Southern District of New York

A New York man was sentenced today to life in prison for detonating a bomb in a New York City subway station. He admitted that he conducted the terrorist attack on behalf of the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization.

Akayed Ullah, 31, of Brooklyn, New York, and a lawful permanent resident of Bangladesh, was convicted by a federal jury of offenses related to the detonation and attempted detonation of a bomb in a subway station near the New York Port Authority Bus Terminal in New York City on Dec. 11, 2017. According to court documents, on Dec. 11, 2017, at approximately 7:20 a.m., Ullah detonated a pipe bomb strapped to his chest in a subway station near the Port Authority Bus Terminal in midtown Manhattan. Shortly after the blast, first responders located Ullah lying on the ground in the station where he had detonated the improvised explosive device, and he was taken into custody. Surveillance footage captured Ullah walking through the station immediately prior to the explosion and then detonating the bomb.

“Ullah constructed a pipe bomb and detonated it in a mass transit hub in the heart of New York City to harm and terrorize as many people as possible - and he admitted that he did it on behalf of ISIS,"  said Assistant Attorney General John C. Demers for the Justice Department’s National Security Division. “This case reminds us that the threat of ISIS-inspired terrorism remains real. This sentence holds Ullah accountable, as he will spend the rest of his life in federal prison for his crimes. I want to thank all of the agents, analysts, and prosecutors whose outstanding work made this result possible.”

“Akayed Ullah, previously convicted in a New York federal court of carrying out a lone-wolf bombing attack on behalf of ISIS at the Port Authority Bus Terminal, a bustling transit artery in New York City, admittedly intended to murder as many innocent Americans as possible,” said U.S. Attorney Audrey Strauss for the Southern District of New York. “Ullah’s motive was clear and unambiguous: a deeply held ideological hatred for America. Ironically, Ullah’s actions resulted only in reaffirming the greatness of America by displaying the fairness and impartiality for which our justice system stands. Ullah received a speedy, fair, public trial, and was convicted by a jury of his peers. Akayed Ullah’s message of hatred clearly backfired; his just sentence of life in prison only exemplifies that cowardly acts of terrorism will be met with law enforcement’s unwavering resolve to protect our core values of freedom and democracy.”

“The defendant sought to attack innocent Americans who were going about their daily lives," said Acting Assistant Director Patrick Reddan for Counterterrorism at the FBI. “He will now spend the rest of his life in prison, where he will not be in a position to attempt another attack. While the terrorism threat continues to evolve in this country, groups like ISIS remain committed to attacking America, and the FBI will continue to work with our JTTF partners across the country in our commitment to track down and disrupt terrorists who seek to harm our homeland.”

According to court documents and the evidence presented at trial, Ullah began radicalizing in approximately 2014. Ullah disagreed with U.S. foreign policy in the Middle East and began seeking out online materials promoting radical Islamic terrorist ideology. In particular, Ullah was inspired by ISIS propaganda, including a video in which ISIS instructed supporters to carry out attacks in their homelands if they were unable to travel overseas to join ISIS. Ullah began researching how to build a bomb about a year prior to his attack. He built his pipe bomb in the weeks leading up to the attack at his Brooklyn apartment.  

Following the attack on Dec. 11, 2017, law enforcement located remnants of the pipe bomb on Ullah’s person and strewn across the attack site in the subway station. Law enforcement found, among other things: (i) a nine-volt battery inside Ullah’s pants pocket, which he used as the power source for triggering the bomb; (ii) wires connected to the battery and running underneath Ullah’s jacket; (iii) plastic zip ties underneath Ullah’s jacket, which he used to strap the bomb to his body; (iv) several fragments of a metal pipe, which Ullah had filled with an explosive substance that he made using sugar and match heads; (v) fragments of Christmas tree lightbulbs attached to wires, which Ullah used to ignite the explosion; and (vi) numerous metal screws. Ullah filled his pipe bomb with dozens of metal screws to function as shrapnel, for the purpose of causing maximum damage.

On the morning of the attack, shortly before detonating his bomb, Ullah posted a statement on Facebook referring to the then-President of the United States, stating: “Trump you failed to protect your nation.” Ullah also posted an ISIS slogan so that ISIS would know that he had carried out the attack on behalf of the foreign terrorist organization.

After Ullah was taken into custody following the attack, he waived his Miranda rights and spoke to law enforcement. Ullah was inspired by ISIS to carry out the Dec. 11 attack, and stated, among other things, “I did it for the Islamic State.” He also said that he chose a busy weekday morning for the attack in order to “terrorize as many people as possible.” One commuter who was inside the station when Ullah detonated the pipe bomb suffered a shrapnel wound to his leg, and two other victims partly lost their hearing as a result of the blast. Ullah’s attack caused the Port Authority subway station and bus terminal to shut down temporarily, disrupting the lives of commuters across the New York City area.

After the attack, law enforcement searched Ullah’s apartment pursuant to a search warrant. Agents recovered, among other things, Ullah’s passport, which contained the handwritten statement, “O AMERICA, DIE IN YOUR RAGE.” Less than two weeks before carrying out the attack, Ullah had watched and drawn inspiration from a particular ISIS propaganda video that proclaimed, “die in your rage, America,” with an image of the U.S. Capitol in the background.

Later in December 2017, while in custody at the Metropolitan Correctional Center on the charges in this case, Ullah began chanting “more is coming” at a correctional officer, and then told the officer: “You started this war, we will finish it. More is coming, you’ll see.”

Assistant Attorney General Demers and Acting U.S. Attorney Strauss praised the outstanding investigative efforts of the FBI, the New York Police Department (NYPD) and Port Authority Police Department (PAPD). Ullah’s conviction is the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York, the Justice Department’s National Security Division, and the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies.

Assistant U.S. Attorneys Rebekah Donaleski and George D. Turner for the Southern District of New York prosecuted this case with assistance from Trial Attorneys Jason Denney and Felice Viti of the National Security Division’s Counterterrorism Section.

Audrey Strauss, U.S. Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, the Commissioner of the Police Department for the City of New York (“NYPD”), announced that NICHOLAS SKULSTAD was taken into federal custody today based on a criminal Complaint filed in White Plains federal court charging him with destruction of a motor vehicle employed in interstate commerce, in connection with SKULSTAD’s alleged assault on a Metropolitan Transportation Authority (“MTA”) vehicle in Ossining, New York, on April 5, 2021.  SKULSTAD will be presented later today before U.S. Magistrate Judge Paul E. Davison.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Nicholas Skulstad used his vehicle as a weapon, repeatedly ramming it into an occupied MTA vehicle, then shattering the driver’s window.  When police officers responded, Skulstad allegedly charged at and threatened them, and had in his car a notebook page titled “List – To Kill,” with names of public figures.  Thanks to the combined response of law enforcement officers and agents, Skulstad is in custody and facing a serious federal charge.”

FBI Assistant Director William F. Sweeney Jr. said:  “Skulstad’s alleged targeting of an MTA vehicle, and the subsequent actions he took against police officers who arrived on scene, remind us of the threat our public servants face each and every day as they uphold their duty to protect the communities they serve. Thanks to the work of the FBI’s JTTFs and our many partners in this case, Skulstad no longer poses a threat to society or, more specifically, those he included as targets on his list.”

NYPD Commissioner Dermot Shea said:  “Attacks against public servants, as alleged in this federal complaint, endanger not only those who work to maintain public safety, but all of society.  I commend our investigators in the NYPD and our partners in the FBI Joint Terrorism Task Force and the United States Attorney’s Office in the Southern District of New York for working closely to ensure this individual would be brought to justice.”

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

On April 5, 2021, SKULSTAD rammed his vehicle repeatedly into an MTA vehicle driven by an MTA employee in Ossining, New York, damaging the MTA vehicle and forcing it off the road.  SKULSTAD subsequently exited his vehicle, approached the MTA vehicle on foot, and banged on the driver-side window until he shattered it.  

When Ossining Police Department officers arrived at the scene, SKULSTAD yelled at an officer, “I’m Jesus Christ!  You are going to die today!  Are you ready to die?”  SKULSTAD then charged a police vehicle, throwing his body into the driver-side door and yelling threats at an officer inside.  SKULSTAD resisted officers’ attempts to subdue him, before ultimately being taken into custody. 

After taking SKULSTAD into custody, law enforcement found in SKULSTAD’s vehicle, among other things, a shell casing and a notebook with a page entitled, “List – To Kill,” which listed the names of various current and former public officials and other public figures. 

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SKULSTAD, 33, of Dobbs Ferry, New York, is charged with destruction of a motor vehicle employed in interstate commerce, which carries a maximum sentence of 20 years in prison.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the FBI’s New York-based Joint Terrorism Task Force (“JTTF”), which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies.  Ms. Strauss also thanked the Ossining Police Department, the Irvington Police Department, the Dobbs Ferry Police Department, the Croton-on-Hudson Police Department, the FBI’s Newark-based JTTF, the FBI’s Counterterrorism Division, the U.S. Attorney’s Office for the District of New Jersey, the Westchester County District Attorney’s Office, the Westchester County Real Time Crime Center, and the New York State Intelligence Center for their assistance.

The case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorneys Sam Adelsberg and Elinor L. Tarlow are in charge of the prosecution, with assistance from Trial Attorney Elisabeth Poteat of the Counterterrorism Section of the Department of Justice’s National Security Division.

The charge contained in the Complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty.

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

Audrey Strauss, the U.S. Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, Commissioner of the Police Department for the City of New York (“NYPD”), announced that AKAYED ULLAH was sentenced today in Manhattan federal court to life in prison for carrying out a terrorist bombing attack on behalf of the Islamic State of Iraq and al-Sham (“ISIS”) in a subway station under the Port Authority Bus Terminal in New York City on December 11, 2017.  In November 2018, a jury convicted ULLAH after a one-week trial of all six counts in the Indictment.  The sentence was imposed by the Honorable Richard J. Sullivan, who also presided over the trial. 

Manhattan U.S. Attorney Audrey Strauss said:  “Akayed Ullah, previously convicted in a New York federal court of carrying out a lone-wolf bombing attack on behalf of ISIS at the Port Authority Bus Terminal, a bustling transit artery in New York City, admittedly intended to murder as many innocent Americans as possible. Ullah’s motive was clear and unambiguous: a deeply held ideological hatred for America. Ironically, Ullah’s actions resulted only in reaffirming the greatness of America by displaying the fairness and impartiality for which our justice system stands. Ullah received a speedy, fair, public trial, and was convicted by a jury of his peers. Akayed Ullah’s message of hatred clearly backfired; his just sentence of life in prison only exemplifies that cowardly acts of terrorism will be met with law enforcement’s unwavering resolve to protect our core values of freedom and democracy.”

Assistant Attorney General John C. Demers said:  “Ullah constructed a pipe bomb and detonated it in a mass transit hub in the heart of New York City to harm and terrorize as many people as possible – and he admitted that he did it on behalf of ISIS. This case reminds us that the threat of ISIS-inspired terrorism remains real. This sentence holds Ullah accountable, as he will spend the rest of his life in federal prison for his crimes. I want to thank all of the agents, analysts, and prosecutors whose outstanding work made this result possible.”

FBI Assistant Director William F. Sweeney Jr. said:  “Bound and determined to incite fear and create a mass casualty incident, Ullah detonated a pipe bomb of his own creation in one of New York City’s major transportation hubs during morning rush hour. The quick thinking of PAPD officers, who responded to the threat undeterred by the potential risk to their safety, in addition to the work of the FBI’s JTTF and the NYPD, is another example for the public of our joint commitment to keep the citizens and visitors of New York City safe. Today’s sentencing is a just ending in this case.”

NYPD Commissioner Dermot Shea said:  “Akayed Ullah accepted the call from ISIS to target and kill New Yorkers. Through planning and research, he built a pipe bomb and detonated it in the heart of the New York City Transit System under the Port Authority Bus Terminal. Fortunately, this cowardly act resulted in no loss of life to New Yorkers.  I commend the FBI agents and NYPD detectives of the JTTF, prosecutors from the United States Attorney for the Southern District of New York, and our other Law Enforcement partners for bringing this individual to Justice.”

As set forth in the Complaint, Indictment, evidence presented at trial, and other court filings and proceedings:

On December 11, 2017, at approximately 7:20 a.m., AKAYED ULLAH detonated a pipe bomb strapped to his chest in a subway station under the Port Authority Bus Terminal in midtown Manhattan.  Shortly after the blast, first responders located ULLAH lying on the ground in the station where he had detonated the improvised explosive device, and he was taken into custody.  Surveillance footage captured ULLAH walking through the station immediately prior to the explosion, and then detonating the bomb.

ULLAH began radicalizing in about 2014.  ULLAH was angry at U.S. foreign policy in the Middle East, and began seeking out online materials promoting radical Islamic terrorist ideology.  In particular, ULLAH was inspired by ISIS propaganda, including a video in which ISIS instructed supporters to carry out attacks in their homelands if they were unable to travel overseas to join ISIS.  ULLAH began researching how to build a bomb about a year prior to his attack.  He built his pipe bomb in the weeks leading up to the attack at his Brooklyn apartment.     

Following the attack on December 11, 2017, law enforcement located remnants of the pipe bomb on ULLAH’s person and strewn across the attack site in the subway station.  Law enforcement found, among other things: (i) a nine-volt battery inside ULLAH’s pants pocket, which he used as the power source for triggering the bomb; (ii) wires connected to the battery and running underneath ULLAH’s jacket; (iii) plastic zip ties underneath ULLAH’s jacket, which he used to strap the bomb to his body; (iv) several fragments of a metal pipe, which ULLAH had filled with an explosive substance that he made using sugar and match heads; (v) fragments of Christmas tree lightbulbs attached to wires, which ULLAH used to ignite the explosion; and (vi) numerous metal screws.  ULLAH filled his pipe bomb with dozens of metal screws to function as shrapnel, for the purpose of causing maximum damage.

On the morning of the attack, shortly before detonating his bomb, ULLAH posted a statement on Facebook referring to the then-President of the United States, stating: “Trump you failed to protect your nation.”  ULLAH also posted an ISIS slogan so that ISIS would know that he had carried out the attack on behalf of ISIS.

After ULLAH was taken into custody following the attack, he waived his Miranda rights and spoke to law enforcement.  ULLAH stated, among other things, that he carried out the bombing on behalf of ISIS, and chose a busy weekday morning for the attack in order to “terrorize as many people as possible.”  One commuter who was inside the station when ULLAH detonated the pipe bomb suffered a shrapnel wound to his leg, and two other victims partly lost their hearing as a result of the blast.  ULLAH’s attack caused the Port Authority subway station and bus terminal to shut down temporarily, disrupting the lives of commuters across the New York City area.

After the attack, law enforcement searched ULLAH’s apartment pursuant to a search warrant.  Agents recovered, among other things, ULLAH’s passport, which contained the handwritten statement, “O AMERICA, DIE IN YOUR RAGE.”  Less than two weeks before carrying out the attack, ULLAH had watched and drawn inspiration from a particular ISIS propaganda video that proclaimed, “die in your rage, America,” with an image of the U.S. Congress in the background.

Later in December 2017, while in custody at the Metropolitan Correctional Center on the charges in this case, ULLAH began chanting “more is coming” at a correctional officer, and then told the officer: “You started this war, we will finish it. More is coming, you’ll see.”

*                      *                      *

In addition to the prison term, ULLAH, 31, was sentenced to life of supervised release.   

Ms. Strauss praised the outstanding investigative efforts of the FBI, the NYPD, and the Port Authority of New York and New Jersey Police Department.  ULLAH’s conviction is the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York and the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies. 

The prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Rebekah Donaleski and George D. Turner are in charge of the prosecution, with assistance from Trial Attorneys Jason Denney and Felice Viti of the Counterterrorism Section of the Department of Justice’s National Security Division.

Audrey Strauss, United States Attorney for the Southern District of New York, announced today that SHENG-WEN CHENG, a/k/a “Justin Cheng,” a/k/a “Justin Jung,” pled guilty to major fraud against the United States, bank fraud, securities fraud, and wire fraud in connection with multiple fraud schemes he perpetrated.  Specifically, CHENG engaged in a scheme to fraudulently obtain over $7 million in Government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic.  CHENG also solicited and obtained investments in Alchemy Coin Technology Limited and related companies controlled by CHENG through materially false and misleading statements and omissions.  Finally, CHENG fraudulently obtained due diligence fees from various start-up companies as part of an advance fee scheme.  CHENG pled guilty today before U.S. District Judge Alison J. Nathan and is scheduled to be sentenced on August 3, 2021, at 3:00 p.m.

U.S. Attorney Audrey Strauss said:  “As he admitted, Sheng-Wen Cheng fraudulently applied for over $7 million in government-guaranteed loans under programs designed to provide relief for small businesses financially struggling in the COVID pandemic.  Cheng lied to the SBA and several banks about ownership of his companies, the number of people employed, and how any loan proceeds would be applied, using forged and fraudulent documents in the process.  Cheng spent much of the money on personal luxury items.  In addition, Cheng committed securities fraud by lying to investors in his blockchain-based peer-to-peer lending platform, and wire fraud by engaging in an advance fee scheme.  Now Cheng awaits sentencing for his multitude of crimes.”

According to the Complaint, Information, and other documents filed in Manhattan federal court:

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 hundreds of billions of dollars in forgivable loans to small businesses for job retention and certain other expenses through the SBA’s Paycheck Protection Program (“PPP”).  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 their average payroll costs.  The CARES Act also expanded the separate Economic Injury Disaster Loan (“EIDL”) Program, which provided small businesses with low-interest loans that can provide vital economic support to help overcome the temporary loss of revenue they are experiencing due to COVID-19.

CHENG, a Taiwanese national who entered the United States on a student visa, is a self-proclaimed “serial entrepreneur” who earned a Bachelor’s Degree from Pennsylvania State University (“Penn State”).  From at least in or about April 2020 through at least on or about August 13, 2020, CHENG used the identity of other individuals to submit online applications to the SBA and at least five financial institutions for a total of over $7 million in government-guaranteed loans through the SBA’s PPP and EIDL Program for several companies controlled by CHENG, namely Alchemy Finance, Inc., Alchemy Guarantor LLC d/b/a “Celer Offer,” Celeri Network, Inc., Celeri Treasury LLC, and Wynston York LLC (collectively, the “Cheng Companies”).  In connection with these loan applications, CHENG represented, among other things, that other individuals were the sole owners of the Cheng Companies and that the Cheng Companies together had over 200 employees and paid a total of approximately $1.5 million in wages to those employees on a monthly basis.  In fact, however, the Cheng Companies appear to have had a total of no more than 14 employees. 

In order to support the false representations in the loan applications about the number of employees at and the wages paid by the Cheng Companies, CHENG submitted fraudulent and doctored tax records that were never actually filed with the IRS and payroll records containing the forged electronic signature of a payroll company employee.  CHENG also submitted a payroll summary for one of his companies that listed the names of more than 90 purported employees, several of whom are current or former athletes, artists, actors, or public figures.  For example, the list of purported employee names included a co-anchor on “Good Morning America,” a former National Football League player, and a prominent former Penn State football coach who is now deceased.

Based on the fraudulent PPP loan applications submitted by CHENG, a total of more than $3.7 million in PPP loans were approved for the Cheng Companies and approximately $2.8 million in PPP loan proceeds were deposited into bank accounts solely controlled by CHENG.  Instead of using the PPP loan proceeds for payroll costs, mortgage interest, rent, and/or utilities for the purported Cheng Companies as required by the PPP, CHENG transferred over $1 million abroad, withdrew approximately $360,000 in cash and/or cashier’s checks, and spent at least approximately $279,000 in PPP loan proceeds on personal expenses.  These personal expenses included the purchase of an 18-carat gold Rolex watch for approximately $40,000, rent and move-in fees for a $17,000 per month luxury condominium used by CHENG, approximately $50,000 of furnishings for the condominium, a portion of the purchase of a 2020 S560X4 Mercedes, and purchases totaling approximately $37,000 at Louis Vuitton, Chanel, Burberry, Gucci, Christian Louboutin, and Yves Saint Laurent.

In addition to the COVID-19 pandemic loan fraud described above, from at least in or about 2017 through at least in or about 2019, CHENG committed securities fraud by soliciting and obtaining investments in Alchemy Coin Technology Limited and related companies (“Alchemy Coin”) controlled by CHENG.  These investments were obtained through materially false and misleading statements and omissions regarding Alchemy Coin’s access to capital, use of investor proceeds, the product readiness of its purported blockchain-based peer-to-peer lending platform, and the registration of its tokens as part of an initial coin offering. 

Finally, from at least in or about 2018 through at least in or about 2019, CHENG committed wire fraud by fraudulently obtaining due diligence fees from various start-up companies as part of an advance fee scheme through materially false and misleading statements regarding the purpose and refundability of the fees and his interest and ability to make investments in the start-up companies.

*                *                *

CHENG, 24 of New York, New York, pled guilty to one count of bank fraud, which carries a maximum sentence of 30 years in prison; one count of securities fraud and one count of wire fraud, which each carry a maximum sentence of 20 years in prison; and one count of major fraud against the United States, which carries a maximum sentence of 10 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the investigative work of the Federal Bureau of Investigation, the Office of the Inspector General of the U.S. Small Business Administration, and the Internal Revenue Service Criminal Investigation.  Ms. Strauss also thanked the United States Securities and Exchange Commission, U.S. Customs and Border Protection, and the New York State Department of Labor for their assistance.

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced new charges against NACHMAN HELBRANS, MAYER ROSNER, YAKOV WEINGARTEN, SHMIEL WEINGARTEN, and YOIL WEINGARTEN for conspiring to (1) transport a minor with intent to engage in criminal sexual activity, and (2) travel with intent to engage in illicit sexual conduct, in connection with the kidnapping of a 14-year-old girl (“Minor-1”) from New York to reunite her with her adult “husband” outside the United States for purposes of continuing their sexual relationship.  The defendants, among other members of Lev Tahor, were previously charged with several other crimes related to the kidnapping of Minor-1 and her younger brother.

U.S. Attorney Audrey Strauss stated:  “As alleged, the defendants engaged in a brazen kidnapping of a minor girl in the middle of the night, taking her across the border to Mexico in order to reunite her with her adult ‘husband’ to continue their sexual relationship.  These charges send a clear message that the sexual exploitation of children will not be tolerated.”

FBI Assistant Director William F. Sweeney Jr. stated:  “International borders will not stop the FBI from pursuing justice and enforcing violations of our laws, especially when you target children.  The behavior alleged today is outrageous, and there is no justification for it whatsoever.  We are grateful for the excellent cooperation from our partners in Mexico and Guatemala who helped us hold these leaders of Lev Tahor accountable for their behavior.  Protecting innocent children should be a priority for all of society – it’s certainly one of ours.  If you know of children who are being trafficked, please contact the FBI at 1-800-CALL-FBI or fbi.tips.gov.”

According to the allegations contained in the Superseding Indictment, other court filings, and statements made during court proceedings:[1]

NACHMAN HELBRANS, MAYER ROSNER, YAKOV WEINGARTEN, SHMIEL WEINGARTEN, and YOIL WEINGARTEN are U.S. citizens and senior leaders of Lev Tahor, an extremist Jewish sect previously based in New York and Canada, and currently based in Guatemala.  HELBRANS became the leader of Lev Tahor in or about 2017.  After HELBRANS and his leadership team took over, they seized tight control over the group and embraced several extreme practices, including strict, invasive monitoring of members, frequent beatings, and forced marriages of minors to adult members.  Children in Lev Tahor are often subject to physical, sexual, and emotional abuse.

In or about 2017, HELBRANS arranged for his then-12-year-old niece, Minor-1, to be “married” to a then-18-year-old man, defendant JACOB ROSNER.  They were religiously “married” the following year, when Minor-1 was 13 and JACOB ROSNER was 19, and immediately began a sexual relationship with the goal of procreation.  They were never legally married.  Lev Tahor leadership, including the defendants, required young brides to have sex with their husbands, to tell people outside Lev Tahor that they were not married, to pretend to be older, and to deliver babies inside their homes instead of at a hospital, partially to conceal from the public the mothers’ young ages.

In or about October 2018, the mother of Minor-1 (who is also HELBRANS’s sister) determined that it was no longer safe for her children to remain in the Lev Tahor community in Guatemala.  The mother escaped from the group’s compound and arrived in the United States in early November 2018.  Also in November 2018, a Brooklyn family court granted her temporary custody of the children and prohibited the children’s father, a leader within Lev Tahor, from communicating with the children.

After the mother fled and settled in New York with her children, the defendants devised a plan to return Minor-1, then 14 years old, to Guatemala and to her then-20-year-old “husband” so that they could resume their sexual relationship and procreate.  In December 2018, they executed their plan, kidnapping Minor-1 and her brother in the middle of the night from a home in New York and transporting them through various states and, eventually, to Mexico.  During this time, Lev Tahor leadership was seeking asylum for the entire Lev Tahor community in the Islamic Republic of Iran. 

Following a three-week search involving scores of local, federal, and international law enforcement entities, Minor-1 and her brother were recovered in Mexico and returned to New York.  On two additional occasions, in or about March 2019 and March 2021, members of Lev Tahor again tried to kidnap Minor-1 and her brother.

*                *                *

NACHMAN HELBRANS, 39, of Guatemala, MAYER ROSNER, 44, of Guatemala, YAKOV WEINGARTEN, 30, of Guatemala, SHMIEL WEINGARTEN, 25, of Guatemala, and YOIL WEINGARTEN, 32, of Guatemala, are charged with (1) conspiring to transport a minor with intent to engage in criminal sexual activity, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; and (2) conspiring to travel with intent to engage in illicit sexual conduct, 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 defendants will be determined by the judge.

