Southern District of New York
Press releases recorded for this federal judicial district.
Manhattan Man Pleads Guilty to $6.9 Million Scheme to Defraud Loan Program Intended to Help Small Businesses During COVID-19 PandemicRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that MARCUS FRAZIER pled guilty to carrying out a fraudulent scheme to obtain $6.9 million in government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic. FRAZIER pled guilty before United States District Judge Alison Nathan, to whom his case is assigned.
U.S. Attorney Damian Williams said: “Marcus Frazier sought millions of dollars in unsecured SBA-guaranteed loans for which his businesses did not qualify. He lied about the number of people employed by his businesses, the salaries they were paid, even that these employees existed. Further, Frazier used the loan proceeds he obtained to fund his lavish lifestyle, not to pay permissible expenses. Now Marcus Frazier awaits sentencing for his admitted crimes.”
According to the allegations in the Complaint, court filings, and statements made during plea proceedings:
The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other business expenses through the Paycheck Protection Program (the “PPP”). The PPP allows qualifying small businesses and other organizations to receive unsecured loans guaranteed by the U.S. Small Business Administration (the “SBA”). PPP loan proceeds must be used by businesses for payroll costs, mortgage interest, rent, and/or utilities, among other specified expenses. Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and its average payroll costs. Businesses applying for a PPP loan must provide documentation to confirm that they have in the past paid employees the compensation represented in the loan application.
Between in or about May 2020 and in or about April 2021, FRAZIER submitted to the SBA at least seven applications for PPP loans for various businesses that he controlled (collectively, the “Frazier Companies”). These applications relied upon fraudulent statements regarding the number of employees of each business and the amount of payroll involved in each business, and were submitted, in many cases, alongside fake bank statements, designed to support FRAZIER’s false statements. These fake bank statements included, among other things, fraudulent account statements for a checking account that showed balances far greater than the account actually held, and that depicted payroll withdrawals that never occurred. FRAZIER also submitted lists of employees on the purported payrolls of the Frazier Companies, which included names and Social Security numbers which do not match the records of the Social Security Administration, suggesting that FRAZIER fabricated the employee records. On at least one occasion, FRAZIER also provided documents purporting to show that one of the Frazier Companies had been in existence for approximately 10 years. In fact, the corporate entity had not been registered until in or about July 2020, months after the onset of the COVID-19 pandemic.
FRAZIER sought a total of more than approximately $6.9 million in PPP loans and was awarded at least approximately $2.17 million. A substantial portion of the funds awarded was spent not on payroll for the Frazier Companies but, rather, on FRAZIER’s personal expenses. During the period between on or about June 18, 2020, shortly after his first PPP loan was funded, and on or about April 7, 2021, FRAZIER utilized PPP funds to spend approximately $124,982 on hotels, including more than approximately $88,791 at a luxury hotel located in Miami, Florida. During the same period, FRAZIER spent approximately $63,000 on restaurants and food service, approximately $17,000 on transportation using the ride-hailing app Uber, approximately $16,519 on airline travel, and approximately $11,000 on clothing. During this same period, FRAZIER collected approximately $21,000 in unemployment benefits.
In addition, between in or about January 2018 and in or about November 2019, FRAZIER engaged in a scheme to obtain personal loans from financial institutions and to evade the payment of credit card debt by making false representations, and sending fake documents, to lenders and banks.
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FRAZIER, 48, of New York, New York York, pled guilty to two counts of wire fraud affecting a financial institution, in violation of 18 U.S.C. § 1343, each of which carries a maximum sentence of 30 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
FRAZIER is scheduled to be sentenced by Judge Nathan on March 1, 2022, at 3:00 p.m.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation, the SBA Office of the Inspector General, the Internal Revenue Service, and the Federal Deposit Insurance Corporation Office of the Inspector General.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Katherine Reilly is in charge of the prosecution.
Statement of U.S. Attorney Damian Williams on Guilty Verdicts Against Lev Parnas and Andrey KukushkinRead the Press Release
“A unanimous federal jury has found that Lev Parnas and Andrey Kukushkin conspired to manipulate the United States political system for their own financial gain. In order to gain influence with American politicians and candidates, they illegally funneled foreign money into the 2018 midterm elections with an eye toward making huge profits in the cannabis business. Campaign finance laws are designed to protect the integrity of our free and fair elections – unencumbered by foreign interests or influence – and safeguarding those laws is essential to preserving the freedoms that Americans hold sacred. I commend the career prosecutors of this Office’s Public Corruption Unit whose outstanding work has helped bring to justice those who sought to illicitly influence our government.”
Bronx Man Convicted of Possessing Ammunition in Connection with August 2020 ShootingRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that ROBERT GONZALEZ pled guilty today to possessing ammunition after having been convicted of a felony in connection with a shooting that took place in the vicinity of the 1800 block of University Avenue in the Bronx, New York, in August of 2020. GONZALEZ pled guilty before U.S. District Judge Valerie E. Caproni.
U.S. Attorney Damian Williams said: “Robert Gonzalez possessed ammunition in furtherance of a violent shooting. Today’s plea and conviction send the message that our Office is committed to bringing to justice those who perpetrate gun violence in our communities.”
As alleged in the Complaint, Indictment, and statements made in open court:
ROBERT GONZALEZ committed a shooting in the vicinity of the 1800 block of University Avenue in the Bronx on or about the evening of August 9, 2020. Law enforcement officers responded to the shooting after three 911 calls. When they arrived at the scene, law enforcement officers noticed two victims with gunshot wounds – one in the hand and another in the leg. The victims were attending a neighborhood block party that began around midnight and continued into the early hours of the morning.
Law enforcement officers identified ROBERT GONZALEZ as the shooter through, among other evidence, surveillance photographs and videos, which showed the shooter’s clothing and a unique-looking fanny pack around his torso, which matched surveillance images and videos of GONZALEZ from shortly before and after the shooting. Officers recovered a 9mm Luger shell casing from the vicinity of the shooting and found a fanny pack that matched the unique-looking fanny pack the shooter wore during a search of GONZALEZ’s apartment.
At the time of the August 9, 2020, shooting, GONZALEZ had been previously convicted of multiple felony offenses, including attempted criminal possession of a weapon, attempted robbery, and narcotics conspiracy.
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GONZALEZ, 34, of the Bronx, New York, pled guilty to one count of being a felon in possession of ammunition, in violation of 18 U.S.C. §§ 922(g)(1), 924(a)(2), and 2, which carries a maximum penalty of 10 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.
GONZALEZ is scheduled to be sentenced by Judge Caproni on February 7, 2022.
Mr. Williams praised the outstanding investigative work of the New York City Police Department, Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorney Brandon D. Harper is in charge of the prosecution.
U.S. Attorney Announces Indictment Charging Former President and Bookkeeper of Moving Company with Multimillion-Dollar Payroll Tax Fraud Scheme, and Related Guilty PleasRead the Press Release
Damian Williams, United States Attorney for the Southern District of New York, and Thomas Fattorusso, Acting Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the unsealing of a federal Indictment charging JOSEPH EUGENE LEMAY, a/k/a “Gene Lemay,” and JOEL LINGAT with criminal tax offenses. LEMAY is the former president of a company that provides moving and storage services (“Company-1”), and LINGAT is Company-1’s bookkeeper. LEMAY and LINGAT are alleged to have conspired to perpetrate a long-running scheme to evade more than approximately $7.8 million in federal payroll taxes owed by Company-1 and affiliated companies to the Internal Revenue Service (“IRS”). LEMAY is also alleged to have evaded his personal income taxes. LINGAT was previously arrested in this case; LEMAY self-surrendered to the federal courthouse today and is expected to be presented on the charges in the Indictment this afternoon. The case is assigned to U.S. District Judge Mary Kay Vyskocil.
Mr. Williams and Mr. Fattorusso also announced today the previously entered guilty pleas of SALMAN RAMI HAIM, former president of Company-1, and NISSIM FADIDA, current President of Company-1. Both HAIM and FADIDA previously admitted to participating in the payroll tax fraud conspiracy while employed by Company-1. The case against HAIM and FADIDA is assigned to U.S. District Judge Ronnie Abrams.
U.S. Attorney Damian Williams said: “As alleged, Gene Lemay and Joel Lingat conspired to defraud the United States and evade nearly $8 million in payroll taxes by creating sham companies and making it appear as though their company’s employees were actually employed by these fictitious companies. Lemay is also alleged to have engaged in criminal chicanery to evade personal income taxes. Now both men face federal charges for their alleged crimes.”
IRS-CI Acting Special Agent in Charge Fattorusso said: “Mr. Lemay and Mr. Lingat today stand accused of participating in a long-running conspiracy to hide millions of dollars in payroll from the IRS. This allegedly cost the American taxpayer millions of dollars in lost tax revenue. As alleged, these men, with others, went through extraordinary lengths to hide the money through a series of completely bogus companies. Today’s indictment, alongside the just announced guilty pleas of Mr. Haim and Mr. Fadida for their own roles in this scheme, demonstrate that IRS Criminal Investigation will continually endeavor to ensure honest taxpayers are protected from these types of criminal abuses.”
According to the allegations in the Indictment unsealed today and the criminal complaint previously filed against LINGAT (where LEMAY is identified as CC-1):[1]
From in or about 2010 through in or about December 2016, LEMAY, LINGAT, and other co-conspirators perpetrated a scheme to defraud the U.S. government of payroll and income taxes due and owing to the IRS by Company-1 and affiliated companies. As part of the criminal scheme, LEMAY, LINGAT, and their co-conspirators created sham companies, nominally owned by close associates or family members of LEMAY or others at Company-1; assigned (on paper only) foremen and movers working for Company-1 to the sham companies; and fraudulently made it appear that the sham companies were independent contractors, including by creating fake invoices by which the sham companies purportedly billed Company-1 for labor. Because the conspirators fraudulently made it appear that the labor was performed by independent contractors, Company-1 was able to deduct the cost of the labor as an expense on its tax returns, without withholding or paying over any payroll taxes to the IRS. Through the criminal scheme, Company-1 and affiliated companies evaded in excess of approximately $7.8 million in payroll taxes, including FICA and Medicare contributions, during the charged period.
LEMAY is also alleged to have evaded personal income taxes by receiving substantial personal income through an entity called GM3 Enterprises Inc (“GM3”); fraudulently deducting substantial personal expenses paid through GM3 as business expenses on GM3’s corporate tax returns; and significantly underreporting his true income and resulting tax liabilities on his personal tax returns, which LEMAY caused to be prepared and filed with the IRS.
LEMAY, 61, of Delray Beach, Florida, and LINGAT, 61, of Jersey City, New Jersey, are charged with one count of conspiracy to defraud the IRS, which carries a maximum sentence of five years in prison. LEMAY is also charged with two counts of tax evasion for the tax years 2014 and 2015, each of which also carry a maximum sentence of five years in person.
The charges in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
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Also announced today were the previously entered guilty pleas of SALMAN RAMI HAIM, former president of Company-1, and NISSIM FADIDA, current president of Company-1. As part of their guilty pleas, HAIM and FADIDA both admitted to participating in the payroll tax fraud conspiracy while employed at Company-1.
HAIM, 46, of Jersey City, New Jersey, pled guilty on May 9, 2019, before U.S. Magistrate Judge Ona T. Wang to one count of conspiring to fail to collect or pay over payroll taxes between approximately 2001 and 2016, in violation of 18 U.S.C. § 371, which carries a maximum sentence of five years in prison; one count of tax evasion for the tax years 2009 through 2016, in violation of 26 U.S.C. § 7201, which carries a maximum sentence of five years in prison; and one count of conspiring to produce false identification documents, in violation of 18 U.S.C. § 1028, which carries a maximum sentence of 15 years in prison.
FADIDA, 45, of East Brunswick, New Jersey, pled guilty on October 15, 2021, before U.S. District Judge Ronnie Abrams to one count of conspiring to defraud the IRS between approximately 2005 and December 2016, in violation of 18 U.S.C. § 371, which carries a maximum sentence of five years in prison; and one count of tax evasion for the tax years 2010 through 2013, in violation of 26 U.S.C. § 7201, which carries a maximum sentence of five years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the IRS-CI.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Jilan Kamal, Katherine Reilly, and Olga I. Zverovich are in charge of the prosecution.
[1] As the introductory phase signifies, the entirety of the text of the Indictment and the criminal complaint, and the description of the Indictment and criminal complaint set forth below, constitute only allegations, and every fact described should be treated as an allegation.
New York Litigation Funder and Fifth Member of $31 Million Dollar Trip-And-Fall Fraud Scheme Arrested and Charged in Manhattan Federal CourtRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced the unsealing of a Superseding Indictment charging ADRIAN ALEXANDER with conspiracy to commit mail and wire fraud, mail fraud, and wire fraud in connection with a scheme to obtain fraudulent insurance reimbursements and other compensation for fraudulent trip-and-fall accidents. ALEXANDER was arrested yesterday and will be presented today before United States Magistrate Judge Robert W. Lehrburger.
A prior Indictment in the case charged New York lawyers George Constantine and Marc Elefant and New York doctors Sady Ribeiro and Andrew Dowd for their participation in the fraud scheme. The Superseding Indictment adds ALEXANDER, who allegedly funded fraudulent lawsuits in furtherance of the trip-and-fall scheme, as the fifth individual charged in the case. The case is assigned to United States District Judge Sidney H. Stein.
U.S. Attorney Damian Williams said: “As alleged, a New York litigation financier has been implicated in this massive trip-and-fall fraud scheme, along with lawyers and doctors who were previously charged. The defendant is alleged to have knowingly financed scores of fraudulent lawsuits, preying upon the desperation of others for his own financial gain. Thanks to the efforts of the FBI, the defendant faces federal charges.”
According to the allegations in the Superseding Indictment[1]:
From in or about January 2013, up to and including in or about April 2018, ALEXANDER and his codefendants engaged in an extensive fraud scheme through which the defendants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents.
Fraud scheme participants recruited individuals (the “Patients”) to stage or falsely claim to have suffered trip-and-fall accidents at particular locations throughout the New York City area (the “Accident Sites”). In the course of the fraud scheme, scheme participants recruited more than 400 Patients. In the beginning, scheme participants would instruct Patients to claim they had tripped and fallen at a particular location, when in fact the Patients had suffered no such accidents. Eventually, at the direction of the lawyers who filed fraudulent lawsuits on behalf of the Patients, scheme participants began to instruct Patients to stage trip-and-fall accidents, i.e., to go to a location and deliberately fall. Common Accident Sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks, and purported “potholes.”
After the staged trip-and-fall accidents, Patients were referred to specific attorneys, including George Constantine and Marc Elefant, who would file personal injury lawsuits (the “Fraudulent Lawsuits”) against the owners of the Accident Sites and/or insurance companies of the owners of the accident sites (the “Victims”). The Fraudulent Lawsuits did not disclose that the Patients had deliberately fallen at the accident sites or, in some cases, had not fallen at all. During the course of the fraud scheme, the defendants, together with others known and unknown, attempted to defraud the Victims of more than $31 million.
The Patients were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors, including Andrew Dowd and Sady Ribeiro. The fraud scheme participants advised the Patients that if they intended to continue with their lawsuits, they were required to undergo surgery. As an incentive to getting surgery, the recruited Patients were offered a payment of typically between $1,000 and $1,500 after they completed surgery (“Post-Surgery Payments”). Patients generally were told to undergo two surgeries. Doctors in the fraud scheme, including Dowd and Ribeiro, were expected to, and in fact did, conduct these surgeries regardless of the legitimate medical needs of the Patients.
Members of the fraud scheme often recruited individuals who were extremely poor as Patients – individuals desperate enough to submit to surgeries in exchange for the small Post-Surgery Payments. For example, it was common for Patients to ask for food when they would appear for their intake meetings with the lawyers. Many of the Patients did not have sufficient clothing to keep them warm during the wintertime and had poor-quality shoes. Members of the fraud scheme also recruited Patients who were drug addicts. It was also common for scheme participants to recruit Patients from homeless shelters in New York City.
The Patients’ legal and medical fees were usually paid for by litigation funding companies (the “Funding Companies”), including a funding company owned by ALEXANDER, even if the Patient maintained medical coverage through an insurance company or a government-subsidized program. The Funding Companies also paid the fraud scheme organizers and participants referral fees, typically $1,000 to $2,500, for each Patient who signed a funding agreement. In exchange for funding Patients’ medical and legal costs, the Funding Companies charged the Patients high interest rates, sometimes up to 50% on medical loans and up to 100% on personal loans. The interest rates were so high that oftentimes the majority (if not all) of the proceeds that were awarded in the Fraudulent Lawsuits were paid to the Funding Companies, lawyers, doctors, and others, with the Patients receiving a much smaller percentage of the remaining recovery.
ALEXANDER’s participation in the fraud scheme, which included funding Fraudulent Lawsuits and unnecessary medical procedures at high interest rates, was extremely lucrative. For example, ALEXANDER had boasted to investors that his funding company had annual returns in excess of 30%.
In addition to owning one of the primary Funding Companies used in the fraud scheme, ALEXANDER owned an MRI facility that performed MRIs on many of the Patients.
ALEXANDER, 75, of New York, New York, is charged with conspiracy to commit mail and wire fraud, which carries a maximum sentence of 20 years in prison, mail fraud, which carries a maximum sentence of 20 years in prison, and wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
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Mr. Williams praised the outstanding investigative work of the New York FBI. Mr. Williams also thanked the National Insurance Crime Bureau for their assistance in the investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Nicholas Chiuchiolo, Nicholas Folly, and Alexandra Rothman are in charge of the prosecution.
The charges contained in the Superseding Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Superseding Indictment, and the description of the Superseding Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Former Pain Management Doctor Charged in Manhattan Federal Court with Sexually Abusing Patients Across Multiple States over the Course of over 15 YearsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that RICARDO CRUCIANI was arrested this morning and charged in connection with his sexual abuse of numerous pain management patients over the course of over 15 years. The Indictment unsealed today alleges that from at least in or about 2002 up to and including at least in or about 2017, CRUCIANI enticed and induced multiple victims to travel to his medical offices in New York, New York, Hopewell, New Jersey, and Philadelphia, Pennsylvania, to subject them to unlawful sexual abuse. CRUCIANI was arrested this morning and is expected to be presented later today before U.S. Magistrate Judge Robert W. Lehrburger in Manhattan federal court. The case is assigned to U.S. District Judge John P. Cronan in the Southern District of New York.
U.S. Attorney Damian Williams said: “Doctors like the defendant take an oath to do no harm. It is difficult to imagine conduct more anathema to that oath than exploiting patients’ vulnerability in order to sexually abuse them. As alleged, Ricardo Cruciani’s sexual abuse involved developing personal relationships with victims to engender trust, and prescribing addictive pain medication that caused his patients to become dependent on him as he engaged in a course of increasingly abusive conduct. The alleged pattern of abuse in this case is outrageous, and Cruciani now faces federal charges for it.”
If you believe you are a victim of the sexual abuse perpetrated by RICARDO CRUCIANI, please contact the United States Attorney’s Office for the Southern District of New York at (646) 372-0364, and reference this case.
According to the Indictment[1] unsealed today in Manhattan federal court:
CRUCIANI was a pain management doctor who treated patients from multiple states who suffered from, among other things, severe and chronic pain. Between at least in or about 2001 and in or about 2014, CRUCIANI was employed by and affiliated with a prominent medical hospital and medical center located in New York, New York, and maintained medical offices in New York, New York. Between at least in or about 2013 and in or about 2016, CRUCIANI was a practicing pain management doctor employed by and affiliated with a prominent medical hospital and medical center located in Hopewell, New Jersey, and maintained medical offices in Hopewell, New Jersey. Between at least in or about 2016 and in or about 2017, CRUCIANI was a practicing pain management doctor employed by and affiliated with a prominent medical hospital and university located in Philadelphia, Pennsylvania, and maintained medical offices in Philadelphia, Pennsylvania.
Over the course of at least approximately 15 years, between at least in or about 2002 and in or about 2017, CRUCIANI sexually abused numerous adult female patients who suffered from severe and chronic pain and were under his medical care as a pain management doctor. CRUCIANI exploited and leveraged his position of trust as a healthcare provider at prominent medical institutions, the significant pain suffered by the victims, and his ability to prescribe or withhold pain medication, including highly addictive opioids, so that he could sexually abuse his patients. In order for them to obtain prescription refills, CRUCIANI required victims to travel to his medical offices and other locations for in-person appointments. CRUCIANI enticed and induced victims to travel interstate at least in part for the purpose of subjecting them to unlawful sexual abuse.
CRUCIANI’s sexual abuse of victims involved developing personal relationships with victims to engender trust, and prescribing addictive pain medication that caused the victims to become dependent on CRUCIANI as he engaged in a course of increasingly abusive conduct. The abusive sexual conduct included, among other things, forcible kissing, touching victims’ breasts and genitals, oral sex acts, vaginal sexual intercourse, and attempted anal sexual intercourse.
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CRUCIANI, 63, of Wynnewood, Pennsylvania, is charged with five counts of enticing and inducing individuals to travel interstate to engage in illegal sexual activity, each of which carries a maximum sentence of 20 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 a judge.
Mr. Williams praised the outstanding investigative work of the Special Agents of the United States Attorney’s Office for the Southern District of New York.
This case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Jane Kim and Jacqueline Kelly are in charge of the prosecution.
The charges contained in the Indictment are merely accusations. 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 therein should be treated as an allegation. The defendant is presumed innocent unless and until proven guilty.
Former CEO, CFO, and VP of Email Security Company Charged with $50 Million Fraud SchemeRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that ROBERT BERNARDI, the founder, and former Chief Executive Officer of the Virginia-based email security company GigaMedia Access Corporation, d/b/a GigaTrust (“GigaTrust”), NIHAT CARDAK, GigaTrust’s former Chief Financial Officer, and SUNIL CHANDRA, GigaTrust’s former Vice President of Business Development, were charged in an Indictment in Manhattan federal court with participating in a scheme to defraud investors and lenders of millions of dollars through false and misleading misrepresentations, including fabricated bank statements and audit reports, and by impersonating a purported customer, auditor, and GigaTrust lawyer.
BERNARDI, CARDAK, and CHANDRA were arrested this morning. They will be presented later before Magistrate Judge Michael S. Nachmanoff in the United States District Court for the Eastern District of Virginia. The case is assigned to United States District Judge Paul G. Gardephe.
U.S. Attorney Damian Williams said: “As alleged, the defendants—the founder and other senior executives at GigaTrust—participated in a scheme to trick investors into providing the company millions of dollars. Today’s indictment alleging a fraud scheme of over $50 million ensures that they will be held accountable for their conduct.”
FBI Assistant Director-in-Charge Michael J. Driscoll said: “Luring investors under false pretenses and misappropriating their money for personal gain is exactly what Giga Trust’s defendants are charged with today. The money they allegedly made from this scheme totals tens of millions of dollars. No matter how lucrative schemes of this nature may appear from the start, they will ultimately result in federal criminal charges.”
According to the allegations in the Indictment[1] unsealed today in Manhattan federal court:
From in or about 2016 through at least in or about 2019, GigaTrust was a private company headquartered in Virginia that purported to be a market-leading provider of cloud-based content security solutions. BERNARDI founded GigaTrust and served as its CEO, while CARDAK and CHANDRA were GigaTrust’s CFO and Vice President of Business Development, respectively. The defendants devised a scheme to defraud investors and lenders by (a) fabricating and disseminating false and misleading bank account statements that overstated GigaTrust’s cash deposits; (b) fabricating and disseminating false and misleading audit materials that purported to have been issued by GigaTrust’s auditors and overstated GigaTrust’s performance; (c) forging and disseminating a false and misleading letter purporting to be from GigaTrust’s New York-based counsel; and (d) impersonating or causing others to impersonate a purported customer and auditor of GigaTrust on telephone calls with a prospective lender.
Specifically, BERNARDI sent fabricated audit materials to a New York-based investment firm, and BERNARDI and CARDAK used fabricated bank statements to obtain multiple rounds of loans and investments for GigaTrust, worth millions of dollars. After a New York-based bank (“Bank-1”), which had loaned GigaTrust $25 million, declared that GigaTrust had defaulted on the terms of its loan agreement, BERNARDI and CARDAK induced additional investments in GigaTrust through, among other things, forging a letter purporting to be from GigaTrust’s New-York based counsel. Shortly thereafter, while negotiating another $25 million deal with a lender (“Lender-1”), BERNARDI and CARDAK devised a scheme to impersonate a GigaTrust customer and auditor on requested diligence calls, which induced Lender-1 to make a $25 million loan to GigaTrust. BERNARDI recruited CHANDRA to pose as one of GigaTrust’s alleged customers on a call with Lender-1. BERNARDI and CARDAK also fabricated bank statements and sent them to Lender-1 right before closing the $25 million deal.
GigaTrust filed for Chapter 7 bankruptcy protection in the District of Delaware on or about November 27, 2019.
