of 20 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 the judge.
Mr. Williams praised the outstanding investigative work of HSI’s New York Child Exploitation Investigations Team, HSI’s Transnational Criminal Investigative Unit, the Colombian National Police, and the NYPD Internal Affairs Bureau.
Mr. Williams stated that the investigation is ongoing and requests that any individuals with information concerning ANGAD BEHARRY and GISAINET CRISTINA CHIRINOS VILORIA and any individuals who may have encountered someone using the WhatsApp name “Gad,” please contact HSI through its toll-free Tip Line at 1-866-DHS-2423 or [email protected] and reference this case. From outside the U.S. and Canada, callers should dial 802-872-6199. Hearing-impaired users can call TTY 802-872-6196.
The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Timothy Ly and Kathryn Wheelock 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 are only allegations, and every fact described should be treated as an allegation.
Former Law Firm Partner Sentenced to 10 Years in Prison for Laundering $400 Million of OneCoin Fraud ProceedsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that MARK SCOTT was sentenced to 10 years in prison by U.S. District Judge Edgardo Ramos for laundering approximately $400 million of proceeds from the massive international fraud scheme known as “OneCoin.” Today’s sentencing followed SCOTT’s conviction on all counts at trial on November 21, 2019.
U.S. Attorney Damian Williams said: “Mark Scott, previously convicted at trial of laundering over $400 million of OneCoin proceeds for ‘Crypto Queen,’ Ruja Ignatova, used his law license as a means to participate in a massive money laundering scheme for a cryptocurrency that had no value since its inception. Scott, an equity partner at a prominent international law firm, had boasted of earning ‘50 by 50.’ Indeed, Scott accomplished his goal, but by fraud and deception, and will now spend a decade in prison and has been ordered to forfeit all of his illegal proceeds.”
According to the Indictment, documents filed in the case, and evidence introduced at trial:
OneCoin, which began operations in 2014 and was based in Sofia, Bulgaria, marketed and sold a fraudulent cryptocurrency by the same name through a global multi-level-marketing (“MLM”) network. OneCoin began operating in the U.S. in or around 2015. The OneCoin scheme was one of the largest fraud schemes ever perpetrated. Between the fourth quarter of 2014 and the fourth quarter of 2016 alone, the scheme took in more than $4 billion from at least 3.5 million victims.
OneCoin marketed its fake cryptocurrency through a global MLM network of OneCoin members. Unlike legitimate cryptocurrencies, OneCoin had no actual value and was conceived of as a fraud from day one. The misrepresentations made to OneCoin investors were legion, and the cryptocurrency was worthless. Among other things, OneCoin lied to its members about how its cryptocurrency was valued, claiming that the price of OneCoin was based on market supply and demand, when in fact OneCoin itself arbitrarily set the value of the coin without regard to market forces. The purported value of a OneCoin grew steadily from €0.50 to approximately €29.95 per coin, as of in or about January 2019. The purported price of OneCoins never decreased in value.
SCOTT, who was employed between June 2015 and September 2016 as an equity partner at Locke Lord LLP, a prominent international law firm, was first introduced to OneCoin’s co-founder, RUJA IGNATOVA, in September 2015. Beginning in early 2016, SCOTT formed a series of fake private equity investment funds in the British Virgin Islands known as the “Fenero Funds.” SCOTT then disguised incoming transfers of approximately $400 million into the Fenero Funds as investments from “wealthy European families,” when in fact the money represented proceeds of the OneCoin fraud scheme. SCOTT layered the money through various Fenero Fund bank accounts in the Cayman Islands and the Republic of Ireland. SCOTT subsequently transferred the funds back to IGNATOVA and other OneCoin associated entities, this time disguising the transfers as outbound investments from the Fenero Funds. As part of the scheme, SCOTT and his co-conspirators lied to banks and other financial institutions all over the world, including to banks in the U.S., to cause those institutions to make transfers of OneCoin proceeds and evade anti-money laundering procedures.
SCOTT, who boasted about earning “50 by 50,” was paid more than $50 million for his money laundering services. He used that money to purchase, among other things, a collection of luxury watches worth hundreds of thousands of dollars, a Ferrari and several Porsches, a 57-foot Sunseeker yacht, and three multimillion-dollar seaside homes in Cape Cod, Massachusetts.
* * *
In addition to the prison term, SCOTT, 55, of Coral Gables, Florida, was sentenced to three years of supervised release. SCOTT was also ordered to forfeit a money judgment in the amount of $392,940,000, several bank accounts, a yacht, two Porsche automobiles, and four real-estate properties.
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 Nicholas Folly, Juliana Murray, and Kevin Mead are in charge of the prosecution.
Westchester County Jail Correction Officer and Co-Conspirator Charged with Robbery and Witness IntimidationRead 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”); Joseph Spano, the Commissioner of the Westchester County Department of Correction (“WCDOC”); and Jose A Gomerez, Police Commissioner of the City of Newburgh, announced that RECALDO FRAY, a correction officer at Westchester County Jail in Vahala, New York, was charged on Monday, January 15 with committing an armed robbery in Newburgh, New York, and later returning to Newburgh to intimidate the robbery victim. FRAY was arrested and presented on Tuesday, January 16 before U.S. Magistrate Judge Andrew E. Krause. During his presentment, FRAY made an application for bail, which the court denied, and he has been detained. Additionally, a Mount Vernon man, KAHEEM PALMER, was charged on Monday, January 22 with committing the armed robbery along with FRAY. PALMER was arrested and presented yesterday before U.S. Magistrate Judge Judith C. McCarthy. PALMER made an application for bail, which the court denied, and he was detained.
U.S. Attorney Damian Williams said: “Recaldo Fray, a correction officer at Westchester County Jail, and Kaheem Palmer are alleged to have committed a gunpoint robbery of two individuals, restraining them and stealing their cash and marijuana. Fray allegedly betrayed his sworn duty to uphold the law, and he will now experience the justice system not as a partner, but as an accused violent offender. Both men will be held accountable for their alleged violent and brazen behavior.”
FBI Assistant Director in Charge James Smith said: “As a correction officer, Recaldo Fray swore an oath to uphold the law, not break it. Fray violated this oath when along with Kaheem Palmer, they allegedly committed an armed robbery. Frey compounded his problems by later attempting to intimidate his victim. Frey and Palmer now face significant time inside a jail cell. The FBI’s Hudson Valley Safe Streets Task Force will continue to put violent offenders – no matter their profession – behind bars.”
WCDOC Commissioner Joseph Spano said: “It’s both disgraceful and upsetting when one of our correction officers betrays their oath to serve and protect as sworn peace officers. Moreover, the alleged actions of this individual tarnishes the reputation of all honest and dedicated correction officers. I commend all of the involved law enforcement agencies for their dedication to uncovering this unlawful behavior and our Major Case Squad for providing assistance. Mr. Fray’s employment with the Westchester Department of Correction has been terminated.”
As alleged in the Complaints against FRAY and PALMER:[1]
On or about December 4, 2023, FRAY and PALMER forced entry into a residence in Newburgh, New York, restrained the two victims inside, and stole, at gunpoint, various items of value, including a large quantity of marijuana and approximately $4,500 in cash. FRAY then returned to the same residence on or about December 16, 2023, and attempted to threaten and intimidate a victim.
* * *
FRAY, 31, of Mount Vernon, New York, is charged with one count of Hobbs Act robbery, which carries a maximum sentence of 20 years in prison; one count of use, carrying, and possession of a firearm, which was brandished, in furtherance of a crime of violence, which carries a minimum sentence of seven years in prison to run consecutive to any other sentence imposed and a maximum sentence of life in prison; and one count of tampering with a witness or victim, and attempting to do the same, which carries a maximum sentence of 20 years in prison.
