Southern District of New York
Press releases recorded for this federal judicial district.
Defendant Sentenced to 18 Years in Prison for 2011 Murder of Joshua RubinRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that MICHAEL MAZUR was sentenced by U.S. District Court Judge Jed S. Rakoff to 216 months in prison for his role in the October 31, 2011, murder of Joshua Rubin in Brooklyn, New York.
U.S. Attorney Damian Williams said: “Michael Mazur participated in the robbery that led to the murder of Joshua Rubin, and then he and his codefendants put Rubin’s body in the trunk of a car, drove it to Pennsylvania, dumped it in a garbage can, and set it afire to cover up the crime. Thanks to our law enforcement partners and the Special Agents of my Office, Mazur will now serve a lengthy prison sentence for his callous crime.”
According to the allegations in the Indictment and other documents filed in federal court, as well as statements made in public court proceedings:
On or about October 31, 2011, MICHAEL MAZUR, Kevin Taylor, and Gary Robles agreed to rob Joshua Rubin of a pound of marijuana. Robles agreed to bring a firearm to the robbery. Taylor lured Rubin to a Brooklyn apartment where, under the guise of purchasing the marijuana, the trio planned to rob Rubin of the drugs. On the night of the robbery, Taylor and Robles waited inside the apartment while MAZUR was positioned outside to serve as a lookout. After Rubin entered the apartment, Taylor and Robles demanded that Rubin surrender the marijuana. When Rubin refused, Robles shot and killed Rubin.
After the murder, MAZUR, Taylor, and Robles placed Rubin’s body into the trunk of a car and drove to rural Pennsylvania. There, MAZUR, Taylor, and Robles put Rubin’s body in a garbage can, doused it with an accelerant, and set the body on fire. MAZUR, Taylor, and Robles then drove back to New York in the early morning hours of November 1, 2011. Over 230 pounds of marijuana and approximately $200,000 were found in MAZUR’S residence at the time of his arrest.
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MAZUR, 27, pled guilty to one count of Hobbs Act robbery, in violation of 18 U.S.C. § 1951, and in connection with his guilty plea admitted to his role in the murder. In addition to his prison sentence, MAZUR, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation, the New York City Police Department, and the Special Agents of the United States Attorney’s Office for the Southern District of New York. He also thanked the Lehigh County District Attorney’s Office, the Pennsylvania State Police, and the South Whitehall Township Police Department for their assistance in the investigation.
The case is being prosecuted by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Alexandra N. Rothman, Mollie Bracewell, and Dominic A. Gentile are in charge of the prosecution.
United States Attorney Damian Williams Announces Investigation of the Mount Vernon Police DepartmentRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York (SDNY), along with Kristen Clarke, Assistant Attorney General for the Justice Department’s Civil Rights Division, announced today that the Justice Department has opened a pattern or practice investigation into the Mount Vernon Police Department (MVPD). The investigation will assess whether MVPD engages in a pattern or practice of discriminatory policing. The investigation will also assess MVPD’s use of force, strip and body cavity searches, and how it handles evidence. As part of the investigation, SDNY and the Civil Rights Division will conduct a comprehensive review of MVPD’s systems of accountability, including complaint intake, investigation, review, disposition, and discipline. SDNY and the Civil Rights Division will also reach out to community groups and members of the public to learn about their experiences with the MVPD.
U.S. Attorney Damian Williams said: “Police officers have tough jobs, and so many do their work honorably, lawfully, and with distinction, respecting the rights of the citizens they have sworn to protect. But when officers break the law, they violate their oath and undermine a community’s trust. We ask anyone who has information relevant to the investigation into the Mount Vernon Police Department to contact the Department of Justice via email at [email protected] or to call (866) 985-1378.”
Assistant Attorney General for the Civil Rights Division Kristen Clarke said: “An effective and accountable police department is a hallmark of a healthy and well-functioning democracy. The Civil Rights Division is committed to ensuring that law enforcement agencies across our country use their authority in a manner that is constitutional, transparent, and free from discrimination.”
This morning, SDNY and Civil Rights Division officials informed Mount Vernon Mayor Shawyn Patterson-Howard, MVPD Chief Marcel Olifiers, City Council President Marcus A. Griffith, Commissioner of Public Safety Glenn Scott, and Corporation Counsel Brian Johnson of the investigation.
The investigation is being conducted pursuant to the Violent Crime Control and Law Enforcement Act of 1994, which prohibits state and local governments from engaging in a pattern or practice of conduct by law enforcement officers that deprives individuals of rights protected by the Constitution or federal law. The Act allows the Department of Justice to remedy such misconduct through civil litigation. SDNY and the Civil Rights Division will be assessing law enforcement practices under the Fourth and Fourteenth Amendments to the U.S. Constitution, as well as under the Safe Streets Act of 1968 and Title VI of the Civil Rights Act of 1964.
The Civil Rights Unit in the Civil Division of the U.S. Attorney’s Office for the Southern District of New York and the Special Litigation Section of the Civil Rights Division, in Washington, D.C., are jointly conducting this investigation. Individuals with relevant information are encouraged to contact the Department of Justice via email at [email protected] or by phone at (866) 985-1378. Individuals can also report civil rights violations regarding this or other matters using the Civil Rights Division’s reporting portal, available at civilrights.justice.gov.
Additional information about the U.S. Attorney’s Office for the Southern District of New York is available on its website at https://www.justice.gov/usao-sdny. Additional information about the Civil Rights Division and the Division’s Police Reform Work is available on its website at www.justice.gov/crt and at /media/872116/dl?inline.
Maryland Attorney Charged in Manhattan Federal Court with over $8 Million Escrow FraudRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a Complaint in Manhattan federal court charging BRIAN O’NEILL, the managing partner of O’Neill & Partners LLC (“O’Neill & Partners”) with wire fraud, perjury, and making false statements. As alleged, O’NEILL defrauded two victim companies of over $8 million that he had promised to hold in escrow. O’NEILL was arrested this morning in Chevy Chase, Maryland, and will be presented later today before United States Magistrate Judge Timothy J. Sullivan in the District of Maryland.
U.S. Attorney Damian Williams said: “As alleged, Brian O’Neill violated the canons of his profession to put self-interest above the interests of his clients; to be blunt, he stole their money. Further, as alleged, when ordered by the federal court in this District to deposit escrow funds he had failed to return to one client, O’Neill misappropriated escrow funds from a second client to make partial satisfaction of the court’s order pertaining to the first client. In addition, as alleged, O’Neill lied to the FBI about his robbing Peter to pay Paul. Now he faces serious criminal charges for his alleged misdeeds.”
FBI Assistant Director Michael J. Driscoll said: “As alleged, Brian O'Neill didn’t just hold his clients’ money in escrow, he held it hostage, and eventually lied to the FBI about his unlawful deeds. His alleged actions weren’t only unethical, they’re punishable by federal law. Today’s charges reflect our ongoing commitment to weeding out criminals who use other people’s money for their own personal gain.”
As alleged in the Complaint unsealed today in Manhattan federal court:[1]
Beginning at least as early as August 2020, O’NEILL engaged in two related fraudulent schemes.
First, O’NEILL engaged in a scheme to defraud a medical equipment company headquartered in Pennsylvania (“Victim-1”) by falsely promising to hold over $5 million of the company’s funds in escrow. Specifically, in August 2020, Victim-1 entered into an agreement with a Florida-based medical wholesale company (“Seller-1”) for the purchase of Personal Protective Equipment (“PPE”). Victim-1 sought to purchase PPE from Seller-1 in order to donate the PPE to the Federal Emergency Management Agency (“FEMA”) to help fight the COVID-19 pandemic. Contemporaneously with the execution of the Purchase Order, Victim-1 and Seller-1 entered into an escrow agreement (“Escrow Agreement-1”) with O’Neill & Partners. Pursuant to Escrow Agreement-1, O’Neill & Partners was to act as escrow agent for the transaction and hold $5.1 million deposited by Victim-1 in escrow. Instead of holding the deposited $5.1 million in escrow, however, O’NEILL secretly used the funds to execute personal deals for the purchase of PPE; O’NEILL dissipated the $5.1 million by approximately November 2020.
In November 2020, Victim-1 served a cancellation notice on O’Neill & Partners and Seller-1 cancelling the transaction (the “Cancellation Notice”). In light of the Cancellation Notice, counsel for Victim-1 sent a letter to O’Neill & Partners requesting that the $5.1 million in escrowed funds be returned to Victim-1 within 48 hours, pursuant to the terms of Escrow Agreement-1. When O’Neill & Partners refused to return Victim-1’s deposited funds, Victim-1 filed a civil action in U.S. District Court for the Southern District of New York (the “Civil Action”). In connection with the Civil Action, the Court ordered O’Neill & Partners to deposit the $5.1 million of escrowed funds with the Clerk of the Court. On September 22, 2021, O’NEILL deposited $3.3 million with the Clerk. Because O’NEILL’s deposit was $1.8 million short of the full $5.1 million he had been ordered to deposit, the Court held O’Neill & Partners and O’NEILL in civil contempt and ordered O’NEILL’s arrest.
Relatedly, O’NEILL engaged in a second scheme that defrauded a Hong Kong-based investor (“Victim-2”) out of over $3 million. Specifically, on April 19, 2021, a Delaware-based company involved in the PPE market (“Buyer-2”) entered into a sale and purchase agreement to purchase certain PPE from an Australia-based medical supply company (“Seller-2”). Funding for the deal was to be provided by Victim-2. At the same time that Buyer-2 and Seller-2 entered into the Sale and Purchase Agreement, they, along with Victim-2, entered into an escrow agreement (“Escrow Agreement-2”) with O’Neill & Partners. Pursuant to Escrow Agreement-2, O’Neill & Partners was to hold certain funds associated with the transaction in escrow. Instead of holding the funds deposited by Victim-2 in escrow, however, O’NEILL used $3.3 million of the funds to attempt to satisfy the Court’s order in the Civil Action by Victim-1 directing him to deposit $5.1 million with the Clerk of the Court.
In an effort to conceal his wrongful conduct, O’NEILL made false statements to the FBI and submitted a false declaration, sworn to under penalty of perjury, to the U.S. District Court for the Southern District of New York in connection with the Civil Action. In particular, on or about September 10, 2021, O’NEILL stated to FBI agents that the $5.1 million placed in escrow pursuant to Escrow Agreement-1 remained in an escrow account. Similarly, on or about October 1, 2021, O’NEILL submitted a declaration in the Civil Action stating, under penalty of perjury, that he “still [had] control of the $1.8 million of the subject escrow funds . . . remaining to be deposited pursuant to the interpleader ordered by [the] Court.” Neither of those statements was true.
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O’NEILL, 48, of Chevy Chase, Maryland, is charged with two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison, and one count each of false statements and perjury, each of which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the investigative work of the FBI.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Maggie Lynaugh is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Former CEO of Real Estate Private Equity Investment Firm Sentenced to 5 Years in Prison for $58 Million Securities FraudRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that ERIC MALLEY, the founder and former chief executive officer of real estate private equity investment firm MG Capital Management L.P., was sentenced today by United States District Judge Edgardo Ramos to 60 months in prison in connection with a securities fraud scheme in which he fraudulently induced hundreds of individuals to invest a total of approximately $58 million in two real estate investment funds. MALLEY pled guilty before Judge Ramos on May 20, 2021.
U.S. Attorney Damian Williams said: “For years, Eric Malley swindled investors through false promises about himself, his credentials, his track record, and the state of his real estate investment funds. Today’s sentence sends an important message that there are grave consequences to such deception.”
According to the allegations contained in the Complaint, the Information to which Malley pled guilty, other court documents, and statements made in public court proceedings:
MALLEY founded MG Capital Management L.P. (“MG Capital”) in approximately January 2013, and served as its chief executive officer and chief investment officer from that time until approximately December 2019. During that time, MALLEY formed two real estate investment funds (collectively, “the Funds”) – MG Capital Management Residential Fund III (“Fund III”), in approximately February 2014, and MG Capital Management Residential Fund IV (“Fund IV”), in approximately September 2017.
MALLEY promised, when soliciting investors and throughout the life of the Funds, that the Funds represented an opportunity to own an equity interest in hundreds of luxury income-producing properties across Manhattan, following a debt-free investment strategy purportedly informed by sophisticated proprietary analytics that MALLEY had developed over the course of his career in real estate. MALLEY touted two purportedly extremely successful prior funds he had formed, Fund I and Fund II; assured investors that the Funds would be and were debt-free; and represented that the properties held by the Funds would be and were leased primarily to corporate tenants, including, among others, well known technology companies and a prominent university based in New York City with which Malley had pre-existing agreements. But MALLEY’s representations were false. Funds I and II did not exist. The Funds were not debt-free, but instead held mortgaged properties. The properties that made up the Funds were almost entirely leased to individual, not corporate, tenants. Malley did not have the corporate relationships or pre-existing agreements he touted. The Funds held far fewer properties than MALLEY had represented. And although Malley promised the investments were fully protected from loss, they were not.
MALLEY induced approximately 335 investors to invest a total of approximately $58 million in the Funds through these and other fraudulent misrepresentations. The Funds together incurred millions of dollars in losses and are currently being liquidated.
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In addition to the prison term, MALLEY, 51, of New Canaan, Connecticut, was sentenced to three years of supervised release and ordered to make restitution in the amount of $33,249,822.12 and forfeiture in the amount of $5,625,747.45.
This case is being handled by the Office’s Securities and Commodities Task Force. Assistant United States Attorney Elizabeth A. Hanft is in charge of the prosecution.
3 Men Sentenced to 10 Years in Prison for Kidnapping and Torturing Government InformantRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that EDWARD HERNANDEZ was sentenced today in Manhattan federal court to 10 years in prison for his role in kidnapping and torturing a Government informant. WALKIN FRANCISCO ARIAS VILLAR and JOSIEL GUSTAVO MARTINEZ GUZMAN were each sentenced, on September 16, 2021, and September 22, 2021, respectively, to 10 years in prison for their roles in the offense. HERNANDEZ and ARIAS VILLAR pled guilty on April 6, 2021, and MARTINEZ GUZMAN pled guilty on March 23, 2021, before U.S. District Judge Paul A. Crotty, who also imposed the sentences.
U.S. Attorney Damian Williams said: “Edward Hernandez now joins his codefendants in being sentenced to spend a decade in federal prison for his admitted role in the brutal and violent kidnapping, torture, and extortion of their victim. This case illustrates yet again how violence goes hand in hand with the illegal drug trade.”
According to documents filed in this case and statements made in court proceedings:
ARIAS VILLAR and MARTINEZ GUZMAN forced a Government informant (the “Victim”) into their car after the Victim – who was acting at the direction of law enforcement – arrived at a meeting in the Bronx, purportedly to retrieve $178,000 in narcotics proceeds to be laundered. HERNANDEZ, who was driving, sped away after the Victim was forced into the car.
MARTINEZ GUZMAN and ARIAS VILLAR physically assaulted the Victim in an effort to extort the Victim into transferring money to their co-conspirators. MARTINEZ GUZMAN burned the Victim with cigarettes, beat him with a handgun, and threatened the Victim’s life. ARIAS VILLAR pointed the handgun at the Victim repeatedly, threatened the Victim’s life, and demanded that the Victim pay them. ARIAS VILLAR broke the Victim’s nose when he threw a laptop computer at his face. HERNANDEZ, ARIAS VILLAR, and MARTINEZ GUZMAN apparently did not know that the Victim was a Government informant, but sought repayment for narcotics proceeds lost to law enforcement seizures. The Victim, fearing for his life, transferred approximately $16,000 of his own money to accounts his abductors supplied.
Drug Enforcement Administration (“DEA”) agents located the car in Fairfield, Connecticut, approximately three hours after the Victim was abducted. MARTINEZ GUZMAN, ARIAS VILLAR, and HERNANDEZ were arrested and the Victim was brought to a hospital for treatment.
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HERNANDEZ, 42, ARIAS VILLAR, 31, and MARTINEZ GUZMAN, 29, were each convicted of one count of conspiracy to commit extortion. In addition to their prison terms, HERNANDEZ, ARIAS VILLAR, and MARTINZ GUZMAN were each sentenced to three years of supervised release. Charges remain pending against Dacheng Zhen.
Mr. Williams praised and thanked the DEA for its outstanding work locating and safely recovering the Victim.
The case is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Aline Flodr, Stephanie Lake, and Sheb Swett are in charge of the prosecution.
Former Employee of Technology Company Charged with Stealing Confidential Data and Extorting Company for Ransom While Posing as Anonymous AttackerRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the arrest today of NICKOLAS SHARP for secretly stealing gigabytes of confidential files from a New York-based technology company where he was employed (“Company‑1”), and then, while purportedly working to remediate the security breach, extorting the company for nearly $2 million for the return of the files and the identification of a remaining purported vulnerability. SHARP subsequently re-victimized his employer by causing the publication of misleading news articles about the company’s handling of the breach that he perpetrated, which were followed by a significant drop in the company’s share price associated with the loss of billions of dollars in its market capitalization.
SHARP was arrested earlier today in the District of Oregon and will be presented this afternoon before U.S. Magistrate Judge John V. Acosta. The case was assigned to U.S. District Judge Katherine Polk Failla.
U.S. Attorney Damian Williams said: “As alleged, Nickolas Sharp exploited his access as a trusted insider to steal gigabytes of confidential data from his employer, then, posing as an anonymous hacker, sent the company a nearly $2 million ransom demand. As further alleged, after the FBI searched his home in connection with the theft, Sharp, now posing as an anonymous company whistle-blower, planted damaging news stories falsely claiming the theft had been by a hacker enabled by a vulnerability in the company’s computer systems. Now the alleged theft and lies have been exposed, and Sharp is facing serious federal charges.”
FBI Assistant Director Michael J. Driscoll said: “We allege Mr. Sharp created a twisted plot to extort the company he worked for by using its technology and data against it. Not only did he allegedly break several federal laws, he orchestrated releasing information to media when his ransom demands weren't met. When confronted, he then lied to FBI agents. Mr. Sharp may have believed he was smart enough to pull off his plan, but a simple technical glitch ended his dreams of striking it rich.”
According to the Indictment unsealed today in Manhattan federal court[1]:
At all times relevant to the Indictment, Company-1 was a technology company headquartered in New York that manufactured and sold wireless communications products, and whose shares were traded on the New York Stock Exchange. NICKOLAS SHARP, the defendant, was employed by Company-1 from in or about August 2018 up to and including on or about April 1, 2021. SHARP was a senior developer who had access to credentials for Company-1’s Amazon Web Services (“AWS”) and GitHub Inc. (“GitHub”) servers.
In about December 2020, SHARP repeatedly misused his administrative access to download gigabytes of confidential data from his employer. For the majority of this cybersecurity incident (the “Incident”), SHARP used a virtual private network service that he subscribed to from a company named Surfshark to mask his Internet Protocol (“IP”) address when he accessed Company-1’s AWS and GitHub infrastructure without authorization. At one point during the exfiltration of Company-1 data, SHARP’s home IP address became unmasked following a temporary internet outage at SHARP’s home.
During the course of the Incident, SHARP caused damage to Company-1’s computer systems by altering log retention policies and other files, to conceal his unauthorized activity on the network. In or about January 2021, while working on a team remediating the effects of the Incident, SHARP sent a ransom note to Company-1, posing as an anonymous attacker who claimed to have obtained unauthorized access to Company-1’s computer networks. The ransom note sought 50 Bitcoin, a cryptocurrency – which was the equivalent of approximately $1.9 million, based on the prevailing exchange rate at the time – in exchange for the return of the stolen data and the identification of a purported “backdoor,” or vulnerability, to Company-1’s computer systems. After Company-1 refused the demand, SHARP published a portion of the stolen files on a publicly accessible online platform.
On or about March 24, 2021, FBI agents executed a search warrant at SHARP’s residence in Portland, Oregon, and seized certain electronic devices belonging to SHARP. During the execution of that search, SHARP made numerous false statements to FBI agents, including, among other things, in substance, that he was not the perpetrator of the Incident and that he had not used Surfshark VPN prior to the discovery of the Incident. When confronted with records demonstrating that SHARP purchased the Surfshark VPN service in July 2020, approximately six months prior to the Incident, SHARP falsely stated, in part and substance, that someone else must have used his PayPal account to make the purchase.
Several days after the FBI executed the search warrant at SHARP’s residence, SHARP caused false news stories to be published about the Incident and Company-1’s response to the Incident and related disclosures. In those stories, SHARP identified himself as an anonymous whistleblower within Company-1 who had worked on remediating the Incident. In particular, SHARP falsely claimed that Company-1 had been hacked by an unidentified perpetrator who maliciously acquired root administrator access to Company-1’s AWS accounts. In fact, as SHARP well knew, SHARP had taken Company-1’s data using credentials to which he had access in his role as Company‑1’s AWS cloud administrator, and SHARP had used that data in a failed attempt to extort Company-1 for millions of dollars.
Following the publication of these articles, between March 30, 2021, and March 31, 2021, Company-1’s stock price fell approximately 20%, losing over $4 billion in market capitalization.
SHARP, 36, of Portland, Oregon, is charged in four counts. The first count charges him with transmitting a program to a protected computer that intentionally caused damage, which carries a maximum sentence of 10 years in prison. The second count charges transmission of an interstate threat, which carries a maximum sentence of two years in prison. The third count charges wire fraud, which carries a maximum sentence of 20 years in prison. The fourth count charges the making of false statements to the FBI, which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the extraordinary work of the FBI.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Vladislav Vainberg 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.
Defendant Sentenced to 24 Years in Prison for 2015 MurderRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that BRYANT BROWN, a/k/a “Trigga,” was sentenced by U.S. District Judge Paul A. Engelmayer yesterday to 24 years in prison for the December 2015 murder of Albendris Nunez and a 2017 armed robbery.
U.S. Attorney Damian Williams said: “On a Sunday morning in 2015, Bryant Brown shot and killed Albendris Nunez in Devoe Park in the Bronx over $600 of marijuana. For this senseless killing, Brown will serve a substantial sentence in federal prison.”
According to the allegations in the Indictment and other filings and statements made in court:
On or about December 20, 2015, BROWN attempted to rob Nunez of approximately $600 worth of marijuana in Devoe Park in the Bronx, New York. BROWN set up the purported drug deal with Nunez over Facebook and instructed Nunez to meet him in Devoe Park. BROWN brought a gun and planned to rob Nunez during this meeting and, during the planned robbery, shot Nunez in the back, killing him.
On or about November 18, 2017, BROWN and a co-conspirator robbed a victim of liquid promethazine with codeine, also known as “wock” or “lean,” inside a residential apartment building in the Bronx, New York. BROWN brought a gun to this robbery and struck the victim in the face with it.
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In addition to his prison sentence, BROWN, 26, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding investigative work of the New York City Police Department in this case.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jamie Bagliebter and Mollie Bracewell are in charge of the prosecution.
Cryptocurrency Trader Pleads GuiltyRead the Press Release
Damian Williams, the United State Attorney for the Southern District of New York, announced today the guilty plea of JEREMY SPENCE, a/k/a “Coin Signals,” a cryptocurrency trader who solicited over $5 million from more than 170 individual investors for various cryptocurrency funds that he operated, after making false representations in connection with these funds. SPENCE pled guilty today before U.S. Magistrate Judge Debra Freeman. The case is assigned to U.S. District Judge Lewis A. Kaplan.
U.S. Attorney Damian Williams said: “Jeremy Spence, a/k/a, ‘Coin Signals,’ admitted today to luring investors to his cryptocurrency investment scam by touting fictitious historical returns of up to 148%. In reality, Spence’s investments consistently lost money, and his scam left investors with a $5 million loss. The bourgeoning cryptocurrency market can be attractive to investors; however, investors should be aware of the inherent risks, including the risk of fraud.”
According to the Indictment and the Complaint filed in this case, and statements made in open court:
From November 2017 through April 2019, SPENCE solicited investors in various cryptocurrency investment pools that SPENCE had created and managed (the “Funds”). SPENCE solicited investments for several Funds, the largest and most active of which were the Coin Signals Bitmex Fund, a/k/a the “CS Mex Fund,” the Coin Signals Alternative Fund, a/k/a the “CS Alt Fund,” and the Coin Signals Long Term Fund. Investors who wanted to participate in a Fund would transfer cryptocurrency, such as Bitcoin and Ethereum, to SPENCE in order for SPENCE to invest it.
