Southern District of New York
Press releases recorded for this federal judicial district.
Two Defendants Arrested for Stealing over $1 Million from ATMs Throughout the BronxRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a two-count Complaint today charging RAMDEO BALLIRAM and LEONARDO ORTIZ with bank theft and conspiracy to commit bank theft in connection with a years-long scheme in which they stole more than $1 million from Automated Teller Machines (“ATMs”) located in commercial establishments throughout the Bronx. BALLIRAM and ORTIZ were arrested today and will be presented before U.S. Magistrate Judge James L. Cott.
U.S. Attorney Damian Williams said: “As alleged, the defendants carried out a calculated scheme for years, stealing over a million dollars from ATMs in businesses throughout the Bronx. The relentless efforts of this Office and our law enforcement partners have finally put an end to the burglaries and thefts allegedly perpetrated by the defendants, and we will continue to be diligent in seeking justice for those affected by these crimes.”
NYPD Commissioner Keechant L. Sewell said: “For nearly two years, these defendants allegedly targeted multiple small businesses in the Bronx – burglarizing, ransacking, and stealing more than $1 million. Their brazen scheme undermined public safety throughout an entire borough, and today’s complaint is the next step toward holding them accountable for their crimes. Thank you to the U.S. Attorney’s Office for the Southern District of New York and all the NYPD investigators who worked together to bring charges in this case.”
According to the allegations contained in the Complaint:[1]
From at least in or about March 2021 through in or about January 2023, BALLIRAM, ORTIZ, and another individual (“CC-1”) engaged in a series of at least 23 burglaries of commercial establishments throughout the Bronx, in which they stole over $1 million from ATMs.
The burglaries followed a simple pattern: on each occasion, BALLIRAM, ORTIZ, and at least one other individual broke into Bronx small businesses — often bodegas or restaurants — in the middle of the night in order to steal all the cash from the ATM inside the store. In the course of stealing all the cash from the ATMs, BALLIRAM and ORTIZ also ransacked each store, stealing all the cash from the register, cigarettes, lottery tickets, alcohol, and digital video recording systems. BALLIRAM and ORTIZ stole tens of thousands of dollars in cash and valuables each time.
BALLIRAM and ORTIZ serially followed an armored car (“Bank Van-1”) as it refilled ATMs throughout the Bronx on behalf of a particular bank in order to determine which ATMs to target. Once BALLIRAM and ORTIZ learned which ATMs had been refilled, they then traveled to that location to break into the store and steal the cash. BALLIRAM and ORTIZ often used sophisticated tools to break into both the commercial establishments and the ATMs, as pictured below. On the occasion pictured below, BALLIRAM and ORTIZ stole more than $77,000 from the ATM:
On a few occasions, when they were unable to break into the ATM to steal the cash, BALLIRAM and ORTIZ stole the entire ATM. On at least one occasion, BALLIRAM and ORTIZ also used a stolen vehicle to carry out the scheme.
* * *
BALLIRAM, 44, of Queens, New York, and Ortiz, 52, of Queens, New York, are each charged with one count of conspiracy to commit bank theft, which carries a maximum potential sentence of five years in prison, and one count of bank theft, which carries a maximum potential sentence of 10 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 NYPD, particularly Detectives of the Bronx Grand Larceny Squad, and the Special Agents and Investigative Analysts of the United States Attorney’s Office for the Southern District of New York.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Jackie Delligatti 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 constitutes only allegations, and every fact described herein should be treated as an allegation.
Staten Island Man Sentenced to 18 Months in Prison for Conspiracy to Commit Antisemitic Hate CrimesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that SAADAH MASOUD was sentenced today to 18 months in prison for his participation in a conspiracy to commit hate crimes in connection with MASOUD’s repeated physical attacks of Jewish victims in New York City between 2021 and 2022. The sentence was imposed by U.S. District Judge Denise L. Cote.
U.S. Attorney Damian Williams said: “Saadah Masoud repeatedly attacked New Yorkers based on their religion and national origin. The prosecution of this case and the sentence imposed today make clear that hate-fueled violence will not be tolerated in our community and that this Office will be unrelenting in our efforts to hold accountable those who perpetrate senseless crimes of hate.”
According to the Indictment, other public filings, and statements made in court:
From at least in or about May 2021 through at least in or about April 2022, MASOUD and others conspired to commit hate crime acts in the Southern District of New York and elsewhere. In furtherance of the conspiracy, MASOUD assaulted at least three victims based upon the victims’ actual and perceived religion and national origin. Specifically, the defendant admitted to committing the following acts of violence that were motivated by the victims’ Jewish or Israeli identity or perceived identity:
- On or about April 20, 2022, in Manhattan, MASOUD assaulted a victim who was wearing an Israeli flag;
- On or about June 2, 2021, in Brooklyn, MASOUD and a co-conspirator assaulted a victim who was wearing clothing traditionally associated with the Jewish religion, including a yarmulke, while the victim was sitting outside the victim’s own home; and
- On or about May 20, 2021, in Manhattan, MASOUD assaulted a victim who was wearing a Star of David necklace.
* * *
In addition to his prison term, SAADAH MASOUD, 29, of Staten Island, New York, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding investigative work of the New York City Police Department’s Hate Crime Task Force and the Special Agents of the United States Attorney’s Office for the Southern District of New York.
The prosecution of this case is being handled by the Office’s Civil Rights Unit in the Criminal Division. Assistant U.S. Attorneys Lindsey Keenan and Mitzi Steiner are charge of the prosecution.
Former U.S. Army Soldier Sentenced to 45 Years in Prison for Attempting for Murder Fellow Service Members in Deadly AmbushRead the Press Release
A Kentucky man was sentenced today to 45 years in prison for attempting to murder U.S. service members, providing and attempting to provide material support to terrorists, and illegally transmitting national defense information.
Ethan Phelan Melzer, aka Etil Reggad, 24, of Louisville, pleaded guilty to attempting to murder U.S. service members, providing and attempting to provide material support to terrorists, and illegally transmitting national defense information on June 24, 2022, before U.S. District Judge Gregory H. Woods, who imposed today’s sentence. According to court documents, Melzer planned a jihadist attack on his U.S. Army unit in the days leading up to a deployment to Turkey and sent sensitive details about the unit — including information about its location, movements, and security — to members of the extremist organization Order of the Nine Angles (O9A), a white supremacist, neo-Nazi and pro-jihadist group.
“Today’s sentence holds Mr. Melzer accountable for an egregious and shameful act of betrayal against his own military unit and his country,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Justice Department will use all available resources to disrupt and bring to justice those who would aid foreign terrorist organizations and use violence to harm our men and women in uniform or any American anywhere.”
“Ethan Melzer infiltrated the U.S. Army in service of a neo-Nazi, white supremacist and jihadist group,” said U.S. Attorney Damian Williams for the Southern District of New York. “He used his membership in the military to pursue an appalling goal: the brutal murder of his fellow U.S. service members in a carefully plotted ambush. By unlawfully disclosing his unit’s location, strength, and armaments to other O9A members and jihadists in furtherance of this ambush, Melzer traitorously sought to attack the very soldiers he was entrusted to protect. Today’s sentence makes clear that Melzer’s brazen actions backfired and that this office — along with our partners in law enforcement and the military — will work tirelessly to bring traitors like Melzer to justice and to protect the safety and integrity of our armed services.”
“Melzer betrayed his fellow soldiers and his country,” said Assistant Director Robert R. Wells of the FBI’s Counterterrorism Division. “Americans serving their country overseas should never have to fear a terrorist attack from within their own ranks, and today’s sentence holds him accountable for his deadly plan to attack the brave men and women of the armed forces who protect our nation.”
According to court documents, Melzer is a member of O9A. O9A espouses neo-Nazi, antisemitic and Satanic beliefs and promotes extreme violence to accelerate and cause the demise of Western civilization. The group has expressed admiration both for Nazis, such as Adolf Hitler, and Islamic jihadists, such as Usama Bin Laden, the now-deceased former leader of al Qaeda. Members and associates of O9A have also participated in acts of violence, including murders. O9A members are instructed to fulfill “sinister” deeds, including “insight roles,” where they attempt to infiltrate various organizations, including the military, to gain training and experience, commit acts of violence, identify like-minded individuals, and ultimately subvert those groups from within.
Melzer joined the U.S. Army in approximately 2018 and infiltrated its ranks as part of an insight role to further his goals as an O9A adherent. In approximately October 2019, Melzer deployed abroad with the Army to Italy as a member of the 173rd Airborne Brigade Combat Team. While stationed abroad, Melzer consumed propaganda from multiple extremist groups, including O9A and the Islamic State of Iraq and al-Sham, which is also known as ISIS. For example, Melzer subscribed to encrypted online forums where he downloaded and accessed videos of jihadist attacks on U.S. troops and facilities and jihadist executions of civilians and soldiers, in addition to far-right, neo-Nazi, and other white supremacist propaganda.
In approximately early May 2020, the Army informed Melzer that he would be reassigned to a unit scheduled for a further foreign deployment, where the unit would be guarding an isolated and sensitive military installation (the Military Base). After he was notified of the assignment, Melzer joined his new unit and attended weeks of training, including classified and unclassified briefings, to prepare for the deployment. As part of this intensive training, Melzer learned details about the purpose, layout, and security of the Military Base. Melzer and his unit also received in-depth training about and practiced for numerous threat scenarios at the Military Base, including how to respond to various potential terrorist attack scenarios.
Upon learning the importance and sensitivity of his upcoming deployment, Melzer immediately began passing that information to members of O9A. Melzer secretly used an encrypted messaging application to propose, advocate for, and plan a deadly attack on his fellow service members. Melzer sent messages to members and associates of O9A and, in particular, a sub-group of O9A known as the “RapeWaffen Division,” providing details about his unit’s anticipated deployment including troop movements, relevant dates, locations, armaments, topography, and security, all in connection with the proposed attack on his unit and the Military Base. Melzer and his co-conspirators used this information to plan what they referred to as a “jihadi attack” with the objective of causing a “mass casualty” event victimizing his fellow service members. For example, after describing the unit’s weaponry during the deployment — and providing information consistent with the briefings he had received — Melzer described to his co-conspirators how an attack would “essentially cripple” the unit’s “fire-teams.”
To further the attack plan, Melzer and his co-conspirators passed these messages to a purported member of al Qaeda. Melzer’s proposed attack evolved as he gathered and distributed additional sensitive information about the deployment. For example, Melzer also promised to leak more information once he arrived at the Military Base — including real-time photographs of the facility and the frequency and channel of U.S. Army radio communications — in order to maximize the likelihood of a successful attack on his unit or on a replacement unit deployed to the Military Base.
Melzer told members of O9A in his encrypted electronic communications “[y]ou just gotta understand that currently I am risking my literal free life to give you all this” and that he was “expecting results.” Melzer further acknowledged that he could be killed during the attack and described his willingness to die for O9A’s goals, writing “who gives a fuck [. . .] it would be another war . . . I would’ve died successfully . . . cause another 10 year war in the Middle East would definitely leave a mark.” Melzer also acknowledged in his messages that he deleted some of the communications regarding the planning of the attack because the plot amounted to treason.
The FBI New York Joint Terrorism Task Force investigated the case, with valuable assistance provided by the FBI’s Legal Attaché Office in Rome; the Air Force Office of Special Investigations; U.S. Army Counterintelligence; U.S. Army Criminal Investigation Command; and the U.S. Department of State Diplomatic Security Service.
Assistant U.S. Attorneys Sam Adelsberg, Matthew J.C. Hellman and Kimberly J. Ravener for the Southern District of New York are prosecuting the case, with valuable assistance provided by Trial Attorneys Alicia Cook of the National Security Division’s Counterterrorism Section and Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section.
Former U.S. Army Soldier Sentenced to 45 Years in Prison for Attempting to Murder Fellow Service Members in Deadly AmbushRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that ETHAN PHELAN MELZER, a/k/a “Etil Reggad,” was sentenced to 45 years in prison for attempting to murder U.S. service members, providing and attempting to provide material support to terrorists, and illegally transmitting national defense information. MELZER planned a jihadist attack on his U.S. Army unit in the days leading up to a deployment to Turkey and sent sensitive details about the unit — including information about its location, movements, and security — to members of the extremist organization Order of the Nine Angles (“O9A”), a white supremacist, neo-Nazi, and pro-jihadist group. MELZER pled guilty on June 24, 2022, before U.S. District Judge Gregory H. Woods, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Ethan Melzer infiltrated the U.S. Army in service of a neo-Nazi, white supremacist, and jihadist group. He used his membership in the military to pursue an appalling goal: the brutal murder of his fellow U.S. service members in a carefully plotted ambush. By unlawfully disclosing his unit’s location, strength, and armaments to other O9A members and jihadists in furtherance of this ambush, Melzer traitorously sought to attack the very soldiers he was entrusted to protect. Today’s sentence makes clear that Melzer’s brazen actions backfired and that this Office — along with our partners in law enforcement and the military — will work tirelessly to bring traitors like Melzer to justice and to protect the safety and integrity of our armed services.”
According to the Indictment and other documents in the public record, as well as statements made in public court proceedings:
MELZER is a member of O9A. O9A espouses neo-Nazi, anti-Semitic, and Satanic beliefs and promotes extreme violence to accelerate and cause the demise of Western civilization. The group has expressed admiration both for Nazis, such as Adolf Hitler, and Islamic jihadists, such as Usama Bin Laden, the now-deceased former leader of al Qaeda. Members and associates of O9A have also participated in acts of violence, including murders. O9A members are instructed to fulfill “sinister” deeds, including “insight roles,” where they attempt to infiltrate various organizations, including the military, to gain training and experience, commit acts of violence, identify like-minded individuals, and ultimately subvert those groups from within.
MELZER joined the U.S. Army in approximately 2018 and infiltrated its ranks as part of an insight role to further his goals as an O9A adherent. In approximately October 2019, MELZER deployed abroad with the Army to Italy as a member of the 173rd Airborne Brigade Combat Team. While stationed abroad, MELZER consumed propaganda from multiple extremist groups, including O9A and the Islamic State of Iraq and al-Sham, which is also known as ISIS. For example, MELZER subscribed to encrypted online forums where he downloaded and accessed videos of jihadist attacks on U.S. troops and facilities and jihadist executions of civilians and soldiers, in addition to far-right, neo-Nazi, and other white supremacist propaganda.
In approximately early May 2020, the Army informed MELZER that he would be reassigned to a unit scheduled for a further foreign deployment, where the unit would be guarding an isolated and sensitive military installation (the “Military Base”). After he was notified of the assignment, MELZER joined his new unit and attended weeks of training, including classified and unclassified briefings, to prepare for the deployment. As part of this intensive training, MELZER learned details about the purpose, layout, and security of the Military Base. MELZER and his unit also received in-depth training about and practiced for numerous threat scenarios at the Military Base, including how to respond to various potential terrorist attack scenarios.
Upon learning the importance and sensitivity of his upcoming deployment, MELZER immediately began passing that information to members of O9A. MELZER secretly used an encrypted messaging application to propose, advocate for, and plan a deadly attack on his fellow service members. MELZER sent messages to members and associates of O9A and, in particular, a sub-group of O9A known as the “RapeWaffen Division,” providing details about his unit’s anticipated deployment including troop movements, relevant dates, locations, armaments, topography, and security, all in connection with the proposed attack on his unit and the Military Base. MELZER and his co-conspirators used this information to plan what they referred to as a “jihadi attack” with the objective of causing a “mass casualty” event victimizing his fellow service members. For example, after describing the unit’s weaponry during the deployment — and providing information consistent with the briefings he had received — MELZER described to his co-conspirators how an attack would “essentially cripple[]” the unit’s “fire-teams.”
To further the attack plan, MELZER and his co-conspirators passed these messages to a purported member of al Qaeda. MELZER’s proposed attack evolved as he gathered and distributed additional sensitive information about the deployment. For example, MELZER also promised to leak more information once he arrived at the Military Base — including real-time photographs of the facility and the frequency and channel of U.S. Army radio communications — in order to maximize the likelihood of a successful attack on his unit or on a replacement unit deployed to the Military Base.
MELZER told members of O9A in his encrypted electronic communications “[y]ou just gotta understand that currently I am risking my literal free life to give you all this” and that he was “expecting results.” MELZER further acknowledged that he could be killed during the attack and described his willingness to die for O9A’s goals, writing “who gives a fuck [. . .] it would be another war . . . I would’ve died successfully . . . cause [] another 10 year war in the Middle East would definitely leave a mark.” MELZER also acknowledged in his messages that he deleted some of the communications regarding the planning of the attack because the plot amounted to treason.
* * *
In addition to the prison term, MELZER, 24, of Louisville, Kentucky, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding efforts of the Federal Bureau of Investigation’s (“FBI”) New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department, along with the FBI’s Legal Attaché Office in Rome, Italy, the Air Force Office of Special Investigations, U.S. Army Counterintelligence, U.S. Army Criminal Investigation Command, Attorneys from the U.S. Army Africa Office of the Staff Judge Advocate and 173rd Airborne Brigade Combat Team, and the U.S. Department of State Diplomatic Security Service. Mr. Williams also thanked the Counterterrorism Section and the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division, as well as the Department’s Office of International Affairs, for their assistance.
This prosecution is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Sam Adelsberg, Matthew J.C. Hellman, and Kimberly J. Ravener are in charge of the prosecution, with assistance from Trial Attorneys Alicia Cook of the Counterterrorism Section and Scott Claffee of the Counterintelligence and Export Control Section.
Former New Yorker Sentenced to Three Years in Prison for Defrauding Purchasers of Cryptocurrency-Mining Computers and Miner-Hosting ServicesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that CHET STOJANOVICH, a/k/a “Chester J. Stojanovich,” was sentenced today to three years in prison. STOJANOVICH was sentenced for defrauding more than a dozen victims of more than $2 million through fraudulent misrepresentations that he would provide his customers with specialized cryptocurrency-mining computers (“Miners”) and Miner-hosting services that would provide the victims with a lucrative stream of “hash power” convertible into cryptocurrency. Instead, STOJANOVICH misappropriated his victims’ money and failed to provide them with the Miners and Miner-hosting services they had purchased from him. Stojanovich previously pled guilty on November 29, 2022, to one count of wire fraud and was sentenced today before United States District Judge Denise Cote.
U.S. Attorney Damian Williams said: “Chet Stojanovich took advantage of a flashy new trend in the financial sector to swindle his victims into sending him more than $2 million dollars in exchange for cryptocurrency-related technology and equipment that these victims never received. This case serves as another reminder that even new financial frontiers are fraught with old-fashioned fraud, but our career prosecutors and law enforcement partners are ever as prepared to root out these schemes.”
According to the Indictment, statements made in court, and other publicly filed documents in this case:
From at least 2019, until his arrest in April 2022, STOJANOVICH controlled various companies, including Chet Mining Co. LLC (“Chet Mining”). Starting in approximately March 2019, STOJANOVICH engaged in a scheme to defraud people who were seeking to purchase Miners and Miner-hosting services through which they expected to obtain “hash power” convertible into cryptocurrency and money. STOJANOVICH defrauded these victims by falsely telling them that: he would purchase, and had purchased, Miners on their behalf; and he would provide them with Miner-hosting services and had already obtained such Miner-hosting services for them.
In total, STOJANOVICH fraudulently induced more than a dozen customer-victims to pay a total of more than $2 million to STOJANOVICH and his companies, ostensibly in return for Miners and Miner-hosting services. Despite fraudulent representations to the contrary, STOJANOVICH: (i) failed to provide many of the Miners that he told customers he had acquired; (ii) failed to provide the Miner-hosting services and cryptocurrency hash power that he represented he would provide; (iii) employed deceptive practices to create the illusion that such Miners had been acquired and were being used to provide hash power to those customers; and (iv) misappropriated his customers’ funds and spent the funds on unrelated and personal expenditures, including chartered air flights, hotel rooms, limousines, and private parties.
Eventually, at least six of STOJANOVICH’s victims sought to hold him accountable for his fraud by suing him in a civil case, Holmes et al. v. Chet Mining, Chet Stojanovich, et ano., Case No. 20 Civ. 4448 (LJL) (S.D.N.Y.). STOJANOVICH sought to obstruct their efforts by lying under oath at a deposition, and lying to the presiding district judge, about the existence and location of electronic evidence in the case.
* * *
In addition to his prison sentence, STOJANOVICH, 38, previously of New York, New York, but residing in California since his release on bail in this case, was sentenced today to three years of supervised release, forfeiture of $2,158,927, and restitution to his victims in the amount of $2,108,927.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation in the investigation of this case
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney David Raymond Lewis is in charge of the prosecution.
Ericsson to Plead Guilty and Pay over $206M Following Breach of 2019 FCPA Deferred Prosecution AgreementRead the Press Release
Telefonaktiebolaget LM Ericsson (Ericsson), a multinational telecommunications company headquartered in Stockholm, Sweden, has agreed to plead guilty and pay a criminal penalty of more than $206 million after breaching a 2019 Deferred Prosecution Agreement (DPA).
Ericsson breached the DPA by violating the agreement’s cooperation and disclosure provisions. Based on the same underlying criminal conduct that gave rise to the DPA, Ericsson will plead guilty to engaging in a long-running scheme to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes, falsifying books and records, and failing to implement reasonable internal accounting controls in multiple countries around the world.
“When the department afforded Ericsson the opportunity to enter into a DPA to resolve an investigation into serious FCPA violations, the company agreed to comply with all provisions of that agreement,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “Instead of honoring that commitment, Ericsson repeatedly failed to fully cooperate and failed to disclose evidence and allegations of misconduct in breach of the agreement. As a result of these broken promises, Ericsson must plead guilty to two criminal offenses and pay an additional fine. Companies should be on notice that we will closely scrutinize their compliance with all terms of corporate resolution agreements and that there will be serious consequences for those that fail to honor their commitments.”
According to court documents, beginning in 2000 and continuing until 2016, Ericsson used third-party agents and consultants to make bribe payments to government officials and to manage off-the-books slush funds in Djibouti, China, Vietnam, Indonesia, and Kuwait. These agents were often engaged through sham contracts and paid pursuant to false invoices, and the payments to them were improperly accounted for in Ericsson’s books and records. In 2019, Ericsson resolved this criminal conduct by entering a DPA with the department in connection with a two-count criminal information filed in the Southern District of New York. As part of the DPA, Ericsson paid a total criminal penalty of over $520 million and agreed to the imposition of an independent compliance monitor for three years. An Ericsson subsidiary, Ericsson Egypt Ltd, also pleaded guilty to a one-count criminal information charging conspiracy to violate the anti-bribery provisions of the FCPA.
Following the 2019 resolution, Ericsson breached the DPA by failing to truthfully disclose all factual information and evidence related to the Djibouti scheme, the China scheme, and other potential violations of the FCPA’s anti-bribery or accounting provisions. Ericsson also failed to promptly report and disclose evidence and allegations of conduct related to its business activities in Iraq that may constitute a violation of the FCPA. These disclosure failures prevented the United States from bringing charges against certain individuals and taking key investigative steps.
“Ericsson engaged in significant FCPA violations and made an agreement with the Department of Justice to clean up its act,” said U.S. Attorney Damian Williams for the Southern District of New York. “The company’s breach of its obligations under the DPA indicate that Ericsson did not learn its lesson, and it is now facing a steep price for its continued missteps. As Ericsson’s anticipated guilty plea makes abundantly clear, the Southern District of New York will hold to account companies that fail to live up to obligations to root out and voluntarily report their misconduct to the Department of Justice.”
“Today’s more than $200 million criminal penalty against Ericsson underscores the significant consequences that result when a DPA is breached,” said Chief James C. Lee of the IRS Criminal Investigation (IRS-CI). “Ericsson’s multiple cooperation and disclosure failures led to this breach, resulting in the company having to plead guilty and pay additional penalties.”
Under the terms of the plea agreement, which must be accepted by the court, Ericsson agreed to plead guilty to the original charges deferred by the 2019 DPA: one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the internal controls and books and records provisions of the FCPA. Ericsson will also be required to serve a term of probation through June 2024 and has agreed to a one-year extension of the independent compliance monitor. The plea agreement also requires Ericsson to pay an additional criminal penalty of $206,728,848 – which includes the elimination of any cooperation credit originally awarded pursuant to the DPA.
