Southern District of New York

Damian Williams, the United States Attorney for the Southern District of New York, Frank A. Tarentino III, Special Agent-in-Charge of the New York Office of the Drug Enforcement Administration (“DEA”), and Keechant L. Sewell, Commissioner of the New York City Police Department (“NYPD”) announced the unsealing of a Superseding Indictment charging ZUKEILA PLAZA, a/k/a “Keila,” MAURICE SINCLAIR, a/k/a “Skino,” a/k/a “Ski,” LAWRENCE GREEN, a/k/a “Lzz,” a/k/a “LJ,” LOUIS LAWRENCE, a/k/a “Adam,” a/k/a “Anthony,” a/k/a “A,” DEION JOHNSON, a/k/a “Billz,” a/k/a “Black,” NATHAN SMITH, a/k/a “Youngin,” a/k/a “600,” a/k/a “Six,” ESTIBEN OLIVA, a/k/a “Mula,” JOHN GRAVES, a/k/a “Nephew,” ALI DOBY, a/k/a “Lee Drilly,” a/k/a “Fifty,” GODDES EARL, a/k/a “Asia,” JAVON HOSKINS, a/k/a “Jason,” a/k/a “Twin,” and JOHN HENDRICKS, a/k/a “Tyson,” a/k/a “Fred,” in connection with their distributing narcotics from the lobby and apartments of a residential building in the Bronx.  Certain of the defendants were also charged with carrying firearms in connection with the drug operation. 

PLAZA, LAWRENCE, JOHNSON, and GRAVES were taken into custody on Friday, June 24, 2022 and were presented before United States Magistrate Judge Ona T. Wang.  EARL, HOSKINS, and SMITH were previously presented after being earlier taken into custody; GREEN and DOBY are in state correctional facilities and will be presented at a later date, and SINCLAIR, OLIVA, and HENDRICKS presently remain at large. The case is assigned to United States District Judge Vernon S. Broderick.

U.S. Attorney Damian Williams said:  “As alleged these charges, for more than three years, the defendants in this case took over the lobby and multiple apartments of an apartment building in the Bronx, turning that building into an open market for drugs and denying its many residences, including families with children, safe access to their homes.  To be clear: armed drug traffickers will face consequences for their actions, whether they are operating on the streets or inside the homes of this City.”

DEA Special Agent in Charge Frank A. Tarentino III said:  “These arrests have brought much needed relief to residents of an apartment building in the Fordham Manor neighborhood of the Bronx.  As alleged, for years, this drug trafficking organization manufactured, sold, and packaged dangerous drugs putting neighboring families and residents in harm’s way.  I applaud our law enforcement partners on their collaboration and resolve to make our city safer and healthier.”

NYPD Commissioner Keechant L. Sewell said:  “This investigation shows that the NYPD and its law enforcement partners are relentless in identifying, arresting, and prosecuting those who allegedly peddle drugs or carry and use illegal guns on the streets of New York City. We vow to keep fighting this criminality, to ensure safer communities for all the people we serve. I want to thank the Office of the U.S. Attorney for the Southern District of New York, the New York Office of the Drug Enforcement Administration, and all of our investigators for their hard work in this important case.”

As alleged in the Superseding Indictment and based on statements made in Manhattan federal court[1]: 

ZUKEILA PLAZA, a/k/a “Keila” (40), MAURICE SINCLAIR, a/k/a “Skino,” a/k/a “Ski” (26), LAWRENCE GREEN, a/k/a “Lzz,” a/k/a “LJ” (28), LOUIS LAWRENCE, a/k/a “Adam,” a/k/a “Anthony,” a/k/a “A” (32), DEION JOHNSON, a/k/a “Billz,” a/k/a “Black” (25), NATHAN SMITH, a/k/a “Youngin,” a/k/a “600,” a/k/a “Six” (24), ESTIBEN OLIVA, a/k/a “Mula” (28), JOHN GRAVES, a/k/a “Nephew” (35), ALI DOBY, a/k/a “Lee Drilly,” a/k/a “Fifty” (20), GODDES EARL, a/k/a “Asia” (49); JAVON HOSKINS, a/k/a “Jason,” a/k/a “Twin” (41), and JOHN HENDRICKS, a/k/a “Tyson,” a/k/a “Fred” (56), all of New York City, are charged with being members of a drug trafficking organization (the “DTO”) that distributed drugs, including crack cocaine, fentanyl, and heroin, in the Bronx, including from inside 2685 Valentine Avenue, from March 2019 through June 2022.  PLAZA, SINCLAIR, GREEN, LAWRENCE, JOHNSON, SMITH, EARL, and HOSKINS are also charged with using and carrying firearms in connection with the charged drug trafficking conspiracy and aiding and abetting the same.

Manufacturing kilograms of crack cocaine on site inside 2685 Valentine Avenue and working in shifts during the day and the night on a day-to-day basis for over three years, the members of the DTO operated freely inside that building, creating an open market for drugs in the building, which they distributed to a large base of customers who bought drugs there.  The drug market the defendants operated often prevented residents of the building, which included families with children, from safely entering the lobby of the apartment building in which they lived.

SMITH is also charged with illegally possessing a gun as a felon on February 17, 2022 in the Bronx.    

*                      *                     *

A set of charts containing the names, charges, and maximum penalties for the defendants is set forth below.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the DEA and NYPD and thanked the Bronx County District Attorney’s Office for its assistance in this case.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Peter J. Davis, Michael R. Herman, and Thomas John Wright are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

[1]              As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that PATRICK KHAZIRAN, a/k/a “Dr. Pat,” pled guilty to conspiracy to commit health care fraud in connection with a scheme to defraud the National Basketball Association (“NBA”) Players’ Health and Welfare Benefit Plan. KHAZIRAN pled guilty before U.S. District Judge Valerie E. Caproni. 

U.S. Attorney Damian Williams said:  “Khaziran abused his position as a medical services provider by creating fraudulent invoices and defrauding the NBA Players’ Health and Welfare Benefit Plan of at least $1.3 million.  I thank our law enforcement partners in the FBI for their hard work unraveling this pervasive scheme.  My office will continue to investigate those who abuse their positions as medical service providers to commit fraud.”   

According to the Information, public court filings, and statements made in court:

The NBA Players’ Health and Welfare Benefit Plan (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 office (“Chiropractic Office-1”), which is a chiropractic and rehabilitation office in Los Angeles, California. 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 other several former NBA players, including Terrence Williams and Keyon Dooling, to defraud the Plan.[1]  KHAZIRAN’s role in the scheme was to document 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 then, in turn, submitted the fraudulent invoices to the Plan to request reimbursements that they were not entitled to. 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 return for his participation in the scheme, KHAZIRAN received approximately 33% of the fraudulent proceeds he documented—i.e., 33% of the value of the fraudulent invoices and 33% of the fraudulent charges on Plan-issued debit cards, which totaled approximately $1.3 million.  The remaining fraudulent proceeds were kept by the former NBA players KHAZIRAN conspired with.

*                *                *

KHAZIRAN, 40, of Los Angeles, California, pled guilty to one count of conspiracy to commit health care fraud, which carries a maximum term of ten years in prison.  As part of his guilty plea, KHAZIRAN agreed to pay restitution of $1,300,000 and to forfeit $429,000 to the United States.  KHAZIRAN is scheduled to be sentenced on January 12, 2023.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Ryan B. Finkel and Kristy J. Greenberg are in charge of the prosecution.

[1] Charges against Williams and Dooling are pending.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that ETHAN PHELAN MELZER, a/k/a “Etil Reggad,” pled guilty to 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”), an occult-based, neo-Nazi, and white supremacist group.  MELZER pled guilty today before U.S. District Judge Gregory H. Woods.

U.S. Attorney Damian Williams said:  “As he admitted in court today, Ethan Melzer attempted to orchestrate a murderous ambush on his own unit by unlawfully disclosing its location, strength, and armaments to a neo-Nazi, anarchist, white supremacist group.  The defendant believed he could force the U.S. into prolonged armed conflict while causing the deaths of as many soldiers as possible.  MELZER’s traitorous conduct was a betrayal of his storied unit and nothing short of an attack against the most essential American values.  Thanks to the incredible work of the FBI and the U.S. Army, MELZER’s duplicity was revealed and his murderous attack thwarted.”    

According to the Indictment and other documents in the public record, as well as statements made in public court proceedings:

MELZER has been a member of O9A since at least 2017.  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 as part of an O9A insight role to infiltrate its ranks and 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.

*                *                *

MELZER, 24, of Louisville, Kentucky, pled guilty to (1) attempting to murder U.S. military service members, in violation of 18 U.S.C. § 1114, which carries a maximum sentence of 20 years in prison; (2) attempting to provide and providing material support to terrorists, in violation of 18 U.S.C. § 2339A, which carries a maximum sentence of 15 years in prison; and (3) illegally transmitting national defense information believing that it could be used to the injury of the United States, in violation of 18 U.S.C. § 793(d), which carries a maximum sentence of 10 years in prison.  MELZER is scheduled to be sentenced by Judge Woods on January 6, 2023, at 10 a.m.

The statutory 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.

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.

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 Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing today of an Indictment charging DOMINIC PINEDA and SHON MORGAN with conspiracy to commit Hobbs Act robbery in May 2020 in Irvington, New York.  PINEDA and MORGAN were arrested yesterday in Virginia and will be presented this afternoon in the Eastern District of Virginia.

U.S. Attorney Damian Williams said:  “As alleged in the indictment, the defendants participated in a violent plan to break into a family’s home in the middle of the night and force its residents to provide the code to what the defendants believed was tens of millions of dollars in Bitcoin currency.  Thanks to the work of the FBI, the defendants will now be held responsible for the alleged acts.”

As alleged in the Indictment unsealed today in White Plains federal court[1]: 

From May 18, 20200 to May 24, 2020, DOMINIC PINEDA and SHON MORGAN participated in a plan to break into a home in Irvington, New York and rob its residents of cash and cryptocurrency. 

*                *                *

PINEDA, 21, of Manassas, Virginia, and MORGAN, 21, of Centreville, Virginia, are each charged with conspiracy to commit Hobbs Act robbery, in violation of 18 U.S.C. § 1951, which carries a maximum term of 20 years in prison. 

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force, which is comprised of special agents and task force officers from the FBI, U.S. Probation, New York State Police, New York State Department of Corrections and Community Supervision, Putnam County Sheriff's Office, Westchester County DAs Office, Rockland County DAs Office, NYPD, Westchester County PD, and the Yonkers, New Rochelle, Mount Vernon, Greenburgh, White Plains, Peekskill, Ramapo, and Clarkstown Police Departments and thanked the Irvington Police Department and the Greenburgh Drug and Alcohol Task Force for their assistance in the investigation and prosecution of PINEDA and MORGAN.

This case is being handled by the Office’s White Plains Division. Assistant United States Attorney Courtney L. Heavey 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 descriptions of the Indictment constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that MARTIN RUIZ, a former investment adviser, was sentenced today to 72 months in prison by U.S. District Judge Vernon S. Broderick.  RUIZ pled guilty on November 12, 2021, for his role in a scheme to defraud his investment advisery clients out of their retirement savings.

According to the allegations in the Complaint, the Information to which RUIZ pled guilty, and statements made during court proceedings:

From at least in or about March 2011 through in or about the present, RUIZ induced multiple individual investment advisery clients of Carter Bain Wealth Management (“CBWM”), many of whom are elderly, to retain RUIZ and CBWM to advise them on how they should invest their retirement savings.  While ostensibly acting in his fiduciary capacity as their investment adviser, RUIZ instead induced more than a dozen such clients to invest more than $10 million in an investment fund called RAM Fund through the purchase of limited partnership interests.  RUIZ did not disclose to those clients that RUIZ controlled RAM Fund and that he planned to misappropriate their funds.  

In fact, rather than invest the funds in legitimate investment projects and real estate, as he falsely represented to clients, RUIZ misappropriated more than $8 million of client funds from the RAM Fund, transferred those funds through a series of entities RUIZ also controlled, and spent the vast majority of the funds on personal expenses, including the purchase of a home, rent payments on several apartments, and the payment of his personal credit card bills.  In so doing, he violated his fiduciary duty to act in his clients’ best interest and avoid self-dealing.  RUIZ also made multiple false statements to the U.S. Securities and Exchange Commission about his companies and investments in order to hide his fraudulent scheme.

*                *                *

In addition to his prison sentence, RUIZ, 46, of New York, New York and Santa Fe, New Mexico, was ordered to pay forfeiture in the amount of $10,925,770.09. 

Mr. Williams praised the outstanding work of Homeland Security Investigations.  Mr. Williams further thanked the U.S. Securities and Exchange Commission for its assistance and cooperation in this investigation. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorney Kiersten A. Fletcher is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Keechant L. Sewell, Commissioner of the New York City Police Department (“NYPD”), and Frank A. Tarentino III, Special Agent-in-Charge of the New York Office of the Drug Enforcement Administration (“DEA”), announced the unsealing today of an Indictment charging BOSS TERRELL with murder and other crimes related to his membership in the “WashSide” gang based in the Bronx.  TERRELL was charged with the June 26, 2020 murder of Tyrone Almodovar in the Morrisania neighborhood in the South Bronx.  TERRELL was arrested today and presented this afternoon before United States Magistrate Judge Valerie Figueredo.  The case is assigned to United States District Judge Jesse M. Furman.

U.S. Attorney Damian Williams said:  “Today’s charges, as alleged, will hold Boss Terrell accountable not only for his murder of Tyrone Almodovar, but for the rash of crimes he committed with his fellow WashSide gang members.  Our Office will continue to root out gang violence in our communities.”

NYPD Commissioner Keechant L. Sewell said:  “The NYPD and our law-enforcement partners will never tolerate violent gangs and the havoc they wreak in our communities.  We remain focused on the small number of people who are responsible for the crime and disorder in our city, and we are using every means available to get them off our streets. As demonstrated by this case, gun violence remains a deadly concern in our communities – and any person who threatens the safety of those communities will be held fully accountable. 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 everyone else who worked on this important investigation.”

DEA Special Agent-in-Charge Frank A. Tarentino III said:  “Boss Terrell’s alleged crimes left a ripple effect by spreading fear and violence throughout the Bronx community.  DEA and our law enforcement partners are focused on safeguarding our communities from gang violence and drug trafficking and this arrest is one step in that direction.”

As alleged in the Indictment unsealed today in Manhattan federal court[1]: 

BOSS TERRELL was a member of “WashSide” or “Wash,” a gang based in the Bronx whose members and associates, from 2015 to 2022, conspired to commit various crimes with the gang, including murder, attempted murder, robbery, interstate transportation and sale of stolen property, access device fraud, wire fraud, and narcotics trafficking.  Among other things, the gang members sold crack, robbed and stole from commercial establishments in the New York City area and in other states, and profited from the use of stolen credit cards and debit cards.  Gang members also used guns, and committed acts of violence, including murder, against rival gang members.  Members of WashSide promoted and celebrated, including in music and on social media, WashSide’s crimes. 

The crimes TERRELL committed with WashSide included the following:

• On June 26, 2020, TERRELL and other members of WashSide participated in the shooting that killed Tyrone Almodovar in the Bronx.
• On July 29, 2020, TERRELL shot at and attempted to murder rival gang members in the Bronx.
• Between June and August 2020, TERRELL conspired with other members of WashSide to rob multiple commercial establishments in the New York City area and in other states.    

*                *                *

TERRELL, 21, of the Bronx, New York, was charged with the offenses listed in the chart set forth below. 

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the DEA and NYPD and thanked the Bronx County District Attorney’s Office for its assistance in this case.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Courtney L. Heavey and Thomas John Wright 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.

COUNT

CHARGE

MAX. PENALTIES

1

Racketeering conspiracy

18 U.S.C. § 1962(d)

Life in prison

2

Murder in aid of racketeering

18 U.S.C. §§ 1959(a)(1) and 2

Mandatory life in prison or death

3

Use of a firearm for murder

18 U.S.C. §§ 924(j) and 2

Life in prison or death

Mandatory minimum consecutive sentence of 5 years in prison

4

Attempted murder and attempted assault with a dangerous weapon in aid of racketeering

18 U.S.C. §§ 1959(a)(5), (a)(6), and 2

10 years in prison

5

Use of a firearm for a crime of violence

18 U.S.C. §§ 924(c)(1)(A)(i), (ii), and (iii) and 2

Life in prison

Mandatory minimum consecutive sentence of 10 years in prison

6

Robbery conspiracy

18 U.S.C. § 1951

20 years in prison

[1]  As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, along with Kristen Clarke, Assistant Attorney General for the Justice Department’s Civil Rights Division, announced today that the Justice Department has entered into a settlement agreement resolving allegations that Meta Platforms, Inc., formerly known as Facebook, Inc., engaged in discriminatory advertising in violation of the Fair Housing Act (FHA).  The agreement would resolve a lawsuit filed today in the U.S. District Court for the Southern District of New York alleging that Meta’s housing advertising system discriminates against Facebook users based on their race, color, religion, sex, disability, familial status, and national origin.  The proposed settlement is subject to the review and approval by a district judge in the Southern District of New York.

U.S. Attorney Damian Williams said:  “When a company develops and deploys technology that deprives users of housing opportunities based in whole or in part on protected characteristics, it has violated the Fair Housing Act, just as when companies engage in discriminatory advertising using more traditional advertising methods.  Because of this ground-breaking lawsuit, Meta will—for the first time—change its ad delivery system to address algorithmic discrimination.  But if Meta fails to demonstrate that it has sufficiently changed its delivery system to guard against algorithmic bias, this Office will proceed with the litigation.”

Assistant Attorney General Kristen Clarke said:  “As technology rapidly evolves, companies like Meta have a responsibility to ensure their algorithmic tools are not used in a discriminatory manner.  This settlement is historic, marking the first time that Meta has agreed to terminate one of its algorithmic targeting tools and modify its delivery algorithms for housing ads in response to a civil rights lawsuit. The Justice Department is committed to holding Meta and other technology companies accountable when they abuse algorithms in ways that unlawfully harm marginalized communities.” 

Principal Deputy Assistant Secretary Demetria McCain said:  “It is not just housing providers who have a duty to abide by fair housing laws.  Parties who discriminate in the housing market, including those engaging in algorithmic bias, must be held accountable.  This type of behavior hurts us all.  HUD appreciates its continued partnership with the Department of Justice as they seek to uphold our country’s civil rights laws.”

Among other things, the complaint alleges that Meta uses algorithms in determining which Facebook users receive housing ads, and that those algorithms rely, in part, on characteristics protected under the FHA.  This is the Justice Department’s first case challenging algorithmic bias under the FHA.

Under the settlement, Meta will stop using an advertising tool for housing ads (known as the “Special Ad Audience” tool) which, according to the complaint, relies on a discriminatory algorithm to find users who “look like” other users based on FHA-protected characteristics.  Meta also will develop a new system over the next six months to address racial and other disparities caused by its use of personalization algorithms in its ad delivery system for housing ads.  If the United States concludes that the new system adequately addresses the discriminatory delivery of housing ads, then Meta will implement the system, which will be subject to Department of Justice approval and court oversight.  If the United States concludes that the new system is insufficient to address algorithmic discrimination in the delivery of housing ads, then the settlement agreement will be terminated.

This settlement marks the first time that Meta will be subject to court oversight for its ad targeting and delivery system.

The United States’ Lawsuit

The United States’ complaint challenges three key aspects of Meta’s ad targeting and delivery system.  Specifically, the complaint alleges that:

• Meta enabled and encouraged advertisers to target their housing ads by relying on race, color, religion, sex, disability, familial status, and national origin to decide which Facebook users will be eligible, and ineligible, to receive housing ads.
• Meta created an ad targeting tool known as the “Lookalike Audience” or “Special Ad Audience.”  The tool uses a machine-learning algorithm to find Facebook users who share similarities with groups of individuals selected by an advertiser using several options provided by Facebook.  Facebook has allowed its algorithm to consider FHA-protected characteristics—including race, religion, and sex—in finding Facebook users who “look like” the advertiser’s source audience and thus are eligible to receive housing ads.
• Meta’s ad delivery system uses machine-learning algorithms that rely in part on FHA-protected characteristics—such as race, national origin, and sex—to help determine which subset of an advertiser’s targeted audience will actually receive a housing ad.
   

The complaint alleges that Meta has used these three aspects of its advertising system to target and deliver housing-related ads to some Facebook users while excluding other users based on FHA-protected characteristics.  The complaint further alleges both disparate treatment and disparate impact discrimination.  Specifically, the complaint alleges that Meta is liable for disparate treatment because it intentionally classifies users on the basis of FHA-protected characteristics and designs algorithms that rely on users’ FHA-protected characteristics.  The complaint also alleges that Meta is liable for disparate impact discrimination because the operation of its algorithms affects Facebook users differently on the basis of their membership in protected classes.

Settlement Agreement

These are the key features of the parties’ settlement agreement:

• By December 31, 2022, Meta must stop using an advertising tool for housing ads known as “Special Ad Audience” (previously called “Lookalike Audience”), which relies on an algorithm that, according to the United States, discriminates on the basis of race, sex, and other FHA-protected characteristics in identifying which Facebook users will be eligible to receive an ad.
• Meta has until December 2022 to develop a new system for housing ads to address disparities for race, ethnicity, and sex between advertisers’ targeted audiences and the group of Facebook users to whom Facebook’s personalization algorithms actually delivers the ads.  If the United States concludes that this new system sufficiently addresses the discriminatory disparities that Meta’s algorithms introduce, then Meta will fully implement the new system by December 31, 2022.
• If the United States concludes that Meta’s changes to its ad delivery system do not adequately address the discriminatory disparities, the settlement agreement will terminate and the United States will litigate its case against Meta in federal court.
• If the new system is implemented, then the parties will select an independent, third-party reviewer to investigate and verify on an ongoing basis whether the new system is meeting the compliance standards agreed to by the parties.  Under the agreement, Meta must provide the reviewer with any information necessary to verify compliance with those standards.  The court will have ultimate authority to resolve disputes over the information that Meta must disclose.
• Meta will not provide any targeting options for housing advertisers that directly describe or relate to FHA-protected characteristics.  Under the agreement, Meta must notify the United States if Meta intends to add any targeting options.  The court will have authority to resolve any disputes between the parties about proposed new targeting options.
• Meta must pay to the United States a civil penalty of $115,054, the maximum penalty available under the Fair Housing Act.

The lawsuit is based on an investigation and charge of discrimination by HUD, which found that all three aspects of Facebook’s ad delivery system delivered housing ads based on FHA-protected characteristics.  During its investigation, HUD found that Facebook allowed housing advertisers to exclude users from receiving housing-related ads through targeting options that referenced FHA-protected characteristics, and that Facebook’s machine-learning algorithm excluded users from receiving housing-related ads, even when advertisers sought to target a diverse group of Facebook users.  On March 28, 2019, HUD issued a charge of discrimination at the conclusion of its investigation, and Facebook elected to have that charge heard in federal court, resulting in this lawsuit.  Prior to filing this suit, this Office, consistent with its standard practice, sought to resolve these issues without litigation.