SPENCE solicited these investments through false representations, including that SPENCE’s crypto trading had been extremely profitable when, in fact, SPENCE’s trading had been consistently unprofitable. For example, on January 28, 2018, SPENCE posted a message in an online chat group falsely claiming that his trading of investor funds over the past month had generated a return of more than 148%. As a result of this misrepresentation, investors transferred additional funds to SPENCE. In fact, over that same period of approximately one month, SPENCE’s trading resulted in net losses in the accounts in which he traded investor funds.
To forestall redemptions by investors, and to continue to raise money from investors to fund his scheme, SPENCE generated fictitious account balances, which he made available to investors online. Instead of accurately reporting the trading losses SPENCE was incurring, the account balances falsely indicated to investors that they were making money by investing with SPENCE. To hide his trading losses, SPENCE used new investor funds to pay back other investors in a Ponzi-like fashion. In total, SPENCE distributed cryptocurrency worth approximately $2 million to investors substantially from funds previously deposited by other investors.
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SPENCE, 25, pled guilty to commodities fraud, which carries a maximum sentence of ten years in prison. The maximum potential sentence is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
SPENCE is scheduled to be sentenced at a later date by Judge Kaplan.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation and thanked the Commodity Futures Trading Commission, which brought a separate civil action.
The case is being handled by the Office’s Securities and Commodities Fraud Unit. Assistant U.S. Attorney Christine I. Magdo is in charge of the prosecution.
CEO of Purported Global Biomedical Company Charged with Stealing over $1 Million of Victim’s Money Through False Promises of Investment OpportunitiesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Ricky J. Patel, the Acting Special Agent-in-Charge of the New York Field Office of the Department of Homeland Security (“HSI”), announced today the unsealing of an Indictment charging NORMAN GRAY with wire fraud, in connection with a scheme to induce an individual (“Victim-1”) into wiring him funds through false promises that those funds would be put towards an equity stake in his purported global biomedical company (“Biomedical Company”) and certain purported investment deals involving the sale of personal protective equipment (“PPE”). GRAY was arrested this morning and will be presented before U.S. Magistrate Judge Debra Freeman later today. The case is assigned to United States District Judge Lorna G. Schofield.
U.S. Attorney Damian Williams said: “Norman Gray, CEO of a purported global biomedical company, allegedly induced his victim investor to entrust Gray with over $1.2 million by claiming the risk involved in their PPE investment deals was ‘virtually zero.’ But in reality, the deals are alleged to be fictitious, and any chance of actually earning a profit with Gray’s investments was virtually zero. We thank the HSI for their assistance in this investigation and charge.”
Acting HSI Special Agent-in-Charge Ricky J. Patel said: "As alleged in the indictment, Norman Gray made fake promises and created a fictitious persona to dupe an investor for over a million dollars in real cash, but in the end, Gray’s dishonest imagination led him right into the hands of law enforcement. HSI Special Agents, in conjunction with our partners, will work tirelessly to prevent shameless activities perpetrated by fraudsters like Gray, who sell dreams of making big profits with little risk to unwitting investors. What made these acts even more deplorable was that he allegedly created this scheme by falsely purporting that the investments were going to legitimate companies providing vital PPE to the public.”
As alleged in the Indictment:[1]
GRAY is the CEO of the Biomedical Company, which is headquartered and incorporated in Hamden, Connecticut. In or about August 2020, GRAY induced Victim-1 to give him $250,000, supposedly as an equity investment in the Biomedical Company. In reality, nearly all of the $250,000 was paid out to a company with no apparent affiliation with the Biomedical Company, and Victim-1 received no equity in the Biomedical Company. In the ensuing months, GRAY further solicited a total of approximately $1,200,000 from Victim-1, representing that he would invest those funds in deals involving the procurement of PPE for two major universities in the tristate area. GRAY represented that the necessary contracts for those deals were in place and that the risk involved with those deals was “virtually zero.” In reality, the necessary contracts did not exist, and GRAY caused substantially all of Victim-1’s funds to be spent on the Biomedical Company’s general operating expenses, as well as products and services having nothing to do with the Biomedical Company or the procurement of personal protective equipment, including, for example, the cash purchase of an approximately $50,000 luxury SUV.
As part of his scheme to fraudulently solicit funds from Victim-1, and as a means of dispelling Victim-1’s concern that an investment with GRAY would require Victim-1 to forego the purchase of a home, GRAY offered Victim-1 a mortgage from the “Tranctus Group.” GRAY claimed that “Tranctus Group” was a boutique mortgage company of which he was the sole investor. GRAY directed Victim-1 to his supposed mortgage broker “Benjamin Mabry.” In fact, “Benjamin Mabry” was a false persona invented by GRAY, and GRAY registered the internet domain associated with the “Tranctus Group” on the very same day that Victim-1 received a purported mortgage commitment letter from “Mabry.” Ultimately, Victim-1 received no return on Victim-1’s investments, GRAY refused to return Victim-1’s money to Victim-1, and the purported “Tranctus Group” mortgage failed to materialize.
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GRAY, 66, of the Hamden, Connecticut area, is charged with one count of wire fraud, which carries a maximum potential prison sentence of 20 years. The maximum potential penalties are prescribed by Congress and are provided here for informational purposes only; any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of Special Agents of the United States Department of Homeland Security, Homeland Security Investigations, New York City Police Department, New York City Sheriff's Office, Bronx District Attorney, Greenburgh Police Department, and HSI New Haven.
This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorneys Benjamin A. Gianforti and Tara La Morte are in charge of the prosecution.
The allegations 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 Information and the description of the Information set forth below constitute only allegations, and every fact described should be treated as an allegation.
U.S. Attorney Files Civil Fraud Lawsuit Against Non-Profit and Settles Fraud Claims Against Its Founder for Inflating Medicaid Reimbursements by Falsely Reporting Millions in CostsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Scott Lampert, the Special Agent in Charge of the New York Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced today that the United States has filed a civil fraud lawsuit against Maranatha Human Services, Inc. (“MARANATHA”) and HENRY ALFONSO COLEY (“COLEY”) for falsely claiming that millions of dollars expended to benefit for-profit ventures owned and controlled by COLEY and MARANATHA, as well as payments to cover COLEY’s personal costs and excessive payments to COLEY’s family members, were reasonable and necessary costs in connection with MARANATHA’s provision of Medicaid-funded services to individuals with developmental disabilities. MARANATHA is a non-profit organization based in Poughkeepsie, New York; COLEY founded MARANATHA in 1988 and served as its chief executive officer until earlier this year.
Specifically, the Government’s complaint alleges that, with its board’s approval, MARANATHA funded for-profit companies operated by COLEY; paid excessive salaries and consulting fees to COLEY’s family members, often in exchange for little to no work; and paid for tens of thousands of dollars of COLEY’s personal expenses. The Government further alleges that, from 2010 to 2019, COLEY and MARANATHA submitted to the State of New York cost reports that falsely claimed millions of dollars in these expenses as “allowable” costs, which fraudulently inflated MARANATHA’s Medicaid reimbursement rates and resulted in MARANATHA receiving millions of dollars in Medicaid funds to which it was not entitled.
Simultaneous with the filing of the lawsuit, the United States has resolved its claims against COLEY through a settlement approved by U.S. District Judge Kenneth M. Karas. Pursuant to the settlement, COLEY will pay $88,000 to the United States and has admitted and accepted responsibility for conduct alleged by the Government in its complaint as further described below. COLEY has also agreed to pay $132,000 to the State of New York to resolve the State’s claims, for a total recovery of $220,000. The settlement amount is based on the Office’s assessment of COLEY’s ability to pay based on the financial information he provided. COLEY also agreed never to work for or accept payments from any entity that receives funds from a federal healthcare program. In addition, COLEY entered into a Voluntary Exclusion Agreement with HHS-OIG, which prohibits him from participating in Medicaid and other federal healthcare programs for 15 years.
U.S. Attorney Damian Williams said: “For a decade, Henry Alfonso Coley and Maranatha defrauded Medicaid by submitting reports that fraudulently claimed as allowable expenses millions of dollars spent on for-profit companies owned by them, on excessive salaries and fees for Coley’s family members, and on Coley’s personal expenses. These expenses were not related to providing care or assistance to the individuals with developmental disabilities Maranatha was meant to serve. This Office will continue to hold entities and their executives accountable when they abuse our federal healthcare programs.”
HHS-OIG Special Agent in Charge Scott Lampert said: “Any threat to the financial health of Medicaid is a threat to the vulnerable people who depend upon it for critical services. We will continue to hold those who steal from federal health care programs accountable for their actions.”
According to the Government’s complaint, from 2010 through 2019:
MARANATHA was required to submit cost reports, called Consolidated Financial Reports (“CFRs”), to the State of New York each year, specifying the reasonable and necessary costs MARANATHA incurred in providing services for its Medicaid-funded programs. These costs were to be reported as “allowable” costs. MARANATHA was required separately to report its other, “non-allowable” costs; “non-allowable” costs include costs unrelated to its Medicaid-funded programs, as well as any unreasonable or unnecessary costs.
With its board’s approval, MARANATHA funded for-profit companies operated by COLEY and owned by COLEY or MARANATHA, as well as various unincorporated pet projects started by COLEY. One of the chief purposes of these ventures was to serve as vehicles to funnel money to COLEY’s daughter, as well as others associated with COLEY, whom MARANATHA paid for work they purportedly did to support these ventures and projects. Over the course of a decade, not one of these ventures ever launched a product or service or earned a single dollar in revenue. COLEY and MARANATHA hired COLEY’s family members as employees and consultants, some in connection with these for-profit ventures, and others in connection with MARANATHA’s Medicaid-funded services. COLEY and MARANATHA paid excessive salaries and consulting fees to COLEY’s family members, often in return for little to no work. MARANATHA also paid for tens of thousands of dollars of COLEY’s personal expenses, including more than $34,000 for personal training sessions at a gym.
COLEY and MARANATHA knowingly submitted CFRs annually to the State of New York fraudulently reporting these expenses – totaling millions of dollars – as “allowable” costs. On each CFR, COLEY falsely certified to the completeness and accuracy of the report. COLEY and MARANATHA knew that the State of New York relied on providers’ CFRs when setting provider-specific reimbursement rates for certain Medicaid-funded programs, including MARANATHA’s largest Medicaid-funded program. As a result of COLEY’s and MARANATHA’s falsely inflated cost reports, the State of New York awarded MARANATHA a higher reimbursement rate and MARANATHA received millions of dollars in Medicaid funds to which it was not entitled.
COLEY has settled the claims against him in the Government’s complaint. As part of the settlement, COLEY admits, acknowledges, and accepts responsibility for the following conduct:
- COLEY made a presentation to MARANATHA’s board of directors acknowledging that “[i]t was always the plan for Maranatha to use government funds as a launching pad to create private enterprise that would enable it to not be dependent on government while at the same time fulfilling its function” consistent with its mission.
- COLEY was familiar with the requirement that MARANATHA distinguish “allowable costs” from “non-allowable costs” in its CFRs.
- COLEY knew that the CFRs are used by the New York State Department of Health to determine MARANTHA’s reimbursement rates for the provision of Medicaid services.
- In each CFR that MARANATHA submitted since 2010, COLEY certified that the (i) the “information furnished in this report . . . is in accordance with the instructions and is true and correct to the best of my knowledge”; and (ii) the statement attached to the CFR “fully and accurately represents all reportable income and expenditures made for services performed in accordance with the provision of the Mental Hygiene Law and approved budgets.”
- COLEY signed the certifications set out above in CFRs that reported as “allowable costs” amounts expended not for MARANTHA’s provision of Medicaid services but instead to pursue certain for-profit business ventures.
- In particular, MARANATHA submitted CFRs reporting as “allowable costs” costs expended to benefit certain entities owned and/or operated by COLEY and/or MARANATHA that did not provide Medicaid-funded services (the “Non-Medicaid Ventures”).
- MARANATHA paid certain employees and contractors, including COLEY’s family members, to perform work related to the Non-Medicaid Ventures. For example, since 2010, MARANATHA paid COLEY’s daughter more than $300,000. Though much of her time was spent on work related to the Non-Medicaid Ventures, COLEY and MARANATHA reported her full compensation as an “allowable cost” in the CFRs.
- Since 2010, COLEY received more than $2 million from MARANATHA in salary and benefits, and MARANTHA claimed the full amount of his compensation as “allowable costs” on its CFRs. However, COLEY devoted much of his to time to working on the Non-Medicaid Ventures.
In connection with the filing of the lawsuit and settlement, the United States joined a private whistleblower lawsuit that had previously been filed under seal pursuant to the False Claims Act.
Mr. Williams praised the outstanding investigative work of the HHS-OIG, and he thanked the Medicaid Fraud Control Unit at the New York State Attorney General’s Office for its extensive collaboration in the investigation.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Jacob Lillywhite is in charge of the case.
Long Island Pain Management Doctor Pleads Guilty to Tax EvasionRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, Thomas Fattorusso, Special Agent in Charge of the Internal Revenue Service - Criminal Investigation (“IRS-CI”) New York Field Office, and Keith Kruskall, Acting Special Agent in Charge of the New York Office of the Drug Enforcement Administration (“DEA”), today announced that defendant JORDAN SUDBERG pled guilty to tax evasion for the calendar years 2015 through 2017, in connection with false deductions from a scheme involving his issuance of hundreds of business checks falsely purporting to be payments for business services, which he provided in exchange for cash to a black market money exchange network. As part of his plea SUDBERG agreed to pay $551,660 in restitution to the Internal Revenue Service (“IRS”), and forfeit an additional $243,257. SUDGERG pled guilty today before U.S. District Judge Paul A. Crotty.
U.S. Attorney Damian Williams said: “As he admitted in court today, Jordan Sudberg engaged in a years-long pattern of fabricating false business expenses to conceal from the IRS large portions of his substantial income earned from his medical practices. He fraudulently claimed more than $1 million in deductions that should have been reported to the IRS as taxable income, and allowed other individuals to create purportedly legitimate origin for their illicit cash in the process. Now Sudberg awaits sentencing for his crime.”
IRS-CI Special Agent in Charge Thomas Fattorusso said: “Medical professionals should be in the business of caring for people, not evading taxes. IRS-CI agents are specially trained to detect tax fraud – even elaborate schemes like the one Sudberg allegedly devised.”
DEA Acting Special Agent in Charge Keith Kruskall said: “This defendant allegedly engaged in a scheme where he purposefully claimed a significantly lower income to evade U.S. tax law. Thanks to the dedication of our law enforcement partners, the defendant will finally be paying his fair share.”
According to the allegations contained in the Information to which SUDBERG pled guilty, a Civil Forfeiture Complaint filed against funds seized from SUDBERG, a Criminal Complaint and Information filed against SUDBERG’s co-conspirator Hua Fen Bi, and statements made in court:
From at least 2015 through 2017, SUDBERG devised and perpetrated a scheme to evade a substantial portion of his personal income taxes. During that period, SUDBERG owned two S-corporations through which he operated a medical practice, specializing in pain management, at locations located in Manhattan, Long Island, and Queens, New York. SUDBERG issued hundreds of checks made payable to various companies and falsely purporting to be payments for business services. In fact, those companies had not performed any business services for SUDBERG’s corporations. In exchange for the checks, SUDBERG received sums of cash that were equal to the value of the checks minus a small fee. SUDBERG falsely reported to the IRS that the checks were for legitimate business expenses and claimed deductions in the amount of the checks, thereby substantially understating his taxable income.
SUDBERG’s tax evasion helped support an unlicensed money services network operated by a number of co-conspirators, including Hua Fen Bi, who was sentenced by U.S. District Judge Colleen McMahon on May 24, 2021, for his role in conspiring to operate an unlicensed money transmitting business. This network permitted individuals to exchange cash for business checks like those provided by SUDBERG, thereby generating a false and nominally legitimate source of funds, including for the laundering of narcotics proceeds.
SUDBERG pled guilty to one count of tax evasion, which carries a maximum penalty of five years in prison. The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
SUDBERG is scheduled to be sentenced on February 23, 2022.
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Mr. Williams praised the outstanding work of the Internal Revenue Service and the Drug Enforcement Administration on this case. He also thanked the Office of the Inspector General of the United States Department of Health and Human Services and the New York Drug Enforcement Task Force for their support and assistance.
The prosecution of this case is being overseen by the Office’s Money Laundering and Transnational Criminal Enterprise Unit. Assistant U.S. Attorneys Emily Deininger and Alexandra Rothman are in charge of the case.
Humberto Rodriguez, a/k/a “El Bori,” Pleads Guilty to April 2020 MurderRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that HUMBERTO RODRIGUEZ, a/k/a “El Bori,” pled guilty today in Manhattan federal court to the April 18, 2020, murder of Jorge Miguel Cabrera. U.S. District Judge P. Kevin Castel accepted the defendant’s guilty plea.
U.S. Attorney Damian Williams said: “In the early morning of April 18, 2020, Humberto Rodriguez shot and ultimately killed Miguel Cabrera in connection with a failed drug transaction. This case is yet another tragic reminder of the violence that often accompanies narcotics trafficking. We continue our daily work with our law enforcement partners to keep our communities safe by vigorously investigating and prosecuting acts of violence and drug trafficking.”
According to the allegations in the Second Superseding Indictment and other documents filed in federal court, as well as statements made in public court proceedings:
On or about April 18, 2020, RODRIGUEZ and other members of a Bronx-based narcotics trafficking organization attempted to purchase one kilogram of cocaine on East 175th Street in the Bronx. After obtaining the buyers’ money, the sellers attempted to flee the scene. At that point, RODRIGUEZ fired a gun at the sellers’ vehicles, striking Cabrera in the spine. Cabrera ultimately died from the gunshot wound.
* * *
RODRIGUEZ, 27, pled guilty to one count of murder through the use of a firearm, in violation of Title 18, United States Code, Sections 924(j) and 2, which carries a maximum term of life in prison and a mandatory minimum term of five years in prison. The maximum and minimum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
RODRIGUEZ is scheduled to be sentenced by Judge Castel on March 9, 2022.
On July 27, 2021, Rodriguez’s codefendant Alex Melendez pled guilty to narcotics and firearms offenses. On November 11, 2021, Rodriguez’s codefendant Sharone Lewis pled guilty to a narcotics offense.
Mr. Williams praised the outstanding investigative work of Homeland Security Investigations, the Drug Enforcement Administration, the New York City Police Department, and the Organized Crime Drug Enforcement Task Force. This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
The prosecution is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Peter J. Davis and Nicholas W. Chiuchiolo are in charge of the prosecution.
Israeli Securities Trader Sentenced to 30 Months in Prison for Role in International Insider Trading SchemeRead the Press Release
Damian Williams, United States Attorney for the Southern District of New York, announced that DOV MALNIK, an Israeli securities trader and finance professional, was sentenced to 30 months in prison for his role in an international insider trading scheme. MALNIK was extradited from Switzerland and pled guilty on June 25, 2021, to insider trading for his role in trading based on confidential inside information stolen by an insider at a global investment bank and shared with MALNIK in exchange for profits. The sentence was imposed on November 19, 2021, by United States District Judge Victor Marrero.
U.S. Attorney Damian Williams said: “This prosecution shows that we will vigorously protect the integrity of our nation’s capital markets by holding insider traders accountable for their use of inside information, regardless of where in the world the inside information is stolen and where tips are illegally passed.”
According to the Superseding Indictment, statements made in open court, and court filings:
DOV MALNIK and his business partner and codefendant Tomer Feingold, both Israeli citizens, were securities traders who traded in their own names and managed various companies and investment funds. From at least 2013 through 2017, MALNIK participated in a large-scale, international insider trading ring. Through the scheme, MALNIK received material, nonpublic information (“MNPI”) concerning acquisitions and potential acquisitions of publicly traded companies from a securities trader who resided in Switzerland (“CC-1”). MALNIK knew that this MNPI was obtained by CC-1 directly and indirectly from individuals who were insiders at publicly traded companies and investment banks. These insiders breached their fiduciary duties and shared MNPI with others, including CC-1, in exchange for compensation, who in turn shared that information with MALNIK. MALNIK used that information to place timely, profitable securities trades resulting in millions of dollars of profits.
Throughout the conspiracy, MALNIK, Feingold, the investment bank insiders, CC-1, and others involved in this scheme, took numerous steps to conceal their unlawful enterprise, including through the use of encrypted messaging applications and multiple unregistered “burner” cellphones to communicate with each other. MALNIK also attempted to avoid detection by engaging in securities trading through numerous offshore corporate entities. For example, in 2011, MALNIK incorporated a British Virgin Islands entity based in Geneva, Switzerland, and subsequently opened trading and/or bank accounts in that shell company’s name. During the insider trading scheme, MALNIK’s offshore companies traded in the stocks of companies about which MALNIK had received MNPI – often with multiple of those companies trading in the same stock and on the same days.
MALNIK also used these entities to transfer a portion of the profits of his and Feingold’s illegal insider trading to CC-1, as per MALNIK’s agreement with CC-1. At first, MALNIK instructed his bank to send the funds to an account at a financial institution in Switzerland that agreed to hold the funds for the benefit of CC-1. After a short time, however, MALNIK’s bank questioned the purpose of the transactions and requested justification for the transfer of funds. Accordingly, in order to deceive the banks, MALNIK, Feingold, and CC-1 agreed that CC-1 would issue fake invoices for consulting services to MALNIK and Feingold’s various offshore entities. The offshore entities would then send the funds to CC-1’s account pursuant to the fake invoices.
To date, this investigation has also resulted in the conviction of other individuals who were involved in this global insider trading scheme, including investment banker Bryan Cohen, who pled guilty on January 7, 2020, to illegally passing MNPI related to his bank’s corporate clients, and entrepreneur and pharmaceutical company executive Telemaque Lavidas, who was convicted on January 15, 2020, of illegally passing MNPI related to Ariad Pharmaceuticals, Inc.
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In addition to the prison term, MALNIK, 43, was ordered to pay a fine of $50,000 and forfeiture of $1,594,779.
Mr. Williams praised the work of the Federal Bureau of Investigation and also thanked the Securities and Exchange Commission. The Justice Department’s Office of International Affairs and the Swiss Federal Office of Justice provided substantial assistance in securing Malnik’s arrest and extradition.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Richard Cooper and Daniel Tracer are in charge of the prosecution.
Real Estate Businessman and Lawyer Arrested in Connection with Campaign Finance SchemeRead the Press Release
Damian Williams, 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 Daniel G. Cort, Acting Commissioner of the New York City Department of Investigation (“DOI”), announced the unsealing of an Indictment charging GERALD MIGDOL with conspiracy to commit wire fraud, wire fraud, and aggravated identity theft in connection with a scheme to misrepresent and conceal the sources of political campaign contributions. MIGDOL was arrested this morning and will be presented before United States Magistrate Judge Ona T. Wang later today. The case is assigned to United States District Judge J. Paul Oetken.
U.S. Attorney Damian Williams said: “Free and fair elections are the foundation of our democracy, and campaign finance regulations are one way communities seek to ensure everyone plays by the same rules. As alleged, Gerald Migdol and others tried to divert taxpayer dollars from New York City’s matching funds program to a particular candidate based on fraudulent campaign contributions. My Office remains vigilant against such attempts to defraud the public.”
FBI Assistant Director Michael J. Driscoll said: “Public programs, such as the one Migdol allegedly defrauded, exist to provide support for New Yorkers who want to represent their city in elections, but find themselves without the means to do so. Illegally subverting the requirements to be eligible for these funds is detrimental to our ability to hold a free and fair election and is a federal offense.”
Acting DOI Commissioner Daniel G. Cort said: “Obtaining fraudulent donations for a political candidate that will ultimately be used to secure matching funds undermines the fair and honest public financing of elections. DOI thanks its partners on this matter, the office of the United States Attorney for the Southern District of New York and the Federal Bureau of Investigation.”
