Southern District of New York

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that NATALIE MAYFLOWER SOURS EDWARDS, a/k/a “Natalie Sours,” a/k/a “Natalie May Edwards,” a/k/a “May Edwards,” a former senior adviser at the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”), pled guilty today to conspiring to unlawfully disclose Suspicious Activity Reports (“SARs”).  EDWARDS pled guilty before United States District Judge Gregory H. Woods.

U.S. Attorney Geoffrey S. Berman said:  “As she has now admitted, Natalie Mayflower Sours Edwards, a former senior-level FinCEN employee, abused her position of trust by agreeing to repeatedly disclose highly sensitive information contained in Suspicious Activity Reports.  Maintaining the confidentiality of SARs, which are filed by banks and other financial institutions to alert law enforcement to potentially illegal transactions, is essential to permit them to serve their statutory function, and the defendant’s conduct violated the integrity of that critical system and the law.”

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

The mission of FinCEN is to “safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.”[1]  Among other things, FinCEN manages the collection and maintenance of SARs regarding potentially suspicious financial transactions, which, under the Bank Secrecy Act (“BSA”), U.S. financial institutions and other parties are required by law to generate and deliver to FinCEN.  Under the BSA and its implementing regulations, willful disclosure of a SAR or its contents by government employees or agents is a felony unless necessary to fulfill official duties.

Beginning in approximately October 2017, and lasting until her arrest in October 2018, EDWARDS agreed to and did unlawfully disclose numerous SARs to a reporter (“Reporter-1”), the substance of which were published over the course of approximately 12 articles by a news organization for which Reporter-1 worked (“News Organization-1”).  The illegally disclosed SARs pertained to, among other things, Paul Manafort, Richard Gates, the Russian Embassy, Mariia Butina, and Prevezon Alexander.  EDWARDS had access to each of the pertinent SARs and saved them – along with thousands of other files containing sensitive government information – to a flash drive provided to her by FinCEN.  She transmitted the SARs to Reporter-1 by means that included taking photographs or images of them and texting the photographs or images to Reporter-1 over an encrypted application.  In addition to disseminating SARs to Reporter-1, EDWARDS sent or described to Reporter-1 internal FinCEN emails or correspondence appearing to relate to SARs or other information protected by the BSA, and FinCEN nonpublic memoranda, including Investigative Memos and Intelligence Assessments published by the FinCEN Intelligence Division, which contained confidential personal information, business information, and/or security threat assessments.

At the time of EDWARDS’s arrest, she was in possession of a flash drive on which she saved the unlawfully disclosed SARs, and a cellphone containing numerous communications over an encrypted application in which she transmitted SARs and other sensitive government information to Reporter-1.

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EDWARDS, 41, of Quinton, Virginia, pled guilty to one count of conspiracy to make unauthorized disclosures of SARs, which carries a maximum sentence of five years in prison.  EDWARDS is scheduled to be sentenced by Judge Woods on Tuesday, June 9, 2020 at 4:00 p.m.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as the sentence of the defendant will be determined by the judge.

Mr. Berman praised the investigative work of the Treasury Department’s Office of Inspector General and the Federal Bureau of Investigation.

This case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Kimberly J. Ravener, Daniel C. Richenthal, and Maurene R. Comey are in charge of the prosecution.

 

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[1] www.fincen.gov/about/mission

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that Joseph Guagliardo, a/k/a “Joseph Gagliardo,” a former New York City Police Department (“NYPD”) officer and former member of the supervisory committee (the “Supervisory Committee”) of Municipal Credit Union (“MCU”), a non-profit financial institution, pled guilty today to abusing his leadership position at MCU to embezzle more than $400,000 dollars from the MCU.  GUAGLIARDO pled guilty before United States District Judge Denise L. Cote.

U.S. Attorney Geoffrey S. Berman said:  “As he has now admitted, Joseph Guagliardo betrayed the trust of MCU’s members, who elected him to supervise and protect MCU, by abusing his position to steal hundreds of thousands of dollars.  Today’s plea is yet another step forward in this Office’s efforts to fully investigate and prosecute those who abused positions of authority at MCU, a multibillion-dollar, non-profit, federally insured credit union, to enrich themselves and their families at the expense of its hard-working members.”

According to the allegations contained in the Complaint, Information, publicly-available information, court filings, and statements made during the plea proceeding:           

MCU is a non-profit financial institution headquartered in New York, New York, which is federally insured by the National Credit Union Administration (“NCUA”).  MCU is the oldest credit union in New York State and one of the oldest and largest in the country, providing banking services to more than 500,000 members, and with more than $2.9 billion in member accounts, each of which is federally insured for at least $250,000 by the National Credit Union Share Insurance Fund, which is administered by the NCUA.  Membership in MCU is generally available to employees of New York City and its agencies, employees of the federal and New York state governments who work in New York City, and employees of hospitals, nursing homes, and similar facilities located within New York State.

GUAGLIARDO is a former officer with the NYPD and a former Supervisory Committee member of MCU, a volunteer position.  In or about 1993, GUAGLIARDO joined the Supervisory Committee, and remained in that position until he was removed from that position by the New York State Department of Financial Services on or about May 24, 2018, except for a brief period of time when he served as a member of MCU’s board of directors in or about 2008. 

Under New York banking law, the Supervisory Committee’s duties included supervision of the actions of MCU’s board of directors and officers.  MCU’s written conflict of interest policy, which was regularly distributed to board members, Supervisory Committee members, and others, provided, among other things, that members of MCU’s “Board of Directors and Supervisory Committee may not do business with the Credit Union, either individually or as representative of any business entity.”

From 2009 through May 2018, in violation of MCU policy and his fiduciary duty as a member of the Supervisory Committee, GUAGLIARDO engaged in a scheme to obtain money from MCU to which he knew he was not entitled, and took steps to conceal his efforts.  Among other things, GUAGLIARDO caused MCU to direct more than $250,000 to a security company created and controlled by GUAGLIARDO, but operated in another’s name, and then directed that money from that company be paid to him and to his family members.  GUAGLIARDO also over-billed MCU more than $200,000 for purported web advertising services provided by a non-profit organization that GUAGLIARDO also controlled.

In addition, during substantially the same period in which GUAGLIARDO was committing these offenses, GUAGLIARDO unlawfully distributed controlled substances to the former chief executive officer of MCU, in the form of prescription drugs, some of which were obtained from GUAGLIARDO’s spouse, who worked as a doctor affiliated with a public hospital, and some of which were obtained from a different doctor affiliated with the NYPD.

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GUAGLIARDO, 62, of Brooklyn, New York, pled guilty to one count of embezzlement from a federally insured credit union, which carries a maximum penalty of 30 years in prison.  In his written plea agreement, GUAGLIARDO agreed to forfeit at least $425,514, and to pay at least $468,189 in restitution to MCU. 

GUAGLIARDO is scheduled to be sentenced by Judge Cote on April 10, 2020, at 2:30 p.m.

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

U.S. Attorney Berman praised the outstanding work of the Special Agents of the United States Attorney’s Office.  Mr. Berman also thanked the New York County District Attorney’s Office, the New York State Department of Financial Services, and the NYPD Internal Affairs Bureau for their assistance.

The case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Eli J. Mark and Daniel C. Richenthal are in charge of the prosecution, with assistance of Special Assistant U.S. Attorney Alona Katz from the New York County District Attorney’s Office.

Eric Dreiband, el Fiscal General Auxiliar de la División de Derechos Civiles, Geoffrey S. Berman, el Fiscal Federal para el Distrito Sur de Nueva York y William F. Sweeney Jr., el Director Auxiliar Encargado de la Oficina del FBI en Nueva York anunciaron hoy que Grafton Thomas ha sido acusado formalmente por un gran jurado de cinco cargos de provocación deliberada de lesiones corporales a cinco víctimas por motivos de la religión de las mismas y cinco cargos de obstrucción al libre ejercicio de religión en un intento de asesinato, los cuales son delitos de odio federales, en relación con su alegado ataque con machete durante una ceremonia del día festivo de Janucá en la casa de un rabino en Monsey, Nueva York, la noche del 28 de diciembre del 2019.

«Desde antes de nuestro establecimiento como nación y desde aquel entonces, este país ha ofrecido refugio a personas de distintos rincones del mundo que han sido víctimas de violencia y de otros tipos de persecución por sus creencias y su derecho al culto», afirmó el Fiscal General Auxiliar de la División de Derechos Civiles, Eric Dreiband. «Hoy en día, Estados Unidos sigue siendo un modelo de libertad para personas perseguidas por motivos de su religión por todo el mundo y un ataque violento contra alguien a causa de su religión no solo es ilegal, sino que también va en contra de todo lo que nuestra nación representa. El Departamento de Justicia de los Estados Unidos seguirá enjuiciando a cualquier persona que se dedique a tales conductas con todo el peso de la ley».

«El 28 de diciembre del 2019, Grafton Thomas supuestamente llegó armado con un machete de 18 pulgadas y entró en la casa de un rabino, donde decenas de personas se habían juntado por el día festivo», dijo el Fiscal Federal para el Distrito Sur de Nueva York, Geoffrey S. Berman. «Ahora alegamos que lo hizo con la intención de convertir a sus víctimas en tales por motivos de su religión. Según las alegaciones, con su cara tapada bajo una bufanda, acuchilló y apuñaló a los congregantes reunidos y huyó, dejando atrás al menos a cinco víctimas. Thomas se enfrenta a una pena de cadena perpetua por sus presuntos actos violentos de perjuicio e intolerancia».

«Cuando las acciones de un individuo traspasan el umbral de un delito federal, tal y como alegamos que el Sr. Grafton hizo en este caso, actuaremos rápidamente», declaró el Director Auxiliar del FBI, William F. Sweeney, Jr. «El mensaje de los cargos de hoy debería ser claro como el agua: el FBI no tolerará violencia contra nadie. Nosotros, junto con nuestros socios, haremos a cualquier persona que cometa delitos como este rendir cuentas de sus acciones. Las sanciones federales por este tipo de ataque son severas y justificadas. En este caso, la comunidad local ayudó, y sus acciones fueron esenciales para la preservación de vidas y llevaron directamente a la captura del Sr. Grafton. Le toca al resto de nuestra comunidad conjuntamente dar un paso adelante y echar una mano. No dejen una brecha abierta para que odio se propague y no hagan caso omiso de este tipo de conducta, tachándolo como el problema de otra persona. Hay que abordarlo y denunciar actividades sospechosas a las autoridades».

Según los alegatos contenidos en la acusación formal y la querella:         

El 28 de diciembre del 2019, Thomas entró en la casa de un rabino en Monsey, Nueva York, la cual es adyacente a la sinagoga del rabino, durante la celebración del fin de Shabat y el séptimo día de Jauncá. Thomas declaró ante decenas de congregantes que «nadie se va a ir» y atacó al grupo con un machete de 18 pulgadas. Al menos cinco víctimas fueron hospitalizadas con lesiones graves, entre ellos tajos, laceraciones profundas, un dedo amputado y una fractura de cráneo.

Tras el ataque, Thomas viajó en carro a la Ciudad de Nueva York. Fue detenido en Harlem por miembros de la Policía de la Ciudad de Nueva York. Los agentes que respondieron a la escena observaron lo que parecía ser sangre en las manos y ropa de Thomas y el olor de lejía que desprendía de su vehículo. Un registro del vehículo de Thomas llevó a la confiscación de, entre otras cosas, un machete que parecía tener encima rastros de sangre seca. Los agentes del orden público registraron posteriormente el domicilio y teléfono celular según las órdenes de registro. El domicilio contenía diarios manuscritos con varias páginas de referencias antisemíticas, las que incluían referencias a «Adolf Hitler» y «la cultura Nazi». El celular de Thomas contenía búsquedas en Internet que se remontaban al menos a noviembre del 2019 de términos como «templos sionistas» en Staten Island y Nueva Jersey, «por qué Hitler odiaba a los judíos» y «compañías destacadas fundadas por judíos en Estados Unidos», así como una visita el día del ataque a una página web que contenía un artículo titulado «Nueva York fortalece la presencia de la policía en barrios judíos tras ataques antisemíticos. Aquí tienes la información más importante».

Se le acusa a Thomas, de 37 años, de cinco cargos de provocación intencional de lesiones corporales e intento de asesinato de cinco víctimas por motivos de su religión, en contra de la Sección 249 del Título 18 del Código de los EE. UU., y cinco cargos de obstrucción al libre ejercicio de religión en un intento de asesinato, en contra de la Sección 247 del Título 18 del Código de los EE. UU. Cada uno de los diez cargos acarrea una pena máxima de cadena perpetua. La máxima pena posible en este caso la dicta el Congreso y se incluye aquí únicamente para fines informativos, ya que es el juez quién determinará la pena verdadera.

El Fiscal General Auxiliar Dreiband y el Sr. Berman elogiaron los esfuerzos extraordinarios del FBI, la Fiscalía de Distrito del Condado de Rockland, la Policía de Ramapo, la Oficina del Sheriff del Condado de Rockland, la Policía Estatal de Nueva York, la Policía de Clarkstown y la Policía de la Ciudad de Nueva York.

La Unidad contra el Terrorismo y Estupefacientes de la Oficina, su División en White Plains y la Unidad de Derechos Civiles de la División Civil de la Oficina están a cargo de este caso. Los Fiscales Federales Auxiliares Michael K. Krouse, Lindsey Keenan y Lara K. Eshkenazi son los encargados del enjuiciamiento.

Los cargos contenidos en la acusación formal son simplemente alegaciones, y al acusado se lo considera inocente mientras no se pruebe su culpabilidad ante un tribunal de justicia.

El año 2020 es el 150º aniversario del Departamento de Justicia. Para aprender más sobre la historia de nuestra agencia, vaya a www.Justice.gov/Celebrating150Years.

Anexo(s): 

Download grafton_thomas_indictment_signed.pdf

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JORGE PADILLA pled guilty today to defrauding victims of more than $900,000 by soliciting investments in a sham financial firm based on misrepresentations and fraudulent documents.  PADILLA pled guilty before U.S. District Judge J. Paul Oetken.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Jorge Padilla fleeced investors through lies and deception.  He lied about the very existence of the company through which he solicited investors, and he sent investors fraudulent statements to prop up the scheme.  Padilla now awaits sentencing for his crime.” 

According to the allegations contained in the Complaint and Information against PADILLA and other documents filed in federal court:

From at least in or about September 2014 through in or about April 2017, JORGE PADILLA orchestrated a scheme to solicit investments in a sham family investment office, Dunatos Capital.  PADILLA, a financial professional registered with the Financial Industry Regulatory Authority (“FINRA”), worked throughout the period at issue for large financial institutions.  Nevertheless, PADILLA, targeting Argentina-based victim-investors who had been clients of one such institution, claimed he had gone to work for Dunatos Capital, purportedly a family office managing tens of millions of dollars in investments.  In order to solicit investments in this sham firm, PADILLA made false representations, including claiming, for example, that Dunatos had tens of millions of dollars under management, was regulated by U.S. financial regulators, and operated out of non-existent Manhattan-based offices.  After victims transferred funds pursuant to PADILLA’s directions, PADILLA prepared and sent fraudulent statements about how the funds were invested.  PADILLA solicited more than $900,000 in purported investments in the sham firm.

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PADILLA, 33, of Haverstraw, New York, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.

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

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Katherine Reilly and Michael McGinnis are in charge of the prosecution. 

Eric Dreiband, Assistant Attorney General for Civil Rights, Geoffrey S. Berman, the United States Attorney for the Southern District of New York and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the FBI announced today that Grafton Thomas has been indicted by a federal grand jury with five counts of willfully causing bodily injury to five victims because of the victims’ religion and five counts of obstructing the free exercise of religion in an attempt to kill, federal hate crimes, related to his alleged machete attack during Hanukkah observances at a rabbi’s home in Monsey, New York, on the night of Dec. 28, 2019. 

“Since before our founding as a nation and ever since, this country has provided refuge for people from other parts of the world who suffered violence and other forms of persecution because of their right to believe and worship as they see fit,” said Assistant Attorney General Eric Dreiband for the Civil Rights Division. “The United States remains today a beacon of freedom for persecuted religious people all over the world, and violent attacks against anyone because of religion is both illegal and against everything our nation stands for. The United States Department of Justice will continue to prosecute anyone who engages in such conduct to the fullest extent of the law.” 

“On December 28, 2019, Grafton Thomas allegedly came armed with an 18-inch machete and entered a rabbi’s home, where dozens had gathered for the holiday,” said U.S. Attorney Geoffrey S. Berman for the Southern District of New York. “We now allege that he did this with the intention of targeting his victims because of their religion. As alleged, with his face concealed beneath a scarf, he slashed and stabbed the assembled congregants, fled, and left at least five victims in his wake. Thomas faces life in prison for his alleged violent acts of prejudice and intolerance.”

“When an individual’s actions cross the threshold of a federal crime, as we allege Mr. Grafton did here, we will act swiftly,” said FBI Assistant Director William F. Sweeney Jr. “The message from today’s charges should be crystal clear – the FBI won’t tolerate violence against anyone. Working with our partners, we will hold anyone who commits a crime like this accountable for their actions. The federal penalties for this type of attack are severe and justified. In this instance, the local community was engaged, and their actions were essential to saving lives and led directly to Mr. Grafton’s capture. It’s the rest of our community’s joint responsibility to step up and engage as well – don’t give hate a platform to propagate and don’t dismiss this type of behavior as someone else’s problem, address it and immediately report suspicious activity to authorities.”

According to the allegations in the Indictment and the Complaint:

On Dec. 28, 2019, Thomas entered a Rabbi’s home in Monsey, New York, which is adjacent to the Rabbi’s synagogue, during observances related to the end of Shabbat and the seventh night of Hanukkah. Thomas declared to dozens of assembled congregants, “no one is leaving,” and attacked the group with an 18-inch machete. At least five victims were hospitalized with serious injuries, including slash wounds, deep lacerations, a severed finger, and a skull fracture. 

Following the attack, Thomas traveled in a car to New York City, and he was stopped in Harlem by members of the New York City Police Department. The responding officers observed what appeared to be blood on Thomas’s hands and clothing, and smelled bleach coming from his vehicle. A search of Thomas’s vehicle led to the seizure of, among other things, a machete that appeared to have traces of dried blood on it. Law enforcement subsequently searched Thomas’s residence and cellphone pursuant to warrants. The residence contained handwritten journals with several pages of anti-Semitic references, including references to “Adolf Hitler” and “Nazi Culture.” Thomas’s cellphone contained Internet searches dating back to at least November 2019 for terms such as “Zionist Temples” in Staten Island and New Jersey, “why did Hitler hate the Jews,” and “prominent companies founded by Jews in America,” as well as a webpage visit on the day of the attack to an article titled, “New York Increases Police Presence in Jewish Neighborhoods After Anti-Semitic Attacks. Here’s What to Know.”

  Thomas, 37, is charged with five counts of willfully causing bodily injury to, and attempting to kill, five victims because of their religion in violation of Title 18, United States Code, Section 249, and five counts of obstructing the free exercise of religion in an attempt to kill, in violation of Title 18, United States Code, Section 247. Each of the 10 counts carries a maximum prison term of life. 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 a judge.

Assistant Attorney General Dreiband and Mr. Berman praised the outstanding efforts of the FBI, the Rockland County District Attorney’s Office, the Ramapo Police Department, the Rockland County Sherriff’s Office, the New York State Police, the Clarkstown Police Department, and the New York City Police Department.

This case is being handled by the Office’s Terrorism and International Narcotics Unit, its White Plains Division, and the Civil Rights Unit of the Office’s Civil Division. Assistant U.S. Attorneys Michael K. Krouse, Lindsey Keenan, and Lara K. Eshkenazi are in charge of the prosecution.

