Southern District of New York

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that FRED ELM, a/k/a “Frederic Elmaleh,” the founder and manager of Elm Tree Investment Advisors LLC (“ETIA”), pled guilty before U.S. District Judge Edgardo Ramos to securities fraud charges stemming from his role in a scheme to defraud investors in multiple investment funds created and controlled by ELM and Ahmad Naqvi, ETIA’s chief operating officer.  Among other illicit activity, ELM and Naqvi fraudulently induced more than 50 investors to invest over $18 million based on the false representation that ELM and Naqvi would invest that money, through the funds, in the shares of privately held technology companies, like Twitter, Alibaba, Uber, and Square, before their initial public offerings (“IPOs”).  Naqvi pled guilty to his role in the scheme before Judge Ramos on May 4, 2020.   

U.S. Attorney Geoffrey S. Berman said:  “Fred Elm, founder and head of Elm Tree Investment Advisors, admitted today to defrauding investors out of more than $18 million by promising big returns from investments in hot tech companies, like Twitter and Uber, before their initial public offerings. In reality, Elm and his co-defendant Ahmed Naqvi lied about their access to pre-IPO investments, and they invested only a portion of the funds in money-losing trades and spent the rest on their own extravagant lifestyles, including a Bentley, a Maserati, and a Range Rover. After fleeing to Canada, Elm has now been brought to justice. He faces serious prison time for his high-flying scheme, which never earned a profit and left his investors high and dry. ”

According to the Superseding Indictment charging ELM and Naqvi, and other filings in the case:

From at least June 2013 through December 2014, ELM and Naqvi engaged in a scheme to defraud investors in funds that ELM and Naqvi created and controlled at ETIA, where ELM was the founder and manager, and Naqvi was the chief operating officer.  ELM and Naqvi raised more than $18 million from over 50 investors in four limited partnerships for which ETIA acted as the fund manager:  Elm Tree Investment Fund, LP; Elm Tree Emerging Growth Fund, LP; Elm Tree ‘e’Conomy Fund, LP; and Elm Tree Motion Opportunity, LP (collectively the “Elm Tree Funds”). 

ELM and Naqvi falsely represented that the Elm Tree Funds used investor capital to purchase shares in privately held technology companies before their IPOs.  These companies included Twitter, Inc., Alibaba Group Holding Limited, Uber Technologies, Inc., Square, Inc., Pinterest, Inc., and GoDaddy Group, Inc.  Moreover, ELM and Naqvi falsely represented that they had access to these pre-IPO shares because of their relationships with leading venture capital firms, such as Kleiner Perkins Caufield & Byers, Benchmark Capital, and Silver Lake Management, L.L.C.  In truth and in fact, ELM and Naqvi did not invest in the pre-IPO shares of these companies and did not have relationships with these venture capital firms.

ELM and Naqvi comingled the approximately $18 million that was invested in the Elm Tree Funds in a single investment account and then invested only a portion of the money, approximately $7.1 million.  At no point did any of the Elm Tree Funds return a profit.  Instead, for example, between January 2014 and November 2014, the Elm Tree Funds lost approximately $3.9 million in trading.

Moreover, of the investor funds that ELM and Naqvi did not lose in securities trading, ELM routinely converted investor funds to his own use in the form of cash withdrawals and to pay personal expenses, including to purchase a multimillion-dollar home, high-end furnishings, and other personal items, such as jewelry, daily living expenses, and luxury automobiles, including a Bentley, a Maserati, and a Range Rover.

The conversion of investors’ funds was contrary to the representations that ELM and Naqvi made to investors concerning their and ETIA’s fees.  ELM and Naqvi falsely represented that they and ETIA would take a two percent annual management fee plus a performance fee of 20 percent of any profits that the Elm Tree Funds earned.  In truth and in fact, ELM converted investor money that far exceeded the two percent management fee.  Moreover, because the Elm Tree Funds never returned a profit, ELM, Naqvi, and ETIA were not entitled to a percentage of any profits.

ELM and Naqvi also used approximately $5.2 million of new investor funds to make payments to earlier investors in a Ponzi-like fashion.  To prevent or forestall redemptions, and continue to raise money to fund their scheme, ELM and Naqvi also generated fictitious account statements and made oral and written misrepresentations that their trading strategies were generating consistently positive returns. 

For example, beginning in mid-2013, ELM and Naqvi began to solicit Victim-1 to invest with ETIA in the Elm Tree Funds.  On June 11, 2013, Naqvi sent Victim-1 a series of emails regarding the Elm Tree Emerging Growth Fund, in which he falsely represented, among other things, that the fund would invest in pre-IPO Twitter shares, and that ELM, Naqvi, and ETIA had “key contacts” with venture capital firms like Kleiner Perkins Caufield & Byers and Benchmark Capital.  ELM and Naqvi subsequently had in-person meetings and telephone calls with Victim-1 about this investment.  On October 9, 2013, Victim-1 invested approximately $52,500 in the Elm Tree Emerging Growth Fund.  Following Twitter’s IPO on November 6, 2013, Twitter’s stock price rose, and Naqvi subsequently told Victim-1 that ELM, Naqvi, and ETIA had used an options strategy to lock in Victim-1’s profits in Twitter.  Because the fund had not invested in pre-IPO Twitter shares, there were no profits to lock in.  Thereafter, ELM and Naqvi sent fraudulent account statements to Victim-1, including one sent on March 7, 2014.  The statement falsely indicated that Victim-1’s investment in the fund was valued at $274,550 (up from $52,500), and that the Elm Tree Emerging Growth Fund was valued at $68,115,855. 

ELM and Naqvi made similar misrepresentations with respect to Victim-1’s subsequent investments in the Elm Tree ‘e’Conomy Fund and Elm Tree Motion Opportunity, falsely indicating that those funds invested in Alibaba, Uber, Square, Pinterest, and GoDaddy, and that Victim-1’s investments were growing.  ELM and Naqvi also falsely represented that the value of the Elm Tree ‘e’Conomy Fund as of December 12, 2014, was $125,484,750 and that the value of Elm Tree Motion Opportunity as of December 18, 2014, was $77,286,220 – falsely claiming that the total value of the Elm Tree Funds was more than $270 million.

ELM was initially arrested in April 2016 and released on bail.  In June 2017, approximately one week before his then-scheduled guilty plea, ELM fled to Canada.  ELM was subsequently arrested in Canada and extradited to the United States in January 2020.  Naqvi, who had been a fugitive since his indictment in 2016, was arrested in Canada and extradited to the United States in November 2019. 

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ELM, 51, pled guilty to one count of securities fraud conspiracy and one count of securities fraud, which carry a maximum sentence of five years and twenty years in prison, respectively.  The charges also carry a maximum fine of $5,000,000, or twice the gross gain or loss from the offenses.  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.  ELM also agreed to forfeit $8,318,840.07.  ELM is scheduled to be sentenced by Judge Ramos on August 7, 2020, at 11:00 a.m.

Mr. Berman praised the work of Homeland Security Investigations and the U.S. Department of Justice’s Office of International Affairs, and thanked the U.S. Securities and Exchange Commission for its assistance.  Mr. Berman also thanked Canadian law enforcement for its support and assistance.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that AHMAD NAQVI, the chief operating officer of Elm Tree Investment Advisors LLC (“ETIA”), pled guilty before U.S. District Judge Edgardo Ramos to securities fraud charges stemming from his role in a scheme to defraud investors in multiple investment funds created and controlled by NAQVI and Fred Elm, a/k/a “Frederic Elmaleh,” the founder and manager.  Among other illicit activity, Elm and NAQVI fraudulently induced more than 50 investors to invest over $18 million based on the false representation that Elm and NAQVI would invest that money, through the funds, in the shares of privately held technology companies, like Twitter, Alibaba, Uber, and Square, before their initial public offerings (“IPOs”).   

U.S. Attorney Geoffrey S. Berman said:  “As he has now admitted in court, Ahmad Naqvi deceived investors with claims that the Elm Tree Funds would generate huge profits from investments in privately-held technology companies.  In fact, the funds never invested in these pre-IPO companies and never returned a profit, and the fraction of investor money actually invested in securities resulted in massive losses.  Now Naqvi awaits sentencing for his crime, and faces the loss of his freedom.”

According to the Superseding Indictment charging Elm and NAQVI, and other filings in the case:

From at least June 2013 through December 2014, Elm and NAQVI engaged in a scheme to defraud investors in funds that Elm and NAQVI created and controlled at ETIA, where Elm was the founder and manager, and NAQVI was the chief operating officer.  Elm and NAQVI raised more than $18 million from over 50 investors in four limited partnerships for which ETIA acted as the fund manager:  Elm Tree Investment Fund, LP; Elm Tree Emerging Growth Fund, LP; Elm Tree ‘e’Conomy Fund, LP; and Elm Tree Motion Opportunity, LP (collectively the “Elm Tree Funds”). 

Elm and NAQVI falsely represented that the Elm Tree Funds used investor capital to purchase shares in privately held technology companies before their IPOs.  These companies included Twitter, Inc., Alibaba Group Holding Limited, Uber Technologies, Inc., Square, Inc., Pinterest, Inc., and GoDaddy Group, Inc.  Moreover, Elm and NAQVI falsely represented that they had access to these pre-IPO shares because of their relationships with leading venture capital firms, such as Kleiner Perkins Caufield & Byers, Benchmark Capital, and Silver Lake Management, L.L.C.  In truth and in fact, Elm and NAQVI did not invest in the pre-IPO shares of these companies and did not have relationships with these venture capital firms.

Elm and NAQVI comingled the approximately $18 million that was invested in the Elm Tree Funds in a single investment account and then invested only a portion of the money, approximately $7.1 million.  At no point did any of the Elm Tree Funds return a profit.  Instead, for example, between January 2014 and November 2014, the Elm Tree Funds lost approximately $3.9 million in trading.

Moreover, of the investor funds that Elm and NAQVI did not lose in securities trading, Elm routinely converted investor funds to his own use in the form of cash withdrawals and to pay personal expenses, including to purchase a multimillion-dollar home, high-end furnishings, and other personal items, such as jewelry, daily living expenses, and luxury automobiles, including a Bentley, a Maserati, and a Range Rover.

The conversion of investors’ funds was contrary to the representations that Elm and NAQVI made to investors concerning their and ETIA’s fees.  Elm and NAQVI falsely represented that they and ETIA would take a two percent annual management fee plus a performance fee of 20 percent of any profits that the Elm Tree Funds earned.  In truth and in fact, Elm converted investor money that far exceeded the two percent management fee.  Moreover, because the Elm Tree Funds never returned a profit, Elm, NAQVI, and ETIA were not entitled to a percentage of any profits.

Elm and NAQVI also used approximately $5.2 million of new investor funds to make payments to earlier investors in a Ponzi-like fashion.  To prevent or forestall redemptions, and continue to raise money to fund their scheme, Elm and NAQVI also generated fictitious account statements and made oral and written misrepresentations that their trading strategies were generating consistently positive returns. 

For example, beginning in mid-2013, Elm and NAQVI began to solicit Victim-1 to invest with ETIA in the Elm Tree Funds.  On June 11, 2013, NAQVI sent Victim-1 a series of emails regarding the Elm Tree Emerging Growth Fund, in which he falsely represented, among other things, that the fund would invest in pre-IPO Twitter shares, and that Elm, NAQVI, and ETIA had “key contacts” with venture capital firms like Kleiner Perkins Caufield & Byers and Benchmark Capital.  Elm and NAQVI subsequently had in-person meetings and telephone calls with Victim-1 about this investment.  On October 9, 2013, Victim-1 invested approximately $52,500 in the Elm Tree Emerging Growth Fund.  Following Twitter’s IPO on November 6, 2013, Twitter’s stock price rose, and NAQVI subsequently told Victim-1 that Elm, NAQVI, and ETIA had used an options strategy to lock in Victim-1’s profits in Twitter.  Because the fund had not invested in pre-IPO Twitter shares, there were no profits to lock in.  Thereafter, Elm and NAQVI sent fraudulent account statements to Victim-1, including one sent on March 7, 2014.  The statement falsely indicated that Victim-1’s investment in the fund was valued at $274,550 (up from $52,500), and that the Elm Tree Emerging Growth Fund was valued at $68,115,855. 

Elm and NAQVI made similar misrepresentations with respect to Victim-1’s subsequent investments in the Elm Tree ‘e’Conomy Fund and Elm Tree Motion Opportunity, falsely indicating that those funds invested in Alibaba, Uber, Square, Pinterest, and GoDaddy, and that Victim-1’s investments were growing.  Elm and NAQVI also falsely represented that the value of the Elm Tree ‘e’Conomy Fund as of December 12, 2014, was $125,484,750 and that the value of Elm Tree Motion Opportunity as of December 18, 2014, was $77,286,220 – falsely claiming that the total value of the Elm Tree Funds was more than $270 million.

NAQVI, who had been a fugitive since his indictment in 2016, was arrested in Canada and extradited to the United States in November 2019.  Elm was initially arrested in April 2016 and released on bail.  In June 2017, approximately one week before his then-scheduled guilty plea, Elm fled to Canada.  Elm was subsequently arrested in Canada and extradited to the United States in January 2020. 

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NAQVI, 51, pled guilty to one count of securities fraud conspiracy, which carries a maximum sentence of five years in prison.  The charge also carries a maximum fine of $250,000, or twice the gross gain or loss from the offenses.  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.  NAQVI is scheduled to be sentenced by Judge Ramos on June 29, 2020, at 10:30 a.m.

Mr. Berman praised the work of Homeland Security Investigations and the U.S. Department of Justice’s Office of International Affairs, and thanked the U.S. Securities and Exchange Commission for its assistance.  Mr. Berman also thanked Canadian law enforcement for its support and assistance.

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

The allegations contained in the Superseding Indictment against Elm are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Jeffrey A. Rosen, the Deputy Attorney General of the United States, Richard E. Zuckerman, the Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division, Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Don Fort, the Chief of the Internal Revenue Service, Criminal Investigation (IRS-CI), announced today the guilty plea of Bank Hapoalim (Switzerland) Ltd. and filing of criminal charges against Bank Hapoalim B.M. for conspiring with U.S. taxpayers and others to hide more than $7.6 billion in more than 5,500 secret Swiss and Israeli bank accounts and the income generated in these accounts from the Internal Revenue Service (the IRS).  BHS’s Chief Executive Officer appeared on behalf of the bank to enter the guilty plea before U.S. District Judge Mary Kay Vyskocil.

As part of today’s resolutions, along with resolutions entered into with state and federal partners, Bank Hapoalim B.M. (BHBM), Israel’s largest bank, and Bank Hapoalim (Switzerland) Ltd. (BHS), its Swiss subsidiary, agreed to pay approximately $874.27 million to the U.S. Treasury, the Federal Reserve, and the New York State Department of Financial Services. Today’s resolution is the second-largest recovery by the Department of Justice in connection with its investigations since 2008 into facilitation of offshore U.S. tax evasion by foreign banks.

“Today’s resolutions and payment of $874 million make clear that tax evasion cannot be taken lightly,” said Deputy Attorney General Jeffrey A. Rosen. “A fair tax system requires even-handed compliance, and honest conduct by all participants in the system.”

“The Department of Justice continues to aggressively prosecute banks and other financial institutions that help U.S. taxpayers conceal their income and assets in offshore bank accounts,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman.  “Today, Bank Hapoalim is being held accountable for its conduct – it has admitted to its crimes and will surrender all fees it earned, repay the United States for lost tax revenue, and pay a substantial fine.”

“Israel’s largest bank, Bank Hapoalim, and its Swiss subsidiary have admitted not only failing to prevent but actively assisting U.S. customers to set up secret accounts, to shelter assets and income, and to evade taxes,” said U.S. Attorney Geoffrey S. Berman of the Southern District of New York.  “The combined payment approaching $1 billion reflects the magnitude of the tax evasion by the Bank’s U.S. customers, the size of the fees the Bank collected to provide this illegal service, and the gravity of the illegal conduct.”

“There is no excuse for a foreign financial institution to unlawfully assist wealthy Americans in flouting their responsibilities to pay their taxes,” said IRS Criminal Investigation Chief Don Fort. “With today’s guilty plea, Bank Hapoalim is taking responsibility for their role in deliberately breaking the law and undermining the integrity of this nation’s tax system. Offshore tax evasion is a top priority for IRS Criminal Investigation and we are wholeheartedly committed to bringing offenders to justice. Today’s resolution serves as proof that financial institutions engaging in tax fraud face dire criminal and financial consequences for their behavior.”

“The vast majority of New Yorkers follow the rules and pay their taxes, thereby contributing their fair share towards critical state and federal government operations and public services,” said Superintendent Linda A. Lacewell of New York State Department of Financial Services. “There are some, however, who went to great lengths to avoid paying their share, and Bank Hapoalim offered a whole array of services to U.S. citizens, including New Yorkers, that knowingly facilitated their tax evasion. DFS will not tolerate such behavior from banks that operate in the State of New York. DFS thanks our federal partners at the U.S. Department of Justice, U.S. Department of the Treasury, and the Federal Reserve Board for their assistance and coordination during this investigation.”

Today’s resolutions include agreements with BHBM and BHS (collectively, the “Bank”) under which the Bank agreed to accept responsibility for its conduct by stipulating to the accuracy of extensive Statements of Facts. BHBM further agreed to refrain from all future criminal conduct, implement remedial measures, and cooperate fully with further investigations into hidden bank accounts. Assuming BHBM’s continued compliance with its agreement, the Government has agreed to defer prosecution of BHBM for a period of three years, after which time the Government will seek to dismiss the charge against BHBM. 

According to documents filed today in Manhattan federal court:

BHBM is Israel’s largest bank and operates primarily as a retail bank with approximately 250 branches throughout Israel and more than 2.5 million accounts. In addition to retail banking services, BHBM offered private banking services for onshore and offshore customers through its retail branches and its Global Private Banking Center. BHBM also wholly owned Poalim Trust Services Ltd., which provided trust formation and management services. Outside Israel, BHBM owned BHS, a Swiss subsidiary that provided private banking. BHS is headquartered in Zurich and at times during the prosecution period had branches in Geneva, Luxembourg, and Singapore. BHBM also had branches in New York, Miami, the Cayman Islands, the United Kingdom, and Jersey.

From at least in or about 2002, and continuing until at least in or about 2014, the Bank conspired with employees, U.S. customers, and others to: (1) defraud the United States with respect to taxes; (2) file false federal tax returns; and (3) commit tax evasion. Employees of BHBM and BHS assisted U.S. customers in concealing their ownership and control of assets and funds held at the Bank, which enabled those U.S. customers to evade their U.S. tax obligations, by engaging in the following conduct:

• Assisting U.S. customers with opening and maintaining accounts in the names of pseudonyms, code names, trust accounts, and offshore nominee entities;
• Opening customer accounts for known U.S. customers using non-U.S. forms of identification;
• Enabling U.S. taxpayers to evade U.S reporting requirements on securities’ earnings in violation of the Bank’s agreements with the IRS;
• Providing “hold mail” services for a fee, avoiding any correspondence regarding the undeclared account being sent to the U.S.;
• Offering back-to-back loans for U.S. taxpayers to enable them to access funds in the United States that were held in offshore accounts at the Bank in Switzerland and Israel; and
• Processing wire transfers or issuing checks in amounts of less than $10,000 that were drawn on the accounts of U.S. taxpayers or entities in order to avoid triggering scrutiny.

At least four senior executives of the Bank, including two former members of BHS’s board of directors, were directly involved in aiding and abetting tax evasion of U.S. taxpayers.

Under today’s resolutions, the Bank is required to cooperate fully with ongoing investigations and affirmatively disclose any information it may later uncover regarding U.S.-related accounts. The Bank is also required to disclose information consistent with the Department of Justice’s Swiss Bank Program relating to accounts closed between Jan. 1, 2009, and Dec. 31, 2019. The agreements provide no protection from criminal or civil prosecution for any individuals.

BHBM will pay a total of $214.38 million, which has three parts. First, BHBM has agreed to pay $77,877,099 in restitution to the IRS, which represents the unpaid taxes resulting from BHBM’s participation in the conspiracy. Second, BHBM has agreed to forfeit $35,696,929 to the United States, which represents gross fees (not profits) that the bank earned on its undeclared accounts between 2002 and 2014. Finally, BHBM has agreed to pay a penalty of $100,811,585.

BHS will pay a total of $402.53 million, which also has three parts. First, BHS has agreed to pay $138,908,073 in restitution to the IRS, which represents the unpaid taxes resulting from BHS’s participation in the conspiracy. Second, BHS has agreed to forfeit $124,628,449 in gross fees to the United States.  Finally, BHS has agreed to pay a fine of $138,998,399. These payments were approved by Judge Vyskocil today in connection with BHS’s plea and sentencing.

Both the penalty and fine amounts take into consideration that the Bank, after initially providing deficient cooperation through an inadequate internal investigation and the provision of incomplete and inaccurate information and data to the Government, thereafter conducted a thorough internal investigation, provided client-identifying information, and cooperated in ongoing investigations and prosecutions. The Bank further implemented remedial measures to protect against the use of its services for tax evasion in the future.

The Board of Governors of the Federal Reserve System is also announcing today that it has reached a resolution with BHBM, by which BHBM has agreed to a consent order, certain remedial steps to ensure its compliance with U.S. law in its ongoing operations, and a civil monetary penalty of $37.35 million. Additionally, the New York State Department of Financial Services is announcing a similar resolution by which BHBM has agreed to a cease and desist order and a monetary penalty of $220 million.

This agreement marks the third time an Israeli bank has admitted to similar criminal conduct. The Bank Leumi Group (in December 2014) and Mizrahi-Tefahot Bank Ltd. (in March 2019) entered into DPAs with the Department of Justice admitting that they conspired with U.S. taxpayers to prepare and present false tax returns to the IRS by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world.

Deputy Attorney General Rosen, Principal Deputy Assistant Attorney General Zuckerman, U.S. Attorney Berman, and Chief Fort commended special agents of IRS-Criminal Investigation, who investigated this case, and Assistant Chief Todd A. Ellinwood and Senior Litigation Counsel Nanette Davis of the Tax Division, and Assistant U.S. Attorneys Sagar K. Ravi and Timothy V. Capozzi of the United States Attorney’s Office for the Southern District of New York, who prosecuted this case. Principal Deputy Assistant Attorney General Zuckerman also thanked Assistant Chief Kathleen Barry and former Trial Attorney Timothy Russo of the Tax Division for their substantial assistance. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Jeffrey A. Rosen, the Deputy Attorney General of the United States, Richard E. Zuckerman, the Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division, and Don Fort, the Chief of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the guilty plea of Bank Hapoalim (Switzerland) Ltd. and entry of criminal charges against Bank Hapoalim B.M. for conspiring with U.S. taxpayers and others to hide more than $7.6 billion in more than 5,500 secret Swiss and Israeli bank accounts and the income generated in these accounts from the Internal Revenue Service (the “IRS”). 

As part of today’s resolutions, along with resolutions entered into with state and federal partners, Bank Hapoalim B.M. (“BHBM”), Israel’s largest bank, and its Swiss subsidiary Bank Hapoalim (Switzerland) Ltd. (“BHS”) (collectively, the “Bank”), agreed to pay approximately $874.27 million to the U.S. Treasury, the Federal Reserve, and the New York State Department of Financial Services.  Today’s resolution is the second-largest recovery by the Department of Justice in connection with its investigations since 2008 into facilitation of offshore U.S. tax evasion by foreign banks.  Officers of BHBM and BHS appeared on behalf of the Bank to enter the guilty plea before U.S. District Judge Mary Kay Vyskocil.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Israel’s largest bank, Bank Hapoalim, and its Swiss subsidiary have admitted not only failing to prevent but actively assisting U.S. customers to set up secret accounts, to shelter assets and income, and to evade taxes.  The combined payment approaching $1 billion reflects the magnitude of the tax evasion by the Bank’s U.S. customers, the size of the fees the Bank collected to provide this illegal service, and the gravity of the illegal conduct.”

Deputy Attorney General Jeffrey A. Rosen said:  “Today’s resolutions and payment of $874 million make clear that tax evasion cannot be taken lightly.  A fair tax system requires even-handed compliance, and honest conduct by all participants in the system.”

Principal Deputy Assistant Attorney General Richard E. Zuckerman said:  “The Department of Justice continues to aggressively prosecute banks and other financial institutions that help U.S. taxpayers conceal their income and assets in offshore bank accounts.  Today, Bank Hapoalim is being held accountable for its conduct – it has admitted to its crimes and will surrender all fees it earned, repay the United States for lost tax revenue, and pay a substantial fine.”

IRS-CI Chief Don Fort said:  “There is no excuse for a foreign financial institution to unlawfully assist wealthy Americans in flouting their responsibilities to pay their taxes. With today’s guilty plea, Bank Hapoalim is taking responsibility for their role in deliberately breaking the law and undermining the integrity of this nation’s tax system.  Offshore tax evasion is a top priority for IRS Criminal Investigation and we are wholeheartedly committed to bringing offenders to justice.  Today’s resolution serves as proof that financial institutions engaging in tax fraud face dire criminal and financial consequences for their behavior.”

Today’s resolutions include agreements with BHBM and BHS under which the Bank agreed to accept responsibility for its conduct by stipulating to the accuracy of extensive Statements of Facts.  BHBM further agreed to refrain from all future criminal conduct, implement remedial measures, and cooperate fully with further investigations into hidden bank accounts.  Assuming BHBM’s continued compliance with its agreement, the Government has agreed to defer prosecution of BHBM for a period of three years, after which time the Government will seek to dismiss the charge against BHBM. 

According to documents filed today in Manhattan federal court:

BHBM is Israel’s largest bank and operates primarily as a retail bank with approximately 250 branches throughout Israel and more than 2.5 million accounts.  In addition to retail banking services, BHBM offered private banking services for onshore and offshore customers through its retail branches and its Global Private Banking Center.  BHBM also wholly owned Poalim Trust Services Ltd., which provided trust formation and management services.  Outside Israel, BHBM owned BHS, a Swiss subsidiary that provided private banking.  BHS is headquartered in Zurich and at times during the prosecution period had branches in Geneva, Luxembourg, and Singapore.  BHBM also had branches in New York, Miami, the Cayman Islands, the United Kingdom, and Jersey.

From at least in or about 2002, and continuing until at least in or about 2014, the Bank conspired with employees, U.S. customers, and others to:  (1) defraud the United States with respect to taxes; (2) file false federal tax returns; and (3) commit tax evasion.  Employees of BHBM and BHS assisted U.S. customers in concealing their ownership and control of assets and funds held at the Bank, which enabled those U.S. customers to evade their U.S. tax obligations, by engaging in the following conduct:

·          Assisting U.S. customers with opening and maintaining accounts in the names of pseudonyms, code names, trust accounts, and offshore nominee entities;

·          Opening customer accounts for known U.S. customers using non-U.S. forms of identification;

·          Enabling U.S. taxpayers to evade U.S reporting requirements on securities’ earnings in violation of the Bank’s agreements with the IRS;

·          Providing “hold mail” services for a fee, avoiding any correspondence regarding the undeclared account being sent to the U.S.;

·          Offering back-to-back loans for U.S. taxpayers to enable them to access funds in the United States that were held in offshore accounts at the Bank in Switzerland and Israel; and

·          Processing wire transfers or issuing checks in amounts of less than $10,000 that were drawn on the accounts of U.S. taxpayers or entities in order to avoid triggering scrutiny.

At least four senior executives of the Bank, including two former members of BHS’s board of directors, were directly involved in aiding and abetting tax evasion of U.S. taxpayers.

Under today’s resolutions, the Bank is required to cooperate fully with ongoing investigations and affirmatively disclose any information it may later uncover regarding U.S.-related accounts.  The Bank is also required to disclose information consistent with the Department of Justice’s Swiss Bank Program relating to accounts closed between Jan. 1, 2009, and Dec. 31, 2019.  The agreements provide no protection from criminal or civil prosecution for any individuals.