The IRS-CI investigated the case.
Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys David Abramowicz and Juliana Murray for the Southern District of New York are prosecuting the case.
The Fraud Section is responsible for investigating and prosecuting FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Ericsson to Plead Guilty and Pay over $206 Million Following Breach of 2019 FCPA Deferred Prosecution AgreementRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, Kenneth A. Polite, Jr., the Assistant Attorney General of the Justice Department’s Criminal Division, and James C. Lee, the Chief of the Internal Revenue Service - Criminal Investigation (“IRS-CI”), announced that TELEFONAKTIEBOLAGET LM ERICSSON (“ERICSSON”), a multinational telecommunications company headquartered in Stockholm, Sweden, has agreed to plead guilty and pay a criminal penalty of more than $206 million after breaching a 2019 Deferred Prosecution Agreement (“DPA”).
ERICSSON breached the DPA by violating the agreement’s cooperation and disclosure provisions. Based on the same underlying criminal conduct that gave rise to the DPA, ERICSSON will plead guilty to engaging in a long-running scheme to violate the Foreign Corrupt Practices Act (“FCPA”) by paying bribes, falsifying books and records, and failing to implement reasonable internal accounting controls in multiple countries around the world.
U.S. Attorney Damian Williams said: “Ericsson engaged in significant FCPA violations and made an agreement with the Department of Justice to clean up its act. The company’s breach of its obligations under the DPA indicate that Ericsson did not learn its lesson, and it is now facing a steep price for its continued missteps. As Ericsson’s anticipated guilty plea makes abundantly clear, the Southern District of New York will hold to account companies that fail to live up to obligations to root out and voluntarily report their misconduct to the Department of Justice.”
Assistant Attorney General Kenneth A. Polite, Jr. said: “When the Department afforded Ericsson the opportunity to enter into a DPA to resolve an investigation into serious FCPA violations, the company agreed to comply with all provisions of that agreement. Instead of honoring that commitment, Ericsson repeatedly failed to fully cooperate and failed to disclose evidence and allegations of misconduct in breach of the agreement. As a result of these broken promises, Ericsson must plead guilty to two criminal offenses and pay an additional fine. Companies should be on notice that we will closely scrutinize their compliance with all terms of corporate resolution agreements and that there will be serious consequences for those that fail to honor their commitments.”
IRS-CI Chief James C. Lee said: “Today’s more than $200 million criminal penalty against Ericsson underscores the significant consequences that result when a DPA is breached. Ericsson’s multiple cooperation and disclosure failures led to this breach, resulting in the company having to plead guilty and pay additional penalties.”
According to court documents:
Beginning in 2000 and continuing until 2016, ERICSSON used third-party agents and consultants to make bribe payments to government officials and to manage off-the-books slush funds in Djibouti, China, Vietnam, Indonesia, and Kuwait. These agents were often engaged through sham contracts and paid pursuant to false invoices, and the payments to the agents were improperly accounted for in ERICSSON’s books and records. In 2019, ERICSSON resolved this criminal conduct by entering a DPA with the Department in connection with a two-count criminal information filed in the Southern District of New York. As part of the DPA, ERICSSON paid a total criminal penalty of over $520 million and agreed to the imposition of an independent compliance monitor for three years. An ERICSSON subsidiary, Ericsson Egypt Ltd, also pled guilty to a one-count criminal information charging conspiracy to violate the anti-bribery provisions of the FCPA.
Following the 2019 resolution, ERICSSON breached the DPA by failing to truthfully disclose all factual information and evidence related to the Djibouti scheme, the China scheme, and other potential violations of the FCPA’s anti-bribery or accounting provisions. ERICSSON also failed to promptly report and disclose evidence and allegations of conduct related to its business activities in Iraq that may constitute a violation of the FCPA. These disclosure failures prevented the United States from bringing charges against certain individuals and taking key investigative steps.
* * *
Under the terms of the plea agreement, which must be accepted by the court, ERICSSON agreed to plead guilty to the original charges deferred by the 2019 DPA: one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the internal controls and books and records provisions of the FCPA. ERICSSON will also be required to serve a term of probation through June 2024 and has agreed to a one-year extension of the independent compliance monitor. The plea agreement also requires ERICSSON to pay an additional criminal penalty of $206,728,848 – which includes the elimination of any cooperation credit originally awarded pursuant to the DPA.
Mr. Williams praised the efforts of the IRS-CI, which conducted the investigation in this case.
The case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the Justice Department’s Fraud Section. Assistant U.S. Attorneys David Abramowicz and Juliana Murray and Trial Attorney Michael Culhane Harper are in charge of the prosecution.
Black-Market Medication Wholesaler, Pharmacy Owner, and Three Other Defendants Charged in $15 Million HIV Medication Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that BORIS AMINOV, CHRISTY CORVALAN, DAVID FERNANDEZ, DEZYRE BAEZ, and CRYSTAL MEDINA were charged with engaging in a years-long scheme to defraud Medicaid and other government insurance plans out of at least approximately $15 million and exploit at least hundreds of low-income individuals with HIV. The defendants were arrested this morning and are being presented today in Manhattan federal court before United States Magistrate Judge Gabriel W. Gorenstein. The case has been assigned to United States District Judge Mary Kay Vyskocil.
U.S. Attorney Damian Williams said: “As alleged, the defendants orchestrated a scheme to get rich by lying to Medicaid and other government insurance programs and depriving vulnerable HIV patients of legitimate and safe medications. The defendants allegedly made millions of dollars through submitting fraudulent insurance claims, paying illegal kickbacks, and buying and selling black-market HIV medications. Today’s arrests send a crystal-clear message to those that seek to line their pockets by lying to federal agencies tasked with providing healthcare for low-income individuals and preying on vulnerable members of society – you will not get away with it.”
FBI Assistant Director Michael J. Driscoll said: “The indictment today alleges the defendants operated a scheme designed not only to defraud Medicaid and other government insurance plans, but also take advantage of vulnerable low-income patients with HIV. This type of criminal activity abuses taxpayer funded healthcare programs and puts those who need help at further risk. The FBI will always do whatever is necessary to ensure the integrity of healthcare programs like Medicaid and hold those willing to exploit these programs accountable.”
According to the allegations contained in the Indictment:[1]
From at least in or about July 2020 through at least in or about February 2023, AMINOV, CORVALAN, FERNANDEZ, BAEZ, and MEDINA operated a scheme that defrauded Medicaid and other government insurance plans out of at least approximately $15 million and exploited at least hundreds of low-income individuals with HIV, jeopardizing the health and safety of those vulnerable patients. AMINOV was a distributor of black-market HIV medications to two pharmacies located in the Bronx, New York (the “Pharmacies”), through which the scheme was perpetrated. CORVALAN owned and operated the Pharmacies. She purchased black-market medications from AMINOV that were then dispensed to patients, funded illegal kickbacks to be paid to patients, and additionally paid patients to sell back their HIV medications to the Pharmacies, thereby inducing patients to forego using the medications they were prescribed to treat their HIV infections. FERNANDEZ, BAEZ, and MEDINA were employees of the Pharmacies who participated in the day-to-day operation of the scheme, including by paying illegal kickbacks to patients to obtain their HIV medications from the Pharmacies and buying-back medications from the patients.
The scheme had two sets of victims: government insurance programs and the patients of the Pharmacies.
First, Medicaid and other government insurance programs were defrauded out of at least approximately $15 million of payments that they made to the Pharmacies to purchase prescription HIV medications for patients through legitimate channels. CORVALAN, FERNANDEZ, BAEZ, and MEDINA, however, instead purchased HIV medications from black-market sources, including AMINOV. Over the duration of the scheme, CORVALAN, FERNANDEZ, BAEZ, and MEDINA used the Pharmacies to pay more than $6 million to purchase black-market HIV medications from AMINOV, which were then distributed to patients.
Second, the scheme exploited low-income HIV patients of the Pharmacies and, in the process, put those vulnerable patients’ health and safety at risk by both paying patients kickbacks to fill their medications at the pharmacies, albeit with black-market drugs, and by encouraging patients to sell back their medications instead of taking them as they were prescribed to control their HIV infections.
The defendants spent the proceeds of the scheme to purchase luxury cars, including a 2021 Mercedes-Benz Maybach with an estimated fair market value of approximately $245,000, millions of dollars in waterfront real-estate, designer clothes, and jewelry.
* * *
AMINOV, 47, of Brooklyn, New York, is charged with one count of conspiracy to commit wire fraud and health care fraud, which carries a maximum potential sentence of 20 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum potential sentence of 20 years in prison.
CORVALAN, 41, of the Bronx, New York, is charged with one count of conspiracy to commit wire fraud and health care fraud, which carries a maximum potential sentence of 20 years in prison; one count of conspiracy to commit money laundering, which carries a maximum potential sentence of 20 years in prison; one count of conspiracy to violate the anti-kickback statute, which carries a maximum potential sentence of five years in prison; and aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison.
FERNANDEZ, 24, BAEZ, 22, and MEDINA, 27, all of the Bronx, New York, are charged with one count of conspiracy to commit wire fraud and health care fraud, which carries a maximum potential sentence of 20 years in prison; one count of conspiracy to violate the anti-kickback statute, which carries a maximum potential sentence of five years in prison; and aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the FBI.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Jeffrey W. Coyle is 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 herein should be treated as an allegation.
Former Bank Employee Charged with Million-Dollar Fraud and Embezzlement SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the arrest of KEVIN CHIU, a former business relationship manager at a financial institution headquartered in Manhattan, for a years-long bank fraud and embezzlement scheme to steal over $2 million from his former clients’ accounts. CHIU was arrested this morning in Brooklyn and will be presented today before U.S. Magistrate Judge James L. Cott.
U.S. Attorney Damian Williams said: “As alleged, for years, Chiu abused his position as a business relationship manager at a financial institution to steal millions from his clients, including elderly clients. Today’s arrest is yet another example of this Office’s commitment to holding accountable those who commit financial frauds, especially those who are in positions of trust within financial institutions.”
FBI Assistant Director Michael J. Driscoll said: “The complaint today alleges that Chiu exploited his access to facilitate a years-long scheme to embezzle more than two million dollars from his clients. Financial crimes like this ultimately undermine the public’s confidence in the financial system. Today’s arrest should serve as reminder to anyone willing to take advantage of their employment to steal funds - the FBI will ensure you are held accountable in the criminal justice system.”
As alleged in the Complaint:[1]
From at least on or about October 28, 2020, through on or about June 29, 2022, CHIU engaged in a scheme to steal from his clients’ accounts by using fraudulent transaction forms to transfer funds out of their accounts. He asked at least one elderly client to sign blank transaction forms when she was meeting with CHIU in person and provided that client with fake account statements so she would not know the true balance of her account, which CHIU had largely drained.
In addition, CHIU transferred stolen funds from some client accounts to others from which he already had stolen to conceal the fraud. In total, CHIU stole over $2 million from his former clients, several of whom were elderly individual clients.
CHIU used the money he stole to purchase securities and trade in the market. He also used the funds for personal expenses.
* * *
CHIU, 32, of Brooklyn, New York, is charged with one count of bank fraud, which carries a maximum sentence of 30 years in prison; one count of embezzlement by a bank employee, which carries a maximum sentence of 30 years in prison; one count of money laundering, which carries a maximum sentence of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two 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 investigative work of the FBI.
The prosecution of this case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Lisa Daniels 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.
United States Enters into Consent Decrees with Principals of CISNE NY Construction, Inc. for Violating Lead Paint Safety RulesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Lisa F. Garcia, the Regional Administrator of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States entered into Consent Decrees settling a civil lawsuit against the principals of CISNE NY CONSTRUCTION, INC. (“CISNE”) — EDISON RUILOVA and JOSE PACCHA — for violations of the Toxic Substances Control Act (“TSCA”) and EPA’s Renovation, Repair, and Painting Rule (“RRP Rule”). Defendants violated provisions of TSCA and the RRP Rule that protect public health by reducing the risk of lead poisoning during renovations in residential buildings that may contain lead paint.
U.S. Attorney Damian Williams said: “CISNE NY Construction, Inc. put the public health at risk by failing to abide by lead-safe work practices during renovations of residential buildings. These consent decrees will help ensure that CISNE NY’s principals abide by safety standards moving forward and send a message that companies and the individuals that run them cannot prioritize profits over complying with health and safety regulations.”EPA Regional Administrator Lisa F. Garcia said: “Protecting children from the harmful effects of lead exposure is a top priority for EPA. In New York, where most housing predates the 1978 federal ban on lead in residential paint, lead exposure is a critical public health concern, particularly for children. Exposure to chips and dust from lead-based paint can cause irreversible brain damage and other debilitating effects, making it essential for renovators to be certified and trained in lead-safe work practices and to implement these practices when disturbing lead-based paint in homes. EPA remains committed to enforcing these vital federal requirements and increasing accountability and awareness to safeguard families and workers from lead exposure.”
The Consent Decrees, which are subject to public comment and approval by the District Court, would resolve a lawsuit filed in Manhattan federal court in 2022, which alleged that CISNE, its principals EDISON RUILOVA and JOSE PACCHA, and several related entities, violated TSCA and the RRP Rule in the course of renovating several Manhattan apartment buildings. The lawsuit also alleged that the same defendants violated TSCA and the RRP Rule by failing to provide EPA with records necessary to enable EPA to monitor the defendants’ compliance.
In the Consent Decrees entered today, JOSE PACCHA and EDISON RUILOVA admitted, acknowledged, and accepted responsibility for the fact that they were the principals of CISNE who were responsible for ensuring the firm’s compliance with the RRP Rule in 2017 and 2018 and that CISNE “violated the RRP Rule and TSCA” as a result of the following conduct during two Manhattan renovation projects:
- Failing to obtain an RRP firm certification prior to conducting renovation work;
- Failing to have a certified renovator direct the renovations and to ensure that all other persons performing the renovations received training on lead-safe work practices;
- Failing to post warning signs defining the work areas and cautioning occupants and other persons not involved in the renovation activities to keep out;
- Failing to provide an EPA pamphlet on lead hazards, The Lead-Safe Certified Guide to Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools, to the owner of the units being renovated;
- Failing to contain the renovation work areas to minimize the risk of lead exposure;
- Failing to clean the work areas after the renovations were completed to ensure that no dust, debris, or residue remained in those areas; and
- Failing to make available to EPA the records necessary to demonstrate compliance with the RRP Rule.
* * *
Pursuant to the Consent Decrees, EDISON RUILOVA and JOSE PACCHA will each pay $25,000 in civil penalties, an amount based on each individual’s documented inability to pay the full civil penalty for which he otherwise would be liable. Further, the Consent Decrees require each individual to receive training before conducting future RRP Rule-covered work and require them to operate any future renovation firm that they own, operate, or control in compliance with safe work practices and other RRP Rule requirements. Failure to comply with the Consent Decrees will result in significant additional penalties.
To provide public notice and afford members of the public the opportunity to comment on the Consent Decrees, the Consent Decrees will be lodged with the District Court for a period of at least 30 days before it is submitted for the Court’s approval.
Mr. Williams thanked the attorneys and enforcement staff at EPA Region 2 for their critical work in this matter.
This case is being handled by the Environmental Protection Unit of the Office’s Civil Division. Assistant U.S. Attorney Zack Bannon is in charge of the case.
Paccha_Consent_Decree.pdf Ruilova_Consent_Decree.pdfSeven Defendants Sentenced for Defrauding Federal Program That Provided Technology Funding for Rockland County SchoolsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the sentencing of all seven defendants who previously pled guilty to defrauding the federal “E-Rate” program, designed to provide information technology to underprivileged schools, in connection with E-Rate funds provided to private religious schools in Rockland County, New York. PERETZ KLEIN, BEN KLEIN, MOSHE SCHWARTZ, SIMON GOLDBRENER, SHOLEM STEINBERG, ARON MELBER, and SUSAN KLEIN had each pled guilty in White Plains federal court to one count of conspiring against the United States and were sentenced in proceedings held between June 2022 and today. PERETZ KLEIN was sentenced to 48 months in prison; BEN KLEIN was sentenced to 27 months in prison; MOSHE SCHWARTZ was sentenced to 27 months in prison; SIMON GOLBRENER was sentenced to 24 months in prison; SHOLEM STEINBERG was sentenced to 12 months and one day in prison; AARON MELBER was sentenced to nine months in prison; and SUSAN KLEIN was sentenced to time served. U.S. District Judge Kenneth M. Karas imposed all sentences.
U.S. Attorney Damian Williams said: “The seven defendants who have now pled guilty in this case sought to steal from our most vulnerable population: economically disadvantaged children. The defendants created elaborate schemes with complete disregard for the fact that the money they selfishly stole should have gone towards providing children with much-needed technology to further their education and brighten their future. Each defendant now faces serious penalties for their callous crime.”
According to the allegations made in the Indictment and the Informations to which the defendants pled guilty, as well as the defendants’ admissions in court:
The E-Rate program distributes funds to schools and libraries mostly serving economically disadvantaged children so that those institutions can afford needed telecommunication services, internet access, and related equipment. Over 30,000 applications from schools and libraries seeking funds to serve economically disadvantaged children were received each year during the relevant time period, and every year, requests for E-Rate funds have exceeded funds available. In order to obtain those funds, educational institutions certify that they are purchasing equipment and services from a private vendor. If approved, the program defrays the cost by up to 90%. The educational institution is supposed to enter into an open bidding process in order to select a vendor, and the educational institution and vendor then submit a series of certifications that they comply with a number of requirements of the E-Rate program. A school applying for E-Rate funds may employ a consultant, but that consultant must be independent of the vendors competing to sell E-Rate funded equipment and services.
The schools at issue in this case never received millions of dollars’ worth of these items and services for which the defendants billed the E-Rate program. In other cases, the schools and the defendants requested hundreds of thousands of dollars of sophisticated technology that served no real purpose for the student population. For example, from 2009 through 2015, one day care center that served toddlers from the ages of two through four requested over $700,000 – nearly $500,000 of which was ultimately funded – for equipment and services – including video conferencing and distance learning, a “media master system,” sophisticated telecommunications systems supporting at least 23 lines, and high-speed internet – from companies controlled by certain defendants. In still other instances, the schools received equipment and services that fulfilled the functions for which the schools had requested E-Rate funds (such as providing the school with internet access), but the schools and the defendants materially overbilled the E-Rate program for the items provided in order to enrich themselves at the expense of the underprivileged children the program was designed to serve.
The defendants also perverted the fair and open bidding process required by the E‑Rate program. Defendants who held themselves out as independent consultants working for the schools in truth worked for and were paid by other defendants who controlled vendor companies. These defendants presented the schools with forms to sign or certify, awarding E-Rate funded contracts to companies owned by several defendants. As a result of false and misleading filings, the defendants received millions of dollars in E-Rate funds for equipment and services that they did not, in fact, provide and which the schools did not use, and the defendants purporting to act as consultants accepted payments totaling hundreds of thousands of dollars from the vendors, despite falsely presenting themselves as independent of the vendors.
In return for their participation in the scheme to defraud the E‑Rate program, certain schools and school officials received a variety of improper benefits from certain defendants, including a percentage of the funds fraudulently obtained from E-Rate for equipment and services that were not, in fact, provided to the schools; free items paid for with E-Rate funds but not authorized by the program, such as cellphones for school employees’ personal use and alarm systems and security equipment (which the E-Rate program does not authorize) installed at the schools; and free services for which the E-Rate program authorizes partial reimbursement (such as internet access) but for which the schools did not – contrary to their statements in filings – make any payment at all.
PERETZ KLEIN, SUSAN KLEIN, BEN KLEIN, and SHOLEM STEINBERG held themselves out as vendors to schools participating in the E‑Rate program. Corporations controlled by these defendants requested over $35 million in E‑Rate funds and received over $14 million in E‑Rate funds from in or about 2010 to in or about 2016. Each of these defendants has now admitted that the companies they controlled did not, in fact, provide much of the equipment for which they billed the federal government.
SIMON GOLDBRENER and MOSHE SCHWARTZ held themselves out as consultants who worked for educational institutions supposedly helping schools to participate in the E-Rate program by, among other things, holding a fair and open bidding process to select cost-effective vendors. GOLDBRENER and SCHWARTZ have now admitted that they were, in fact, paid hundreds of thousands of dollars by the vendors to complete and file false E-Rate documents that circumvented the bidding process and resulted in the payment of millions of dollars to the vendors.
ARON MELBER was an official at a private religious school in Rockland County, New York, that participated in the E-Rate program with some of the defendants. MELBER has now admitted that he filed false certifications with the E-Rate program, falsely claiming to have obtained authorized E‑Rate funded equipment and services from vendors selected through a fair and open bidding process.
Each defendant pled guilty to one count of a conspiracy to commit wire fraud.
* * *
PERETZ KLEIN, 68, of Spring Valley, New York, was sentenced on June 8, 2022, to 48 months in prison followed by 24 months of supervised release and was ordered to forfeit $1,144,288.37 and to pay restitution of the same amount.
BEN KLEIN, 43, of Monsey, New York, was sentenced on October 19, 2022, to 27 months in prison followed by 24 months of supervised release and was ordered to forfeit $412,586.37 and to pay restitution of the same amount.
MOSHE SCHWARTZ, 50, of Monsey, New York, was sentenced on June 9, 2022, to 27 months in prison followed by 24 months of supervised release and was ordered to forfeit $275,160.00 and to pay restitution of the same amount.
SIMON GOLDBRENER, 59, of Monsey, New York, was sentenced on November 7, 2022, to 24 months in prison followed by 24 months of supervised release and was ordered to forfeit $479,357.18 and to pay restitution of the same amount.
SHOLEM STEINBERG, 43, of Monsey, New York, was sentenced on November 7, 2022, to 12 months and one day in prison followed by 24 months of supervised release and was ordered to forfeit $191,423.50 and to pay restitution of the same amount.
ARON MELBER, 47, of Monsey, New York, was sentenced on February 28, 2023, to nine months in prison followed by 24 months of supervised release and was ordered to forfeit $127,654.55 and to pay restitution of the same amount.
SUSAN KLEIN, 62, of Spring Valley, New York, was sentenced on June 8, 2022, to time served followed by 12 months of supervised release and was ordered to forfeit $1,144,288.37 and to pay restitution of the same amount.
Mr. Williams thanked the Federal Bureau of Investigation, the Federal Communications Commission - Office of the Inspector General, and the Rockland County District Attorney’s Office for their outstanding work on the investigation.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Michael D. Maimin, Hagan Scotten, and Vladislav Vainberg are in charge of the prosecution.
Serial Con Artist Sentenced to 51 Months in Connection with Embezzlement SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that TRACII SHOW HUTSONA was sentenced today to 51 months in prison for her embezzlement of more than one million dollars as part of a confidence scheme. The sentence was imposed by U.S. District Judge Jesse M. Furman.
U.S. Attorney Damian Williams said: “Not long after serving a lengthy sentence for a previous federal conviction, Tracii Show Hutsona betrayed her employer’s trust by misusing her employer’s financial information to fund her own luxury lifestyle for years. Her desire to live the high life at the expense of her victim has placed her back where she began — facing another substantial federal sentence.”
According to public court filings and statements made in Court:
Between October 2015 and November 2019, SHOW HUTSONA engaged in a confidence scheme to embezzle over a million dollars from a victim (the “Victim”). The Victim hired SHOW HUTSONA to serve as a personal assistant at the Victim’s home and trusted SHOW HUTSONA with access to the Victim’s financial information. Just a few months after she was hired, and while SHOW HUTSONA was on supervised release in connection with a previous federal fraud conviction in California, SHOW HUTSONA began using that access to finance her own luxury lifestyle.
In February 2016, SHOW HUTSONA opened a credit card account in the Victim’s name without the Victim’s knowledge or authorization. In September 2018, after the Victim learned about significant expenditures from the Victim’s financial accounts, the Victim confronted SHOW HUTSONA, who confessed that she had used the Victim’s financial accounts for her own personal use and repeatedly apologized to the Victim. Shortly thereafter, SHOW HUTSONA and the Victim signed an agreement, which stated, among other things, that SHOW HUTSONA had obtained an “additional user card” (the “User Card”) and that SHOW HUTSONA “had been using [the Victim’s] account since July 2016.” The agreement further stated that SHOW HUTSONA needed to repay $307,498.02 to the Victim. Having regained the Victim’s trust, in the days and months after executing the agreement with the Victim, SHOW HUTSONA continued to use the Victim’s financial accounts without permission, including through use of the User Card, which SHOW HUTSONA had represented to the Victim had been destroyed.