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BERNARDI, 68, and CARDAK, 51, both of Virginia, are each charged with one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison, one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison, one count of conspiracy to commit wire fraud affecting a financial institution, which carries a maximum sentence of 30 years in prison, and one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years’ imprisonment. CHANDRA, 80, of Virginia, is charged with one count of conspiracy to commit wire fraud affecting a financial institution, which carries a maximum sentence of 30 years in prison, and one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years’ imprisonment. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation in this case. Mr. Williams further thanked the Securities and Exchange Commission, which has filed a civil enforcement action against the defendants, for its cooperation and assistance in this investigation.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Peter J. Davis and Emily A. Johnson are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Brooklyn Man Charged with Enticement of Two 14-Year-Old ChildrenRead 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 arrest of FABRICE TONTISABO, a/k/a “Fabrice Williams” for persuading, inducing, enticing and coercing two 14-year-old minors to engage in sexual activity. TONTISABO was arrested this morning and will be presented later today before U.S. Magistrate Judge Robert W. Lehrburger in Manhattan federal court.
U.S. Attorney Damian Williams said: “As alleged, Fabrice Tontisabo engaged in abhorrent sexual activities with two 14-year-old children. We will continue to use every law enforcement asset available to protect our children, and we will investigate, prosecute, and punish those who engage in their exploitation.”
Acting HSI Special Agent-in-Charge Ricky J. Patel said: “As alleged, Sidbewende Fabrice Tontisabo preyed upon the most vulnerable members of society, innocent children. Through its investigation, HSI New York’s Human Trafficking Task Force was able to arrest Tontisabo and put an end to his alleged abuse. Working with our local, state, and federal partners, HSI New York utilizes its unique authorities and resources to prevent these predators from harming innocent victims.”
According to the Complaint[1] filed on September 9, 2021 in Manhattan federal court and unsealed today:
Between at least on or about October 2020, up to and including at least on or about March 2021, TONTISABO persuaded a 14-year-old minor (“Minor Victim-1”) to meet him in person on multiple occasions to engage in sexual activities with TONTISABO in exchange for cash, alcohol, and marijuana.
In addition, between at least on or about October 2019, up to and including at least on or about January 2020, TONTISABO persuaded another 14-year-old minor (“Minor Victim-2”) to meet him in person on multiple occasions to engage in sexual activities with TONTISABO in exchange for cash, alcohol, and marijuana.
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TONTISABO, 33, of Brooklyn, New York, is charged with two counts of enticement of a minor, which each carry a mandatory minimum sentence of 10 years in prison and a maximum sentence of life imprisonment. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the efforts of HSI. He added that the investigation is ongoing.
The prosecution is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Camille Fletcher and Kevin Mead are in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitutes only allegations, and every fact described therein should be treated as an allegation.
Bronx Gang Member Convicted of Two Attempted MurdersRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict yesterday against JOSE CABAN, a/k/a “Nene,” on four counts in a Superseding Indictment, including charges of violent crimes in aid of racketeering, and firearms offenses. CABAN was convicted after a four-day trial presided over by U.S. District Judge Valerie E. Caproni.
U.S. Attorney Damian Williams said: “Jose Caban participated in a violent gang. He helped shoot an 18-year-old who was paralyzed as a result, and he opened fire on a crowded street filled with children. Now convicted of his crimes, Caban will no longer be able to inflict harm on the people of this City.”
According to the Superseding Indictment and the evidence at trial:
The Jack Boyz are a criminal enterprise involved in committing numerous acts of violence, including shootings, in and around the Bronx. Members and associates of the Jack Boyz engage in violence to retaliate against rival gangs, and to promote the standing and reputation of the Jack Boyz.
On June 19, 2018, near East 136th Street and Willis Avenue in the Bronx, New York, CABAN helped another gang member attempt to murder a rival, who was shot in the spine and paralyzed from the chest down.
On February 8, 2019, CABAN fired a gun five times on a street crowded with innocent bystanders, including children, in an attempt to murder a rival near East 135th Street and Willis Avenue in the Bronx.
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CABAN, 22, of the Bronx, New York, was convicted on four counts: (1) two counts of attempted murder and assault with a dangerous weapon in aid of racketeering, each of which carries a maximum prison term of 20 years; and (2) two counts of using and carrying a firearm during, and possessing a firearm in furtherance of, a crime of violence, each of 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.
CABAN is scheduled to be sentenced on February 17, 2022.
Mr. Williams praised the outstanding investigative work of the New York City Police Department and Homeland Security Investigations.
The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jamie E. Bagliebter, Lindsey Keenan, Justin V. Rodriguez, and Mathew Andrews are in charge of the prosecution.
Australian National Sentenced to More Than 9 Years in Prison for Multimillion-Dollar Text-Messaging Consumer Fraud SchemeRead the Press Release
Damian Williams, United States Attorney for the Southern District of New York, announced that MICHAEL PEARSE, an Australian national who was extradited to the United States from Australia in January 2021, was sentenced today to 109 months in prison for his participation in a fraudulent scheme to charge hundreds of thousands of mobile phone customers millions of dollars in monthly fees for unsolicited, recurring text messages without the customers’ knowledge or consent – a practice the conspirators referred to as “auto-subscribing.” PEARSE played a key role in the scheme as CEO of a company that created the computer program that was used to enroll victims into the text message services without their knowledge or consent. PEARSE previously pled guilty before United States District Judge Analisa Torres, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Michael Pearse played a vital role in an international consumer fraud conspiracy that swindled hundreds of thousands of mobile phone customers out of millions, and ‘earned’ Pearse and his co-conspirators at least $50 million, of which Pearse pocketed more than $10 million. Thanks to IRS Criminal Investigation and the FBI, as well as our international partners, Pearse was apprehended, prosecuted, and now sentenced for his crime.”
According to the allegations contained in the Indictment, evidence presented at the trial of co-conspirator Darcy Wedd, court filings, and statements made during plea proceedings:
From in or about 2011 through in or about 2013, PEARSE and his co-conspirators engaged in a multimillion-dollar scheme to defraud U.S.-based consumers (and others) by placing unauthorized charges for premium text messaging services on consumers’ cellular phone bills. To carry out the scheme, PEARSE and others caused unsolicited and recurring text messages to be sent to mobile phone users containing content such as horoscopes, celebrity gossip, or trivia facts. The victims of the fraud scheme never ordered these services, which were known in the industry as premium text messaging (“PSMS”) services, but were fraudulently “auto-subscribed” and billed for them at a rate of $9.99 per month. The $9.99 charge recurred each month unless and until consumers noticed the charges and took action to unsubscribe. Even then, consumers’ attempts to dispute the charges and obtain refunds were often unsuccessful.
During the relevant period, co-conspirator Lin Miao operated a company called Tatto Inc., a/k/a “Tatto Media” (“Tatto”), that offered PSMS services to mobile phone customers. PEARSE was the CEO of a company called Bullroarer, which was affiliated with Tatto. To enable Tatto to auto-subscribe consumers to unwanted PSMS services, PEARSE and co-defendant Yongchao Liu, a/k/a “Kevin Liu,” who worked as a Java Development Engineer for Bullroarer, agreed to build a computer program that could spoof the required consumer authorizations – i.e., a program that could generate the text message correspondence that one would ordinarily see with genuine PSMS subscriptions. PEARSE and Liu agreed to build the program (the “Auto-Subscription Platform”), which was operational by in or about the middle of 2011. PEARSE, Liu, and Miao then used the Auto-Subscription Platform to fraudulently auto-subscribe hundreds of thousands of mobile phone customers, using phone numbers provided by co-conspirators at Mobile Messenger, a U.S. aggregation company operated by Darcy Wedd that served as a middleman between content providers such as Tatto and mobile phone carriers. Through their successful orchestration of the fraudulent scheme, PEARSE and his co-conspirators generated more than $50 million in fraud proceeds for themselves and PEARSE personally pocketed more than $10 million.
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In addition to the prison sentence, PEARSE was ordered PEARSE to forfeit $10,162,937.96, as well as his interest in three real properties in Australia and other assets, representing proceeds traceable to the fraud that PEARSE personally obtained.
To date, nine other defendants – Liu, Miao, Andrew Bachman, Michael Pajaczkowski, Erdolo Eromo, Jonathan Murad, Francis Assifuah, Jason Lee, and Christopher Goff – have pled guilty in connection with their participation in the fraud. Two additional defendants, Darcy Wedd and Fraser Thompson, were convicted in 2017 following jury trials.
Mr. Williams praised the outstanding investigative work of the Internal Revenue Service, Criminal Investigation, and the Federal Bureau of Investigation. In addition, Mr. Williams thanked law enforcement partners in Australia, as well as the U.S. Department of Justice’s Office of International Affairs of the Department’s Criminal Division, for their support and assistance with the extradition of PEARSE and codefendant Liu.
This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Jilan Kamal and Olga I. Zverovich are in charge of the prosecution.
U.S. Attorney Announces Charges Against Two Defendants Relating to Armed Robbery in Ossining That Resulted in the Death of A Co-ConspiratorRead the Press Release
Damian Williams, the U.S. Attorney for the Southern District of New York, Michael J. Driscoll, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Kevin Sylvester, Chief of the Village of Ossining Police Department (“Ossining PD”), announced the unsealing yesterday of a four‑count indictment charging MATTHEW DUSABLON, a/k/a “Mateo,” a/k/a “Murk,” and JAHAIRA MEJIA with robbery and obstruction of justice. The defendants were arrested yesterday and presented before United States Magistrate Judge Judith C. McCarthy in White Plains federal court.
U.S. Attorney Damian Williams said: “As alleged in the Indictment, the defendants participated in a gunpoint robbery that resulted in the death of a co-conspirator and then worked to cover their tracks. Thanks to the extraordinary and tenacious work of our partners at the FBI and the Ossining Police Department, the defendants are now facing federal charges for their alleged crimes.”
FBI Assistant Director Michael J. Driscoll said: “As if the robbery at the center of this case wasn’t bad enough, the suspects allegedly decided to take it a step further and obstruct law enforcement’s ability to investigate it. They failed at both. Now, thanks to the outstanding work of the FBI Westchester County Safe Streets Task Force and our many partners, the suspects we arrested will serve as cautionary examples to others – trying to cover up your crimes only leads to more criminal charges.”
Ossining Police Chief Kevin Sylvester said: “Our community has waited patiently for resolution of this case and I’m relieved that we can now share the results of law enforcement professionals at the federal, state, and local levels all working seamlessly to restore our neighbors’ sense of peace and security.”
As alleged in the Indictment unsealed yesterday[1], and other publicly available documents:
On December 6, 2020, DUSABLON, MEJIA, and at least three other co-conspirators committed a gunpoint robbery in Ossining, New York, during which one of the co-conspirators brandished a firearm. That same co-conspirator died from injuries sustained during the robbery victim’s flight from the scene of the robbery.
DUSABLON and MEJIA later concealed a jacket that another co-conspirator was wearing during the robbery and deleted information from their cell phones and social media accounts in order to obstruct the federal investigation of the December 6, 2020, robbery. DUSABLON also directed a co-conspirator to erase information from the co-conspirator’s cellphone and social media accounts in order to obstruct the federal investigation of the December 6, 2020, robbery.
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DUSABLON, 27, and MEJIA, 35, both of the Bronx, are each charged with Hobbs Act robbery conspiracy and Hobbs Act robbery, in violation of 18 U.S.C. §§ 1951 and 2 (Counts One and Two); a related firearms offense, in violation of 18 U.S.C. §§ 924(c) and 2 (Count Three); and obstruction of justice, in violation of 18 U.S.C. § 1512(c)(2) (Count Four). Counts One, Two, and Four each carry a maximum term of 20 years in prison. Count Three carries a maximum term of life in prison and a mandatory minimum term of seven years in prison that must run consecutive to any other term of imprisonment imposed. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the OPD and the FBI’s Westchester Safe Streets Task Force, which comprises Special Agents and Task Force Officers from the FBI, U.S. Probation, New York State Police, New York State Department of Corrections and Community Supervision, the New York City Police Department, Westchester County Police Department, Westchester County District Attorney’s Office, Putnam County Sheriff’s Department, and the Yonkers, Mount Vernon, White Plains, New Rochelle, Peekskill, Greenburgh, Clarkstown, and Ramapo Police Departments.
The case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Benjamin A. Gianforti is in charge of the prosecution.
The charges contained in the Indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
U.S. Attorney Announces Settlement of Civil Fraud Lawsuit Against Garment Manfacturer and Its Owner for Fraudulently Underreporting Value of Imported Goods to Evade Customs DutiesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Frank Russo, Director, Field Operations, New York, U.S. Customs and Border Protection (“CBP”), announced today that the United States settled a civil fraud lawsuit against QUEEN APPAREL NY, INC. (“QUEEN”), a defunct manufacturer and importer of apparel, and HANK HYUNHO CHOI (“CHOI”), the sole owner of QUEEN, for defrauding the United States by knowingly evading customs duties owed on imported goods. Specifically, the Government alleges that for years QUEEN, with CHOI’s knowledge, repeatedly falsified customs forms by undervaluing the garments it manufactured overseas and then imported into the United States. As part of the settlement, approved today in Manhattan federal court by U.S. District Judge George B. Daniels, QUEEN and CHOI made admissions regarding their conduct, agreed to pay $50,000 to the United States, and agreed, among other things, to refrain from acting as the importer of record for the purpose of entering merchandise into the United States.
U.S. Attorney Damian Williams said: “Queen and its owner engaged in a fraudulent scheme to cheat the Government of customs duties owed on imported garments. This Office remains committed to combatting customs fraud. Manufacturers, importers, and their owners will be held responsible when they evade customs duties by lying about the value of the goods they bring into the United States.”
HSI Special Agent in Charge Peter C. Fitzhugh said: “Queen Apparel NY underreported the value of garments imported in the United States for the sole purpose of evading customs duties, resulting in a significant financial loss to the US government. Import fraud affects the integrity of our economy and trade, so HSI makes a priority to investigate any organization who chooses profits over honesty. Working closely with our partners at U.S. Customs and Border Protection, together we ensure anything that comes through our borders is in compliance with U.S. law.”
CBP Director of New York Field Operations Frank Russo said: “As global supply chains grow more complex, it is important for American businesses to know their suppliers and be confident of their integrity. The outcome of this case is a testament to the dedication of our partners in the United States Attorney’s Office, Homeland Security Investigations, and the men and women of CBP in enforcing our nation’s trade laws and holding accountable those perpetrating this type of fraud.”
QUEEN is a defunct New York-based manufacturer and importer of garments. While in business, QUEEN manufactured and imported garments for third parties who would then sell those garments through department stores and national retail chains in the United States. CHOI was the sole owner of QUEEN and was involved in the management and operations of the business.
The Complaint previously filed in Manhattan federal court alleges that from 2009 to 2013, QUEEN and CHOI manufactured garments overseas, imported those garments into the United States, and then repeatedly and falsely undervalued those garments on customs forms in order to evade the payment of lawful duties to the United States.
As part of the settlement, QUEEN and CHOI admit, acknowledge, and accept responsibility for the following conduct:
- QUEEN manufactured garments and imported them into the United States for various wholesalers. CHOI was the sole owner of QUEEN and was involved in the management and operations of QUEEN, including the importing of goods.
- QUEEN was responsible for paying any import duties owed to the United States for garments manufactured abroad and imported into the United States by QUEEN.
- During the relevant time period, and at CHOI’s direction, QUEEN repeatedly undervalued the garments it imported into the United States by making false statements in entry documents and commercial invoices that it presented to CBP. As a result of these false valuations, QUEEN underpaid customs duties that were due and owing to the United States.
On March 26, 2019, the United States settled a related civil fraud lawsuit against Byer California, Inc., a wholesaler that used QUEEN to manufacture and import garments from Vietnam. The conduct in this matter was first brought to the attention of federal law enforcement by a whistleblower who filed a lawsuit under the False Claims Act.
Mr. Williams praised the investigative work of HSI on this case. He also thanked CBP for its assistance.
This case is being handled by the Office’s Civil Frauds Unit. Assistant United States Attorney Jacob Bergman is in charge of the case.
Member of $4 Million National Luxury Stolen Car Ring Sentenced to Five Years in PrisonRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that LASHAUMBA RANDOLPH was sentenced today to 60 months in prison for providing fake titles and other fraudulent vehicle documentation used to defraud car buyers as part of a national stolen car ring involving approximately 60 stolen luxury cars, including Ferraris, Lamborghinis, and Corvettes, worth more than $4 million. RANDOLPH previously pled guilty to conspiracy to commit wire fraud, and was sentenced today before U.S. District Judge Cathy Seibel.
All defendants have pled guilty and RANDOLPH is the ninth defendant sentenced to date. Earlier in the case, Judge Seibel sentenced eight co-defendants for their roles in the $4 million stolen car ring. CLIPHAS BELFON, a/k/a “Cliff,” who supplied from Florida many of the stolen cars sold by the ring, was sentenced to 52 months in prison on May 27, 2021. COLIN BURNETT, a/k/a “Greg,” who made fraudulent documentation for the cars, was also sentenced to 52 months in prison on October 6, 2021. BESAR ISMAILI, who supplied, stored, and sold stolen cars to secondhand buyers, was sentenced to 42 months in prison on April 20, 2021. ROBERT PINSKY, a supplier of stolen cars and false vehicle documentation, was sentenced to 40 months in prison on July 9, 2021. ANTONIO SANTIAGO, another Florida supplier of stolen cars, was sentenced to 30 months in prison on January 21, 2020. CHARLES WALTON, a Michigan-based supplier of stolen cars, was sentenced to 21 months in prison on August 27, 2020. STEVEN KLEIN, who provided financing for the scheme and resold stolen cars to secondhand buyers, was sentenced to 18 months in prison on June 11, 2021. NICHOLAS DIXON, who transported some of the stolen cars, was sentenced to time served on September 10, 2020.
As a result of the investigation, law enforcement recovered more than 30 stolen cars, and the defendants have already paid more than $443,000 in combined restitution to victims of the stolen car ring, forfeiture, and fines.
U.S. Attorney Damian Williams said: “These defendants used sophisticated methods to traffic scores of stolen luxury cars worth more than $4 million, stealing from rightful owners and defrauding buyers and state departments of motor vehicles. This unacceptable crime harms car owner victims, muddies up car records relied upon by the public, and also imposes hidden costs on the public, including anyone paying for car insurance. It will not be tolerated.”
According to the allegations in the Indictment, as well as other public documents and court proceedings:
From October 2017 through November 2018, MARVIN WILLIAMS, CLIPHAS BELFON, a/k/a “Cliff,” COLIN BURNETT, a/k/a “Greg,” NICHOLAS DIXON, a/k/a “Robbie,” BESAR ISMAILI, STEVEN KLEIN, ROBERT PINKSY, LASHAUMBA RANDOLPH, ANTONIO SANTIAGO, and CHARLES WALTON operated a sophisticated, interstate stolen car ring, during which they (1) obtained stolen cars from, among other places, Michigan and Florida; (2) transported the stolen cars to, among other places, the Southern District of New York and Connecticut, for resale; (3) created and/or obtained false titles, registrations, and temporary license plates for the stolen cars; (4) used the false car records to deceive car buyers and the South Dakota Division of Motor Vehicles; and (5) used online markets, such as eBay, to solicit buyers of the stolen cars in various states. Through this extensive criminal scheme, the co-conspirators obtained, transported, and sold or attempted to sell more than 60 cars worth, in total, more than $4 million.
To carry out the stolen car ring, its members performed multiple and various roles. Some members stole and/or obtained luxury cars from the rightful, original owners, including dealerships and car rental businesses in Florida and Michigan. Others assisted in transporting the cars from Florida and Michigan to, among other places, New York or Connecticut. Others provided financing and assisted in purchasing or finding buyers for stolen cars. Others attempted to conceal the scheme from or deceive car buyers, law enforcement, and the SDDMV by “re-VINning cars,” and using fraudulent documents, such as fraudulent titles and VIN stickers, to acquire new titles and registrations for the stolen cars, making it appear as if the stolen cars were not, in fact, stolen.
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RANDOLPH, 46, of Atlanta, Georgia, pled guilty on February 2, 2021 to conspiring to commit wire fraud from in or about October 2017 through in or about November 2018. In addition to the prison term, RANDOLPH was sentenced today to three years of supervised release, and ordered to pay forfeiture of $9,500 and restitution of 26,098.47.
BELFON, 28, of Miami, Florida, pled guilty on May 14, 2020, to conspiring to receive, possess, and sell stolen cars from in or about October 2017 through in or about November 2018, and was sentenced on May 27, 2021 to 52 months in prison, and forfeiture of $17,000.
BURNETT, 30, of Atlanta, Georgia, pled guilty on September 15, 2020, to conspiring to receive, possess, and sell stolen cars from in or about October 2017 through in or about November 2018, and was sentenced on October 6, 2021 to 52 months in prison, forfeiture of $8,577, and restitution of $24,991.24.
ISMAILI, 40, of Waterbury, Connecticut, pled guilty on December 22, 2020 to conspiring to commit wire fraud from in or about October 2017 through in or about November 2018, and was sentenced on April 20, 2021 to 42 months in prison, forfeiture of $76,000, and restitution of $393,329.96.
PINSKY, 52, of Howell, New Jersey, pled guilty on March 12, 2020 to conspiring to receive, possess, and sell stolen cars from in or about October 2017 through in or about November 2018, and was sentenced on July 9, 2021 to 40 months in prison, forfeiture of $77,000, and restitution of $51,444.08.
SANTIAGO, 38, of Pompano Beach, Florida, pled guilty on June 11, 2019 to conspiring to receive, possess, and sell stolen cars from in or about October 2017 through in or about November 2018, and was sentenced on January 21, 2020 to 30 months in prison, forfeiture of $22,500, and restitution of $66,671.91.
WALTON, 35, of Detroit, Michigan, pled guilty on March 17, 2020 to conspiring to receive, possess, and sell stolen cars from in or about October 2017 through in or about November 2018, and was sentenced on August 27, 2020 to 21 months in prison, forfeiture of $36,000, and restitution of $41,365.33.
KLEIN, 58, of Easton, Connecticut, pled guilty on March 3, 2021 to conspiring to commit wire fraud, and was sentenced on June 11, 2021 to 18 months in prison, forfeiture of $70,000, restitution of $240,000, and a fine of $15,000.
DIXON, 46, of Tamarac, Florida, pled guilty on May 7, 2020 to receiving a stolen car, and was sentenced on September 10, 2020 to time served, forfeiture of $34,050, and restitution of $6,849.59.
WILLIAMS, 35, of Torrington, Connecticut, pled guilty on October 11, 2019, and is awaiting sentencing.
Mr. Williams praised the excellent work of the Federal Bureau of Investigation and the New York State Police.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Emily Deininger and David Felton are in charge of the prosecution.
Defendant Sentenced to 23 Years in Prison for 2011 MurderRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that MICHAEL CASTILLO, a/k/a “Squirrel,” was sentenced by U.S. District Judge John G. Koeltl to 276 months in prison for the March 10, 2011 murder of Hector Arias in the Bronx, New York.
U.S. Attorney Damian Williams said: “In 2011, Michael Castillo shot and killed Hector Arias in cold blood in front of his fiancée and her young child. Today’s lengthy sentence shows that law enforcement will never give up on murder victims and their loved ones, no matter how long it takes to achieve justice.”
According to the allegations in the Indictment and other filings and statements made in court:
CASTILLO was a member of a conspiracy to distribute marijuana centered near 193rd Street and Broadway in Manhattan. CASTILLO was hired by the leader of the conspiracy, DAVID ESPINAL, a/k/a “D-Block,” to kill Hector Arias, the leader of a rival marijuana business operating in the same area. On March 10, 2011, CASTILLO shot and killed Arias near 712 East Gun Hill Road in the Bronx, New York. Arias’s fiancée and her eight year-old child witnessed the murder. CASTILLO and ESPINAL’s murder plot arose out of the rivalry between ESPINAL and Arias’s two marijuana businesses. After CASTILLO completed the murder, ESPINAL paid him in cash.
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In addition to his prison sentence, CASTILLO, 38, was sentenced to five years of supervised release.
On or about December 8, 2020, CASTILLO’s co-defendant, ESPINAL, pleaded guilty to conspiring to kill Arias, among other offenses. During his guilty plea, ESPINAL admitted to hiring a hitman to kill Arias.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation in this case.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jamie Bagliebter, Maurene Comey, Peter J. Davis, Scott Hartman, Lindsey Keenan and Jacqueline Kelly are in charge of the prosecution.
California Man Pleads Guilty to Making Threats Directed Against A Journalist Relating to the Outcome of the 2020 Presidential ElectionRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced today that ROBERT LEMKE pled guilty to making threatening interstate communications to a New York City-based family member of a journalist (the “Journalist”), citing the Journalist’s statements about the outcome of the 2020 U.S. presidential election. LEMKE pled guilty today before U.S. District Judge Alvin K. Hellerstein.