BHBM will pay a total of $214.38 million, which has three parts.  First, BHBM has agreed to pay $77,877,099 in restitution to the IRS, which represents the unpaid taxes resulting from BHBM’s participation in the conspiracy.  Second, BHBM has agreed to forfeit $35,696,929 to the United States, which represents gross fees (not profits) that the bank earned on its undeclared accounts between 2002 and 2014.  Finally, BHBM has agreed to pay a penalty of $100,811,585.

BHS will pay a total of $402.53 million, which also has three parts.  First, BHS has agreed to pay $138,908,073 in restitution to the IRS, which represents the unpaid taxes resulting from BHS’s participation in the conspiracy.  Second, BHS has agreed to forfeit $124,628,449 in gross fees to the United States.  Finally, BHS has agreed to pay a fine of $138,998,399.  These payments were approved by Judge Vyskocil today in connection with BHS’s plea and sentencing.

Both the penalty and fine amounts take into consideration that the Bank, after initially providing deficient cooperation through an inadequate internal investigation and the provision of incomplete and inaccurate information and data to the Government, thereafter conducted a thorough internal investigation, provided client-identifying information, and cooperated in ongoing investigations and prosecutions.  The Bank further implemented remedial measures to protect against the use of its services for tax evasion in the future.

The Board of Governors of the Federal Reserve System is also announcing today that it has reached a resolution with BHBM, by which BHBM has agreed to a cease and desist order, certain remedial steps to ensure its compliance with U.S. law in its ongoing operations, and a civil monetary penalty of $37.35 million.  Additionally, the New York State Department of Financial Services is announcing a similar resolution by which BHBM has agreed to a consent order and a monetary penalty of $220 million.

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Mr. Berman praised the outstanding investigative work of the special agents of IRS-Criminal Investigation, and thanked the Justice Department’s Tax Division for their partnership on this case.

This prosecution is being handled by the Tax Division and the Complex Frauds and Cybercrime Unit of the United States Attorney’s Office for the Southern District of New York.  Assistant Chief Todd A. Ellinwood and Senior Litigation Counsel Nanette Davis of the Tax Division, and Assistant U.S. Attorneys Sagar K. Ravi and Timothy V. Capozzi of the United States Attorney’s Office for the Southern District of New York, are in charge of the prosecution.  Principal Deputy Assistant Attorney General Zuckerman also thanked Assistant Chief Kathleen Barry and former Trial Attorney Timothy Russo of the Tax Division for their substantial assistance. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Wendy Woolcock, Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that JUAN CARLOS BONILLA VALLADARES, a/k/a “El Tigre,” was charged in Manhattan federal court with conspiring to import cocaine into the United States, and related weapons offenses involving the use and possession of machineguns and destructive devices. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Juan Carlos Bonilla Valladares, the former chief of the Honduran National Police, allegedly abused his positions in Honduran law enforcement to flout the law and play a key role in a violent international drug trafficking conspiracy.  As alleged, on behalf of convicted former Honduran congressman Tony Hernandez and his brother the president, Bonilla Valladares oversaw the transshipment of multi-ton loads of cocaine bound for the U.S., used machineguns and other weaponry to accomplish that, and participated in extreme violence, including the murder of a rival trafficker, to further the conspiracy. Now Bonilla Valladares has been marked as an outlaw and charged with crimes that could send him to a U.S. prison for life.”

DEA Special Agent in Charge Wendy Woolcock said:  “Juan Carlos Bonilla-Valladares allegedly used his high ranking position to influence those working for him and violently protect the politically connected drug traffickers who would smuggle cocaine destined for the United States.  As alleged, this was a blatant and horrific violation of the oath taken by Bonilla-Valladares to protect the citizens of Honduras.  The filing of these charges is another positive action taken by the United States to bring corrupt officials to justice.”

According to the allegations contained in the Complaint charging BONILLA VALLADARES, evidence presented at the October 2019 trial of Juan Antonio Hernandez Alvarado in the Southern District of New York, and statements in open court during the prosecution of Hernandez Alvarado[1]:

Between approximately 2003 and 2020, multiple drug trafficking organizations in Honduras and elsewhere worked together, and with support from certain prominent public and private individuals, including Honduran politicians and law enforcement officials, to receive multi-ton loads of cocaine sent to Honduras from, among other places, Colombia and Venezuela via air and maritime routes, and to transport the drugs westward in Honduras toward the border with Guatemala and eventually to the United States.  For protection from law enforcement interference, and in order to facilitate the safe passage through Honduras of multi-ton loads of cocaine, drug traffickers paid bribes to public officials, including certain presidents, members of the National Congress of Honduras, and personnel from the Honduran National Police, including BONILLA VALLADARES.  For example, following an October 2019 trial in the Southern District of New York, former Honduran congressman Juan Antonio Hernandez Alvarado was convicted of drug trafficking, weapons, and false statements charges related to his role in the conspiracy described in the charges against BONILLA VALLADARES.  Hernandez Alvarado is scheduled to be sentenced by U.S. District Judge P. Kevin Castel on June 29, 2020. 

BONILLA VALLADARES was a member of the Honduran National Police between approximately 1985 and approximately 2016.  During his tenure, he held high-ranking positions, including Regional Police Chief with authority over locations in western Honduras that were strategically important to drug traffickers, and Chief of the Honduran National Police for all of Honduras between approximately 2012 and approximately 2013.  BONILLA VALLADARES corruptly exploited these official positions to facilitate cocaine trafficking, and used violence, including murder, to protect the particular cell of politically connected drug traffickers he aligned with, including Hernandez Alvarado and at least one of Hernandez Alvarado’s brothers, who is a former Honduran congressman and the current president of Honduras referred to in the Complaint charging BONILLA VALLADARES as “CC-4.”  For example, in exchange for bribes paid in drug proceeds, BONILLA VALLADARES directed members of the Honduran National Police, who were armed with machineguns, to let cocaine shipments pass through police checkpoints without being inspected or seized.  BONILLA VALLADARES, in coordination with Hernandez Alvarado and others, also provided members of their conspiracy with sensitive law enforcement information to facilitate cocaine shipments, including information regarding aerial and maritime interdiction operations.

In or about 2010, Hernandez Alvarado told a cooperating witness (“CW-1”) that Hernandez Alvarado and CC-4 helped BONILLA VALLADARES advance his position within the Honduran National Police, and that BONILLA VALLADARES protected their drug trafficking activities in return.  Hernandez Alvarado also told CW-1 that BONILLA VALLADARES was very violent, and that Hernandez Alvarado and CC-4 trusted BONILLA VALLADARES with special assignments, including murder.

For example, in or about July 2011, BONILLA VALLADARES participated in the murder of a rival drug trafficker at the request of Hernandez Alvarado and others because the rival trafficker had attempted to prevent Hernandez Alvarado and other members of the conspiracy from transporting cocaine through a region of western Honduras near the border with Guatemala.  Claiming to investigate the murder at the time, BONILLA VALLADARES reportedly told a member of the media, in substance, that the murder was a well planned surprise attack that had been carried out efficiently and that the perpetrators had cleaned the murder scene thoroughly.  BONILLA VALLADARES reportedly added that the perpetrators of the murder had used 40-millimeter grenade launchers, M-16 assault rifles, and Galil assault rifles.  The latter two types of weapons were issued by the Honduran government to some members of the Honduran National Police.

*                      *                     *

The Complaint charges BONILLA VALLADARES, 60, with: (1) conspiring to import cocaine into the United States, (2) using and carrying machine guns and destructive devices during and in relation to, and possessing machine guns and destructive devices in furtherance of, the cocaine importation conspiracy; and (3) conspiring to use and carry machine guns and destructive devices during and in relation to, and to possess machine guns and destructive devices in furtherance of, the cocaine importation conspiracy.  If convicted, BONILLA VALLADARES faces a mandatory minimum sentence of 10 years in prison and a maximum term of life in prison on Count One, a mandatory minimum sentence of 30 years in prison and a maximum term of life in prison on Count Two, and a maximum term of life in prison on Count Three. 

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

Mr. Berman praised the outstanding investigative work of the DEA’s Special Operations Division Bilateral Investigations Unit and Strike Force.

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

The charges in the Complaint are merely accusations, and BONILLA VALLADARES 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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that TORRIE JOHNSON was sentenced today in Manhattan federal court to 78 months in prison for trafficking 25 firearms from South Carolina into New York City.  In May 2019, JOHNSON was arrested, charged, and detained.  In January 2020, JOHNSON pled guilty to one count of firearms trafficking before United States District Judge Naomi Reice Buchwald, who also imposed the sentence.

U.S. Attorney Geoffrey S. Berman said:  “Torrie Johnson illegally sold more than two dozen firearms in New York City without regard for where they ended up or how they would be used.  Thanks to the work of the ATF and the NYPD, the guns were taken off the street, and now Torrie Johnson is headed to prison.”

According to the allegations set forth in the Complaint, the Indictment, and the Superseding Information filed against JOHNSON in Manhattan federal court, as well as statements made in public court filings and proceedings, including JOHNSON’s sentencing hearing:

On at least five occasions between January 23, 2019, and May 9, 2019, JOHNSON sold firearms to an undercover New York City Police Department (“NYPD”) detective (the “UC”).  In total, JOHNSON sold 25 firearms to the UC in Manhattan and the Bronx, including a variety of 9 millimeter, .32, .38, .40, .45, and .380 caliber pistols and revolvers, as well as hundreds of rounds of assorted ammunition.

JOHNSON purchased the firearms in South Carolina, and transported them to New York City for the purpose of selling them here.  On at least two occasions, the UC specifically told JOHNSON that the UC was planning to transport at least some of the firearms that JOHNSON had sold to the UC to a foreign country, and resell them there for a profit.  JOHNSON told the UC that he was attempting to obtain for sale to the UC a Century Arms Mini Draco AK-47 semi‑automatic pistol.

In addition to his prison term, JOHNSON, 42, of Sumter, South Carolina, was sentenced to three years of supervised release.

Mr. Berman praised the outstanding investigative work of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the NYPD, and the Joint Firearms Task Force.

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Benjamin Woodside Schrier is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Jeffrey E. Peterson, the Special Agent-in-Charge of the Anchorage, Alaska, Field Office of the Federal Bureau of Investigation (“FBI”), announced criminal charges against Industrial Bank of Korea (“IBK” or the “Bank”) consisting of a one-count felony information charging IBK with violating the Bank Secrecy Act (the “BSA”) by willfully failing to establish, implement, and maintain an adequate anti-money laundering (“AML”) program at IBK’s New York branch (“IBKNY”), a failure that permitted the processing of more than $1 billion in transactions in violation of the International Emergency Economic Powers Act (“IEEPA”).  The case is assigned to United States District Judge Denise L. Cote. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As they have admitted today, the Industrial Bank of Korea and its New York branch enabled years-long access to and exploitation of the U.S. banking system for prohibited transactions.  As detailed in an extensive Statement of Facts, IBK failed to institute the effective anti-money laundering program repeatedly requested by its own New York-based compliance officer.  As a result, IBKNY failed to detect and report $10 million in illegal U.S. dollar payments from Korean entities to Iranian ones.  Nor did IBK report the balance of the $1 billion of such sanctioned transactions between those parties.  Banks conducting business in the U.S. have a responsibility to ensure that they establish safeguards against the exploitation of the banking system by sanctioned entities that foster, promote, or engage in terrorism.  This Office remains committed to enforcing the law against banks that willfully fail to do so.”

FBI Anchorage Special Agent-in-Charge Jeffrey E. Peterson said:  “Today’s forfeiture is another important step in the FBI’s investigation of the Industrial Bank of Korea’s illegal movement of millions of dollars through the U.S. financial system on behalf of sanctioned Iranian entities. The FBI remains committed to protecting and upholding the integrity of the American financial system and ensuring global banking institutions adhere to U.S. laws, including sanctions against potentially hostile countries.”

Mr. Berman also announced an agreement (the “Agreement”) under which IBK agreed to accept responsibility for its conduct by stipulating to the accuracy of an extensive Statement of Facts, pay penalties totaling $86 million to prosecutors and regulators, refrain from all future criminal conduct, and implement remedial measures as required by its regulators.  Assuming IBK’s continued compliance with the Agreement, the Government has agreed to defer prosecution for a period of two years, after which time the Government will seek to dismiss the charges. 

The federal penalty shall be collected through IBK’s forfeiture to the United States of $51 million in a civil forfeiture action also filed today.  Of that amount, one half shall be transferred to the United States Victims of State Sponsored Terrorism Fund, pursuant to the Justice for United States Victims of State Sponsored Terrorism Act.  In addition, IBK has reached a separate agreement with the New York State Department of Financial Services (“DFS”) covering various regulatory violations, under which it shall pay an additional $35 million penalty.

The Government entered into this resolution due, in part, to IBK’s acceptance and acknowledgement of responsibility under the laws of the United States for its conduct, as exhibited by its undertaking of a thorough internal investigation and transactional analysis, providing frequent and regular updates to the U.S. Attorney’s Office, collecting and producing evidence located in other countries to the full extent permitted under applicable laws and regulations, and making employees located in other countries available for interviews in the United States.  These factors and IBK’s willingness to enter into the commitments set forth in the Agreement, along with all other relevant factors and considerations, collectively weighed in favor of deferral of prosecution, and outweighed in this particular case IBK’s failure to self-report the full extent of its involvement in processing transactions that violated United States sanctions laws, failure to preserve certain electronic evidence relevant to those transactions, and failure to remediate fully and promptly the deficiencies in its compliance programs, as described below.

According to the documents filed today in Manhattan federal court:

IBK and IBKNY’s Failure to Maintain an Adequate AML Program

From at least in or about 2011, and continuing until at least in or about 2014, IBK and IBKNY violated United States law by willfully failing to establish, implement, and maintain an adequate AML program at IBKNY.  Among other things, despite requests and admonitions from regulators and IBKNY’s own compliance officer (the “Compliance Officer”), IBK and IBKNY failed to provide the resources, staffing, and training necessary to maintain an adequate AML program by declining to take steps to implement an automated transaction review program or to provide the Compliance Officer with any support staff or assistance.  This failure permitted, among other things, the processing through IBKNY and other U.S. financial institutions of approximately $1 billion in transactions on behalf of one or more IBK customers that violated IEEPA.

From at least 2006 until approximately January 2013, IBKNY used a manual process for reviewing transactions processed by the branch.  By at least early 2010, both outside regulators and the Compliance Officer had come to view the manual review as insufficient and flagged the need to enhance the branch’s transaction monitoring system with additional resources.  In 2010 and 2011, the Compliance Officer made repeated requests, including to IBKNY’s branch manager and to IBK’s Compliance Committee for an automated transaction review system, at one point noting that the “current [manual review] process is manually intensive, excessively time consuming to complete and prone to error, thereby exposing IBKNY to significant Bank Regulatory Sanctions.” 

In 2010 and 2011, the Compliance Officer was the only compliance employee at IBKNY.  During the same time period when the Compliance Officer was documenting the deficiencies in the IBKNY transaction review program, the Compliance Officer also made “a formal request for one additional IBKNY professional compliance staff” member.  In response, IBKNY senior leadership, including IBKNY’s branch manager, first proposed assigning bank interns to assist the Compliance Officer, and ultimately assigned one of IBKNY’s IT employees to assist the Compliance Officer on a part-time basis while still maintaining responsibility for IT work.  That employee, who had limited English language ability, had no experience in compliance and was of limited use to the Compliance Officer.

In March 2011, the Compliance Officer wrote another memo, in which he highlighted the significant problems caused by the continued need to engage in manual review of all transactions, adding that he had fallen so far behind at that point that “it would take approximately six months to get caught up enough to meet regulatory expectations.”  The Compliance Officer thus wrote that “it is imperative that IBKNY immediately recruit additional experienced AML/BSA resources” and recommended that, given the delay in starting the automated review of transactions, IBKNY hire additional experienced BSA/AML staff.  No meaningful action was taken on the Compliance Officer’s request for additional personnel.  Rather, the Branch Manager agreed to authorize overtime for the Compliance Officer and the IT employee assisting him so that they could devote extra hours to the manual review process. 

Due to the lack of an automated screening program and the lack of sufficient, adequately trained compliance staff to engage in the manual review process, the Compliance Officer fell months behind in his review of transactions being processed on behalf of IBK through IBKNY.  As a result, IBKNY did not detect or flag significant suspicious transactions that were processed through the branch until months after those transactions had been completed. 

IEEPA-Violating Transactions by Kenneth Zong and His Co-Conspirators

In particular, IBKNY and IBK failed to promptly identify a series of transactions that violated the United States’ economic sanctions against Iran (the “Zong Transactions”):  From January 2011 until July 2011, Kenneth Zong,[1] an American citizen, and various primarily Iranian co-conspirators exploited bank accounts that had been established at IBK and at another bank to permit certain forms of trade between Korea-based entities and Iran (the “CBI Won Accounts”), to transfer U.S. Dollars (“USD”) unlawfully to Iranian-controlled entities.  In order to evade U.S. sanctions, Zong and his co-conspirators set up shell companies in Korea, Iran, and elsewhere, which engaged in sham trade transactions and submitted fictitious documentation to Korean banks, including IBK, in order to facilitate the transfer of Iranian funds from the CBI Won Accounts to Korean entities’ accounts, the conversion of the funds into USD, and the subsequent transfer of USD from those entities through U.S. financial institutions to other accounts controlled by Zong and his co-conspirators and/or for the benefit of Zong and his co-conspirators.

IBKNY did not review and identify the Zong Transactions as unlawful until more than five months after they began to be processed through IBK, after IBK had already processed more than $1 billion worth of such transactions.

IBK and IBKNY’s Continued Failure to Implement an Adequate AML Program  

Shortly after the Compliance Officer flagged the Zong Transactions, he again alerted IBK’s management to the dire state of IBKNY’s AML program, noting in a memo to senior leadership at IBK’s Head Office that:

[C]urrently the branch AML monitoring program is behind 8 monthly BSA reviews due to insufficient resources.  Branch management has refused to accept my repeated recommendation to increase resources. . . .  Regulation H of the Federal Reserve mandates a branch have a BSA program that includes an effective BSA review process with sufficient resources to be able to detect and report suspicious activity within a reasonable time frame.  Under these requirements, the branch is deficient in both areas.

Nevertheless, IBKNY did not take immediate steps to remedy these deficiencies.  While IBK initiated a process to select a vendor to install an automated system in August 2011, the system did not become operational for another 18 months.  Moreover, while the system commenced operation in January 2013, it was not validated by IBKNY’s external auditor until 2014.  Nor did IBKNY hire even a second full-time compliance employee until October 2014. 

Even after these fundamental improvements were made, IBK did not fully remediate IBKNY’s broader BSA/AML deficiencies for years, even after entering into a Written Agreement with their primary regulators to correct such deficiencies in February 2016.

IBK’s Failure to Disclose Its Wrongdoing in a Timely Manner

While IBKNY filed a suspicious activity report regarding the subset of Zong’s transactions that had been processed through IBKNY (approximately $10 million worth of transactions) and made a disclosure regarding those transactions to the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) in August 2011, IBK never self-reported to OFAC its involvement in the remaining $990 million worth of Zong’s illegal transactions.  Similarly, IBK did not self-disclose its willful violations of the Bank Secrecy Act prior to the Government’s investigation.

*                *                *

Mr. Berman praised the outstanding investigative work of the Anchorage Field Office of the FBI.  He also thanked the United States Attorney’s Office for the District of Alaska, the Federal Reserve Bank of New York, and the New York State Department of Financial Services for their assistance with this matter.  The Office of the New York State Attorney General also conducted its own investigation alongside the United States Attorney’s Office for the Southern District of New York on this investigation.

The prosecution is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Edward B. Diskant, Benet J. Kearney, and Alexander Wilson are in charge of the prosecution. 

[1] On or about December 14, 2016, Zong was indicted in the District of Alaska and charged with violations of IEEPA and money laundering offenses.  The entirety of the text of that indictment and the description of the indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), announced today that the Madoff Victim Fund established by the Department of Justice began its fifth distribution to victims of funds forfeited to the United States Government in connection with the Bernard L. Madoff Investment Securities LLC (“BLMIS”) fraud scheme.  The distribution will include $378.5 million in additional funds, bringing the total distributed to date to approximately $2.7 billion.  The funds will be sent to more than 26,000 victims worldwide, the fifth payment to victims that will bring their total recovery from all sources of compensation to 73.65 % of their losses.  The Madoff Victim Fund will ultimately return to victims more than $4 billion in assets that have been recovered as compensation for losses suffered by the collapse of BLMIS, following the largest fraud in history.  Another $5 billion in assets recovered by the U.S. Attorney’s Office are being separately paid to Madoff victims through the BLMIS Customer Fund administered by the Securities Investor Protection Act Trustee.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “This Office continues its efforts to seek justice for victims of history’s largest Ponzi scheme.  Today’s additional payment of more than $378 million by this Office and the U.S. Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section represents the fifth in an on-going series of distributions that will leave victims with compensation for more than 73 percent of their losses.  But our work is not yet finished, and this extraordinary level of recovery represents this Office’s ongoing and tireless commitment to compensating the victims who suffered as a result of Madoff’s predatory criminal scheme.”

Assistant Attorney General Brian A. Benczkowski said:  “It is entirely fitting during this Crime Victims’ Rights Week that the department is able to make the latest distribution from the Madoff Victims Fund.  With the $378 million distributed today, the department has now returned $2.7 billion to Madoff’s victims, allowing them to recover almost 74 percent of their losses.  All of this has been made possible by the department’s steadfast commitment to the pursuit of the proceeds of fraud through civil forfeiture.”  

Since the early 1970s, BERNARD L. MADOFF (“MADOFF”) used his position as Chairman of BLMIS, the investment advisory business he founded, to steal billions from his clients.  On March 12, 2009, MADOFF pled guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family, and select members of his inner circle.  On June 29, 2009, United States District Judge Denny Chin sentenced MADOFF to 150 years in prison for running the largest fraudulent scheme in history.  Judge Chin ordered MADOFF to forfeit $170,799,000,000 as part of MADOFF’s sentence.   

The Madoff Victim Fund is funded through recoveries by the U.S. Attorney’s Office in various criminal and civil forfeiture actions, and is overseen by Richard Breeden, the former Chairman of the United States Securities and Exchange Commission, in his capacity as Special Master appointed by the Department of Justice to assist in connection with the victim remission proceedings.

Of the approximately $4.05 billion that will be made available to victims through the Madoff Victim Fund, approximately $2.2 billion was collected as part of the civil forfeiture recovery from the estate of deceased MADOFF investor Jeffry Picower.  An additional $1.7 billion was collected as part of a Deferred Prosecution Agreement with JPMorgan Chase Bank N.A. for MADOFF-related Bank Secrecy Act violations.  Additional funds were collected through criminal and civil forfeiture actions against MADOFF and his co-conspirators, and certain MADOFF investors.

Mr. Berman praised the work of the FBI and the Madoff Victim Fund, and thanked the Money Laundering and Asset Recovery Section of the Department of Justice’s Criminal Division for their assistance.

For more information about the Madoff Victim Fund, compensation to victims of BLMIS, eligibility criteria, and payment information, please visit www.madoffvictimfund.com.

The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorney Louis A. Pellegrino is in charge of the case.  The remission of these forfeited funds is being handled by the Office and the U.S. Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section.

At the start of National Crime Victims’ Rights Week, the Department of Justice today announced that on April 20, the Madoff Victim Fund (MVF) began its fifth distribution of approximately $378.5 million in funds forfeited to the U.S. Government in connection with the Bernard L. Madoff Investment Securities LLC (BLMIS) fraud scheme, bringing the total distributed to over $2.7 billion to nearly 38,000 victims worldwide. 

In this distribution, payments will be sent to over 26,000 victims across the globe, bringing their total recovery to 73.65 percent.  This distribution represents the fifth in a series of payments that will eventually return over $4 billion to victims as compensation for losses they suffered from the collapse of the BLMIS.  The MVF has received over 65,000 petitions from victims in 136 countries.

“It is entirely fitting during this Crime Victims’ Rights Week that the department is able to make the latest distribution from the Madoff Victims Fund,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “With the $378 million distributed today, the department has now returned $2.7 billion to Madoff’s victims, allowing them to recover almost 74 percent of their losses.  All of this has been made possible by the department’s steadfast commitment to the pursuit of the proceeds of fraud through civil forfeiture.”  

“This office continues its efforts to seek justice for victims of history’s largest Ponzi scheme.  Today’s additional payments of more than $378 million by this office and the U.S. Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section represents the fifth in an on-going series of distributions that will leave victims with compensation for more than 73 percent of their losses,” said U.S. Attorney Geoffrey S. Berman of the Southern District of New York.  “But our work is not yet finished, and this extraordinary level of recovery represents this Office’s ongoing and tireless commitment to compensating the victims who suffered as a result of Madoff’s heinous crimes.”

For decades, Bernard L. Madoff used his position as Chairman of BLMIS, the investment advisory business he founded in 1960, to steal billions from his clients.  On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family and select members of his inner circle.  On June 29, 2009, U.S. District Judge Denny Chin sentenced Madoff to serve 150 years in prison for running the largest fraudulent scheme in history.  Of the approximately $4.05 billion that will be made available to victims, approximately $2.2 billion was collected as part of the historic civil forfeiture recovery from the estate of deceased Madoff investor Jeffry Picower.  An additional $1.7 billion was collected as part of a deferred prosecution agreement with JPMorgan Chase Bank N.A. and civilly forfeited in a parallel action.  The remaining funds were collected through a civil forfeiture action against investor Carl Shapiro and his family, and from civil and criminal forfeiture actions against Bernard L. Madoff, Peter B. Madoff and their co-conspirators.

The MVF’s payouts would not have been possible without the extraordinary efforts of the Criminal Division’s Money Laundering and Asset Recovery Section, the U.S. Attorney’s Office for the Southern District of New York, and the FBI in the prosecution of these crimes and the recovery of assets supporting the forfeiture in this case.  The MVF is overseen by Richard Breeden, former Chairman of the U.S. Securities and Exchange Commission, in his capacity as Special Master appointed by the Department of Justice to assist in connection with the victim remission proceedings.  The Department of Justice also acknowledges the sacrifice of numerous individuals during this period of quarantine due to COVID-19 to ensure that this distribution occurred and remained on schedule.  

More information about MVF and its compensation to victims of BLMIS is available on the MVF website at www.madoffvictimfund.com, such as eligibility criteria, process updates, and frequently asked questions.  Further questions may be directed to the MVF at 866-624-3670 or [email protected].

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Lt. Gen. Ronald J. Place, Director of the Defense Health Agency of the U.S. Department of Defense (“DoD”), Scott J. Lampert, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), Michael Mikulka, Special Agent-in-Charge of the Office of Investigations, Labor Racketeering and Fraud, of the U.S. Department of Labor, Office of Inspector General (“DOL-OIG”), and Thomas W. South, Deputy Assistant Inspector General for Investigations of the U.S. Office of Personnel Management, Office of Inspector General (“OPM-OIG”), announced today that the United States has filed a lawsuit and simultaneously settled civil healthcare fraud claims against FPR SPECIALTY PHARMACY LLC and MEAD SQUARE PHARMACY, INC. (“MEAD SQUARE” and together, the “Pharmacies”), and their owners, CHRISTOPHER K. CASEY and WILLIAM RUE (collectively, “Defendants”), for their submission of fraudulent claims for reimbursement to federal healthcare programs for compounded prescription drugs in violation of the False Claims Act and the Anti-Kickback Statute.  Specifically, as alleged in the Government’s complaint, the Pharmacies sold prescription drugs to federal healthcare program beneficiaries in states in which the Pharmacies were not licensed, improperly induced patients to purchase expensive custom compounded medications by waiving all or part of the substantial co-payments required under the federal healthcare programs, and paid sales representatives per-prescription commissions to illegally induce more prescriptions to be written.  In connection with the settlement agreements, which were approved today by U.S. District Judge Paul A. Engelmayer, Defendants agreed to pay a total of $426,000, and admitted to and accepted responsibility for the conduct alleged in the complaint.  The amounts paid by Defendants under the settlements are based on the Office’s assessment of their ability to pay based on the financial information they provided.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Pharmacies, like other participants in the healthcare industry, must follow the rules.  The defendants here brazenly flouted basic rules on licensing and kickbacks to line their pockets with dollars from federal healthcare programs.  That is a prescription for intervention by my Office and our partners.”