On March 29, 2019, the day after the HUD charge was issued, a judge in the Southern District of New York approved the settlement of a private litigation that addressed certain of the issues raised in the HUD charge, in National Fair Housing Alliance et al. v. Facebook, Inc., 18 Civ. 2689.  Although that settlement reduced the potentially discriminatory targeting options available to advertisers, thus overlapping with some of the issues raised in the complaint the Justice Department files today, it did not resolve other problems raised in the Department’s complaint―Facebook’s discriminatory delivery of housing ads through machine-learning algorithms.  The U.S. Attorney’s Office for the Southern District of New York had filed a Statement of Interest in support of the National Fair Housing Alliance case on August 17, 2018, arguing that the Communications Decency Act does not shield Facebook from liability for the delivery of housing ads.

U.S. Attorney Damian Williams and Assistant Attorney General Clarke thanked the Department of Housing and Urban Development for its efforts in the investigation.

The Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin, and disability.  More information about the Civil Rights Division and the civil rights laws it enforces is available at www.justice.gov/crt.  More information about the U.S. Attorney’s Office for the Southern District of New York is available at www.justice.gov/usao-sdny.  Individuals who believe they have been victims of housing discrimination may submit a report to the U.S. Attorney’s Office for the Southern District of New York online at https://www.justice.gov/usao-sdny/civil-rights or by telephone at (212) 637-0840; may submit a report online to the Department of Justice atwww.civilrights.justice.gov; or may contact the Department of Housing and Urban Development at 1-800-669-9777 or through its website at www.hud.gov. 

The case is being handled by the Office’s Civil Rights Unit in the Civil Division.  Assistant U.S. Attorneys Ellen Blain, David J. Kennedy, Jacob Lillywhite, and Christine S. Poscablo filed the case.

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Terry Harris, Special Agent-in-Charge of the Eastern Regional Office of the U.S. Department of Education Office of Inspector General (“ED-OIG”), announced today the unsealing of a criminal complaint charging CATHERINE SEEMER with wire fraud, federal financial aid fraud, and aggravated identity theft in connection with a scheme that resulted in the fraudulent discharge of over $10.5 million worth of student loans on the basis of falsified medical certifications of permanent disabilities.  SEEMER was arrested this morning and will be presented before United States Magistrate Judge Andrew E. Krause.

U.S. Attorney Damian Williams said:  “The Total and Permanent Disability Discharge Program is designed to help ease the financial burden of those who suffer from permanent physical or mental disabilities, including military veterans who endure service-related disabilities, by relieving them of their student loan obligations.  As alleged, the defendant defrauded this program for her own benefit.  She stole the identities of more than a dozen medical doctors and falsified the disabilities of more than 100 borrowers in order to profit from the multi-year scheme, which resulted in the fraudulent discharge of over $10.5 million in loans.  This Office, along with our law enforcement partners, will continue to vigilantly protect the integrity of critical programs that exist to help those who are most in need.” 

FBI Assistant Director-in-Charge Michael J. Driscoll said:  “As alleged, Ms. Seemer fraudulently orchestrated the discharge of student loans in excess of $10 million on behalf of more than 100 borrowers she led to believe were eligible for various forms of student-loan relief.  She ultimately reaped more than $1 million in ill-gotten gains by charging borrowers fees in exchange for her “services.”  The action we have taken today is yet another example of the FBI’s commitment to protecting government programs from fraudsters who seek to undermine them for their own selfish purposes.”

ED-OIG Special Agent-in-Charge Terry Harris said:  “Tracking down those who cheat the Federal student aid programs is a priority of our office.  The OIG is committed to fighting student aid fraud in all its forms and we will continue to pursue anyone who participates in these types of crimes.”

As alleged in the Complaint filed today in White Plains federal court:[1]

From June 2017 through March 2022, SEEMER orchestrated a scheme to cause the fraudulent discharge of millions of dollars’ worth of student loans for borrowers who did not qualify for relief under the federal Total and Permanent Disability Discharge Program and its private analogue.  As part of the scheme, SEEMER deceived over 100 borrowers into believing they qualified for various forms of student loan relief and charged them fees—often between 10% and 20% of the loan amount—to facilitate their loan discharge process.  She then used the personal identifying information of the unsuspecting borrowers to submit fraudulent applications for student loan discharge on the basis of non-existent permanent physical and mental disabilities.  In support of these applications, SEEMER used the stolen identities, medical license numbers, and forged signatures of over a dozen medical doctors to falsify medical diagnoses and disability certifications.  The scheme resulted in the wrongful discharge of over approximately $10.5 million in loans under the disability-based relief programs.  It is estimated that SEEMER earned at least approximately $1 million as a result of the scheme.   

*                *                *

CATHERINE SEEMER, 42, of Elmsford, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of federal financial aid fraud, which carries a maximum sentence of five 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 Federal Bureau of Investigation and the U.S. Department of Education, Office of Inspector General.  Mr. Williams noted that the investigation is ongoing.

The case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorney Qais Ghafary 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, constitutes only allegations, and every fact described therein should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, and Lisa F. Garcia, Regional Administrator of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States has filed and simultaneously settled a counterclaim against TZUMI INNOVATIONS, LLC (“TZUMI”) for illegally distributing and selling millions of products claiming to have antimicrobial properties in violation of the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”) during the height of the COVID-19 pandemic.  TZUMI sold these products without submitting them to EPA for registration, a mandatory process that allows EPA to assess the safety and effectiveness of the products.  TZUMI specifically targeted lower-income customers for sale of one of its products, “Wipe Out! Wipes.” 

The proposed stipulation and order of settlement (“settlement”) agreed to by TZUMI includes payment of a $1.5 million civil penalty, the largest FIFRA civil penalty ever obtained in a judicial settlement and one of the largest FIFRA penalties obtained by EPA in any context. 

U.S. Attorney Damian Williams said:  “At the height of the pandemic, Tzumi misled consumers and retailers and exposed the public to pesticide products that had not been found by EPA to be safe and effective.  It compounded matters by targeting low-income customers, who face disproportionate environmental burdens.  Today’s settlement ensures that Tzumi pays the price for its misconduct.  We will continue to pursue justice in environmental enforcement matters.”

EPA Regional Administrator Lisa F. Garcia stated:  “Consumers must be provided accurate information about pesticide products and merchandise such as those items involved in this case, which must be properly labeled and registered with EPA to protect public health.  This settlement demonstrates EPA’s commitment to hold companies accountable that violate critical environmental laws and includes a provision where Tzumi Innovations, LLC will develop an extensive campaign to inform the public and retailers about the appropriate uses for the products in question.”

The counterclaim filed in Manhattan federal court today alleges that in 2020, TZUMI began to sell three product lines—Wipe Out! Wipes, Wipe Out! Multi-Surface Wipes, and Wipe Out! Multi-Surface Decontaminant Spray—in an effort to respond to the public’s increased demand for disinfectant products during the COVID-19 public health crisis.  TZUMI expressly stated that it intended Wipe Out! Wipes to be sold to “lower income level customers.” 

None of these supposedly antimicrobial products were registered with EPA under FIFRA.  FIFRA prohibits the distribution or sale of pesticides—including products claiming to have antimicrobial properties intended to be used to disinfect surfaces—that are not registered under FIFRA, absent exceptions to registration not applicable here.  Registration is a critical step in ensuring the efficacy and safety of antimicrobial pesticides:  Among other things, during registration, EPA reviews the application information and performs a rigorous, comprehensive scientific assessment of the product, including the product’s active and inert ingredients and the proposed uses of the product, to ensure that the product is effective and has no unreasonable adverse effects on human health or the environment when used for its intended purpose and according to labeled directions. 

TZUMI failed to register the Wipe Out! products with EPA, even though its labeling made antimicrobial pesticidal claims suggesting that these products were intended to be used to disinfect surfaces and TZUMI had knowledge that the products would be used as a pesticide, as that term is defined in FIFRA.  Consistent with TZUMI’s claims, retailers then sold these products on their websites or in their physical stores in the same sections in which they included properly registered antimicrobial disinfectants, like Clorox and Lysol products.  Reviews on retailers’ websites demonstrate that consumers in fact were misled into believing that Wipe Out! Wipes in particular could be used as an antimicrobial pesticide to disinfect surfaces.

TZUMI’s actions put the public—including the low-income consumers that TZUMI targeted—at risk of using products that failed to work as claimed or that were unsafe. Low-income communities in general bear a disproportionate burden of environmental exposures and public health risks, and selling unregistered pesticides to these communities raises particular concerns of environmental justice.  

*                *                *

In the settlement lodged with the federal court today, TZUMI admits, acknowledges, and accepts responsibility for the following, among other things:

• In 2020, Tzumi introduced new product lines to the domestic household market in an effort to respond to the public’s increased demand for disinfectant products during the COVID-19 public health crisis. The new products Tzumi distributed or sold included Wipe Out! Wipes, Wipe Out! Multi-Surface Wipes, and Wipe Out! Multi-Surface Decontaminant Spray.
• Wipe Out! Wipes, Wipe Out! Multi-Surface Wipes, and Wipe Out! Multi-Surface Decontaminant Spray have never been registered as pesticides with EPA under Section 3 of FIFRA, 7 U.S.C. § 136a.
• From at least August through December 2020, Tzumi distributed 4,895,184 units of Wipe Out! Wipes to Home Depot bearing a label stating on the front in part “Wipe Out Antibacterial Wipes” and “KILLS GERMS FAST*” and on the back in part “To decrease bacteria on the skin that could cause disease”; “Cleans and sanitizes”; “KILLS 99.9% OF GERMS*”; “*Escherichia Coli (E. coli), Staphylococcus Aureus (Staph), Candida Albicans”; and “Use it Anytime, Anywhere.” 
• From October through November 2020, Tzumi sold 472,281 units of Wipe Out! Multi-Surface Wipes bearing a label that displayed the words “active ingredient” and “purpose: antibacterial” and graphics of household appliances, bathroom fixtures, and surfaces.
• From February 2021 through April 2021, Tzumi sold 62,796 units of Wipe Out! Multi-Surface Decontaminant Spray that stated on its label “Controls Algae Harmful Bacteria” (sic) and “… spray directly on the surface and let stand … ten minutes for antimicrobial response.”

The settlement requires TZUMI to pay a $1.5 million civil penalty and to issue corrective statements advising consumers and retailers of the unregistered status and limited appropriate use of the Wipe Out! products.  It also requires TZUMI not to distribute or sell such unregistered pesticide products in the future. 

The settlement remains subject to a period of public comment and Court approval.  Notice of the proposed settlement will be published in the Federal Register and the public will have the opportunity to submit comments on the proposed settlement for a period of at least 30 days before it is submitted for the Court’s approval.

U.S. Attorney Williams thanked EPA Region 2’s attorneys and program staff for their critical work on this case.

This case is being handled by the Environmental Protection Unit of the Office’s Civil Division.  Assistant U.S. Attorney Allison Rovner is in charge of the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that ELIJAH BILAL, a/k/a “Karate Kid,” pled guilty today to conspiring to commit a firearms crime in connection with the April 15, 2012 murder of Terrance Martin, 25, in the Bronx, New York.  As part of his plea, BILAL admitted that he murdered Martin.  BILAL pled in the middle of his jury trial before U.S. District Judge J. Paul Oetken.  BILAL also pled guilty to conspiring to tamper with witnesses who were expected to testify against him at trial.

U.S. Attorney Damian Williams said:   “Through his guilty plea, Elijah Bilal admitted that he shot and killed Terrance Martin.  Thanks to the efforts of our law enforcement partners, Bilal will be held accountable for his crimes.”

According to the allegations in the Indictment, other filings in this case, and statements during court proceedings:

On or about April 15, 2012, in a public courtyard in the Andrew Jackson Houses in the Bronx, New York, BILAL shot and killed Martin over a drug debt in connection with a conspiracy to distribute crack cocaine.  BILAL killed Martin by firing a single bullet into the back of his head from approximately two feet away.  Prior to trial, BILAL conspired from prison to disseminate the names of the witnesses who were expected to testify against him.  His co-conspirator released the witnesses’ names on Instagram.

*                *                *

BILAL, 30, of the Bronx, New York, pled guilty to one count of conspiracy to possess a firearm in furtherance of a drug trafficking crime, one count of conspiracy to commit witness tampering, and one count of conspiracy to distribute marijuana. 

Mr. Williams praised the outstanding investigative work of the NYPD.

The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Emily A. Johnson, Peter J. Davis, Thomas J. Wright, Adam S. Hobson, and Christopher Clore are in charge of the prosecution.

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 Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment in White Plains federal court charging ELIZIER SCHER with wire fraud in connection with his scheme to defraud the U.S. Small Business Administration of more than $1.6 million in COVID-19 relief funds.  SCHER was arrested this morning and was presented in White Plains federal court earlier today. 

U.S. Attorney Damian Williams said:  “As alleged, the defendant schemed to steal taxpayer funds intended for small businesses in need of assistance during the pandemic.  My Office will continue to investigate and prosecute those who illegally seek to profit from a national emergency.”

FBI Assistant Director -in-Charge Michael J. Driscoll said:  “Administration of more than $1.6 million in COVID-19 relief funds.  Elizier Scher allegedly made materially-false statements in at least a dozen applications for money intended to assist honest businesses navigate the financial hardships they faced as a consequence of the pandemic.  As today’s action demonstrates, the FBI remains committed to bringing to justice those who would aim to serve their own greed at the expense of the government and American taxpayers.”

According to the Indictment unsealed today in White Plains federal court[1]:

The SBA is a federal agency that administers assistance to American small businesses, including the Economic Injury Disaster Loan (“EIDL”) program, which was intended to provide funding to help small business recover from the economic impacts of the COVID-19 pandemic.  The maximum amount of an EIDL loan is determined by a formula based on the date the borrower began operating and the borrower’s gross revenue and cost of goods sold for the twelve months prior to January 31, 2020.  The loans can be used for only working capital and other normal operating expenses.  While the loans generally need to be repaid, some borrowers are eligible for up to $15,000 in advances that do not need to be repaid. 

Over an approximately four-hour period on or about July 13, 2020, SCHER submitted twelve applications for EIDL loans in a principal amount of $150,000 to the SBA over the Internet on behalf of twelve different corporations that he owned and controlled.  SCHER further requested on each application that the borrower be considered for an advance of up to $10,000 that did not need to be repaid.  SCHER made materially false statements in each application with respect to each applicant’s gross revenue and cost of goods sold for the twelve-month period prior to January 31, 2020.

Between on or about July 20, 2020 and on or about August 11, 2020, eleven of the twelve applicants received a net total of $1,648,900 in loan proceeds from the SBA.  SCHER used the proceeds to buy real estate and to pay credit card expenses instead of using it for working capital for the borrowers, as SCHER had agreed to do in the loan agreements he executed on behalf of the borrowers.

*                *                *

SCHER, 33, of Spring Valley, New York is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison. 

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the investigative work of the FBI.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney James McMahon 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 should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Keechant L. Sewell, Police Commissioner for the City of New York (“NYPD”), announced today that JOSHUA RODRIGUEZ, a/k/a “Suave,” was charged with the October 23, 2018 murder of Jaquan Millien in connection with a drug trafficking crime.  As alleged, RODRIGUEZ shot and killed Millien in the Webster Houses apartments in the Bronx, New York.  During the shooting, RODRIGUEZ shot Millien’s five-year-old son, who was with his father at the time.  Thankfully, his son survived.  RODRIGUEZ was arrested today and will be presented this afternoon in Manhattan federal court.  The case has been assigned to United States District Judge Jed S. Rakoff.

U.S. Attorney Damian Williams said:  “Rodriguez allegedly murdered Jaquan Millien with his five-year-old son at his side.  His callous actions not only took Millien’s life, but also put Millien’s son’s life in jeopardy too when he shot him during the murder.  We hope that today’s charges bring some measure of comfort to the family of Jaquan Millien and make clear that this Office and our law enforcement partners will continue to be relentless in our pursuit of anyone who takes another person’s life.”

FBI Assistant Director-in-Charge Michael J. Driscoll said:  “Allegedly murdering a man, and nearly murdering his five-year-old child, didn't solve the rivalry between Rodriguez and his victim. Now multiple lives are shattered, and Rodriguez faces life in federal prison for his alleged criminal actions. This type of senseless violence puts everyone in the community at risk, and it will not be tolerated.”

NYPD Commissioner Keechant L. Sewell said:  “Joshua Rodriguez, by his alleged actions, was willing to shoot and kill a rival drug trafficker and to do so without regard for the victim’s innocent five-year-old son, who was wounded by the gunfire. This kind of criminality, and the violence it breeds, remains a focus of the NYPD. We commend our detectives, our F.B.I. partners, and the federal prosecutors of the United States Attorney’s Office in the Southern District of New York for working together to achieve a measure of justice with today’s arrest.”

According to the allegations in the Indictment unsealed today in Manhattan federal court[1]:

On or about October 23, 2018, JOSHUA RODRIGUEZ, a/k/a “Suave,” shot and killed Jaquan Millien in the vicinity of the Webster Houses in the Bronx, New York.  During the shooting, RODRIGUEZ shot Millien’s five-year-old son.  The murder was in connection with a marijuana trafficking rivalry between RODRIGUEZ and Millien. 

*                *                *

RODRIGUEZ, 30, of the Bronx, New York, is charged with one count of conspiracy to distribute marijuana, which carries a maximum sentence of twenty years in prison; one count of possession with intent to distribute marijuana, which carries a maximum sentence of five years in prison; and using a firearm to commit murder during a drug-trafficking crime, which carries a maximum sentence of death or life 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 and NYPD.

The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorney Mathew Andrews 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 should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that the United States has filed a lawsuit against the TOWN/VILLAGE OF HARRISON (“HARRISON”), the FIRE DISTRICT TWO OF HARRISON, and the HARRISON VOLUNTEER FIRE DEPARTMENT NO. 1 OF HARRISON, N.Y. d/b/a HARRISON FIRE DEPARTMENT (“HARRISON FIRE DEPARTMENT”), alleging discrimination on the basis of sex and retaliation in violation of Title VII of the Civil Rights Act of 1964 (“Title VII”). HARRISON and the HARRISON FIRE DEPARTMENT are alleged to have unlawfully discriminated against a female firefighter by creating a hostile work environment and terminating her employment after she reported that a male senior firefighter had harassed and stalked her.

U.S. Attorney Damian Williams said:  “Sexual harassment in the workplace is abhorrent. All employers, including government agencies, must ensure that sexual harassment is prohibited—not ignored or followed by illegal employment actions against victims, as we allege occurred at the Town of Harrison. This suit seeks to remedy the civil rights violations committed by the Harrison Fire Department and the Town of Harrison, and ensure that Harrison protects its employees’ rights in the future.”

As alleged in the complaint filed in the White Plains federal court:

In 2015, Angela Bommarito (“Bommarito”) joined the HARRISON Fire Department. In her first month on the job, a senior firefighter, Henry Mohr (“Mohr”), pressured Bommarito with unwanted sexual advances. Mohr later also harassed and stalked Bommarito, including by repeatedly following her and calling her on numerous occasions. Further, Mohr used sexually demeaning expletives to describe Bommarito in front of other firefighters. HARRISON and HARRISON FIRE DEPARTMENT leaders learned of Mohr’s harassment, including through reports by Bommarito. After those officials failed to take any employment action against Mohr and the harassment persisted, Bommarito filed a report with HARRISON’s Police Department. In response, HARRISON’s then-Police Chief told Mohr, in a recorded interaction, that Bommarito’s presence at the firehouse was a “temptation,” which was “hard to resist sometimes,” and that the Police Chief “want[ed] to broker a deal with the Town to make sure this whole thing dies” so that he could get Mohr “out of this situation.” Bommarito subsequently signed a resignation letter prepared by the Police Chief after he threatened to arrest her and report her other relationships to HARRISON’s Fire Commissioners. Soon after, Bommarito attempted to withdraw the resignation, but the HARRISON FIRE DEPARTMENT proceeded with the termination of her employment.

Following Bommarito’s departure from the Harrison Fire Department, Mohr continued to harass and stalk her. Mohr was eventually arrested for his harassment of Bommarito and pled guilty to harassment in the second degree.  A family court judge also entered an order of protection against Mohr.

Title VII authorizes the Department of Justice to commence an action in the United States District Court against HARRISON and the HARRISON FIRE DEPARTMENT to remedy discrimination on the basis of sex and retaliation in violation of Title VII. The United States’ complaint seeks declaratory and injunctive relief, as well as compensatory damages on behalf of Bommarito.

*                *                *

This case is being handled by the Office’s Civil Rights Unit. Assistant United States Attorneys Charles S. Jacob and Natasha W. Teleanu are in charge of the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced today the arrest of THOMAS RIVERA.  RIVERA is charged with communicating online with a 13-year-old girl and persuading the girl to meet him in Dutchess County, New York to engage in sexual activities.  RIVERA was presented today before U.S. Magistrate Judge Judith C. McCarthy in White Plains federal court and detained.

U.S. Attorney Damian Williams said:  “Through the use of video game chats, Thomas Rivera is alleged to have found and lured a 13-year-old girl into meeting him in person for the purpose of exploiting her for sex.  The conduct alleged against Rivera is assuredly terrifying to any parent, and a reminder that a seemingly innocuous video game can be utilized as a weapon by online predators; we urge anyone caring for children to be mindful of their children’s online activities.” 

According to the allegations in the Complaint[1] filed on June 3, 2022 in White Plains federal court:

On or about April 3, 2022, at approximately 4:50 p.m., the Town of Poughkeepsie Police Department (“TPPD”) received a report from the Town of Hyde Park Police Department concerning a 13-year-old girl being raped by a subject named “Thomas” at a hotel (“Hotel-1”) in the Town of Poughkeepsie. TPPD officers were dispatched to Hotel-1. Upon their arrival, they determined that a “Thomas Rivera” was staying in a particular room and they went to that room.  RIVERA opened the door and was detained.  A 13-year-old child (“Victim-1”) was found in the bathroom.  Victim-1 advised that RIVERA, the defendant, had attempted to rape her.

On or about May 3, 2022, a Special Agent of the FBI (“Agent-1”) met with Victim-1, who stated, among other things and in substance and part, that she met RIVERA online in or about February 2022, while playing an online video game.  Thereafter, they communicated via various gaming apps and social media platforms, including Discord and Snapchat.  Victim-1 told RIVERA that she was 14 years old and in middle school.  RIVERA told her that he was 31 and would be turning 32 in March.  Victim-1 reported that RIVERA repeatedly asked Victim-1 to take and send him nude photos of herself. RIVERA told her that he was going to come and see her.  They made a plan and he picked her up near her house.