In September 2019, the Victim terminated her relationship with SHOW HUTSONA after discovering additional unauthorized charges made by SHOW HUTSONA. The Victim reported fraudulent expenditures on the Victim’s financial accounts to her bank. During the bank’s subsequent investigation, SHOW HUTSONA faxed the bank a fraudulent “Power of Attorney” document (the “Power of Attorney”), which appeared to be signed by the Victim and notarized. The Power of Attorney stated that SHOW HUTSONA would serve as the Victim’s “attorney-in-fact” and have control over the Victim’s “Banking and other financial institution transactions.” In fact, the Victim did not provide SHOW HUTSONA with any such power of attorney, the Victim did not sign the document, and the notary did not notarize it.
During the scheme, SHOW HUTSONA, without authorization, added herself as an additional account holder to at least two checking accounts and a savings account maintained by the Victim and obtained multiple credit cards in her own name but drawn on accounts of the Victim (collectively, the “Fraud Accounts”). Over the course of approximately four years, SHOW HUTSONA used the Fraud Accounts to steal over $1 million from the Victim. SHOW HUTSONA used the proceeds of her fraud scheme to make payments to SHOW HUTSONA’s concierge business and for personal expenses, such as mobile phones, restaurants and nightclubs, luxury hotels, and jewelry. To cover the purchases, SHOW HUTSONA transferred hundreds of thousands of dollars into the Fraud Accounts from a checking account of the Victim and two 529 college savings accounts maintained by the Victim on behalf of the Victim’s children.
* * *
In addition to her prison term, SHOW HUTSONA, 54, of Scottsdale, Arizona, was sentenced to three years of supervised release. She was further ordered to forfeit $1,148,759.28 and to pay restitution in the amount of $1,148,759.28.
Mr. Williams praised the outstanding investigative work of the United States Secret Service and the New York City Police Department.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Timothy V. Capozzi is in charge of the prosecution.
New York Gang Member Sentenced to 25 Years in Prison for 2010 East Harlem MurderRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that JAMAL ADAMSON, a/k/a “J-Rock,” was sentenced today to 25 years in prison for the June 20, 2010, murder of David Moore in East Harlem and other racketeering offenses. ADAMSON previously pled guilty before United States District Judge Gregory H. Woods, who imposed the sentence.
U.S. Attorney Damian Williams said: “Jamal Adamson callously took the life of another during a gang-related shooting. As today’s sentence shows, those who commit acts of gang violence in New York City are subject to spending serious time in federal prison.”
As alleged in the Indictment and other documents filed in federal court and based on statements made in public court proceedings:
The Cash Money Boys (“CMB”) gang was a criminal enterprise involved in committing numerous acts of violence, including murder, attempted murder, robberies, and assaults, in and around Manhattan. Members and associates of CMB engaged in violence to retaliate against rival gangs, to promote the standing and reputation of CMB, and to protect the gang’s narcotics sales.
From at least in or about 2006 to in or about 2017, members and associates of CMB regularly distributed crack cocaine and other drugs in the vicinity of Lexington Avenue between East 122nd Street and East 123rd Street. CMB controlled drug sales within this area by preventing non-members, outsiders, and rival drug dealers from selling drugs in the area controlled by the gang. This included gang members shooting at, assaulting, and/or robbing other drug dealers and members of rival gangs who entered CMB’s territory.
On June 20, 2010, after members of CMB and a rival gang got into a physical altercation, ADAMSON shot and killed David Moore, 23, near the corner of East 122nd Street and Lexington Avenue.
* * *
In addition to his prison sentence, ADAMSON, 28, of New York, New York, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding work of the Special Agents of the United States Attorney’s Office for the Southern District of New York and the New York City Police Department.
The case is being prosecuted by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Maurene Comey, Dominic A. Gentile, Christopher J. Clore, and Peter J. Davis are in charge of the prosecution.
Money Launderer for $5 Million Vehicle Sale Scam Extradited from SpainRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that ION VIOREL IONITOIU, a Romanian national who resided in Spain, was extradited to the United States on bank fraud and money laundering offenses arising from a scheme to launder money derived from an online vehicle sale scam that took in at least $5 million from defrauded consumers.
U.S. Attorney Damian Williams said: “Ionitoiu is the seventh member of an operation that laundered fraud proceeds for online swindlers who preyed on U.S. consumers who has been charged, and he will now face justice for his actions. This Office is committed to rooting out both those who commit the underlying fraud and their enablers, regardless of where they reside.”
As alleged in the Indictment, and based on other documents filed in court and statements made in court: [1]
From at least March 2019 through at least April 2021, ION VIOREL IONITOIU was an intermediary between co-conspirators who defrauded consumers who were trying to buy vehicles online and a money laundering crew that operated in Brooklyn, New York. Other members of the conspiracy, pretending to represent car dealerships, advertised vehicles that they did not own and were not authorized to sell on fake websites with domain names that sounded like legitimate car dealerships or through online marketplaces like Craigslist and eBay. Victims who responded to those advertisements and negotiated a purchase price were instructed by the purported sellers to wire payment to bank accounts in New York. Unbeknownst to the victims, the accounts were opened at IONITOIU’s direction by co-conspirators who operated in Brooklyn, including KAROL KAMINSKI, STANISLAV TUNKEVIC, ARTURAS GILYS, and SVETLANA VAIDOTIENE. Once the payments cleared, the account owners quickly withdrew the funds before the victims realized they had been defrauded. The victims never received the vehicles they thought they had bought or any refunds from the fake sellers. In total, dozens of victims were defrauded of a total of at least $5 million.
* * *
ION VIOREL IONITOIU, 34, a Romanian national and Spanish resident, was extradited to the United States on February 24, 2023. IONITOIU is charged with one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison and a maximum fine of $1,000,000, and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison and a maximum fine of $500,000 or twice the value of the property involved in the transaction.
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.
KAROL KAMINSKI, 33, STANISLAV TUNKEVIC, 48, and ARTURAS GILYS, 41, all of Lithuania, pled guilty to one count of conspiracy to commit bank fraud. They are scheduled to be sentenced on March 28, 2023, by U.S. District Judge Analisa Torres.
SVETLANA VAIDOTIENE, 55, of Lithuania, was sentenced to time-served (10 months and eight days) on January 17, 2023. She was also ordered to forfeit and to make restitution in the amount of $271,000 and has been removed from the United States.
Mr. Williams praised the outstanding investigative work of Homeland Security Investigations. He also thanked the U.S. Department of Justice’s Office of International Affairs of the Department’s Criminal Division, the United States Marshals Service, the Prosecutor General’s Office of the Republic of Lithuania, and the Lithuanian Criminal Police Bureau for their assistance in this investigation.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Sarah Lai is in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described herein should be treated as an allegation as to the charged defendant.
Statement of U.S. Attorney Damian Williams on the Convictions of Mohamed Tahlil Mohamed and Abdi Yusuf HassanRead the Press Release
"For 977 days, Michael Scott Moore, an American journalist, was held hostage in Somalia by pirates. Today, a unanimous jury found two key players in Moore's years-long captivity guilty on all counts: Mohamed Tahlil Mohamed and Abdi Yusuf Hassan. Tahlil, a Somali Army officer, left his post to take command of the pirates holding Moore captive and obtained the machineguns and grenade launchers used to threaten and hold Moore. Hassan, the Minister of Interior and Security for the province in Somalia where Moore was held hostage, abused his government position and led the pirates' efforts to extort a massive ransom from Moore's mother. Today's guilty verdicts show that neither time nor distance can weaken our resolve to hold those who dare to take Americans hostage overseas fully accountable for their crimes, and to see justice done for the victims of such brutal and brazen attacks against Americans."
Queens Man Arrested for Defrauding Former Employer of $4.4 Million in Fake Invoice SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the arrest of BHASKARRAY BAROT for engaging in a years-long scheme to defraud his former employer out of approximately $4.4 million. BAROT was arrested this morning in Queens, New York, on a criminal Complaint and was presented before a magistrate judge in the Southern District of New York.
U.S. Attorney Damian Williams said: “As alleged, over the course of years, Barot created fraudulent invoices and processed them for payment at the Manhattan-based company where he used to work as a procurement manager. Barot designed the invoices to closely resemble the invoices that the company received from real vendors and other entities owed payment from the company. But the fraudulent invoices differed in a crucial way: they directed payment into Barot’s pocket. Today’s arrest demonstrates that this Office will seek justice for companies that fall victim to corporate theft.”
FBI Assistant Director Michael J. Driscoll said: "As the charges today allege, Barot operated a years-long deception, scamming his employer out of millions of dollars through bogus invoices. Duplicitous schemes like this bring undue harm to the greater financial community. The FBI will continue to investigate complex financial crimes and hold the transgressors accountable in the criminal justice system."
According to the allegations contained in the Complaint, which was unsealed today in Manhattan federal court:[1]
From at least in or about July 2018, up to and including at least August 2022, BAROT engaged in a scheme to defraud his former employer (the “Company”) of approximately $4.4 million through fake invoices designed to resemble those received from legitimate vendors of the Company. BAROT used his position as a procurement manager at the Company to process the fraudulent invoices for payment. When doing so, he often affixed the fake invoices to email messages that he, in some cases, sent in the names of employees of the Company’s real vendors so that it would appear as though the real vendors were seeking payment on the fake invoices.
The fake invoices, however, stated that payment should be made to entities with names that often differed slightly from those of the real vendor companies. BAROT then incorporated companies and opened bank accounts in the names of some of the entities listed for payment on the fake invoices so that he could collect the payments that the Company made on the fake invoices.
BAROT repeated these fraudulent tactics with more than a dozen fictitious entities and caused payment to be made by the Company on approximately 40 fake invoices, totaling approximately $4.4 million.
* * *
BAROT, 32, of Queens, New York, is charged with one count of wire fraud, which carries a maximum potential sentence of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the FBI.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Jeffrey W. Coyle is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the 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.
Civil Forfeiture Complaint Filed Against Six Luxury Real Estate Properties Involved in Sanctions Evasion and Money LaunderingRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, Andrew C. Adams, the Director of Task Force KleptoCapture, Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Maged Behnam, Acting Special Agent in Charge of the Miami Field Office of the Federal Bureau of Investigation (“FBI”), announced today the filing of a civil forfeiture complaint against six real properties located in New York, New York, Southampton, New York, and Fisher Island, Florida, worth approximately $75 million. The Complaint alleges that the properties, which are beneficially owned by Russian oligarch Viktor Vekselberg, are the proceeds of sanctions violations and were involved in international money laundering in promotion of sanctions violations committed by, among others, Vladimir Voronchenko, a/k/a “Vladimir Vorontchenko,” who was indicted on February 7, 2023.
U.S. Attorney Damian Williams said: “Today’s action, filed on the anniversary of Russia’s full-scale invasion of Ukraine, seeks forfeiture of six luxury properties owned by Viktor Vekselberg that his associate Vladimir Voronchenko maintained by funneling millions of dollars into the United States. With the filing of this complaint, the United States sends a strong message to those who violate sanctions and engage in money laundering that the United States will use every available tool to forfeit criminal proceeds and will use that money to help our allies in Ukraine under the newly enacted law.”
Director of Task Force KleptoCapture Andrew C. Adams said: “Strawmen, corrupt professionals, and shell companies may be the hallmarks of money laundering and sanctions evasion, but they are obstacles that diligent, dedicated investigators and prosecutors will surmount. Today’s filing marks yet another step that the Department of Justice and our partners at HSI and FBI have taken toward dislodging ill-gotten gains from those who would attempt to evade U.S. sanctions, and toward making the value of these properties available for aid to Ukraine.”
HSI Special Agent in Charge Ivan J. Arvelo said: “For years, Russia’s weaponization of corruption has relied on opaque legal structures – and Western enablers – to move, hide, and spend stolen wealth, enriching its oligarchs and ultimately resourcing the war in the Ukraine. Since the invasion, HSI New York and our partners have worked tirelessly to cut Russia’s corruptocrats and their assets out of the American financial system. Today we continue our active measures and remove jewels from the crown of yet another oligarch, stripping him of the luxury assets he so cherishes.”
FBI Acting Special Agent in Charge Maged Behnam said: “The mission of the interagency Task Force KleptoCapture is to enforce sanctions, export restrictions, and economic countermeasures imposed by the United States in response to Russia’s unprovoked military invasion of Ukraine one year ago. This civil forfeiture complaint is an example of the Task Force’s ongoing work to fulfill this mission. I commend the hard work, dedication, and cooperation of this team of professionals.”
According to the allegations in the Complaint filed in Manhattan federal court today:[1]
On April 6, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated Vekselberg as a Specially Designated National (“SDN”) in connection with its finding that the actions of the Government of the Russian Federation in Ukraine constituted an unusual and extraordinary threat to the national security and foreign policy of the United States. On or about March 11, 2022, OFAC redesignated Vekselberg as an SDN and blocked Vekselberg’s yacht and private airplane.
Prior to his designation by OFAC, between in or about 2008 and in or about 2017, Vekselberg, through a series of shell companies, acquired six real properties in the United States, specifically, (i) two apartments on Park Avenue in New York, New York, (ii) an estate in Southampton, New York, (iii) two apartments on Fisher Island, Florida, and (iv) a penthouse apartment also on Fisher Island, Florida (collectively, “the Properties” or the “Defendants-in-rem”). As of the date of the Complaint, the Properties were worth approximately $75 million.
Voronchenko, Vekselberg’s close friend and business associate, retained an attorney (the “Attorney”), who practiced in New York, New York, in connection with the acquisition of the Properties. The Attorney also managed the finances of the Properties, including by paying common charges, property taxes, insurance premiums, and other fees associated with the Properties in U.S. dollar transactions from the Attorney’s interest on lawyer’s trust account (“IOLTA account”).
Prior to Vekselberg’s designation as an SDN, between approximately February 2009 and March 2018, companies owned by Vekselberg sent approximately 90 wire transfers totaling approximately $18.5 million to the IOLTA account. At the direction of Voronchenko and his family member who lived in Russia, the Attorney used these funds to make various U.S. dollar payments to maintain and service the Properties.
Immediately after Vekselberg’s designation as an SDN, the source of the funds used to maintain and service the Properties changed. The IOLTA Account began to receive wires from a bank account in the Bahamas held in the name of a shell company controlled by Voronchenko, Smile Holding Ltd., and from a Russian bank account held in the name of a Russian national who was related to Voronchenko. Between approximately June 2018 and March 2022, approximately 25 wire transfers totaling approximately $4 million were sent to the IOLTA account. Although the source of the payments changed, the management of the payments remained the same as before: Voronchenko and his family member directed the Attorney to use these funds to make various U.S. dollar payments to maintain and service the Properties. Additionally, after Vekselberg was sanctioned in 2018, Voronchenko and others tried to sell both the Park Avenue apartment and the Southampton estate. No licenses from OFAC were applied for or issued for any of these payments or attempted transfers.
On or about May 13, 2022, federal agents served Voronchenko on Fisher Island with a Grand Jury subpoena, which called for his personal appearance for testimony and his production of documents, including documents relating to the Properties. Approximately nine days later, on or about May 22, 2022, Voronchenko took a flight from Miami, Florida, to Dubai, United Arab Emirates, and then went to Moscow, Russia. Voronchenko failed to appear before the Grand Jury and has not returned to the United States.
* * *
The Properties subject to the forfeiture action are as follows:
- 19 Duck Pond Lane, Southampton, New York 11968;
- 515 Park Avenue, Units 21 and 2I, New York, New York 10022;
- 7002 Fisher Island Drive, Unit 7002 PH2, Miami Beach, Florida 33109; and
- 7183 Fisher Island Drive, Units 7182 and 7183, Miami Beach, Florida 33109.
Mr. Williams praised the outstanding work of the New York and Miami field offices of HSI and the FBI. Mr. Williams further thanked the Department of Justice’s National Security Division and Office of International Affairs and OFAC for their assistance and cooperation in this investigation.
On March 2, 2022, the Attorney General announced the launch of Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed, along with allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. The Task Force will leverage all the Department’s tools and authorities against efforts to evade or undermine the economic actions taken by the U.S. government in response to Russian military aggression.
This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant U.S. Attorneys Jessica Greenwood, Joshua A. Naftalis, and Sheb Swett are in charge of this action.
[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.
Former Pharma Executive and Cousin Charged with Insider Trading of Kodak StockRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging JAMES ANDREW STILES, a/k/a “Andrew Stiles,” and EDWARD GRAY STILES, a/k/a “Gray Stiles,” with multiple counts of securities fraud and conspiracy to commit both wire fraud and securities fraud in connection with a scheme to commit insider trading based on misappropriated information about potential government loans to be made to the Eastman Kodak Company to finance the production of COVID-19-releated pharmaceutical components. ANDREW STILES was arrested this morning in South Carolina, and GRAY STILES was arrested this morning in Virginia.
U.S. Attorney Damian Williams said: “By stealing confidential business information, Andrew Stiles allegedly betrayed the trust and confidence of his employer — a pharmaceutical company working to help the public at the height of the COVID-19 pandemic — and schemed with his cousin, Gray Stiles, to collectively make more than a million dollars of illegal profits. Today’s arrests show that this Office will continue to prosecute those who seek to profit at the expense of the integrity and fairness of our financial markets.”
FBI Assistant Director Michael J. Driscoll said: “As alleged, the defendants are the latest examples of criminal actors relying on material non-public information to trade securities for their own profit. When individuals motivated by greed illegally tip the scales in their favor, public confidence in the integrity of our financial markets is eroded. Investigating and holding accountable the perpetrators of these schemes remains a priority for the FBI.”
According to the allegations in the Indictment unsealed in Manhattan federal court:[1]
Between June and July 2020, ANDREW STILES conducted an insider trading scheme in which he misappropriated material, non-public information (“MNPI”) and used it to trade in the stock of the Eastman Kodak Company (“Kodak”) and further provided that MNPI to his cousin, GRAY STILES, so that GRAY would likewise trade on the MNPI.
During that time, ANDREW STILES was an executive at a company (“Company-1”) that was working with Kodak to collaborate on the production of chemicals for pharmaceutical manufacturing in connection with the COVID-19 pandemic. Company-1 was also assisting Kodak in its application for a significant government loan, which ultimately resulted in the news, on July 27, 2020, of a government “letter of interest” to provide Kodak with a loan of $765 million (the “LOI”). In the following days, Kodak stock rose substantially, at one point increasing to more than 2,500% above the closing price prior to the news of the LOI.
During June and July 2020, ANDREW STILES was kept apprised of Kodak’s efforts to obtain the government loan, and he both traded using that non-public information and passed that information to GRAY STILES. For example, on July 9, 2020, when Kodak had applied for a loan in the amount of $655 million, ANDREW STILES and GRAY STILES exchanged the following coded text messages:
GRAY: Any update on the film we sent off a few weeks ago to get developed
ANDREW: 600+. Maybe 2 weeks out
GRAY: I can live with that hahaha
Between June 2020, after ANDREW STILES learned about the potential loan to Kodak, and July 27, 2020, the date the LOI was first publicized, ANDREW STILES purchased more than 90,000 shares of Kodak stock, including multiple purchases the day before the LOI was scheduled to be announced. GRAY STILES purchased more than 30,000 shares, more than half of which were purchased the day prior to the scheduled announcement of the LOI. In fact, on July 27, 2020, ANDREW STILES texted GRAY STILES, “Tmw,” indicating the expected date of the announcement. Less than one minute later, GRAY STILES responded, “Hot damn.” Following that exchange, and before the news was announced, ANDREW and GRAY STILES each purchased more than 10,000 additional shares.
ANDREW and GRAY STILES each sold the entirety of their shares in the days and weeks after the announcement. ANDREW STILES realized profits of more than $500,000; GRAY STILES realized profits of more than $700,000.
* * *
ANDREW STILES, 37, of South Carolina, and GRAY STILES, 37, of Virginia, are each charged with three counts of securities fraud, each of which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit wire fraud and securities fraud, which carries a maximum sentence of five years in prison.
The statutory maximum penalties in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the outstanding work of the FBI.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Alex Rossmiller, Nicolas Roos, and Allison Nichols 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 in this release constitute only allegations, and every fact described should be treated as an allegation.
Eight Members of Bronx Gangs “Sev Side” and “Third Side” Charged with Murder, Racketeering, and Related Violent OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Keechant L. Sewell, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing today of an Indictment charging KEVIN PEREZ, a/k/a “Kay Flock,” a/k/a “Kay,” a/k/a “KK,” DEVON MASON, a/k/a “BJ,” ERVIN BEAMON, a/k/a “EJ,” NICHOLAS JOHNSON, a/k/a “Nick,” SEAN SMITH, a/k/a “Sticky,” and JOSSI CASTRO, a/k/a “Jesse,” with racketeering conspiracy and other crimes related to their membership in “Sev Side,” or “DOA,” a street gang based in the Bronx, New York. On January 26, 2023, a Superseding Indictment was unsealed charging ISZAYAH ROWSON, a/k/a “Zay Munna,” a/k/a “Zay,” and MICHAEL GANT, a/k/a “AP,” with racketeering conspiracy and other crimes related to their membership in “Third Side,” a street gang also based in the Bronx, New York, that was closely affiliated with Sev Side. PEREZ was also charged with the gang-related murder of Hwascar Hernandez, who was shot to death on December 16, 2021, in the Hamilton Heights section of Upper Manhattan. PEREZ, MASON, BEAMON, JOHNSON, ROWSON, and GANT were further charged with multiple other violent crimes in connection with the Sev Side and Third Side gangs, including attempted murder and assault with a dangerous weapon arising from seven shootings committed in the Bronx between June 2020 and February 2022. The Sev Side Indictment is assigned to United States District Judge Lewis J. Liman. The Third Side Indictment is assigned to United States District Judge Paul A. Engelmayer.
ROWSON and GANT are currently in federal custody in connection with the charges contained in the Third Side Superseding Indictment. MASON, JOHNSON, and CASTRO were arrested this morning in the Bronx and are expected to be presented later today before Magistrate Judge Valerie Figueredo. PEREZ, who was in state custody, has been transferred to federal custody and is also expected to be presented later today. SMITH and BEAMON are fugitives.
U.S. Attorney Damian Williams said: “Over a span of several years, the members of these gangs allegedly terrorized neighborhoods in the Bronx and Manhattan by killing and shooting other people. Through these charges, we will hold Sev Side and Third Side members responsible for plaguing our communities with gun violence.”
NYPD Commissioner Keechant L. Sewell said: “The deadly nexus of gangs and illegal guns in New York City is a grave threat to public safety in our city. Combatting this crisis is the NYPD’s top priority, and today’s indictments are another step toward ridding our streets of violence and fear. I want to thank the U.S. Attorney’s Office for the Southern District of New York and everyone else involved with this case who worked to make our city safer for all the people we serve.”
According to the allegations in the Sev Side Indictment and the Third Side Superseding Indictment and statements previously made on the record in this case and related matters:[1]
From at least 2019 to 2022, members of Sev Side and Third Side, two street gangs based in the 48th Precinct in the Bronx, New York, aligned with one another to terrorize their own and surrounding neighborhoods by committing indiscriminate shootings against members of rival street gangs. Members of the gangs also promoted the gangs and gun violence on social media and through music they created and promoted, which referenced real acts of violence.
For years, Sev Side and Third Side engaged in disputes with rival crews in the Bronx and in Manhattan, which resulted in numerous acts of violence, including the following:
- PEREZ murdered Hwascar Hernandez in broad daylight in Manhattan on December 16, 2021;
- PEREZ, GANT, and ROWSON shot at rival gang members on June 20, 2020;
- JOHNSON shot at a rival gang member on June 26, 2020;
- GANT shot at rival gang members on July 7, 2020;
- GANT shot at rival gang members on July 16, 2020;
- ROWSON shot at a rival gang member on December 13, 2020;
- PEREZ, MASON, and BEAMON shot at rival gang members on November 10, 2021; and
- MASON shot at a rival gang member and hit an innocent bystander on February 10, 2022.