U.S. Attorney Damian Williams stated: “Robert Lemke was frustrated with the result of the 2020 Presidential Election. Rather than attempting to effect change through legal discourse or any of the other freedoms of expression that all Americans enjoy, he instead sent threatening messages to the family member of a journalist. Inevitably, elections result in frustrations for some – that is part of the political process – but trying to instill fear in others by threat will not be tolerated by law enforcement.”
According to the allegations in the Complaint, Superseding Indictment, and other documents in the public record, as well as statements made in public court proceedings:
From November 2020 through early January 2021, the defendant sent threatening electronic and audio messages to approximately 50 victims, including journalists and politicians, targeting those individuals as a result of their statements expressing that then-President Trump had lost the 2020 presidential election. On January 6, 2021, the same day that individuals purporting to protest the 2020 presidential election gathered in Washington, D.C. and stormed the Capitol Building, LEMKE sent a series of these threatening text messages to journalists, members of Congress, other politicians, and their families.
As the attack on the Capitol Building was ongoing, LEMKE sent threatening text messages to a relative of the Journalist, stating: “[The Journalist’s] words are putting you and your family at risk. We are nearby, armed and ready. Thousands of us are active/retired law enforcement, military, etc. That’s how we do it.”
At approximately the same time that LEMKE was sending threats directed at the Journalist, LEMKE also sent threats to the brother of a New York City-based U.S. Congressman (the “Congressman”), citing the Congressman’s statements about the result of the 2020 presidential election. LEMKE’s text messages, which included a picture of a home in the same neighborhood as the home of the Congressman’s brother, stated:
Your brother is putting your entire family at risk with his lies and other words. We are armed and nearby your house. You had better have a word with him. We are not far from his either. Already spoke to [the Congressman’s son] and know where his kids are.
. . . your words have consequences. Stop telling lies; Biden did not win, he will not be president. We are not[] white supremacists. Most of us are active/retired law enforcement or military. You are putting your family at risk. We have armed members near your home . . . . . Don’t risk their safety with your words and lies.
LEMKE acquired and used at least three different phone numbers and various electronic accounts to mask his identity when sending threats to his victims. LEMKE was not in fact affiliated with law enforcement or the U.S. military as he claimed in some of his threats. On or about November 7, 2020, LEMKE posted to Facebook: “Folks. Be ready for war. Trump has refused to cede. Evidence shows fraud occurred and the Supreme Court cases will be successful. We blockchained and watermarked ballots in 16 states. Trump will prevail.[] Spread this message. . . . FAITH my fellow Republicans. Do not give up.”
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ROBERT LEMKE, 36, of Bay Point, California, pled guilty to one count of making threatening interstate communications, which carries a maximum sentence of five years in prison. LEMKE is scheduled to be sentenced by Judge Hellerstein on December 14, 2021.
The maximum potential sentence 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 the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the Federal Bureau of Investigation (“FBI”), the New York City Police Department, and over 50 other federal, state, and local agencies. Mr. Williams also thanked the U.S. Attorney’s Office for the Northern District of California and the FBI’s San Francisco Field Office for their assistance.
The case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys Kimberly J. Ravener and Kyle A. Wirshba are in charge of the prosecution.
Aquilino Torres Sentenced to over 24 Years in Prison for Brutal Kidnapping of Mother and ChildRead the Press Release
Damian Williams, United States Attorney for the Southern District of New York, announced today that AQUILINO TORRES was sentenced to 292 months in prison for his kidnapping and stalking of an adult woman (“Victim-1”) and the kidnapping of her seven-year-old son (“Minor Victim-1”) in or around October 2020. TORRES was convicted following a one-week jury trial in July 2021 before U.S. District Judge Denise L. Cote, who imposed today’s sentence.
U.S. Attorney Damian Williams said: “Aquilino Torres carried out a brutal kidnapping of a 7-year-old child and his mother, and threatened to kill the child. He held his victims captive and physically abused both mother and child. Thanks to the FBI and NYPD, Torres was apprehended, prosecuted, and convicted of these horrific crimes, and has now been sentenced to a lengthy prison term.”
According to court documents and the evidence presented at the trial of TORRES:
On or about October 5, 2020, TORRES texted and called Victim-1 hundreds of times, including a text threatening to “kick [Minor Victim-1’s] teeth out.” Later that night, TORRES took Victim-1 and Minor Victim-1 to a motel in the Bronx, where he hit Minor Victim-1 in the face and assaulted Victim-1, breaking both sides of her jaw. While TORRES assaulted Victim-1, he told her that he would hang Victim-1 and that Minor Victim-1 would be found dead in the river. TORRES then had sex with Victim-1 against her will. For the next five days, TORRES held Victim-1 and Minor Victim-1 against their will at an apartment in Washington Heights, without medical treatment for Victim-1’s broken jaw. On or about October 10, 2020, Victim-1 and Minor Victim-1 escaped from the apartment and were admitted to a hospital shortly thereafter. In response to their escape, TORRES once again sent Victim-1 hundreds of threatening text messages and called Victim-1 hundreds of times. For example, TORRES texted Victim-1, telling her that he had put GPS on her phone and that, if he made the decision to go looking for her, “there won’t be turning back.” TORRES then followed through on those threats and attempted to track down Victim-1 and also posted nude photographs of Victim-1 on the internet.
At the time of the events described above, TORRES had absconded from parole supervision, having been placed on such supervision following a 2014 New York State conviction for second degree assault against the mother of TORRES’s children, who was then pregnant.
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TORRES, 27, was found guilty after trial of (i) one count of kidnapping, in violation of 18 U.S.C. §§ 1201(a)(1) and (b); (ii) one count of kidnapping of a minor, in violation of 18 U.S.C. §§ 1201(a)(1), (b), and (g); and (iii) one count of stalking, in violation of 18 U.S.C. §§ 2261A(2)(A) and (B), 2261(b)(3), and 2265A.
Mr. Williams praised the outstanding investigative work of the FBI-NYPD Violent Crimes Task Force.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys David Robles, Sarah Kushner, and Andrew Dember are in charge of the prosecution.
Four Defendants Charged in $7.6 Million COVID-19 Fraud SchemeRead 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 Office of the Federal Bureau of Investigation (“FBI”), and Amaleka McCall-Brathwaite, Special Agent in Charge, U.S. Small Business Administration, Office of Inspector General (“SBA-OIG”), announced today the unsealing of a complaint charging JACOB CARTER, QUADRI SALAHUDDIN, ANWAR SALAHUDDIN, and CHRISTAL RANSOM with conspiracy to commit wire fraud, wire fraud, false statements, and aggravated identity theft in connection with a scheme to defraud the U.S. Small Business Administration (“SBA”), resulting in a loss to the SBA of more than $7.6 million. The defendants were arrested this morning. QUADRI SALAHUDDIN and ANWAR SALAHUDDIN will be presented this afternoon before United States Magistrate Judge Andrew E. Krause in White Plains federal court. JACOB CARTER will be presented this afternoon in the United States District Court for the Northern District of Texas. CHRISTAL RANSOM will be presented later today in the United States District Court for the Central District of California.
U.S. Attorney Damian Williams said: “As alleged, the defendants schemed to steal taxpayer-funded resources intended for small businesses in need of assistance during the pandemic. My Office will continue to investigate and prosecute those who would illegally seek to profit from a national emergency.”
FBI Assistant Michael J. Driscoll said: “Today’s defendants have become the latest in line to be charged for SBA loan fraud as a result of their alleged conduct during the COVID-19 pandemic. As this behavior continues to be uncovered, the FBI will continue to respond to illegal activity with appropriate legal action.”
As alleged in the Complaint:[1]
The SBA is a federal agency of the Executive Branch that administers assistance to American small businesses. This assistance includes making direct loans to applicants through the Economic Injury Disaster Loan (“EIDL”) Program. In response to the COVID-19 pandemic, Congress expanded SBA’s EIDL Program to provide small businesses with low-interest loans of up to $2 million prior to in or about May 2020 and up to $150,000 beginning in or about May 2020, in order to provide vital economic support to help overcome the loss of revenue small businesses are experiencing due to COVID-19. Applicants seeking a loan under the EIDL program were also now permitted to request and receive an advance of approximately $1,000 per employee, for an amount up to $10,000, which the SBA has generally provided while the loan application was pending.
From March through July 2020, JACOB CARTER, QUADRI SALAHUDDIN, ANWAR SALAHUDDIN, and CHRISTAL RANSOM used the identities of more than 1,000 other individuals (the “Applicants”) to submit more than 1,000 online applications to the SBA, seeking over $10 million of funds through the SBA’s EIDL Program. (the “EIDL Applications”). In connection with the EIDL Applications, CARTER, QUADRI SALAHUDDIN, ANWAR SALAHUDDIN, and RANSOM falsely represented to the SBA, among other things, that the Applicants were the owners of businesses with 10 or more employees. Based on the fraudulent EIDL Applications, the SBA made advance payments of more than $7.6 million to the Applicants, who often then kicked back a portion of the advance payments to CARTER, QUADRI SALAHUDDIN, ANWAR SALAHUDDIN, and RANSOM.
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JACOB CARTER, 35, of Capitol Heights, Maryland, QUADRI SALAHUDDIN, 25, and ANWAR SALAHUDDIN, 35, of Mount Vernon, New York, and CHRISTAL RANSOM, 44, of Los Angeles, California, are each charged with (1) conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, (2) wire fraud, which carries a maximum sentence of 20 years in prison, (3) false statements, which carries a maximum sentence of five years in prison, and (4) aggravated identity theft, which carries a mandatory two-year consecutive sentence.
The maximum potential sentences in these cases are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the outstanding work of the FBI and the SBA-OIG.
The case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Jeffrey C. Coffman and Courtney Heavey are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitutes only allegations, and every fact described therein should be treated as an allegation.
Former Godfather of Black Stone Gorilla Gang Sentenced to 12 Years in PrisonRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that MICHAEL DELAGUILA, a/k/a “Grizz,” was sentenced today to 12 years in prison in connection with his leadership of the Black Stone Gorilla Gang, a violent street gang that operated in New York City and elsewhere, and his participation in narcotics trafficking and firearms offenses. On May 26, 2021, DELAGUILA pled guilty to narcotics conspiracy and a firearms offense before U.S. District Judge Jesse M. Furman, who also imposed today’s sentence.
U.S. Attorney Damian Williams said: “Michael Delaguila was one of the Godfathers of a notoriously violent and lawless gang that terrorized communities across New York City and elsewhere. Delaguila recruited other individuals into the gang and authorized acts of violence and drug trafficking in New York City for years. Today’s lengthy sentence sends an important message to gang members who commit crimes that they will be apprehended and prosecuted to the fullest extent of the law.”
As alleged in the Indictment and based on statements made in open court:
MICHAEL DELAGUILA, a/k/a “Grizz,” was previously one of the Godfathers of the Black Stone Gorilla Gang, a racketeering enterprise that operated principally in the New York City metropolitan area and in the jails and prisons of New York City and the State of New York. In order to enrich the enterprise, preserve and protect the power of the enterprise, and enhance its criminal operations, BSGG members and associates committed, conspired, attempted, and threatened to commit acts of violence, including murder and assaults; distributed and possessed with intent to distribute narcotics; committed robberies; engaged in bank fraud and wire fraud; and obtained, possessed, and used firearms. BSGG members also evaded prosecution by law enforcement authorities through acts of intimidation and violence against potential witnesses to crimes committed by the gang. DELAGUILA accepted responsibility for participating in a conspiracy to distribute quantities of cocaine, heroin, and cocaine base, and for using and carrying firearms in furtherance of drug trafficking.
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In addition to his prison term, MICHAEL DELAGUILA, 30, of the Bronx, was sentenced to four years of supervised release.
Mr. Williams praised the outstanding investigative work of the New York City Police Department, the Drug Enforcement Administration, Homeland Security Investigations, the New York City Department of Corrections, and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Danielle R. Sassoon, Andrew K. Chan, and Brandon D. Harper, and Special Assistant United States Attorney Jaclyn M. Wood, are in charge of the prosecution.
Bronx Gang Member Sentenced for 2018 Playground Shooting of A 13-Year-OldRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that MARVIN GAMONEDA, a/k/a “June,” was sentenced today to 13 years in prison in connection with a shooting in the Nelson Playground on June 6, 2018, in the Highbridge neighborhood of the Bronx. On March 15, 2021, GAMONEDA pled guilty to attempted murder and assault with a deadly weapon in aid of racketeering and a firearms offense before U.S. District Judge John G. Koeltl, who also imposed today’s sentence.
U.S. Attorney Damian Williams said: “On June 6, 2018, Marvin Gamoneda participated in a shooting in broad daylight in a Bronx playground filled with people, including children. During the shooting, two individuals, including a child, were hit. Today’s lengthy sentence sends an important message that we will continue vigorously to investigate and prosecute gang violence.”
As alleged in the Indictment and statements made in open court:
Woodycrime was a criminal enterprise involved in committing numerous acts of violence, including attempted murders and assaults, as well as drug dealing, in the Bronx. Members and associates of Woodycrime engaged in violence to retaliate against rival gangs, to preserve and expand the gang’s territory, and to protect the gang’s narcotics business. Members and associates of Woodycrime enriched themselves by selling drugs, such as crack cocaine, marijuana, oxycodone, and MDMA or “ecstasy.” On June 6, 2018, GAMONEDA and others shot at a rival gang member in the vicinity of the Nelson Playground in the Bronx, during which two victims, including a 13-year-old child, were injured.
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In addition to his prison term, MARVIN GAMONEDA, 34, of the Bronx, was sentenced to three years of supervised release.
Mr. Williams praised the outstanding investigative work of the New York City Police Department and the Federal Bureau of Investigation.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Andrew K. Chan, Jacob R. Fiddelman, and James Ligtenberg are in charge of the prosecution.
U.S. Attorney Damian Williams Announces the Selection of Deputy U.S. Attorney and Chief of the Criminal DivisionRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, today announced the selection of Margaret Garnett as Deputy United States Attorney and Daniel M. Gitner as Chief of the Office’s Criminal Division.
Since December 2018, Ms. Garnett has served as the Commissioner of New York City’s Department of Investigation (“DOI”), one of the oldest municipal anti-corruption agencies in the United States. Prior to her service at DOI, Ms. Garnett served as Executive Deputy Attorney General for Criminal Justice in the Office of the New York State Attorney General. Ms. Garnett was an Assistant U.S. Attorney in the Office for 12 years, serving at times as Chief of Appeals and Chief of the Violent and Organized Crime Unit. She received the Director’s Award for Outstanding Performance and the Stimson Medal for her exceptional service in the Criminal Division. Prior to her public service, Ms. Garnett worked as an associate at Wachtell, Lipton, Rosen & Katz. She began her public service career as a law clerk to the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York. Ms. Garnett received her B.A. from the University of Notre Dame, her M.A. from Yale University, and her J.D. from Columbia University.
Mr. Gitner returns to the Office from the law firm of Lankler Siffert & Wohl, where he has served as a partner since 2005. From 1997 to 2005, he served as an Assistant U.S. Attorney in the Southern District of New York and served, from 2003 to 2005, as Chief of the General Crimes Unit. During his tenure, he received the Director’s Award for Superior Performance and was named the Federal Prosecutor of the Year in 2003 by the Federal Law Enforcement Foundation. He began his legal career as a law clerk to the Honorable Naomi Reice Buchwald and to the Honorable Barbara S. Jones, both of the U.S. District Court for the Southern District of New York. Mr. Gitner received his B.A. from Cornell University and his J.D. from Columbia University.
In making these selections, U.S. Attorney Damian Williams said: “I am pleased to welcome Margaret and Dan back to the U.S. Attorney’s Office. Margaret was a legendary Assistant U.S. Attorney. During her time in the Office, she led some of the Office’s most important investigations and prosecutions, and mentored countless AUSAs. Her storied career in public service leaves no doubt that she will be an exceptional Deputy U.S. Attorney. Dan was one of the best AUSAs of his generation when he was in the Office, and he has been one of the best trial lawyers in America since he left. I am confident that his experience, judgment, and love for the Office will make him an outstanding Chief of the Criminal Division. I want to thank Ilan Graff and Laura Birger for their friendship and outstanding service to the Office during some of the most unprecedented times in the history of the Southern District of New York. I have asked Ilan and Laura to continue their service until Margaret’s and Dan’s arrival and to advise the new Executive staff, and me, during this period of transition.”
U.S. Attorney Announces Charges Against 11 Members of Money Laundering and Bank Fraud RingRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Patrick J. Freaney, the Special Agent-in-Charge of the New York Field Office of the United States Secret Service (“Secret Service”), announced today the unsealing of an Indictment charging 11 defendants with conspiracy to commit money laundering, conspiracy to commit bank fraud, and aggravated identity theft, in connection with their involvement in laundering millions of dollars in proceeds derived from business email compromises and romance fraud schemes. Nine defendants were arrested today in the District of New Jersey and the Eastern District of New York, and will be presented this afternoon before United States Magistrate Judge Sarah Netburn in the Southern District of New York. One defendant was arrested in the Southern District of Texas, and will be presented today in that district’s federal court. One defendant remains at large.
U.S. Attorney Damian Williams said: “As alleged, the defendants were part of a criminal enterprise that not only defrauded businesses by assuming the online identities of legitimate counterparties, but also preyed on vulnerable elderly people, deceiving victims into sending money in phony romance scams. Thanks to the Secret Service, the defendants are now facing federal felony charges.”
Secret Service Special Agent-in-Charge Patrick J. Freaney said: “As the continued threat posed by cyber enabled fraud remains ever present, the U.S. Secret Service remains steadfast in its pursuit of those who threaten our collective financial security. This case is no exception, as the defendants allegedly utilized a myriad of fraud schemes, to include romance scams and business email compromises, to defraud over 50 victims in excess of $9 million. Due to the efforts of the Secret Service and our partners at the New York City Police Department Financial Crimes Task Force, this organized group will no longer be able to operate its alleged scheme to defraud and will answer the charges brought against them in the Southern District of New York.”
As alleged in the Indictment unsealed in Manhattan federal court[1]:
ADEDAYO JOHN, OLUWADAMILOLA AKINPELU, KAZEEM RAHEEM, MORAKINYO GBEYIDE, WARRIS ADENUGA, a/k/a “Blue,” SMART AGUNBIADE, LATEEF GOLOBA, SAMSONDEEN GOLOBA, OLAWALE OLANIYAN, OLAWOYIN PETER OLAREWAJU, and EMMANUEL ORONSAYE-AJAYI (collectively, the “Defendants”) participated in one or both of a money laundering conspiracy and bank fraud conspiracy, which received funds stolen from victims.
Victims were typically defrauded in one of two ways. In some instances, business email compromise fraud schemes were used to trick businesses into transferring funds to bank accounts the victims believed were under the control of legitimate recipients of the funds as part of normal business operations, when in fact the bank accounts were under the control of the Defendants or their co-conspirators. In other instances, romance scams were used, primarily through electronic messages sent via email, text messaging, social media, or online dating websites, to deceive victims – many of whom were vulnerable older men and women – into believing they were in romantic relationships with fake identities, and then using false pretenses to cause the victims to transfer funds to bank accounts controlled by the Defendants or their co-conspirators.
As a result of these frauds, law enforcement officers have identified more than 50 victims who have transferred more than $9 million to bank accounts under the control of the Defendants.
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Ten defendants – ADEDAYO JOHN, 32, OLUWADAMILOLA AKINPELU, 26, KAZEEM RAHEEM, 29, MORAKINYO GBEYIDE, 39, WARRIS ADENUGA, a/k/a “Blue,” 26, LATEEF GOLOBA, 27, SAMSONDEEN GOLOBA, 29, OLAWALE OLANIYAN, 41, OLAWOYIN PETER OLAREWAJU, 34, and EMMANUEL ORONSAYE-AJAYI, 30 – are each charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison. Nine defendants – ADEDAYO JOHN, 32, SMART AGUNBIADE, 28, OLUWADAMILOLA AKINPELU, 26, MORAKINYO GBEYIDE, 39, WARRIS ADENUGA, a/k/a “Blue,” 26, LATEEF GOLOBA, 27, SAMSONDEEN GOLOBA, 29, OLAWOYIN PETER OLAREWAJU, 34, and EMMANUEL ORONSAYE-AJAYI, 30 – are each charged with one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison. One defendant – MORAKINYO GBEYIDE, 39 – is also charged with one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison. The maximum potential penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by a judge.
Mr. Williams praised the outstanding investigative work of the Secret Service. The case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Kaylan E. Lasky and Matthew Weinberg are in charge of the prosecution.
The charges contained in the Indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
[1] 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.
Man Charged with Selling Multiple Forged Paintings by Contemporary Artist Raymond PettibonRead 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 today the indictment of CHRISTIAN ROSA WEINBERGER, a/k/a “Christian Rosa,” for his role in a scheme to defraud art buyers through the sale of forged paintings by the artist Raymond Pettibon accompanied by fake certificates of authenticity. WEINBERGER fled the United States in early 2021 shortly after news about his involvement in selling a fake Pettibon painting was reported in the press, and he remains at large. This case is assigned to U.S. District Judge Andrew Carter.
U.S. Attorney Damian Williams said: “As alleged, Christian Rosa Weinberger cheated contemporary art buyers by selling them forged paintings purportedly from the hand of Raymond Pettibon. Weinberger swindled buyers out of hundreds of thousands of dollars, and risked a New York artist’s legacy, through his forgery scheme. Thanks to the partnership of this Office and the FBI’s Art Theft Crime Team, Weinberger’s forgery scheme is at an end.”
FBI Assistant Director Michael J. Driscoll said: "The beauty of art may be in the eye of the beholder, but the behavior we allege today is objectively ugly. Quite simply, it's a federal crime to defraud investors and fake documentation of artwork provenance. Mr. Weinberger may believe he escaped justice when he fled the country earlier this year, but the FBI and our partners have international reach and steadfast determination. We encourage him to turn himself in, because we will eventually find him with that persistent long arm of the law."
According to the allegations in the Indictment[1] filed today in Manhattan federal court:
From approximately 2017 through 2020, WEINBERGER, together with others known and unknown, engaged in a scheme to defraud potential art buyers by selling forged Pettibon paintings. Pettibon is a prominent contemporary artist based primarily in New York, New York, who has produced a series of paintings depicting ocean waves with surfers accompanied by handwritten text (the “Wave Series”). WEINBERGER is a contemporary visual artist based primarily in Los Angeles, California and Vienna, Austria. As part of the scheme to defraud, in or about 2018 and 2020, WEINBERGER sold the following artworks, which WEINBERGER falsely represented to be authentic Pettibon “Wave Series” paintings, to two buyers (“Buyer-1” and “Buyer-2”):
- Untitled (“It was the Moment . . . ”), 2013, 100 cm by 155 cm:
- Untitled (“Drop in . . .”), 2011, 80 cm by 60 cm:
- Untitled (“Bail, or bail out . . .”), 2012, 115 cm by 163 cm:
- Untitled (“If there is a line . . .”), 2016, 118.1 by 208.3 cm:
WEINBERGER used the proceeds from the sale to Buyer-1 of Untitled (“Bail, or bail out . . .”), and Untitled (“If there is a line . . .”) to make the down payment and subsequent mortgage payments on a residence in California. WEINBERGER also gifted the following “Wave Series” painting to Buyer-1 in exchange for Buyer-1’s help in selling paintings attributed to Pettibon to Buyer-2: Untitled (“I Keep Pouring . . .”), 1997, 110 cm by 90 cm.
In connection with the sale or transfer of the above paintings to Buyer-1 and Buyer-2, WEINBERGER provided purported certificates of authenticity for each painting. The purported certificates of authenticity contained an image of the particular painting, and were purportedly signed by Pettibon. In fact, these purported certificates of authenticity were fake, and Pettibon’s signatures were forged.
In or about December 2019, around the same time that WEINBERGER was discussing the sale of certain Pettibon paintings with Buyer-1, WEINBERGER exchanged emails with a friend of WEINBERGER’s (“Co-conspirator-1”) about trying to find a buyer for certain unnamed paintings. In one of the emails, WEINBERGER told Co-conspirator-1 that “they’re asking about the certificates, how we’re getting them.” Co-conspirator-1 asked WEINBERGER, in substance and in part, why the sales were taking so long. WEINBERGER responded explaining that he wanted to find a buyer who would agree not to resell the works at auction, and wrote in English that “I am not trying to get busted so that’s why it’s takeing[sic] longer.”