At the time of his arrest by TPPD officers on April 3, 2022, RIVERA possessed a phone, which was seized.  RIVERA’s phone revealed sexually explicit messages between RIVERA and Victim-1 exchanged via Snapchat from in or about February 23, 2022 up to in or about April 3, 2022.

On April 3, 2022, RIVERA was interviewed by TPPD detectives.  Among other things, RIVERA admitted that he met Victim-1 online playing games about two months ago, that they began speaking daily via voice calls and text, that they discussed sex, and that he travelled to New York to see Victim-1. RIVERA was charged in Town of Poughkeepsie Justice Court with Endangering the Welfare of a Child and Sexual Abuse in the Second Degree, and was released on bail.

There may be other victims of this alleged conduct.  If you have information to report, contact the Federal Bureau of Investigation through its toll-free Tip Line at 1-800-CALL-FBI.

*                *                *

RIVERA, 32 of Lauderhill, Florida is charged with one count of enticement of a minor, which carries a minimum sentence of 10 years in prison and a maximum sentence of life in prison.

The statutory minimum and 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.

Following today’s presentment, Judge McCarthy ordered that THOMAS RIVERA be detained.

Mr. Williams praised the efforts of the Federal Bureau of Investigation, the Hudson Valley Safe Streets Task Force, the Town of Poughkeepsie Police Department, the City of Poughkeepsie Police Department, the Town of Hyde Park Police Department, the Dutchess County Sheriff’s Office, and the Dutchess County District Attorney’s Office.  He added that the investigation is ongoing.  

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorney Marcia S. Cohen is in charge of the prosecution.  

[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.

“While the jury was unfortunately unable to reach a unanimous verdict in U.S. v. Timothy Shea, that in no way lessens our resolve or belief in the powerful and compelling evidence that we strongly believe proves his guilt.  We look forward to retrying this case as soon as possible.”

Damian Williams, the United States Attorney for the Southern District of New York, announced that earlier today, MARCELO IRIGOIN pled guilty to money laundering in connection with transactions involving his electronics export company.  As part of the scheme, IRIGOIN moved over $1.4 million in narcotics proceeds through the Black Market Peso Exchange, a sophisticated market in which narcotics proceeds are bought and sold by money-launderers and then transferred overseas through shell companies and mirrored transactions.  After IRIGION learned that he was the subject of a Government investigation, he provided falsified records to law enforcement in order to conceal his laundering activities from Government.

U.S. Attorney Damian Williams said:  “Marcelo Irigoin not only helped launder over one million dollars in drug proceeds through the Black Market Peso Exchange, he also tried to cover his tracks after he learned about the Government’s investigation.  The Black Market Peso Exchange relies on so-called clean money from businesses like Irigoin’s to launder drug proceeds back to cartels overseas.  Today’s guilty plea reflects this Office’s commitment to investigate and prosecute businesses and individuals who make their seemingly legitimate businesses available to facilitate these illegal transactions.”

According to the allegations in the Information and statements made during the plea and other proceedings in the case:

Beginning in June 2020, MARCELO IRIGOIN received narcotics proceeds into accounts held by his company (“Company-1”), an electronics exporter based in Doral, Florida, as payments for electronics on behalf of a particular Company-1 customer (“Customer-1”).  These payments were all made by third parties with no connection Customer-1.  Additionally, these payments contained significant red flags consistent with money-laundering activity, including payment amounts that did not correspond to the actual electronics Customer-1 had purchased, as well as payments broken up into multiple smaller wire transfers over the course of a single day or several days.  IRIGOIN regularly communicated with the owner of Customer-1 (“CC-1”) and they discussed, among other things, the fact that CC-1 did not know in advance which third party would be sending money to Company-1 on behalf of Customer-1 for any given transaction.

These third parties were in fact shell companies that collected narcotics proceeds in the United States and sent them to Company-1 on behalf of Customer-1.  Once the money was sent to Company-1, Customer-1 would release an equivalent amount of proceeds to the drug trafficking organizations, minus a commission for the money-laundering brokers.  This system, known as the Black Market Peso Exchange (“BMPE”), allowed the drug traffickers to collect their narcotics proceeds in their home country without ever actually sending money in cross-border transactions from the United States. 

In May 2020, the DEA served a subpoena on Company-1 for records relating to its transactions with these BMPE entities.  In responding to this subpoena, IRIGOIN provided false information meant to give the impression that these BMPE entities were actually Company-1 customers, when they were in fact only making payments to Company-1 on behalf of Customer-1.  Additionally, IRIGOIN secretly told CC-1 to stop sending payments to Company-1, which was under Government investigation, and instead set up a separate bank account that he used to receive payments from BMPE entities on behalf of Customer-1.

*                *                *

As part of his guilty plea, IRIGOIN, 41, of Hialeah, Florida, agreed to forfeit $1,436,171.60 to the United States, including over $600,000 the Government had previously seized from various company bank accounts.  IRIGOIN pled guilty today to one count of money laundering.  This offense carries a maximum sentence of twenty years in prison. 

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as IRIGOIN’s sentence will be determined by the judge. 

IRIGOIN is scheduled to be sentenced by U.S. District Judge Paul A. Crotty on September 13, 2022.

Mr. Williams praised the outstanding investigative work of Special Agents from the Drug Enforcement Administration.  

The prosecution of this case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Emily Deininger and Sheb Swett are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York,  Andrew C. Adams, Task Force KleptoCapture Director, Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Matthew S. Axelrod, Assistant Secretary of Commerce for Export Enforcement, announced today that the United States of America has been authorized to seize a Boeing 787-8 aircraft and a Gulfstream G650ER aircraft owned and/or controlled by Russian oligarch Roman Abramovich, pursuant to a seizure warrant from the U.S. District Court for the Southern District of New York, which found that the airplanes are subject to seizure and forfeiture based on probable cause of violations of the Export Control Reform Act (“ECRA”) and the recent sanctions issued against Russia.

U.S. Attorney Damian Williams said:  “Today’s affidavit and warrant demonstrate the Southern District’s commitment to bring to bear every legal tool available for enforcement of sanctions and export controls imposed in response to Russia’s illegal war in Ukraine.  Our international partners — nations devoted to the rule of law — far outnumber those jurisdictions where these aircraft can safely hide, and our investigation of illegal exports in violation of U.S. law will continue unabated.”

Task Force KleptoCapture Director Andrew C. Adams said:  “Today’s action reflects the global scope of the United States’ response to illegal Russian aggression in Ukraine.  While we seek to execute on these warrants, the Task Force eagerly anticipates working with international partners to uphold the rule of law and reminds members of the aviation, insurance, and financial industries that these aircraft constitute tainted property under active investigation by the United States.”

FBI Assistant Director Michael J. Driscoll said:  “These wealthy Russian oligarchs have helped foster an environment that enabled Russia to pursue its deadly war in Ukraine.  The seizure of their valuable possessions, including these two aircraft, is just one way the U.S government holds accountable those who break U.S. laws and support Russia in its attempt to conquer a sovereign nation.  Our work has only just begun and we won't back away.”

Assistant Secretary of Commerce for Export Enforcement Matthew S. Axelrod:  “The Commerce Department has put in place unprecedented export controls in response to Russia’s illegal war against Ukraine.  Today’s action, and our recent changes to make such actions public when brought, provides notice to the world of our commitment to enforce those controls aggressively in a transparent way, consistent with our commitment to the rule of law.”

According to the seizure warrant and affidavit sworn out today:[1]

In response to Russia’s invasion of Ukraine, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued various sanctions against Russia that impose export controls and license requirements to protect U.S. national security and foreign policy interests.  These Russia sanctions include expanded prohibitions on the export, reexport, or in-country transfer of U.S.-manufactured aircraft and aircraft parts and components to or within Russia without a BIS license, and eliminate the availability of any license exception for aircraft owned or controlled, or under charter or lease, by Russia or a Russian national.

The Boeing and the Gulfstream each were reexported to Russia (i.e., flown from a foreign country to Russia) in violation of the ECRA and regulations issued thereunder, including the recent Russia sanctions.  The Boeing was flown to Russia on March 4, 2022 without a BIS license and without a license exception, and is now in the United Arab Emirates.  The Gulfstream was flown to Russia on March 12 and 15, 2022 without a BIS license and without a license exception, and remains in Russia.  The Boeing and Gulfstream are owned and/or controlled by Roman Abramovich, a Russia national, through a series of shell companies in Cyprus, Jersey, and the British Virgin Islands. 

The Boeing (pictured below), bearing tail number P4-BDL and manufacturer serial number 37306, is believed to be worth approximately $350 million.

The Gulfstream (pictured below), bearing tail number LX-RAY and manufacturer serial number 6417, is believed to be worth approximately $60 million. 

*                *                *

Mr. Williams praised the outstanding work of the FBI and BIS.  In a charging letter that separately issued today, BIS initiated administrative proceedings against Roman Abramovich, seeking penalties of up to twice the value of the Boeing and the Gulfstream.  Mr. Williams further thanked the Justice Department’s National Security Division and Office of International Affairs, the U.S. Treasury Department’s Office of Foreign Assets Control, and Her Majesty’s Attorney General for the Bailiwick of Jersey for their assistance in this investigation. 

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit and National Security and International Narcotics Unit.  Assistant United States Attorneys Joshua A. Naftalis, Anden Chow, Michael D. Lockard, and Kaylan E. Lasky are in charge of the investigation. 

The investigation was coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls, and economic countermeasures that the United States, along with its foreign allies and partners, has imposed in response to Russia’s unprovoked military invasion of Ukraine.  Announced by the Attorney General on March 2 and run out of the Office of the Deputy Attorney General, the task force will continue to leverage all of the Department’s tools and authorities to combat efforts to evade or undermine the collective actions taken by the U.S. government in response to Russian military aggression.

[1]   The burden to prove forfeitability in a forfeiture proceeding is upon the government.

Damian Williams, the United States Attorney for the Southern District of New York, announced today the arrest of BRIAN REED.  REED is charged with communicating online with an individual he believed to be a 13-year-old girl and attempting to meet the girl to engage in sexual activities and with engaging in that offense while a registered sex offender.  REED was presented today before U.S. Magistrate Judge Andrew E. Krause in White Plains federal court and detained.

U.S. Attorney Damian Williams said:  “This case underlines the urgent need for law enforcement to continue its efforts to protect children from those who prey on them. As this arrest shows, we will use every tool available to law enforcement to investigate and prosecute those who sexually exploit children.” 

According to the allegations in the Complaint[1] filed on May 31, 2022 in White Plains federal court:

On May 25, 2022 and May 26, 2022, an investigator with the Rockland County District Attorney’s Office (“Investigator-1”), who was posing as a 13-year-old girl on various online social media platforms, communicated via text with BRIAN REED.  REED asked Investigator-1 for sexually explicit photos and indicated that he wanted to meet with her for the purpose of having sex.

During the communications with REED, Investigator-1 referred on multiple occasions to the fact that she was 13 years old and also told REED that “im a virgin still.” REED  responded, “Thats ok.”  REED told Investigator-1 that he wanted to speak by phone and Investigator-1 spoke to REED by phone on a number of occasions.  During their calls, REED and Investigator-1 discussed meeting in person and REED described in detail various sexual activities that he wanted to engage in with Investigator-1.   REED said he was excited to meet her and that he could “teach [her] some things.”  REED made a plan to meet Investigator-1 at a park in Rockland County, New York.

On May 26, 2022, at approximately 11:35 p.m., REED arrived at a parking lot near the agreed-upon meeting spot and parked his car. As he began to walk toward Investigator-1, who was waiting at the meeting spot, REED was arrested.  Following his arrest, REED was interviewed and he admitted, among other things, that he communicated with an individual he believed was 13 years old and made a plan to meet her so that he could have sex with her. In addition, REED stated that he had been convicted of a sex offense and was a registered sex offender.  On May 27, 2022, BRIAN REED, the defendant, was charged in Clarkstown Justice Court with Attempted Rape in the 2nd Degree and Disseminating Indecent material to minors.

On October 17, 2016, REED was convicted in Morris County Superior Court, New Jersey, of Endangering the Welfare of a Child Through Sexual Conduct and sentenced to three years in prison.  REED was required to register as a sex offender upon his release from prison. 

There may be other victims of this alleged conduct.  If you have information to report, contact the Federal Bureau of Investigation through its toll-free Tip Line at 1-800-CALL-FBI

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REED, 33 of Sussex, New Jersey is charged with one count of attempted enticement of a minor, which carries a minimum sentence of 10 years in prison and a maximum sentence of life in prison, and one count of committing the offense of attempted enticement while a registered sex offender, which carries a minimum sentence of 10 years to be imposed consecutively to any sentence of imprisonment imposed for the attempted enticement.

The statutory minimum and 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.

Following today’s presentment, Judge Krause ordered that BRIAN REED be detained.

Mr. Williams praised the efforts of the Federal Bureau of Investigation, Homeland Security Investigations, the Rockland County District Attorney’s Office, Rockland County District Attorney’s Office Special Investigations Unit, Rockland County District Attorney’s Office Special Victims Unit, Town of Clarkstown Police Department, and the Westchester County Safe Streets Task Force, which is comprised of special agents and task force officers from the FBI, U.S. Probation, New York State Police, New York State Department of Corrections and Community Supervision, Putnam County Sheriff's Office, Westchester County DAs Office, Rockland County DAs Office, NYPD, Westchester County PD, and the Yonkers, New Rochelle, Mount Vernon, Greenburgh, White Plains, Peekskill, Ramapo, and Clarkstown Police Departments. He added that the investigation is ongoing.         

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Marcia S. Cohen is in charge of the prosecution.  

[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.

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 Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an indictment charging ANTHONY SIROTKA, the former chief administrative officer of a FTE Networks, Inc. (“FTE”), along with the company’s former chief executive officer, Michael Palleschi and former chief financial officer, David Lethem, with conspiracy, securities fraud, wire fraud, improperly influencing the conduct of an audit and aggravated identity theft.  These charges stem from a years-long scheme to inflate FTE’s revenue and to conceal liabilities and expenses.  SIROTKA was arrested this morning and was presented today in Manhattan federal court.  Palleschi and Lethem were previously arrested based on an indictment charging them with the same crimes.

U.S. Attorney Damian Williams said:  “As alleged, Anthony Sirotka conspired with his co-defendants to lure investors with false claims about FTE’s financial condition and to make the company appear more profitable than it was.  Sirotka helped to deceive FTE’s auditors and the investing public, and now faces serious criminal charges for his alleged conduct.”

According to the allegations in Indictment unsealed today in Manhattan federal court:[1]

FTE was a telecommunications company based in Naples, Florida and Manhattan.  As of December 2017, its stock traded on the NYSE American market.  SIROTKA served as the company’s Chief Administrative Officer, Senior Vice President of Business Development, and Chief Business Development Officer.  Together with Palleschi and Lethem, among other things, SIROTKA caused FTE to recognize more than $13 million in fraudulent revenue.  This fraudulent revenue included more than $10 million in “unbilled” revenue that the defendants represented FTE had earned from services it had supposedly provided to a large customer that would not yet accept bills for those services.  FTE never provided any such services.  In addition, the defendants caused FTE to recognize approximately $2.6 million as an account receivable for which there was no support.  When FTE’s auditors said that the account receivable should be written off, SIROTKA and his co-conspirators created a fake email from a representative of the customer saying that the customer would “expedite payments” for more than $1.5 million for projects completed by FTE in 2016 and 2017.  The defendants caused this fake email to be sent to FTE’s auditors so that FTE could continue to recognize the receivable. 

As a result of the defendants’ fraudulent recognition of revenue, FTE’s financial statements overstated the company’s accounts receivable by between 18% and 120% for each of the quarters in 2017 and 2018 and by approximately 477% for 2016.

In a separate action, the United States Securities and Exchange Commission (“SEC”) filed civil charges against SIROTKA.  The SEC previously filed civil charges against Palleschi and Lethem.

*                *                *

SIROTKA, 55, of New York, New York, is charged with one count of conspiring to commit securities fraud, wire fraud, making false statements in SEC filings and improperly influencing the conduct of audits, which carries a maximum sentence of five years in prison; one count of securities fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of improperly influencing the conduct of audits, which carries a maximum sentence of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory minimum term 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 defendants will be determined by the judge.

Mr. Williams praised the investigative work of the FBI and thanked the SEC for its assistance.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys James McMahon and Daniel Loss 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 constitutes only allegations, and every fact described herein should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced that SADICK EDUSEI KISSI was convicted today of three criminal counts he was charged with for his participation in a conspiracy based in the Republic of Ghana (“Ghana”) involving the theft of more than one million dollars.  KISSI was convicted after a jury trial before U.S. District Judge Paul A. Crotty which lasted approximately one week.  KISSI was previously arrested on February 5, 2021.  

As reflected in the Indictment, public filings, and the evidence presented at trial:

From in or about 2014 through in or about February 2020, a criminal enterprise (the “Enterprise”) based in Ghana committed a series of romance scams against individuals and businesses located across the United States, including in the Southern District of New York.  The Enterprise conducted the romance scams by using electronic messages sent via email, text messaging, or online dating websites that deluded victims, many of whom were vulnerable older men and women who lived alone, into believing the victim was in a romantic relationship with a fake identity assumed by members of the Enterprise.  Once members of the Enterprise had gained the trust of the victims using the fake identity, they used false pretenses to cause the victims to wire money to bank accounts the victims believed were controlled by their romantic interests, when in fact the bank accounts were controlled by members of the Enterprise like KISSI. 

KISSI received money sent by victims of the Enterprise under false pretenses into personal bank accounts located in the Bronx, New York.  The defendant also received criminal proceeds from other U.S.-based members of the Enterprise by cash deliveries.  Once KISSI received these funds, he took out a percentage fee and then withdrew, transported, and laundered those criminal proceeds to other members of the Enterprise, in order to send those funds abroad to Ghana. 

From in or about 2015 through in or about 2020, KISSI controlled more than eight bank accounts that had deposits that totaled over approximately $1 million during that time period.  A substantial portion of the deposits consisted of large wire transfers and check or cash deposits from U.S.-based individuals and entities that were victims of schemes of the Enterprise.   

*                *                *

KISSI, 25, of Dickinson, North Dakota, was convicted by a jury of one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison; one count of receipt of stolen money, which carries a maximum sentence of 10 years in prison; and one count of conspiracy to receive stolen money, which carries a maximum sentence of five years in prison.  KISSI was also acquitted of one count of conspiring to commit wire fraud.

KISSI will be sentenced before Judge Crotty at a later date.

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 Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Katherine C. Reilly, Mitzi Steiner, and Sagar Ravi are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that MICHAEL AVENATTI was sentenced today in Manhattan federal court by United States District Judge Jesse M. Furman to 48 months in prison for fraud and aggravated identity theft.  AVENATTI was previously found guilty on February 4, 2022, following a two-week jury trial.

U.S. Attorney Damian Williams said:  “Lawyers have a duty to be loyal and advocates for their clients.  Far from being a loyal advocate for his client, Michael Avenatti stole his client’s identity and her money in order to line his own pockets.  Now, Avenatti will serve a substantial prison sentence for his brazen crimes and betrayal of his client.”

According to the allegations in the Indictment, court documents, and evidence presented at trial:

AVENATTI met Stormy Daniels in February 2018, when she was seeking an attorney to assist her with respect to a non-disclosure agreement that she had earlier signed with President Donald Trump.  Daniels later signed a book deal to publish her memoir, and AVENATTI, pretending to act as her attorney and in her interests, stole a portion of the advance on that deal by directing her literary agent to send the money to a bank account AVENATTI controlled. 

Specifically, AVENATTI stole two installments of Daniels’ book advance, totaling $297,500.  AVENATTI sent to Daniels’ literary agent a fraudulent and unauthorized letter purporting to be from Daniels and appearing to bear her signature, which directed that future payments be sent to a bank account controlled by AVENATTI.  In fact, AVENATTI wrote the letter himself, never received authorization from Daniels, and caused Daniels’ signature to be copied and pasted from another document onto the letter without her consent.

After transmitting the fraudulent letter to Daniels’ literary agent, AVENATTI received an installment of Daniels’ advance, worth $148,750, and promptly spent the money to satisfy his own personal and business expenses.  When Daniels began inquiring of AVENATTI as to why she had not received the payment, AVENATTI lied to Daniels, telling her that her publisher had not made the payment.  Approximately one month after diverting the payment, after Daniels threatened to go directly to her publisher about the missing payment, AVENATTI obtained a personal loan to pay $148,750 to Daniels, so that Daniels would not realize that AVENATTI had previously taken and used Daniels’ money.

A short time later, AVENATTI pressured the publisher to make the next installment payment early, purportedly at Daniels’ request though in truth without her awareness.  AVENATTI soon received that installment, another payment of $148,750, which he again spent for his own purposes.  For months after he had stolen this installment, Daniels repeatedly asked AVENATTI about the missing payment and, after he again falsely claimed that the publisher had not made the payment, asked that AVENATTI, as her lawyer, assist her in obtaining the book payment.  AVENATTI continued to lie and claim that he was fighting with the publisher on her behalf when, as he knew, the publisher had made the payment early, but that he had stolen it.  At the same time, further to avoid discovery of his scheme, AVENATTI, purporting to act as Daniels’ attorney, told her publisher and literary agent not to respond to direct requests for information from Daniels.

*                *                *

In addition to the prison sentence, AVENATTI, 51, of Los Angeles, California, was sentenced to three years of supervised release, as well as restitution and forfeiture.  AVENATTI is currently serving a thirty-month sentence for extorting NIKE, Inc., imposed by Judge Paul G. Gardephe in United States v. Avenatti, 19 Cr. 373.  Thirty months of imprisonment in this case were imposed consecutively with AVENATTI’s other sentence, and the remainder will run concurrently.

Mr. Williams praised the work of the Federal Bureau of Investigation and the Special Agents of the United States Attorney’s Office for the Southern District of New York.

The cases are being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Matthew Podolsky, Robert B. Sobelman, and Andrew A. Rohrbach are in charge of the prosecution.

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 Office of the Federal Bureau of Investigation (“FBI”), announced that MORDECHAY MALKA and MATITYAU MALKA were convicted in White Plains federal court of kidnapping following a three-week jury trial.  The defendants, members of an extremist Jewish sect called Lev Tahor, participated in a scheme to kidnap a 14-year-old girl (“Minor-1”) and a 12-year-old boy (“Minor-2”) from their mother in Woodridge, New York in December 2018.  The kidnappers then smuggled the children across the U.S. border to Mexico, where they reunited Minor-1 with her adult “husband,” who she had religiously “married” when she was 13 years old.  After the children were recovered and returned to their mother, the defendants and their co-conspirators tried to kidnap the children a second time in March 2019.  Two co-conspirators, Nachman Helbrans and Mayer Rosner, were previously convicted of kidnapping and sexual exploitation charges in connection with this case after an October 2021 trial and have each been sentenced to 12 years in prison. 