The Superseding Indictment also includes charges that were previously brought against the defendants and other members of Lev Tahor.  Specifically, it charges NACHMAN HELBRANS, MAYER ROSNER, YAKOV WEINGARTEN, SHMIEL WEINGARTEN, YOIL WEINGARTEN, MORDECHAY MALKA, 26, of Guatemala, ARON ROSNER, 47, of Brooklyn, New York, JACOB ROSNER, 21, of Guatemala, and MATITYAU MOSHE MALKA, 29, of Guatemala, with conspiring to kidnap, unlawfully use a means of identification, and enter by false pretenses the secure area of an airport, and charges three additional counts of international parental kidnapping.

Ms. Strauss praised the outstanding work of the FBI, the New York State Police, the Sullivan County District Attorney’s Office, United States Customs and Border Protection, the Village of Spring Valley Police Department, and our law enforcement partners in Mexico and Guatemala.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Sam Adelsberg, Jamie Bagliebter, and Jim Ligtenberg 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.

Audrey Strauss, United States Attorney for the Southern District of New York, announced that GUSTAVO L. VILA, a disbarred lawyer in New York, was sentenced today in White Plains federal court to 51 months in prison for stealing approximately $1 million that the Department of Justice’s 9/11 Victim Compensation Fund (“VCF”) had awarded to VILA’s client, a 9/11 first responder.  VILA pled guilty on October 29, 2020, before U.S. District Judge Vincent L. Briccetti, who also imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “Gustavo Vila stole money awarded by the 9/11 Victim Compensation Fund to his client, an NYPD officer and 9/11 first responder.  Further, Vila lied to his client for more than three years, telling him that the stolen money had yet to be released by the Fund.  Now Gustavo Vila has been sentenced to prison for his betrayal.”

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

In the wake of the September 11 terrorist attacks, Congress created the VCF to provide compensation with federal government funds to any individual who suffered physical harm or was killed as a result of the terrorist attacks, or as a result of the debris removal efforts that took place in the immediate aftermath of those attacks.  The original VCF operated from 2001 to 2004.  President Obama and President Trump reactivated the VCF, authorizing it to operate through October 2016, and December 2020, respectively.  Claimants seeking compensation from the VCF were authorized to work with an attorney and have the attorney, on the claimant’s behalf, submit a claim to, and receive the claimant’s award from, the VCF.  An attorney’s fees were limited to 10% of a VCF award.

From at least in or about 2012 through at least in or about 2019, VILA represented a retired New York City Police Department officer (“Victim-1”) in connection with Victim-1’s claim for compensation from VCF.  Victim-1 was diagnosed with, and suffered from, serious, life-threatening medical conditions, including cancer, as a result of rescue and recovery work he performed at Ground Zero.  Throughout his representation of Victim-1, VILA held himself out as an attorney to Victim-1 and to the VCF, despite the fact that in 2015, VILA was disbarred, after being convicted in Westchester County Supreme Court of grand larceny in the third degree, a felony, for stealing funds from another client.  

Despite his disbarment, VILA continued to hold himself out as an attorney to Victim-1 and to the VCF and to represent Victim-1 in connection with his VCF claim.  Victim-1, on VILA’s advice, authorized the VCF to deposit any money it awarded Victim-1 directly into VILA’s bank account.  On or about September 13, 2016, the VCF authorized an award to Victim-1 of $1,030,622.04 for life-threatening illnesses Victim-1 had sustained from rescue and recovery work he performed as a police officer at Ground Zero.  On or about October 12, 2016, the VCF deposited the full amount of Victim-1’s award – mover $1 million – into VILA’s bank account.  At that point, VILA was required to distribute all of that money, less 10 percent for his purported attorney’s fees, to Victim-1.  VILA, however, represented to Victim-1 that the VCF had only released 10 percent of the award, that is, approximately $103,062, which VILA sent Victim-1 on or about October 26, 2016.  That is the only portion of the award that Victim-1 ever received.  VILA stole the remaining 90 percent of the award – approximately $927,559.84 – and used those funds for his own personal benefit, including to pay his own taxes and personal loans.  Over the next three-plus years, VILA continued to lie to Victim-1, repeatedly telling Victim-1 and his family that the VCF had not yet released the full amount of the award, when in fact, the entire award had been released for Victim-1’s benefit in October 2016. 

*                *                *

VILA, 62, of Yorktown Heights, New York, pled guilty to, and was sentenced on, one count of theft of government funds, in violation of Title 18, United States Code, Section 641.  In addition to the 51-month prison term, VILA was sentenced to three years of supervised release and was ordered to forfeit $922,559.84, and to pay restitution to Victim-1 in the amount of $867,870.76.

Ms. Strauss praised the outstanding investigative work of the U.S. Department of Justice Office of the Inspector General's Fraud Detection Office. 

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Sarah L. Kushner is in charge of the prosecution.

Audrey Strauss, United States Attorney for the Southern District of New York, announced today that BILAL SALAJ was sentenced in Manhattan federal court to 19 months in prison for perpetrating tax fraud.  SALAJ previously pled guilty before U.S. Magistrate Judge Ona T. Wang to conspiracy to defraud the Internal Revenue Service (“IRS”), tax evasion, and failure to pay over payroll taxes.  U.S. District Judge P. Kevin Castel, who accepted SALAJ’s guilty plea, imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “Bilal Salaj failed to pay his tax obligations to the IRS and maintained a cash payroll for his business while cheating the government out of almost $1 million. Our self-assessment system of tax reporting is not synonymous with ‘forthrightness optional.’ The government — and especially our law enforcement partners — won’t miss, overlook, or ignore those who misreport on their tax returns. In the competitive small business world, being dishonest and underreporting tax obligations might be tempting. But Salaj’s sentence is a reminder that tax fraud is a serious federal crime and not worth the risk.”

According to the allegations contained in the Information to which SALAJ pled guilty, court filings, and statements made in public court proceedings:    

At all relevant times, BILAL SALAJ, a citizen and resident of the United States, operated a construction business in Manhattan.  Initially, SALAJ was the record owner of the business, but in approximately July 2014, SALAJ began operating the business under a new entity that, on paper, was wholly owned by a third party (“Individual-1”), who worked for SALAJ in the construction business.  Despite this purported change in ownership, SALAJ continued to exercise principal control and decision-making authority over the business and its financial affairs.  In particular, SALAJ was a responsible person under federal law for collecting, truthfully accounting for, and paying over payroll taxes for the business to the IRS.

Between at least in or about 2014 and in or about June 2019, SALAJ devised and perpetrated a scheme to evade a substantial portion of both the payroll taxes for the construction business and SALAJ’s personal income taxes for the period 2014 through 2018.  During this period, SALAJ cashed, and caused Individual-1 to cash, approximately $3.2 million in business checks payable to the construction company at check cashing facilities in Manhattan, instead of depositing them into the company’s operating bank account.  SALAJ and Individual-1 used a portion of the proceeds from the cashed checks to pay cash wages to employees of the construction business, and spent most of the rest on personal expenses.  SALAJ did not withhold or pay over to the IRS any payroll taxes on the cash wages paid to the employees, and did not report to the IRS or pay any personal income taxes on the cash income he realized through the cashed checks.  As part of the tax evasion scheme, SALAJ fraudulently withheld from his accountant any records relating to the cashed business checks, and thereby caused false tax returns to be filed with the IRS.  The tax evasion scheme, including relevant conduct, resulted in a tax loss to the IRS of approximately $952,778.

*                *                *

In addition to the prison term, Judge Castel ordered SALAJ, 56, of Morganville, New Jersey, to pay restitution to the IRS in the amount of $952,778.  SALAJ was also ordered to serve three years of supervised release.

Ms. Strauss praised the outstanding work of the Internal Revenue Service, Criminal Investigation, in this case. 

This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Olga I. Zverovich is in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of a criminal Complaint charging MALIK SANCHEZ, a/k/a “Smooth Sanchez,” with making a hoax threat to detonate a bomb at a restaurant in the Flatiron neighborhood in New York, New York, on or about February 13, 2021.  SANCHEZ was arrested today in Manhattan, and he will be presented this afternoon before United States Magistrate Judge Ona T. Wang.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Malik Sanchez perpetrated a hoax bomb threat at a Manhattan restaurant that frightened innocent victims, sowed chaos, and diverted precious law enforcement resources.  Today’s arrest makes clear that such conduct will not be tolerated.”

FBI Assistant Director William F. Sweeney Jr. said:  “Whether real or perceived, a threat of violence is a serious action with real-life consequences. In this case, Sanchez’s alleged behavior carries the potential for a federal prison sentence.  Anyone who intends to carry out a similar hoax should know that the FBI’s JTTF is ready and willing to respond.”

NYPD Commissioner Dermot Shea said:  “Malik Sanchez’s alleged hoax bomb threat, as detailed in today’s federal complaint, disrupted not only the safety and well-being of several innocent restaurant patrons but the fabric of society.  Our NYPD detectives, with our partners in the FBI’s Joint Terrorism Task Force and the United States Attorney’s Office in the Southern District of New York, have zero tolerance for actions like these.”

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

SANCHEZ self-identifies as an “Involuntary Celibate” or “Incel,” which refers to a primarily online group of individuals, mostly men, who believe that society unjustly denies them sexual or romantic attention to which they are entitled.  SANCHEZ has posted multiple videos to social media accounts depicting SANCHEZ harassing, threatening, and in one instance harming individuals whom SANCHEZ encounters in Manhattan, while expressing support for Incel ideology, including for carrying out violence against women in the name of the group.

For example, on or about February 7, 2021, SANCHEZ posted online a video with a caption including “INCEL ARMY RISE UP.”  The video depicts SANCHEZ yelling at two women walking on a street in Manhattan that SANCHEZ has “Incel rage”; that he supports Incel’s unofficial founder, Elliot Rodger, who attacked a sorority house and pedestrians in California in 2014, killing six victims and injuring 14 others; and that Rodger’s victims “deserved to be run over and hit by a truck.  They deserved to be slaughtered.”[2]  On or about March 20, 2021, SANCHEZ posted another video filmed in Manhattan, which depicts SANCHEZ approaching multiple women at an outdoor seating area.  In the video, SANCHEZ again proclaimed his support for Incels and Elliot Rodger, while making hand gestures mimicking pointing a gun.  After multiple individuals attempted to get SANCHEZ to stop, SANCHEZ sprayed pepper spray in the face of one of those individuals.  SANCHEZ was arrested by responding NYPD officers and charged with state offenses, and was thereafter released on bail.  

On or about February 13, 2021, SANCHEZ posted a video that depicts him perpetrating a hoax bomb threat at a restaurant in Manhattan’s Flatiron neighborhood.  The video shows SANCHEZ approaching an outdoor seating area in front of the restaurant and stating:  “Let’s enhance their meal.”  SANCHEZ then positioned himself close to two women seated at one of the tables, and conveyed that he was about to detonate a bomb.  SANCHEZ loudly stated:  “Allahu Akbar.  Allahu Akbar.  Bomb detonation in two, in two minutes.  I take you with me and I kill all you.  I kill all you right now.  And I kill all you for Allah. . . .  I’m gonna do it.  I’m gonna fucking do it for Allah.  I’m gonna do it, for, Allah, Allah, Allahu Akbar, Come on.  I do it, bomb now, bomb now.”  The two women appeared startled, gathered their belongings, and went into the restaurant; approximately four other individuals in the seating area grabbed their belongings and ran away.  SANCHEZ then stated:  “Yo, all of them scattered” and “Holy shit boys.  That was fucking five stars.  That was five stars.”  At least one individual called 911 in connection with the bomb threat, and law enforcement responded to the scene.  By that point, SANCHEZ had left the area.

*                *                *

SANCHEZ, 19, of New York, New York, is charged with one count of conveying false and misleading information and hoaxes, in violation of Title 18, United States Code, Section 1038, which carries a maximum sentence of five years in prison.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.

Ms. Strauss praised the outstanding investigative work of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies.

The case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorney Kaylan E. Lasky is in charge of the prosecution, with assistance from Trial Attorney Elisabeth Poteat of the Counterterrorism Section of the Department of Justice’s National Security Division.

The charge contained in the Complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty.

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

[2] Statements discussed and quoted herein are described in substance and in part.

Audrey Strauss, United States Attorney for the Southern District of New York, announced that MARTIN SILVER, a managing partner and the chief operating officer of the New York-based investment advisory firm International Investment Group (“IIG”), pled guilty today before U.S. District Judge Alvin K. Hellerstein to investment adviser fraud, securities fraud, and wire fraud offenses in connection with an over $100 million scheme to defraud IIG’s investment advisory fund clients and investors.  Throughout the course of more than 10 years, SILVER perpetrated the scheme by, among other fraudulent actions, creating fictitious investments and overvaluing investments used to generate funds to pay off earlier investors in a Ponzi-like manner.  In connection with his plea agreement, SILVER has also agreed to cooperate with the Government’s ongoing investigation.

Manhattan U.S. Attorney Audrey Strauss said:  “Today, Martin Silver admitted to participating in a sophisticated, decade-long scheme to defraud IIG funds and investors, abandoning his fiduciary responsibilities to IIG’s clients, and causing millions of dollars of losses.  My Office remains committed to policing investment advisers who seek to take advantage of their clients for personal and professional gain.”

According to the allegations contained in the Information and based on statements made in Manhattan federal court:           

Background of IIG 

SILVER and a co-conspirator (“CC-1”) founded IIG in 1994.  SILVER was a managing partner and the chief operating officer of IIG.  IIG, an SEC-registered investment adviser, provided investment management and advisory services, including for three private funds that it operated: (1) the IIG Trade Opportunities Fund N.V. (“TOF”), (2) the IIG Global Trade Finance Fund, Ltd. (“GTFF”), and (3) the IIG Structured Trade Finance Fund, Ltd. (“STFF”).  IIG also advised the Venezuela Recovery Fund (“VRF”), a fund that managed the remaining assets of a failed Venezuelan bank (VRF, together with TOF, GTFF, and STFF, the “IIG Funds”).  In March 2018, IIG reported to the SEC that it had approximately $373 million in assets under management.

IIG advertised itself as specializing in global trade financing, particularly in providing trade finance loans to small and medium-sized businesses.  IIG’s principal investment advisory strategy, including with respect to the IIG Funds, was investing in trade finance loans that it also originated.  Trade finance loans are used by small and medium-sized companies, typically exporters and importers, to facilitate international trade.  IIG’s purported expertise was in trade finance loans to borrowers located in Central or South America, and in a variety of industries, with a stated focus on “soft commodities,” such as coffee, agriculture, fishing, and other food products.  IIG’s trade finance loans were purportedly secured by collateral, such as the underlying traded goods, assets held by the borrowers, or expected payments by third parties.

Investments in TOF, STFF, and GTFF were marketed by IIG to institutional investors, such as pension funds, hedge funds, and insurers.  In offering memoranda and communications with investors, IIG advertised strict risk controls, such as promises to use diligence to carefully select borrowers or issuers with trusted management and marketable assets, and portfolio concentration limits based on borrower, developing country, and industry.

IIG purported to value the trade finance loans in the IIG Funds on a regular basis.  IIG and, in turn, SILVER, received a performance fee with respect to the IIG Funds, as well as a management fee, which was calculated as a percentage of the assets under management held in the Funds.

The Scheme

From approximately 2007 to 2019, SILVER conspired to defraud investors in IIG-managed funds by: (i) overvaluing distressed loans held by the IIG Funds, (ii) falsifying paperwork to create a series of fake loans that were classified, fraudulently, as positively performing loans, and to otherwise hide losses, (iii) selling overvalued and fake loans to a collateralized loan obligation trust and new private funds established and advised by IIG, and (iv) using the proceeds from those fraudulent sales to generate liquidity required to pay off earlier investors in a Ponzi-like manner.

*                *                *           

MARTIN SILVER, 63, of New Jersey, pled guilty to one count of conspiracy to commit investment adviser fraud, securities fraud, and wire 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, and one count of wire fraud, which carries a maximum sentence of 20 years in prison.  Sentencing before Judge Hellerstein has been scheduled for November 16, 2021, at 11:00 a.m.

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 the FBI and also thanked the SEC for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Drew Skinner, Negar Tekeei, and Alex Rossmiller are in charge of the prosecution.

Audrey Strauss, United States Attorney for the Southern District of New York, announced that IFEANYI EKE, a/k/a “Luther Mulbah Doley,” pled guilty today and was sentenced in Manhattan federal court by U.S. District Judge Jesse M. Furman to 40 months in prison for conspiring to commit wire fraud as part of a wide-ranging international business email compromise (“BEC”) syndicate. 

U.S. Attorney Audrey Strauss said:  “As he admitted today, Ifeanyi Eke played a key role in an international conspiracy that deceived and defrauded dozens of victims of nearly $3 million.  Fittingly, Eke has been sentenced to prison and ordered to make restitution to the victims of the conspiracy.”

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

Between in or about 2016 and July 2018, EKE and his co-conspirators, including codefendants Cyril Ashu, Joshua Ikejimba, and Chinedu Ironuah, perpetrated a fraudulent BEC scheme through which they deceived dozens of victims, both foreign and domestic, into wiring millions of dollars to bank accounts controlled by the syndicate.  The fraud was perpetrated by sending victims “spoofed” emails, which purported to be from counterparties whom the victims knew and trusted, and which contained wiring instructions fraudulently directing the victims to send funds to accounts that were in fact controlled by the defendants and others involved in the scheme.    

EKE played a broad role in the fraud.  As part of the scheme, EKE personally received wire transfers of fraud proceeds from several different victims in bank accounts that he opened and controlled.  One of the victims, an intergovernmental organization headquartered in New York, was defrauded into sending $188,815 into EKE’s bank account.  After receiving the fraud proceeds, EKE withdrew and transferred them both for his own use and for dissemination to his co-conspirators.  In addition to receiving and dissipating victim funds directly, EKE managed and supervised other members of the conspiracy, including by arranging for co-conspirators’ accounts to receive fraud proceeds, receiving and communicating wire transfer information contained in victim emails, and coordinating the acquisition and deposit of checks representing fraud proceeds.  In total, EKE is responsible for actual losses to 35 victims totaling approximately $2.7 million.

*                *                *

EKE, 34, of Sandy Springs, Georgia, pled guilty to, and was sentenced on, one count of conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349.  In addition to the prison term, EKE was sentenced to three years of supervised release.  EKE was further ordered to forfeit $365,205, and to pay restitution to his victims in the amount of $2,691,908.30.

Ms. Strauss praised the outstanding investigative work of the FBI.  The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Olga I. Zverovich and Jarrod L. Schaeffer are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that JAMES SPINA was sentenced to 108 months in prison for his participation in a widespread health care fraud scheme through the fraudulent operation of Dolson Avenue Medical (“DAM” or the “Practice”), a multi-disciplinary medical clinic located in Middletown, New York.  SPINA previously pled guilty before U.S. District Judge Kenneth M. Karas, who imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “James Spina led a sophisticated, widespread, and callous scheme that put greed and profits ahead of patients and their well-being.  In doing so, he betrayed his professional obligations and bilked insurance companies and Medicare out of millions of dollars.  Thanks to the coordinated efforts of federal and state investigative agencies, Spina will now serve a lengthy sentence in federal prison.”

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

From 2011 through September 2017, DAM was a registered medical service corporation in New York State that purported to provide a variety of pain management and rehabilitation services, including physical medicine and rehabilitation, chiropractic services, physical therapy, diagnostic testing, and acupuncture.  DAM primarily provided treatment services from its clinic located at 201 Dolson Avenue, Middletown, New York.

In addition to DAM, at least eight other corporations, including four other medical corporations, billed Medicare and other health insurance providers (the “Insurance Providers”) from 201 Dolson Avenue (the “Associated Businesses”).  On paper, DAM and the Associated Businesses appeared to be separate entities owned by multiple different qualified individuals.  But in reality, JAMES SPINA, who is a doctor of chiropractic – not a medical doctor – along with his co-defendant, were the true owners and operators of the different medical service corporations.

JAMES SPINA and his co-conspirators made all corporate decisions for DAM and the Associated Businesses.  In particular, JAMES SPINA ran the day-to-day operations of the businesses.  JAMES SPINA and his co-conspirators controlled payroll, the hiring and firing of employees, corporate expenses such as employee compensation and rent, and billing to Insurance Providers.  Further, JAMES SPINA and one of his co-conspirators were the financial beneficiaries of DAM and its Associated Businesses. 

JAMES SPINA also went to great lengths to conceal his control and ownership of DAM and the Associated Businesses.  In particular, JAMES SPINA and one of his co-conspirators recruited medical doctors and other professionals to serve as the nominee owners of DAM and the Associated Businesses.  JAMES SPINA further concealed his ownership of DAM and the Associated Businesses by transferring revenues of these companies into other companies that he and a codefendant owned.  To further disguise these transfers, JAMES SPINA drafted fake lease and marketing agreements between DAM and the Associated Businesses and purported real estate and marketing companies he owned, and referred to the payments as “rent” or “marketing fees.”  JAMES SPINA and his co-conspirators also used phony and non-existent addresses for the corporations so that it would appear that DAM and the Associated Businesses were operating out of separate locations.

In operating the multiple fraudulent businesses, JAMES SPINA and his co-conspirators routinely showed little, if any, regard for which medical services or treatments were medically necessary, or even whether the services were actually provided to patients, and instead operated DAM and billed Insurance Providers to maximize DAM’s reimbursements and, ultimately, their own profits.  In particular, JAMES SPINA and his co-conspirators: (a) submitted and caused to be submitted claims to Insurance Providers for medically unnecessary services and procedures; (b) submitted and caused to be submitted claims to Insurance Providers for medical services that were not rendered; (c) double billed, i.e., submitted and caused to be submitted multiple claims for the same service to two different Insurance Providers; (d) altered and fabricated medical records; and (e) obstructed and impeded audits by Medicare and other Insurance Providers to conceal their fraud.

As part of the fraudulent scheme, one of the doctors who worked at DAM and the Associated Businesses introduced a lucrative procedure called a facet injection.  Because the facet joints to which the injections are applied are near the spinal cord, such procedures are high-risk, with a small margin for error.  The doctor had no formal training in the procedure, and taught himself by shadowing other doctors and watching YouTube videos.  JAMES SPINA was intimately involved with all billing-related aspects of the facet injections, and continued to encourage their use even after several patients suffered serious, adverse events, and one patient died of complications following a facet injection.

As a consequence of the above-described scheme, a substantial number of claims submitted by DAM and the Associated Businesses to Medicare and other Insurance Providers were false and fraudulent. 

In addition to the prison term, JAMES SPINA, 63, of Middletown, New York, was sentenced to three years of supervised release.  The Court also ordered JAMES SPINA to pay $9,760,555.20 in restitution, and to forfeit $9,105,741.61.  On May 2, 2019, JAMES SPINA pled guilty to one count of conspiracy to commit healthcare fraud, in violation of Title 18, United States Code, Section 1349.

Ms. Strauss praised the outstanding investigative work of the FBI, the U.S. Department of Health and Human Services-Office of the Inspector General, the New York State Office of the State Comptroller, and the Orange County Sheriff’s Office. 

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney Nicholas S. Bradley is in charge of the prosecution.  The prosecution was previously led by former Assistant U.S. Attorney Kathryn Martin. 

Audrey Strauss, the United States Attorney for the Southern District of New York, and Michael J. Missal, the Inspector General of the United States Department of Veterans Affairs, Office of the Inspector General (“VA-OIG”), announced that SHAWN PIERRE HOBBS, a soldier for the Connecticut Army National Guard (“Army National Guard”) and a Rikers Island correction officer employed by the New York City Department of Correction (“NYC DOC”), was arrested yesterday in El Paso, Texas, on wire fraud and aggravated identity theft charges.  HOBBS is alleged to have defrauded the Department of Veterans Affairs (“VA”) and NYC DOC in order to receive financial and other benefits to which he was not entitled.  HOBBS is expected to be presented in federal court in El Paso this afternoon. 

U.S. Attorney Audrey Strauss said:  “Shawn Pierre Hobbs, a National Guard soldier and correction officer at Rikers Island, allegedly submitted false certifications to receive veterans benefits for hundreds of hours of work he did not perform. Moreover, Hobbs allegedly forged the signatures of his colleagues to make the fraudulent paperwork appear to be authentic. Hobbs’s alleged conduct certainly does not befit that of a sworn officer of two government agencies, and thanks to the assistance of Veterans Affairs, he is now charged criminally for fraud and identity theft.”

VA-OIG Inspector General Michael J. Missal said:  “The charges unsealed today are the result of the hard work and dedication of the VA Office of Inspector General’s special agents working with our law enforcement partners.  The VA OIG will seek to hold accountable those who perpetrate fraud and steal benefits that are intended for deserving veterans.”

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

From at least in or about April 2015, up to and including at least on or about April 8, 2021, SHAWN PIERRE HOBBS served as a soldier in the Army National Guard.  Army National Guard soldiers hold civilian jobs or attend school while maintaining their military training part-time.  The VA provides certain benefits to United States veterans, including Army National Guard soldiers, who work in approved on-the-job training programs (“VA Benefits”).  From at least in or about January 2019, up to and including at least on or about April 8, 2021, HOBBS was employed by NYC DOC as a correction officer at Rikers Island, a VA-approved on-the-job training program.  NYC DOC employees who are members of the military are entitled to paid leave, with certain limitations, while they are engaged in the performance of ordered military duty.