* * *
A chart containing the names of the defendants who were charged today and on January 26, 2023, and the charges and minimum and maximum penalties they face is attached. All of the defendants are residents of the Bronx, New York.
The statutory minimum and maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by a judge.
Mr. Williams praised the outstanding investigative work of the NYPD and thanked the New York County District Attorney’s Office and the Bronx County District Attorney’s Office for their assistance.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Elizabeth Espinosa, Jim Ligtenberg, and Ni Qian are in charge of the prosecution.
The charges contained in the Indictment and the Superseding Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
Defendant
Age
Charges
Minimum and Maximum Penalties
KEVIN PEREZ
19
Racketeering Conspiracy, Murder in Aid of Racketeering, Use of a Firearm Resulting in Death, Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, Use of a Firearm for Attempted Murder and Assault with a Dangerous Weapon
Mandatory life in prison or death
DEVON MASON
24
Racketeering Conspiracy, Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, Use of a Firearm for Attempted Murder and Assault with a Dangerous Weapon, Possession of a Firearm with Defaced Serial Number
Maximum of life in prison; mandatory minimum 20 years to run consecutive to any other sentence
ERVIN BEAMON
23
Racketeering Conspiracy, Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, Use of a Firearm for Attempted Murder and Assault with a Dangerous Weapon
Maximum of life in prison; mandatory minimum 10 years to run consecutive to any other sentence
NICHOLAS JOHNSON
21
Racketeering Conspiracy, Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, Use of a Firearm for Attempted Murder and Assault with a Dangerous Weapon
Maximum of life in prison; mandatory minimum 10 years to run consecutive to any other sentence
SEAN SMITH
32
Racketeering Conspiracy, Possession of a Firearm After a Felony Conviction
Maximum of 30 years in prison
JOSSI CASTRO
25
Racketeering Conspiracy
Maximum of 20 years in prison
ISZAYAH ROWSON
22
Racketeering Conspiracy, Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, Use of a Firearm for Attempted Murder and Assault with a Dangerous Weapon; Transportation and Receipt of a Firearm While Under Felony Indictment
Maximum of life in prison; mandatory minimum 20 years to run consecutive to any other sentence
MICHAEL GANT
21
Racketeering Conspiracy, Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, Use of a Firearm for Attempted Murder and Assault with a Dangerous Weapon
Maximum of life in prison; mandatory minimum 20 years to run consecutive to any other sentence
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the Superseding Indictment and the description of the indictments set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Recidivist Fraudster Pleads Guilty to Fraud, Identity Theft, and Making False Statements in Connection with Andrews Air Force Base Construction ContractRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that RAYMOND WHITE, a/k/a “John Raymond Anthony White,” a/k/a “Raymond Alexander White,” pled guilty yesterday to a scheme in which he defrauded the government by submitting fraudulent documents and false information about himself, his company’s business, and his company’s finances in order to obtain a $4.8 million contract to build a munitions load crew training facility at Joint Base Andrews, Maryland (“Andrews Air Force Base”), and to obtain a bond guarantee from the United States Small Business Administration (“SBA”) in connection with the contract. WHITE also committed aggravated identity theft by using another person’s signature and Social Security number. WHITE pled guilty before United States District Judge Edgardo Ramos.
U.S. Attorney Damian Williams said: “Despite a prior conviction by this Office, Raymond White continued to lie and fabricate information in order to line his own pockets. This time, White defrauded the government, submitting fraudulent documents and false information to obtain a nearly $5 million construction contract and to obtain a bond guarantee from the SBA in connection with the contract. This Office will continue to prosecute recidivist fraudsters until the message is clear and they have learned their lesson: committing financial fraud will lead to significant penalties.”
According to the Complaint, Superseding Indictment, public court filings, and statements made in court:
From in or about May 2019 through in or about September 2020, WHITE submitted a bid and related documents to the District of Columbia Army National Guard (“National Guard”) on a contract (the “Contract”) to build a munitions load crew training facility at Andrews Air Force Base. Prior to obtaining the Contract, WHITE provided the National Guard with fraudulent documents about himself and his company, Kochendorfer Group USA Inc., (“Kochendorfer”). WHITE submitted similar information to the SBA to obtain a guarantee from the SBA that was a requirement for obtaining the Contract.
The fraudulent documents that WHITE submitted to the National Guard and the SBA included a doctored bank account statement, fake reports from an accounting firm that WHITE had invented, and falsified financials. These documents purported to show that Kochendorfer had significant cash assets. In fact, Kochendorfer had virtually no money. WHITE also submitted a false resume and firm dossier, which described fictitious construction jobs and provided fake references. WHITE claimed, among other things, that he had overseen the construction of a World Cup soccer stadium in Brazil from 2012 to 2014 when in fact, WHITE was in federal prison during that time frame, serving a prison term on a prior fraud conviction. WHITE also lied to the SBA by denying that he had any prior criminal convictions. In furtherance of this fraud on the National Guard and the SBA, WHITE forged the signature of an attorney on a Kochendorfer letter and used another individual’s Social Security number on his SBA guarantee application.
Based on WHITE’s misrepresentations, the National Guard awarded the Contract to Kochendorfer and the SBA issued a guarantee. The National Guard terminated the Contract after discovering WHITE’s fraud, and no construction work was ever performed on the site. As a result of the Contract’s termination, the SBA has fulfilled multiple claims pursuant to the guarantee provided by the SBA.
In 2011, WHITE was convicted following a jury trial in the U.S. District Court for the Southern District of New York under the name “John Raymond Anthony White” for engaging in major fraud, mail fraud, false statements, and witness tampering. United States v. John Raymond Anthony White, S1 10 Cr. 516 (SHS). WHITE’s prior conviction arose out of his fraud in the procurement of four government contracts, for a scheme in which he falsely represented that he was a disabled veteran. As a result of his 2011 federal conviction, WHITE and his prior construction company, Mitsubishi Construction Corporation, were excluded from government contracting for a period of five years. The name that WHITE used in connection with the Contract — Raymond White — was different from the name he had used in connection with the government contracts at issue in his prior federal conviction.
* * *
WHITE, 58, of New York, New York, pled guilty to one count of major fraud against the United States, which carries a maximum sentence of 10 years in prison; two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison; two counts of false statements and false writings, each of which carries a maximum sentence of five years in prison; and one count of aggravated identity theft, which carries a consecutive mandatory minimum sentence of two years in prison.
The minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. Sentencing is scheduled for May 23, 2023, at 11:00 a.m.
Mr. Williams praised the work of the Air Force Office of Procurement Fraud Investigations and Office of Special Investigations and the Army Major Procurement Fraud Unit in this investigation.
The case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Edward C. Robinson Jr., Jessica Greenwood, and Frank Balsamello are in charge of the prosecution, with the assistance of Paralegal Specialist Maria Gatica.
Nigerian Man Sentenced to Five Years in Prison for Multimillion Dollar Fraud Scheme in Which He Impersonated Procurement Officials of U.S. State and Local Governments and Educational InstitutionsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that FATADE IDOWU OLAMILEKAN, a/k/a “Fatade Olamilekan Idowu,” a/k/a “Olamilekan Idowu Fatade,” a/k/a “Idowu Fatade,” a citizen of Nigeria, was sentenced to five years in prison in connection with a scheme to fraudulently obtain and attempt to obtain millions of dollars of medical equipment, laboratory products, computer equipment and hardware, and other merchandise from suppliers of such merchandise across the United States by impersonating, among other individuals, procurement officials of U.S. state and local governments and educational institutions. OLAMILEKAN was arrested in Nigeria on October 1, 2021, and extradited from Nigeria to the United States on July 14, 2022, and he has been detained since his arrest. The defendant previously pled guilty to wire fraud before U.S. District Judge Valerie E. Caproni, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Fatade Idowu Olamilekan carried out a sprawling criminal scheme from Nigeria to fraudulently obtain medical equipment and other merchandise by impersonating government officials, including the Chief Procurement Officer for New York. Olamilekan will now face substantial prison time for his criminal conduct. This case demonstrates that we will go to great lengths to pursue defendants located abroad who seek to defraud American businesses and individuals.”
According to the allegations in the Indictment and other court documents:
From at least in or about 2018 through at least on or about September 14, 2020, OLAMILEKAN engaged in a scheme to fraudulently obtain and attempt to obtain millions of dollars of medical equipment, laboratory products, computer equipment and hardware, and other merchandise from suppliers of such merchandise across the United States by impersonating, among other individuals, procurement officials of U.S. state and local governments and educational institutions. In particular, during the COVID-19 pandemic, OLAMILEKAN impersonated the Chief Procurement Officer of New York State in an effort to fraudulently obtain medical equipment, including defibrillators. OLAMILEKAN engaged in the following conduct to carry out his criminal scheme:
First, OLAMILEKAN engaged in extensive research to identify specific procurement officials of U.S. state and local governments and educational institutions to impersonate and U.S. suppliers of medical, laboratory, and computer equipment to target as part of the scheme. This research included obtaining information about the current suppliers to the state and local governments and educational institutions OLAMILEKAN sought to impersonate and targeting those suppliers in order to avoid arousing suspicion. For example, OLAMILEKAN appears to have specifically targeted a medical supplier that was already providing medical equipment to New York State in or to avoid suspicion when OLAMILEKAN, who was impersonating the Chief Procurement Officer of New York State, contacted the supplier to obtain medical equipment.
Second, after OLAMILEKAN identified procurement officials to impersonate, he used aliases and a Lithuanian web hosting company to register email accounts with domains that had slight variations from the legitimate email accounts used by procurement officials in order to “spoof” or impersonate those officials’ email accounts (the “spoofed emailed accounts”). The spoofed email accounts used by OLAMILEKAN usually had the same username as the procurement official’s email account but added an extra letter or common domain name to the domain of the email account. These spoofed email accounts were therefore specifically designed to trick suppliers to impersonated procurement officials into thinking the spoofed email accounts were authentic. In total, OLAMILEKAN registered and used spoofed email accounts impersonating at least (i) eight different procurement officials of state and local governments in California, Illinois, Minnesota, New York, North Carolina, Pennsylvania, Texas, and Vermont; and (ii) three procurement officials of educational institutions located in Georgia and New York.
Third, OLAMILEKAN used the spoofed email accounts to send emails impersonating the procurement official and seeking quotes for medical, laboratory, and computer equipment from targeted suppliers. These emails typically indicated that the payment terms would be “net 30 days,” which is a standard term of trade credit for government and educational entities that only requires payment for the goods within 30 days of delivery. OLAMILEKAN therefore impersonated the identities of procurement officials of government entities and educational institutions in order to exploit this industry standard and fraudulently obtain equipment without providing any advance payment information or deposit prior to delivery of the equipment.
Finally, once OLAMILEKAN received a response from a targeted supplier, he provided the supplier with a purchase order containing the forged signature of the impersonated procurement official and an address for a warehouse located in the United States for delivery and storage of the equipment purchased. Once the purchased items shipped to the warehouse provided by OLAMILEKAN, he typically had the warehouse re-ship the items to another warehouse and, ultimately, from the United States to locations in Australia, the United Kingdom, and/or Nigeria. OLAMILEKAN also coordinated with the warehouses receiving the shipments from the targeted suppliers using the stolen identity of at least one U.S. resident, thereby further concealing his own identity and avoiding detection of his criminal activity. Because payment was not due to the suppliers until 30 days after delivery of the equipment, OLAMILEKAN was able to take possession of the equipment prior to detection of the fraud, which typically occurred after payment was not received by the supplier within the 30-day period.
* * *
In addition to the prison sentence, OLAMILEKAN, 41, of Lagos, Nigeria, was sentenced to three years of supervised release and ordered to pay restitution and forfeiture of $306,852.18.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation. Mr. Williams also thanked Nigeria’s Federal Ministry of Justice, Nigeria’s Economic and Financial Crimes Commission (“EFCC”), the Central Authority Unit of Nigeria’s Ministry of Justice, and the Attorney General of the Federal Republic of Nigeria for their assistance in the investigation. The U.S. Department of Justice’s Office of International Affairs of the Department’s Criminal Division provided significant assistance in securing the defendant’s extradition from Nigeria.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Sagar K. Ravi is in charge of the prosecution.
Damian Williams and Breon Peace Announce New Voluntary Self-Disclosure Policy for United States Attorney’s OfficesRead the Press Release
Earlier today, Damian Williams, United States Attorney for the Southern District of New York and Chair of the Attorney General’s Advisory Committee (AGAC), and Breon Peace, United States Attorney for the Eastern District of New York and the Chair of the White Collar Fraud Subcommittee of the AGAC, announced the implementation of the new United States Attorney’s Offices’ Voluntary Self-Disclosure Policy. The policy, which is effective immediately, details the circumstances under which a company will be considered to have made a voluntary self-disclosure (VSD) of misconduct to a United States Attorney’s Office (USAO). The policy provides transparency and predictability to companies and the defense bar concerning the concrete benefits and potential outcomes in cases where companies voluntarily self-disclose misconduct, fully cooperate, and timely and appropriately remediate. The goal of the policy is to standardize how VSDs are defined and credited by USAOs nationwide, and to incentivize companies to maintain effective compliance programs capable of identifying misconduct, expeditiously and voluntarily disclose and remediate misconduct, and cooperate fully with the government in corporate criminal investigations. The policy was developed pursuant to the Deputy Attorney General’s September 15, 2022, memorandum, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group” (Monaco Memo), which directed each Department of Justice (DOJ) component to develop and publish a VSD policy.
U.S. Attorney Damian Williams said: “The new Voluntary Self-Disclosure Policy is an important step forward in encouraging corporate accountability. This transparent and clearly delineated policy allows for more predictable outcomes and seeks to incentivize corporations to do the right thing by reporting wrongdoing before detected by regulators and law enforcement. We hope that this new policy has a long-lasting, nationwide effect in promoting honest corporate culture and leads to more companies getting ahead of financial malfeasance before authorities come to them.”
E.D.N.Y. U.S. Attorney Breon Peace said: “The new Voluntary Self-Disclosure Policy sets a nationwide standard for how U.S. Attorney’s Offices will determine whether a company has made a voluntary self-disclosure, and makes transparent the specific, tangible benefits to a company for making a voluntary self-disclosure fully cooperating, and remediating the criminal conduct. As a result, no matter where in the country a company operates, it can rely on receiving the same treatment and benefits for voluntarily self-disclosing criminal conduct to a U.S. Attorney’s Office. We hope and expect that companies, as good corporate citizens, will take advantage of this new policy to report criminal misconduct by employees and agents when they become aware of it, so that individual wrongdoers can be held accountable. When they do, they will have far better and more predicable outcomes under this policy.”
The Monaco Memo instructed that each DOJ component that prosecutes corporate crime review its policies on corporate voluntary self-disclosure and, if there was no formal written policy to incentivize self-disclosure, draft and publicly share such a policy. In response, the AGAC, under the leadership of U.S. Attorney Williams, requested that the White Collar Fraud Subcommittee, under the leadership of U.S. Attorney Peace, develop such a policy. The policy announced today was prepared by a Corporate Criminal Enforcement Policy Working Group comprised of U.S. Attorneys from geographically diverse districts, including U.S. Attorney Peace, as well as U.S. Attorney for the Eastern District of Virginia Jessica Aber, U.S. Attorney for the District of Connecticut Vanessa Avery, U.S. Attorney for the District of Hawaii Clare Connors, U.S. Attorney for the Eastern District of North Carolina Michael F. Easley, Jr., U.S. Attorney for the Northern District of California Stephanie Hinds, U.S. Attorney for the Western District of Virginia Christopher Kavanaugh, and U.S. Attorney for the District of New Jersey Philip Sellinger. Assistant U.S. Attorney Amanda Riedel, White Collar Crimes Coordinator for the Executive Office for U.S. Attorneys, also participated in the development of the policy.
Under the new VSD policy, a company is considered to have made a VSD if it becomes aware of misconduct by employees or agents before that misconduct is publicly reported or otherwise known to the DOJ, and discloses all relevant facts known to the company about the misconduct to a USAO in a timely fashion prior to an imminent threat of disclosure or government investigation. A company that voluntarily self-discloses as defined in the policy and fully meets the other requirements of the policy, by — in the absence of any aggravating factor — fully cooperating and timely and appropriately remediating the criminal conduct (including agreeing to pay all disgorgement, forfeiture, and restitution resulting from the misconduct), will receive significant benefits, including that the USAO will not seek a guilty plea; may choose not to impose any criminal penalty, and in any event will not impose a criminal penalty that is greater than 50% below the low end of the United States Sentencing Guidelines (USSG) fine range; and will not seek the imposition of an independent compliance monitor if the company demonstrates that it has implemented and tested an effective compliance program.
The policy identifies three aggravating factors that may warrant a USAO seeking a guilty plea even if the other requirements of the VSD policy are met: (1) if the misconduct poses a grave threat to national security, public health, or the environment; (2) if the misconduct is deeply pervasive throughout the company; or (3) if the misconduct involved current executive management of the company. The presence of an aggravating factor does not necessarily mean that a guilty plea will be required; instead, the USAO will assess the relevant facts and circumstances to determine the appropriate resolution. If a guilty plea is ultimately required, the company will still receive the other benefits under the VSD policy, including that the USAO will recommend a criminal penalty of at least a 50% and up to a 75% reduction off the low end of the USSG fine range, and that the USAO will not require the appointment of a monitor if the company has implemented and tested an effective compliance program.
In cases where a company is being jointly prosecuted by a USAO and another DOJ component, or where the misconduct reported by the company falls within the scope of conduct covered by VSD policies administered by other DOJ components, the USAO will coordinate with, or, if necessary, obtain approval from, the DOJ component responsible for the VSD policy specific to the reported misconduct when considering a potential resolution. Consistent with relevant provisions of the Justice Manual and as allowable under alternate VSD policies, the USAO may choose to apply any provision of an alternate VSD policy in addition to, or in place of, any provision of its policy.
Bronx Gang Leader Sentenced to 35 Years in Prison for 2020 Murder and Other CrimesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that ANDREW DONE, a/k/a “Caballo,” the leader of the “Shooting Boys” gang, was sentenced today to 35 years in prison for the November 5, 2020, murder of Angel Barreiro in the Bronx and other racketeering offenses. DONE previously pled guilty before United States District Judge Jed S. Rakoff, who imposed the sentence.
U.S. Attorney Damian Williams said: “Andrew Done, dissatisfied with his membership in the Trinitarios gang, decided to perpetuate gang violence in New York City by breaking off from the Trinitarios and starting his own gang. His decision created a rivalry between his new gang and the Trinitarios, which led to increased acts of violence, multiple shootings, and the tragic murder of Angel Barreiro. Done’s sentence should highlight that anyone who exacerbates violent crime in our community will face a lengthy prison sentence.”
According to the Indictment, other documents filed in federal court, and statements made in public court proceedings:
The “Shooting Boys” is a criminal organization based in the University Heights section of the Bronx. DONE founded the Shooting Boys in or about 2017. DONE and his followers were originally associated with the “Sunset” chapter of the Trinitarios gang, but DONE decided to break off from the Trinitarios and form his own gang. DONE then convinced other disaffected Trinitarios to join the Shooting Boys as well.
Under DONE’s leadership, the Shooting Boys sold crack, cocaine, heroin, and marijuana throughout the Bronx and engaged in a back-and-forth series of shootings with the Trinitarios and other associated gangs. The rivalry between the Shooting Boys and the Trinitarios led to multiple non-fatal shootings and other acts of violence against rival gang members and innocent bystanders. It culminated in the murder of Angel Barreiro on November 5, 2020.
On that date, Barreiro was sitting in the driver’s seat of his parked car opposite 1365 Cromwell Avenue in the Bronx. DONE approached Barreiro, removed a firearm from his jacket, and shot Barreiro multiple times through the car’s passenger side window. DONE then walked over to the driver’s side of the car and shot Barreiro again. DONE fled to the Dominican Republic shortly after the murder and was apprehended by the United States Marshals Service in April 2022.
* * *
In addition to his prison term, DONE, 24, of the Bronx, New York, was sentenced to five years of supervised release.
DONE was initially charged by indictment in March 2022 with nine other individuals who were members or associates of the Shooting Boys gang. The other nine defendants have all pled guilty to various racketeering related charges and have either been sentenced to prison terms or are awaiting sentencing.
Mr. Williams praised the outstanding investigative work of the New York City Police Department and Homeland Security Investigations.
The case is being prosecuted by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Dominic A. Gentile, Adam S. Hobson, and Jim Ligtenberg are in charge of the prosecution.
Owner of Insurance Firm Pleads Guilty in $40 Million Scheme to Steal Client Healthcare Funds and Defraud LendersRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that ANTHONY RICCARDI, an owner and manager of the Connecticut insurance firm Employee Benefit Solutions LLC (“EBS”), pled guilty today in White Plains federal court to conspiracy to commit wire fraud and bank fraud. Between 2015 and 2019, RICCARDI and his co-conspirators used EBS as part of a widespread, $40 million scheme to misappropriate and steal client healthcare funds and defraud multiple lenders. RICCARDI pled guilty today before United States District Judge Philip M. Halpern.
U.S. Attorney Damian Williams said: “Anthony Riccardi admitted today to leading a brazen, widespread scheme over nearly five years to abuse his position of trust by stealing millions in fiduciary money that was meant to pay for important employee healthcare expenses. To keep the scheme going, Riccardi also defrauded lenders out of millions. Thanks to the tireless efforts of our law enforcement partners to untangle this fraud, Riccardi will now be held accountable for these serious crimes.”
According to the Indictment, the Complaint, other court filings, and statements made during court proceedings:
From at least 2015 and continuing through 2019, ANTHONY RICCARDI was the 50% co-owner and Executive Vice President of EBS, which offered a variety of healthcare insurance-related services to clients. EBS, among other things, provided third party healthcare claims administration (“TPA”) services to clients that elected to “self-fund” (or self-insure) their employee healthcare plans. As a TPA, EBS would purportedly administer, process, and pay healthcare claims for its clients’ employees in exchange for an administrative fee.
Between at least 2015 and continuing through 2019, EBS represented an automobile dealership chain (“Company-1”) headquartered in Westchester County, New York. During this time period, EBS served as a TPA for Company-1’s self-funded employee healthcare program and purported to process and pay claims to medical providers that treated Company-1’s employees. To do this, EBS generated bimonthly “check register” invoices for Company-1 that listed all employee healthcare expenses from healthcare providers during that two-week period. EBS also administered a bank account on Company-1’s behalf for the express purpose of paying Company-1 healthcare claims. Company-1 would fund each check register by paying the invoiced amount, expecting that EBS would promptly pay the claims to the healthcare providers. During this time period, Company-1 transferred approximately $26 million to EBS for the payment of healthcare claims.
In reality, a significant number of purported checks listed on the EBS “check register” invoices were never actually deposited by the healthcare providers. Instead, approximately $17.87 million in Company-1 healthcare payments were misappropriated with the overwhelming majority simply transferred by EBS into its own operating account, where they were used for non-healthcare expenses by the managers and owners of EBS. For example, a review of bank records indicates that Company-1 healthcare funds were used by RICCARDI and his co-conspirators to pay their home mortgage expenses as well as a personal credit card account with expenses relating to boating, luxury cars, and golf.
EBS, through RICCARDI and his co-conspirators, made decisions on what few Company-1 healthcare claims they did pay based on which healthcare providers were likely to complain if they did not receive payment or if the claims were connected to Company-1 executives.
The “check registers” sent to Company-1 also contained millions of dollars in fraudulent or inflated healthcare claims that were eventually paid by Company-1. EBS routinely inflated the Company-1 check registers at the direction of RICCARDI and his co-conspirators. Such efforts were typically accomplished through RICCARDI and his co-conspirators instructing others to manually create fraudulent entries in the EBS claims processing software, including fake claims under the name of a business controlled by RICCARDI. RICCARDI and his co-conspirators also took steps to conceal their fraud from Company-1 by creating and sending manipulated and fabricated bank statements and checks to create the appearance that healthcare claims were being paid by EBS, when in reality, they were not.