According to the complaint filed in Manhattan federal court:

During the relevant period, from 2011 through 2015, the Pharmacies dispensed a compounded prescription analgesic cream known as Focused Pain Relief from their facility in Victor, New York, to patients around the country.  Many of the Pharmacies’ patients were beneficiaries of federal healthcare programs such as TRICARE, Medicare, federal employee workers’ compensation programs overseen by DOL, and the Federal Employee Health Benefit Program.  CASEY and RUE co-owned and managed FPR SPECIALTY PHARMACY, while CASEY owned and managed MEAD SQUARE, for which RUE also worked for a time. 

The rules governing federal healthcare programs require pharmacies dispensing prescriptions to their members to be licensed with the appropriate state authorities in order to request reimbursement for the cost of the medications.  The Pharmacies violated the False Claims Act by dispensing and requesting reimbursement for hundreds of prescriptions of Focused Pain Relief dispensed to federal healthcare program beneficiaries located in states where the Pharmacies were not licensed to operate by the appropriate state authorities, and by failing to disclose that they were not licensed.  The Pharmacies also violated the False Claims Act by billing federal healthcare programs for prescriptions dispensed in states in which they had obtained their state licenses under false pretenses, including by failing to inform state authorities that they had previously dispensed drugs in the states without a license and by failing to disclose CASEY’s criminal history on pharmacy license applications.

In addition, the Pharmacies violated the Anti-Kickback Statute by engaging in two separate illegal practices.  First, the Pharmacies regularly charged federal healthcare program beneficiaries co-payments substantially below program requirements (which often exceeded $100) in order to induce them to purchase expensive prescriptions of Focused Pain Relief, for which the federal healthcare programs paid hundreds and sometimes thousands of dollars each.  And second, the Pharmacies often paid illegal kickbacks to their sales representatives in the form of sales commissions tied to the number of Focused Pain Relief prescriptions written by the physicians to whom each representative marketed. 

As part of the settlement agreements, Defendants agreed and accepted responsibility for the following:

• The Pharmacies sold prescriptions to customers covered by federal healthcare programs who were located in several states in which they were not licensed or no longer licensed by the relevant state pharmacy boards to operate as out-of-state mail-order pharmacies or otherwise sell prescription drugs to residents of those states.
   
• The Pharmacies did not disclose, in connection with their applications to state pharmacy boards, which were usually signed by CASEY, when they had previously sold mail-order prescription drugs to residents of those states where the Pharmacies either were not licensed or had license applications pending but were not yet licensed.

• The Pharmacies often did not charge customers who were covered by federal healthcare programs the required co-pays or coinsurance payments mandated by those programs for prescription drugs, in connection with their sales of Focused Pain Relief to those customers.

• The Pharmacies entered into agreements with independent sales agents and distributors to solicit physicians to prescribe Focused Pain Relief.  These agreements, which were often signed by RUE, generally provided that the Pharmacies would pay the sales agents and distributors specific sums as sales commissions for each prescription of Focused Pain Relief prescribed by a physician assigned to the particular agent or distributor.  The Pharmacies actually paid their sales agents and distributors sales commissions on a per-prescription basis, in accordance with these agreements.

*                      *                      *

As part of today’s settlement, MEAD SQUARE also entered into a corporate integrity agreement with HHS-OIG, through which it agreed to implement compliance measures and submit to monitoring.  FPR SPECIALTY PHARMACY dissolved in 2016.

In connection with the filing of the lawsuit and settlement, the Government intervened in a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act. 

Mr. Berman thanked DoD, HHS-OIG, DOL-OIG, and OPM-OIG for their assistance with the case.

The case is being handled by the Office’s Civil Frauds Unit.  Assistant United States Attorney Jean-David Barnea is in charge of the case.

Geoffrey S. Berman, 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, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an indictment charging KEVIN TAYLOR, GARY ROBLES, and MICHAEL MAZUR with the October 31, 2011, murder of Joshua Rubin in Brooklyn, New York.  All three defendants were arrested today and will be presented this afternoon before United States Magistrate Judge Ona T. Wang.  The case is assigned to United States District Judge Laura Taylor Swain.

U.S. Attorney Geoffrey S. Berman said:  “Over eight years ago, Joshua Rubin’s life was taken.  As alleged in the Indictment, these defendants were responsible for that terrible crime.  Now, thanks to the determination of our law enforcement partners and the Special Agents of our Office, the defendants are charged in federal court with murder.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “After years of wondering what led to Mr. Rubin disappearing from his Brooklyn neighborhood, and his body being found in rural Pennsylvania, his family and the community may finally get some answers.  The passage of time makes cold cases difficult, but the people who committed the crimes are still out there, and they will be held accountable.  I want to commend agents and detectives on the FBI New York Joint Violent Crimes Task Force and the NYPD Cold Case Homicide Unit for never giving up, and never forgetting the victim deserves justice.”

NYPD Commissioner Dermot Shea said:  “When a life is violently taken, law enforcement is there to speak for the voiceless. From the moment of Joshua Rubin’s disappearance and murder, in 2011, our NYPD investigators and federal and local law enforcement partners never stopped working to bring justice for him and all who knew him.”

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

On October 31, 2011, TAYLOR, ROBLES, and MAZUR robbed Rubin of marijuana in the vicinity of 1021 McDonald Avenue, Brooklyn, New York, and in the course of that robbery Rubin was shot and killed.

*              *             *

TAYLOR, 27, ROBLES, 37, and MAZUR, 26, are each charged with murder through the use of a firearm, which carries a maximum penalty of death or life in prison and a mandatory minimum sentence of five years in prison.  

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

 Mr. Berman praised the outstanding work of the FBI, NYPD, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.  He also thanked the Lehigh County District Attorney’s Office, the Pennsylvania State Police, and the South Whitehall Township Police Department for their assistance in the investigation.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Alexandra Rothman, Mollie Bracewell, and Dominic A. Gentile are in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that the United States filed a civil fraud lawsuit today against ANTHEM, INC. (“ANTHEM”), alleging that ANTHEM falsely certified the accuracy of the diagnosis data it submitted to the Centers for Medicare and Medicaid Services (“CMS”) for risk-adjustment purposes under Medicare Part C and knowingly failed to delete inaccurate diagnosis codes.  As a result of these acts, ANTHEM caused CMS to calculate the risk-adjustment payments to ANTHEM based on inaccurate, and inflated, diagnosis information, which enabled ANTHEM to obtain millions of dollars in Medicare funds to which it was not entitled.

Manhattan U.S. Attorney Geoffrey Berman said:  “The integrity of Medicare’s payment system is critical to our healthcare.  This Office is dedicated to vigorously using all of the legal tools available, including the False Claims Act, to ensure the integrity of Medicare payments.  The case against Anthem today is an illustration of that commitment.” 

As set forth in the Complaint, Medicare Part C, also known as Medicare Advantage, provides health insurance coverage for tens of millions of Americans who opt out of traditional Medicare.  Under Medicare Part C, Medicare Advantage Organizations (“MAOs”), typically private insurers like ANTHEM, provide coverage for Medicare beneficiaries.  In return, MAOs receive capitated payments from CMS based on the patients’ medical conditions and demographic factors.  More specifically, MAOs like ANTHEM submit diagnosis data, typically passed along from beneficiaries’ healthcare providers, to CMS.  CMS then uses that diagnosis data, in conjunction with demographic factors, to calculate a “risk score” for each beneficiary and, in turn, the amount of the capitated payment that the MAO will receive for covering that beneficiary.

The Complaint alleges that ANTHEM, as one of the nation’s largest MAOs, operated dozens of Medicare Part C plans, including the Empire MediBlue plan in New York.  To supplement its collection of diagnosis codes besides what it received from healthcare providers, ANTHEM implemented a “retrospective chart review” program using a vendor called Medi-Connect.  Specifically, ANTHEM paid Medi-Connect to collect medical records from healthcare providers corresponding to services they rendered to ANTHEM’s Part C beneficiaries and then review those records to identify all diagnosis codes supported by the medical records.  ANTHEM then submitted to CMS any diagnosis codes identified by Medi-Connect that ANTHEM had not already submitted to CMS based on what providers initially reported. 

The Complaint further alleges that when ANTHEM asked healthcare providers to provide records to Medi-Connect, ANTHEM characterized its chart review program as an “oversight activity” that would “help ensure that the [diagnosis] codes have been reported accurately.”  In fact, however, ANTHEM did not use the information it received from Medi-Connect to check the accuracy of diagnosis codes it had submitted to CMS.  Specifically, when Medi-Connect’s review did not validate diagnosis codes that ANTHEM previously submitted to CMS, ANTHEM did not make any effort to verify or delete those codes. 

According to the Complaint, ANTHEM did not do so because deleting invalid diagnosis codes would have substantially reduced the additional revenue the chart review program generated for ANTHEM, which frequently exceeded $100 million per year.  Instead, ANTHEM treated its chart review program solely as a tool for revenue enhancement and viewed it as ANTHEM’s “cash cow.”    

As alleged in the Complaint, ANTHEM not only knowingly failed to delete diagnosis codes shown by its chart review program to be unsupported by the medical records, but also repeatedly made false statements to CMS.  Specifically, ANTHEM made false annual attestations to CMS certifying that its risk-adjustment data submissions were “accurate” according to its “best knowledge, information and belief.”  ANTHEM also falsely told CMS that it would “research and correct” risk adjustment data discrepancies.  As result of its false statements and its failure to delete inaccurate diagnosis codes, ANTHEM improperly obtained or retained millions of dollars in payments from CMS to which it was not entitled, in violation of the False Claims Act.

Mr. Berman thanked the Office of Counsel to the Inspector General for the Department of Health and Human Services and the Commercial Litigation Branch at the Civil Division of the Department of Justice for their extensive assistance.

This case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Li Yu, Peter Aronoff, and Rachael Doud are in charge of this case.

William Barr, the Attorney General of the United States, Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Brian Benczkowski, Assistant Attorney General for the Criminal Division of the Department of Justice, Uttam Dhillon, Acting Administrator of the United States Drug Enforcement Administration (“DEA”), and Alysa D. Erichs, U.S. Immigration and Customs Enforcement’s Acting Executive Associate Director for Homeland Security Investigations (“HSI”), announced the unsealing of two separate indictments charging current and former Venezuelan officials and FARC leadership.  One Superseding Indictment includes narco-terrorism, drug trafficking, and weapons charges against NICOLÁS MADURO MOROS, Diosdado CABELLO RONDÓN, HUGO ARMANDO CARVAJAL BARRIOS, a/k/a “El Pollo,” CLÍVER ANTONIO ALCALÁ CORDONES, LUCIANO MARÍN ARANGO, a/k/a “Ivan Marquez,” and SEUXIS PAUCIS HERNÁNDEZ SOLARTE, a/k/a “Jesús Santrich.”  The other Superseding Indictment alleges violations of the International Emergency Economic Powers Act (“IEEPA”) and the Foreign Narcotics Kingpin Designation Act (“Kingpin Act”), and a related conspiracy to defraud the U.S. Department of the Treasury, the Office of Foreign Assets Control (“OFAC”), against TARECK ZAIDAN EL AISSAMI MADDAH, JOSELIT RAMIREZ CAMACHO, and SAMARK LOPEZ BELLO.  The charges are contained in separate Superseding Indictments unsealed today in Manhattan federal court.  Both cases are pending before U.S. District Judge Alvin K. Hellerstein.

The U.S. Department of State, through its Narcotics Rewards Program, is offering rewards of up to $15 million for information leading to the arrest and/or conviction of MADURO MOROS, up to $10 million for information leading to the arrest and/or conviction of CABELLO RONDÓN, CARVAJAL BARRIOS, and ALCALÁ CORDONES, and up to $5 million for information leading to the arrest and/or conviction of MARÍN ARANGO.  Anyone with information that may lead to the arrest and/or conviction of Maduro Moros, Cabello Rondón, Carvajal Barrios, or Marín Arango can email the DEA at [email protected], or message the DEA at 1-202-681-8187 using text messages, WhatsApp, or Signal. 

The U.S. Department of State is also offering rewards of up to $10 million for information leading to the arrest and/or conviction of EL AISSAMI MADDAH.  Anyone with information that may lead to the arrest and/or conviction of EL AISSAMI MADDAH can contact HSI 1-866-347-2423.

Attorney General William Barr said: “The Venezuelan regime, once led by Nicolás Maduro Moros, remains plagued by criminality and corruption. For more than 20 years, Maduro and a number of high-ranking colleagues allegedly conspired with the FARC, causing tons of cocaine to enter and devastate American communities. Today’s announcement is focused on rooting out the extensive corruption within the Venezuelan government – a system constructed and controlled to enrich those at the highest levels of the government. The United States will not allow these corrupt Venezuelan officials to use the U.S. banking system to move their illicit proceeds from South America nor further their criminal schemes.”

U.S. Attorney Geoffrey S. Berman said:  “Today we announce criminal charges against Nicolas Maduro for running, together with his top lieutenants, a narco-terrorism partnership with the FARC for the past 20 years.  The scope and magnitude of the drug trafficking alleged was made possible only because Maduro and others corrupted the institutions of Venezuela and provided political and military protection for the rampant narco-terrorism crimes described in our charges.  As alleged, Maduro and the other defendants expressly intended to flood the United States with cocaine in order to undermine the health and wellbeing of our nation.  Maduro very deliberately deployed cocaine as a weapon.  While Maduro and other cartel members held lofty titles in Venezuela’s political and military leadership, the conduct described in the Indictment wasn’t statecraft or service to the Venezuelan people.   As alleged, the defendants betrayed the Venezuelan people and corrupted Venezuelan institutions to line their pockets with drug money.”

DEA Acting Administrator Uttam Dhillon said:  “These indictments expose the devastating systemic corruption at the highest levels of Nicolas Maduro’s regime.  These officials repeatedly and knowingly betrayed the people of Venezuela, conspiring, for personal gain, with drug traffickers and designated foreign terrorist organizations like the FARC. Today’s actions send a clear message to corrupt officials everywhere that no one is above the law or beyond the reach of U.S. law enforcement.  The Department of Justice and the Drug Enforcement Administration will continue to protect the American people from ruthless drug traffickers – no matter who they are or where they live.”

ICE Acting Executive Associate Director for HSI Alysa D. Erichs said:  “The collaborative nature of this investigation is representative of the ongoing work HSI and international law enforcement agencies perform each day, often behind the scenes and unknown to the public, to make our communities safer and free from corruption.  Today’s announcement highlights HSI’s global reach and commitment to aggressively identify, target and investigate individuals who violate U.S. laws, exploit financial systems, and hide behind cryptocurrency to further their illicit criminal activity. Let this indictment be a reminder that no one is above the law - not even powerful political officials.”

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

Since at least 1999, MADURO MOROS, DIOSDADO CABELLO RONDÓN, HUGO CARVAJAL BARRIOS, a/k/a “El Pollo,” and CLÍVER ALCALÁ CORDONES, acted as leaders and managers of the Cártel de Los Soles, or “Cartel of the Suns.”  The Cartel’s name refers to the sun insignias affixed to the uniforms of high-ranking Venezuelan military officials. MADURO MOROS and the other charged Cartel members abused the Venezuelan people and corrupted the legitimate institutions of Venezuela – including parts of the military, intelligence apparatus, legislature, and the judiciary – to facilitate the importation of tons of cocaine into the United States.  The Cártel de Los Soles sought not only to enrich its members and enhance their power, but also to “flood” the United States with cocaine and inflict the drug’s harmful and addictive effects on users into the United States.

MARÍN ARANGO and HERNÁNDEZ SOLARTE are leaders of the FARC.  Beginning in approximately 1999, while the FARC was purporting to negotiate toward peace with the Colombian government, FARC leaders agreed with leaders of the Cártel de Los Soles to relocate some of the FARC’s operations to Venezuela under the protection of the Cartel.  Thereafter, the FARC and the Cártel de Los Soles dispatched processed cocaine from Venezuela to the United States via transshipment points in the Caribbean and Central America, such as Honduras.  By approximately 2004, the United States Department of State estimated that 250 or more tons of cocaine were transiting Venezuela per year.  The maritime shipments were shipped north from Venezuela’s coastline using go-fast vessels, fishing boats, and container ships.  Air shipments were often dispatched from clandestine airstrips, typically made of dirt or grass, concentrated in the Apure State.  According to the United States Department of State, approximately 75 unauthorized flights suspected of drug trafficking activities entered Honduran airspace in 2010 alone, using what is known as the “air bridge” cocaine route between Venezuela and Honduras.

In his role as a leader of the Cártel de Los Soles, MADURO MOROS negotiated multi-ton shipments of FARC-produced cocaine; directed that the Cártel de Los Soles provide military-grade weapons to the FARC; coordinated foreign affairs with Honduras and other countries to facilitate large-scale drug trafficking; and solicited assistance from FARC leadership in training an unsanctioned militia group that functioned, in essence, as an armed forces unit for the Cártel de Los Soles.

The Defendants

MADURO MOROS is the former president of Venezuela.  He previously held a seat in the Venezuelan National Assembly between approximately 2000 and approximately 2006, acted as the Venezuelan foreign minister between approximately 2006 and approximately 2013, and acted as the vice president of Venezuela in approximately 2013.  MADURO MOROS succeeded to the Venezuelan presidency after Hugo Chávez died in 2013 and, during his presidency, continued to participate in cocaine trafficking with the Cártel de Los Soles and the FARC.  In approximately 2018, MADURO MOROS declared victory in a presidential election in Venezuela.  In approximately 2019, the National Assembly of Venezuela invoked the Venezuelan constitution and declared that MADURO MOROS had usurped power and was not the president of Venezuela.  Since approximately 2019, more than 50 countries, including the United States, have refused to recognize MADURO MOROS as Venezuela’s head of state and instead recognized Juan Guaidó as the interim president of Venezuela.  In approximately January 2020, the U.S. State Department certified the authority of Guaidó, as the interim president of Venezuela, to receive and control property in accounts at the United States Federal Reserve maintained by the Venezuelan government and the Central Bank of Venezuela.

CABELLO RONDÓN is president of Venezuela’s National Constituent Assembly, and a member of the Venezuelan armed forces.  CABELLO RONDÓN previously acted as chief of staff to Chávez in approximately 2001, vice president of Venezuela in approximately 2002, governor of Venezuela’s Miranda State between approximately 2004 and approximately 2008, and president of Venezuela’s National Assembly between approximately 2012 and approximately 2016.

CARVAJAL BARRIOS is a Venezuelan citizen and was the director of Venezuela’s military intelligence agency, which was known as the Dirección de Inteligencia Militar (“DIM”), between approximately 2004 and approximately 2011.  In approximately April 2011, the United States Attorney’s Office for the Southern District of New York filed the original indictment in this case, charging CARVAJAL BARRIOS with drug trafficking, 11 Cr. 205 (AKH).  Nonetheless, in approximately 2013, MADURO MOROS made CARVAJAL BARRIOS the director of the DIM for a second time.  Between approximately January 2014 and approximately June 2014, CARVAJAL BARRIOS held the title of Venezuela’s consul general to Aruba.  In approximately January 2016, despite being a fugitive on the above-described drug trafficking charges, CARVAJAL BARRIOS was elected to the Venezuelan National Assembly.  As of today, CARVAJAL BARRIOS remains a fugitive on pending charges in underlying indictments in the Southern District of New York and subject to a lawful order of extradition issued by Spain in approximately 2019.

ALCALÁ CORDONES is a former general in the Venezuelan military.

MARÍN ARANGO joined the FARC in approximately 1985.  In approximately 2006, the United States Attorney’s Office for the Southern District of New York filed a drug trafficking charge against 50 leaders of the FARC, including MARÍN ARANGO.  As of today, MARÍN ARANGO is a fugitive on that charge and a member of the FARC’s Secretariat, which is the FARC’s highest leadership body.

HERNÁNDEZ SOLARTE joined the FARC in approximately 1991.  As of today, HERNÁNDEZ SOLARTE is a member of the FARC’s Central High Command, which is the FARC’s second-highest leadership body.  As described below, in approximately 2018, the United States Attorney’s Office for the Southern District of New York filed drug trafficking charges against HERNÁNDEZ SOLARTE.  HERNÁNDEZ SOLARTE remains a fugitive on those charges.

*                *                *

MADURO MOROS, 57, CABELLO RONDÓN, 56, CARVAJAL BARRIOS, 59, ALCALÁ CORDONES, 58, MARÍN ARANGO, 64, and HERNÁNDEZ SOLARTE, 53, have each been charged with: (1) participating in a narco-terrorism conspiracy, which carries a 20-year mandatory minimum sentence and a maximum of life; (2) conspiring to import cocaine into the United States, which carries a 10-year mandatory minimum sentence and a maximum of life; (3) using and carrying machine guns and destructive devices during and in relation to, and possessing machine guns and destructive devices in furtherance of, the narco-terrorism and cocaine importation conspiracies, which carries a 30-year mandatory minimum sentence and a maximum of life; and (4) conspiring to use and carry machine guns and destructive devices during and in relation to, and to possess machine guns and destructive devices in furtherance of, the narco-terrorism and cocaine importation conspiracies, which carries a maximum sentence of life.  The potential mandatory minimum and maximum sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the DEA’s Special Operations Division Bilateral Investigations Unit, New York Strike Force, and Miami Field Division, as well as the U.S. Department of Justice’s Office of International Affairs and the National Security Division’s Counterterrorism Section. 

This case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Amanda L. Houle, Matthew J. Laroche, Jason A. Richman, and Kyle A. Wirshba are in charge of the prosecution.

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

*                *                *

A separate Superseding Indictment unsealed today in Manhattan federal court charges TARECK ZAIDAN EL AISSAMI MADDAH, Venezuela’s vice president for the economy, JOSELIT RAMIREZ CAMACHO, Venezuela’s superintendent of cryptocurrency (Sunacrip), and SAMARK LOPEZ BELLO, a Venezuelan businessman, with violations of IEEPA, the Kingpin Act, and other offenses related to efforts to evade sanctions imposed by OFAC against MADURO MOROS, EL AISSAMI MADDAH, and LOPEZ BELLO. 

According to the allegations contained in the Superseding Indictment charging EL AISSAMI MADDAH and others, other court filings, and statements made during court proceedings[2]:

From February 2017 until March 2019, EL AISSAMI MADDAH and RAMIREZ CAMACHO worked with U.S. persons and U.S.-based entities to provide private flight services for the benefit of MADURO MOROS’s 2018 presidential campaign, in violation of OFAC’s sanctions targeting MADURO MOROS after he organized elections for the illegitimate National Constituent Assembly that CABELLO RONDÓN now leads. 

*                *                *

EL AISSAMI MADDAH, 45, RAMIREZ CAMACHO, 33, and LOPEZ BELLO, 45, are charged with: (1) conspiracy to obstruct the lawful governmental functions of OFAC, which carries a maximum of 5 years’ imprisonment; (2) conspiracy to violate the Kingpin Act, which carries a maximum of 30 years’ imprisonment; and (3) four substantive violations of the Kingpin Act, each of which carries a maximum of 30 years’ imprisonment.  EL AISSAMI MADDAH and RAMIREZ CAMACHO are also charged with: (4) conspiracy to violate IEEPA, which carries a maximum of 20 years’ imprisonment; and (5) conspiracy to commit money laundering, which carries a maximum of 20 years’ imprisonment. The potential mandatory minimum and maximum sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of HSI’s New York Field Office, as well as OFAC, the U.S. Department of Justice’s Office of International Affairs, and the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division. 

This case is also being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Sam Adelsberg and Amanda L. Houle are in charge of the prosecution.

The charges 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.

[2] 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.    

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ISAI SCHEINBERG, the founder and former executive of PokerStars, an online poker company, pled guilty today to running a multimillion-dollar unlawful internet gambling business.  SCHEINBERG pled guilty before U.S. Magistrate Judge Sarah L. Cave.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Ten years ago, this Office charged 11 defendants who operated, or provided fraudulent payment processing services to, three of the largest online poker companies then operating in the United States – PokerStars, Full Tilt Poker, and Absolute Poker – with operating illegal gambling businesses and other crimes.  As Isai Scheinberg’s guilty plea today shows, the passage of time will not undermine this Office’s commitment to holding accountable individuals who violate U.S. law.” 

As alleged in the Indictment filed in March 2011 in Manhattan federal court, PokerStars was founded in approximately 2001, with headquarters in the Isle of Man.  PokerStars offered online poker games to players around the world, including in New York, New York.  SCHEINBERG was PokerStars’ founder and principal.  On October 13, 2006, the United States enacted the Unlawful Internet Gambling Enforcement Act (“UIGEA”), making it a federal crime for gambling businesses to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.”  With the enactment of UIGEA, leading internet gambling businesses – including the leading internet poker company doing business in the United States at that time – terminated their United States operations.  However, PokerStars, along with Full Tilt Poker and Absolute Poker, continued illegally to make internet poker available to U.S. customers through March 2011.  

In pleading guilty today, SCHEINBERG admitted that he knew operating a business that offered internet poker to New Yorkers violated state law, and that it was the clear position of the U.S. government that offering online poker in the United States violated federal law.  Nonetheless, Scheinberg decided to continue running his multimillion-dollar online poker business in the United States. 

In 2012, PokerStars and its related companies (the “PokerStars Companies”) agreed to settle a civil forfeiture and civil money laundering action brought by the Office.  That settlement involved, among other things, the PokerStars Companies forfeiting $547 million to the United States and assuming approximately $184 million in foreign player liabilities of another online poker company subject to the settlement.  Additionally, in June 2013, Mark Scheinberg, ISAI SCHEINBERG’s son, agreed to forfeit to the United States an additional $50 million of distributions he received from the operation of the PokerStars Companies.

*                *                *

SCHEINBERG, 73, a dual Canadian and Israeli national, was arrested in Switzerland on June 7, 2019, based on the U.S. charges.  In early October 2019, SCHEINBERG was ordered to be extradited to the United States by the Swiss Federal Office of Justice, a decision he initially appealed.  SCHEINBERG subsequently withdrew his appeal and surrendered to U.S. federal agents on January 17, 2020.  He was arraigned before United States Magistrate Judge Katharine H. Parker on the same day.

SCHEINBERG pled guilty to one count of operating an illegal gambling business, in violation of 18 U.S.C. § 1955.  SCHEINBERG faces a maximum sentence of five years in prison.  He is scheduled to be sentenced by United States District Judge Lewis A. Kaplan on a date to be determined.

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

Mr. Berman thanked the Federal Bureau of Investigation and Homeland Security Investigations for their outstanding work and perseverance in the investigation and prosecution of this case, and Swiss authorities and the Department of Justice Criminal Division’s Office of International Affairs for their assistance with SCHEINBERG’s arrest and extradition proceedings.

With SCHEINBERG’s guilty plea, all 11 defendants – including Raymond Bitar, Scott Tom, Brent Beckley, Nelson Burtnick, Paul Tate, Ryan Lang, Bradley Franzen, Ira Rubin, Chad Elie, and John Campos – originally charged in the Indictment have now pled guilty.  All but SCHEINBERG have been sentenced.

This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Olga Zverovich, Sarah Lai, and Jason Cowley are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Ray Donovan, Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), Keith M. Corlett, Superintendent of the New York State Police (“NYSP”), and Thomas Pape, Chief of Police for the City of Poughkeepsie, announced charges today against MICHAEL NICHOLAS, a/k/a “Pop,” DARREN PARKER, a/k/a “Born,” REGINA CUMMINGS, a/k/a “Gina,” and JAQUON DANCY, a/k/a “Wiz,” with various narcotics-related offenses.  During search warrant operations of NICHOLAS’s residence in Poughkeepsie, New York, law enforcement recovered approximately 15 kilograms of narcotics, including powder cocaine, heroin, crack cocaine, and approximately 1.5 kilograms of substances containing fentanyl.  Three firearms were also recovered from NICHOLAS’s residence. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants trafficked in large amounts of fentanyl and other narcotics in and around Dutchess County.  Fentanyl is one of the leading causes of overdose deaths and it has devastated communities across Dutchess County and the Southern District of New York.  I commend our law enforcement partners in stopping those who allegedly traffic in fentanyl and other narcotics.”