From at least in or about January 2019, up to and including at least in or about March 2021, HOBBS defrauded the VA and NYC DOC in order to obtain VA Benefits and paid military leave from NYC DOC, among other things.  Specifically, HOBBS submitted eight fraudulent military memoranda purportedly from the Army National Guard to NYC DOC in order to obtain paid leave.  The fraudulent military memoranda each bore the seal of the United States Department of Defense and the letterhead of the Army National Guard, and falsely represented that HOBBS had served military duty on hundreds of days on which he, in fact, had not served.  At the same time, HOBBS transmitted by fax 16 fraudulent employment certifications to the VA that were purportedly from NYC DOC and falsely represented that he had worked for NYC DOC for hundreds of hours, which he had not worked.  To effectuate this scheme, HOBBS used the names, identities, and signatures of an Army National Guard Platoon Leader, an Army National Guard Readiness Noncommissioned Officer, and a NYC DOC employee without their knowledge or authorization on the fraudulent military memoranda and employment certifications.

*                *                *

SHAWN PIERRE HOBBS, 34, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory consecutive term of two years in prison.  The statutory maximum and mandatory 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.

Ms. Strauss praised the outstanding investigative work of VA-OIG.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorney Jane Kim is in charge of the prosecution.

The charges contained in the Complaint 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 Complaint, and the description of the Complaint as 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.

Audrey Strauss, United States Attorney for the Southern District of New York, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that ARMANDO J. PEREZ, the former Chief of Police of the City of Bridgeport, Connecticut (the “City”), was sentenced today to 12 months and one day in prison for participating in a scheme to defraud the City by rigging the 2018 police chief examination in order to ensure he would be selected for the position, and to making false statements to federal agents in the course of the investigation.  PEREZ previously pled guilty in Bridgeport federal court on October 5, 2020, before U.S. District Judge Kari A. Dooley, who also imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “Former Chief Perez schemed to rig the search for a permanent police chief to ensure the position was awarded to him, and then he repeatedly lied to federal agents in order to conceal his conduct.  Today’s sentence sends a strong message that public officials will be held accountable when they corruptly put their own self-interest above their duties to faithfully serve their citizens.”   

According to the allegations contained in the Complaint, the Information, other court filings, statements made during court proceedings, and publicly available information:

The Scheme to Rig the City of Bridgeport’s Police Chief Exam

In or about 2018, PEREZ participated in a criminal scheme to rig the City’s search for a new Bridgeport Police Department (“BPD”) chief in 2018.  During the course of this scheme, PEREZ – who was serving as the acting BPD chief at the time – conspired with David Dunn, who was at that time the City’s acting personnel director, to deceive the City by secretly rigging the supposedly independent search process for a new BPD chief to ensure that PEREZ was ranked as one of the top three candidates and could therefore be awarded a five-year contract to serve as the BPD chief.

More specifically, in or about February 2018, the City commenced a search to fill the position of permanent Chief of Police.  Under the City’s Charter, the City was required to conduct an “open and competitive examination” to determine the top three scoring candidates for the position, from which the mayor could then choose.  Dunn, in his role as the personnel director, oversaw the police chief examination process, and retained an outside consultant (“Consultant-1”) to assist with developing and carrying out the exam.  PEREZ and Dunn then manipulated that examination process in multiple ways:  Dunn stole confidential examination questions and related information developed by Consultant-1, and provided those materials to PEREZ, including by email; Dunn had Consultant-1 tailor the examination scoring criteria to favor PEREZ; PEREZ enlisted two BPD officers to secretly draft and write PEREZ’s written exam; and Dunn attempted to influence a panelist, tasked with ranking the candidates in the last stage of the exam, to ensure that PEREZ was scored as one of the top three candidates. 

As a result of the scheme, the City was deceived into ranking PEREZ among the top three candidates, which rendered him eligible for the permanent police chief position.  The mayor ultimately offered the position to PEREZ, and the City, under the assurance that PEREZ had been appointed in accordance with the City Charter, entered into a five-year contract with PEREZ, the terms of which included a payout to PEREZ for accrued leave.

PEREZ’s False Statements

PEREZ was voluntarily interviewed in connection with the FBI’s investigation.  In an attempt to conceal his conduct, during those interviews he lied to FBI agents about facts material to the criminal investigation.  PEREZ provided false and misleading information about the assistance Dunn and others had provided him in connection with the examination process, including his requests to a BPD officer to sneak into headquarters to retrieve stolen confidential information provided by Dunn. 

*                *                *

In addition to the prison term, PEREZ, 64, of Trumbull, Connecticut, was sentenced to two years of supervised release, a fine in the amount of $7,500, and restitution of $299,407. 

On October 5, 2020, Dunn pled guilty to his participation in the scheme to rig the City’s police chief search and to making false statements to federal investigators, and is scheduled to be sentenced by Judge Dooley tomorrow.              

Ms. Strauss praised the outstanding work of the FBI and the Special Agents of the U.S. Attorney’s Office. 

The case is being prosecuted by the Office’s Public Corruption Unit and White Plains Division.  Assistant U.S. Attorneys Eli J. Mark and Jeffrey C. Coffman, and Assistant U.S. Attorney Jonathan N. Francis of the U.S. Attorney’s Office for the District of Connecticut, are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that YUSUF OWOLABI ABDUL, a/k/a “Saheed Sador,” a citizen of Nigeria and a resident of Canada, was extradited today from Germany.  ABDUL was charged with participation in a fraud scheme from at least in or about 2013 until at least April 2019 involving the theft and laundering of victim funds.  ABDUL was arrested in Germany on December 11, 2020, on an Interpol Red Notice, and is the fifth defendant charged in this case.  ABDUL is expected to be presented on Monday, April 12, before U.S. Magistrate Judge Ona T. Wang.  ABDUL’s case is assigned to U.S. District Judge Katherine Polk Failla.

U.S. Attorney Audrey Strauss said:  “As alleged, Yusuf Owolabi Abdul and his codefendants used a widely available telephone ‘spoofing’ service and other deceitful means to steal and conceal millions of dollars in victim funds.  Thanks to the FBI and international cooperation, Abdul is in U.S. custody and facing charges in this District.”

According to the allegations in the Indictment [1]:

From at least 2013 through in or about 2018, ABDUL and various other conspirators, located in countries including the United States, Canada, Italy, the United Kingdom, and the United Arab Emirates (collectively, the “Conspirators”), were involved in a scheme to fraudulently access individuals’ and corporations’ bank accounts and to conduct financial transactions using those bank accounts without the knowledge or authority of the accounts’ legitimate owners (the “Bank Scheme”).  As part of the Bank Scheme, the Conspirators placed thousands of calls to various United States banks, holding themselves out as legitimate accountholders of particular targeted bank accounts and using the stolen personal identifying information belonging to those accountholders.  Using a particular telephone number “spoofing” service, and voice-altering technology, the Conspirators would deceive bank representatives into believing that the Conspirators were actual accountholders.  In so doing, they convinced multiple U.S. banks to, among other things: move money from a victim’s savings account to the victim’s checking account (so that the Conspirators could more easily access the funds and conduct unauthorized transactions); falsely note on the account that the accountholder was traveling abroad (making the bank less likely to void suspicious international transactions made by the Conspirators); have “replacement” credit cards mailed to international addresses controlled by the Conspirators (whereupon the Conspirators could use them to make unauthorized purchases); and authorize foreign purchases made by the Conspirators.

*                *                *

ABDUL, 45­, a citizen of Nigeria and resident of Canada, is charged with one count of conspiracy to commit bank and wire fraud, which carries a maximum sentence of 30 years in prison; one count of conspiracy to commit money laundering, which carries a maximum of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison, to be served consecutively to the other charges. 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.

Other defendants charged in this case include Alade Kazeem Sodiq, a/k/a “Eluku,” a citizen of the United Arab Emirates and Abdulai Kennedy Saaka, a/k/a “Kenny,” of Atlanta, Georgia, who each pled guilty to one count of money laundering conspiracy and were sentenced to 50 months in prison and 32 months in prison, respectively; Habeeb Audu, a/k/a “Dickson” whose case remains pending; and Dominic Francis Labiran, a citizen of the United Kingdom, who remains at large.

Ms. Strauss praised the outstanding investigative work of the Federal Bureau of Investigation.  The U.S. Department of Justice’s Office of International Affairs of the Department’s Criminal Division provided significant assistance in securing the defendant’s extradition from Germany.

The prosecution of this case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Kiersten A. Fletcher, Jonathan E. Rebold, and Andrew A. Rohrbach are in charge of the prosecution.

The charges against ABDUL, Audu, and Labiran contained in the Indictment are merely accusations, and they 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 below constitute only allegations, and every fact described should be treated as an allegation.

Audrey Strauss, the United States Attorney for the Southern District of New York, David M. Hoovler, Orange County District Attorney, and William F. Sweeney Jr., Assistant Director-in-Charge, New York Division, Federal Bureau of Investigation (“FBI”), announced today that TISHAWN C. WOODS has been arrested for his participation in a string of armed home invasion and gas station robberies in and around Newburgh, New York.  WOODS was apprehended yesterday in Orange, New Jersey, and will be presented this afternoon before United States Magistrate Judge Andrew E. Krause in White Plains federal court. 

U.S. Attorney Audrey Strauss said:  “As alleged, Tishawn Woods and an accomplice committed a series of robberies during which they discharged firearms, shooting and seriously wounding one of their victims.  We thank the FBI and the Orange County District Attorney’s Office for their efforts to bring Woods to justice and keep the public safe.”   

Orange County District Attorney David M. Hoovler said:  “It takes the combined cooperative efforts of different law enforcement officials to stop organized violent criminal activity, particularly where it crosses over into different jurisdictions.  I am grateful for the cooperation and work of the City of Newburgh Police Department, the Town of Newburgh Police Department, the Town of New Windsor Police Department, and the FBI’s Safe Streets Task Force in this case.  I am proud of the work of my office’s investigators and assistant district attorneys in this matter, particularly in obtaining some of the video evidence.  Very often digital recordings possessed by private citizens provide crucial evidence in solving violent crimes, which is why in 2016 we created the Video Camera Community Partnership Program.  I thank United States Attorney Audrey Strauss for the professionalism, diligence, and courtesy shown by her staff and look forward to working with the United States Attorney’s Office of the Southern District of New York on this and other matters.”   

FBI Assistant Director William F. Sweeney Jr. said:  “We’ve recently seen an uptick in violent offenses, and today I have a sincere warning for those planning similar violent behavior – think twice.  Respect others’ property and belongings. The FBI and our law enforcement partners will track you down and hold you accountable for violent behavior.  If you break federal law you will face federal penalties.”

According to the allegations in the Complaint:[1]

In the early morning hours of March 17, 2021, WOODS and an accomplice, armed with handguns, burst inside an apartment in Newburgh, New York, where they robbed and shot the apartment’s occupant, inflicting life-threatening injuries. 

In the early morning hours of March 22 and March 28, 2021, WOODS and an accomplice committed armed robberies of gas stations in New Windsor, New York, during which they fired shots near the gas stations’ clerks.

*                *                *

WOODS, 20, of Newburgh, New York, is charged with three counts of Hobbs Act robbery, each of which carries a maximum sentence of 20 years in prison, and three counts of using, carrying, brandishing, and discharging a firearm during, in relation to, and in furtherance of, a crime of violence, each of which carries a mandatory 10-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 defendant will be determined by a judge.

Ms. Strauss praised the outstanding work of the FBI, the Orange County District Attorney’s Office, the Orange County Crime Analysis Center, the City of Newburgh Police Department, the Town of Newburgh Police Department, and the Town of New Windsor Police Department.

The case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorney Jeffrey C. Coffman is in charge of the prosecution.

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

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

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that ADEDAYO ILORI pled guilty today before United States District Judge Lewis J. Liman to one count of conspiracy to commit wire and mail fraud in connection with his role in a loan fraud scheme.  ILORI also admitted that he conspired to commit money laundering, in violation of Title 18, United States Code, Section 1956(h).  Codefendants Herode Chancy and Michael Albarella, who at the time of offense were employed as a managers at a Manhattan branch of a national bank (“Bank-1”), previously pled guilty before Judge Liman in connection with their respective roles in the scheme.

U.S. Attorney Audrey Strauss said:  “Adedayo Ilori worked with bank insiders to obtain over $1 million in commercial loans for fake businesses.  Ilori used stolen identities to apply for the loans and open bank accounts to receive the loan proceeds.  His co-conspirators used a stolen identity provided by Ilori to launder a portion of the loan proceeds.  Now all three have admitted their guilt and await sentencing for their crimes.”

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

From at least in or about March 2019 up to and including at least in or about March 2020, ILORI and Chancy conspired to fraudulently obtain business loans from a third-party commercial lender with the intent not to repay the loans – i.e., with the intent to “bust out” the loans.  ILORI and Chancy together submitted eight fraudulent business loan applications for a total of $1,020,000 in business loans.  The business loan applications submitted by ILORI and Chancy included doctored bank statements and listed the identities of other persons as the loan applicants, including stolen identities provided by ILORI.  ILORI and Chancy also opened bank accounts using the identities of those other persons in order to receive the loan payments from the third-party commercial lender.  ILORI and Chancy subsequently conspired with Albarella to open a bank account at Bank-1 using a stolen identity provided by ILORI to launder approximately $200,000 of the expected proceeds of the loan scheme.  Albarella opened the bank account at Bank-1 using the stolen identity provided by ILORI and Chancy, and Albarella accepted a $10,000 bribe to open the bank account.       

ILORI and Chancy believed that the underwriter for the third-party commercial lender was participating in the scheme and agreed to pay the underwriter a “commission” for the underwriter’s role in the scheme.  In reality, however, the underwriter was an undercover law enforcement officer. 

*                *                *

ILORI, 42 of Queens, New York, pled guilty to one count of conspiracy to commit wire and mail fraud, which carries a maximum penalty of 20 years in prison.  The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

ILORI is scheduled to be sentenced by Judge Liman on July 22, 2021, at 2:00 p.m.

Ms. Strauss praised the outstanding investigative work of the New York FBI’s Eurasian Organized Crime Task Force and the El Dorado Task Force of Homeland Security Investigations. 

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a criminal complaint charging GANGADAI RAMPERSAUD AZIM, a/k/a “Julie Azim,” with wire fraud, bank fraud, bank theft, money laundering, and conspiracy, for her role in a scheme to defraud her employer, a Manhattan-based bank, of approximately $1.7 million.  AZIM was arrested today and presented before United States Magistrate Judge Stewart D. Aaron this afternoon.

U.S. Attorney Audrey Strauss said:  “As alleged, Gangadai Azim betrayed her position as a trusted bank employee to defraud the bank and misappropriate client funds for more than a dozen years.  She allegedly stole more than $1.7 million and concealed the scheme until an absence from work led to its discovery.  Now Azim faces the prospect of a much longer absence from work.”

FBI Assistant Director William F. Sweeney Jr. said:  “Azim’s alleged $1.7 million fraud scheme not only victimized her employer, but also risked the financial standing of the customers whose accounts she manipulated.  In the long run, defrauding a financial institution with the hope of making an easy profit only resulted in federal charges and the potential for time behind bars.”

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

Between August 2008 and January 2021, AZIM, a long-time employee of a New York, New York-based bank (“Bank-1”) stole approximately $1.7 million from her employer.  Over the course of approximately 12 years, AZIM executed hundreds of wire transfers of Bank-1 funds to co-conspirators and related companies, who then sent portions of the ill-gotten funds to AZIM’s personal bank account. 

In furtherance of her scheme to defraud Bank-1, AZIM repeatedly made false entries in Bank-1’s systems, misappropriating funds paid to Bank-1 by its clients to satisfy outstanding loan obligations and then extending the maturity dates of those loan obligations, making it appear as though the loan obligations had not yet been paid.  When even the fraudulently extended maturity dates came due, AZIM originated new, fraudulent loans.  AZIM utilized the proceeds of those fraudulent loans to satisfy the loans for which she had previously stolen the client payments.  In doing so, AZIM abused her position at Bank-1 and enriched herself at the expense of her employer.

AZIM’s fraud was discovered by Bank-1 when AZIM took a leave from her position at Bank-1 as a result of illness earlier this year.  In January 2021, Bank-1 debited the account of a client of Bank-1 (“Client-1”) in order to pay off an outstanding loan obligation Client-1 had coming due.  Client-1 then alerted Bank-1 that the debit was improper, as Client-1 had, in fact, paid off that obligation in 2019.  Upon further investigation, Bank-1 discovered that while the funds had been withdrawn from Client-1’s account in or about 2019, AZIM had misappropriated those funds, using them for purposes other than satisfying Client-1’s obligation.

As a result of identifying this discrepancy, Bank-1 officials discovered approximately 14 loan obligations (the “Fraudulent Loan Obligations”), worth more than approximately $1 million, for which no underlying documents existed.  AZIM appears to have entered each of the Fraudulent Loan Obligations in Bank-1’s systems so that the proceeds could be used, in significant part, to pay off outstanding loan obligations coming to maturity; those loan obligations had, in fact, already been satisfied by clients, but AZIM had misappropriated the payments.  In addition, Bank-1 officials discovered approximately five outstanding loan obligations, worth more than approximately $706,000, for which AZIM appears to have extended the maturity dates, despite the relevant clients having paid off the loan obligations.  

The approximately $1.7 million of loan proceeds resulting from the Fraudulent Loan Obligations and the improperly extended maturity dates appear to have been misappropriated by AZIM.  Over the course of approximately 12 years, between 2008 and 2020, AZIM caused approximately 200 wire transfers of Bank-1’s funds, each for an amount under $10,000, to be sent to third party accounts, including those of co-conspirators and related companies, which then returned portions of those funds to AZIM.

*                *                *

AZIM, 58, of Richmond Hill, New York, is charged in the Complaint with (1) conspiring to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison; (2) bank fraud, which carries a maximum sentence of 30 years in prison ; (3) wire fraud, which carries a maximum sentence of 20 years in prison; (4) bank theft, embezzlement, or misapplication, which carries a maximum sentence of 30 years in prison; (5) conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison; and (6) money laundering, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the FBI in this case.

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.

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

[1] As the introductory phase 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.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that ALADE KAZEEM SODIQ, a/k/a “Eluku,” was sentenced in Manhattan federal court to 50 months in prison for conspiracy to commit money laundering.  SODIQ, a money launderer who operated in Dubai, United Arab Emirates, was charged in 2019 along with Habeeb Audu, Abdulai Kennedy Saaka, Dominic Francis Labiran, and Yusuf Owolabi Abdul.  SODIQ pled guilty on November 19, 2020, to one count of conspiracy to commit money laundering, before U.S. District Judge Katherine Polk Failla, who also imposed today’s sentence.

 U.S. Attorney Audrey Strauss said:  “Using a widely available telephone ‘spoofing’ service and other deceitful means, Alade Sodiq, in concert with others, was able to steal and conceal millions of dollars in victim funds.  Sodiq has rightly received a significant sentence for his crimes.  This Office is committed to working with the FBI to uncover and uproot organizations like Sodiq’s that would exploit the U.S. financial system.”

According to the allegations in the Indictment, court filings, and statements made during court proceedings, including SODIQ’s plea and sentencing hearings:

From at least 2013 through in or about 2018, SODIQ and various other conspirators, located in countries including the United States, Canada, Italy, the United Kingdom, and the United Arab Emirates (collectively, the “Conspirators”), were involved in a scheme to fraudulently access millions of dollars held in individuals’ and corporations’ bank accounts, and to conduct financial transactions using those bank accounts without the knowledge or authority of the accounts’ legitimate owners (the “Bank Scheme”).  As part of the Bank Scheme, the Conspirators placed thousands of calls to various United States banks, holding themselves out as legitimate accountholders of particular targeted bank accounts and using the stolen personal identifying information belonging to those accountholders.  Using a particular telephone number “spoofing” service, and voice-altering technology, the Conspirators would deceive bank representatives into believing that the Conspirators were actual accountholders.  In so doing, they convinced multiple U.S. banks to, among other things:  Transfer funds into accounts from which the Conspirators could access the funds and conduct further unauthorized transactions; falsely list victim accountholders as “traveling abroad” to reduce the chances of the bank flagging suspicious international transactions made by the Conspirators; have “replacement” credit cards mailed to international addresses controlled by the Conspirators; and authorize foreign purchases made by the Conspirators.

SODIQ was also involved in separate schemes to defraud United States-based businesses and banks by means of business email compromise schemes (the “BEC Fraud Schemes”).  For example, SODIQ and his co-conspirators defrauded a North Carolina-based healthcare company (the “Healthcare Company Victim”) into wiring over $1 million to a bank account controlled by one of SODIQ’s co-conspirators (the “SODIQ Co-conspirator Account”).  They did so by tricking the Healthcare Company Victim into believing that one of its legitimate vendors had changed bank accounts to the SODIQ Co-conspirator Account, such that payment for the vendor’s services were made to the SODIQ Co-conspirator Account.  These funds were thereafter quickly withdrawn from the SODIQ Co-conspirator Account and dispersed to other accounts controlled by SODIQ and his co-conspirators.

Thereafter, in connection with an FBI undercover operation, SODIQ and others each agreed, for a substantial fee, to launder funds that they believed to be fraud proceeds through bank accounts controlled by SODIQ’s co-conspirators.  SODIQ and his co-conspirators agreed to conceal the nature of those purportedly fraudulent proceeds. 

In addition to the prison term, SODIQ, 5­­­0, of Dubai, United Arab Emirates, was also sentenced to one year of supervised release, and ordered to pay $298,581.11 in restitution and forfeiture in the amount of $23,385.00. 

Other defendants charged in this case include Abdulai Kennedy Saaka, a/k/a “Kenny,” of Atlanta, Georgia, who pled guilty to one count of money laundering conspiracy was sentenced to 32 months in prison; Habeeb Audu, a/k/a “Dickson,” a citizen of the United Kingdom and Yusuf Owolabi Abdul, a/k/a “Saheed Sador,”  a citizen of Canada, whose cases remain pending; and Dominic Francis Labiran, a citizen of the United Kingdom, who remains at large.

Ms. Strauss praised the outstanding investigative work of the FBI.

The prosecution of this case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Kiersten A. Fletcher, Jonathan E. Rebold, and Andrew A. Rohrbach are in charge of the prosecution.

The charges against Habeeb Audu, Yusuf Owolabi Abdul, and Dominic Francis Labiran are merely accusations, and they are presumed innocent unless and until proven guilty.

Audrey Strauss, the U.S. Attorney for the Southern District of New York, and Raymond P. Donovan, Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), announced today the unsealing of a nine‑count superseding indictment charging FERNANDO RA, KENNY BATISTA, FERNANDO ROSARIO CRUZ, YONATHAN JUNIOR GARCIA VALDEZ, ANTTWAN CROSBIE, ELMER GILL, and MICHAEL ASHLEY with kidnapping, robbery, firearms, and narcotics offenses.

As alleged in the Superseding Indictment unsealed today and other publicly available documents, the charges arise, in part, from an October 3, 2020 kidnapping and robbery during which certain of the defendants brandished a firearm and assaulted two victims in connection with the defendants’ trafficking of cocaine.[1] 

RA was previously charged by indictment with firearms and narcotics offenses, based on his possession of an assault rifle, a loaded pistol, and approximately 700 fentanyl pills.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged in the Superseding Indictment, the defendants were responsible for a brutal kidnapping and robbery in furtherance of their narcotics trafficking.  Thanks to the extraordinary work of our partners at the DEA and the Special Agents and Investigative Analysts at the U.S. Attorney’s Office, the defendants now face federal charges for their crimes”

DEA Special Agent in Charge Raymond P. Donovan said:  “As alleged, this investigation took us to the dark side of drug trafficking that includes kidnapping, armed robbery, and assault.  These arrests make it poignantly clear that alleged traffickers disregard the rule of law and will stop at nothing to continue their illegal trade.  I applaud the investigators and prosecutors whose exceptional work resulted in today’s announcement.”

*                      *                      *

BATISTA, 25, ROSARIO, 27, GARCIA, 21, GILL, 36, and ASHLEY, 30, were arrested today, and CROSBIE, 26, was arrested yesterday.  BATISTA, ROSARIO, GARCIA, GILL, and CROSBIE will be presented before United States Magistrate Judge Stewart D. Aaron.  ASHLEY will be presented before United States Magistrate Judge Jeremiah J. McCarthy of the Western District of New York.  RA was already in federal custody.  The case is assigned to United States District Judge P. Kevin Castel.

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

Ms. Strauss praised the outstanding investigative work of Special Agents from the New York Division of the DEA and Special Agents from the U.S. Attorney’s Office for the Southern District of New York.  Ms. Strauss also thanked the DEA Buffalo Resident Office and the Paterson (New Jersey) Police Department for their assistance with the investigation, as well as the Organized Crime Drug Enforcement Task Force New York Strike Force, Financial Investigation Team, comprising agents and officers of the DEA, NYPD, Bergen County Prosecutors Office, Fort Lee Police Department, Teaneck Police Department, Hillsdale Police Department, Northvale Police Department, Palisades Interstate Parkway Police, and Closter Police Department.

The case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Rushmi Bhaskaran and Benjamin Woodside Schrier are in charge of the prosecution.