According to the allegations contained in the Superseding Indictment, other court filings, and the evidence presented at trial:

MORDECHAY MALKA and MATITYAU MALKA are U.S. citizens and members of Lev Tahor, an extremist Jewish sect that has been located in several different jurisdictions, including New York, Israel, Canada, Mexico, and Guatemala.  In or about October 2018, the mother of Minor-1 and Minor-2 escaped from Lev Tahor’s compound in Guatemala and arrived in the United States in early November 2018.  Also in November 2018, a Brooklyn family court granted her sole custody of the children and prohibited the children’s father, a leader within Lev Tahor, from communicating with the children.

After the mother fled and settled in New York with her children, MORDECHAY MALKA and other Lev Tahor members devised a plan to return Minor-1 and Minor-2 to the Lev Tahor community.  Then, in December 2018, the kidnappers took the children in the middle of the night from a home in upstate New York and transported them through various states and, eventually, to Mexico.  MORDECHAY MALKA and his co-conspirators used disguises, aliases, drop phones, fake travel documents, an encrypted application, and a secret pact to execute on their kidnapping plan.  At the time of the kidnapping, Lev Tahor leadership was seeking asylum for the entire Lev Tahor community in the Islamic Republic of Iran. 

Following a three-week search involving hundreds of local, federal, and international law enforcement officers, Minor-1 and Minor-2 were recovered in Mexico and returned to their mother in New York. 

Then, in March 2019, members of Lev Tahor again tried to kidnap the children.  The leader of Lev Tahor, Nachman Helbrans, attempted another kidnapping of the children while incarcerated in Westchester, New York.  MATITYAU MALKA acted as the operative on the ground to execute the attempted kidnapping.

*                *                *

MORDECHAY MALKA, 27, of Guatemala, and MATITAU MALKA, 30, of Guatemala, were convicted of one count of conspiring to commit international parental kidnapping, to unlawfully use a means of identification, and to enter by false pretenses the secure area of an airport, which carries a maximum sentence of five years in prison.  MORDECHAY MALKA was also convicted of two counts of international parental kidnapping, which carries a maximum sentence of three years in prison for each count.  MATITYAU MALKA was also convicted of one count of attempted international parental kidnapping, which carries a maximum sentence of three years in prison for each count. 

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 work of the FBI, United States Customs and Border Protection, the Department of State, the Transportation Security Administration, the New York State Police, the Rockland County Sheriff’s Department, the Sullivan County District Attorney’s Office, the Village of Spring Valley Police Department, Special Agents with the U.S. Attorney’s Office for the Southern District of New York, and our law enforcement partners in Mexico, Guatemala, Canada, and Israel.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Sam Adelsberg, Jamie Bagliebter, Jim Ligtenberg, and Daniel Tracer, and paralegal specialist Shannon Becker, are in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, announced today the arrest of TONG HYON SUH, a/k/a “Jason Suh.”  SUH is charged with communicating online with an individual he believed to be a 14-year-old girl and attempting to meet the girl to engage in sexual activities and record the activities.  SUH was presented today before U.S. Magistrate Judge Andrew E. Krause in White Plains federal court and detained.

U.S. Attorney Damian Williams said:  “Suh’s behavior is the nightmare of every parent. He attempted to exploit the most vulnerable in our society. This case underlines the urgent need for law enforcement to continue its efforts to protect children from those who prey on them.”

According to the allegations in the Complaint[1] filed yesterday in White Plains federal court:

Beginning on April 24, 2022, a detective with the Greenwich Police Department (“Detective-1”), who was posing as a 14-year-old girl named “Megan,” communicated via the social platform, Kik, with TONG HYON SUH, a/k/a “Jason Suh.” During the communications, SUH, who was using the Kik user name “suhjason,” identified himself as a 45-year-old Korean male living in New York City and indicated that he wanted to meet with “Megan” for the purpose of having sex.  Detective-1 told SUH that she was a 14-year-old female from Connecticut. During the communications, SUH sent various photos of himself showing his face.

During their communications, which occurred from April 24, 2022 to May 27, 2022, among other things, SUH told Detective-1 that he “find[s] the age gap hot tbh” and “tbh on the down low I want a young submissive sl*t.” SUH requested pictures from “Megan.” For example, he told her, “So sneak in a bathroom break pic. I love a good sl*t.”

On April 26, 2022, SUH discussed meeting in person. He asked “Megan” for some “sl*tty pics” that she could “delete after taking.” During the communications, SUH referenced other teenage girls with whom he had engaged in sexual activity.  On or about May 2, 2022, SUH told “Megan” that he wanted to film them engaging in sexual acts and he continued to request pictures. 

On or about May 20, 2022, an FBI Special Agent acting in an undercover capacity as “Megan,” spoke to SUH by phone.  During the call, SUH identified himself as “Daddy” and “Jason.”  SUH stated that he was born in 1977, is a New York attorney with an office in the Bronx, and has been a lawyer since he was 26 years old.

SUH and “Megan” spoke again on May 24, 2022.  SUH and “Megan” discussed meeting and SUH said he would rent a residence and take the train to Greenwich, Connecticut. He said that he would use a ride service to pick “Megan” up at her house, and then they would travel together to the rented residence, where they would engage in sexual activity and smoke marijuana. During the conversation, “Megan” requested that SUH bring condoms, lollipops and marijuana, and wear a suit. “Megan” gave SUH an address in Greenwich, Connecticut and told him that she lived in an apartment located at that address.

After the May 24, 2022 phone call, SUH told “Megan” that they should meet on Friday, May 27, 2022. SUH said that he and “Megan” would use a ride service to go to the residence he rented in Stamford, Connecticut.

A public database for New York attorney registration information indicates that a “TONG-HYON SUH” is registered as an active attorney in New York with a business address in the Bronx. Additionally, the database indicates that “TONG-HYON SUH” was admitted to the New York bar on or about November 19, 2003.

On May 27, 2022, at approximately 3:31 p.m., TONG HYON SUH, a/k/a “Jason Suh,”  arrived at the Metro North train station in Greenwich, Connecticut on a northbound Metro North train after passing through Westchester County.  SUH was wearing a suit and carrying a black briefcase and a red and white shopping bag. Law enforcement observed SUH enter the rear passenger seat of a black Toyota Highlander and depart the train station.

At approximately 3:50 p.m., TONG HYON SUH, a/k/a “Jason Suh,” the defendant, arrived at the address provided by “Megan.”  When SUH entered the building located at that address, detectives with the Greenwich Police Department arrested him. After SUH’s arrest, the detectives retrieved a black briefcase and a red and white shopping bag from the vehicle in which SUH was riding.  An inventory search of the briefcase and bag revealed that they contained, among other things, a laptop computer, a thumb drive, sneakers, matches, marijuana, toiletries, clothing, an unopened package of lollipops, and six condoms.

Following his arrest, TONG HYON SUH, a/k/a “Jason Suh,” was charged in Stamford Superior Court.

There may be other victims of this alleged conduct.  If you have information to report, contact the Federal Bureau of Investigation through its toll-free Tip Line at 1-800-CALL-FBI

*                *                *

SUH, 45 of Bronx, New York, is charged with one count of attempted sexual exploitation of a minor, which carries a minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison, and one count of attempted enticement of a minor, which carries a minimum sentence of 10 years in prison and a maximum sentence of life in prison. 

The statutory minimum and 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.

Following today’s presentment, Judge Krause ordered that SUH be detained.

Mr. Williams praised the efforts of the Federal Bureau of Investigation, Connecticut State’s Attorneys Office, Greenwich Police Department, and the Westchester County Safe Streets Task Force, which is comprised of special agents and task force officers from the FBI, U.S. Probation, New York State Police, New York State Department of Corrections and Community Supervision, Putnam County Sheriff's Office, Westchester County DAs Office, Rockland County DAs Office, NYPD, Westchester County PD, and the Yonkers, New Rochelle, Mount Vernon, Greenburgh, White Plains, Peekskill, Ramapo, and Clarkstown Police Department. He added that the investigation is ongoing.  

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Jennifer N. Ong and Marcia S. Cohen are in charge of the prosecution.  

[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.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that MANSUR MOHAMED SURUR, a/k/a “Mansour,” a Kenyan citizen, pled guilty to conspiring to traffic in rhinoceros horns and elephant ivory, both endangered wildlife species, which involved the illegal poaching of more than approximately 35 rhinoceros and more than 100 elephants.  SURUR also pled guilty to conspiring to distribute heroin to a buyer located in the United States.

Two of SURUR’s co-defendants, MOAZU KROMAH, a/k/a “Ayoub,” a/k/a “Ayuba,” a/k/a “Kampala Man,” a citizen of Liberia, and AMARA CHERIF, a/k/a “Bamba Issiaka,” a citizen of Guinea, previously pled guilty on March 30, 2022, and April 27, 2022, respectively to conspiring to traffic in rhinoceros horns and elephant ivory, as well as substantive charges of trafficking in rhinoceros horns.  The remaining defendants, BADRU ABDUL AZIZ SALEH, a/k/a “Badro,” and ABDI HUSSEIN AHMED, a/k/a “Abu Khadi,” are both citizens of Kenya.  SALEH is in custody in Kenya based on a U.S. extradition request, and AHMED remains a fugitive.  The U.S. Department of State has offered a reward of up to $1,000,000 for information leading to his arrest and/or conviction, and any information may be provided to [email protected] or by calling 1-844-FWS-TIPS.  

U.S. Attorney Damian Williams said:  “The protection of endangered wildlife and natural resources is a crucial and important priority for my Office.  These defendants were responsible for furthering an industry that illegally slaughters species protected by international agreements around the world.  One of these defendants also engaged in a narcotics conspiracy involving a large quantity of heroin.  Thanks to the tireless efforts of the U.S. Fish and Wildlife Service and the Drug Enforcement Administration, these defendants have now pled guilty to the serious and destructive crimes they committed.”

According to the charging and other documents filed in the case, as well as statements made during the plea and other proceedings:

KROMAH, CHERIF, and SURUR were members of a transnational criminal enterprise (the “Enterprise”) based in Uganda and surrounding countries that was engaged in the large-scale trafficking and smuggling of rhinoceros horns and elephant ivory, both protected wildlife species.  Trade involving endangered or threatened species violates several U.S. laws, as well as international treaties implemented by certain U.S. laws.

From at least in or about December 2012 through at least in or about May 2019, KROMAH, CHERIF, SURUR, and others conspired to transport, distribute, sell, and smuggle at least approximately 190 kilograms of rhinoceros horns and at least approximately 10 tons of elephant ivory from or involving various countries in East Africa, including Uganda, the Democratic Republic of the Congo, Guinea, Kenya, Mozambique, Senegal, and Tanzania, to buyers located in the United States and countries in Southeast Asia.  Such weights of rhinoceros horn and elephant ivory are estimated to have involved the illegal poaching of more than approximately 35 rhinoceros and more than approximately 100 elephants.  In total, the estimated average retail value of the rhinoceros horn involved in the conspiracy was at least approximately $3.4 million, and the estimated average retail value of the elephant ivory involved in the conspiracy was at least approximately $4 million.

Typically, the defendants exported and agreed to export rhinoceros horns and elephant ivory for delivery to foreign buyers, including certain rhinoceros horns to a buyer represented to be in Manhattan, in packaging that concealed the horns in, among other things, pieces of art such as African masks and statues.  The defendants received and deposited payments from foreign customers that were sent in the form of international wire transfers, some of which were sent through U.S. financial institutions, and paid in cash.

On or about March 16, 2018, law enforcement agents intercepted a package containing a black rhinoceros horn sold by the defendants that was intended for a buyer represented to be in Manhattan.  From in or about March 2018 through in or about May 2018, the defendants offered to sell additional rhinoceros horns of varying weights, including horns weighing up to approximately seven kilograms.  On or about July 17, 2018, law enforcement agents intercepted a package containing two rhinoceros horns sold by the defendants that were intended for a buyer represented to be in Manhattan.

Separately, from at least in or about August 2018 through at least in or about May 2019, SURUR conspired with others to distribute and possess with intent to distribute a large quantity of heroin to a buyer represented to be located in New York.

KROMAH previously was expelled to the United States from Uganda, while CHERIF and SURUR were extradited from Senegal and Kenya, respectively.  The defendants have been detained since their arrest and arrival in this country.

*                *                *

KROMAH, 52; CHERIF, 57; and SURUR, 62, each pled guilty to one count of conspiracy to commit wildlife trafficking, which carries a maximum sentence of five years in prison.  In addition, KROMAH and CHERIF both pled to two counts of wildlife trafficking, each of which carries a maximum sentence of five years in prison, and SURUR also pled guilty to one count of conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin, which carries a maximum sentence of life 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 U.S. Fish and Wildlife Service and the U.S. Drug Enforcement Administration, and he thanked law enforcement authorities and conservation partners in Uganda and Kenya, including the Uganda Wildlife Authority, the Uganda Office of the Director of Public Prosecution, the Uganda Police Force, the Kenya Directorate of Criminal Investigations, and the Kenyan Office of the Director of Public Prosecutions, for their assistance in this investigation.  Mr. Williams also thanked the U.S. Department of State and the U.S. Department of Justice’s Office of International Affairs for their assistance.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Sagar K. Ravi and Jarrod L. Schaeffer are in charge of the prosecution.

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 unsealing of an Indictment charging NATHANIEL CHASTAIN, a former product manager at Ozone Networks, Inc. d/b/a OpenSea (“OpenSea”), with wire fraud and money laundering in connection with a scheme to commit insider trading in Non-Fungible Tokens, or “NFTs,” by using confidential information about what NFTs were going to be featured on OpenSea’s homepage for his personal financial gain.  CHASTAIN was arrested this morning in New York, New York and will be presented today in the United States District Court for the Southern District of New York.

U.S. Attorney Damian Williams said:  “NFTs might be new, but this type of criminal scheme is not.  As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself.  Today’s charges demonstrate the commitment of this Office to stamping out insider trading – whether it occurs on the stock market or the blockchain.”

FBI Assistant Director-in-Charge Michael J. Driscoll said:  “In this case, as alleged, Chastain launched an age-old scheme to commit insider trading by using his knowledge of confidential information to purchase dozens of NFTs in advance of them being featured on OpenSea’s homepage. With the emergence of any new investment tool, such as blockchain supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain. The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way.”

As alleged in the Indictment unsealed today in Manhattan federal court:[1]

This case concerns insider trading in NFTs on OpenSea, the largest online marketplace for the purchase and sale of NFTs. In violation of the duties of trust and confidence he owed to his employer, OpenSea, CHASTAIN exploited his advanced knowledge of what NFTs would be featured on OpenSea’s homepage for his personal financial gain.

As part of his employment, CHASTAIN was responsible for selecting NFTs to be featured on OpenSea’s homepage. OpenSea kept confidential the identity of featured NFTs until they appeared on its homepage. After an NFT was featured on OpenSea’s homepage, the price buyers were willing to pay for that NFT, and for other NFTs made by the same NFT creator, typically increased substantially.

From at least in or about June 2021 to at least in or about September 2021, CHASTAIN used OpenSea’s confidential business information about what NFTs were going to be featured on its homepage to secretly purchase dozens of NFTs shortly before they were featured. After those NFTs were featured on OpenSea, CHASTAIN sold them at profits of two- to five-times his initial purchase price. To conceal the fraud, CHASTAIN conducted these purchases and sales using anonymous digital currency wallets and anonymous accounts on OpenSea.

*                *                *

CHASTAIN, 31, of New York, New York is charged with one count of wire fraud and one count of money laundering, each of which carries a maximum sentence of 20 years in prison. 

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Williams praised the outstanding work of the FBI. Mr. Williams also thanked the National Cryptocurrency Enforcement Team for their assistance in the investigation. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Thomas S. Burnett and Nicolas Roos are in charge of the prosecution. 

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth in this release constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that EPHRAIM JOSEPH ULLMANN pled guilty to conspiracy to commit wire fraud in connection with a scheme to defraud victims by telling them that they could obtain large loans or letters of credit if they provided up-front investments as collateral for the loans. In reality, there were no loans available and the victims were defrauded of more than $3 million that they invested in reliance on ULLMANN’s false statements. ULLMANN pled guilty before U.S. District Judge Richard M. Berman.

U.S. Attorney Damian Williams said:  “Ephraim Ullmann admitted to participating in a scheme to defraud victims of millions of dollars by making false statements about fictional opportunities to obtain loans and letters of credit. As a result of his guilty plea, Ullmann will now face a term of imprisonment. Our Office will continue to work with our law enforcement partners to investigate and prosecute those who defraud investors with false promises and lies.”

According to the Indictment, public court filings, and statements made in court:

From at least in or about November 2014 through at least in or about 2020, ULLMANN participated in a scheme to defraud investors by falsely telling them that they could obtain letters of credit or loans if they provided initial funds as collateral for the loans. ULLMANN told one group of victims who had started a home building company that he had been hired by an American Indian tribe to use tribal bonds as collateral to obtain large loans for companies seeking financing. ULLMANN told these victims to send hundreds of thousands of dollars to a bank account he provided them, which he described as “seed capital” to obtain the tribal bond-backed loan. In reality, ULLMANN had not been hired by the tribe and there was no loan available for the victims. ULLMANN also sent multiple forged bank documents to the victims to deceive them into thinking that the promised financing was being provided.

In addition to the tribal bond scheme, ULLMANN told a separate group of victims who were involved with starting a new oil company that he could obtain a multi-million dollar letter of credit for the company if the victims provided initial funding. In reality, there was no letter of credit available, and the victims were fraudulently induced to wire millions of dollars to bank accounts identified by ULLMANN and his co-conspirators.

*                *                *

ULLMANN, 58, of New York, New York, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum term of 20 years in prison, and agreed to restitution of $3,032,000.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.

The prosecution is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorney Thane Rehn is in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, announced today the conviction of EDWARD SHIN, then-CEO of a Pennsylvania-based bank (the “Bank”), for taking bribes in connection with the Bank’s issuance of loans that were guaranteed by the United States Small Business Administration (“SBA”).  SHIN was arrested in May of 2019 and charged with taking bribes by siphoning off a portion of commissions on SBA-guaranteed loans and causing the Bank to issue SBA-guaranteed and commercial loans to companies in which SHIN had a secret interest.  The charges are the culmination of a joint investigation by the Federal Deposit Insurance Corporation – Office of Inspector General (“FDIC-OIG”), Homeland Security Investigations (“HSI”), the SBA Office of the Inspector General (“SBA-OIG”), and the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”).  SHIN was convicted on all counts of the indictment in Manhattan federal court before U.S. District Judge John P. Cronan.

According to the allegations in the Criminal Complaint, Indictment, and statements made during trial in Manhattan federal: 

The SBA helps Americans start, build, and grow businesses by guaranteeing certain loans made by banks to help those businesses succeed.  Between 2009 and 2013, the Bank offered a range of financial products, including SBA-guaranteed loans to small businesses in the New York-New Jersey area, which the Bank could extend only on the condition that all aspects of those loans complied with SBA regulations and SBA’s standard operating procedures.  In particular, SBA regulations and procedures prohibited bank officers, including SHIN, from receiving any payments in connection with SBA-backed loans and prohibited banks from extending such loans to any institution in which a bank officer held an interest.

Notwithstanding these regulations, SHIN, then the CEO of the Bank, secretly solicited and received bribe payments in connection with SBA-guaranteed loans issued by the Bank and caused the Bank to extend SBA-guaranteed and commercial loans to companies in which SHIN had secret ownership interests.  Specifically, when the Bank issued business loans that did not involve the use of any actual broker, SHIN nonetheless arranged to have his longtime friend, a real estate and loan broker (the “Broker”), inserted unnecessarily into the transaction solely to generate a broker fee that could be shared with SHIN; in fact, the Broker did no actual work to earn a commission on those transactions, but split the “broker’s fee” with SHIN as an illegal kickback.

SHIN also arranged for the Bank to issue SBA-guaranteed loans to businesses in which he secretly retained an ownership interest, in violation of SBA regulations and procedures.  For example, in or about June 2010, the Bank issued an SBA-guaranteed loan for approximately $950,000 to a business in New York, New York.  Although documents submitted to the Bank for purposes of securing the loan did not mention SHIN’s financial interest, the business was secretly operated as a partnership between SHIN, the Broker, and another individual.   The loan ultimately went into default status, ultimately resulting in a loss to the Bank of approximately $591,278.60.    

*                      *                      *

SHIN, 58, of Ambler, Pennsylvania, was convicted of one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution, which carries a maximum potential sentence of 30 years in prison, one count of conspiracy to commit bank bribery, which carries a maximum potential sentence of five years in prison, one count of conspiracy to commit loan fraud, which carries a maximum potential sentence of five years in prison, another count of conspiracy to commit bank fraud, which carries a maximum potential sentence of 30 years in prison, and one count each of bank bribery, and theft of funds by a bank officer, each of which carries a maximum potential sentence of 30 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the FDIC-OIG, HSI, SBA-OIG, and SIGTARP.

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Tara La Morte, Anden Chow, Jessica Greenwood, and Daniel M. Tracer are in charge of the prosecution.

Damian Williams, United States Attorney for the Southern District of New York, John DeVito, Special Agent-in-Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Division (ATF), and Keechant L. Sewell, Police Commissioner for the City of New York (NYPD), announced today that RONALD ROGERS and ANAUNCIA ROGERS were charged with conspiracy to commit gun trafficking and gun trafficking, in connection with their involvement in a scheme to illegally obtain and transport firearms from Georgia for resale to residents of New York.  RONALD ROGERS was arrested yesterday traveling from Georgia to New York and was presented today before Magistrate Judge Robert W. Lehrburger in the Southern District of New York.  ANAUNCIA ROGERS was also arrested yesterday in Georgia and was presented today in the Northern District of Georgia.

U.S. Attorney Damian Williams said:  “As alleged, Anauncia and Ronald Rogers were in the business of illegally purchasing firearms in Georgia and transporting them to New York.  The two are alleged to have purchased 68 guns in their interstate weapons-buying scheme.  The importation of firearms into the tri-state exposes millions of New Yorkers to potentially lethal harm, and I commend the career prosecutors of this Office for partnering with the ATF and NYPD in the ongoing effort to rid our streets of illegal guns.”

ATF Special Agent-in-Charge John  DeVito said:  “One of ATF’s top priorities is to decrease the ever-growing threat to public safety caused by illegally trafficked firearms.  The men and women of the Joint Firearms Task Force worked diligently to identify, investigate and to apprehend Ronald and Anauncia Rogers in this case.  This investigation is yet another example of the collaborative work of the NYC Crime Gun Intelligence Center and all our investigative partners to reduce firearms trafficking and violent crime across our City and Nation.”

NYPD Commissioner Keechant L. Sewell said:  “The NYPD and our law enforcement partners at the ATF and the Office of the U.S. Attorney for the Southern District remain precisely focused on building strong cases against anyone who peddles illegal guns on the streets of New York.  Bringing these gun traffickers to justice is dangerous work, and I commend our dedicated investigators for identifying and taking into custody this husband-and-wife team, who will now face the full consequences of their alleged actions.”