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

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, Eric Dreiband, Assistant Attorney General for Civil Rights, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that GRAFTON THOMAS has been indicted by a federal grand jury with five counts of willfully causing bodily injury to five victims because of the victims’ religion and five counts of obstructing the free exercise of religion in an attempt to kill, federal hate crimes, related to his machete attack during Hanukkah observances at a rabbi’s home in Monsey, New York, on the night of December 28, 2019. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “On December 28, 2019, Grafton Thomas allegedly came armed with an 18-inch machete and entered a rabbi’s home, where dozens had gathered for the holiday.  We now allege that he did this with the intention of targeting his victims because of their religion.  As alleged, with his face concealed beneath a scarf, he slashed and stabbed the assembled congregants, fled, and left at least five victims in his wake.  Thomas faces life in prison for his alleged violent acts of prejudice and intolerance.”

Assistant Attorney General Eric Dreiband said:  “Since before our founding as a nation and ever since, this country has provided refuge for people from other parts of the world who suffered violence and other forms of persecution because of their right to believe and worship as they see fit.  The United States remains today a beacon of freedom for persecuted religious people all over the world, and violent attacks against anyone because of religion are both illegal and against everything our nation stands for.  The United States Department of Justice will continue to prosecute anyone who engages in such conduct to the fullest extent of the law.” 

FBI Assistant Director William F. Sweeney Jr. said:  “When an individual’s actions cross the threshold of a federal crime, as we allege Mr. Thomas did here, we will act swiftly.  The message from today’s indictment should be crystal clear – the FBI won’t tolerate violence against anyone.  Working with our partners, we will hold anyone who allegedly commits a crime like this accountable for their actions.  The federal penalties for this type of attack are severe and justified.  In this instance, the local community was engaged, and their actions were essential to saving lives and led directly to Mr. Thomas’s capture.  It’s the rest of our community’s joint responsibility to step up and engage as well – don’t give hate a platform to propagate and don’t dismiss this type of behavior as someone else’s problem, address it and immediately report suspicious activity to authorities.” 

According to the allegations in the Indictment and the Complaint[[1]]:

On December 28, 2019, THOMAS entered a Rabbi’s home in Monsey, New York, which is adjacent to the Rabbi’s synagogue, during observances related to the end of Shabbat and the seventh night of Hanukkah.  THOMAS declared to dozens of assembled congregants, “no one is leaving,” and attacked the group with an 18-inch machete.  At least five victims were hospitalized with serious injuries, including slash wounds, deep lacerations, a severed finger, and a skull fracture. 

Following the attack, Thomas traveled in a car to New York City, and he was stopped in Harlem by members of the New York City Police Department.  The responding officers observed what appeared to be blood on THOMAS’s hands and clothing, and smelled bleach coming from his vehicle.  A search of THOMAS’s vehicle led to the seizure of, among other things, a machete that appeared to have traces of dried blood on it.  Law enforcement subsequently searched THOMAS’s residence and cellphone pursuant to warrants.  The residence contained handwritten journals with several pages of anti-Semitic references, including references to “Adolf Hitler” and “Nazi Culture.”  THOMAS’s cellphone contained Internet searches dating back to at least November 2019 for terms such as “Zionist Temples” in Staten Island and New Jersey, “why did Hitler hate the Jews,” and “prominent companies founded by Jews in America,” as well as a webpage visit on the day of the attack to an article titled, “New York Increases Police Presence in Jewish Neighborhoods After Anti-Semitic Attacks.  Here’s What to Know.”

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THOMAS, 37, is charged with five counts of willfully causing bodily injury to, and attempting to kill, five victims because of their religion in violation of Title 18, United States Code, Section 249, and five counts of obstructing the free exercise of religion in an attempt to kill, in violation of Title 18, United States Code, Section 247.  Each of the ten counts carries a maximum prison term of life.  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 a judge.

Mr. Berman praised the outstanding efforts of the FBI, the Rockland County District Attorney’s Office, the Ramapo Police Department, the Rockland County Sherriff’s Office, the New York State Police, the Clarkstown Police Department, and the New York City Police Department, as well as the U.S. Department of Justice’s Civil Rights Division.

This case is being handled by the Office’s Terrorism and International Narcotics Unit, its White Plains Division, and the Civil Rights Unit of the Office’s Civil Division.  Assistant U.S. Attorneys Michael K. Krouse, Lindsey Keenan, and Lara K. Eshkenazi are in charge of the prosecution.

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

 

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[1] As the introductory phrase signifies, the entirety of the texts of the Indictment and Complaint and the description of the Indictment and 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 JASON RHODES pled guilty today before U.S. District Judge Sidney H. Stein to securities fraud, wire fraud, investment adviser fraud, and conspiracy charges in connection with his participation in a scheme to defraud approximately 25 investors in Sentinel Growth Fund Management, LLC (“Sentinel”), a hedge fund RHODES co-founded, out of approximately $19.6 million by lying to the investors and using investor funds for his own personal use and to make repayments to earlier investors in a Ponzi-like manner.    

U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, Jason Rhodes solicited investors’ money with a promise to invest it in securities.  Instead, he used it to line his own pockets and to pay off other investors who were demanding their money.  Rhodes now faces significant time in federal prison for his admitted crimes.”

According to the Indictment and other Court filings:

Beginning in at least 2013 and through in or about December 2016, RHODES, together with his co-conspirators, solicited investments in Sentinel by falsely representing to investors that their funds would be used for legitimate, specified investment purposes, namely purchasing securities.  In fact, RHODES failed to invest the investor monies as promised, but rather diverted investor funds to his own personal use and the personal use of his co-conspirators and, in a Ponzi-like manner, to make repayments to other investors who were demanding their money.  Among other things, RHODES diverted investor funds to a trucking business operated by RHODES and his wife; to pay more than $1 million to settle an unrelated civil lawsuit filed against RHODES and one of his co-conspirators; and on other personal expenses including a resort stay in Dubai and a luxury time-share vacation club.  Through this scheme, RHODES and his co-conspirators defrauded approximately 25 investors out of a total of approximately $19.6 million.

Among other fraudulent acts, RHODES and a co-conspirator falsified an account statement for an investor (“Investor-1”) to conceal the fact that RHODES and his co-conspirators had misappropriated most of the $4.2 million Investor-1 had invested in Sentinel.  After Investor-1 discovered the fraudulent nature of the account statement, RHODES, working with others, obtained funds from yet another investor (“Investor-2”) in order to make payments to Investor-1.  RHODES and his co-conspirators then, on multiple occasions, created fraudulent reports for Investor-2, falsely reflecting that Investor-2’s funds were invested with portfolio managers in Sentinel’s brokerage accounts and were earning returns.  In truth and in fact, and as RHODES well knew, Investor-2’s funds had been almost entirely misappropriated upon their receipt to repay Investor-1, and were not being managed by portfolio managers on Sentinel’s platform. 

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RHODES, 47, of Rowayton, Connecticut, pled guilty to one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, one count of wire fraud, and one count of investment adviser fraud.  The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million or twice the gross gain or loss from the offense.  The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The investment adviser fraud count carries a maximum sentence of five years in prison and a maximum fine of $10,000. 

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.

RHODES is scheduled to be sentenced by Judge Stein on April 6, 2020, at 2:30 p.m.

Mr. Berman praised the work of the Federal Bureau of Investigation.  He also thanked the Securities and Exchange Commission for its cooperation and assistance in this investigation.  

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Elisha J. Kobre and Jared Lenow are in charge of the prosecution.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that BRYAN DUNCAN, ROBERT LOCUST, and RYAN RAINFORD were sentenced yesterday by U.S. District Judge Sidney H. Stein to prison in connection with their participation in a multimillion-dollar trip-and-fall fraud scheme.  DUNCAN was sentenced to 80 months in prison; RAINFORD was sentenced to 68 months in prison; and LOCUST was sentenced to 60 months in prison. 

On May 28, 2019, DUNCAN, LOCUST, and RAINFORD were each convicted for their participation in a conspiracy to commit mail and wire fraud following a three-week trial before Judge Stein.  The jury also convicted DUNCAN of a second count of conspiracy to commit mail and wire fraud, along with one count of mail fraud and one count of wire fraud.  Co-conspirators Peter Kalkanis, a former chiropractor, and Kerry Gordon previously pled guilty before Judge Stein to conspiracy to commit mail and wire fraud, mail fraud, and wire fraud.  Kalkanis also pled guilty to aggravated identity theft.  Kalkanis and Gordon have yet to be sentenced.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Bryan Duncan, Robert Locust, and Ryan Rainford were each sentenced to lengthy prison terms for their roles in an age-old fraud scheme that was callous and exploitive.  They honed the slip-and-fall ‘accident’ to an efficient operation, recruiting people to stage accidents, filing fraudulent lawsuits against property owners, steering ‘accident victims’ to particular crooked medical clinics, and often even directing them to have unnecessary surgeries.  Now they will spend years in prison for their crimes.”

Judge Stein said during LOCUST’s sentencing:  “The whole essence of this conspiracy is find the down-and-out, find the desperate, find the homeless.  No person who has a job and education and can support his or her family even minimally is going to say, ‘Oh, I’ll undergo unnecessary back surgery for a thousand dollars.’  These people were vulnerable and desperate.”

According to the evidence introduced at trial, other proceedings in this case, and documents previously filed in Manhattan federal court:

Between in or about 2013 through 2018, DUNCAN, LOCUST, and RAINFORD, the defendants, engaged in a widespread fraud scheme through which the defendants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents.  Fraud scheme participants, including the defendants, recruited hundreds of individuals to stage trip-and-fall accidents at particular locations throughout New York City and to claim that they injured themselves as a result of their accidents.  Common accident sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks, and purported “pot holes.”  The defendants instructed the recruited patients to claim that they sustained injuries to particular areas of their bodies, including the knees, shoulders, and/or back – body parts that, if injured, would reap high recoveries in personal injury lawsuits.

After the staged trip-and-fall accidents, recruited patients were referred to specific attorneys who would file lawsuits against the owners of the accident sites and/or insurance companies of the owners of the accident sites (the “Victims”).  The lawsuits did not disclose that the recruited patients had deliberately fallen at the accident sites or, in some cases, had not fallen at all.  During the course of the fraud scheme, the defendants, together with others known and unknown, attempted to defraud the Victims of at least $31,791,000.

The recruited patients were also instructed to receive ongoing medical treatment from certain chiropractors and doctors.  The fraud scheme participants advised the recruited patients that if they intended to continue with their lawsuits, they were required to undergo surgery to increase the value of their fraudulent lawsuits.  The medical procedures included discectomies, spinal fusions, non-surgical epidural injections, and knee and shoulder surgeries.  As an incentive to getting surgery, the recruited patients were offered payments after they completed surgery as well as a percentage of any settlement payments from their lawsuits.  Patients generally had two surgeries and received between $1,000 and $1,500 after each surgery.

The defendants recruited low-income individuals as patients – individuals desperate enough to undergo surgeries in exchange for these small post-surgery payments.  In some instances, the defendants even recruited patients from homeless shelters in New York City.  Over the course of the trial, more than 20 witnesses testified, including 11 patients who admitted to staging trip-and-fall accidents at the direction of DUNCAN, LOCUST, RAINFORD, or other co-conspirators.     

DUNCAN was one of the organizers and leaders of the scheme.  DUNCAN recruited patients into the scheme, organized the recruited patients’ legal and medical appointments, and assisted in procuring the funding for the recruited patients’ medical treatment and lawsuits.  DUNCAN and his partner Kerry Gordon, who started their own case management and legal funding companies, made over $1.5 million in profit from the fraud scheme. 

LOCUST and RAINFORD helped recruit patients into the fraud scheme, transported patients to medical and legal appointments, identified potential accident sites, made payments to recruited patients, and coached recruited patients on faking their injuries. 

Peter Kalkanis, was another organizer and leader of the scheme.  Kalkanis paid his co-defendants to recruit patients into the scheme and transport the patients to medical and attorney appointments.

*                      *                     *

In addition to the prison terms, DUNCAN, RAINFORD, and LOCUST, were each sentenced to three years of supervised release.   

Mr. Berman praised the outstanding investigative work of the New York Field Office of the Federal Bureau of Investigation and the New York City Police Department.  Mr. Berman also thanked the National Insurance Crime Bureau for their assistance in the investigation. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Nicholas Folly, Alexandra Rothman, and Nicholas Chiuchiolo are in charge of the prosecution.      

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ROBERT ALEXANDER pled guilty today to securities fraud and wire fraud in connection to his participation in a scheme to defraud investors by soliciting investments in his online gaming company (the “Company”) through false representations, and his misappropriation of investor funds for his own personal use.  ALEXANDER pled guilty before United States District Judge Andrew L. Carter Jr. 

U.S. Attorney Geoffrey S. Berman said:  “Robert Alexander, president of an online gaming company, induced investors through false statements about the health of his company and his own background.  Alexander betrayed his investors and spent their funds to support his lifestyle, including gambling excursions to multiple casinos, and a luxury car for one of his family members.  Robert Alexander now faces serious time in prison for gaming his investors.”

According to the Indictment and statements made in open court:

Beginning in at least 2013 and continuing through in or about 2017, ALEXANDER engaged in a scheme to defraud investors in the Company.  Specifically, ALEXANDER solicited and maintained investments in the Company through numerous false representations, including concerning his own professional background, the Company’s financial condition, expected returns on investment, and through false assurances to investors that their investments would be used solely for the Company’s business purposes.  

Also in furtherance of his scheme and contrary to representations made to investors, ALEXANDER used more than approximately $1.3 million of the funds he obtained from investors on his own personal expenses instead of for the Company’s business purposes.  For example, ALEXANDER used investor funds to make payments toward his personal credit cards, to fund his gambling excursions to multiple casinos, to make rental payments for his personal residence, and to make car payments for a luxury car purchased for one of ALEXANDER’s family members.

*                      *                      *

ALEXANDER, 49, of Las Vegas, Nevada, pled guilty to one count of securities fraud and one count of wire fraud.  The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million or twice the gross gain or loss from the offense.  The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  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 work of the Federal Bureau of Investigation.  He also thanked the Securities and Exchange Commission for its cooperation and assistance in this investigation.  

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Elisha J. Kobre and Margaret Graham are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Peter Lopez, Regional Administrator for the U.S. Environmental Protection Agency (“EPA”), Region 2, announced today that the United States has filed a civil lawsuit against DOVER GREENS, LLC (“DOVER GREENS”), for violations of the Clean Air Act (“CAA”) and EPA’s National Emissions Standards for Asbestos (“Asbestos NESHAP”) during renovation of the former Harlem Valley Psychiatric Center in Wingdale, New York (the “Campus”).  DOVER GREENS violated the CAA and Asbestos NESHAP when it failed to take the necessary precautions and follow the proper protocols pertaining to the removal, handling, and disposal of asbestos.  The Asbestos NESHAP is designed to protect the public health by preventing exposure to airborne asbestos fibers during building demolition or renovations, waste packaging, transportation, and disposal.  

Along with the lawsuit, the United States has filed a consent decree, agreed to by DOVER GREENS, that resolves the violations through payment of a $575,000 financial penalty and the imposition of injunctive relief, including a requirement that DOVER GREENS provide medical monitoring to individuals potentially exposed to airborne asbestos fibers as a result of these violations.  The consent decree remains subject to Court approval.

U.S. Attorney Geoffrey S. Berman said:  “Despite knowing that it was required to comply with asbestos safety regulations, Dover Greens conducted renovations in flagrant violation of those regulations, risking the health of members of the public and workers at the facility.  The consent decree ensures that Dover Greens will protect people from asbestos exposure in its further work on the Campus and provides medical monitoring for individuals who may have been exposed to asbestos due to Dover Greens’ conduct.  Also, by requiring Dover Greens to pay a substantial penalty, we have sent a strong message that this conduct will not be tolerated.”

EPA Regional Administrator Peter Lopez stated:  “We are determined to protect public health and the environment.  The Clean Air Act and EPA’s National Emissions Standards for Asbestos have been set in place to do just that.  This settlement sends the important message that we will not allow groups or individuals to skirt the law and put people at risk.”

The complaint filed in Manhattan federal court today alleges that in October 2013, DOVER GREENS violated the CAA and Asbestos NESHAP when it rushed to renovate numerous buildings at the Campus (the “October 2013 Work”) in order to prepare the Campus to host a fundraiser.  DOVER GREENS knew that its buildings contained asbestos and that asbestos work practice regulations must be followed.  However, it repeatedly failed to comply with these regulations in its work.  In particular, the complaint alleges that DOVER GREENS violated Asbestos NESHAP requirements to inspect the Campus properly and notify EPA before commencing renovation activities; to remove, store, and dispose of asbestos-containing materials safely; and to have a trained representative present during the renovation.  As a result of its conduct, DOVER GREENS’ employees, contractors, and the individuals who attended this fundraiser faced an increased risk of asbestos exposure. 

The complaint also alleges that during EPA’s investigation, DOVER GREENS failed to provide EPA access and information, as required by the CAA.

*                *                *

In the consent decree lodged with the federal court today, DOVER GREENS admits, acknowledges, and accepts responsibility for the fact that it “failed to follow EPA regulations concerning asbestos when conducting the October 2013 Work.”  DOVER GREENS further admits, acknowledges, and accepts responsibility for the following:

• DOVER GREENS failed to inspect the buildings at issue thoroughly for the presence of regulated asbestos-containing material (“RACM”) and notify EPA prior to commencing the October 2013 Work.
• DOVER GREENS failed to (a) ensure that all RACM was removed before beginning the renovation; (b) ensure that all RACM was adequately wetted before stripping it from buildings; and (c) ensure that all RACM remained wet until it was collected and contained for disposal.
• DOVER GREENS failed to seal all asbestos-containing materials in leak-tight containers while wet and failed to label containers or plastic bags containing RACM with proper warning labels and the name of the waste generator or the location at which waste was generated.
• DOVER GREENS failed to (a) dispose of asbestos waste at a proper disposal site; (b) ensure that properly marked vehicles were used to transport asbestos containing waste; (c) and maintain waste shipment records; and
• DOVER GREENS failed to have a trained representative present during the October 2013 Work.
• The October 2013 Work disturbed asbestos in numerous buildings, potentially exposing DOVER GREENS’ employees, contractors, and guests to asbestos.
• When EPA sought to investigate the October 2013 Work, DOVER GREENS failed to provide EPA inspectors with access to the Campus and failed to provide complete responses to EPA’s requests for information.

Pursuant to the consent decree, DOVER GREENS will pay a civil penalty of $575,000.  The consent decree also requires DOVER GREENS to offer an initial asbestos medical surveillance exam and, if necessary, pay for ongoing medical surveillance for each individual who may have been exposed to asbestos as a result of the October 2013 Work.  Further, DOVER GREENS agrees under the consent decree to conduct routine inspections of and, if necessary, repairs to all buildings on the Campus in order to prevent the release of asbestos fibers into the environment; ensure that warning signs are properly posted on Campus buildings; provide annual asbestos awareness training to DOVER GREENS’ maintenance employees; comply with a detailed Asbestos Operations & Maintenance Plan designed to minimize the potential for asbestos exposure to DOVER GREENS’ employees, building occupants, visitors, and workers; and comply in all respects with the CAA and Asbestos NESHAP when conducting asbestos abatement activity. 

To provide public notice and to afford members of the public the opportunity to comment, the consent decree will be lodged with the District Court for a period of at least 30 days before it is submitted for the Court’s approval.

U.S. Attorney Berman thanked the attorneys and enforcement staff at EPA Region 2 for their critical work in this matter.

This case is being handled by the Office’s Environmental Protection Unit.  Assistant U.S. Attorney Jacob Bergman is in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Carmen Rottenberg, Administrator of the U.S. Department of Agriculture’s (“USDA”) Food Safety and Inspection Service (“FSIS”), announced today the filing of a complaint and the entry of a consent decree against defendants CHUNG SHING MEATS, INC., also known as NEW CHUNG HING MEATS, INC., and its present and former owners or operators, WING HONG CHEUNG, MIAO HE FENG, YIU KWAN CHEUNG, and TIAN LUN FENG (collectively, the “defendants”), for violations of the Federal Meat Inspection Act and Poultry Products Inspection Act and related regulations at the defendants’ meat distributorship in Chinatown, Manhattan.