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

COUNT

DEFENDANT(S)

MAX. TERM OF IMPRISONMENT

Count One: Conspiracy to Distribute and Possess with the Intent to Distribute More than 40 Grams of Fentanyl (21 U.S.C. § 846)

Fernando Ra

Anttwan Crosbie

40 Years; Mandatory Minimum Sentence of Five Years

Count Two:  Using, Carrying, and Possessing a Firearm During, in Relation to, and in Furtherance of a Drug Trafficking Crime (18 U.S.C. §§ 924(c)(1)(A)(i) and 2)

Fernando Ra

Life; Mandatory Consecutive Sentence of Five Years

Count Three: Felon in Possession of a Firearm (18 U.S.C. § 922(g)(1))

Fernando Ra

10 Years

Count Four:  Conspiracy to Distribute and Possess with the Intent to Distribute More than Five Kilograms of Cocaine (21 U.S.C. § 846)

All Defendants

Life; Mandatory Minimum Sentence of 10 Years

Count Five: Conspiracy to Commit Kidnapping (18 U.S.C. § 1201(c))

Fernando Ra

Kenny Batista

Fernando Rosario Cruz

Yonathan Junior Garcia Valdez

Anttwan Crosbie

Life

Count Six: Conspiracy to Commit Hobbs Act Robbery (18 U.S.C. § 1951(a))

Fernando Ra

Kenny Batista

Fernando Rosario Cruz

Yonathan Junior Garcia Valdez

Anttwan Crosbie

20 Years

Count Seven: Attempted Hobbs Act Robbery (18 U.S.C. §§ 1951(a) and 2)

Fernando Ra

Kenny Batista

Fernando Rosario Cruz

Yonathan Junior Garcia Valdez

20 Years

Count Eight: Using, Carrying, and Brandishing a Firearm During, in Relation to, and in Furtherance of a Crime of Violence and a Drug Trafficking Crime (18 U.S.C. §§ 924(c)(1)(A)(i), 924(c)(1)(A)(ii), and 2)

Fernando Ra

Kenny Batista

Fernando Rosario Cruz

Yonathan Junior Garcia Valdez

Life; Mandatory Consecutive Sentence of Seven Years

Count Nine: Conspiracy to Use, Carry, and Possess a Firearm During, in Relation to, and in Furtherance of a Crime of Violence and a Drug Trafficking Crime (18 U.S.C. § 924(o))

Fernando Ra

Anttwan Crosbie

20 Years

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

Audrey Strauss, United States Attorney for the Southern District of New York, and Margaret Garnett, Commissioner of the New York City Department of Investigation (“DOI”), announced today the unsealing of a Complaint charging PAUL FISHBEIN, the defendant, with theft of government funds, wire fraud, and mail fraud for defrauding rental assistance programs administered by New York City’s Human Resources Administration (“HRA”), New York City’s Housing Preservation & Development (“HPD”), and the New York City Housing Authority (“NYCHA”), by falsely claiming to be the owner and landlord of 20 properties (the “Properties”) in New York City, renting out the Properties to families in need through the rental assistance programs, and collecting money – including federal funds – from HRA, HPD, and NYCHA as the purported owner and landlord of the Properties.  The defendant is also charged with Medicaid fraud.  The defendant was arrested today and will be presented later today in Manhattan federal court before United States Magistrate Judge Stewart D. Aaron.

U.S. Attorney Audrey Strauss said:  “As alleged, Paul Fishbein not only took advantage of New Yorkers in need, he also defrauded city and federal government programs designed to help those very people.  Fishbein allegedly lied about ownership of residential properties, fraudulently took rent subsidies and other benefits from those government housing programs, and often evicted tenants without cause from housing that was substandard in any event.  Now Paul Fishbein is in custody and facing serious federal charges for his alleged fraud and exploitation.”

DOI Commissioner Margaret Garnett said:  “This defendant’s alleged conduct wove a web of lies that allowed him to illegally profit from government programs meant to help those in desperate need of housing, and he further exploited them by providing squalid apartments in properties he did not rightly own, often evicting them shortly after they moved in, according to the charges.  Homeless New Yorkers, and others in critical need of housing, not only have a need but a right to homes that are clean, safe, and secure, especially when they are offered through public assistance programs.  DOI will continue to work in partnership with the U.S. Attorney’s Office for the Southern District of New York to root out and stop the corruption and fraud that undermines basic needs such as housing.”

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

The Rental Assistance Program Fraud 

The Rental Assistance Programs

HRA, HPD, and NYCHA (collectively, the “Agencies”) each offer a rental subsidy program that helps provide critical affordable housing to New Yorkers in need.  Landlords who participate in these programs receive guaranteed monthly rent payments, among other benefits.  Rental units must meet federal “Housing Quality Standards,” which are based on the minimum criteria for safe housing, and otherwise meet basic safety and living conditions.

Specifically, HRA administers a rental assistance program (the “Rental Assistance Program”) that helps homeless families move out of the shelter system and into stable housing.  Landlords who participate in the Rental Assistance Program rent housing to homeless families, and in turn, HRA pays participating landlords, among other things, (i) the first month’s rent; (ii) a landlord bonus at signing, which is currently $4,300; and (iii) a rent supplement for either the first three or 11 months’ rent, which is paid in a lump sum at the time of the lease.  In addition, if a landlord uses the services of a broker in renting out the property, HRA will pay the broker a broker’s fee equal to 15 percent of the annual rent.  These and other program-related payments from HRA to participating landlords and brokers include funds from the federal government.  

HPD offers a Housing Choice Voucher program, which is also known as Section 8 (“HPD’s Section 8 Housing Program”).  This program provides federal funding to local housing agencies to assist eligible low-income families with rental subsidies toward decent, safe, and affordable housing.  Participating families pay a certain percentage of their income toward rent and HPD pays the difference directly to the landlord.

NYCHA also operates a Section 8 program (“NYCHA’s Section 8 Housing Program”), which provides assistance to eligible low- and moderate-income families to rent housing in the private market.  NYCHA’s Section 8 Housing Program works as a rental subsidy that allows families to pay a reasonable amount of their income toward their rent.  In general, families pay no more than 40 percent of their adjusted monthly income toward their rent share.  NYCHA pays the remaining amount to the property owner on the family’s behalf.

The Housing Fraud

In this case, from at least in or about 2013 through at least in or about the present, the defendant defrauded the Agencies’ rental assistance programs by falsely claiming to be the owner and landlord of 20 different Properties in New York City based on forged deeds that purported to transfer the Properties from legitimate owners to the defendant.  The defendant rented out the Properties to homeless and low/moderate-income families through the Agencies’ programs, and collected payments from the Agencies as the purported owner and landlord of the Properties.  In addition, the defendant falsely represented to HRA that he used a broker to rent out the Properties, and collected and kept for himself certain broker’s fees that HRA issued for the Properties.  The defendant also took advantage of the homeless and in-need families who were placed in the Properties.  For example, most of the Properties that Fishbein rented out were dilapidated and uninhabitable.  Moreover, even though he was not the lawful owner of the Properties, the defendant often evicted families shortly after they were placed in the Properties.  Through this scheme, the defendant fraudulently obtained more than $1.5 million from HRA, HPD, and NYCHA, including more than $270,000 in federal funds.

The Medicaid Fraud

The defendant also committed Medicaid fraud.  Medicaid is a health insurance program for low-income adults, children, pregnant women, elderly adults, and people with disabilities, which is funded jointly by states and the federal government.   

From at least in or about 2014 through at least in or about the present, the defendant received Medicaid benefits based on his false representations to HRA that he was financially eligible for Medicaid.  During that time, the defendant represented to HRA that he worked at a company where his total income was approximately $150 a week – that is, approximately $600 a month or approximately $7,200 a year.  In reality, the defendant made hundreds of thousands of dollars each year, thus, far exceeding the income and asset limitations for Medicaid eligibility.  By lying about his income and assets, the defendant received at least approximately $47,621 in Medicaid benefits to which he was not entitled.

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FISHBEIN, 47, of Far Rockaway, New York, is charged with two counts of theft of government funds, in violation of Title 18, United States Code, Section 641, each of which carries a maximum sentence of 10 years in prison, one count of mail fraud, in violation of Title 18, United States Code, Section 1341, and one count of wire fraud, in violation of Title 18, United States Code, Section 1343, each of which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Ms. Strauss praised the outstanding investigative work of DOI. 

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Sarah L. Kushner is in charge of the prosecution.

The charges contained in the 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.

Audrey Strauss, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Jonathan Carson, Special Agent in Charge of the New York Field Office of the U.S. Department of Commerce, Office of Export Enforcement (“DOC-OEE”), announced today the unsealing of charges against MICHAEL ROSE for conspiring to violate the International Emergency Economic Powers Act (“IEEPA”), and participating in bank fraud and money laundering conspiracies.  ROSE was arrested by the FBI and OEE today, and he will be presented later today in Manhattan federal court before United States Magistrate Judge Stewart D. Aaron.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Michael Rose participated in a years-long scheme to violate our sanctions by surreptitiously exporting cosmetics to Iran via front company intermediaries in the Middle East.  Today’s charges underscore that those who violate our sanctions on Iran will be investigated and prosecuted.” 

FBI Assistant Director William F. Sweeney Jr. said:  “Whatever his motivation – greed or something more sinister – we allege Mr. Rose intentionally disguised his products’ ultimate destination and lied about those products’ prices to limit his customs liability.  It’s a federal crime to violate sanctions the United States put in place to protect our national interests from Iran and other designated nation states.  Mr. Rose may have thought the rules didn’t apply to him, but, if he did, today’s action demonstrates otherwise.”

DOC-OEE Special Agent in Charge Jonathan Carson said:  “The Office of Export Enforcement will vigorously enforce sanctions violations involving Iran, including actions by exporters to undermine the integrity of our export control system through the submission of false or misleading information.  The Office of Export Enforcement will continue applying the investigative resources and authorities necessary to protect and promote U.S. national security, foreign policy, and economic interests.”

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

MICHAEL ROSE is the president of a Long Island-based cosmetics manufacturer and supplier (“Company-1”).  In that role, ROSE manages, among other things, Company-1’s operations and its international sales business.  Between 2015 and 2018, ROSE participated in a conspiracy to evade U.S. sanctions on Iran by causing Company-1 to export from the United States more than $350,000 worth of cosmetics to an importer in Iran (“Importer-1”).  In or about June 2015, ROSE signed a contract with Importer-1 establishing that Importer-1’s Iran-based company would be the exclusive distributor for Company-1’s products in Iran.  Importer-1 then used front companies based outside Iran to make payments to Company-1 in New York and to arrange for the transshipment of Company-1’s goods to Iran via the United Arab Emirates.  In addition to shipping goods and accepting payments in violation of U.S. sanctions, ROSE also filed false and misleading information on United States Department of Commerce Shipper’s Export Declaration forms in connection with the illegal shipments.  The forms falsely represented that the “ultimate consignee” for the goods was in the United Arab Emirates, not Iran, and also falsely lowered the purchase price for the goods purchased by Importer-1 in order to evade customs payments.

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ROSE, 50, of Ridgefield, Connecticut, is charged in the Indictment with (1) conspiring to violate IEEPA, in violation of 50 U.S.C. § 1705, which carries a maximum sentence of 20 years in prison; (2) conspiring to launder money, in violation of 18 U.S.C. § 1956(h), which carries a maximum sentence of 20 years in prison; and (3) conspiring to commit bank fraud, in violation of 18 U.S.C. § 1349, which carries a maximum sentence of 30 years in prison.  The statutory 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.

Ms. Strauss praised the outstanding efforts of the FBI and the Department of Commerce’s Bureau of Industry and Security (“BIS”) for their assistance.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorney Sam Adelsberg is in charge of the prosecution, with assistance from Trial Attorney Scott Claffee of the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division.

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

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

Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that CHARLES HUSTIS, a former town trustee and substitute teacher in Cold Spring, New York, was sentenced to five years in prison for attempted receipt of child pornography from a former student.  CHARLES HUSTIS previously pled guilty before U.S. District Judge Cathy Seibel, who imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “Charles Hustis used his social media account to persuade a minor victim and former student to meet with him and perform sexual acts.  In doing so, Charles Hustis repeatedly solicited pornographic pictures from the victim.  This predatory behavior was a betrayal of the trust that the Cold Spring community placed in Charles Hustis, both as a former teacher and as a public official.  Today, he has been sentenced to federal prison.  Our Office will continue to work with our law enforcement partners at all levels of government to keep our children safe.”

According to the Information, other court filings (including the complaint), and statements made during court proceedings:

Between at least on or about December 8, 2019, and December 16, 2019, HUSTIS, a former teacher and public official in Cold Spring, New York, communicated over Facebook Messenger with a 16-year-old victim (“Victim-1”).  During these communications, HUSTIS sent Victim-1 sexual images, including photographs of himself, and attempted to arrange a meeting with Victim-1 with the understanding that HUSTIS and Victim-1 would perform various sexual acts.  HUSTIS repeatedly solicited pornographic pictures from Victim-1 while arranging his planned meeting.  HUSTIS was arrested by law enforcement officers on December 16, 2019, after he arrived at a meeting location that he had arranged with Victim-1, expecting to bring Victim-1 back to his apartment for sexual activity.   

In addition to the prison term, CHARLES HUSTIS, 37, of Cold Spring, New York, was sentenced to seven years of supervised release.  On November 19, 2020, HUSTIS pled guilty to one count of attempted receipt of child pornography, in violation of Title 18, United States Code, Sections 2252A(a)(2)(A) and (b)(1).

Ms. Strauss praised the outstanding investigative work of the FBI, the Putnam County Sheriff’s Department, and the Cold Spring Police Department.

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

Audrey Strauss, the U.S. Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), announced that JAMES BRADLEY, a/k/a “Abdullah,” and ARWA MUTHANA were arrested yesterday, March 31, 2021, at a seaport in Newark, New Jersey.  A criminal Complaint was subsequently filed in Manhattan federal court charging BRADLEY and MUTHANA with attempting and conspiring to provide material support to a designated foreign terrorist organization, the Islamic State of Iraq and al-Sham (“ISIS”).  As alleged in the Complaint, BRADLEY, who resides in the Bronx, New York, has expressed his support for ISIS and his desire to join the group overseas or commit a terrorist attack in the United States.  BRADLEY and his wife MUTHANA, of Alabama, who has also expressed her support for ISIS, were arrested while attempting to travel together by cargo ship to the Middle East to join and fight for ISIS.  BRADLEY and MUTHANA were presented before United States Magistrate Judge Debra Freeman in Manhattan federal court this afternoon.

Manhattan U.S. Attorney Audrey Strauss said:  “James Bradley allegedly pledged devout allegiance to ISIS, expressing his desire to ‘fight among the rank[s] for the Islamic State.’ Suspecting he may be unable to travel, Bradley instead allegedly discussed conducting terrorist attacks along with his wife, Arwa Muthana, also an ISIS supporter, against the US Military Academy at West Point or another area university where Bradley knew military recruits to be training. But in an alleged attempt to evade the watchful eye of law enforcement, the two ultimately planned to travel to Yemen by cargo ship to fulfil their wish to fight with the terrorist organization. As Bradley suspected, he and his wife were indeed on law enforcement’s radar – he was confiding in and planning their journey for terror with an undercover officer – and their plans to wage attacks against the United States have been thwarted.”

Assistant Attorney General John C. Demers said: “As alleged, the defendants planned to travel overseas to join and support ISIS.  The threat of terrorism at home and abroad remains, and the National Security Division is committed to holding accountable those who would provide material support to foreign terrorist organizations.  I want to thank the agents, analysts, and prosecutors who are responsible for this case.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Like others who followed a similar path before them, Mr. Bradley and his wife Mrs. Muthana have now learned their alleged attempts to fight on behalf of ISIS, inside the U.S. or overseas, instead begin with two pairs of FBI JTTF handcuffs and court appearances in lower Manhattan.  Our goal is to interdict violence before it occurs, and once again I commend the work of the FBI-NYPD Joint Terrorism Task Force personnel who work 24/7 to keep their fellow citizens safe."

NYPD Commissioner Dermot Shea said:  “James Bradley and his wife Arwa Muthana’s alleged determination to join ISIS and carry out terrorism against Americans overseas or here in New York is well documented in this multi-year investigation. It is yet another example of the effectiveness of the undercover operatives, detectives and analysts of the NYPD’s Intelligence Bureau working in seamless coordination with our partners at the FBI and the Joint Terrorism Task Force.”

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

BRADLEY and MUTHANA are ISIS supporters who attempted to travel to the Middle East to join and fight for ISIS.  Since at least 2019, BRADLEY has expressed violent extremist views, including his desire to support ISIS by traveling overseas to join the group or committing a terrorist attack in the United States.  In May 2020, BRADLEY stated to an undercover law enforcement officer (“UC-1”) that he believed that ISIS may be good for Muslims because ISIS was establishing a caliphate.[2]  BRADLEY further expressed his desire to conduct a terrorist attack in the United States and discussed potentially seeking to attack the United States Military Academy in West Point, New York.  BRADLEY explained that if he could not leave the United States because he might be on a terrorism watch list, he would do “something” in the United States instead, referring to carrying out an attack. 

In June 2020, BRADLEY stated to UC-1 that his plan to attack a military base was something he really wanted to do and that it would be his contribution to the cause of jihad.  In January 2021, BRADLEY mentioned to UC-1 another university in New York State where he frequently saw Reserve Officer Training Corps (“ROTC”) cadets training.  BRADLEY stated that he could use his truck in an attack, and that he along with MUTHANA could take all of the ROTC cadets “out.”

In late January 2021, BRADLEY married MUTHANA in an Islamic marriage ceremony.  Beginning before and continuing after their marriage, BRADLEY and MUTHANA discussed, planned, and ultimately attempted to travel to the Middle East together in order to join and fight with ISIS.  In or about early March 2021, BRADLEY traveled from New York to Alabama to visit MUTHANA.  BRADLEY and MUTHANA subsequently traveled together to New York in order to begin their journey to join ISIS.  Thereafter, BRADLEY raised the possibility of UC-1 helping BRADLEY and MUTHANA get on a cargo ship to travel to Asia or Africa for the purpose of ultimately joining and fighting for ISIS.  UC-1 subsequently put BRADLEY in contact with a purported associate who could assist BRADLEY in making arrangements for BRADLEY and MUTHANA to travel to the Middle East via cargo ship.  In reality, the purported facilitator was a law enforcement officer acting in an undercover capacity (“UC-2”). 

Later in March 2021, BRADLEY met with UC-2 and expressed his desire to travel via cargo ship and to “fight among the rank[s] of the Islamic State.”  In a subsequent meeting with UC-2, BRADLEY provided UC-2 $1,000 in cash as travel costs for BRADLEY and MUTHANA to take a cargo ship to Yemen. BRADLEY told UC-2 that he and MUTHANA both planned to be “fighting” after arriving in the Middle East.  BRADLEY also told UC-2 that he had a dream that he had given “bay’ah,” an Arabic term meaning the oath of allegiance, to Abu Ibrahim al-hashimi al-Qurashi, the current leader of ISIS.

On March 25, 2021, UC-2 told BRADLEY that the cargo ship would be leaving on Wednesday, March 31, from a seaport in Newark, New Jersey.  BRADLEY praised Allah and confirmed he and MUTHANA planned to travel on the ship.

On March 31, 2021, BRADLEY and MUTHANA met with UC-2 en route to the seaport.  During the course of this meeting, MUTHANA confirmed to UC-2 that she was traveling to the Middle East to fight for ISIS.  BRADLEY and MUTHANA were arrested as they walked on a gangplank to board the cargo ship.  After MUTHANA was arrested, she waived her Miranda rights and stated during an interview that she was willing to fight and kill Americans if it was for Allah.  Also on March 31, 2021, in connection with a court-authorized search, the FBI seized from a bedroom previously used by BRADLEY what appears to be a hand-drawn image of a jihadi flag commonly used by ISIS and a hand-drawn map of the Pakistan region. 

*                      *                      *

BRADLEY, 20, of the Bronx, New York, and MUTHANA, 29, of Hoover, Alabama, are charged with (1) one count of attempting to provide material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison, and (2) one count of conspiring to provide material support to a designated foreign terrorist organization, which also 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 a judge.

Ms. Strauss praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies; the NYPD’s Intelligence Division; and U.S. Customs and Border Protection New York Field Office Director of Field Operations (DFO) Marty C. Raybon.  Ms. Strauss also thanked the Counterterrorism Section of the Department of Justice’s National Security Division, as well as the FBI’s Birmingham, Alabama Field Office, and the U.S. Attorney’s Office for the Northern District of Alabama.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Andrew J. DeFilippis and Jason A. Richman are in charge of the prosecution, with assistance from Trial Attorney Jennifer Burke of the National Security Division’s Counterterrorism Section.

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

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

[2] Communications, conversations, and statements discussed herein are described in substance and in part.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced the conviction in Manhattan federal court of ALAN KAUFMAN for participating in a scheme in which KAUFMAN, who was then the Chief Executive Officer of Melrose Credit Union (“Melrose CU”), accepted rent-free housing and financing for the purchase of his personal residence from Tony Georgiton as a reward for the approval of 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 a media company and other vendors, as a reward  for Melrose CU purchasing increased advertising from those companies.  The jury convicted KAUFMAN today following a two-week trial before U.S. District Judge Lewis A. Kaplan.  Georgiton pleaded guilty before Judge Kaplan on September 9, 2020.

U.S. Attorney Audrey Strauss said:  “A unanimous Manhattan jury has found that Alan Kaufman, the former CEO of Melrose Credit Union, accepted luxurious gifts from Georgiton as a reward for favorable loan rates for his companies. In doing so, Kaufman shirked his fiduciary obligation to act in the best interests of Melrose to instead exploit his control of union funds for his own personal gain.  Melrose’s members certainly deserved better representation than Alan Kaufman, who placed his own selfish needs above theirs – and thanks to the work of the FBI, Kaufman and Georgiton both stand convicted of federal crimes.”

According to the Indictment, documents previously filed in the case, and evidence introduced 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 given 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 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 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 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 personal loan and KAUFMAN has never made a payment on that personal loan.  Rather than repay the loan, the following year, KAUFMAN purchased a used Maserati sports car for his wife, valued at over $100,000. 

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 a media company (“Media Company-1”) and other media vendors, as a reward  for KAUFMAN’s approval of advertising spending by Melrose CU.  For example, in 2010, Media Company-1 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, Media Company-1 paid for KAUFMAN and his wife to fly to Maui, Hawaii and stay at the Four Seasons in Wailea.  In 2013, Media Company-1 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 CU Board, nor did he disclose these vendor-paid trips to the Melrose CU Board, in violation of Melrose CU’s anti-bribery policy.          

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KAUFMAN was found guilty of two counts of bribery of a financial institution officer, which each carry a maximum sentence of 30 years in prison.  KAUFMAN was found not guilty of one count of conspiracy to commit bribery of a financial institution officer.  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.  KAUFMAN is scheduled to appear for sentencing before Judge Kaplan on June 23, 2021.

Ms. Strauss praised the outstanding work of the FBI.  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.

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 Field Office of Homeland Security Investigations (“HSI”), and Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a Superseding Indictment charging JENNIFER SHAH and STUART SMITH with conspiracy to commit wire fraud in connection with telemarketing and conspiracy to commit money laundering.  The case has been assigned to United States District Judge Sidney H. Stein.

SHAH and SMITH were arrested earlier today and will be presented this afternoon in Salt Lake City federal court before United States Magistrate Judge Dustin Pead.

Manhattan U.S. Attorney Audrey Strauss said:  “Jennifer Shah, who portrays herself as a wealthy and successful businessperson on ‘reality’ television, and Stuart Smith, who is portrayed as Shah’s ‘first assistant,’ allegedly generated and sold ‘lead lists’ of innocent individuals for other members of their scheme to repeatedly scam.  In actual reality and as alleged, the so-called business opportunities pushed on the victims by Shah, Smith, and their co-conspirators were just fraudulent schemes, motivated by greed, to steal victims’ money.  Now, these defendants face time in prison for their alleged crimes.”

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “Shah and Smith flaunted their lavish lifestyle to the public as a symbol of their ‘success.’  In reality, they allegedly built their opulent lifestyle at the expense of vulnerable, often elderly, working-class people.  As alleged, disturbingly, Shah and Smith objectified their very real human victims as ‘leads’ to be bought and sold, offering their personal information for sale to other members of their fraud ring.  Working with our partners at the NYPD and the United States Attorney’s Office, SDNY, and with the assistance of HSI Salt Lake City, HSI New York worked to ensure that Shah and Smith will answer for their alleged crimes.  As a result, their new reality may very well turn out differently than they expected.”

NYPD Commissioner Dermot Shea said:  “These individuals allegedly targeted and defrauded hundreds of victims but thanks to the hard work of the NYPD and our law enforcement partners, this illegal scheme was brought to an end.  I congratulate the NYPD detectives, Homeland Security Investigations, and the U.S. Attorney for the Southern District of New York for their hard work in bringing these persons to justice.”

According to the allegations in the Superseding Indictment[1]:

From 2012 until March 2021, JENNIFER SHAH and STUART SMITH, together with others (collectively, the “Participants”) carried out a wide-ranging telemarketing scheme that defrauded hundreds of victims (the “Victims”) throughout the United States, many of whom were over age 55, by selling those Victims so-called “business services” in connection with the Victims’ purported online businesses (the “Business Opportunity Scheme”). 

In order to perpetrate the Business Opportunity Scheme, Participants, including SHAH and SMITH, engaged in a widespread, coordinated effort to traffic in lists of potential victims, or “leads,” many of whom had previously made an initial investment to create an online business with other Participants in the Scheme.  Leads were initially generated by sales floors operating in, among other places, Arizona, Nevada, and Utah.  The owners and operators of those sales floors operated in coordination with several telemarketing sales floors in the New York and New Jersey area, including in Manhattan, and provided lead lists and assistance in fighting Victim refund requests to other Participants operating those floors.