By mid-2017, as EBS buckled under mounting outstanding fiduciary obligations, RICCARDI and his co-conspirators began an elaborate effort to conceal and perpetuate the ongoing fraud on Company-1 by applying for multiple fraudulent bank loans and merchant cash advances designed in part to pay various fiduciary obligations that EBS owed to Company-1. RICCARDI and his co-conspirators fraudulently applied for and received millions of dollars in loans under the auspices of financing the purchase of upgraded billing software for EBS, which included RICCARDI and his co-conspirators submitting fabricated invoices from a fake company that supposedly sold the billing software.
* * *
RICCARDI, 46, of New Canaan, Connecticut, pled guilty to one count of conspiring to commit wire fraud and bank fraud, which carries a maximum potential sentence of 30 years in prison. In connection with the guilty plea, RICCARDI agreed to pay $14,870,653.36 in restitution and forfeit $2,000,000.00.
The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. Sentencing has been scheduled for July 20, 2023.
RICCARDI’s co-defendant, Patricia Riccardi, previously pled guilty to one count of conspiring to commit wire fraud and bank fraud before Judge Halpern. Patricia Riccardi’s sentencing is scheduled for June 20, 2023.
RICCARDI’s co-conspirator, Erin Verespy, was previously sentenced to 66 months in prison following her guilty plea to one count of conspiring to commit wire fraud and bank fraud before United States District Judge Cathy Seibel.
Mr. Williams praised the outstanding investigative work of the U.S. Postal Inspection Service and the Special Agents of the United States Attorney’s Office. Mr. Williams also thanked the U.S. Department of Labor, Employee Benefits Security Administration; the U.S. Department of Labor, Office of Inspector General; and the United States Secret Service, which are assisting in the investigation, as well as the U.S. Attorney’s Office for the District of Connecticut.
The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Nicholas S. Bradley is in charge of the prosecution.
Leader of Sunset Trinitarios Sentented to Life in Prison for Racketeering, Including Ordering Multiple MurdersRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that EDIBERTO SANTANA, a/k/a “Flaco Veneno,” was sentenced to life imprisonment for leading the Sunset Trinitarios gang from at least 2010 through 2019 and, in that capacity, ordering multiple acts of brutal violence, including the March 13, 2011, murder of Dennis Marquez, age 16, who was stabbed to death in the Bronx; the October 23, 2013, murder of Michael Beltre, age 17, who was shot and killed in the Bronx; and the November 17, 2013, murder of Rafael Alam, age 22, who was shot and killed in the Bronx. U.S. District Judge Paul A. Crotty imposed today’s sentence.
U.S. Attorney Damian Williams said: “While nothing can make whole the families and communities of Dennis Marquez, Michael Beltre, and Rafael Alam, we hope that today’s sentence is some measure of closure and justice for them. We are committed to addressing gang violence in our communities and to holding accountable those who instigate such violence.”
* * *
SANTANA, 33, of Brooklyn, New York, previously pled guilty to one count of racketeering conspiracy with murder as a special sentencing factor, which carries a maximum sentence of life in prison.
Mr. Williams praised the outstanding work of the Drug Enforcement Administration, Homeland Security Investigations, the New York City Police Department, the New York State Police, and the New York City Department of Investigation.
Assistant U.S. Attorneys Celia V. Cohen, Jacqueline C. Kelly, and Lindsey Keenan are in charge of the prosecution. The case is being handled by the Office’s Violent and Organized Crime Unit.
Recidivist Defendant Charged in Connection with Million-Dollar Fraud Scheme Targeting Senior Executives of Investment FirmsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a criminal Complaint today charging JONATHAN GHERTLER with engaging in a sophisticated scheme to impersonate senior leaders of two Manhattan-based investment firms, resulting in over $1 million in losses to their portfolio companies, and impersonating a partner of a global law firm on telephone calls with federal agents who were investigating the scheme. GHERTLER was arrested yesterday and will be presented in the Middle District of Florida on Tuesday.
U.S. Attorney Damian Williams said: “As alleged, Jonathan Ghertler impersonated some of the most prominent figures in finance and law to defraud companies of over $1 million and convince federal investigators to stop their investigation into his scheme. Ghertler is a serial fraudster and has been prosecuted for similar impersonation schemes and frauds in the past, including by this Office. Today’s arrest demonstrates this Office’s commitment to stopping recidivist fraudsters like Ghertler and to seeking justice for victims of financial frauds.”
FBI Assistant Director Michael J. Driscoll said: “As alleged, Ghertler impersonated high-level executives at two different financial firms and directed personnel from those firms to pay for non-existent internal investigations aimed at determining if there were links between individuals associated with the firms and Jeffrey Epstein. In addition, when he learned his fraud was being investigated, he impersonated a partner of a law firm purportedly representing one of the financial firms and attempted to convince federal agents that no crime had been committed. The action we have taken today will ensure Ghertler – in his true identity – will be forced to face the consequences of his deceit.”
According to the allegations in the Complaint:[1]
From at least in or about December 2021, up to and including at least June 2022, GHERTLER impersonated the General Counsel of a global private equity firm (the “Private Equity Firm”). In doing so, GHERTLER fraudulently caused the Private Equity Firm’s portfolio companies to pay at least $200,000 to fund a non-existent internal investigation into alleged links between senior employees of the Private Equity Firm and Jeffrey Epstein, the deceased financier who, before he died on or about August 10, 2019, had been charged in the Southern District of New York with sex trafficking of minors and conspiring to commit sex trafficking of minors.
In addition, from at least May 2021, up to and including February 2023, GHERTLER impersonated the founder of an investment firm (the “Investment Firm”), directing the Chief Executive Officer (the “CEO”) of one of the Investment Firm’s portfolio companies (the “IF Portfolio Company”) to make at least $865,000 in payments to fund a non-existent internal investigation related to the founder’s alleged relationship with Epstein. In recent weeks, GHERTLER, posing as the founder of the Investment Firm, had discussed with the CEO the possibility of making a large investment into a restaurant chain owned by another investment firm.
On or about February 7, 2023, after learning from the CEO that federal investigators were investigating a potentially fraudulent payment made by the Investment Firm, GHERTLER, posing as a partner (the “Partner”) at a global law firm, spoke on the phone with Special Agents with the FBI. GHERTLER told the federal agents that the IF Portfolio Company had chosen not to report the fraud because it had been “made whole” by the fraudster.
On or about February 10, 2023, GHERTLER, impersonating the Partner, spoke again with federal agents. GHERTLER said, after “consult[ing]” with “associates and lower-level partners” at the Global Law Firm who “used to work” at the United States Attorney’s Office for the Southern District of New York, “our position is that, uh, the law states that, umm, you know, if the money was paid back prior to, uh, the crime being, uh, discovered, uh, it’s not a crime.” GHERTLER added that his “client [i.e., the founder of the Investment Firm] has a lot of other issues he is dealing with right now, so this is one he really doesn’t need to deal with.”
* * *
GHERTLER, 60, of Orlando, Florida, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison; and one count of making false statements, which carries a maximum sentence of five years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the FBI and additionally thanked the Orange County, Florida, Sheriff’s Office and Orlando Police Department for their assistance.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Adam Sowlati 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 in this release constitute only allegations, and every fact described should be treated as an allegation.
Former NBA Players Keyon Dooling and Alan Anderson Sentenced to 30 and 24 Months in Prison for Defrauding NBA Players’ Health and Welfare Benefit PlanRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that KEYON DOOLING and ALAN ANDERSON were sentenced to 30 months and 24 months in prison, respectively, for their roles in a scheme to defraud the National Basketball Association (“NBA”) Players’ Health and Welfare Benefit Plan (the “Plan”). U.S. District Judge Valerie E. Caproni sentenced DOOLING today and previously sentenced ANDERSON on February 10, 2023.
U.S. Attorney Damian Williams said: “These former players recruited others to take part in this widespread fraud scheme and went to great lengths to keep the scheme running smoothly, facilitating hundreds of thousands of dollars of fraudulent claims. This Office will continue to aggressively prosecute those engaged in health care fraud schemes, no matter what their profession. Those considering submitting false claims to health care plans should recognize that they will be subject to serious penalties.”
According to the Indictments, public court filings, and statements made in court:
The Plan is a health care plan providing benefits to eligible active and former players of the NBA. DOOLING and ANDERSON both played in the NBA and were eligible to receive reimbursements from the Plan for legitimate, qualifying medical expenses.
Co-defendant TERRENCE WILLIAMS orchestrated the scheme to defraud the Plan.[1] DOOLING and ANDERSON also occupied managerial roles in the scheme.
WILLIAMS, DOOLING, and ANDERSON recruited other former NBA players to defraud the Plan, including by offering to provide them with false invoices to support their fraudulent claims.
WILLIAMS provided the other former NBA players fake invoices from a particular chiropractic office in California, run by co-defendant PATRICK KHAZIRAN,[2] which were created by individuals working with WILLIAMS. In addition, WILLIAMS obtained fraudulent invoices from a dentist affiliated with dental offices in Beverly Hills, California, run by co-defendant AAMIR WAHAB, and from a doctor at a wellness office in Washington State. The fraudulent invoices purported to document that ANDERSON, other co-defendants, and, in some cases, members of their families, had been recipients of expensive medical and dental services, but the defendants had not received the medical or dental services described in the invoices WILLIAMS provided them. In many instances, the defendants were not even located in the vicinity of the service providers on the dates the invoices stated they received medical or dental services. In particular, GPS location information and documentary evidence, such as flight records, show that the defendants were in locations other than the vicinity of the medical or dental offices falsely claimed as the providers of services.
DOOLING participated in the scheme from at least in or about 2017 through in or about 2019. DOOLING traded on his reputation among current and former NBA players to refer other former NBA players to co-defendant KHAZIRAN and WAHAB. DOOLING also recruited and attempted to recruit additional Plan-participants and medical professionals into the fraud scheme. DOOLING himself submitted fraudulent invoices to the Plan, relating to services purportedly performed by co-defendants KHAZIRAN and WAHAB. DOOLING received approximately $363,000 in fraudulent reimbursements, and he is responsible for facilitating the fraudulent claims filed by other defendants, who received approximately $194,295 in fraudulent proceeds from the plan.
ANDERSON also recruited multiple former NBA players to the fraud scheme. When co-conspirators encountered difficulties in obtaining reimbursements for fraudulent claims, ANDERSON encouraged them to submit forged letters of medical necessity to substantiate those claims. When those letters were unsuccessful, ANDERSON arranged for the co-conspirators to visit a Las Vegas doctor, after-hours, to further attempt to justify the fraudulent claims. ANDERSON himself submitted approximately $121,000 in fraudulent claims to the Plan. ANDERSON is also responsible for recruiting and facilitating the fraud of additional defendants who sought approximately $710,000 in fraudulent claims.
* * *
In addition to their prison terms, DOOLING, 42, of Orlando, Florida, was ordered to forfeit $449,250.50 and pay restitution of $547,495; and ANDERSON, 40, of Las Vegas, Nevada, was ordered to forfeit $121,000 and pay restitution of $121,000.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Ryan B. Finkel and Daniel G. Nessim are in charge of the prosecution.
[1] WILLIAMS has pled guilty to conspiracy to commit wire and health care fraud and aggravated identity theft and is awaiting sentencing.
[2] On February 7, 2023, Judge Caproni sentenced KHAZIRAN to 30 months in prison.
Seven Defendants Charged with Million-Dollar Identity Theft and Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, Daniel B. Brubaker, Inspector in Charge of the New York Division of the United States Postal Inspection Service (“USPIS”), J. Russell George, the Treasury Inspector General for Tax Administration (“TIGTA”), Francis J. Russo, the Director of the New York Field Office of U.S. Customs and Border Protection (“CBP”), and Ivan J. Arvelo, Special Agent in Charge for Homeland Security Investigations ("HSI") New York, announced today the unsealing of a seven-count Complaint charging seven participants in an identity theft and fraud scheme, through which they are alleged to have stolen at least $1 million from victims’ bank accounts. Six of the seven defendants were arrested yesterday and today in Georgia, Florida, and Illinois. GILBERT HUERTAS, a/k/a “Bully,” and ANAYDA HUERTAS were presented in federal court yesterday in the Middle District of Florida. CHRISTOPHER PEEPLES, a/k/a “Jerry Chen,” a/k/a “Reginald Griffin,” a/k/a “Charles Richardson,” a/k/a “Robert Wolff,” and MALCOLM REASONOVER, a/k/a “Uncle,” were presented in federal court yesterday in the Northern District of Illinois, and DEMETRIUS TORRY, a/k/a “Meechie,” will be presented today in the Northern District of Illinois. KHALIL BEY-MUHAMMAD will be presented today in federal court in the Northern District of Georgia. GERALD LEE, a/k/a “Pimp,” remains at large.
U.S. Attorney Damian Williams said: “These defendants allegedly developed a sophisticated scheme to steal money from innocent victims’ bank accounts. The defendants allegedly stole victims’ identities, hijacked their bank accounts and cellphones, brazenly impersonated them at bank branches throughout the country, and drained their accounts. Thanks to our partners at USPIS, TIGTA, CBP, and HSI, the defendants’ alleged crimes have been brought to a halt.”
USPIS Inspector in Charge Daniel B. Brubaker said: “Peeples allegedly led a crew that perpetrated a complex, multi-state fraudulent scheme that involved identity theft and bank account takeovers. But today, Peeples and the alleged actions of his co-conspirators are leading them all straight to federal court. These alleged criminals are charged with draining their victims’ accounts of a fortune. In some cases, allegedly stealing tens of thousands of dollars at a time. As part of the charged scheme, Peeples and his crew allegedly stole the identities of unknowing third parties, to hide their crimes behind the good names of their victims. In total, they allegedly caused at least a $1 million loss, to first the individual victims, and then the banking industry. We hope all the fraudsters out there are listening: if you plan to commit identity theft and bank fraud, Postal Inspectors and our law enforcement partners will use every resource at our disposal to investigate you and bring you to justice – and we are very good at it.”
TIGTA Treasury Inspector General J. Russell George said: “The Treasury Inspector General for Tax Administration is committed to aggressively pursuing those individuals who use Internal Revenue Service systems to facilitate their fraudulent activity. Fraudulent schemes such as this undermine the integrity of tax administration. We would like to thank the United States Postal Inspection Service, Customs and Border Protection, Homeland Security Investigations, and the United States Attorney’s Office for their continued partnership in the pursuit of justice.”
CBP Director Francis J. Russo said: “U.S. Customs and Border Protection is proud to have contributed to this ongoing investigation that resulted in the takedown of an elaborate conspiracy to defraud innocent victims. CBP will continue to collaborate with our law enforcement partners to uncover and dismantle nefarious criminal networks that seek to defraud innocent victims for illicit gain.”
HSI Special Agent in Charge Ivan J. Arvelo said: "As technology has advanced and become part of our everyday lives, fraudsters too have evolved with the times. Instances of internet based identity theft are on the rise and criminal organizations falsely operate under the impression that they are immune from prosecution. These arrests should send a clear message that HSI and our partners will continue to work tirelessly to identify these fraud crews no matter where they may be located and aggressively pursue justice for innocent victims.”
According to the allegations in the Complaint:[1]
Since in or about 2020, law enforcement has been investigating a fraud crew (the “Crew”) led by CHRISTOPHER PEEPLES and whose members also include KHALIL BEY-MUHAMMAD, GERALD LEE, MALCOLM REASONOVER, DEMETRIUS TORRY, GILBERT HUERTAS, and ANAYDA HUERTAS.
From at least 2020 up to and including at least 2022, CHRISTOPHER PEEPLES, and/or KHALIL BEY-MUHAMMAD, purchased or otherwise obtained, through the Internet, personally identifiable and financial information belonging to victims of their scheme. Such information would generally include victims’ names, dates of birth, home addresses, social security numbers, driver’s license numbers, bank account information (sometimes including passwords), and phone numbers (the “Stolen Information”).
Once PEEPLES and/or BEY-MUHAMMAD obtained Stolen Information for a victim, they would provide that information to co-conspirators responsible for forging identification documents (the “ID Forgers”). Using the Stolen Information, the ID Forgers would manufacture a counterfeit driver’s license and sometimes a secondary form of false identification (each a “Fake ID”) in the victim’s identity. If the Fake ID was a form of photo identification, it would bear the photograph of one of the Crew’s members, typically LEE, REASONOVER, or ANAYDA HUERTAS.
In some cases, the Crew would take over the victim’s phone number through a “SIM swap” fraud — that is, by tricking the victim’s cellphone service provider to switch service for the victim’s cellphone number to a SIM card or cellphone controlled by the Crew. Members of the Crew would either impersonate the victim and claim that the victim’s existing cellphone had been lost or would enlist the assistance of corrupt cellphone store employees who would agree to process the SIM swap in exchange for payment. The purpose of the SIM swap was to take control of the victim’s cellphone number in order to gain access to the victim’s bank accounts — for example, to receive two-factor authentication or security text messages intended for the victim.
In some cases, the Crew would use the Stolen Information to log into victims’ online banking profiles, create new accounts in a victim’s name at the banks, and transfer funds from a victim’s existing accounts to the newly created accounts. The purpose of doing so was to divide the victims’ funds among as many bank accounts as possible and steal those funds through smaller withdrawals, which would be less likely to attract scrutiny from individual bank tellers processing single withdrawals in a single account.
Following the preparatory steps described above, the Crew would fly to a city in the United States to fraudulently withdraw funds from victims’ accounts over a period of days. During these trips, a Crew member (the “Runner”) would enter different bank locations impersonating a particular victim. The Runner would bring Fake IDs in the victim’s identity (and bearing a photograph of the Runner). At the teller window, the Runner would request a withdrawal, typically for less than $5,000 at a time to avoid triggering heightened bank scrutiny. In cases in which the Crew also obtained a “SIM-swapped” cellphone, that cellphone could also be used to intercept and impersonate the victim in response to the bank’s identification verification procedures. After a successful withdrawal, the Runner — and any Crew members participating in that trip — would drive to another bank branch location nearby to repeat the process until the victim’s bank accounts were substantially drained of funds. On a given trip, the Crew typically targeted multiple different victims’ accounts and typically stole tens of thousands of dollars or more.
The Crew has stolen at least approximately $1 million from bank accounts belonging to victims.
* * *
PEEPLES, 33, of Chicago, Illinois, BEY-MUHAMMAD, 25, of Oswego, Illinois, LEE, 64, of New York, New York, REASONOVER, 56, of Chicago, Illinois, TORRY, 33, of Chicago, Illinois, GILBERT HUERTAS, 28, of Tampa, Florida, and ANAYDA HUERTAS, 51, of Tampa, Florida, are each charged with one count of conspiracy to commit wire and bank fraud, which carries a maximum sentence of 30 years in prison; one count of conspiracy to commit access device fraud, which carries a maximum sentence of five years in prison; and one or more counts of aggravated identity theft, which carries a mandatory sentence of two 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 would be determined by a judge.
Mr. Williams praised the outstanding investigative work of the USPIS, TIGTA, CBP, and Special Agents and Analysts of the United States Attorney’s Office for the Southern District of New York. Mr. Williams also thanked the HSI New York Darkweb and Cryptocurrency Task Force for their assistance in this matter.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Jun Xiang, Matthew R. Shahabian, and Justin Horton 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 in this release constitute only allegations, and every fact described should be treated as an allegation.
Former High School Dean Charged with 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 Keechant Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced today that a grand jury in Manhattan federal court returned a Superseding Indictment charging ISRAEL GARCIA a/k/a “Shorty Rock,” the former leader of the Get Money Gunnaz set of the Young Gunnaz street gang (the “GMG YGz”) with murder in aid of racketeering and other charges in connection with the October 11, 2010, murder of Alfonso “Joey” McClinton. GARCIA and 12 others had previously been charged in July 2021 with engaging in a conspiracy to distribute narcotics and with possessing firearms during that conspiracy in connection with their involvement with the GMG YGz.
U.S. Attorney Damian Williams said: “As a former high school dean, Israel Garcia was trusted with guiding children towards a bright future, but we allege that Garcia himself was participating in the drug trafficking activity that a high school dean should be protecting his students from. In addition, as alleged, the defendant shot and murdered Alfonso McClinton as part of the defendant’s gang membership and drug dealing. We will continue to work with our law enforcement partners to weed out violent gang activity from every corner of our community.”
DEA Special Agent in Charge Frank A. Tarentino III said: “This superseding indictment exemplifies law enforcement’s commitment to bringing justice to victims of violent crime. I commend the dedicated agents, detectives, and prosecutors whose dogged work led to murder charges for Israel Garcia, one of the leaders of the Young Gunnaz.”
NYPD Commissioner Keechant L. Sewell said: “The NYPD and our law enforcement partners ceaselessly pursue all violent criminals who terrorize our neighborhoods. True to form, our officers were relentless in investigating this murder – despite it occurring more than a decade ago – to ensure that all of those allegedly involved are held responsible. I want to thank the U.S. Attorney’s Office for the Southern District of New York, the Drug Enforcement Administration’s New York Division, and all who sought justice for this victim and his family.”
As alleged in the Indictment, court filings, and statements made in federal and New York state court:[1]
For more than a decade, the defendant controlled the sale of narcotics in the vicinity of East 184th Street and Morris Avenue in the Bronx as the leader of the GMG YGz. As part of their narcotics operation, GMG YGz members carried firearms and engaged in back-and-forth shootings with neighboring, rival crews. This violence resulted in, among other acts, the 2010 murder of Alfonso “Joey” McClinton (“McClinton”). The State of New York arrested and prosecuted GMG YGz member Joseph (“Juice”) Johnson for the killing.[2] Ballistics, video evidence, and eyewitness testimony, however, reveal that there was a second shooter involved in Mr. McClinton’s murder. Today’s Indictment charges GARCIA with being that second shooter.
* * *
GARCIA, 32, of the Bronx, New York, is charged with (i) murder in aid of racketeering, which carries a maximum sentence of death or life in prison and a mandatory minimum sentence of life in prison; (ii) narcotics conspiracy, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison; (iii) murder while engaged in a narcotics conspiracy, which carries a maximum sentence of death or life in prison and a mandatory minimum sentence of 20 years in prison; (iv) murder through the use of a firearm, which carries a maximum sentence of death or life in prison and a mandatory minimum sentence of five years in prison; (v) firearms use, carrying, and possession in connection with a drug trafficking crime, which carries a maximum sentence of life in prison and a mandatory minimum sentence of five years in prison, which must be served consecutively to any other sentence imposed; (vi) witness tampering, which carries a maximum sentence of 20 years in prison; and (vii) conspiracy to commit witness tampering, 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 investigative work of the DEA, the NYPD, the Department of Homeland Security, Homeland Security Investigations, the United States Marshals Service, and the Organized Crime Drug Enforcement Task Forces. 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.
This case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Maggie Lynaugh, Micah Fergenson, Jacob Gutwillig, Matthew Hellman, and Kaylan Lasky are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment set forth in this release constitute only allegations, and every fact described should be treated as an allegation.
[2] Johnson was convicted at trial of second-degree murder in The People of the State of New York v. Joseph Johnson, Index Number 4311/2010. On February 3, 2022, the verdict against Johnson was vacated. Johnson subsequently pled guilty to manslaughter and is serving a 17-year sentence.
Former Bond Trader and Hedge Fund Founder Jeffrey Soberman Parket Pleads Guilty to $65 Million Ponzi Lending SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Daniel B. Brubaker, Inspector in Charge of the New York Division of the U.S. Postal Inspection Service (“USPIS”), announced that JEFFREY SOBERMAN PARKET, a former bond trader and the former principal of several hedge funds, pled guilty today in Manhattan federal court to wire fraud and bank fraud. PARKET obtained over $65 million in loans from individual and institutional lenders by fabricating assets, doctoring bank and brokerage statements, and forging business correspondence and signatures, resulting in over $37 million in victim losses. PARKET pled guilty before United States District Judge Mary Kay Vyskocil.
U.S. Attorney Damian Williams said: “Parket traded on his reputation as a respected financier and fabricated paper assets to defraud lenders of millions of dollars in loans that they never would have made if not for his lies and the sophisticated ruses he used to support those lies. His scheme cost some of his victims everything they had. He will now be held accountable for his deceit.”