U.S. Attorney Geoffrey S. Berman said:  “The owners and operators of Chung Shing Meats, Inc., disregarded federal regulations designed to ensure that food on people’s kitchen tables is wholesome and unadulterated.  The defendants repeatedly sold uninspected meat products, in some instances selling uninspected beef bones as ‘Confucius Style Duckling.’  No style of duckling is composed of beef bones, let alone uninspected and potentially tainted beef bones.  The defendants put people at risk.  Today’s consent decree ensures that Chung Shing Meats will follow the law, protecting the public health and allowing consumers to have confidence in the safety of the food they buy.” 

USDA FSIS Administrator Carmen Rottenberg said:  “The defendants repeatedly violated food safety laws by selling misbranded meat and poultry products and thereby put consumers at risk for foodborne illnesses.  The consent decree agreed to by the defendants ensures that they are not selling any uninspected meat or poultry products and outlines specific ramifications if the provisions of the decree are violated.”

According to the Complaint filed in Manhattan federal court:

The Federal Meat Inspection Act (“FMIA”) and Poultry Products Inspection Act (“PPIA”) protect the public health by imposing a set of inspections, labeling, and packaging requirements for meat and poultry products.  These requirements allow consumers to have confidence in the safety of their meat and poultry products and permit public health officials to trace problems to their source.

For years, the defendants repeatedly violated federal law by selling uninspected and misbranded meat and poultry products to retailers in New York City from their facility at 19 Catherine Street, New York, New York.  The defendants routinely prepared and sold meat and poultry products without meeting the minimum federal meat inspection and identification requirements of the FMIA and the PPIA, including by misbranding or repackaging meat and poultry products without the marks of federal inspection.  USDA has identified FMIA and PPIA violations by the defendants that include selling uninspected or misbranded roast pork, pork chops, roast ducks, beef brisket, Silkie chickens, and other beef, poultry, and pork products.  In all, USDA’s inspections have uncovered over 400 pounds of meat products sold or offered for sale in violation of the FMIA and PPIA.  Although USDA inspectors repeatedly warned the defendants, they did not conform their conduct to the law.

In the consent decree entered today, the defendants admit, acknowledge, and accept responsibility for the following:

• The defendants have repeatedly sold non-federally inspected and misbranded meat and poultry products to retailers for resale, in violation of federal law.

• Among other instances, on or about April 29, 2019, May 2, 2019, and April 6, 2018, the defendants sold for resale non-federally inspected sliced beef meat, non-federally inspected pork baby ribs, non-federally inspected beef shin meat, or non-federally inspected beef bones misbranded as Confucius Style Duckling.

Pursuant to the consent decree, the defendants are enjoined from (1) selling or transporting any meat or poultry products required to be inspected and passed by USDA’s Food Safety and Inspection Service that have not been inspected and passed by USDA inspectors; (2) preparing or processing meat or poultry products in unsanitary conditions; and (3) engaging in any other conduct that would violate the FMIA, PPIA, and related regulations.  The consent decree also requires the defendants to keep records that fully disclose transactions involving meat or poultry products and to complete mandatory training in relevant federal law and regulations.  The defendants are subject to additional actions, including civil monetary penalties, termination of exempt status, contempt sanctions, and other relief, if they violate the provisions of the consent decree.

Mr. Berman thanked the USDA for its investigative efforts on this matter.

This case is being handled by this Office’s Environmental Protection Unit of the Civil Division, as part of its Food Safety Initiative.  Assistant United States Attorney Steven J. Kochevar is in charge of the case.

Audrey Strauss, Attorney for the United States acting under authority conferred by 28 U.S.C. § 515, announced that BRYAN COHEN, a former investment banker based in New York, pled guilty today to conspiring to commit securities fraud.  COHEN’s plea stems from stealing material, nonpublic information (“MNPI”) from the investment bank where he worked and passing it to a securities trader based in Switzerland.

COHEN was arrested on October 18, 2019, and pled guilty today before United States Magistrate Judge Debra Freeman.  COHEN’s case is assigned to United States District Judge William H. Pauley III.

According to the Superseding Indictment and statements made in open court:

COHEN was an investment banker working in the investment banking division of a global investment banking advisory firm (“Investment Bank A”).  By virtue of his employment at Investment Bank A, COHEN had access to MNPI relating to corporate transactions, and was under duties and obligations to keep that MNPI strictly confidential.  COHEN previously worked in the London office of Investment Bank A, and later transferred to its New York office.   

Notwithstanding his duties to keep the MNPI confidential, between 2015 and 2017, COHEN stole MNPI from Investment Bank A and passed it to a securities trader based in Switzerland in order to enable the securities trader to place timely, profitable trades based on the MNPI.  COHEN informed the securities trader about corporate acquisitions and provided updates about how the deals were progressing over time.  Some of the inside information that COHEN provided related to companies whose securities were listed on United States exchanges.  The information that COHEN provided ultimately resulted in substantial profits for the traders who received it and traded based on it.  In exchange for providing MNPI he stole from Investment Bank A, COHEN received benefits, including cash, from the securities trader.

COHEN took steps to conceal his scheme, including communicating through prepaid, “burner” cellphones, which he picked up at a Manhattan business, and receiving cash in person and through intermediaries.

*                      *                      *

COHEN, 33, pled guilty to one count of conspiring to commit securities fraud.  This charge carries a maximum term 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.

Ms. Strauss praised the work of the FBI.  She further thanked the Securities and Exchange Commission for its cooperation and assistance in this investigation.  She added that the FBI’s investigation was ongoing. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Richard Cooper, Daniel Tracer, and Drew Skinner are in charge of the prosecution.         

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 Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced today the arrest of DAVID WILLIAMS, a/k/a “Pap,” a/k/a “Pap Avilii,” a/k/a “Daddy,” for operating a sex trafficking enterprise, in connection with which WILLIAMS kidnapped, raped, and trafficked an adult victim (“Victim-1”) and also trafficked a minor victim (“Victim-2”).  WILLIAMS will be presented before United States Magistrate Judge Debra Freeman later today.     

U.S. Attorney Geoffrey S. Berman said:  “David Williams allegedly kidnapped, raped, and forced women into prostitution – one of whom was just 14 years old – in operating his human sex trafficking enterprise.  It is reprehensible that a person would forcibly coerce another human being into sex and seek to profit from it, and for allegedly doing so, Williams now faces life in prison.  Human trafficking continues to be a priority for this Office, and I commend the FBI’s Child Exploitation and Human Trafficking Task Force for aggressively pursuing cases to bring sexual predators to justice.”

FBI Assistant Director William F. Sweeney Jr. said:  “The victims in this investigation are living, breathing humans; not property or goods to be sold for sex.  As law enforcement, we will do everything we can to stop criminals from preying on children and vulnerable women, but shockingly these cases don’t go away.  As a community, we must do more to stop the cycle of demand for this despicable criminal activity, and do more to protect these victims.”           

NYPD Commissioner Dermot Shea said: "The NYPD, along with our partners at the Southern District and the FBI, share an unwavering commitment to ensuring that anyone who would seek to profit through the abuse and exploitation of another person – especially at-risk youth – is brought to justice swiftly and successfully. "

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

From at least in or about December 2018 up to and including at least in or about February 2019, WILLIAMS ran a sex trafficking enterprise (the “Business”), along with another person (“CC-1”), who also worked as a prostitute for WILLIAMS.

In February 2019, WILLIAMS and CC-1 kidnapped Victim-1, who was an adult, in Atlantic City, New Jersey, and transported her to the Bronx, New York, to work as a prostitute for the Business.  During the time that Victim-1 was held by WILLIAMS and CC-1, WILLIAMS and CC-1 advertised Victim-1 for sex and also forced Victim-1 to engage in sex acts with clients in exchange for money.  When Victim-1 expressed resistance to being trafficked for sex, WILLIAMS brandished a gun and threatened to hurt Victim-1 unless she complied.  On at least one occasion, WILLIAMS raped Victim-1 after threatening her with a gun.

In or about December 2018, WILLIAMS and CC-1 recruited Victim-2, who was 14 years old at the time, to work as a prostitute for the Business.  During the ensuing months, until in or about February 2019, WILLIAMS and CC-1 advertised Victim-2 for sex and directed Victim-2 to engage in sex acts with clients in exchange for money.  WILLIAMS and CC-1 forced Victim-2 to turn over the money Victim-2 earned from prostitution. 

*                *                *

WILLIAMS is charged with: (1) conspiracy to commit sex trafficking by force, threats of force, fraud, or coercion and sex trafficking of a minor, (2) sex trafficking by force, threats of force, fraud, or coercion, (3) sex trafficking of a minor, (4) coercion and enticement under the Mann Act, (5) coercion and enticement of a minor under the Mann Act, and (6) kidnapping.  Conspiracy to commit sex trafficking by force, threats of force, fraud, or coercion and sex trafficking of a minor, in violation of 18 U.S.C. § 1594(c), carries a maximum term of life in prison.  Sex trafficking by force, threats of force, fraud or coercion, in violation of 18 U.S.C. § 1591(a) and (b)(1), carries a mandatory minimum term of 15 years in prison and a maximum term of life.  Sex trafficking of a minor, in violation of 18 U.S.C. § 1591(a) and (b)(2), carries a mandatory minimum term of 10 years in prison and a maximum term of life.  Coercion and enticement under the Mann Act, in violation of 18 U.S.C. § 2422(a), carries a maximum prison term of 20 years.  Coercion and enticement of a minor under the Mann Act, in violation of 18 U.S.C. § 2422(b), carries a mandatory minimum prison term of 10 years and a maximum term of life.  Kidnapping, in violation of 18 U.S.C. § 1201, carries a maximum term of life in prison.  The maximum potential sentences and the mandatory minimum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge. 

Mr. Berman praised the outstanding investigative work of the FBI and, in particular, the New York Child Exploitation and Human Trafficking Task Force.  The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Jun Xiang and Danielle M. Kudla are in charge of the prosecution.

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

 

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[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, William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Phillip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced today the arrest of AMEEN KESHAVJEE for allegedly mailing a white powdery substance, along with a note indicating the substance was anthrax, to an employee at a Manhattan bar.  KESHAVJEE is charged in a criminal Complaint, unsealed today, with one count of mailing a threatening communication and one count of conveying an anthrax hoax threat.  KESHAVJEE was presented today in Manhattan federal court before U.S. Magistrate Judge Debra Freeman.

U.S. Attorney Geoffrey S. Berman said:  “Today’s arrest makes clear that we will not tolerate anthrax threats.  Thanks to the work of the FBI and the United States Postal Inspection Service, the defendant will have to answer for his alleged threatening actions.”

FBI Assistant Director William F. Sweeney Jr. said:  “Even though there was no actual anthrax in the note allegedly mailed by Keshavjee, that doesn’t minimize the consequences of the crime.  Hoax threats not only intimidate the victims they are intended for, they require extensive law enforcement resources that could be better used elsewhere.  For anyone out there who might be contemplating a hoax of this nature, just remember Keshavjee now faces up to 10 years in prison for his alleged actions.”   

USPIS Inspector-in-Charge Phillip R. Bartlett said:  “As alleged, Mr. Keshavjee used scare tactics to show his displeasure with employees at the bar.  Postal Inspectors remind the public that sending threats through the U.S. mail is illegal.  These types of cases are aggressively investigated by Postal Inspectors and those allegedly involved will be arrested and brought to justice for their crimes.”

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

KESHAVJEE was a patron at a bar in the East Village neighborhood in Manhattan, and sent a series of communications via e-mail to an employee at the bar (“Employee-1”).  In approximately February 2019, Employee-1 told KESHAVJEE that if KESHAVJEE continued sending him messages, he would no longer be welcome at the bar.  KESHAVJEE stopped coming to the bar, but began sending threatening e-mails in which KESHAVJEE, among other things, indicated that he hoped for Employee-1’s death.

On December 9, 2019, KESHAVJEE mailed an envelope to Employee-1 at the bar.  The envelope included a white powdery substance and a note indicating that the substance was anthrax.  Upon opening the envelope, Empoyee-1 called 911.  Law enforcement responded to the scene, secured the area, and seized the materials mailed by KESHAVJEE.  The City of New York Department of Health and Mental Hygiene Public Health Laboratory later concluded that the materials did not contain anthrax.

*                *                *

KESHAVJEE is charged with one count of mailing a threatening communication and one count of conveying an anthrax hoax threat, each of which carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding work of the FBI, the USPIS, 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 Sam Adelsberg 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.

 

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[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, United States Attorney for the Southern District of New York, and Jonathan D. Larsen, Special Agent in Charge of the New York Office of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced today that HICHAM KABBAJ, a former senior manager in Manhattan for a global internet company (“Company-1”), pled guilty before Untied States Magistrate Judge Stewart D. Aaron to one count of wire fraud.  KABBAJ will be sentenced by United States District Judge Richard M. Berman, to whom the case is assigned.

Manhattan U.S. Attorney Geoffrey S. Berman said: “As he admitted today, Hicham Kabbaj defrauded the company for which he worked by arranging for payment of fraudulent invoices to a shell company he created.  Kabbaj now awaits sentencing for his $6 million deception.”

IRS-CI Special Agent in Charge Jonathan D. Larsen said:  “Today, Mr. Kabbaj pled guilty to a serious felony because he chose to misuse his position of trust as a corporate executive to steal company funds for his own personal gain.  As a result of the dedicated work of IRS-CI special agents, along with our partners at the U.S. Attorney’s Office, Mr. Kabbaj will face the consequences of his crime when he is sentenced by a federal judge.”

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

From at least August 2015 until at least May 2019, KABBAJ engaged in a scheme to defraud his employer into paying a vendor named Interactive Systems, a KABBAJ-controlled shell company, for various information technology (“IT”) products and services.  As part of the scheme, KABBAJ caused Interactive Systems to send invoices to Company-1 claiming that Interactive Systems performed services and purchased firewalls and servers for Company-1.  In reality, Interactive Systems did none of that work, and KABBAJ quickly transferred the money that Company-1 paid to Interactive Systems to his own personal bank accounts.  In total, KABBAJ defrauded Company-1 of more than $6 million as a result of the scheme.

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KABBAJ, 48, of Floral Park, New York, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  KABBAJ has agreed to forfeit his homes in Palm Beach Gardens, Florida, and Hewitt, New Jersey, as property traceable to the offense, among other assets, and he has agreed pay restitution in the amount of $6,051,453.

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

Mr. Berman praised the investigative work of the IRS-CI and Special Agents of the U.S. Attorney’s Office.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Ni Qian and Andrew A. Rohrbach 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., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an indictment charging BLACKLIGHT, S.A., a Swiss entity purporting to offer asset management and trustee services, and its founder and principal owner, KENNETH CIAPALA, as well as ULRIK DEBO, a/k/a “Molgaard Debo,” a/k/a “Ulrik Molgaard,” with engaging in a long-running stock manipulation scheme involving numerous United States issuers.  CIAPALA and DEBO were arrested in the United Kingdom, and the United States Government will be seeking their extradition to the United States. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, for years the Swiss firm Blacklight, S.A., its owner, Kenneth Ciapala, and Ulrik Debo have made millions of dollars by orchestrating stock manipulation schemes of publicly traded shares of U.S.-based issuers.  Today’s charges make clear that our Office, along with our law enforcement partners, will vigorously prosecute those who allegedly manipulate the stocks of U.S. issuers, including those operating abroad.” 

FBI Assistant Director William F. Sweeney Jr. said:  “As a major facilitator of market manipulation schemes, Blacklight, S.A, allegedly enabled numerous ‘pump and dumps’ over the course of six years.  Disrupting the orchestrators of illegal financial activity is a top priority for the FBI’s securities fraud team, and we consider today’s indictment of Blacklight, its founder and principal owner Kenneth Ciapala, and co-conspirator Ulrik Debo an important step in that mission.”           

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

BLACKLIGHT, S.A. (“BLACKLIGHT”), a Swiss entity based in Geneva, Switzerland, that purported to offer asset management and trustee services to its clients, and a founder and co-principal of BLACKLIGHT, KENNETH CIAPALA, executed a wide-ranging stock manipulation scheme that spanned from in or about 2013 through December 2019 in which they manipulated the share price and trading volume of the publicly traded shares of multiple companies, and laundered the proceeds generated by the scheme.  CIAPALA, utilizing BLACKLIGHT, set up various nominee entities to help scheme participants conceal their ownership of public company shares and evade SEC reporting requirements.  BLACKLIGHT opened bank accounts and brokerage accounts on behalf of these nominee entities and executed trades in accounts held by these nominee entities in furtherance of the stock manipulation scheme. 

ULRIK DEBO, a Danish citizen who resided in Europe, furthered the stock manipulation scheme by, among other things, identifying suitable publicly traded shell companies that could be used in the scheme; identifying, in certain instances, suitable privately held companies to engage in “reverse merger” transactions with the shell companies; obtaining financing to purchase all or substantially all of the outstanding shares of the issuers; causing various nominee entities to obtain ownership of the issuer’s shares; identifying and paying “promoters” that issued exaggerated and, at times, false press releases about the issuers in order to raise the trading price and volume of the issuer’s shares; and identifying and paying various “trading specialists” who assisted in artificially manipulating the trading volume and price of the issuer’s shares.

Overview of the Stock Manipulation Scheme

As alleged, from at least 2013 through December 2019, CIAPALA and his firm, BLACKLIGHT, as well as others, conspired to defraud the investing public by orchestrating and facilitating the manipulation of multiple publicly traded stocks, commonly referred to as “pump and dump” schemes.  The vast majority of the stocks that CIAPALA, BLACKLIGHT, DEBO, and their co-conspirators sought to manipulate were “penny” or “microcap” stocks that traded in the United States on the over-the-counter (“OTC”) market.  In executing these pump and dump schemes, CIAPALA, BLACKLIGHT, DEBO, and their co-conspirators (i) secretly amassed beneficial ownership of all, or substantially all, of the stock of certain publicly traded companies; (ii) began manipulating the price and demand for these stocks through, among other means, the release of materially false information to the investing public and manipulative trading practices, thereby causing the share price of these stocks to become artificially inflated; and (iii) sold out of their secretly-amassed positions at artificially inflated values at the expense of the investing public. 

CIAPALA, using his firm BLACKLIGHT, primarily furthered the stock manipulation scheme by helping other participants in the scheme to obscure their beneficial ownership and control of all or substantially all of the shares of companies whose securities they sought to manipulate.  CIAPALA caused BLACKLIGHT to establish nominee entities that were registered in the names of various third parties to hold the shares that were, in reality, beneficially owned and controlled by the scheme participants.  In order to obscure their ownership interests, CIAPALA, BLACKLIGHT, DEBO, and others typically caused these nominee entities’ holdings to be structured so as to ensure that no single nominee entity held more than five percent of the outstanding stock of any of the relevant companies.

CIAPALA also caused BLACKLIGHT to open bank accounts in the names of these nominee entities and to trade shares owned by these nominee entities through various brokerage accounts.  Through BLACKLIGHT, CIAPALA exercised trading authority over these nominee entities’ shares, and CIAPALA directed brokers to execute trades on behalf of these nominee entities in furtherance of the stock manipulation scheme.  After CIAPALA, BLACKLIGHT, DEBO, and others participating in the scheme had obtained control of all or substantially all of the shares of a company, the scheme participants manipulated the share price and trading volume of the stock of the company.  This typically occurred through a promotional campaign and through certain manipulative trading practices. 

With respect to the promotional campaign, CIAPALA, BLACKLIGHT, DEBO, and others participating in the scheme caused promotional materials to be distributed to the investing public that contained exaggerated and, at times, false claims about the company whose stock they sought to manipulate. The scheme participants concealed from the investing public that these promotional materials were financed and created at the direction of those who beneficially owned and controlled substantially all of the shares of the relevant company that was the subject of the promotion. 

In addition, to drive investor demand and artificially inflate the share price, CIAPALA, BLACKLIGHT, DEBO, and other participants also engaged in manipulative trading activity in order to artificially increase the trading volume and share price of the issuers whose stock they sought to manipulate.  This manipulative trading activity included “match” trades whereby the scheme participants caused multiple nominee entities they controlled to essentially trade with one another to create the false appearance of trading volume and demand for the stock. 