SHAH and SMITH, among other things, generated and sold leads to other Participants for use by their telemarketing sales floors with the knowledge that the individuals they had identified as “leads” would be defrauded by the other Participants.  SHAH and SMITH received as profit a share of the fraudulent revenue per the terms of their agreement with those Participants.  SHAH and SMITH often controlled each aspect of the frauds perpetrated by other Participants on the individuals they had identified by, among other things, determining which “coaching” sales floor could buy leads from them, selecting the downstream sales floors to which the “coaching” sales floor was permitted to pass the leads, choosing the firms to provide “fulfillment” services, that is, documents and records purporting to demonstrate that the services the Participants claimed to provide to those Victims were actual and legitimate, setting how much the downstream sales floors could charge, and determining which “products” each of the downstream sales floors could sell. 

To perpetrate the Business Opportunity Scheme, certain of the Participants sold alleged services purporting to make the management of Victims’ businesses more efficient or profitable, including tax preparation or website design services, notwithstanding that many Victims were elderly and did not own a computer.  At the outset of the Business Opportunity Scheme, certain Participants employed by a purported fulfillment company sent a given Victim electronic or paper pamphlets or provided so-called “coaching sessions” regarding these purported online businesses, but at no point did the defendants intend that the Victims would actually earn any of the promised return on their intended investment, nor did the Victims actually earn any such returns. 

SHAH and SMITH undertook significant efforts to conceal their roles in the Business Opportunity Scheme.  For example, SHAH and SMITH, among other things, incorporated their business entities using third parties’ names and instructed other Participants to do the same, used and directed others to use encrypted messaging applications to communicate with other Participants, instructed other Participants to send SHAH’s and SMITH’s shares of certain fraud proceeds to offshore bank accounts, and made numerous cash withdrawals structured to avoid currency transaction reporting requirements.

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SHAH, 47, of Park City, Utah, and SMITH, 43, of Lehi, Utah, are each charged with one count of conspiracy to commit wire fraud in connection with telemarketing through which they victimized 10 or more persons over the age of 55, which carries a maximum sentence of 30 years, and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 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 defendants will be determined by the judge.  

Ms. Strauss praised the outstanding investigative work of HSI’s El Dorado Task Force and the NYPD.  Ms. Strauss also thanked HSI Utah and the United States Attorney’s Office for the District of Utah for their support and assistance in this investigation.   

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Kiersten A. Fletcher, Benet J. Kearney, and Robert B. Sobelman are in charge of the prosecution. 

If you believe you have been a victim of the scheme described above, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office for the Southern District of New York, at 866-874-8900 or [email protected].  You may also report it to Detective Christopher Bastos at 917-480-7167 or [email protected].

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.

Audrey Strauss, the United States Attorney for the Southern District of New York, and Wendy C. Woolcock, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that JUAN ANTONIO HERNÁNDEZ ALVARADO, a/k/a “Tony Hernández” (“HERNÁNDEZ”) was sentenced to life in prison for cocaine-importation, weapons, and false-statements offenses.  HERNÁNDEZ is a former Honduran congressman and the brother of Juan Orlando Hernández, the current president of Honduras.  HERNÁNDEZ was convicted on October 18, 2019, following a jury trial before U.S. District Judge P. Kevin Castel, who also imposed today’s sentence. 

Manhattan U.S. Attorney Audrey Strauss said:  “Former Honduran congressman Juan Antonio Hernández Alvarado was involved in all stages of the trafficking through Honduras of multi-ton loads of cocaine destined for the U.S.  Hernández bribed law enforcement officials to protect drug shipments, arranged for heavily armed security for cocaine shipments, and brokered large bribes from major drug traffickers to powerful political figures, including the former and current presidents of Honduras.  Hernández was complicit in at least two murders.  Today, Tony Hernández was rightly sentenced to life in prison.”

Special Agent in Charge Wendy C. Woolcock said:  “Exploiting a high-ranking position in government to wield the power of the state to support drug trafficking is as nefarious as it comes.  The conviction and sentencing of Tony Hernandez is a reminder there is no position powerful enough to shield you from facing justice when you violate U.S. drug laws by sending tons of cocaine to our country.  As important as this conviction is to the people of the United States, it is also important to the citizens of Honduras who Hernandez purposely put in harm’s way for his own personal gain.  Today’s sentencing is a victory for the rule of law and we are grateful to our federal and international partners who made this possible.”

As reflected in the Superseding Indictment, other filings in Manhattan federal court, evidence at trial, and statements made in court proceedings:

HERNÁNDEZ played a leadership role in a violent, state-sponsored drug trafficking conspiracy.  Over a 15-year period, HERNÁNDEZ manufactured and distributed at least 185,000 kilograms of cocaine that was imported into the United States.  HERNÁNDEZ commanded heavily armed members of the Honduran military and Honduran National Police; he sold machineguns and ammunition to drug traffickers, some of which he obtained from the Honduran military; he controlled cocaine laboratories in Colombia and Honduras; he secured millions of dollars of drug proceeds for Honduras’s National Party campaigns in connection with presidential elections in 2009, 2013, and 2017; and he helped cause at least two murders.  HERNÁNDEZ made at least $138.5 million through his drug trafficking activities, money he was ordered to forfeit in connection with today’s sentencing. 

Hernández’s Drug Trafficking Conduct

HERNÁNDEZ’s drug trafficking career started in about 2004 when he began providing sensitive law enforcement and military information to major Honduran drug traffickers Victor Hugo Diaz Morales, a/k/a “El Rojo,” and Hector Emilio Fernandez Rosa, a/k/a “Don H.”  HERNÁNDEZ provided Diaz Morales with information about, among other things, operations of the Honduran Navy; efforts by the United States to train Honduran Air Force pilots to fly at night to conduct anti-narcotics operations; military radar capabilities so that cocaine plane shipments could avoid detection; and interdiction efforts by certain Honduran National Police officials.  Over the course of their relationship, HERNÁNDEZ helped Fernandez Rosa and Diaz Morales distribute approximately 140,000 kilograms of cocaine. 

By 2008, HERNÁNDEZ’s narcotics trafficking had expanded, and he was also manufacturing his own cocaine in a laboratory he controlled near El Aceitico, Colombia.  HERNÁNDEZ told his co-conspirators that some of the cocaine manufactured at his laboratory was stamped with his initials “TH,” and a photograph of a kilogram of “TH” stamped cocaine was intercepted during the course of the investigation.  HERNÁNDEZ supplied his co-conspirators with tons of cocaine that was produced at his laboratory.    

Beginning in about 2008, HERNÁNDEZ partnered with Amilcar Alexander Ardon Soriano, a former Honduran drug trafficker and mayor, under the protection of members of the  National Party leadership.  Testimony at trial established that HERNÁNDEZ and Ardon Soriano secured protection from investigation, arrest, and extradition through massive bribes paid to high-ranking politicians, including, among others, Porfirio “Pepe” Lobo Sosa and Juan Orlando Hernández.  In connection with the 2009 national elections, drug proceed bribes paid in exchange for protection included:  (i) Ardon Soriano paying $2 million to support Lobo Sosa’s campaign for presidency and Juan Orlando Hernández’s reelection campaign for a position in the Honduran congress; (ii) Diaz Morales paying $100,000 to HERNÁNDEZ to support National Party campaigns; and (iii) Ardon Soriano bribing three congressmen at the direction of Juan Orlando Hernández so that the congressmen would support Juan Orlando Hernández’s efforts to become president of the congress.    

Juan Orlando Hernandez was named president of the congress in early 2010.  HERNÁNDEZ, Ardon Soriano, and their co-conspirators, including co-defendant Mario Jose Calix Hernández, a Honduran deputy mayor, and codefendant Mauricio Hernández Pineda, a then-member of the Honduran National Police and HERNÁNDEZ’s cousin, took advantage of National Party protection to continue transporting huge quantities of cocaine.  Once or twice a month in 2010, HERNÁNDEZ sent Ardon Soriano cocaine shipments consisting of approximately 300 kilograms; and once a month in 2011 and 2012, HERNÁNDEZ sent Ardon Soriano maritime cocaine shipments ranging in size from 700 to 1,600 kilograms.    

   In 2013, HERNÁNDEZ was campaigning to become a congressman and Juan Orlando Hernández was campaigning to become president.  Around this time, according to testimony at trial, Juan Orlando Hernández solicited $1.6 million in drug proceeds from Ardon Soriano to support himself and National Party campaigns.  Also during the 2013 campaign, HERNÁNDEZ accepted $1 million from former Sinaloa Cartel leader Joaquín Archivaldo Guzmán Loera, a/k/a “Chapo,” to support Juan Orlando Hernández’s presidential campaign.  During meetings with Chapo in Honduras, HERNÁNDEZ promised to provide protection for members of their conspiracy and their cocaine shipments through Honduran territory if Juan Orlando Hernández was elected president. 

In November 2013, HERNÁNDEZ was elected to the Honduran congress and Juan Orlando Hernández was elected president.  Between 2015 and 2017, per trial testimony, HERNÁNDEZ and Juan Orlando Hernández continued to secure large sums of drug proceeds for National Party campaigns in exchange for protecting drug traffickers.  For example, there was testimony at trial that approximately six months before the November 2017 national elections, HERNÁNDEZ and Juan Orlando Hernández met with Ardon Soriano in Copán, Honduras.  During that meeting, HERNÁNDEZ and Juan Orlando Hernández solicited $500,000 and 1.6 million Lempira in drug proceeds from Ardon Soriano to “finance” the National Party’s campaign in the Copán and Lempira Departments.    

In 2018, HERNÁNDEZ continued to engage in large cocaine shipments with Nery López Sanabria, another significant Honduran drug trafficker.  Honduran authorities arrested and detained López Sanabria in connection with a traffic incident and recovered, among other things, several drug ledgers in a secret compartment of his car.  One of the ledgers was labeled “Hard Work” 2018, and reflected a 650-kilogram cocaine shipment with HERNÁNDEZ.  At least one of the other ledgers seized by Honduran law enforcement in 2018 contained references to “JOH,” initials used by Juan Orlando Hernández.  López Sanabria was murdered in a Honduran prison, as described below, shortly after his drug ledgers were introduced at HERNÁNDEZ’s trial. 

Hernández’s Weapons Possession and Acts of Violence

HERNÁNDEZ used firearms throughout his drug trafficking.  HERNÁNDEZ’s personal weapons included a modified AR-15, an Uzi inscribed with the name of Juan Orlando Hernández, “Presidente de la República,” and an M60 belt-fed machinegun.  HERNÁNDEZ also sold machineguns and ammunition to drug traffickers.  In 2010, Diaz Morales obtained between 4,000 and 6,000 rounds of assault rifle ammunition from a member of the Honduran National Police who told Diaz Morales he obtained the ammunition from HERNÁNDEZ.  In 2012, HERNÁNDEZ supplied 40 M16s to another drug trafficker.   

HERNÁNDEZ also coordinated at least two drug-related murders.  In 2011, HERNÁNDEZ and Ardon Soriano caused the murder of a rival drug trafficker named Franklin Arita in the Copán Department.  HERNÁNDEZ directed Juan Carlos “Tigre” Bonilla Valladares, the regional Honduran National Police chief responsible for the Copán Department at the time, to arrange for Arita’s murder, which was executed by assassins using two 40-millimeter grenade launchers, M16s, and Israeli-made Galil assault rifles.  In 2013, HERNÁNDEZ worked with other drug traffickers, including Ardon Soriano, to murder a drug trafficker named Chino because HERNÁNDEZ was concerned that Chino might cooperate with law enforcement.    

   Hernández’s Obstruction and Other Efforts to Influence the Investigation

HERNÁNDEZ made false statements to law enforcement and the Court during the course of this investigation and prosecution, and he obstructed justice.  HERNÁNDEZ (i) traveled to the United States in 2016 and made false statements to law enforcement about his drug trafficking activities; (ii) made false statements about his assets during a January 2019 bail hearing; (iii) caused sensitive witness information to be disclosed in Honduras in violation of a protective order in October 2019; and (iv) made false statements about his assets during an application for appointed counsel in February 2020.

Eight days after the jury found HERNÁNDEZ guilty, on October 26, 2019, López Sanabria – the drug trafficker from whom were seized the ledgers bearing HERNÁNDEZ’s name and Juan Orlando Hernández’s initials – was murdered at a maximum security prison in Honduras.  López Sanabria’s attorneys confirmed to the media that: one of HERNÁNDEZ’s family members and an investigator hired by HERNÁNDEZ’s family had made unauthorized visits to López Sanabria prior to HERNÁNDEZ’s trial; López Sanabria had rejected their efforts to obtain information about whether he was cooperating with the DEA; and López Sanabria had planned to cooperate with the DEA against Juan Orlando Hernández and HERNÁNDEZ.  Leaked surveillance video of the murder shows López Sanabria talking to the warden of the facility, Pedro Ildefonso Armas, while a masked man walks past and unlocks a nearby door.  Several individuals who are believed to be prisoners then storm through the door and shoot and stab López Sanabria to death.  On December 9, 2019, a group of unknown assailants murdered Jose Luis Pinto, a lawyer who represented López Sanabria.  Three days later, on December 12, 2019, a group of unknown gunmen on motorcycles murdered Ildefenso Armas, the warden of the facility in which López Sanabria was murdered, in Tegucigalpa.    

Hernández’s Co-Conspirators

On August 8, 2019, Fernandez Rosa was sentenced in this District to life in prison for, among other things, his participation in HERNÁNDEZ’s cocaine importation conspiracy and for committing 18 murders.  Several of HERNÁNDEZ’s other co-conspirators, including, among others, Hernández Pineda, Calix Hernández, Bonilla Valladares, Arnaldo Urbina Soto, Carlos Fernando Urbina Soto, and Miguel Angel Urbina Soto, are also charged in this District with firearms and drug trafficking offenses based on, among other things, their participation in HERNÁNDEZ’s cocaine importation conspiracy.  On February 12, 2020, Hernández Pineda surrendered in this District and he is awaiting trial.  On March 22, 2021, HERNÁNDEZ’s co defendant and co-conspirator Geovanny Fuentes Ramirez was convicted at trial in this District of drug trafficking and weapons offenses.  Fuentes Ramirez’s sentencing is scheduled for June 22, 2021.     

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In addition to the prison term, HERNÁNDEZ, 42, was sentenced to five years of supervised release.

Ms. Strauss praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, OCDETF New York Strike Force, and Tegucigalpa Country Office, as well as the U.S. Department of Justice’s Office of International Affairs.

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 Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Amanda L. Houle, Matthew Laroche, and Jason A. Richman are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, and Wendy C. Woolcock, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that JUAN MANUEL AVILA MEZA, a former member of the Honduran National Police, was sentenced today to 12 years in prison for conspiring to import cocaine into the United States.  AVILA MEZA previously pled guilty before U.S. District Judge Lorna G. Schofield, who imposed today’s sentence. 

Manhattan U.S. Attorney Audrey Strauss said:  “Juan Manuel Avila Meza conspired to transport large shipments of cocaine into, within, and out of Honduras, including shipments bound for the U.S.  He provided sensitive law enforcement information to members of the Cachiros to enable their trafficking operations, and he brokered meetings with other corrupt officials to facilitate money laundering and cocaine trafficking.  Juan Manuel Avila Meza tarnished the badge he wore by protecting drug traffickers rather than those he took an oath to protect and serve.”

Special Agent in Charge Wendy C. Woolcock said:  “Juan Manuel Avila Meza leveraged his position in law enforcement and as an attorney to attempt to rise above the law, profiting from the reprehensible criminal activities he helped facilitate.  Today’s sentencing reaffirms that corruption in law enforcement will never go unchecked by the United States.  The Drug Enforcement Administration, alongside our domestic and international partners, will continue working tirelessly to bring to justice all those who participate in drug trafficking.”

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

Between at least approximately 2004 and 2014, AVILA MEZA worked with members of a drug trafficking organization known as the Cachiros, which was a prolific and violent criminal syndicate that relied on connections to politicians, military personnel, and law enforcement to transport cocaine to, within, and from Honduras.  During that time, and while AVILA MEZA was purportedly enforcing the law as a police officer and, later, an attorney, AVILA MEZA participated in the Cachiros’ criminal enterprise by engaging in drug trafficking, money laundering, sanctions evasion, and debt collection. 

Beginning in about 2004, AVILA MEZA provided the Cachiros with sensitive law enforcement information to facilitate the transportation of cocaine.  AVILA MEZA also assisted the Cachiros with money laundering and evasion of U.S. sanctions.  In May 2013, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) publicly identified the Cachiros as a significant foreign narcotics group pursuant to the Foreign Narcotics Kingpin Designation Act.  Nevertheless, beginning in August 2013, the defendant – as an active member of both the Honduran National Police and the Cachiros – assisted the Cachiros with an asset-based money laundering transaction related to a large piece of real estate in San Pedro Sula, Honduras. 

In February 2014, AVILA MEZA helped set up and attended a meeting between one of the leaders of the Cachiros and Juan Antonio Hernández Alvarado, a/k/a “Tony Hernández,” another convicted major drug trafficker who is the brother of current Honduran president Juan Orlando Hernández, to discuss money laundering transactions between a Cachiros front company and the Honduran government.  In June 2014, AVILA MEZA met with six other members of the Honduran National Police, Fabio Lobo Sosa, the now-convicted son of Porfirio Lobo Sosa, the Honduran president who preceded Juan Orlando Hernández, and two DEA confidential sources purporting to be members of the Sinaloa Cartel.  During the meeting, AVILA MEZA led a discussion of how best to rely on the Honduran National Police to secure safe passage for a large cocaine shipment. 

Six other former members of the Honduran National Police, including, among others, Victor Oswaldo Lopez Flores, Ludwig Criss Zelaya Romero, Carlos Jose Zavala Velasquez, and Carlos Alberto Valladares Garcia, were convicted in this case of firearms and/or drug trafficking offenses for conspiring to import cocaine into the United States.  Each of those individuals has pled guilty in federal court, along with co-conspirator Fabio Lobo.  On September 5, 2017, Lobo was sentenced to 24 years in prison; on February 6, 2018, Flores was sentenced to five years in prison; on June 27, 2018, Velasquez was sentenced to 12 years in prison; and on September 27, 2018, Garcia was sentenced to 14 years in prison.  Zelaya Romero is awaiting sentencing by Judge Schofield.  On October 18, 2019, Hernández Alvarado was convicted at a trial before the Honorable P. Kevin Castel of cocaine importation, weapons, and false statements offenses, and he is scheduled to be sentenced by Judge Castel tomorrow. 

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In addition to the prison term, AVILA MEZA, 50, was sentenced to four years of supervised release.          

Ms. Strauss praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, New York Strike Force, and Tegucigalpa Country Office, as well as the U.S. Department of Justice’s Office of International Affairs.

This case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Jacob Gutwillig, Matthew Laroche, Jason A. Richman, and Elinor Tarlow are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced the conviction today of HAMID “Ray” AKHAVAN and RUBEN WEIGAND, following a four-week trial before the Honorable Jed S. Rakoff.  AKHAVAN and WEIGAND devised a complex scheme involving fake companies, false websites, and fake “customer service centers,” to deceive U.S. issuing banks and credit unions into effectuating more than $150 million of credit and debit card purchases of marijuana by disguising those purchases as being for other kinds of goods, such as face creams and dog products.  The defendants were each convicted of one count of conspiracy to commit bank fraud, in violation of Title 18, United States Code, Section 1349. 

Manhattan U.S. Attorney Audrey Strauss said:  “As a jury has now found, Ray Akhavan and Ruben Weigand were in the business of selling lies.  Under the radar of U.S. banks and credit card companies screening for suspicious and illegal activity, these men offered their services: creating fake companies and fake websites, and ginning up fake web traffic to those fake websites, all in the service of fraudulently moving money through the United States financial system.  Today, a jury has seen through those lies and convicted Akhavan and Weigand of bank fraud.” 

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

From in or around 2016 through in or around 2019, AKHAVAN and WEIGAND, working with others, including principals from one of the leading on-demand marijuana delivery companies in the United States (the “Company”) planned and executed a scheme to deceive United States banks and other financial institutions into processing over $150 million in credit and debit card payments for the purchase and delivery of marijuana products (the “Scheme”).

The Scheme involved the deception of virtually all of the participants in the payment processing network, including issuing banks in the United States (the “Issuing Banks”) and Visa and MasterCard.  The primary method used by AKHAVAN, WEIGAND, and other coconspirators to deceive the Issuing Banks involved the purchase and use of shell companies that were used to disguise the marijuana transactions through the use of phony merchants (the “Phony Merchants”).  The shell companies were used to open offshore bank accounts with merchant acquiring banks and to initiate credit card charges for marijuana purchases made through the Company.  AKHAVAN and WEIGAND worked with other co-conspirators to create these phony merchant accounts – including phony online merchants purportedly selling dog products, diving gear, carbonated drinks, green tea, and face creams – and established Visa and MasterCard merchant processing accounts with one or more offshore acquiring banks.  They then arranged for more than a dozen Phony Merchants to be used by the Company to process debit and credit card purchases of marijuana products.  Many of the Phony Merchants purported to be based in the United Kingdom, but, despite being based outside the United States, claimed to maintain U.S.-based customer service numbers.

To facilitate the Scheme, webpages were created and deployed to lend legitimacy to the Phony Merchants.  The Phony Merchants typically had web pages suggesting that they were involved in selling legitimate goods, such as carbonated drinks, face cream, dog products, and diving gear.  Yet these companies were actually being used to facilitate the approval and processing of marijuana transactions.  The defendants’ scheme even involved fake visits to those websites to make it appear as though the websites had real customers and were operating legitimate online businesses.

The defendants’ scheme also involved the use of online tracking pixels.  Because the descriptors listed on Company customers’ credit card statements often were the URLs for the Phony Merchant websites, Company customers were sometimes confused and did not recognize the transactions on their credit card statements.  The defendants and their coconspirators were concerned that confused customers would call their Issuing Banks and inadvertently reveal the Scheme by indicating that they had purchased marijuana products and/or that they had made a purchase through the Company.  To lessen the risk that customers would be confused, the defendants used a number of techniques, including online tracking pixels to track which users had visited the Company’s website.  If a Company customer had visited the Company’s website and went to the URL listed on their credit card statement, they would automatically be re-routed to a webpage connected to the Company so that the customer would understand what the real purchase had been for (i.e., from the Company).  However, in order to hide the Scheme, the defendants ensured that if a third party such as a bank or credit card company investigator visited a URL of a Phony Merchant, they would not be re-routed, and would therefore be unable to discern any connection between the Phony Merchant website and the Company and/or the sale of marijuana products. 

Over $150 million in marijuana credit and debit card transactions were processed using the Phony Merchants.  Some of the merchant websites listed for those transactions included: diverkingdom.com, desirescent.com, outdoormaxx.com, and happypuppybox.com.  Moreover, none of the Phony Merchant website names listed for those transactions referred to the Company or to marijuana.  AKHAVAN, WEIGAND, and others also worked with and directed others to apply incorrect merchant category codes (“MCCs”) to the marijuana transactions in order to disguise the nature of those transactions and create the false appearance that the transactions were completely unrelated to marijuana.  Some of the MCCs/categories listed for the transactions included freight carrier, trucking; clock, jewelry, watch, and silverware; stenographic services; department stores; music stores/pianos; and cosmetic stores.            

AKHAVAN was the leader of the transaction laundering scheme and WEIGAND was responsible for overseeing the acquiring bank accounts used by the Phony Merchants and sending the proceeds from the marijuana transactions back to bank accounts in the United States.

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AKHAVAN, 43, of, California, and WEIGAND, 38, of Germany, were each convicted of one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as the sentencing of the defendants will be determined by the judge.  Sentencing before Judge Rakoff is scheduled for June 25, 2021.

Ms. Strauss praised the work of the Federal Bureau of Investigation.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Nicholas Folly, Tara La Morte, and Emily Deininger are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, and Margaret Garnett, the Commissioner of the New York City Department of Investigation (“DOI”), announced today the arrest of VICTOR RIVERA on charges of honest services fraud and money laundering. As alleged in an Information filed today in Manhattan federal court, RIVERA, while leading a non-profit organization (“Organization-1”) that operated soup kitchens, homeless shelters, and affordable-housing facilities in New York City, schemed to enrich himself through bribes and kickbacks from Organization-1’s contractors. RIVERA will be presented and arraigned later today before United States District Judge Sidney H. Stein. 

Manhattan U.S. Attorney Audrey Strauss said:  “Many of the over 8.4 million residents of New York City rely on government-assisted non-profits to provide food, affordable housing, and other essential services for their well-being. As alleged in today’s charges, by accepting bribes and kickbacks, Victor Rivera sought to leverage his position as the CEO of a non-profit into a very much for-profit situation for himself.  The vast majority of organizations in New York City’s non-profit networks honorably provide assistance to those in need, but when any individual selfishly exploits one of those organizations for their own personal gain, they will find themselves facing criminal charges for corruption.”

DOI Commissioner Margaret Garnett said:  “As CEO of a City-funded nonprofit, this defendant should have been serving the underprivileged, including the homeless;  instead, according to the criminal information, he schemed to enrich himself and his relatives, taking bribes and kickbacks from those doing business with his organization. New York City provides billions of dollars to support nonprofits, many of which run organizations with integrity and provide valuable, essential services. But corruption at nonprofit social services contractors remains an investigative priority for DOI, and today's arrest should serve as notice to any individual who sees the City's coffers as a path to personal profit. DOI thanks the U.S. Attorney's Office for the Southern District of New York for its partnership and commitment to this important corruption investigation.”