According to the allegations in the Indictment and information in the public record[1]:
From at least in or about October 2019, through at least in or about January 2021, GERALD MIGDOL orchestrated and participated in a scheme to misrepresent and conceal sources of contributions made during the 2021 election cycle to the campaign of a candidate for New York City Comptroller (“Candidate-1”), fraudulently attempting to procure public funds for Candidate-1 from the campaign finance program overseen by the New York City Campaign Finance Board (“CFB”). That campaign finance program included, among other things, a “matching funds program” that provided eligible candidates with public funds based on the number and amount of certain donor contributions. According to the CFB, “[b]y matching their contributions with public funds, the [p]rogram empowers New Yorkers in every neighborhood to make their voices heard in city elections” and “[b]y encouraging candidates to raise small-dollar contributions from average New Yorkers, the program increases engagement between voters and those who seek to represent them.”[2]
Candidates running for the office of New York City Comptroller were eligible to participate in the matching funds program if they met certain criteria, and eligible candidates could receive up to approximately $3.4 million in public matching funds based on qualifying contributions. Candidate-1 filed a certification with the CFB in or about September 2019, becoming a candidate for the office of the New York City Comptroller and opting in to the CFB’s matching funds program. Thereafter, MIGDOL and others conspired to obtain fraudulent contributions for Candidate-1 that would be used, among other things, to seek public matching funds from the CFB. A number of those contributions were “nominee contributions,” in which money was given to Candidate-1’s campaign under one contributor’s name, but in reality the money for the contribution came from, or was reimbursed by, another person. Other contributions obtained at MIGDOL’s direction were fraudulently made in the names of individuals who, in fact, had never authorized those contributions.
Through these and other efforts, MIGDOL and others involved in the scheme procured nominee and other fraudulent contributions for Candidate-1’s campaign, which in turn were submitted to the CFB by Candidate-1’s campaign in connection with requests for at least tens of thousands of dollars in additional public matching funds.
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MIGDOL, 71, of New York, New York, is charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison. The statutory maximum penalties are prescribed by Congress, and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the FBI and DOI. This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys Jarrod L. Schaeffer, David Abramowitz, Tara La Morte, and Alison Moe 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.
[2] https://www.nyccfb.info/program/benefits.
Former Law Firm Partner Arrested for Cyberstalking Multiple VictimsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging WILLIE DENNIS with cyberstalking partners of DENNIS’s former law firm. DENNIS, a U.S. citizen, was arrested this week in the Dominican Republic and will be presented today in Manhattan federal court before United States Magistrate Judge Ona T. Wang. The case is assigned to U.S. District Court Judge Lorna G. Schofield.
As alleged in the Indictment unsealed today in Manhattan federal court[1]:
From at least in or about 2018, up to and including in or about November 2020, WILLIE DENNIS, a former partner at a prominent national law firm (the “Firm”), engaged in a campaign of harassment, intimidation, and threats against multiple individuals, including other partners, who worked at the Firm. As part of that campaign, DENNIS sent the victims thousands of harassing, threatening, and intimidating emails and text messages.
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DENNIS, 59, of New York, New York, is charged with four counts of cyberstalking, in violation of Title 18, United States Code, Section 2261A(2)(b). Each count carries a maximum sentence of five years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
Mr. Williams praised the outstanding investigative work of the FBI.
The prosecution of this case is being handled by the Office’s General Crimes Unit. Assistant United States Attorney Sarah L. Kushner is in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
U.S. Attorney Announces Charges Against Two Iranian Nationals for Cyber-Enabled Disinformation and Threat Campaign Designed to Interfere with the 2020 U.S. Presidential ElectionRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Bryan Vorndran, the Assistant Director of the Federal Bureau of Investigation’s Cyber Division (“FBI”), and Matthew G. Olsen, Assistant Attorney General for National Security, announced today the unsealing of an indictment charging Iranian citizens and residents Seyyed Mohammad Hosein and MUSA KAZEMI (سید محمد حسین موسی کاظمی), a/k/a “Mohammad Hosein Musa Kazem,” a/k/a “Hosein Zamani,” and SAJJAD KASHIAN (سجاد کاشیان), a/k/a “Kiarash Nabavi,”for their involvement in a cyber-enabled campaign to intimidate and influence American voters, and otherwise undermine voter confidence and sow discord, in connection with the 2020 U.S. Presidential election. As part of this campaign, the conspirators obtained confidential United States voter information from at least one state election website, sent threatening email messages to intimidate voters, created and disseminated a video containing disinformation pertaining to purported but non-existent voting vulnerabilities, attempted to access, without authorization, several states’ voting-related websites, and successfully gained unauthorized access to a U.S. media company’s computer network that, if not for successful FBI and victim company efforts to mitigate, would have provided the conspirators another vehicle for further disseminating false claims after the election. The case has been assigned to U.S. District Judge Victor Marrero.
U.S. Attorney Damian Williams said: “As alleged, Kazemi and Kashian were part of a coordinated conspiracy in which Iranian hackers sought to undermine faith and confidence in the U.S. Presidential elections. Working with others, Kazemi and Kashian accessed voter information from at least one state’s voter database, threatened U.S. voters via email, and even disseminated a fictitious video that purported to depict actors fabricating overseas ballots. The United States will never tolerate any foreign actors’ attempts to undermine our free and democratic elections. As a result of the charges unsealed today, and the concurrent efforts of our U.S. government partners, Kazemi and Kashian will forever look over their shoulders as we strive to bring them to justice.”
Assistant Director of the FBI’s Cyber Division Bryan Vorndran.said: “The FBI remains committed to countering malicious cyber activity targeting our democratic process. Working rapidly with our private sector and U.S. government partners and ahead of the election, we were able to disrupt and mitigate this malicious activity – and then to enable today’s joint, sequenced operations against the adversary. Today’s announcement shows what we can accomplish as a community and a country when we work together, and the FBI will continue to do its part to keep our democracy safe.”
Assistant Attorney General for National Security Matthew G. Olsen said: “The Department is committed to using all tools at its disposal, including criminal charges, to expose and disrupt malign foreign influence efforts and bring the responsible actors to justice. The indictment reveals that Iranian actors sought to sow discord by targeting Republicans with messages claiming voter fraud, and Democrats with ‘false flag’ threats from the Proud Boys. Its detailed allegations provide unadulterated facts that will help further inoculate the U.S. public, regardless of political affiliation, from future tailored and targeted disinformation campaigns.”
According to the allegations contained in the Indictment[1] unsealed today in Manhattan federal court:
The 2020 Election Interference Campaign
Starting in approximately August 2020, and proceeding until November 2020, KAZEMI, KASHIAN, and other co-conspirators began a coordinated, four-stage campaign to undermine faith and confidence in the 2020 Presidential Election (the “Election Interference Campaign”) and otherwise sow discord within U.S. society. The campaign had four components:
- In September and October 2020, members of the conspiracy conducted reconnaissance on, and attempted to compromise, approximately eleven state voter websites, including state voter registration websites and state voter information websites. Those efforts resulted in the successful exploitation of a misconfigured computer system of a particular U.S. state (“State-1”), and the resulting unauthorized downloading of more than 100,000 State-1 voters’ information.
- In October 2020, members of the conspiracy, claiming to be a “group of Proud Boys volunteers,” sent Facebook messages and emails (the “False Election Messages”) to Republican Senators, Republican members of Congress, individuals associated with the Presidential campaign of Donald J. Trump, White House advisors, and members of the media. The False Election Messages claimed that the Democratic Party was planning to exploit “serious security vulnerabilities” in state voter registration websites to “edit mail-in ballots or even register non-existent voters.” The False Election Messages were accompanied by a video (the “False Election Video”) which purported, via simulated intrusions and the use of State-1 voter data, to depict an individual affiliated with the Proud Boys hacking into state voter websites and using stolen voter information to create fraudulent absentee ballots through the Federal Voting Assistance Program (“FVAP”) for military and overseas voters.[2]
- Also in October 2020, the conspirators engaged in an online voter intimidation campaign involving the dissemination of a threatening message (the “Voter Threat Emails”), purporting to be from the Proud Boys, to tens of thousands of registered voters, including some voters whose information the conspiracy had obtained from State-1’s website. The emails were sent to registered Democrats, and threatened the recipients with physical injury if they did not change their party affiliation and vote for President Trump.
- On November 4, 2020, the day after the 2020 U.S. Presidential election, the conspirators sought to leverage earlier September and October 2020 intrusions into an American media company’s (“Media Company-1”) computer networks. Specifically, on that day, the conspirators attempted to use stolen credentials to again access Media Company-1’s network, which would have provided them another vehicle for further disseminating false claims concerning the election through conspirator-modified or created content. However, because of an earlier FBI victim notification, Media Company-1 had by that time mitigated the conspirators’ unauthorized access and these log-in attempts failed.
Background on Kazemi and Kashian
SEYYED MOHAMMAD HOSEIN MUSA KAZEMI and SAJJAD KASHIAN are experienced Iran-based computer hackers that worked as contractors for an Iran-based company called Eeleyanet Gostar, now known as Emennet Pasargad. Eeleyanet Gostar purported to provide cybersecurity services within Iran. Among other things, Eeleyanet Gostar is known to have provided services to the Iranian Government, including to the Guardian Council.
As part of his role in the Election Interference Campaign, KAZEMI compromised computer servers that were used to send the Voter Threat Emails, prepared such emails, and compromised the systems of Media Company-1. KASHIAN’s role was to manage the conspirators’ computer infrastructure used to carry out the Voter Threat Email campaign, and to purchase social media accounts in furtherance of the Election Interference Campaign.
* * *
KAZEMI, 24, and KASHIAN, 27, are both charged with one count of conspiracy, which carries a maximum sentence of five years in prison; one count of voter intimidation, which carries a maximum sentence of one year in prison; and one count of transmission of interstate threats, which carries a maximum sentence of five years in prison. KAZEMI is additionally charged with one count of unauthorized computer intrusion, which carries a maximum sentence of five years in prison; and one count of computer fraud: knowingly damaging a protected computer, which carries a maximum sentence of ten years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the assigned judge.
Concurrent with the unsealing of the indictment, the Department of the Treasury Office of Foreign Assets Control (“OFAC”) designated Emennet Pasargad, KAZEMI, KASHIAN, and four other Iranian nationals comprising Emennet Pasargad leadership pursuant to Executive Order (E.O.) 13848, “Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election.” Additionally, the Department of State’s Rewards for Justice Program, is offering a reward of up to $10 million for information on or about the KAZEMI and KASHIAN’s activities.
Mr. Williams praised the outstanding investigative work of the FBI, including the work of the Cleveland FBI Field Office and the FBI Cyber Division.
The case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Dina McLeod and Louis A. Pellegrino are in charge of the prosecution, with assistance from Trial Attorney Adam Small of the National Security Division’s Counterintelligence and Export Control Section.
The charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
[2] In actuality, the computer intrusions depicted in the False Election Video were simulated intrusions created by members of the conspiracy using their own server and data obtained during the State-1 exploitation. Further, the FVAP could not actually be leveraged in the manner implied by the False Election Video.
Two Iranian Nationals Charged for Cyber-Enabled Disinformation and Threat Campaign Designed to Influence the 2020 U.S. Presidential ElectionRead the Press Release
An indictment was unsealed in New York today charging two Iranian nationals for their involvement in a cyber-enabled campaign to intimidate and influence American voters, and otherwise undermine voter confidence and sow discord, in connection with the 2020 U.S. presidential election.
According to court documents, Seyyed Mohammad Hosein Musa Kazemi (سید محمد حسین موسی کاظمی), aka Mohammad Hosein Musa Kazem, aka Hosein Zamani, 24, and Sajjad Kashian (سجاد کاشیان), aka Kiarash Nabavi, 27, both of Iran, obtained confidential U.S. voter information from at least one state election website; sent threatening email messages to intimidate and interfere with voters; created and disseminated a video containing disinformation about purported election infrastructure vulnerabilities; attempted to access, without authorization, several states’ voting-related websites; and successfully gained unauthorized access to a U.S. media company’s computer network that, if not for successful FBI and victim company efforts to mitigate, would have provided the conspirators another vehicle to disseminate false claims after the election.
“This indictment details how two Iran-based actors waged a targeted, coordinated campaign to erode confidence in the integrity of the U.S. electoral system and to sow discord among Americans,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The allegations illustrate how foreign disinformation campaigns operate and seek to influence the American public. The Department is committed to exposing and disrupting malign foreign influence efforts using all available tools, including criminal charges.”
“As alleged, Kazemi and Kashian were part of a coordinated conspiracy in which Iranian hackers sought to undermine faith and confidence in the U.S. presidential election,” said U.S. Attorney Damian Williams for the Southern District of New York. “Working with others, Kazemi and Kashian accessed voter information from at least one state’s voter database, threatened U.S. voters via email, and even disseminated a fictitious video that purported to depict actors fabricating overseas ballots. The United States will never tolerate any foreign actors’ attempts to undermine our free and democratic elections. As a result of the charges unsealed today, and the concurrent efforts of our U.S. government partners, Kazemi and Kashian will forever look over their shoulders as we strive to bring them to justice.”
“The FBI remains committed to countering malicious cyber activity targeting our democratic process,” said Assistant Director Bryan Vorndran of the FBI’s Cyber Division. “Working rapidly with our private sector and U.S. government partners and ahead of the election, we were able to disrupt and mitigate this malicious activity – and then to enable today’s joint, sequenced operations against the adversary. Today’s announcement shows what we can accomplish as a community and a country when we work together, and the FBI will continue to do its part to keep our democracy safe.”
According to the allegations contained in the indictment unsealed today:
The Voter Intimidation and Influence Campaign
Starting in approximately August 2020, and proceeding until November 2020, Kazemi, Kashian, and other co-conspirators began a coordinated, campaign to undermine faith and confidence in the 2020 presidential election (the “Voter Intimidation and Influence Campaign”) and otherwise sow discord within U.S. society. The Campaign had four components:
- In September and October 2020, members of the conspiracy conducted reconnaissance on, and attempted to compromise, approximately 11 state voter websites, including state voter registration websites and state voter information websites. Those efforts resulted in the successful exploitation of a misconfigured computer system of a particular U.S. state (“State-1”), and the resulting unauthorized downloading of information concerning more than 100,000 of State-1’s voters.
- In October 2020, members of the conspiracy, claiming to be a “group of Proud Boys volunteers,” sent Facebook messages and emails (the “False Election Messages”) to Republican Senators, Republican members of Congress, individuals associated with the presidential campaign of Donald J. Trump, White House advisors, and members of the media. The False Election Messages claimed that the Democratic Party was planning to exploit “serious security vulnerabilities” in state voter registration websites to “edit mail-in ballots or even register non-existent voters.” The False Election Messages were accompanied by a video (the “False Election Video”) carrying the Proud Boys logo, which purported, via simulated intrusions and the use of State-1 voter data, to depict an individual hacking into state voter websites and using stolen voter information to create fraudulent absentee ballots through the Federal Voting Assistance Program (FVAP) for military and overseas voters.[1]
- Also in October 2020, the conspirators engaged in an online voter intimidation campaign involving the dissemination of a threatening message (the “Voter Threat Emails”), purporting to be from the Proud Boys, to tens of thousands of registered voters, including some voters whose information the conspiracy had obtained from State-1’s website. The emails were sent to registered Democrats and threatened the recipients with physical injury if they did not change their party affiliation and vote for President Trump.
- On Nov. 4, 2020, the day after the 2020 U.S. presidential election, the conspirators sought to leverage earlier September and October 2020 intrusions into an American media company’s (Media Company-1) computer networks. Specifically, on that day, the conspirators attempted to use stolen credentials to again access Media Company-1’s network, which would have provided them another vehicle for further disseminating false claims concerning the election through conspirator-modified or created content. However, because of an earlier FBI victim notification, Media Company-1 had by that time mitigated the conspirators’ unauthorized access and these log-in attempts failed.
Background on Kazemi and Kashian
Kazemi and Kashian are experienced Iran-based computer hackers who worked as contractors for an Iran-based company formerly known as Eeleyanet Gostar, and now known as Emennet Pasargad. Eeleyanet Gostar purported to provide cybersecurity services within Iran. Among other things, Eeleyanet Gostar is known to have provided services to the Iranian government, including to the Guardian Council.
As part of his role in the Voter Intimidation and Influence Campaign, Kazemi compromised computer servers that were used to send the Voter Threat Emails, drafted those emails, and compromised the systems of Media Company-1. Kashian managed the conspirators’ computer infrastructure used to carry out the Voter Threat Emails campaign and he purchased social media accounts in furtherance of the Voter Intimidation and Influence Campaign.
Kazemi and Kashian are both charged with one count of conspiracy to commit computer fraud and abuse, intimidate voters, and transmit interstate threats, which carries a maximum sentence of five years in prison; one count of voter intimidation, which carries a maximum sentence of one year in prison; and one count of transmission of interstate threats, which carries a maximum sentence of five years in prison. Kazemi is additionally charged with one count of unauthorized computer intrusion, which carries a maximum sentence of five years in prison; and one count of computer fraud, namely, knowingly damaging a protected computer, which carries a maximum sentence of 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Concurrent with the unsealing of the indictment, the Department of the Treasury Office of Foreign Assets Control (OFAC) designated Emennet Pasargad, Kazemi, Kashian, and four other Iranian nationals comprising Emennet Pasargad leadership pursuant to Executive Order 13848, “Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election.” Additionally, the Department of State’s Rewards for Justice Program, is offering a reward of up to $10 million for information on or about the Kazemi and Kashian’s activities.
The FBI’s Cyber Division and Cleveland Field Office are investigating the case.
Assistant U.S. Attorneys Dina McLeod and Louis A. Pellegrino and Trial Attorney Adam Small of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.
An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
[1] In actuality, the computer intrusions depicted in the False Election Video were simulated intrusions created by members of the conspiracy using their own server and data obtained during the State-1 exploitation. Further, the FVAP could not actually be leveraged in the manner implied by the False Election Video.
Queens Man Charged with Making Hoax Bomb Threat at New York FBI HeadquartersRead the Press Release
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 Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced that GERARDO MANUEL CHECO NUNEZ has been charged with making a hoax bomb threat yesterday, November 17, 2021, to FBI personnel at the Jacob K. Javits Federal Office Building (the “Javits Building”), located at 26 Federal Plaza in Manhattan, which houses the headquarters of the New York Field Office of the FBI and other federal agencies. CHECO NUNEZ was arrested yesterday after making the alleged bomb threat and was presented before United States Magistrate Judge Ona T. Wang in Manhattan federal court this afternoon.
U.S. Attorney Damian Williams said: “As alleged, the defendant’s bomb threat caused an immediate mobilization by the FBI and the NYPD appropriate for a real explosive device. Hoax or not, a bomb threat requires the diversion of valuable law enforcement and public safety resources, and causes genuine fear in the public. The defendant now faces a serious federal charge for his alleged conduct.”
FBI Assistant Director‑in‑Charge Michael J. Driscoll said: “While Nunez’s alleged threat to our federal building was deemed a hoax, his actions called for the resources of law enforcement, which were expended in response to one man’s personal gripe. Aside from the fact that these types of hoax threats divert resources and cost taxpayer dollars, they put law enforcement in harm’s way regardless of their intended purpose. Make no mistake about it, this case will be taken as seriously as any other.”
NYPD Commissioner Dermot Shea said: “In a city that has experienced more than 50 terrorist plots and four attacks, making a claim that you have a bomb at a government building is no joke. Mr. Checo Nunez faces serious charges which should serve as an example to others who believe making threats is an effective way to get attention.”
As alleged in the Complaint filed in Manhattan federal court[1]:
On November 17, 2021, CHECO NUNEZ entered the Javits Building and approached a security booth staffed by members of the uniformed security police of the FBI (the “FBI Police”). The security booth is protected by a transparent security screen. CHECO NUNEZ slammed against the security screen a copy of a written complaint he had previously filed through the FBI’s website alleging that a foreign government had hacked his accounts and was trying to extort him.[2] CHECO NUNEZ then stated to the FBI Police that he had an improvised explosive device (“IED”) in his vehicle (“Vehicle‑1”), and that he wanted to turn himself in. The FBI Police asked CHECO NUNEZ to confirm that there was an IED in Vehicle‑1, and CHECO NUNEZ responded affirmatively. FBI Police took CHECO NUNEZ into custody, and alerted members of the FBI’s New York Joint Terrorism Task Force (the “JTTF”).
Members of the JTTF asked CHECO NUNEZ if there was an IED in Vehicle‑1. CHECO NUNEZ responded that there was not an IED in Vehicle‑1, and that he had told the FBI Police that there was an IED in Vehicle‑1 because the FBI had ignored his hacking complaints, and he wanted the FBI to pay attention to those complaints. CHECO NUNEZ provided a description of Vehicle‑1 and its approximate location outside the Javits Building.
Members of the JTTF located Vehicle‑1, which is a full‑size cargo van. Vehicle‑1 was parked on Worth Street near the intersection of Worth Street and Lafayette Street, which is approximately across the street from the Javits Building. Vehicle‑1 was parked in the immediate vicinity of a closed coffee shop and an apartment building in which numerous individuals reside. Law enforcement evacuated the area around Vehicle‑1, including the apartment building, and closed the area to pedestrian and vehicle traffic. At least one law enforcement helicopter began surveilling the scene.
FBI bomb technicians searched Vehicle‑1 and determined that it did not contain an IED or any other type of explosive device or materials. During subsequent searches of Vehicle‑1, members of the JTTF found at least approximately several rounds of .223 caliber ammunition, as well as written materials regarding weapons of mass destruction and the detection of IEDs. From approximately 2006 to 2013, CHECO NUNEZ was enlisted in the United States Marine Corps, including as an Engineer Equipment Operator.
* * *
CHECO NUNEZ, 33, of Queens, New York, is charged with one count of conveying false information and hoaxes in connection with the alleged bomb threat, in violation of Title 18, United States Code, Section 1038, which carries a maximum sentence of five years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.
Mr. Williams praised the outstanding efforts of the FBI’s New York JTTF, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorney Benjamin Woodside Schrier is in charge of the prosecution.
The charge contained in the Complaint is merely an accusation, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described herein should be treated as an allegation.
[2] Communications and statements discussed herein are described in substance and in part.
Member of International Movie Piracy Ring Pleads GuiltyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today the guilty plea of GEORGE BRIDI, a citizen of the United Kingdom, for his role in the Sparks Group, an international piracy group that illegally distributed movies and television shows on the Internet. BRIDI pled guilty today before U.S. District Judge Richard M. Berman.
U.S. Attorney Damian Williams said: “As he admitted in court today, George Bridi participated in an international video piracy ring that illegally distributed worldwide on the Internet nearly every movie released by major production studios, as well as television shows. Bridi circumvented copyright protections on DVDs and Blu-Ray discs to illegally share movies online, but he and his crew could not evade law enforcement scrutiny, and Bridi now awaits sentencing for his crime.”
As alleged in the Indictment and statements made in open court:
Between 2011 and the present, GEORGE BRIDI and others known and unknown were members of the Sparks Group, a criminal organization that disseminated on the Internet movies and television shows prior to their retail release date, including nearly every movie released by major production studios, after compromising the content’s copyright protections.
In furtherance of its scheme, the Sparks Group fraudulently obtained copyrighted DVDs and Blu-Ray discs from wholesale distributors in advance of their retail release date by, among other things, making various misrepresentations to the wholesale distributors concerning the reasons that they were obtaining the discs prior to the retail release date.
Sparks Group members then used computers with specialized software to compromise the copyright protections on the discs, a process referred to as “cracking” or “ripping,” and to reproduce and encode the content in a format that could be easily copied and disseminated over the Internet. Sparks Group members then uploaded copies of the copyrighted content onto servers controlled by the Sparks Group, where other members further reproduced and disseminated the content on streaming websites, peer-to-peer networks, torrent networks, and other servers accessible to public. The Sparks Group identified its reproductions by encoding the filenames of reproduced copyrighted content with distinctive tags, and also uploaded photographs of the discs in their original packaging to demonstrate that the reproduced content originated from authentic DVDs and Blu-Ray discs.
BRIDI arranged for discs to be picked up, mailed, or delivered from distributors located in Manhattan, Brooklyn, and New Jersey to other members of the Sparks Group prior to their official release date. BRIDI then reproduced, and aided and abetted the reproduction of, these discs by using computer software that circumvented copyright protections on the discs and reproducing the copyrighted content for further distribution on the Internet.
The Sparks Group has caused tens of millions of dollars in losses to film production studios.
* * *
BRIDI, 52, pled guilty to conspiracy to commit copyright infringement, which carries a maximum sentence of five years in prison. The maximum potential sentence is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
BRIDI is scheduled to be sentenced on January 20, 2022, at 12:00 p.m.
Mr. Williams praised the outstanding investigative work of Homeland Security Investigations and the U.S. Postal Inspection Service. Mr. Williams also thanked Europol and Eurojust as well as law enforcement authorities in the following countries for their assistance in the investigation: Canada, Cyprus, Czech Republic, Denmark, France, Germany, Italy, Republic of Korea, Latvia, Netherlands, Norway, Poland, Portugal, Romania, Spain, Sweden, Switzerland, and the United Kingdom.