Laundering of the Profits Generated by the Scheme           

As a result of the stock manipulation scheme, the scheme’s participants reaped millions of dollars in illicit profits by selling the shares they beneficially owned and controlled into the market at artificially inflated prices.  After these crime proceeds were generated, CIAPALA and BLACKLIGHT allegedly assisted other scheme participants in obtaining their share of the proceeds by sending these funds to them in a manner designed to conceal the source of these funds and the identity of the true recipients of the funds.  With CIAPALA’s knowledge and at times at his direction, transfers of the proceeds of the stock manipulation scheme were executed in a manner intended to conceal the true source of the funds and the recipients of these funds by, for example, using fabricated invoices to justify wire transfers from accounts held in the names of nominee entities (controlled and operated by BLACKLIGHT) to other bank accounts controlled by the scheme participants.   

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The Indictment charges CIAPALA, 38, who resides in Switzerland, and BLACKLIGHT with one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison; three counts of securities fraud, each of which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; wire fraud, which carries a maximum sentence of 20 years in prison; conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison; and money laundering, which carries a maximum sentence of 20 years in prison.  

DEBO, 50, is charged with one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison; two counts of securities fraud, each of which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; and wire fraud, which carries a maximum sentence of 20 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 investigative work of the FBI, and thanked authorities in the United Kingdom, the Justice Department’s Office of International Affairs of the Department’s Criminal Division, and the Securities and Exchange Commission, which initiated civil proceedings against CIAPALA, BLACKLIGHT, DEBO, and others, for their assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force and Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Noah Solowiejczyk and Vladislav Vainberg are in charge of the prosecution.

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

 

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[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.

Eric Dreiband, Assistant Attorney General for Civil Rights, Geoffrey S. Berman, the U.S. Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the FBI, announced today that Grafton Thomas has been charged with five counts of obstructing the free exercise of religion in an attempt to kill, a federal hate crime, related to his machete attack during Shabbat and Hanukkah observances at a Rabbi’s home in Monsey, New York, on the night of Dec. 28, 2019. Thomas is expected to be presented in White Plains federal court later today.

”Every American should be free to live and worship in safety,” said Assistant Attorney General Eric Dreiband for the Civil Rights Division. “The department will vigorously prosecute those who commit hate crimes, and we will continue to work with our state and local partners to bring to justice anyone who violates the civil rights of Americans.”

“As alleged, Grafton Thomas targeted his victims in the midst of a religious ceremony, transforming a joyous Hanukkah celebration into a scene of carnage and pain,” said U.S. Attorney Geoffrey S. Berman for the Southern District of New York. “Today is the eighth day of Hanukkah, the festival of lights that commemorates Jews’ struggle to practice their faith more than two millennia ago. And we are about to welcome a new year. Even in the face of tragedy, both milestones are an occasion for renewed hope and resolve: To combat bigotry in all its forms – and to bring to justice the perpetrators of hate-fueled attacks.”

“When an individual’s actions cross the threshold of a federal crime, as we allege Mr. Grafton did here, we will act swiftly,” said FBI Assistant Director William F. Sweeney Jr. “The message from today’s charges should be crystal clear – the FBI won’t tolerate violence against anyone. Working with our partners, we will hold anyone who commits a crime like this accountable for their actions. The federal penalties for this type of attack are severe and justified. In this instance, the local community was engaged, and their actions were essential to saving lives and led directly to Mr. Grafton’s capture. It’s the rest of our community’s joint responsibility to step up and engage as well – don’t give hate a platform to propagate and don’t dismiss this type of behavior as someone else’s problem, address it and immediately report suspicious activity to authorities.”

According to the complaint unsealed today in White Plains federal court:

On Dec. 28, 2019, Thomas entered a Rabbi’s home in Monsey, New York, which is adjacent to the Rabbi’s synagogue, during observances related to the end of Shabbat and the seventh night of Hanukkah. Thomas declared to dozens of assembled congregants, “no one is leaving,” and attacked the group with an 18-inch machete. At least five victims were hospitalized with serious injuries, including slash wounds, deep lacerations, a severed finger, and a skull fracture. 

Following the attack, Thomas traveled in a car to New York City, and he was stopped in Harlem by members of the New York City Police Department. The responding officers observed what appeared to be blood on Thomas’s hands and clothing, and smelled bleach coming from his vehicle. A search of Thomas’s vehicle led to the seizure of, among other things, a machete that appeared to have traces of dried blood on it. Law enforcement subsequently searched Thomas’s residence and cellphone pursuant to warrants. The residence contained handwritten journals with several pages of anti-Semitic references. Thomas’s cellphone contained Internet searches dating back to at least November 2019 for terms such as “Zionist Temples” in Staten Island and New Jersey, as well as a webpage visit on the day of the attack to an article titled, “New York To Increase Police Presence After Anti-Semitic Attacks.”

Thomas, 37, is charged with five counts of obstructing the free exercise of religion in an attempt to kill, in violation of Title 18, United States Code, Section 247. An indictment is merely an accusation, and the defendant is presumed innocent unless and until proven guilty. Each of the five counts carries a maximum prison term of life. 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 a judge.

Assistant Attorney General Dreiband and Mr. Berman praised the outstanding efforts of the FBI, the Rockland County District Attorney’s Office, the Ramapo Police Department, the Rockland County Sherriff’s Office, the New York State Police, the Clarkstown Police Department, and the New York City Police Department.

This case is being handled by the Office’s Terrorism and International Narcotics Unit and its White Plains Division. Assistant U.S. Attorneys Michael K. Krouse and Lindsey Keenan are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Eric Dreiband, Assistant Attorney General for Civil Rights, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that GRAFTON THOMAS has been charged with five counts of obstructing the free exercise of religion in an attempt to kill, a federal hate crime, related to his machete attack during Hanukkah observances at a rabbi’s home in Monsey, New York, on the night of December 28, 2019.  THOMAS is expected to be presented in White Plains federal court later today.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Grafton Thomas targeted his victims in the midst of a religious ceremony, transforming a joyous Hanukkah celebration into a scene of carnage and pain.  Today is the eighth day of Hanukkah, the festival of lights that commemorates Jews’ struggle to practice their faith more than two millennia ago, and we are about to welcome in a new year.  Even in the face of tragedy, both milestones are an occasion for renewed hope and resolve:  To combat bigotry in all its forms – and to bring to justice the perpetrators of hate-fueled attacks.”

Assistant Attorney General Eric Dreiband said:  “Every American should be free to live and worship in safety.  The Department will vigorously prosecute those who commit hate crimes, and we will continue to work with our state and local partners to bring to justice anyone who violates the civil rights of Americans.”

FBI Assistant Director William F. Sweeney Jr. said:  “When an individual’s actions cross the threshold of a federal crime, as we allege Mr. Thomas did here, we will act swiftly.  The message from today’s charges should be crystal clear – the FBI won’t tolerate violence against anyone.  Working with our partners, we will hold anyone who commits a crime like this accountable for their actions.  The federal penalties for this type of attack are severe and justified.  In this instance, the local community was engaged, and their actions were essential to saving lives and led directly to Mr. Thomas’s capture.  It’s the rest of our community’s joint responsibility to step up and engage as well – don’t give hate a platform to propagate and don’t dismiss this type of behavior as someone else’s problem, address it and immediately report suspicious activity to authorities.” 

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

On December 28, 2019, THOMAS entered a Rabbi’s home in Monsey, New York, which is adjacent to the Rabbi’s synagogue, during observances related to the end of Shabbat and the seventh night of Hanukkah.  THOMAS declared to dozens of assembled congregants, “no one is leaving,” and attacked the group with an 18-inch machete.  At least five victims were hospitalized with serious injuries, including slash wounds, deep lacerations, a severed finger, and a skull fracture. 

Following the attack, Thomas traveled in a car to New York City, and he was stopped in Harlem by members of the New York City Police Department.  The responding officers observed what appeared to be blood on THOMAS’s hands and clothing, and smelled bleach coming from his vehicle.  A search of THOMAS’s vehicle led to the seizure of, among other things, a machete that appeared to have traces of dried blood on it.  Law enforcement subsequently searched THOMAS’s residence and cellphone pursuant to warrants.  The residence contained handwritten journals with several pages of anti-Semitic references.  THOMAS’s cellphone contained Internet searches dating back to at least November 2019 for terms such as “Zionist Temples” in Staten Island and New Jersey, as well as a webpage visit on the day of the attack to an article titled, “New York To Increase Police Presence After Anti-Semitic Attacks.”  

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THOMAS, 37, is charged with five counts of obstructing the free exercise of religion in an attempt to kill, in violation of Title 18, United States Code, Section 247.  Each of the five counts carries a maximum prison term of life.  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 a judge.

Mr. Berman praised the outstanding efforts of the FBI, the Rockland County District Attorney’s Office, the Ramapo Police Department, the Rockland County Sherriff’s Office, the New York State Police, the Clarkstown Police Department, and the New York City Police Department, as well as the U.S. Department of Justice’s Civil Rights Division.

This case is being handled by the Office’s Terrorism and International Narcotics Unit, its White Plains Division, and the Civil Rights Unit of the Office’s Civil Division.  Assistant U.S. Attorneys Michael K. Krouse, Lindsey Keenan, and Lara Eshkenazi are in charge of the prosecution.

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

 

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[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 Eric Dreiband, Assistant Attorney General for the Department of Justice Civil Rights Division, announced today that Related Companies L.P. (“Related”) and ERY Vessel LLC have agreed to install a one-of-a-kind platform lift mechanism on the upper levels of the Vessel, a new public attraction in Hudson Yards, to increase the Vessel’s accessibility for individuals with disabilities.  Under the agreement, Related has agreed to design, construct, install, and operate a platform lift mechanism that will allow individuals with disabilities to traverse the stairways and platforms at the top levels of the Vessel so as to enjoy 360-degree views, providing access to the most traveled areas of the Vessel that are also currently inaccessible to individuals with disabilities.     

The United States contends that as constructed, the Vessel, a multi-story, open air structure composed of eighty (80) platforms connected by stairways, is inaccessible to individuals with disabilities in violation of the Americans with Disabilities Act of 1990.  Related has described the Vessel as the centerpiece of the new Hudson Yards development in Manhattan, and as a “public landmark” that “will lift the public up, offering a multitude of ways to engage with and experience New York, Hudson Yards and each other.”  But the Vessel’s current design allows individuals with disabilities to access at most only three (3) of the 80 platforms, all on one side of the structure, as the sole elevator reaches three platforms and visitors must otherwise traverse stairs to move among the platforms.  Due to the high demand for the elevator, Related has at times directed that the elevator bypass the platforms at levels 5 and 7, thereby rendering only one platform (at level 8) accessible to individuals with disabilities. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “We are pleased that Related has designed an innovative solution to increase accessibility to the Vessel.  Related has agreed to commit substantial resources to install a platform lift that will allow individuals with disabilities to enjoy 360-degree views from the Vessel’s top level.”

Assistant Attorney General Eric Dreiband said:  “As we approach the ADA’s 30th Anniversary, it is vital that individuals with disabilities have access to major new tourist attractions in our cities.  I am pleased that Related is taking steps to increase accessibility of the Vessel.”

The agreement also requires Related to ensure that the elevator stops at levels 5 and 7 upon request, to operate the elevator on a pre-set, timed schedule, and to modify the Vessel’s ticketing reservation options to allow individuals with disabilities to reserve priority access to the elevator.

This case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorney Ellen Blain is in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced that ALAN SEIDEL and BENJAMIN MEKAWAY were charged this morning with falsifying the books and records of Seidel & Co., LLC (“Seidel & Co.” or the “Firm”), a broker-dealer they controlled, submitting false reports to the United States Securities and  Exchange Commission (“SEC”) regarding Seidel & Co.’s net capital, and making false statements to SEC staff.  As alleged, in late 2016, SEIDEL, Seidel & Co.’s chief executive officer, and MEKAWAY, a Seidel & Co. employee, falsified the financial records of Seidel & Co. to obscure the fact that Seidel & Co.’s net capital fell below the threshold mandated by SEC regulations, submitted reports to the SEC containing false representations regarding Seidel & Co.’s financial condition, and lied to SEC staff members who made inquiries about Seidel & Co.’s net capital.  SEIDEL and MEKAWAY will be presented today before U.S. Magistrate Judge Stewart D. Aaron.

U.S. Attorney Geoffrey S. Berman said:  “In order to protect investors and our markets, the SEC must be able to rely on the accuracy of the books and records and regulatory filings of the firms it oversees.  By allegedly lying to the SEC about Seidel & Co.’s financial condition, and then attempting to cover it up, Alan Seidel and Benjamin Mekaway threatened to undermine the SEC’s vital mission.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “As alleged, these individuals, being fully aware of the financial status of their firm, chose to lie to the SEC by cooking their books to reflect a healthier financial condition.  The investing public relies on the information provided by firms to make sound financial decisions.  Shame on these two for allegedly falsifying their records and then trying to hide it from regulators.  Criminal acts of the sort alleged here will always be uncovered by law enforcement, ensuring that individuals who break the law will be brought to justice.”

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

At all relevant times, SEIDEL was the CEO of Seidel & Co., a Manhattan-based inter-dealer broker registered with the SEC.  MEKAWAY was a Seidel & Co. employee.  As an inter-dealer broker, Seidel & Co. acted primarily as an intermediary between institutional broker-dealers trading bonds of various types. 

SEC regulations required Seidel & Co. to maintain net capital reserves of the greater of $100,000 or six and two-thirds percent of its aggregate indebtedness.  If Seidel & Co.’s net capital fell below the required threshold, the Firm was required to notify the SEC of that fact the same day.  Once a broker-dealer falls out of its net capital requirement, it becomes subject to the suspension or revocation of its registration.

In order to ensure, among other things, that a broker-dealer maintains adequate net capital, SEC regulations require broker-dealers like Seidel & Co. to maintain books and records reflecting each expense incurred relating to their business and any corresponding liability.  Seidel & Co. was also required to file monthly reports with the SEC summarizing information concerning its financial and operational status, including its current net capital position.

Beginning at least in or about late-2016, SEIDEL and MEKAWAY caused Seidel & Co. to maintain inaccurate books and records regarding its net capital position and to submit false reports to the SEC regarding Seidel & Co.’s net capital position.  In particular, in monthly reports filed with the SEC reflecting Seidel & Co.’s financial position for the months of October 2016 and November 2016, SEIDEL and MEKAWAY caused Seidel & Co. to falsely represent that it had the requisite net capital to meet its regulatory requirements for those months.  In fact, as SEIDEL and MEKAWAY well knew, the net capital of Seidel & Co. fell far below the requisite amount in both months.  Specifically, in its filings for month-end October 2016, Seidel & Co. fraudulently represented that its net capital exceeded the minimum amount by: (i) failing to account for a debt of approximately $104,000 that the firm owed to its landlord, and (ii) falsely inflating the balance of a Firm brokerage account, for which MEKAWAY submitted a forged bank statement to the external financial operations entity the Firm engaged to prepare and submit reports to the SEC.  Subsequently, in order to falsely represent that Seidel & Co. met its capital requirements in its filing for November 2016, Seidel & Co. falsely recorded as a capital contribution a $1 million loan that should have been recorded as a liability.

When, in December 2016, the SEC began to examine Seidel & Co.’s true net capital position, SEIDEL made false statements to the SEC’s exam staff regarding the $1 million loan.  SEIDEL initially claimed on multiple occasions that the loan was a capital investment.  When the SEC sought verification of this assertion, SEIDEL acknowledged that the money was in fact a loan but claimed, falsely, that he believed it might be converted to a capital investment. 

Subsequently, in or about August 2018, MEKAWAY sought to obstruct an investigation by the SEC’s Division of Enforcement into the misconduct at Seidel & Co. by failing to produce relevant documents and emails in response to a subpoena for records and falsely denying that he was in possession of Seidel & Co. records.

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ALAN SEIDEL, 73, of Long Beach, New York, and BENJAMIN MEKAWAY, 37, of Hazlet, New Jersey, were charged in the Complaint with one count of conspiracy, one count of falsifying required books and records of a broker-dealer, and one count of falsifying records in a federal investigation.  SEIDEL and MEKWAWY are also each charged with one count of making false statements to the SEC.  The conspiracy charge and the false statements charges each carry a maximum prison term of five years.  The falsification of records charges each carry a maximum prison term of 20 years.

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

Mr. Berman praised the work of the investigative work of USPIS.  Mr. Berman also thanked the SEC, which brought a separate civil action.

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

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the descriptions of the Complaint 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 RICHARD LIRIANO pled guilty today to one count of computer fraud in connection with his scheme to use malicious software programs, including a program known as a “keylogger,” on dozens of his coworkers’ computers at a New York City-area hospital, secretly obtaining user names and passwords to his victims’ personal email and other accounts, and using that unauthorized access to steal private and confidential files.  Using his victims’ stolen credentials, LIRIANO repeatedly compromised their password-protected online accounts, and accessed their sensitive personal photographs, videos, and other private documents.  LIRIANO pled guilty earlier today in Manhattan federal court before United States Magistrate Judge Kevin N. Fox.

U.S. Attorney Geoffrey S. Berman said:  “To feed his voyeuristic curiosity, Richard Liriano, an information technology professional at a New York hospital, installed a “keylogger” on dozens of his coworkers’ computers and used other unauthorized software to spy on and steal personal information from them.  Liriano’s disturbing crimes not only invaded the privacy of his coworkers; he also intruded into computers housing vital healthcare and patient information, costing his former employer hundreds of thousands of dollars to remediate.  He will now be held accountable for his actions.”

According to the allegations in the Information to which LIRIANO pled guilty, a prior Indictment filed against LIRIANO, as well as statements made during the plea and other proceedings in the case: 

From at least in or about 2013, up to and including at least in or about 2018, LIRIANO misused administrative access provided to him as an information technology employee at a New York City-area hospital (“Hospital-1”), to log in to employee accounts, and copy other employees’ personal documents, including tax records and personal photographs, onto his own workspace computer for his own personal use. 

To further his efforts to steal personal information from Hospital-1’s employees, LIRIANO, without authorization, used various malicious programs to steal the user names and passwords of his primarily female co-workers.  One of these programs was known as a keylogger, which recorded and sent victim employees’ keystrokes to LIRIANO, such as the usernames and passwords those employees entered to access their personal web-based email accounts.  Through the course of this conduct, LIRANO stole usernames and passwords for at least approximately 70 email accounts belonging to Hospital-1 employees or persons associated with those employees (the “Compromised Accounts”). 

LIRIANO then used those stolen usernames and passwords to log in to the Compromised Accounts and obtain unauthorized access to other password-protected email, social media, photographs, and online accounts to which the Compromised Accounts were registered.  Among other things, LIRIANO conducted searches for sexually explicit photographs and videos in the Compromised Accounts.  

LIRIANO’s computer intrusions into Hospital-1’s computer networks caused over $350,000 in losses to Hospital-1.

*                      *                      *

LIRIANO, 33, of the Bronx, New York, was arrested on November 14, 2019.  LIRIANO pled guilty today to one count of transmitting a program to a protected computer that intentionally caused damage, which carries 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.

LIRIANO is scheduled to be sentenced by U.S. District Judge Lewis A. Kaplan on April 15, 2020, at 3:00 p.m.           

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and thanked the New York City Police Department for its assistance.  

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Vladislav Vainberg is in charge of the prosecution.    

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced that PEDRO ANDRES OSORIO was sentenced by U.S. District Judge William H. Pauley III to 76 months in prison for his role in a scheme to defraud investors of more than $1 million.  OSORIO pled guilty before Judge Pauley on September 4, 2019, to one count of wire fraud.

U.S. Attorney Geoffrey S. Berman said:  “Pedro Andres Osorio defrauded his friends and family of nearly $1 million by convincing them to invest in his sham liquor company.  Osorio’s scheme destroyed his victims’ financial and emotional wellbeing.  Rather than take responsibility for his actions and face his victims, Osorio was caught trying to flee the country before his sentencing.  Now Osorio will spend years in prison for his betrayals of his investors and the Court.”