DEA Special Agent in Charge Ray Donovan said:  “The fact that these individuals are facing charges today demonstrates the degree of danger their alleged drug trafficking was to the City of Poughkeepsie.  I commend our law enforcement partners who continue to keep our cities safe.”

NYSP Superintendent Keith M. Corlett said:  “Once again, excellent police work by our federal, state and local departments has dismantled an alleged drug operation, put four allegedly dangerous individuals behind bars and seized drugs, cash and weapons. As alleged, these dealers were selling and transporting fentanyl, heroin and crack cocaine throughout the Poughkeepsie area. I applaud the hard work of the members involved in this investigation and together we will continue the fight to keep drugs off our streets.”

As alleged in the Indictments unsealed today and statements made in Court proceedings[1]:

From at least September 2018 till February 2020, MICHAEL NICHOLAS and DARREN PARKER conspired to distribute 400 grams or more of mixtures and substances containing fentanyl.

In addition, from at least January 2020 up to and including March 2020, NICHOLAS and REGINA CUMMINGS conspired to distribute 28 grams or more of crack cocaine. 

Finally, in March 2020, JAQUON DANCY conspired with others to distribute 40 grams or more mixtures and substances containing fentanyl.

The defendants were arrested early this morning.  Law enforcement recovered approximately 15 kilograms of narcotics and three firearms during search operations.

*                *                *

NICHOLAS, 33, of Poughkeepsie, New York, is charged with one count of conspiring to distribute 400 grams or more of mixtures and substances containing fentanyl, which carries a mandatory minimum of 10 years in prison and a maximum sentence of life in prison.  He is also charged with one count of conspiring to distribute 28 grams or more of crack cocaine, which carries a maximum sentence of 40 years in prison.

PARKER, 51, of Poughkeepsie, New York, is charged with one count of conspiring to distribute 400 grams or more of mixtures and substances containing fentanyl, which carries a mandatory minimum of 10 years in prison and a maximum sentence of life in prison. 

CUMMINGS, 51, is charged with one count of conspiring to distribute 28 grams or more of crack cocaine, which carries a mandatory minimum of five years in prison and a maximum sentence of 40 years in prison.

DANCY, 25, is charged with one count of conspiring to distribute 40 grams or more of mixtures and substances containing fentanyl, which carries a mandatory minimum of five years in prison and a maximum sentence of 40 years in prison. 

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

Mr. Berman praised the outstanding investigative work of the DEA, the NYSP, and the City of Poughkeepsie Police Department. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorney Shiva H. Logarajah is in charge of the prosecution.

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

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

Geoffrey S. Berman, 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, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of a Superseding Indictment charging NAZEEM FRANCIS, a/k/a “Naz,” JONATHAN COLON, a/k/a “Johnny Blaze,” a/k/a “JB,” JULIO OZUNA, a/k/a “JJ,” a/k/a “Josh Balla,” a/k/a “Chocolate,” PRINCE GAINES, a/k/a “Poodie,” ERICK OLEAGA, a/k/a “E.D.,” VICTOR MARTINEZ, and KHALIL SUGGS, a/k/a “KI,” with crimes including murder, robbery, robbery conspiracy, narcotics distribution conspiracy, and firearms offenses. 

Five defendants were arrested today and will be presented this afternoon before United States Magistrate Judge Sarah L. Cave.  Two defendants were already in custody and will be presented at a later date.  The case has been assigned to United States District Judge Mary Kay Vyskocil. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged in the indictment, the defendants brought violence and drugs to the streets of the Bronx.  Now, thanks to our outstanding law enforcement partners at the FBI and the NYPD, these defendants face charges in federal court.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: "This investigation illustrates the extremes violent gang members will go to, all in the pursuit of making easy money.  The arrests and announcement today also demonstrate that while much of the world is rightly slowing down, FBI special agents and detectives on the New York FBI Metro Safe Streets Gang Task Force will continue the extremely critical work of keeping criminals from putting more lives in danger."

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

On or about September 3, 2018, FRANCIS, COLON, and OZUNA aided and abetted the shooting and killing of Christopher Pierce in the Bronx, New York, following the attempted robbery of Pierce’s friend, a marijuana dealer.  FRANCIS, COLON, and OZUNA are also charged with attempted robbery and robbery conspiracy based on their participation in the botched robbery that led to Pierce’s death.

COLON, OZUNA, GAINES, OLEAGA, MARTINEZ, and SUGGS are charged with participating in a conspiracy to distribute cocaine and crack cocaine from in or about 2018 through in or about March 2020. 

On or about November 18, 2019, SUGGS brandished a firearm, and aided and abetted the same, in furtherance of the drug trafficking conspiracy.

On or about January 19, 2020, OZUNA robbed an individual at gunpoint.  OZUNA is charged with robbery, robbery conspiracy, and brandishing a firearm based on his participation in that gunpoint robbery.

*                *                *

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

Mr. Berman praised the outstanding investigative work of the FBI’s Safe Streets Task Force, as well as NYPD’s 43rd Police Precinct and Bronx Narcotics.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Allison Nichols and Jamie Bagliebter are in charge of the prosecution.

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

COUNT

CHARGE

DEFENDANTS

MAX. PENALTY

Count One

Murder through the Use of a Firearm

18 U.S.C. §§ 924(j) and 2

NAZEEM FRANCIS

JONATHAN COLON

JULIO OZUNA

Death or life imprisonment;

Mandatory minimum of five years’ imprisonment

Count Two

Attempted Robbery

18 U.S.C. §§ 1951 and 2

NAZEEM FRANCIS

JONATHAN COLON

JULIO OZUNA

20 years’ imprisonment

Count Three

Robbery Conspiracy

18 U.S.C. § 1951

NAZEEM FRANCIS

JONATHAN COLON

JULIO OZUNA

20 years’ imprisonment

Count Four

Narcotics Conspiracy

21 U.S.C. § 846

JONATHAN COLON

JULIO OZUNA

PRINCE GAINES

KHALIL SUGGS

ERICK OLEAGA

VICTOR MARTINEZ

40 years’ imprisonment

Mandatory minimum of 5 years’ imprisonment

Count Five

Firearm Offense

18 U.S.C. §§ 924(c) and 2

KHALIL SUGGS

Life

Mandatory minimum of 7 years’ imprisonment

Count Six

Robbery

18 U.S.C. §§ 1951 and 2

JULIO OZUNA

20 years’ imprisonment

Count Seven

Robbery conspiracy

18 U.S.C. § 1951

JULIO OZUNA

20 years’ imprisonment

Count Eight

 Firearm Offense

18 U.S.C. §§ 924(c) and 2

JULIO OZUNA

Life

Mandatory minimum of 7 years’ imprisonment

[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.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, and Darcel D. Clark, Bronx District Attorney, announced the unsealing yesterday of a Superseding Indictment charging JERRY ROJAS, a/k/a “Feddi,” with the January 13, 2020, murder of Vladimir Olivo, 42, in the vicinity of Northern Boulevard and 208th Street in Queens, New York.  The case has been assigned to United States District Judge Jesse M. Furman.  ROJAS was arrested yesterday and presented before U.S. Magistrate Judge Thérèse Wiley Dancks in the Northern District of New York.

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the Indictment, Jerry Rojas murdered Vladimir Olivo earlier this year.  Thanks to the outstanding work of the NYPD, DEA, and the Special Agents of our Office, Rojas now faces federal murder charges for this terrible crime.  I want to specially thank District Attorney Clark for the collaboration between our offices that helped make this prosecution possible.”

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

JERRY ROJAS, a/k/a “Feddi,” is a member of the Black Stone Gorilla Gang, a racketeering enterprise that operates principally in the New York City metropolitan area and in the jails and prisons of New York City and the State of New York.  In order to enrich the enterprise, preserve and protect the power of the enterprise, and enhance its criminal operations, BSGG members and associates committed, conspired, attempted, and threatened to commit acts of violence, including murder and assaults; distributed and possessed with intent to distribute narcotics; committed robberies; engaged in bank fraud and wire fraud; and obtained, possessed, and used firearms.  BSGG members also evaded prosecution by law enforcement authorities through acts of intimidation and violence against potential witnesses to crimes committed by the gang.

On or about January 13, 2020, ROJAS shot and killed Vladimir Olivo in the vicinity of Northern Boulevard and 208th Street in Queens.

ROJAS is also charged with participating in a conspiracy to distribute heroin, cocaine, cocaine base, oxycodone, and marijuana from in or about 2011 through in or about March 2020, and using a firearm in furtherance of that conspiracy.           

*                      *                     *

ROJAS, 26, is charged in the following counts of the Superseding Indictment:

COUNT

CHARGE

MAX. PENALTY

Count One

Racketeering Conspiracy

18 U.S.C. § 1962(d)

Life imprisonment

Count Ten

Narcotics Conspiracy

21 U.S.C. § 846

Life

Mandatory minimum of 10 years’ imprisonment

Count Eleven

Firearms Offense

18 U.S.C. §§ 924(c) and 2

Life

Mandatory minimum of 5 years’ imprisonment

Count Twelve

Murder in Aid of Racketeering

18 U.S.C. §§ 1959 and 2

Death or life imprisonment;

Mandatory minimum of life imprisonment

Count Thirteen

Murder through the Use of a Firearm

18 U.S.C. §§ 924(j) and 2

Death or life imprisonment;

Mandatory minimum of five years’ imprisonment

Mr. Berman praised the outstanding investigative work of the NYPD, DEA, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.  Mr. Berman also thanked the New York/New Jersey Regional Fugitive Task Force of the United States Marshals Service for its work in apprehending ROJAS.

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

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

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that PETER BRIGHT, a former technology editor for an online publication, was convicted in Manhattan federal court Monday of attempted child enticement.  BRIGHT was convicted after a one-week jury trial before U.S. District Judge P. Kevin Castel.

U.S. Attorney Geoffrey S. Berman said:  “As the jury found, Peter Bright attempted the basest type of crime, arranging to engage in sex with young children.  Thanks to the FBI, Bright is in custody and facing serious prison time.”

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

In April 2019, BRIGHT reached out online to an undercover agent of the Federal Bureau of Investigation (“FBI”), who was posing as the mother of a 7-year-old girl and 9-year-old boy (the “Minors”).  Over the course of hundreds of chat communications, BRIGHT discussed with the undercover agent BRIGHT’s plan to meet the Minors to engage in sexual activity.  BRIGHT also requested photographs of the Minors. 

In May 2019, BRIGHT met the undercover agent at a public park in New York, New York, for the purpose of engaging in sexual activity with the Minors.  As BRIGHT and the undercover agent began walking to the Minors’ residence, BRIGHT was arrested. 

*                *                *

BRIGHT, 39, of Brooklyn, New York, was convicted of one count of attempted enticement of a minor to engage in illegal sexual activity, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as the sentencing of the defendant will be determined by the judge.

BRIGHT is scheduled to be sentenced on June 29, 2020, at 11:30 a.m.

Mr. Berman praised the outstanding investigative work of the FBI. 

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Alexander Li, Michael D. Maimin, and Timothy T. Howard, and paralegal specialist Ariella Fetman, are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Darcel D. Clark, District Attorney for Bronx County, Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), Ray Donovan, Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), Peter C. Fitzhugh, Special Agent in Charge of Homeland Security Investigations in New York (“HSI”), and Cynthia Brann, Commissioner of the New York City Department of Correction (“NYCDOC”), announced today the unsealing of an Indictment charging ALEXANDER ARGUEDAS, a/k/a “Reckless,” MICHAEL DELAGUILA, a/k/a “Grizz,” STEVEN JUSTO, a/k/a “Riko,” DAVONTE BROWN, a/k/a “Tae,” JACOBB PADIN, a/k/a “Chino,” EDGARDO BARANCO, a/k/a “Slime,” ABBAS OZKURT, a/k/a “AB,” JAHVONNE CHAMBERS, a/k/a “JV,” DENISE BULLOCK, a/k/a “Mocha,” SIMONE CORDERO, a/k/a “Mixy,” MATTHEW NIEVES, a/k/a “WB,” TYERANCE MICKEY, a/k/a “Hoodlum,” and MARK BROCK, a/k/a “Rover,” with racketeering, firearms, and narcotics offenses, in connection with their membership and association with the Black Stone Gorilla Gang (“BSGG”).  ARGUEDAS is also charged with the December 9, 2012, murder of Gary Rodriguez.  ANDRE CURRY, a/k/a “Flex,” is charged with narcotics and firearms offenses.

Seven defendants were arrested today and will be presented this afternoon before United States Magistrate Judge Stewart D. Aaron.  Three defendants were already in federal or state custody on other charges.  The case has been assigned to United States District Judge Jesse M. Furman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Today’s indictment charges members and associates of a violent gang that allegedly wreaked havoc in the Bronx for years, committing numerous acts of violence against rival gang members and innocent victims.  These charges are the product of a joint effort between our Office and the Bronx District Attorney’s Office, whom we thank for their outstanding partnership, not only in this case, but in our ongoing, shared commitment to keeping the people of the Bronx safe from violence.  Because of that partnership, and thanks to the extraordinary efforts of the NYPD, DEA, Department of Correction, HSI, and Special Agents of the U.S. Attorney’s Office, the defendants now face federal charges for their alleged crimes.”           

Bronx District Attorney Darcel D. Clark said:  “This gang has allegedly brought violence, guns and illicit narcotics to Bronx streets, and my Office’s partnership with U.S. Attorney Geoffrey Berman, the NYPD, the DEA, the Department of Correction, and HSI has now brought them to justice. We remain unrelenting in putting such violent criminal enterprises out of business.”

NYPD Commissioner Dermot Shea said:  “The NYPD’s work to identify and dismantle gangs and crews, and prevent the violence so often associated with their activities, continues to be of paramount importance to the NYPD and all our law enforcement partners.  I thank the NYPD detectives involved in this case and our law enforcement partners for their hard work which resulted in these arrests.”

DEA Special Agent in Charge Ray Donovan said:  “With deep rooted history of violence both in and outside of prison, the Black Stone Gorilla Gang is a fierce threat to New Yorkers.  Today’s arrests have put an alleged murderer in jail along with 13 other gang associates allegedly embedded in racketeering, fraud, firearms, narcotics trafficking and/or assaults.  I thank our law enforcement partners for their collaboration and partnership.” 

NYCDOC Commissioner Cynthia Brann said:  “Our Correction Intelligence Bureau works tirelessly to reduce violence and increase safety in our facilities, and we are proud of their hard work in this case, which involved many hours of collaboration with our fellow law enforcement partners.  Gang activity drives a disproportionate amount of violence in our city, in both the streets and the jails, and because of these efforts both communities are safer.”

HSI Special Agent in Charge Peter C. Fitzhugh said:  “HSI is always willing to assist our law enforcement partners in any criminal investigation where our resources, capabilities and personnel can be of value.  Bringing these dangerous individuals to face justice is why we invest in the specialized training and equipment we keep at the ready.  HSI and our law enforcement partners will continue to thrive in arresting those most dangerous because of the dedication and teamwork we put forward.”

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

ALEXANDER ARGUEDAS, a/k/a “Reckless,” MICHAEL DELAGUILA, a/k/a “Grizz,” STEVEN JUSTO, a/k/a “Riko,” DAVONTE BROWN, a/k/a “Tae,” JACOBB PADIN, a/k/a “Chino,” EDGARDO BARANCO, a/k/a “Slime,” ABBAS OZKURT, a/k/a “AB,” JAHVONNE CHAMBERS, a/k/a “JV,” DENISE BULLOCK, a/k/a “Mocha,” SIMONE CORDERO, a/k/a “Mixy,” MATTHEW NIEVES, a/k/a “WB,” TYERANCE MICKEY, a/k/a “Hoodlum,” and MARK BROCK, a/k/a “Rover,” are members and associates of the Black Stone Gorilla Gang, a racketeering enterprise that operates principally in the New York City metropolitan area and in the jails and prisons of New York City and the State of New York.  In order to enrich the enterprise, preserve and protect the power of the enterprise, and enhance its criminal operations, BSGG members and associates committed, conspired, attempted, and threatened to commit acts of violence, including murder and assaults; distributed and possessed with intent to distribute narcotics; committed robberies; engaged in bank fraud and wire fraud; and obtained, possessed, and used firearms.  BSGG members also evaded prosecution by law enforcement authorities through acts of intimidation and violence against potential witnesses to crimes committed by the gang.

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

In or around 2018, ARGUEDAS and others conspired to murder a fellow BSGG member who had fallen out of ARGUEDAS’s favor.  At ARGUEDAS’s direction, another gang member shot at that individual.

On or about August 27, 2018, at ARGUEDAS’s direction, CHAMBERS attempted to slash a rival gang member with a scalpel in the Bronx, New York.

On or about November 12, 2019, ARGUEDAS and MICKEY assaulted a fellow BSGG member with a chair in the vicinity of 3063 Hull Avenue in the Bronx, New York.

On or about November 12, 2019, BROCK slashed an individual across the face in Manhattan, New York.

The defendants are also charged with participating in a conspiracy to distribute heroin, cocaine, cocaine base, oxycodone, and marijuana from in or about 2011 through in or about March 2020.                

*                *                *

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

Mr. Berman praised the outstanding investigative work of the NYPD’s Gun Violence Suppression Division and Financial Crimes Task Force, the DEA, the NYCDOC Correction Intelligence Bureau, HSI, and the Special Agents of the U.S. Attorney’s Office.

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

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

COUNT

CHARGE

DEFENDANTS

MAX. PENALTY

Count One

Racketeering Conspiracy

18 U.S.C. § 1962(d)

ALEXANDER ARGUEDAS

MICHAEL DELAGUILA

STEVEN JUSTO

DAVONTE BROWN

JACOBB PADIN

EDGARDO BARANCO

ABBAS OZKURT

DENISE BULLOCK

SIMONE CORDERO

MATTHEW NIEVES

Life imprisonment

JAHVONNE CHAMBERS

20 years’ imprisonment

Count Two

Murder in Aid of Racketeering

18 U.S.C. §§ 1959 and 2

ALEXANDER ARGUEDAS

Death or life Imprisonment;

Mandatory minimum of life imprisonment

Count Three

Murder through the Use of a Firearm

18 U.S.C. §§ 924(j) and 2

ALEXANDER ARGUEDAS

Death or life imprisonment;

Mandatory minimum of five years’ imprisonment

Count Four

Conspiracy to Commit Murder in Aid of Racketeering and Assault with a Dangerous Weapon in Aid of Racketeering

ALEXANDER ARGUEDAS

10 years’ imprisonment

Court Five

Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering

18 U.S.C. §§ 1959 and 2

ALEXANDER ARGUEDAS

20 years’ imprisonment 

Count Six

Firearms offense

18 U.S.C. §§ 924(c) and 2

ALEXANDER ARGUEDAS

Life imprisonment

Mandatory minimum of ten years’ imprisonment

Count Seven

Attempted Assault with a Dangerous Weapon in Aid of Racketeering

18 U.S.C. §§ 1959 and 2

ALEXANDER ARGUEDAS

JAHVONNE CHAMBERS

3 years’ imprisonment

Count Eight

Assault with a Dangerous Weapon in Aid of Racketeering

18 U.S.C. §§ 1959 and 2

ALEXANDER ARGUEDAS

TYERANCE MICKEY

20 years’ imprisonment

Count Nine

Maiming, Assault with a Dangerous Weapon, and Assault Resulting in Serious Bodily Injury in Aid of Racketeering

18 U.S.C. §§ 1959 and 2

MARK BROCK

20 years’ imprisonment

Count Ten

Narcotics Conspiracy

21 U.S.C. § 846

ALEXANDER ARGUEDAS

MICHAEL DELAGUILA

STEVEN JUSTO

DAVONTE BROWN

JACOBB PADIN

EDGARDO BARANCO

ABBAS OZKURT

DENISE BULLOCK

SIMONE CORDERO

MATTHEW NIEVES

ANDRE CURRY

Life

Mandatory minimum of 10 years’ imprisonment

Count Eleven

Firearms Offense

18 U.S.C. §§ 924(c) and 2

ALEXANDER ARGUEDAS

MICHAEL DELAGUILA

STEVEN JUSTO

JACOBB PADIN

EDGARDO BARANCO

ABBAS OZKURT

MATTHEW NIEVES

ANDRE CURRY

Life

Mandatory minimum of 5 years’ imprisonment

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that CRISTIAN FERNANDEZ was sentenced to 204 months in prison for conspiring to distribute heroin and possessing firearms in furtherance of drug trafficking between 2017 and 2018.  Fernandez pled guilty on December 5, 2019, before U.S. District Court Judge Vincent L. Briccetti, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Cristian Fernandez was a leader of a transnational criminal organization that trafficked illegal guns and drugs.  Today he was handed the lengthy prison sentence his crimes deserve.”

According court filings and statements made at public court proceedings:

Between 2017 and 2018, FERNANDEZ led a transnational criminal organization that trafficked drugs and guns in Port Chester, New York, and other locations throughout the United States.  FERNANDEZ received kilograms of heroin from a supplier in Mexico and headed a network of co-conspirators who helped distribute the drugs for profit in different parts of the United States. 

In addition to trafficking drugs, FERNANDEZ also operated a firearms business, through which he sold and possessed at least six firearms, five of which were operable.  In one transaction, on December 12, 2017, FERNANDEZ sold a 7.62 millimeter AK-type rifle with evidence of discharge in the barrel and a 20-gauge shotgun, both operable, along with nearly 450 grams of heroin mixed with fentanyl for the total price of $25,600.

*                *                *

In addition to the prison term, FERNANDEZ, 45, of Port Chester, New York, was sentenced to five years of supervised release and ordered to forfeit $570,000, including $51,869 in cash that was seized from his residence on the day of his arrest.

 Mr. Berman praised the outstanding investigative work of the FBI and the Port Chester Police Department.  Mr. Berman also thanked the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Westchester County Police Department, and the Peekskill Police Department for their assistance in this investigation. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Olga Zverovich and Samuel Adelsberg are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Douglas Shoemaker, the Special Agent in Charge of the New York Regional Investigations Office of the United States Department of Transportation Office of Inspector General (“DOT-OIG”), and Carolyn Pokorny, Metropolitan Transportation Authority Inspector General for the State of New York (“MTA-OIG”), announced that PARESH PATEL, a former MTA manager, pled guilty today before U.S. Magistrate Judge Ona T. Wang to obstructing a federal investigation into bid rigging and fraud in connection with contracts awarded by the MTA for Superstorm Sandy-related subway repairs.  PATEL, who set up a private company that participated in a bid for a project that he would oversee at the MTA, took numerous steps upon learning that his conduct was being investigated, including deleting an email account, asking others to destroy evidence, and encouraging others to lie to authorities to obstruct the investigation.  PATEL previously surrendered to federal authorities on February 18, 2020. 

U.S. Attorney Geoffrey S. Berman said:  “In the wake of Superstorm Sandy, Paresh Patel set up a company so that he and his family could profit from the work that was being done to repair our subways.  When Patel learned he was under investigation, he destroyed evidence and asked others to lie to federal and local investigators.  Efforts to obstruct investigations into corruption at the MTA undermine the public’s faith in the nation’s largest public transportation system and threaten the ability of our Government to ensure that justice is done.”

DOT-OIG Special Agent in Charge Douglas Shoemaker said:  “The devastation caused by Hurricane Sandy is only exacerbated by the unscrupulous actions of Mr. Patel, who was entrusted with aiding in the restoration of the New York region’s transit infrastructure. Working with our law enforcement and prosecutorial partners, we will continue to protect the taxpayers’ investment in our nation’s infrastructure and pursue those who participate in fraud schemes that undermine DOT-funded programs and projects, and the public trust.”

MTA Inspector General Carolyn Pokorny said:  “It is simply unacceptable for an MTA employee to obstruct any investigation - let alone a criminal investigation.  We are proud that our initial probe has resulted in derailing this scheme to defraud riders, taxpayers, and other stakeholders of our great transportation system, and thankful to our law enforcement partners who worked with us to leave no doubt that obstructing a federal investigation is a crime.”

According to the allegations made in the Information to which the defendant pled guilty, as well as the defendant’s admissions in court:

In order to manage necessary subway rehabilitation work following Superstorm Sandy in 2013, the MTA awarded construction management contracts for managers to oversee post-Sandy subway projects.  To prevent self-dealing and the appearance of corruption, the MTA maintains rules relating to conflicts of interest.  The rules provide that MTA employees are barred from participating in the selection, award, or administration of a contract if the employee, his or her family member, or an organization that employs the employee or one of the employee’s family members has a financial interest in any of the companies that propose or bid on, or are awarded, such a contract.

PATEL was a program manager at the MTA and was responsible for awarding contracts and exercising oversight of Superstorm Sandy-related subway repairs.  In June 2014, PATEL and another MTA employee set up an engineering consulting firm named Satkirti Consulting Engineering LLC (“Satkirti”).  Because MTA rules prohibited them from having an interest in such a company, PATEL and the other employee registered Satkirti in the names of their children, and then transferred the ownership to a friend of PATEL who played no substantive role in the management of Satkirti.  In February 2015, Satkirti was awarded a contract as a subcontractor on the Joralemon Tube subway rehabilitation project, which project PATEL would oversee in his role at the MTA.  Although the technical employees of Satkirti who sought and carried out the subcontract were PATEL’s friend, who had no background or qualifications in engineering, and a second individual who PATEL recruited from a pizzeria owned by PATEL, PATEL directed the operations of Satkirti and its employees while concealing his involvement with the company.  Among other things, PATEL created a company email account for Satkirti, and instructed Satkirti’s employees about what to write in emails.  On many occasions, PATEL instructed Satkirti’s employees not to mention PATEL’s name and reminded them that PATEL was not supposed to be involved in the operation of Satkirti.

In the spring of 2016, MTA-OIG launched an investigation, later joined by the DOT-OIG and the U.S. Attorney’s Office, into the contract that was awarded to Satkirti.  MTA-OIG served subpoenas and conducted interviews with individuals involved in Satkirti, many of whom made false statements about their and PATEL’s involvement in the company.  After MTA-OIG began serving subpoenas, PATEL told one of Satkirti’s employees to delete from his personal email account all emails with PATEL.  On November 16, 2016, after federal investigators began serving grand jury subpoenas, PATEL deleted the Satkirti company email account, which contained records of Satkirti’s business and evidence that would have connected PATEL to Satkirti.  Over the course of the MTA-OIG and federal investigation, at the request of PATEL, several individuals questioned by investigators also concealed and lied about PATEL’s involvement in Satkirti. 

*                *                *

PARESH PATEL, 59, of Paramus, New Jersey, pled guilty to one count of obstruction of justice, which carries a maximum sentence of 20 years in prison. 

PATEL will be sentenced by U.S. District Judge Kimba M. Wood on a date to be determined. 

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

Mr. Berman praised the outstanding investigative work of the special agents from the DOT-OIG and investigators at the MTA-OIG.

The case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Nicolas Roos and Ryan B. Finkel are in charge of the prosecution.

Geoffrey S. Berman, 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”), Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), Catherine A. Hermsen, U.S. Food and Drug Administration Assistant Commissioner for Criminal Investigations (“FDA-OCI”), and Troy Miller, Director of Field Operations for U.S. Customs and Border Protection in New York (“CBP”), announced the unsealing of four indictments charging 27 individuals with offenses relating to the systematic and covert administration of illegal performance-enhancing drugs (“PEDs”) to racehorses competing across the United States and abroad. The Indictments unsealed today each allege the shipment and administration of adulterated and misbranded drugs designed to secretly and dangerously enhance the racing performance of horses beyond their natural ability, a dishonest practice that places the lives of affected animals at risk.