This case is being handled by the Office’s Violent & Organized Crime Unit. Assistant United States Attorneys Andrew K. Chan, Mollie Bracewell, and Christy Slavik are in charge of the prosecution. The Justice Department’s Office of International Affairs (OIA) provided significant and ongoing assistance with facilitating the execution of dozens of mutual legal assistance requests in 18 different countries necessary for taking down servers and gathering evidence. OIA also provided critical support in working with Eurojust and Europol in planning the coordinated operation in August 2020.
Leader of International Cellphone Fraud Scheme ArrestedRead the Press Release
Damian Williams, United States Attorney for the Southern District of New York, and Ricky J. Patel, Acting Special Agent in Charge of the New York Field Office of the Homeland Security Investigations (“HSI”), announced today the arrest of JUAN S. CORDERO, who is charged with leading a fraud ring operating in the United States and the Dominican Republic in which co-conspirators fraudulently purchased iPhones that were billed to compromised accounts of AT&T Wireless (“AT&T”) customers. CORDERO was apprehended by authorities in the Dominican Republic and transported to the Southern District of New York, where he will be presented later today. He is the eighth and final defendant arrested on an Indictment that charges CORDERO, DANIEL A. TORRES, ALEKSEY SERYY, RARNIERY MOLINA, a/k/a “Eddy,” ADAEL ARIEL FIGARO, SALAH SAL ALTAWEEL, JOSE F. CORDERO, and JEANCARLOS URENA with conspiracy to commit wire fraud, wire fraud, and aggravated identity theft. The case is assigned to United States District Judge Alvin K. Hellerstein.
U.S. Attorney Damian Williams said: “As alleged, Juan S. Cordero and his co-conspirators obtained millions of dollars’ worth of iPhones after customers were deceived into providing PIN codes needed to complete the fraudulent transactions. Now, each defendant has been arrested and charged with serious crimes, and the international scheme has been disconnected.”
HSI Acting Special Agent in Charge Ricky J. Patel said: “This arrest closes the final chapter of an alleged fraud network operating in New York and the Dominican Republic that used modern technology to steal and monetize personal information. The co-conspirators’ alleged activities left a trail of unsuspecting victims across the United States and caused significant business losses. HSI prides itself on its ability to couple traditional investigative techniques with cutting edge technical skills to combat cybercrime.”
As alleged in the Indictment[1]:
From at least in or around February 2016 up to and including in or around June 2020, the defendants participated in a criminal fraud ring (the “Fraud Ring”) based in the United States and the Dominican Republic. Participants in the Fraud Ring sought to obtain iPhones and other electronic devices by billing the devices to the wireless service accounts of victim account holders without the account holders’ knowledge or consent.
To effectuate the scheme, the Fraud Ring obtained personally identifying information (“PII”) belonging to AT&T customers in one of two ways:
First, the Fraud Ring purchased from the dark web account information, such as usernames and passwords, belonging to AT&T customers. Having purchased the username and password belonging to a particular AT&T customer, a member of the Fraud Ring was able to log into the account of that customer and add a co-conspirator as an authorized user. In order to complete the addition of an authorized user, a member of the Fraud Ring also had to obtain the resulting confirmatory PIN code sent by AT&T to the true customer. To do so, a member of the Fraud Ring purporting to be an AT&T representative called the customer. When placing these calls, the Fraud Ring used Voice Over Internet Protocol (“VOIP”) Technology, which enables a caller to insert a chosen telephone number into the originating caller field. Often the Fraud Ring input numbers affiliated with, or closely related to, AT&T customer service telephone numbers, leading unsuspecting customers to provide their PIN codes based on their belief that they were communicating with representatives of AT&T.
Alternatively, the Fraud Ring obtained PII of customer accounts through password reset requests. Using this method, a member of the Fraud Ring, purporting to be an AT&T representative, typically placed a VOIP call to a particular wireless customer and alerted the customer to a forthcoming PIN code. At that point, while still on the line with the AT&T customer, a member of the Fraud Ring reset the password on that customer’s account and asked the customer to recite the PIN code just sent via text message. Having obtained the PIN code, the Fraud Ring then changed the password of the customer’s account and added a co-conspirator as an authorized user.
Next, the member of the Fraud Ring whose name had been added to a particular customer account entered either an AT&T retail location or a retailer of iPhones and electronic devices registered to the AT&T network. Once at the retail location, that member of the Fraud Ring purchased one or more electronic devices, typically iPhones cost at least $1000 each. The cost of the devices would be charged to the customer account, while the member of the Fraud Ring making the purchase paid only the taxes and processing fees.
Members of the Fraud Ring made in-store purchases of iPhones and other electronic devices from retailers in the Southern District of New York and elsewhere in New York, and in 45 other states. Once purchased, the iPhones were sold to buyers nationwide.
Following the re-sale of the fraudulently obtained iPhones, co-conspirators wired money to other co-conspirators across the country and in the Dominican Republic.
Over the course of the conspiracy, the Fraud Ring billed over 4,800 iPhones and other electronic devices to AT&T customer accounts, resulting in over $4 million in customer losses, which were ultimately absorbed by AT&T.
* * *
A chart 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 HSI.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Marguerite B. Colson and Patrick R. Moroney are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
COUNT
CHARGE
DEFENDANTS
(Age and Residence)MAX. PENALTIES
1
Conspiracy to Commit Wire Fraud
18 U.S.C. § 1349
JUAN S. CORDERO
(age: 33; Yonkers, NY and Dominican Republic)
DANIEL A. TORRES
(age: 25; Yonkers, NY)
ALEKSEY SERYY
(age: 30; Fairfield, NJ)
RARNIERY MOLINA,
a/k/a “Eddy,”
(age: 28; Yonkers, NY)
ADAEL ARIEL FIGARO
(age: 30; Yonkers, NY)
SALAH SAL ALTAWEEL
(age: 24; Yonkers, NY)
JOSE F. CORDERO
(age: 29; Yonkers, NY)
JEANCARLOS URENA
(age: 32; Yonkers, NY)
20 years in prison
2
Wire Fraud
18 U.S.C. § 1343 and 2
JUAN S. CORDERO,
DANIEL A. TORRES,
ALEKSEY SERYY,
RARNIERY MOLINA,
a/k/a “Eddy,”
ADAEL ARIEL FIGARO,
SALAH SAL ALTAWEEL,
JOSE F. CORDERO, and
JEANCARLOS URENA
20 years in prison
3
Aggravated Identity Theft
18 U.S.C. § 1028A and 2
JUAN S. CORDERO,
DANIEL A. TORRES,
ALEKSEY SERYY,
RARNIERY MOLINA,
a/k/a “Eddy,”
ADAEL ARIEL FIGARO,
SALAH SAL ALTAWEEL,
JOSE F. CORDERO, and
JEANCARLOS URENA
Mandatory consecutive 2 years in prison
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Former London and Miami Art Dealer Pleads Guilty to Defrauding Art Buyers and Financers of More Than $86 MillionRead the Press Release
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, pled guilty today before United States District Judge Sidney H. Stein to one count of wire fraud for perpetrating a multi-year scheme to defraud various individuals and entities in order to finance his art business. In total, PHILBRICK fraudulently obtained more than $86 million as a result of the scheme.
U.S. Attorney Damian Williams said: “Inigo Philbrick was a serial swindler who took advantage of the lack of transparency in the art market to defraud art collectors, investors, and lenders of more than $86 million to finance his art business and his lifestyle. Philbrick has now admitted his guilt and awaits sentencing for perpetrating this extensive fraud.”
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.
* * *
PHILBRICK, 34, a U.S. citizen previously residing in London, United Kingdom, pled guilty to one count of wire fraud, which carries a maximum prison term of 20 years. The statutory maximum sentence is prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. PHILBRICK is scheduled to be sentenced by Judge Stein on March 18, 2022 at 12:00 p.m.
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.
White Plains Investment Adviser Sentenced to 63 Months in Federal Prison for EmbezzlementRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that GREGG BRIE, an investment adviser in White Plains, New York, was sentenced yesterday in White Plains federal court to 63 months in prison for fraud in connection with his embezzlement of more than $640,000 from three clients. BRIE had previously pled guilty to one count of wire fraud and was sentenced by U.S. District Judge Cathy Seibel.
According to the allegations in the Information to which BRIE pled guilty and other court documents:
BRIE embezzled funds from three victims, two of whom lived in his White Plains apartment complex. He advised his first victim, a disabled man on a fixed income and confined to a wheelchair, to buy shares in Alaska Air Group, Inc. Bank records show that this victim gave BRIE more than $480,000. BRIE told his victim that he had opened accounts for him at a brokerage firm and that his stock had increased in value to approximately $8 million. When the victim asked for his money, BRIE told him that his accounts were frozen because the stockbrokers had done something “sketchy” in order to buy the shares at a lower price. When the victim attempted to contact the brokerage firm, BRIE told him that he would “murder [him]” if the victim attempted to contact the firm again. BRIE repeated this threat at least two more times, noting that he meant his threats to be taken “literally, not metaphorically.”
According to written loan agreements drafted by BRIE, the second victim made three loans to BRIE in a total amount of approximately $157,000 “for the purpose of producing and distributing a proprietary, composite unimold commode for use within indigent venues of the African nation of Uganda.” The third victim loaned $2,000 to BRIE on BRIE’s representation that he was illiquid because he had put all of his cash into the unimold commode project.
The Federal Bureau of Investigation’s (“FBI”) analysis of bank accounts controlled by BRIE showed that BRIE spent the money he obtained from his victims primarily on credit cards and a Mercedes Benz lease. The evidence showed that there was no brokerage account.
In addition to the prison term, Judge Seibel ordered BRIE, 54, of White Plains, New York, to serve three years of supervised release and to pay forfeiture and restitution, each in the amount of $642,333.33.
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Mr. Williams praised the outstanding investigative work of the FBI.
The prosecution of this case is being handled by the Office’s White Plains Division. Assistant United States Attorneys James McMahon and Shiva Logarajah are in charge of the prosecution.
Former Employees at State Administrator of Medicaid Transportation and Business Owner Charged with Submitting Fraudulent ClaimsRead the Press Release
Damian Williams, United States Attorney for the Southern District of New York, Scott J. Lampert, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of the Inspector General (“HHS-OIG”), and Ricky J. Patel, Acting Special Agent in Charge of the New York Field Office of the Homeland Security Investigations (“HSI”), announced the unsealing of an Indictment charging PATRICK NDUKWE, DAVID TRAVERS, and MICHELLE MARTIN with participating in a fraudulent scheme in which TRAVERS and MARTIN improperly routed trips for Medicaid-funded transportation to NDUKWE’s company, Quality Service Medical Transportation (“Quality”) and facilitated fraudulent Medicaid claims by Quality. The case is assigned to U.S. District Judge Denise L. Cote.
U.S. Attorney Damian Williams said: “Every day, thousands of government employees and private contractors around New York are entrusted with handling, disbursing, and guarding public funds. As alleged, David Travers and Michelle Martin, who were employees at the state manager for Medicaid-funded transportation, abused their roles and the public’s trust when they took payments to steer business to a private company and helped that company submit fraudulent Medicaid claims. This Office and our law enforcement partners will always investigate and prosecute the illegal abuse of public programs for unjust enrichment.”
HHS-OIG Special Agent in Charge Scott J. Lampert said: “The defendants in this case allegedly engaged in a greed-fueled fraud scheme that undermined the Medicaid program and diverted taxpayer funds from their intended purpose of providing health care benefits to low-income individuals and families. Together with our law enforcement partners, HHS-OIG will continue to vigorously pursue those who steal from government health programs for personal gain.”
HSI Acting Special Agent in Charge Ricky J. Patel said: “As alleged, these defendants lined their pockets by abusing a program created to provide assistance to the sick and injured in our communities. Working with our partners, HSI will seek out and bring to justice those that attempt to undermine any federal or state program, explicitly those designed to help millions of our most vulnerable in New York.”
As alleged in the Indictment, which was unsealed today, public filings, and statements in court:[1]
In New York, individuals who are enrolled in the state’s Medicaid program are eligible to have Medicaid pay for their transportation to and from medical appointments if they are not able to safely take public transportation. To obtain Medicaid-funded transportation, the enrollee or their health care professional must schedule transportation by contacting the private company that is contracted to manage Medicaid-funded transportation in the New York City area (the “Transportation Manager”).
NDUKWE, 56, was the owner and operator of Quality. From in or about May 2017 to March 2020, Quality was paid more than $7.3 million for more than 120,000 trips the company purportedly provided for Medicaid-enrolled customers in the New York City area. However, many of these trip claims were fraudulent and never actually performed. In some instances, the Medicaid-enrollee who purportedly used Quality to travel to a medical appointment had, in fact, never heard of or used the company for any transportation services. In other instances, the driver who Quality said performed the trip had never actually worked for the company. In yet other instances, Quality paid a periodic “kickback” to a Medicaid enrollee to use that enrollee’s personal identifying information to submit a trip claim.
TRAVERS and MARTIN were customer service representatives at the Transportation Manager. Both were responsible for, among other things, receiving calls from Medicaid enrollees who needed transportation and then randomly assigning those trips among the dozens of eligible transportation companies in the New York City area. However, both TRAVERS and MARTIN steered a disproportionately high volume of their trips to Quality. In addition, when certain enrollees requested to be moved from Quality to another transportation company, TRAVERS and MARTIN ensured that the customers were eventually reassigned back to Quality. TRAVERS and MARTIN also scheduled trips for Quality that they knew would not be performed and would allow Quality to submit fraudulent claims for payment. For their fraud, both TRAVERS and MARTIN received payments from NDUKWE.
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NDUKWE was arrested this morning in the Bronx and will be presented later today before U.S. Magistrate Judge Ona T. Wang in Manhattan federal court. TRAVERS was arrested this morning in Syracuse, New York, and Martin was arrested this morning in East Syracuse, New York. Both TRAVERS and MARTIN will be presented later today before U.S. Magistrate Judge Therese Wiley Dancks.
NDUKWE, TRAVERS, and MARTIN are each charged with one count of theft of government funds, in violation of 18 U.S.C. § 641; one count of health care fraud, in violation of 18 U.S.C. § 1347; one count of conspiracy to commit health care fraud, in violation of 18 U.S.C. § 1349; and one count of violating the Anti-Kickback statute, in violation of 42 U.S.C. § 1320a-7b. In addition, NDUKWE is charged with one count of aggravated identity theft, in violation 18 U.S.C. § 1028A. In February 2020, as part of the same investigation, the Government charged 13 defendants involved in a different transportation company.
The crimes of theft of government funds, health care fraud, conspiracy to commit health care fraud, and violating the Anti-Kickback Statute each carry a maximum sentence of 10 years in prison. The crime of aggravated identity theft carries a mandatory two years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by a judge.
Mr. Williams praised the outstanding work of DHHS-OIG and HSI. He also thanked the Office of the New York State Medicaid Inspector General, New York Attorney General’s Medicaid Fraud Control Unit, United States Customs and Border Protection, the Syracuse Police Department, the Onondaga County Sheriff’s Office, the Internal Revenue Service, the New York City Police Department, and the U.S. Probation Office for the Northern District of New York for their assistance in the case.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Brandon D. Harper and Kedar S. Bhatia are in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment are herein are only allegations, and every fact described herein should be treated as an allegation.
Manhattan Real Estate Fund Manager Charged with Securities Fraud OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, the Inspector-in-Charge of the New York Division of the U.S. Postal Inspection Service (“USPIS”), announced today the unsealing of an indictment charging JOSHUA BURRELL with securities fraud, wire fraud, and aggravated identity theft in connection with his operation of a New York-based investment firm, Activated Capital, LLC. Based on fraudulent representations, BURRELL sought to raise up to $75 million for Opportunity Zone Funds, which are vehicles for making real estate investments in economically distressed areas. BURRELL touted Activated Capital’s Opportunity Zone Funds for delivering consistent and stable cash flows to investors through targeted eight percent annual distributions. However, contrary to BURRELL’s claims, Activated Capital’s funds did not generate enough income on their real estate investments to make those payments, and BURRELL used investors’ money to help make up the shortfall. BURRELL was arrested this morning in Richmond Heights, Missouri, and is expected to be presented tomorrow before United States Magistrate Judge John Bodenhausen in St. Louis federal court.
U.S. Attorney Damian Williams said: “As alleged, Joshua Burrell solicited investors through a series of lies. While promising investors transparency, he doctored documents and falsely depicted his firm’s finances. Now, Burrell faces prosecution for his alleged crimes.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “Mr. Burrell’s scheme is unfortunately not an uncommon scam in the investment community. Investors must always check and double check any firm or individual promising guaranteed positive returns to ensure they will not be taken for a ride. It is a good practice for all investors to trust their gut. If it doesn’t seem right, walk away.”
According to the allegations contained in the Indictment,[1] unsealed today in Manhattan federal court:
From in or about 2019 through in or about 2021, BURRELL sought to obtain tens of millions of dollars of investments for the Activated Tax Advantaged Opportunity Fund, LLC, and Activated Capital Opportunity Zone Fund II, LLC (collectively, the “Activated OZ Funds” or the “Funds”) based on fraudulent representations. BURRELL represented, in substance, that the money invested in the Activated OZ Funds would be used to purchase real estate properties in Opportunity Zones and that investors would receive distribution payments out of the Funds’ net real estate investment income. Contrary to those representations, BURRELL caused the Activated OZ Funds to pay putative distributions in amounts greater than the Funds’ net income. From the inception of the Funds in 2019 through approximately February 2021, BURRELL used investor money to help pay distributions totaling approximately $470,000 in a manner akin to a Ponzi scheme. BURRELL also falsely inflated Activate Capital’s assets under management in communications with prospective investors.
To attract additional investment capital for the Activated OZ Funds, BURRELL sought to establish a partnership with an investment bank headquartered in Manhattan (“Company-1”). As part of Company-1’s diligence process, Company-1 asked BURRELL for “[b]acking to show current fund proceeds/acquisitions made.” In response to these requests, BURRELL fabricated documents to make it appear that the Activated OZ Funds were more successful, owned more properties, and were in better financial condition than was actually the case. For example, BURRELL sent Company-1 fake bank statements making it appear that, for the period July 2019 through October 2019, one of the Activated OZ Funds had ending monthly account balances of between approximately $2,094,450 and $2,463,100 when the real account statements for that period showed ending monthly balances of between only $116,369 and $154,399.
BURRELL fabricated additional documents to make it appear to Company-1 that an Activated Capital affiliate had purchased nine properties in Detroit, Michigan, when none of the transactions had taken place. The fabricated documents contained identifying information for two individuals that BURRELL used without lawful authority.
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JOSHUA BURRELL, 38, of New York, New York, faces a maximum sentence of 20 years in prison on each of the securities and wire fraud counts and a mandatory sentence of two years in prison on the aggravated identity theft count, which must run consecutively to any other sentence of imprisonment. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of a defendant would be determined by the judge.
Mr. Williams praised the investigative work of the U.S. Postal Inspection Service. Mr. Williams also thanked the Securities & Exchange Commission, which brought a separate civil action against BURRELL.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Daniel Loss and Alexander Rossmiller are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment constitute only allegations, and every fact described should be treated as an allegation.
Hudson Valley Tequila Producer Pleads Guilty to Securities Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that JOSEPH CIMINO, the founder of a tequila brand based in the Hudson Valley, pled guilty today to securities and wire fraud charges before U.S. District Judge Vincent Briccetti. CIMINO admitted as part of his plea that he fraudulently solicited investments for his company.
U.S. Attorney Damian Williams stated: “As he admitted in court today, Joseph Cimino lied about his tequila business’s finances to lure investors and then diverted investor funds in order to line his own pockets. Now Cimino awaits sentencing for his fraudulent conduct.”
According to court documents and statements in court, from in or about 2014 to 2018, CIMINO raised approximately $935,000 from at least 25 investors based on fraudulent representations. To attract investors, CIMINO falsely inflated the amount of capital that he had raised from prior investors, and falsely described as investors 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. For example, from 2014 to 2018, CIMINO transferred approximately $472,000 of investor money to his personal bank account in order to subsidize his food, entertainment, and other living expenses.
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CIMINO, 57, of Warwick, New York, pled guilty to one count of securities fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
CIMINO is scheduled to be sentenced by Judge Briccetti on February 18, 2022, at 2:30 p.m.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Securities and Exchange Commission for its assistance in the investigation.
This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Benjamin A. Gianforti and Daniel Loss are in charge of the prosecution.
Former CEO of Publicly Traded Houston Company Sentenced to Three Years in Prison for Accounting Fraud and Misappropriation SchemesRead the Press Release
Damian Williams, the United State Attorney for the Southern District of New York, announced today that JEFFREY HASTINGS, the former Chief Executive Officer and Chairman of the Board of Directors of SAExploration Holdings, Inc. (“SAEX” or the “Company”), a publicly traded seismic data company based in Houston, Texas, was sentenced today in Manhattan federal court to three years in prison for his role in a scheme to fraudulently and materially inflate the publicly reported revenue of SAEX by tens of millions of dollars, in 2015 and 2016, and also for misappropriating millions of dollars from the Company. On August 13, 2021 HASTINGS pled guilty before U.S. District Judge Gregory H. Woods, who imposed today’s sentence.
According to the Superseding Information, the Superseding Indictment, and the Complaint filed in this case, and statements made in connection with sentencing:
At all times relevant to the Information until August 2016, HASTINGS was the Executive Chairman of the Board of Directors of SAEX (the “Board”). After August 2016, HASTINGS served as both the Chairman of the Board and the Chief Executive Officer (“CEO”) of SAEX until he separated from the company in August 2019. SAEX was a publicly-traded seismic data acquisition company headquartered in Houston, Texas, that traded under the symbol “SAEX” on the NASDAQ. In May 2020, SAEX was delisted from the NASDAQ and, in December 2020, was taken private. SAEX provided land and marine-based seismic acquisition services including program design, planning and permitting, camp services, survey, drilling, recording and processing. Seismic data is used by oil and gas companies to identify and analyze drilling prospects and maximize successful drilling.
From February 2015 through May 2019, HASTINGS, together with Brent Whiteley, the then Chief Financial Officer and General Counsel of SAEX; Michael Scott, the then Executive Vice President of Operations at SAEX; and the founder, and at various times the President, CEO, and Chief Operating Officer of SAEX (“CC-1”), devised and carried out a scheme to defraud SAEX’s shareholders, bondholders, and the investing public by artificially and materially inflating SAEX’s reported revenue by making it appear that Alaskan Seismic Ventures, LLC (“ASV”) was an independent and reliable source of tens of millions of dollars of revenue.
In February 2015, HASTINGS and Whiteley discussed finding a way for SAEX to take advantage of certain tax credits offered by the State of Alaska to seismic data library companies, to offset the costs of exploring for oil and gas in Alaska (the “Alaska Tax Credits”). The Board of SAEX was opposed to operating its own data library company because of concerns about the ability to ensure payment to SAEX, including through the monetization of Alaska Tax Credits, among other reasons. To avoid the appearance that SAEX was operating a data library company that licensed data to third parties, HASTINGS and Whiteley set up ASV, to purport to operate as an independent customer purchasing seismic data from SAEX and licensing it to third parties. HASTINGS recruited an acquaintance to serve as the owner and sole employee of ASV. In truth and in fact, and as hidden from investors, ASV was not independent and could not pay SAEX for its seismic data.
After setting up ASV, HASTINGS and Whiteley created and caused to be created a number of shell companies (the “Shell Companies”) for the purpose of secretly transferring funds from SAEX into ASV. One of the Shell Companies, Global Equipment Solutions (“Global Equipment”), was purportedly an equipment rental company from which SAEX rented seismic acquisition equipment. In truth and in fact, and as HASTINGS and his co-conspirators well knew, SAEX did not rent any equipment from Global Equipment and did not owe Global Equipment any money. The co-conspirators took steps to make the payments from SAEX to Global Equipment appear legitimate to others at SAEX; for example, Whiteley drafted a lease agreement between SAEX and Global Equipment, and Scott caused fake purchase orders to be created that purported to show expenses incurred by SAEX as a result of renting equipment from Global Equipment.
By the end of 2015, SAEX had recorded on its books approximately $12 million in payables to Global Equipment. HASTINGS and his co-conspirators ultimately routed approximately $5.8 million of SAEX’s funds through Global Equipment, and the other Shell Companies, to ASV. That money then went from ASV back to SAEX to pay outstanding receivables. The fact that these funds belonged to and originated with SAEX was not disclosed to investors. HASTINGS and his co-conspirators referred to this portion of the scheme as “round-tripping.” In addition, HASTINGS and Whiteley then misappropriated more than $5 million of the funds that SAEX transferred to Global Equipment for their own use, including making payments to Scott and CC-1, among others.