According to the allegations contained in the Complaint[1]:

From at least in or around September 2018 up to and including March 2022, RONALD ROGERS and ANAUNCIA ROGERS, both residents of the state of Georgia, engaged in a scheme to buy at least 68 firearms from at least seven federal firearms licensees (“FFLs”) in Georgia.  Over the course of the scheme, ANAUNCIA ROGERS personally purchased at least 47 firearms. In connection with each purchase, ANAUNCIA ROGERS attested that she was the true purchaser of the firearms, when in fact she was buying guns on behalf of her husband and co-defendant, RONALD ROGERS.  After ANAUNCIA ROGERS purchased the guns, RONALD ROGERS transported the firearms to New York City, usually by car, and illegally resold many of the guns to others.

To date, the NYPD has seized six firearms purchased in Georgia by ANAUNCIA ROGERS during arrests in New York City. 

*                *                *

RONALD ROGERS, 26, and ANAUNCIA ROGERS, 26, both of Riverdale, Georgia, are charged with one count of conspiracy to commit gun trafficking, which carries a maximum penalty of five years in prison, and one count of gun trafficking, which also carries a maximum penalty of five years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding work of the ATF and the NYPD for their assistance in this investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Matthew J. King is in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth in this release constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced that RULESS PIERRE was sentenced to 84 months in prison yesterday in connection with his Ponzi-like securities fraud schemes that primarily targeted PIERRE’s own Haitian community in Rockland County, New York.  PIERRE was convicted of securities fraud, wire fraud, and structuring offenses after a jury trial in May 2021 before U.S. District Judge Sidney Stein, who imposed the sentence. 

U.S. Attorney Damian Williams said:  “Ruless Pierre violated the trust of his closest friends and fellow community members.  Pierre’s brazen lies caused many of his victims not only financial losses, but long-lasting emotional damage as well.  This sentence achieves some measure of justice for Pierre’s victims and puts fraudsters on notice that we will protect investors from those that would violate their trust.”   

According to the Complaint, the Indictment, and the evidence presented at trial: 

Investment Promissory Fraud

From at least November 2016 through October 2019, PIERRE solicited money from investors in Ruless Pierre Consulting Group (“RPCG”) by falsely promising them that he would earn a 20% return on their initial investment every 60 days through stock trading (the “Promissory Note Fraud”).  The investments were written down in documents known as “Investment Promissory Notes.”  These investment contracts generally promised that the investor would be paid 20% interest every 60 days and that the investor could withdraw all funds from the investment with 30 days’ notice.  Based on these documents and the false representations of PIERRE, the investors understood that their principal and interest were guaranteed.  

During the course of the investment fraud scheme, PIERRE fraudulently obtained over $2 million from approximately 100 investors.  After receiving money from investors, PIERRE deposited the money into one of his personal bank accounts or bank accounts of RPCG.  PIERRE then transferred the money to trading accounts, where he engaged in unprofitable day trading.  Despite his trading losses, PIERRE repeatedly and falsely represented to investors, including in investment statements containing fictitious balances, that the trading was profitable and that their investments were growing as promised.  In addition to losing their money, PIERRE also used investors’ funds to pay for personal expenses, including luxury vehicles.  Additionally, PIERRE further concealed the truth from investors by using money obtained from new investors to make redemption payments to previous investors, in Ponzi-like fashion.

The Franchise Investment Fraud

Beginning in or about November 2018, PIERRE began to offer investors, including some individuals who invested in his Promissory Note Fraud, the opportunity to purchase partnership interests in a partnership that would run three fast-food franchise locations (hereinafter, the “Franchise Investment Fraud”).   At the time, PIERRE did not own any of the fast-food franchises, but he was in discussions regarding purchasing them.  Each investment was memorialized in a document entitled “Silent Partnership Agreement.” 

The Silent Partnership Agreements promised the investors a 5% monthly return on the investment, in addition to a 40% pro rata share of the quarterly gross operating profit.  The minimum investment was $5,000. 

The Silent Partnership Agreements further provided that PIERRE was the General Partner, and that he was responsible “for the complete management, control, and policies related to the operation and conduct of the business.”

PIERRE received financial statements for the franchise locations, which showed minimal profits.  Nonetheless, PIERRE promised investors an unrealistic 5% monthly return on their investment.

In or about April 2019, PIERRE purchased one fast food franchise for approximately $50,000.  Pierre did not purchase the other franchises.

PIERRE deposited the fast-food franchise investors’ money in various bank accounts, which commingled the funds from the Franchise Investment Fraud with the Promissory Note Fraud.  In Ponzi-like fashion, PIERRE fraudulently misappropriated some of the fast-food franchise investors’ money to pay back investors in the Promissory Note Fraud.

In total, PIERRE raised at least $200,000 by selling the Silent Partnership Agreements to at least 18 investors.  Some of the investors were paid their five percent monthly distribution, but the vast majority of the investors were not been made whole.  The fast-food franchise went out of business in December 2019.

The Embezzlement Fraud Scheme and Structuring

In the another scheme, PIERRE embezzled money from his former employers.  From approximately 2007 until February 2016, PIERRE was the director of finance for two different hotels, which were owned by the same company (“Company-1”).  One hotel was located in the Palisades, New York (“Hotel-1”), while the other was located in Armonk, New York (“Hotel-2”) (collectively, “the Hotels”).   As the director of finance, PIERRE was the signatory on several bank accounts held in the name of the management companies that managed the Hotels (“Management Companies”). 

After August 2018, PIERRE no longer worked at either Hotel-1 or Hotel-2, but he regularly wrote himself checks payable to cash from the Management Companies’ bank accounts.  Specifically, from September 2018 through March 2019, PIERRE wrote over 70 checks to “cash” or “petty cash” from one of the bank accounts for Hotel-1, for over $300,000.

In addition, from March 2017 through 2019, PIERRE deposited large amounts of cash into his personal bank accounts in amounts that were generally less than $10,000.  The deposits were conducted at various bank locations and typically took place on the same day, consecutive days, or within a short period of time.  For example, in just seven months, from June 2018 through December 2018, PIERRE deposited approximately $225,612, through 138 cash deposits all under $10,000, into a bank account in the name of RPCG.

*                *                *

In addition to the prison term, PIERRE, 52, of Nanuet, New York, was sentenced to 3 years of supervised release and was ordered to pay forfeiture in the amount of $3,701,893.91 and restitution to victims in the amount of $2,030,337.32.

Mr. Williams praised the outstanding investigative work of Homeland Security Investigations and thanked the United States Postal Inspection Service, the United States Internal Revenue Service, the New York City Police Department, and the New York City Sherriff’s Office, which assisted in the investigation.  Mr. Williams also thanked the Securities and Exchange Commission, which has brought and filed a civil enforcement action against the defendant. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Drew Skinner is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that ALEXANDER ARGUEDAS, a/k/a “Reckless,” was sentenced today to 32 years and 6 months in prison in connection with his leadership of the Black Stone Gorilla Gang, a violent street gang that operated in New York City and elsewhere, including for his participation in the December 9, 2012 murder of Gary Rodriguez, narcotics trafficking, firearms offenses, and other acts of violence.  On February 8, 2022, ARGUEDAS pled guilty to racketeering conspiracy, narcotics conspiracy, and a firearms offense.  U.S. District Judge Jesse M. Furman imposed today’s sentence.

U.S. Attorney Damian Williams said:  “Alexander Arguedas was one of the Godfathers of the Black Stone Gorilla Gang, a violent Bloods gang that flooded New York City neighborhoods with drugs, assaults, slashings, and shootings.  He groomed young men to become drug dealers, shooters, and gang members.  He murdered Gary Rodriguez in cold blood in December 2012, and he went on to commit a multitude of other heinous acts of violence.  Today’s lengthy sentence sends an important message to gang members who commit crimes that they will be apprehended and prosecuted to the fullest extent of the law.”

As alleged in the Indictment and based on statements made in open court:

ALEXANDER ARGUEDAS, a/k/a “Reckless,” was previously one of the Godfathers of the Black Stone Gorilla Gang (“BSGG”), a racketeering enterprise that operated principally in the New York City metropolitan area and in the jails and prisons of New York City and the State of New York.  In order to enrich the enterprise, preserve and protect the power of the enterprise, and enhance its criminal operations, BSGG members and associates committed, conspired, attempted, and threatened to commit acts of violence, including murder and assaults; distributed and possessed with intent to distribute narcotics; committed robberies; engaged in bank fraud and wire fraud; and obtained, possessed, and used firearms.  BSGG members also attempted to evade prosecution by law enforcement authorities through acts of intimidation and violence against potential witnesses to crimes committed by the gang.  ARGUEDAS accepted responsibility for participating in a conspiracy to distribute quantities of cocaine, heroin, and cocaine base, and for using and carrying firearms in furtherance of drug trafficking.  ARGUEDAS also participated in the following acts of violence, among others:

On December 9, 2012, ARGUEDAS shot and killed Gary Rodriguez, 46, in the vicinity of 3089 Decatur Avenue in the Bronx.

On September 5, 2015, ARGUEDAS assaulted another inmate while in the custody of the New York State Department of Corrections, causing the victim to lose consciousness.

Between 2017 and 2018, ARGUEDAS got into a violent dispute with another BSGG member (“Victim-1”) about who would serve as a Godfather of the gang.  As a result of this conflict, in or around the Summer of 2018, ARGUEDAS ordered another BSGG member to fire shots at Victim-1 during a BSGG meeting in a public park in the vicinity of Olinville Avenue and East Gun Hill Road in the Bronx, New York.

On August 27, 2018, ARGUEDAS ordered co-defendant JAHVONNE CHAMBERS, a/k/a “JV”, who was incarcerated in the New York City Department of Corrections, to use a scalpel to slash a rival gang member housed in the same facility (“Victim-2”).

On November 12, 2019, ARGUEDAS and co-defendant TYERANCE MICKEY, a/k/a “Hoodlum,” participated in a brutal assault of a disfavored BSGG member (“Victim-3”).  During the assault, ARGUEDAS placed a plastic bag over Victim-3’s head in an attempt to suffocate Victim-3, and MICKEY hit Victim-3 over the head with a chair.  As a result of the assault, Victim-3 suffered a broken arm and substantial bruising to Victim-3’s face and body.

*                *                *

In addition to his prison term, ARGUEDAS, 32, of the Bronx, New York, was sentenced to five years of supervised release.

Mr. Williams praised the outstanding investigative work of the Drug Enforcement Administration, Homeland Security Investigations, the Special Agents of the U.S. Attorney’s Office for the Southern District of New York, the New York City Police Department, and the New York City Department of Corrections.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Andrew K. Chan, Brandon D. Harper, Emily A. Johnson, Danielle R. Sassoon and Special Assistant United States Attorney Jaclyn M. Wood are in charge of the prosecution.

Merrick B. Garland, the United States Attorney General, Damian Williams, the United States Attorney for the Southern District of New York, Kenneth A. Polite, Jr., Assistant Attorney General of the Justice Department’s Criminal Division, Vanessa Roberts Avery, U.S. Attorney of the District of Connecticut, Luis Quesada, Assistant Director of the Federal Bureau of Investigation’s Criminal Investigative Division, and Gary Barksdale, Chief Postal Inspector of the United States Postal Inspection Service, announced that Glencore International A.G. (Glencore) pled guilty today in the Southern District of New York to violations of the Foreign Corrupt Practices Act (FCPA).  In addition, as part of a separate resolution, Glencore Ltd., pled guilty in the District of Connecticut to a commodity price manipulation conspiracy.  Together, Glencore and Glencore Ltd., both part of a multi-national commodity trading and mining firm headquartered in Switzerland, agreed to pay over $1.1 billion to resolve the government’s investigations into bribery and commodity and price manipulation.   These guilty pleas are part of coordinated resolutions with criminal and civil authorities in the U.S., U.K., and Brazil.

Attorney General Merrick B. Garland said:  “The rule of law requires that there not be one rule for the powerful and another for the powerless; one rule for the rich and another for the poor.  The Justice Department will continue to bring to bear its resources on these types of cases, no matter the company and no matter the individual.”

U.S. Attorney Damian Williams said:  “The scope of this criminal bribery scheme is staggering.  Glencore paid bribes to secure oil contracts.  Glencore paid bribes to avoid government audits.  Glencore bribed judges to make lawsuits disappear.  At bottom, Glencore paid bribes to make money—hundreds of millions of dollars.  And it did so with the approval, and even encouragement, of its top executives.  The criminal charges filed against Glencore in the Southern District of New York are another step in making clear that no one – not even multinational corporations—is above the law.”

Assistant Attorney General Kenneth A. Polite, Jr. said: “Glencore’s guilty pleas demonstrate the Department’s commitment to holding accountable those who profit by manipulating our financial markets and engaging in corrupt schemes around the world.  In the foreign bribery case, Glencore International A.G. and its subsidiaries bribed corrupt intermediaries and foreign officials in seven countries for over a decade. In the commodity price manipulation scheme, Glencore Ltd. undermined public confidence by creating the false appearance of supply and demand to manipulate oil prices.”

U.S. Attorney Vanessa Roberts Avery said: “Glencore’s market price manipulation threatened not just financial harm, but undermined participants’ faith in the commodities markets’ fair and efficient function that we all rely on.  This guilty plea, and the substantial financial penalty incurred, is an appropriate consequence for Glencore’s criminal conduct, and we are pleased that Glencore has agreed to cooperate in any ongoing investigations and prosecutions relating to their misconduct, and to strengthen its compliance program company-wide.  I thank both our partners at the U.S. Postal Inspection Service for their hard work and dedication in investigating this sophisticated set of facts and unraveling this scheme, and the Fraud Section, with whom we look forward to continuing our fruitful partnership of prosecuting complex financial and corporate criminal cases.

FBI Assistant Director Luis Quesada said:  “Today’s guilty pleas by Glencore entities show that there is no place for corruption and fraud in international markets.  Glencore engaged in long-running bribery and price manipulation conspiracies, ultimately costing the company over a billion dollars in fines. The FBI and our law enforcement partners will continue to investigate criminal financial activities and work to restore the public’s trust in the marketplace.”

USPIS Chief Postal Inspector Gary Barksdale said:  “The idea of fair and honest trade is at the bedrock of American commerce. It is insult to our shared traditions and values when individuals and corporations use their power, wealth, and influence to stack the deck unfairly in their own favor.  The resulting guilty plea by Glencore Limited demonstrates the tenacity of the U.S. Postal Inspection Service and its law enforcement partners in holding criminals accountable who try to enrich themselves by undermining the forces of supply and demand.”

The FCPA Case

According to the Information filed in the Southern District of New York, statements made in court, as well as other publicly-filed documents in this case:

Glencore, acting through its employees and agents, engaged in a conspiracy for over a decade to pay more than $100 million to third-party intermediaries, while intending that a significant portion of these payments would be used to pay bribes to officials in several countries, including Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, Brazil, Venezuela, and the Democratic Republic of the Congo (DRC).

Between approximately 2007 and 2018, Glencore and its subsidiaries caused approximately $79.6 million in payments to be made to intermediary companies in order to secure improper advantages to obtain and retain business with state-owned and state-controlled entities in West Africa, including Nigeria, Cameroon, Ivory Coast, and Equatorial Guinea. Glencore concealed the bribe payments by entering into sham consulting agreements, paying inflated invoices, and using intermediary companies to make corrupt payments to foreign officials. For example, in Nigeria, Glencore and Glencore’s U.K. subsidiaries entered into multiple agreements to purchase crude oil and refined petroleum products from Nigeria’s state-owned and state-controlled oil company. Glencore and its subsidiaries engaged two intermediaries to pursue business opportunities and other improper business advantages, including the award of crude oil contracts, while knowing that the intermediaries would make bribe payments to Nigerian government officials to obtain such business. In Nigeria alone, Glencore and its subsidiaries paid more than $52 million to the intermediaries, intending that those funds be used, at least in part, to pay bribes to Nigerian officials.

In the DRC, Glencore admitted that it conspired to corruptly offer and pay approximately $27.5 million to third parties, while intending for a portion of the payments to be used as bribes to DRC officials, in order to secure improper business advantages. Glencore also admitted to bribery of officials in Brazil and Venezuela. In Brazil, the company caused approximately $147,202 to be used, at least in part, as corrupt payments for Brazilian officials. In Venezuela, Glencore admitted to conspiring to secure improper business advantages by paying over $1.2 million to an intermediary company that made corrupt payments for the benefit of a Venezuelan official.

In July 2021, a former senior trader in charge of Glencore’s West Africa desk for the crude oil business pled guilty to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering.

Under the terms of the plea agreement, which remains subject to Court approval, Glencore pled guilty to one count of conspiracy to violate the FCPA, agreed to a criminal fine of $428,521,173, and acknowledged criminal forfeiture liability in the amount of $272,185,792. Glencore also had charges brought against it by the U.K.’s Serious Fraud Office (SFO) and reached separate parallel resolutions with the Brazilian Ministério Público Federal (MPF) and the Commodity Futures Trading Commission (CFTC). Under the terms of the plea agreement, the department has agreed to credit the company over $256 million in payments that it makes to the CFTC, to the Court in the U.K. as well as to authorities in Switzerland, in the event that the company reaches a resolution with Swiss authorities within one year.

The department reached its agreement with Glencore based on a number of factors, including the nature, seriousness, and pervasiveness of the offense conduct, which spanned over a 10-year period, in numerous countries, and involved high-level employees and agents of the company; the company’s failure to voluntarily and timely disclose the conduct to the department; the state of Glencore’s compliance program and the progress of its remediation; the company’s resolutions with other domestic and foreign authorities; and the company’s continued cooperation with the department’s ongoing investigation. Glencore did not receive full credit for cooperation and remediation, because it did not at all times demonstrate a commitment to full cooperation, it was delayed in producing relevant evidence, and it did not timely and appropriately remediate with respect to disciplining certain employees involved in the misconduct. Although Glencore has taken remedial measures, certain of the compliance enhancements are new and have not been fully implemented or tested to demonstrate that they would prevent and detect similar misconduct in the future, necessitating the imposition of an independent compliance monitor for a term of three years.

The Commodity Price Manipulation Case

According to court documents filed in the District of Connecticut, Glencore Ltd. operated a global commodity trading business, which included trading in fuel oil. Between approximately January 2011 and August 2019, Glencore Ltd. employees (including those who worked at Chemoil Corporation, which was majority-owned by Glencore Ltd.’s parent company and then fully-acquired in 2014) conspired to manipulate two benchmark price assessments published by S&P Global Platts (Platts) for fuel oil products, specifically, intermediate fuel oil 380 CST at the Port of Los Angeles (Los Angeles 380 CST Bunker Fuel) and RMG 380 fuel oil at the Port of Houston (U.S. Gulf Coast High-Sulfur Fuel Oil). The Port of Los Angeles is the busiest shipping port in the U.S. by container volume. The Port of Houston is the largest U.S. port on the Gulf Coast and the busiest port in the U.S. by foreign waterborne tonnage.

As part of the conspiracy, Glencore Ltd. employees sought to unlawfully enrich themselves and Glencore Ltd. itself, by increasing profits and reducing costs on contracts to buy and sell physical fuel oil, as well as certain derivative positions that Glencore Ltd. held. The price terms of the physical contracts and derivative positions were set by reference to daily benchmark price assessments published by Platts—either Los Angeles 380 CST Bunker Fuel or U.S. Gulf Coast High-Sulfur Fuel Oil—on a certain day or days plus or minus a fixed premium. On these pricing days, Glencore Ltd. employees submitted orders to buy and sell (bids and offers) to Platts during the daily trading “window” for the Platts price assessments with the intent to artificially push the price assessment up or down.

For example, if Glencore Ltd. had a contract to buy fuel oil, Glencore Ltd. employees submitted offers during the Platts “window” for the express purpose of pushing down the price assessment and hence the price of the fuel oil that Glencore Ltd. purchased. The bids and offers were not submitted to Platts for any legitimate economic reason by Glencore Ltd. employees, but rather for the purpose of artificially affecting the relevant Platts price assessment so that the benchmark price, and hence the price of fuel oil that Glencore Ltd. bought from, and sold to, another party, did not reflect legitimate forces of supply and demand.

According to court documents, between approximately September 2012 and August 2016, Glencore Ltd. employees conspired to manipulate the price of fuel oil bought from, and sold to, a particular counterparty, Company A, through private, bilateral contracts, by manipulating the Platts price assessment for Los Angeles 380 CST Bunker Fuel. Between approximately January 2014 and February 2016, Glencore Ltd. employees also undertook a “joint venture” with Company A, which involved buying fuel oil from Company A at prices artificially depressed by Glencore Ltd.’s manipulation of the Platts Los Angeles 380 CST Bunker Fuel benchmark. Finally, between approximately January 2011 and August 2019, Glencore Ltd. employees conspired to manipulate the price of fuel oil bought and sold through private, bilateral contracts, as well as derivative positions, by manipulating the Platts price assessment for U.S. Gulf Coast High-Sulfur Fuel Oil.

A former Glencore Ltd. senior fuel oil trader, Emilio Jose Heredia Collado, of Lafayette, California, pled guilty in March 2021 to one count of conspiracy to engage in commodities price manipulation in connection with his trading activity related to the Platts Los Angeles 380 CST Bunker Fuel price assessment. Heredia’s sentencing is scheduled for June 17, 2022.

Glencore Ltd. pleaded guilty, pursuant to a plea agreement, to one count of conspiracy to engage in commodity price manipulation. Under the terms of Glencore Ltd.’s plea agreement regarding the commodity price manipulation conspiracy, which remains subject to court approval, Glencore Ltd. will pay a criminal fine of $341,221,682 and criminal forfeiture of $144,417,203. Under the terms of the plea agreement, the department will credit over $242 million in payments that the company makes to the CFTC. Glencore Ltd. also agreed to, among other things, continue to cooperate with the department in any ongoing investigations and prosecutions relating to the underlying misconduct, to modify its compliance program where necessary and appropriate, and to retain an independent compliance monitor for a period of three years.

A number of relevant considerations contributed to the department’s plea agreement with Glencore Ltd., including the nature and seriousness of the offense, Glencore Ltd.’s failure to fully and voluntarily self‑disclose the offense conduct to the department, Glencore Ltd.’s cooperation with the department’s investigation, and the state of Glencore Ltd.’s compliance program and the progress of its remediation.

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A sentencing control date was scheduled in the Southern District of New York on October 3, 2022, before United States District Judge Lorna G. Schofield, who presided over Glencore’s guilty plea today.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.