USPIS Inspector in Charge Daniel B. Brubaker said: “Parket took advantage of his investors’ trust, among them his friends and family members, and perpetrated an intricate scheme involving fraudulent documents and identity theft to hide his fraud from them. However, Postal Inspectors and our law enforcement partners unraveled Parket’s web of deceit and exposed all his crimes. Parket’s conviction today vindicates the investors he defrauded of almost $40 million. His conviction should also serve as a warning to would-be fraudsters: Postal Inspectors will dedicate every resource in our arsenal to protect the integrity of the mail and pursue anyone who betrays the public trust and preys on innocent investors.”
As alleged in the Complaint and Information and based on other filings and statements made in court:
From at least 2016 through December 2021, PARKET fraudulently obtained over $65 million in short-term loans from individuals and financial institutions by materially misrepresenting his financial condition and pledging fake collateral. Claiming that he needed short-term liquidity for investment opportunities or real estate purchases, PARKET constructed elaborate stories and submitted hundreds of pages of supporting documents to obtain loans he had no intention of repaying. Among other things, he falsified bank and brokerage statements and contracts allegedly reflecting his significant assets and ownership interests in valuable investment accounts. To furnish proof of some of these ownership interests, PARKET also used the names, titles, and forged signatures of actual company executives he falsely claimed were his business associates. He created fake email addresses for them and forged lengthy email correspondence regarding measures supposedly taken by PARKET and his purported business associates to secure the loans.
To perpetuate the scheme, PARKET used loans from new lenders to pay back earlier lenders. He also made fraudulent representations about delayed acquisitions and temporary liquidity issues to induce his existing lenders to extend the maturity date of his loans or to provide him millions of dollars in additional loans.
PARKET’s individual victims included friends and professional acquaintances, some of whom he persuaded to provide him numerous loans. His institutional victims included short-term bridge lenders, a real estate services company, a bank insured by the Federal Deposit Insurance Corporation, and an insurance company focused on helping clients save for retirement.
Throughout the offense period, PARKET also persuaded family members to transfer funds to his personal accounts by falsely promising to safely invest their life savings on their behalf. He then used the funds to pay down fraudulently obtained loans.
* * *
PARKET, 59, of Great Neck, New York, pled guilty to one count of wire fraud affecting a financial institution and one count of bank fraud, each of which carries a maximum potential 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 defendant will be determined by the judge. Sentencing has been scheduled for June 28, 2023.
Mr. Williams praised the outstanding investigative work of USPIS.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Jane Y. Chong is in charge of the prosecution.
California Residents Indicted for Defrauding Architecture Firm of More Than $91,000 by Using Fictitious Law Firm and Fraudulent Target LetterRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Daniel B. Brubaker, Inspector in Charge of the New York Division of the United States Postal Inspection Service (“USPIS”), announced the return of an Indictment today by a grand jury charging MATTHEW BLAKE MORROW-WU and SHANGZHEN WU, a/k/a “Daniel Wu,” with perpetrating a scheme to defraud a Manhattan architecture firm (the “Company”) at which WU was employed as a business manager. MORROW-WU and WU were arrested on February 1, 2023, in Los Angeles, California, pursuant to a criminal Complaint and presented in the Central District of California. The case has been assigned to U.S. District Judge Alvin K. Hellerstein.
U.S. Attorney Damian Williams said: “Morrow-Wu and Wu brazenly used an architecture firm, at which Wu worked, as their personal ATM. They transferred over $91,000 from the architecture firm to a fictitious law firm that they incorporated, forged false documentation that appeared to authorize the fraudulent transactions, and ultimately sent a fake target letter — purportedly from this Office — to the architecture firm threatening it with criminal prosecution after the architecture firm continued to dispute the fraudulent transactions. Morrow-Wu and Wu now face a harsh reality as a result of their elaborate lies and false threats of prosecution: a real prosecution by the Southern District of New York.”
USPIS Inspector in Charge Daniel B. Brubaker said: “Morrow-Wu and Wu conspired to allegedly steal nearly $100,000 from a Manhattan-based business. Their misguided aim was to make money and conceal their scheme by allegedly duping innocent victims into believing they were the target of a federal investigation. By mailing their fictitious letter, Morrow-Wu and Wu attracted the attention of the U.S. Attorney’s Office and Postal Inspectors. In an ironic twist, they became the targets of a federal criminal investigation. Today’s indictment is the next step on the road to justice for this couple. This indictment should serve as a stern warning to anyone who would use the U.S. Mail to commit fraud: Postal Inspectors and our law enforcement partners will tirelessly pursue you across the country, from one coast to another, to bring you to justice.”
According to the allegations contained in the Complaint, the Indictment, and statements at public court proceedings in the case:[1]
From at least in or about January 2022 through in or about October 2022, MORROW-WU and WU perpetrated a scheme to steal more than $91,000 from the Company, where WU was employed as a business manager, through the fraudulent and unauthorized use of a credit card held by the Company. MORROW-WU and WU took extensive steps to conceal the fraud, which included the following:
- Forming a sham law firm named Morrow Law Group (“MLG”) to receive the funds under the guise of receiving legal fees from the Company, despite the fact that neither MORROW-WU nor WU appear to be licensed attorneys.
- Fabricating a retainer agreement between MLG and the Company that purported to pre-authorize payments from the Company to MLG, as well as other correspondence from the Company to MLG purportedly authorizing the fraudulent transactions, and forging the signatures of Company representatives in these documents.
- Using a payment processing provider to process the credit card transactions, enabling MORROW-WU and WU to manually input the names of legitimate vendors of the Company as false recipients of the funds and further disguise the true recipients of the funds.
After the Company confirmed the credit card transactions were fraudulent and unauthorized, it disputed the transactions with the credit card company, leading MORROW-WU and WU to attempt to deter any further action by sending the Company a fake “target letter” from the U.S. Attorney’s Office for the Southern District of New York (the “Fraudulent Target Letter”). The Fraudulent Target Letter purported to be signed by a Special Assistant U.S. Attorney on behalf of the U.S. Attorney and threatened the Company with criminal prosecution for wire fraud, conspiracy to commit wire fraud, and the fraudulent use of credit cards.
* * *
MORROW-WU, 38, and WU, 29, both of Los Angeles, California, are each charged with one count of conspiracy to commit wire and mail fraud, which carries a maximum penalty of 20 years in prison; one count of wire fraud, which carries a maximum penalty of 20 years in prison; one count of mail fraud, which carries a maximum penalty of 20 years in prison; one count of impersonating a federal officer, which carries a maximum penalty of three years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the Special Agents of the United States Attorney’s Office for the Southern District of New York and the U.S. Postal Inspectors of the USPIS.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Jerry J. Fang is in charge of the prosecution.
The charges contained in the Complaint and 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 Complaint and the Indictment and the descriptions of the Complaint and the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Texas Man Sentenced to 42 Months in Prison for Role in Scheme to Fraudulently Obtain over $30 Million in COVID-19 Relief LoansRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that AMOS MUNDENDI, a/k/a “Mos,” a/k/a “El Ashile Mundi,” was sentenced today in Manhattan federal court by United States District Judge Paul A. Engelmayer to 42 months in prison for his participation in a scheme to fraudulently obtain over $30 million in Government-guaranteed loans designed to provide relief to small businesses during the COVID-19 pandemic. MUNDENDI is the last of five defendants to be sentenced in the case. MACKENZY TOUSSAINT, APOCALYPSE BELLA, a/k/a “Dias Yumba,” BRANDON JACKSON, and ALVIN MAXWELL were previously sentenced by Judge Engelmayer.
U.S. Attorney Damian Williams said: “Amid the outbreak of the COVID-19 pandemic that wreaked havoc on economies worldwide, Amos Mundendi and his co-defendants illegally plundered funds meant to financially support struggling businesses. All defendants in this case will now serve substantial prison time for stealing much-needed relief intended for legitimately deserving companies.”
According to allegations in the Complaints, the Indictments, the Superseding Information, and statements made during court proceedings:
TOUSSAINT, BELLA, MAXWELL, and MUNDENDI were involved in an extensive scheme to prepare and submit fraudulent applications to the Small Business Administration (“SBA”) and to at least one company which processed loan applications under the SBA’s Paycheck Protection Program (“PPP”). Over the course of the scheme, TOUSSAINT, BELLA, MAXWELL, and MUNDENDI attempted to fraudulently obtain over $30 million in Government-guaranteed loans for various companies through the PPP, designed to provide financial relief to qualifying companies during the COVID-19 pandemic. The scheme resulted in over $15 million in actual loss.
The defendants’ scheme included the submission of fraudulent applications for PPP loans for several companies, including two companies (“Company‑1” and “Company-2”) both located in the Southern District of New York. The loan proceeds for Companies-1 and -2 totaled approximately $4 million, and the fraudulent funds were distributed to a series of bank accounts located in the United States and elsewhere, including bank accounts controlled by TOUSSAINT and BELLA.
The PPP loan applications for Company-1 and Company-2 were false, containing lies designed to maximize proceeds to the fraud scheme. Specifically, applications for both Company-1 and Company-2 contained material differences from loan applications submitted for both companies under the Economic Injury Disaster Loan (“EIDL”) program just months earlier. For instance, the PPP loan application for Company-1 — which was submitted on June 30, 2020 — represented that Company-1 had over 100 employees. However, an earlier EIDL loan application for Company-1 dated on or about March 30, 2020, represented that Company-1 had only four employees.
TOUSSAINT, BELLA, and MUNDENDI devised and executed the fraud scheme by conspiring with individuals who owned, operated, or otherwise were affiliated with businesses such as Company-1 and Company-2. MAXWELL was one such individual — a business-owner who participated in the scheme to fraudulently obtain over $1.6 million for his own business.
In addition, TOUSSAINT and JACKSON engaged in a separate scheme to submit fraudulent EIDL applications, often through the use of synthetic identities (i.e., a fake name used in combination with true personal identifying information of another person). TOUSSAINT and JACKSON used Social Security Numbers belonging to minors as part of the synthetic identities created for use in the fraud scheme. At least approximately $1.7 million in EIDL loan funds were disbursed as a result of TOUSSAINT’s and JACKON’s EIDL loan fraud scheme.
* * *
In addition to the prison sentence, MUNDENDI, 33, of Irving, Texas, was ordered to pay $9,315,418.00 in restitution.
On October 27, 2022, BELLA, 48, of Clackamas, Oregon, was sentenced to 40 months in prison and ordered to pay $4,088,084.42 in restitution.
On November 10, 2022, TOUSSAINT, 40, of Irving, Texas, was sentenced to 90 months in prison and ordered to pay $12,402,676.92 in restitution.
On December 6, 2022, MAXWELL, 46, of Lancaster, Texas, was sentenced to 18 months in prison and ordered to pay $1,696,534.63 in restitution.
On February 3, 2023, JACKSON, 35, of Farmer’s Branch, Texas, was sentenced to 33 months in prison and ordered to pay $1,772,453.00 in restitution.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation, the Small Business Administration’s Office of the Inspector General, and the Internal Revenue Service, Criminal Investigation.
The case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Dina McLeod is in charge of the prosecution.
Idaho I.T. Professional Sentenced to 28 Months in Prison for Insider Trading SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that DAVID STONE was sentenced by U.S. District Judge Mary Kay Vyskocil to 28 months in prison for his participation in an insider trading scheme. STONE previously pled guilty to one count of securities fraud.
U.S. Attorney Damian Williams said: “David Stone unlawfully accessed pre-publication stock picks from an investment advice service so that he could beat the markets and generate millions in trading profits for himself. Today’s sentence reflects that this Office will find and prosecute those who seek to profit at the expense of the integrity and fairness of our financial markets.”
According to the allegations in the Information and statements made in public court proceedings and filings:
From 2020 up to at least March 2022, DAVID STONE exploited market-moving stock recommendations made by an investment recommendation service (“Advisor-1”) before those recommendations were released to paying subscribers. STONE, an I.T. professional, accessed Advisor-1’s computing system using log-in credentials he obtained without authorization and used his improperly obtained access to view information relating to Advisor-1’s recommendations before they were announced to Advisor-1’s paying subscribers.
Advisor-1’s stock recommendations typically lead to higher closing prices for the recommended stock as compared to the prior day’s closing price. By trading on those recommendations before they were announced, STONE was able to obtain significant profits unavailable to other market participants. In fact, across all the brokerage accounts he traded in, STONE realized gains of at least $4.8 million.
In addition to his own trading, STONE supplied these stolen trading tips to another person (“Tippee-1”). From in or about January 2021 up to and including in or about March 2022, on approximately 45 different days, STONE sent emails to Tippee-1 providing stock names and/or ticker symbols ahead of Advisor-1 announcements of stock recommendations to its paying subscribers. A brokerage account associated with Tippee-1 traded ahead of Advisor-1’s recommendations on more than a dozen occasions. As a result of that trading, Tippee-1 profited more than approximately $2.7 million.
* * *
In addition to the prison sentence, DAVID STONE, 37, of Nampa, Idaho, was sentenced to three years of supervised release and ordered to forfeit $2,883,800 and particular shares of stock, to pay $344,000 in restitution to Advisor-1, and to pay a $20,000 fine.
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 Samuel P. Rothschild and Andrew Thomas are in charge of the prosecution.
Defendant Convicted in Scheme to Steal Nearly $1 Million from Tech CompanyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict today against SURESH MUNSHANI on charges of conspiracy to commit wire fraud and conspiracy to commit money laundering. MUNSHANI is scheduled to be sentenced on May 10, 2023, by U.S. District Judge Jed S. Rakoff, who presided over the one-week trial.
U.S. Attorney Damian Williams said: “Suresh Munshani and his brother thought they could get away with stealing nearly $1 million from his brother’s employer and laundering that money through a Canadian bank account, but today’s jury verdict shows that this Office will continue to follow the dirty money to bring those responsible for financial crimes to justice.”
According to the Superseding Indictment and the evidence presented at trial:
Between 2011 and 2018, SURESH MUNSHANI conspired with his brother, Suni Munshani, to steal from the victim company (the “Company”) and to launder the stolen funds back to his brother. During the relevant period, Suni Munshani was the Chief Executive Officer (“CEO”) of the Company, which provided data security services to its clients. In furtherance of the scheme, SURESH MUNSHANI, among other things, formed a fake company, added the name of that fake company to a bank account he controlled in Canada, lied to his bank about how he was using his account, and worked with his brother to deposit into that account approximately $860,000 stolen from the Victim Company. SURESH MUNSHANI thereafter laundered the majority of the stolen money back to a bank account controlled by Suni Munshani and kept approximately $150,000 of the stolen funds for himself.
Suni Munshani previously pled guilty to one count of conspiracy to commit wire fraud in connection with his involvement in the scheme.
* * *
SURESH MUNSHANI, 58, of New York, New York, was convicted of one count of wire fraud conspiracy and one count of money laundering conspiracy. Each count 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 the judge.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation’s New York Office for their assistance.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Timothy V. Capozzi and Steven J. Kochevar, with the assistance of Paralegal Specialist Geoffrey Mearns, are in charge of the prosecution.
Two Bronx Men Sentenced to 14 and over 11 Years in Prison for Shooting Three Victims Near A PlaygroundRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that ROBERT WADE was sentenced to 168 months in prison and DARRIUS CHRISTOPHER was sentenced to 137 months in prison by U.S. District Judge Sidney H. Stein. CHRISTOPHER and WADE were each convicted, following trial, on December 7, 2022, of one count of possessing ammunition after having previously been convicted of a felony and one count of conspiracy to possess ammunition after having previously been convicted of a felony.
U.S. Attorney Damian Williams said: “Today’s sentence demonstrates that those who use illegal weapons to inflict violence in our community will be held accountable for their crimes. I thank our law enforcement partners in the New York City Police Department and the Drug Enforcement Administration for working with us to keep violent criminals off the streets and to keep our communities safe.”
According to evidence presented in court during the trial:
On October 25, 2019, minutes before 7:42 p.m., CHRISTOPHER and WADE were dropped off by a car on Ryer Avenue in the Bronx, New York, approximately one block north of Slattery Playground. CHRISTOPHER and WADE walked side-by-side southbound toward a group of approximately 10 young people gathered on the sidewalk next to Slattery Playground. As they approached the group from the opposite side of Ryer Avenue, CHRISTOPHER removed a handgun from his pocket and racked the weapon, readying it to fire. Soon after, CHRISTOPHER crossed the street and approached the group of people while WADE positioned himself on the opposite street of Ryer Avenue. When CHRISTOPHER was mere feet from the group, CHRISTOPHER and WADE both opened fire. CHRISTOPHER fired three shots while WADE fired seven bullets at the crowd. CHRISTOPHER and WADE hit three victims, all of whom received treatment from a local hospital that night and were released. CHRISTOPHER and WADE then made a prompt escape into a waiting getaway car a few blocks away.
Evidence at trial demonstrated that CHRISTOPHER and WADE were members of a gang and that one of the shooting victims had posted online video footage insulting rival gang members only hours before the shooting. CHRISTOPHER and WADE’s shooting was revenge for insults one of their victims lodged against their gang.
When imposing today’s sentences, Judge Stein described the defendants’ crime as “horrific.” Judge Stein further remarked he “couldn’t overstate the extreme gravity of this crime, shooting innocent bystanders” simply because the defendants “were called names.”
* * *
CHRISTOPHER, 31, of the Bronx, New York, had previously been convicted of three crimes, including attempted robbery in the second degree and attempted assault in the first degree. WADE, 34, of the Bronx, New York, had previously been convicted of four crimes, including assault in the second degree and attempted possession of a loaded firearm in the second degree. In addition to the prison term, CHRISTOPHER and WADE were sentenced to three years of supervised release.
Mr. Williams praised the outstanding investigative work of the New York City Police Department and the Drug Enforcement Administration in this investigation.
The prosecution is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Ryan B. Finkel and Mollie E. Bracewell are in charge of the prosecution.
Leader of Drug Trafficking Organization Pleads Guilty to Trafficking Thousands of Kilograms of CocaineRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that CAMILO ENRIQUEZ-NUNEZ, a/k/a “Viejo,” the leader of a drug trafficking organization that distributed thousands of kilograms of cocaine, pled guilty today in Manhattan federal court before U.S. District Judge Paul A. Engelmayer to conspiring to distribute more than 5,000 kilograms of cocaine.
U.S. Attorney Damian Williams said: “Thanks to our partners at the DEA, approximately 1,300 kilograms of cocaine was seized before it could hit the streets. Now, the leader of this major trafficking organization has been held accountable for his crimes.”
According to the allegations in the Superseding Information and other filings and statements made in court:
ENRIQUEZ-NUNEZ controlled a drug trafficking organization (the “DTO”) responsible for trafficking more than 5,000 kilograms of cocaine from Puerto Rico to the mainland United States.
On September 29, 2021, law enforcement officers seized 920 kilograms — more than one ton — of cocaine belonging to the DTO in New Jersey. Three defendants were arrested in New Jersey along with that seizure.
On July 18, 2022, ENRIQUEZ-NUNEZ was arrested in Puerto Rico. At approximately the same time as the arrest, law enforcement also seized approximately 380 kilograms of additional cocaine, four assault rifles, and $750,000 in cash belonging to the DTO.
* * *
ENRIQUEZ-NUNEZ, 43, of Puerto Rico, pled guilty to one count of conspiracy to distribute and possess with intent to distribute cocaine, which carries a maximum potential sentence of life in prison.
The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as the sentencing of the defendant will be determined by a judge. Sentencing before Judge Engelmayer is scheduled for May 30, 2023, at 11:00 a.m.
Mr. Williams praised the outstanding investigative work of the Drug Enforcement Administration.
The case is being prosecuted by the Office’s Narcotics Unit. Assistant U.S. Attorneys Samuel P. Rothschild, Kevin Mead, and Marguerite B. Colson are in charge of the prosecution.
Former Law Firm Partner Sentenced to Two Years in Prison for CyberstalkingRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that WILLIE DENNIS was sentenced today by U.S. District Judge Jed S. Rakoff to two years in prison for cyberstalking three victims, all his former colleagues at a global law firm (the “Law Firm”). DENNIS was convicted in October 2022 following a one-week trial before Judge Rakoff.
U.S. Attorney Damian Williams said: “Willie Dennis, a former law firm partner in Manhattan, waged a relentless cyberstalking campaign against his own former colleagues. During the years-long, merciless harassment, Dennis’s victims were forced to change their ways of living out of fear that Dennis would make good on his threats. The sentence imposed today ensures that Dennis’s victims will no longer needlessly endure his attacks.”
According to the Indictment, documents previously filed in the case, and the evidence introduced at trial:
WILLIE DENNIS, a former partner at the Law Firm, engaged in a years-long campaign of harassment, intimidation, and threats against his victims, who were partners at the Law Firm. As part of that campaign, DENNIS sent the victims thousands of harassing, threatening, and intimidating emails and text messages. Despite having been warned by the Law Firm over and over again that his communications were unwanted, abusive, and harassing, DENNIS continued to send nonstop messages to his former partners. He sent the messages at all hours of the day and night. DENNIS targeted the victims and their families, and he threatened their physical safety. He demeaned the victims, called some of them by racist and antisemitic names, and warned them that they would become “biblical symbols.” In his threats, he told one victim to “sleep with one eye open.”
* * *
In addition to his prison term, DENNIS, 60, of New York, New York, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Sarah L. Kushner, Stephanie Simon, and Kimberly Ravener are in charge of the prosecution.
California Man Pleads Guilty to Submitting False Declarations to Court in $50 Million LawsuitRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that ROVIER CARRINGTON pled guilty today in Manhattan federal court before U.S. District Judge Valerie E. Caproni to submitting false declarations to the court in connection with a $50 million civil lawsuit.
U.S. Attorney Damian Williams said: “Rovier Carrington submitted fake evidence in court, knowingly swore that the fake evidence was true, and doubled down on his lies when confronted. Today’s conviction sends a message: when a party in civil litigation swears to tell the truth, breaking that oath has consequences.”
According to the Indictment and statements made in court proceedings and filings:
In a civil lawsuit that CARRINGTON filed in Manhattan federal court (the “Civil Case”), CARRINGTON sued Hollywood executives alleging that the executives had sexually assaulted him and that they had defrauded him in connection with a decision to refuse to produce CARRINGTON’s reality television program. CARRINGTON sought damages of $50 million in the Civil Case.
CARRINGTON submitted to the court several falsified emails (the “Faked Emails”) as exhibits to his amended complaint in the Civil Case, which included the following fabricated exchanges:
- CARRINGTON: My mind is scrambled after last night. I can't remove “Our Jewish bodies” and “Call me Mr. [Executive-1]” from repeating in my head. I can’t properly sit down after being viciously assaulted yet again by that two-sided shit [Executive-1]. This was too far. Too damn far. I have cuts on my face and thighs from him forcing himself into me. That bastard can’t take NO for an answer and he remains using his title to force himself onto me.
- CARRINGTON: Also, If [third party] thinks he can mute me like the others with an envelope filled with cash driving by his personal driver, he’s sadly mistaken. I get assaulted two days ago at the “Super 8” premiere by [Executive-1] who's been stalking me prior to this. Did [Executive-1] tell you he shows up at my place begging for me to be his private Boyfriend ? and say’s, “If I cared about my career I’d obey” ? He threaten my career becuase [sic] I want to work and not fly private with him or attend art museums when his trophy isn't there. This dude is newly married and doesn't comprehend he forces himself onto me. [Executive-1] clearly knows he's crossed the line after spitting in my face and grabbing my genitals while relaying “I'll never work again”.
- CARRINGTON: Here’s the dramatic series I was discussing with you. I appreciate you finally moving forward with both shows. Especially with our contract in place.
Executive-2: I’ll present the material to my business associates and we’ll figure out how to combine the reality show with the series. You keep me happy and we’ll do well together. :)
When confronted about the Faked Emails, CARRINGTON submitted a false affidavit to the court in the Civil Case, in which he swore under penalty of perjury that “Each and every email annexed to my Amended Complaint, and hereto, are forwarded copies of the original email I received, or exchanged, in the exact same condition, upon which the email was received, or exchanged . . . I have not doctored, fabricated, or altered, any of the emails annexed to my Amended Complaint, and hereto.”