On or about January 29, 2021, an online news source published an article reporting accusations that WEINBERGER had forged Untitled (“If there is a line . . .”), one of the “Wave Series” paintings originally purchased by Buyer-1, which was later placed for sale by a subsequent purchaser at a New York auction house. On or about January 30, 2021, the day after the article was published, WEINBERGER emailed Co-conspirator-1 that “[t]he secret is out.” On or about January 31, 2021, WEINBERGER drafted an email to Pettibon, in which he stated that the painting featured in the article “is a overpainted print made from [Co-Conspirator-1] a friend from Austria[.]” Less than a month later, WEINBERGER left the United States. A few months later, WEINBERGER sold the California residence and attempted to transfer the funds abroad.
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WEINBERGER, 43, a Brazilian and Austrian citizen previously residing in Los Angeles, California, before fleeing the United States in February 2021, was charged in the Indictment with one count of wire fraud conspiracy, one count of wire fraud, and one count of aggravated identity theft. The wire fraud charges carry a maximum prison term of 20 years. The aggravated identity theft charge carries a mandatory sentence of two years in prison.
The maximum and minimum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence will be determined by the judge.
Mr. Williams praised the investigative work of the FBI’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.
To report information related to this case, please contact the FBI's Art Crime Team at [email protected].
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.
Former NYPD Officer Pleads Guilty to Trafficking Large Quantities of Methamphetamine and Liquid Date Rape DrugRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that former New York City Police Department (“NYPD”) officer JOHN CICERO pled guilty today to distributing large quantities of methamphetamine and gamma-butyrolactone (known as “GBL”) in Westchester County and New York City. CICERO pled guilty before U.S. Magistrate Judge Andrew E. Krause.
U.S. Attorney Damian Williams said: “A former NYPD police officer once sworn to protect the public, John Cicero now stands convicted of trafficking substantial quantities of methamphetamine and GBL, a liquid date-rape drug, throughout Westchester and New York City. As he admitted today, over several years, Cicero was a leader of a drug trafficking ring, and he was personally responsible for moving over three kilograms of methamphetamine and 750 liters of GBL, and importing narcotics from overseas. Thanks to the dedication of our partners at the Federal Bureau of Investigation, Cicero now awaits sentencing for his dangerous conduct.”
According to the Indictment, public court filings, and statements made in court:
Beginning in at least 2017 and lasting until his arrest in February 2020, CICERO and his co-conspirators stockpiled and sold liters of GBL and kilograms of methamphetamine in apartments, hotel rooms, and storage units in the heart of midtown Manhattan, and a residence in Bronxville, New York. CICERO repeatedly brokered large-scale narcotics transactions over recorded prison calls with an inmate then in New York State custody. U.S. Customs and Border Protection has previously seized GBL sent from China to CICERO’s address in New York. As part of his guilty plea, CICERO stipulated that he was an organizer, leader, manager, or supervisor in the criminal activity, the offense involved the importation of methamphetamine, and his offense conduct involved over three kilograms of methamphetamine and 750 liters of GBL. The charged conduct began years after CICERO left the NYPD.
On February 19, 2020, CICERO was arrested in a Wall Street hotel, in a room he had rented under a false identity. In addition to methamphetamine and GBL, law enforcement recovered from CICERO’s room a bank card and a fake ID, bearing CICERO’s photograph, all in the name of the false identity to whom the room was rented. As part of CICERO’s arrest, law enforcement also recovered detailed drug ledgers, credit card making equipment, and notebooks full of victims’ personally identifiable information.
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CICERO, 39, of Bronxville, New York, is scheduled to be sentenced by United States District Judge Kenneth M. Karas on February 10, 2022. CICERO pled guilty to one count of conspiring to distribute 50 grams of methamphetamine and GBL, which carries a statutory mandatory minimum term of five years in prison and maximum penalty of 40 years in prison. The maximum and mandatory minimum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force, which comprises agents and detectives from the FBI, Westchester County District Attorney’s Office, Westchester County Police Department, Yonkers Police Department, Peekskill Police Department, Mount Vernon Police Department, NYPD, and U.S. Probation. He also thanked the New York State Department of Corrections Office of Special Investigations, Drug Enforcement Administration, and U.S. Customs and Border Protection for their assistance.
This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys David R. Felton and Daniel G. Nessim are in charge of the prosecution.
“Diamond Enterprise” Boss Pleads Guilty to Racketeering, Interstate Threats, Money Laundering, Fraud, and Gambling OffensesRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that ABDURAMAN ISENI, a/k/a “Diamond,” pled guilty today to eight counts of criminal conduct, including overseeing a multi-year racketeering enterprise, interstate threats, money laundering, bank fraud conspiracy, false statements to a bank, and two gambling conspiracy offenses. ISENI pled guilty before U.S. District Judge Andrew L. Carter, to whom the case is assigned.
U.S. Attorney Damian Williams said: “As he admitted today, Abduraman Iseni led a network of underground gambling establishments to prop up a criminal enterprise under his control. Iseni engaged in a series of additional crimes, including money laundering, threatening a victim with physical violence, and defrauding and lying to banks in an effort to receive money to which he was not entitled. Thanks to the hard work of our partners at the FBI, Iseni stands convicted of numerous offenses and awaits sentencing for his years of crime.”
According to the Indictment, public court filings, and statements made in court:
ISENI oversaw a racketeering enterprise referred to in the Indictment as the “Diamond Enterprise.” The Diamond Enterprise was an organized criminal group operating under ISENI’s direction. ISENI offered his protection, connections, and substantial influence in the criminal underworld to other members of the racketeering enterprise, in exchange for a share of their illegal profits. The Diamond Enterprise thrived in part on the revenues generated by a network of illegal gambling parlors – “Sports Café,” “Friendly Café,” and “Oasis Café” – located throughout Brooklyn that hosted underground poker games and hosted illegal sports books. Some of these revenues, in turn, were laundered through a series of bank accounts in an effort to conceal and facilitate the Enterprise’s continued operations.
In addition to the Enterprise’s operations, ISENI separately admitted to threatening a victim with physical violence, and a host of additional crimes, including money laundering, bank fraud conspiracy, and making false statements to a bank for the purpose of inducing the bank to release funds to which ISENI was not entitled.
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ISENI, 56, of Staten Island, New York, is scheduled to be sentenced by Judge Carter on January 18, 2022, at 3:30 p.m. Under the terms of his plea agreement, ISENI also agreed to pay forfeiture of $349,000.
Mr. Williams praised the outstanding work of New York FBI’s Balkans and Middle East Organized Crime Squad. He also thanked the FBI’s Newark Office, the New York City Police Department, the State Department’s Diplomatic Security Service, the Small Business Administration Office of the Inspector General, the Social Security Administration Office of the Inspector General, the New York State Liquor Authority, and United States Customs and Border Protection for their investigative efforts and ongoing support and assistance with the case.
The prosecution of this case is being overseen by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant U.S. Attorneys Samuel L. Raymond and David R. Felton are in charge of the case.
U.S. Attorney Announces Arrest of Iranian Large-Scale Heroin TraffickerRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Anne Milgram, the Administrator of the U.S. Drug Enforcement Administration (“DEA”), announced today the arrest of MALEK MOHAMMAD BALOUCHZEHI, a/k/a “Malek Khan,” for conspiring to import heroin into the United States and distributing heroin for importation into the United States. BALOUCHZEHI, a citizen of Iran, was taken into custody by Kenyan authorities expelled to the United States from Kenya on October 9, 2021. BALOUCHZEHI was presented before United States Magistrate Judge Sarah Netburn earlier today.
U.S. Attorney Damian Williams said: “From thousands of miles away, Malek Balouchzehi allegedly arranged the importation of massive quantities of heroin into the United States with seemingly little regard for the devastation that highly addictive opiates cause after landing at our shores. Balouchzehi’s expulsion to the United States is a direct result of this Office’s successful ongoing partnership with the D.E.A., and we commend the outstanding work of the agents both here and abroad who made today’s charges possible.”
D.E.A. Administrator Anne Milgram said: “This investigation demonstrates our collective resolve to pursue criminals who traffic in these dangerous, addictive substances. For decades, DEA’s partnerships with our law enforcement partners around the world have been the key to bringing to justice those threatening our communities. DEA will continue to bring all that we have to bear to combat and defeat the criminal drug traffickers putting Americans’ safety and health at risk.”
According to the allegations contained in the Complaint charging the defendant,[1] which was unsealed today in Manhattan federal court:
BALOUCHZEHI is an Iran-based drug trafficker who distributes methamphetamine and manufactures and distributes heroin. In or about September 2019, BALOUCHZEHI and his associate began communicating and meeting with individuals whom BALOUCHZEHI believed were heroin traffickers interested in large quantities of heroin for importation into the United States, as well as methamphetamine for distribution in Australia. Those individuals were, in fact, a confidential source working at the DEA’s direction, and an undercover DEA agent posing as a New York-based heroin distributor. In December 2019, BALOUCHZEHI caused a sample of approximately two kilograms of heroin to be delivered in Mozambique, with the understanding that those drugs would be transported to the United States for testing and sale. Following this sample shipment, BALOUCHZEHI planned to supply larger quantities of heroin for importation to and distribution within the United States, and in December 2019, BALOUCHZEHI discussed providing as many as 400 kilograms of heroin for importation to the United States in the next transaction.
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BALOUCHZEHI, 38, a citizen of Iran, is charged with one count of conspiring to import heroin into the United States and one count of distributing heroin intending that the narcotics would be imported into the United States. Both counts carry a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison. The statutory minimum and maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative efforts of the DEA’s Special Operations Division, Bilateral Investigations Unit and New York Field Division; the DEA’s Nairobi, Maputo, Pretoria, Bucharest, and Jakarta Country Offices; the Kenyan National Police, Directorate of Criminal Investigations; the Mozambique National Criminal Investigation Services; and the Western Australia Police Force. Mr. Williams also thanked the U.S. Department of Justice’s Office of International Affairs for its assistance.
The case is being prosecuted by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Michael D. Lockard and Kimberly J. Ravener 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 below constitute only allegations and every fact described should be treated as an allegation.
Sean Merchant, a/k/a “Bronxwood,” Sentenced to More Than 16 Years in Prison for Sex Trafficking of MinorsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that SEAN MERCHANT was sentenced today to 196 months in prison for sex trafficking of three minor females. MERCHANT was sentenced by U.S. District Judge Kimba M. Wood, before whom he previously pled guilty to one count of sex trafficking of a minor. As part of his plea, MERCHANT acknowledged that he trafficked three minor females.
U.S. Attorney Damian Williams said: “Sean Merchant preyed upon three minor females who had previously resided at a residential treatment facility for at-risk children and adolescents. Merchant placed these young women in harm’s way by enticing them to perform commercial sex acts for money, and in turn providing them with addictive drugs. It is hard to imagine a more selfish and inhumane act than coercing a minor to have sex with strangers for profit, and Merchant has justly been sentenced to more than 16 years in prison for his outrageous conduct.”
According to the allegations contained in the Indictment and other court documents filed in Manhattan federal court:
From at least in or about March 2017 to at least in or about October 2017, SEAN MERCHANT, a/k/a “Bronxwood,” the defendant, engaged in the sex trafficking and sexual exploitation of three minor victims (“Minor Victim-1,” “Minor Victim-2,” and “Minor Victim-3,” and together, the “Minor Victims”). The defendant recruited, enticed, harbored, transported, provided, obtained, and maintained the Minor Victims for the purpose of commercial sex. Prior to being trafficked by MERCHANT, each of the Minor Victims previously resided at a residential treatment facility located in Westchester County, which provided housing for at-risk troubled children and adolescents on behalf of department of social services for certain counties in New York State.
The defendant recruited the Minor Victims to engage in commercial sex. Subsequently, the defendant used the website Backpage.com, an online classifieds website, to post advertisements of the Minor Victims for commercial sex. The defendant provided Minor Victim-1 and Minor Victim-2 with drugs, and directed them to engage in commercial sex acts in particular locations in the Bronx, New York.
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In addition to his prison sentence, MERCHANT, 32, was sentenced to five years of supervised release.
MERCHANT is the third defendant to be sentenced in this case by Judge Wood for his participation in sex trafficking of minors. Steven Lesane, who pled guilty to sex trafficking of two minor victims, was sentenced to a term of 256 months in prison on July 27, 2021. Jermaine Myrie, who pled guilty to participating in a conspiracy to commit sex trafficking of a minor, was sentenced to a term of 135 months in prison on February 12, 2020. Reuben Sands, who pled guilty to conspiracy to violate the Travel Act, was sentenced to a term of 60 months in prison on December 18, 2019. The final defendant, Martique Mcgriff, is scheduled to be sentenced on December 8, 2021.
This case is part of an ongoing prosecution of 19 defendants, set forth in eight indictments, for the sex trafficking of at least 20 minor girls and young adults in New York State’s social services system. All 19 of the defendants have been convicted, either via guilty plea or following trial.
Any individuals who believe that they have information that may be relevant to this investigation should contact the FBI at 1-212-384-1000 or https://tips.fbi.gov.
Mr. Williams thanked the FBI and the NYPD for their outstanding work in this matter and, in particular, the New York Child Exploitation and Human Trafficking Task Force.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Mollie Bracewell, Elinor Tarlow, Jacob Gutwillig, and Peter Davis are in charge of the prosecution.
Bronx Man Who Attempted to Travel to Afghanistan in 2019 to Join Taliban Convicted of Attempting to Provide Material Support for TerrorismRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict last Friday against DELOWAR MOHAMMED HOSSAIN on both counts of the Superseding Indictment, for attempting to provide material support for terrorism and attempting to make a contribution of funds, goods, and services to the Taliban. United States District Judge Sidney H. Stein presided over the one-week trial.
U.S. Attorney Damian Williams said: “As the jury found, Delowar Hossain made elaborate preparations to travel to Afghanistan to join the Taliban and kill American troops, and he was intercepted at JFK Airport attempting to board a flight while carrying mountain survival gear and thousands in cash for weapons to achieve his murderous plan. I commend the excellent work of the Joint Terrorism Task Force to uncover the plot and stop Hossain, who now awaits sentencing for his crimes.”
According to court documents and the evidence at trial:
Beginning in the fall of 2018, HOSSAIN expressed his desire to travel to Afghanistan, join the Taliban, and kill American servicemembers. Over the next approximately 10 months, HOSSAIN attempted to recruit several other individuals into his plot; attempted to contact at least one individual in Pakistan who was associated with the Taliban; saved at least approximately $10,000, with which he planned to buy weapons to use after he joined the Taliban; and bought survival gear for the mountains of Afghanistan. During recorded conversations with two confidential sources working with the Federal Bureau of Investigation (“FBI”), HOSSAIN consistently reiterated his desire to join the Taliban and kill Americans. HOSSAIN also took steps to develop a cover story designed to disguise his extremism and evade detection by the FBI, which included traveling to Thailand on his way to Afghanistan.
On July 26, 2019, the FBI arrested HOSSAIN at John F. Kennedy International Airport as he was walking down the jet bridge to a flight that would have taken him to Thailand, the first leg of his planned journey to Afghanistan to join the Taliban. A subsequent search of HOSSAIN’s person and luggage revealed approximately $10,000 in cash and survival gear, including a machete, an ax, a knife, a tent, sleeping bags rated for freezing temperatures, emergency thermal blankets, personal water filters, and solar power panels.
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HOSSAIN, 36, of the Bronx, New York, was convicted of one count of attempting to provide material support for terrorism, which carries a maximum sentence of 15 years in prison, and one count of attempting to make a contribution of funds, goods, and services to the Taliban, 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 Judge Stein. Sentencing before Judge Stein is scheduled for January 12, 2022, at 2:30 p.m.
Mr. Williams praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which consists principally of agents from the FBI and detectives from the New York City Police Department. Mr. Williams also thanked the Counterterrorism Section of the Department of Justice’s National Security Division, as well as the New York Office of U.S. Customs and Border Protection.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys David W. Denton Jr., Jessica K. Fender, and Benjamin Woodside Schrier are in charge of the prosecution, assisted by Paralegal Specialist Daniel Sitko, and with assistance from Trial Attorney Jennifer Burke of the Counterterrorism Section.
Napoleon Grier Extradited from the Netherlands on Fraud ChargesRead the Press Release
Audrey Strauss, 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 extradition of NAPOLEON GRIER from the Netherlands on alleged wire fraud and wire fraud conspiracy charges. GRIER was taken into custody by Dutch authorities in Amsterdam on August 13, 2019. After contested extradition proceedings, GRIER arrived in the United States yesterday. He will be presented today before United States Magistrate Katharine H. Parker. The case is assigned to United States District Judge Richard M. Berman.
U.S. Attorney Audrey Strauss said: “As alleged, Napoleon Grier was part of a criminal conspiracy that bilked victims out of more than $2 million in advance fees for promised project financing that was never delivered. Now, Grier is in U.S. custody and facing federal felony charges.”
FBI Assistant Director Michael J. Driscoll said: “Advance-fee schemes are based on false pretenses that criminals use to ensnare victims and trap them in their fraudulent plot. When victims pay these fees, they assume their alleged investor will put up the money promised to fund their venture, but that never happens. While Grier’s victims expected a loan they never received, he and his co-conspirators likely didn’t anticipate the FBI would deliver on its promise to hold con artists accountable.”
According to the allegations in the Complaint and the Indictment[1]:
From at least in or about April 2012, up to and including at least in or about August 2012, GRIER and others devised and participated in a scheme that defrauded victims of at least $2.275 million (the “Advance Fee Scheme”). GRIER and his co-conspirators – operating out of offices near Wall Street in New York, New York – held themselves out to victims as experienced financiers and promised that they could obtain financing for victims’ intended projects. GRIER and his co-conspirators promised victims that after the victims wired initial deposits into escrow accounts controlled by the co-conspirators, the victims would later receive the full amount of their promised financing, often in a few months’ time. GRIER and his co-conspirators never provided any of the financing they promised to victims and they never returned any of the more than $2.275 million in advance fees they defrauded the victims into depositing into escrow accounts.
The Advance Fee Scheme included at least four sets of victims. GRIER and his co-conspirators defrauded (1) a New Jersey-based woman, who was promised $2.5 million in financing to purchase, remodel, and reopen a concert hall in New Jersey, of a $225,000 advance fee; (2) two Pennsylvania-based men, who were promised $20 million in financing to start a fuel additive company in Ecuador, of a $150,000 to advance fee; (3) a Canadian filmmaker and a California-based filmmaker, who were promised $3 million of financing to make a movie, of a more than $900,000 advance fee; and (4) two Illinois-based men, who were promised up to $10 million in financing for the purchase of a Canadian wind turbine company, of a $1 million advance fee.
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GRIER, 56, is charged with one count of wire fraud and one count of wire fraud conspiracy, each of which carries a maximum penalty 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.
Ms. Strauss praised the outstanding investigative work of the FBI. She also thanked the Justice Department’s Office of International Affairs of the Department’s Criminal Division and the Netherlands’ Ministry of Justice and Security for their assistance.
The prosecution is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Justin V. Rodriguez is in charge of the prosecution.
[1] As the introductory phase signifies, the entirety of the texts of the Indictment and the Complaint, and the description of the Indictment and Complaint set forth below, constitute only allegations, and every fact described should be treated as an allegation.
Former Taliban Commander Charged with Killing American Troops in 2008Read the Press Release
A federal grand jury in New York unsealed a superseding indictment today charging an Afghanistan national with federal terrorism-related offenses spanning approximately 2007 to 2009 and stemming from his role as a Taliban commander in Afghanistan.
According to court documents, Haji Najibullah, aka Najibullah Naim, Abu Tayeb, Atiqullah and Nesar Ahmad Mohammad, 45, of Afghanistan, was previously charged with crimes related to the 2008 kidnapping of an American journalist and two Afghan nationals. In addition to those charges, the superseding indictment charges Najibullah with attacks on U.S. troops conducted by Najibullah and the Taliban fighters under his command, including a June 26, 2008, attack on an American military convoy that killed three U.S. Army servicemembers – Sergeants First Class Matthew L. Hilton and Joseph A. McKay, and Sergeant Mark Palmateer – and their Afghan interpreter, as well as an Oct. 27, 2008, attack that resulted in the shooting down of a U.S. military helicopter. In October 2020, Najibullah was arrested and extradited from Ukraine to the United States where he remains in federal custody.
“Najibullah, who allegedly served as a Taliban commander in 2007 and 2008, is charged with numerous terrorism offenses relating to attacks against the U.S. military in Afghanistan, including an attack that killed three U.S. servicemembers, and others relating to taking an American journalist hostage in Afghanistan,” said Acting Assistant Attorney General Mark J. Lesko for the Justice Department’s National Security Division. “He will now be held accountable in an American courtroom. The National Security Division and our partners are committed to identifying and holding accountable those who target and harm Americans anywhere in the world. I want to thank the agents, analysts, and prosecutors who are responsible for this case.”
“As alleged, during one of the most dangerous periods of the conflict in Afghanistan, Haji Najibullah led a vicious band of Taliban insurgents who terrorized part of Afghanistan and attacked U.S. troops,” said U.S. Attorney Audrey Strauss for the Southern District of New York. “One of these lethal attacks resulted in the deaths of three brave American servicemembers and their Afghan interpreter, and another attack brought down a U.S. helicopter. Najibullah also arranged to kidnap at gunpoint an American journalist and two other men and held them hostage for more than seven months. Neither time nor distance can weaken our resolve to hold terrorists accountable for their crimes and to see justice done for their victims. Thanks to the outstanding work of our law enforcement partners, Najibullah will answer for his heinous acts in an American courtroom.”
According to court documents, as of in or about 2007, Najibullah was the Taliban commander responsible for the Jaghato district in Afghanistan’s Wardak Province, which borders Kabul. In this role, Najibullah commanded more than a thousand fighters, at times acted as a spokesperson for the Taliban, and reported to senior leadership in the Taliban. During that time, Najibullah and the Taliban fighters under his command conducted attacks intended to kill and which did kill American and NATO troops and their Afghan allies, using automatic weapons, improvised explosive devices (IEDs), rocket-propelled grenades (RPGs), and other anti-tank weapons, including an attack that destroyed an Afghan Border Patrol outpost in or about September 2008.
On or about June 26, 2008, Taliban fighters under Najibullah’s command attacked a U.S. military convoy in the vicinity of Sayed Abad, Wardak Province, Afghanistan, with IEDs, RPGs, and automatic weapons, killing three U.S. Army servicemembers, Sergeants First Class Matthew L. Hilton and Joseph A. McKay, and Sergeant Mark Palmateer, and their Afghan interpreter.
On or about Oct. 27, 2008, Taliban fighters under Najibullah’s command shot down a U.S. military helicopter using RPGs in the vicinity of Sayed Abad, Wardak Province, Afghanistan. The Taliban subsequently claimed responsibility for downing the helicopter, asserting that it was “shot down [by] the mujahideen of the Islamic Emirate.” The Taliban also falsely claimed that “[a]ll those onboard were killed,” when, in fact, no troops died as a result of the attack.
On or about Nov. 10, 2008, Najibullah and his co-conspirators, armed with machineguns, kidnapped an American journalist (Victim-1) and two Afghan nationals who were assisting Victim-1 (Victim-2 and Victim-3) at gunpoint in Afghanistan. Approximately five days later, on or about Nov. 15, 2008, Najibullah and his co-conspirators forced the three hostages to hike across the border from Afghanistan to Pakistan, where Najibullah and his co-conspirators detained the hostages. For the next seven months, Najibullah and his co-conspirators held the hostages captive in Pakistan.
During their captivity, Najibullah and his co-conspirators forced the victims to make numerous calls and videos seeking help. For example, on or about Nov. 19, 2008, while in Pakistan, Najibullah and a co-conspirator (CC-1) directed Victim-1 to call his wife in New York. In one of the videos, Victim-1 – the American journalist – was forced to beg for his life while a guard pointed a machinegun at Victim-1’s face.
Najibullah is charged with conspiring to provide material support for acts of terrorism resulting in death; providing material support for acts of terrorism resulting in death; conspiring to murder U.S. nationals; murdering U.S. nationals Hilton, McKay, and Palmateer; murdering officers and employees of the United States, and a person assisting them in their duties, by killing Hilton, McKay, Palmateer, and their interpreter; attempting to murder officers and employees of the United States; conspiring to destroy U.S. military aircraft; destroying a U.S. military aircraft; conspiring to use weapons of mass destruction; conspiring to take hostages; hostage-taking; conspiring to commit kidnapping; and kidnapping. Counts one through five and nine through 13 each carry a maximum penalty of life in prison. Counts six through eight each carry a maximum sentence of 20 years’ imprisonment. Count five also carries a mandatory minimum sentence of life in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD, is investigating the case. Valuable assistance was provided by the New York and New Jersey Port Authority Police and the Department of Defense, as well as the Ukrainian authorities and the Justice Department’s Office of International Affairs, which assisted in the arrest and extradition of the defendant.