FBI Assistant Director William F. Sweeney Jr. said:  “Not only did Osorio steal from people within his inner circle to keep up the façade of his fraudulent investment scheme, he attempted to leave the country after being released on bond in an attempt to escape the consequences of his actions.  Today Osorio has learned the hard way that two wrongs certainly don’t make things right.”

According to the allegations in the Complaint, the Indictment, and other documents filed in federal court, as well as statements made in public court proceedings:

From December 2015 to November 2017, OSORIO solicited investments in a purported liquor distribution company from approximately nine people whom he knew from his own family and social circles in Florida and New York.  OSORIO promised the investors high rates of return on importing Colombian liquor, and told them that his new company was working in partnership with a more established company.

In truth, OSORIO’s liquor company was a sham.  OSORIO did not import or distribute liquor, and did not have a business relationship with another liquor distribution company.  Instead, OSORIO used the investors’ money for himself, including for air travel, cruises, jewelry, electronics, and furniture.  OSORIO also redistributed some of the investors’ money to other investors as supposed profits in order to induce additional investments.  In total, OSORIO defrauded investors of approximately $1 million.

OSORIO had been released on bond during the pendency of the case, and was required to surrender his Colombian passport and remain in Florida (where he lived) and New York.  However, on October 29, 2019, OSORIO was arrested at Miami International Airport attempting to jump bail and flee the United States to Colombia.  OSORIO’s ticket was purchased the day before and he had obtained a new Colombian passport.  OSORIO has since remained in custody until his sentencing.

*                *                *

In addition to the prison term, OSORIO, 36, of Doral, Florida, was sentenced to three years of supervised release and ordered to make restitution in the amount of $994,106.  Forfeiture will be in an amount to be determined. 

Mr. Berman thanked the FBI for their outstanding work.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Brett M. Kalikow is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that EVALDAS RIMASAUSKAS, a Lithuanian citizen, was sentenced today to 60 months in prison for participating in a fraudulent business email compromise scheme that induced two U.S.-based Internet companies (the “Victim Companies”) to wire a total of over $120 million to bank accounts he controlled.  RIMASAUSKAS previously pled guilty to one count of wire fraud before U.S. District Judge George B. Daniels, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Evaldas Rimasauskas devised an audacious scheme to fleece U.S. companies out of more than $120 million, and then funneled those funds to bank accounts around the globe.  Rimasauskas carried out his high-tech theft from halfway across the globe, but he got sentenced to prison right here in Manhattan federal court.”

According to the allegations in the Indictment to which RIMASAUSKAS pled guilty, court filings, and statements made in public court proceedings:

From at least in or around 2013 through in or about 2015, RIMASAUSKAS orchestrated a fraudulent scheme designed to deceive the Victim Companies, including a multinational technology company and a multinational online social media company, into wiring funds to bank accounts controlled by RIMASAUSKAS.  Specifically, RIMASAUSKAS registered and incorporated a company in Latvia (“Company-2”) that bore the same name as an Asian-based computer hardware manufacturer (“Company-1”), and opened, maintained, and controlled various accounts at banks located in Latvia and Cyprus in the name of Company-2.  Thereafter, fraudulent phishing emails were sent to employees and agents of the Victim Companies, which regularly conducted multimillion-dollar transactions with Company-1, directing that money the Victim Companies owed Company-1 for legitimate goods and services be sent to Company-2’s bank accounts in Latvia and Cyprus, which were controlled by RIMASAUSKAS.  These emails purported to be from employees and agents of Company-1, and were sent from email accounts that were designed to create the false appearance that they were sent by employees and agents of Company-1, but in truth and in fact, were neither sent nor authorized by Company-1.  This scheme succeeded in deceiving the Victim Companies into complying with the fraudulent wiring instructions.

After the Victim Companies wired funds intended for Company-1 to Company-2’s bank accounts in Latvia and Cyprus, RIMASAUSKAS caused the stolen funds to be quickly wired into different bank accounts in various locations throughout the world, including Latvia, Cyprus, Slovakia, Lithuania, Hungary, and Hong Kong.  RIMASAUSKAS also caused forged invoices, contracts, and letters that falsely appeared to have been executed and signed by executives and agents of the Victim Companies, and which bore false corporate stamps embossed with the Victim Companies’ names, to be submitted to banks in support of the large volume of funds that were fraudulently transmitted via wire transfer.

Through these false and deceptive representations over the course of the scheme, RIMASAUSKAS, the defendant, caused the Victim Companies to transfer a total of over $120,000,000 in U.S. currency from the Victim Companies’ bank accounts to Company-2’s bank accounts. 

            RIMASAUSKAS was arrested by Lithuanian authorities in March 2017, pursuant to a provisional arrest warrant, and was extradited to the Southern District of New York in August 2017.

*                *                *

In addition to the prison term, Judge Daniels ordered RIMASAUSKAS to serve two years of supervised release, to forfeit $49,738,559.41, and to pay restitution in the amount of $26,479,079.24.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation, and thanked the Prosecutor General’s Office of the Republic of Lithuania, the Lithuanian Criminal Police Bureau, the Vilnius District Prosecutor’s Office and the Economic Crime Investigation Board of Vilnius County Police Headquarters, the Prosecutor General’s Office of the Republic of Latvia, and the International Assistance Group at the Department of Justice, Canada, for their assistance in the investigation, arrests, and extradition, as well the Department of Justice’s Office of International Affairs.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Eun Young Choi and Olga Zverovich are in charge of the prosecution. 

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that THERYN JONES, a/k/a “Ty,” a/k/a “Old Man Ty,” a/k/a “Tyballa,” and ARIUS HOPKINS, a/k/a “Scrappy,” a/k/a “Scrap,” were convicted of the January 2, 2014, murder of Shaquille Malcolm, 20, in the Bronx, New York.  JONES and HOPKINS were convicted yesterday following a two-week trial before U.S. District Judge Lewis A. Kaplan. 

U.S. Attorney Geoffrey S. Berman said:  “Nearly six years ago, 20-year-old Shaquille Malcolm was shot 13 times and killed in a Bronx apartment lobby.  A unanimous jury has now held Jones and Hopkins responsible for this terrible crime.”

As reflected in the Indictment, and according to the evidence introduced at trial:

THERYN JONES was a high-ranking leader of the Mac Balla gang and the leader of a large-scale drug trafficking organization that distributed crack cocaine out of a residential building in the Allerton section of the Bronx, New York.  Because Shaquille Malcolm and others were encroaching on JONES’s drug territory, JONES directed HOPKINS and another person to murder Malcolm. 

On January 2, 2014, HOPKINS and another individual shot Shaquille Malcolm multiple times in the lobby of an apartment building located at 2818 Bronx Park East in the Bronx, New York.  Malcolm died at the scene. 

*                      *                      *

JONES, 42, of the Bronx, New York, and HOPKINS, 25, of the Bronx, New York, were each convicted of using a firearm to commit murder in furtherance of a drug trafficking crime (Count One), which carries a mandatory minimum sentence of five years in prison and a maximum sentence of life in prison, and murder while engaged in a conspiracy to distribute 280 grams and more of crack cocaine (Count Two), which carries a mandatory minimum sentence of 20 years’ in prison and a maximum sentence of life in prison.  JONES and HOPKINS are scheduled to be sentenced on May 7, 2020.

Mr. Berman praised the outstanding investigative work of the New York City Police Department.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Michael K. Krouse, Danielle R. Sassoon, Margaret Graham, and Jessica Fender are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GORDON FREEDMAN, a doctor who practiced in New York, New York, pled guilty today to one count of distributing oxycodone and fentanyl to a patient for no legitimate medical purpose, which resulted in the overdose of the patient.  FREEDMAN pled guilty before U.S. District Judge Alison J. Nathan.

Manhattan U.S. Attorney Geoffrey S. Berman said: “Less than two weeks ago, Gordon Freedman was convicted of accepting hundreds of thousands of dollars from a pharmaceutical company to push medically unneeded fentanyl.  Today, in a separate but hardly unrelated case, he admitted to dispensing massive quantities of oxycodone and fentanyl to a patient who died of a fentanyl overdose in 2017.  It seems clear Gordon Freedman was more concerned with his own wealth than his patients’ health.”    

According to the allegations contained in the Indictment against FREEDMAN and filings in related proceedings:

From in or about 2013 through in or about May 2017, FREEDMAN, who worked at and owned a private pain-management office on the Upper East Side of Manhattan and was an Associate Clinical Professor at a large hospital in Manhattan, prescribed numerous controlled substances to a particular patient (“Patient-1”), including enormous quantities of oxycodone and fentanyl.  For example, in 2013 alone, FREEDMAN prescribed Patient-1 approximately 85,427 oxycodone pills – an average of approximately 234 oxycodone pills per day – containing a total of approximately 2,422,435 mg of oxycodone. 

On or about April 13, 2017, FREEDMAN gave Patient-1 prescriptions for approximately 150 doses of a drug containing fentanyl, and for approximately 950 oxycodone pills containing approximately 30 mg of oxycodone per pill.  On or about May 4, 2017, Patient-1 died of a fentanyl overdose after ingesting a quantity of the drug prescribed by FREEDMAN on or about April 13, 2017.

*                *                *

FREEDMAN, 59, of Mount Kisco, New York, pled guilty to one count of distributing oxycodone and fentanyl, which carries a maximum sentence of 20 years in prison. The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.

FREEDMAN is scheduled to be sentenced by Judge Nathan on March 18, 2020.

On December 5, 2019, FREEDMAN was convicted in a separate case, U.S. v. Gordon Freedman et al., 18 Cr. 217 (KMW), of charges of conspiracy to violate the Anti-Kickback Statute, violation of the Anti-Kickback Statute, and conspiracy to commit honest-services wire fraud.  In connection with that case, FREEDMAN is scheduled to appear for sentencing before U.S. District Judge Kimba M. Wood on March 19, 2020.

Mr. Berman praised the Federal Bureau of Investigation and the New York City Police Department for their investigative efforts and ongoing support and assistance with the case.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Noah Solowiejczyk, David Abramowicz, and Katherine Reilly are in charge of the prosecution.

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 today FRANCIS J. O’REILLY, a Carmel attorney, pled guilty to failure to pay over payroll taxes and tax evasion for the calendar year 2015.  O’REILLY pled guilty before U.S. Magistrate Judge Lisa Margaret Smith. 

U.S. Attorney Geoffrey S. Berman said:  “Francis O’Reilly is an attorney who has been in practice for three decades.  He certainly ought to know his obligations under the law at least as well as any non-lawyer.  And yet, today he admitted that he failed to pay over payroll taxes for years, and failed to report personal income and pay taxes due on that for years as well.  Now O’Reilly awaits sentencing for his crimes.”

IRS-CI Special Agent-in-Charge Jonathan D. Larsen said:  “Francis O’Reilly spent over two decades trying to evade his personal and business tax obligations using a multitude of schemes.  Not only did Mr. O’Reilly evade his own personal tax obligations, but he also stole payroll taxes collected from his own employees.  It is ironic that Mr. O’Reilly specialized in criminal defense, as his actions in this case are wholly criminal.  As we enter the beginning of the tax filing season, it’s important to remember the consequences associated with tax fraud and tax evasion.  Today’s guilty plea demonstrates to Mr. O’Reilly and all other criminals that these types of offenses will not be tolerated.  IRS-CI appreciates the assistance of the United States Attorney for the Southern District of New York in helping to bring Mr. O’Reilly to justice.”

According to the allegations contained in the Information to which O’REILLY pled guilty and statements made in court:       

In or about 1989, O’REILLY was admitted to practice law in New York State.  At all relevant times, O’REILLY was a self-employed attorney who maintained a law practice in Putnam County, New York (the “O’Reilly Law Practice”).  The O’Reilly Law Practice specialized in, among other things, bankruptcy, foreclosure defense, and criminal defense.

O’REILLY operated the O’Reilly Law Practice as a sole proprietorship.  In the calendar year 2015, O’REILLY had between approximately three and eight paid employees.  As the owner and operator of the O’Reilly Law Practice, O’REILLY exercised control over the O’Reilly Law Practice’s financial affairs and was a responsible person under federal law for collecting, truthfully accounting for, and paying over payroll taxes to the Internal Revenue Service (“IRS”). 

During the calendar year 2015, O’REILLY withheld payroll taxes from the salaries of some employees of the O’Reilly Law Practice and filed Forms 941, Employer’s Quarterly Federal Tax Returns, reporting substantial amounts of payroll taxes due and owing to the IRS.  However, O’REILLY failed to pay over the payroll taxes for employees of the O’Reilly Law Practice to the IRS as required by law.  Instead, O’REILLY spent the withheld payroll taxes, which O’REILLY was required to hold in trust for the United States Government, on personal and business expenses.

O’REILLY’s failure to pay over payroll taxes for 2015 was part of a long-running course of conduct.  Between 1997 and 2018, O’REILLY failed to pay over a total of approximately $155,771 in payroll taxes, resulting in a liability of approximately $232,283 after interest and penalties.

In addition to failing to pay over payroll taxes to the IRS, O’REILLY also committed personal tax evasion.  During the calendar year 2015, O’REILLY withdrew approximately $119,427 from his attorney trust account at KeyBank (the “Attorney Trust Account”) for personal use.  O’REILLY did not report the income he realized from the Attorney Trust Account on his 2015 Form 1040, United States Individual Income Tax Return, which O’REILLY prepared and filed with the IRS in or about April 2016.  Instead, O’REILLY’s 2015 Form 1040 declared only approximately $58,223 in business income and a corresponding tax liability in the approximate amount of $14,403, which O’REILLY did not pay. 

O’REILLY’s conduct with respect to his personal income taxes in 2015 was also part of a long-running tax evasion scheme.  During the calendar years 2013 through 2017, O’REILLY withdrew a total of approximately $481,673 from his Attorney Trust Account for personal use.  O’REILLY did not pay taxes on this income and did not report it on his federal individual tax returns.  In addition, O’REILLY failed to pay most of the taxes that O’REILLY reported on his tax returns for the calendar years 2007 through 2015 and 2018.  In total, in the calendar years 2007 through 2018, O’REILLY evaded the payment of approximately $566,027 in personal federal income taxes, including interest and penalties.

In or about late 2016, in an effort to settle his outstanding tax liabilities, including his personal tax liabilities for the calendar years 2002 through 2015 and payroll tax liabilities for the period 2006 through 2015, O’REILLY submitted an offer in compromise to the IRS proposing to settle at least approximately $691,561 in outstanding tax liabilities for merely $12,400.  In the 2016 offer in compromise, which O’REILLY signed under penalty of perjury, O’REILLY made several material misstatements and omissions regarding his income and assets.  Among other things, O’REILLY’s offer in compromise: (a) failed to disclose the existence of O’REILLY’s Attorney Trust Account, from which, as described above, O’REILLY drew substantial income; (b) failed to disclose real property and land that O’REILLY owned in Socorro County, New Mexico; and (c) failed to disclose a 2010 Lincoln vehicle that O’REILLY had recently purchased for approximately $16,000.

*                *                *

O’REILLY, 61, of Danbury, Connecticut, pled guilty to one count of failing to pay over payroll taxes and one count of tax evasion for the calendar year 2015, each of which carries a maximum sentence of five years in prison.  As part of the plea agreement, O’REILLY has agreed to pay restitution to the IRS in the amount of at least $801,969.  Sentencing is scheduled for April 22, 2020, at 2:00 p.m., before U.S. District Judge Kenneth M. Karas.

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

Mr. Berman praised the outstanding work of IRS Criminal Investigation in this case.

This case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorney Olga I. Zverovich is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced that MARKO STASIV was sentenced to seven years in prison today by U.S. District Judge P. Kevin Castel for his participation in a scheme to defraud banks and check-cashing stores by cashing hundreds of thousands of dollars in unfunded payroll checks.  STASIV was convicted, after a seven-day jury trial in May 2019, of wire fraud, conspiracy to commit bank and wire fraud, and aggravated identity theft. 

U.S. Attorney Geoffrey S. Berman said:  “Marko Stasiv was sentenced today for his leading role in a choreographed scheme to defraud.  He led a group of conspirators in bilking banks and check-cashing businesses in state after state, staying one step ahead of the law – until he was caught.  Now he faces seven years in federal prison for his crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “There was nothing about Marko Stasiv’s payroll scheme that was on the up and up.  As one would imagine, his initial success couldn’t be sustained for long. Today’s sentencing ensures a long, well-deserved stay in prison, and this time the government will make the room arrangements.”

According to a Superseding Indictment filed December 18, 2018, other court documents, and the evidence presented at trial: 

From approximately September 2016 through February 2018, the defendant and his co-conspirators engaged in a coordinated scheme to defraud check-cashing businesses and federally insured banks (the “Check Scam”).  The Check Scam’s primary objective was to generate illicit profit for its participants by deceiving check-cashing businesses and banks into honoring ostensible payroll checks for which insufficient funds were available to cover the face-value of the checks.  The Check Scam involved building trust and confidence with check-cashing businesses and banks through a purportedly legitimate course of dealings before taking advantage of that trust and confidence to stage intentional, coordinated overdrafts.  This included the use of fraudulently obtained identity documents, sham companies, and interstate wires. 

As part of the scheme, the conspirators incorporated multiple sham companies (the “Sham Companies”) in multiple states, and then opened bank accounts in the names of those sham companies (the “Sham Bank Accounts”).  The individuals opening the Sham Bank Accounts often did so by using legitimate state identification cards (“State IDs”), obtained under false pretenses.  Upon opening the Sham Bank Accounts, members of the Scheme would obtain and print payroll checks, issued by a Sham Company and issued to a member of the Scheme (a “Check Casher”), who posed as an employee of the Sham Company.  Over the course of several weeks, the Check Cashers cashed multiple payroll checks, of gradually increasing values, at multiple check-cashing stores in the state of the Sham Company’s incorporation.  Members of the Scheme would then immediately redeposit these funds into the Sham Bank Account, so that the checks would clear.  In doing so, the Check Cashers developed credibility with the check-cashing stores.  In each state, the Check Scam would culminate during a final week (the “Bomb Week”).  During the Bomb Week, the Check Cashers would cash high-value checks at as many check-cashing stores as possible.  However, during the Bomb Week, the conspirators would not redeposit these funds into the Sham Bank Account, and would instead divide the proceeds among themselves.  By the time the checks bounced, the conspirators had moved on to the next state, where they executed the Check Scam again, using a new Sham Company and Sham Bank Account.

The defendant was one of the Check Scam’s leaders.  Among other things, he recruited Check Cashers; helped Check Cashers obtain State IDs and open Sham Bank Accounts under false pretenses; distributed payroll checks to the Check Cashers; drove the Check Cashers to various check-cashing stores; instructed Check Cashers on how to execute the Check Scam; and collected and redistributed the proceeds of the Check Scam.  The defendant and his conspirators executed or planned to execute the Check Scam in various locations throughout the United States, including in and around New York City, Pennsylvania, Florida, Maryland, Georgia, Virginia, Texas, Illinois, and California.

As a way to keep overhead costs lower while executing the Check Scam in various states, the conspirators obtained hotel rooms, unlawfully and without authorization, by using the names and hotel loyalty program accounts of real persons who were neither part of nor aware of the Check Scam (the “Hotel Scam”).  The defendant personally executed the Hotel Scam with the assistance of at least two associates in Ukraine, who helped arrange dozens of days-long hotel stays for the Check Scam’s participants at various locations by unlawfully accessing victims’ hotel rewards points, and using them to book hotel rooms listing the defendant and other conspirators as authorized guests. 

*                *                *

In addition to the prison term, Judge Castel sentenced STASIV to three years of supervised release and ordered him to pay restitution in the amount of $548,178.70, forfeiture in the amount of $122,424.92, and a $100 special assessment. 