PALMER, 31, of Mount Vernon, New York, is charged with one count of Hobbs Act robbery, which carries a maximum sentence of 20 years in prison, and one count of use, carrying, and possession of a firearm, which was brandished, in furtherance of a crime of violence, which carries a minimum sentence of seven years in prison to run consecutive to any other sentence imposed 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 defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the FBI’s Hudson Valley Safe Streets Task Force and the City of Newburgh Police Department. Mr. Williams also thanked the Westchester County Department of Correction and its major case squad for their assistance in the investigation.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Margaret N. Vasu and Jennifer N. Ong 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 Complaints and the description of the Complaints set forth herein constitute only allegations, and every fact described should be treated as an allegation.
U.S. Attorney Charges Bedford Hills Man with Sexual Exploitation of A Minor and Attempted EnticementRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the unsealing of a Complaint charging JAMES COLLINS, JR., with enticing a minor to engage in unlawful sexual activity and with sexual exploitation of a minor. COLLINS was arrested this morning and will be presented later this afternoon before U.S. Magistrate Judge Judith C. McCarthy in White Plains federal court.
U.S. Attorney Damian Williams said: “This case underlines the urgent need for law enforcement to continue its efforts to protect children from those who prey on them. As today’s arrest shows, we will use every tool available to law enforcement to investigate and prosecute those alleged to have sexually exploited children.”
As alleged in the Complaint:[1]
On or about November 7, 2023, COLLINS attempted to persuade an individual acting in an undercover capacity and posing as a 15-year-old boy to meet the defendant in Westchester County, New York, for the purpose of engaging in sexual activities.
From at least on or about September 16, 2023, up to and including at least on or about November 7, 2023, COLLINS, who used the Snapchat username “jimc20237221,” persuaded a 17-year-old minor in Illinois to engage in sexually explicit activity and send COLLINS videos and photos of such activity.
COLLINS was previously arrested and charged in Westchester County with Criminal Sexual Act in the Third Degree in connection with his November 7, 2023, conduct. He was on bail at the time of today’s arrest.
Anyone who may have encountered COLLINS or whose child may have had any communications with COLLINS is asked to contact the FBI at 1-800-CALL-FBI (225-5324).
* * *
COLLINS, 67, of Bedford Hills, New York, is charged with one count of attempting to entice a minor to engage in unlawful sexual activity, which carries a maximum sentence of life in prison. He is also charged with one count of sexual exploitation of a minor, which carries a maximum sentence of 30 years in prison.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the efforts of the Federal Bureau of Investigation, the Westchester District Attorney’s Office, the New Castle Police Department, and the Oswego Police Department in Oswego, Illinois in connection with this investigation.
The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Marcia S. Cohen is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
British Investor and Billionaire Businessman 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 JOSEPH LEWIS to charges of committing securities fraud and conspiring to commit securities fraud through insider trading. LEWIS was arrested in July 2023 and pled guilty before U.S. District Judge Jessica G.L. Clarke today. In addition, BROAD BAY LTD., a corporate entity owned and directed by LEWIS, pled guilty today before Judge Clarke to a superseding criminal information, regarding its participation in a securities fraud scheme to hide LEWIS’s ownership shares of a pharmaceutical company through a pattern of false filings and misleading statements. In connection with this plea, BROAD BAY LTD. has agreed to pay $50 million in financial penalties, among other penalties, and to continue to cooperate with the Government in this investigation.
U.S. Attorney Damian Williams said: “Today’s guilty pleas once again confirm — as I said in announcing the charges against Joseph Lewis just six months ago – the law applies to everyone, no matter who you are or how much wealth you have. Billionaire Lewis abused inside information he gained through his access to corporate boardrooms to tip off his friends, employees, and romantic interests. Now, he will pay the price with a federal conviction, the prospect of time in prison, and the largest financial penalty for insider trading in a decade. His company, Broad Bay Ltd., who failed to detect and report this misconduct, has also been held to account and will plead guilty and pay more than $50 million in financial penalties.”
According to the allegations contained in the Indictments, Superseding Information, and other filings and statements made in court:
JOSEPH LEWIS is a billionaire businessman and investor who is the principal owner of the Tavistock Group, an international private investment organization. By virtue of LEWIS’s investments in certain companies, he has controlled one or more board of director seats at those companies and has deputized employees to serve on various company boards. In turn, through these employees, LEWIS received material, non-public information about these companies. LEWIS, on multiple occasions over the course of several years, misused and misappropriated this confidential information to provide stock tips to various individuals in his life, including his employees, romantic partners, and friends, as a way to provide them with compensation and gifts. These individuals, in turn, traded on the tips provided by LEWIS for vast personal gain.
In addition, BROAD BAY LTD. and other corporate entities under the direction and control of LEWIS engaged in a scheme to hide LEWIS’s ownership and control shares of a pharmaceutical company through a pattern of false filings and misleading statements. LEWIS and his companies were required to file schedules of share ownership with the Securities and Exchange Commission (the “SEC”) because he was an owner of more than 10% of the stock of Mirati Therapeutics (“Mirati”). LEWIS and entities under his control reported to the SEC that he owned between 16 and 19.99% of the stock, when, in reality, he beneficially owned and controlled more than 19.99% of Mirati stock through offshore shell companies and other entities. As a result of the false disclosure of his ownership, corporate entities under the direction and control of LEWIS were able to exercise warrants in Mirati that they would otherwise not have been able to exercise, at vast financial gain. LEWIS and certain entities under his control falsely swore on SEC filings to incorrect Mirati share ownership totals on at least 13 separate occasions between in or about November 2013 and in or about November 2017. In or about 2018, the Mirati shares held in offshore entities were sold, and then approximately $25 million in proceeds was transferred to an account controlled by BROAD BAY LTD.
As part of the guilty plea of BROAD BAY LTD., LEWIS and BROAD BAY LTD. have agreed LEWIS and his companies will resign and relinquish their control over board of director seats and participation in board of director meetings of any corporation publicly traded in the United States, will cease ownership of certain investments over the five year period of probation, will cooperate with the Government’s ongoing investigation and prosecution, and will pay $50 million in financial penalties, including a $15,586,021 fine and $34,413,979 in forfeiture.
* * *
LEWIS, 86, a British national, pled guilty 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.
BROAD BAY LTD. pled guilty to one count of securities fraud, which carries a maximum sentence of five years’ probation.
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.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation. He also expressed appreciation for the SEC, which previously initiated civil proceedings against LEWIS.
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.
President of Hair Testing Company Pleads Guilty to Defrauding over 88,000 Customers in Testing ScamRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the guilty plea of KYLE TSUI in connection with a fraud scheme that resulted in sales of approximately $5.9 million worth of fabricated allergy and sensitivity tests to tens of thousands of customers. TSUI pled guilty to wire fraud and mail fraud before U.S. Magistrate Judge Judith C. McCarthy earlier today, following his extradition from Spain in November 2023.
U.S. Attorney Damian Williams said: “As he has now admitted, Kyle Tsui defrauded tens of thousands of innocent victims, whose health was put at risk with false allergy and sensitivity testing results. Tsui’s company advertised ‘highly-rated’ allergy and sensitivity testing services but didn’t even attempt to test the samples his paying customers sent in, instead directing others to throw the samples in the garbage. Tsui now faces prison time for his brazen scam.”
According to the allegations contained in the Indictment, the defendant’s statements when pleading guilty, and statements made in related court filings and proceedings:
From September 2018 through April 2019, TSUI orchestrated a scheme to defraud customers of his company, the “Allergy Testing Company,” by purporting to sell food and environmental sensitivity testing services that TSUI knew were not, in fact, being performed. In total, TSUI sold fabricated tests worth approximately $5.9 million to more than 88,000 victims through an online marketplace.
TSUI’s company promoted its “[h]ighly-rated, top selling sensitivity and intolerance test” that “determines how your body responds to 800 different food and environmental items” with just “a small hair sample.” But rather than actually test the hair samples as customers were promised, TSUI directed that the hair samples be discarded in the trash without any laboratory analysis. Customers then received fabricated test results purporting to identify certain foods and environmental factors that were “safe” for them and others that the customers were supposedly “sensitive” to and should avoid.
* * *
KYLE TSUI, 41, of Ontario, Canada, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of mail fraud, which carries a maximum sentence of 20 years in prison. TSUI also agreed to pay forfeiture in the amount of $4,165,884.70.