Assistant U.S. Attorneys Sam Adelsberg, David W. Denton Jr., and Jessica K. Fender of the Southern District of New York are prosecuting the case, with valuable assistance provided by Trial Attorney Jennifer Burke of the National Security Division’s Counterterrorism Section.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Former Taliban Commander Charged with Killing American Troops in 2008Read the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, Mark J. Lesko, Acting Assistant Attorney General for National Security, Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, Police Commissioner of the City of New York (“NYPD”), announced the filing of a 13-count superseding indictment charging HAJI NAJIBULLAH, a/k/a “Najibullah Naim,” a/k/a “Abu Tayeb,” a/k/a “Atiqullah,” a/k/a “Nesar Ahmad Mohammad,” with federal terrorism-related offenses spanning approximately 2007 to 2009 and stemming from NAJIBULLAH’s role as a Taliban commander in Afghanistan. NAJIBULLAH had previously been charged with crimes related to the 2008 kidnapping of an American journalist and two Afghan nationals. In addition to those charges, the superseding indictment charges NAJIBULLAH with attacks on U.S. troops conducted by NAJIBULLAH and the Taliban fighters under his command, including a June 26, 2008, attack on an American military convoy that killed three U.S. Army servicemembers – Sergeants First Class Matthew L. Hilton and Joseph A. McKay, and Sergeant Mark Palmateer – and their Afghan interpreter, as well as an October 27, 2008, attack that resulted in the shooting down of a U.S. military helicopter. NAJIBULLAH is already in federal custody on the initial indictment. The case is assigned to U.S. District Judge Katherine P. Failla.
U.S. Attorney Audrey Strauss said: “As alleged, during one of the most dangerous periods of the conflict in Afghanistan, Haji Najibullah led a vicious band of Taliban insurgents who terrorized part of Afghanistan and attacked U.S. troops. One of these lethal attacks resulted in the deaths of three brave American servicemembers and their Afghan interpreter, and another attack brought down a U.S. helicopter. Najibullah also arranged to kidnap at gunpoint an American journalist and two other men, and held them hostage for more than seven months. Neither time nor distance can weaken our resolve to hold terrorists accountable for their crimes and to see justice done for their victims. Thanks to the outstanding work of our law enforcement partners, Najibullah will answer for his heinous acts in an American courtroom.”
Acting Assistant Attorney General Mark J. Lesko said: “Najibullah, who allegedly served as a Taliban commander in 2007 and 2008, is charged with numerous terrorism offenses relating to attacks against the U.S. military in Afghanistan, including an attack that killed three U.S. servicemembers, and others relating to taking an American journalist hostage in Afghanistan. He will now be held accountable in an American courtroom. The National Security Division and our partners are committed to identifying and holding accountable those who target and harm Americans anywhere in the world. I want to thank the agents, analysts, and prosecutors who are responsible for this case.”
FBI Assistant Director Michael J. Driscoll said: “We meant what we said when we told the public we wouldn’t stop aggressively pursuing charges against those who harm our citizens, servicemembers, and allies, whether at home or abroad. Najibullah’s alleged actions will not be forgiven or forgotten, and the FBI, along with our partners, will continue to pursue justice for all victims in this case.”
NYPD Commissioner Dermot Shea said: “Time and again, the FBI agents and our NYPD detectives of the Joint Terrorism Task Force have demonstrated that they will go to any corner of the globe to ensure terrorists are captured and brought to justice. Haji Najibullah was charged with kidnapping three men including a journalist from New York City. Even after those crimes were charged, the JTTF investigators continued to gather more evidence. These newest charges for the terrorist murders of U.S. servicemen in Afghanistan will hopefully bring some small measure of closure to the families of those soldiers who gave their lives for our country.”
According to the superseding indictment unsealed today in Manhattan federal court:[1]
As of in or about 2007, NAJIBULLAH was the Taliban commander responsible for the Jaghato district in Afghanistan’s Wardak Province, which borders Kabul. In this role, NAJIBULLAH commanded more than a thousand fighters, at times acted as a spokesperson for the Taliban, and reported to senior leadership in the Taliban. During that time, NAJIBULLAH and the Taliban fighters under his command conducted attacks intended to kill and which did kill American and NATO troops and their Afghan allies, using automatic weapons, improvised explosive devices (“IEDs”), rocket-propelled grenades (“RPGs”), and other anti-tank weapons, including an attack that destroyed an Afghan Border Patrol outpost in or about September 2008.
On or about June 26, 2008, Taliban fighters under NAJIBULLAH’s command attacked a U.S. military convoy in the vicinity of Sayed Abad, Wardak Province, Afghanistan, with IEDs, RPGs, and automatic weapons, killing three U.S. Army servicemembers – Sergeants First Class Matthew L. Hilton and Joseph A. McKay, and Sergeant Mark Palmateer – and their Afghan interpreter.
On or about October 27, 2008, Taliban fighters under NAJIBULLAH’s command shot down a U.S. military helicopter using RPGs in the vicinity of Sayed Abad, Wardak Province, Afghanistan. The Taliban subsequently claimed responsibility for downing the helicopter, asserting that it was “shot down [by] the mujahideen of the Islamic Emirate.” The Taliban also falsely claimed that “[a]ll those onboard were killed,” when, in fact, no troops died as a result of the attack.
On or about November 10, 2008, NAJIBULLAH and his co-conspirators, armed with machineguns, kidnapped an American journalist (“Victim-1”) and two Afghan nationals who were assisting Victim-1 (“Victim-2” and “Victim-3”) at gunpoint in Afghanistan. Approximately five days later, on or about November 15, 2008, NAJIBULLAH and his co-conspirators forced the three hostages to hike across the border from Afghanistan to Pakistan, where NAJIBULLAH and his co-conspirators detained the hostages. For the next seven months, NAJIBULLAH and his co-conspirators held the hostages captive in Pakistan.
During their captivity, the victims of NAJIBULLAH and his co-conspirators were forced to make numerous calls and videos seeking help. For example, on or about November 19, 2008, while in Pakistan, NAJIBULLAH and a co-conspirator (“CC-1”) directed Victim-1 to call his wife in New York. In one of the videos, Victim-1 – the American journalist – was forced to beg for his life while a guard pointed a machinegun at Victim-1’s face.
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NAJIBULLAH, 45, of Afghanistan, is charged with (1) conspiring to provide material support for acts of terrorism resulting in death, (2) providing material support for acts of terrorism resulting in death, (3) conspiring to murder U.S. nationals, (4) murdering U.S. nationals Hilton, McKay, and Palmateer, (5) murdering officers and employees of the United States, and a person assisting them in their duties, by killing Hilton, McKay, Palmateer, and their interpreter, (6) attempting to murder officers and employees of the United States, (7) conspiring to destroy U.S. military aircraft, (8) destroying a U.S. military aircraft, (9) conspiring to use weapons of mass destruction, (10) conspiring to take hostages, (11) hostage-taking, (12) conspiring to commit kidnapping, and (13) kidnapping. Counts One through Five and Nine through Thirteen each carry a maximum penalty of life in prison. Counts Six through Eight each carry a maximum sentence of 20 years in prison. Count Five also carries a mandatory minimum sentence of life in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Ms. Strauss and Mr. Lesko praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD. They also thanked the New York and New Jersey Port Authority Police and the Department of Defense for their assistance with this investigation, as well as the Ukrainian authorities and the Office of International Affairs of the Justice Department’s Criminal Division for their assistance in the arrest and extradition of the defendant.
This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Sam Adelsberg, David W. Denton, Jr., and Jessica K. Fender are in charge of the prosecution, with assistance from Trial Attorney Jennifer Burke of the Counterterrorism Section.
The charges contained in the superseding 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 superseding indictment and the description of the indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
19 Defendants Charged with Defrauding the National Basketball Association Players’ Health and Welfare Benefit PlanRead the Press Release
Audrey Strauss, 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, Police Commissioner of the City of New York (“NYPD”), announced today the unsealing of an Indictment charging TERRENCE WILLIAMS, ALAN ANDERSON, ANTHONY ALLEN, DESIREE ALLEN, SHANNON BROWN, WILLIAM BYNUM, RONALD GLEN DAVIS, CHRISTOPHER DOUGLAS-ROBERTS, a/k/a “Supreme Bey,” MELVIN ELY, JAMARIO MOON, DARIUS MILES, MILTON PALACIO, RUBEN PATTERSON, EDDIE ROBINSON, GREGORY SMITH, SEBASTIAN TELFAIR, CHARLES WATSON JR., ANTOINE WRIGHT, and ANTHONY WROTEN with conspiracy to commit health care fraud and wire fraud, in connection with a scheme to defraud the National Basketball Associations (“NBA’s”) Health and Welfare Benefit Plan out of nearly $4,000,000. TERRENCE WILLIAMS is also charged with aggravated identity theft in connection with the same scheme. The case is assigned to U.S. District Judge Valerie E. Caproni.
Manhattan U.S. Attorney Audrey Strauss said: “The defendants’ playbook involved fraud and deception. Thanks to the hard work of our law enforcement partners, their alleged scheme has been disrupted and they will have to answer for their flagrant violations of law.”
FBI Assistant Director Michael J. Driscoll said: “Today we’ve charged 18 former NBA players and one spouse for their alleged participation in a health care fraud scheme that resulted in nearly $2 million in losses to the National Basketball Association’s Health and Welfare Benefit Plan. The health care industry loses tens of billions of dollars a year to fraud. Thanks to the work of our dedicated FBI agents and partners alike, cases like this demonstrate our continued focus in uncovering health care fraud scams that harm both the industry and the consumers of their services.”
NYPD Commissioner Dermot Shea said: “Today’s federal indictment represents the NYPD’s long-term commitment, working with its law enforcement partners, in making sure those accused of health care related fraud are held accountable. I commend those involved in the investigation, the FBI, and the office of the United States Attorney for the Southern District in New York for its work in ensuring there is justice in this case.”
TERRENCE WILLIAMS, ALAN ANDERSON, DESIREE ALLEN, SHANNON BROWN, WILLIAM BYNUM, RONALD GLEN DAVIS, MELVIN ELY, JAMARIO MOON, DARIUS MILES, MILTON PALACIO, RUBEN PATTERSON, SEBASTIAN TELFAIR, CHARLES WATSON JR., ANTOINE WRIGHT, GREGORY SMITH, and ANTHONY WROTEN were arrested today.
WILLIAMS and WROTEN will be presented in the Western District of Washington. DAVIS will be presented in the Central District of California. SMITH will be presented in the Eastern District of California. PATTERSON will presented in the Northern District of Ohio. MOON will be presented in the Northern District of Alabama. BYNUM and ELY will be presented in the Northern District of Illinois. MILES will be presented in the Middle District of Florida. ANDERSON, WATSON, and WRIGHT will be presented in the District of Nevada. BROWN will be presented in the Northern District of Georgia. DESIREE ALLEN will be presented in the Western District of Tennessee. TELFAIR will be presented in the Southern District of New York before U.S. Magistrate Judge Katharine H. Parker.
ANTHONY ALLEN, DOUGLAS-ROBERTS, and ROBINSON remain at large.
As alleged in the Indictment unsealed today[1]:
The National Basketball Association Players’ Health and Welfare Benefit Plan (the “Plan”) is a health care plan providing benefits to eligible active and former players of the NBA. From at least in or about 2017, up to and including at least in or about 2020, TERRENCE WILLIAMS, ALAN ANDERSON, ANTHONY ALLEN, DESIREE ALLEN, SHANNON BROWN, WILLIAM BYNUM, RONALD GLEN DAVIS, CHRISTOPHER DOUGLAS-ROBERTS, a/k/a “Supreme Bey,” MELVIN ELY, JAMARIO MOON, DARIUS MILES, MILTON PALACIO, RUBEN PATTERSON, EDDIE ROBINSON, GREGORY SMITH, SEBASTIAN TELFAIR, CHARLES WATSON JR., ANTOINE WRIGHT, and ANTHONY WROTEN engaged in a widespread scheme to defraud the Plan by submitting and causing to be submitted fraudulent claims for reimbursement of medical and dental services that were not actually rendered. Over the course of the scheme, the defendants submitted and caused to be submitted to the Plan false claims totaling nearly $4 million.
WILLIAMS orchestrated the scheme to defraud the Plan. WILLIAMS recruited other Plan participants to defraud the Plan by offering to provide them with false invoices to support their fraudulent claims. WILLIAMS provided ANDERSON, ANTHONY ALLEN, DESIREE ALLEN, BROWN, BYNUM, DAVIS, DOUGLAS-ROBERTS, ELY, MOON, MILES, PALACIO, PATTERSON, ROBINSON, SMITH, TELFAIR, WATSON, WRIGHT, and WROTEN with false provider invoices, which those defendants then submitted and caused to be submitted to the Plan for reimbursement of fraudulent claims.
WILLIAMS provided the other charged defendants fake invoices from a particular Chiropractic Office in California, which were created by individuals working with WILLIAMS. In addition, WILLIAMS obtained fraudulent invoices from a dentist affiliated with dental offices in Beverly Hills, California, and from a doctor at a Wellness Office in Washington State. The fraudulent invoices purported to document that ANDERSON, ANTHONY ALLEN, DESIREE ALLEN, BROWN, BYNUM, DAVIS, DOUGLAS-ROBERTS, ELY, MOON, MILES, PALACIO, PATTERSON, ROBINSON, SMITH, TELFAIR, WATSON, WRIGHT, and WROTEN, and, in some cases, members of their families, had been recipients of expensive medical and dental services. But the defendants had not received the medical or dental services described in the invoices WILLIAMS provided them. In many instances, the defendants were not even located in the vicinity of the service providers on the dates the invoices stated they received medical or dental services. In particular, GPS location information and/or documents, such as flight records, show that the defendants were in locations other than the vicinity of the medical or dental offices falsely claimed as the providers of services.
In return for his provision of false supporting documentation for their fraudulent claims, many of the defendants paid WILLIAMS kickbacks, totaling at least approximately $230,000. WILLIAMS also used the personal identifying information of an employee of the Administrative Manager, which managed the Plan, in the course of the fraud scheme.
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TERRENCE WILLIAMS, ALAN ANDERSON, ANTHONY ALLEN, DESIREE ALLEN, SHANNON BROWN, WILLIAM BYNUM, RONALD GLEN DAVIS, CHRISTOPHER DOUGLAS-ROBERTS, a/k/a “Supreme Bey,” MELVIN ELY, JAMARIO MOON, DARIUS MILES, MILTON PALACIO, RUBEN PATTERSON, EDDIE ROBINSON, GREGORY SMITH, SEBASTIAN TELFAIR, CHARLES WATSON JR., ANTOINE WRIGHT, and ANTHONY WROTEN are each charged with one count of conspiracy to commit health care fraud and wire fraud, which carries a maximum sentence of 20 years in prison. TERRENCE WILLIAMS is also charged with one count of aggravated identity theft, which carries a mandatory minimum sentence of two years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Ms. Strauss praised the outstanding investigative work of the FBI/NYPD Health Care Fraud Task Force, which is composed of agents, detectives, and investigators from the FBI, the NYPD, and other law enforcement entities. Ms. Strauss additionally praised the work of the FBI’s Seattle, Los Angeles, Cleveland, Birmingham, Chicago, Sacramento, Memphis, Tampa, Las Vegas, Atlanta, Portland, and Detroit Field Offices.
The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Kristy J. Greenberg and Ryan B. Finkel are in charge of the prosecution.
The charges contained in the Indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
[1] 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.
Two New Jersey Men Arrested and Charged with Securities Fraud for Scheme to Defraud Investors in Hemp CompanyRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the arrests of VITALY FARGESEN and IGOR PALATNIK, and unsealing of an Indictment charging FARGESEN and PALATNIK with securities fraud, wire fraud and related offenses in connection with their fraudulent scheme to defraud investors in CanaFarma Corp. and later CanaFarma Hemp Products Corp. (together “CanaFarma”) by soliciting funds based upon false and misleading representations, failing to invest investor’s funds as promised, manipulating the public stock price of CanaFarma, and secretly misappropriating millions of dollars of CanaFarma funds. The case is assigned to U.S. District Judge Loretta A. Preska.
Manhattan U.S. Attorney Audrey Strauss said: “Vitaly Fargesen and Igor Palatnik presented themselves as entrepreneurs developing a new business for an emerging industry. But, as alleged, Fargesen and Palatnik were just using the trappings of a start-up to run an old-time scam: lying to investors to take money for themselves.”
F.B.I. Assistant Director-in-Charge Michael J. Driscoll said: “The defendants, as alleged, lured investors to CanaFarma by falsely representing the company’s financials, manipulating their stock price, and misappropriating millions for their personal benefit. Just as a reminder to anyone who thinks they can manipulate people’s investments in this way—that’s simply not the case.”
According to the allegations contained in the Indictment[1]:
From in or about March 2019 to in or about March 2020, CanaFarma was a privately-held Delaware corporation with offices in Manhattan, New York. Beginning on or about March 19, 2020, CanaFarma was listed on the Canadian Stock Exchange and beginning on or about March 23, 2020, CanaFarma was listed on the Frankfurt Stock Exchange. CanaFarma marketed itself to the investors as a “fully integrated cannabis company addressing the entire cannabis spectrum from seed to delivery of consumer products.” FARGESEN and PALATNIK, who held themselves out as Senior Vice Presidents at CanaFarma, in fact exercised full control of CanaFarma, The men hid their control from the investing public by, among things, convincing an experienced businessman to falsely present himself to the market as the CEO of the company.
Using their control of CanaFarma, FARGESEN and PALATNIK devised and carried out a scheme to defraud CanaFarma’s investors by soliciting more than $14 million in funds, including investments in private shares of CanaFarma, with false and misleading representations concerning the company’s management, products, and financials, failing to invest investor’s funds as promised, causing the manipulation of the public stock price of CanaFarma for the purposes of advancing the scheme to defraud investors and enriching themselves, and secretly misappropriating at least $4 million of CanaFarma funds for their own benefit.
FARGESEN and PALATNIK effectuated the scheme by: (a) purchasing a Canadian shell company through a straw purchaser; (b) directing the reverse merger of the shell company and CanaFarma to exercise secret control of the resulting publicly traded company; (c) controlling CanaFarma through a nominal Chief Executive Officer who reported to FARGESEN and PALATNIK; (d) supporting CanaFarma’s stock price through manipulative trading; (e) attempting to artificially inflate CanaFarma’s reported revenue; and (f) making false statements to CanaFarma’s auditors.
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FARGESEN, 52, and PALATNIK, 47, both of New Jersey, are each charged with one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison, one count of securities fraud, which carries a maximum sentence of 20 years in prison, one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, and one count of wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Ms. Strauss praised the investigative work of the FBI and also thanked the Securities and Exchange Commission, which has filed a civil enforcement action against the defendants, for its assistance in the investigation.
The case is being overseen by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Gina Castellano and Andrew Thomas are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Owner of New York Investment Fund Sentenced to Seven Years in Prison for Orchestrating $26 Million Scheme to Defraud InvestorsRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that BRENT BORLAND, the owner and principal of a New York-based investment fund known as Belize Infrastructure Fund I LLC (“Belize Fund”), was sentenced today in Manhattan federal court to 84 months in prison for orchestrating a $26 million investment fraud scheme against dozens of investors. BORLAND pled guilty in February 2019 to conspiring to commit, and the commission of, securities fraud and wire fraud before U.S. District Judge Katherine Polk Failla, who imposed today’s sentence.
Manhattan U.S. Attorney Strauss said: “Brent Borland led a years-long, multifaceted scheme to bilk victims out of more than $26 million. Using lies and deceit, Borland tricked more than 40 investors into entrusting him with their hard-earned money. In truth, Borland’s promises to investors were lies, and he spent much of their money on himself. For the financial and emotional devastation his fraud has inflicted, Borland will spend the next seven years in prison.”
According to the Complaint, Indictment, and statements made in connection with sentencing:
From 2014 through March 2018, BORLAND and others solicited and received approximately $26.1 million from approximately 40 investors based upon representations that he would use the investors’ money to construct an airport in Belize. BORLAND promised investors high rates of return on their investments, which he represented were temporary “bridge financing.” BORLAND also represented to investors that their investments would be fully secured by real property in Belize that was unencumbered by any liens or obligations.
In fact, however, BORLAND misappropriated millions of dollars of investors’ funds and used those funds for his own personal benefit. BORLAND diverted a substantial portion of the funds invested by victims to himself to pay for a variety of personal expenses, including his mortgage payments, credit card bills, luxury automobiles, a beach club membership, and private school tuition for his children. In contrast to BORLAND’s representations that investors would receive high rates of return within a specified time frame, all known investors in the scheme lost money. And while BORLAND represented that the investments would be secured by real property, the property purportedly serving as collateral was improperly pledged to multiple investors and, in some cases, did not even exist in the manner identified and described by Borland in documents he provided to the investors.
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In addition to his prison term, BORLAND, 51, of West Palm Beach, Florida, was sentenced to three years of supervised release and ordered to pay forfeiture of $26,584,970 and restitution of $26,184,970.
Ms. Strauss praised the investigative work of the U.S. Postal Inspection Service 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 Task Force. Assistant U.S. Attorneys Negar Tekeei and Edward Imperatore are in charge of the prosecution.
Four Defendants Charged with COVID-19 Fraud SchemeRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, Margaret Garnett, the Commissioner of the New York City Department of Investigation (“DOI”), and Jonathan Mellone, Special Agent-in-Charge of the New York Regional Office of the U.S. Department of Labor - Office of Inspector General (“DOL-OIG”), announced charges against CHANETTE LEWIS, TATIANA BENJAMIN, TATIANA DANIEL, and HEAVEN WEST for participating in a scheme that defrauded New York City’s COVID-19 Hotel Room Isolation Program of more than $400,000. LEWIS was also charged with a second COVID‑19 scheme involving unemployment benefits fraud. LEWIS and DANIEL were arrested today in New York and will be presented before Magistrate Judge Katharine H. Parker in Manhattan federal court. WEST was arrested in Atlanta, Georgia, and will be presented before Magistrate Judge Catherine M. Salinas in the Northern District of Georgia. BENJAMIN remains at large.
Manhattan U.S. Attorney Audrey Strauss said: “At the height of the COVID-19 pandemic in 2020, New York City designed a program to provide hotel rooms, free of cost, for qualifying individuals who could not safely self-isolate in their own homes, such as healthcare workers and individuals infected with COVID-19. As alleged, the defendants abused this program by falsely claiming to be healthcare workers and by selling hotel rooms to non-qualifying individuals. When, as alleged here, people illicitly exploit a public health crisis for private gain, they will find themselves facing criminal charges.”
DOI Commissioner Margaret Garnett said: “During the heart of the COVID-19 pandemic, while this City grappled with soaring transmission and death rates, these defendants exploited the very City-run program meant to provide respite and isolation to healthcare workers and City residents desperately trying to find space to quarantine and stem the spread of the virus, according to the charges. These defendants shamelessly posted their illegal conduct on social media and sold personal identification information of medical professionals to further their scheme, which siphoned more than $400,000 in hotel rooms paid for by the City and federal governments, according to the criminal complaint. DOI issued recommendations to the City Emergency Management to strengthen controls over this program, which has since ended, and thanks the agency for reporting this matter to DOI. I want to also thank our federal law enforcement partners at the Office of the U.S. Attorney for the Southern District of New York and the Office of Inspector General for the U.S. Department of Labor for working in partnership with us to uncover these charged COVID-19-related crimes and holding those involved accountable.”
DOL-OIG Special Agent-in-Charge Jonathan Mellone said: “The Unemployment Insurance Program exists to provide needed assistance to qualified individuals who are unemployed due to no fault of their own. Fraud against the Unemployment Insurance Program distracts state workforce agencies from ensuring benefits go to individuals who are eligible to receive them. The Office of Inspector General will continue to work closely with our many law enforcement partners, to investigate those who exploit the Unemployment Insurance Program.”
According to the allegations contained in the Complaint:[1]
In response to the COVID-19 pandemic, New York City created the COVID-19 Hotel Room Isolation Program (the “Program”). Funded by New York City and the Federal Emergency Management Agency, the Program provided free hotel rooms for qualifying individuals throughout New York City. The Program was open to: (1) healthcare workers who needed to isolate because of exposure to COVID-19; (2) patients who had tested positive for COVID-19; (3) individuals who believed, based on their symptoms, that they were infected with COVID-19; and (4) individuals who lived with someone who had COVID-19. As stated on the City’s website describing the Program, such individuals “may qualify to self-isolate in a hotel, free of charge, for up to 14 days if you do not have a safe place to self-isolate.” Those who wished to book a hotel room through the Program could either call a phone number or use an online hotel booking platform.
The four defendants defrauded the Program in at least two respects. First, they secured free Program hotel rooms for themselves by falsely claiming to be healthcare workers. Second, they sold fraudulently obtained hotel rooms – including rooms located in Manhattan and the Bronx – to customers who were ineligible for the Program. In total, the defendants collectively diverted more than 2,700 nights’ worth of hotel rooms through this scheme. The defendants charged varying amounts depending on the duration of the customers’ hotel stay (e.g., $150 for one week, or $300 for two weeks). Customers paid the defendants in cash and using electronic payment services. The federal government and New York City paid more than approximately $400,000 for the hotel rooms that were fraudulently diverted as a result of the defendants’ scheme.