The FCPA case is being prosecuted by Assistant U.S. Attorneys Michael McGinnis and Juliana Murray of the Southern District of New York, Trial Attorneys Leila Babaeva and James Mandolfo of the Justice Department’s Fraud Section, and Trial Attorney Michael Khoo of the Justice Department’s Money Laundering and Asset Recovery Section.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that KARIM ELKORANY, a former communications specialist with the United Nations (“UN”) in Iraq, pled guilty before United States District Judge Naomi Reice Buchwald to sexually assaulting an internationally protected person and making false statements to cover up another sexual assault.  In connection with the plea, ELKORANY also admitted that he drugged and/or sexually assaulted seventeen additional victims. 

U.S. Attorney Damian Williams said:  “Karim Elkorany admitted today to drugging at least 19 victims, and sexually assaulting at least 13 of them while they were unconscious after he drugged them.  He committed many of his heinous crimes while employed by the United Nations.  Nothing can reclaim what Elkorany stole from his victims, but we hope the victims will take some measure of comfort in knowing that Elkorany has admitted to and been convicted of his abominable crimes.   We again urge anyone who thinks they may be victim of Elkorany to please contact the FBI at 1-800-CALL-FBI or tips.fbi.gov.”

According to the Indictment, public court filings, and statements during court proceedings:

Since at least in or about 2005 up to at least in or about April 2018, ELKORANY worked in international aid, development and/or foreign relations.  From in or about October 2013 up to in or about April 2016, ELKORANY worked for the UN Children’s Fund in Iraq.  From in or about July 2016 up to in or about April 2018, ELKORANY worked as a Communications Specialist for the UN in Iraq. 

In or about November 2016, ELKORANY drugged and sexually assaulted a woman (“Victim-1”) in Iraq, where he was stationed while working for the UN.  ELKORANY drugged Victim-1 and brought Victim-1 to his apartment.  While at ELKORANY’s apartment, ELKORANY sexually assaulted Victim-1 while she was unconscious.  In or around December 2016, Victim-1 reported the sexual assault to the UN.  The UN initiated an investigation, through which ELKORANY was notified of the substance of Victim-1’s allegations against him.

On or about November 3, 2017, special agents working with the New York Field Office of the Federal Bureau of Investigation (“FBI”) conducted a voluntary interview of ELKORANY outside of his residence in New Jersey.  During that interview, ELKORANY expressed familiarity with the nature and substance of the allegations made by Victim-1 to the UN, but falsely stated that the drugging and sexual assault by ELKORANY that Victim-1 had reported to the UN did not occur. 

ELKORANY also engaged in a pattern of similar conduct involving many other women.  Between in or around 2014 and in or around 2019, ELKORANY drugged and sexually assaulted a woman (“Victim-2”), who was a contractor for a UN organization at relevant times, in the United States and Iraq, among other locations, on multiple occasions.  In addition to Victim-1 and Victim‑2, ELKORANY drugged and sexually assaulted eleven additional victims between in or around 2002 and in or around 2016, and drugged six additional victims between in or around 2007 and 2016.

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ELKORANY, 38, of West Orange, New Jersey, pled guilty to one count of making false statements to special agents of the FBI, and one count of assault of an internationally protected person.  The total maximum term of prison on these two counts is 15 years.  

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as sentencing of the defendant will be determined by the court.  ELKORANY is scheduled to be sentenced by Judge Buchwald on September 29, 2022.

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation.  Mr. Williams also thanked the United States Department of State and the UN for their assistance.  Any individuals who believe they have information concerning ELKORANY or any similar conduct should contact the FBI at 1-800-CALL-FBI or tips.fbi.gov.

The case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Lara Pomerantz, Amanda L. Houle, Daniel C. Richenthal, and Robert B. Sobelman are in charge of the prosecution.

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 unsealing of a complaint charging FRANK GLASSNER, a principal of an executive compensation consulting firm based in Novato, California (the “Consulting Firm”), with securities fraud in connection with a scheme to commit insider trading based on material, nonpublic information regarding the upcoming public announcement that Kadmon Holdings, Inc. (“Kadmon”) – which GLASSNER and the consulting firm were advising – would be acquired by Sanofi, S.A. (“Sanofi”).  GLASSNER was arrested this morning in Novato, California and will be presented today in the United States District Court for the District of Northern California.

U.S. Attorney Damian Williams said:  “As an advisor to Kadmon Holdings, Frank Glassner is alleged to have illegally taken advantage of his access to nonpublic information regarding the company’s acquisition to front run trades for himself.  Glassner’s alleged attempts to illegally game the markets may have given him a profitable edge, but they also exposed him to a much riskier downside — criminal liability for insider trading.”

FBI Assistant Director-in-Charge Michael J. Driscoll said:  “We allege Glassner used confidential information he was privy to as a consultant to trade in advance of a company’s acquisition and then to cash in after the deal was publicly announced. This type of illicit action makes markets unfair and creates an atmosphere of distrust. Our work investigating insider trading hopefully restores faith for investors who need to believe in the process.”

As alleged in the Complaint unsealed today in Manhattan federal court:[1]

Prior to its acquisition by Sanofi, Kadmon was a publicly-traded biopharmaceutical company that engaged in the discovery, development, and commercialization of small molecules and biologics with a focus on inflammatory and fibrotic diseases. Kadmon’s stock was traded under the ticker symbol “KDMN” on the NASDAQ.

Between July 2021 and September 2021, Kadmon engaged GLASSNER and the Consulting Firm to provide executive compensation consulting services related to the potential acquisition of Kadmon. In connection with this engagement, GLASSNER had access to material, non-public information, which he misappropriated and, in violation of the duties that he owed to Kadmon, used to trade Kadmon stock and call options. 

GLASSNER engaged in this trading between on or about August 3, 2021 and on or about August 23, 2021 – at the same time he was advising Kadmon about its potential acquisition. On September 8, 2021, Kadmon publicly announced that it had agreed to be acquired by Sanofi for a per-share price significantly above the share price at which Kadmon was trading. That day, Kadmon’s share price increased by approximately 71% and GLASSNER earned approximately $405,000 of realized and unrealized profits on the Kadmon stock and call options he had previously purchased. 

*                *                *

GLASSNER, 68, of Novato, California is charged with two counts of securities fraud, one of which carries a maximum sentence of 20 years in prison and one of which carries a maximum sentence of 25 years in prison. 

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Williams praised the outstanding work of the FBI. Mr. Williams also thanked the U.S. Securities and Exchange Commission, which today filed a parallel civil action. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Christine Magdo is in charge of the prosecution. 

The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth in this release constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced that VICTOR RIVERA was sentenced today to 27 months in prison for conspiring to commit honest services fraud. RIVERA, who used to lead Bronx Parent Housing Network (“BPHN”), a non-profit organization that operated soup kitchens, homeless shelters, and affordable-housing facilities in New York City, schemed to enrich himself through bribes and kickbacks from BPHN’s contractors. RIVERA was sentenced by United States District Judge Sidney H. Stein.

U.S. Attorney Damian Williams said:  “Victor Rivera abused his position of authority at a non-profit established to help the most vulnerable in order to line his own pockets. For this egregious violation of trust, he is now sentenced to prison.”

According to allegations in the Information, other court filings, and statements made in court:

RIVERA was the President and Chief Executive Officer of BPHN, which annually spent millions of dollars in public funds on real estate, security, cleaning, construction, and food expenses, among other costs related to the housing and social services BPHN provided. From at least in or about 2013 until in or about 2020, RIVERA engaged in a scheme to enrich himself and his relatives by soliciting and accepting bribes and kickbacks from contractors doing work related to or for BPHN. The scheme yielded RIVERA hundreds of thousands of dollars in illicit gains. 

*                *                *

In addition to his prison sentence, RIVERA, 62, of Stony Point, New York, was sentenced to two years of supervised release. RIVERA was also ordered to forfeit $1,249,158.93, and to pay BPHN $902,269.23 in restitution.

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 New York Department of Investigation. Mr. Williams also thanked the Internal Revenue Service for its assistance.

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorneys David Abramowicz and Tara La Morte are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that INIGO PHILBRICK, an art dealer specializing in post-war and contemporary fine art with galleries in London, United Kingdom, and Miami, Florida, was sentenced today to 84 months in prison in connection with a multi-year scheme to defraud various individuals and entities in order to finance his art business. U.S. District Judge Sydney H. Stein imposed today’s sentence.

U.S. Attorney Damian Williams said:  “Inigo Philbrick grew his purportedly successful art business by collateralizing and reselling fractional shares in high dollar contemporary art. Unfortunately, his success was built on brazen lies, including concealed ownership interests, fake documents, and even an invented art collector. When the house of cards fell apart, Philbrick fled for a remote island in the Pacific, leaving many of his victims without recourse. For his extensive fraud, Philbrick is now sentenced to a substantial prison term.” 

According to the allegations in the Complaint, Indictment, and statements made in court:

From approximately 2016 through 2019, to finance his art business, PHILBRICK engaged in a scheme to defraud multiple individuals and entities in the art market located in the New York metropolitan area and abroad.  PHILBRICK made material misrepresentations and omissions to art collectors, investors, and lenders to access valuable art and obtain sales proceeds, funding, and loans (the “Fraud Scheme”).  PHILBRICK knowingly misrepresented the ownership of certain artworks, for example, by selling a total of more than 100 percent ownership in an artwork to multiple individuals and entities without their knowledge; and by selling artworks and/or using artworks as collateral on loans without the knowledge of co-owners, and without disclosing the ownership interests of third parties to buyers and lenders. PHILBRICK furnished fraudulent contracts and records to investors to artificially inflate the artworks’ value and conceal his scheme, including a contract that listed a stolen identity as the seller.

Over the years, PHILBRICK obtained over $86 million in loans and sale proceeds in connection with the Fraud Scheme.  Artworks about which PHILBRICK made these fraudulent misrepresentations in furtherance of the Fraud Scheme include, among others, a 1982 painting by the artist Jean-Michel Basquiat titled “Humidity,” a 2010 untitled painting by the artist Christopher Wool, and an untitled 2012 painting by the artist Rudolf Stingel depicting the artist Pablo Picasso.  

By in or about the fall of 2019, PHILBRICK’s Fraud Scheme began to come to light as various investors and lenders learned about the fraudulent records PHILBRICK had provided and the material misrepresentations and omissions he had made.  By in or about mid-October, a lender officially notified PHILBRICK that he was in default of approximately a $14 million loan, and by November 2019, various investors had filed civil lawsuits in multiple jurisdictions regarding PHILBRICK’s Fraud Scheme in connection with various artworks.  At around the same time, PHILBRICK’s art galleries in Miami and London closed, and PHILBRICK stopped responding to legal process.  PHILBRICK fled the United States shortly before public reporting began about the lawsuits.  A fugitive, PHILBRICK resided in Vanuatu from approximately October 2019 until he was arrested there on June 11, 2020, in connection with this case.   

*                *                *

In addition to the prison term, PHILBRICK, 34, a U.S. citizen previously residing in London, United Kingdom, was sentenced to two years of supervised release.  PHILBRICK was further ordered to pay a forfeiture of $86,672,790. 

Mr. Williams praised the investigative work of the Federal Bureau of Investigation’s Art Crime Team.

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Jessica K. Feinstein and Cecilia E. Vogel are in charge of the prosecution.

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 CHIBUNDU JOSEPH ANUEBUNWA, a citizen of Nigeria, was extradited from the United Kingdom and arrived in the United States this afternoon.  ANUEBUNWA was extradited on charges of conspiracy to commit wire fraud and wire fraud in connection with his alleged participation in a multimillion-dollar business email compromise campaign that targeted thousands of victims around the world, including in the United States.  ANUEBUNWA will be presented today before U.S. Magistrate Judge Katharine H. Parker.  The case is assigned to U.S. District Judge Paul A. Crotty.  In connection with the same conspiracy as ANUEBUNWA, co-defendant DAVID CHUKWUNEKE ADINDU was previously sentenced to 41 months in prison, and co-defendant ONYEKACHI EMMANUEL OPARA was previously extradited from South Africa and sentenced to 60 months in prison.

U.S. Attorney Damian Williams said:  “As alleged in the indictment, Chibundu Joseph Anuebunwa tried to steal money from thousands of businesses around the world by impersonating corporate executives and sending phony emails to company employees.  Today’s extradition should serve as a warning to those who think they can defraud victims in the United States from halfway around the world: the United States and its international partners will find you and hold you accountable no matter how long it takes.”

According to the allegations in the Indictment unsealed today in Manhattan federal court[1]:

Between 2014 and 2016, ANUEBUNWA, OPARA, and ADINDU participated in business email compromise scams (“BEC scams”) targeting thousands of victims around the world, including in the United States.  As part of the BEC scams, emails were sent to employees of various companies directing that funds be transferred to specified bank accounts.  The emails purported to be from supervisors at those companies or third-party vendors that did business with those companies.  The emails, however, were not legitimate.  Rather, they were either from email accounts with a domain name that was very similar to a legitimate domain name, or the metadata in the emails had been modified so that the emails appeared as if they were from legitimate email addresses.  After victims complied with the fraudulent wiring instructions, the transferred funds were quickly withdrawn or moved into different bank accounts.  In total, the BEC scams attempted to defraud millions of dollars from victims.

ANUEBUNWA and others carried out BEC scams by exchanging information regarding: (1) bank accounts used for receiving funds from victims; (2) email accounts used for communicating with victims; (3) scripts for requesting wire transfers from victims; and (4) lists of names and email addresses for contacting and impersonating potential victims.

*                *                *

ANUEBUNWA, 39, of Lagos, Nigeria, is charged with one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison, and one count of wire fraud, which also carries a maximum penalty of 20 years in prison. 

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the investigative work of the FBI and thanked the Yahoo E-Crime Investigations Team for their assistance.  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 the United Kingdom. Mr. Williams also thanked the United Kingdom’s Crown Prosecution Service for their assistance in today’s extradition.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Andrew K. Chan and Daniel Loss 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 constitutes only allegations, and every fact described herein should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced that Arthur Hayes was sentenced today to six months of home detention, in connection with his violation of the Bank Secrecy Act (the “BSA”), through his willful failure to establish, implement, and maintain an anti-money laundering (“AML”) program at the cryptocurrency company he co-founded and owned, Bitcoin Mercantile Exchange or “BitMEX”.  U.S. District Judge John G. Koeltl imposed today’s sentence.

U.S. Attorney Damian Williams said:  “While building a cryptocurrency platform that profited him millions of dollars, Arthur Hayes willfully defied U.S. law that requires businesses to do their part to help in preventing crime and corruption.  He intentionally failed to implement and maintain even basic anti-money laundering policies, which allowed BitMEX to operate as a platform in the shadows of the financial markets. This Office will continue to vigorously enforce United States law intended to prevent money laundering through financial institutions, including cryptocurrency platforms.”

According to the Indictment, public court filings, and statements made in court:

ARTHUR HAYES, together with BENJAMIN DELO and SAM REED, who have also pled guilty and are scheduled to be sentenced in the near-future, was one of the three co-founders and the CEO of BitMEX. 

BitMEX is an online cryptocurrency derivatives exchange that, during the relevant time period, had U.S.-based operations and served thousands of U.S. customers, notwithstanding false representations to the contrary by the company, including HAYES.  From at least September 2015, and continuing at least through the time of the Indictment in September 2020, HAYES willfully caused BitMEX to fail to establish and maintain an AML program, including a program for verifying the identify of BitMEX’s customers (or a “know your customer” or “KYC” program).  As a result of its willful failure to implement AML and KYC programs, BitMEX was in effect a money laundering platform.  For example, in May 2018, HAYES was notified of allegations that BitMEX was being used to launder the proceeds of a cryptocurrency hack.  Neither HAYES nor the company filed a suspicious activity report thereafter, nor did they implement an AML or KYC program in response. 

HAYES failed to institute AML or KYC programs at BitMEX despite closely following U.S. regulatory developments that made clear their legal obligation to do so if BitMEX operated in the United States, which it did.  Despite repeatedly stating that BitMEX did not serve U.S. customers, including to members of the press and others outside of BitMEX, HAYES knew that BitMEX’s purported withdrawal from the U.S. market in or about September 2015 was a sham, and that “controls” BitMEX put in place to prevent U.S. trading were an ineffective facade that did not, in fact, prevent users from accessing or trading on BitMEX from the United States. 

HAYES derived substantial profits from BitMEX, as a result of U.S.-based trading, and aggressively advertised the company’s lack of an AML or KYC program.  At various points in time, BitMEX’s website stated that “No real name or other advanced verification is required on BitMEX.”  Through at least August 2017, the platform’s registration page explicitly stated that first and last name were “not required” to register.

Because of the lack of KYC, the full scope of criminal conduct on BitMEX may never be known. The company, still owned by HAYES and his co-defendants, accepted a settlement with the Department of Treasury in which the Company neither admitted nor denied that that it had conducted more than $200 million in suspicious transactions, and that the Company had failed to file suspicious activity reports on nearly 600 specific suspicious transactions.

*                *                *

HAYES, 36, of Miami, Florida, was sentenced to six months of home detention and two years of probation.  Hayes also agreed to pay a fine of $10 million dollars representing his pecuniary gain from the offense.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation’s New York Money Laundering Investigation Squad, and thanked the attorneys and investigators at the Commodity Futures Trading Commission whose expertise and diligence were integral to the development of this case.

The prosecution is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Jessica Greenwood, Samuel Raymond, and Thane Rehn are in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and James F. Boyersmith, Special Agent-in-Charge of the Department of Justice Office of the Inspector General Miami Field Office, announced today that JOHN COSTANZO JR., a Drug Enforcement Administration (“DEA”) Special Agent, and MANUEL RECIO, a former DEA Assistant Special Agent-in-Charge, were indicted in Manhattan federal court with conspiracy to bribe a public official, conspiracy to commit honest services wire fraud, and honest services wire fraud, for a scheme in which RECIO funneled tens of thousands of dollars to COSTANZO in exchange for COSTANZO providing sensitive law enforcement information to RECIO to assist RECIO in recruiting clients for defense lawyers. In addition, COSTANZO was charged with accepting a bribe from RECIO and RECIO was charged with giving a bribe to COSTANZO. COSTANZO and RECIO were arrested today and presented before Magistrate Judge Barbara Moses.  The case has been assigned to U.S. District Judge J. Paul Oetken.

U.S. Attorney Damian Williams said:  “The conduct alleged in the indictment violates the core duty of law enforcement officers to protect and serve the public, rather than to use their access to sensitive information to enrich themselves. As alleged, Manuel Recio provided substantial secret payments to John Costanzo Jr., and in exchange, received information about pending DEA investigations, sealed indictments, and impending arrests. It is critical for federal law enforcement officers to preserve the integrity of ongoing investigations and not divulge confidential information to the private sector in exchange for financial benefits.”

According to the Indictment unsealed today in Manhattan federal court:[1]

JOHN COSTANZO JR. is a DEA special agent currently assigned to DEA Headquarters and was a Group Supervisor in the DEA’s Miami Field Office until June 2019. MANUEL RECIO is a former DEA special agent who retired as the Assistant Special Agent-in-Charge for the Miami Field Office in November 2018. Upon his retirement, RECIO began operating his own business, which provided private investigative services to criminal defense attorneys and also helped defense attorneys to recruit clients. From around the time of RECIO’s retirement through around November 2019, RECIO agreed with COSTANZO to provide benefits to COSTANZO in exchange for COSTANZO providing RECIO with nonpublic information about DEA investigations. COSTANZO provided RECIO with information about forthcoming, sealed indictments and nonpublic investigations, such as the identities of individuals charged and the anticipated timing of arrests; and intelligence which COSTANZO obtained from the Narcotics and Dangerous Drugs Information System (“NADDIS”), a DEA database that contains information about individuals who are or have been under investigation by the DEA. RECIO paid COSTANZO for this information, which RECIO used to help recruit new clients for criminal defense attorneys.

As alleged in the Indictment, among the benefits paid to COSTANZO were a $2,500 payment made in November 2018, shortly after RECIO’s retirement from the DEA, which was funneled to COSTANZO through a company owned by a close family member of COSTANZO. At the same time that this payment was made, RECIO began asking COSTANZO to run searches in NADDIS to provide RECIO with nonpublic DEA information about DEA targets and investigations. Following that initial payment, RECIO and others continued to provide benefits to COSTANZO, including tens of thousands of dollars that were funneled from RECIO through a company created by a DEA task force officer, and $50,000 that was paid to COSTANZO through a close family member for COSTANZO’s purchase of a condominium in January and February 2019.

In return, COSTANZO continued to provide nonpublic DEA information to RECIO, including information about the timing of forthcoming indictments and information about DEA arrest plans of particular targets. COSTANZO also searched NADDIS for names of particular individuals requested by RECIO on dozens of occasions during the scheme, and provided RECIO with information and assistance with particular charged defendants represented by attorneys for whom REICO was working. During the scheme, COSTANZO and RECIO took steps to conceal the existence of the scheme, including by structuring the payments from RECIO to COSTANZO through third parties, and through COSTANZO’s use of a cellphone provided by RECIO for communications related to the scheme.

*                *                *

COSTANZO JR., 47, of Arlington, Virginia, and RECIO, 53, of Miami, Florida, are each charged with one count of conspiracy to commit bribery, which carries a maximum term of five years in prison, and one count of receiving or paying a bribe, respectively, which carries a maximum term of 15 years in prison. COSTANZO and RECIO are also charged with one count of conspiracy to commit honest services wire fraud and one count of honest services wire fraud, each of which counts carries a maximum term of 20 years in prison.

The maximum potential sentences in this case are prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the FBI and the Department of Justice Office of the Inspector General, and thanked the DEA’s Office of Professional Responsibility for its support in this matter.

The prosecution is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Thane Rehn and Sheb Swett are in charge of the prosecution. 

[1] The entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced that FRED ASANTE was sentenced to 108 months for his role as the top U.S.-based money launderer for a criminal enterprise based in the Republic of Ghana (“Ghana”) that engaged in fraud schemes that stole tens of millions of dollars from victims across the United States.  These fraud schemes included business email compromises, romance scams targeting elderly victims, and fraud schemes related to the COVID-19 pandemic.  ASANTE was arrested on February 17, 2021 in Virginia and pled guilty to conspiracy to commit money laundering on February 16, 2022 before District Judge Jed S. Rakoff, who imposed today’s sentence.

U.S. Attorney Damian Williams said:  “Fred Asante set up companies that appeared to be involved in legitimate business, but in reality they were simply fronts that he used to receive and launder millions of dollars for a criminal enterprise in Ghana that defrauded American businesses and individuals through online scams.  Asante will now serve a substantial term in prison for his money laundering operation.  We will continue to work tirelessly with our law enforcement partners to hold accountable those who participate in the money side of the fraud business.”