As alleged in the Information:[1]

RIVERA was the President and Chief Executive Officer of Organization-1, which annually spent millions of dollars in public funds on real estate, security, cleaning, construction, and food expenses, among other costs related to the housing and social services Organization-1 provided. From at least in or about 2013 until in or about 2020, RIVERA engaged in a scheme to enrich himself and his relatives by soliciting and accepting bribes and kickbacks from contractors doing work related to or for Organization-1. The scheme yielded RIVERA at least hundreds of thousands of dollars in illicit gains. RIVERA laundered some of the corrupt payments through intermediary entities he controlled, including through a purported consulting company nominally owned by one of RIVERA’s relatives. 

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RIVERA, 61, of Stony Point, New York, is charged with one count of honest services wire fraud conspiracy, one count of honest services wire fraud, and one count of money laundering. Each count carries a maximum potential prison sentence of 20 years. The maximum potential penalties are prescribed by Congress and are provided here for informational purposes only; any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the outstanding investigative work of Special Agents of the United States Attorney’s Office for the Southern District of New York and of DOI, and thanked the Internal Revenue Service for its participation in the investigation.

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

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

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

Audrey Strauss, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge, New York Division, 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 ALICIA AYERS, ANDREA AYERS, and TRACI PROCTOR 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 $1.6 million.  All three defendants were arrested this morning.  ALICIA AYERS and ANDREA AYERS will be presented this afternoon before United States Magistrate Judge Judith C. McCarthy.  TRACI PROCTOR will be presented in United States District Court for the Northern District of Georgia.

U.S. Attorney Audrey Strauss said:  “As alleged, the defendants schemed to defraud the SBA by submitting disaster loan and grant applications for non-existent businesses.  In so doing, they stole funds intended for the many small businesses that are struggling as a result of the COVID-19 pandemic.  We thank the FBI and SBA-OIG for their partnership in investigating the scheme alleged.”   

FBI Assistant Director William F. Sweeney Jr. said: “While small businesses throughout the country were clamoring for the economic support they so desperately needed after the first quarter of the pandemic, those charged today allegedly saw the SBA’s Economic Injury Disaster Loan Program as nothing more than an opportunity to turn a quick profit. As alleged, Ayers, Ayers, and Proctor filed more than 300 online applications on behalf of others that included false information to support their claims. This resulted in nearly $1.7 million worth of payments from the SBA, a portion of which the defendants received in the form of kickbacks. No matter how creative the scheme is, rest assured those who siphon money from taxpayer funded programs will be aggressively pursued. This investigation remains ongoing, and we ask anyone with information to call us at 1-800-CALL-FBI or reach us online at tips.fbi.gov.” 

SBA OIG’s Eastern Region Special Agent-in-Charge Amaleka McCall-Brathwaite said: “Law enforcement will aggressively unmask fraudsters who allegedly hid behind stolen identities to gain access to SBA’s EIDL funds. SBA OIG will aggressively pursue evidence of fraud with its law enforcement partners.  I want to thank the U.S. Attorney’s Office for its leadership and dedication to pursuing justice.”

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.

In June and July 2020, ALICIA AYERS, ANDREA AYERS, and TRACI PROCTOR used the identities of approximately 300 other individuals (the “Applicants”) to submit approximately 315 online applications to the SBA, seeking over $3 million of funds through the SBA’s EIDL Program.  (the “EIDL Applications”).  In connection with the EIDL Applications, ALICIA AYERS, ANDREA AYERS, and PROCTOR falsely represented to the SBA, among other things, that the Applicants were the owners of businesses with ten or more employees.  In fact, however, the applications falsely reported the businesses’ numbers of employees, and the vast majority of the purported businesses appear not to have existed at all.  Based on the fraudulent EIDL Applications, the SBA made advance payments of approximately $1,690,000 to the Applicants, who often then kicked back a portion of the advance payments to ALICIA AYERS, ANDREA AYERS, and TRACI PROCTOR.

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ALICIA AYERS, 34, and ANDREA AYERS, 54, of Mount Vernon, New York, and TRACI PROCTOR, 47, of Clarkston, Georgia, are 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 2 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.

Ms. Strauss 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.

Audrey Strauss, the United States Attorney for the Southern District of New York announced that MICHAEL PIZARRO, a/k/a “Eric Miller,” was sentenced today to 40 months in prison in connection with PIZARRO’s scheme to defraud individuals (the “Victims” ) by representing to them that they had qualified for a government grant, which could only be accessed upon the payment of an up-front refundable application fee.  In actuality, the government grant did not exist and none of the Victims had been approved for such a grant.  PIZARRO pled guilty to a one-count information on August 20, 2019, before United States Magistrate Judge Gabriel W. Gorentstein.  Today, United States District Judge Paul A. Crotty accepted PIZARRO’s guilty plea and imposed the sentence.

U.S. Attorney Audrey Strauss said:  “Michael Pizarro promised government grants to his victims under the condition they pay an up-front application fee. Regretfully, Pizarro’s victims, many of whom were over 70 years old, eventually discovered that they had fallen prey to a serial fraudster – there were no government grants, and they would not be receiving any funds. Michael Pizarro has now been sentenced to time in federal prison for his brazen fraud.”

According to allegations in the criminal complaint, the information, and other documents filed in federal court, as well as statements made in public court proceedings:

Beginning in at least February 2017 through July 25, 2019, PIZARRO called the Victims, many of whom were more than 70 years old, and told them that his name was “Eric Miller” and that he was calling on behalf of a company named “National Grants.”  PIZARRO informed the Victims that they had been approved for a government grant, which was being held in escrow at an account with the “World Bank” in Washington, D.C.  Before the funds could be released, however, the Victims would have to pay a registration fee.  In fact, none of the Victims had been approved for a grant, the grants did not exist, and no Victim ever received any funds.

In April 2018, PIZARRO was charged in New York Supreme Court in connection with his involvement with National Grants from October 2015 through January 2017.  PIZARRO pled guilty to those charges in December 2018 and was awaiting sentencing when he was arrested in connection with this scheme on May 2, 2019.  After he was released on bail in connection with the federal charges, PIZARRO continued to seek contact information for additional Victims in furtherance of the scheme.  In total, not including the conduct charged in New York Supreme Court, PIZARRO defrauded the Victims out of approximately $270,000.

In addition to his prison sentence, PIZARRO, 38, of Brooklyn, New York, was sentenced to three years of supervised release and ordered to pay forfeiture and restitution in the amount of $278,853.37.

Ms. Strauss praised the outstanding investigative work of the Department of Homeland Security, Homeland Security Investigations and the New York City Police Department. 

The prosecution is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Kiersten A. Fletcher and Benet J. Kearney are in charge of the prosecution. 

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that JAMAL BRISSETT, a/k/a “Trigger,” a/k/a “Trigg,” pled guilty today before U.S. Magistrate Judge Kevin N. Fox to one count of Hobbs Act robbery.  As part of his plea, BRISSETT admitted that on June 30, 2009, he shot and killed Leshaun Gordon, the victim of the robbery.  BRISSETT is scheduled to be sentenced by U.S. District Judge Kimba M. Wood on June 22, 2021.

U.S. Attorney Audrey Strauss said:  “In 2009, Jamal Brissett robbed and murdered Leshaun Gordon in cold blood.  Now Brissett awaits sentencing for his callous conduct that robbed another man of his life.”

According to statements in the Information, and other filings and statements at public court proceedings in the case, on June 30, 2009, BRISSETT robbed Gordon near the intersection of Mickle Avenue and Chester Street in the Bronx, New York.  BRISSETT planned to, and did, shoot and kill Gordon during the robbery.          

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The sole count of the Information charges BRISSETT with one count of Hobbs Act robbery, in violation of 18 U.S.C. § 1951, carrying a maximum penalty 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 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 Hagan Scotten and Danielle R. Sassoon are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), and Ray Donovan, Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), announced today the unsealing of a Superseding Indictment charging RONALD GOLAND, a/k/a “Bigg Base,” a/k/a “Base,” with murder in aid of racketeering and a firearms offense in connection with the murder of Odane Bentley on July 17, 2015, in the Bronx; attempted murder and assault with a dangerous weapon in aid of racketeering and a firearms offense in connection with the shooting of a rival gang member on November 9, 2018, in the Bronx; and, conspiracy to commit murder in aid of racketeering.  Isaiah Smith, who is also charged in the Superseding Indictment, was previously arrested on charges related to the November 9, 2018, shooting and is already in federal custody.

GOLAND was arrested this morning and will be presented later today before U.S. Magistrate Judge Kevin Nathaniel Fox.  The case is assigned to U.S. District Judge Kimba M. Wood.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Ronald Goland engaged in senseless gang violence, resulting in the tragic murder of Odane Bentley.  We commend the extraordinary efforts of our law enforcement partners, who have worked tirelessly to investigate Odane Bentley’s death.”           

NYPD Commissioner Dermot Shea said:  “This case reflects the NYPD’s continued effort to eradicate violent street crime by targeting those most responsible.  I want to commend our law enforcement partners and the U.S. Attorney’s Office for the Southern District for helping to bring these individuals to justice.”

DEA Special Agent in Charge Ray Donovan said:  “This arrest sends a message to New Yorkers that law enforcement is committed to bringing to justice those fueling gang violence in our city.   I commend the NYPD and the U.S. Attorney’s Office Southern District of New York for their diligent efforts throughout this investigation and thank them for their partnership.” 

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

GOLAND is a member or associate of the MacBallas, a subset of the larger Bloods street gang.  In order to preserve and protect the MacBallas’ power, enrich its members, keep victims in fear, and promote and enhance its reputation, members and associates of the MacBallas committed, conspired, attempted, and threatened to commit acts of violence, including acts involving murder and assault, against others, including, in particular, rival gang members; conspired to distribute and possess with intent to distribute narcotics; and, possessed, stored, and used firearms. 

On July 17, 2015, GOLAND shot at a rival gang member (the “Rival Gang Member”) and, in doing so, fired a bullet through the front door of 4431 DeReimer Avenue in the Bronx, New York, killing Odane Bentley.

On November 9, 2018, GOLAND and Isaiah Smith planned and carried out the shooting of the Rival Gang Member in the vicinity of Murdock Avenue in the Bronx, New York.                

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GOLAND, 29, from the Bronx, New York, is charged with one count of murder in aid of racketeering, which carries a sentence of death or life in prison; one count of murder through the use of a firearm, which carries a maximum sentence of death or life in prison, and a mandatory minimum sentence of five years in prison; one count of conspiracy to commit murder in aid of racketeering, which carries a maximum sentence of 10 years in prison; one count of attempted murder and assault with a dangerous weapon in aid of racketeering, which carries a maximum sentence of 20 years in prison; and possession of a firearm in furtherance of a crime of violence, which firearm was brandished and discharged, which carries a maximum sentence of life in prison and a mandatory minimum of 10 years in prison.

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

Ms. Strauss praised the outstanding investigative work of the NYPD and the DEA.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Justin V. Rodriguez and Andrew K. Chan 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 constitutes only allegations, and every fact described herein should be treated as an allegation.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that a jury returned a guilty verdict against GEOVANNY FUENTES RAMIREZ (“FUENTES RAMIREZ”) on all three counts in the Indictment, which included cocaine-importation and weapons charges.  FUENTES RAMIREZ is scheduled to be sentenced by the Honorable P. Kevin Castel on June 22, 2021.

Manhattan U.S. Attorney Audrey Strauss said:  “Geovanny Fuentes Ramirez was, up until his arrest by the DEA just over a year ago, a ruthless, powerful, and murderous cocaine trafficker in Honduras.  He facilitated the shipment of large loads of cocaine by bribing Juan Orlando Hernández Alvarado, then president of the Honduran National Congress and now the Honduran president.  Hernández Alvarado instructed Fuentes Ramirez to report directly to convicted co-conspirator and former Honduran congressman Tony Hernandez, the president’s brother.  Now Geovanny Fuentes Ramirez, one of the criminal conduits between Honduran officials and drug traffickers, faces a possible life behind bars.”

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

Beginning in or about 2009, FUENTES RAMIREZ and others established and operated a cocaine laboratory in the Cortés Department of Honduras, where they produced hundreds of kilograms of cocaine each month.  FUENTES RAMIREZ worked with others to receive cocaine shipments sent to Honduras over air and maritime routes, and to transport cocaine that he produced at the laboratory.  FUENTES RAMIREZ provided security for the facility, and for the transportation of cocaine, using heavily armed workers and Honduran police and military personnel.

On several occasions between approximately 2010 and 2013, FUENTES RAMIREZ helped arrange or directly participated in drug-related violence.  In or about 2012, for example, after FUENTES RAMIREZ’s cocaine laboratory was raided by law enforcement, FUENTES RAMIREZ beat and tortured a law enforcement official who FUENTES RAMIREZ believed to have been involved in the investigation of the laboratory.  FUENTES RAMIREZ murdered the officer by shooting him in the head with what FUENTES RAMIREZ described as “mercy shots.”

In or about 2013, FUENTES RAMIREZ paid a bribe of at least approximately $25,000 to Honduran president Juan Orlando Hernández Alvarado (“JOH”), who was at the time the president of the Honduran National Congress, and allowed JOH to access millions of dollars’ worth of cocaine from FUENTES RAMIREZ’s laboratory.  In connection with negotiations relating to the laboratory, JOH told FUENTES RAMIREZ that he was interested in access to the laboratory because of its proximity to Puerto Cortés, a key shipping port on the northern coast of Honduras.  JOH also told FUENTES RAMIREZ that the Honduran armed forces would provide security, and that Óscar Fernando Chinchilla Banegas, the Attorney General of Honduras, would help protect FUENTES RAMIREZ’s drug trafficking activities.  JOH instructed FUENTES RAMIREZ to report directly to JOH’s brother, Juan Antonio Hernández Alvarado (“Tony Hernández”), for purposes of their drug trafficking partnership.  Finally, JOH told FUENTES RAMIREZ that he wanted to make the DEA think that Honduras was fighting drug trafficking, but that instead he was going to eliminate extradition and “stuff drugs up the gringos’ noses,” referring to flooding the United States with cocaine. 

In October 2019, Tony Hernández was convicted of the same offenses as FUENTES RAMIREZ, as well as an additional count of making false statements to the DEA.  FUENTES RAMIREZ met with JOH following two key filings in the prosecution of Tony Hernández, as demonstrated by, among other things, data from FUENTES RAMIREZ’s phone reflecting that he twice searched for directions to JOH’s Casa Presidencial in Tegucigalpa, Honduras, after the filings.  Tony Hernández is scheduled to be sentenced by Judge Castel on March 30, 2021.  

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FUENTES RAMIREZ, 51, was convicted on three counts:  (1) conspiring to import cocaine into the United States, which carries a mandatory minimum prison term of 10 years and a maximum prison term of life; (2) using and carrying machine guns during, and possessing machine guns in furtherance of, the cocaine-importation conspiracy, which carries a mandatory consecutive prison term of 30 years; and (3) conspiring to use and carry machine guns during, and to possess machine guns in furtherance of, the cocaine-importation conspiracy, which carries a maximum prison term of life.

Ms. Strauss praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, New York Strike Force, and Tegucigalpa Country Office, as well as the U.S. Department of Justice’s Office of International Affairs.

This case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Michael D. Lockard, Jacob H. Gutwillig, Matthew J. Laroche, Jason A. Richman, and Elinor L. Tarlow are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that codefendants HERODE CHANCY and MICHAEL ALBARELLA, who at the time of offense were employed as a managers at a Manhattan branch of a national bank (“Bank-1”), have pled guilty before United States District Judge Lewis J. Liman in connection with their respective roles in a loan fraud and bank bribery scheme.  CHANCY pled guilty on March 12, 2021, to conspiracy to commit wire and mail fraud, and ALBARELLA pled guilty today to bank bribery.     

U.S. Attorney Audrey Strauss said: “Bank employee Herode Chancy engaged in a scheme to obtain over $1 million in commercial loans for fake businesses, and his co-worker Michael Albarella then accepted a bribe to open a bank account using a stolen identity for the purpose of laundering a portion of the stolen money.  Chancy and Albarella now await sentencing for their fraudulent and corrupt acts.”

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

From at least in or about March 2019 up to and including at least in or about March 2020, CHANCY and Adedayo Ilori conspired to fraudulently obtain business loans from a third-party commercial lender with the intent not to repay the loans – i.e., with the intent to “bust out” the loans.  CHANCY and Ilori together submitted eight fraudulent business loan applications for a total of $1,025,000 in business loans.  The business loan applications submitted by CHANCY and Ilori included doctored bank statements and listed the identities of other persons as the loan applicants, including stolen identities.  CHANCY and Ilori also opened bank accounts using the identities of those other persons in order to receive the loan payments from the third-party commercial lender.  CHANCY and Ilori subsequently conspired with ALBARELLA, another bank manager at Bank-1, to open a bank account using a stolen identity to launder approximately $200,000 of the expected proceeds of the loan scheme.  ALBARELLA opened the bank account at Bank-1 using the stolen identity provided by CHANCY and Ilori, and ALBARELLA accepted a $10,000 bribe to open the bank account.        

CHANCY and Ilori believed that the underwriter for the third-party commercial lender was participating in the scheme and agreed to pay the underwriter a “commission” for the underwriter’s role in the scheme.  In reality, however, the underwriter was an undercover law enforcement officer. 

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CHANCY, 41, of Bellerose, New York, pled guilty to one count of conspiracy to commit wire and mail fraud, which carries a maximum penalty of 20 years in prison.  CHANCY also admitted that he conspired to commit money laundering, in violation of Title 18, United States Code, Section 1956(h).  CHANCY will be sentenced by Judge Liman on July 9, 2021, at 2:00 p.m.

ALBARELLA, 35, of Floral Park, New York, pled guilty to one count of bank bribery, which carries a maximum penalty of 30 years in prison.  ALBARELLA will be sentenced by Judge Liman on June 28, 2021, at 2:00 p.m. 

Ilori is charged with: (1) conspiracy to commit mail and wire fraud, (2) wire fraud, (3) mail fraud, and (4) conspiracy to commit money laundering, each of which carries a maximum penalty of 20 years in prison, and (5) aggravated identity theft, which carries a mandatory term of two years in prison, to be served consecutively to any other term of imprisonment.  

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 a judge. 

Ms. Strauss praised the outstanding investigative work of the New York FBI’s Eurasian Organized Crime Task Force and Homeland Security Investigation’s El Dorado Task Force. 

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

The allegations against Ilori in the Complaint and Indictment are merely accusations, and Ilori is presumed innocent unless and until proven guilty.

Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment charging ABRAHAM ADENIYI with money laundering and bank fraud offenses in connection with his years-long involvement in a money laundering operation.  ADENIYI, who was arrested this morning in Georgia, will be presented later today before a federal magistrate judge in the Northern District of Georgia.

U.S. Attorney Audrey Strauss said:  “As alleged, Abraham Adeniyi used a web of bank accounts to hide millions of dollars stolen from fraud victims, some of which went to Adeniyi’s own pockets.  Thanks to the FBI, Adeniyi now faces federal charges.”

FBI Assistant Director William F. Sweeney Jr. said:  “Criminals will always believe there is a pot of gold at the end of the rainbow. As we allege in this investigation, Mr. Adeniyi and his cohorts stole money and attempted to conceal its origin through a series of bank accounts – all the while thinking no one would be able to track it. He discovered his luck ran out when all he found at the end of his rainbow was the FBI and the federal criminal justice system.”

According to the allegations in the indictment[1] filed against ADENIYI and other court proceedings:

From at least in or about 2017 through at least in or about 2020, ADENIYI opened and directed others to open multiple bank accounts, which received proceeds of various wire fraud schemes, and transferred and directed others to transfer those proceeds among the bank accounts he had opened, as well as to other bank accounts controlled by participants in the scheme, in order to conceal and disguise the source, location, ownership, and control of the funds.  As part of the scheme, ADENIYI and others used fraudulent identification information to open accounts at FDIC-insured banks and to obtain the funds in those accounts.

*                *                *

ADENIYI, 37, of Atlanta, Georgia, is charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and onecount of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison. 

Ms. Strauss praised the outstanding investigative work of the FBI.

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

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

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced that VICTOR MONES CORO (“MONES CORO”) was sentenced today to 55 months in prison, in connection with a scheme to provide private charter flights to two prominent members of former Venezuelan President Nicolás Maduro’s inner circle:  former Venezuelan Vice President Tareck Zaidan El Aissami Maddah (“El Aissami”) and his frontman, Samark Jose Lopez Bello (“Lopez Bello”).  These flight services violated sanctions imposed by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) pursuant to the Foreign Narcotics Kingpin Designation Act (“Kingpin Act”).  MONES CORO pled guilty to a five-count Indictment on January 4, 2021, and was sentenced today by U.S. District Judge Alvin K. Hellerstein. 

Manhattan U.S. Attorney Audrey Strauss said:  “Victor Mones Coro led a concerted, sustained, multi-year scheme to provide millions of dollars’ worth of illicit flight services to Venezuelan leaders in direct contravention of our country’s sanctions regime and foreign policy.  Today’s sentence serves as a reminder that, together with our law enforcement partners, we will aggressively prosecute sanctions violators to protect our national security.”

HSI Special Agent in Charge Peter C. Fitzhugh said:  “HSI is instrumental in protecting the interests of the United States by leveraging our unique and expansive authorities to root out the corrupt regimes operating around the globe.  For over 25 years, the HSI New York El Dorado Task Force has investigated and dismantled complex international money laundering schemes along with other serious financial crimes.  Working with our law enforcement partners around the country and around the world, we continue to safeguard our financial systems from international corruption that enriches the coffers of dictators and their cohorts.”

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

Between February 2017 and March 2019, MONES CORO provided travel services, including private jet charters, to El Aissami and Lopez Bello, as well as their associates, in violation of OFAC sanctions.  El Aissami became the vice president of Venezuela in approximately January 2017 and is currently Venezuela’s Minister of Industry and National Production.  In February 2017, OFAC designated El Aissami and Lopez Bello as Specially Designated Narcotics Traffickers pursuant to the Kingpin Act and related regulations.  As a result of OFAC’s designations, U.S. persons are generally prohibited from, among other things, engaging in transactions with or providing services to El Aissami and Lopez Bello absent authorization from OFAC.

To evade the OFAC designations, MONES CORO designed an elaborate criminal scheme to enrich himself and provide flight services to El Aissami and Lopez Bello, among other influential Venezuelans in Maduro’s inner circle, including the president of Venezuela’s Supreme Court, Maikel Moreno, who had also been previously sanctioned by OFAC.   In spearheading this criminal scheme, MONES CORO used his U.S.-based company, American Charter Services (“ACS”), its planes, and its employees to fly Lopez Bello, El Aissami, and others around the world, including to foreign countries of strategic importance to the Maduro regime such as Russia and Turkey. 

MONES CORO also provided flights in furtherance of Maduro’s May 2018 campaign for re-election, a corrupt campaign through which Maduro illegitimately maintained control of Venezuela.  In particular, between approximately February and May 2018, MONES CORO and ACS arranged between 20 to 25 domestic Venezuelan flights for the Maduro campaign.  These flights transported people, campaign materials, and food, among other things, and were coordinated with associates of El Aissami and Lopez Bello.

To avoid detection, MONES CORO and his co-conspirators, including Joselit Ramírez Camacho, Venezuela’s current Superintendent of Cryptocurrencies, engaged in various forms of subterfuge.  They used code names, falsified flight manifests and invoices, communicated over encrypted messaging applications, received cash flown into the United States from Venezuela, and accepted wire transfers from a front company tied to the sanctioned Venezuelan leaders.   MONES CORO also tried to cover his tracks by directing one of his pilots to lie to law enforcement.

MONES CORO perpetrated these crimes at a time when the United States and its allies were engaged in the crucial undertaking of depriving Venezuela and its leadership of resources for its malign, undemocratic, and deadly activities – including its systematic and oftentimes fatal repression of activists, its subversion of Venezuelan democratic institutions, and its corrupt plundering of Venezuela’s natural resources.  Maduro and others are charged with narco-terrorism and related crimes in a Superseding Indictment also pending before Judge Hellerstein.  In a separate Superseding Indictment, El Aissami, Lopez Bello, and Ramírez Camacho are charged with sanctions violations based on their roles in the scheme with MONES CORO.

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In addition to his prison sentence, MONES CORO, 52, of Florida, was sentenced to two years of supervised release and ordered to pay a fine of $250,000.

Ms. Strauss praised the outstanding efforts of U.S. Customs and Border Protection, and the DEA’s Special Operations Division Bilateral Investigations Unit.  Ms. Strauss also thanked the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division, and OFAC.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Sam Adelsberg and Amanda Houle are in charge of the prosecution, with assistance from David Recker of the Counterintelligence and Export Control Section.

The charges against Maduro, El Aissami, Lopez Bello, and Ramírez Camacho are merely accusations, and those defendants are presumed innocent unless and until proven guilty.

Audrey Strauss, the United States Attorney for the Southern District of New York, Michael C. Mikulka, Special Agent in Charge of the New York Regional Office of the U.S. Department of Labor Office of Inspector General (“DOL-OIG”), and Patrick Freaney, Deputy Special Agent in Charge of the New York Field Office of the U.S. Secret Service (“USSS”), announced today the unsealing of a complaint charging ELVIN GERMAN with wire fraud and aggravated identity theft in connection with a COVID-19 unemployment benefit scheme that resulted in the loss of more than $1.4 million from the New York Department of Labor (“NY DOL”).  GERMAN was arrested on March 16, 2021 in the Bronx, New York, and will be presented this afternoon before United States Magistrate Judge Sarah L. Cave.    