Mr. Berman praised the investigative work of the FBI and its Eurasian Organized Crime Squad.  He also thanked the New York City Police Department and United States Customs and Border Protection for their assistance in the matter.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Peter C. Fitzhugh, the Special Agent in Charge of the New York Office of Homeland Security Investigations (“HSI”), announced charges against HENRY PEREZ, ASHLEY GOMEZ, and MISTY ALIZETTE INFANTE for participating in a multi-year cellphone account takeover fraud conspiracy that impersonated legitimate cellphone accountholders to fraudulently obtain smartphones and electronic devices that were charged to compromised accounts.  The scheme also caused a number of individual victims across the United States to lose cellphone service for a period of time.  PEREZ, GOMEZ, and INFANTE were all arrested today and were presented before Magistrate Judge Kevin N. Fox in Manhattan federal court.  The case has been assigned to U.S. District Judge Richard M. Berman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants participated in a sophisticated fraud that impersonated victims, changed victims’ account information so that victims would not receive fraud alerts, charged purchases to victims’ accounts, and deprived victims of cellphone service.  Thanks to the dedicated work of our partners at HSI, these alleged cellphone fraudsters will now face the call of justice.”

HSI Special Agent in Charge Peter C. Fitzhugh said:  “Regardless of the fraud or the methods employed by criminal elements, HSI and our partner law enforcement agencies will continue to unmask those responsible.  The individuals arrested today allegedly used social engineering techniques to impersonate victim account holders which may have provided them with a false sense of anonymity, however, our special agents will continuously identify and bring those responsible to justice.”

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

From June 2017 through December 2019, PEREZ, GOMEZ, and INFANTE were members of a criminal fraud ring that committed cellphone account takeover fraud and identity theft across the United States, including in the Southern District of New York.  The scheme’s primary objective was to obtain new, valuable technological devices, including iPhones, and charge these purchases to someone else’s account, without the knowledge or consent of that victim accountholder.  Over the course of the conspiracy, the scheme attempted to fraudulently obtain more than $1 million worth of devices and, in fact, fraudulently obtained more than $500,000 worth of devices, by charging purchases to victims’ accounts.

To conduct the scheme, members of the scheme, including HENRY PEREZ, used stolen identity information to impersonate a victim who had a cellphone account with a particular cellphone service provider (“Provider-1”).  Members of the conspiracy then called customer service representatives of Provider-1 and used social engineering techniques to take over accounts by making various misrepresentations, including impersonating accountholders and indicating a purported need to regain access to their accounts.  Through these misrepresentations, the conspiracy was able to gain unauthorized access to, and control of, accounts belonging to victim accountholders.  Once they gained access, members of the conspiracy made various unauthorized changes to victim accounts, so that fraud alerts, and emails notifying an accountholder of account changes, were sent to them, rather than the legitimate accountholders.  Members of the conspiracy then purchased new electronic devices – typically but not exclusively iPhones – which they charged to victim accounts, without the knowledge or consent of victims. 

In many instances, the conspiracy arranged for the fraudulently ordered devices to be shipped to addresses under their control.  In other instances, members of the scheme, including HENRY PEREZ, ASHLEY GOMEZ, and MISTY ALIZETTE INFANTE, personally entered stores operated by Provider-1 in order to pick up fraudulently obtained devices.  In total, members of the conspiracy conducted in-store pickups of fraudulently obtained devices in at least 10 different states.

Once they had successfully exploited a particular victim’s account, members of the conspiracy typically relinquished control of that account, and moved on to exploiting other victim accounts.  During the period in which the conspiracy compromised, and retained control of, a particular victim’s cellphone account, that victim typically lost cellphone service.

*                *                *

The Indictment contains six counts.  A chart containing the names, ages, residences, charges for each defendant, and maximum penalties, is set forth below.  The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised HSI’s El Dorado Task Force for its outstanding work on the investigation.  He added that the investigation is continuing. 

This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Michael D. Neff is in charge of the prosecution.

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

Defendant, Age, Hometown

Charges, Maximum Penalties

HENRY PEREZ, 32

Fort Lee, New Jersey 

Wire fraud: 20 years’ imprisonment

Wire fraud conspiracy: 20 years’ imprisonment

Computer intrusion: 10 years’ imprisonment

Computer intrusion: 5 years’ imprisonment

Aggravated identity theft (2 counts): mandatory minimum term of 2 years’ imprisonment, consecutive to any other term of imprisonment

ASHLEY GOMEZ, 21

Bronx, New York

 Wire fraud: 20 years’ imprisonment

Wire fraud conspiracy: 20 years’ imprisonment

Aggravated identity theft: mandatory minimum term of 2 years’ imprisonment, consecutive to any other term of imprisonment 

MISTY ALIZETTE INFANTE, 23

Bronx, New York    

Wire fraud: 20 years’ imprisonment

Wire fraud conspiracy: 20 years’ imprisonment

Aggravated identity theft: mandatory minimum term of 2 years’ imprisonment, consecutive to any other term of imprisonment 

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Scott J. Lampert, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of the Inspector General (“HHS-OIG”), announced today that the United States has filed a civil healthcare fraud lawsuit against OMNICARE, INC., and its parent company, CVS HEALTH CORPORATION.  The Government’s Complaint seeks damages and civil penalties under the False Claims Act for fraudulently billing federal healthcare programs for hundreds of thousands of non-controlled prescription drugs dispensed based on stale, invalid prescriptions to elderly and disabled individuals.  These individuals lived in assisted living facilities, group homes, independent living communities, and other non-skilled residential long-term care facilities.  The illegally dispensed drugs include antipsychotics, anticonvulsants, and antidepressants.

The lawsuit alleges that OMNICARE failed to obtain new prescriptions from patients’ doctors after the old ones had expired or run out of refills.  Instead, OMNCIARE just assigned a new number to the old prescription and kept on dispensing drugs for months, and sometimes years, after the prescriptions had expired.  OMNICARE internally referred to these as “rollover” prescriptions.  As set forth in the Complaint, OMNICARE submitted, or caused to be submitted, false claims for payment for these illegally dispensed drugs to Medicare, Medicaid, and TRICARE.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Omnicare put at risk the health of tens of thousands of elderly and disabled individuals living in assisted living and other residential long-term care facilities by dispensing drugs for months, and sometimes years, without obtaining current, valid prescriptions from doctors.  A pharmacy’s fundamental obligation is to ensure that drugs are dispensed only under the supervision of treating doctors who monitor patients’ drug therapies.  Omnicare blatantly ignored this obligation in favor of pushing drugs out the door as quickly as possible to make more money.  This Office will continue to hold accountable those who put at risk people’s health and safety just to turn a profit.” 

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Failing to consult doctors as to whether prescriptions should be refilled places patients’ health and medical care at serious risk.  These automatic rollover refills could have significant consequences for vulnerable people in long term-care facilities.  We will continue working with law enforcement partners to protect people depending on these taxpayer-funded government health programs.”     

The following allegations are based on the Complaint that was filed in Manhattan federal court today: 

OMNICARE is the country’s largest provider of pharmacy services to long-term care facilities, operating approximately 160 pharmacies in 47 states across the United States.  Every year, OMNICARE dispenses tens of millions of prescription drugs to long-term care facilities, including assisted living and other non-skilled residential facilities that serve elderly and disabled individuals.  CVS acquired Omnicare in May 2015, and shortly thereafter assumed an active role in overseeing OMNICARE’s operations, including pharmacy dispensing practices and systems.

From 2010 until 2018, OMNICARE and CVS allowed OMNICARE pharmacies to dispense non-controlled prescription drugs to tens of thousands of elderly and disabled individuals living in assisted living and other residential long-term care facilities across the country based on prescriptions that had expired, were out of refills, or were otherwise invalid.  OMNICARE repeatedly disregarded prescription refill limitations and expiration dates that would have triggered doctor visits to evaluate whether the drug should be renewed, choosing instead to push drugs out the door as fast as possible based on stale, invalid prescriptions.  OMNICARE managers exerted pressure on overwhelmed pharmacy staff to fill prescriptions quickly so that OMNICARE could submit claims and collect payments.  Many pharmacies had to process and dispense thousands of orders each day.

Instead of requesting new prescriptions when old ones expired, OMNICARE allowed prescriptions to “roll over.”  At OMNICARE, “rolling over” a prescription meant that when a prescription expired, OMNCIARE’s computer systems would assign the old prescription a new number and the pharmacy would continue to dispense the drug indefinitely without the need for a prescription renewal.  Depending on the computer system used, OMNICARE also sometimes assigned a fake number of authorized refills to a prescription – usually 99 allowable refills for Medicare patients – to allow for continuous refilling.  OMNICARE pharmacies “rolled over” prescriptions for elderly and disabled individuals living in more than 3,000 residential long-term care facilities, including assisted living facilities operated by the largest long-term care providers in the country, such as Brookdale Senior Living, Atria Senior Living, Sunrise Senior Living Services, and Five Star Senior Living.

Senior OMNICARE and CVS management knew that pharmacies were routinely dispensing drugs without valid prescriptions, but they failed to begin to address the problem until after they found out about this Office’s investigation.  Indeed, OMNICARE’s Compliance Department succinctly acknowledged the problem in an internal April 2015 email in which one Regional Compliance Officer stated:  “An issue that I am running into more and more in multiple states concerns the ability of our systems to allow prescriptions to continue to roll after a year to a new prescription number without any documentation or pharmacist intervention.”  A compliance officer then forwarded the email to the head of OMNICARE’s Third Party Audit group, who responded that she had a “potential solution (programmed last year) but no one is rolling it out now.”

OMNICARE’s practice of illegally dispensing drugs to elderly and disabled individuals living in residential facilities exposed these vulnerable individuals to a significant risk of harm.  In contrast to traditional skilled nursing homes, where residents have access to 24-hour medical care supervised by doctors, assisted living and other non-skilled residential facilities offer more limited medical care, or none at all.  In particular, these facilities generally do not have doctors on staff to oversee and monitor residents’ drug therapy.

Many of the prescription drugs dispensed by OMNICARE without valid prescriptions treat serious, chronic conditions, such as dementia, depression, and heart disease.  They include antipsychotics, anticonvulsants, cardiovascular medications, anti-depressants, and other drugs that can have dangerous side effects and need to be closely monitored by doctors, particularly when taken in combination with other drugs by elderly patients.  By repeatedly dispensing potent drugs without current and valid prescriptions, OMNICARE jeopardized the health and safety of tens of thousands of individuals who continued to take the same drugs for months, and sometimes years, without consulting their doctors to determine whether the medications were still clinically appropriate.

A large percentage of the long-term care residents served by OMNICARE are beneficiaries of federal healthcare programs.  By dispensing drugs without valid prescriptions, OMNICARE presented, or caused to be presented, hundreds of thousands of false claims to Medicare, Medicaid, and TRICARE.  These claims were ineligible for payment.  In addition, OMNICARE knowingly transmitted false information to these federal healthcare programs that made it appear that drug dispensations were supported by current, valid prescriptions from physicians when in fact they were not.

The Government intervened in two private whistleblower lawsuits before Chief Judge Colleen McMahon that had previously been filed under seal pursuant to the False Claims Act.

Mr. Berman thanked HHS-OIG for its assistance with the case.

The case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Jeffrey K. Powell and Mónica P. Folch are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, the Inspector-in-Charge of the New York Division of the U.S. Postal Inspection Service (“USPIS”), announced today the unsealing of an indictment charging DONALD LAGUARDIA with securities fraud, wire fraud, and investment adviser fraud in connection with his operation of a now-bankrupt New York-based investment firm, L-R Managers, LLC.  Over several years, LAGUARDIA, the chief executive officer and co-founder of L-R Managers, misappropriated more than $1.5 million from private investment funds managed by the firm and used the stolen money to finance his personal and business expenses.  LAGUARDIA was arrested this morning in Lavallette, New Jersey.  The case is assigned to U.S. District Judge Lewis A. Kaplan.  LAGUARDIA will be presented before Judge Kaplan in Manhattan federal court later today.

U.S. Geoffrey S. Berman said:  “As alleged, Donald Laguardia stole from investors through a series of lies.  He violated his clients’ trust by siphoning their money to bankroll his business and line his own pockets.  Now, Laguardia faces prosecution for his alleged crimes.”

USPIS Inspector-in-Charge Philip R. Bartlett said: “Mr. Laguardia showed a reckless disregard for his clients when he allegedly misappropriated their investment money to fund personal and business expenses.  This is a clear case of greed overshadowing honest business practices.”

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

From in or about 2013 through in or about 2017, LAGUARDIA solicited millions of dollars from investors for the LR Global Frontier Master Fund and two related feeder funds (collectively, the “Frontier Funds”), which had a stated focus on investments in “frontier” markets in Latin America, Central and Eastern Europe, the Middle East, Africa, and Asia.  Contrary to LAGUARDIA’s representations, and in breach of his duties to investors in the Frontier Funds, LAGUARDIA misappropriated investors’ money to finance L-R Managers’ payroll, rent for its office space on Park Avenue in Manhattan, and hundreds of thousands of dollars in charges on the firm’s credit card, among other unauthorized expenses.  At least $191,000 of the misappropriated money went directly to, or for the benefit of, LAGUARDIA personally.

In one example, in 2013, LAGUARDIA solicited an $800,000 investment in the Frontier Funds from an investor (“Investor-1”).  Upon receipt of Investor-1’s money, an L-R Managers employee sent an email to LAGUARDIA and another person asking for approval to forward the $800,000 to the Frontier Funds.  LAGUARDIA responded, “Dont [sic] wire anything yet!”  LAGUARDIA then caused approximately $390,000 of Investor-1’s investment never to be transmitted to the Frontier Funds, but instead to be used to pay himself approximately $52,000 and for various other personal and business expenses.

By September 2015, L-R Managers faced substantial financial difficulties.  On September 1, 2015, an L-R Managers principal sent an email to LAGUARDIA and others at the firm stating that it would be “ethically troubling to accept money into the [Frontier Funds] when [L-R Managers] can no longer support . . . payroll and mission critical services.”  Nevertheless, just a few days later, a new investor solicited by LAGUARDIA (“Investor-2”) made a $2 million investment into the Frontier Funds.  Prior to this investment, LAGUARDIA concealed his firm’s near insolvency from Investor-2 and did not disclose that the Frontier Funds had been paying substantial expenses for L-R Managers, contrary to the representations in the funds’ offering documents.  LAGUARDIA then proceeded, over the course of several months, to use a substantial portion of Investor-2’s investment in the Frontier Funds to continue paying himself and subsidizing his firm’s business expenses.

*                *                *

LAGUARDIA, 52, of Lavallette, New Jersey, is charged with one count of securities fraud, one count of wire fraud, and one count of investment adviser fraud.  LAGUARDIA faces a maximum sentence of 20 years in prison on each of the securities and wire fraud counts and a maximum sentence of five years in prison on the investment adviser fraud count.

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

Mr. Berman praised the investigative work of the USPIS.  Mr. Berman also thanked the Securities & Exchange Commission, which previously brought a related civil action against LAGUARDIA.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Margaret Graham and Daniel Loss 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.

 

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[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, and Wendy Woolcock, Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced that AMADO BELTRAN BELTRAN, a/k/a “Don Amado,” OTTO RENE SALGUERO MORALES, a/k/a “Otto Salguero,” RONALD ENRIQUE SALGUERO PORTILLO, a/k/a “Ronald Salguero,” and FERNANDO FELIX RODRIGUEZ, a/k/a “Don Fernando,” were charged in a Superseding Indictment 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.  The case is assigned to U.S. District Judge P. Kevin Castel.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants conspired with the corrupt Honduran officials they bribed to facilitate the importation into the U.S. of large quantities of cocaine for the Sinaloa cartel.  They allegedly provided security personnel – armed with machineguns and RPGs – for the drug shipments.  Thanks to the DEA, the defendants are now facing potential lengthy prison sentences if convicted.”

DEA Special Agent in Charge Wendy Woolcock said:  “Following the recent conviction of former Honduran congressman Tony Hernandez, today’s charges are further proof that even well-connected drug traffickers will be held to account.  These alleged criminals will stop at nothing to protect their shipments of poison, often resorting to bribery, intimidation, and even violence.  The DEA is committed to doing all it can to combat the threat of drug-trafficking and stop these dangerous substances from flooding our communities and harming Americans.”

As alleged in the Superseding Indictment unsealed in federal court and statements made in court filings and proceedings[1]:

Beginning in at least approximately 2004, BELTRAN BELTRAN, SALGUERO MORALES, SALGUERO PORTILLO, and FELIX RODRIGUEZ worked together and with others – including, at times, former Honduran congressman Juan Antonio Hernandez Alvarado, a/k/a “Tony Hernandez,” and the leadership of Mexico’s Sinaloa Cartel – to transport large shipments of cocaine.  The defendants and other drug traffickers received the cocaine shipments in Honduras via air and maritime routes, which were typically dispatched from Colombia and Venezuela.  For protection from official interference, and in order to facilitate the safe passage of the cocaine through Honduras, Guatemala, and Mexico so that the drugs could be imported into the United States, the defendants and others facilitated the payment of bribes to public officials, including Hernandez Alvarado and other Honduran politicians.  The defendants and others also provided armed security for the drugs, including individuals carrying machineguns and rocket-propelled grenade launchers.

*                      *                      *

BELTRAN BELTRAN, 57, of Mexico, SALGUERO MORALES, 58, of Guatemala, SALGUERO PORTILLO, 49, of Guatemala, and FELIX RODRIGUEZ, 45, of Mexico, are charged with (1) conspiring to import cocaine into the United States, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; (2) using and carrying machine guns and destructive devices during, and possessing machine guns and destructive devices in furtherance of, the cocaine-importation conspiracy, which carries a mandatory minimum sentence of 30 years in prison and a maximum sentence of life in prison; and (3) conspiring to use and carry machine guns and destructive devices during, and to possess machine guns and destructive devices in furtherance of, the cocaine-importation conspiracy, which carries a maximum sentence of life in prison.

Mr. Berman praised the outstanding investigative work of the DEA’s Special Operations Division Bilateral Investigations Unit, New York Strike Force, and Tegucigalpa Country Office, as well as the Office of International Affairs of the Justice Department’s Criminal Division.

The case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorneys Michael K. Krouse, Stephanie Lake, Daniel G. Nessim, Benjamin W. Schrier, and Kyle A. Wirshba are in charge of the prosecution.

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

 

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that KAREEM DAVIS, a/k/a “Reem,” a member of a violent, Bronx-based street gang known as “Killbrook,” was convicted of the April 2011 murder of Bolivia Beck, as well as participating in a racketeering conspiracy.  DAVIS was convicted following a one-week trial before U.S. District Judge Lorna G. Schofield. 

U.S. Attorney Geoffrey S. Berman said:  “A unanimous jury convicted Kareem Davis of killing Bolivia Beck as she was meeting her boyfriend’s grandparents, more than eight years ago.   We hope today’s verdict brings some solace to the victim’s family, while also taking a violent offender off the street.”

As reflected in the Indictment, documents previously filed in the case, and evidence introduced at trial:

From at least in or about 2007 through in or about October 2017, DAVIS was a member of Killbrook, a violent street gang based in the “Down the Block” section of the Mill Brook Houses.  Killbrook members were responsible for narcotics trafficking, shootings, robberies, and murder.  In or around 2007, a violent rivalry started between Killbrook and “MBG,” another gang based in the “Up the Block” section of the Mill Brook Houses.  This rivalry involved numerous shootings and acts of violence, including a shooting at a baby shower in the Mill Brook community center. 

On April 18, 2011, Bolivia Beck and her boyfriend, a member of MBG, were walking through the Mill Brook Houses.  As Beck and her boyfriend approached her boyfriend’s grandparents, DAVIS and a co-conspirator fired multiple times, aiming for the boyfriend but instead striking Beck in the head with a single bullet.  The shooting occurred in broad daylight.  Beck died two days later from the gunshot wound. 

*                *                *

DAVIS, 30, was found guilty of one count of racketeering conspiracy, which carries a maximum sentence of life in prison; one count of murder in aid of racketeering, which carries a mandatory minimum sentence of life in prison; and one count of murder through the use of a firearm, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of life in prison.  DAVIS is scheduled to be sentenced on April 16, 2020.