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. TSUI’s sentencing is scheduled for May 30, 2024, before U.S. District Judge Kenneth M. Karas.
Mr. Williams praised the outstanding work of the U.S. Postal Inspection Service. Mr. Williams also thanked the Hyde Park Police Department, the New York State Troopers, the Toronto Police Service, the Department of Justice’s Office of International Affairs, and the Canadian Anti-Fraud Centre for their assistance in the investigation, as well as the Government of Spain for working with U.S. authorities to arrest and extradite TSUI to the United States.
If you believe you are a victim of the Allergy Testing Company 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 prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Qais Ghafary and Benjamin Levander are in charge of the prosecution, which was previously handled by former Assistant U.S. Attorney Daniel Loss.
Former Police Chief and Doctor Plead Guilty to Insider Trading Around Alexion Pharmaceuticals’ Acquisition of Portola PharmaceuticalsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that SHAWN CRONIN and PAUL FELDMAN each pled guilty before U.S. Magistrate Judge Sarah Netburn to one count of securities fraud in connection with their participation in an insider trading scheme surrounding the announcement of Alexion Pharmaceutical, Inc.’s acquisition of Portola Pharmaceuticals, Inc. CRONIN and FELDMAN were arrested in June 2023.
U.S. Attorney Damian Williams said: “As a law enforcement leader, Cronin was sworn to uphold the law and was trusted to set an example for junior officers. And as a medical doctor, Feldman held a position of trust and respect in our society. Rather than live up to their posts, these men broke the rules to try to make a quick buck. Their convictions reflect my Office’s ongoing commitment to relentlessly rooting out corruption in our financial markets.”
According to the allegations in the Indictment and statements made in public court proceedings:
In 2020, CRONIN, FELDMAN, and others engaged in an insider trading scheme surrounding the announcement of Alexion’s acquisition of Portola. In April 2020, before that acquisition was publicly announced, CRONIN’s childhood friend, a then-vice president at Alexion, misappropriated material, non-public information (“MNPI”) about the acquisition and provided it to CRONIN so that CRONIN could profitably trade in securities.
In turn, CRONIN, who, at the time, was a police sergeant in Dighton, Massachusetts, and went on to become the police chief, provided another friend with the MNPI about Portola’s pending acquisition, both so that that friend could trade in advance of the acquisition and so that that friend would assist CRONIN in formulating trading strategies to maximize CRONIN’s trading profits.
The friend CRONIN tipped was a physician who went on to tip his friend and colleague, FELDMAN. FELDMAN, for his part, aggressively bought Portola call options and also tipped at least five additional individuals who traded on the tip.
After Alexion’s acquisition of Portola was publicly announced on the morning of May 5, 2020, causing Portola’s stock price to increase significantly, CRONIN, FELDMAN, and others who had purchased shares and options based on the inside information sold their securities, reaping millions of dollars of illegally obtained profits.
* * *
CRONIN, 44, of Dighton, Massachusetts, and FELDMAN, 49, of Poughquag, New York, each pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison.
The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. CRONIN and FELDMAN will be sentenced by U.S. District Judge Gregory H. Woods on May 13, 2024.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation. Mr. Williams also thanked the U.S. Securities and Exchange Commission, which has filed a parallel civil action.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Margaret Graham, Sarah Mortazavi, and Samuel P. Rothschild are in charge of the prosecution.
Bronx Man Charged with Production, Distribution, and Possession 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 the unsealing of a Complaint charging DERICK COLON with producing, distributing, and possessing child pornography. COLON was presented Monday, January 22 before Chief U.S. Magistrate Judge Sarah Netburn.
U.S. Attorney Damian Williams said: “Derick Colon’s alleged conduct is horrific and deeply disturbing. Colon was entrusted to care for his daughter, but instead, as alleged, Colon violated that trust by filming himself performing heinous sex acts against her and other minors and distributing those videos through social media. Investigating and prosecuting those who sexually exploit children is of paramount importance to this Office, and we will work around the clock to protect the children in our community.”
FBI Assistant Director in Charge James Smith said: “The alleged actions of Derick Colon are depraved and beyond disturbing. Parents should nurture and protect a child, not subject them to extreme sexual exploitation and abuse. Colon now faces severe punishment for his alleged inexcusable crimes. The FBI’s Child Exploitation and Human Trafficking Task Force will continue to do whatever it takes to protect the most vulnerable members of society—our children—from predators, no matter who they are.”
According to the allegations in the Complaint:[1]
On or about January 19, 2024, COLON shared videos with another individual on a social networking application that allows users to exchange private messages and send photos and videos to others within the network. The videos depict COLON engaged in sexually explicit conduct with a minor who appears to be approximately six to eight years old (“Victim-1”).
On or about January 21, 2024, law enforcement officials executed a judicially authorized search warrant at a known residence of COLON. Upon entering the residence, law enforcement officials observed COLON sitting on the couch beside a girl who appeared to be approximately four years old (“Victim-2”). COLON stated that Victim-2 was his daughter.
Law enforcement officials seized COLON’s cellphone pursuant to the search warrant and discovered approximately 12 additional videos of COLON sexually abusing a minor who appears to be Victim-2. Following his arrest and after waiving his Miranda rights, COLON stated, in sum and substance, that he “messed up” and that he had sexually abused Victim-2.
* * *
COLON, 24, of the Bronx, New York, is charged with one count of production of child pornography, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison, and one count of distribution of child pornography, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison. COLON is further charged with possession of child pornography, which carries a maximum sentence of 20 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 defendant will be determined by a judge.
Mr. Williams praised the efforts of the FBI and the New York City Police Department (“NYPD”) for their outstanding work on this matter, particularly the FBI-NYPD New York Child Exploitation and Human Trafficking Task Force. Mr. Williams also thanked the Manhattan District Attorney’s Office for their assistance. He added that the investigation is ongoing.
Any individuals who believe they have information that may be relevant to this investigation should contact the FBI at 1-800-CALL-FBI or tips.fbi.gov.
The prosecution is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney William K. Stone is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Two Defendants Charged with Obstruction of Justice in Connection with Sentencing ProceedingsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Erin Keegan, the Acting Special Agent in Charge of the U.S. Department of Homeland Security, Homeland Security Investigations (“HSI”); and Edward A. Caban, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a Complaint charging LEO HERNANDEZ with obstruction of justice in connection with his October 2022 sentencing proceeding in a federal narcotics case. HERNANDEZ will be presented today before the Honorable Sarah Netburn.
Mr. Williams and Christopher Hileman, the Special Agent in Charge of the U.S. Department of State, Office of Inspector General (“State-OIG”), also announced the unsealing of an indictment charging OBIOMA IWOBI with obstruction of justice in connection with his March 2023 sentencing proceeding in a federal fraud case. IWOBI’s case has been assigned to the Honorable Naomi Reice Buchwald.
U.S. Attorney Damian Williams said: “Leo Hernandez and Obioma Iwobi allegedly provided false information to federal judges in improper attempts to obtain leniency at sentencing. The obstruction of justice charges announced today should send a clear message that this Office will not tolerate attempts by criminal defendants to manipulate the court system.”
HSI Acting Special Agent in Charge Erin Keegan said: “As alleged, Leo Hernandez has shown once again he is neither reformed nor remorseful for the crimes of which he is accused. I commend HSI New York’s Border Enforcement Security Task Force and our law enforcement partners for their continued emphasis on securing justice.”
State-OIG Special Agent in Charge Christopher Hileman said: “Our office commends and appreciates the vigilance and efforts of the United States Attorney’s Office for the Southern District of New York in addressing the alleged attempts by a subject to obtain leniency during his sentencing hearing through the submission of false attestations. This indictment shows that the U.S. criminal justice system will hold accountable those who seek to deceive and defraud it.”