Of the 27 defendants, 19 – including trainers JORGE NAVARRO and JASON SERVIS – are charged in an indictment detailing four conspiracies to manufacture, distribute, and administer adulterated or misbranded drugs as set forth in United States v. Jorge Navarro, et al., 20 Cr. 160 (the “Navarro Indictment”), which has been assigned to U.S. District Judge Mary Kay Vyskocil.  Of those defendants, 13 were taken into federal custody and are expected to be presented in the Southern District of New York today before U.S. Magistrate Judge Ona T. Wang.  Defendant SETH FISHMAN was previously charged by complaint in United States v. Seth Fishman, 19 Mag. 10120, and arrested on October 28, 2019, in Miami, Florida, and was presented in U.S. District Court for the Southern District of Florida. The remaining defendants were arrested today outside of the Southern District of New York and adjacent districts, and will be presented today before the appropriate District Courts.

Four additional defendants are charged in United States v. Louis Grasso, et al., 20 Cr. 163 (the “Grasso Indictment”), which has been assigned to U.S. District Judge P. Kevin Castel.  Two defendants are charged in United States v. Scott Robinson and Scott Mangini, 20 Cr. 162 (the “Robinson Indictment”), assigned to U.S. District Judge J. Paul Oetken; and two defendants are charged in United States v. Sarah Izhaki and Ashley Lebowitz, 20 Cr. 161 (the “Izhaki Indictment”), assigned to U.S. District Judge Mary Kay Vyskocil. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Today’s unsealing of four indictments for widespread doping of racehorses is the largest ever of its kind from the Department of Justice.  These defendants engaged in this conduct not for the love of the sport, and certainly not out of concern for the horses, but for money.  And it was the racehorses that paid the price for the defendants’ greed.  The care and respect due to the animals competing, as well as the integrity of racing, are matters of deep concern to the people of this District and to this Office.”

FBI Assistant Director William F. Sweeney Jr. said:  “These men allegedly saw the $100 billion dollar global horse racing industry as their way to get rich at the expense of the animals that were doing all the hard work.  Our investigation reveals the cruelty and inhumane treatment these horses suffered all to win a race.  The FBI New York Joint Eurasian Organized Crime Task Force worked along with our law enforcement partners at the New York State Police, FDA, and DEA to stop this ring of criminals from abusing helpless animals simply so they could cheat the odds and rake in millions of dollars.”

Police Commissioner Dermot Shea said:  “I want to commend our NYPD investigators, working with our federal partners, for carrying out a meticulous and important investigation. Putting the lives of horses at the center of an alleged plot to cheat professional horseracing around the world can never be accepted.”

FDA Assistant Commissioner for Criminal Investigations Catherine A. Hermsen said:  “The FDA is responsible for protecting not only the health of humans, but also of animals.  The manufacturing and trafficking of misbranded and unapproved animal drugs, and the administering of such drugs to racehorses to enhance their performance at the track, seriously endangers the health of these animals in pursuit of financial gain.  Today’s announcement should serve as a reminder of our continued focus on those individuals and companies that put profits ahead of the public health.”

CBP Director of Field Operations Troy Miller said:  “U.S. Customs and Border Protection is proud to have collaborated with our fellow law enforcement partners during this investigation. We value our partnerships and the arrests today demonstrate that together, no matter how complex the case, we will do what it takes to bring those who violate the law to justice.”

According to the allegations contained in the Indictments,[1] other filings in this case, and statements during court proceedings:

The charges in these four Indictments arise from an investigation of widespread schemes by racehorse trainers, veterinarians, PED distributors, and others to manufacture, distribute, and receive adulterated and misbranded PEDs and to secretly administer those PEDs to racehorses competing at all levels of professional horseracing.  By evading Food and Drug Administration (“FDA”) rules and regulations, as well as prohibitions against the use of PEDs, and by deceiving regulators and horse racing officials, participants in these schemes sought to improve race performance and obtain prize money from racetracks throughout the United States and other countries, including in New York, New Jersey, Florida, Ohio, Kentucky, and the United Arab Emirates (“UAE”), notwithstanding the detriment and risk of the health and well-being of the racehorses.   Trainers who participated in the schemes stood to profit from the success of racehorses under their control by earning a share of their horses’ winnings, and by improving their horses’ racing records, thereby yielding higher trainer fees and increasing the number of racehorses under their control.  Veterinarians and drug distributors simply profited from the callous sale and administration of these medically unnecessary substances.

The Navarro Indictment

The Navarro Indictment charges 19 individuals representing a cross-section of corruption throughout the Thoroughbred and Standardbred racing industries.  As alleged, JORGE NAVARRO, a racehorse trainer, has participated in the doping of horses under his control using a variety of PEDs, including customized PEDs designed in part to evade normal anti-doping tests administered by racing regulators.  NAVARRO operated his doping scheme covertly, using a straw man to receive certain products designed to mask the presence of PEDs, avoiding explicit discussion of PEDs during certain telephone calls, and working with others to coordinate the administration of PEDs at times that racing officials would not detect such cheating.

NAVARRO trained and doped XY Jet, a thoroughbred horse that won the 2019 Golden Shaheen race in Dubai.  As alleged, NAVARRO was intercepted during telephone conversations discussing his doping practices, and administered PEDs to XY Jet.  Among NAVARRO’s preferred PEDs were various “blood building” drugs, which, when administered before intense physical exertion, can lead to cardiac issues or death.  NAVARRO announced XY Jet’s death, as the result of an apparent heart attack, in January of this year.  Investigation of the circumstances of that death remains ongoing.

NAVARRO was assisted by many of the charged defendants in the Navarro Indictment, and also assisted others, including JASON SERVIS, in obtaining adulterated and misbranded drugs to dope racehorses.

As alleged, SERVIS doped virtually all horses under his control, including Maximum Security, the horse that crossed the finish line first in the 2019 Kentucky Derby before being disqualified for interference.  Among the misbranded and adulterated PEDs used by SERVIS was the drug “SGF-1000,” marketed and sold by defendant MICHAEL KEGLEY JR., among others, and which is compounded and manufactured in unregistered facilities.  SGF-1000, like many other customized PEDs, may cause racehorses to perform beyond their natural abilities, thereby increasing the risk of injuries.  SERVIS and others working with him, including veterinarians KRISTIAN RHEIN and ALEXANDER CHAN, attempted to conceal SERVIS’s doping practices through the use of falsified veterinary bills and fake prescriptions. SERVIS also tipped off NAVARRO to the presence of racing officials searching for signs of illegal doping. NAVARRO expressed his relief regarding SERVIS’ “tip”:  “[The track official] would’ve caught our asses fucking pumping and pumping and fuming every fucking horse [that] runs today.”

The Navarro Indictment also includes charges against veterinarian SETH FISHMAN who also created and shipped adulterated and misbranded drugs. As alleged, SETH FISHMAN, along with LISA GIANNELLI, JORDAN FISHMAN, and others, developed and distributed multiple illegal PEDs.  Those included “blood building” drugs specifically designed to evade anti-doping testing regimes.  On one occasion, SETH FISHMAN touted precisely this deceptive aspect of his illegal PEDs:  “[D]on’t kid yourself: if you’re giving something to a horse to make it better, and you’re not supposed to do that. . . .  That’s doping.  You know, whether or not it’s testable, that’s a different story.”

Finally, the Navarro Indictment includes charges against trainer NICHOLAS SURICK who, among other things, distributed the adulterated and misbranded PED “red acid” (an anti-inflammatory drug) to NAVARRO.  SURICK also obtained and administered other adulterated and misbranded PEDs to horses under his care, including administering the blood building drug Epogen to the racehorse Northern Virgin.  SURICK and others then took extraordinary steps to physically conceal Northern Virgin from New Jersey state regulators seeking to test horses under SURICK’s control, for which SURICK is also charged with obstruction.  

The Grasso Indictment

The Grasso Indictment charges four defendants, including veterinarian LOUIS GRASSO, with conspiring to violate the misbranding laws of the United States.  As alleged, GRASSO manufactured, sold, and distributed adulterated and misbranded PEDs for use on racehorses.  GRASSO also obtained and distributed other PEDs, including snake venom, a type of pain blocking substance.  GRASSO worked with DONATO POLISENO, a Delaware-based distributor of PEDs manufactured by GRASSO and others.  The Grasso Indictment also charges two horse trainers, THOMAS GUIDO III and CONOR FLYNN, with, among other things, causing the shipment of adulterated and misbranded PEDs prior to administering those drugs to horses under their control.  The dangers of that practice are reflected in the death of a horse doped by GUIDO in or about October 2019, about which GRASSO commented:  “I’ve seen that happen 20 times.” 

The Robinson Indictment

SCOTT ROBINSON and SCOTT MANGINI are each charged with misbranding and adulteration conspiracies in the Robinson Indictment.  As alleged, the two defendants previously collaborated in running online marketplaces selling adulterated and misbranded PEDs for racehorses.  The drugs distributed through the defendants’ websites were manufactured in non-FDA registered facilities and carried significant risks to the animals affected through the administration of those illicit PEDs.  In one instance, on January 2, 2016, ROBINSON forwarded a customer complaint to MANGINI:  “I [i.e., a customer contacting ROBINSON] ordered some [PED-1] . . . 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, “here is another one.”

The Izhaki Indictment

The fourth Indictment unsealed today, the Izhaki Indictment, charges SARAH IZKAHI and ASHLEY LEBOWITZ in connection with their distribution of an adulterated and misbranded blood builder sourced illegally from a Mexico-based pharmaceutical company.  As alleged, IZHAKI has obtained this substance by smuggling the drug into the United States, where IZHAKI and LEBOWITZ distribute the drug to horse trainers in and around the New York City area.

*                *                *

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

Mr. Berman praised the outstanding investigative work of the FBI and the FBI’s Integrity in Sports and Gaming Initiative.  Mr. Berman 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 Customs and Border Protection, the Food and Drug Administration and 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.

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

The Indictments are posted on our website under the heading "Indictments in Horse Doping Case."

Navarro Indictment

Count

Charge

Defendants

Max. Penalty

Count One

Misbranding Conspiracy

18 U.S.C. § 371

JORGE NAVARRO

ERICA GARCIA

MARCOS ZULUETA

MICHAEL TANNUZZO

GREGORY SKELTON

ROSS COHEN

SETH FISHMAN

CHRISTOPHER OAKES

NICHOLAS SURICK

5 years’ imprisonment.

Count Two

Misbranding Conspiracy

18 U.S.C. § 371

SETH FISHMAN

LISA GIANNELLI

JORDAN FISHMAN

RICK DANE JR.

5 years’ imprisonment.

Count Three

Misbranding Conspiracy

18 U.S.C. § 371

JASON SERVIS

KRISTIAN RHEIN

MICHAEL KEGLEY JR.

ALEXANDER CHAN

HENRY ARGUETA

JORGE NAVARRO

5 years’ imprisonment.

Count Four

Misbranding Conspiracy

18 U.S.C. § 371

NICHOLAS SURICK

REBECCA LINKE

CHRISTOPHER MARINO

5 years’ imprisonment.

Count Five

Obstruction

18 U.S.C. §§ 1512(b)(3) & 2

NICHOLAS SURICK

20 years’ imprisonment.

Count Six

Obstruction

18 U.S.C. §§ 1512(c) & 2

NICHOLAS SURICK

20 years’ imprisonment.

Grasso Indictment

Count

Charge

Defendants

Max. Penalty

Count One

Misbranding Conspiracy

18 U.S.C. § 371

LOUIS GRASSO

DONATO POLISENO

CONOR FLYNN

THOMAS GUIDO III

5 years’ imprisonment.

Robinson Indictment

Count

Charge

Defendants

Max. Penalty

Count One

Misbranding Conspiracy

18 U.S.C. § 371

SCOTT ROBINSON

SCOTT MANGINI

5 years’ imprisonment.

Count Two

Misbranding Conspiracy

18 U.S.C. § 371

SCOTT ROBINSON

5 years’ imprisonment.

Count One

Misbranding Conspiracy

18 U.S.C. § 371

SCOTT MANGINI

5 years’ imprisonment.

Izhaki Indictment

Count

Charge

Defendants

Max. Penalty

Count One

Misbranding Conspiracy

18 U.S.C. § 371

SARAH IZHAKI

ASHLEY LEBOWITZ

5 years’ imprisonment.

Count Two

Smuggling

18 U.S.C. §§ 545 & 2

SARAH IZHAKI

20 years’ imprisonment.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that MICHAEL SOLOMON MARKOWITZ, a/k/a “Sol Markowitz,” and DAVID BINET pled guilty to conspiring to steal hundreds of thousands of dollars in advance fees from victims seeking standby letters of credit (“SBLCs”).  BINET pled guilty today, while MARKOWITZ pled guilty on February 26, 2020.  Both defendants pled guilty before U.S. District Judge Paul A. Engelmayer.

U.S. Attorney Geoffrey S. Berman said:  “As they admitted in court, Michael Solomon Markowitz and David Binet perpetrated an advance fee scheme whose victims paid hundreds of thousands of dollars for phantom letters of credit.  Now they both face the very real possibility of being sentenced to prison for their crimes.”

According to the Complaint, the Informations to which MARKOWITZ and BINET pled guilty, and court filings and statements made in public court proceedings:

SBLCs are financial instruments that provide a bank’s commitment to pay a third party in the event that the bank’s client defaults on an agreement with the third party.  An SBLC is a “standby” agreement because the bank will have to pay only in a worst-case scenario where the client defaults on an ongoing agreement.  Fraudulent SBLCs are frequently used in advance-fee schemes so that victims provide funds up front in exchange for the promise of an SBLC.  In reality, and in fact, the victim never receives the SBLC or receives a fake SBLC. 

Since at least 2012 through 2019, MARKOWITZ and BINET engaged in a scheme to defraud victims by inducing them to pay six-figure advance fees in exchange for an SBLC.  MARKOWITZ and BINET purported to be able to help companies and individuals obtain financing for international projects, such as oil and gas projects in Africa.  In fact, MARKOWTIZ and BINET stole the advance fees and never obtained SBLCs.

MARKOWITZ further admitted that he conspired to commit bank fraud by providing fraudulent proof-of-funds letters and SBLCs worth more than $25 million to financial institutions.  On some occasions, MARKOWITZ used fake financial institutions incorporated in Switzerland to provide a veneer of legitimacy for the transactions.

*                *                *

MARKOWITZ, 71, of Brooklyn, New York, pled guilty to one count of conspiracy to commit wire fraud and bank fraud, which carries a maximum sentence of five years in prison.  He is scheduled to be sentenced by Judge Engelmayer on June 8, 2020.

BINET, 62, of New Jersey, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison.  He is scheduled to be sentenced by Judge Engelmayer on June 15, 2020.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the special agents for the United States Attorney’s Office for the Southern District of New York. 

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys David Abramowicz, Jilan Kamal, and Michael McGinnis are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Guido Modano, Special Agent in Charge of the New York Field Office of the Department of Justice Office of the Inspector General (“DOJ OIG”), announced today the unsealing of a Complaint in Manhattan federal court charging corrections officers JERMAINE HARMON, a/k/a “Mel,” KHARI FAISON, a/k/a “Country,” and COMPTON RICHMOND, a/k/a “Rich,” with taking bribes in exchange for smuggling contraband into a private detention facility in Queens, New York, which houses federal inmates pursuant to a contract with the United States Marshals Service (the “Jail”). 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these correction officers abused the power entrusted to them and compromised the safety of the very institution they swore to protect by taking bribes in exchange for smuggling contraband to the inmates in their custody.  We remain committed to rooting out corruption anywhere it takes hold – from the halls of power to the corridors of our correctional facilities.”

DOJ OIG Special Agent in Charge Guido Modano said:  “The public relies on Correctional Officers to maintain order and uphold the law.  Instead, these three Correctional Officers allegedly accepted bribes for smuggling drugs and cell phones into the jail, endangering their fellow Correctional Officers, staff, inmates and the public, and also jeopardizing the security of the jail facility.”

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

HARMON, FAISON, and RICHMOND were all, at relevant times, correction officers at the Jail.  As alleged, HARMON, FAISON, and RICHMOND took bribes from numerous inmates housed at the Jail in exchange for smuggling contraband to those inmates, including marijuana and, in HARMON and FAISON’s case, smokeable synthetic cannabinoids (“K2”).  The bribes were funneled to HARMON, FAISON, and RICHMOND by non-incarcerated friends and relatives of the inmates either in cash or via a cellphone payment application.  For example, on at least four occasions in 2019, HARMON is alleged to have received bribes from an inmate (“Inmate-1”) in exchange for smuggling marijuana and cigarettes into the Jail.  HARMON warned Inmate-1 to “stay low” and “be careful” and offered Inmate-1 marijuana to assault inmates whom HARMON believed to be providing information about him, but Inmate-1 declined.  On multiple occasions in 2019, HARMON took bribes from another inmate (“Inmate-2”) in exchange for smuggling marijuana, K2, and cigarettes into the Jail.  On at least four occasions in 2019, FAISON is alleged to have accepted bribes from two inmates (“Inmate-8” and “Inmate-9”) in exchange for smuggling marijuana, K2, cigarettes, and a cellphone into the Jail.  On at least two occasions in 2019, RICHMOND is alleged to have taken bribes from one of the same inmates who bribed FAISON (Inmate-9) in exchange for smuggling contraband, including marijuana, into the Jail.  As alleged, in most instances, RICHMOND, HARMON, and FAISON obtained the contraband, including marijuana and K2, from non-incarcerated associates of the inmates; those non-incarcerated associates also paid cash bribes, either in person or via mobile applications, to RICHMOND, HARMON, and FAISON.

*                      *                      *

JERMAINE HARMON, 32, of Brooklyn, New York, KHARI FAISON, 26, of Brooklyn, New York, and COMPTON RICHMOND, 24, of Staten Island, New York, each have been charged in the Complaint with one count of conspiracy to commit bribery and to introduce contraband into prison, which carries a maximum prison term of five years, and one count of bribery, which carries a maximum prison term of 15 years.

Mr. Berman praised the investigative work of the DOJ Office of Inspector General in this investigation.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Maurene Comey and Jessica Lonergan 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 constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Jonathan D. Larsen, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation ("IRS-CI"), announced that ANTONIO NIKC, a Chappaqua businessman, pled guilty to tax evasion for the calendar years 2010 through 2014.  As part of his plea, NIKC agreed to pay $395,745 in restitution to the Internal Revenue Service (“IRS”).  NIKC pled guilty on March 3 before U.S. Magistrate Judge Lisa Margaret Smith. 

U.S. Attorney Geoffrey S. Berman said:  “As he admitted, Antonio Nikc used family businesses to conceal his substantial income and prevent the IRS from calculating his tax due.  While using the business accounts to fund his extravagant lifestyle, Nikc failed to file any personal income tax returns.  Now Nikc awaits sentencing for his crime.”

IRS-CI Special Agent in Charge Jonathan D. Larsen said:  "Our tax system is based on voluntary compliance and we will hold those accountable who fail to report their income out of greed.  IRS-CI special agents will continue to pursue those who take advantage of our tax system."

According to the allegations contained in the Information to which NIKC pled guilty and statements made in court:

From 2010 to 2015, NIKC managed a number of family businesses that operate large rental buildings in New York and Connecticut.  NIKC ran these businesses and managed his personal finances in a manner designed to conceal his sources of income and prevent the IRS from calculating or assessing his tax due.  NIKC treated the business entities’ bank accounts as his own personal bank accounts, using them to pay for more than $1.5 million in personal expenses, including oceanside condominiums in Miami, marina fees for a boat docked in Miami, airline tickets, luxury car payments, college tuition and allowances for his children, and purchases at jewelry stores, clothing stores, and restaurants.

Despite earning and spending a substantial income, NIKC failed to file any personal federal income tax returns and failed to pay any taxes due and owing on the income he received.  NIKC took various affirmative steps to evade the assessment of taxes on that income, including paying for personal expenses out of the family business accounts and intentionally maintaining few assets in his own name.  Through this scheme, NIKC evaded $395,745 in federal income taxes.   

*                *                *

NIKC, 58, of Chappaqua, New York, pled guilty to one count of tax evasion, which carries a maximum sentence of five years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  NIKC is scheduled to be sentenced by U.S. District Judge Nelson S. Román on June 5, 2020, at 11:00 a.m.

Mr. Berman praised the outstanding work of the Internal Revenue Service, Criminal Investigation, in this case.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney Jim Ligtenberg is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that BARBARA MEYZEN, a/k/a “Bobbie Meyzen,” the owner and operator of La Cremaillere Restaurant in Banksville, New York, pled guilty to wire fraud in connection with her multi-year scheme to defraud the restaurant’s lenders, mortgagee, bankruptcy creditors, and customers.  MEYZEN pled guilty before the Honorable Vincent L. Briccetti in White Plains federal court today.

U.S. Attorney Geoffrey S. Berman said:  “Barbara Meyzen ran a renowned restaurant that served fine French food.  As she admitted today, she also cooked the books and engaged in wholesale fraud, and deceived creditors, the bankruptcy trustee, and FBI agents.  That is a recipe for federal prosecution and a potential prison sentence.”

According to the allegations in the Superseding Information to which MEYZEN pled guilty and other court documents:

MEYZEN has owned and operated the La Cremaillere Restaurant in Banksville, New York, since 1993.  From August 2015 to July 2016, MEYZEN submitted applications for credit on behalf of La Cremaillere to at least nine lenders, factors, and financiers.  In support of those applications, MEYZEN gave the potential lenders La Cremaillere’s bank statements that she had modified to change negative balances to positive balances; to remove references to checks returned for insufficient funds; and to reduce service fees.  For example, MEYZEN modified one month’s statement to change a negative beginning balance of $32,865.57 to a positive beginning balance of $27,766.29; to change from negative to positive the negative ending balance for that month of $5,268.13; and to change service charges of $2,385.60 to $8.00.  When one lender discovered that MEYZEN had altered the bank statements, MEYZEN created an email account in the name of one of the bank’s officers and sent the lender an email in which she, in the guise of the bank officer, told the lender that the statements were genuine.

MEYZEN also falsely represented to the same lender that the second mortgage on the restaurant’s property in Banksville had been discharged.  She created a false satisfaction of mortgage on which she forged the signature of a representative of the restaurant’s second mortgagee, who is MEYZEN’s relative by marriage.  MEYZEN filed the false satisfaction of mortgage with the Westchester County Clerk, paid the Clerk’s filing fee, and sent a copy of the filed satisfaction of mortgage to the lender.  MEYZEN later denied filing the false satisfaction of mortgage or paying the filing fee when she was interviewed by special agents of the FBI.  She told the FBI that she believed a loan broker with whom she had worked in the past, and whom she identified by name, had filed the false satisfaction of mortgage.

Throughout the summer of 2017, MEYZEN charged more than $80,000 in food and restaurant supplies to one of the restaurant’s customers who had left her credit card number on file at the restaurant.  When the customer discovered the charges, MEYZEN claimed the charges were a mistake and repeatedly promised to resolve the problem.  MEYZEN gave the customer two checks in a total amount of $32,000, but the checks bounced.  When she was interviewed by the FBI, MEYZEN denied knowing anything about unauthorized charges to the customer’s credit card or ever speaking with the customer about the unauthorized charges.  MEYZEN also denied giving the customer checks.

Meyzen Family Realty Associates, LLC, which owns the real property from which the restaurant operates, filed for bankruptcy in the U.S. Bankruptcy Court in White Plains in September 2018.  La Cremaillere Restaurant Corp., which operates the restaurant, filed for bankruptcy in April 2019.  MEYZEN is a part owner of both entities.  In May 2019, MEYZEN misled the office of the United States Trustee, which oversees bankruptcy cases, about insurance coverage on the restaurant property.  MEYZEN caused her bankruptcy counsel to give the United States Trustee and an attorney for Meyzen Family Realty’s largest creditor documents indicating that the property was insured when, in fact, the insurance coverage had been canceled months earlier for nonpayment.  MEYZEN knew that the coverage had been canceled because her insurance broker had communicated with her several times about the cancellation of the policies.  In June 2019, MEYZEN falsely testified under oath in a deposition conducted by the United States Trustee that she was not aware that the insurance had been canceled when she caused her attorney to turn the documents over to the United States Trustee. 

Two days after La Cremaillere filed for bankruptcy in April 2019, MEYZEN opened a bank account in her name and diverted more than $40,000 of the restaurant’s credit card receipts to that account.  MEYZEN used a portion of that money to make payments to a food distributor and to an in-home nursing service.  This account was closed on May 1, 2019.  On May 7, 2019, MEYZEN opened an account in the name of Honey Bee Farm, LLC, at another bank and diverted La Cremaillere’s credit card receipts, as well as $20,000 in advances on La Cremaillere’s future credit card revenue, to that account.  MEYZEN used a portion of that money to make a payment on Meyzen Family Realty’s mortgage and to pay food distributors, two wine wholesalers, a commercial trash service, a tableware and china company, and an employee of La Cremaillere.

*                *                *

MEYZEN, 57, of Redding, Connecticut, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of MEYZEN will be determined by a judge.  MEYZEN is scheduled to be sentenced by Judge Briccetti on June 24, 2020.

Mr. Berman praised the outstanding investigative work of the FBI and the Office of Internal Affairs, New York State Department of Taxation and Finance.

The prosecution of this case is being handled by the Office’s White Plains Division.  Assistant United States Attorney James McMahon is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Raymond P. Donovan, Special Agent in Charge of the New York Office of the Drug Enforcement Administration (“DEA”), and Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing today of an Indictment charging EDWARD ABREU, ALICIA ARIAS, LUIS FRIAS, TIMOTHY WALLACE, a/k/a “Larry,” DEREK LIVINGSTON, a/k/a “Wiz,” CHARKEEM PAYNE, a/k/a “Lite,” CAROL LANE, TRACEY SMITH, a/k/a “Trey,” HERMAN STEWARD, TASHA BURNETT, a/k/a “Dutchis,” TYRISS GWYNN, EDGAR MONTES, a/k/a “E,” and FERNANDO DISLA, a/k/a “Lolo,” with participating in a conspiracy to distribute cocaine and crack cocaine.  Eight defendants were taken into custody today and will be presented this afternoon before United States Magistrate Judge Kevin Nathaniel Fox.  Four defendants were previously presented after being taken into custody and one defendant remains at large. The case is assigned to United States District Judge Denise L. Cote.

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the indictment, the defendants in this case brought cocaine and crack into our communities for well over a year.  Thanks to the extraordinary work of the NYPD and DEA, the defendants will now face justice in federal court.”

DEA Special Agent in Charge Ray Donovan said:  “The Gunna Ave gang’s alleged drug trafficking operations encouraged drug abuse and drove crime and violence in the community where they live.  Our partnership with the NYPD and U.S. Attorney’s Office focuses on disrupting drug trafficking organizations at all levels of distribution, as evidenced in this investigation.” 

NYPD Commissioner Dermot Shea said:  “I commend our investigators, together with our federal partners, for the great work throughout this investigation. The men and women of the NYPD work each day to eradicate illegal drugs from our City and ensure safety across every neighborhood.”

As alleged in the Indictment unsealed today in Manhattan federal court[1] and in statements on the record in court: 

EDWARD ABREU, ALICIA ARIAS, LUIS FRIAS, TIMOTHY WALLACE, a/k/a “Larry,” DEREK LIVINGSTON, a/k/a “Wiz,” CHARKEEM PAYNE, a/k/a “Lite,” CAROL LANE, TRACEY SMITH, a/k/a “Trey,” HERMAN STEWARD, TASHA BURNETT, a/k/a “Dutchis,” TYRISS GWYNN, EDGAR MONTES, a/k/a “E,” and FERNANDO DISLA, a/k/a “Lolo,” were members of a drug trafficking organization (the “DTO”) that distributed cocaine and crack cocaine within the Bronx, including in the vicinity of East 167th Street and Sheridan Avenue from at least in or about January 2019 through March 2020.  LIVINGSTON is also charged with having used and possessed a firearm in furtherance of the charged drug trafficking conspiracy and being a felon in possession of a firearm.

*                      *                     *

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

Mr. Berman praised the outstanding investigative work of the DEA and NYPD.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorney Thomas John Wright is in charge of the prosecution.