Mr. Berman praised the outstanding investigative work of the New York City Police Department.  

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Christopher Clore, Jordan Estes, and Alexandra Rothman are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOEL MARGULIES was sentenced to four years in prison today by U.S. District Judge Jed S. Rakoff for participating in two schemes to defraud more than 50 investors in the Starship Snacks Corporation and the All American Pet Company of more than $2.9 million, by making false and fraudulent representations about, among other things, the status of the companies’ products, guarantees that purportedly backed the investments, and the interest of large multi-national corporations in acquiring the companies.  MARGULIES was convicted after a seven-day jury trial in August 2019 of various fraud counts, aggravated identity theft, and the illegal transfer of a firearm to an out-of-state resident; he then entered a plea of guilty to participating in a narcotics distribution conspiracy.

U.S. Attorney Geoffrey Berman said:  “For years, Joel Margulies took advantage of individuals who thought they were investing in start-up companies, when in fact Margulies and his co-conspirators diverted for their own personal benefit the more than $2.9 million they had raised.  Margulies perpetuated lies about the products that companies were developing, the interest of large public corporations in buying out the companies, and the existence of guarantees to back the investments.  In order to make these lies more convincing, Margulies stole the identities of three individuals, and created fake letters that appeared to be authored by those individuals.  For the financial and emotional devastation his fraud inflicted on more than 50 individuals, Margulies will spend the next four years of his life in prison.”  

According to allegations contained in the Indictment filed against MARGULIES, the evidence presented during trial and statements made in related court filings and proceedings:

The All American Pet Company Fraud Scheme

From October 2013 through May 2017, MARGULIES, co-defendant Lisa Bershan, and a co-conspirator raised more than $575,000 in purported loans for the All American Pet Company (“AAPT”), a penny-stock company that produced, marketed, and sold food bars and other products for dogs, based on the following misrepresentations, among others: (a) that the Internal Revenue Service (“IRS”) had accepted an “offer in compromise” from AAPT that significantly reduced the back taxes AAPT owed to the IRS; (b) that Lisa Bershan had paid to the IRS the amount of this offer in compromise and had thus absolved AAPT of its outstanding tax liability, (c) that Lisa Bershan was the beneficial owner of a bank account containing over $6.9 million, (d) that Lisa Bershan would personally guarantee some of the loans, and (e) that Nestlé USA had proposed various business deals with AAPT.  MARGULIES held himself out as AAPT’s vice president for marketing and advertising, but in reality he played a number of roles at the company, including communicating with investors and creating fake documents, such as forged bank account statements and letters, to support AAPT’s misrepresentations to investors.

Although MARGULIES and his co-conspirators had promised investors that they would use the loans to help improve AAPT’s manufacturing and distribution capacities, the conspirators instead used those funds largely for their personal expenses, including the rental of a luxury villa in the Bel Air neighborhood of Los Angeles where all three of them lived.

In connection with the AAPT fraud scheme, MARGULIES used the stolen identities of three individuals – an IRS employee, a Nestlé Purina employee, and a Manhattan attorney – to create false and fraudulent letters that were sent to AAPT investors to induce them to make loans to AAPT.

The Starship Snack Corporation Fraud Scheme

From approximately August 2015 through August 2017, MARGULIES, Bershan, and  co-defendant Barry Schwartz raised more than $2.3 million from investors in a company originally called the Awake Company and later renamed Starship Snacks Corporation (“Starship”), which purported to be in the business of developing and manufacturing caffeinated snack products, based on the following misrepresentations, among others: (a) that investments in Starship were guaranteed against losses by Bershan; (b) that Starship was going to be acquired by Monster Beverage (“Monster”) in a one-for-one stock exchange; (c) that Starship was engaged in actual product development and had procured samples of chocolate candies infused with caffeine; and (d) that MARGULIES and others at Starship had entered into non-disclosure agreements with Monster that prohibited them from discussing Starship’s purported acquisition by Monster and its purported product development.  MARGULIES’s title at Starship was senior vice president; he served as the primary point of contact for investors, to whom he made the aforementioned misrepresentations, and he also created a number of fake documents that were used in connection with the Starship fraud.

After receiving funds from Starship investors, MARGULIES and his co-conspirators used those funds to maintain their own extravagant lifestyles, spending hundreds of thousands of dollars on things like luxury clothing, plastic surgery, interior decorating, the rental of a high-end apartment in New York City, and the down payment for a multimillion-dollar house in Florida. 

The Illegal Firearm Transfer and Narcotics Distribution  

In addition to the fraud and identity theft conduct set forth above, MARGULIES was sentenced for illegally transferring a firearm and ammunition from Tennessee to Bershan in New York via commercial courier without being a licensed firearms dealer.  Finally, MARGULIES was also sentenced for conspiracy to distribute cocaine, a charge that had been severed from the charges that were the subject of the trial. 

In addition to the prison term, MARGULIES, 75, was sentenced to three years of supervised release.  MARGULIES was also ordered to forfeit $108,983 and to make restitution in the amount of $2,926,702.54.

Lisa Bershan was convicted upon a guilty plea, and sentenced by Judge Rakoff on November 22, 2019, principally to a term of seven years in prison. 

Barry Schwartz was convicted upon a guilty plea, and sentenced by Judge Rakoff on December 12, 2019, principally to a term of four years in prison.

Mr. Berman praised the work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its assistance.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that SALVATORE ARENA was sentenced on December 13 to 42 months in prison for defrauding clients who trusted him to prepare and pay their taxes.  ARENA misappropriated over $780,000 of client money from approximately 170 victims for his own use.  ARENA pled guilty on August 23, 2019, before United States District Judge Katherine Polk Failla, who imposed Friday’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Salvatore Arena misappropriated money his clients intended would be used to pay their taxes.  He defrauded his clients and the United States, and now he has been sentenced to prison for his crimes.”

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

During the relevant time period, ARENA purported to offer tax services, including the preparation and payment of taxes, to clients of an accounting firm in Manhattan.  Instead of making payments on behalf of those clients, as ARENA represented he would, he diverted client funds for his own use.  ARENA executed this fraudulent scheme in two primary ways – first, by diverting pre-payments of taxes to his own tax account and later claiming illegitimate refunds; and second, by misappropriating tax payments clients had wired into a bank account controlled by ARENA.

ARENA defrauded approximately 170 victims during the period from January 2014 through March 2019, and agreed as part of his guilty plea to forfeit $789,195.35 in United States currency, representing proceeds traceable to the charged offenses, and was ordered by the Court to pay restitution of at least $726,608.42.

*                *                *

ARENA, 46, of Queens, New York, was sentenced to concurrent terms of 42 months in prison for mail fraud, money laundering, and wire fraud.  In addition to the prison term, ARENA was also sentenced to three years of supervised release.

Mr. Berman praised the outstanding investigative work of Special Agents from TIGTA, Criminal Investigators from the NYSDTF, and Special Agents from the U.S. Attorney’s Office for the Southern District of New York. 

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Jarrod L. Schaeffer is 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 Robert L. Langley Jr., the Putnam County Sheriff, announced the arrest of CHARLES HUSTIS for attempted enticement of a minor to engage in sexual activity.  HUSTIS was arrested today and presented before United States Judge Lisa Margaret Smith.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Charles Hustis used his social media account in an attempt to persuade an innocent minor victim to meet with him and perform sexual acts.  Sexualizing and preying on minors is unconscionable.  Our Office will continue to work with our law enforcement partners at all levels of government to keep our children safe and stop those who seek to take advantage of them.”

FBI Assistant Director William F. Sweeney Jr. said:  “Predators who use their access to children for their own sexual gratification are a parent’s worst fear come true, and their actions can cause detrimental impacts on the victims.  I want to thank the agents and detectives who worked this case for the speed with which they acted once they had the information regarding Mr. Hustis’s position in a school.  If anyone in the community believes their child may have been a victim, we ask for them to call us at 1-800-CALL-FBI.”

Sheriff Robert L. Langley Jr. said:  “This is another example of why all law enforcement agencies should continue to work together at the local and federal levels in order to better serve their communities.  The Putnam County Sheriff’s Department looks forward to continuing our already good working relationship with the FBI and other federal agencies.”

According to the allegations in the Complaint[1] filed today:

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

HUSTIS, 36, of Cold Spring, New York, is charged with one count of attempted enticement of a minor, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life 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.

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

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

Mr. Berman stated that the investigation is ongoing.  Mr. Berman requests that any individuals with relevant information concerning CHARLES HUSTIS should contact the Federal Bureau of Investigation at 1-800-CALL FBI.

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

 

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[1] 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 JOHN ULRICH, who previously served as the vice president of the International Brotherhood of Teamsters Local 812 (the “Union”) and as a trustee of the Union’s employee health benefit plan (the “Plan”), pled guilty today to soliciting tens of thousands of dollars in bribe payments from an executive with the Plan’s Third Party Administrator (the “TPA-1”), in exchange for using his influence to ensure the Union’s continued retention of TPA-1 as its Plan administrator.  ULRICH pled guilty before United States District Judge Analisa Torres.

U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, John Ulrich betrayed the trust of the Union members who elected him in order to line his pockets with bribe money.  This Office is committed to prosecuting corrupt union officials who abuse their positions of trust for their own financial benefit.”

According to the allegations in the Indictment, other public filings, and statements made during the plea proceeding:

The Union has more than approximately 3,000 members, and represents workers in the beverage industry throughout the New York metropolitan area.  The Union’s members are covered by the Plan, which provides, among other things, life insurance, health insurance, dental, vision, and disability benefits to Union members and their families.  As the Plan’s third-party administrator, TPA-1 processed health insurance claims for participants in the Plan.  At all times relevant to the Indictment, ULRICH was a member and officer of the Union and a trustee of the Plan.

In or about 2013, ULRICH  solicited bribe payments from an executive with TPA-1 (“Executive-1”) of $5,000 per quarter in exchange for using his influence to maintain TPA-1 as the Plan’s third-party administrator.  Before ULRICH solicited these bribes, the Plan had issued a request for proposals for a new third-party administrator, and TPA-1 was at risk of losing the Plan’s business.  ULRICH told Executive-1 that ULRICH would use his influence with the Union to ensure that the Plan continued to use TPA-1 to administer the Union’s health care plan.  Executive-1 agreed to make $5,000 quarterly payments to ULRICH, and began doing so.  Subsequently, despite receiving multiple bids from other third-party administrators, the Plan then continued to work with TPA-1.   

In or about 2014, ULRICH demanded increased bribe payments from Executive-1.  In part, ULRICH told Executive-1 that these increased bribe payments were needed for another trustee of the Plan, and Executive-1 began making such increased payments.  On or about September 19, 2015, ULRICH again solicited additional bribe payments for this trustee.

After a special board meeting convened by the Plan in February 2016, ULRICH was terminated as vice president and trustee of the Union and Plan, respectively.  In total, ULRICH demanded, and Executive-1 paid, tens of thousands in bribes before ULRICH was removed from office.

*                *                *

ULRICH, 48, of Newburgh, New York, pled guilty to one count of conspiracy to solicit and receive bribe payments to influence the operation of an employee benefit plan, which carries a maximum penalty 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. 

ULRICH is scheduled to be sentenced by Judge Torres on April 23, 2020, at 2:00 p.m.

Mr. Berman praised the Federal Bureau of Investigation, the U.S. Department of Labor Office of Inspector General, the U.S. Department of Labor Employee Benefits Security Administration, and the U.S. Department of Labor Office of Labor-Management Standards for their outstanding investigative work in this case.

This matter is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Eli J. Mark and Louis A. Pellegrino are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Todd J. Brown, Director of the U.S. Department of State’s Diplomatic Security Service (“DSS”), announced today that former Ambassador from the Permanent Mission of the Kingdom of Morocco to the United Nations (the “Moroccan Mission”) ABDESLAM JAIDI (“JAIDI”), his now ex-wife, MARIA LUISA ESTRELLA JAIDI (“ESTRELLA”), and ESTRELLA’s brother, RAMON SINGSON ESTRELLA (“SINGSON”) were charged in White Plains federal court with conspiring to defraud the United States, to make materially false statements, to commit visa fraud, and to induce aliens to illegally enter, come to, and remain in the United States.  The charges stem from a scheme to bring domestic workers into the United States under fraudulently obtained diplomatic visas, only to then be exploited by JAIDI and ESTRELLA once they arrived.  On March 13, 2019, ESTRELLA was arrested on a complaint and presented in White Plains federal court.  Both JAIDI and SINGSON remain at large.  

U.S. Attorney Geoffrey S. Berman stated:  “Today’s charges underscore that no one is above the law.  The conspiracy alleged to have occurred here was intentionally designed to circumvent important protections against exploitation for domestic workers brought to the United States.  We will not tolerate this type of fraud on the United States or the exploitation of domestic workers – no matter the title or position of the alleged offender.”

DSS Director Todd J. Brown said:  “We are committed to working with our law enforcement partners to prevent situations where vulnerable individuals are exploited for personal gain in schemes such as this.  Because of our global presence, DSS is well positioned to work with U.S. and foreign law enforcement to stop those who would criminally manipulate instruments of international travel, such as passports and visas, to abuse the legal immigration system.”

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

From approximately 2006 through 2019, JAIDI, ESTRELLA, and SINGSON conspired to fraudulently procure visas for at least 10 foreign domestic workers (collectively, the “Domestic Workers”), who were from the Philippines and Morocco, among other countries.  At various times relevant to the Indictment, JAIDI was a diplomatic agent accredited to the Moroccan Mission with the rank of ambassador.  From approximately 1980 through approximately 2016, JAIDI and ESTRELLA were married. 

In order to fraudulently obtain visas for the Domestic Workers, JAIDI and ESTRELLA caused the Domestic Workers to submit visa applications containing false statements and to submit fraudulent employment contracts in support of those visa applications.  SINGSON – who resides in the Philippines – helped recruit several of the Domestic Workers in the Philippines to work for JAIDI and ESTRELLA in the United States and instructed the Domestic Workers to make false statements in their visa applications and to State Department officials.  

In particular, JAIDI, ESTRELLA, and SINGSON caused a number of the Domestic Workers to falsely state in their visa applications that they would be employed as administrative staff at the Moroccan Mission or at the Consulate General of the Kingdom of Morocco in Manhattan.  In addition, they caused some of the Domestic Workers to submit fraudulent employment contracts to the State Department in support of their visa applications.  The fraudulent employment contracts overstated the Domestic Workers’ salaries, understated their hours, and, in many cases, falsely guaranteed benefits, including, among others, sick leave, dental insurance, and medical insurance. 

Once the Domestic Workers arrived in the United States, JAIDI and ESTRELLA employed the workers as their personal drivers, domestic helpers, farmhands, and assistants at their residence in Bronxville, New York and their farm in Ancramdale, New York.  JAIDI and ESTRELLA paid the Domestic Workers less than the minimum salary required by law and regularly compelled them to work far in excess of 40 hours per week.  In addition, JAIDI and ESTRELLA generally denied the Domestic Workers the benefits set forth in their employment contracts, compelled the Domestic Workers to work seven days a week, and required the Domestic Workers to surrender their passports. 

*                *                *

JAIDI, 82, of Rabat, Morocco, ESTRELLA, 60, of Scarsdale, New York, and SINGSON, 55, of Manila, Philippines, are each charged with one count of conspiracy to defraud the United States, to make materially false statements, and to commit visa fraud, which carries a maximum sentence of five years, and one count of conspiracy to induce aliens to illegally enter, come to, and remain in the United States, which carries a maximum sentence of 10 years.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the DSS Criminal Fraud Investigations Branch, the DSS Saint Albans Resident Office, the DSS New York Field Office, Homeland Security Investigations, the U.S. Department of Labor’s Wage and Hour Division from the Albany District Office, the Yonkers Police Department, and the New York State Police.  In addition, Mr. Berman thanked the U.S. Attorney’s Office in the Northern District of New York, the Community Development Project at the Urban Justice Center, and the Human Trafficking Program at the Worker Justice Center of New York for their assistance in this investigation.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Sam Adelsberg, Gillian Grossman, and James Ligtenberg 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.

 

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[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 BARRY SCHWARTZ was sentenced to four years in prison today by U.S. District Judge Jed S. Rakoff for participating in a conspiracy to defraud more than 50 investors in the Starship Snacks Corporation of more than $2.3 million, by making false and fraudulent representations about, among other things, the status of the company’s products, guarantees that purportedly backed the investments, and the interest of large multi-national corporations in acquiring the companies.

U.S. Attorney Geoffrey Berman said:  “Barry Schwartz participated in a conspiracy to defraud investors, telling them their investments were safe and guaranteed when, in fact, he and his co-conspirators had misappropriated investor funds to support their lavish lifestyles.  Schwartz lied about the readiness of his company’s products and about the claim that two large multi-national companies were vying to buy the company.  Schwartz’s house of lies eventually collapsed, bringing financial devastation to many of its victims.  Today Schwartz was held accountable for the criminal conduct that defrauded more than 50 investors of more than $2.3 million.”

According to the allegations contained in the Indictment filed against SCHWARTZ and statements made in related court filings and proceedings, including the trial of co-defendant Joel Margulies:

The Starship Snack Corporation Fraud Scheme

From approximately August 2015 through August 2017, SCHWARTZ, Margulies, and a co-conspirator, Lisa Bershan, raised more than $2.3 million from investors in a company originally called the Awake Company and later renamed Starship Snacks Corporation (“Starship”), which purported to be in the business of developing and manufacturing caffeinated snack products, based on the following misrepresentations, among others: (a) that investments in Starship were guaranteed against losses by Bershan; (b) that Starship was going to be acquired by Monster Beverage (“Monster”) in a one-for-one stock exchange; (c) that Starship was engaged in actual product development and had procured samples of candies infused with caffeine; (d) that SCHWARTZ and others at Starship had entered into non-disclosure agreements with Monster that prohibited them from discussing Starship’s purported acquisition by Monster and its purported product development.  SCHWARTZ held himself out as Starship’s corporate secretary.   

After receiving funds from Starship investors, SCHWARTZ and his co-conspirators used those funds to maintain their own extravagant lifestyles, spending hundreds of thousands of dollars on things like luxury clothing, plastic surgery, interior decorating, the rental of a high-end apartment in New York City, and the down payment for a multimillion-dollar house in Florida. 

In addition to the prison term, SCHWARTZ, 73, was sentenced to two years of supervised release.  SCHWARTZ was also ordered to forfeit $2,163,214.  A restitution order will be entered within 90 days.

Lisa Bershan was convicted upon a guilty plea, and sentenced by Judge Rakoff on November 22, 2019, principally to a term of seven years in prison.  Joel Margulies was convicted following a seven-day jury trial before Judge Rakoff and is scheduled to be sentenced on December 16, 2019. 

Mr. Berman praised the work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its assistance.

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

Geoffrey S.  Berman, the United States Attorney for the Southern District of New York, announced that physician PAUL J. MATHIEU was sentenced yesterday evening by U.S. District Judge Lorna G. Schofield to 48 months in prison for his participation in a $30 million scheme to defraud Medicare and the New York State Medicaid Program.  Between 2007 and 2013, MATHIEU falsely posed as the owner of three medical clinics, which were actually owned a by corrupt businessman, and falsely claimed that he had examined and treated thousands of patients whom he had not in fact seen.  In addition, occupational therapist LINA ZHITNIK was sentenced by Judge Schofield on December 3, 2019, to 14 months in prison for her role in the same scheme, which included falsifying medical records in order to claim that she had provided therapy services that she had not in fact provided.  MATHIEU was convicted in May 2019, following a six-week trial, on charges of health care fraud, wire fraud, mail fraud, conspiracy to commit those offenses, and conspiracy to make false statements in connection with a federal health care program.  ZHITNIK pled guilty to health care fraud and conspiracy to commit health care fraud, mail fraud and wire fraud in April 2019, during jury selection for trial.

U.S. Attorney Geoffrey S. Berman said:  “Corrupt doctors and therapists who defraud Medicare and Medicaid betray their medical training, their professions, their patients, and the taxpayers.  These taxpayer-funded programs are designed to provide essential medical services to the elderly and the needy, not to enrich corrupt doctors and other fraudsters.  Paul Mathieu’s sentence sends a clear message that those who cheat Medicare and Medicaid will be held accountable.”