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In addition to his prison term, HASTINGS, 63, of Anchorage, Alaska and British Columbia, Canada, was sentenced to two years of supervised release and ordered to pay a forfeiture money judgment in the amount of $590,807. Judge Woods deferred determination of restitution for 90 days.
Two co-defendants – Brent Whiteley and Michael Scott – have already pled guilty and await sentencing before Judge Woods.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission, which brought a separate civil action.
The case is being handled by the Office’s Securities and Commodities Fraud Unit. Assistant U.S. Attorneys Christine I. Magdo and Gina Castellano are in charge of the prosecution.
Bahamian Man Sentenced to Five Years in Prison for More Than $1.2 Million Credit Card Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced that KEVIN DION ROLLE, Jr. was sentenced by U.S. District Judge Alison J. Nathan to 60 months in prison for his role in a $1.2 million credit card scheme. ROLLE, Jr. pled guilty before Judge Nathan on August 5, 2021, to one count of wire fraud.
According to the allegations in the Complaint, the Indictment, and other documents filed in federal court, as well as statements made in public court proceedings:
From October 2015 to September 2020, ROLLE participated in what is known by various credit card companies as a “bust-out” scheme whereby the credit card user applies for a credit card and incurs numerous charges with no intention of paying the balance. As part of his multi-year fraud scheme, ROLLE submitted multiple credit card applications to American Express (“Amex”), which often included or were supported by documentation containing false identifying information. Once ROLLE received a credit card, he used the credit card for a short period of time to purchase luxury items, including, among other things, Cartier jewelry and a Bentley.
In total, ROLLE incurred $1,205,318.18 in Amex credit card charges that remain outstanding and collected an $209,500 in insurance proceeds based on a claim for jewelry pieces purchased with the fraudulent Amex credit cards.
On the basis of multiple Court filings, ROLLE admitted in the terms of his plea agreement to obstructing justice. ROLLE made numerous self-serving, false, and/or inconsistent statements to the Court and the United States District Court for the District of Puerto Rico where he was first arrested regarding his personal background, possession of foreign passports, and his purported ties to New York. At the time of his arrest, ROLLE presented an Irish passport, which was later found to have been obtained with a fake United States passport. Additionally, ROLLE purported to be the president of a particular college in The Bahamas—the existence of which was unable to be verified by the FBI.
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In addition to the prison term, ROLLE, 27, of The Bahamas, was ordered to make restitution in the amount of $1,414,818.18 and forfeiture in the amount of $1,504,818.18.
Mr. Williams thanked the FBI Foreign Influence Task Force for their outstanding work.
The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorneys Emily A. Johnson and Danielle M. Kudla are in charge of the prosecution.
Manhattan Man Who Identifies as an “Incel” or “Involuntary Celibate” Pleads Guilty to Carrying Out Hoax Bomb Threat at RestaurantRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that MALIK SANCHEZ, a/k/a “Smooth Sanchez,” pled guilty to making a hoax threat to detonate a bomb at a restaurant in the Flatiron neighborhood in New York, New York, on or about February 13, 2021. SANCHEZ pled guilty before United States Magistrate Judge Kevin N. Fox in Manhattan federal court. The case is assigned to United States District Judge Colleen McMahon.
According to the Indictment, Complaint, and other public documents in the case, as well as statements made during the plea proceeding:
SANCHEZ self-identifies as an “Involuntary Celibate” or “Incel,” which refers to a group of individuals with an active online community, mostly men, who believe that society unjustly denies them sexual or romantic attention to which they are entitled. Through online activity and in some instances violence, Incels target those who they believe are unjustly denying them sexual or romantic attention, which in most cases are women.
SANCHEZ has posted multiple videos to social media accounts depicting SANCHEZ harassing, threatening, and in several instances harming individuals whom SANCHEZ encountered in Manhattan, while expressing support for Incel ideology, including for carrying out violence against women in the name of the group.
For example, on or about February 7, 2021, SANCHEZ posted online a video with a caption including “INCEL ARMY RISE UP.” The video depicts SANCHEZ yelling at two women walking on a street in Manhattan that SANCHEZ has “Incel rage”; that he supports Incel’s unofficial founder, Elliot Rodger, who attacked a sorority house and pedestrians in California in 2014, killing six victims and injuring 14 others; and that Rodger’s victims “deserved to be run over and hit by a truck. They deserved to be slaughtered.”[1] On or about March 20, 2021, SANCHEZ posted another video filmed in Manhattan, which depicts SANCHEZ approaching multiple women at an outdoor seating area. In the video, SANCHEZ again proclaimed his support for Incels and Elliot Rodger, while making hand gestures mimicking pointing a gun. After multiple individuals attempted to get SANCHEZ to stop, SANCHEZ sprayed pepper spray in the face of one of those individuals. SANCHEZ was arrested by responding law enforcement officers and charged with state offenses, and was thereafter released on bail.
On or about February 13, 2021, SANCHEZ posted a video that depicts him perpetrating a hoax bomb threat at a restaurant in Manhattan’s Flatiron neighborhood. The video shows SANCHEZ approaching an outdoor seating area in front of the restaurant and stating: “Let’s enhance their meal.” SANCHEZ then positioned himself close to two women seated at one of the tables, and conveyed that he was about to detonate a bomb. SANCHEZ loudly stated: “Allahu Akbar. Allahu Akbar. Bomb detonation in two, in two minutes. I take you with me and I kill all you. I kill all you right now. And I kill all you for Allah. . . . I’m gonna do it. I’m gonna fucking do it for Allah. I’m gonna do it, for, Allah, Allah, Allahu Akbar, Come on. I do it, bomb now, bomb now.” The two women appeared startled, gathered their belongings, and went into the restaurant; approximately four other individuals in the seating area grabbed their belongings and ran away. SANCHEZ then stated: “Yo, all of them scattered” and “Holy shit boys. That was fucking five stars. That was five stars.” At least one individual called 911 in connection with the bomb threat, and law enforcement responded to the scene. By that point, SANCHEZ had left the area.
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SANCHEZ, 19, of New York, New York, pled guilty to one count of conveying false and misleading information and hoaxes, in violation of Title 18, United States Code, Section 1038, which carries a maximum sentence of five years in prison. The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
SANCHEZ is scheduled to be sentenced by Judge McMahon on February 8, 2022, at 3:00 p.m.
Mr. Williams praised the outstanding efforts of the Federal Bureau of Investigation (“FBI”) New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the New York City Police Department, and over 50 other federal, state, and local agencies.
The case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorney Kaylan E. Lasky is in charge of the prosecution, with assistance from Trial Attorney Elisabeth Poteat of the Counterterrorism Section of the Department of Justice’s National Security Division.
[1] Statements discussed and quoted herein are described in substance and in part.
Top Lev Tahor Leaders Convicted at Trial of Child Sexual Exploitation and KidnappingRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that NACHMAN HELBRANS and MAYER ROSNER were convicted in White Plains federal court of child sexual exploitation offenses and kidnapping following a four-week jury trial. The defendants, leaders of an extremist Jewish sect called Lev Tahor, masterminded a scheme to kidnap a 14-year-old girl (“Minor-1”) and a 12-year-old boy (“Minor-2”) from their mother in Woodridge, New York. The defendants then smuggled the children across the U.S. border to Mexico, where they reunited Minor-1 with her adult “husband” to allow him to continue his illegal sexual relationship with Minor-1.
U.S. Attorney Damian Williams said: “Nachman Helbrans and Mayer Rosner brazenly kidnapped two children from their mother in the middle of the night to return a 14-year-old girl to an illegal sexual relationship with an adult man. Today’s verdict makes clear that our Office – and our law enforcement partners – will not be deterred from achieving justice for victims of child sexual exploitation.”
According to the allegations contained in the Superseding Indictment, other court filings, and the evidence presented at trial:
NACHMAN HELBRANS and MAYER ROSNER are U.S. citizens and senior leaders of Lev Tahor, an extremist Jewish sect that has been located in several different jurisdictions, including New York, Israel, Canada, Mexico, and Guatemala. HELBRANS became the leader of Lev Tahor in or about 2017 and ROSNER served as a top lieutenant. After HELBRANS and his leadership team took over, they seized tight control over the group and embraced several extreme practices, including child marriages and underage sex.
In or about 2017, HELBRANS arranged for his then-12-year-old niece, Minor-1, to be “married” to a then-18-year-old man. They were religiously “married” the following year, when Minor-1 was 13 and her “husband” was 19, and immediately began a sexual relationship with the goal of procreation. They were never legally married. Lev Tahor leadership, including HELBRANS and ROSNER, required young brides to have sex with their husbands, to tell people outside Lev Tahor that they were not married, to pretend to be older, and to deliver babies inside their homes instead of at a hospital, to conceal the mothers’ young ages from the public.
In or about October 2018, the mother of Minor-1 determined that it was no longer safe for her children to remain in the Lev Tahor community in Guatemala. The mother escaped from the group’s compound 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, the defendants devised a plan to return Minor-1, then 14 years old, to Guatemala and to her then-20-year-old “husband” so that they could resume their sexual relationship and procreate. Then, in December 2018, they kidnapped Minor-1 and her brother in the middle of the night from a home in upstate New York and transported them through various states and, eventually, to Mexico. The defendants 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 entities, Minor-1 and Minor-2 were recovered in Mexico and returned to New York. Then, in or about March 2019 and March 2021, members of Lev Tahor again tried to kidnap the children.
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NACHMAN HELBRANS, 39, of Guatemala, and MAYER ROSNER, 45, of Guatemala, were convicted of (1) conspiring to transport a minor with intent to engage in criminal sexual activity, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; (2) conspiring to travel with intent to engage in illicit sexual conduct, which carries a maximum sentence of 30 years in prison; (3) two counts of international parental kidnapping, which carries a maximum sentence of three years in prison for each count; and (4) 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. HELBRANS was also convicted of an additional count of international parental kidnapping in connection with an attempt to kidnap Minor-1 in March 2019.
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 Federal Bureau of Investigation, the New York State Police, the Sullivan County District Attorney’s Office, United States Customs and Border Protection, the Rockland County Sheriff’s Department, the Village of Spring Valley Police Department, Special Agents with the U.S. Attorney’s Office for the Southern District of New York, the Department of State, the Transportation Security Administration, and our law enforcement partners in Mexico, Guatemala, Canada, and Israel.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Sam Adelsberg, Jamie Bagliebter, Jim Ligtenberg, and Daniel Tracer, and paralegal specialist Shannon Becker, are in charge of the prosecution.
Management Consulting Firm Partner Charged in Insider Trading SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a criminal complaint charging PUNEET DIKSHIT, a partner in a global management consulting firm (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 an investment bank (the “Investment Bank”) – which DIKSHIT and the Consulting Firm were advising – would be acquiring GreenSky, Inc. (“GreenSky”). The defendant was arrested earlier today and will be presented this afternoon before U.S. Magistrate Judge Kevin N. Fox.
U.S. Attorney Damian Williams said: “As alleged, Puneet Dikshit, a consulting firm partner, exploited his access to material nonpublic information about a pending acquisition of GreenSky, Inc., to trade in GreenSky call options. This breach of duties to his firm and its investment bank client – and violation of the law – allegedly reaped the defendant nearly half a million dollars in illegal profits. Now Puneet Dikshit has been charged with serious felonies for his alleged conduct.”
FBI Assistant Director Michael J. Driscoll said: “As alleged, Mr. Dikshit exploited his access to material nonpublic information regarding the acquisition of Green Sky to profit from trades he made in options markets. Actions like those we allege serve to undermine the public’s confidence in the integrity of financial markets, and, as we have demonstrated time and again, the FBI and our partners are committed to ensuring a level playing field for all investors. Mr. Dikshit now faces significant federal charges, which should serve as a warning to others considering similar conduct.”
According to the allegations in the Complaint unsealed today in Manhattan federal court:[1]
GreenSky was a publicly traded financial technology company that provided technology to banks and merchants to make loans to consumers for home improvement, solar, healthcare, and other purposes. GreenSky’s common stock traded under the symbol “GSKY” on the NASDAQ.
Between on or about November 2019 and on or about July 2020, and again between on or about April 2021 and on or about September 2021, the Investment Bank engaged the Consulting Firm to provide various consulting services related to its consideration of an acquisition of GreenSky and the post-acquisition integration of GreenSky. DIKSHIT was one of the Consulting Firm partners leading these engagements. In that role, he had access to material, nonpublic information, which he misappropriated and, in violation of the duties that he owed to the Investment Bank and the Consulting Firm, used to trade GreenSky call options.
DIKSHIT engaged in this trading between on or about July 26, 2021, and on or about September 15, 2021 – at the same time he was leading the Consulting Firm team that was advising the Investment Bank about its potential acquisition of GreenSky. At various times between on or about July 26, 2021, and on or about September 13, 2021, DIKSHIT purchased and sold relatively small numbers of GreenSky call options, which had expiration dates weeks or months from the time of purchase. However, in the two days before the September 15, 2021, public announcement that the Investment Bank would be acquiring GreenSky, DIKSHIT sold all of these longer-dated GreenSky call options and purchased approximately 2,500 out-of-the-money GreenSky call options that were due to expire just a few days later, on September 17, 2021. After the deal was announced, DIKSHIT sold these calls and realized profits of approximately $450,000.
* * *
DIKSHIT, 40, of New York, New York, is charged with two counts of securities fraud, each of which has a maximum sentence of 20 years in prison. The statutory maximum sentences are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
Mr. Williams praised the outstanding work of the FBI. Mr. Williams further thanked the U.S. Securities and Exchange Commission, which today filed a parallel civil action, for its assistance and cooperation in this investigation.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorneys Joshua A. Naftalis and Matthew Podolsky are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth in this release constitute only allegations, and every fact described should be treated as an allegation.
Looted Cambodian Antiquities in Denver Museum Are Subject of Forfeiture Action Filed in Manhattan Federal CourtRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced the filing of a civil complaint today seeking forfeiture of four looted Cambodian antiquities at a museum in Denver, Colorado, for the purpose of returning the antiquities to the Kingdom of Cambodia. The antiquities, which include a 12th to 13th century Khmer sandstone sculpture depicting Prajnaparamita, and a 7th to 8th century Khmer sandstone sculpture depicting Surya, were sold to the museum by antiquities dealer Douglas Latchford through the use of false provenance documents. The museum has voluntarily relinquished possession of the antiquities.
U.S. Attorney Damian Williams said: “As alleged, Douglas Latchford papered over the problematic provenance of Cambodian antiquities with falsehoods, in the process successfully placing stolen goods in the permanent collection of an American museum. Eradicating the illegal trade in stolen antiquities requires the vigilance of all parties in the art market, especially cultural institutions.”
According to the civil complaint filed in Manhattan federal court today:
The United States of America seeks the forfeiture of the following antiquities, currently in the possession of a museum located in Denver, Colorado (the “Museum”): (1) a 12th to 13th century Khmer sandstone sculpture depicting standing Prajnaparamita (“Prajnaparamita”), (2) a 7th to 8th century Khmer sandstone sculpture depicting standing Surya (“Surya”), (3) an Iron Age Dong Son bronze bell (the “Bell”), and (4) a 17th to 18th century sandstone lintel depicting the sleep of Vishnu and birth of Brahma (the “Lintel”). Together, the Prajnaparamita, Surya, Bell, and Lintel are the “Defendants in Rem.”
Investigators working for the Cambodian Ministry of Culture and Fine Arts and the United States Government have interviewed a Cambodian national who was previously engaged in the theft and looting of antiquities from Cambodian temples and archeological sites (“Looter-1”). Looter-1, a former member of the Khmer Rouge, led a group of approximately 450 people working in multiple teams to loot temples and archeological sites in Cambodia. Looter-1 has reviewed photographs of the Prajnaparamita, Surya, Bell, and Lintel, and recognized them as antiquities that Looter-1 and his team had stolen from archeological and religious sites in Cambodia.
The Museum acquired the Prajnaparamita, Surya, Bell, and Lintel from Douglas Latchford, a prominent collector and dealer in Southeast Asian art and antiquities who was previously indicted in this District with crimes related to a many-year scheme to sell looted Cambodian antiquities on the international art market. As alleged in the indictment, United States v. Latchford, 19 Cr. 748 (AT), as part of the scheme, Latchford created false provenance documents and false invoices and shipping documents for the antiquities he was selling. In September 2020, the indictment against Latchford was dismissed due to his death. Latchford was closely associated with a particular scholar of Khmer art (the “Scholar”). Over the years, the Scholar, who was a volunteer research consultant for the Museum, assisted Latchford on many occasions by verifying or vouching for the proffered provenance of Khmer antiquities that Latchford was trying to sell.
Latchford lied repeatedly to the Museum, in particular with regard to the provenance of the Prajnaparamita and Surya. Latchford provided false provenance for the Prajnaparamita and Surya, and made multiple misrepresentations and contradictory statements regarding when certain of the Defendants in Rem were shipped and imported into the United States. For example, Latchford told the Museum that he had purchased the Prajnaparamita from a particular art collector (the “False Collector”) in June 1999, who had in turn acquired the Prajnaparamita in Vietnam between 1964 and 1966. Other documents indicate that Latchford shipped the Prajnaparamita from Thailand to London in 1994, well before the June 1999 date, and that it entered the United States in May 2000, after the enactment of an embargo on the importation of Khmer stone antiquities.
The Museum has voluntarily agreed to relinquish possession of the Defendants in Rem to the United States in order for them to be repatriated to the Kingdom of Cambodia, and waived all claims of right, title, and interest in the Defendants in Rem.
* * *
Mr. Williams thanked Homeland Security Investigations for its outstanding work on this investigation, which he noted is ongoing, and praised its ongoing efforts to find and repatriate stolen and looted cultural property. Mr. Williams also thanked the Kingdom of Cambodia’s Ministry of Culture and Fine Arts for its assistance with this investigation.
This matter is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant U. S. Attorney Jessica Feinstein is in charge of the case.
Florida Attorney Pleads Guilty to Securities Fraud in Connection with Fraudulent Opinion Letter SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that THOMAS CRAFT, a licensed attorney, pled guilty in Manhattan federal court to securities fraud. CRAFT’s guilty plea results from his involvement in a fraudulent scheme in which he falsely represented that he had undertaken certain legal work in connection with attorney opinion letters, when in truth and in fact, he merely rubber-stamped the opinion letters that had been prepared by his co-defendant, Richard Rubin, who was a disbarred attorney.
CRAFT was arrested on December 2, 2020, and pled guilty today before U.S. District Judge Paul A. Engelmayer. As part of his plea agreement, CRAFT agreed to relinquish his law license in Florida.
U.S. Attorney Damian Williams said: “As an attorney, Craft was supposed to act as a gatekeeper against fraud in the securities markets. Instead, as he admitted today, Craft falsely represented that he had carried out certain work in attorney opinion letters, giving false comfort to the investing public that the relevant securities rules had been satisfied. Now he stands guilty of securities fraud and awaits sentencing for his crime.”
As alleged in the Indictment filed against CRAFT, as well as his co-conspirator Rubin, and other statements made in open court:
Securities Registration Requirements and SEC Rule 144
Under the Securities Act of 1933 (the “Securities Act”), anyone seeking to sell a security must first register that security unless an exemption applies. This registration requirement protects investors by promoting disclosure of information pertinent to informed investment decisions.
A company registering new securities must complete a registration statement known as U.S. Securities and Exchange Commission (“SEC”) Form S-1 before the securities can be listed on a national exchange and publicly traded. SEC Form S-1 contains information pertinent to informed investment decisions, including, among other things, information on the company’s business operations, the company’s financial condition, and a description of the company’s management. In connection with SEC Form S-1, the company is required to file an opinion letter (the “Form S-1 Opinion Letter”) from a licensed attorney attesting that the statements in the SEC Form S-1 are true and correct. A company’s SEC Form S-1 and the Form S-1 Opinion Letter are available to the public on the SEC’s Electronic Data Gathering, Analysis, and Retrieval System (“EDGAR”).
“Restricted securities” refers to securities acquired in unregistered, private sales from the issuing company or from an affiliate of the issuer, with “affiliate” meaning a person who directly or indirectly controls, or is controlled by, or is under common control with, an issuer. Affiliates can also include an executive officer or a director or large shareholder who is in a relationship of control with respect to the issuing company. Restricted securities bear a legend indicating that the securities may not be resold in the marketplace unless they are registered with the SEC or are exempt from such registration requirements.
Securities Act Rule 144 (“Rule 144”), codified at 17 C.F.R. § 230.144, provides a registration exemption for restricted securities. Specifically, it permits the public resale of restricted securities if a number of conditions are met, including conditions relating to how long the securities are held, the way in which they are sold, the public information available to investors about the securities, and the amount that can be sold at any one time. Pursuant to Rule 144, however, even if these conditions are met, the sale of restricted securities to the public is still not permitted until a transfer agent removes the “restricted” legend from the security.
The term “transfer agent” refers to a company that keeps track of individuals and entities that own the stocks and bonds of a given company that has publicly traded securities. Among other things, transfer agents issue and cancel certificates to reflect changes in ownership, serve as the company’s intermediary for payouts, exchanges, or mailings, and handle lost, destroyed or stolen certificates. Transfer agents also, when appropriate, remove the “restricted” legend from securities.
A Rule 144 Seller’s Representation Letter, or “Seller’s Representation Letter,” is a letter from an affiliate seller (that is, a seller in a relationship of control with the issuer, such as an executive officer, a director, or a large shareholder) of restricted securities to a transfer agent to establish certain facts underlying a legal opinion that the securities at issue can be sold publicly pursuant to Rule 144. The issuer’s consent to the removal of a legend typically comes in the form of an opinion letter from the issuing company’s attorney, the Seller’s Representation Letter, indicating that the securities at issue satisfy the conditions of Rule 144. Seller’s Representation Letters contain multiple attestations that are required by law prior to the restricted legend being removed. The transfer agent relies on the Seller’s Representation Letter in determining whether to remove the restricted legend from a security.
Over-the-Counter Securities and OTC Markets Group
Over-the-counter (“OTC”) securities are securities that are traded between two counterparties outside of a formal securities exchange. OTC Markets Group (“OTC Markets”) is a securities market headquartered in New York, New York, that provides price and liquidity information for OTC securities.
OTC Markets requires issuers seeking to be listed on OTC Markets to hire a licensed attorney to review company records and submit a letter to OTC Markets (an “OTC Markets Attorney Letter”) regarding whether information publicly disclosed by the issuer is in compliance with the condition in SEC Rule 144 governing the public information available to investors about the issuer. OTC Markets relies on the OTC Markets Attorney Letter to determine whether an issuer’s security may be listed on OTC Markets. OTC Markets Attorney Letters are available to the public on the OTC Markets website.
The Scheme to Defraud
From at least in or about 2011 through at least in or about September 2018, CRAFT and Rubin participated in a fraudulent scheme in which CRAFT falsely represented that he had undertaken certain legal work in connection with Seller’s Representation Letters, OTC Markets Attorney Letters, and S-1 Opinion Letters, all of which enabled the relevant securities to be sold to the investing public. The false representations were in letters pertaining to over a dozen companies.
CRAFT, 56, of Tequesta, Florida, pled guilty to one count of securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5, and 18 U.S.C. § 2, 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.
CRAFT will be sentenced on February 24, 2022, at 10:30 a.m. CRAFT’s co-defendant, Richard Rubin, was sentenced on November 2, 2021, to one year’s probation, 200 hours of community service, and a $1,000 fine. Rubin was also ordered to forfeit $117,068.15 in crime proceeds.
* * *
Mr. Williams praised the investigative work of the Office of Inspector General of the SEC and also thanked the SEC Division of Enforcement for its assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Jordan Estes is in charge of the prosecution.
Estonian Man Sentenced to 10 Years in Prison for Conspiring to Import Fentanyl into the United StatesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that AMID MAGERRAMOV was sentenced to 10 years in prison for conspiring to import massive quantities of carfentanil and fentanyl into the United States. MAGERRAMOV pled guilty on May 4, 2021, before U.S. District Judge J. Paul Oetken, who imposed today’s sentence.
U.S. Attorney Damian Williams stated: “Amid Magerramov conspired to import into the U.S. large quantities of fentanyl and carfentanil – an opioid so potent that its legitimate use is as an elephant sedative. Appropriately, he has now been sentenced to prison for conspiring to add fuel to the fire that is the opioid crisis in this country.”