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

                                                                                                                                                                                                                    ###

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Narcotics conspiracy

21 U.S.C. § 846

EDWARD ABREU, 44,

ALICIA ARIAS, 36,

LUIS FRIAS, 40,

TIMOTHY WALLACE, 32,

a/k/a “Larry,”

DEREK LIVINGSTON, 32,

a/k/a “Wiz,”

CHARKEEM PAYNE, 32,

a/k/a “Lite,”

CAROL LANE, 52, and

TRACEY SMITH, 52,

a/k/a “Trey”

HERMAN STEWARD, 62,

TASHA BURNETT, 44,

a/k/a “Dutchis,”

EDGAR MONTES, 40,

a/k/a “E,” and

FERNANDO DISLA, 33,

a/k/a “Lolo”

TYRISS GWYNN, 34,

Life in prison

Mandatory minimum of 10 years in prison

40 years in prison

Mandatory minimum of 5 years in prison

20 years in prison

2

Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a drug trafficking crime

18 U.S.C. § 924(c)

DEREK LIVINGSTON,

a/k/a “Wiz”

Life in prison

Mandatory minimum of 5 years in prison

3

Felon in possession of a firearm

18 U.S.C. § 922(g)

DEREK LIVINGSTON,

a/k/a “Wiz”

10 years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Peter C. Fitzhugh, Special Agent in Charge of the New York Office of Homeland Security Investigations (“HSI”), announced today the arrest of HERODE CHANCY and MICHAEL ALBARELLA, who are both employed as managers at a Manhattan branch of a national bank (“Bank-1”), and ADEDAYO ILLORI for engaging in a scheme to fraudulently obtain business loans and to launder the proceeds of that scheme using a bank account opened with a stolen identity.  CHANCY, ALBARELLA, and ILORI were arrested in the New York metropolitan area and are expected to be presented before U.S. Magistrate Judge Kevin Nathaniel Fox in Manhattan federal court.   

U.S. Attorney Geoffrey S. Berman said:  “Bank employees, Herode Chancy and Michael Albarella, and another individual, Adedayo Illori, allegedly engaged in a scheme to use a stolen identity to secure over $1 million in illegal loans.  Furthermore, the defendants allegedly offered the underwriter of the fraudulent loans – who unbeknownst to them was an undercover law enforcement officer – a commission to carry out their scheme.  The defendants stated that they wanted to ‘bust out’ the ill-gotten loans, but ironically find themselves busted for serious federal crimes.”           

FBI Assistant Director William F. Sweeney Jr. said:  “The three subjects in this fraud scheme allegedly thought they could ‘bust out’ of a loan, and steal millions of dollars that wasn’t theirs.  But they got caught, and now they’ll have even more trouble ‘busting out’ of their next destination, a federal prison.  I want to commend the work done by our law enforcement partners and the FBI New York Joint Organized Crime Task Force, who do all they can to protect the public from fraudsters who use insiders to aid and hide their theft.”

HSI Special Agent in Charge Peter C. Fitzhugh said:  “Driven by greed, Chancy and Albarella, allegedly abused their positions as bank officials to perpetrate this loan ‘bust out’ scheme.  By allegedly conspiring with Ilori, the three men were responsible for fraudulently obtaining in excess of $1 million in loans while victimizing the lending institution.  Utilizing the expertise of HSI New York’s El Dorado Financial Crimes Task Force along with our law enforcement partners, this trio was arrested and will have to face criminal charges including money laundering, wire fraud, identity theft and bank bribery.”

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

From at least in or about March 2019 up to and including at least in or about March 2020, CHANCY and ILORI conspired to obtain business loans fraudulently from a third-party commercial lender with the intent to “bust out,” that is, not repay, the loans.  CHANCY and ILORI submitted eight fraudulent business loan applications for a total of $1,025,000 in business loans in furtherance of this scam.  The business loan applications submitted by CHANCY and ILORI included doctored bank statements and listed the identities of other persons as the loan applicants.  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 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.

To effect their illegal scheme, CHANCY and ILORI conspired with bank insider ALBARELLA to launder approximately $1 million of the expected proceeds of the loan scheme.  ALBARELLA opened a bank account at Bank-1 using a stolen identity in order to launder the proceeds of the loan scheme, and ALBARELLA accepted a $10,000 bribe in order to open the bank account.    

*                *                *

CHANCY, 40, and ILORI, 42, are charged with: (1) conspiracy to commit wire fraud, (2) wire fraud, (3) aggravated identity theft, and (4) conspiracy to commit money laundering.  ALBARELLA, 34, is charged with: (1) conspiracy to commit money laundering, and (2) bank bribery.  

Wire fraud and conspiracy to commit wire fraud, in violation of 18 U.S.C. §§ 1343 and 1349, carries a maximum of 20 years in prison.  Aggravated identity theft, in violation of 18 U.S.C. § 1028A, carries a mandatory term of two years in prison, to be served consecutively to any other term of imprisonment.  Conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h), carries a maximum term of 20 years in prison.  Bank bribery, in violation of 18 U.S.C. § 215, carries a maximum term of 30 years in prison.  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. 

Mr. Berman praised the outstanding investigative work of the FBI and HSI.

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 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 should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that COLIN AKPARANTA, a correctional officer at the Metropolitan Correctional Center (“MCC”), which houses federal inmates in Manhattan, pled guilty before United States Magistrate Judge Kevin Nathaniel Fox to one count of abusive sexual contact of an inmate, in violation of Title 18, United States Code, Section 2244(a)(4), and one count of deprivation of the civil rights of that inmate, in violation of Title 18, United States Code, Section 242.  In connection with the plea, AKPARANTA also admitted that he engaged in abusive sexual contact with six additional victims, and engaged in sexual acts with all seven of the victims.  

U.S. Attorney Geoffrey S. Berman said:  “As he has now admitted, Colin Akparanta abused his position of authority as a correctional officer at the MCC to sexually abuse at least seven inmates whose safety and security he was duty-bound to protect.  This Office has prosecuted, and will continue to prosecute, correctional officers who use their positions to engage in criminal conduct, and I encourage anyone with knowledge of this or similar criminal conduct involving correctional officers at the MCC to contact my Office.” 

According to the Indictment, other filings in this case, and statements during court proceedings, including AKPARANTA’s guilty plea hearing:

AKPARANTA has been employed as a correctional officer at the MCC since 2004.

Between in or about late 2012 and in or about April 2018, AKPARANTA used his official position to engage in sexual acts and contact with at least seven female inmates at the MCC while they were under AKPARANTA’s custodial, supervisory, and disciplinary authority.  AKPARANTA digitally penetrated the victims’ vaginas and touched their breasts, buttocks, and/or genitalia.  AKPARANTA also had some of the victims touch his penis over his pants.  In addition, AKPARANTA smuggled contraband, including, but not limited to, personal hygiene items, makeup, and food into the MCC for some of the victims, and, with respect to at least one of the victims, explicitly conditioned his provision of contraband on the inmate’s continued performance of sexual acts with him.  AKPARANTA also asked the victims for their contact information in order to reach them after their release.           

*                *                *

COLIN AKPARANTA, 43, of Irvington, New Jersey, pled guilty to one count of abusive sexual contact, which carries a maximum sentence of two years in prison, and one count of deprivation of civil rights, which carries a maximum sentence 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 defendant will be determined by the judge.  AKPARANTA is scheduled to be sentenced by the Honorable Lorna G. Schofield on July 8, 2020.   

Any individuals who believe they have information concerning COLIN AKPARANTA or any criminal conduct involving correctional officers at the MCC should contact the United States Attorney’s Office at (866) 874-8900.

Mr. Berman praised the investigative work of the DOJ Office of the Inspector General and the special agents of the United States Attorney’s Office.  

The prosecution is being handled by the Office’s Public Corruption, Violent and Organized Crime, and Civil Rights Units.  Assistant U.S. Attorneys Lara Pomerantz, Sarah Krissoff, and Rachael Doud are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Wendy Woolcock, Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that GEOVANNY DANIEL FUENTES RAMIREZ was charged in Manhattan federal court with conspiring to import cocaine into the United States and related weapons offenses involving the use and possession of machineguns and destructive devices.  DEA agents arrested FUENTES RAMIREZ on March 1, 2020, at Miami International Airport as he attempted to depart the United States, and was presented yesterday afternoon in Miami federal court.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Geovanny Daniel Fuentes Ramirez was, up until his arrest by the DEA two days ago, a prolific, powerful, and murderous cocaine trafficker in Honduras.  As further alleged, Fuentes Ramirez paved the way for unimpeded shipment of multi-ton loads of cocaine by bribing police and a high-ranking Honduran politician, and reporting directly to Tony Hernandez, another co-conspirator in the scheme and himself a former Honduran congressman.  Thanks to the DEA, a key player in the unholy alliance of Honduran officials and drug traffickers is now in custody and facing a possible life behind bars.”

DEA Special Agent in Charge Wendy Woolcock said:  “The arrest of Geovanny Daniel Fuentes Ramirez is yet another example of DEA’s perseverance to bring to justice criminal associates of corrupt Honduran public officials and law enforcement officers who enabled the trafficking of massive amounts of cocaine headed to the United States.  These corrupt arrangements resulted in horrible violence in Honduras and beyond.  The DEA will continue to aggressively pursue and bring to justice those who participated in these activities, threatened the rule of law, and operated with complete disregard for human life for their financial gain.”

According to the allegations contained in the Complaint[1] charging FUENTES RAMIREZ, evidence presented at the October 2019 trial of Juan Antonio Hernandez Alvarado in the Southern District of New York, and statements in open court during the prosecution of Hernandez Alvarado:

Between approximately 2004 and 2020, multiple drug trafficking organizations in Honduras and elsewhere worked together, and with support from certain prominent public and private individuals, including Honduran politicians and law enforcement officials, to receive multi-ton loads of cocaine sent to Honduras from, among other places, Colombia via air and maritime routes, and to transport the drugs westward in Honduras toward the border with Guatemala and eventually to the United States.  For protection from law enforcement interference, and in order to facilitate the safe passage through Honduras of multi-ton loads of cocaine, FUENTES RAMIREZ and other drug traffickers paid bribes to Honduran public officials, including certain members of the Honduran National Police and the Honduran National Congress.  For example, following an October 2019 trial in the Southern District of New York, former Honduran congressman Juan Antonio Hernandez Alvarado was convicted of drug trafficking, weapons, and false statements charges related to his role in this scheme.  Hernandez Alvarado is scheduled to be sentenced by U.S. District Judge P. Kevin Castel on April 15, 2020.   

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 and transport cocaine that he produced, including using planes that landed and departed from a clandestine airstrip that he operated near the Cortés Department.  In order to protect these large quantities of cocaine and his foothold as a large-scale drug trafficker in Honduras, FUENTES RAMIREZ and his workers used firearms, including 9 millimeter handguns, AK-47 assault rifles, and AR-15 assault rifles, and resorted to significant acts of violence, including murder.  In or about 2012, for example, after FUENTES RAMIREZ’s cocaine laboratory was raided by law enforcement, FUENTES RAMIREZ participated in the stabbing murder of a law enforcement official who FUENTES RAMIREZ believed to have been involved in the investigation of the laboratory. 

In or about 2013, FUENTES RAMIREZ paid at least approximately $25,000 to a high-ranking Honduran official referred to in the Complaint as “CC-4,” in exchange for protection from further interventions by law enforcement targeting FUENTES RAMIREZ and his drug trafficking activities.  Around the time of the bribe, during a series of meetings between FUENTES RAMIREZ, CC-4, and others, CC-4 expressed interest in access to FUENTES RAMIREZ’s cocaine laboratory because of its proximity to a major commercial shipping port, agreed to facilitate the use of Honduran armed forces personnel as security for FUENTES RAMIREZ’s drug trafficking activities, and instructed FUENTES RAMIREZ to report directly to Juan Antonio Hernandez Alvarado for subsequent drug trafficking activities.

*                      *                     *

The Complaint charges FUENTES RAMIREZ, 50, with: (1) conspiring to import cocaine into the United States, (2) using and carrying machine guns and destructive devices during and in relation to, and possessing machine guns and destructive devices in furtherance of, the cocaine importation conspiracy; and (3) conspiring to use and carry machine guns and destructive devices during and in relation to, and to possess machine guns and destructive devices in furtherance of, the cocaine importation conspiracy.  If convicted, FUENTES RAMIREZ faces a mandatory minimum sentence of 10 years in prison and a maximum term of life in prison on Count One, a mandatory minimum sentence of 30 years in prison and a maximum term of life in prison on Count Two, a maximum term of life in prison on Count Three. 

Mr. Berman praised the outstanding investigative work of the DEA’s Special Operations Division Bilateral Investigations Unit and Strike Force.

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

The charges in the Complaint are merely accusations, and FUENTES RAMIREZ 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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that CHRISTIAN ERAZO pled guilty in Manhattan federal court to conspiring with others to commit wire fraud and computer intrusion.  As part of that scheme, ERAZO and others obtained unauthorized access to a music producer’s social networking account to impersonate the producer, in order to solicit and obtain unreleased music from other artists.  In addition, ERAZO hacked the online accounts of two music management companies in order to steal unreleased music of numerous music industry professionals.  He pled guilty before U.S. Magistrate Judge Kevin N. Fox.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Christian Erazo hacked the accounts of music producers and management companies in order to steal over 50 gigabytes of content, including then-unreleased music, and leaked it on the internet.  This scheme caused financial harm to companies, producers, and artists, and deprived the artists of the ability to release content at their discretion.  Now Erazo must face the music.”

According to the Superseding Indictment and statements made at today’s guilty plea:

From at least in or about late 2016 through at least in or about April 2017, CHRISTIAN ERAZO, the defendant, and others known and unknown, unlawfully obtained unauthorized access to Internet cloud storage service accounts of two music management companies and a music producer (“Producer Victim-1”) by, among other things, using the credentials, or usernames and passwords, of individuals with authorized access to those accounts.  From those accounts, ERAZO and his co-conspirators stole over approximately 50 gigabytes of music, including music that had not yet been publicly released, from over 20 recording artists, as well as usernames and passwords to other online accounts, among other things.  ERAZO and his co-conspirators also leaked on public online forums music that had not yet been publicly released, causing financial and reputational harm to Producer Victim-1 and other recording artists.

In addition, from at least in or about late 2016 through at least in or about late 2017, CHRISTIAN ERAZO, and others known and unknown, unlawfully accessed without authorization a social networking account belonging to Producer Victim-1, from which ERAZO and a co-conspirator (“CC-1”) impersonated Producer Victim-1 and sent private messages to numerous recording artists to solicit music from them that they had not yet released.  ERAZO and CC-1 directed these artists to send their music to a fake email account that ERAZO created that incorporated Producer Victim-1’s professional name, which numerous artists did.

*                      *                     *

ERAZO, 27, of Austin, Texas, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit computer intrusion, which carries a maximum sentence of five years in prison.  The statutory 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.  ERAZO is scheduled to be sentenced by U.S. District Judge Lorna G. Schofield on July 7, 2020.

Mr. Berman praised the outstanding investigative work of the New York Field Office of Homeland Security Investigations.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York,  Patrick Freaney, Deputy Special Agent in Charge of the New York Field Office of the United States Secret Service (“Secret Service”), Troy Miller, Director of New York Field Operations for United States Customs and Border Protection (“CBP”), and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”),  announced today the arrests of JACOB SAGIAO, MARYLYNN PENEUETA, BRITT JACKSON, JOSHUA FITTEN, DONTAE COTTRELL, ARINZE OBIKA, HERMAN BASS, DAVID URO, and PRINCE UKO for money laundering and wire fraud schemes.  Eight of the defendants were presented before United States Magistrate Judges in three federal judicial districts on February 27 and 28.  UKO will be presented before a United States Magistrate Judge in the Northern District of Georgia later today.  Two other defendants, VICTOR AHAIWE and NDUKWE ANYAOGU, remain at large.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants conspired to launder the proceeds of online fraud schemes that deceived victims into sending the defendants more than $5 million.  Thanks to the Secret Service and CBP, nine of the defendants are in custody, and all 11 face serious federal charges.”           

Secret Service Deputy Special Agent in Charge Patrick Freaney said:  “The U.S. Secret Service is dedicated to the pursuit and investigation of those responsible for committing cyber-enabled fraud.  The success of this investigation is the result of a collaborative effort between the New York Field Office of the Secret Service and the U.S. Attorney’s Office of the Southern District of New York.  Additionally, I would like to recognize the efforts of the Atlanta Field Office and Los Angeles Field Office of the Secret Service for their invaluable assistance that have made this investigation a success.”

CBP Director of New York Field Operations Troy Miller said:  “This case exemplifies the collaborative law enforcement efforts to combat transnational criminal organizations. U.S. Customs and Border Protection is proud to have collaborated with our fellow law enforcement partners during this investigation leading to today’s arrests.”

FBI Assistant Director William F. Sweeney Jr. said:  “The threat of cyber-enabled fraud has long been publicized, and many people assume they know enough to avoid being victimized by this type of crime.  The truth is, however, fraudsters are often very skilled at targeting their victims and masking their behavior in a way that often goes undetected until it’s too late.  Today’s charges are yet another reminder to the public to exercise due diligence in both personal and professional online settings as we work together to defeat cybercrime worldwide.”

According to the allegations in the two Complaints charging the defendants:

From at least in or about July 2018 up to and including at least in or about November 2019, SAGIAO, PENEUETA, JACKSON, FITTEN, COTTRELL, OBIKA, BASS, URO, AHAIWE, ANYAOGU, and UKO received and laundered the proceeds of three business email compromise schemes, in which the corporate and organizational victims were fraudulently induced to send nearly $5 million to bank accounts controlled by SAGIAO, OBIKA, and others.

From at least in or about June 2019 up to and including the present, JACKSON participated in and received proceeds from an online romance fraud scheme, in which the victim was fraudulently induced to send over $130,000 to JACKSON and others.

In or about October 2018, ANYAOGU participated in and received proceeds from an email compromise scheme, in which a foreign law firm was fraudulently induced to transfer approximately $380,000, intended for another person, to a bank account ANYAOGU controlled.

In or about February 2020, UKO made the false statements to federal law enforcement officers that he had never exchanged text messages with a co-conspirator and that certain transactions were for a textile business rather than to launder the proceeds of criminal activity.

*                *                *

SAGIAO, PENEUETA, JACKSON, FITTEN, COTTRELL, OBIKA, BASS, URO, AHAIWE, and ANYAOGU are charged with: (1) conspiracy to commit bank fraud, and (2) conspiracy to commit money laundering.  AHAIWE is also charged with aggravated identity theft, and JACKSON and ANYAOGU are also charged with wire fraud.  UKO is charged with conspiracy to commit money laundering and making false statements in a matter within the jurisdiction of the executive branch of the Government of the United States.  Conspiracy to commit bank fraud, in violation of 18 U.S.C. § 1349, carries a maximum term of 30 years in prison.  Conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h), carries a maximum term of 20 years in prison.  Aggravated identity theft, in violation of 18 U.S.C. § 1028A, carries a mandatory consecutive term of two years in prison.  Wire fraud, in violation of 18 U.S.C. § 1343, carries a maximum term of 20 years in prison.  Making a false statement in a matter within the jurisdiction of the executive branch of the Government of the United States, in violation of 18 U.S.C. § 1001, carries maximum term of five years in prison.  The maximum potential sentences and the mandatory minimum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge. 

Mr. Berman praised the outstanding investigative work of the Secret Service, and, in particular, the Secret Service’s Electronic Crimes Task Force, CBP, the FBI, and special agents of the United States Attorney’s Office for the Southern District of New York.  The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Jun Xiang and Kevin Mead are in charge of the prosecution.

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

Defendant

Age

Hometown

Charges

JACOB SAGIAO

47

Oxnard, CA

Bank fraud conspiracy; money laundering conspiracy

MARYLYNN PENEUETA

46

Oxnard, CA

Bank fraud conspiracy; money laundering conspiracy

BRITT JACKSON

43

Columbus, GA

Bank fraud conspiracy; money laundering conspiracy; wire fraud

JOSHUA FITTEN

25

Hacienda Heights, CA

Bank fraud conspiracy; money laundering conspiracy

DONTAE COTTRELL

36

Whittier, CA

Bank fraud conspiracy; money laundering conspiracy

ARINZE OBIKA

33

Queens, NY

Bank fraud conspiracy; money laundering conspiracy

NDUKWE ANYAOGU

43

Marietta, GA

Bank fraud conspiracy; money laundering conspiracy; wire fraud

HERMAN BASS

37

Hawthorne, CA

Bank fraud conspiracy; money laundering conspiracy

DAVID URO

28

Brooklyn, NY

Bank fraud conspiracy; money laundering conspiracy

VICTOR AHAIWE

54

Rancho Cucamonga, CA

Bank fraud conspiracy; money laundering conspiracy; aggravated identity theft

PRINCE UKO

46

Jonesboro, GA

Money laundering conspiracy; false statements

As the introductory phrase signifies, the entirety of the text of the Complaints and the descriptions of the Complaints set forth herein constitute only allegations and every fact described should be treated as an allegation.

A Massachusetts-based accountant who was charged along with three others in connection with a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (Mossack Fonseca), a Panamanian-based global law firm, and its related entities, pleaded guilty today to wire and tax fraud, money laundering, aggravated identity theft and other charges. 

Richard Gaffey, aka “Dick Gaffey,” 75, of Medfield, Massachusetts, pleaded guilty to one count of conspiracy to commit tax evasion and to defraud the United States, one count of wire fraud, one count of money laundering conspiracy, four counts of willful failure to file Reports of Foreign Bank and Financial Accounts (Financial Crimes Enforcement Network Reports 114), and one count of aggravated identity theft.

“This defendant worked with the Mossack Fonseca law firm and exploited his role as an accountant to create fraudulent shell companies and defraud the United States of millions of dollars over decades,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Today’s guilty plea reflects the Department’s commitment to prosecute financial professionals and other gatekeepers to the U.S. financial system who abuse the public’s trust.”

“Richard Gaffey went to extraordinary lengths to circumvent U.S. tax laws in order to maintain Harald Joachim von der Goltz’s wealth and hide it from the IRS,” said U.S. Attorney Geoffrey S. Berman of the Southern District of New York.  “Using the specialized criminal services of global law firm Mossack Fonseca, Gaffey assisted others in violating U.S. tax laws for decades.”

According to the allegations contained in the indictments , other filings in this case, and statements during court proceedings, including Gaffey’s guilty plea hearing, since at least 2000 through 2018, Gaffey conspired with others to defraud the United States by concealing his clients’ assets and investments, and the income generated by those assets and investments, from the IRS through fraudulent, deceitful, and dishonest means. 

During all relevant times, while acting as an accountant, Gaffey assisted U.S. taxpayers who were required to report and pay income tax on worldwide income, including income and capital gains generated in domestic and foreign bank accounts.  Gaffey helped those U.S. taxpayers evade their tax reporting obligations in a variety of ways, including by hiding the beneficial ownership of his clients’ offshore shell companies and by setting up bank accounts for those shell companies.  These shell companies and bank accounts made and held investments totaling tens of millions of dollars.  For one U.S. taxpayer, Gaffey advised the taxpayer how to covertly repatriate approximately $3 million to the United States by reporting to the IRS a fictitious company sale  to thereby evade paying the full U.S. tax amount.  Gaffey was assisted in this scheme through the use of Mossack Fonseca law firm, including Ramses Owens, a Panamanian lawyer who previously worked at the Mossack Fonseca.

Gaffey was the U.S. accountant for co-defendant Harald Joachim von der Goltz.  From 2000 until 2017, von der Goltz was a U.S. resident and was subject to U.S. tax laws, which required him to report and pay income tax on worldwide income.  In furtherance of von der Goltz’s efforts to conceal his assets and income from the IRS, Gaffey falsely claimed that von der Goltz’s elderly mother was the sole beneficial owner of the shell companies and bank accounts at issue because, at all relevant times, she was a Guatemalan citizen and resident, and – unlike von der Goltz – was not a U.S. taxpayer.  In support of this fraudulent scheme, Gaffey submitted the name, date of birth, government passport number, address, and other means of identification of von der Goltz’s elderly mother to a U.S. bank in Manhattan. 

Gaffey is scheduled to be sentenced by Judge Berman on June 29, 2020.  Von der Goltz, who pleaded guilty on Feb. 18, 2020, is scheduled to be sentenced by Judge Berman on June 24, 2020. 

An indictment is merely an allegation and any charged defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Assistant Attorney General Benczkowski praised the outstanding investigative work of IRS-Criminal Investigation and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and thanked the Justice Department’s Tax Division and the FBI for their significant assistance in the investigation.  Assistant Attorney General Benczkowski also thanked the Criminal Division’s Office of International Affairs as well as law enforcement partners in France, the United Kingdom and Germany for their assistance in the case.

The Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), working in partnership with the Southern District of New York’s Complex Frauds and Cybercrime Unit and Money Laundering and Transnational Criminal Enterprises Unit are handling this case.  MLARS Trial Attorneys Michael Parker and Parker Tobin, along with Assistant U.S. Attorneys Eun Young Choi and Thane Rehn, are in charge of the prosecution.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JACQUELINE GRAHAM was sentenced today to 132 months in prison in connection with a $38 million fraudulent mortgage debt elimination scheme.  GRAHAM previously was convicted in June 2019 after a two-week trial before U.S. District Judge Nelson S. Román, who also imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jacqueline Graham brazenly defrauded vulnerable homeowners during the housing crisis by falsely promising that, for substantial fees, she could make millions of dollars of their mortgage debt disappear.  In reality, she pilfered her victims’ money, leaving them far worse off, and some ended up losing their homes.  Now Graham will spend 11 years in federal prison for preying upon her many victims.”

According to the Indictment in the case, the evidence presented at trial, and statements made in public court filings and proceedings, including GRAHAM’s sentencing hearing:

From at least 2011 to at least 2012, JACQUELINE GRAHAM partnered with Bruce Lewis and John Ruzza in operating the Valhalla, New York-based Terra Foundation, which held itself out as a business that would investigate and eliminate mortgage loans in exchange for fees, soliciting clients who were having difficulties making their mortgage payments.  In fact, however, Terra engaged in a wide-ranging scheme to defraud clients, county clerks’ offices, and banks.

The fraudulent scheme, which was created by GRAHAM and Lewis, involved Terra performing “audits” of clients’ mortgages, sending pseudo-legal paperwork to the banks and/or lenders holding the mortgages, and ultimately filing purported mortgage discharges with the relevant county clerks’ offices.  As a result, anyone doing a title search for one of Terra’s clients would see that the client’s mortgage had been satisfied.  The mortgages had not, however, been discharged, and the mortgages were eventually reinstated, after the clients paid their fees.

In order to effectuate the scheme, GRAHAM, Lewis, and Ruzza involved others, including Rocco Cermele, the director of operations, Paula Guadagno, who filed discharges on behalf of Terra, and Anthony Vigna, a lawyer and CPA who worked in Terra’s offices.  Vigna was formerly an Assistant Corporation Counsel for the City of Yonkers, and a college accounting and law professor, including stints on the faculties of Mercy College, Iona College, SUNY Maritime College, College of Mount St. Vincent, and Westchester Community College.

In total, GRAHAM and her co-conspirators filed over 60 fraudulent discharges in Westchester and Putnam Counties in New York, and in Connecticut.  The fraudulent discharges claimed to discharge mortgages with a total loan principal of nearly $38 million.

*                *                *

In addition to her prison term, GRAHAM, 54, formerly of Antioch, California, and Levittown, Pennsylvania, was sentenced to five years of supervised release and ordered to pay restitution to her victims in the amount of $694,450 and forfeiture of $138,941.86.

Lewis, 67, formerly of Alaska and Washington State, previously was sentenced by Judge Román to seven years in prison, three years of supervised release, and forfeiture of $149,408.

Vigna, 61, of Thornwood, New York, previously was sentenced by Judge Román to one year and one day in prison, three years of supervised release, and $250,500 of restitution.

Ruzza, 49, formerly of Mahopac, New York, previously pled guilty before U.S. District Judge Cathy Seibel to one count of participating in a conspiracy to commit mail fraud, wire fraud, and bank fraud relating to the Terra scheme, as well as one count of participating in a conspiracy to commit wire fraud, two counts of bank fraud, two counts of wire fraud, and one count of obstruction of justice.