Manhattan U.S. Attorney Audrey Strauss said: “As alleged, Elvin German used the identities of over 250 unknowing victims to file false claims in order to receive over $1.4 million in COVID-19 unemployment benefits. But investigators were able to detect a pattern to his alleged scam, partly because German typically used the same IP address and security question and answer – the name of family dog, Benji – to illegally submit applications on the DOL’s website. We thank our partners at DOL and Secret Service for alertly detecting German’s attempt to profiteer from funds earmarked to provide relief for families struggling with financial hardships resulting from the ongoing pandemic.”

DOL-OIG Special Agent in Charge Michael C. Mikulka said: “Investigating fraud involving the Unemployment Insurance Program is an important part of the mission of the U.S. Department of Labor Office of Inspector General, particularly now when our nation is providing billions of dollars in unemployment benefits to American workers in need due to the economic effects of the COVID-19 pandemic. We will continue to work with our law enforcement partners to vigorously investigate unemployment insurance fraud.”

USSS Deputy Special Agent in Charge Patrick Freaney said:  “It is a priority of the U.S. Secret Service to investigate and hold responsible those who manipulate financial programs for their own personal gain. In this case, the defendant allegedly used personally identifiable information of over 200 individuals to file fraudulent unemployment insurance claims resulting in over a million dollars of loss.  The Secret Service looks forward to our continued partnership with the U.S. Department of Labor as we collectively pursue those who seek to commit unemployment insurance fraud.” 

As alleged in the Complaint[1]:

From May 2020 through March 2021, ELVIN GERMAN engaged in a scheme to obtain COVID-19 unemployment benefits by fraudulently filing and verifying applications using the names and social security numbers of more than 250 other people.  The NY DOL was alerted to the suspicious activity based on metadata associated with the applications (the “Applications”), which indicated that the Applications were either submitted and/or verified on a weekly basis from the same internet protocol (“IP”) address.   Additionally, the Applications had the same security questions and responses, including that the applicant’s first pet was named “Benji.”  After identifying the residence assigned to the IP address, DOL-OIG and USSS conducted a joint search of the residence, locating, among other items linked to GERMAN, approximately $7,000 in cash, a computer loaded to the NY DOL unemployment benefits page with the personal identifying information of four individuals named in the Applications open in an adjacent computer file, and, consistent with the security question used in the fraudulent applications – a dog wearing a collar inscribed with the name “Benji.”  As a result of GERMAN’s scheme, the NY DOL authorized the release of more than $1.4 million of COVID-19 unemployment benefits. 

*                      *                      *

ELVIN GERMAN, 41, is charged with (1) wire fraud, which carries a maximum sentence of 20 years in prison, and (2) aggravated identity theft, which carries a mandatory two-year consecutive sentence. 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 assigned judge.

Ms. Strauss praised the outstanding investigative work of DOL-OIG, the USSS, and the NY DOL.

The case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Danielle M. Kudla is in charge of the prosecution.

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

Audrey Strauss, United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Jonathan D. Larsen, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and Thomas Licetti, New York Regional Director, U.S. Department of Labor Employee Benefits Security Administration (“DOL-EBSA”), announced today the unsealing of a complaint charging MELISSA PANAYIOTA KANES with health care fraud, money laundering, and aggravated identity theft in connection with a scheme to submit more than $800,000 in fraudulent health care claims, including by using, over the course of multiple years, the identities of three per diem chiropractors when submitting claims in an effort to hide the defendant’s association with the claims.

KANES was arrested this morning on Long Island, New York, and was presented earlier today before U.S. Magistrate Judge Sarah L. Cave. 

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Melissa Kanes filed numerous fraudulent health insurance claims for her chiropractic services.  Indeed, as further alleged, Kanes filed so many claims that an insurer flagged her for suspicious billing, at which point she tried to circumvent scrutiny by filing claims in the names of other chiropractors without their knowledge.  Now Melissa Kanes is in custody and facing federal charges.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Kanes used the identities of three different chiropractors to reap more than $800,000 from fraudulent insurance claims.  The crimes with which she is charged today are serious ones, which carry the possibility of a lengthy prison sentence.  This case should serve as a warning to others unwilling to make adjustments to their illegal behavior – the federal criminal justice system could be just what the doctor ordered.”

IRS-CI Special Agent in Charge Jonathan D. Larsen said:  “The offenses charged in this case are particularly troubling because once the fraudulent activities were detected, the defendant allegedly continued the activities using additional concealment methods.  While the vast majority of health care providers are operating in good faith to take care of patient needs, it is the role of IRS CI and our law enforcement partners to bring to justice the small percentage of providers who are knowingly abusing the health care system for personal profit.”

DOL-EBSA New York Regional Director Thomas Licetti said:  “This type of activity is detrimental to workers, employers and the entire healthcare system. EBSA is proud to partner with our fellow federal agencies in protecting hard-earned employee benefits.”

According to the allegations in the Complaint:[1]

MELISSA PANAYIOTA KANES, the defendant, worked as a licensed chiropractor in New York, New York.

Between 2014 and 2016, KANES submitted a high volume of insurance claims to one of the largest private health insurance companies in the country (“Insurer-1”).  Insurer-1 served as the third-party claims administrator for various health plans, including a health plan covering the employees of a large consulting firm (“Victim Employer-1”).  At the outset, KANES submitted the bills using companies publicly associated with her and her own identification number.  But in 2016, Insurer-1 flagged KANES for improper billing and slowed or ceased payments to KANES.  Thereafter, KANES continued to submit claims to Insurer-1, but took steps to hide KANES’s association with the bills.  In particular, KANES submitted bills under the names and identification numbers of two newly incorporated companies (“New Company-1” and “New Company-2”), and three newly recruited per diem chiropractors (“Victim Chiropractor-1,” “Victim Chiropractor-2,” and “Victim Chiropractor-3”; together, the “Victim Chiropractors”), without the Victim Chiropractors’ knowledge or consent.

These claims to Insurer-1 – the vast majority of which related to services purportedly rendered to employees in the Manhattan office of Victim Employer-1, which was nearby KANES’s regular office in Manhattan – were false.  The claims variously misrepresented the provider of the services (as one of the Victim Chiropractors), the location of the services (as somewhere other than KANES’s regular office), and which chiropractic services were in fact rendered (including whether any were rendered at all).  More generally, the claims misleadingly omitted KANES’s involvement.  The fraudulent claims that KANES submitted to Insurer-1 alone totaled more than $800,000.

Along with Insurer-1, KANES submitted claims to other private health insurance companies during the relevant time period.  At least some set of those claims were also false.  In particular, on certain dates for which KANES claimed to have provided the services billed, KANES was, in fact, traveling outside the United States.

*                *                *

KANES, 50, of New Hyde Park, New York, is charged with one count of health care fraud, which carries a maximum sentence of 10 years in prison, one count of money laundering, which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory consecutive term of two years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.

Ms. Strauss praised the outstanding investigative work of the FBI, IRS-CI, and DOL-EBSA.

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900, or [email protected].  For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html.

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.

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

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

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that JOSE MORELY CHOCRON pled guilty today before U.S. District Judge Jed S. Rakoff to one count of money laundering.  CHOCRON laundered more than $500,000 in funds that had been represented to him to be the proceeds of a scheme to bribe Brazilian political officials, using a network and bank accounts to which he had access by virtue of his operation of an unlicensed money transmitting business.

U.S. Attorney Audrey Strauss said:  “Jose Chocron’s black-market banking was designed to facilitate tax evasion, and was used to facilitate what he thought was the bribery of a foreign official.  Unbeknownst to Chocron, the FBI had identified his network and worked quickly to dismantle it.  This Office will continue to ensure the integrity of the U.S. financial system by identifying and prosecuting shadow banking operations like Chocron’s.”  

According to the Complaint, the Indictment, and other filings in this case:

Between May 2019 and October 2019, CHOCRON, working with his co-conspirators, utilized his network of contacts and bank accounts to launder funds that had been provided to him by individuals who – unbeknownst to CHOCRON – were working for the Federal Bureau of Investigation (“FBI”).  Those individuals informed CHOCRON that the funds were the proceeds of bribes that had been paid to Brazilian public officials in order to obtain licenses and permits.  On four occasions, CHOCRON accepted cash from individuals who were working for the FBI or arranged to have the cash delivered to his associates.  He then arranged for the funds to be transferred to bank accounts specified by the FBI, minus a commission payment.

CHOCRON explained that he was able to receive large amounts of cash in the United States and arrange for those funds to be transferred to bank accounts because CHOCRON “ha[d] . . . people here that need cash.  They will transfer to you, because they don’t want to pay taxes . . .  What do I do? I give them the money and they make a transfer to me.”  He also requested a higher commission for his services than initially offered, stating “Let’s be clear, that’s laundering money.” 

*                *                *

CHOCRON, 61, of Spain and Venezuela, pled guilty to one count of money laundering, 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.  In connection with his guilty plea, CHOCRON also admitted that he operated an unlicensed money transmitting business, in violation of Title 18, United States Code, Section 1960.

CHOCRON is scheduled to be sentenced by Judge Rakoff on July 16, 2021, at 4:00 p.m.

Ms. Strauss praised the outstanding work of FBI New York’s Eurasian Organized Crime Task Force.

The prosecution of this case is being overseen by the Office’s Money Laundering and Transitional Criminal Enterprises Unit.  Assistant U.S. Attorneys Andrew C. Adams, Benet J. Kearney, and Sarah Mortazavi are in charge of the case.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced the entry today of a Consent Order of Preliminary Injunction (the “Injunction”) mandating that the Village of Airmont (“AIRMONT”) immediately cease enforcement of zoning code provisions enacted in 2018 that discriminate against Orthodox Jewish residents in violation of the Religious Land Use and Institutionalized Persons Act (“RLUIPA”), as alleged in a lawsuit brought by the United States (the “Government”).  Among other things, the zoning code provisions at issue limit the amount of space in private homes that can be used as a Residential Place of Worship (“RPW”), restrict whom residents are allowed to invite into their own homes to pray, and expand the use of an arbitrary, drawn-out application process designed to delay and effectively deny permits for even minor alterations to private houses.  After commencing its lawsuit in December 2020, the Government presented evidence that the provisions had been motivated by discriminatory animus and served no legitimate governmental purpose.  Following the Government’s submission, AIRMONT agreed to entry of the Injunction.

U.S. Attorney Audrey Strauss said:  “The right to Free Exercise of religion is central to the First Amendment, and our multicultural society is only as strong as our willingness to stand up for the rights of religious minorities.  We appreciate Airmont’s willingness to agree to cease enforcement of its discriminatory zoning code restrictions pending final resolution of this matter.”  

Under the terms of the Injunction entered today by U.S. District Judge Nelson S. Román, AIRMONT:

• Must restore RPWs as a recognized land use category permitted as of right in all residential districts and may not enforce contrary provisions of local law enacted in 2018 that removed RPWs as a recognized of-right use from AIRMONT’s zoning code;

• Must restore in full zoning provisions protecting the right to residential worship enacted by order of the District Court in 1996 after a jury found that AIRMONT had engaged in discrimination against Orthodox Jews, which AIRMONT removed from its zoning code in 2018 in violation of the Court-entered final judgment;    
   
• Must ensure that all applications for RPWs that are 1,400 square feet or less in total size are reviewed and approved on an expedited basis without public hearing; and
   
• May not adjudicate applications for RPWs that are larger than 1,400 square feet under the terms of site development regulations enacted in 2018, which expanded and made mandatory a disproportionately burdensome review process, and may instead only apply regulations that were in effect under an earlier version of AIRMONT’s zoning code enacted in 1997.

RLUIPA authorizes the Department of Justice to commence an action against any local government that implements a land use regulation that places a substantial burden on religious exercise or discriminates on the basis of religion.  By its terms, the Injunction will remain in effect until further order of the District Court.

The case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorney Stephen Cha-Kim is charge of the case.

Audrey Strauss, the United States Attorney for the Southern District of New York, and Raymond P. Donovan, Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), announced that ADRIANO RODRIGUEZ-DIAZ, IRONELLYS PAULINO-NOLASCO, and ROBERT NUNEZ were charged in a criminal complaint filed in Manhattan federal court with narcotics importation, narcotics trafficking, and firearms offenses.  RODRIGUEZ-DIAZ and PAULINO-NOLASCO were apprehended on March 12, 2021 and will be presented this afternoon before United States Magistrate Judge Sarah L. Cave.  NUNEZ remains at large. 

Manhattan U.S. Attorney Audrey Strauss said:  “This  investigation has yielded the seizure of over 120 kilograms of cocaine and over $1 million in suspected proceeds from illegal narcotics trafficking, disrupting the operation of this alleged drug trafficking organization. Thanks to our partners at the DEA, this massive shipment of potentially deadly narcotics has been kept off the streets.”

DEA Special Agent in Charge Raymond P. Donovan said:  “A stakeout turned into a three-day enforcement operation taking six million dollars’ worth of cocaine sales away from alleged drug traffickers while saving lives. Over one hundred kilograms of cocaine is significant in many ways since CDC warned of a 26.5% increase in overdose deaths involving cocaine in a 12- month period ending May 2020. Law enforcement will continue to rally our resources to seize illegal drugs responsible for record-breaking overdose rates.” 

As alleged in the Complaint[1]:

Since in or about late 2020, the DEA has been investigating the importation and distribution of narcotics through a produce warehouse in New Jersey called “Sweet Produce” (the “Warehouse”).  Cocaine was shipped from a company in the Dominican Republic to the Warehouse.  Between March 9, 2021 and March 12, 2021, DEA agents observed members of the conspiracy receive and move shipments from the Warehouse to other locations, including an apartment in the Bronx.

On March 10, 2021, agents seized approximately one kilogram of cocaine from a car driven by NUNEZ.  On March 11, 2021, agents seized approximately 20 kilograms of cocaine and $1.3 million in United States currency from the apartment in the Bronx.  On March 12, 2021, agents seized approximately 100 kilograms of cocaine from a produce van as it left the Warehouse, and also seized a firearm from the Warehouse.  The Produce Van was en route to a safe house in New Jersey that contained approximately one kilogram of cocaine, a cocaine press, and packaging materials.    

*                      *                      *

ADRIANO RODRIGUEZ-DIAZ, 41, IRONELLYS PAULINO-NOLASCO, 37, and ROBERT NUNEZ, 50, are charged with conspiring to import at least five kilograms of cocaine into the United States, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison, and conspiring to distribute and possess with intent to distribute at least five kilograms of cocaine, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.  RODRIGUEZ-DIAZ is also charged with possession of a firearm during and in relation to the narcotics importation and trafficking conspiracies, which carries a mandatory consecutive sentence of five years in prison.

The maximum potential sentences described above are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the assigned judge.

Ms. Strauss praised the outstanding investigative work of the New York Division the DEA.  Ms. Strauss also thanked the El Dorado Task Force of the United States Department of Homeland Security, Homeland Security Investigations, the New York City Police Department and the Organized Crime Drug Enforcement Task Force New York Strike Force, Financial Investigation Team comprising agents and officers of the DEA, NYPD, Bergen County Prosecutors Office, Fort Lee Police Department, Teaneck Police Department, Hillsdale Police Department, Northvale Police Department, Palisades Interstate Parkway Police, and Closter Police Department for its assistance in the investigation.  

The case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Danielle M. Kudla and Alexander Li are in charge of the prosecution.

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

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that MARVIN GAMONEDA, a/k/a “June,” pled guilty today in Manhattan federal court in connection with a shooting in the Nelson Playground on June 7, 2018, in furtherance of the Woodycrime criminal enterprise.  U.S. District Judge John G. Koeltl accepted the defendant’s guilty plea.

U.S. Attorney Audrey Strauss said:  “Today, Marvin Gamoneda admitted his responsibility for a brazen shooting in the middle of the afternoon in a playground in the Bronx.  During the shooting, two individuals, including a child, were hit.  We continue our daily work with our law enforcement partners to keep our communities safe and to vigorously investigate acts of 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 7, 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.  

*                *                *

GAMONEDA, 34, of the Bronx, New York, pled guilty to attempted murder and assault with a dangerous weapon in aid of racketeering, which carries a maximum sentence of 20 years in prison, and using and carrying a firearm in furtherance of a crime of violence, which carries a maximum sentence of life and a mandatory minimum sentence of five years in prison.  GAMONEDA will be sentenced before Judge Koeltl on July 30, 2021, at 10:00 a.m.

The statutory maximum penalties are prescribed by Congress and are provided here for information purposes only, as any sentencing of the defendant would be determined by Judge Koeltl.

Ms. Strauss praised the outstanding investigative work of the NYPD and the FBI.

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.

Audrey Strauss, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Philip R. Bartlett, Inspector-in-Charge of the New York Field Division of the United States Postal Inspection Service (“USPIS”), Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), and Joseph Fucito, New York City Sheriff, announced today the unsealing of a criminal Complaint charging SHAMOON RAFIQ, a/k/a “Shamoon Omer Rafiq,” a/k/a “Omar Rafiq,” a/k/a “Omer Rafiq,” a resident of Singapore, with securities fraud, wire fraud, and aggravated identity theft for engaging in a scheme in which RAFIQ solicited millions of dollars through his use of false representations offering to sell purported investments in shares of stock in privately held companies that have not yet conducted an initial public offering (“pre-IPO stock”) that he did not actually own, his false impersonation of senior officials of a reputable family office investment firm, and other acts of deception.

U.S. Attorney Audrey Strauss said:  “As alleged, Shamoon Rafiq exploited investors’ fear of missing out on the potential gains to be earned from investing in companies before they go public, and solicited millions of dollars from investors through brazen lies and deception. Rafiq allegedly elicited millions under the false pretense that he would sell shares of pre-IPO stocks which – unbeknownst to his investors – he did not even own and therefore could not sell.  Furthermore, Rafiq allegedly sent faked emails impersonating senior officials of a reputable family office investment firm that supposedly backed his claims.  I sincerely thank our law enforcement partners for their assistance in charging Rafiq for alleged predatory acts of deceit on his victims.” 

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “A fraudster with a felony conviction for wire fraud, Rafiq allegedly attempted to fleece investors out of their hard-earned cash by creating the illusion of a once-in-a-lifetime opportunity to invest victims’ funds into pre-IPO stocks such as Airbnb shares. In reality, no such opportunity existed and Rafiq' was simply trying to walk off with millions of dollars from Singapore. HSI’s El Dorado Task Force and our partners will continue to work tirelessly to identify, investigate, arrest and prosecute individuals, like Rafiq, who allegedly peddled too good to be true financial opportunities within the U.S. financial markets. Investors should be reminded that unbelievable investment prospects are sometimes just that.”

USPIS Inspector-in-Charge Phillip R, Bartlett said:  “Mr. Rafiq’s alleged scheme is all based on the alleged perfect opportunity for ‘stock’ in a well-known company. The opportunity to own prominent holdings would be a boon to any investor, but in this case there was no stock, just a made up investment scheme to enrich an alleged serial fraudster. Through the collaboration of law enforcement, both domestically and globally, Mr. Rafiq will once again answer for his crimes to defraud investors. A reminder that no one eludes justice forever.”

NYPD Commissioner Dermot Shea said:  “As alleged in this complaint, Shamoon Rafiq preyed on the hopes of innocent victims in elaborate financial swindles. But the joint work of our NYPD investigators and law enforcement partners put an end to these alleged crimes and I commend the United States Attorney’s Office in the Southern District of New York for bringing this important case.”

If you believe you are a victim of a fraudulent pre-IPO stock scheme perpetrated by SHAMOON RAFIQ or have information about the crimes charged in the Complaint, please call the United States Attorney’s Office at 866-874-8900.

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

SHAMOON RAFIQ, a/k/a “Shamoon Omer Rafiq,” a/k/a “Omar Rafiq,” a/k/a “Omer Rafiq,” was born in the Netherlands in 1973 and presently resides in Singapore.  RAFIQ was convicted in 2004 in the United States District Court for the Eastern District of New York for carrying out a wire fraud scheme in which he purported to sell pre-IPO stock in a privately held company that had not yet conducted its initial public offering when, in fact, RAFIQ did not own or have access to such stock.  After serving a 41-month federal prison sentence for that crime, RAFIQ was deported from the United States and eventually relocated to Singapore.

Since at least July 2020, RAFIQ has been engaging in a new scheme from Singapore to defraud victims into paying him millions of dollars for alleged investment interests in various pre-IPO stocks that he does not actually own or control. 

In connection with his new fraud scheme, RAFIQ has fraudulently impersonated two senior officials (“Victim-1” and “Victim-2”) of a prominent family office investment firm (“FamCap”) that manages and invests assets of members of a prominent billionaire family (the “Family”).  In July 2020, RAFIQ caused the creation of a fake FamCap website (the “Fake FamCap Website”) that has automatically routed users to the official FamCap website, and the creation of fake FamCap email addresses for Victim-1 and Victim-2 that closely resemble, but are slightly different from, their official FamCap email addresses (the “Fake FamCap Email Addresses”).  The Fake FamCap Website and Fake FamCap Email Addresses for Victim-1 and Victim-2 were created without their or FamCap’s consent.  The Fake FamCap Email Addresses also included the names of Victim-1 and Victim-2 without their authorization.

In July 2020, RAFIQ began soliciting millions of dollars from investment firms in New York and elsewhere based on false claims that in exchange for their funds, he would sell them investment interests in a purported special purpose investment vehicle called “[Fam] Capital Technology Fund, LLC” that was supposedly managed by FamCap and allegedly owned pre-IPO stock in Airbnb, Inc., among other companies.  For example, as part of this fraudulent scheme, RAFIQ deceived an investment firm based in New York, New York (the “New York Firm”), and one of the firm’s foreign institutional clients (the “Client”) into making agreements under which the Client wired about $9 million in mid-August 2020 into an escrow account in New York for anticipated release to a bank account in Singapore to pay RAFIQ for his purported sale of investment interests in the LLC.

In soliciting this $9 million investment, RAFIQ made a variety of false representations, including the following:

• RAFIQ falsely claimed that the LLC was managed by FamCap.  In fact, the LLC never existed.

• RAFIQ falsely claimed that the LLC owned pre-IPO shares of Airbnb.  In fact, the LLC did not own and could not have owned such stock because the LLC never existed.

• RAFIQ falsely claimed that Victim-1 and Victim-2 had approved of his sale of his alleged interests in the LLC.  In fact, Victim-1 and Victim-2 do not know RAFIQ and have confirmed that FamCap was never involved in or approved of any such transaction.

During and to further the goals of this fraudulent scheme, RAFIQ also caused the creation and transmission of emails from the Fake FamCap Email Addresses and fake contracts and deal documents purporting to have been signed by Victim-1 or Victim-2 on behalf of FamCap that neither of them approved.  For example, in August 2020, during the course of email communications with the New York Firm and Client concerning RAFIQ’s alleged sale to them of his purported interests in an alleged FamCap-managed LLC that supposedly held Airbnb shares, RAFIQ copied into the email chain the Fake FamCap Email Addresses to create the false impression that FamCap was involved in and approved of the alleged transaction.

In a separate parallel enforcement action, the United States Securities and Exchange Commission (the “SEC”) has filed civil charges against RAFIQ.        

*                      *                      *

RAFIQ, 47, is a resident of Singapore and a citizen of the Netherlands.  RAFIQ has been charged in a three-count Complaint with one count of securities fraud, which carries a maximum potential sentence of 20 years in prison; one count of wire fraud, which carries a maximum potential sentence of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory prison sentence of two years that must be imposed to run consecutively to any other terms of imprisonment.  In addition to potential prison sentences, each of these charges also carries potential financial penalties.  The maximum potential prison 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. 

RAFIQ remains at large.  The United States looks forward to working with our foreign partners to bring RAFIQ to justice.

Ms. Strauss praised the investigative work of HSI, USPIS, the NYPD and the New York City Sheriff’s Office, and she also thanked the SEC, which conducted a separate parallel investigation, for its assistance.

This case is being handled by this Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorney Samson Enzer is in charge of the prosecution.

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

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

Audrey Strauss, United States Attorney for the Southern District of New York, Stuart M. Goldberg, Acting Deputy Assistant Attorney General for the Department of Justice’s Tax Division, and James C. Lee, Chief of the Internal Revenue Service-Criminal Investigation (“IRS-CI”), announced the filing of a criminal Information against RAHN+BODMER CO. (“R+B”), a financial institution located in Zurich, Switzerland.  The Information charges R+B with one count of conspiring to help U.S. accountholders evade their U.S. tax obligations, file false federal tax returns, and otherwise defraud the Internal Revenue Service (“IRS”) by hiding hundreds of millions of dollars in offshore bank accounts at R+B.

Ms. Strauss, Mr. Goldberg, and Mr. Lee also announced a deferred prosecution agreement with R+B (the “Agreement”), under which R+B admits to its unlawful conduct in assisting U.S. accountholders in violating their legal duties.  R+B’s admissions are contained in a detailed Statement of Facts attached to the Agreement.  The Agreement requires R+B to provide ongoing assistance to the Department of Justice and to pay a total of $22 million in restitution, forfeiture, and penalties.  If R+B abides by all of the terms of the Agreement, the Government will defer prosecution on the Information for three years and then seek to dismiss the charge.

Manhattan U.S. Attorney Audrey Strauss said:  “As Rahn+Bodmer now admits, it aided U.S. taxpayers in evading their tax responsibilities to the tune of more than $16 million.  This venerated banking institution knowingly offered banking services that assisted its U.S. customers in evading their tax obligations, and affirmatively schemed to conceal from the IRS the assets and income of U.S. accountholders.  Now Rahn+Bodmer will pay $22 million and commit to helping the Justice Department uncover tax evasion by U.S. customers.”