According to the Indictment, public court filings, and statements made in court:

From at least September 2016 through when he was arrested in February 2021, ASANTE was a member of a criminal enterprise (the “Enterprise”) based in Ghana that committed a series of frauds against individuals and businesses located across the United States, including in the Southern District of New York.  The frauds perpetrated by the Enterprise have consisted of, among other frauds, business email compromises, romance scams, and fraud schemes related to the novel coronavirus/COVID-19 pandemic.  First, the objective of the Enterprise’s business email compromise fraud scheme was to trick and deceive businesses into wiring funds into accounts controlled by the Enterprise through the use of email accounts that “spoofed” or impersonated employees of a victim company or third parties engaged in business with a victim company.  Second, the Enterprise conducted the romance scams by using electronic messages sent via email, text messaging, or online dating websites that deluded victims, many of whom were vulnerable older men and women who lived alone, into believing the victim was in a romantic relationship with a fake identity assumed by members of the Enterprise.  Once members of the Enterprise had gained the trust of the victims using the fake identity, they used false pretenses to cause the victims to wire money to bank accounts the victims believed were controlled by their romantic interests, when in fact the bank accounts were controlled by members of the Enterprise.  Finally, the Enterprise submitted fraudulent loan applications through a loan program of the United States Small Business Administration (the “SBA”) designed to provide relief to small businesses during the COVID-19 pandemic, namely the Economic Injury Disaster Loan (“EIDL”) Program.  The Enterprise submitted fraudulent EIDL applications in the names of actual companies to the SBA and when an EIDL loan was approved, the funds were ultimately deposited in bank accounts controlled by members of the Enterprise. 

ASANTE and other members of the Enterprise received fraud proceeds from victims of the Enterprise in dozens of business bank accounts that they controlled in New York, New Jersey, and Virginia.  The business bank accounts were opened in the names of companies formed by ASANTE and other members of the Enterprise that were purportedly involved in, among other things, automobile sales, food imports and exports, and freight trucking and shipping.  Once ASANTE received fraud proceeds in bank accounts under his control, he withdrew, transported, and laundered those fraud proceeds to other members of the Enterprise abroad.  ASANTE primarily laundered the fraud proceeds through his businesses by using the proceeds to purchase automobiles, food products, and other goods from U.S.-based suppliers and distributors of such products and shipping those products to Ghana and elsewhere.  These transactions had the appearance of legitimate business transactions when, in fact, the products had been purchased using the proceeds of fraud schemes.  This trade-based money laundering scheme was designed to obscure the origin of the fraud proceeds as well as the identity of the ultimate beneficiaries of these schemes. 

In total, ASANTE opened and maintained 19 bank accounts at more than 10 different banks as part of his money laundering operation.  These bank accounts had deposits that totaled approximately $36.4 million during the 4.5-year period from September 2016 through January 2021, which included fraud proceeds from more than 80 identified victims.  

*                *                *

In addition to the prison term, ASANTE, 37, of Fredericksburg, Virginia, was sentenced to three years of supervised release.  ASANTE was also ordered to pay forfeiture in the amount of $647,488 and restitution in the amount of  $2,292,486.71.    

ASANTE’s co-defendant, LORD ANING, was previously sentenced to two years in prison by Judge Rakoff on February 28, 2022. 

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Sagar K. Ravi, Katherine Reilly, and Mitzi Steiner are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that JOSEPH CIMINO was sentenced today to 18 months in prison, in connection with his scheme to induce victims to invest several hundred thousand dollars into his Hudson Valley tequila business based on false information about the company’s finances.  CIMINO previously pled guilty to committing securities fraud and wire fraud in connection with his misrepresentations to investors and misappropriation of investor funds.  U.S. District Judge Vincent L. Briccetti imposed today’s sentence in White Plains federal court.

U.S. Attorney Damian Williams said:  “Cimino doctored documents and provided phony information to dupe investors into handing over hundreds of thousands of dollars that he used in part to line his own pockets.  Now Cimino has been sentenced for his crimes.”

According to statements in the Complaint, Information, and other filings and statements at public court proceedings in the case:

In or about 2016 to 2018, CIMINO raised approximately $615,000 from approximately 16 investors.  To attract investors, CIMINO falsely inflated the amount of capital that he had raised from prior investors, and fraudulently altered an investor list to include several individuals who, in fact, had not contributed any funds.  CIMINO also falsely inflated his company’s sales.  For example, in July 2017, CIMINO claimed in an investor report that year-to-date sales totaled 3,410 cases of tequila, when the actual sales totaled only 350 cases.  Similarly, in October 2017, CIMINO falsely claimed that year-to-date sales totaled 6,035 cases, which was approximately five times the actual total.  CIMINO further claimed in October 2017 that his company would receive reimbursement for 800 cases of tequila supposedly destroyed at a Puerto Rican warehouse as a result of Hurricane Maria.  In reality, no inventory was destroyed in the hurricane, and the company lacked insurance.

CIMINO also misused a substantial portion of investor money that was intended to fund the operations of his tequila business for personal expenses, contrary to the company’s operating agreement.  For example, CIMINO transferred investor money to his personal bank account in order to subsidize his food, entertainment, and other living expenses.

*                *                *

In addition to the prison term, CIMINO, 58, of Warwich, New York, was sentenced to three years of supervised release.  CIMINO was further ordered to pay restitution to his victims in the amount of $615,000.02 and to forfeit $159,258.23 in fraud proceeds.  

Ms. Williams praised the investigative work of the Federal Bureau of Investigation and thanked the U.S. Securities and Exchange Commission for its assistance.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Benjamin Gianforti and Daniel Loss are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Catherine Hermsen, Assistant Commissioner, United States Food and Drug Administration Office of Criminal Investigations (“FDA-OIC”), Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), and Thomas Walsh, Rockland County District Attorney, announced that GABRIEL LETIZIA, Jr., was sentenced in White Plains federal court to 60 months in prison for defrauding customers of his consumer products testing company and causing misbranded drugs to be introduced into interstate commerce.  United States District Judge Kenneth M. Karas imposed today’s sentence.  LETIZIA previously pled guilty before United States Magistrate Judge Paul E. Davison. 

U.S. Attorney Damian Williams said:  “For three decades, Gabriel Letizia defrauded AMA’s customers and jeopardized the safety of millions of consumers, all in the name of greed.  Thanks to our partners at FDA-OIC, the FBI, and the Rockland County District Attorney’s Office, he has now been sentenced to prison.”   

According to the allegations in the Indictment, the Superseding Information to which LETIZIA pled guilty, court filings, and statements made in court:

LETIZIA was the owner and executive director of AMA Laboratories, Inc. (“AMA”), a consumer product testing company in Rockland County, New York.  LETIZIA began operating AMA in the early 1980s, and became its sole owner in approximately 2003.

AMA purported to test the safety and efficacy of cosmetics, sunscreens, and other products on specified numbers of volunteer panelists for consumer products companies.  Clients of AMA used the test results to support their claims that their products were safe, effective, hypoallergenic, or provided a certain Sun Protection Factor (“SPF”), including after exposure to water.  AMA clients that manufactured sunscreens used the test results to comply with FDA regulations requiring sunscreen manufacturers to have their products tested and to maintain the test results for possible review by the FDA. 

From 1987 through April 2017, LETIZIA and AMA personnel operating at his direction defrauded AMA’s customers of more than $46 million by testing products on materially lower numbers of panelists than the numbers specified and paid for by AMA’s customers.  According to AMA employees, the majority of AMA’s tests contained fraudulent results, for two reasons.  First, at LETIZIA’s instruction, AMA personnel rarely tested products on the number of panelists requested by AMA’s clients.  Instead, AMA tested products on a far lower number of panelists, typically 20 or less, rather than the 50 for which the clients had paid.  AMA’s fees for tests were based, in part, on the number of panelists that were to participate in the study.  At LETIZIA’s direction, AMA sent its clients fraudulent test results in which AMA personnel included fictitious data for “phantom” panelists who had not actually participated in the tests. 

Second, at LETIZIA’s direction, AMA personnel routinely falsified test results relating to its clients’ products, which included suppressing adverse reactions and deviating from testing protocols.  From 2012 through April 2017, AMA received $46.2 million in revenue from the fraudulent reports. 

*                *                *

In addition to his prison term, LETIZIA, 72, of New City, New York, was sentenced to three years of supervised release, restitution in the amount of $1,440,238, and forfeiture in the amount of $46,200,000. 

Mr. Williams praised the outstanding investigative work of the U.S. Food and Drug Administration, Office of Criminal Investigations, the Federal Bureau of Investigation, and the Rockland County District Attorney’s Office.

The case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys Jeffrey C. Coffman, James McMahon, and Olga I. Zverovich are in charge of the prosecution.

Allianz Global Investors U.S. LLC Also Charged with Securities Fraud, Agrees to Plead Guilty

An indictment was unsealed today in the Southern District of New York charging Gregoire Tournant, the Chief Investment Officer and co-lead Portfolio Manager for a series of private investment funds managed by Allianz Global Investors U.S. LLC (AGI), with securities fraud, investment adviser fraud and obstruction of justice offenses in connection with a scheme to defraud investors. Those funds ultimately collapsed, leading to billions of dollars of investor losses. Tournant surrendered to Postal Inspectors in Denver, Colorado, this morning and is expected to be presented later today. The case has been assigned to U.S District Court Judge Laura Taylor Swain.

Also unsealed today are the guilty pleas of Trevor Taylor and Stephen Bond-Nelson in connection with their respective roles in the scheme. Taylor pleaded guilty pursuant to an information before U.S. District Judge Denise Cote on March 8. Bond-Nelson pled guilty pursuant to an information before U.S. District Judge Paul A. Engelmayer on March 3. Both are cooperating with the government.

“I previously warned that the Department of Justice would crack down on corporate crime, without regard to size, salary or other privilege,” said Deputy Attorney General Lisa O. Monaco. “For the second time in under a month, the Department has brought charges in connection with a sophisticated Wall Street scheme that cost victims billions of dollars. Other corporations should take note that the results here are driven in part by the fact that this company failed to self-report their crimes. The Department stands ready to keep bringing these kinds of charges to assure the public that no one is above the law.”

U.S. Attorney Damian Williams for the Southern District of New York and Inspector-in-Charge Daniel B. Brubaker of the New York Office of the U.S. Postal Inspection Service also announced today a plea agreement (the agreement) pursuant to which AGI will plead guilty to securities fraud in connection with this fraudulent scheme, and pay more than $3 billion in restitution to the victims of this fraud, pay a criminal fine of approximately $2.3 billion, and forfeit approximately $463 million to the government. The case has been assigned to U.S. District Judge Colleen McMahon. A conference has been scheduled for today at 3:00 p.m. before U.S. District Court Judge Loretta A. Preska, at which time AGI is expected to plead guilty to an information pursuant to the agreement.

“As alleged, Gregoire Tournant and his co-conspirators lied to investors and secretly exposed them to substantial risk in order to line their own pockets and those of their employer, AGI,” said U.S. Attorney Williams. “Pensions funds for so many retirees, religious organizations and essential workers – from laborers in Alaska, to teachers in Arkansas, to bus drivers and subway conductors here in New York City – invested with AGI because they were promised a relatively safe investment with strict risk controls. But AGI, the ‘master cop’ that Tournant claimed was watching over his shoulder, making sure that he adhered to his promises, was asleep on the beat. And when the storm came in March 2020, when the COVID-19 crash hit, these investors got soaked and lost billions. Today’s actions are further evidence that this office is not asleep on the beat and that with our law enforcement partners we will act swiftly to protect investors and bring white collar criminals to justice.”

“These individuals working under the name of Allianz Global Investors, an international management firm, allegedly took advantage of its global recognition when they devised a scheme to mislead investors leading to the loss of billions of dollars,” said Inspector-in-Charge Daniel B. Brubaker of the New York Office of the U.S. Postal Inspection Service. “Postal Inspectors will never let these schemes go unchecked and will vigorously investigate and pursue those who choose criminal behavior over honest business practices.”

According to the allegations in the indictment and the agreement unsealed today in Manhattan federal court:

Between 2014 and 2020, Gregoire Tournant, the defendant, was the Chief Investment Officer of a set of private funds at AGI known as the Structured Alpha Funds. These funds were marketed largely to institutional investors, including pension funds for workers all across America. As alleged, Tournant and his co-conspirators misled these investors into believing that the funds were protected from a sudden stock market crash with particular hedges. But in late 2015, as the cost of those promised hedges increased, Tournant decided to lie and secretly buy cheaper hedges that provided much less protection to investors. As alleged, Tournant and his co-conspirators also provided investors with altered documents that were sent to investors to hide the true riskiness of the funds’ investments, including that they were buying cheaper hedges.

In March 2020, following the onset of market dislocations brought on by the COVID-19 pandemic, the funds lost in excess of $7 billion in market value, including over $3.2 billion in principal, faced margin calls and redemption requests, and ultimately were shut down. More than 100 institutional investors, representing more than 100,000 individuals, were victims of this scheme. These institutional investors included, among others, pension funds for teachers in Arkansas, laborers in Alaska, bus drivers and subway conductors in New York City, as well as religious organizations, engineers, and other individuals, universities and charitable organizations across the United States.

The scheme alleged was an egregious, long-running and extensive fraud that went undetected for years. It occurred at a very profitable component of AGI – one that accounted for 25% of AGI’s revenue in recent years, which amounted to hundreds of millions of dollars. As alleged, one of the ways Tournant carried out the fraud was by marketing the fact that he worked for a well-respected financial institution, AGI, which is a part of the Allianz SE (Allianz) family. Allianz is one of the world’s largest financial services companies and one of the world’s largest insurance companies. Tournant touted the protections provided by the funds’ position within the global Allianz corporate structure, calling Allianz a “master cop” that would ensure that Tournant followed the risk guidelines promised to investors.

Despite Tournant’s claim that Allianz acted as a “master cop” looking over his shoulder, no one at AGI or Allianz was verifying that Tournant and his colleagues were actually adhering to the investment strategies promised to investors. No risk or compliance personnel at AGI verified, attempted to verify or were responsible for verifying that Tournant and his colleagues were purchasing hedging positions within the range that was represented to investors. Much of this historic fraud was made possible because AGI’s control environment was not designed to verify that Tournant and his co-conspirators were telling investors the truth. Because AGI, a registered investment adviser, failed to provide meaningful oversight, Tournant and his co-conspirators were able to deceive investors about the risks they were taking with their money.

In addition, as alleged, in the summer of 2020, after the onset of the pandemic and in order to cover up the fraudulent scheme, Tournant attempted to obstruct an investigation by the U.S. Securities and Exchange Commission (SEC) into the circumstances that led to the losses in March 2020.

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.

A chart containing the names, ages, residences, charges and maximum penalties for the defendants is attached.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

The U.S. Postal Inspection Service and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York investigated this case. The U.S. Securities and Exchange Commission filed a parallel civil action today.

This case is being handled by SDNY’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Margaret Graham, Gina Castellano, Nicholas Folly and Richard Cooper 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.

Defendant

Age

Residence

Charges

Maximum Potential Sentence(s)

United States v. Gregoire Tournant, 22 Cr. 276 (LTS)

TOURNANT

55

Basalt, Colorado

Conspiracy to commit securities fraud, investment adviser fraud, and wire, 18 U.S.C. § 371 (Count One)

Securities fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Two)

Investment adviser fraud, 15 U.S.C. §§ 80b-6 & 80b-17 (Count Three)

Investment adviser fraud, 15 U.S.C. §§ 80b-6(4) & 80b-17, 17 C.F.R. § 275.206(4)-8 (Count Four)

Conspiracy to obstruct justice, 18 U.S.C. § 371 (Count Five)

5 years

20 years

5 years (on each count)

5 years

5 years

United States v. Trevor Taylor, 22 Cr. 149 (DLC)

TAYLOR

49

Miami, Florida

Conspiracy to commit securities fraud, investment adviser fraud, and wire fraud, 18 U.S.C. § 371 (Count One)

Securities fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Two)

Investment adviser fraud, 15 U.S.C. §§ 80b-6 & 80b-17 (Count Three)

5 years

20 years

5 years

United States v. Stephen Bond-Nelson, 22 Cr. 137 (PAE)

BOND-NELSON

51

Berkeley Heights, New Jersey

Conspiracy to commit securities fraud, investment adviser fraud, and wire fraud, 18 U.S.C. § 371 (Count One)

Securities fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Two)

Investment adviser fraud, 15 U.S.C. §§ 80b-6 & 80b-17 (Count Three)

Conspiracy to obstruct justice, 18 U.S.C. § 371 (Count Four)

5 years

20 years

5 years

5 years

United States v. Allianz Global Investors U.S. LLC

AGI US

Securities Fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Two)

5 years’ probation

Allianz Global Investors U.S. LLC Also Charged With Securities Fraud, Agrees to Plead Guilty

Damian Williams, the United States Attorney for the Southern District of New York, Lisa O. Monaco, the Deputy Attorney General of the United States, and Daniel B. Brubaker, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced today the unsealing of an indictment charging GREGOIRE TOURNANT, the Chief Investment Officer and co-lead Portfolio Manager for a series of private investment funds managed by Allianz Global Investors U.S. LLC (“AGI”), with conspiracy, securities fraud, investment adviser fraud, and obstruction of justice offenses in connection with a scheme to defraud investors. Those funds ultimately collapsed, leading to billions of dollars of investor losses. TOURNANT surrendered to Postal Inspectors in Denver, Colorado this morning and is expected to be presented later today.  The case has been assigned to U.S District Judge Laura Taylor Swain.

Also unsealed today are the guilty pleas of TREVOR TAYLOR and STEPHEN BOND-NELSON in connection with their respective roles in the scheme. TAYLOR pled guilty pursuant to an Information before U.S. District Judge Denise Cote on March 8, 2022. BOND-NELSON pled guilty pursuant to an Information before U.S. District Judge Paul A. Engelmayer on March 3, 2022. Both are cooperating with the Government.

U.S. Attorney Williams, Deputy Attorney General Monaco, and Inspector-in-Charge Brubaker also announced today a plea agreement (the “Agreement”) pursuant to which AGI will plead guilty to securities fraud in connection with this fraudulent scheme, and pay more than $3 billion in restitution to the innocent victims of this fraud, pay a criminal fine of approximately $2.3 billion, and forfeit approximately $463 million to the Government.  The case has been assigned to U.S. District Judge Colleen McMahon. A conference has been scheduled for today at 3:00 p.m. before U.S. District Judge Loretta A. Preska, Part I, at which time AGI is expected to plead guilty to an Information pursuant to the Agreement.

U.S. Attorney Damian Williams said:  “As alleged, Gregoire Tournant and his co-conspirators lied to investors and secretly exposed them to substantial risk in order to line their own pockets and those of their employer, AGI.  Pension funds for so many retirees, religious organizations, and essential workers – from laborers in Alaska, to teachers in Arkansas, to bus drivers and subway conductors here in New York City – invested with AGI because they were promised a relatively safe investment with strict risk controls.  But AGI, the “master cop” that Tournant claimed was watching over his shoulder, making sure that he adhered to his promises, was asleep on the beat. And when the storm came in March 2020, when the COVID crash hit, these investors got soaked and lost billions.  Today’s actions are further evidence that this office is not asleep on the beat and that with our law enforcement partners we will act swiftly to protect investors and bring white collar criminals to justice.”

Deputy Attorney General Lisa O. Monaco said:  “I previously warned that the Department of Justice would crack down on corporate crime, without regard to size, salary, or other privilege. For the second time in under a month, the Department has brought charges in connection with a sophisticated Wall Street scheme that cost victims billions of dollars. Other corporations should take note that the results here are driven in part by the fact that this company failed to self-report their crimes. The Department stands ready to keep bringing these kinds of charges to assure the public that no one is above the law.”

USPIS Inspector-in-Charge Daniel B. Brubaker said: “These individuals working under the name of Allianz Global Investors, an international management firm, allegedly took advantage of its global recognition when they devised a scheme to mislead investors leading to the loss of billions of dollars. Postal Inspectors will never let these schemes go unchecked and will vigorously investigate and pursue those who choose criminal behavior over honest business practices.”

According to the allegations in the Indictment and the Agreement unsealed today in Manhattan federal court:[1]

Between 2014 and 2020, GREGOIRE TOURNANT, the defendant, was the Chief Investment Officer of a set of private funds at AGI known as the Structured Alpha Funds.  These funds were marketed largely to institutional investors, including pension funds for workers all across America.  As alleged, TOURNANT and his co-conspirators misled these investors into believing that the funds were protected from a sudden stock market crash with particular hedges.  But in late 2015, as the cost of those promised hedges increased, TOURNANT decided to lie and secretly buy cheaper hedges that provided much less protection to investors.  As alleged, TOURNANT and his co-conspirators also provided investors with altered documents that were sent to investors to hide the true riskiness of the funds’ investments, including that they were buying cheaper hedges.  

In March 2020, following the onset of market dislocations brought on by the COVID-19 pandemic, the funds lost in excess of $7 billion in market value, including over $3.2 billion in principal, faced margin calls and redemption requests, and ultimately were shut down.  More than 100 institutional investors, representing more than one hundred thousand individuals, were victims of this scheme. These institutional investors included, among others, pension funds for teachers in Arkansas, laborers in Alaska, bus drivers and subway conductors in New York City, as well as religious organizations, engineers, and other individuals, universities, and charitable organizations across the United States.

The scheme alleged was an egregious, long-running, and extensive fraud that went undetected for years.  It occurred at a very profitable component of AGI – one that accounted for 25% of AGI’s revenue in recent years, which amounted to hundreds of millions of dollars.  As alleged, one of the ways TOURNANT carried out the fraud was by marketing the fact that he worked for a well-respected financial institution, AGI, which is a part of the Allianz SE (“Allianz”) family.  Allianz is one of the world’s largest financial services companies and one of the world’s largest insurance companies.  TOURNANT touted the protections provided by the funds’ position within the global Allianz corporate structure, calling Allianz a “master cop” that would ensure that TOURNANT followed the risk guidelines promised to investors. 

Despite TOURNANT’s claim that Allianz acted as a “master cop” looking over his shoulder, no one at AGI or Allianz was verifying that TOURNANT and his colleagues were actually adhering to the investment strategies promised to investors.  No risk or compliance personnel at AGI verified, attempted to verify, or were responsible for verifying that TOURNANT and his colleagues were purchasing hedging positions within the range that was represented to investors.  Much of this historic fraud was made possible because AGI’s control environment was not designed to verify that TOURNANT and his co-conspirators were telling investors the truth.  Because AGI, a registered investment adviser, failed to provide meaningful oversight,  TOURNANT and his co-conspirators were able to deceive investors about the risks they were taking with their money. 

In addition, as alleged, in the summer of 2020, after the onset of the pandemic and in order to cover up the fraudulent scheme, TOURNANT attempted to obstruct an investigation by the U.S. Securities and Exchange Commission (the “SEC”) into the circumstances that led to the losses in March 2020. 

*                *                *

A chart containing the names, ages, residences, charges, and maximum penalties for the defendants is attached.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Williams praised the outstanding work of the USPIS and Special Agents of the United States Attorney’s Office. Mr. Williams further thanked the U.S. Securities and Exchange Commission, which today filed a parallel civil action.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorneys Margaret Graham, Gina Castellano, Nicholas Folly, and Richard Cooper 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.