Cermele, 57, of Yonkers, New York, and Guadagno, 62, of Verplanck, New York, previously pled guilty to their participation in the scheme.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked the Westchester County District Attorney’s Office and the Department of Housing and Urban Development for their assistance in the case.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys David Felton, Michael Maimin, and James McMahon are in charge of the prosecutions.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York and Brian A. Benczkowski, Assistant Attorney General of the Criminal Division of the U.S. Department of Justice, announced today that RICHARD GAFFEY, a/k/a “Dick Gaffey,” pled guilty today before U.S. District Judge Richard M. Berman to wire fraud, tax fraud, money laundering, aggravated identity theft, and other charges.  GAFFEY, a resident of Massachusetts, is charged along with Harald Joachim von der Goltz, Ramses Owens, and Dirk Brauer in connection with a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (“Mossack Fonseca”), a Panamanian-based global law firm, and its related entities.  Harald Joachim von der Goltz pled guilty to his role in the scheme on February 18, 2020.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Richard Gaffey went to extraordinary lengths to circumvent U.S. tax laws in order to maintain Harald Joachim von der Goltz’s wealth and hide it from the IRS.  Using the specialized criminal services of global law firm Mossack Fonseca, Gaffey assisted others in violating U.S. tax laws for decades.”

Assistant Attorney General Brian A. Benczkowski said:  “This defendant worked with the Mossack Fonseca law firm and exploited his role as an accountant to create fraudulent shell companies and defraud the United States of millions of dollars over decades.  Today’s guilty plea reflects the Department’s commitment to prosecute financial professionals and other gatekeepers to the U.S. financial system who abuse the public’s trust.”

According to the allegations contained in the Indictments[1], other filings in this case, and statements during court proceedings, including GAFFEY’s guilty plea hearing:

Since at least 2000 through 2018, GAFFEY conspired with others to defraud the United States by concealing his clients’ assets and investments, and the income generated by those assets and investments, from the Internal Revenue Service (“IRS”) through fraudulent, deceitful, and dishonest means.  During all relevant times, GAFFEY assisted U.S. taxpayers who were required to report and pay income tax on worldwide income, including income and capital gains generated in domestic and foreign bank accounts.  GAFFEY helped those U.S. taxpayers evade their tax reporting obligations in a variety of ways, including by hiding the beneficial ownership of his clients’ offshore shell companies and setting up bank accounts for those shell companies.  These shell companies and bank accounts made investments totaling tens of millions of dollars.  For one U.S. taxpayer, GAFFEY advised how to covertly repatriate approximately $3 million to the United States by reporting to the IRS a fictitious company sale that never actually occurred to evade paying the full U.S. tax amount.  GAFFEY was assisted in this scheme through the use of Mossack Fonseca, including Ramses Owens, a Panamanian lawyer who previously worked at Mossack Fonseca.

GAFFEY was the U.S. accountant for Harald Joachim von der Goltz.  From 2000 until 2017, von der Goltz was a U.S. resident and was subject to U.S. tax laws, which required him to report and pay income tax on worldwide income.  In furtherance of von der Goltz’s efforts to conceal his assets and income from the IRS, GAFFEY falsely claimed that von der Goltz’s elderly mother was the sole beneficial owner of the shell companies and bank accounts at issue because, at all relevant times, she was a Guatemalan citizen and resident, and – unlike von der Goltz – was not a U.S. taxpayer.  In support of this fraudulent scheme, GAFFEY submitted the name, date of birth, government passport number, address, and other means of identification of von der Goltz’s elderly mother to a U.S. bank in Manhattan.

*                *                *

GAFFEY, 75, a U.S. citizen and resident of Medfield, Massachusetts, pled guilty to one count of conspiracy to commit tax evasion and to defraud the United States, which carries a maximum sentence of five years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of money laundering conspiracy, which carries a maximum sentence of 20 years in prison; four counts of willful failure to file Reports of Foreign Bank and Financial Accounts, FINCEN Reports 114, each of which carries a maximum sentence of five years in prison; and one count of aggravated identity theft, which carries a mandatory minimum sentence of two years in prison. 

GAFFEY is scheduled to be sentenced by Judge Berman on is June 29, 2020, at 11:00 a.m.  Von der Goltz is scheduled to be sentenced by Judge Berman on June 24, 2020, 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 sentence for the defendant will be determined by the judge.

*                *                *

U.S. Attorney Berman praised the outstanding investigative work of IRS-Criminal Investigation and Homeland Security Investigations, and thanked the Justice Department’s Tax Division and the Federal Bureau of Investigation for their significant assistance in the investigation.  Mr. Berman also thanked the Criminal Division’s Office of International Affairs as well as law enforcement partners in France, the United Kingdom, Panama, and Germany for their assistance in the case.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Transnational Criminal Enterprises Unit, working in partnership with the Money Laundering and Asset Recovery Section of the Criminal Division.  Assistant United States Attorneys Eun Young Choi and Thane Rehn, along with Trial Attorneys Michael Parker and Parker Tobin of the Money Laundering and Asset Recovery Section, are in charge of the prosecution.

[1] As the introductory phrase signifies, the entirety of the texts of the Indictments and the descriptions of the Indictments set forth herein constitute only allegations as to Owens and Brauer, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that TERRELL POLK was sentenced today to 35 years in prison in connection with his participation in a crack cocaine conspiracy and related firearms charges.  As the evidence at trial established, POLK committed three shootings of drug rivals in the Bronx, New York during August 2015.  POLK was convicted following a trial before United States District Judge George B. Daniels, who also imposed today’s sentence.    

U.S. Attorney Geoffrey S. Berman said:  “As the jury found, Terrell Polk sold large quantities of crack cocaine and resolved disputes over drug territory with terrifying violence.  As a result of the skill and determination of our law enforcement partners, Polk will now spend several decades behind bars.”

According to the evidence presented during the trial:

Terrell Polk was a member of a violent drug trafficking organization that sold large quantities of crack cocaine in the Highbridge section of the Bronx.  On July 25, 2015, Polk used a .40 caliber pistol to shoot a rival drug dealer at point blank range on University Avenue in the Bronx.  The victim of this shooting suffered a fractured leg. 

Approximately 10 days later, on August 4, 2015, Polk used a shotgun to shoot two victims inside of a store located on Anderson Avenue in the Bronx.  On that occasion, Polk was in a car when he saw one of his victims standing on the sidewalk.  Polk stopped the car, jumped out of the driver’s seat with a shotgun, and chased the victim into a store.  The victim and an innocent bystander in the store barricaded themselves in the back room to hide from Polk.  When Polk was unable to gain access to the room, he fired a shotgun blast through the door, wounding both men.  The first victim sustained shotgun wounds to his leg and hand, and the second victim sustained shotgun wounds to his elbow. 

A few weeks after these shooting incidents, on August 26, 2015, New York City Police Department (“NYPD”) officers stopped a vehicle driven by Polk, and recovered a loaded gun from the back seat.

*                      *                      *

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and NYPD.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Michael K. Krouse, Nicholas S. Folly, and Max C. Nicholas are in charge of the prosecution.

Geoffrey S. Berman, 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, Commissioner of the New York City Police Department (“NYPD”), announced the arrest of ALLAMBERGEN KUDAYBERGENOV, a/k/a “Allambergen Kuday Bergenov,” for allegedly sending over the internet numerous race-related threats of violence and murder to a former employer at a restaurant in New York, New York.  KUDAYBERGENOV is charged in a criminal Complaint, unsealed yesterday, with one count of making interstate threats, one count of using false immigration documents, and one count of aggravated identity theft.  KUDAYBERGENOV was presented yesterday in Manhattan federal court before U.S. Magistrate Judge Sarah L. Cave and detained.

U.S. Attorney Geoffrey S. Berman said:  “The arrest of Allambergen Kudaybergenov makes clear that we will not tolerate threats of violence, especially those directed at individuals based on their race, ethnicity, sexual orientation, or religious beliefs.  Thanks to the work of the FBI-NYPD Joint Terrorism Task Force, the defendant will have to answer for his alleged threatening actions.”

FBI Assistant Director William F. Sweeney Jr. said:  “The alarming messages Kudaybergenov sent to his intended victims explicitly spelled out what his alleged intentions were.  Threatening violence against someone is disturbing in and of itself.  When the language of the threat includes racist and homophobic sentiments, however, this raises the bar – but it won’t be tolerated here.”

Police Commissioner Dermot Shea said:  “There is no place for hate or intolerance in New York City, or anywhere.  I commend the effort of the NYPD investigators and our federal partners whose hard work resulted in this arrest and charges.”

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

In approximately April 2019, KUDAYBERGENOV used false identity documents, which included stolen personal identifying information belonging to others, as part of his application for employment at a restaurant (the “Victim Business”) in Manhattan.  Soon after KUDAYBERGENOV was hired, he sent a series of communications via a web-based email service to the Victim Business.  In those messages, KUDAYBERGENOV threatened violence against other employees of the Victim Business.  In one such message, KUDAYBERGENOV wrote, in part, that an employee (“Victim-2”) of the Victim Business was a “jjew [sic] waiting for war.”  Following a dispute at the Victim Business, KUDAYBERGENOV ceased working at the Victim Business, but continued sending threatening messages.  In one of those messages, dated December 26, 2019, KUDAYBERGENOV referenced two more employees of the Victim Business (“Victim-1” and “Victim-3”), writing, in part, “Happy new year [Victim-1].  Soon I kill homosexual dog [Victim-3].”  Later, on January 26, 2020, KUDAYBERGENOV sent a message to the Victim Business and referenced two more employees of the Victim Business (“Victim-4” and “Victim-5”), writing, in part, “I was working there in [Victim Business] as a busboy.  I work there with jews Managers named [Victim-4], [Victim-2] and others.  Jew fucking guy (manager) named [Victim-4] asked me do you speak Spanish.  I told him I wanna another holocaust killing 60 million jews like [Victim4]. [ . . . ] As long as these jews like [Victim-4], [Victim-2], and [Victim-5] are alive, they are dangerous.  [Victim-1], we must kill them.”  Additionally, on February 16, 2020, KUDAYBERGENOV sent a message to the Victim Business, writing, in part, “This message is to [Victim-1]  . . .  once upon a day I said that war started from a jew manager named [Victim-3] who created war, I will finish that war.  I will put fire in all [Victim Business] restaurants in Brooklyn in Manhattan.  The era of whites (jews) and negros are long gone.”

*                *                *

KUDAYBERGENOV is charged with one count of making threatening interstate communications and one count of using false immigration identification documents, each of which carries a maximum sentence of five years in prison, and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison, which must be imposed consecutively to any other sentence imposed.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding work of the FBI, and the FBI’s New York Joint Terrorism Task Force, which consists principally of agents from the FBI and detectives from the New York City Police Department.

This case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorney Matthew J.C. Hellman is in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Dermot Shea, the Police Commissioner of the City of New York (“NYPD”), and Peter C. Fitzhugh, the Special Agent in Charge of the New York Office of Homeland Security Investigations (“HSI”), announced that yesterday, RANDY TORRES, a/k/a “Rico,” 38, WALSTON OWEN, a/k/a “Purp,” 36, and CHARLES VENTURA, a/k/a “Gutta,” 27, were convicted of racketeering charges relating to their involvement in the violent Rollin’ 30s Crips street gang.  OWEN and VENTURA were also found guilty of attempted murders in aid of racketeering and related firearms offenses.  The convictions followed a fifteen-day trial before United States District Judge Victor Marrero.

The jury found that TORRES’s involvement in the Rollin’ 30s racketeering conspiracy included the September 19, 2015 murder of Nester Suazo and that OWEN’s involvement included the March 26, 2015 murder of Victor Chafla.  Suazo was killed after Torres and other gang members fought with members of a rival Crip faction at a music video shoot in the Bronx.  Chafla, an innocent bystander, was caught in the crossfire during an attempt by Rollin’ 30s members to shoot at a member of an opposing street gang in the Bronx.  At the time he was shot, Chafla was standing outside the store where he worked stocking fruits and vegetables. Chafla died from his wounds a few days later.

U.S. Attorney Geoffrey S. Berman said:  “As the jury unanimously found, the defendants were members of a violent gang, and were responsible for multiple murders.  Thanks to the dedication of our partners at the NYPD and HSI, the defendants now stand convicted in federal court for their crimes.”

According to the allegations contained in the Superseding Indictments and other documents in the public record, and the evidence at trial:

From at least in or about 2009 up to and including in or about 2017, in the Southern District of New York and elsewhere, RANDY TORRES, a/k/a “Rico,” WALSTON OWEN, a/k/a “Purpose,” CHARLES VENTURA, a/k/a “Gutta,” and others were members or associates of a racketeering enterprise known as the “Rollin’ 30s,” also known as the “Harlem Mafia Crips,” or “Dirt Gang.”  In order to fund the enterprise, protect and expand its interests, and promote its standing, members and associates of the Rollin’ 30s committed, conspired, attempted, and threatened to commit acts of violence, including murder, attempted murder, and robbery; and they conspired to distribute and possess with intent to distribute narcotics.

OWEN and VENTURA each face a mandatory minimum sentence of ten years’ imprisonment; all three defendants face a maximum sentence of life imprisonment.  Sentencing of the defendants has been scheduled for July 10, 2020.

Mr. Berman praised the outstanding investigative work of the NYPD and HSI. 

The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jessica K. Fender, Anden Chow, and Jacqueline C. Kelly are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that today SKYLAR DAVIS, a/k/a “S-Dot,” was sentenced to 30 years in prison in connection with his robbery and participation in the murder of Samuel Stubbs, a community member in the City of Newburgh, New York, and DAVIS’s membership in and leadership of “Southside,” a violent street gang that operated in Newburgh.  DAVIS previously pled guilty to racketeering and murder charges before United States District Cathy Seibel, who also imposed today’s sentence.  Besides his gang leadership and his participation in the murder of Samuel Stubbs, DAVIS also committed or helped commit six additional nonfatal shootings of Southside’s gang rivals in Newburgh over an approximately nine-month period in 2015 and 2016.

U.S. Attorney Geoffrey S. Berman said:  “On a summer night in 2015, Southside gang leader Skylar Davis participated in the murder of Samuel Stubbs.  Davis also committed or participated in more than half a dozen other attempted murders over the ensuing year.  Now he will spend many years in federal prison for his reign of violence.”

According to the various Indictments filed in this case, other documents filed, as well as statements made in open court:

From at least 2014 through June 2017, the Southside Gang was a criminal enterprise centered in and around the intersection of South Street and Chambers Street in an area of Newburgh known as the “Southside.”  In order to gain funds for the gang, protect the gang’s territory, and promote the gang’s standing, members of Southside engaged in, among other things, narcotics trafficking, robbery, and acts involving murder.  To that end, Southside members sold heroin, crack cocaine, and marijuana in the gang’s territory, promoted their gang affiliation on social media sites such as Facebook, possessed firearms, and engaged in shootings as part of their gang membership.  Southside members participated in numerous shootings of rival gang members and innocent bystanders, including two murders.

DAVIS was a longtime member of Southside and one of the gang’s leaders.  On August 13, 2015, DAVIS, along with others, decided to rob a high-stakes card game that Stubbs was playing outside, near the intersection of Lander and Courtney Streets in Newburgh.  DAVIS and a co-conspirator approached the three card players with guns drawn and then started firing.  All three men were hit by the ensuing gunfire, and Stubbs, 67, died of his injuries. 

The Stubbs murder was only one of many acts of violence DAVIS participated in as part of his leadership of the Southside gang, including numerous violent crimes after DAVIS participated in Stubbs’s murder.  Beginning in the summer of 2015, Southside engaged in a series of retaliatory shootings with its primary rival gang in Newburgh, the Yellow Tape Money Gang, or “YTMG,” and with other Newburgh gangs allied with YTMG.  DAVIS committed, assisted, and/or caused the following additional Newburgh shootings:

• The attempted murder of rival gang member Gabriel Warren, a/k/a “Stacks,” in the late summer or early fall of 2015;
• The attempted murder of rival gang member Armad Evans, a/k/a “Yellow,” on or about October 5, 2015;
• The attempted murder of rival gang member Tyrin Gayle, a/k/a “Spazzo,” and other YTMG members on or about December 11, 2015;
• The attempted murder of rival YTMG gang members on or about March 17, 2016;
• Aiding and abetting the attempted murder of rival gang member Romeo Herring on or about April 3, 2016; and
• The attempted murder of rival gang members in the vicinity of the 845 Lounge located at 778 Broadway on or about May 21, 2016.

DAVIS bragged about his violence, his drug dealing, and his firearms possession on Facebook, which helped further fuel the violent rivalry between Southside and YTMG. 

DAVIS, 22, of Newburgh, was arrested in June 2017 as a result of a multi-year investigation by the FBI’s Hudson Valley Safe Streets Task Force and the City of Newburgh Police Department into gang violence in Newburgh.  DAVIS was previously serving a lengthy sentence for New York state weapon and controlled substance offenses.  The Hudson Valley Safe Streets Task Force and the City of Newburgh Police Department had previously arrested members of YTMG in 2016; every charged member of YTMG was sentenced by Judge Seibel in 2017 and 2018.

Davis is the thirteenth member of Southside to be sentenced by Judge Seibel.  Judge Seibel has imposed substantial periods of incarceration on each:

Name

Convictions:

Sentence

Skylar Davis

Racketeering Conspiracy

Murder in Furtherance of Drug Trafficking

Murder Through Use of a Firearm

Ardae Hines

Racketeering Conspiracy

Narcotics Conspiracy

180 months

Michael Simmons

Racketeering Conspiracy

Possessing Firearms During and in Relation to Drug Trafficking

111 months

Demetrice McLean

Racketeering Conspiracy

Possessing Firearms During and in Relation to Attempted Murder in Aid of Racketeering

180 months

Christopher Davis

Racketeering Conspiracy

Narcotics Conspiracy

126 months

Diamante Frazier

Narcotics Conspiracy

Brandishing Firearms During and in Relation to Assault with a Deadly Weapon and Attempted Murder in Aid of Racketeering

120 months

Ditavious Williams

Racketeering Conspiracy

Narcotics Conspiracy

121 months

Donte Nugent

Racketeering Conspiracy

Narcotics Conspiracy

108 months

Davante Nugent

Racketeering Conspiracy

Narcotics Conspiracy

60 months

Calvin Lembhard

Discharging Firearm in Furtherance of Attempted Murder in Aid of Racketeering

120 months

Paradise Branch

Racketeering Conspiracy

Narcotics Conspiracy

120 months

William Fennell

Racketeering Conspiracy

Narcotics Conspiracy

Discharging Firearms in Furtherance of Drug Trafficking

240 months

Troy Young

Racketeering Conspiracy

Using a Firearm in Furtherance of Murder in Aid of Racketeering

180 months

*                      *                     *

Mr. Berman praised the outstanding investigative work of the FBI, the Bureau of Alcohol, Firearms, Tobacco, and Explosives, and the City of Newburgh Police Department.  Mr. Berman thanked the Orange County District Attorney’s Office for its invaluable ongoing assistance in the case.  Mr. Berman also thanked the Town of Newburgh Police Department, the New York State Police, the Orange County Sheriff’s Department, the Town of New Windsor Police Department, and the New York Department of Corrections and Community Supervision for their assistance in the case. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Jacqueline Kelly, Allison Nichols, Maurene Comey, and Samuel Raymond are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that ALJERMIAH MACK, a/k/a “Nuke,” was sentenced to 204 months in prison in connection with his participation in the Nine Trey Gangsta Bloods (“Nine Trey”) and the distribution of narcotics, including heroin and fentanyl.  MACK was convicted following a three-week jury trial in October 2019 before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Aljermiah Mack was a leader of the Nine Trey Gangsta Bloods, a violent gang that wreaked havoc across New York City.  Now, thanks to the outstanding work of our partners at the NYPD, HSI, and ATF, he will spend the next 17 years in federal prison.”

According to court documents and the evidence presented at the trial of MACK and co-defendant Anthony Ellison:

Nine Trey was a criminal enterprise involved in committing numerous acts of violence, including shootings, robberies, and assaults in and around Manhattan and Brooklyn.  Members and associates of Nine Trey engaged in violence to retaliate against rival gangs, to promote the standing and reputation of Nine Trey, and to protect the gang’s narcotics business.  Members and associates of Nine Trey enriched themselves by committing robberies and selling drugs, such as heroin, fentanyl, furanyl fentanyl, MDMA, dibutylone, and marijuana.

The leadership structure of Nine Trey is divided into two parts:  the Prison Lineup, which consists of incarcerated members, and the Street Lineup, which consists of members who are not incarcerated.  MACK was one of the highest-ranking members of the Street Lineup.

MACK was found guilty after trial of racketeering conspiracy for his participation in the Nine Trey enterprise and conspiracy to distribute and possess with intent to distribute one kilogram and more of mixtures and substances containing heroin.

*                *                *

In addition to the prison term, MACK, 34, of Brooklyn, New York, was sentenced to five years of supervised release.              

Mr. Berman praised the outstanding investigative work of the New York City Police Department, Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.  Mr. Berman also praised the New York City Department of Correction, Correction Intelligence Bureau, and the Kings County District Attorney’s Office for their assistance in the investigation.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Michael Longyear, Jacob Warren, and Jonathan Rebold are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment charging OWEN DRAIN, a/k/a “Whiteboy,” a/k/a “Tommy,” with the November 19, 2019, gunpoint kidnapping of a victim in the Bronx.  The case has been assigned to United States District Judge Victor Marrero.  DRAIN was arrested this afternoon, and will be presented today before United States Magistrate Judge Barbara C. Moses.

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the Indictment, the defendant kidnapped a victim in a car at gunpoint.  Thanks to the outstanding work of the FBI and the NYPD, the defendant is now charged in federal court for this extremely serious crime.”

Police Commissioner Dermot Shea said:  “This arrest and indictment reflects the hard work that members of the NYPD engage in each day to hold responsible the small number of individuals committing much of the violence in New York City. I commend the efforts of the NYPD investigators and our law enforcement partners involved in this investigation.”

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

As alleged, on November 19, 2019, OWEN DRAIN kidnapped a victim at gunpoint and zip tied the victim during the course of the kidnapping.

*                *                *

DRAIN, 35, of Yonkers, New York, is charged with kidnapping, which carries a maximum sentence of life imprisonment.  The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.           

Mr. Berman praised the outstanding investigative work of the NYPD and FBI. 

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Ni Qian and Michael D. Longyear are in charge of the prosecution.           

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that FRANK MOSS, a/k/a “Jigga,” a Poughkeepsie drug dealer whose fentanyl led to the overdose deaths of two women, was sentenced to almost 22 years in prison, and ARNOLD MELENDEZ, a/k/a “Frankie,” another Poughkeepsie drug dealer whose fentanyl led to the overdose deaths of two men, was sentenced to almost 16 years in prison, following their pleas of guilty to conspiracy to distribute and possess with the intent to distribute fentanyl.  MOSS and MELENDEZ were sentenced on January 29, 2020, by U.S. District Judge Kenneth M. Karas and U.S. District Judge Vincent L. Briccetti, respectively.

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

Beginning in February 2017 – right after being released from prison – MOSS agreed with others to sell fentanyl.  By August 2017, MOSS was selling mixtures of fentanyl with the stamp “Go Time.”  However, he switched to selling fentanyl with the stamp “No Days Off.”  MOSS knew that “No Days Off” contained pure fentanyl, even warning one of his co-conspirators.  One of MOSS’s co-conspirators learned that people – including himself – were overdosing on “No Days Off” and warned MOSS that people were “falling out,” which is a street term for overdosing.  MOSS replied, “That’s what the people want.”

Not having heeded the warning, MOSS continued to sell “No Days Off.”  Two of his customers, Aracelis Batista and Julie Mach, overdosed and died in August 2017 as a result of using MOSS’s fentanyl.  

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

Beginning no later than December 2017 – the month after his most recent release from prison – MELENDEZ began selling fentanyl to customers in Poughkeepsie, New York, some of which he misrepresented to be heroin.  On multiple occasions, MELENDEZ’s customers told MELENDEZ that users of his drugs were overdosing, and MELENDEZ continued to sell fentanyl.  On at least one occasion, one of MELENDEZ’s customers told MELENDEZ, in substance and in part, that “his sh*t was killing people,” and MELENDEZ responded, in substance and in part, that “I don’t give a sh*t, it’s not my problem.”

Several of MELENDEZ’s customers – whether direct customers or customers of others who purchased drugs from MELENDEZ – overdosed on MELENDEZ’s drugs, but survived after the administration of naloxone.  Two indirect customers – that is, customers of others who purchased drugs from MELENDEZ – overdosed and died after taking MELENDEZ’s drugs.

The MELENDEZ and MOSS cases are unrelated.

*                *                *

In addition to his prison term, MOSS was ordered to serve five years of supervised release, and to forfeit $50,000 in criminal proceeds.

In addition to his prison term, MELENDEZ was ordered to serve five years of supervised release, and to forfeit $20,395 in criminal proceeds, as well as his right to a loaded firearm found at the time of his arrest.

Mr. Berman thanked the Drug Enforcement Administration and the Dutchess County Drug Task Force – which consists of the Dutchess County Sheriff’s Office, the City of Beacon Police Department, the Town of East Fishkill Police Department, the City of Poughkeepsie Police Department, the Town of Poughkeepsie Police Department, and the Town of Hyde Park Police Department – for their outstanding work on the investigations.  This case is being handled by the Office’s White Plains Division.  Assistant United States Attorney Michael D. Maimin is in charge of the prosecutions.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), and Thomas Gleason, Commissioner of the Westchester County Police (“WCP”), announced the unsealing of an Indictment yesterday charging five defendants, including former New York City Police Department (“NYPD”) officer JOHN CICERO, with narcotics distribution offenses in and around Westchester County and New York City. 

Three of the defendants, MARCO CASO, ERIC BAKER, and MATHEW MATTEO, a/k/a “Matthew Mateo,” were arrested yesterday and presented in White Plains federal court before United States Magistrate Judge Lisa Margaret Smith.  CICERO has not been arrested and remains at large.  The fifth defendant, IRMA MATERASSO, is in state custody on other charges and will be transferred to federal custody at a later date.  The case has been assigned to United States District Judge Kenneth M. Karas.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants trafficked large quantities of methamphetamine and GBL – a liquid date-rape drug – throughout Westchester and New York City.  Methamphetamine devastates communities and GBL spreads danger all over the Southern District of New York, which is why the defendants face serious federal charges.”      

FBI Assistant Director William F. Sweeney Jr. said:  “As a former police officer, sworn to protect others, Mr. Cicero has seen firsthand the harm these drugs do to our society which makes the charges announced today even more egregious.  He now faces the same grim reality criminals he once locked up did - a long prison sentence, this time in a federal jail cell.”

Westchester County Police Commissioner Thomas Gleason said:  “We are pleased that our partnership with the FBI and other federal, state and local law enforcement agencies continues to support our efforts to stem the flow of illegal drugs into Westchester County.” 

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

From at least 2017 through February 2020, MARCO CASO, JOHN CICERO, IRMA MATERASSO, ERIC BAKER, and MATHEW MATTEO, a/k/a “Matthew Mateo,” conspired to distribute 500 grams and more of methamphetamine.  In addition, from at least 2017 through February 2020, MARCO CASO, JOHN CICERO, IRMA MATERASSO, and MATHEW MATTEO, a/k/a “Matthew Mateo,” conspired to distribute gamma-butyrolactone (known as “GBL”), which is a liquid date-rape drug. 

*                *                *

CASO, 48, of New York, New York, CICERO, 38, of Bronxville, New York, MATERASSO, 36, of New Rochelle, New York, BAKER, 37, of Somerset, New Jersey, and MATTEO, 22, of the Bronx, New York, are each charged with conspiring to distribute 500 grams and more of methamphetamine, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.  CASO, CICERO, MATERASSO, and MATTEO are also charged with conspiring to distribute GBL, which carries a maximum sentence of 20 years in prison.