LEWIS worked at a call center (“Call Center-1”) that handled phone calls and certain reservations for the Program for several months in 2020. LEWIS was hired specifically for the Program, and as a result of her employment, she had access to legitimate healthcare workers’ identifying information. LEWIS abused her position, including by misappropriating healthcare workers’ identifying information, revealing the Program’s inner workings to co-conspirators, and making unauthorized sales of Program hotel rooms to ineligible individuals. For instance, LEWIS sold BENJAMIN, for $800, personal identifying information of at least five healthcare professionals, as well as certain “codes” to use when booking hotel reservations through the Program, such as the employee ID number and license number. LEWIS admitted, in Facebook messages, that she had stolen doctors’ identifying information in furtherance of the scheme, writing: “I work for 311 oem that how I got doctors licenses and stuff . . . I work in the part that I collect they information and I do and approval the booking . . . I take doctors and stuff certificate numbers and stuff.” LEWIS also advertised to potential customers that, when hotels asked for a healthcare worker’s identification, LEWIS would supply a purported paystub and a letter asserting that the individual was (purportedly) a healthcare worker.
All four defendants used Facebook to advertise the sale of fraudulently obtained Program hotel rooms; communicate with co-conspirators; and communicate directly with customers. LEWIS worked directly with BENJAMIN and DANIEL, while WEST worked with, among others, DANIEL. The defendants made various incriminating statements via Facebook, including the following statements: (1) LEWIS told one hotel customer, “I’m booking it as u a health care worker”; (2) BENJAMIN told a Facebook user, “Friend at 311 gave me the juice for the hotel so I been booking ppl rooms”; (3) DANIEL told LEWIS, “We gotta relocate that bitch they keep asking for employee ID”; and (4) when asked whether she had “rooms” available, WEST replied, “Nah I dead don’t bro / All essential hotels are clipped” and added: “They finding out we was scamming the system lol.” All four defendants were paid by, among other means, Cash App, and their Cash App accounts revealed payments where the memo line said, for instance, “1 month telly”, “Hotel Manhattan 2 week extension for Kenny []”, “for the 2 week room”, “ayo telly”, “2 week stay in Manhattan”, “the room”, and “hotel for july 4-6”.
LEWIS is also charged with a second COVID-19 scheme involving unemployment benefits fraud. LEWIS fraudulently obtained more than $45,000 in unemployment benefits by claiming falsely that she had not been employed since February 2020 due to a lack of work because of the COVID-19 pandemic. In fact, LEWIS was employed for at least some of that period at Call Center-1, and LEWIS’s employment there ceased not because of the COVID-19 pandemic, but because LEWIS stopped showing up to work.
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The Complaint contains five counts. A chart containing the names, ages, residences, charges for each defendant, and maximum penalties, is set forth below. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Ms. Strauss praised the outstanding efforts of agents, investigators, and analysts from DOI, DOL-OIG, and the U.S. Attorney’s Office for the Southern District of New York. Ms. Strauss also thanked the New York/New Jersey High Intensity Drug Trafficking Area (HIDTA) Intelligence Analysts for their support and assistance in this investigation. She also expressed gratitude to the New York City Police Department, the New York State Department of Labor, and the DOL-OIG Atlanta Regional Office for their assistance. She added that the investigation is continuing.
This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Michael D. Neff is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Defendant, Age, Hometown
Charges, Maximum Penalties
CHANETTE LEWIS, 30
Brooklyn, New York
Wire fraud: 20 years’ imprisonment
Wire fraud conspiracy: 20 years’ imprisonment
Honest services fraud: 20 years’ imprisonment
Aggravated identity theft: mandatory minimum term of 2 years’ imprisonment, consecutive to any other term of imprisonment
Theft of Government funds: 10 years’ imprisonment
TATIANA BENJAMIN, 26
Queens, New York
Wire fraud: 20 years’ imprisonment
Wire fraud conspiracy: 20 years’ imprisonment
Aggravated identity theft: mandatory minimum term of 2 years’ imprisonment, consecutive to any other term of imprisonment
TATIANA DANIEL, 27
Brooklyn, New York
Wire fraud: 20 years’ imprisonment
Wire fraud conspiracy: 20 years’ imprisonment
HEAVEN WEST, 21
Brooklyn, New York
Wire fraud: 20 years’ imprisonment
Wire fraud conspiracy: 20 years’ imprisonment
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
Bronx Man Who Possessed Five “Ghost Guns” Charged with Possessing A Firearm and AmmunitionRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, John B. DeVito, Special Agent-in-Charge of the New York Field Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), and Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), announced the arrest of DOMINGO VALLE for being a felon in possession of a firearm and ammunition. VALLE was arrested yesterday and was presented in Manhattan federal court before U.S. Magistrate Katharine H. Parker today.
Manhattan U.S. Attorney Audrey Strauss said: “Domingo Valle, despite being a felon, allegedly possessed six firearms, including two privately made AR-style rifles and three privately made pistols, and ammunition. As alleged, for years, Valle purchased firearm tools, parts, and accessories online in order to create privately manufactured firearms, also known as ‘ghost guns,’ which are difficult to detect and trace. Thanks to the ATF and NYPD, these dangerous weapons are out of the hands of a felon and will no longer pose a threat to the community.”
ATF Special Agent-in-Charge John B. DeVito said: “Privately manufactured firearms (PMFs) are an increasing source of weapons for criminals and pose an emerging threat to public safety. ATF will continue to partner with NYPD and other agencies to identify, rigorously investigate, and apprehend those involved in the illegal manufacture and possession of firearms that endanger our communities.”
According to the allegations in the Complaint[1]:
For at least the past seven years, at least over 50 times, VALLE purchased online firearm parts, tools, and accessories that allow an individual to assemble a working firearm from component parts. For example, in 2020, VALLE purchased online a replacement part for an Easy Jig, which an individual can use to create an assembled firearm from component parts, such as an 80% AR-15 lower receiver. That same year, VALLE purchased online an 80% AR-15 lower receiver.
On October 4, 2021, agents from the ATF and NYPD recovered a pistol and five rounds of ammunition from VALLE’s residence in the Bronx, New York. Inside the residence, agents also found two privately made AR-style rifles, three privately made pistols, body armor, which was loaded with rifle and pistol magazines, and numerous bullets. In an effort to conceal the firearms, VALLE stored three of the privately made firearms in a concealed wall-mounted shelf in the residence.
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VALLE, 51, of Bronx, New York, is charged with being a felon in possession of a firearm and ammunition, which carries a maximum sentence of 10 years. 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.
Ms. Strauss praised the outstanding investigative work of the ATF and the NYPD. Ms. Strauss also thanked the Metropolitan Transportation Authority Office of the Inspector General for its assistance in the investigation.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorney Rebecca T. Dell 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 should be treated as an allegation.
Leader of Cellphone Account Takeover Fraud Scheme Pleads GuiltyRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, announced that defendant HENRY PEREZ pled guilty today to leading a multi-year cellphone account takeover fraud conspiracy. PEREZ impersonated legitimate cellphone accountholders in order to fraudulently obtain smartphones and electronic devices that he charged to compromised accounts. The fraud scheme also caused more than 300 victims across the United States to lose cellphone service for a period of time. PEREZ pled guilty before U.S. District Judge Richard M. Berman, to whom the case is assigned.
Manhattan U.S. Attorney Audrey Strauss said: “As he admitted today, Henry Perez led a sophisticated fraud scheme that impersonated victims, changed victims’ account information so victims would not receive fraud alerts, charged purchases to victims’ accounts, and deprived victims of cellphone service. Thanks to the dedicated work of our partners at Homeland Security, Perez stands convicted of this cellphone fraud scheme and now awaits sentencing for his crime.”
According to the allegations in the Indictment, public court filings, and statements made in court:
From June 2017 through December 2019, PEREZ was the leader of a criminal fraud ring that committed cellphone account takeover fraud and identity theft across the United States, including in the Southern District of New York. The scheme’s primary objective was to obtain new, valuable electronic devices, including iPhones, and charge these purchases to victims’ accounts, without the knowledge or consent of the victim accountholders. Over the course of the conspiracy, participants in the scheme attempted to fraudulently obtain more than $1 million worth of devices and, in fact, fraudulently obtained more than $530,000 worth of devices (e.g., iPhones, iPads, and AirPods), by charging purchases to victims’ accounts.
To conduct the scheme, members of the conspiracy, including PEREZ, used stolen identity information to impersonate victims who had cellphone accounts with a particular cellphone service provider (“Provider-1”). Members of the conspiracy then called customer service representatives of Provider-1 and used social engineering techniques to take over accounts by making various misrepresentations, including impersonating accountholders and expressing a purported need to regain access to their accounts. Through these misrepresentations, conspirators were able to gain unauthorized access to, and control of, accounts belonging to victim accountholders. Once they gained access, members of the conspiracy made various unauthorized changes to victim accounts, so that fraud alerts and emails relating to account changes were sent to a conspiracy member, rather than to the legitimate accountholders. Participants in the conspiracy then purchased new electronic devices, which they charged to victim accounts, without the knowledge or consent of the victims.
In many instances, conspirators arranged for the fraudulently ordered devices to be shipped to addresses under their control. In other instances, members of the scheme, including PEREZ, personally entered stores operated by Provider-1 to pick up fraudulently obtained devices. In total, participants in the conspiracy conducted in-store pickups of fraudulently obtained devices in at least 10 different states.
Once they had successfully exploited a particular victim’s account, members of the conspiracy typically relinquished control of that account, and moved on to exploiting other victim accounts. During the period in which the conspiracy compromised, and retained control of, a particular victim’s cellphone account, that victim typically lost cellphone service. In total, the scheme caused more than 300 victims across the United States to lose cellphone service for a period of time.
PEREZ was integrally involved in all aspects of the scheme, including using victims’ personal identifying information to dupe Provider-1; gaining unauthorized access to victim accounts; making unauthorized changes to victim accounts; receiving fraudulently obtained devices; and recruiting, directing, and paying a subordinate, including supplying that subordinate with victim information.
PEREZ, 33, of Fort Lee, New Jersey, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
PEREZ is scheduled to be sentenced by Judge Berman on January 18, 2022, at 10:00 a.m. Under the terms of his plea agreement, PEREZ also agreed to pay restitution of $539,654.96 and forfeiture of $532,374.96.
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Ms. Strauss praised the New York Office of Homeland Security Investigations (“HSI”) and its El Dorado Task Force for its outstanding work on this case.
This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Michael D. Neff is in charge of the prosecution.
Latin Kings Member Charged with the 2017 Murder of Joshua FloresRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, Michael J. Driscoll, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a five-count Superseding Indictment charging JONATHAN GARCIA, a/k/a “Jayo,” with racketeering, murder in aid of racketeering, firearms, and narcotics offenses, in connection with GARCIA’s involvement in the 2017 murder of Joshua Flores, a/k/a “Monster,” and offenses committed by GARCIA as a member of the Latin Kings, including the Black Mob tribe of the Latin Kings. GARCIA was arrested today and will be presented before U.S. Magistrate Judge Gabriel W. Gorenstein in Manhattan federal court. The case has been assigned to U.S. District Judge Valerie E. Caproni.
U.S. Attorney Audrey Strauss said: “Latin Kings, like other gangs, solve disputes with intimidation and violence, as Jonathan Garcia allegedly did when he shot and killed Joshua Flores in 2017. Acts such as this endanger the public and wreak havoc on the neighborhoods where gangs have entrenched themselves. We will continue our partnership with the NYPD and FBI to stop the proliferation of deadly gang violence on the streets of our City.”
FBI Assistant Director Michael J. Driscoll said: “Violent street gang like the Latin Kings use brutal tactics in their pursuit of illegal drugs and firearms, terrorizing all those who stand in their way. Basing status within the gang on a member’s violent acts is a stark illustration of their utter lack of respect for human life. For his alleged acts of violence, Mr. Garcia now faces a possible lifetime in federal prison.”
As alleged in the Superseding Indictment[1] unsealed today in Manhattan federal court and statements made in public filings:
GARCIA is a member of a racketeering enterprise known as the Latin Kings, and specifically, the set or “tribe” of the Latin Kings known as the Black Mob, which operates in the Bronx, Manhattan, Queens, Brooklyn, and Long Island. In order to enrich the enterprise, protect and expand its criminal operations, enforce discipline among its members, and retaliate against members of rival gangs, members and associates of the Black Mob committed, conspired, attempted, and threatened to commit acts of violence; distributed and possessed with intent to distribute narcotics, including heroin, fentanyl, and crack; committed robberies; and obtained, possessed, and used firearms. In December 2019 and April 2021, several members and associates of the Black Mob, including its senior-most leaders, were charged with racketeering offenses, narcotics conspiracy, and firearms offenses.
Since at least in or around 2012, GARCIA has been a member of the Latin Kings. On or about May 18, 2017, GARCIA shot and killed Joshua Flores, a/k/a “Monster.” The murder elevated GARCIA’s status within the Latin Kings, including the Black Mob.
GARCIA, 27, of Queens, New York, is charged with: (1) conspiracy to commit racketeering, in violation of Title 18, United States Code, Sections 1962(d) and 1963, which carries a maximum term of life in prison; (2) murder in aid of racketeering, in violation of Title 18, United States Code, Sections 1959(a)(1) and 2, which carries a mandatory term of life in prison or death; (3) murder through the use of a firearm, in violation of Title 18, United States Code, Sections 924(j)(1) and 2, which carries a maximum term of life in prison or death; (4) narcotics conspiracy, in violation of Title 21, United States Code, Sections 846 and 841 (b)(1)(A), which carries a maximum term of life in prison and a mandatory minimum term of 10 years in prison; and (5) use of a firearm in furtherance of a drug trafficking offense, in violation of Title 18 United States Code, Sections 924(c)(1)(A) and 2, which carries a maximum term of life in prison, and a mandatory minimum term of 10 years in prison, which must be served consecutively to any other term of in prison. The maximum potential sentences and the mandatory minimum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
Ms. Strauss praised the outstanding investigative work of the FBI and NYPD.
This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
This case is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Adam Hobson, Elinor Tarlow, and David Robles are in charge of the prosecution.
The charges in the Superseding 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 Superseding Indictment constitutes only allegations, and every fact described herein should be treated as an allegation.
Former CEO of Melrose Credit Union Sentenced to Nearly 4 Years in Prison for Violating Bank Bribery StatuteRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that ALAN KAUFMAN, who at the time of the offense was the chief executive officer of Melrose Credit Union (“Melrose CU”), was sentenced today to 46 months in prison. KAUFMAN was previously convicted, following a three-week jury trial, of participating in a scheme in which he accepted from Tony Georgiton free housing and hundreds of thousands of dollars in financing for the purchase of his personal residence, after approving millions of dollars in loans to Georgiton’s companies at favorable terms. KAUFMAN was also convicted for accepting lavish vacations, including to Paris and Hawaii, from CBS Radio after increasing Melrose CU’s advertising purchases at CBS Radio. KAUFMAN’s sentence was imposed by United States District Judge Lewis A. Kaplan.
U.S. Attorney Audrey Strauss said: “Alan Kaufman accepted lavish gifts from Tony Georgiton as a reward for favorable loan rates for Georgiton’s companies. In addition, Kaufman accepted luxury travel and hotel accommodations in return for approval of advertising spending by Melrose Credit Union at CBS Radio and elsewhere. Kaufman shirked his duty to act in the best interests of the credit union and its account holders, exploiting his position for personal gain. Now, thanks to the work of the FBI, Kaufman will spend time in federal prison for his crimes.”
According to the Indictment, documents previously filed in the case, and evidence presented at trial:
In 2010, Georgiton purchased a home in Jericho, New York (the “Jericho Residence”), and permitted KAUFMAN to live in that home rent-free for over two years. While KAUFMAN was living rent-free at the Jericho Residence, KAUFMAN personally approved the refinancing of over $100 million worth of loans at Melrose CU held by a company owned by Georgiton with favorable terms. The head of Melrose CU’s loan department did not sign off on the loans made to Georgiton because, among other things, he believed that the terms were too favorable and did not comply with Melrose CU’s loan policy.
In 2011, KAUFMAN sought approval from Melrose CU’s board of directors (the “Melrose Board”) for Melrose CU to purchase the naming rights to a ballroom under construction in Astoria, Queens (the “Melrose Ballroom”). That ballroom was owned by a company that was in turn owned by Georgiton. KAUFMAN did not disclose to the Melrose Board that he was living rent-free in a house owned by Georgiton at the time he sought Melrose Board approval for the naming rights acquisition. Over the next five years, Melrose CU paid $2 million to Georgiton’s company for the naming rights to the Melrose Ballroom. KAUFMAN also directed that payment for the naming rights be paid a year in advance of the Melrose Ballroom’s actual opening for operations.
In 2013, KAUFMAN purchased the Jericho Residence from Georgiton, with financing that largely came from Georgiton. To purchase the Jericho Residence, KAUFMAN took out a $200,000 loan from Melrose CU, co-signed by Georgiton and secured by Georgiton’s shares in Melrose CU. Georgiton also gave KAUFMAN a $240,000 unsecured personal “loan.” Georgiton has never made a demand for payment on that purported loan and KAUFMAN has never made a payment on that purported loan. Rather than repay the loan, the following year, KAUFMAN purchased a used Maserati sports car valued at over $100,000 for his wife.
In addition, from in or about 2010 through in or about 2015, KAUFMAN solicited and accepted lavish vacations and other gifts worth tens of thousands of dollars from CBS Radio and other media vendors, after KAUFMAN approved advertising spending by Melrose CU. For example, in 2010, CBS Radio paid for KAUFMAN and his wife, who also worked at Melrose CU, to fly to Paris, France, and stay at the Four Seasons George V Paris. In 2012, CBS Radio paid for KAUFMAN and his wife to fly to Maui, Hawaii, and stay at the Four Seasons in Wailea. In 2013, CBS Radio paid for KAUFMAN and his wife to attend the Super Bowl in New Orleans.
KAUFMAN did not seek approval for these vendor-paid trips from the Melrose Board, nor did he disclose these vendor-paid trips to the Melrose Board, in violation of Melrose CU’s anti-bribery policy.
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In addition to the prison term, KAUFMAN, 62, of Jericho, New York, was sentenced to two years of supervised release and ordered to forfeit specified property, pay restitution to the National Credit Union Administration in the amount of $2 million, and pay a fine of $30,000.
On January 11, 2021, Georgiton was sentenced to three years’ probation, a fine of $95,000, forfeiture of $286,663.65, and a special condition of nine months’ home confinement.
Ms. Strauss praised the outstanding work of the Federal Bureau of Investigation. She also thanked the National Credit Union Administration for their efforts and ongoing support and assistance with the case.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Dina McLeod, Michael McGinnis, and Nicholas Chiuchiolo are in charge of the prosecution.
U.S. Attorney Announces Unsealing of Indictment Charging Six Individuals and One Corporate Entity with Tax Fraud Conspiracy, and Related Guilty PleaRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, Stuart M. Goldberg, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division, and James C. Lee, Chief of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the unsealing of an Indictment charging six foreign individuals and a Swiss financial services company with conspiring to defraud the IRS by helping three high-value U.S. taxpayer-clients conceal more than $60 million in income and assets held in undeclared, offshore bank accounts and to evade U.S. income taxes. The case has been assigned to U.S. District Judge Gregory H. Woods. One of the charged defendants was recently arrested in Spain.
Ms. Strauss, Mr. Goldberg, and Mr. Lee also announced today the unsealing of the guilty plea of Wayne Franklyn Chinn, one of the U.S. taxpayer-clients who participated in the tax fraud scheme. The case against CHINN is assigned to U.S. District Judge Victor Marrero. Through a related civil forfeiture action, the Government forfeited approximately $2.2 million in CHINN’s untaxed funds and repatriated these funds from Singapore to the United States.
Manhattan U.S. Attorney Audrey Strauss said: “As alleged, the individual defendants and the Swiss firm Allied Finance conspired to defraud the IRS by assisting U.S. taxpayers in avoiding their tax obligations. They allegedly did this through an elaborate scheme that involved concealing customer assets at a Swiss private bank through nominee bank accounts in Hong Kong and elsewhere, with funds returning to the private bank in the name of a Singapore firm. One such U.S. customer, Wayne Chinn, pled guilty to his participation in the so-called ‘Singapore Solution,’ forfeited more than $2 million to the United States, and awaits sentencing for his admitted crime.”
Acting Deputy Assistant Attorney General Stuart M. Goldberg said: “Prosecuting offshore tax evasion remains one of the Tax Division’s highest priorities. Taxpayers contemplating hiding money abroad – and the foreign bankers, attorneys and finance professionals who design and execute strategies to assist their evasion – should know that the Tax Division and IRS have the investigative resources and expertise to unravel even the most elaborate schemes.”
IRS-CI Chief James C. Lee said: “The defendants allegedly helped their clients conceal more than $60 million in income and assets in an attempt to evade their U.S. tax responsibilities. Through the hard work of IRS-CI and the cooperation of our law enforcement partners, we were able to uncover the massive fraud allegedly being perpetrated by these individuals and hold them accountable for their actions. We are also proud to recognize the guilty plea of Mr. Wayne Chinn. His actions demonstrate complete disregard for the United States tax laws, but thanks to the commitment of our agents, we were able to unravel his scheme and bring him to justice.”
According to the allegations in the Indictment unsealed today[1]:
From in or about 2009 to in or about 2014, Ivo Bechtiger, Bernhard Lampert, Peter Rüegg, Roderic Sage, Rolf Schnellmann, Daniel Wälchli, and Allied Finance Trust AG of Zurich, Switzerland (“ALLIED FINANCE”), the defendants, defrauded the IRS by concealing income and assets of certain U.S. taxpayer-clients with undeclared bank accounts located at Privatbank IHAG Zurich AG (“IHAG”), a Swiss private bank in Zurich, Switzerland,[2] and elsewhere. In order to assist the U.S. taxpayer-clients, the defendants and others devised and implemented a scheme dubbed the “Singapore Solution” to fraudulently conceal the bank accounts of the U.S. taxpayer-clients, their assets, and their income from U.S. authorities. In furtherance of the fraudulent scheme, the defendants and others conspired to transfer more than $60 million from undeclared IHAG bank accounts of three U.S. taxpayer-clients through a series of nominee bank accounts in Hong Kong and other locations before returning the funds to newly opened accounts at IHAG in the name of a Singapore-based asset-management firm. The U.S. taxpayer-clients paid large fees to IHAG and others to help them conceal their funds and assets and evade taxes.
On or about August 16, 2021, defendant PETER RÜEGG, 61, of Switzerland was arrested in Spain. As alleged in the Indictment, RÜEGG was a member of IHAG’s management and a relationship manager for one of the U.S. taxpayer-clients who participated in the Singapore Solution scheme. RÜEGG is alleged to have helped the U.S. taxpayer-client conceal approximately $50 million in undeclared assets at IHAG through the Singapore Solution.
If convicted, the individual defendants face a maximum penalty of five years in prison, and ALLIED FINANCE faces monetary penalties.
The charges in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
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Also unsealed today was the guilty plea of Wayne Franklyn Chinn, one of the U.S. taxpayer-clients who participated in the Singapore Solution scheme. According to statements made during CHINN’s plea proceeding, and related court filings:
From at least in or about 2001 through at least in or about January 2019, CHINN concealed approximately $5 million in undisclosed and untaxed income for tax years 2001 through 2018. During this period, CHINN held offshore accounts at IHAG in nominee names. Beginning in 2010, CHINN and others transferred funds from these offshore accounts at IHAG through nominee accounts outside of Switzerland, including in Hong Kong, before returning them to newly opened accounts at IHAG held in the name of a Singapore-based trust company purportedly on behalf of two foundations created by a co-conspirator. They did so to continue to conceal CHINN’s income and assets from U.S. authorities. CHINN subsequently transferred the funds out of Switzerland to undeclared accounts in Singapore. CHINN did not file any tax returns or disclose his offshore bank accounts during the years at issue.
CHINN, 79, of Ho Chi Minh City, Vietnam, and San Francisco, California, pled guilty on December 19, 2019, before U.S. Magistrate Judge Kevin Nathaniel Fox to one count of tax evasion for the calendar years 2001 through 2018, in violation of 26 U.S.C. § 7201, which carries a maximum penalty of five years in prison. CHINN also consented to the civil forfeiture of 83% of the funds held in five accounts at two Singapore banks, which resulted in the successful forfeiture and repatriation to the United States of approximately $2.2 million. The civil forfeiture proceeding is United States of America v. Certain Funds on Deposit in Various Accounts, 20 Civ. 3397 (LJL).