According to the Complaint, Indictment, and other filings in the case:
Between approximately October 2017 and August 2018, MAGERRAMOV conspired to import large quantities of carfentanil and fentanyl into the United States. Carfentanil is a fentanyl analogue approximately 1,000 times more potent than heroin, and is used commercially to sedate large animals such as elephants. During that period, MAGERRAMOV participated in a series of recorded meetings and telephone communications with an individual he understood to be affiliated with an international drug trafficking organization, for the purpose of arranging to import narcotics into the United States. That individual was, in fact, a confidential source (the “CS”) working with the U.S. Drug Enforcement Administration (“DEA”). MAGERRAMOV and his co-conspirators prepared and distributed a total of over five kilograms of substances containing carfentanil for importation into the United States.
In mid-October 2017, MAGERRAMOV met together with the CS in Estonia. During the meeting, the CS informed MAGERRAMOV that the CS was a member of a Colombian drug cartel that distributed narcotics in the United States and laundered the resulting proceeds.
Throughout late 2017 and early 2018, the CS also participated in a series of meetings with MAGERRAMOV and his co-conspirators to discuss narcotics transactions. During the meetings, MAGERRAMOV agreed to provide the CS with fentanyl in Denmark, with the understanding that the fentanyl would be transported to the United States, mixed with heroin and other controlled substances, and sold to the cartel’s customers in New York City, among other places.
In May 2018, MAGERRAMOV coordinated the delivery of samples of carfentanil to the CS in Denmark. On May 9, 2018, MAGERRAMOV and his co-conspirators delivered three samples of narcotics to an agreed-upon location in Denmark. The three samples were seized by law enforcement, tested in a laboratory, and found to contain approximately 550 grams of mixtures and substances containing carfentanil. The CS later informed MAGERRAMOV that the three samples had been transported to the United States, that the purported cartel was satisfied with the quality of the narcotics, and that the CS wanted to purchase additional carfentanil from MAGERRAMOV and his associates.
In late May 2018, MAGERRAMOV arranged to have additional carfentanil delivered to the CS for importation into the United States. On May 30, 2018, one of MAGERRAMOV’s co-conspirators delivered a package of narcotics to an agreed-upon location in Denmark. The package was seized by law enforcement, tested in a laboratory, and found to contain approximately 5.2 kilograms of mixtures and substances containing carfentanil. The CS subsequently reported to MAGERRAMOV that the carfentanil had been transported to the United States.
During June and July 2018, the CS continued to meet and communicate with MAGERRAMOV about arranging additional narcotics transactions in the future and payment for the carfentanil that had been delivered.
* * *
MAGERRAMOV, 40, of Estonia, pled guilty to one count of conspiring to import fentanyl and carfentanil into the United States. In addition to the prison term, MAGERRAMOV was ordered to forfeit $38,500.
Mr. Williams praised the outstanding efforts of the DEA’s Special Operations Division, the DEA’s Country Office in Copenhagen, Denmark, the Estonia Central Criminal Police, the Estonia Office of the Prosecutor General, and the U.S. Department of Justice’s Office of International Affairs.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys George D. Turner and Kyle A. Wirshba are in charge of the prosecution.
Former Correction Officer Charged with Using Excessive Force Against Inmate at Green Haven Correctional FacilityRead the Press Release
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 Field Office of the Federal Bureau of Investigation (“FBI”), and Anthony J. Annucci, Acting Commissioner of the New York State Department of Corrections and Community Supervision (“DOCCS”), announced today the unsealing of a federal indictment, charging former correction officer AARON FINN with violating the constitutional rights of an inmate in the custody of the DOCCS. FINN is alleged to have willfully used excessive force amounting to cruel and unusual punishment against a restrained inmate by striking and thrashing him, causing bodily injury to that inmate, in violation the inmate’s rights under the United States Constitution. FINN was arrested this morning, and was presented before U.S. Magistrate Judge Andrew E. Krause in White Plains federal court this afternoon. This case been assigned to U.S. District Judge Nelson S. Román.
U.S. Attorney Damian Williams said: “Correction officer Aaron Finn allegedly assaulted an inmate whom he was sworn not only to guard—but also to protect. The manner in which a country treats its incarcerated is indicative of its values, and today’s indictment underscores that incarceration should not result in undue loss of human dignity. Unfair and illegal abuses to those serving their debt to society cannot and will not be tolerated by this Office.”
FBI Assistant Director-in-Charge Michael J. Driscoll said: “Those charged with maintaining a stable environment within the prison system are not exempt from facing charges themselves if their conduct crosses constitutional lines. Today we allege Finn did just that when he applied excessive force against an inmate. Allegations of this type will always be investigated and never be tolerated.”
DOCCS Acting Commissioner Anthony J. Annucci said: “The Department is overwhelmingly comprised of dedicated, professional staff who take their jobs seriously and carry out their duties in a professional manner, and those few who choose to violate their oath of office, are not welcome among our ranks. The message here is loud and clear: criminal behavior will not be tolerated and those who break the law will be held accountable and prosecuted. I am proud that the Department’s Office of Special Investigations was able to partner with the Federal Bureau of Investigation in this arrest and the pursuit of justice.”
According to the allegations in the Indictment[1] unsealed today in White Plains federal court:
Green Haven Correctional Facility is a maximum security prison located in the town of Stormville, New York, and is maintained by the DOCCS. At the time of the deprivation of the inmate’s constitutional rights, FINN was employed at Green Haven as a correction officer. On March 19, 2020, while working at Green Haven, FINN struck an inmate in DOCCS custody (“Inmate-1”) multiple times, and thrashed Inmate-1’s body and head while Inmate-1 was restrained.
* * *
AARON FINN, 35, of Hyde Park, New York, is charged with one count of deprivation of civil rights under color of law, which carries a maximum sentence of 10 years in prison.
Mr. Williams praised the investigative work of the FBI, and the Department of Corrections and Community Supervision Office of Special Investigations.
The case is being handled by the Office’s White Plains Division and Civil Rights Unit. Assistant United States Attorneys Charles S. Jacob and Lindsey Keenan are in charge of the prosecution.
The allegations in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Current and Former Metropolitan Correctional Center Employees and Inmates Indicted for Bribery, Contraband Smuggling, Narcotics Distribution, and Obstruction of Justice OffensesRead the Press Release
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”), Ryan T. Geach, Special Agent-in-Charge of the Department of Justice Office of the Inspector General New York Field Office (“DOJ-OIG”), and Frank Russo, Director of Field Operations for U.S. Customs and Border Protection in New York (“CBP”), announced today the unsealing of an indictment charging three current or former Bureau of Prisons (“BOP”) employees, as well as eight former inmates of the Metropolitan Correctional Center (“MCC”), of conspiring to smuggle contraband such as drugs, alcohol, and cellphones to inmates at the MCC. Two of the BOP employees were also charged with obstructing justice. Four of the defendants were arrested today and will be presented before Magistrate Judge Sarah L. Cave later today. The additional defendants are already in federal custody and will be presented in this District at a later date. The case has been assigned to U.S. District Judge Andrew L. Carter.
U.S. Attorney Damian Williams said: “As alleged, MCC corrections officers Perry Joyner and Mario Feliciano, and MCC unit secretary Sharon Griffith-McKnight, undermined the institution they swore to serve by conspiring with the very inmates they are charged to protect by smuggling contraband into the MCC and, in the case of Joyner and Griffith-McKnight, by obstructing the pursuit of justice. This Office is committed to rooting out corruption in our jails and prisons.”
FBI Assistant Director-in-Charge Michael J. Driscoll said: “Federal law enforcement officers take an oath to defend the laws of the United States and protect its citizens. We allege the guards we've arrested today acted like nothing more than the criminals in their charge and assisted incarcerated offenders in committing more crimes. Our FBI/NYPD Joint Violent Crimes Task Force is working with our partners to root out the corruption we've uncovered; they will find everyone who should be held accountable for their blatant disregard for the law.”
DOJ-OIG Special Agent-in-Charge Ryan T. Geach said: “The defendants allegedly engaged in an extensive scheme to introduce dangerous contraband into MCC New York, threatening the safety and security of the institution, inmates, staff, and the public.”
CBP Director of Field Operations Frank Russo said: “As public servants, we are naturally held to a higher standard of conduct and subject to the same laws and rules that apply to private citizens. CBP will fully assist the Department of Justice in any and all investigations involving alleged unlawful conduct by our personnel, including cases that involve conduct which occurred prior to employment with CBP.”
According to the Indictment[1] unsealed today:
The defendants participated in an extensive scheme involving bribery and smuggling of contraband, and the distribution of contraband within the MCC. The defendants include two current employees of the BOP, PERRY JOYNER and SHARON GRIFFITH-MCKNIGHT, and one former employee of the BOP, MARIO FELICIANO, as well as eight former MCC inmates: DONNELL MURRAY, a/k/a “Don P,” MARKEEN JORDAN, a/k/a “Kingo,” ANTHONY ELLISON, a/k/a “Harv,” TYRELL SUMPTER, a/k/a “Rell,” KEVIN CROSBY, a/k/a “Sama,” DAVID VALERIO, a/k/a “Santana,” a/k/a “Bando,” VIRGILIO ACEVEDO DE LOS SANTOS, a/k/a “Jairo Taveras,” a/k/a “Junior,” and STARLIN NUNEZ, a/k/a “Chino,” a/k/a “Junior.”
The contraband that JOYNER, FELICIANO, and GRIFFITH-MCKNIGHT smuggled into the MCC included controlled substances, cellphones, alcohol, and cigarettes. For their efforts, JOYNER and FELICIANO agreed to receive, and did receive, bribes from the inmate-defendants.
During the course of the scheme, in an effort to obtain a lesser sentence for ELLISON, GRIFFITH-MCKNIGHT submitted a letter to the District Judge responsible for sentencing inmate and co-defendant ELLISON that falsely described ELLISON as a “model inmate” even though at the time GRIFFITH-MCKNIGHT was smuggling contraband to ELLISON and therefore knew he was anything but a “model inmate.” Relying on this letter from GRIFFITH-MCKNIGHT, the District Judge who presided over ELLISON’s sentencing remarked that ELLISON’s purported good behavior in prison was “impressive” and that “[u]nless this is some sort of Grisham novel, and people are all corrupt and making all of this up about [ELLISON], it seems to me that it’s unavoidable that [ELLISON’s] trajectory at the MCC contains a lot of good.”
JOYNER obstructed justice by intimidating and threatening an inmate—an inmate that JOYNER was charged with protecting—whom JOYNER believed was providing the Government with information about JOYNER’s participation in the charged scheme.
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A chart 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 assigned to each case.
Mr. Williams praised the outstanding work of the FBI, DOJ OIG, Special Agents from the U.S. Attorney’s Office for the Southern District of New York, and CBP.
The prosecution of this case is being handled by the Office’s Public Corruption and Narcotics Units. Assistant United States Attorneys Aline R. Flodr, Jonathan E. Rebold, and Daniel H. Wolf 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.
21-313 ###
Count
Defendant(s)
Max. Term of Imprisonment
Count One:
Perry Joyner (age 30)
Sharon Griffith-McKnight (age 35)
Mario Feliciano (age 30)
Donnell Murray (age 42)
Markeen Jordan (age 28)
Anthony Ellison (age 34)
Tyrell Sumpter (age 27)
Kevin Crosby (age 25)
David Valerio (age 34)
Virgilio Acevedo de Los Santos (age 44)
Starlin Nunez (age 45)
5 years
Count Two: Honest Services Wire Fraud Conspiracy
(18 U.S.C. § 1349)
Perry Joyner
Mario Feliciano
Donnell Murray
Markeen Jordan
Anthony Ellison
Tyrell Sumpter
Kevin Crosby
David Valerio
Virgilio Acevedo de Los Santos
Starlin Nunez
20 years
Count Three: Narcotics Conspiracy
(21 U.S.C. §§ 846, 841(b)(1)(C), 841(b)(1)(D), 841(b)(1)(E), and 841(b)(2))
Perry Joyner
Donnell Murray
Markeen Jordan
Anthony Ellison
Tyrell Sumpter
Kevin Crosby
David Valerio
Virgilio Acevedo de Los Santos
Starlin Nunez
20 years
Count Four: Obstruction of Justice
(18 U.S.C. §§ 1512(b)(3))
Perry Joyner
20 years
Count Five: Obstruction of Justice (18 U.S.C. §§ 1512(a)(2)(C) and 2)
Sharon Griffith-McKnight
20 years
[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 therein should be treated as an allegation. The defendant is presumed innocent unless and until proven guilty.
U.S. Attorney Announces Indictment Charging U.K. Citizen with Conspiracy to Commit Computer Intrusions and Other OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Janeen DiGuiseppi, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging JOSEPH JAMES O’CONNOR, a/k/a “PlugwalkJoe,” with conspiracy to commit computer hacking and other crimes in connection with a SIM swapping scheme that resulted in the theft of approximately $784,000 worth of cryptocurrency. The case has been assigned to U.S. District Judge Richard M. Berman. O’CONNOR was previously arrested in Spain on other U.S. federal charges. The Government is also pursuing O’CONNOR’s extradition from Spain on the charges in this case.
According to the allegations in the Indictment unsealed yesterday[1]:
During a cyber intrusion known as a SIM swap attack, cyber threat actors gain control of a victim’s mobile phone number by linking that number to a subscriber identity module (“SIM”) card controlled by the threat actors, resulting in the victim’s calls and messages being routed to a malicious unauthorized device controlled by the threat actors. The threat actors then typically use control of the victim’s mobile phone number to obtain unauthorized access to accounts held by the victim that are registered to the mobile phone number.
Between approximately March 2019 and May 2019, JOSEPH JAMES O’CONNOR, a/k/a “PlugwalkJoe,” the defendant, and his co-conspirators perpetrated a scheme to use SIM swaps to conduct cyber intrusions in order to steal approximately $784,000 worth of cryptocurrency from a Manhattan-based cryptocurrency company (“Company-1”), which, at all relevant times, provided wallet infrastructure and related software to cryptocurrency exchanges around the world.
As part of the scheme, O’CONNOR and his co-conspirators successfully perpetrated SIM swap attacks targeting at least three Company-1 executives. Following a successful SIM swap attack targeting one of the executives on or about April 30, 2019, O’CONNOR and his co-conspirators successfully gained unauthorized access to multiple Company-1 accounts and computer systems. On or about May 1, 2019, through their unauthorized access, O’CONNOR and his co-conspirators stole and fraudulently diverted cryptocurrency of various types (the “Stolen Cryptocurrency”) from cryptocurrency wallets maintained by Company-1 on behalf of two of its clients. The Stolen Cryptocurrency was worth at least approximately $784,000 at the time of the theft and included approximately 770.784869 Bitcoin cash, approximately 6,363.490509 Litecoin, approximately 407.396074 Ethereum, and approximately 7.456728 Bitcoin.
After stealing and fraudulently diverting the Stolen Cryptocurrency, O’CONNOR and his co-conspirators laundered it through dozens of transfers and transactions and exchanged some of it for Bitcoin using cryptocurrency exchange services. Ultimately, a portion of the Stolen Cryptocurrency was deposited into a cryptocurrency exchange account controlled by O’CONNOR.
* * *
O’CONNOR, 22, of the United Kingdom, is charged with conspiracy to commit computer hacking, which carries a maximum sentence of five years in prison; conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; aggravated identity theft, which carries a mandatory sentence of two years in prison, which must run consecutively to any other prison term imposed on the other charges; and conspiracy to commit money laundering, which carries a maximum term of 20 years in prison. The maximum potential sentences set forth above are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the Court.
The charges in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Mr. Williams praised the outstanding work of the FBI. Mr. Williams also thanked the Department of Justice Office of International Affairs for its assistance in this matter.
This prosecution is being handled by the Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Olga I. Zverovich is in charge of the prosecution.
[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.
Owner and Principal of Investment Fund Sentenced to Three Years in Prison for Insider Trading and Investment FraudRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that DONALD BLAKSTAD, the owner and principal of a California-based investment fund, was sentenced today in Manhattan federal court to 36 months in prison for committing insider trading and orchestrating a securities offering fraud scheme. In June 2021, a jury found BLAKSTAD guilty of conspiracy, securities fraud, and wire fraud offenses following a two-week jury trial before U.S. District Judge Edgardo Ramos, who imposed today’s sentence.
According to the Indictment, evidence presented at trial, and statements made in connection with sentencing:
BLAKSTAD was a stock trader and the owner and principal of an investment fund known as Midcontinental Petroleum Inc. (“Midcontinental Petroleum”), which purported to be in the business of soliciting investments in the energy industry. Martha Bustos was a former certified public accountant who worked in the finance department at Illumina, Inc. (“Illumina”), a San Diego-based biotechnology company whose securities trade on NASDAQ. By virtue of her employment at Illumina, Bustos had access to material nonpublic information about Illumina’s financial condition, including its earnings.
On several occasions, from 2016 through 2018, BLAKSTAD obtained inside information about Illumina’s financial condition from Bustos before Illumina publicly announced its earnings and financial results. As BLAKSTAD knew, Bustos owed a duty to keep inside information about Illumina confidential.
BLAKSTAD, aware of Bustos’s breach of duty to Illumina, used this inside information to make profitable trades in Illumina securities shortly before Illumina’s earnings announcements. At times, BLAKSTAD tipped his associates so that they could trade Illumina stock and options based on the inside information. At other times, in order to avoid detection, BLAKSTAD arranged for his associates to purchase Illumina securities for BLAKSTAD’s benefit in accounts controlled by his associates.
Following the public announcement of Illumina’s earnings, BLAKSTAD and his associates sold the Illumina securities at a significant profit, sometimes exceeding more than 2,000 percent. In total, BLAKSTAD and his associates made more than $6 million in profits from purchasing and selling Illumina securities.
In addition, from at least in or about 2015 through at least in or about 2019, BLAKSTAD devised and operated a securities offering fraud to fraudulently obtain more than a $1 million from a number of investors. BLAKSTAD fraudulently induced victim investors to make up-front, lump-sum investments for securities issued by Midcontinental Petroleum, which funds BLAKSTAD then misappropriated, in substantial part.
To facilitate the scheme, BLAKSTAD made false and misleading representations to investor victims regarding how their investment funds would be utilized. During the scheme, at BLAKSTAD’s direction, victims transmitted their funds, including by wire transfer, into bank accounts that were controlled by BLAKSTAD. Once he obtained these investor funds, BLAKSTAD did not use them for the purposes he had represented to investors. Instead, BLAKSTAD diverted a substantial portion of victims’ funds to himself and to co-conspirators. For example, BLAKSTAD used the funds to pay for a variety of personal expenses and for purposes that were unrelated to the business of Midcontinental Petroleum.
BLAKSTAD also made a series of false and misleading statements to victims designed to avoid detection, perpetuate the scheme, and keep the victim funds he received as a result of the fraud.
In total, BLAKSTAD’s schemes yielded more than $7 million in criminal profits.
* * *
In addition to his prison term, BLAKSTAD, 62, of San Diego, California, was sentenced to three years of supervised release and ordered to pay restitution to victims in the amount of $669,000.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission, which brought a separate civil action.
This case is being handled by the Office’s Securities and Commodities Fraud Unit. Assistant U.S. Attorneys Edward A. Imperatore and Jared Lenow are in charge of the prosecution.
Leader of MS-13 in Honduras and Drug Supplier for MS-13 Charged in Manhattan Federal Court with Racketeering, Narcotics Trafficking, and Firearms OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, John J. Durham, Director of Joint Task Force Vulcan (“JTFV”), Anne Milgram, Administrator of the Drug Enforcement Administration (“DEA”), Jay Greenberg, Acting Assistant Director of the Criminal Investigative Division of the Federal Bureau of Investigation (“FBI”), and Steve Francis, Acting Executive Associate Director, Department of Homeland Security, Homeland Security Investigations (“HSI”), announced the unsealing of a Superseding Indictment in Manhattan federal court charging YULAN ANDONY ARCHAGA CARÍAS, a/k/a “Alexander Mendoza,” a/k/a “Porky,” and DAVID CAMPBELL, a/k/a “Viejo Dan,” a/k/a “Don David,” with committing racketeering, narcotics trafficking, and firearms offenses. ARCHAGA Carías, a Honduran national, remains at large and has been added to the FBI’s Ten Most Wanted Fugitives List, the DEA’s Most Wanted Fugitives List, and HSI’s Most Wanted Fugitives List. CAMPBELL, a Honduran national, is currently in custody in Nicaragua. The case is assigned to U.S. District Judge Gregory H. Woods.
U.S. Attorney Damian Williams said: “As alleged, Yulan Andony Archaga Carías is MS-13’s highest-ranking member in Honduras, responsible for trafficking multi-ton shipments of cocaine into the U.S. and ordering and overseeing the multiple violent acts carried out to make those shipments happen. These allegedly included numerous murders of rivals. David Campbell was, until his capture, allegedly one of Archaga Carías’s major suppliers of drugs and guns, and he planned and coordinated violent acts with Archaga Carías. Campbell is in custody, and now a reward is offered for information leading to the arrest of Archaga Carías.”
JTFV Director John J. Durham said: “MS-13 violence, fueled by drug trafficking and firearms, has a devastating impact across the United States and Central America. The indictment unsealed today, which charges the highest ranking leader of MS-13 in Honduras and one of MS-13’s alleged main drug suppliers in Honduras, shows that no leader of MS-13 is beyond the reach of the Department of Justice and United States law enforcement. JTFV gratefully appreciates its partnership with the U.S. Attorney’s Office for the Southern District of New York, and will continue to work with our law enforcement partners to dismantle MS-13’s command and control structure throughout the Western Hemisphere.”
DEA Administrator Anne Milgram said: “For decades, MS-13 has been synonymous with extreme violence and brutality. The only way to weaken and disrupt criminal organizations that wreak havoc on our communities is to attack them at their core – their leadership and suppliers. DEA’s successful investigation leading to today’s charges, along with the addition of Archaga Carías to the DEA and FBI most wanted lists, represent a significant stride in our efforts to stop the devastating effects of MS-13’s violent drug trafficking activities that endanger the safety and health of Americans.”
Acting Assistant Director Jay Greenberg of the FBI’s Criminal Investigative Division said: “This indictment demonstrates the resolve of the FBI to aggressively pursue transnational criminal gangs like MS-13. We will work with our law enforcement partners to find wanted fugitives wherever they seek refuge and hold them accountable for their crimes."
HSI Acting Executive Associate Director Steve Francis said: “Today’s announcement highlights our commitment to working with domestic and international law enforcement partners to dismantle gangs like MS-13. By contributing our unique capabilities to this joint effort, Homeland Security Investigations is helping to make our nation safer.”
As alleged in the Superseding Indictment unsealed in Manhattan federal court[1]:
Mara Salvatrucha, commonly known as MS-13, is a transnational criminal organization that engages in acts of violence, including murders, kidnapping, assaults, extortion, and large-scale drug importation and distribution throughout Central America and the United States. ARCHAGA CARÍAS is the highest-ranking member of MS-13 in Honduras. As the leader and highest-ranking member of MS-13 in Honduras, ARCHAGA CARÍAS is in charge of, among other things, the gang’s drug trafficking operations, ordering and coordinating acts of violence, including numerous murders, and the laundering of drug proceeds. MS-13’s drug trafficking operations led by ARCHAGA CARÍAS include the processing, receiving, transporting, and distributing of multi-ton loads of cocaine shipped through Honduras and into the United States.
ARCHAGA CARÍAS and other MS-13 members and associates acting at his direction also provided protection for other drug trafficking organizations (“DTOs”) engaged in transporting multi-ton loads of cocaine through Honduras and destined for the United States. ARCHAGA CARÍAS contracted out members of MS-13 as “Sicarios,” or hit men, to other DTOs for payment. In that role, members of MS-13 committed numerous murders for hire for DTOs trafficking cocaine through Honduras to the United States. ARCHAGA CARÍAS and MS-13 also supplied other DTOs with firearms, including machineguns, that were received from El Salvador, Nicaragua, and elsewhere. ARCHAGA CARÍAS also ordered multiple murders of rival gang members and drug trafficking competitors in Honduras, as well as other members of MS-13 who ARCHAGA CARÍAS believed had been disloyal to the gang.