Defendant

Age

Residence

Charges

Maximum Potential Sentence(s)

United States v. Gregoire Tournant, 22 Cr. 276 (LTS)

TOURNANT

55

Basalt, Colorado

Conspiracy to commit securities fraud, investment adviser fraud, and wire, 18 U.S.C. § 371

(Count One)

Securities fraud, 15 U.S.C. §§ 78j(b) & 78ff

(Count Two)

Investment adviser fraud, 15 U.S.C. §§ 80b-6 & 80b-17 (Count Three)

Investment adviser fraud, 15 U.S.C. §§ 80b-6(4) & 80b-17, 17 C.F.R. § 275.206(4)-8 (Count Four)

Conspiracy to obstruct justice, 18 U.S.C. § 371 (Count Five)

5 years

20 years

5 years (on each count)

5 years

5 years

United States v. Trevor Taylor, 22 Cr. 149 (DLC)

TAYLOR

49

Miami, Florida

Conspiracy to commit securities fraud, investment adviser fraud, and wire fraud, 18 U.S.C. § 371 (Count One)

Securities fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Two)

Investment adviser fraud, 15 U.S.C. §§ 80b-6 & 80b-17 (Count Three)

5 years

20 years

5 years

United States v. Stephen Bond-Nelson, 22 Cr. 137 (PAE)

BOND-NELSON

51

Berkeley Heights, New Jersey

Conspiracy to commit securities fraud, investment adviser fraud, and wire fraud, 18 U.S.C. § 371 (Count One)

Securities fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Two)

Investment adviser fraud, 15 U.S.C. §§ 80b-6 & 80b-17 (Count Three)

Conspiracy to obstruct justice, 18 U.S.C. § 371

(Count Four)

5 years

20 years

5 years

5 years

United States v. Allianz Global Investors U.S. LLC, 22 Cr. 279 (CM)

AGI US

Securities Fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Two)

5 years’ probation

[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.

Damian Williams, the United States Attorney for the Southern District of New York, and Keechant L. Sewell, Police Commissioner for the City of New York (“NYPD”), announced today that RICARDO FERGUSON, a/k/a “Mayback,” was charged with the December 5, 2021 murder of Robert Brown, Sr., in the Aqueduct Walk park in the University Heights neighborhood of the Bronx. FERGUSON was arrested today and will be presented this afternoon in Manhattan federal court. The case has been assigned to United States District Judge Richard M. Berman.

U.S. Attorney Damian Williams said:  “Ferguson allegedly murdered Robert Brown, Sr., in broad daylight in a Bronx park. We hope that today’s charges bring some measure of comfort to the family of Robert Brown, Sr. and make clear that this Office and our law enforcement partners will continue to be relentless in our pursuit of anyone who takes another person’s life.”

NYPD Commissioner Keechant L. Sewell said:  “Aqueduct Walk is a tree lined stretch lined with park benches where New Yorkers can take a walk or find a moment’s peace from the bustle of Fordham Road. When gunfire broke that peace on December 5th and a man was shot dead on that tree lined stretch, NYPD detectives went to work to gather evidence and bring justice. I want to thank US Attorney Damian Williams and the Criminal Investigators of the US Attorney’s Office for the Southern District of New York for their efforts that resulted in this federal indictment. These federal charges should remind those willing to carry guns or commit murder associated with drug-trafficking: You may face many years or even life in prison.”

According to the allegations in the Indictment unsealed today in Manhattan federal court[1]:

On or about December 5, 2021, in the Aqueduct Walk park, near Aqueduct Avenue and West Fordham Road in the Bronx, FERGUSON shot and killed Robert Brown, Sr. while FERGUSON and another attempted to rob Brown.

*               *                *

FERGUSON, 36, of the Bronx, New York, is charged with one count of conspiracy to distribute crack cocaine, which carries a maximum sentence of twenty years in prison; one count of attempted Hobbs Act robbery, which caries a maximum sentence of twenty years in prison; one count of using violence in furtherance of a plan to commit Hobbs Act robbery, which carries a maximum sentence of twenty years in prison; and using a firearm to commit murder during a drug-trafficking crime and crime of violence, which carries a maximum sentence of death or life in prison, and a mandatory minimum term of five years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the NYPD and the Special Agents of the United States Attorney’s Office.

The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Mathew Andrews and Peter Davis are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.    

[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced that defendant ELLIOT SMERLING was sentenced to 97 months in prison for a multi-year bank and securities fraud scheme that caused the issuance of approximately $133 million in collateralized loans on the basis of forged documents, including subscription agreements from purported limited partners, audit letters attesting to his private equity firm’s finances, and falsified bank account statements.  SMERLING previously pled guilty before U.S. District Judge Denise L. Cote, who imposed today’s sentence.

U.S. Attorney Damian Williams said:  “Elliot Smerling previously admitted to securing funding for his private equity fund by submitting a constellation of fraudulent documents and assurances to lenders. Smerling’s misrepresentations ultimately resulted in massive losses to banks, as he received over $133 million in ill-gotten loans. Smerling has now fittingly been sentenced to more than eight years in federal prison for his bank and securities fraud scheme.”

According to the allegations contained in public court filings and statements made in court:

From at least in or about January 2019 through at least in or about March 2021, ELLIOT SMERLING was the mastermind of a scheme to secure financing for a series of private equity funds (the “Funds”) through fraud and deceit.  SMERLING solicited and obtained loans totaling approximately $133 million on behalf of the Funds, which were secured by purported capital commitments made by limited partners in the Funds.  SMERLING obtained the loans on the basis of falsified documents and material misrepresentations, including:  (1) a forged audit letter, purportedly prepared by an international network of accounting, audit, tax, and professional services firms, attesting to audited financial statements; (2) forged subscription agreements that falsely represented, among other things, that the investment fund of a private university based in New York, New York had committed $45 million to the Funds, and that the investment management division of a banking and financial services firm headquartered in New York, New York had committed $40 million to the Funds; and (3) falsified bank records showing wire transfers from purported limited partners to the Funds.  

In connection with his bank fraud scheme, from at least in or about January 2013 through at least in or about March 2021, SMERLING also solicited investments in his Funds through materially false and misleading statements concerning the Funds’ audited financial statements, limited partners, capital commitments, and holdings.

*                *                *

In addition to his prison term, SMERLING, 52, of Lake Worth, Florida, was sentenced to three years of supervised released.  The Court deferred its decision on the amount of restitution.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Jilan J. Kamal and Timothy V. Capozzi are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, John B. DeVito, Special Agent-in-Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Division (ATF), Frank A. Tarentino, Special Agent-in-Charge of the Drug Enforcement Administration, New York Division (DEA), and Glenn Scott, Commissioner of the Mount Vernon Police Department, announced the unsealing of a federal Indictment charging JAMES BAZEMORE, a/k/a “TJ,” with the broad daylight murder of Tasheen Williams on April 30, 2018 in Mount Vernon, New York.  The Indictment also charges JARED MUJAAHID, a/k/a “Jay,” with aiding and abetting assault with a deadly weapon by providing BAZEMORE with the gun BAZMORE used to commit the murder. The Indictment also charges BAZEMORE and MUJAAHID with racketeering conspiracy. BAZEMORE is detained pending trial on other federal charges brought by this Office and MUJAAHID is serving a sentence from a prior federal conviction in this District. The defendants will be brought to the federal courthouse in White Plains, New York to be presented before a United States Magistrate Judge.

U.S. Attorney Damian Williams said:  “In April 2018, Tasheen Williams was shot dead in broad daylight just as a local school was letting out, the victim of senseless gang-related violence. As alleged in the Indictment, James Bazemore is responsible for that murder, and Jared Mujaahid gave him the murder weapon. Thanks to the work of our remarkable law enforcement partners, Bazemore and Mujaahid now stand charged in federal court for this terrible crime.”

ATF Special Agent-in-Charge John B. DeVito said:  “ATF’s top priority is investigating and apprehending those who commit firearms violence and those who provide  firearms for use in violent crimes. This indictment demonstrates the commitment of ATF and our great partners at DEA and the Mount Vernon Police Department to relentlessly pursue justice for victims of violent gun crime and hold those responsible accountable no matter how long it takes.”

DEA Special Agent-in-Charge Frank A. Tarentino said:  “This cold-blooded murder is another example of drug-related violence plaguing our cities. DEA’s priority is making our communities safer through investigations and arresting members of criminal organizations responsible for drug-related overdoses, drug trafficking, and violent crime. I thank the ATF and US Attorney's Office Southern District of New York for their partnership and diligent work on this investigation.”

MVPD Commissioner Glenn Scott said:  “This arrest again shows that Mount Vernon continues to benefit from the partnership the MVPD has formed with its Federal Law Enforcement partners. The Bureau of Alcohol, Tobacco, Firearms, and Explosives, NY Field Office has shown how dedicated they are to assisting the MVPD with closing violent crime investigations. Mount Vernon Police has had Detectives assigned as Task Force Officers with the ATF for several years and this is just one of the many violent crimes that has been solved as a result of the hard work of the Detectives and the Special Agents from ATF.  In cases of this magnitude the MVPD always strives to bring justice to the families effected by violence and we will utilize any and all resources and partnerships that we can do achieve that goal.” 

According to the allegations in the Indictment[1]:

BAZEMORE and MUJAAHID were members or associates of a racketeering enterprise known as Big Paper. In order to fund the enterprise, protect and expand its interests, and promote its standing, members and associates of Big Paper committed, conspired, attempted, and threatened to commit acts of violence against rivals, including murder and assault; conspired to distribute and possess with intent to distribute narcotics; and obtained, possessed and used firearms, including by brandishing and discharging them.

On or about April 30, 2018, BAZEMORE acquired a gun from MUJAAHID, and then BAZEMORE stalked and shot Tasheen Williams dead in Mount Vernon, New York.

*              *             *

BAZEMORE is charged with one count of racketeering conspiracy, which carries a statutory maximum sentence of life in prison, one count of murder in aid of racketeering, which carries a statutory maximum sentence of life in prison, and a mandatory minimum sentence of life in prison; and one count of murder through use of a firearm, which carries a statutory maximum sentence of life in prison, and a mandatory minimum sentence of five years in prison.

MUJAAHID is charged with one count of racketeering conspiracy, which carries a statutory maximum sentence of twenty years in prison, one count of aiding and abetting assault with a deadly weapon in aid of racketeering, which carries a statutory maximum sentence of twenty years in prison; and one count of aiding and abetting the discharge of a firearm in furtherance of a crime of violence, which carries a statutory maximum sentence of life in prison and a mandatory minimum sentence of ten years in prison.

The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.

Mr. Williams praised the outstanding work of the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Drug Enforcement Administration, and thanked the Westchester County District Attorney’s Office and the Mount Vernon Police Department for their assistance with the investigation.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Christopher Brumwell and Benjamin A. Gianforti are in charge of the prosecution.

[1] As the introductory phase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that AMILCAR ROMERO, a/k/a “Soldado,” a high-ranking member of Mara Salvatrucha, or MS-13, was sentenced by U.S. District Judge Vernon S. Broderick to 13 years in prison. ROMERO previously pled guilty to conspiracy to distribute and possess with intent to distribute methamphetamine. Judge Broderick ordered ROMERO’s sentence in this case to run consecutively to a prior sentence for attempted murder imposed in California state court in 1997 and another prior sentence for conspiring to participate in the affairs of a racketeering enterprise, namely MS-13, imposed in the District of New Jersey in 2016.

U.S. Attorney Damian Williams said:  “Amilcar Romero, a senior leader of the L.A. Program of MS-13, helped plan a cross-border methamphetamine distribution network. He did this by communicating with other members of the gang through a contraband cellphone in state prison while serving a lengthy sentence for a violent crime. With our law enforcement partners, we will continue to hold accountable those like Romero who threaten the safety and well-being of our communities, even if they do so from prison.”

According to the Indictment, other filings in this case, and statements during court proceedings:

ROMERO is a member of MS-13, a transnational racketeering enterprise which operates throughout North and Central America, including in El Salvador, Mexico, New York, California, Texas, Virginia, Tennessee, and North Carolina. To enrich the enterprise, protect and expand its criminal operations, enforce discipline among its members, and retaliate against members of rival gangs, members and associates of MS-13 committed, conspired, attempted, and threatened to commit acts of violence; distributed and possessed with intent to distribute narcotics, including methamphetamine; and obtained, possessed, and used firearms.

MS-13 is organized into chapters called “cliques.” Groups of cliques, in turn, are aligned as “programs.” Each program is governed by a group of senior gang leaders known as the “table.”

ROMERO is a high-ranking member of the table of the “L.A. Program” of MS-13. In 2019, ROMERO participated in the transnational and nationwide affairs of MS-13 through a contraband prison cellphone while he was incarcerated in Calipatria State Prison in California, including by communicating with and relaying orders to other members of MS-13 throughout the United States and in El Salvador.

In the summer and fall of 2019, ROMERO helped plan, with other high-ranking members of MS-13, for the establishment of a methamphetamine distribution network that started in Mexico and operated throughout the United States, including North Carolina, New York, Virginia, and Tennessee.

In addition, in September 2019, ROMERO and other senior members of MS-13 conspired to extort another gang member, who was told that he either had to repay money or be “green lit” (i.e., killed) for introducing a “bad connection” who supplied poor quality narcotics to the gang.

*                *                *

In addition to the prison term, Judge Broderick sentenced ROMERO, 52, to three years of supervised release.

Mr. Williams praised the investigative work of Homeland Security Investigations and the New York City Police Department.

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 Violent & Organized Crime Unit.  Assistant United States Attorneys Michael D. Longyear, Justin V. Rodriguez, and Jacob Warren are in charge of the prosecution.

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, announced today the unsealing of a Complaint in Manhattan federal court charging EDDY ALEXANDRE, the leader of a purported cryptocurrency and forex trading platform called EminiFX, with commodities fraud and wire fraud offenses.  As alleged, ALEXANDRE solicited more than $59 million in investments from hundreds of individual investors after making false representations in connection with the EminiFX trading platform.  ALEXANDRE was arrested this morning and will be presented later today before Magistrate Judge Katharine H. Parker in the U.S. District Court for the Southern District of New York.

U.S. Attorney Damian Williams said:  “Eddy Alexandre allegedly induced his clients to invest over $59 million with promises of huge passive income returns via his own proprietary trading platform called EminiFx. In reality, no such technology existed, as Alexandre is alleged to have invested very little of their money – most of which he lost – and transferred most of it to his own personal accounts to pay for luxury items for himself.  As in any of the financial markets, the foreign exchanges offer high return potential, but investors should beware of the downside risks of false claims and get rich quick schemes that oftentimes are too good to be true.” 

FBI Assistant Director-in-Charge Michael J. Driscoll said:  “As alleged, Mr. Alexandre solicited millions of dollars from unwitting investors to whom he ‘guaranteed’ weekly returns of 5% through his trading platform using a new technology he refused to disclose.  As with many greedy actors who have preceded him, he then used significant portions of the investor funds he solicited to buy expensive luxuries for himself.  Today's action again demonstrates the FBI's commitment to pursuing fraudsters like Mr. Alexandre and guaranteeing they face the consequences of their actions in the federal criminal justice system.”

As alleged in the Complaint unsealed today in Manhattan federal court[1]:

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 $59 million in investments from hundreds of individual investors. ALEXANDRE marketed EminiFX as an investment platform through which investors would earn passive income through automated investments in cryptocurrency and foreign exchange (“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 a 5% weekly return 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 the vast majority of investor funds entrusted to him, and ALEXANDRE sustained over $6 million 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 misdirected at least approximately $14,700,000 to his personal bank account and failed to invest the vast majority of the investors’ funds. 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, is charged with one count of commodities fraud, which carries a maximum sentence of 10 years in prison, and one count of wire fraud, which carries a maximum sentence of 20 years in prison. 

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Williams praised the investigative work of the Federal Bureau of Investigation and also thanked the Commodity Futures Trading Commission for its assistance.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Nicholas Folly and Jared Lenow are in charge of the prosecution.

[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.

Damian Williams, the United States Attorney for the Southern District of New York, announced that recording artist CASWELL SENIOR, a/k/a “Casanova,” pled guilty today to racketeering and narcotics offenses arising out of his leadership role in the Untouchable Gorilla Stone Nation Bloods Gang (“Gorilla Stone”) in Westchester County, New York City, and Florida.  As part of the racketeering conspiracy offense, SENIOR admitted to participating in a shooting in Florida on July 5, 2020, a robbery in New York City on August 5, 2018, and conspiring to traffic over 100 kilograms of marijuana.  SENIOR pled guilty before U.S. District Judge Philip M. Halpern. 

U.S. Attorney Damian Williams said:  “Like twelve of his co-defendants, Caswell Senior, an accomplished recording artist and performer, now stands convicted of playing a leadership role in Gorilla Stone, a particularly violent Bloods gang that operates throughout New York and across the country.  In addition to his supervisory role, Senior was an active, hands-on participant in the gang’s senseless violence, including a shooting in Miami and contributing to a robbery at a Manhattan diner.  Dismantling violent gangs and stopping gun violence continues to be one of my highest priorities.  Thanks to the dedication of our partners at the Federal Bureau of Investigation, Senior now awaits sentencing for his dangerous conduct.”      

According to the Indictment, public court filings, and statements made in court:

Beginning in at least 2004 and lasting until December 2020, SENIOR participated in and was associated with the Gorilla Stone racketeering conspiracy.  Senior admitted that as part of the racketeering activity, on or about July 5, 2020, while at a party in Florida that included gang members, he discharged a firearm at an individual with whom he was having a gambling dispute.  A victim suffered serious bodily injury because of the shooting.  Thereafter, other party attendees discharged multiple firearms.  Additionally, SENIOR stipulated that as part of a separate August 5, 2018 robbery in Manhattan, a victim was restrained and suffered serious bodily injury.  In connection with his guilty plea, SENIOR further stipulated that he was an organizer or leader of a criminal activity that involved five or more participants and he agreed to traffic at least 100 kilograms of marijuana.

*                *                *

SENIOR, 35, of Montville, New Jersey, is scheduled to be sentenced by United States District Judge Philip M. Halpern on December 6, 2022, at 11:00 a.m.  SENIOR pled guilty to one count of conspiring to conduct and participate in the conduct of the affairs of a criminal enterprise through a pattern of racketeering activity and one count of conspiring to distribute over 100 kilograms of marijuana.  The total maximum term of prison on these two counts is 60 years, with a mandatory minimum term of five years in prison. 

The maximum and mandatory minimum 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.

SENIOR is the thirteenth defendant in the Gorilla Stone case to plead guilty.  The twelve other defendants who previously pled guilty are: DESHAWN THOMAS, a/k/a “Don,” NAYA AUSTIN, a/k/a “Baby,” BRANDON NIEVES, a/k/a “Untouchable Dot,” DONAVAN GILLARD, a/k/a “Donnie Love,” JARRETT CRISLER, Jr., a/k/a “Jayecee,” DEZON WASHINGTON, a/k/a “Blakk,” STEPHEN HUGH, a/k/a “Chino,” JORDAN INGRAM, a/k/a “Flow,” SHANAY OUTLAW, a/k/a “Easy,” ROBERTA SLIGH, a/k/a “Trouble,” BRINAE THORNTON, a/k/a “Luxury,” and JAMAL TRENT, a/ka/ “Trap Smoke.” 

Mr. Williams praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force, which is comprised of special agents and task force officers from the FBI, US Probation, New York State Police, New York State Department of Corrections and Community Supervision, NYPD, Westchester County PD, Westchester County DAs Office, Putnam County Sheriff's Office, Rockland DAs Office and the Yonkers, New Rochelle, Mount Vernon, Greenburgh, White Plains, Peekskill, Ramapo and Clarkstown Police Departments.

This case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys Shiva H. Logarajah, David R. Felton, and Courtney L. Heavey are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that defendants LOUIS GRASSO and RICHARD BANCA pled guilty to their respective roles in the distribution of adulterated and misbranded drugs with the intent to defraud and mislead, in connection with the charges filed in United States v. Grasso et al., 20 Cr. 163 (OKC).  Both GRASSO and BANCA pled guilty before U.S. District Judge P. Kevin Castel. GRASSO and BANCA will each be sentenced by Judge Castel on September 6, 2022.

U.S. Attorney Damian Williams said:  “Grasso and Banca represent the corruption and greed of those in the racehorse industry looking to win at any cost.  In peddling illegal drugs and selling prescriptions to corrupt trainers, Louis Grasso abdicated his responsibilities as a medical professional to ensure the safety and health of the racehorses he “treated.” By injecting horses with unnecessary and, at times, unknown drugs, Grasso risked the lives and welfare of the animals under his care, all in service of helping corrupt racehorse trainers like Banca line their pockets through fraud. These latest convictions demonstrate the commitment of this Office and of our partners at the FBI to hold accountable individuals seeking to profit from animal abuse and deceit.”

According to the allegations contained in the Superseding Indictment, the Superseding Information charging GRASSO and BANCA, prior charging instruments and other filings in this case[1], and statements during court proceedings:

The charges in the GRASSO case arise from an investigation of widespread schemes by racehorse trainers, veterinarians, PED distributors, and others to manufacture, distribute, and receive adulterated and misbranded PEDs and to secretly administer those PEDs to racehorses competing at all levels of professional horseracing. By evading PED prohibitions and deceiving regulators and horse racing officials, participants in these schemes sought to improve race performance and obtain prize money from racetracks throughout the United States, all to the detriment and risk of the health and well-being of the racehorses.  GRASSO, a veterinarian, not only accepted payment in exchange for prescriptions for powerful and medically unnecessary performance-enhancing drugs, he also created, distributed, and administered custom-made performance-enhancing drugs that were all misbranded and adulterated substances designed solely to improve racehorse performance. Through this fraudulent scheme, GRASSO helped corrupt trainers collect over $47 million in ill-gotten purse winnings. As a racehorse trainer, BANCA purchased and administered adulterated and misbranded drugs to his racehorses, and as a result of his crimes, his horses earned over $16 million in purse winnings. BANCA stood to profit from the success of racehorses under his control by earning a share of his horses’ winnings, and by improving his horses’ racing records, thereby yielding higher trainer fees and increasing the number of racehorses under his control.

*                 *                 *

U.S. Attorney Williams praised the outstanding investigative work of the FBI New York Office’s Eurasian Organized Crime Task Force and its support of the Bureau’s Integrity in Sports and Gaming Initiative. Mr. Williams also thanked the Food and Drug Administration for their assistance.

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Sarah Mortazavi and Anden Chow are in charge of the prosecution.

[1] As to Grasso and Banca’s co-defendants, the entirety of the texts of the Indictments and the descriptions of the Indictments set forth herein constitute only allegations and every fact described should be treated as an allegation.