CHINN is scheduled to be sentenced by Judge Marrero on November 19, 2021.
The maximum potential sentences set forth above are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the Court.
Ms. Strauss and Mr. Goldberg praised the outstanding work of IRS-CI. Ms. Strauss thanked the Department of Justice’s Tax Division for their partnership on this case. Ms. Strauss, Mr. Goldberg, and Mr. Lee also thanked the Department of Justice’s Office of International Affairs, the Singapore Attorney-General’s Chambers, and the Commercial Affairs Department of the Singapore Police Force for their assistance in this matter.
This prosecution is being handled by the Complex Frauds and Cybercrime Unit of the United States Attorney’s Office for the Southern District of New York and the Department of Justice’s Tax Division. Assistant U.S. Attorney Olga I. Zverovich of the United States Attorney’s Office for the Southern District of New York and Senior Litigation Counsel Nanette Davis and Trial Attorney Sean Green of the Tax Division are 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.
[2] In November 2015, IHAG entered into a non-prosecution agreement with the Department of Justice, paid a penalty of approximately $7.4 million, and agreed to cooperate with U.S. authorities.
Man Convicted of Murder in Manhattan Federal Court for June 2000 Fatal ShootingRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that RALPH BERRY was found guilty by a unanimous Manhattan jury for the murder of Caprice Jones in the vicinity of 751 East 161 Street, Bronx, New York. BERRY will be sentenced before the Honorable U.S. District Judge Alison J. Nathan, who presided over the jury trial.
U.S. Attorney Audrey Strauss said: “In June of 2000, Caprice Jones was senselessly gunned down, the unintended victim of drug-dealer Ralph Berry and a co-defendant, who tragically missed their mark when trying to murder a rival dealer. Instead, their bullet struck Jones, who died after suffering a years-long spinal injury. This case typifies the inherent danger of the drug trade, which oftentimes leaves innocent victims in its wake. I commend the career prosecutors and agents of this Office in their partnership with the outstanding detectives of the NYPD for their determination in bringing closure in the cold case.”
According to the Indictment and other evidence presented at trial in federal court:
In the summer of 2000, BERRY was the head of a violent drug crew that operated in the McKinley Housing Development in the Bronx, New York. On June 21, 2000, BERRY ordered one of his subordinates to shoot a rival drug dealer with whom BERRY had been feuding over drug territory. That subordinate followed BERRY’s order and fired multiple shots into a Father’s Day barbecue being held on the McKinley Houses basketball courts. Caprice Jones, an innocent bystander who was not involved in the drug dispute, was struck in the spine by one of the bullets. The gunshot injury Jones sustained that day left him paralyzed from the waist down and ultimately caused his death in November 2010, at the age of 42.
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BERRY, 54, was convicted of murder through use of a firearm, which carries a maximum penalty of life in prison and a mandatory minimum sentence of five years in prison, murder in connection with a drug trafficking crime, which carries a maximum penalty of life in prison and a mandatory minimum sentence of 20 years in prison, and murder in aid of a racketeering enterprise, which carries a mandatory minimum sentence of life in prison.
The maximum potential sentence in this case is prescribed by Congress and is provided here for information purposes only, as any sentencing of the defendants will be determined by the judge.
Ms. Strauss 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 Dominic A. Gentile, Maurene Comey, Adam S. Hobson, and Jacob R. Fiddelman are in charge of the prosecution.
Indictment Unsealed Against Six Individuals and Foreign Financial Service Firm for Tax Evasion ConspiracyRead the Press Release
An indictment was unsealed today in New York, New York, that charges offshore financial service executives and a Swiss financial services company with conspiracy to defraud the IRS by helping three large-value U.S. taxpayer-clients conceal more than $60 million in income and assets held in undeclared, offshore bank accounts and to evade U.S. income taxes.
According to the indictment, from 2009 to 2014, Ivo Bechtiger, Bernhard Lampert, Peter Rüegg, Roderic Sage, Rolf Schnellmann, Daniel Wälchli and Zurich, Switzerland-based Allied Finance Trust AG allegedly defrauded the IRS by concealing income and assets of certain U.S. taxpayer clients with undeclared bank accounts located at Privatbank IHAG (IHAG), a Swiss private bank in Zurich, Switzerland, and elsewhere. In order to assist those clients, the defendants and others allegedly devised and used a scheme called the “Singapore Solution” to conceal the bank accounts of the U.S.-based clients, their assets, and their income from U.S. authorities. In furtherance of the scheme, the defendants and others allegedly conspired to transfer more than $60 million from undeclared IHAG bank accounts of the three U.S. clients through a series of nominee bank accounts in Hong Kong and other locations before returning the funds to newly opened accounts at IHAG, ostensibly held in the name of a Singapore-based asset manager. The U.S. clients allegedly paid large fees to IHAG and others to help them conceal their funds and assets.
“Prosecuting offshore tax evasion remains one of the Tax Division’s highest priorities,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. “Taxpayers contemplating hiding money abroad – and the foreign bankers, attorneys and finance professionals who design and execute strategies to assist their evasion – should know that the Tax Division and IRS have the investigative resources and expertise to unravel even the most elaborate schemes.”
“As alleged, the individual defendants and the Swiss firm Allied Finance conspired to defraud the IRS by assisting U.S. taxpayers in avoiding their tax obligations,” said U.S. Attorney Audrey Strauss for the Southern District of New York. “They allegedly did this through an elaborate scheme that involved concealing customer assets at a Swiss private bank through nominee bank accounts in Hong Kong and elsewhere, with funds returning to the private bank in the name of a Singapore firm. One such U.S. customer, Wayne Chinn, pleaded guilty to his participation in the so-called ‘Singapore Solution,’ forfeited more than $2 million to the United States, and awaits sentencing for his admitted crime.”
If convicted, the defendants face a maximum penalty of five years in prison, supervised release, and monetary penalties, and the corporate defendant faces monetary penalties. An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Also unsealed today was the guilty plea of Wayne Franklyn Chinn, of Vietnam and San Francisco, California, one of the U.S. taxpayer-clients, who participated in the Singapore Solution scheme.
According to court documents filed in relation to his guilty plea, from 2001 through 2018, Chinn concealed approximately $5 million in undisclosed and untaxed income. During this period, Chinn held accounts in nominee names at Privatbank IHAG. Beginning in 2010, Chinn wired funds from these offshore accounts through nominee accounts in Hong Kong before returning them to newly opened accounts at IHAG held in the name of a Singapore based trust company acting on behalf of two foundations created to conceal Chinn’s ownership of the accounts. Chinn subsequently transferred the funds out of Switzerland to undeclared accounts in Singapore. Chinn did not file any tax returns or disclose his foreign bank accounts during the years at issue.
Chinn pleaded guilty to one count of tax evasion which carries a maximum penalty of five years in prison. Chinn also consented to the civil forfeiture of 83% of the funds held in five accounts at two Singapore banks, which resulted in the successful forfeiture and repatriation to the United States of approximately $2.2 million. The civil forfeiture proceeding is United States of America v. Certain Funds on Deposit in Various Accounts, 20 Civ. 3397 (LJL).
Chinn is scheduled to be sentenced on Nov. 19, and faces a maximum penalty of five years in prison. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division; U.S. Attorney Audrey Strauss for the Southern District of New York; and Chief James Lee of IRS-Criminal Investigation made the announcement. The Department of Justice Office of International Affairs, the Singapore Attorney-General’s Chambers and the Commercial Affairs Department of the Singapore Police Force provided significant assistance in this matter.
The IRS-Criminal Investigation Division is investigating the case.
Senior Litigation Counsel Nanette Davis and Trial Attorney Sean Green of the Justice Department’s Tax Division and Assistant U.S. Attorney Olga Zverovich of the U.S. Attorney’s Office for the Southern District of New York are prosecuting the case.
Founder of New York Litigation Finance Firm Pleads Guilty to Multimillion-Dollar Securities Fraud SchemeRead the Press Release
Audrey Strauss, 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 that JAESON BIRNBAUM, an attorney and the founder of Cash4Cases, Inc., a bankrupt litigation funding firm that was headquartered in New York, New York, pled guilty to securities fraud today before U.S. District Judge Paul A. Crotty. BIRNBAUM admitted as part of his plea that he used investor funds for his own purposes and double-pledged the same case recoveries as collateral to multiple parties.
U.S. Attorney Audrey Strauss said: “Jaeson Birnbaum conned investors through a series of lies about his litigation finance business, Cash4Cases. He used Cash4Cases to steal cash for himself and then tried to cover up his scheme by directing a subordinate to falsify books and records. Now Birnbaum awaits sentencing for his fraudulent conduct.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “Everything Mr. Birnbaum told his investors was a lie framed around the idea of a good investment. Postal Inspectors see these cases all the time and remind investors to thoroughly check the fine print on any investment offer, and if the return seems too lucrative or unreal, pass it by to make sure your money goes to fund your lifestyle and not the criminal’s.”
According to the Information and statements made in Court:
From at least in or about 2017 through in or about 2019, BIRNBUAM obtained more than $3 million in investments for Cash4Cases based on fraudulent misrepresentations. These investments were in the form of promissory notes, titled “Investor Security Agreements” (“ISAs”), which purported to provide the relevant investors with a security interest in the recoveries associated with certain specified lawsuits that were ostensibly purchased by Cash4Cases. In fact, in some instances, the lawsuits that were either never funded by Cash4Cases or BIRNBAUM had previously pledged their recoveries to other parties.
To help carry out his fraud, BIRNBAUM directed an employee to falsify his company’s books and records to make it appear that the recoveries from lawsuits that had already been paid out were still available to be pledged as collateral to new investors.
BIRNBAUM also misappropriated a substantial portion of investors’ funds for his personal use and to make promised payments to earlier investors. As one example, BIRNBAUM obtained a $1 million investment for Cash4Cases in September 2019. Prior to this investment, BIRNBAUM told the investor that Cash4Cases would use the money exclusively for advances to litigants. However, contrary to this representation, on the same date that Cash4Cases received the $1 million investment, BIRNBAUM used the money to send a $530,000 wire toward the purchase of a house in New Jersey.
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BIRNBAUM, 47, of Boca Raton, Florida, faces 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. BIRNBAUM is scheduled to be sentenced before Judge Crotty on January 6, 2022, at 12:00 p.m.
Ms. Strauss praised the investigative work of the USPIS. Ms. Strauss also thanked the Securities & Exchange Commission, which brought a civil action today against BIRNBAUM in Manhattan federal court.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Daniel Loss is in charge of the prosecution.
6 Physical Therapists and 2 Acupuncturists Charged in over $20 Million Health Care Fraud SchemeRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, and Scott Lampert, 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 the unsealing today of an indictment charging acupuncturists JUNYI LIU, a/k/a “Jenny,” and HONGXING WANG, as well as physical therapists GLEEN ANCIRO, NOEMI ALGODON, MOHAMED ELMANDOUH, GERARD ESTRELLA, RAMON GARCIA III, and HENLER DATU TAHIL, and cashier ZIHAO CHEN with operating an over $20 million health care fraud scheme at fraudulent medical offices in Manhattan, Brooklyn, and Queens. As part of the fraud scheme, CHEN and other of the defendants’ co-conspirators paid cash kickbacks to patients (the “Paid Patients”) who were insured by Medicare and/or other insurance providers (collectively, the “Insurance Providers”), and the defendants and their co-conspirators then billed Medicare and the insurance providers for physical therapy and acupuncture services related to the Paid Patients that were unnecessary or never performed. LIU was additionally charged with unlawfully enriching herself and a family member through a COVID-19 unemployment benefit scheme.
The defendants were arrested earlier today and will be presented this afternoon before U.S. Magistrate Judge Gabriel W. Gorenstein. The case is assigned to Chief U.S. District Judge Laura Taylor Swain.
U.S. Attorney Audrey Strauss said: “As alleged, the defendants perpetrated a multimillion-dollar health care fraud scheme in which they billed Medicare and other insurers for physical therapy and acupuncture services that were either not rendered in the manner purported or not rendered at all. Large-scale insurance frauds of the type alleged here impose hidden but very real costs on the public as well as insurers. Thanks to our partners in this case, the defendants are in custody and facing serious federal charges.”
HHS Special Agent in Charge Scott Lampert said: “These allegations describe a greed-fueled scheme that undermined our health care system and the people it serves. Health care providers participating in the Medicare program are trusted to furnish medically necessary services and to make beneficiaries collaborators in their care, not conspirators in fraud. HHS-OIG and our law enforcement partners proudly work to protect federal health care funds by identifying and quelling fraudulent billing of providers.”
According to the allegations contained in the Indictment[1] and statements made during court proceedings:
Between 2018 and 2021, LIU, a licensed acupuncturist, operated medical offices (the “Offices”) from which LIU and her partners fraudulently billed the Insurance Providers for physical therapy and acupuncture services that were not rendered in the manner represented or not rendered at all. During the scheme, LIU partnered with other licensed medical professionals, including ANCIRO, ALGODON, ELMANDOUH, ESTRELLA, GARCIA, and TAHIL, all of whom were licensed physical therapists, and WANG, who was a licensed acupuncturist (collectively, the “Partners”). The Partners’ roles in the scheme typically included: (i) allowing the Offices to use their enrollments with the Insurance Providers to submit to the Insurance Providers materially false and fraudulent claims for reimbursement for physical therapy and acupuncture services that were not rendered in the manner represented or were not rendered at all; (ii) creating materially false medical documentation, which stated that certain physical therapy and acupuncture services had been rendered, when such services in fact were not rendered in the manner represented or were not rendered at all; and (iii) contributing financing for the Offices, including for the payment of cash kickbacks to the Paid Patients to induce those patients to provide their insurance information and receive medically unnecessary and/or non-existent services at the Offices. LIU and certain of the Partners also agreed to give kickbacks, including cash and expensive wine, to employees of Insurance Providers to enable the scheme to continue.
In furtherance of the scheme, LIU employed receptionists, cashiers, marketers, financial and billing personnel, acupuncturists, massagists, and other personnel. The cashiers included CHEN, who on numerous occasions distributed tens of thousands of dollars in cash kickbacks to the Paid Patients. In some instances, these Paid Patients visited the Offices, signed in, and received unnecessary physical therapy and acupuncture services. In other instances, the Paid Patients visited the Offices, signed a sign-in sheet and other documents, and then left without receiving any services at all. In yet other instances, the Paid Patients did not visit the Offices at all and instead signed sign-in sheets and other documents brought to them elsewhere. Regardless of whether the Paid Patients received any services or even visited the Offices at all, the Partners used the Paid Patients’ insurance information to fraudulently bill the Insurance Providers for unnecessary and/or never rendered services.
While LIU and her Partners were defrauding the Insurance Providers of millions of dollars, from April 2020 through September 2021, LIU also engaged in a scheme to obtain COVID-19 unemployment benefits for herself and a family member (the “Family Member”) by fraudulently submitting and causing to be submitted to the New York Department of Labor materially false online applications and certifications for COVID-19 benefits. Among other things, the applications and/or certifications represented that LIU was unemployed when, in fact, she continued to operate the Offices for all or nearly all of this period, and that LIU’s Family Member was unable to work because of COVID-19 during a five-month period when the Family Member was in China.
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JUNYI LIU, 67, of Great Neck, New York, GLEEN ANCIRO, 50, of Floral Park, New York, NOEMI ALGODON, 49, of Mineola, New York, MOHAMED ELMANDOUH, 48, of Staten Island, New York, GERARD ESTRELLA, 39, of West Hempstead, New York, RAMON GARCIA III, 39, of Merrick, New York, HENLER DATU TAHIL, 38, of East Meadow, New York, HONGXING WANG, 61, of Brooklyn, and ZIHAO CHEN, 20, of Queens, are each charged with: (1) conspiring to commit health care fraud, which carries a maximum sentence of 20 years in prison; (2) conspiring to violate the Anti-Kickback Statute, which has a maximum penalty of five years in prison; and (3) conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison. LIU is also charged with wire fraud, which has a maximum penalty of 20 years in prison, and theft of Government funds, which has a maximum penalty of 10 years in prison.
The statutory maximum sentences are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.
Ms. Strauss praised the outstanding investigative work of HHS-OIG’s New York Office and the New York Field Office of the Internal Revenue Service, Criminal Investigation. Ms. Strauss also thanked the New York State Attorney General’s Medicaid Fraud Control Unit and the U.S. Department of Labor, Office of Inspector General, for their assistance.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Timothy V. Capozzi is in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth in this release constitute only allegations, and every fact described should be treated as an allegation.
United States Citizen Pleads Guilty to Conspiring to Assist North Korea in Evading SanctionsRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that VIRGIL GRIFFITH, a U.S. citizen, pled guilty to conspiring to violate the International Emergency Economic Powers Act (“IEEPA”) by providing services to the Democratic People’s Republic of Korea (“DPRK” or “North Korea”) including technical advice on using cryptocurrency and blockchain technology to evade sanctions. GRIFFITH pled guilty today before U.S. District Judge P. Kevin Castel.
U.S. Attorney Audrey Strauss stated: “As he admitted in court today, Virgil Griffith agreed to help one of our nation’s most dangerous foreign adversaries, North Korea. Griffith worked with others to provide cryptocurrency services to North Korea and assist North Korea in evading sanctions, and traveled to North Korea to do so. In the process, Griffith jeopardized the national security of the United States by undermining the sanctions that both Congress and the President have enacted to place maximum pressure on the threat posed by North Korea’s treacherous regime.”
According to the Indictment and other documents in the public record, as well as statements made in public court proceedings:
Pursuant to the IEEPA and Executive Order 13466, United States Persons are prohibited from exporting any goods, services, or technology to the DPRK without a license from the Department of the Treasury, Office of Foreign Assets Control (“OFAC”).
GRIFFITH, a cryptocurrency expert, began formulating plans as early as 2018 to provide services to individuals in the DPRK by developing and funding cryptocurrency infrastructure there, including to mine cryptocurrency. GRIFFITH knew that the DPRK could use these services to evade and avoid U.S. sanctions, and to fund its nuclear weapons program and other illicit activities.
In April 2019, GRIFFITH traveled to the DPRK to attend and present at the “Pyongyang Blockchain and Cryptocurrency Conference” (the “DPRK Cryptocurrency Conference”). Despite the fact that the U.S. Department of State had denied GRIFFITH permission to travel to the DPRK, GRIFFITH delivered presentations at the DPRK Cryptocurrency Conference, tailored to the DPRK audience, knowing that doing so violated sanctions against the DPRK.
At the DPRK Cryptocurrency Conference, GRIFFITH and his co-conspirators provided instruction on how the DPRK could use blockchain and cryptocurrency technology to launder money and evade sanctions. GRIFFITH’s presentations at the DPRK Cryptocurrency Conference had been approved by DPRK officials and focused on, among other things, how blockchain technology such as “smart contracts” could be used to benefit the DPRK, including in nuclear weapons negotiations with the United States. GRIFFITH and his co-conspirators also answered specific questions about blockchain and cryptocurrency technologies for the DPRK audience, including individuals whom GRIFFITH understood worked for the North Korean government.
After the DPRK Cryptocurrency Conference, GRIFFITH pursued plans to facilitate the exchange of cryptocurrency between the DPRK and South Korea, despite knowing that assisting with such an exchange would violate sanctions against the DPRK. GRIFFITH also attempted to recruit other U.S. citizens to travel to North Korea and provide similar services to DPRK persons, and attempted to broker introductions for the DPRK to other cryptocurrency and blockchain service providers. At no time did GRIFFITH obtain permission from OFAC to provide goods, services, or technology to the DPRK.
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VIRGIL GRIFFITH, 38, a resident of Singapore and citizen of the United States, pled guilty to one count of conspiring to violate IEEPA, which carries a maximum term of 20 years in prison. GRIFFITH is scheduled to be sentenced by Judge Castel on January 18, 2022, at 11:00 a.m.
The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
Ms. Strauss praised the outstanding investigative work of the Federal Bureau of Investigation and its New York Field Office, Counterintelligence Division, and thanked the U.S. Department of State’s Diplomatic Security Service, the Department of Justice’s National Security Division, Counterintelligence and Export Control Section, the Department of Justice’s Office of International Affairs, and the Singapore Police Force for their assistance.
The case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Kimberly Ravener and Kyle A. Wirshba are in charge of the case, with assistance from Deputy Chief Elizabeth Cannon and Trial Attorney Matthew J. McKenzie of the Counterintelligence and Export Control Section.
Manhattan U.S. Attorney Announces $72.6 Million Settlement of Fraud Lawsuit Against Wells Fargo Bank for Overcharging Foreign Exchange Customers over Seven YearsRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that the United States has simultaneously filed and settled a civil fraud lawsuit against Wells Fargo Bank, N.A. (“Wells Fargo” or the “Bank”) alleging that it violated the Financial Institutions Reform Recovery and Enforcement Act (“FIRREA”) by fraudulently overcharging hundreds of commercial customers, many of them small and medium-sized businesses and federally-insured financial institutions, who used the Bank’s foreign exchange (“FX”) service. Specifically, the United States alleged that, from 2010 through 2017, Wells Fargo FX sales specialists defrauded 771 customers by systematically charging them higher markups on FX transactions than they represented the Bank would charge, and concealing these overcharges through various misrepresentations and deceptive practices.
As part of the settlement, approved today by U.S. District Judge John G. Koeltl, Wells Fargo will pay a total of approximately $72.6 million, with approximately $35.3 million having been paid directly to the 771 customers collectively as restitution and approximately $37.3 million to be paid to the United States as civil penalties under FIRREA and as asset forfeiture. Wells Fargo also made extensive admissions of certain conduct alleged in the Government’s complaint, including that many FX sales specialists overcharged hundreds of commercial customers by applying larger sales margins or spreads than they represented they would, and that, in certain instances, when customers contacted the Bank to inquire about higher-than-agreed-upon pricing, FX sales specialists would give customers false explanations for the inflated prices.
U.S. Attorney Audrey Strauss said: “We all put trust in our banking institutions to deal with us honestly, fairly, and transparently when we are their customers. For the better part of a decade, Wells Fargo abused this trust, using tricks, false information, and other deceptive practices to fraudulently overcharge customers who used the Bank’s foreign exchange service. This settlement, which requires Wells Fargo to make its customers whole for their losses and pay a substantial penalty, sends a strong message to the banking industry that financial institutions who take advantage of their customers will be held to account.”
As alleged in the Government’s complaint:
During 2010 through 2017 (the “Covered Period”), Wells Fargo offered FX services to commercial customers located throughout the United States, such as converting the customers’ US dollars into foreign currency for outgoing wire transfers and converting incoming wire transfers of foreign currency into U.S. dollars. Wells Fargo profited from these transactions by marking up the prices on currency it was selling to and marking down the prices on currency it was buying from its customers. Wells Fargo employees referred internally to this currency mark-up as a “spread” or “sales margin.” Wells Fargo FX sales specialists frequently entered into agreements with the Bank’s customers pursuant to which they represented that the Bank would charge specific spreads or sales margins on their FX transactions. These agreements, referred to internally as “fixed-pricing agreements,” were both written and oral in nature.
During the Covered Period, Wells Fargo defrauded 771 of its commercial customers with fixed-pricing agreements, many of them small or medium-sized companies and federally-insured financial institutions, by falsely representing to the customers that the Bank would charge specific fixed FX spreads on FX transactions, when, in fact, Wells Fargo was surreptitiously and systematically charging significantly higher spreads and pocketing tens of millions of dollars in ill-gotten FX revenue. By financially incentivizing its FX sales specialists to overcharge FX customers while failing to take steps to ensure that FX sales specialists honored pricing representations, Wells Fargo created an atmosphere in which employees openly joked about and celebrated taking advantage of the Bank’s customers.
Wells Fargo FX sales specialists used a variety of misrepresentations and deceptive practices to defraud customers. For example, instead of applying agreed-upon fixed spreads to customers’ outgoing wires, FX sales specialists would charge inflated spreads that were as large as the FX sales specialists thought they could get away with. Furthermore, rather than charging the agreed-upon fixed spread to the FX market rate at the time the outgoing wire was converted, FX sales specialists would select the best rate for the Bank and worst rate for the customer from the FX price fluctuations from the beginning of the trading day until the time of the transaction. This practice was referred to internally as “Range of Day” Pricing.
In addition, FX sales specialists sometimes would give customers fictitious underlying FX market rates and spread calculations to create the false impression that Wells Fargo was complying with pricing representations when that was not the case. Other times, FX sales specialists would make intentional “errors” to the exchange rate given to a customer to make the Bank’s spread much larger. If caught, the FX sales specialist would falsely claim that digits in the price had been mistakenly transposed. This practice was known as the “Big Figure Trick.”
FX sales specialists also at times would charge a customer different spreads depending on which customer representative initiated the transaction. Because Wells Fargo’s online FX service tracked user identities, FX sales specialists would impose larger spreads on transactions initiated by those representatives thought to be less sophisticated or experienced in FX trading. This practice was known internally as “User-Based Pricing.”