According to the allegations in the Complaint charging HERNANDEZ and the Indictment charging IWOBI:[1]
HERNANDEZ was prosecuted for participating in a conspiracy to distribute narcotics in United States v. Leo Hernandez, No. 20 Cr. 79 (RMB). In advance of the sentencing proceeding in that case, HERNANDEZ obstructed the sentencing proceeding by, among other things, (i) falsely stating to the U.S. Probation Office for the Southern District of New York that he had an opioid addiction, which was then incorporated into HERNANDEZ’s presentence investigation report, and (ii) causing his attorney in that case to make false representations to the Court in connection with sentencing regarding HERNANDEZ’s purported addiction, including a claim that the addiction motivated the criminal conduct for which HERNANDEZ was prosecuted. However, in truth and in fact, HERNANDEZ had no such addiction and provided false information to the Court in an improper attempt to obtain leniency at sentencing.
IWOBI was prosecuted for participating in a fraud and identity theft scheme in United States v. Obioma Iwobi, No. 22 Cr. 652 (ER). In advance of the sentencing proceeding in that case, IWOBI caused false and fraudulent letters to be submitted, and caused false and misleading statements to be made, to the Court in an improper attempt to obtain leniency at sentencing.
* * *
HERNANDEZ, 42, of Staten Island, New York, and IWOBI, 43, who is currently incarcerated in Seagoville, Texas, are each charged with one count of obstruction of justice, which carries a maximum sentence of 20 years in prison.
The maximum potential sentence 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 HSI, HSI New York’s Border Enforcement Security Task Force’s Trade Enforcement and Interdiction Group, the NYPD, and State-OIG.
The cases are being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Samuel P. Rothschild and Robert B. Sobelman are in charge of the HERNANDEZ prosecution. Assistant U.S. Attorney T. Josiah Pertz is in charge of the IWOBI 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 Complaint and the Indictment and the description of the Complaint and Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Bronx Attorney Charged with Large-Scale Immigration Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael Alfonso, the Acting Special Agent in Charge of the Newark Field Office of Homeland Security Investigations (“HSI”), announced today the unsealing of a Complaint charging Bronx-based immigration attorney KOFI AMANKWAA and his son, KOFI AMANKWAA, JR., with carrying out a large-scale immigration fraud scheme. The defendants will be presented this afternoon before U.S. Magistrate Judge Sarah Netburn.
U.S. Attorney Damian Williams said: “As alleged, Kofi Amankwaa, an immigration attorney, and his son, Kofi Amankwaa, Jr., sought to make a mockery of the U.S. immigration system by conspiring to defraud the United States and commit immigration fraud. Amankwaa and his son allegedly exploited the Violence Against Women Act — a law that allows noncitizen victims of domestic abuse a path to lawful permanent residence status — for their own financial gain by falsely claiming that their clients were victims of domestic abuse. Thanks to the dedicated actions of our law enforcement partners and the career prosecutors of this Office, the defendants must now answer for these crimes.”
HSI Acting Special Agent in Charge Michael Alfonso said: “Kofi Amankwaa is charged with deceitful practices whereby he allegedly victimized clients who relied on his legal assistance with their immigration process. HSI is committed to protecting the applicants, petitioners, and requestors of U.S. citizenship who, unfortunately, are often at risk of falling for scams or fraud. HSI is thankful for the collaboration in this investigation with other Department of Homeland Security components, as well as other federal agencies, who continue to help us combat document and benefit fraud.”
According to the allegations in the Complaint:[1]
From September 2016 through November 2023, AMANKWAA and AMANKWAA, JR., met with clients and directed them to sign fraudulent Form I-360 Violence Against Women Act (“VAWA”) Petitions falsely stating that the clients were abused by their U.S. citizen children. AMANKWAA also signed the petitions, under penalty of perjury, as the attorney preparer.
The defendants used the filing of the fraudulent Form I-360 VAWA Petitions, among other filings, as a basis to request advance parole travel documents for their clients — documents that enable individuals without legal status in the United States to travel abroad temporarily and return. The defendants then directed their clients, upon obtaining the advance parole travel documents, to travel abroad and return to the United States. Last, the defendants used the fraudulently procured advance parole as a basis for their clients to apply for lawful permanent resident status.
The defendants carried out this illegal scheme knowing that their clients had not, in fact, been abused by their children or without ever asking whether any such abuse occurred. Moreover, the defendants were often unsuccessful in obtaining lawful permanent resident status for their clients because the clients’ immigration applications were denied on the basis of fraud, among other reasons. The defendants typically charged their clients $6,000 for their services, plus administrative fees.
In November 2023, following numerous complaints by clients regarding the fraudulent abuse allegations, AMANKWAA’s license to practice law in the State of New York was suspended.
* * *
KOFI AMANKWAA, 69, and KOFI AMANKWAA, JR., 37, both of South River, New Jersey, are each charged with one count of conspiracy to defraud the United States and to commit immigration fraud, which carries a maximum sentence of five years in prison, and one count of immigration fraud, which carries a maximum sentence of 10 years in prison.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the HSI. Mr. Williams also thanked the U.S. Citizenship and Immigration Services’ Office of Fraud Detection and National Security for their support in this investigation. He also noted that the New York State Attorney General’s Office separately initiated a parallel civil proceeding against AMANKWAA and AMANKWAA, JR., today.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Adam Z. Margulies 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.
Five Defendants Arrested for $7 Million Embezzlement Scheme Targeting IT Services CompanyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York; Stuart M. Goldberg, the Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division; James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”); Thomas M. Fattorusso, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”); and Jonathan Mellone, the Special Agent in Charge of the Northeast Regional Office of the U.S. Department of Labor – Office of Inspector General (“DOL-OIG”), announced the arrests today of five defendants on fraud charges: MARK ANGAROLA, ALLISON ANGAROLA, JOSE GARCIA, MICHELLE COX, and LISA MINCAK. The five defendants are charged with perpetrating a yearslong embezzlement scheme that involved both no-show jobs and disguising personal expenses as purported business expenses. In addition, three of the defendants — MARK ANGAROLA, GARCIA, and COX — are charged with tax fraud for their failures to report income to the IRS, including income derived from the embezzlement scheme. MARK ANGAROLA and ALLISON ANGAROLA were arrested earlier this week in Point Lookout, New York, and were presented in Manhattan federal court before U.S. Magistrate Judge Katharine H. Parker; JOSE GARCIA and MICHELLE COX surrendered today and will be presented in Manhattan federal court before Magistrate Judge Parker; and LISA MINCAK surrendered yesterday and was presented in the Eastern District of Texas before U.S. Magistrate Judge Kimberly C. Priest Johnson. The case has been assigned to U.S. District Judge Dale E. Ho.
U.S. Attorney Damian Williams said: “As alleged, the five defendants engaged in a brazen, lengthy embezzlement scheme that involved no-show jobs, false timesheets, fraudulent billings, and disguising personal expenses as purported business expenses. In total, they allegedly bilked a corporate victim out of more than $7 million. As part of the alleged scheme, the defendants charged an array of personal expenses to a corporate victim, including a cruise, hotels, private car service, gentlemen’s clubs, and more. Several defendants also allegedly sought to conceal the fraud by failing to report, or pay taxes on, the income they received from the scheme. Today’s arrests are yet another example of this Office’s commitment to holding accountable those who commit financial fraud.”
FBI Assistant Director in Charge James Smith said: “When an individual puts in an honest day’s work, they deserve to be compensated fairly. The defendants in this case allegedly sought to do the opposite, scheming to create a dishonest plan involving no-show jobs and reporting personal spending as business. Through their alleged scam, they received significant benefits including payment, travel, and entertainment. The FBI will ensure that anyone attempting to benefit from deceit is instead held accountable in the justice system.”
IRS-CI Special Agent in Charge Thomas M. Fattorusso said: “The five defendants allegedly created a web of lies, resulting in a scheme to embezzle millions, while three are additionally charged with evading taxes on their illicit gains. Though it’s purported they ‘lived the good life’ through this deception, today’s arrests ensure that their very near future won’t be so comfortable.”