The court in the Civil Case conducted a detailed investigation into whether the Faked Emails were real, which CARRINGTON tried to obstruct. Among other things, CARRINGTON (i) deleted one of the email accounts from which he had purportedly sent some of the Faked Emails the day after he filed his amended complaint; (ii) deleted another email account from which he had purportedly sent some of the Faked Emails, after the court began its investigation, and then called the email provider to confirm that the account’s emails would never be accessible; and (iii) failed to appear in court for questioning about the Faked Emails.
The court in the Civil Case ultimately dismissed the Civil Case and imposed sanctions on CARRINGTON, ruling, “these emails were fabricated, and that was bad enough, but the deactivation of the accounts, the efforts undertaken to really foreclose what is necessary discovery in this case, and the stream of lies to me necessitate the sanctions that I am imposing.”
* * *
CARRINGTON, 34, of Los Angeles, California, pled guilty today to one count of submitting a false declaration to a court, which carries a maximum sentence of five years in prison.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. CARRINGTON is scheduled to be sentenced by Judge Caproni on June 1, 2023, at 3:00 p.m.
Mr. Williams praised the outstanding investigative work of the Special Agents of the United States Attorney’s Office for the Southern District of New York.
The case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Kevin Mead and Thomas S. Burnett are in charge of the prosecution.
CEO of Cryptocurrency and Forex Trading Platform Pleads Guilty to over $240 Million Scheme to Defraud InvestorsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the guilty plea of EDDY ALEXANDRE, the leader of a purported cryptocurrency and foreign exchange (“forex”) trading platform called EminiFX, who solicited more than $248 million in investments from tens of thousands of individual investors after making false representations in connection with the EminiFX trading platform. U.S. District Judge John P. Cronan accepted the defendant’s guilty plea.
U.S. Attorney Damian Williams said: “Eddy Alexandre admitted today to luring investors to his cryptocurrency investment scam by fabricating weekly returns of at least 5%. In reality, Alexandre failed to invest a substantial portion of this investors’ money and even used some funds for personal purchases. Alexandre’s scam caused investors to lose millions of dollars, and this case should serve as yet another warning to cryptocurrency executives that the Southern District of New York is closely watching and ready to prosecute any and all misconduct in the crypto markets.”
According to the allegations in the Indictment and other filings and statements made in court:
From in or about September 2021, up to and including in or about May 2022, ALEXANDRE operated EminiFX, Inc. (“EminiFX”), a purported investment platform that ALEXANDRE founded, and for which he solicited more than $248 million in investments from tens of thousands of individual investors. ALEXANDRE marketed EminiFX as an investment platform through which investors would earn passive income through automated investments in cryptocurrency and forex trading. ALEXANDRE offered his investors “guaranteed” high investment returns using new technology that he claimed was secret. Specifically, ALEXANDRE falsely represented to investors that they would double their money within five months of investing by earning at least 5% weekly returns on their investment using a “Robo-Advisor Assisted account” to conduct trading. ALEXANDRE referred to this technology as his “trade secret” and refused to tell investors what the technology was. Each week EminiFX’s website falsely represented to investors that they had earned at least 5% on their investment, which they could withdraw or re-invest.
In truth and in fact, and as ALEXANDRE well knew, EminiFX did not earn 5% weekly returns for its investors. ALEXANDRE did not even invest a substantial portion of the investor funds entrusted to him, and ALEXANDRE sustained millions of dollars in losses on the limited portion of funds that he did invest, which he did not disclose to his investors. Instead of using investors’ funds as he had promised, ALEXANDRE also misdirected at least approximately $14,700,000 to his personal bank account. For example, ALEXANDRE used $155,000 in investor funds to purchase a BMW car for himself and spent an additional $13,000 of investor funds on car payments, including to Mercedes Benz.
* * *
ALEXANDRE, 50, of Valley Stream, New York, pled guilty to one count of commodities fraud and agreed to pay forfeiture in the amount of $248,829,276.73, as well as restitution in an amount to be specified by the Court. The offense of commodities fraud carries a maximum sentence of 10 years in prison.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. Sentencing before Judge Cronan is scheduled for July 12, 2023, at 4:00 p.m.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation and also thanked the Commodity Futures Trading Commission, which brought a separate civil action.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Nicholas Folly and Jared Lenow are in charge of the prosecution.
Six Genovese Organized Crime Family Defendants Plead Guilty to RacketeeringRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the guilty pleas of four members and two associates of the Genovese Organized Crime Family to racketeering conspiracy. Genovese Family associate THOMAS POLI pled guilty before United States District Judge John G. Koeltl on September 29, 2022, and is scheduled to be sentenced by Judge Koeltl on April 13, 2023. Genovese Family Captain NICHOLAS CALISI, Solider JOHN CAMPANELLA, and associate MICHAEL POLI pled guilty before Judge Koeltl on February 8, 2023, and are scheduled to be sentenced by him on June 27, 2023. Genovese Family Captain RALPH BALSAMO and Soldier MICHAEL MESSINA pled guilty before Judge Koeltl earlier today and are scheduled to be sentenced by him on June 28, 2023.
U.S. Attorney Damian Williams said: “We remain committed to protecting the people of the Southern District of New York from being preyed on by organized crime. Today’s pleas demonstrate that those who swear a lifetime allegiance to criminal organizations will be prosecuted, no matter their efforts to insulate themselves.”
According to the Superseding Indictment, the defendants’ statements when pleading guilty, and statements made in related court filings and proceedings:
The Genovese Organized Crime Family is part of a nationwide criminal organization known by various names, including “La Cosa Nostra” (“LCN”) and the “Mafia,” which operates through entities known as “Families.”
Like other LCN Families, the Genovese Organized Crime Family operates through groups of individuals known as “crews.” Each “crew” has as its leader a person known as a “Captain” and consists of “made” members, known as “Soldiers.” Soldiers are aided in their criminal endeavors by other trusted individuals, known as “associates,” who sometimes are referred to as “connected” or identified as “with” a Soldier or other member of the Family. Associates participate in the various activities of the crew and its members. In order for an associate to become a made member of the Family, the associate typically needs to demonstrate the ability to generate income for the Family and/or that the associate is capable of committing acts of violence.
A Captain is responsible for supervising the criminal activities of his crew, resolving disputes between and among members of the Family, resolving disputes between members of the Family and members of other Families and other criminal organizations, and providing Soldiers and associates with support and protection. In return, the Captain typically receives a share of the illegal earnings of each of his crew’s Soldiers and associates.
At times relevant to the charges in the Superseding Indictment, NICHOLAS CALISI and RALPH BALSAMO were Captains in the Genovese Family, MICHAEL MESSINA and JOHN CAMPANELLA were Soldiers in the Genovese Family, and MICHAEL POLI and THOMAS POLI were associates of the Genovese Family.
Members of the Genovese Family, including CALISI, BALSAMO, MESSINA, and CAMPANELLA, and associates MICHAEL POLI and THOMAS POLI, engaged in extortionate extensions of credit, financing extortionate extensions of credit, collecting extensions of credit by extortion, extortion, operating illegal gambling businesses, and the transmission of gambling information.
* * *
A chart containing the ages, residency information, and the charges to which the defendants pled guilty, as well as the maximum penalties they face, is attached.
The maximum penalties are prescribed by Congress and are provided here for informational purposes only, as the sentencing of the defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the Office of the New York Attorney General’s Organized Crime Task Force and the Kings County District Attorney’s Office and thanked the Federal Bureau of Investigation for its assistance in this investigation.
The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Celia V. Cohen, Rushmi Bhaskaran, and Justin Rodriguez, as well as Special Assistant U.S. Attorney Pamela Murray, are in charge of the prosecution.
Defendant
Age
City Of Residence
Charges
Max Penalties
MICHAEL MESSINA
69
New Fairfield, CT
Racketeering conspiracy
20 years
NICHOLAS CALISI
63
Boca Raton, FL
Racketeering conspiracy
20 years
RALPH BALSAMO
51
Bronx, NY
Racketeering conspiracy
20 years
JOHN CAMPANELLA
47
Bronx, NY
Racketeering conspiracy
20 years
MICHAEL POLI
37
Hawthorne, NY
Racketeering conspiracy
20 years
THOMAS POLI
64
Bronx, NY
Racketeering conspiracy
20 years
NYCHA Superintendents Sentenced to Prison for Accepting BribesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that LEROY GIBBS was sentenced yesterday by U.S. District Judge Colleen McMahon to 33 months in prison, and JULIO FIGUEROA was sentenced today by U.S. District Judge Denise L. Cote to 15 months in prison, for accepting bribes in exchange for awarding no-bid contracts at the New York City Housing Authority (“NYCHA”) facilities where they worked. GIBBS also obstructed justice in the weeks before his sentencing. GIBBS and FIGUEROA each previously pled guilty to one count of solicitation and receipt of a bribe.
U.S. Attorney Damian Williams said: “Leroy Gibbs and Julio Figueroa betrayed the trust of NYCHA and harmed the residents of Douglass Houses and Ft. Independence Houses, taxpayers, and the contractors who were forced to pay them bribes in order to receive work – all so that they could line their pockets. By accepting bribes, they put greed above their duty to the public.”
According to the Complaints, Informations, and statements made in court proceedings and filings:
In February 2020, GIBBS, who was then employed as the Resident Buildings Superintendent at Douglass Houses in New York, New York, solicited and accepted approximately $2,000 in bribes from a confidential informant (the “CI”) in exchange for awarding no-bid contracts to the CI worth a total of approximately $9,950 from NYCHA for work at that NYCHA facility.
These were not the only bribes GIBBS solicited and received; between at least 2019 and 2022, GIBBS demanded bribes from numerous other contractors who sought to do work for NYCHA at Douglass Houses. For example, in one text message exchange in February 2020, GIBBS wrote to a contractor, “so there isn’t anything confusion like before. What is my $ from this? I have to ask because you guys were trying to be funny last time.” The contractor replied, “Good evening sir[,] 50k yours 50k us.” If contractors were too explicit about the bribery scheme in their messages to GIBBS, he admonished them; for example, when a contractor asked GIBBS, “Did [my associate] gave you 4k last week?”, GIBBS replied, “Don’t ever text something like that. Ever are you crazy.” GIBBS also referred to his practice of receiving a $1,000 bribe for each awarded job as his “side hustle,” and wrote that he had previously “put hands on” a contractor who had threatened to report his corruption.
In January 2023, just weeks before he was due to be sentenced, GIBBS took several steps to obstruct justice, including by deleting text messages and obtaining a new phone number to communicate with a co-conspirator.
Between July 2021 and August 2022, FIGUEROA, who was then employed as the Assistant Resident Buildings Superintendent at the Ft. Independence St.-Heath Ave. Houses in the Bronx, New York, solicited and accepted approximately $6,000 in bribes from the CI in exchange for awarding no-bid contracts to the CI worth a total of approximately $46,622 from NYCHA for work at that NYCHA facility. FIGUEROA continued to solicit bribes even after learning about the arrests of nine NYCHA contractors in September 2021 for paying bribes, telling the CI that he hoped he would not be the subject of an undercover investigation and that he would probably only deal with the CI from then on because the news of the arrests scared him.
* * *
In addition to his prison sentence, GIBBS, 58, of Bay Shore, New York, was sentenced to three years of supervised release, including 120 hours of community service per year, and was ordered to pay a $100,000 fine, forfeit $2,000, and pay $2,000 in restitution.
In addition to his prison sentence, FIGUEROA, 45, of the Bronx, New York, was sentenced to three years of supervised release and was ordered to forfeit $6,000 and pay $6,000 in restitution.
Mr. Williams praised the outstanding investigative work of the New York City Department of Investigation, the United States Department of Housing and Urban Development’s Office of Inspector General, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.
The prosecution of this case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Catherine Ghosh and Robert B. Sobelman are in charge of the prosecution.
Movie Producer Sentenced for Conspiring to Operate A Prostitution BusinessRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that DILLON JORDAN, a/k/a “Daniel Jordan,” a/k/a “Daniel Maurice Hatton,” a/k/a “Daniel Bohler,” was sentenced today to five years in prison in connection with operating a prostitution business with national and international reach from 2010 through 2017. JORDAN pled guilty to conspiracy to violate the Mann Act on September 1, 2022, before U.S. District Judge John P. Cronan. Judge Cronan imposed today’s sentence.
U.S. Attorney Damian Williams said: “For years, the defendant operated and profited from an extensive prostitution business that catered to wealthy men and was predicated on the exploitation of young women. This Office is committed to prosecuting the perpetrators of sex crimes, especially those who use physical and emotional abuse to make a profit.”
According to the allegations in the Indictment and statements made in Court:
From in or about 2010 through at least in or about May 2017, JORDAN operated a prostitution business throughout the United States and abroad. JORDAN maintained a roster of women who resided around the United States and who, in exchange for payment, performed sexual acts for JORDAN’s clients at locations throughout the United States, including the Southern District of New York, and abroad. JORDAN communicated with the clients of his prostitution business by email to coordinate the prostitution services, which included sending to clients photos of women who were available for hire for prostitution services, discussing the price of prostitution services, and overseeing travel logistics for women to travel to engage in prostitution. At times, JORDAN himself arranged the interstate travel for the women to engage in prostitution, and at other times, clients, at JORDAN’s direction, arranged the interstate travel for the women whom JORDAN directed to those clients. To facilitate his prostitution business, JORDAN also coordinated with a United Kingdom-based madam by sharing and referring customers and prostitutes.
JORDAN personally recruited women to work for him to engage in prostitution. JORDAN emotionally and sexually abused at least some of the women who engaged in paid sex work at his direction or whom he sought to recruit to engage in prostitution on his behalf. Prior to operating the prostitution business that is the basis of this conviction, JORDAN was in prison in Cuba for eight years for sex crimes. JORDAN began operating the prostitution business that is the basis of this conviction immediately upon his return to the United States from Cuban prison in 2010.
JORDAN primarily managed the finances of the prostitution business through two front companies – a purported party and event planning company and a movie production company – incorporated in California. JORDAN opened multiple bank accounts for these companies, which he used to accept cash, wire, and check payments for prostitution services from clients and to pay for the expenses of the prostitution business, including paying the women for their prostitution services by cash and check. By using the two front companies to receive deposits from the prostitution business, JORDAN ensured that transactions involving those proceeds from the prostitution business would disguise the nature, source, and origin of those proceeds.
In imposing today’s sentence, Judge Cronan emphasized that JORDAN’s “whole business was based on the exploitation of women… Each of whom has endured permanent physical and emotional scars… I may have well gone beyond five years, if I had the authority to do so.”
* * *
In addition to the prison term, JORDAN, 50, of Lake Arrowhead, California, was sentenced to three years of supervised release. JORDAN was further ordered to pay a forfeiture of $1,429,717.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant U.S. Attorney Cecilia E. Vogel is in charge of the prosecution.
Financial Advisor Sentenced to 42 Months in Prison on Fraud and False Statement ChargesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that ADAM BELARDINO, the former chief executive officer of the Maddox Group, was sentenced in White Plains federal court to 42 months in prison for fraud in connection with separate schemes to defraud clients and to fail to pay over contributions made by Maddox Group employees to the Maddox Group 401(k) plan. BELARDINO had previously pled guilty to two counts of wire fraud and one count of making a false statement to a government agency. He was sentenced today by U.S. District Judge Kenneth M. Karas.
According to the allegations in the Superseding Information to which BELARDINO pled guilty and other court documents:
Embezzlement from Victim-1
BELARDINO had managed Victim-1’s investments at another firm before he founded Maddox in July 2019. In August 2019, BELARDINO convinced Victim-1 to liquidate some of her portfolio and to transfer the liquidated funds to Maddox for investment. Victim-1 then transferred more than $313,000 to Maddox in eight separate transactions between August 2019 and October 2020. Instead of investing Victim-1’s money as he had promised, BELARDINO used her money to pay the operating expenses of Maddox, including payroll and office rent; to pay down prior debt; to pay credit card charges, which consisted primarily of personal items; and to pay for personal travel.
In September 2021, Victim-1 directed BELARDINO to transfer her portfolio at Maddox to her brokerage account at another firm. From September 2021 to February 2022, BELARDINO sent Victim-1 and members of her family emails and texts in which he said he was liquidating the portfolio and would return the funds shortly. BELARDINO also provided Victim-1’s family with documents suggesting that a wire transfer of the funds to Victim-1’s bank account was imminent or pending. BELARDINO also deposited checks drawn on a checking account held by Maddox (“the Maddox Account”) into Victim-1’s bank account for what he claimed was the full value of her portfolio.
Victim-1 never received any funds by wire and the checks BELARDINO deposited into her bank account were returned because the Maddox Account did not have sufficient funds to cover the checks. BELARDINO sent members of Victim-1’s family emails and texts in which he said in substance and in part that he was working with bank officials to resolve the problem and that his family would repay Victim-1 if he was unable to do so. BELARDINO also sent members of Victim-1’s family a document that falsely stated that the Maddox Account had sufficient funds to repay Victim-1.
Scheme to Obtain Fraudulent Life Insurance Commissions – Victim-2
In or about May 2019, BELARDINO served as the agent for Insurance Company-1 in connection with an application by Victim-2 for a life insurance policy with a face amount of $1 million, which amount was eventually increased to $18 million. As an agent, BELARDINO received commissions from Insurance Company-1 once Victim-2’s application was approved.
In or about April 2020, BELARDINO applied for a life insurance policy with a face amount of $3 million with Insurance Company-2 on behalf of Victim-2 without Victim-2’s knowledge or authorization. BELARDINO made materially false statements regarding Victim-2’s income, net worth, and health in the application. In or about August 2020, BELARDINO caused Insurance Company-2 to increase the face amount of the policy to $6 million without Victim-2’s knowledge or authorization. BELARDINO paid and attempted to pay the policy premiums of $194,280 with Victim-2’s funds without her knowledge or authorization. BELARDINO received approximately $84,997 in commissions from Insurance Company-2.
In or about January 2021, BELARDINO applied for a life insurance policy with a face amount of $5 million with Insurance Company-3 on behalf of Victim-2 without Victim-2’s knowledge or authorization. BELARDINO made materially false statements regarding Victim-2’s income, net worth, and health in the application. BELARDINO caused Insurance Company-3 to increase the face amount of the policy to $6.5 million in March 2021 and to $12.1 million in May 2021, all without Victim-2’s knowledge or authorization. BELARDINO paid the policy premiums in a total amount of $105,000 with Victim-2’s funds without her knowledge or authorization. BELARDINO received approximately $94,500 in commissions from Insurance Company-3.
False Statement in Connection with Fraudulent Withholding of Employee 401(k) Contributions
BELARDINO adopted a retirement savings plan pursuant to Title 26, United States Code, Section 401(k) (the “Plan”) on behalf of the Maddox Group that became effective on January 1, 2020. He served as the trustee of the Plan. Under the Plan, an employee of Maddox could elect to have money withheld from his paycheck each pay period in an amount he chose within specified legal limits. BELARDINO was required to deposit these withheld funds into the Plan for investment at the employee’s direction in various options offered by the Plan. Taxes on the money deposited to the Plan as well as gains from investment of those funds would be deferred. BELARDINO was required to deposit funds withheld for the Plan into the Plan’s trust account for investment within seven business days.
From on or about November 1, 2020, through on or about August 13, 2021, BELARDINO withheld $8,004.67 from the paychecks of the four Maddox employees other than himself who chose to participate in the Plan. BELARDINO failed to deposit these withheld funds into the Plan’s trust account and instead converted those funds to his and Maddox’s use.
On or about October 14, 2021, BELARDINO authorized the Plan administrator to file with the Internal Revenue Service a Form 5500-SF for the 2020 calendar year in which he falsely answered in the negative when asked “During [2020]: Was there a failure to transmit to the plan any participant contributions . . .?”
* * *
In addition to his prison sentence, BELARDINO, 36, of New York, New York, was sentenced to three years of supervised release. He was also ordered to pay restitution in the amount of $501,499.67 and to forfeit $501,499.67.
Mr. Williams praised the outstanding investigative work of the Special Agents of the Federal Bureau of Investigation and Criminal Investigators of the Employee Benefits Security Administration of the United States Department of Labor.
The prosecution of 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 Correctional Officer Sentenced to 36 Months in Prison for Obstructing Investigation into Smuggling of Firearm into Metropolitan Correctional CenterRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that GREG MCKENZIE, a former Bureau of Prisons correctional officer, was sentenced to 36 months in prison for obstructing a federal investigation into the smuggling of a firearm into the Metropolitan Correctional Center (“MCC”) by lying to federal investigators about using a prepaid cellphone to communicate secretly with Deejay White, the inmate who possessed the firearm in the MCC, and his wife Dawntiana White, who helped smuggle in the firearm. The loaded firearm was recovered from inside the MCC on March 5, 2020. MCKENZIE pled guilty before United States District Judge P. Kevin Castel on September 14, 2022. Judge Castel sentenced MCKENZIE earlier today.
U.S. Attorney Damian Williams said: “Greg McKenzie, a former correctional officer, obstructed an investigation into the smuggling of a firearm into the MCC that endangered the safety of inmates, prison staff, and the greater community. By lying about his secret communications with the very inmate who possessed a firearm in the MCC and that inmate’s wife, who helped smuggle the firearm into the MCC, McKenzie thwarted a serious criminal investigation and sacrificed the integrity of the institution he swore to protect. McKenzie’s sentence underscores this Office’s commitment to holding public servants accountable and ensuring that no one is above the law.”
According to the Indictment, public court filings, and statements made in court proceedings:
On or about March 5, 2020, a loaded .22 caliber firearm (the “Firearm”) was recovered from inside an MCC prison cell that had last been occupied by two inmates, including Deejay White. Approximately five weeks earlier, on January 30, 2020, MCKENZIE purchased a prepaid cellphone (the “McKenzie Prepaid Cellphone”) and used it to communicate with Deejay White and his wife Dawntiana on multiple occasions on January 31, 2020, and February 1, 2020. In addition, cellphone location information indicated that on the evening of January 31, 2020, MCKENZIE and Dawntiana each traveled to the same vicinity in the Bronx at about the same time, after which MCKENZIE drove to lower Manhattan and started a shift at the MCC at midnight. MCKENZIE’s assignment for that shift was to work on the unit where Deejay was housed.
Surveillance video and call detail records further established that, upon entering the MCC for his shift, MCKENZIE circumvented a metal detector. Shortly after MCKENZIE’s shift began, Deejay White used a contraband cellphone to call and then text the McKenzie Prepaid Cellphone. Within minutes, MCKENZIE returned to Deejay White’s cellblock – alone – while appearing to carry an object under his left arm.
On July 23, 2021, Deejay White pled guilty to possessing the Firearm inside the MCC before Judge Castel, and on July 13, 2021, Dawntiana White pled guilty to conspiring to smuggle the Firearm into the MCC before U.S. District Judge Katherine Polk Failla.
On November 4, 2021, two federal agents conducted a voluntary interview with MCKENZIE. During the interview, MCKENZIE falsely denied ownership, possession, and use of the McKenzie Prepaid Cellphone, and falsely denied ever using any prepaid cellphone to communicate with an MCC inmate or inmate’s associate.
* * *
In addition to his prison sentence, MCKENZIE, 35, of Danbury, Connecticut, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation, the Department of Justice – Office of the Inspector General, Special Agents from the U.S. Attorney’s Office for the Southern District of New York, and the U.S. Customs and Border Protection in New York.
The prosecution of this case is being handled by the Office’s Public Corruption and Narcotics Units. Assistant U.S. Attorneys Aline R. Flodr, Jonathan E. Rebold, and Daniel H. Wolf are in charge of the prosecution, with assistance from Assistant U.S. Attorney Juliana N. Murray.
Fentanyl Trafficker Arrested in ManhattanRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, Frank A. Tarentino III, the Special Agent-in-Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), and Steven A. Nigrelli, the Acting Superintendent of the New York State Police (“NYSP”), announced that AGARI REYES-SILLERO was arrested while attempting to sell approximately 50,000 multicolored fentanyl pills to a cooperating witness in exchange for $400,000. REYES-SILLERO was arrested on Monday and was presented today before Magistrate Judge Ona T. Wang.
U.S. Attorney Damian Williams said: “The pills the defendant allegedly attempted to sell were bright and colorful, which obscured their true danger. The 50,000 pills seized by law enforcement contained fentanyl, one of the deadliest drugs on the planet. Thanks to the work of our law enforcement partners, these lethal drugs have now been taken off the street.”