CAMPBELL was one of the principal suppliers of cocaine and weapons, including machineguns, to MS-13. As an associate of MS-13 and close confidant of ARCHAGA CARÍAS, CAMPBELL planned and coordinated retaliatory acts of violence with ARCHAGA CARÍAS, and assisted MS-13 and ARCHAGA CARÍAS in establishing businesses to launder the gang’s drug proceeds. CAMPBELL and MS-13 used businesses they owned or controlled to launder drug proceeds, including through banks in the United States.
* * *
ARCHAGA CARÍAS, 39, of Honduras, remains at large, and has now been named to the FBI’s Ten Most Wanted Fugitives List (https://www.fbi.gov/wanted/topten), the DEA’s Most Wanted Fugitives List (https://www.dea.gov/fugitives), and HSI’s Most Wanted Fugitives List. The FBI is offering up to $100,000 for information leading to the arrest of ARCHAGA CARÍAS. Anyone with information that may lead to the arrest of ARCHAGA CARÍAS can contact the FBI at 1-800-CALL-FBI. CAMPBELL, 54, of Honduras, is currently in custody in Nicaragua on local charges.
If convicted, each defendant faces a maximum penalty of life in prison and a mandatory minimum sentence of 40 years in prison. A chart containing the charges and statutory minimum 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 a judge.
Mr. Williams praised the outstanding investigative work of the FBI, DEA, and HSI.
The case is being handled by JTFV and the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorney Jacob Warren and Special Assistant United States Attorney Christopher A. Eason are in charge of the prosecution.
Since its creation in August 2019, JTFV has successfully implemented a whole-of-government approach to combatting MS-13, including increasing coordination and collaboration with domestic and foreign law enforcement partners; designating priority MS-13 programs, cliques and leaders, who have the most impact on the United States, for targeted prosecutions; and coordinating significant MS-13 indictments, including the first use of national security charges against MS-13 leaders. JTFV has comprised members from U.S. Attorney’s Offices across the country, including this Office, the Eastern District of New York, the Eastern District of Texas, the District of New Jersey, the Northern District of Ohio, the District of Utah, the Eastern District of Virginia, the District of Massachusetts, the District of Alaska, the Southern District of Florida, the Southern District of California, the District of Nevada, and the District of Columbia, as well as the National Security Division’s Counterterrorism Section and the Criminal Division’s Organized Crime and Gang Section. All Department of Justice law enforcement agencies are involved in the effort, including the FBI, DEA, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Marshals Service, and the U.S. Bureau of Prisons. In addition, HSI plays a critical role in JTFV. The Organized Crime Drug Enforcement Task Forces (“OCDETF”) also supports JTFV in its mission. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
The charges contained in the Superseding Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
COUNT
CHARGE
DEFENDANTS
MIN./MAX. PENALTIES
1
Racketeering conspiracy
18 U.S.C. § 1962(d)
YULAN ANDONY ARCHAGA CARÍAS, a/k/a “Alexander Mendoza,” a/k/a “Porky,” and
DAVID CAMPBELL,
a/k/a “Viejo Dan,” a/k/a “Don David”
Life in prison
2
Narcotics importation conspiracy
21 U.S.C. § 963
YULAN ANDONY ARCHAGA CARÍAS, a/k/a “Alexander Mendoza,” a/k/a “Porky,” and
DAVID CAMPBELL,
a/k/a “Viejo Dan,” a/k/a “Don David”
Life in prison
Mandatory minimum of 10 years in prison
3
Using or carrying a machinegun during and in relation to, or possessing a machinegun in furtherance of, a narcotics trafficking crime
§§ 924(c)(1)(A) and 924(c)(1)(B)(ii)
YULAN ANDONY ARCHAGA CARÍAS, a/k/a “Alexander Mendoza,” a/k/a “Porky,” and
DAVID CAMPBELL,
a/k/a “Viejo Dan,” a/k/a “Don David”
Life in prison
Mandatory minimum of 30 years in prison
4
Machinegun conspiracy
18 U.S.C. § 924(o)
YULAN ANDONY ARCHAGA CARÍAS, a/k/a “Alexander Mendoza,” a/k/a “Porky,” and
DAVID CAMPBELL,
a/k/a “Viejo Dan,” a/k/a “Don David”
Life in prison
[1] As the introductory phrase signifies, the entirety of the text of the Superseding Indictment constitutes only allegations, and every fact described herein should be treated as an allegation.
“Pure Armenian Blood” Member Pleads Guilty to Racketeering and Fraud OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that DAVIT YEGHOYAN pled guilty today to his role in a coast-to-coast racketeering enterprise referred to as “Pure Armenian Blood” or “P.A.B.,” in connection with the charges filed in United States v. Narek Marutyan, et al., 20 Cr. 652 (VM). YEGHOYAN pled guilty before U.S. Magistrate Judge Sarah L. Cave, and will be sentenced by U.S. District Judge Victor Marrero on a date to be determined.
U.S. Attorney Damian Williams said: “As a member of a sophisticated coast-to-coast organized criminal enterprise, Davit Yeghoyan enriched himself by stealing others’ identities, falsifying documents, and spending other people’s money, as he admitted in court today.”
According to the allegations contained in the Indictment, and statements during court proceedings:
Pure Armenian Blood was an organized criminal group operating under the direction and protection of an unindicted co-conspirator (“CC-1”), a “vor v zakone” or “vor,” which are Russian phrases translated roughly as “Thief-in-Law” or “Thief,” and which refer to an order of elite criminals from the former Soviet Union who receive tribute from other criminals, offer protection, and use their recognized status as vor to adjudicate disputes among lower-level criminals. Members and associates of Pure Armenian Blood operated under the direction and protection of CC-1, a vor of Armenian descent previously based in Los Angeles before being deported in or about 2018. Pure Armenian Blood operated through groups of individuals, often with overlapping members or associates, dedicated to particular criminal tasks, particularly identity theft, access device fraud, and credit card fraud, among others. While Pure Armenian Blood exploited victims and the financial system in New York City, it had operations in various locations throughout the United States and abroad, including through the use of purportedly legitimate business entities operating under the control and in conjunction with members of P.A.B. at various points throughout the conspiracy.
As a member of P.A.B., YEGHOYAN participated in and facilitated P.A.B’s various illicit activities, including the use of counterfeit credit cards and stolen personal identifying information, selling goods purchased with counterfeit credit cards for profit, fraudulently opening and exhausting lines of credit, and then falsifying documents to “clean” the credit of account holders in whose names the lines of credit were opened, and making purchases at collusive businesses with counterfeit credit cards or credit cards that were fraudulently opened.
YEGHOYAN, 29, of Brooklyn, New York, pled guilty to participating in a racketeering conspiracy, which carries a maximum penalty of 20 years in prison. The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
* * *
Mr. Williams praised the outstanding investigative work of FBI New York’s Eurasian Organized Crime Squad, as well as the FBI’s Newark, Los Angeles, and Miami offices, Homeland Security Investigations, the New York City Police Department, the United States Postal Inspection Service, and United States Customs and Border Protection for their investigative efforts and ongoing support and assistance with the case. This case is part of an Organized Crime Drug Enforcement Task Force (“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.
The prosecution of this case is being overseen by the Office’s Money Laundering and Transitional Criminal Enterprise Unit. Assistant U.S. Attorneys Benet J. Kearney, Abigail S. Kurland, and Emily Deininger are in charge of the case.
Three Defendants Indicted for Narcotics ConspiracyRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, Ray Donovan, Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), and Thomas A. Gleason, Commissioner of the Westchester County Department of Public Safety, announced that JORGE APONTE-GUZMAN, NELSON AGRAMONTE-MINAYA, and CARLOS MAISONET-LOPEZ were indicted yesterday for their participation in a drug trafficking conspiracy. The defendants were arrested on September 29, 2021, and were presented before United States Magistrate Judge Gabriel W. Gorenstein on September 30, in the cases of AGRAMONTE-MINAYA and MAISONET-LOPEZ, and on October 1, in the case of APONTE-GUZMAN. The case is assigned to United States District Judge Alison J. Nathan.
U.S. Attorney Damian Williams said: “This investigation has yielded the seizure of approximately 920 kilograms of cocaine, disrupting an alleged narcotics trafficking organization. Thanks to our partners at the DEA, this massive quantity of dangerous drugs has been kept off the streets.”
DEA Special Agent in Charge Ray Donovan said: “A multimillion-dollar storm of cocaine was seized before it could wreak havoc in the Northeast. Over one ton of cocaine was seized, making it the largest cocaine seizure destined for the streets of New York in over a decade. This seizure signifies a shift in the illegal drug landscape in New York, with cocaine seizures rising more than 150% in the last year. DEA and our law enforcement partners will continue to guard against drug trafficking organizations’ tactics and techniques to smuggle drugs into our country.”
Westchester County Police Commissioner Thomas A. Gleason said: “A seizure of this magnitude underscores the critical importance of working together with our federal and local law enforcement partners in the DEA Westchester Task Force. The tremendous work and dedication of the DEA and Task Force Investigators has interrupted a major drug distribution operation and prevented approximately one ton of dangerous, illegal narcotics from being distributed on the streets of our area.”
According to the allegations in the Indictment unsealed yesterday in Manhattan federal court and in other public court documents[1]:
On or about September 29, 2021, APONTE-GUZMAN traveled in a rental van from a loading dock in New Jersey to the area of a New Jersey residence, where he was met by MAISONET-LOPEZ and AGRAMONTE-MINAYA. Inside the rental van driven by APONTE-GUZMAN, law enforcement seized approximately 460 kilograms of cocaine that were packaged inside 10 large metal lawn rollers. Records relating to the shipment of the lawn rollers indicate that the lawn rollers were shipped from Puerto Rico to New Jersey, with a consignee in the Bronx, New York.
The next day, on or about September 30, 2021, DEA agents seized a substantially similar shipment of 10 large metal lawn rollers from the loading dock that APONTE-GUZMAN had visited the day before. In that second shipment, agents found an additional approximately 460 kilograms of cocaine.
* * *
APONTE-GUZMAN, 33, AGRAMONTE-MINAYA, 37, and MAISONET-LOPEZ, 32, are charged with conspiring to distribute and possess with intent to distribute at least five kilograms of cocaine, which carries a mandatory minimum sentence of 10 years in prison and 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 defendants would be determined by the assigned judge.
Mr. Williams praised the outstanding investigative work of the New York Division of the DEA, the Westchester County Department of Public Safety, and the Mt. Vernon Police Department. Mr. Williams also thanked the Westchester Resident Office of the DEA, the Port Authority Police Department, the New Rochelle Police Department, the Portchester Police Department, the White Plains Police Department, and the Yonkers Police Department for their assistance in the investigation.
The case is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Kevin Mead and Samuel P. Rothschild are in charge of the prosecution.
The charges in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and other assertions in public court documents, and the descriptions of those documents set forth in this release, constitute allegations only, and every fact described should be treated as an allegation.
California Attorney Pleads Guilty to Investment Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that DEREK JONES, an attorney currently suspended from practicing law in California, pled guilty today to one count of wire fraud. JONES is scheduled to be sentenced on February 23, 2022, before United States District Judge Loretta A. Preska, who accepted today’s plea.
According to the allegations set forth in the Indictment and other documents filed in the case:
From at least 2012 through at least 2019, JONES solicited and obtained investments into various companies and investment funds he controlled, including purported real estate development and investment firms using variations of the names “BlueRidge,” “Living City,” and “Atiswin,” and the purported venture capital firm Realize Holdings (“Realize”).
In fraudulently inducing victims to invest in his funds, JONES routinely made materially false oral and written statements, including in glossy brochures and legal documents that contained lies about real estate purportedly owned or otherwise controlled by BlueRidge, Living City, and Atiswin. For example, JONES falsely told investors and prospective investors that BlueRidge was developing a “resort village” on land it controlled in Washington State, and separately that BlueRidge had purchased an existing hotel in that same location, when in fact neither BlueRidge nor JONES owned or controlled any of that property. In other cases, JONES falsely claimed that his companies were under contract to purchase a ranch in Colorado, and that his companies had leased various pieces of property slated for development. Instead, JONES misappropriated investors’ money, using much of it to make Ponzi-like payments to other investors to whom he owed money in connection with earlier transactions, and for personal and family expenses, including the private-school tuition of his children.
In executing his scheme, JONES also sent investors and others falsified and counterfeit documents. For example, on repeated occasions JONES provided doctored bank statements stating that he had millions of dollars in various corporate accounts, when in fact he had little or no money in such accounts. On other occasions, he provided counterfeit financial statements that falsely purported to be based on internal audits of companies that he controlled.
JONES defrauded investors—at least three of whom lived and/or transacted their banking in Manhattan—out of at least approximately $5.8 million. To prolong and conceal the fraud scheme, JONES regularly told lies designed to avoid meetings with or inquiries from victims. For example, in explaining his failure to respond promptly to questions or his reason for postponing meetings, JONES falsely told different investors, on different occasions, that one of his relatives was hospitalized and undergoing surgery. JONES also used the names of other individuals—without those individuals’ authorization or knowledge—to communicate via email with investors and thus foster the illusion that JONES’s businesses were viable operations with real employees.
* * *
JONES, 47, of California, pled guilty today to a single count of wire fraud. That charge carries a maximum sentence of 20 years in prison. The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the sentencing judge.
Mr. Williams praised the excellent 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 David Raymond Lewis, Michael C. McGinnis, and David M. Abramowicz are in charge of the prosecution.
Bronx Man Pleads Guilty to Drug Trafficking and Firearms OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that ANTONIO MORA pled guilty today to drug trafficking and firearms offenses in connection with his participation in two Bronx-based narcotics conspiracies. MORA is scheduled to be sentenced on February 3, 2022, by U.S. District Judge J. Paul Oetken, who accepted today’s plea.
U.S. Attorney Damian Williams said: “Antonio Mora was a prolific dealer of heroin and crack, and a violent enforcer for two different narcotics organizations. Mora participated in multiple shootings of rival drug dealers, including a brazen daytime shooting on a busy residential street where Mora shot a man twice in front of his young daughter. Now Mora awaits sentencing for his multiple acts of violence and drug trafficking.”
According to the Superseding Indictment, statements made in court, as well as other publicly filed documents in this case:
Between in or about December 2015 and in or about November 2018, MORA participated in two separate conspiracies to distribute crack cocaine and heroin in the Bronx and elsewhere. MORA also participated in multiple shootings, including two in the second half of 2018. On September 6, 2018, the defendant and a co-conspirator pursued a rival drug dealer in broad daylight and shot him in the abdomen. On September 17, 2018, MORA and others chased down a rival drug dealer while he was walking on the street with his daughter in the Bronx, pulled the rival dealer’s daughter from his hands, and shot him twice in the leg.
* * *
MORA, 28, pled guilty to three counts: (1) conspiring to distribute and possess with intent to distribute 280 grams and more of crack cocaine and 1 kilogram and more of heroin from in or about December 2015 to June 2018, which carries a mandatory minimum prison term of 10 years and a maximum prison term of life; (2) conspiring to distribute and possess with intent to distribute crack cocaine and heroin from in or about June 2018 to November 2018, which carries a maximum term of 20 years in prison; and (3) using and carrying firearms during, and possessing firearms in furtherance of, the narcotics conspiracy, some of which firearms were discharged, which carries a mandatory consecutive prison term of 10 years and a maximum prison term of life.
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
Mr. Williams praised the outstanding investigative work of the New York City Police Department.
The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Mathew Andrews, Courtney Heavey, Danielle Sassoon, and paralegal specialist Christopher Sykes are in charge of the prosecution.
New York Gang Member Pleads Guilty to Racketeering and Drug Trafficking Offenses, Including 2010 East Harlem MurderRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that JAMAL ADAMSON, a/k/a “J-Rock,” pled guilty today in Manhattan federal court for his participation in crimes with the Cash Money Boys gang, including the June 2010 murder of David Moore in East Harlem. United States District Judge Gregory H. Woods accepted the defendant’s guilty plea.
U.S. Attorney Damian Williams said: “As a member of the violent Cash Money Boys street gang, Jamal Adamson caused the death of a 23-year-old man, attempted to kill another individual, and dealt dangerous drugs. Now, Adamson faces significant prison time for his crimes and the harm he inflicted on his community.”
As alleged in the Indictment and other documents filed in federal court, and based on statements made in public court proceedings:
The Cash Money Boys, or “CMB,” gang was a criminal enterprise involved in committing numerous acts of violence, including murder, attempted murder, robberies, and assaults in and around Manhattan. Members and associates of CMB engaged in violence to retaliate against rival gangs, to promote the standing and reputation of CMB, and to protect the gang’s narcotics sales.
From at least in or about 2006 to in or about 2017, members and associates of CMB regularly distributed crack cocaine and other drugs in the vicinity of Lexington Avenue between East 122nd Street and East 123rd Street. CMB controlled drug sales within this area by prohibiting and preventing non-members, outsiders, and rival drug dealers from selling drugs in the area controlled by the gang. This included gang members shooting at, assaulting, and/or robbing other drug dealers and members of rival gangs who entered CMB’s territory.
On or about June 20, 2010, after members of CMB and a rival gang got into a physical altercation, ADAMSON shot and killed David Moore, 23, near the corner of East 122nd Street and Lexington Avenue.
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ADAMSON, 28, of New York, New York, pled guilty to a Superseding Information charging him with one count of racketeering conspiracy, in violation of 18 U.S.C. § 1962(d), which carries a maximum penalty of 20 years in prison, and one count of narcotics distribution conspiracy, in violation of 18 U.S.C. § 371, which carries a maximum penalty of five years in prison.
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
Mr. Williams praised the outstanding work of the New York City Police Department and the Special Agents of the United States Attorney’s Office for the Southern District of New York.
The case is being prosecuted by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Maurene Comey, Jacob Warren, Dominic A. Gentile, Christopher J. Clore, and Peter J. Davis are in charge of the prosecution.
Minnesota Man Charged with Computer Intrusion and Illegally Streaming Content from Four Major Professional Sports LeaguesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that JOSHUA STREIT, a/k/a “Josh Brody,” was charged with conducting intrusions into Major League Baseball (“MLB”) computer systems, and illegally streaming copyrighted content from MLB, the National Basketball Association (“NBA”), the National Football League (“NFL”), and the National Hockey League (“NHL”), in connection with a website STREIT operated that offered the illegally streamed content to the public for profit. In addition, STREIT is charged with extortion for attempting to extort approximately $150,000 from MLB. STREIT is expected to be presented today before a U.S. magistrate judge in the District of Minnesota.
U.S. Attorney Damian Williams said: “Joshua Streit is alleged to have illegally streamed sports content online from MLB, the NHL, the NBA, and the NFL for his own personal profit. Furthermore, Streit allegedly hacked MLB’s computer systems and attempted to extort $150,000 from the league. Thanks to this Office’s teamwork with all four major American sports leagues and the FBI, Streit has struck out on his illegal streaming and extortion scheme.”
FBI Assistant Director Michael J. Driscoll said: “We allege Mr. Brody hacked into the systems of several of our country's biggest professional sports leagues and illegally streamed copyrighted live games. Instead of quitting while he was ahead, he allegedly decided to continue the game by extorting one of the leagues, threatening to expose the very vulnerability he used to hack them. Now instead of scoring a payday, Mr. Brody faces the possibility of a federal prison sentence as a penalty.”
According to the Complaint[1] unsealed today in Manhattan federal court:
Beginning in or about 2017, to in or about August 2021, JOSHUA STREIT a/k/a, “Joshua Brody,” the defendant, operated a website that streamed copyrighted content, primarily livestreamed games from major professional sports leagues, including MLB, the NBA, the NFL, and the NHL, which STREIT had no authorization to stream. STREIT obtained the copyrighted content by gaining unauthorized access to the websites for those sports leagues via misappropriated login credentials from legitimate users of those websites. One of the victim sports leagues sustained losses of approximately $3 million due to STREIT’s conduct.
In addition, at the same time STREIT was illicitly streaming copyrighted content from MLB, STREIT was engaged in an attempt to extort approximately $150,000 from MLB via a threat from STREIT to publicize alleged vulnerabilities in MLB’s internet infrastructure. STREIT initiated the extortion scheme at the same time that he was exploiting MLB’s computer systems to gain unauthorized access to copyright content that he streamed for profit.
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STREIT, 30 of St. Louis Park, Minnesota, is charged with: (1) one count of knowingly accessing a protected computer in furtherance of a criminal act and for purposes of commercial advantage and private financial gain, which carries a maximum sentence of five years in prison; (2) one count of knowingly accessing a protected computer in furtherance of fraud, which carries a maximum sentence of five years in prison; (3) one count of wire fraud, which carries a maximum sentence of 20 years in prison; (4) one count of illicit digital transmission, which carries a maximum sentence of five years in prison; and (5) one count of sending interstate threats with the intent to extort, which carries a maximum 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 the judge.
Mr. Williams praised the outstanding work of the FBI. He also thanked MLB, the NBA, the NFL, and the NHL for their ongoing support and assistance with the case.
The case is being handled by the Office’s Complex Frauds and Cybercrime Unit, and Assistant U.S. Attorney Dina McLeod is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Leader of International Burglary Crew Sentenced to 8 Years in PrisonRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that DAMIR PEJCINOVIC was sentenced today to eight years in prison in connection with his participation and management of a criminal organization that committed a series of sophisticated burglaries and engaged in the interstate transportation of stolen goods between 2006 and 2017. On November 19, 2020, PEJCINOVIC pled guilty before U.S. Magistrate Judge Kevin Nathaniel Fox to participating in a racketeering conspiracy. PEJCINOVIC was sentenced today before U.S. District Judge Victor Marrero.
U.S. Attorney Damian Williams said: “For over a decade, the defendant supervised a sophisticated burglary crew that carried out multimillion-dollar heists all over the United States and on both sides of the Atlantic. Today’s lengthy sentence sends an important message to members of criminal organizations that they will face justice for their crimes.”
As alleged in the Indictment and statements made in open court:
Between 2006 and April 2017, DAMIR PEJCINOVIC, a/k/a “Damian,” a/k/a “CoCo,” Gzimi Bojkovic, a/k/a Jimmy,” Adrian Fiseku, and Elvis Cirikovic, a/k/a “Gorilla,” participated in a criminal organization whose members and associates engaged in, among other things, the commission of burglaries and the interstate transportation and sale of stolen goods. The criminal organization operated principally in New York City, California, New Jersey, Pennsylvania, Florida, Massachusetts, Maine, and Europe. Members and associates of the organization committed, conspired to commit, and attempted to commit numerous burglaries of jewelry stores and banks, as well as the interstate transportation and sale of stolen property from the burglaries. PEJCINOVIC, Bojkovic, Fiseku, Cirikovic, and other members and associates of the criminal organization committed the following burglaries and attempted burglaries:
Between February 2006 and March 2006, PEJCINOVIC participated in a burglary of a restaurant and an attempted burglary of a jewelry store in Portland, Oregon.
On March 29, 2008, PEJCINOVIC, Bojkovic, and Cirikovic participated in a burglary of a jewelry store in New York, New York, that resulted in the theft of jewelry valued at over $2.5 million.
On October 11, 2008, PEJCINOVIC and Cirikovic participated in an attempted burglary of a jewelry store in Germany, attempting to steal gold valued at more than €10 million.
On July 26, 2009, PEJCINOVIC and Bojkovic participated in a burglary of a Manhattan jewelry store that resulted in the theft of jewelry valued at over $850,000.
On August 25, 2010, PEJCINOVIC participated in an attempted burglary of a jewelry store in Manhattan.
On August 28, 2010, PEJCINOVIC and Bojkovic participated in a burglary of a jewelry store in Beverly Hills that resulted in the theft of jewelry valued at over $70,000.
On September 5, 2010, PEJCINOVIC participated in a burglary of a jewelry store in Kansas City that resulted in the theft, interstate transportation, and sale of jewelry valued at over $1 million.
On February 19, 2011, PEJCINOVIC, Cirikovic, and Fiseku participated in a jewelry store in Los Angeles that resulted in the theft, interstate transportation, and sale of jewelry valued at over $3 million.
In the summer of 2011, PEJCINOVIC participated in an attempted burglary of a jewelry store in Brooklyn.
On September 16, 2011, PEJCINOVIC and Cirikovic participated in a burglary of a jewelry store in Los Angeles that resulted in the theft of jewelry valued at over $150,000.
In the fall of 2012, PEJCINOVIC and Bojkovic participated in an attempted burglary of a bank in Philadelphia.
On June 30, 2012, PEJCINOVIC and Cirikovic participated in an attempted burglary of a bank in Scarsdale, New York.
On July 22, 2012, PEJCINOVIC participated in an attempted burglary of a jewelry store in Manhattan.