Acting Deputy Assistant Attorney General Stuart M. Goldberg said:  “Under today’s resolution, Rahn+Bodmer is paying $22 million for helping U.S. accountholders evade their taxes, and  has agreed to fully cooperate with investigations into those taxpayers.  With the April 15 tax filing date fast approaching, there is a clear message for those intending not to pay their fair share – nothing remains hidden forever.”

IRS-CI Chief James C. Lee said:  “Through a years-long scheme, the R+B bank hid the assets of U.S. accountholders to shield them from their tax obligations.  Today’s admission and agreement provide a clear path to recovery of funds owed to the U.S. government, and sends a strong signal that offshore accounts are not beyond the reach of special agents with IRS CI.”

According to the Agreement, the accompanying Statement of Facts, and other documents filed today in Manhattan federal court:

From at least in or about 2004 and continuing until at least in or about 2012, R+B conspired with certain of its U.S. accountholders and others to defraud the United States with respect to taxes, file false federal tax returns, and commit tax evasion.  R+B’s bankers assisted U.S. accountholders in concealing their ownership and control of assets and funds held in undeclared R+B accounts, which enabled those U.S. accountholders to evade their U.S. tax obligations.  R+B admitted to holding undeclared accounts on behalf of approximately 340 U.S. taxpayers, who collectively evaded approximately $16.4 million in U.S. taxes between in or about 2004 and in or about 2012.  The assets under management that R+B held for undeclared U.S. accountholders increased from approximately $391 million in 2004 to approximately $550 million in 2007, its peak year for undeclared assets under management.

In furtherance of the scheme to help U.S. taxpayers hide assets from the IRS and evade taxes, R+B undertook the following actions, among others:

• R+B opened “numbered” or “pseudonym” accounts for U.S. accountholders in order to reduce the risk that U.S. tax authorities would learn their identities.
   
• R+B opened and maintained accounts for U.S. accountholders in the names of non-U.S. corporations, foundations, trusts, or other legal entities, thereby helping U.S. taxpayers conceal their beneficial ownership of the accounts.
   
• R+B agreed to hold bank statements and other account-related mail in Switzerland, rather than send them to the U.S. accountholders in the United States, which helped ensure that documents reflecting the existence of the accounts remained outside the United States and beyond the reach of U.S. tax authorities.
   
• After Liechtenstein and the United States signed a Tax Information Exchange Treaty in December 2008, R+B transferred the undeclared assets of certain U.S. taxpayers from accounts held in the names of sham foundations organized under the laws of Liechtenstein to new accounts held in the names of new sham foundations organized under the laws of Panama, in an effort to further conceal the accounts from U.S. tax authorities.
   
• R+B allowed U.S. accountholders and third-party asset managers to make withdrawals by check from undeclared accounts in amounts of less than $10,000, in an apparent attempt to conceal transactions from U.S. authorities.
   
• On occasion, R+B opened accounts for U.S. taxpayers who were exiting UBS AG and other Swiss banks, and allowed these U.S. taxpayers to continue to conceal their undeclared assets at R+B.  R+B additionally opened “escrow” accounts on behalf of a Swiss attorney to facilitate the transfer of undeclared assets of U.S. accountholders that had been converted to gold and other precious metals held in a vault at UBS.
   
• R+B helped U.S. accountholders to repatriate funds to the United States in a manner designed to ensure that U.S. tax authorities did not discover the undeclared accounts, including by transferring the funds of one U.S. accountholder in increments of approximately $100,000 to another Swiss bank before the U.S. accountholder routed the funds to a diamond dealer in Manhattan, where the U.S. accountholder ultimately received them.
   
• R+B, through its bankers, made regular visits to the United States to solicit, open, and service undeclared accounts of U.S taxpayers.

Under today’s resolution, R+B is required to cooperate fully with the Department of Justice and affirmatively disclose new information it may later uncover regarding U.S.-related accounts.  R+B is also required to disclose information consistent with the Department’s Swiss Bank Program relating to accounts closed between January 1, 2009, and December 31, 2019.   

As part of the resolution, R+B will pay a total of $22 million, which has three parts.  First, R+B has agreed to pay $4.9 million in restitution to the IRS, which represents the estimated unpaid taxes resulting from R+B’s participation in the conspiracy.  Second, R+B has agreed to forfeit $9.7 million to the United States, which represents the approximate gross fees that R+B earned on its undeclared U.S.-related accounts between 2004 and 2012.  Finally, R+B has agreed to pay a penalty of $7.4 million.  The penalty takes into consideration that R+B conducted a thorough internal investigation and provided a substantial volume of documents to the Department, as well as implemented remedial measures to protect against the use of its services for tax evasion in the future.

*                *                *

Ms. Strauss and Mr. Goldberg praised the outstanding work of IRS-CI.  Ms. Strauss also thanked the Department of Justice’s Tax Division for their partnership on this case.

This case 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 and Trial Attorney Ellen M. Quattrucci are in charge of the case.   

Audrey Strauss, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, Special Agent in Charge of Homeland Security Investigations (“HSI”) in New York, Matthew Modafferi, Special Agent in Charge of the Northeast Area Field Office of the U.S. Postal Service, Officer of Inspector General (“USPS-OIG”), and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced the unsealing of an indictment today charging LUIS GAMEZ, HUGO RICHARD VILLANUEVA TORRES, DANIEL ORTIZ, JOSE LUIS MARTINEZ ROSARIO and JAYSON COLON with participating in a conspiracy to distribute heroin and fentanyl in connection with a scheme to transport those narcotics through the U.S. mail.  GAMEZ was arrested on Sunday evening in California and was presented yesterday before a federal magistrate judge in the Central District of California.  VILLANUEVA, ORTIZ, MARTINEZ, and COLON were arrested yesterday in New Jersey and were presented before U.S. Magistrate Judge Barbara C. Moses that same day.   The case is assigned to United States District Judge Paul A. Engelmayer.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, the defendants are charged with trafficking large quantities of fentanyl and heroin.  We thank our partners at HSI and USPS-OIG for their outstanding work in stopping the shipment of narcotics through the U.S. mail.”

HSI Special Agent in Charge Peter C. Fitzhugh said: “These defendants allegedly operated a cross-country drug distribution network which placed profits above all else, including the safety of our communities. During this week's operation, we arrested 5 members of this drug trafficking organization.  More importantly, we seized over 6 kilograms of fentanyl and heroin, which contain numerous fatal doses of these dangerous drugs.  Working with our law enforcement partners at the U.S. Postal Inspection Service, the U.S. Postal OIG and the United States Attorney’s Office, SDNY, HSI will continue to protect the public from those who would exploit our communities for their own financial and personal gain.”

USPS-OIG Special Agent in Charge Matthew Modafferi said: “The Special Agents of the U.S. Postal Service Office of Inspector General are dedicated to maintaining the integrity of the Postal Service and its personnel. When a Postal Service employee allegedly decides to break the public’s trust and participates in a scheme to transport illegal narcotics through the U.S. Mail, USPS OIG Special Agents will tirelessly work to bring those responsible to justice.  The USPS OIG is thankful for the great relationships we have developed with our law enforcement partners and with the U.S. Attorney’s Office to combat the shipment of illegal narcotics through the U.S. Mail.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “Using the U.S. Mail to facilitate the transportation of deadly fentanyl was one of many mistakes allegedly made by these subjects. Postal Inspectors and their law enforcement partners will arrest and bring to justice anyone who breaks the sanctity of the trust placed in the U.S. Mail, no matter where they are found.”

As alleged in the Indictment unsealed yesterday in Manhattan federal court and in other court papers and proceedings[1]:

From at least in or about May 2020 up to and including in or about February 2021, LUIS GAMEZ, HUGO RICHARD VILLANUEVA TORRES, DANIEL ORTIZ, JOSE LUIS MARTINEZ ROSARIO, and JAYSON COLON participated in a conspiracy to distribute kilograms of fentanyl and heroin.  The conspirators transported kilogram-quantities of fentanyl and heroin, as well as narcotics proceeds, in packages shipped through the United States mail with the assistance of ORTIZ, an employee of the U.S. Postal Service.

*                *                *

GAMEZ, 30, of Riverside, California, VILLANUEVA, 29, of Belleville, New Jersey, ORTIZ, 41, of Harrison, New Jersey, MARTINEZ, 44, of Harrison, New Jersey, and COLON, 42, of Kearny, New Jersey, are each charged with one count of conspiracy to distribute 400 grams or more of fentanyl and one kilogram or more of heroin.  That charge carries a mandatory minimum sentence of ten years in prison and a maximum sentence of life in prison.

Ms. Strauss praised the outstanding investigative work of HSI-New York, USPS-OIG, and the United States Postal Inspection Service, and thanked HSI-Newark and HSI-Riverside for their assistance.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Kedar Bhatia and Andrew A. Rohrbach are in charge of the prosecution.

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

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that SCOTT ROBINSON was sentenced today to 18 months in prison in connection with ROBINSON’s years-long sale and distribution of adulterated and misbranded drugs, including performance-enhancing drugs marketed to racehorse trainers and others in the racehorse industry.  ROBINSON pled guilty to a one-count Information on September 16, 2020, before U.S. District Judge J. Paul Oetken, who also imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “Scott Robinson created and profited from a system designed to exploit racehorses in the pursuit of speed and prize money, risking their safety and wellbeing.  Robinson sold unsanitary, misbranded, and adulterated drugs, and misled and deceived regulators and law enforcement in the process.”  

According to the Indictment, the Superseding Information to which ROBINSON pled guilty, and other court documents, as well as statements made in public court proceedings:

From at least in or about 2011 through at least in or about March 2020, ROBINSON conspired with others to manufacture, sell, and ship millions of dollars’ worth of adulterated and misbranded equine drugs, including performance-enhancing drugs (“PEDs”) intended to be administered to racehorses for the purpose of improving those horses’ race performances in order to win races and obtain prize money.  ROBINSON sold these drugs through several direct-to-consumer websites designed to appeal to racehorse trainers and owners, including, among others, “horseprerace.com.” 

ROBINSON contributed to the conspiracy by, among other things, sourcing chemicals used to create custom PEDs that were advertised and sold; falsely labeling, packaging, and shipping those PEDs to customers across the country, including in the Southern District of New York; and collecting, reporting, and responding to employee and customer complaints regarding the misbranded and adulterated products advertised and sold online.  Among the drugs advertised and sold during the course of the conspiracy were “blood builders,” which are used by racehorse trainers and others to increase red blood cell counts and/or the oxygenation of muscle tissue of a racehorse in order to stimulate the horse’s endurance, which enhances that horse’s performance in, and recovery from, a race, as well as customized analgesics that are used by racehorse trainers and others to deaden a horse’s nerves and block pain in order to improve a horse’s race performance.  The drugs distributed through the defendant’s websites were manufactured in non-FDA registered facilities and carried significant risks to the animals affected through the administration of those illicit PEDs.  For example, in 2016, ROBINSON received a complaint regarding the effect of his unregulated drugs on a customer’s horse: “starting bout 8 hours after I give the injection and for about 36 hours afterwards both my horses act like they are heavily sedated, can barely walk.  Could I have a bad bottle of medicine, I’m afraid to give it anymore since this has happened three times.”  Commenting on this complaint, ROBINSON wrote simply, “here is another one.”

*                *                *

In addition to his prison sentence, ROBINSON, 46, of Tampa, Florida, was sentenced to three years of supervised release and forfeiture of $3,832,318.90.

Ms. Strauss praised the outstanding investigative work of the New York FBI Office’s Eurasian Organized Crime Task Force and its support of the FBI’s Integrity in Sports and Gaming Initiative.  Ms. Strauss also thanked the New Jersey Attorney General’s Office, the New York State Police, and the New York City Police Department for their support of this investigation, and the Food and Drug Administration and the Drug Enforcement Administration for their assistance and expertise.

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Sarah Mortazavi, Benet J. Kearney, and Andrew C. Adams are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, Thomas E. Walsh II, Rockland County District Attorney, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Raymond McCullagh, Chief of the Clarkstown Police Department, announced that DWAYNE HICKS and TNAIYA WILLIAMS were arrested on March 6, 2021, based on a criminal Complaint filed in White Plains federal court.  HICKS and WILLIAMS are charged with conspiracy to commit carjacking and carjacking, stemming from their participation in a brutal beating and robbery of a victim in New City, New York.  HICKS and WILLIAMS will be presented before United States Magistrate Judge Andrew E. Krause in White Plains federal court later today.

U.S. Attorney Audrey Strauss said:  “As alleged, Dwayne Hicks and Tnaiya Williams took part in a brazen and brutal carjacking, inflicting grievous bodily injuries to the victim and leaving him for dead.  Thanks to the FBI and the Clarkstown Police, Hicks and Williams are in custody and facing justice in federal court.”

Rockland County District Attorney Thomas E. Walsh II said:  “The arrests of these two individuals are another example of great cooperation by multiple law enforcement agencies working together to ensure that Rockland County remains a safe community. I commend the dedication and professionalism by all those involved. We will now push forward with an aggressive prosecution of the crimes alleged to bring closure to the victim of this violent attack.”

FBI Assistant Director William F. Sweeney Jr. said:  “As we allege, the subjects in this case committed unfathomable acts of violence when they brutally beat and stabbed a man, left him naked and bloody in a snowbank, and stole his car.  I want to commend the quick action of our law enforcement partners and the FBI Westchester County Safe Streets Task Force in getting these assailants off the street before they could do more harm.”

Clarkstown Police Chief Raymond McCullagh said:  “This heinous crime was not perpetrated on just one victim alone, it affected our entire community. Though these types of crimes are thankfully uncommon in Clarkstown, the men and women of the Clarkstown Police Department were able to swiftly find justice for the victim and allay the concerns of the community. We would like to thank District Attorney Thomas Walsh of the RCDA, FBI, and the U.S. Attorney’s Office of the Southern District for their partnership in this investigation.”

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

On February 28, 2021, HICKS lured a victim to a certain residence in New City, New York.  Once the victim arrived there, HICKS and multiple other assailants, including WILLIAMS, viciously attacked the victim.  HICKS, WILLIAMS, and others forced the victim to strip naked, stole his personal belongings, including the keys to his car, and then beat the victim with a baseball bat, belts, and their hands, and repeatedly slashed and stabbed the victim with a large knife.  The victim ultimately fled, after being left, naked and covered in blood, in a pile of snow, and some of the assailants drove off in the victim’s car.    

*                       *                      *

HICKS, 27, of Spring Valley, New York and WILLIAMS, 26, of New City, New York are each charged with one count of conspiracy to commit carjacking, which carries a maximum sentence of five years in prison, and one count of carjacking, which carries a maximum sentence of 25 years in prison.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.

Ms. Strauss praised the investigative work of the FBI and its Westchester County Safe Streets Task Force, the Clarkstown Police Department, and the Rockland County District Attorney’s Office.

The case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Derek Wikstrom and T. Josiah Pertz are in charge of the prosecution.

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

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

Audrey Strauss, United States Attorney for the Southern District of New York, and Larry Starfield, Acting Assistant Administrator for the Office of Enforcement and Compliance Assurance of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States has filed a civil lawsuit against Cayman Islands-based EZ LYNK, SEZC (“EZ LYNK”), a related company, PRESTIGE WORLDWIDE, SEZC (“PRESTIGE”), and their U.S.-based founders and owners, BRADLEY GINTZ and THOMAS WOOD (collectively, “Defendants”).  The lawsuit alleges that Defendants manufacture and sell a defeat device designed to permit car and truck owners to remove computerized emissions controls in violation of the Clean Air Act.  The complaint also alleges that EZ LYNK, GINTZ, and WOOD violated the Clean Air Act by refusing to provide EPA with information about the manufacture, sale, and use of EZ LYNK’s defeat device.

U.S. Attorney Audrey Strauss said:  “Emissions controls on cars and trucks protect the public from harmful effects of air pollution.  EZ Lynk has put the public’s health at risk by manufacturing and selling devices intended to disable those emissions controls.  Through our lawsuit, we will prevent Defendants from continuing to sell this product and impose civil penalties to hold them to account.”

EPA Acting Assistant Administrator Larry Starfield stated:  “EZ Lynk refused to cooperate with EPA’s investigation, and all the while continued to sell aftermarket defeat devices that resulted in harmful air pollution.  This is not acceptable and EPA will work diligently with the Department of Justice to stop the illegal activities and ensure that EZ Lynk complies with the Clean Air Act.”

The complaint filed in Manhattan federal court today alleges that for more than four years, Defendants violated the Clean Air Act’s prohibition on defeat devices.  Among other things, the complaint alleges the following:

The Clean Air Act requires motor vehicle manufacturers to design vehicles to meet detailed standards for limiting the emission of harmful air pollutants, which are linked to premature death and cause heart and lung disease, heart attacks, and aggravated asthma, among other serious illnesses.  To achieve these limitations, vehicles contain both hardware components and software that work together to maintain vehicle emissions within legal limits.  The Clean Air Act makes it illegal to manufacture, sell, offer to sell, or cause to be sold any part or component that has a principal effect of defeating emissions controls, if the defendant knew or had reason to know the product is put to this use.

EZ LYNK manufactures and sells a product permitting drivers to “delete” computerized emissions controls in their vehicles, in violation of the Clean Air Act.  Referred to as the “EZ Lynk System,” this product consists of three components: the Auto Agent, which is a physical device that plugs into vehicle computer systems to install software designed to “delete” emissions controls; the EZ Lynk Cloud, which is a cloud computing platform that stores the deletion software; and the Auto Agent App, a smartphone application that connects the Auto Agent to the EZ Lynk Cloud, allowing customers to acquire and install deletion software through their smartphones.  EZ LYNK has sold its product to thousands of drivers across the United States.

EZ LYNK also knows and has reason to know that the principal effect and use of this product is to defeat emission controls.  Among other things, EZ LYNK maintains an online “EZ Lynk Forum” on social media to encourage and assist drivers looking to disable their vehicle emissions controls using the EZ Lynk System.  Hundreds of drivers have visited the EZ Lynk Forum to post their experiences “deleting” emissions controls using the EZ Lynk System.  EZ LYNK representatives have explicitly approved many of the posts, and in some instances have offered technical support to drivers disabling emissions controls.  For example:

• A driver posted, in part, “Finally made the jump and deleted my 14 Ram 2500: Holy hell [] this thing is awesome!  The EZ lynk worked flawlessly, albeit I was a nervous wreck during the tune flash,” adding that “the guys at EZ lynk are doing great work!”  The driver tagged an EZ Lynk representative, who later “loved” the post.
   
• Another driver posted to the EZ Lynk Forum, “Had a few small issues with my ez lynk install.  Got in touch with the tech support.  All issues resolved.  Couldn’t be happier with my ez lynk.  Truck has shown huge improvement with the deletes and new tunes.”  Again, an EZ Lynk representative “loved” the post.

• A driver posted to the EZ Lynk Forum, “Installed ez Lynk on my 14 ram 3500 fully deleted the other day [but] as soon as it loaded” experienced a malfunction.  The driver asked if anyone else had experienced the same problem.  An EZ LYNK representative responded, providing detailed instructions to fix the problem.  The driver then wrote “[p]roblems fixed with the help of EZ Lynk’s Technical Support Representative.”

In fact, some drivers have used the same EZ Lynk Forum maintained by EZ LYNK to urge others to keep quiet about their use of the EZ Lynk System to defeat emissions controls.  For instance, one driver wrote, “If everyone keeps their mouth shut about deleting sooner or later the EPA will calm down.”  Since the EZ Lynk System launched in mid-2016, EZ LYNK has manufactured and/or sold at least tens of thousands of EZ Lynk Systems.

Defendants GINTZ and WOOD own EZ LYNK and control, direct, and manage the marketing and sale of the EZ Lynk System as well as the technical support for the EZ Lynk System.  Defendant PRESTIGE, which is also owned by GINTZ and WOOD, facilitates EZ LYNK’s sale of the EZ Lynk System in the United States by purchasing the Auto Agent devices from EZ Lynk and selling them onward to distributors that sell the devices within the United States.

EZ LYNK’s illegal activity has been compounded by its refusal to provide EPA with basic information about the manufacture, sale, and use of the EZ Lynk System.  The Clean Air Act requires manufacturers like EZ LYNK to provide information that EPA may reasonably require to determine whether the manufacturer’s product complies with the Clean Air Act.  As alleged in the complaint, despite repeated requests, EZ LYNK has refused to provide EPA with much of the requested information about the manufacture, sale, and use of the EZ Lynk System.  EZ LYNK’s efforts to stymie EPA’s investigation also violate the Clean Air Act.

In its complaint, the United States seeks an injunction barring the sale of the EZ Lynk System, the assessment of civil penalties against all Defendants, and other relief.

*                *                *

Ms. Strauss thanked the attorneys in EPA’s Air Enforcement Division and program staff at EPA’s Office of Transportation and Air Quality for their critical work on this case.  Ms. Strauss also thanked Nicole Veilleux, Senior Counsel in the Environment and Natural Resources Division of the U.S. Department of Justice, for her assistance.

This case is being handled by the Environmental Protection Unit of the Office’s Civil Division.  Assistant U.S. Attorneys Mónica Folch and Jennifer Jude are in charge of the case.

Audrey Strauss, the United States Attorney for the Southern District of New York, and Scott Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s (“HHS-OIG”) New York Region, announced today that the civil and criminal healthcare fraud cases against FENG QIN, M.D. (“QIN”), a vascular surgeon, and his medical practice QIN MEDICAL P.C. (“QIN MEDICAL”) have been resolved.  QIN, who practiced in Lower Manhattan and Far Rockaway, Queens, was criminally charged in December 2018 with fraudulently billing Medicare for vascular surgery procedures performed on end-stage renal disease (“ESRD”) patients that were not medically reasonable and necessary or covered under Medicare rules; the United States also filed a civil healthcare fraud complaint against QIN and QIN MEDICAL in December 2018. 

Under the civil settlement approved today by U.S. District Judge Laura Taylor Swain, QIN and QIN MEDICAL agreed to a pay $783,200 to the United States.  The State of New York is expected soon to enter into an additional settlement with defendants in the amount of $16,800, for a total recovery of $800,000.  The amount is based on the Office’s assessment of the defendants’ ability to pay based on the financial information they provided.  As part of the settlement, QIN and QIN MEDICAL admitted and accepted responsibility for conduct alleged by the Government in its civil complaint as further described below.  QIN previously paid $150,000 to settle a prior civil fraud lawsuit filed against him and his previous employer for engaging in fraudulent billing practices during the time period 2010 through 2012.

QIN also entered into a Voluntary Exclusion Agreement with HHS-OIG, which prohibits him from participating in Medicare and other federal healthcare programs for four years.  This is in addition to the more than two years he has been so excluded since his arrest, as a condition of his bail.  The Government has agreed to defer QIN’s criminal prosecution for a period of one year, after which time it will seek to dismiss the charges if QIN abides by the terms of the deferred prosecution agreement.    

Manhattan U.S. Attorney Audrey Strauss said:  “For several years, Dr. Qin performed interventional vascular procedures on patients with end-stage renal disease without any documented clinical justification.  As a repeat offender, Dr. Qin now faces a lengthy suspension from participating in federal healthcare programs and must make a hefty monetary payment.  This Office will continue to hold unscrupulous medical providers accountable when they perform and bill the Government for medically unnecessary procedures.”

HHS-OIG Special Agent in Charge Scott Lampert said:  “By billing Medicare for medically unnecessary procedures, Dr. Qin needlessly compromised patient care and victimized taxpayers.  Our agency will continue to hold medical professionals accountable, while protecting the federal health care programs intended for those that depend on them for critical services.”

According to the indictment and the Government’s civil complaint:

Patients with ESRD who are receiving dialysis may require vascular access surgical procedures, such as fistulagrams, where dye is injected into the patient’s vein or artery to visualize blood flow, and percutaneous transluminal angioplasties, in which wires and balloons are inserted into blood vessels that have narrowed in order to restore blood flow.  However, as Medicare billing guidelines made clear, it is not reasonable and necessary for physicians to bill the program for fistulagrams and angioplasties unless the patient has specific and documented clinical problems, such as significant difficulty receiving dialysis properly. 

The patients at QIN’s medical practice primarily consisted of ESRD patients undergoing dialysis treatment.  During the relevant period, from 2015 to 2016, QIN routinely scheduled patients for fistulagrams and angioplasties three months in advance, and performed fistulagrams and angioplasties on these patients as a matter of routine, regardless of whether there was a justifiable clinical reason to do so.  Furthermore, on multiple occasions he misrepresented the medical conditions of patients in their medical records to make it seem as if they suffered from symptoms that would warrant the procedures when they did not.  QIN MEDICAL then unlawfully billed and received payment from Medicare for these procedures, which were excluded from Medicare coverage, as QIN knew.

As part of the civil settlement, QIN and QIN MEDICAL admit, acknowledge, and accept responsibility for the following conduct:

• QIN often routinely scheduled, and actually saw, ESRD patients approximately every three months, regardless of their medical need.
   
• QIN treated many of his ESRD patients with fistulagrams and angioplasties.  The symptoms documented in the medical records, including the records of the dialysis center and the treating nephrologist, were insufficient to justify these treatments for numerous ESRD patients.
   
• QIN knew that in the absence of a documented clinical justification, Medicare would not pay for fistulagrams or angioplasties.  Nevertheless on numerous occasions, QIN MEDICAL sought and received reimbursement from Medicare for these treatments without the required documented clinical justification. 

The allegations of fraud stated in the civil complaint were first brought to the attention of federal law enforcement by a whistleblower who filed a lawsuit under the False Claims Act.

The criminal case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Jean-David Barnea, Michael Krouse, and Alexander Li are in charge of the criminal prosecution.  The civil case is being handled by the Office’s Civil Frauds Unit, and Assistant United States Attorney Barnea is in charge of the matter.