According to the allegations in the Indictment:[1]
From at least in or about May 2010 through at least in or about February 2019, the five defendants and others (the “Conspirators”) executed a fraudulent scheme to unlawfully enrich themselves by submitting and causing to be submitted fraudulent invoices and expenses to an information technology (“IT”) services company (the “Contractor”), at which MARK ANGAROLA was employed in a senior position.
Specifically, MARK ANGAROLA was a Global Account General Manager at the Contractor, working out of the Contractor’s office in New York, New York. MARK ANGAROLA was responsible for managing the Contractor’s relationship with a particular client, which was a subsidiary of a global financial institution (the “Client”). The Contractor had a service contract with the Client, pursuant to which the Contractor would provide IT support services to the Client at locations across the United States. The Contractor subcontracted certain of its work under the Service Contract to a technology solutions company (the “Subcontractor”) based in New Jersey. Pursuant to the agreement between the Contractor and the Subcontractor (the “Subcontract”), the Subcontractor provided certain IT support services directly to the Client in the place of the Contractor. MARK ANGAROLA was responsible for oversight of the Subcontractor’s performance under the Subcontract, which included approving payment to the Subcontractor on invoices submitted for work purportedly performed and expenses purportedly incurred in the Subcontractor’s performance on the Subcontract.
MARK ANGAROLA used his position at the Contractor — and in particular his oversight of the Contractor’s relationship with the Client and the Subcontractor — to fraudulently enrich himself, his family, and his friends. For example, MARK ANGAROLA arranged for the Subcontractor to hire certain of his family members, friends, and subordinates, despite the fact that these individuals — which included a schoolteacher, a homemaker, a police sergeant, and a manager in the construction industry — lacked apparent qualifications to perform deskside IT work. MARK ANGAROLA arranged for the Subcontractor to hire, among others, ALLISON ANGAROLA, JOSE GARCIA, MICHELLE COX, and LISA MINCAK, the defendants. Thereafter, ALLISON ANGAROLA, GARCIA, COX, MINCAK, and others who MARK ANGAROLA caused to be hired by the Subcontractor, repeatedly falsely reported to the Subcontractor that they had performed work under the Subcontract and incurred business expenses. GARCIA also used nominee corporate and limited liability entities to further disguise his receipt of funds for purported work performed under the Subcontract, including for alleged “Management Fees” due. The Subcontractor submitted invoices to the Contractor for the hours purportedly worked by several of the Conspirators, for purported management fees allegedly due and for the purported business expenses incurred by several of the Conspirators in connection with that work, which hours, fees, and expenses were falsely reported to the Subcontractor by the Conspirators. MARK ANGAROLA, in turn, caused the Contractor to pay the Subcontractor on these fraudulent invoices.
The purported business expenses incurred by several of the Conspirators and ultimately paid for by the Contractor at the direction of MARK ANGAROLA included, among other things, restaurant meals, hotel stays, transportation fees, a cruise, and gentlemen’s clubs. In fact, the expenses were personal expenses and were not reimbursable. In addition, to circumvent the Contractor’s expense policies, MARK ANGAROLA charged certain of his own personal expenses — including a private car service that he used for personal travel to restaurants, cigar bars, and gentlemen’s clubs, and to transport his children to visit family regularly and his friends to parties at his residence — to credit cards in the name of co-conspirators, including LISA MINCAK. MARK ANGAROLA, with the assistance of MINCAK and others, who falsely represented to the Subcontractor that the expenses were incurred in connection with work for the Subcontractor, fraudulently caused the Contractor to pay for such personal expenses of MARK ANGAROLA.
As a result of the scheme, MARK ANGAROLA, ALLISON ANGAROLA, JOSE GARCIA, MICHELLE COX, and LISA MINCAK, and entities controlled by certain Conspirators, received personal benefits, including travel, meals, and entertainment, and were paid substantial sums. For example, despite the fact that most Conspirators provided few, if any services, to the Client, the Conspirators fraudulently obtained at least the following approximate amounts through this scheme: $1,468,215 to MARK ANGAROLA; $751,641 to ALLISON ANGAROLA; $4,554,950 to JOSE GARCIA and entities he controlled; $335,500 to MICHELLE COX; $88,793 to LISA MINCAK; and $90,521 to Anthony Lisi, a previously charged co-conspirator who pled guilty for his involvement in the embezzlement scheme on September 13, 2022, before U.S. District Judge Paul A. Engelmayer.
Several participants in this fraud scheme also committed related tax fraud by concealing from the IRS substantial income that they had obtained through the scheme. For several years, MARK ANGAROLA and JOSE GARCIA committed tax evasion, and MICHELLE COX failed to file individual income tax returns.
* * *
MARK ANGAROLA, 50, of Point Lookout, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud conspiracy, which carries a maximum sentence of 20 years in prison; and three counts of tax evasion, which each carry a maximum sentence of five years in prison.
ALLISON ANGAROLA, 53, of Point Lookout, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of wire fraud conspiracy, which carries a maximum sentence of 20 years in prison.
JOSE GARCIA, 52, of New York, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud conspiracy, which carries a maximum sentence of 20 years in prison; and three counts of tax evasion, which each carry a maximum sentence of five years in prison.
MICHELLE COX, 52, of New York, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud conspiracy, which carries a maximum sentence of 20 years in prison; and two counts of failure to file an individual income tax return, which each carry a maximum sentence of one year in prison.
LISA MINCAK, 46, of Plano, Texas, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of wire fraud conspiracy, 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 defendants will be determined by the judge.
Mr. Williams praised the outstanding efforts of the FBI, IRS-CI, and DOL-OIG. Mr. Williams also noted that the investigation is ongoing.
This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Michael D. Neff, Timothy V. Capozzi, and Special Assistant U.S. Attorney Jorge Almonte of the Tax Division 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.
CEO of Cryptocurrency Ponzi Scheme “IcomTech” Sentenced to Five-Year Prison TermRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that MARCO RUIZ OCHOA was sentenced principally to five years in prison for his role in promoting a large-scale cryptocurrency Ponzi scheme known as IcomTech. OCHOA was sentenced today before U.S. District Judge Jennifer L. Rochon. On September 27, 2023, OCHOA pled guilty to one count of conspiracy to commit wire fraud.
U.S. Attorney Damian Williams said: “Ochoa took advantage of the hype around cryptocurrency to con unsuspecting victims into investing in the IcomTech pyramid scheme. This significant sentence sends a message to anyone considering following in his footsteps: that path leads to serious prison time.”
According to the Indictment and statements made in court:
DAVID CARMONA started IcomTech in 2018, and IcomTech promotional materials put OCHOA forward as IcomTech’s CEO until 2019, when a new CEO replaced him. IcomTech was a purported cryptocurrency mining and trading company that promised to earn its victim-investors (“Victims”) profits in exchange for their purchase of purported cryptocurrency-related investment products. OCHOA and the other promoters of IcomTech, including his co-defendants CARMONA, JUAN ARELLANO, MOSES VALDEZ, and DAVID BREND, falsely promised their respective Victims, among other things, that profits from the company’s 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 OCHOA and IcomTech’s other promoters used Victim funds to pay other Victims to further promote the schemes and to enrich themselves.
IcomTech promoters, including OCHOA, traveled throughout the United States and internationally, 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 OCHOA, 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.
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 OCHOA, continued to promote IcomTech and accept Victims’ investments. 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.
* * *
In addition to the prison term, OCHOA, 35, of Nashua, New Hampshire, was sentenced to two years of supervised release and ordered to forfeit $914,000 in criminal proceeds.
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 and Money Laundering Unit. Assistant U.S. Attorneys Benjamin A. Gianforti, Michael Maimin, Josiah Pertz, and Cecilia E. Vogel are in charge of the prosecution.
Operator of Online Pornography Marketplace “the Ho Zone” Charged with Advertisement, Receipt, 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 today the arrest of KYLE WHITE. WHITE is charged with advertisement, receipt, and distribution of child pornography. WHITE was presented this afternoon before U.S. Magistrate Judge Colin H. Lindsay of the U.S. District Court for the Western District of Kentucky.