FX sales specialists frequently would apply an even more egregious form of Range of Day pricing to customers’ incoming wire transfers, called “BSwift” wires. Because Wells Fargo generally did not notify customers when they received incoming wires of foreign currency or when those wires were converted, FX sales specialist could wait until the end of the day and select the best rate for the Bank and worst rate for the customer from price fluctuations throughout the entire trading day. One FX specialist called this practice the “BSwift Pinata.”
As part of the settlement, Wells Fargo admitted and accepted responsibility for the following conduct:
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- During the Covered Period, many FX sales specialists overcharged hundreds of commercial customers by applying larger sales margins or spreads to customer FX transactions than they represented they would.
- Wells Fargo received millions of dollars from customers to which the Bank was not entitled.
- FX sales specialists internally discussed and even celebrated transactions resulting in larger FX spreads than agreed to with customers or transactions generating large FX revenue. For example, FX sales specialists on Wells Fargo’s San Francisco FX desk would celebrate transactions with large spreads or sales margins by ringing a bell located on the trading floor. Other FX sales specialists would use expressions such as, “back the truck up,” and “when in doubt, spread them out,” to jokingly describe how Wells Fargo and its FX sales specialists were making money on transactions by charging large FX spreads, including larger FX spreads than agreed to with customers.
- Wells Fargo’s own internal CMR database indicated that FX sales specialists were charging customers FX spreads that were higher than those the Bank had represented. Certain CMR notes reflected that while a customer thought it would receive the rate that the Bank had represented to the customer, the Bank in fact charged the customer undisclosed higher spreads. For example, an FX sales specialist stated in one CMR note concerning Customer A that there was an “agreement w/the customer” to charge “25 pips [points in percentage]on spot trades” but that the Bank would “take 30-35 . . . if possible.”
False Information
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- In certain instances, when customers contacted the Bank to inquire about higher-than-agreed-upon pricing, FX sales specialists would give false explanations for the prices such as “time fluctuations” or other supposed events in the market.
- In a few cases, FX sales specialists provided customers false transaction data. In one instance, an FX sales specialist represented to Customer E that it would charge a spread of 5 basis points on certain BSwift wire transactions. Contrary to this agreement, the Bank actually charged higher spreads on a series of FX transactions. Then, in email correspondence with representatives of Customer E, the FX sales specialist provided inaccurate market rate information to the customer to make the FX spread falsely appear consistent with the agreement terms.
The Big Figure Trick
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- For some customers, FX sales specialists also used what they internally called the “big figure trick” or the “transposition error game” to increase the FX sales margin by switching digits in the price of the transactions in a way that would cost customers more money. For example, if the correct hypothetical price to purchase a Euro was 1.0123 dollars, an FX sales specialist would use the big figure trick to switch the price to 1.0213 dollars, thus taking more spread (in this example, an additional 89 basis points) from the customer.
- If caught by the customer, the FX sales specialist would claim that it was simply a mistake of adjusting the wrong digit in the price. One FX sales specialist explained, “You can play the transposition error game if you get called out.” Another FX sales specialist noted to a colleague about a previous transaction that a customer “didn’t flinch at the big fig the other day. Want to take a bit more?”
User-Based Pricing
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- At times, Wells Fargo’s FX sales specialists charged the same customers different spreads depending on which representative of the customer happened to be involved in executing the trade. Specifically, Wells Fargo’s FX sales specialists would charge larger spreads on transactions requested by certain customer representatives thought to be less sophisticated or experienced in FX trading.
BSwift Piñata
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- As noted above, because Wells Fargo generally did not provide immediate notice to customers when they received incoming wires, known as BSwifts, Wells Fargo’s FX sales specialists took advantage of this time delay to charge higher spreads than the Bank had represented it would.
- An FX sales specialist in a written instant message to another sales specialist referred to the Bank’s pricing of BSwift wire transfers as the “BSWIFT pinata.” An additional FX sales specialist noted in a recorded call that she preferred to book her own BSwifts to stretch the spread and could take more spread because she was doing the pricing herself. She observed that she could “dance around it” if the customer called with questions.
- Another FX sales specialist observed in an internal email communication that customers would not notice higher spreads on BSwift wires. He wrote, after noting that he “bumped spreads up a pinch,” that “these clients who are in the mode of just processing wires will most likely not notice this slight change in pricing” and that it “could have a very quick positive impact on revenue without a lot of risk.”
Financial Incentives and Lack of Meaningful or Effective Oversight
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- Wells Fargo incentivized its FX sales specialists to generate FX sales revenue by tying their bonuses exclusively to the amount of sales revenue they generated for the Bank from FX transactions. Specifically, before 2017, Wells Fargo paid bonuses to FX sales specialists based upon the percentage of the FX sales revenue that each FX sales specialist and FX desk generated. Each year during the Covered Period, Wells Fargo paid hundreds of thousands of dollars in bonuses to various FX sales specialists based on FX revenue. Some FX sales specialists received bonus compensation exceeding $1 million in a single year.
- Prior to 2017, Wells Fargo failed to put meaningful or effective safeguards in place to ensure that FX sales specialists priced customer FX transactions in accordance with the terms represented in fixed-pricing agreements. For example, during the Covered Period, Wells Fargo: (i) had no meaningful or effective policies or procedures governing how fixed-pricing agreements should be negotiated, memorialized, recorded, or implemented; (ii) provided no training to FX sales specialists concerning fixed-pricing agreements; (iii) had no meaningful or effective process to systematically track the existence or terms of fixed-pricing agreements; (iv) had no systemic process in place to monitor whether FX sales specialists were pricing FX transactions in a manner that was consistent with fixed-pricing agreements; (v) did not implement any electronic safeguards that would have prevented FX sales specialists from pricing transactions in a manner that deviated from fixed-pricing agreements; and (vi) did not conduct any audits or reviews of FX transactions to determine whether FX pricing matched fixed-pricing agreements until 2017.
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In the settlement, Wells Fargo acknowledged that it took adverse employment actions against more than 20 Wells Fargo employees who were involved in the FX business, including various disciplinary actions and separation of employment, and affirmed that it has taken various steps in an effort to comply with industry FX best practices.This matter was initially brought to the Government’s attention by a whistleblower who filed a confidential declaration with the U.S. Department of Justice pursuant to the Financial Institutions Anti-Fraud Enforcement Act.
Ms. Strauss praised the investigative work of the FBI.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorneys Lawrence H. Fogelman and Pierre G. Armand are in charge of the case, and Assistant U.S. Attorney Alex Wilson of the Money Laundering and Transnational Criminal Enterprises Unit is responsible for the forfeiture aspects of the case.
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Brazilian National Sentenced to 4 Years in Prison for $15 Million Advance Fee Scheme; Additional Charges Unsealed Against 4 Co-ConspiratorsRead the Press Release
Audrey Strauss, United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector in Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced that JOAO DJALMA PRESTES JUNIOR, a/k/a “Joao Pereira,” a Brazilian national, was sentenced today to 48 months in prison after pleading guilty to defrauding Brazilian businesses of approximately $15 million through an international advance fee scheme. PRESTES JUNIOR was arrested in June 2020 and pled guilty in April 2021 before U.S. District Judge Jed S. Rakoff, who imposed today’s sentence.
In addition, Superseding Indictments were unsealed today charging co-conspirators HERMINIO RIBEIRO DIAS CRUZ, JUAN CARLOS VILLALBA, ROSE MARTINS DE OLIVEIRA, and ALEX PEREIRA DE SOUTO with wire fraud and conspiracy to commit wire fraud in connection with the same international advance fee scheme. CRUZ, VILLALBA, DE OLIVEIRA, and DE SOUTO remain at large.
Manhattan U.S. Attorney Audrey Strauss said: “Partly through face-to-face meetings with victims in a Manhattan skyscraper, Joao Djalma Prestes Junior stole millions of dollars from companies seeking loans. Prestes Junior will now spend four years in U.S. prison for those crimes. As alleged, Prestes Junior did not work alone. His four fugitive alleged co-conspirators in this multimillion-dollar international advance fee scheme have now been charged.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “Postal Inspectors usually see advance fee scams tied to lottery fraud. However, in this case the victims were allegedly duped into paying fees in advance to secure business loans. The defendants allegedly used victim money to fund their opulent lifestyles. Postal Inspectors remind those seeking loans to exercise due diligence when you have to pay money to get money.”
According to public filings and court proceedings in the case against PRESTES JUNIOR, CRUZ, VILLALBA, DE OLIVEIRA, and DE SOUTO, including the allegations in the Superseding Indictments[1]:
Since at least July 2018 up to and including February 2020, PRESTES JUNIOR participated in a scheme to defraud Brazilian-based businesses of millions of dollars through an advance fee scheme.
As part of the scheme PRESTES JUNIOR and his co-conspirators falsely represented that the victims would receive a large loan after making advance payment of various fees to entities that, unbeknownst to the victims, were controlled by the conspirators. To effect the scheme, PRESTES JUNIOR and his co-conspirators created several shell companies (and accompanying websites) in the United States: a purported financial entity, a purported escrow company, and a purported insurance entity. The defendant and his co-conspirators directed victims to pay advance fees to the escrow company and the insurance entity. After the initial payments were made, the defendant and his co-conspirators falsely represented that there was some obstacle to transferring the loan money to the victim – such as a tax payment – and that the obstacle could be overcome if the victim made yet another advance payment. Ultimately, despite paying one or more such fees up front, the victims never received the promised loans, and the money paid in advance was never returned.
PRESTES JUNIOR also had executives of the victim companies travel to New York, New York, for in-person meetings in a suite in a skyscraper in downtown Manhattan that was purportedly the financial entity’s New York office. When interacting with victim companies, however, PRESTES JUNIOR used an alias, “Joao Pereira,” due to the defendant’s notoriety in Brazil, where the defendant was previously the subject of widely publicized criminal proceedings.
Money stolen from victims was used in part to fund PRESTES JUNIOR’s lavish lifestyle. For example, although PRESTES JUNIOR did not even live in the United States full time, he owned a Maserati in this country.
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In addition to the prison term, JOAO DJALMA PRESTES JUNIOR, a/k/a “Joao Pereira,” 48, a Brazilian national, was ordered to forfeit $15,266,679.10 and to make restitution in the amount of $15,266,679.10.
HERMINIO RIBEIRO DIAS CRUZ, 76, a Portuguese national, JUAN CARLOS VILLALBA, 56, a Paraguayan national, ROSE MARTINS DE OLIVEIRA, 61, a Brazilian national, and ALEX PEREIRA DE SOUTO, 40, a Brazilian national, are each charged with one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, each of which carries a maximum sentence of 20 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of these defendants would be determined by a judge.
Ms. Strauss praised the outstanding investigative work of the USPIS.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorney Micah F. Fergenson is in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Superseding Indictments and the description of the Superseding Indictments set forth in this release constitute only allegations, and every fact described should be treated as an allegation.
Manhattan U.S. Attorney Announces Criminal and Civil Charges Against CEO of Apparel Company for Engaging in Customs FraudRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent in Charge of the New York Office of the U.S. Department of Homeland Security, Homeland Security Investigations (“HSI”), and Marty Raybon, Acting Director, Field Operations, New York, U.S. Customs and Border Protection (“CBP”), announced the filing of criminal and civil charges against GEORGE ILOULIAN, a/k/a “George Illulian,” the CEO of an apparel company located in New York, New York. ILOULIAN was charged, in an indictment unsealed yesterday, with participating in a years-long scheme to defraud CBP by submitting invoices to CBP that falsely understated the true value of the goods his company imported into the United States, thereby evading the obligation to pay hundreds of thousands of dollars in customs duties.
ILOULIAN was arrested yesterday and presented before U.S. Magistrate Judge James L. Cott in Manhattan federal court. The criminal case has been assigned to U.S. District Judge Paul G. Gardephe. In addition, a civil fraud lawsuit against ILOULIAN and his company, DELTA UNIFORMS, INC. (“DELTA”), which is also assigned to Judge Gardephe, was unsealed in Manhattan federal court earlier today. The civil complaint asserts that ILOULIAN and DELTA violated the False Claims Act by misrepresenting the true value and nature of the goods they imported into the United States on entry documents submitted to CBP. The conduct in this matter was first brought to the attention of federal law enforcement by a whistleblower who filed a lawsuit under the False Claims Act.
Manhattan U.S. Attorney Audrey Strauss said: “As alleged, George Iloulian cheated the United States out of hundreds of thousands of dollars by causing false documents that misrepresented the value of imported goods to be submitted to CBP to avoid paying lawfully owed customs duties. Iloulian now faces criminal charges for his alleged fraud, and the government’s civil suit seeks treble damages and penalties against Iloulian and his company.”
HSI Special Agent in Charge Peter C. Fitzhugh said: “Iloulian allegedly evaded the obligation to pay hundreds of thousands of dollars in customs duties using a double-invoicing scheme, essentially creating two invoices, one for payment and one for customs. HSI New York and U.S. Customs and Border Protection will continue to partner in protecting U.S. trade from perpetrators who intentionally defraud the U.S. government for a profit.”
CBP Acting Director of New York Field Operations Marty Raybon said: “U.S. Customs and Border Protection is proud to have played an important role to this ongoing investigation that resulted in the takedown of an elaborate conspiracy to defraud the United States of hundreds of thousands of dollars in revenue. This case serves as a great example of collaborative law enforcement efforts to uncover and dismantle nefarious enterprises that seek to defraud the United States government for personal gain while causing economic harm to their competitors.”
According to the allegations in the Government’s indictment and civil complaint[1]:
From at least in or about 2010 through at least in or about 2020, ILOULIAN, and others known and unknown, including individuals associated with overseas manufacturers, conspired to submit fraudulent invoices to CBP that understated the value of apparel imported into the United States, thereby depriving the United States of hundreds of thousands of dollars in customs duty revenue. ILOULIAN and his co-conspirators achieved lower customs duties on imported goods in two ways: (i) a “double-invoicing scheme,” and (ii) a “fabric-type scheme.”
To effect the double-invoicing scheme, which was perpetrated by ILOULIAN and his co-conspirators from at least in or about 2010 through at least in or about 2020, ILOULIAN utilized two invoices: One invoice, at times referred to by ILOULIAN and his co-conspirators as the “Actual Invoice” or the “For Payment” invoice, contained higher prices and reflected what DELTA actually paid overseas manufacturers for apparel. The second invoice, which they at times referred to as the “Customs Invoice” or “For Customs Declaration” invoice, contained false lower prices. The information in the Customs Invoice was submitted by DELTA, through a customs broker (the “Customs Broker”), to CBP. CBP relied on the information from the Customs Invoice in assessing and collecting customs duties from DELTA. Accordingly, by presenting the false Customs Invoices to CBP, DELTA was able to pay fraudulently lower customs duties than DELTA actually owed. In one version of the double-invoicing scheme, DELTA directed an overseas manufacturer to send to DELTA two sets of invoices for the same shipment of merchandise, the Actual Invoice and the Customs Invoice. In a second version of the double-invoicing scheme, the overseas manufacturer provided DELTA with only the Actual Invoice; a Customs Invoice was created by other means and provided by DELTA to the Customs Broker.
From at least in or about 2011 through at least in or about 2016, ILOULIAN and his co-conspirators also engaged in a fabric-type scheme. To effect the fabric-type scheme, DELTA directed an overseas manufacturer to misstate the composition of the fabric in the apparel in order to obtain a lower duty rate. Specifically, the invoice would indicate that the imported goods were predominantly made of cotton rather than from man-made fibers, even though the reverse was true. The falsified invoices were then presented to CBP, which allowed DELTA to pay lower customs duties than DELTA actually owed, because materials containing more cotton than man-made materials are subject to lower duty rates.
These multi-year fraud schemes resulted in the loss of hundreds of thousands of dollars in duty revenue to the United States.
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ILOULIAN is charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of falsely effecting the entry of goods into the United States, which carries a maximum sentence of two years. 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. ILOULIAN and DELTA are also charged with civil claims under the False Claims Act, through which the Government may recover treble damages and civil penalties arising from his conduct.
Ms. Strauss thanked HSI, CBP, and the Special Agents of the United States Attorney’s Office for the Southern District of New York for their efforts and ongoing support and assistance with the case.
The criminal case is being handled by the Office’s General Crimes Unit, and Assistant U.S. Attorney Kaylan E. Lasky is in charge of the prosecution.
The civil case is being handled by the Office’s Civil Frauds Unit, and Assistant U.S. Attorney Dominika Tarczynska is in charge of the matter.
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 texts of the indictment and the civil complaint, and the descriptions of the indictment and civil complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Queens Man Sentenced to 30 Years in Prison for Kidnapping That Resulted in the Murder of 24-Year-Old WomanRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that JAVIER ENRIQUE DA SILVA ROJAS (the “defendant” or “DA SILVA”) was sentenced today to 360 months in prison for kidnapping Valerie Reyes (the “Victim”) in New Rochelle, New York and unlawfully transporting her to Connecticut, where her body was found approximately a week later. DA SILVA, who was arrested in Flushing, Queens in February 2019, pled guilty before U.S. District Judge Vincent Briccetti on February 4, 2020.
U.S. Attorney Audrey Strauss stated: “Javier Da Silva committed a horrific kidnapping that resulted in the death of a young woman. In the days after, he used her ATM card to empty her bank account and then attempted to cover up the evidence of his conduct. Valerie Reyes, the victim of this crime, was in the prime of her life when it was senselessly ended by Da Silva’s abhorrent act. Those who commit violence, especially those who kill, will not escape justice.”
According to the Indictment and other court documents, as well as statements made in public court proceedings:
DA SILVA and the Victim, who was 24 years old at the time of her death, were previously in a romantic relationship, which ended in approximately April 2018. In the late evening of January 28, 2019, DA SILVA rented a car from a garage in Flushing, New York and drove to the Victim’s residence in New Rochelle, New York, arriving in the early morning hours of January 29, 2019. Before he entered the Victim’s home, DA SILVA switched his phone to “airplane mode.” Sometime after DA SILVA entered the Victim’s apartment, DA SILVA and the Victim had a violent altercation, during which the Victim suffered head trauma, bruising around the face, and a large hematoma to her forehead. DA SILVA then kidnapped the Victim—covering her mouth with several layers of packing tape and binding her feet and hands with packing tape and twine and putting her in a suitcase—before disposing of her body, still inside the suitcase, in Connecticut. Over the ensuing days, DA SILVA used the Victim’s debit card on various occasions to withdraw approximately $5,350 in cash from her bank account. DA SILVA also sold an iPad belonging to the Victim in the days following her death.
On January 30, 2019, the Victim was reported missing to the New Rochelle Police Department. A few days later, on February 5, 2019, her body was recovered in a red suitcase alongside a public road in the Town of Greenwich, Connecticut. The Connecticut Medical Examiner’s Office later concluded that the Victim died of homicidal asphyxiation.
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DA SILVA, 25, pled guilty to one count of kidnapping. In addition to the prison term, DA SILVA was sentenced to two years of supervised release.
Ms. Strauss praised the outstanding work of the FBI Westchester County Safe Streets Task Force, which comprises agents and detectives from the FBI, Yonkers Police Department, Westchester County District Attorney’s Office, Westchester County Police Department, Peekskill Police Department, Mount Vernon Police Department, New York City Police Department, and U.S. Probation, as well as the FBI New Haven Division, the New Rochelle Police Department, the Greenwich Police Department, the Westchester County District Attorney’s Office, the Westchester County Department of Public Safety, and the Westchester County Real Time Crime Center.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Sam Adelsberg, Mathew Andrews, and Andrew Dember are in charge of the prosecution.
Former Analyst Charged with $8 Million Insider Trading Scheme for Front-Running Employer’s Pending TradesRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a Complaint charging SERGEI POLEVIKOV with securities fraud, wire fraud, and investment company fraud in connection with his fraudulent scheme to misappropriate confidential information about pending trades by his employer, an investment adviser, on behalf of its investment company clients. POLEVIKOV was arrested last night and will be presented this afternoon before Magistrate Judge James L. Cott.
Manhattan U.S. Attorney Audrey Strauss said: “As alleged, Sergei Polevikov violated not just the terms of his employment but also the law when he exploited material, nonpublic information to make personal trades ahead of large institutional trades, reaping more than $8 million in illicit profits. Despite his alleged efforts to conceal it, Polevikov’s scheme was uncovered, and he is facing serious federal charges.”
FBI Assistant Director Michael J. Driscoll said: “Using material, nonpublic information to exploit small price movements in his employer’s stock, Polevikov, as we allege, realized significant financial gains for himself through his trades. While these schemes are unfortunately all too common, so is the response of the FBI – if you misappropriate proprietary information for your own personal gain, you should expect to hear from us.”
According to the allegations contained in the Complaint[1]:
From at least in or about 2014 through in or about October 2019, SERGEI POLEVIKOV was employed as a quantitative analyst at an asset management firm with headquarters in New York, New York (the “Employer Firm”). In his role at the Employer Firm, POLEVIKOV had regular access to information regarding contemplated securities trades on behalf of the Employer Firm’s clients, which included investment companies. During the period charged in the Complaint, POLEVIKOV engaged in a front-running scheme to misappropriate confidential, material, nonpublic information about the securities trade orders of the Employer Firm on behalf of its clients in order to engage in short-term personal securities trading in a brokerage account opened in his wife’s name. POLEVIKOV’s scheme was designed to profit by executing trades that take advantage of relatively small price movements in a company’s stock that follow from large securities orders executed by the Employer Firm on behalf of its clients. In total, POLEVIKOV’s scheme yielded more than $8.5 million in illicit profits.
To conceal his front-running scheme, and notwithstanding policies of the Employer Firm to prevent insider trading, POLEVIKOV lied to the Employer Firm about his personal trading accounts and securities trades conducted therein in violation of the Investment Company Act.
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POLEVIKOV, 48, of Port Washington, New York, is charged with one count of securities fraud, one count of wire fraud, and one count of investment company fraud. POLEVIKOV faces a maximum sentence of 20 years in prison on the securities fraud and wire fraud charges, and five years in prison on the investment company fraud charge.
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.
Ms. Strauss praised the investigative work of FBI. Ms. Strauss also thanked the Securities & Exchange Commission, which brought a related civil action against POLEVIKOV that was filed today.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Kiersten A. Fletcher is in charge of the prosecution.
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.
Monroe Prior Sex Felon Sentenced to 10 Years in PrisonRead the Press Release
Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that EDUARDO TALENTINO was sentenced to 10 years in prison by United States District Judge Vincent Briccetti for possessing, and accessing with intent to view, images of child pornography, possessing a firearm after having been convicted of a felony, and failing to register as a sex offender. The sentencing today followed TALENTINO’s guilty plea on May 27, 2021.
U.S. Attorney Audrey Strauss said: “This case underscores the urgent need for law enforcement to continue to use every available tool to prosecute and punish those who sexually exploit children.”
According to documents filed in this case and statements made in related court proceedings:
On May 27, 2021, TALENTINO pled guilty to a three-count Information. Count One charged him with possessing, and accessing with intent to view, images of child pornography, including images of prepubescent children and minors who had not attained the age of 12, on a phone in Orange County, New York, in violation of Title 18, United States Code, Section 2252A(a)(5)(b) and (b)(2). Count Two charged that TALENTINO, after having been convicted of a felony, possessed a Colt Pocket Positive .32 caliber revolver. Count Three charged that TALENTINO, while required to register as a sex offender pursuant to the Sex Offender Registration and Notification Act (“SORNA”), failed to register as a sex offender.
In August 1997, in the Commonwealth of Massachusetts, Suffolk Superior Court, TALENTINO was convicted of two counts of Rape of a Child, one count of Assault with Intent to Commit Rape, two counts of Indecent Assault and Battery on a Child Under 14, one count on Indecent Assault and Battery on a Person 14 and Over, and two counts of Disseminate Matter Harmful to Minors. For these offenses, TALENTINO was sentenced to a term of four years and a day in prison.
On November 7, 2019, TALENTINO pled guilty in Orange County Court to Unauthorized Practice of Profession, and on February 13, 2020, he was sentenced to one to three years in prison.
In or about December 2017, TALENTINO became the guardian of a 16-year-old minor (“Victim-1”). While acting as Victim-1’s guardian, TALENTINO sexually abused Victim-1.
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In addition to the prison term, TALENTINO, 56, of Monroe, New York, was sentenced to lifetime supervised release.
Ms. Strauss praised the efforts of the Federal Bureau of Investigation, the Orange County District Attorney’s Office, the New York State Police, the Orange County Child Sexual Abuse Task Force, Orange County Child Protective Services, and the Orange County Sherriff’s Office in connection with this investigation.
The prosecution is being handled by the Office’s White Plains Division. Assistant United States Attorney Marcia S. Cohen is in charge of the prosecution.