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

Mr. Berman praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force and the Westchester County Police Department.  The Westchester County Safe Streets Task Force comprises Special Agents and Task Force Officers from the FBI, U.S. Probation, Bureau of Alcohol, Tobacco, Firearms and Explosives, New York State Police, Westchester County Police Department, Westchester County DA’s Office, NYPD, Yonkers Police Department, Mount Vernon Police Department, Peekskill Police Department, Greenburgh Police Department, and New Rochelle Police Department.  He also thanked the New York State Department of Corrections Office of Special Investigations, Drug Enforcement Administration, and U.S. Customs and Border Protection for their assistance.

This case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys David R. Felton and Daniel G. Nessim are in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York and Brian A. Benczkowski, Assistant Attorney General of the Criminal Division of the U.S. Department of Justice, announced today that HARALD JOACHIM VON DER GOLTZ, a/k/a “H.J. von der Goltz,” “Johan von der Goltz,” “Jochen von der Goltz,” “Tica,” “Tika,” pled guilty today before U.S. Magistrate Judge Barbara Moses to wire fraud, tax fraud, money laundering, false statements, and other charges.  VON DER GOLTZ, a former U.S. resident and taxpayer, is charged along with Ramses Owens, Dirk Brauer, and Richard Gaffey, a/k/a “Dick Gaffey,” in connection with a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (“Mossack Fonseca”), a Panamanian-based global law firm, and its related entities. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Harald Joachim von der Goltz went to extraordinary lengths to circumvent U.S. tax laws in order to maintain his wealth and hide it from the IRS.  Using the specialized criminal services of global law firm Mossack Fonseca, von der Goltz set up shell companies and off-shore accounts to conceal millions of dollars.  Now, after years of concealment from the United States, von der Goltz has admitted guilt in a U.S. court and awaits sentencing that could result in a term in a U.S. prison.”

AAG Brian A. Benczkowski said:  “Over nearly two decades, von der Goltz conspired to keep his income hidden from U.S. tax authorities and law enforcement.  Today’s guilty plea demonstrates the Department’s steadfast commitment to prosecute taxpayers who use offshore structures to obscure their wealth and evade their tax obligations.”According to the allegations contained in the Indictments[1], other filings in this case, and statements during court proceedings, including VON DER GOLTZ’s guilty plea hearing:

Since at least 2000 through 2017, VON DER GOLTZ conspired with others to conceal his assets and investments, and the income generated by those assets and investments, from the Internal Revenue Service (“IRS”) through fraudulent, deceitful, and dishonest means.  During all relevant times, VON DER GOLTZ was a U.S. resident and was subject to U.S. tax laws, which required him to report and pay income tax on worldwide income, including income and capital gains generated in domestic and foreign bank accounts.  Nevertheless, VON DER GOLTZ evaded his tax reporting obligations by setting up a series of shell companies and bank accounts, and hiding his beneficial ownership of the shell companies and bank accounts from the IRS.  These shell companies and bank accounts made investments totaling tens of millions of dollars.  VON DER GOLTZ was assisted in this scheme through the use of Mossack Fonseca, including Ramses Owens, a Panamanian lawyer who previously worked at Mossack Fonseca, and by Richard Gaffey, a partner at a U.S.-based accounting firm.  Specifically, in furtherance of VON DER GOLTZ’s efforts to conceal his assets and income from the IRS, VON DER GOLTZ engaged the services of Mossack Fonseca, including Owens, to create a sham foundation and shell companies formed under the laws of Panama and the British Virgin Islands to conceal from the IRS and others the ownership by VON DER GOLTZ of accounts established at overseas banks, as well as the income generated in those accounts.  VON DER GOLTZ, Gaffey, and Owens also falsely claimed that VON DER GOLTZ’s elderly mother was the sole beneficial owner of the shell companies and bank accounts at issue because, at all relevant times, she was a Guatemalan citizen and resident, and – unlike VON DER GOLTZ – was not a U.S. taxpayer. 

*                *                *

VON DER GOLTZ, 82, a citizen of Germany and Guatemala who resided in Needham, Massachusetts, and Key Biscayne, Florida, pled guilty to one count of conspiracy to commit tax evasion, which carries a maximum sentence of five years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of money laundering conspiracy, which carries a maximum sentence of 20 years in prison; four counts of willful failure to file Reports of Foreign Bank and Financial Accounts, FINCEN Reports 114, each of which carries a maximum sentence of five years in prison; and two counts of false statements, each of which carries a maximum sentence of five years in prison. 

VON DER GOLTZ is scheduled to appear before Judge Richard M. Berman on February 24, 2020, at 9:30 a.m., at which time it is anticipated Judge Berman will set a sentencing date.

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

Gaffey is scheduled to proceed to trial on March 9, 2020, before Judge Berman. 

*                *                *

U.S. Attorney Berman praised the outstanding investigative work of IRS - Criminal Investigation and HSI, and thanked the Justice Department’s Tax Division and the Federal Bureau of Investigation for their significant assistance in the investigation.  Mr. Berman also thanked the Criminal Division’s Office of International Affairs, which provided significant assistance in securing the defendant’s extradition from the United Kingdom.  He also thanked law enforcement partners in France, the United Kingdom, Panama, and Germany for their assistance in the case.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Transnational Criminal Enterprises Unit, working in partnership with the Money Laundering and Asset Recovery Section of the Criminal Division.  Assistant United States Attorneys Eun Young Choi and Thane Rehn, along with Trial Attorneys Michael Parker and Parker Tobin of the Money Laundering and Asset Recovery Section, are in charge of the prosecution.

The charges as to Owens, Brauer, and Gaffey are merely accusations, and they are presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the texts of the Indictments and the descriptions of the Indictments set forth herein constitute only allegations as to Owens, Brauer, and Gaffey, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), and Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced the unsealing of an Indictment charging 18 members of the 59 Brims gang, including the gang’s leaders, with committing various racketeering, narcotics, and firearms offenses, including murder and attempted murder. 

WILLIE EVANS, a/k/a “Mills,” JAMARR SIMMONS, a/k/a “Show Off,” ALBERT SHOULDERS, a/k/a “Bundy,” RANELL SLOAN, a/k/a “Rah,” DARNELL COOPER, a/k/a “Jeez,” JOSE RODRIGUEZ, a/k/a “Meso,” SYLVESTER WINT, a/k/a “Vesta,” YONETTE RESPASS, a/k/a “Yonette Davis,” a/k/a “Star Brim,” MARKELL BOBIAN, a/k/a “Kellz,” TIMOTHY COLEMAN, a/k/a “LA,” TYRONE ERVIN, a/k/a “Shoota,” SEAN GAMBRELL, a/k/a “Kash,” DARON GOODMAN, a/k/a “Handsome,” JAVARIS JENKINS, a/k/a “JayBz,” JERLAINE LITTLE, a/k/a “Noni,” SHAMARE REID, a/k/a “Sha,” MARKQUEL SIMMONS, a/k/a “Shellz,” and TYRIQUE SNOWDEN, a/k/a “Ty,” are members of a racketeering enterprise known as the 59 Brims.

The Indictment charges WILLIE EVANS, the gang’s godfather, or highest-ranking, non-incarcerated member, and JAMARR SIMMONS, the highest-ranking member in the Bronx, with the September 28, 2019, murder of Bradford Mensah, 22, in the vicinity of Crotona Park in the Bronx, New York.  JAMARR SIMMONS and DARON GOODMAN were previously charged with the January 11, 2020, murder of Jason Parris, 36, in the vicinity of East 170th Street and Webster Avenue in the Bronx, New York.  

In addition to EVANS and JAMARR SIMMONS, the Indictment also charges YONETTE RESPASS, the gang’s godmother, or highest-ranking female member, with participating in the racketeering conspiracy and with ordering a slashing.

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the Indictment, the defendants were responsible for brutal acts of violence – murders, attempted murders, a maiming, and robberies – in service of the 59 Brims gang.  Thanks to the extraordinary work of our partners at the NYPD and HSI, the defendants, who include the leaders of the gang, now face federal charges for their crimes.”

NYPD Commissioner Dermot Shea said:  “Targeting and dismantling gangs and crews, and preventing the violence so often associated with their illegal activities, continues to be one of our highest priorities.  By using precision policing we are targeting the small percentage of people responsible for committing much of the violence in New York, and making the safest large city in America even safer.  I’d like to thank our law enforcement partners for their efforts in helping us achieve this goal.”

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “The list of allegations against those arrested today includes murder, attempted murder, narcotics violations, firearms offenses, and robbery.  The 59 Brims gang acts with no apparent regard for human life and today’s arrests hopefully put an end to their senseless violence.  As law enforcement, we build investigations to identify not only those who carry out monstrous acts, but also to get the leaders in the organization who facilitate the horrific crimes.  Today, due to the great investigative activity in this case, HSI and its partners are happy to announce that those allegedly responsible from the street level to the highest-ranking members of the 59 Brims gang are facing justice, ultimately making the community safer.”

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

On January 11, 2020, DARON GOODMAN and JAMARR SIMMONS shot and killed Jason Parris in the vicinity of 1441 Webster Avenue in the Bronx, and aided and abetted the same.  GOODMAN and SIMMONS killed Parris in part to maintain and increase their positions in the 59 Brims racketeering enterprise operating in the Southern District of New York.

On September 28, 2019, WILLIE EVANS and JAMARR SIMMONS shot and killed Bradford Mensah in the vicinity of Crotona Park in the Bronx, and aided and abetted the same.  EVANS and SIMMONS killed Mensah in part to maintain and increase their positions in the 59 Brims racketeering enterprise operating in the Southern District of New York.

On September 2, 2019, JAVARIS JENKINS shot at a rival gang member in the Bronx, and aided and abetted the same.  JENKINS shot at the rival in part to maintain and increase his position in the 59 Brims racketeering enterprise operating in the Southern District of New York.

On August 28, 2019, TYRIQUE SNOWDEN shot at an individual while attempting to rob the individual of narcotics and narcotics proceeds in the Bronx, and aided and abetted the same.

On August 24, 2019, SYLVESTER WINT and SHAMARE REID shot at rival gang members in the Bronx, and aided and abetted the same.  WINT and REID shot at the rivals in part to maintain and increase their positions in the 59 Brims racketeering enterprise operating in the Southern District of New York.

On August 8, 2019, JAMARR SIMMONS, ALBERT SHOULDERS, SYLVESTER WINT, YONETTE RESPASS, and SHAMARE REID maimed and assaulted an individual with a dangerous weapon, and aided and abetted the same, by slashing the individual in the face.  SIMMONS, SHOULDERS, WINT, RESPASS, and REID slashed the individual in part to maintain and increase their positions in the 59 Brims racketeering enterprise operating in the Southern District of New York.

On August 1, 2019, JAVARIS JENKINS shot at rival gang members in the Bronx, and aided and abetted the same.  JENKINS shot at the rival in part to maintain and increase his position in the 59 Brims racketeering enterprise operating in the Southern District of New York.

On May 21, 2019, JAMARR SIMMONS, TYRONE ERVIN, and SEAN GAMBRELL robbed at gunpoint individuals who were playing a dice game, and shot at the individuals while robbing them, in the vicinity of Davidson Avenue in the Bronx, and aided and abetted the same.  SIMMONS, ERVIN, and GAMBRELL robbed and shot at the individuals in part to maintain and increase their positions in the 59 Brims racketeering enterprise operating in the Southern District of New York.

On March 30, 2019, JAMARR SIMMONS and TIMOTHY COLEMAN stabbed a rival gang member in the Bronx, and aided and abetted the same.  SIMMONS and COLEMAN stabbed the individual in part to maintain and increase their positions in the 59 Brims racketeering enterprise operating in the Southern District of New York.

On December 6, 2018, JERLAINE LITTLE and others pistol-whipped an individual while robbing the individual at gunpoint in the Bronx, and aided and abetted the same.  LITTLE robbed the individual in part to maintain and increase her position in the 59 Brims racketeering enterprise operating in the Southern District of New York.

On November 29, 2018, JAMARR SIMMONS, MARKELL BOBIAN, TYRONE ERVIN, SEAN GAMBRELL, JERLAINE LITTLE, and MARKQUEL SIMMONS pistol-whipped an individual while robbing the individual at gunpoint in the Bronx, and aided and abetted the same.  JAMARR SIMMONS, BOBIAN, ERVIN, GAMBRELL, LITTLE, MARKQUEL SIMMONS robbed the individual in part to maintain and increase their positions in the 59 Brims racketeering enterprise operating in the Southern District of New York.

Between January 2019 and September 2019, SYLVESTER WINT made the unauthorized sale of multiple firearms that had been transported in interstate commerce, including at a location in the Bronx.

*                *                *

EVANS, 28, SHOULDERS, 23, RODRIGUEZ, 26, BOBIAN, 22, ERVIN, 19, GAMBRELL, 22, JENKINS, 22, LITTLE, 28, REID, 18, and MARKQUEL SIMMONS, 23, were arrested today and will be presented before United States Magistrate Judge Barbara Moses.  GOODMAN, 22, JAMARR SIMMONS, 33, and SNOWDEN, 20, were already in federal custody.  COLEMAN, 32, is in New York City custody and will be transferred to federal custody at a later date.  SLOAN, 27, COOPER, 28, and WINT, 21, have not been arrested and remain at large.  RESPASS, 28, has not been arrested at this time.  This case is assigned to United States District Judge George B. Daniels.

Charts 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 judge.

Mr. Berman praised the outstanding investigative work of the NYPD and HSI.  Mr. Berman also praised the New York City Department of Correction, Correction Intelligence Bureau, and the Bronx County District Attorney’s Office for their assistance in the investigation.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Michael D. Longyear, Jacob Warren, and Adam S. Hobson are in charge of the prosecution.           

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

COUNT

DEFENDANT(S)

MAX. TERM OF IMPRISONMENT

Count One: Conspiracy to Commit Racketeering (18 U.S.C. § 1962(d))

All defendants

Life imprisonment as to all defendants except Respass and Coleman, for whom the maximum term of imprisonment is 20 years

Count Two:  Murder in Aid of Racketeering

(18 U.S.C. §§ 1959(a)(1) and 2)

Jamarr Simmons

Daron Goodman

Death or a Mandatory Minimum Sentence of Life Imprisonment

Count Three: Use of a Firearm to Commit Murder (18 U.S.C. § 924(j)(1))

Jamarr Simmons

Daron Goodman

Death or Life Imprisonment; Mandatory Minimum Sentence of 5 years

Count Four:  Murder in Aid of Racketeering

(18 U.S.C. §§ 1959(a)(1) and 2)

Willie Evans

Jamarr Simmons

Death or a Mandatory Minimum Sentence of Life Imprisonment

Count Five: Use of a Firearm to Commit Murder (18 U.S.C. §§ 924(j)(1) and 2)

Willie Evans

Jamarr Simmons

Death or Life Imprisonment; Mandatory Minimum Sentence of 5 years

Count Six: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Javaris Jenkins

20 years’ imprisonment

Count Seven: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii) and 2)

Javaris Jenkins

Life imprisonment; Mandatory Minimum Sentence of 10 years

Count Eight: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Sylvester Wint

Shamare Reid

20 years’ imprisonment

Count Nine: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii) and 2)

Sylvester Wint

Shamare Reid

Life imprisonment; Mandatory Minimum Sentence of 10 years

Count Ten: Maiming and Assault in Aid of Racketeering (18 U.S.C. §§ 1959(a)(2), (a)(3), and 2)

Jamarr Simmons

Albert Shoulders

Sylvester Wint

Yonette Respass

Shamare Reid

30 years’ imprisonment

Count Eleven: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Javaris Jenkins

20 years’ imprisonment

Count Twelve: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii) and 2)

Javaris Jenkins

Life imprisonment; Mandatory Minimum Sentence of 10 years

Count Thirteen: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Jamarr Simmons

Tyrone Ervin

Sean Gambrell

20 years’ imprisonment

Count Fourteen: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii) and 2)

Jamarr Simmons

Tyrone Ervin

Sean Gambrell

Life imprisonment; Mandatory Minimum Sentence of 10 years

Count Fifteen: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Jamarr Simmons

Timothy Coleman

20 years’ imprisonment

Count Sixteen: Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

Jerlaine Little

20 years’ imprisonment

Count Seventeen: Brandishing a Firearm in Furtherance of a Crime of Violence (18 U.S.C. §§ 924(c)(1)(A)(i), (ii) and 2)

Jerlaine Little

Life imprisonment; Mandatory Minimum Sentence of 7 years

Count Eighteen: Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

Jamarr Simmons

Markell Bobian

Tyrone Ervin

Sean Gambrell

Jerlaine Little

Markquel Simmons

20 years’ imprisonment

Count Nineteen: Brandishing a Firearm in Furtherance of a Crime of Violence (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), and 2)

Jamarr Simmons

Markell Bobian

Tyrone Ervin

Sean Gambrell

Jerlaine Little

Markquel Simmons

Life imprisonment; Mandatory Minimum Sentence of 7 years

Count Twenty: Conspiracy to Distribute Controlled Substances (21 U.S.C. § 846)

Willie Evans

Jamarr Simmons

Albert Shoulders

Ranell Sloan

Darnell Cooper

Jose Rodriguez

Sylvester Wint

Markell Bobian

Tyrone Ervin

Sean Gambrell

Javaris Jenkins

Jerlaine Little

Shamare Reid

Markquel Simmons

Tyrique Snowden

Life imprisonment; Mandatory Minimum Sentence of 10 years

Count Twenty One: Possession of a Firearm in Furtherance of a Drug Trafficking Crime (18 U.S.C. §§ 924(c)(1)(A)(i) and 2)

Willie Evans

Jamarr Simmons

Albert Shoulders

Ranell Sloan

Darnell Cooper

Jose Rodriguez

Sylvester Wint

Markell Bobian

Tyrone Ervin

Sean Gambrell

Javaris Jenkins

Jerlaine Little

Shamare Reid

Markquel Simmons

Tyrique Snowden

Life Imprisonment; Mandatory Minimum Sentence of 5 years

Count Twenty Two: Firearms Trafficking (18 U.S.C. §§ 922(a)(1)(A) and 2)

Sylvester Wint

5 years’ imprisonment

Count Twenty Three: Attempted Robbery (18 U.S.C. §§ 1951 and 2)

Tyrique Snowden

20 years’ imprisonment

Count Twenty-Four: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii) and 2

Tyrique Snowden

Life Imprisonment; Mandatory Minimum Sentence of 10 years

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

A former U.S. resident and taxpayer who was charged along with three others in connection with a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (Mossack Fonseca), a Panamanian-based global law firm, and its related entities, pleaded guilty today to wire and tax fraud, money laundering, false statements and other charges. 

Harald Joachim von der Goltz, aka “H.J von der Goltz,” “Johan von der Goltz,” “Jochen von der Goltz,” “Tica,” and “Tika,” 82, a citizen of Germany and Guatemala who last resided in Needham, Massachusetts, and Key Biscayne, Florida, pleaded guilty to one count of conspiracy to commit tax evasion, one count of wire fraud, one count of money laundering conspiracy, four counts of willful failure to file reports of foreign bank and financial accounts (Financial Crimes Enforcement Network Reports 114) and two counts of false statements. 

“Over nearly two decades, von der Goltz conspired to keep his income hidden from U.S. tax authorities and law enforcement,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Today’s guilty plea demonstrates the Department’s steadfast commitment to prosecute taxpayers who use offshore structures to obscure their wealth and evade their tax obligations.”

“Harald Joachim von der Goltz went to extraordinary lengths to circumvent U.S. tax laws in order to maintain his wealth and hide it from the IRS,” said U.S. Attorney Geoffrey S. Berman of the Southern District of New York.  “Using the specialized criminal services of global law firm Mossack Fonseca, von der Goltz set up shell companies and off-shore accounts to conceal millions of dollars.  Now, after years of concealment from the United States, von der Goltz has admitted guilt in a U.S. court and awaits sentencing that could result in a term in a U.S. prison.”

According to the allegations contained in the indictments, other filings in this case and statements during court proceedings, including von der Goltz’s guilty plea hearing, since at least 2000 through 2017, von der Goltz conspired with others to conceal his assets and investments, and the income generated by those assets and investments, from the IRS through fraudulent, deceitful and dishonest means. 

During all relevant times, von der Goltz was a U.S. resident and was subject to U.S. tax laws, which required him to report and pay income tax on worldwide income, including income and capital gains generated in domestic and foreign bank accounts.  Nevertheless, von der Goltz evaded his tax reporting obligations by setting up a series of shell companies and bank accounts, and hiding his beneficial ownership of the shell companies and bank accounts from the IRS.  These shell companies and bank accounts made investments totaling tens of millions of dollars.  Von der Goltz was assisted in this scheme through the use of Mossack Fonseca, including Ramses Owens, a Panamanian lawyer who previously worked at the Mossack Fonseca law firm, and by Richard Gaffey, a partner at a U.S.-based accounting firm. 

In furtherance of von der Goltz’s efforts to conceal his assets and income from the IRS, von der Goltz engaged the services of Mossack Fonseca, including Owens, to create a sham foundation and shell companies formed under the laws of Panama and the British Virgin Islands to conceal from the IRS and others the ownership by von der Goltz of accounts established at overseas banks, as well as the income generated in those accounts.  von der Goltz, Gaffey and Owens also falsely claimed that von der Goltz’s elderly mother was the sole beneficial owner of the shell companies and bank accounts at issue because, at all relevant times, she was a Guatemalan citizen and resident, and — unlike von der Goltz — was not a U.S. taxpayer. 

Von der Goltz is scheduled to appear before U.S. District Judge Richard M. Berman on February 24, 2020.

Gaffey is scheduled to proceed to trial on March 9, 2020, before Judge Berman. 

Assistant Attorney General Benczkowski praised the outstanding investigative work of IRS-Criminal Investigation and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and thanked the Justice Department’s Tax Division and the FBI for their significant assistance in the investigation. The Criminal Division’s Office of International Affairs provided significant assistance in securing the defendant’s extradition from the United Kingdom.  Assistant Attorney General Benczkowski also thanked law enforcement partners in France, the United Kingdom, and Germany for their assistance in the case.

The Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), working in partnership with the Southern District of New York’s Complex Frauds and Cybercrime Unit and Money Laundering and Transnational Criminal Enterprises Unit are handling this case.  MLARS Trial Attorneys Michael Parker and Parker Tobin along with Assistant U.S. Attorneys Eun Young Choi and Thane Rehn are in charge of the prosecution.

As the introductory phrase signifies, the entirety of the texts of the Indictments and the descriptions of the Indictments set forth herein constitute only allegations as to Owens, Brauer, and Gaffey, and every fact described should be treated as an allegation.

Geoffrey S.  Berman, 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 that GREG MILLER pled guilty today to participating in a $9 million scheme to defraud providers of “no-fault” insurance plans.  As part of the scheme, MILLER and his co-conspirators billed insurance companies millions of dollars for expensive durable medical equipment that was never provided to patients.  MILLER pled guilty before United States District Court Judge Katherine Polk Failla.     

U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, Greg Miller exploited New York’s no-fault auto insurance system by billing millions of dollars for durable medical equipment that was never actually provided to patients, was medically unnecessary, or was far more expensive than the equipment that was provided.  Now Miller awaits sentencing for his crime.”

FBI Assistant Director William F. Sweeney Jr. said:  “When private health care programs are abused, the financial burden is typically passed on to consumers of these programs by way of increased premiums and other means of supporting services provided by the company.  This is in no way a victimless crime, as it translates into very real numbers for those who pay into these health care programs.  Miller’s conduct was just another way to make a quick profit at the expense of others, and this type of behavior can’t be tolerated.” 

As alleged in the Information filed today in Manhattan federal court:

Between 2014 and 2019, GREG MILLER employed other individuals to serve as the nominal owners of at least two durable medical equipment (“DME”) supply companies located in Brooklyn, New York.  MILLER, the true owner and operator of the companies, directed these individuals to submit fraudulent bills to private insurance companies that provided “no-fault” insurance plans.  Under New York State law, a company that insures a vehicle involved in an accident is required to provide reimbursement for certain treatments and services provided to the vehicle occupants, regardless of who was at fault in the accident.  These treatments and services may include DME if the DME is necessary and actually provided.  The bills submitted by MILLER’s companies were fraudulent because, among other things, the bills were for DME that was never provided to patients, for DME that was medically unnecessary, or for expensive DME purportedly provided to patients when the DME in fact provided to patients was inexpensive DME.        

MILLER, 60, pled guilty to one count of conspiring to commit health care fraud and faces a maximum sentence of 10 years in prison.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  As part of his plea, MILLER agreed to forfeit $3,698,010 and to pay at least that amount in restitution.

Mr. Berman praised the outstanding investigative work of FBI’s Healthcare Fraud Task Force.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Timothy V. Capozzi is in charge of the prosecution.

“Today a unanimous jury found Michael Avenatti guilty of misusing his client’s information in an effort to extort tens of millions of dollars from the athletic apparel company Nike.  While the defendant may have tried to hide behind legal terms and a suit and tie, the jury clearly saw the defendant’s scheme for what it was – an old fashioned shakedown.”

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that NICHOLAS JOSEPH GENOVESE was sentenced on February 11 in Manhattan federal court to 140 months in federal prison for committing securities fraud.  GENOVESE induced more than $11.2 million in investments in a hedge fund that he founded, Willow Creek Investments LP (“Willow Creek”), by misrepresenting his qualifications and professional background and concealing that he had prior felony convictions for fraud-related crimes.  In February 2018, GENOVESE was charged, arrested, and detained for perpetrating this fraud.  In October 2018, GENOVESE pled guilty to one count of securities fraud before United States District Judge William H. Pauley III, who also imposed the sentence. 

United States Attorney Geoffrey S. Berman said:  “Nicholas Genovese is a recidivist fraudster and con artist who tricked more than ten victims into investing more than $11.2 million dollars into his hedge fund, Willow Creek, based on false claims about his background and credentials.  Genovese brazenly lied to his victims, falsely claiming that he was an heir to a multimillion-dollar fortune, that he had an Ivy League MBA, and that he had served in senior roles at major Wall Street firms.  In reality, Genovese was a repeat offender with nine prior criminal convictions for fraud-related and other crimes.  Genovese now faces more than a decade in prison for defrauding his victims.”

According to the allegations set forth in the Complaint and Indictment filed against GENOVESE in Manhattan federal court, and statements made in public court filings and proceedings including GENOVESE’s sentencing hearing:

In or about 2015, GENOVESE began soliciting individuals to invest in the hedge fund that became Willow Creek, which was based in New York, New York.  In doing so, GENOVESE represented, among other things, that he was part of the Genovese family that had owned the Genovese Drug Store chain in the New York area and was an heir to this family’s fortune from the sale of that business for hundreds of millions of dollars in the late 1990s; that he had graduated from Dartmouth College’s Tuck School of Business; and that he had extensive Wall Street experience.  In particular, GENOVESE claimed that he had been a Goldman Sachs partner and a Bear Sterns portfolio manager before forming Willow Creek.  Based in part on these claims, victims invested $11,211,704 with GENOVESE. 

These representations were false.  GENOVESE is not related to the Genovese family that owned and sold the Genovese Drug Store Chain, did not attend the Tuck School of Business, and had never worked for Goldman Sachs or Bear Stearns.  GENOVESE also did not tell his investors that he had multiple prior felony convictions for fraud-related offenses including forgery, identity theft, and grand larceny.

When investors began to ask for their money back, GENOVESE put them off.  He told one investor that he would only return that investor’s funds after “the stars have aligned,” or else there would be a risk that almost all the money would be lost as a result of the purported impracticalities of unwinding unspecified trading positions.  Records indicate that GENOVESE lost approximately $8 million trading in TD Ameritrade accounts between January 2015 and December 2017.  GENOVESE also used proceeds of his fraud to purchase various luxuries for himself.

*                      *                      *

GENOVESE, 54, was born and raised in Illinois and is a resident of New York, New York.  In addition to his prison term, GENOVESE was sentenced to three years of supervised release and ordered to pay restitution to his victims in the amount of $11,211,704 in addition to forfeiture of the proceeds of his crime. 

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and thanked the New York Regional Office of the United States Securities and Exchange Commission for its assistance.

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