U.S. Attorney Damian Williams said: “Kyle White’s alleged conduct is abhorrent and depraved. As alleged, from behind a computer screen in the comfort of his own home, White ran a lucrative and illegal online pornography marketplace called ‘The Ho Zone,’ where he sold access to child pornography and illegally obtained adult pornography to thousands of people. White’s alleged callous disregard for his victims is striking — White profited at the expense of innocent children, whose sexual abuse and trauma White broadcasted to the world in high definition. Let these charges against White serve as a warning to anyone who seeks to capitalize on the sexual exploitation of children: this Office will work relentlessly to hold you accountable for your crimes.”
FBI Assistant Director in Charge James Smith said: “Kyle White’s actions – allegedly running an online marketplace selling access to child pornography – are unconscionable. Thankfully, he now faces a lengthy punishment for his crimes. The FBI remains vigilant in our efforts to protect children. Removing predators who seek to exchange and profit from sexually explicit material of minors will remain a top priority.”
According to the allegations in the Complaint:[1]
WHITE ran an online pornography marketplace known as “The Ho Zone” on the messaging application Telegram. WHITE categorized the pornography he advertised and sold on “The Ho Zone” into dozens of groups and channels with thousands of members and subscribers, such as “Other Teen (18+) Leaks,” “THZ Black Market,” “MOST POPULAR GIRLS LISTS,” “Tiktoker Private Leaks,” “ATHLEAKS,” and more. Within each of these groups and channels, WHITE further categorized the pornography by the name of the woman or minor girl featured in the sexually explicit content. Each group and channel on “The Ho Zone” featured a variety of free content as a preview of what users could get if they were to pay WHITE for full access. Such access cost between $15 and $75 depending on the pornography purchased. Once a user paid WHITE for the content of a specific woman or minor girl available on “The Ho Zone,” the user gained permanent access to numerous sexually explicit photographs and videos of that woman or minor girl that WHITE had compiled, enhanced, and edited.
WHITE advertised and sold child pornography on “The Ho Zone,” which depicted minor victims as young as 11 years old, as well as minor victims engaging in sexually explicit conduct with their minor victim siblings.
WHITE also sold illegally obtained adult pornography on “The Ho Zone,” including pornography that had been hacked from women’s cellphones and pornography that was the product of blackmail. The victims featured in such pornography included women with large social media followings and female athletes, among others.
WHITE knew that running “The Ho Zone” was illegal but he continued to sell child pornography and illegally obtained adult pornography on the marketplace because it was lucrative. For example, WHITE claimed in a message to another Telegram user that he “made over 300k in the first year” of operating “The Ho Zone.”[2] In a chat with another Telegram user, WHITE stated that he “[p]rob made over $10k off the girls” in the “THZ Black Market” channel. WHITE also stated that he did not want to stop selling child pornography because “[i]t’s just easier said than done givin up $1,000’s.”
* * *
WHITE, 24, of Louisville, Kentucky, is charged with advertisement of child pornography, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison. WHITE is also charged with receipt and distribution of child pornography, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison.
The mandatory 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 a judge.
Mr. Williams praised the outstanding investigative work of the FBI’s Criminal Guardian Squad.
This case is being supervised by the Office’s General Crimes Unit. Assistant U.S. Attorney Chelsea L. Scism 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.
[2] Communications referenced herein are described in substance and in part.
Former Pfizer Employee Convicted at Trial of Insider TradingRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that a jury returned a guilty verdict against AMIT DAGAR for insider trading and conspiracy to commit insider trading. The defendant was found guilty following a two-week trial before U.S. District Judge Andrew L. Carter.
U.S. Attorney Damian Williams said: “As the jury’s swift verdict shows, the proof at trial was overwhelming that Amit Dagar stole information about Paxlovid from his employer, Pfizer, and used that illegal edge to profit in the stock market. Combatting the corruption of our financial markets continues to be a top priority of this Office. Would-be insider traders tempted by the prospect of easy money should know that the Southern District of New York is watching, we’ll catch you, and we’ll make sure you pay the price for violating the law.”
According to the Indictment, statements made in public court proceedings and filings, and the evidence at trial:
In November 2021, DAGAR participated in an insider trading scheme to reap illicit profits from options trading based on inside information about the results of clinical trials of Paxlovid, a medicine used to treat COVID-19. DAGAR was an employee of Pfizer Inc. (“Pfizer”) and assisted in managing the data analysis in certain clinical drug trials.
On November 4, 2021, DAGAR learned that a Pfizer trial of the drug Paxlovid, a medicine designed to treat mild to severe COVID‑19 infection, had produced positive results. The results were confidential and meant to remain so until Pfizer publicized them on November 5, 2021.
Later that same day, and while the results remained confidential, DAGAR purchased short-dated, out-of-the-money Pfizer call options that expired days and weeks later. DAGAR also tipped a close friend, who also purchased short-dated, out-of-the-money Pfizer call options.
The following day, on November 5, 2021, Pfizer publicly released results of its Paxlovid study prior to the market opening. That same day, following the publication of the positive results, Pfizer’s stock price increased substantially, opening — and eventually closing — more than 10% higher than the prior day’s closing price. In the following weeks, DAGAR sold his Pfizer call options for profits of more than $270,000.
* * *
DAGAR, 44, of Hillsborough, New Jersey, was convicted of one count of securities fraud, which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation. Mr. Williams also thanked the U.S. Securities and Exchange Commission, which has filed a parallel civil action, 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 Alex Rossmiller and Justin V. Rodriguez are in charge of the prosecution, with assistance from Paralegal Specialists Madeline Sonderby and Anna Gamboa.
Spring Valley Man Sentenced to One Year and One Day in Prison for $1.6 Million COVID-19 Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that ELIZIER SCHER was sentenced to one year and one day in prison by U.S. District Judge Philip M. Halpern for his scheme to defraud the U.S. Small Business Administration (“SBA”) of more than $1.6 million in COVID-19 relief funds. SCHER previously pled guilty before Judge Halpern to one count of wire fraud on February 1, 2023.
U.S. Attorney Damian Williams said: “Elizier Scher schemed to steal taxpayer funds intended for small businesses in need of assistance during the pandemic. His intent to illegally profit from a national emergency that affected countless businesses and uprooted lives resulted in a sentencing reflecting the severity of his actions. Exploiting a crisis for personal gain will face the full force of the law.”
According to documents filed in this case and statements made in court proceedings:
The SBA is a federal agency that administers assistance to American small businesses, including the Economic Injury Disaster Loan (“EIDL”) program, which was intended to provide funding to help small business recover from the economic impacts of the COVID-19 pandemic. The maximum amount of an EIDL loan is determined by a formula based on the date the borrower began operating and the borrower’s gross revenue and cost of goods sold for the 12 months prior to January 31, 2020. The loans can only be used for working capital and other normal operating expenses.
Over an approximately four-hour period on or about July 13, 2020, SCHER submitted 12 applications for EIDL loans in a principal amount of $150,000 to the SBA online on behalf of 12 different corporations that he owned and controlled. SCHER made materially false statements in each application with respect to each applicant’s gross revenue and cost of goods sold for the 12-month period prior to January 31, 2020.
Between on or about July 20, 2020, and on or about August 11, 2020, 11 of the 12 applicants received a net total of $1,648,900 in loan proceeds from the SBA. SCHER used the proceeds to buy real estate and to pay credit card expenses instead of using it for working capital for the borrowers, as SCHER had agreed to do in the loan agreements he executed on behalf of the borrowers.
* * *
In addition to the prison term, SCHER, 34, of Spring Valley, New York, was sentenced to two years of supervised release and ordered to pay $1,648,900 in forfeiture.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney James McMahon is in charge of the prosecution.