DEA Special Agent-in-Charge Frank A. Tarentino III said: “Fake counterfeit prescription pills are flooding this city. Fentanyl is the deadliest drug to ever hit the streets and traffickers are masking the threat by selling lethal doses in colorful pill forms mimicking prescription medication. DEA analysis indicates that 60% of trafficked fentanyl pills on the street contain lethal doses; therefore, 30,000 deadly doses were removed from circulation by the hardworking members of the New York Drug Enforcement Task Force. I commend our law enforcement partners for their hard work on this investigation.”
NYPD Commissioner Keechant L. Sewell said: “The NYPD and our law enforcement partners will never waver in our commitment to rid New York of fentanyl. Anyone who displays the negligent depravity to sell this deadly poison on our streets – to put lives at risk for a profit – will be held fully accountable. I commend and thank for their exceptional work the Office of the U.S. Attorney for the Southern District, the DEA, the New York State Police, and every member of the NYDETF involved in this important case.”
NYSP Acting Superintendent Steven A. Nigrelli said: “I commend the vital collaborative work of our law enforcement partners in the relentless efforts to keep illegal drugs off our streets. The arrest of Ms. Reyes-Sillero reinforces that we will continue to be vigilant in stopping the flow of these dangerous drugs into our neighborhoods. Each arrest, each seizure is saving lives and decreases the additional crime that surrounds these illegal and dangerous operations.”
As alleged in the Complaint:[1]
On or about February 5, 2023, REYES-SILLERO met with a witness who was cooperating with law enforcement (“CW-1”) to sell CW-1 approximately 50,000 fentanyl pills. After entering CW-1’s car with the pills, REYES-SILLERO confirmed that CW-1 was to pay $400,000. Law enforcement agents arrested REYES-SILLERO and seized the fentanyl pills, which were packaged inside four protein powder containers, as pictured below:
* * *
REYES-SILLERO, 34, of Mexico, is charged with one count of possession with intent to distribute 400 grams and more of fentanyl. This offense carries a mandatory minimum sentence of 10 years in prison and a maximum term of life in prison.
The minimum and maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentence will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the DEA, the NYPD, and the New York State Police.
This case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Patrick R. Moroney and Andrew W. Jones 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 constitutes only allegations, and every fact described herein should be treated as an allegation.
American Citizen Convicted of Providing Material Support to ISIS that Resulted in Death and Related OffensesRead the Press Release
A federal jury yesterday convicted Ruslan Maratovich Asainov, 46, a U.S. citizen and former resident of Bay Ridge, New York, of all five counts of an indictment charging him with conspiracy to provide material support to ISIS; providing material support to ISIS in the form of personnel, training, expert advice and assistance; receipt of military-type training from ISIS; and obstruction of justice. The jury also found that the defendant’s provision of material support to ISIS resulted in the death of one or more persons. The verdict followed a two-week trial before U.S. District Judge Nicholas G. Garaufis.
“Mr. Asainov, a US citizen, traveled abroad to kill and train others to kill on behalf of ISIS. Now, he is being held accountable,” said Assistant Attorney General for National Security Matthew G. Olsen. “Part of the National Security Division’s core mission is to protect Americans from terrorist organizations who would do them harm and we will bring to justice all those who would try.”
“As proven at trial, Asainov was a member of ISIS who was so committed to the terrorist organization’s evil cause that he abandoned his young family here in Brooklyn, New York, to make an extraordinary journey to the battlefield in Syria where he became a lethal sniper and trained many others to kill their adversaries, and even after being captured still pledged his allegiance to ISIS’ murderous path,” said U.S. Attorney Breon Peace for the Eastern District of New York. “There is no place in a civilized world for the defendant’s bloody campaign of death and destruction. Today’s verdict in an American courtroom is a victory for our system of justice, and against ISIS and those like the defendant who are committed to murdering innocent people here in the United States and abroad.”
“The defendant in this case fought for ISIS and also trained many others how to kill for that terrorist organization,” said Assistant Director Robert R. Wells of the FBI’s Counterterrorism Division. “This verdict demonstrates the FBI and our partners will use all of our legally available tools to hold accountable anyone who assists ISIS or other terrorist groups.”
As proven at trial, between December 2013 and March 2019, Asainov provided and conspired to provide material support and resources in the form of personnel, including himself and others, training, and expert advice and assistance, to a foreign terrorist organization, namely ISIS, knowing that ISIS was a designated foreign terrorist organization that had engaged in terrorist activity and terrorism. Asainov also received military-type training from ISIS, in violation of federal law.
Asainov converted to Islam in 2009 and subsequently became increasingly interested in Islamic extremism. By the fall of 2013, he was consuming radical Islamic content online. He abruptly dropped out of classes at the Borough of Manhattan Community College in September 2013 and began making preparations to travel to Syria to wage violent jihad.
On Dec. 24, 2013, Asainov abandoned his wife and daughter in Brooklyn, and traveled on a one-way ticket from New York to Istanbul, Turkey, to obtain entry into Syria.
Over the course of approximately five years fighting on behalf of ISIS, Asainov fought in numerous battles against ISIS enemies, including engagements at Kobani; Tabqa; Raqqa; Dayr Az Zawr; up to and including ISIS’s last stand in Syria at Baghouz in March 2019. Asainov received training in how to use automatic rifles, machine guns and rocket propelled grenades. In Tabqa, in mid-2014, he volunteered to train as a sniper. Over time, Asainov became a sniper trainer or “emir” on behalf of ISIS, estimating that he taught nearly 100 students. A former U.S. Navy SEAL scout sniper testified that the defendant’s self-described sniper training course was consistent with what the former SEAL would expect to be taught in a sniper training program.
From Syria, the defendant attempted to recruit another individual to travel from the United States to Syria to fight for ISIS, and sought to obtain funds to purchase a scope for his rifle from the same person. The defendant also told his estranged spouse that he was fighting on behalf of ISIS, described by him in a recorded January 2015 voicemail as “the most atrocious terrorist organization in the world that ever existed.” Asainov’s wife testified that he sent her a photograph of three dead fighters, one of whom was wearing a patch that stated “Islamic State of Iraq and al-Sham,” i.e., ISIS, in Arabic script.
Asainov was captured in Syria after ISIS’s last stand at Baghouz, near the Syria-Iraq border. Just before his capture, Asainov discarded his rifle and destroyed his cell phone.
Asainov admitted to agents from the FBI’s Joint Terrorism Task Force that he had fought in numerous battles on behalf of ISIS as a warrior and sniper, serving in several different katibas or ISIS fighting brigades. In recorded phone calls to his mother from facilities operated by the Bureau of Prisons (BOP), the defendant told her that he was carrying out Allah’s orders when he waged jihad and killed for ISIS, that he intended to return to waging jihad if released and that he would fight until he “meet[s] Allah,” i.e., until his death. In September 2020, staff at a BOP facility confiscated a makeshift ISIS flag affixed to Asainov’s cell wall. The defendant had filled in an 8.5” x 11” sheet of paper with black ink and Arabic writing in the design of the ISIS flag.
When sentenced, Asainov faces up to life in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The Justice Department’s Office of International Affairs, the FBI’s Legal Attachés abroad and foreign authorities in multiple countries on multiple continents provided critical assistance in this case. The Bosnian and Herzegovinian authorities, and the FBI Legal Attaché Office in Sarajevo provided extraordinary assistance in the investigation and prosecution. The Ministry of Justice for the Republic of Finland, the Stuttgart Police Department and Federal Office of Justice in the Federal Republic of Germany, the Department of Justice & Constitutional Development in the Republic of South Africa, and the Prosecutor General’s Office in Ukraine, and the FBI’s Legal Attaché Offices in or responsible for those countries provided valuable assistance in the investigation.
Assistant U.S. Attorneys Douglas M. Pravda, Saritha Komatireddy, J. Matthew Haggans, Nicholas J. Moscow and Nina C. Gupta for the Eastern District of New York are prosecuting the case, with assistance provided by Trial Attorney Jennifer Levy of the National Security Division’s Counterterrorism Section and Paralegal Specialists Mary Clare McMahon and Wayne Colon.
U.S. Attorney Announces $1 Million Settlement of Civil Fraud Lawsuit Against Trading Company for Underpaying Customs Duties on Imported FootwearRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, AnnMarie R. Highsmith, the Executive Assistant Commissioner for U.S. Customs and Border Protection’s (“CBP”) Office of Trade, Francis J. Russo, the Director of CBP Field Operations New York, and Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced that the United States has filed and settled a civil lawsuit against Samsung C&T America, Inc. (“SCTA”), a global trading and investment company that is a U.S. subsidiary of the Korean conglomerate Samsung C&T Corporation. Among other things, SCTA imports and sells footwear manufactured overseas in partnership with other companies. SCTA performs services in connection with the importation and sale of footwear, including financing, transportation, warehousing, and distribution. The settlement resolves claims brought by the United States that between May 2016 and December 2018, SCTA violated the False Claims Act by misclassifying imported footwear under the Harmonized Tariff Schedule (“HTS”) and by not paying the full amount of customs duties owed.
Under the settlement agreement approved by U.S. District Judge Paul G. Gardephe, SCTA will pay a total of $1 million to the United States. As a part of the settlement agreement, SCTA also made admissions regarding certain conduct alleged in the Government’s Complaint. Specifically, SCTA admitted that it misclassified certain imported footwear on entry documents filed with CBP and, in some instances, underpaid customs duties on the footwear. SCTA further admitted that it had reason to know that certain documents provided to its customs brokers inaccurately described the construction and materials of the imported footwear and that SCTA failed to verify the accuracy of this information before providing it to its customs brokers.
U.S. Attorney Damian Williams said: “SCTA improperly avoided paying the full customs duties owed to the United States by misclassifying certain footwear that it imported and thereby reducing the duty rate applied. This Office is committed to combatting customs fraud by holding companies accountable when they misclassify goods and evade paying their legally required duties.”
CBP Executive Assistant Commissioner AnnMarie R. Highsmith said: “Misclassification and avoiding the payment of lawful duties on imported goods is a serious matter. This practice allows entities to import goods without paying the U.S. Government the lawful amount of duties owed, creating an unfair advantage over law-abiding American businesses. I am glad that we were able to work with our federal partners to reach a satisfactory settlement to recover these funds.”
CBP Director of Field Operations Francis J. Russo said: “U.S. Customs and Border Protection demonstrated its tenacity once again in preventing the circumvention of the payment of proper duties. This was a total team effort by CBP import specialists and regulatory auditors, HSI investigators, and the U.S. Attorney’s Office for the Southern District of New York to uncover SCTA’s misclassification of goods, which shortchanged the United States government of the proper amount of customs duties owed.”
HSI Special Agent in Charge Ivan J. Arvelo said: “For two and a half years, Samsung C&T America, Inc. submitted false information to the United States Government, misclassified imported goods, and underpaid customs duties. As this settlement proves, HSI, along with our law enforcement partners, will hold accountable organizations that engage in improper trade practices and deny our government of vital revenues.”
As alleged in the Complaint filed in Manhattan federal court:
From May 2016 through December 2018 (the “Relevant Period”), SCTA, in conjunction with a business partner, imported footwear manufactured overseas, including from manufacturers in China and Vietnam, into the United States. The tariff classifications for footwear depend on the characteristics of the footwear, including the footwear’s materials, its construction, and its intended use. Depending on the classification of the footwear, the duties owed vary significantly.
During the Relevant Period, SCTA, as the importer of record for certain customs entries referenced in the Government’s Complaint, violated the False Claims Act by misclassifying certain footwear under the HTS and by causing entry summary forms to be presented to CBP that SCTA knew or had reason to know contained false classifications. SCTA provided its customs brokers with documentation and information, including invoices, that (i) misclassified the footwear under the HTS, and/or (ii) contained inaccurate information concerning the materials and construction of the footwear. Accordingly, in many instances, the footwear was entered at a lower duty rate than would have been applicable had the footwear been properly classified. As a result of the misclassifications, SCTA avoided paying the full amount of the customs duties owed.
In the settlement agreement, SCTA admitted, acknowledged, and accepted responsibility for the following conduct:
- As the United States importer of record, SCTA was responsible for paying the customs duties owed on the footwear at issue and providing accurate documents to CBP to allow CBP to assess customs duties applicable to the footwear.
- SCTA and its business partner provided SCTA’s customs brokers with invoices and other documents and information that purportedly reflected the tariff classification of the footwear under the HTS, as well as the corresponding materials and construction of the footwear. SCTA knew that its customs brokers would rely on the documents and information to prepare the entry summaries submitted to CBP, which required classifying the footwear under the HTS, determining the applicable duty rates, and calculating the amount of the customs duties owed on the footwear.
- SCTA had reason to know that certain documents provided to its customs brokers, including invoices, inaccurately stated the materials and construction of the footwear at issue. SCTA failed to verify the accuracy of this information before providing it to its customs brokers. As a result, SCTA materially misreported the classification of the footwear under the HTS and misrepresented the true materials and construction of the footwear.
- SCTA, through its customs brokers, misclassified the footwear at issue on the associated entry documents filed with CBP and, in many instances, underpaid customs duties on the footwear.
* * *
In connection with the filing of the lawsuit and settlement, the Government intervened in a whistleblower lawsuit that had been previously filed under seal pursuant to the False Claims Act.
Mr. Williams thanked CBP and HSI for their assistance and support with the case.
This case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Samuel Dolinger is in charge of the case.
Former Coinbase Insider Pleads Guilty in First-Ever Cryptocurrency Insider Trading CaseRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that ISHAN WAHI, a former product manager at Coinbase Global, Inc. (“Coinbase”), pled guilty to two counts of conspiracy to commit wire fraud in connection with a scheme to commit insider trading in cryptocurrency assets by using confidential Coinbase information about which crypto assets were scheduled to be listed on Coinbase’s exchanges. WAHI was arrested and charged in July 2022 and pled guilty earlier today before U.S. District Judge Loretta A. Preska.
U.S. Attorney Damian Williams said: “Ishan Wahi – a former Coinbase product manager – admitted in court today that he tipped others regarding Coinbase’s planned token listings so that they could trade in crypto assets for a profit. Wahi is the first insider to admit guilt in an insider trading case involving the cryptocurrency markets. Whether it occurs in the equity markets or the crypto markets, stealing confidential business information for your own personal profit or the profit of others is a serious federal crime. The Southern District of New York has decades of experience pursuing insider trading cases, and we will continue to use our expertise to prosecute this crime no matter what form it takes and where it occurs.”
According to the allegations in the Indictment and statements made in public court proceedings:
At all relevant times, Coinbase was one of the largest cryptocurrency exchanges in the world. Coinbase users could acquire, exchange, and sell various crypto assets through online user accounts with Coinbase. Periodically, Coinbase added new crypto assets to those that could be traded through its exchange, and the market value of crypto assets typically significantly increased after Coinbase announced that it would be listing a particular crypto asset. Accordingly, Coinbase kept such information strictly confidential and prohibited its employees from sharing that information with others, including by providing a “tip” to any person who might trade based on that information.
Beginning in approximately October 2020, ISHAN WAHI worked at Coinbase as a product manager assigned to a Coinbase asset listing team. In that role, WAHI was involved in the highly confidential process of listing crypto assets on Coinbase’s exchanges and had detailed and advanced knowledge of which crypto assets Coinbase was planning to list and the timing of public announcements about those crypto asset listings.
On multiple occasions between June 2021 and April 2022, WAHI violated his duties of trust and confidence to Coinbase by providing confidential business information that he learned in connection with his employment at Coinbase to Nikhil Wahi and Sameer Ramani so that they could secretly engage in profitable trades around public announcements by Coinbase that it would be listing certain crypto assets on Coinbase’s exchanges. Following Coinbase’s public listing announcements, on multiple occasions, Nikhil Wahi and Ramani sold the crypto assets for a profit.
On April 12, 2022, a Twitter account that is well known in the crypto community tweeted regarding an Ethereum blockchain wallet “that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published.” The trading activity referenced in the April 12 tweet was trading previously conducted by Ramani based on tips provided by WAHI. Coinbase thereafter publicly replied on Twitter, noting that it had already begun investigating the matter and, a few weeks later, stated in a public blog post that any Coinbase employee who leaked confidential company information would be “immediately terminated and referred to relevant authorities (potentially for criminal prosecution).” On May 11, 2022, Coinbase’s director of security operations emailed WAHI to inform him that he should appear for an in-person meeting relating to Coinbase’s asset listing process at Coinbase’s Seattle, Washington, office on May 16, 2022. WAHI confirmed he would attend the meeting.
On the evening of May 15, 2022, WAHI purchased a one-way flight to India that was scheduled to depart the next day shortly before WAHI was supposed to be interviewed by Coinbase. In the hours between booking the flight and his scheduled departure, WAHI called and texted Nikhil Wahi and Ramani about Coinbase’s investigation and sent both of them a photograph of the messages he had received on May 11, 2022, from Coinbase’s director of security operations. Prior to boarding the May 16, 2022, flight to India, WAHI was stopped by law enforcement and prevented from leaving the country.
* * *
ISHAN WAHI, 32, of Seattle, Washington, pled guilty to two counts of conspiracy to commit wire fraud, which each carry, respectively, a maximum sentence of 20 years in prison.
The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. WAHI is scheduled to be sentenced by Judge Preska on May 10, 2023, at 12:00 p.m.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation. He also acknowledged the assistance of the Justice Department’s National Cryptocurrency Enforcement Team, as well as that of the Securities and Exchange Commission, which separately initiated civil proceedings against WAHI.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Noah Solowiejczyk and Nicolas Roos are in charge of the prosecution.
Disaster Relief Consultant Pleads Guilty to Fraud in Connection with New York City’s Hurricane Sandy Recovery EffortsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Jocelyn E. Strauber, the Commissioner of the New York City Department of Investigation ("DOI"), announced that MARK O’MARA, a disaster relief consultant, pled guilty to fraud in connection with his work for an Illinois-based consulting firm (“Company-1”) that provided Hurricane Sandy-related recovery services to the City of New York. O’MARA surrendered today and pled guilty before U.S. District Judge Richard M. Berman in federal court in Manhattan. O’MARA is the second Company-1 employee to plead guilty in recent months to fraud related to Hurricane Sandy relief work, as WALTER MELNICK previously pled guilty in a separate case assigned to U.S. District Judge Victor Marrero.
U.S. Attorney Damian Williams said: “Instead of helping New York City recover from the devastation of Hurricane Sandy, Mark O’Mara helped himself by fraudulently obtaining housing benefits to which he was not entitled. I commend the Department of Investigation and this Office for holding to account those who conspire to defraud invaluable federal programs.”
DOI Commissioner Jocelyn E. Strauber said: “This defendant used Hurricane Sandy as an opportunity for personal profit, through a scheme to pocket federal relief funds intended to help New Yorkers rebuild from this disaster. Today, he takes responsibility for that conduct, pleading guilty to federal offenses, including destroying evidence, and agreeing to repay the City nearly $225,000, forfeit over a quarter-million dollars, and pay any past-due taxes. DOI and our law enforcement partners in the U.S. Attorney’s Office for the Southern District of New York are committed to stopping frauds that drain public resources and holding accountable those who participate.”
According to the allegations in the Information, court filings, and statements made in court:
Beginning in or about 2013, in the aftermath of Hurricane Sandy, the City of New York (the “City”) received billions of dollars in federal money to fund Hurricane Sandy-related recovery efforts. The City used certain of these funds to hire Company-1 to assist with Hurricane Sandy relief (the “Sandy Project”). Company-1 hired O’MARA to work on the Sandy Project.
Between at least in or about 2013 and in or about 2019, while working for Company-1, O’MARA submitted fraudulent information and documents, including a fraudulent lease agreement, to the New York City Office of Management and Budget (“NYC-OMB”) via Company-1 in order to obtain lodging reimbursements from the City to which he knew he was not entitled. Between in or about 2017 and in or about 2019, O’MARA also conspired with others – including another consultant at Company-1, WALTER MELNICK – to defraud the City by falsely claiming that he was residing in an apartment purchased by an individual at MELNICK’s direction. O’MARA fraudulently obtained more than approximately $250,000 from the City via Company-1 as a result of these schemes.
Additionally, in or about February 2020, when the City began raising concerns about Company-1’s travel reimbursements, O’MARA destroyed relevant emails and other communications to cover up the fraud.
MELNICK previously pled guilty in a separate case to conspiring to commit federal program fraud while working for Company-1 on the Sandy Project for fraudulently obtaining housing reimbursements based on a fake lease and other fraudulent documentation. MELNICK agreed to pay $387,749 in forfeiture and restitution. MELNICK is scheduled to be sentenced by Judge Marrero on February 24, 2023.
O’MARA is cooperating with the Government.
* * *
MARK O’MARA, 41, of New York, New York, pled guilty to one count of federal program fraud, which carries a maximum sentence of 10 years in prison; one count of wire fraud in connection with a presidentially-declared major disaster, which carries a maximum sentence of 30 years in prison; one count of conspiracy to commit federal program fraud and wire fraud, which carries a maximum sentence of five years in prison; and one count of destruction of evidence, which carries a maximum sentence of 20 years in prison. Under the terms of his plea agreement, O’MARA agreed to forfeit $258,900 and to pay restitution to NYC-OMB in the amount of $224,687.26.
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 would be determined by a judge.
Mr. Williams praised the outstanding investigative work of DOI.
This matter is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Jane Kim and Catherine Ghosh are in charge of the prosecution.
Chiropractor Sentenced to 30 Months in Prison for Defrauding the NBA Players’ Health and Welfare Benefit Plan of $1,300,000Read the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that PATRICK KHAZIRAN, a/k/a “Dr. Pat,” was sentenced to 30 months in prison for his role in a scheme to defraud the National Basketball Association (“NBA”) Players’ Health and Welfare Benefit Plan (the “Plan”). U.S. District Judge Valerie E. Caproni imposed the sentence.
U.S. Attorney Damian Williams said: “As a medical provider, Patrick Khaziran had a responsibility not to abuse his position of trust. Instead, Khaziran used his role as a licensed chiropractor to generate dozens of fraudulent invoices for at least 22 former NBA players. He did this to enrich himself and his co-conspirators at the expense of the NBA Players’ Health and Welfare Benefit Plan. Today’s sentence sends a clear message that those who engage in health care fraud schemes, particularly medical providers, will face stringent penalties.”
According to the Information, public court filings, and statements made in court:
The Plan is a health care plan providing benefits to eligible active and former players of the NBA. KHAZIRAN is a chiropractor licensed in the State of California who owns and operates a chiropractic and rehabilitation office in Los Angeles, California (“Chiropractic Office-1”). Chiropractic Office-1 serves the general public and also provides rehabilitation services to professional athletes.
From at least in or about 2016, up to and including at least in or about 2019, KHAZIRAN participated in a scheme with several other former NBA players, including Terrence Williams and Keyon Dooling, to defraud the Plan.[1] KHAZIRAN’s role in the scheme was to provide false documentation showing that former NBA players received certain medical services when, in truth and in fact, the medical services were never provided.
KHAZIRAN accomplished his role in the scheme in two ways. First, beginning in 2016, KHAZIRAN created, and caused others to create, fraudulent invoices for former NBA players. The former NBA players that received fraudulent invoices, in turn, submitted the fraudulent invoices to the Plan to request reimbursements to which they were not entitled. Second, KHAZIRAN charged, and caused others to charge, the Plan-issued debit cards of former NBA players. The Plan-issued debit cards were intended to be used by Plan participants to pay for eligible medical services at the point of service. However, KHAZIRAN charged the Plan-issued debit cards of former NBA players for medical services that were never actually provided. In total, KHAZIRAN’s fraudulent invoices and fraudulent debit card charges resulted in approximately $1.3 million in losses to the Plan. In return for his participation in the scheme, KHAZIRAN received approximately 33% of that amount, i.e., approximately $439,000. The remaining fraud proceeds were kept by the former NBA players with whom KHAZIRAN conspired.
* * *
In addition to his prison term, KHAZIRAN, 40, of Los Angeles, California, was ordered to forfeit $439,000 and pay restitution of $1,300,000.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Ryan B. Finkel and Daniel G. Nessim are in charge of the prosecution.
[1] Williams and Dooling have plead guilty and await sentencing.