In the fall of 2013, PEJCINOVIC, Bojkovic, and Cirikovic participated in the burglary of a jewelry store in New Jersey.
On December 31, 2016, PEJCINOVIC, Bojkovic, and Fiseku participated in the burglary of a jewelry store in Manhattan that resulted in the theft, interstate transportation, and sale of jewelry valued at over $3 million.
On March 20, 2017, PEJCINOVIC, Bojkovic, and Fiseku participated in the burglary of a jewelry store in Los Angeles that resulted in the theft of jewelry valued at over $2 million.
* * *
In addition to his prison term, DAMIR PEJCINOVIC, 47, of New York, New York, was sentenced to three years of supervised release. PEJCINOVIC was also ordered to pay restitution of $13,020,000.
Bojkovic, 39, of Staten Island, New York, pled guilty on October 7, 2019, to participating in a racketeering conspiracy. He was sentenced on November 17, 2020, to 36 months in prison, three years of supervised release, and ordered to pay restitution of $9,020,000.00.
Fiseku, 38, of Staten Island, New York, pled guilty on March 13, 2020, to participating in a racketeering conspiracy. He was sentenced on January 22, 2021, to 30 months in prison, three years of supervised release, and ordered to pay restitution of $8,600,000.00.
Cirikovic, 38, of Woodhaven, New York, pled guilty on August 26, 2019, to participating in a racketeering conspiracy. He was sentenced on January 13, 2020, to 27 months in prison and ordered to pay restitution of $2,505,500.00.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation and the New York City Police Department. Mr. Williams also thanked the Los Angeles Police Department, Beverly Hills Police Department, Kansas City Police Department, Portland Police Department, German Federal Police, Interpol, Europol, the Justice Department’s Office of International Affairs, and the Manhattan District Attorney’s Office for their assistance in this investigation.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Andrew K. Chan, Margaret Graham, and Jamie Bagliebter are in charge of the prosecution.
Two Defendants Convicted for Operating Multimillion-Dollar Business Email Compromise and Money Laundering SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned guilty verdicts yesterday against OLUWASEUN ADELEKAN, a/k/a “Sean Adelekan,” and TEMITOPE OMOTAYO for conspiracies to commit wire fraud and money laundering, and aggravated identity theft. U.S. District Judge Loretta A. Preska presided over the one-week trial.
U.S. Attorney Damian Williams said: “As a unanimous jury swiftly determined, Oluwaseun Adelekan and Temitope Omotayo were members of a years-long scheme to steal millions of dollars from businesses large and small across the globe and to launder their fraud proceeds domestically and internationally. The two will now pay for their criminal activity and the harm they exacted upon their victims. ”
As reflected in the Superseding Indictment, public filings, and the evidence presented at trial:
Beginning no later than in or about July 2016, ADELEKAN and OMOTAYO agreed with others to impersonate trusted advisers and business partners of victim individuals and businesses, and to trick those victims into wiring millions of dollars into “business” bank accounts controlled by ADELEKAN, OMOTAYO, and their co-conspirators.
After the victims wired funds intended for their advisers and business partners to ADELEKAN, OMOTAYO, and their co-conspirators, ADELEKAN and OMOTAYO caused those funds to be transferred quickly into different bank accounts in various locations throughout the world, including China and Nigeria. ADELAKAN and OMOTAYO also created fraudulent invoices and contracts, using their victims’ identities, to be submitted to banks in support of the large volume of funds that were fraudulently transmitted via wire transfers.
Through these false and deceptive representations over the course of the scheme, ADELEKAN, OMOTAYO, and their co-conspirators caused losses to victims in excess of $6 million.
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ADELEKAN, 39, of the United States and Nigeria, and OMOTAYO, 39, of Nigeria, were each convicted of (1) one count of conspiracy to commit wire fraud, which carries a maximum term of 20 years in prison; (2) one count of conspiracy to commit money laundering, which carries a maximum term of 20 years in prison; and (3) one count of aggravated identity theft, which carries a mandatory consecutive term of two years in prison. The statutory maximum sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by Judge Preska. The defendants are scheduled to be sentenced on January 27, 2022.
Mr. Williams praised the outstanding work of Homeland Security Investigations and Special Agents from the U.S. Attorney’s Office for the Southern District of New York.
The prosecution of this case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Rebecca T. Dell, Daniel H. Wolf, and Robert B. Sobelman are in charge of the prosecution.
New York City Man Charged in Connection with Three-Day Crime Spree, Including Subway Shooting and Bank RobberiesRead the Press Release
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 Field Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced that DAMON BAILEY was arrested yesterday at Union Square subway station, one day after allegedly shooting a fellow train rider during rush hour at that station. Today BAILEY was charged in a criminal Complaint with being a felon in possession of a firearm in connection with the subway shooting and an attempted deli robbery, with robbing two banks in Manhattan at gunpoint on October 25, 2021 and October 26, 2021, and with brandishing a firearm in connection with those bank robberies. BAILEY was presented today in Manhattan federal court before United States Magistrate Judge Barbara Moses.
U.S. Attorney Damian Williams said: “As alleged, during a brazen multiday armed robbery spree, Damon Bailey shot a fellow passenger on a crowded subway. We commend the extraordinary work of our law enforcement partners who swiftly connected the many dots and safely apprehended the suspect.”
FBI Assistant Director Michael J. Driscoll said: “As we allege today, Mr. Bailey engaged in a gun and violent crime spree spanning several days. In so doing, he terrorized several of our neighbors and deprived them of their right to feel safe as they live their lives. The swift action taken today by the FBI/NYPD Joint Violent Crimes Task Force should serve as a reminder to all that we will not tolerate this type of behavior in our city.”
NYPD Commissioner Dermot Shea said: “As alleged, this individual, a day after committing a shooting in a subway, walked away from a Manhattan bank with a satchel of cash and three firearms – but thanks to NYPD officers, this crime spree came to an abrupt end. The NYPD, along with our federal partners at the United States Attorney’s Office for the Southern District of New York, will continue to work to ensure that this person is brought to justice for the series of violent crimes he is charged with.”
As alleged in the Complaint filed today in Manhattan federal court[1]:
Over the course of three days, BAILEY committed two gunpoint robberies in Manhattan and attempted to commit two others. On October 24, 2021, BAILEY flashed a firearm in his waistband and demanded money from a customer in a deli near Grand Central Station. On October 25, BAILEY robbed a bank at gunpoint in lower Manhattan and, approximately ten minutes later, attempted to rob a victim on the subway and then shot the victim as the train pulled into Union Square station at rush hour. On October 26, BAILEY robbed a second bank at gunpoint, in Chelsea. In each of the robberies, BAILEY carried a light gray backpack and wore sneakers with a distinctive green toe box and white trim.
After the second robbery, BAILEY again got on the subway, but this time he was apprehended and arrested when he arrived at Union Square station. Based on the proximity of the second bank to the NQR subway line, NYPD officers proceeded to a southbound platform at Union Square subway station and held an incoming train to conduct a search of the train cars for a person matching the description of the robber. An officer found BAILEY in one of the train cars, wearing a light gray backpack and sneakers with a green toe box and white trim. Upon his arrest, three firearms—two semiautomatic pistols and one revolver—were found inside his backpack.
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BAILEY, 38, is charged with two counts of bank robbery, which carries a maximum sentence of 20 years in prison; one count of being a felon in possession of firearms, which carries a maximum sentence of 10 years in prison; and two counts of knowingly using and carrying a firearm during and in relation to a crime of violence, and possession of a firearm in furtherance of a crime of violence, which firearm was brandished, which carries a mandatory minimum term of seven years in prison consecutive to any other term of imprisonment, up to life in prison.
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
Mr. Williams praised the outstanding, coordinated investigative work of the FBI and NYPD.
This case is being handle by the Office’s General Crimes Unit. Assistant United States Attorney Jane Y. Chong is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Two Defendants Convicted of Aviation-Based Drug Trafficking ChargesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Wendy C. Woolcock, Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that a jury returned guilty verdicts yesterday against JEAN-CLAUDE OKONGO LANDJI and JIBRIL ADAMU on the charge of conspiring to traffic five kilograms and more of cocaine on board an aircraft owned by a United States citizen and registered in the United States. U.S. District Judge Paul G. Gardephe presided over the two-week trial.
U.S. Attorney Damian Williams said: “As a jury found, Jean-Claude Okongo Landji and Jibril Adamu sought to exploit their abilities as pilots and use Landji’s private jet to smuggle multi-ton loads of cocaine from South America to West Africa and on to Europe and elsewhere. Presuming they would be able to make regular runs to Europe, figuratively flying under the radar, Landji and Adamu were instead arrested in Croatia at the end of an initial test flight. Now they await sentencing for their crime.”
As reflected in the Indictment, public filings, and the evidence presented at trial:
Beginning in or about October 2017, LANDJI, ADAMU, and others agreed to use a United States-registered Gulfstream G2 private jet owned by LANDJI, a United States citizen, to distribute multi-ton quantities of cocaine in South America, Africa, Europe, and elsewhere. LANDJI and ADAMU, who are both pilots, planned to use the G2 and other aircraft to fly unregistered and untraceable “black flights” with multi-thousand kilogram loads of cocaine from South America to West Africa to be unloaded at clandestine airstrips, including landing sites in the Sahara desert. After the cocaine was off-loaded in Africa, LANDJI and ADAMU planned to use LANDJI’s aviation business, incorporated in the state of Georgia, as cover for cocaine smuggling flights to Europe and elsewhere. For example, LANDJI agreed to use his company to arrange seemingly legitimate passenger “VIP” flights to Europe for which ADAMU would serve as a pilot while concealing multi-ton quantities of cocaine hidden on board for further distribution in European countries. LANDJI and ADAMU further sought in particular to evade the scrutiny of the DEA and U.S. law enforcement and discussed methods to avoid the U.S. justice system. For example, during recorded meetings in 2018, LANDJI agreed to traffic cocaine by aircraft with a co-conspirator who warned “if you put one kilo on a plane that has the American registration, it’s the same thing[] as putting it . . . in the middle of . . . Madison Square Garden in New York. The same thing. For the justice system.”
On or about October 30, 2018, LANDJI and ADAMU conducted a test shipment and flew the G2 from Mali to Croatia with one kilogram of cocaine on board. LANDJI and ADAMU expected that their successful provision of the one-kilogram cocaine sample to clients in Europe would pave the way for providing twice-monthly shipments of cocaine worth as much as $40 million each in the European market. However, members of the Croatian National Police investigating LANDJI and ADAMU in coordination with the DEA searched the G2 following their arrival in Croatia, recovered the kilogram of cocaine, and arrested LANDJI and ADAMU. Both defendants were later extradited to the United States.
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LANDJI, 58, of the United States and Gabon, and ADAMU, 58, of Nigeria, were convicted of one count of conspiring to distribute and possess with intent to distribute cocaine with a United States citizen on board any aircraft, and on board an aircraft owned by a United States citizen or registered in the United States, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. The statutory minimum and maximum sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by Judge Gardephe.
Mr. Williams praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, U.S. Customs and Border Protection, Homeland Security Investigations New York Office, the United Kingdom’s National Crime Agency, and the Croatian National Police Office for the Suppression of Corruption and Organized Crime, as well as the U.S. Department of Justice’s Office of International Affairs.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Elinor L. Tarlow and Matthew J.C. Hellman are in charge of the prosecution.
Stock Trader Arrested and Charged with Securities Fraud for Using His Twitter Account to Operate A Pump-And-Dump SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Ricky J. Patel, Acting Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced today that STEVEN GALLAGHER was charged in a Complaint in Manhattan federal court with securities fraud, wire fraud, and market manipulation. GALLAGHER, using the alias “Alex DeLarge,” created a stock promotion account on Twitter that gained over 70,000 followers. GALLAGHER used that account to tout certain over-the-counter penny stocks and to disseminate false and misleading information about his trading in those stocks in order to induce his followers to purchase those stocks and drive up their prices. GALLAGHER earned over $1 million in profits by then secretly selling his previously acquired holdings of those penny stocks. GALLAGHER was arrested today in the Northern District of Ohio and is expected to be presented before a magistrate judge this afternoon.
U.S. Attorney Damian Williams said: “As alleged, Steven Gallagher brought old-school boiler room tactics to the Twitter age, and operated a social media pump-and-dump scam that defrauded ordinary investors, all so that he could make over $1 million in profits. Today’s arrest of Gallagher demonstrates that this Office and our law enforcement partners will be vigilant as securities fraud schemes move onto Twitter and other forms of social media.”
Acting HSI Special Agent-in-Charge Ricky J. Patel said: “Turning lies into cash, Gallagher allegedly engaged in a pump & dump scheme, where he and his followers manipulated the price of penny stocks and guaranteed profits for themselves. Pump and dump stock schemes cause mistrust in the market and have real victims who often invest large sums of money, only to have their hopes shattered by a fraudster’s greed. Like so many Hollywood movies which have portrayed stock frauds, Gallagher met the same fate as those storylines, he was arrested and will now face justice. Working with our partners at the USAO-SDNY and the SEC, identifying and disrupting illegal financial schemes like this one is a top priority for HSI.”
If you believe you are a victim of this crime, or if you have information relevant to this investigation, please send an email to [email protected].
As alleged in the Complaint unsealed today in Manhattan federal court:[1]
STEVEN GALLAGHER is an active day trader in over-the-counter securities, or “OTC securities.” Those securities typically do not trade on centralized exchanges such as the New York Stock Exchange or the NASDAQ Stock Exchange. OTC securities often trade for less than one dollar per share, and thus are often referred to as “penny stocks.” Many OTC securities are thinly traded, and therefore are particularly susceptible to stock manipulation schemes.
In September 2019, GALLAGHER created a Twitter account using the alias “Alex DeLarge,” a character from the Anthony Burgess novel A Clockwork Orange and the Stanley Kubrick film of the same name (the “DeLarge Twitter Account”). As of October 19, 2021, the DeLarge Twitter Account had over 70,000 followers.
From 2020 to the present, GALLAGHER has operated a fraudulent pump-and-dump scheme that employed a variety of tactics to defraud individual, non-professional investors – so-called “retail investors” – in thinly traded over-the-counter securities. GALLAGHER repeated the scheme again and again with respect to numerous securities, employing substantially the same means and methods. As part of his fraudulent scheme, GALLAGHER first secretly acquired a substantial volume of shares of thinly traded penny stocks (the “Subject Securities”). GALLAGHER then used the DeLarge Twitter Account to artificially “pump” the Subject Securities, including by making materially false and misleading statements about those securities. For example, GALLAGHER made false and misleading statements about the nature and timing of GALLAGHER’s own financial interest in those securities, at times representing that he was purchasing or holding shares of certain of the Subject Securities he was touting when, in fact, he was secretly selling. During the course of the scheme, GALLAGHER also regularly posted images of his brokerage account balance and gains on the Delarge Twitter Account in order to bolster his reputation and induce his followers to trade in accordance with his suggestions.
During the “pump” phase of this scheme, the prices of the Subject Securities rose when the Twitter followers of the DeLarge Twitter Account purchased them. Then, GALLAGHER began the “dump” phase of the scheme wherein he sold his shares at the inflated prices while continuing to use the DeLarge Twitter Account to disseminate materially false and fraudulent statements in an effort to obtain the best possible sales price for himself. As a result of this fraudulent scheme, GALLAGHER earned over $1 million in trading profits.
In addition to making false and misleading statements to “pump” the Subject Securities, as a further part of his fraudulent scheme, GALLAGHER also engaged in an additional form of market manipulation with at least one of the Subject Securities. Specifically, GALLAGHER engaged in a series of transactions designed to artificially raise the end-of-day price of one of the Subject Securities by making purchases at above-market prices in order to make the stock appear favorable to potential purchasers, a deceptive practice known as “marking the close.” As with GALLAGHER’s efforts to artificially raise the price of the Subject Securities through false and misleading statements, these manipulative transactions induced other market participants to purchase the security and continue the upward trend in its price while GALLAGHER secretly sold his shares at a profit.
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GALLAGHER, 50, of Maumee, Ohio, is charged with one count of securities fraud, which carries a maximum sentence of twenty years in prison, one count of wire fraud, which carries a maximum sentence of twenty years in prison, one count of securities fraud, which carries a maximum sentence of twenty-five years in prison, and one count of one count of market manipulation, which carries a maximum sentence of twenty 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 work of the HSI, and noted that the investigation remains ongoing. Mr. Williams further thanked the Securities and Exchange Commission for their cooperation and assistance in this investigation.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Richard Cooper, Daniel Tracer, and Allison Nichols are in charge of the prosecution.
The allegations 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 Indictments, and the description of the Indictments set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
10 Foreign Nationals Charged in Years-Long, Multimillion-Dollar Investment and Impersonation SchemeRead the Press Release
Damian Williams, United States Attorney for the Southern District of New York, Philip R. Bartlett, Inspector in Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), Thomas Fattorusso, Acting Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and John Condon, Special Agent in Charge of the Tampa Office of Homeland Security Investigations (“HSI”), announced today the unsealing of Indictments charging NICHOLAS RUSSELL JAMES GILLIE, a/k/a “James William Carter,” NEOPHYTOS GEORGIOU, a/k/a “Nick,” a/k/a “PT,” a/k/a “The Boss,” URS MEISTERHANS, SCOTT STEVEN NEILSON, LIAM JAMES SMOUT, a/k/a “Pringle,” DANIEL NIELSEN, BRENDA LAVERTY, ANDREW GEORGIOU, a/k/a “Andy,” THOMAS ANDREW KENNY, a/k/a “Irish,” and JAKE MARDELL with conspiracy to commit wire fraud, conspiracy to commit money laundering, and aggravated identity theft, in connection with a scheme to impersonate prominent investment firms and individuals to defraud victim investors in countries around the world. The case is assigned to U.S. District Judge J. Paul Oetken.
GILLIE, NEOPHYTOS GEORGIOU, LAVERTY, ANDREW GEORGIOU, and MARDELL were arrested in Cyprus in May 2021. SMOUT was arrested in Spain in July 2021. DANIEL NIELSEN was arrested in Romania in June 2021. KENNY and SCOTT STEVEN NEILSON were arrested in the United Kingdom last month and earlier this month, respectively.
In September 2021, DANIEL NIELSEN was extradited to the United States from Romania. Additional U.S. extradition requests remain pending.
MEISTERHANS, a Swiss national, remains at large and has been residing in Switzerland since May 2021 as a fugitive from U.S. justice.
U.S. Attorney Damian Williams said: “As alleged, the defendants carried out an international scheme that fleeced investors out of more than $6 million, in part by impersonating legitimate investment firms and fabricating the trappings of real investment opportunities, including news articles, advertisements, and other online content, as well as fake contracts and other documents. Now nine of the 10 are in custody, and all of the defendants are charged with multiple felonies in this district.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “International criminals have had a field day on U.S. consumers and investors over the past few years. Whenever making an investment, it is strongly advised to dig deep and review everything you can find about the investment firm, managers and purported returns. Use the power of the internet to search for negative information about the company. In this case, the victims relied on the good names of successful financial firms, only to later realize they had been swindled. Postal Inspectors and their law enforcement partners will always be on the alert to alleged cons like these to maintain honest investment platforms and ensure those who allegedly commit crimes against investors are brought to justice.”
IRS-CI Acting Special Agent in Charge Fattorusso said: “This case demonstrates to the world that IRS-CI and our many law enforcement partners continue to uncover and expose fraud wherever it may be located. This alleged scheme took advantage of victims with the promise of valuable financial assets when in reality the funds are alleged to have been stolen and laundered back to the criminal conspirators. We would like to specifically thank HSI, U.S. Postal Inspectors, the U.S. Attorney’s Office for the Southern District of New York, as well as our International J5 partner agencies for their outstanding work in this case.”
HSI Tampa Special Agent in Charge John Condon said: “Thanks to a collaborative investigative effort between HSI, the IRS-Criminal Investigations and the U.S. Postal Inspectors, this international criminal conspiracy has been stopped.”
As alleged in the Indictments unsealed today:
Beginning in at least 2015, NICHOLAS RUSSELL JAMES GILLIE, NEOPHYTOS GEORGIOU, URS MEISTERHANS, SCOTT STEVEN NEILSON, LIAM JAMES SMOUT, DANIEL NIELSEN, BRENDA LAVERTY, ANDREW GEORGIOU, THOMAS ANDREW KENNY, and JAKE MARDELL participated in a sophisticated international mass-marketing investment fraud scheme to defraud English-speaking investors from around the world of millions of dollars, and to launder the fraud proceeds and distribute those proceeds among the conspirators. NEOPHYTOS GEORGIOU, who owns bars and restaurants in Cyprus, financed the costs of the investment fraud scheme, which was orchestrated by GILLIE, his longstanding partner in Cyprus. MEISTERHANS was a key “banker” – that is, money launderer – in the scheme, who laundered victim funds through bank accounts in the United States and several other countries.
As part of the investment fraud scheme, conspirators purported to be employees of successful financial investment firms and took sophisticated steps to convince victims of the firms’ existence and legitimacy. Those steps commonly included impersonating real financial investment firms, creating fraudulent websites that appeared to be associated with the real firms, creating fraudulent email addresses that appeared to be associated with employees of the real firms, publishing fraudulent news articles relating to the fake firms and their supposed investments, utilizing a widely-used internet search engine to disseminate scheme-related online advertisements, creating fraudulent investment-related contracts and other financial and legal documents, and using the names, titles, signatures, email addresses, and likenesses of real individuals prominent in business and finance. Employing those tactics, among others, and through hard-sell telemarketing calls and emails with victim-investors orchestrated from so-called “boiler rooms” located in Cyprus, Spain, Romania, and Cambodia, the conspirators convinced victims to transfer funds to one or more bank accounts under the conspirators’ control (the “Victim Depository Accounts”) for what the victims understood to be investments in various companies – that is, the purchase of company shares. In reality, however, the conspirators’ purported financial investment firms were fake, the purported share purchases were fraudulent, and the money sent by victims was never returned. The combined losses of victims exceeded $6 million.
Rather than being used to make investments, the funds that victims transferred to the Victim Depository Accounts were sent back to the conspirators by individuals sometimes referred to by conspirators as “bankers” (the “Bankers”), who were in fact responsible for laundering the proceeds of the investment fraud scheme. For example, fraud proceeds were at times transferred from a Banker to bank accounts held in the names of individuals who do not actually exist, such as “James William Carter” and “Jonathan Timothy Turner,” but in whose names the conspirators had opened bank accounts using fake United Kingdom passports and other documents. The fraud proceeds were then distributed among the conspirators, as salary or commission, for their participation in the investment fraud scheme.
One component of the years-long investment fraud scheme involved the impersonation, in or about 2019, of a New York-based private investment fund (the “New York Fund”) founded by an internationally renowned billionaire investor (the “Founder”). While impersonating the New York Fund, conspirators fraudulently induced victim-investors from Australia, Europe, and elsewhere to enter into various purported investments, including the supposed purchase of “pre-IPO” shares of a successful and relatively young international company that did not have its shares listed on a public stock exchange (“Company‑1”).
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GILLIE, 51, a U.K. national, NEOPHYTOS GEORGIOU, 60, a dual U.K. and Cypriot national, MEISTERHANS, 60, a Swiss national, SCOTT STEVEN NEILSON, 34, a U.K. national, SMOUT, 26, a U.K. national, DANIEL NIELSEN, 32, a U.K. national, LAVERTY, 40, an Irish national, GEORGIOU, 62, a dual U.K. and Cypriot national, KENNY, 33, a U.K. national, and MARDELL, 25, a U.K. national, are each charged with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956, which carries a maximum sentence of 20 years in prison; and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A, which carries a mandatory minimum sentence of two years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of these defendants would be determined by a judge.
Mr. Williams praised the outstanding investigative work of the USPIS and HSI, as well as IRS-CI and their partnership with the J5. The J5, known as the Joint Chiefs of Global Tax Enforcement, works together to gather information, share intelligence and conduct coordinated operations against transnational financial crimes. The J5 includes the Australian Taxation Office, the Canadian Revenue Agency, the Dutch Fiscal Information and Investigation Service, Her Majesty's Revenue and Customs from the U.K. and IRS-CI from the U.S. The Justice Department’s Office of International Affairs provided substantial assistance in securing the arrests and extradition.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Micah F. Fergenson and Andrew Jones are in charge of the prosecution.
As the introductory phrase signifies, the entirety of the text of the Indictments and the description of the Indictments set forth in this release constitute only allegations, and every fact described should be treated as an allegation.