Former Law Enforcement Union Officials Sentenced to Prison for Defrauding Union’s Annuity FundRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that KENNETH WYNDER Jr., a former New York State Trooper and the president of the Law Enforcement Employees Benevolent Association (“LEEBA”), a labor union for law enforcement officers employed by the City of New York (the “City”), was sentenced to 40 months in prison, and ANDREW BROWN, a/k/a “Drew Brown,” the former financial advisor for LEEBA, was sentenced to 18 months in prison, for defrauding union members by misappropriating money from LEEBA’s Annuity Fund. WYNDER was also sentenced for personal income tax evasion and conspiring to evade federal taxes, including payroll taxes owed by LEEBA and its employees. WYNDER and BROWN were convicted after a five-day jury trial before U.S. District Judge P. Kevin Castel, who imposed today’s sentence. In addition, STEVEN WHITTICK, LEEBA’s former treasurer and a former police officer for New York City’s Department of Environmental Protection (“DEP”), previously pled guilty to conspiring to commit tax evasion and making false statements to law enforcement and was sentenced to 28 months in prison.
U.S. Attorney Damian William said: “Kenneth Wynder and Andrew Brown raided union-sponsored retirement accounts for years, placing their self interest over the hard-working public servants they represented as the president and financial advisor of the union, respectively. Wynder also evaded taxes on cash, checks, and other income he obtained from the union, including as a product of their theft from the union members’ retirement accounts. Union officials and advisors who violate their duties to the union members they represent will face serious consequences for their abuse of trust.”
According to the Indictment, Superseding Indictment, the underlying complaints filed in this case, as well as other publicly available information, prior court filings, and evidence presented during the trial in Manhattan federal court:
Law Enforcement Employees Benevolent Association and the Annuity Fund
LEEBA is a labor union that has acted as the collective bargaining representative principally for law enforcement personnel at various City agencies and has entered into agreements on behalf of those law enforcement employees, including agreements for insurance and retirement benefits. The City agencies whose employees LEEBA represented included, at various times, DEP, the Department of Sanitation (“Sanitation”), and the Department of Transportation (“Transportation”).
The Annuity Fund is a LEEBA fund that received monthly contributions from the City for the benefit of LEEBA’s members and maintained separate accounts for each fund member. These accounts were functionally similar to employer-sponsored 401(k) retirement accounts. WYNDER was a Trustee of the Annuity Fund and signatory to agreements that governed the fund, and BROWN was a Plan Administrator and Financial Advisor of the Annuity Fund. Under the relevant agreements and plans, the money in the Annuity Fund could be used for no purpose other than funding individual members’ retirement accounts and defraying reasonable administrative expenses of the Annuity Fund itself.
WYNDER
WYNDER, a former New York State Trooper, is the founder and former President of LEEBA and a former member of LEEBA’s board of directors. WYNDER also formerly served as the Fund Administrator of the Annuity Fund and as a member of the board of trustees of the Annuity Fund, pursuant to which he owed a fiduciary duty to act in the best interests of the Annuity Fund and its account holders. WYNDER also was on the board of trustees of the LEEBA Welfare Fund (the “Welfare Fund,” and collectively with the Annuity Fund, the “LEEBA Funds”), which provided supplemental insurance benefits to its members. While occupying those positions, WYNDER centralized and controlled major decision-making authority for LEEBA and the LEEBA Funds, often acting without the proper approval of their respective boards of directors or trustees. WYNDER’s de facto dominance of LEEBA and the LEEBA Funds enabled him to make decisions in his own self-interest and contrary to the interests of the Annuity Fund and individual members.
BROWN
BROWN, the founder of a Westchester-based financial services company, is the former Benefits Administrator and insurance broker for LEEBA and the LEEBA Funds. As a LEEBA Annuity Fund Plan Administrator and Financial Advisor, BROWN helped manage the investments in the Annuity Fund, receiving a commission for his services, and had a responsibility to act in the best interest of LEEBA’s members.
WYNDER’s and BROWN’s Fraud Scheme
From at least in or about 2012 up to and including 2020, WYNDER and BROWN participated in a scheme to steal, embezzle, and misappropriate money from the Annuity Fund and individual members’ retirement accounts. Specifically, WYNDER and BROWN made hundreds of thousands of dollars of fraudulent transfers from the Annuity Fund to LEEBA’s operating account, which WYNDER controlled, and WYNDER regularly used the funds, once transferred from the Annuity Fund, to enrich himself at union members’ expense, including through unauthorized and excessive checks to himself and cash withdrawals for his own benefit and to pay insurance benefits for which BROWN received commissions. In addition, WYNDER caused the union to pay for various personal expenses such as the purchase of a Lexus automobile, travel expenses to Dallas to watch a Dallas Cowboys football game, and a sailing trip, all paid for by the union, and none of which were contemporaneously reported to the Internal Revenue Service (“IRS”), as required.
To accomplish this fraudulent scheme, WYNDER and BROWN, acting in their capacity as the Annuity Fund’s Plan Administrators, repeatedly made false and misleading statements to a third-party retirement plan manager that served as the custodian for the Annuity Fund and the retirement accounts of individual union members, including through emails and faxes that WYNDER and BROWN used to withdraw increasingly large sums of money from the Annuity Fund, effectively causing such withdrawals to be made from the retirement accounts of individual members. From in or about 2014 through in or about 2019, WYNDER and BROWN caused the withdrawal of more than $500,000 from the individual retirement accounts that constitute the Annuity Fund, thereby wiping out the entire balance of certain members’ accounts. Without these improper withdrawals from the Annuity Fund, the LEEBA operating account would have been insolvent and would have had insufficient funds to pay for WYNDER’s excessive checks to himself and cash withdrawals and the personal expenses he caused to be charged to that account, as well as to pay for benefits for which BROWN made commissions as an insurance broker.
In addition, throughout the duration of this scheme, WYNDER and BROWN repeatedly made and approved false and misleading statements to LEEBA’s members and prospective members about how they were purportedly using and protecting their retirement accounts and the LEEBA Annuity Fund. WYNDER further concealed the scheme by causing LEEBA to fail to timely file mandatory reports and financial disclosures with the City and public reports to the Annuity Fund’s members and by making false statements to the Annuity Fund’s auditors and accountants.
WYNDER’s and WHITTICK’s Tax Evasion Scheme
From at least in or about 2015 through 2019, WYNDER participated in a conspiracy with LEEBA’s then-Treasurer, WHITTICK, to cause LEEBA to make payments to WYNDER and WHITTICK, by check and in cash, and to conceal those payments from the IRS. WYNDER and WHITTICK further conspired to ensure that such payments were made outside of LEEBA’s payroll processor. WYNDER and WHITTICK then concealed these payments from the IRS — including off-the-books payments to WYNDER of more than $400,000 — in order to evade their own personal income taxes and to evade the payroll taxes that were owed by LEEBA and certain LEEBA employees.
WHITTICK’s False Statements to Federal Agents
In or about October 2019, while serving as LEEBA’s Treasurer and after learning of a federal investigation into LEEBA’s finances – including the investigation of an alleged embezzlement scheme that ultimately resulted in wire fraud charges against WYNDER – WHITTICK repeatedly lied to federal agents in an effort to obstruct that investigation. WHITTICK did so despite personal involvement in some of the financial improprieties with which WYNDER was convicted. For example, on at least two occasions, on or about February 1, 2018, and March 30, 2018, WHITTICK withdrew $16,000 in cash from a LEEBA bank account and on each occasion deposited $15,000 cash into Wynder’s personal bank account and $1,000 cash into WHITTICK’s own personal bank account.
After the FBI executed a search warrant of LEEBA’s offices in September 2019, WHITTICK attempted to obstruct and to influence the ongoing federal investigation by making, in two different interviews with law enforcement agents, false statements about, among other subjects, cash withdrawals he made from LEEBA’s bank accounts, unauthorized withdrawals from LEEBA’s Annuity Fund and from the individual retirement accounts of Fund participants, and LEEBA’s payment for certain travel and entertainment expenses for union officers, including WHITTICK and WYNDER.
* * *
In addition to his prison term, WYNDER, 60, of Stroudsburg, Pennsylvania, was ordered to forfeit $529,000 and to pay $838,683 in restitution.
In addition to his prison term, BROWN, 56, of Putnam Valley, New York, was ordered to forfeit $3,049 and to pay $529,000 in restitution.
On November 17, 2021, WHITTICK, 54, of Kingston, New York, was sentenced to 28 months in prison and ordered to pay $179,766 in restitution.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation, the Department of Labor Office of Labor-Management Standards, and IRS, Criminal Investigation. Mr. Williams also thanked the New York City Comptroller’s Office and the New York City Department of Investigation for their assistance.
The case is being prosecuted by the Office’s Public Corruption Unit. Assistant U.S. Attorney Eli J. Mark is in charge of the prosecution, with the assistance of Paralegal Specialists Connor Hamill and Lauren Scarff.
U.S. Attorney Charges Two Men with Firebombing A Mount Kisco Residence and Conspiring to Stalk A Westchester BusinessmanRead 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”); Bryan DiGirolamo, the Assistant Special Agent in Charge of the New York Field Division of the Bureau of Alcohol, Tobacco and Firearms (“ATF”); Melvin Padilla, the Chief of the Bedford Police Department; and Terrance Raynor, the Acting Commissioner of the Westchester County Department of Public Safety, announced that DAMJAN STANIVUKOVIC and VLADAMIR RADUNOVIC were arrested on January 13, 2024, and each charged with one count of unlawful possession of a destructive device and one count of conspiracy to commit stalking. The Complaint charges that on or about January 11, 2024, the defendants transported a homemade destructive device to a neighborhood in Mount Kisco, New York, and dropped the destructive device off in the driveway of the victim’s residence, where it exploded. In addition, the Complaint charges that later that same day, as part of the conspiracy, the victim received a text message that this was his “final warning.” STANIVUKOVIC, the owner of a contracting company, is involved in a long-running legal dispute with the victim. When searching STANIVUKOVIC’s residence, law enforcement seized, among other things, multiple loaded firearms, items matching those used to make the destructive device, and written instructions on how to make explosives. The defendants were presented on January 13, 2024, before U.S. Magistrate Judge Victoria Reznik and detained without bail.
U.S. Attorney Damian William said: “The career prosecutors of this Office and our law enforcement partners stand ready to act around the clock when our communities are threatened. Damjan Stanivukovic and Vladamir Radunovic were in custody just two days after they allegedly planted a destructive device in the driveway of the victim’s residence. This case is a testament to the critical and effective work that our interagency collaborations accomplish on a daily basis. We have no tolerance for violence in the Southern District of New York.”
FBI Assistant Director in Charge James Smith said: “Damjan Stanivukovic and Vladamir Radunovic allegedly tried to resolve a contentious business relationship with threats of violence and a homemade bomb. While business deals aren’t always successful, neither are overt acts of violence that bring forth federal charges. Thankfully, in this case, no one was injured. The FBI will continue to ensure that anyone willing to solve personal grievances with threats and attempts of violence are punished to the fullest extent in the criminal justice system.”
ATF Assistant Special Agent in Charge Bryan DiGirolamo said: “Perpetuating violence against others, under any context, is unacceptable behavior. The men and women of ATF NY Hudson Valley Field Office will continue to work alongside our partners at FBI and Bedford Police to address acts of violence in our communities.”
Bedford Police Chief Melvin Padilla said: “The safety and security of our residents is our primary focus, and thanks to the diligent work of our detectives and the cooperation and assistance from our federal partners, the defendants were quickly identified and apprehended.”
Westchester County Department of Public Safety Acting Commissioner Terrance Raynor said: “I commend all the agencies involved for their skillful and effective collaboration in bringing this investigation to a swift conclusion. This is yet another example of the value and importance of multi-agency partnerships, which help us keep Westchester safe.”
As alleged in the criminal Complaint:[1]
At approximately 5:11 a.m. on or about January 11, 2024, STANIVUKOVIC and RADUNOVIC traveled through Rockland County, New York, to Westchester County, New York, in a black Jeep Grand Cherokee and dropped a destructive device off at the victim’s residence in Mount Kisco, New York, where the destructive device exploded. Law enforcement recovered a box from the scene, which bore STANIVUKOVIC’s name and address, as well as a 2.5-gallon gasoline can, firework tubing, and firework residue.
Later that day, on or about 12:11 p.m., the victim received a text message from a particular phone number, which stated “Knock knock, show up and what do you think is next. This is your final warning.” Around the time that text message was sent, the cellphone associated with that particular phone number was located in the vicinity of STANIVUKOVIC’s business address and the black Jeep Grand Cherokee.
A search warrant executed at STANIVUKOVIC’s residence, where RADUNOVIC had been staying, recovered, among other things, gasoline canisters and fireworks matching those used to construct the destructive device, multiple loaded firearms, and a book titled “Make Fireworks and Explosives at Home – The Ultimate Instruction Manual for Beginners and Pyrotechnicians to Build Firecrackers, Fireworks and Explosives from Scratch.”
* * *
DAMJAN STANIVUKOVIC, 52, of Closter, New Jersey, and VLADAMIR RADUNOVIC, 47, of Pompton Lakes, New Jersey, are each charged with one count of unlawful possession of a destructive device, which carries a maximum sentence of 10 years in prison, and one count of conspiracy to commit stalking, which carries a maximum sentence of five years in prison.
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.
Mr. Williams praised the outstanding investigative work of the FBI’s Westchester Safe Streets Task Force, the ATF, the Bedford Police Department, the Westchester County Department of Public Safety, and the Closter, New Jersey Police Department.
The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Kathryn Wheelock is in charge of the prosecution.
The allegations 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.
U.S. Attorney Announces 30-Count Indictment Charging Garment-Manufacturing Executive with Tax Fraud Scheme, Masking Millions in PayrollRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Thomas Fattorusso, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the unsealing of an Indictment charging AI ZHEN XU with criminal tax offenses. XU was the vice president and secretary of the garment-manufacturing company Winner Fashions, Inc. (“Winner Fashions”). XU is alleged to have conspired to perpetrate a long-running scheme to conceal more than approximately $3,800,000 in gross receipts attributable to Winner Fashions and to evade more than approximately $290,000 in federal payroll taxes owed by Winner Fashions to the Internal Revenue Service (“IRS”). XU was arrested this morning and will be presented before U.S. Magistrate Judge Katharine H. Parker this afternoon. The case is assigned to U.S. District Judge Mary Kay Vyskocil.
U.S. Attorney Damian Williams said: “For at least six years, Ai Zhen Xu allegedly engaged in a scheme by which she used the off-the-books services of a check-cashing business to conceal nearly $4 million in gross receipts paid to her company and evade payroll taxes. Thanks to the skillful investigative work of IRS-CI and the career prosecutors of this Office, the defendant will be held accountable for her actions.”
IRS-CI Special Agent in Charge Thomas Fattorusso said: “It’s alleged Xu concealed millions to avoid paying the federal taxes that every legitimate business pays. This is not a victimless crime. While this failure to pay business taxes further widens the American tax gap, every other taxpayer is now responsible to cover the cost. Xu’s alleged willful disregard for U.S. law has prompted this arrest, and she will now pay the price for her actions.”
According to the allegations in the Indictment:[1]
From 2016 through at least 2021, XU and others used the services of a check‑cashing business to cash checks issued to Winner Fashions as payment for its services. XU concealed this cash revenue from Winner Fashions’ accountant, resulting in Winner Fashions’ relevant tax filings omitting substantial amounts of gross receipts.
During the same period, XU and others paid Winner Fashions’ employees via a combination of cash payments and payroll checks generated by Winner Fashions’ accountant. XU concealed these cash payments from Winner Fashions’ accountant, resulting in Winner Fashions failing to pay to the IRS payroll taxes associated with these unreported cash payments.
* * *
XU, 70, of Port Washington, New York, is charged with one count of conspiracy to defraud the IRS, which carries a maximum sentence of five years in prison. XU is also charged with 23 counts of failure to collect, account for, and pay over payroll taxes, each of which also carries a maximum sentence of five years in prison, and six counts of aiding and assisting the preparation and presentation of false U.S. corporation income tax returns, each of which carries a maximum sentence of three years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of IRS-CI.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Benjamin M. Burkett 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 below constitute only allegations, and every fact described should be treated as an allegation.