According to the evidence presented at trial and other public documents, including Zhitnik’s guilty plea transcript:

Between 2007 and 2013, Aleksandr Burman – who is currently serving a 10-year prison term for his participation in this scheme – owned and operated six medical clinics in Brooklyn (the “Clinics”) that fraudulently billed Medicare and Medicaid approximately $30 million for medical services and supplies that were not provided, were provided without regard to medical necessity, or were otherwise fraudulently billed.  Under New York State law, professional medical corporations must be owned by a medical professional.  To circumvent this requirement, Burman and MATHIEU agreed to have MATHIEU pose as the true owner of a succession of three different clinics, which Burman owned and operated for more than five years, from 2007 through 2013.  Throughout those years, MATHIEU signed a variety of fraudulent documents that falsely represented to banks, Medicare, Medicaid, and others that MATHIEU was the sole owner of The Medical Office of Paul J. Mathieu, P.C.; Sunlight Medical, P.C.; and Ocean View Medical of Brooklyn, P.C.  Burman also hired two other doctors, Ewald J. Antoine and Mustak Y. Vaid, to pose fraudulently as the owners of three additional, related clinics. 

MATHIEU also came weekly to several of the clinics, where he signed stacks of false and fraudulent medical charts, and issued referrals for expensive additional testing, occupational therapy, and physical therapy.  For the last 3½ years of the scheme, MATHIEU saw no patients at all, simply falsifying enormous stacks of phony medical records falsely stating that he had seen and treated such patients.

In addition to his role in the clinics, MATHIEU also wrote unneeded prescriptions for adult diapers and other incontinence products, which prescriptions were filled at Universal Supply Depot, a medical supply company also owned by Aleksandr Burman.  MATHIEU was so prolific in this regard that, throughout the period of the fraud, he was the No. 1 top prescriber of adult diapers in the State of New York.  The only year MATHIEU ranked second, he ranked behind another member of the same criminal scheme.  MATHIEU continued to write such prescriptions, even after the medical clinics closed after Medicare stopped paying any of the clinics’ claims.

ZHITNIK participated in the scheme for more than a year, from mid-2011 through mid-2012.  ZHITNIK was paid to come to one of the clinics for a portion of each day.  While there, ZHITNIK signed large numbers of medical records to be used in fraudulent billing, falsely claiming to have provided occupational therapy services that she did not in fact provide.  Indeed, ZHITNIK signed such fraudulent paperwork, backdated, even for weeks when she was on family vacations in New Orleans and Miami, as well as when she was on shorter trips or out of town taking private flying lessons.

MATHIEU is the tenth defendant, and the third physician, who has been sentenced in this case and a related case.  The other defendants, each of whom pled guilty, include:  Aleksandr Burman, who was sentenced in a related case on May 8, 2017, to 10 years in prison; Marina Burman, the former wife of Aleksandr Burman and the owner of a related medical supply company, sentenced on May 17, 2018, to three years in prison; Mustak Y. Vaid, a physician sentenced on August 1, 2018, to 18 months in prison; Ewald J. Antoine, a physician sentenced on August 21, 2018, to a year and a day in prison; Asher Oleg Kataev, a Burman business partner, sentenced on May 31, 2018, to three years in prison; Alla Tsirlin, a Clinic office manager, sentenced on June 5, 2018, to a year and a day in prison; and Edward Miselevich and Ivan Voychak, Burman partners who jointly ran a related ambulette company, sentenced on June 12 and July 19, 2018, to three years in prison each.

One additional defendant awaits sentencing, physical therapist Hatem Behiry, who was convicted at trial with MATHIEU.

In addition to the prison term, MATHIEU, 54, of Morristown, New Jersey, was sentenced to three years of supervised release.  Judge Schofield also ordered MATHIEU to pay restitution and forfeiture.  ZHITNIK, 52, of Brooklyn, New York, was also sentenced to three years of supervised release, ordered to pay restitution of $1,369,554, and to forfeit $89,682.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation, the Office of the Inspector General of the U.S. Department of Health and Human Services, and the New York State Office of the Medicaid Inspector General (“OMIG”).

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys David Raymond Lewis, Stephen J. Ritchin, and Timothy V. Capozzi are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Dermot Shea, the Commissioner of the Police Department for the City of New York (“NYPD”), announced the unsealing of an Indictment charging 12 individuals with operating a crack cocaine distribution ring in the vicinity of 125th Street and Lexington Avenue in Manhattan.  Six of the 12 defendants charged in the Indictment were arrested yesterday, and are scheduled to appear before U.S. Magistrate Sarah L. Cave in federal court later today.  One of the defendants is already in state custody and will be presented at a later date.  Five defendants remain at large.  The case has been assigned to U.S. District Court Judge Andrew L. Carter, Jr.       

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants were members of a Harlem crack distribution crew that peddled its wares in and around the AK Houses, the Metro-North station at 125th Street, and P.S. 30.  Several members are also alleged to have used guns in the plying of their illegal trade.  Our thanks to the NYPD for their continued efforts to rid our neighborhoods of illegal drugs and guns.”

NYPD Police Commissioner Dermot Shea said:  “This case highlights our success in stopping those offenders who sow violence in our city’s neighborhoods. Working together, our mission to eradicate narcotics and illegal guns is clear and I want to commend our NYPD investigators and partners for targeting violent crime and dismantling it with precise effectiveness.”

According to the allegations in the Indictment[1]:

The defendants are members and associates of a drug trafficking organization (the “AK Houses Crew” or “Crew”) that sold crack cocaine in and around the AK Houses apartment complex, located at East 128th Street in the Harlem neighborhood of Manhattan.   During the period 2017 to the present, the AK Houses Crew sold hundreds of grams of crack to customers on the streets of Harlem, and crew members carried and displayed firearms in furtherance of the drug trade.  These crew members routinely sold crack in the vicinity of, among other locations, the area of the AK Houses, the Metro-North commuter rail station at East 125th Street, and Public School 30 at East 128th Street.

The leaders of the AK Houses Crew included defendants VAN WHITMORE, a/k/a “V-High,” RONALD NIXON, a/k/a “Jeter,” and BARRY WILLIAMS, a/k/a “Bistro.”  WHITMORE, NIXON, and WILLIAMS were responsible for, among other things, obtaining supplies of powder cocaine, converting the cocaine into crack, and pushing that crack to customers on the street through the Crew’s network of street-level dealers.  These leaders also maintained order and discipline within the Crew, including by using threats of violence.  Other members of the AK Houses Crew, including defendants RODNEY ROBINSON, a/k/a “Stretch,” KAPRIE LAMBERT, a/k/a “Pri,” SHAROD BELL, a/k/a “Rodo,” and IAN HAYLOCK, a/k/a “E,” served the Crew by, among other things, managing and enforcing order within the Crew’s network of street-level crack dealers, and collecting proceeds from their crack sales to finance the Crew’s operations.

The Crew’s street-level crack dealers included defendants MALIK HAWKINS, a/k/a “Leeky,” ABDOUL HANNE, a/k/a “Buylot,” MALIK BREEDLOVE, a/k/a “LB,” TYRELL MURPHY, a/k/a “Fat Cat,” and ANTHONY MCDADE, a/k/a “Pap,” each of whom obtained crack from other members of the Crew and sold the crack to customers on the street.  In addition, certain members of the AK Houses Crew, including WHITMORE, ROBINSON, HAYLOCK, BELL, and HAWKINS, used and facilitated the use of firearms in furtherance of the Crew’s crack dealing, including for the purposes of enforcing the collection of payment for drugs and to protect members of the Crew.  In the course of the narcotics conspiracy, HAYLOCK and BELL also sold firearms to undercover law enforcement officers in Harlem.

During the execution of a search warrant at NIXON’s house yesterday, law enforcement recovered a firearm, more than 80 grams of heroin belonging to NIXON, and paraphernalia for packaging narcotics for distribution.  During the execution of a search warrant at an apartment where BREEDLOVE was arrested yesterday, law enforcement recovered approximately 50 grams of crack cocaine.

The Indictment charges 12 defendants and contains two counts.  A chart containing the names, ages, residences, and charges for the defendants is set forth below.  The maximum term of imprisonment for both counts is life imprisonment.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

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

This case is being handled by the Office’s Narcotics Unit.   Assistant United States Attorneys Juliana Murray and Louis Pellegrino are in charge of the prosecution.

*                *                *

Defendant

Age

Hometown

Charges

 

VAN WHITMORE,

a/k/a “V High” 

49

Harlem, New York

 

 

Narcotics Conspiracy; Firearms Offense

 

 

 

RONALD NIXON,

a/k/a “Jeter”

 

42

New Rochelle, New York

 

 

Narcotics Conspiracy

 

 

BARRY WILLIAMS,

a/k/a “Bistro”

 

42

Bronx, New York

 

 

Narcotics Conspiracy

 

 

RODNEY ROBINSON,

a/k/a “Stretch”     

 

44

Harlem, New York

Narcotics Conspiracy; Firearms Offense

 

KAPRIE LAMBERT,

a/k/a “Pri”

22

Harlem, New York

 

 

Narcotics Conspiracy

 

 

IAN HAYLOCK,

a/k/a “E”

24

Harlem, New York

 

 

Narcotics Conspiracy; Firearms Offense

 

SHAROD BELL,

a/k/a “Rodo”

23

Harlem, New York

 

 

Narcotics Conspiracy; Firearms Offense

 

MALIK HAWKINS,

a/k/a “Leeky”

26

Harlem, New York

 

 

Narcotics Conspiracy; Firearms Offense

 

 

ABDOUL

HANNE

a/k/a “Buylot”

  

27

Harlem, New York

 

 

Narcotics Conspiracy

 

 

MALIK BREEDLOVE,

a/k/a “LB”

 

23

Harlem, New York

 

Narcotics Conspiracy

 

 

TYRELL MURPHY,

a/k/a “Fat Cat”

 

21

Harlem, New York

 

 

Narcotics Conspiracy

 

 

 

ANTHONY MCDADE,

a/k/a “Pap”

 

 

28

Bronx, New York

 

 

Narco

###

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that LATIQUE JOHNSON, a/k/a “La Brim,” a/k/a “Straight 2 Business,” a/k/a “Breezy,” a/k/a “Boss Dog,” 39, of the Bronx, New York, was sentenced today to 30 years in prison in connection with his leadership of the Blood Hound Brims, a violent street and prison gang that operated in New York City and elsewhere, and his participation in narcotics trafficking and acts of violence, including two shootings in 2012.  JOHNSON was convicted on March 27, 2019, following a five-week jury trial before Judge Gardephe, who also imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “Latique Johnson founded a notoriously violent and lawless gang from within the New York State prison system that grew to terrorize communities across New York City and New York State.  As the founder and leader of the Blood Hound Brims, Johnson recruited members based on their violent reputations and willingness to follow his orders.  Together with other members of the Blood Hound Brims, Johnson is responsible for several heinous acts of violence.  Today’s lengthy sentence sends an important message to gang members who commit violent crimes that they will be apprehended and prosecuted to the fullest extent of the law.” 

According to court documents, the evidence at trial, and statements made in court proceedings:

The Blood Hound Brims (“BHB”) were a criminal enterprise that operated principally in the greater New York area, from at least 2005 up to and including 2016.  The BHB was a faction of the Bloods street gang, which operates nationwide, and is under the New York Blood Brim Army (“NYBBA”).  The BHB operated within and around various locations in New York, including New York City, Westchester County, Elmira, and in Pennsylvania, as well as within and outside federal and state penal systems. 

The BHB used a hierarchical structure that was organized, in part, by New York City borough, and that was maintained, in part, through the payment of dues.  The founder and leader of the gang was LATIQUE JOHNSON, and other members and associates of the BHB referred to JOHNSON as the “Godfather.”  The gang was divided into several “pedigrees,” each of which had its own leadership structure that was approved by JOHNSON.  Leadership positions within the pedigrees included, among others, treasurers who collected dues from members of a particular pedigree, and individuals who performed security and disciplinary functions for the pedigree. 

Members of the BHB had regular meetings, sometimes called “pow wows” or “9-11s,” at which members were required to pay dues.  Some of the meetings were among members of a particular pedigree, and other meetings were for all members of the enterprise.  Word of the meetings was disseminated via text message, word-of-mouth, and flyers.  The BHB’s business, including rivalries with other gangs, shootings, the arrest of gang members, guns, and drugs, was regularly discussed at these meetings.  “Kitty dues” – money that paid for commissary funds, lawyers, guns, and drugs, and that served as tribute to JOHNSON – were collected at these meetings.  The BHB maintained its own rules and constitution that new members were required to learn.  Members of the BHB also used code words and secret phrases to communicate with each other both while in prison and on the street in order to avoid detection by law enforcement.   

One of the BHB’s principal objectives was to sell cocaine base – commonly known as “crack cocaine” – powder cocaine, and heroin, which members and associates of the BHB sold throughout the greater New York area and in Pennsylvania. 

Members and associates of the BHB engaged in multiple acts of violence against rival gangs.  These acts of violence included assaults and attempted murders, and were committed to protect the BHB’s drug territory, to retaliate against members of rival gangs who had encroached on the territory controlled by the BHB, and to otherwise promote the standing and reputation of the gang vis-à-vis rival gangs.  These acts of violence also included assaults and attempted murders against members and associates of the BHB itself, as part of internal power struggles within the gang.

For example, on or about January 28, 2012, in the Bronx, New York, JOHNSON, aided and abetted by his co-defendant Donnell Murray, used an AK-47 assault rifle to fire into a fried chicken restaurant where rival gang members were gathered, injuring two individuals who survived the shooting.  The violence continued in fall of 2012 when JOHNSON ordered the shooting of two other members of a rival gang, who survived.

                                    *                      *                     *                      

Donnell Murray, 39, of the Bronx, New York, was convicted following a jury trial of racketeering conspiracy, assault in aid of racketeering, narcotics conspiracy, and firearms offenses.  Murray was sentenced in November 2019 to 20 years in prison.

Brandon Green, 36, of the Bronx, New York, was convicted following a jury trial of racketeering conspiracy, narcotics conspiracy, and firearms offenses.  Green is facing a mandatory minimum of 20 years in prison and will be sentenced in 2020. 

David Cherry, 39, of the Bronx, New York, was convicted following a guilty plea to a firearms offense.  Cherry faces a mandatory minimum of seven years in prison and will be sentenced in 2020.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation, the New York City Police Department, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.

The prosecution is being handled by the Violent and Organized Crime Unit of the U.S. Attorney’s Office for the Southern District of New York.  Assistant U.S. Attorneys  Jessica Feinstein, Allison Nichols, Andrew Chan, and Abigail Kurland are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced today the arrests of LAGARIA SLAUGHTER and TANNER HOWELL, both of whom are service members stationed at a base in New York State, and the unsealing of a Complaint charging SLAUGHTER and HOWELL with distributing Molly on September 1, 2018, to a young woman attending the Electric Zoo music festival in New York, who subsequently died of a drug overdose.  The Complaint also charges SLAUGHTER with conspiring to distribute Molly and LSD between May 2018 and March 2019.  SLAUGHTER and HOWELL were arrested this morning and will be presented later today in federal court in Manhattan before U.S. Magistrate Judge Sarah L. Cave.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Lagaria Slaughter and Tanner Howell supplied the dangerous drug Molly to a young concert-goer, who overdosed and died after using Molly and other drugs.  Tragically, this is not the first time my Office has charged people in connection with the overdose death of a concert-goer at the Electric Zoo festival.  Today’s arrests should serve as a dual-purpose reminder:  To those who peddle dangerous and potentially lethal drugs, this Office and the NYPD are committed to apprehending and prosecuting you.  To prospective users of these drugs, there is nothing ‘recreational’ about drugs that can kill you.”

NYPD Commissioner Dermot Shea said:  “The NYPD is committed to bringing those who commit these acts to justice. I commend the members of the Detective Borough Bronx Overdose Squad, the U.S. Attorney’s Office for the Southern District, and the FBI, who dedicated themselves to help move this case forward.”

According to the allegations in the Complaint[1]:

On September 1, 2018, a young woman (“Victim-1”) began experiencing the effects of a drug overdose after using drugs while attending the Electric Zoo music festival (the “Festival”) on Randall’s Island in Manhattan.  Victim-1 died on September 3, 2018, after being treated for the overdose at a hospital in Manhattan.  Following an investigation by the NYPD, law enforcement identified SLAUGHTER and HOWELL, both members of the U.S. military stationed at a base located in New York State (the “Base”), as individuals who distributed Molly (3,4-methyl​enedioxy​methamphetamine) to Victim-1 on September 1, 2018, while she was attending the Festival and shortly before she fatally overdosed.  Medical records show that Victim-1’s death was caused by acute intoxication from the combined effects of multiple drugs, including Molly.

Days earlier, SLAUGHTER had organized a trip to New York City with other service members to attend the Festival.  At that time, SLAUGHTER was involved in trafficking both Molly and LSD (lysergic acid diethylamide).  From May 2018 to March 2019, SLAUGHTER worked with others to sell Molly and LSD to customers on and off the Base.  While in New York City for the Festival, SLAUGHTER and another individual met HOWELL at a nightclub.  HOWELL told SLAUGHTER that he was going to the Festival the following day with a large group of friends and they wanted to buy Molly to take while at the Festival.  SLAUGHTER agreed to supply the Molly for distribution to the group.  The following day, September 1, 2018, HOWELL arranged to purchase 57 capsules of Molly from SLAUGHTER, at a total price of $560.  SLAUGHTER and another individual traveled to the Festival to sell the Molly.  HOWELL had two female members of his group – Victim-1 and her friend – meet SLAUGHTER and the other individual outside the concert entrance to retrieve the Molly to be used by the group.  HOWELL paid for the Molly via electronic payment, and SLAUGHTER provided the 57 capsules of Molly to Victim-1 and her friend.  Upon completion of the transaction, Victim-1 and her friend entered the Festival with the Molly.  Victim-1 overdosed later that day and died two days later. 

On April 24, 2019, law enforcement searched SLAUGHTER’s barracks at the Base.  Law enforcement recovered, among other things, approximately 10 capsules of Molly, 55 doses of LSD, and drug packaging materials.  Text messages recovered from SLAUGHTER’s cellphone show SLAUGHTER offering to sell hundreds of capsules of Molly to other service members on the Base. 

*                *                *

SLAUGHTER, 25, of Jefferson County, New York, is charged with one count of conspiring to distribute Molly and LSD, and one count of distributing and possessing with intent to distribute Molly.  Both counts carry a maximum sentence of 20 years in prison. 

HOWELL, 22, of Jefferson County, New York, is charged with one count of distributing and possessing with intent to distribute Molly, 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 would be determined by the judge.

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

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Dominic A. Gentile and Peter J. Davis 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.

 

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[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, United States Attorney for the Southern District of New York, Dermot Shea, the Commissioner of the Police Department for the City of New York (“NYPD”), Philip R. Bartlett, the Inspector-in-Charge of the New York Division of the U.S. Postal Inspection Service (“USPIS”), Patrick Freaney, the Assistant Special Agent-in-Charge of the New York Field Office of the United States Secret Service (“USSS”), and Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced the unsealing today of a criminal Complaint charging 15 defendants with conspiracy to commit wire fraud and bank fraud.  Four defendants were arrested today in the District of Maryland, the District of Columbia, and the Eastern District of Virginia, and were to be presented today in those districts’ federal courts.  One defendant is in state custody and will be presented at a later date.  Ten defendants remain at large.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants conspired to steal millions of dollars by stealing identities, opening fictitious bank accounts, and depositing stolen checks – or conning victims to wire funds – into those accounts.  All told, as alleged, the scheme netted more than $18 million and victimized numerous individuals and businesses.  Thanks to the combined efforts of our law enforcement partners, the game is up.”

NYPD Commissioner Dermot Shea said:  “This case shows that as criminals move into the areas of cyber-related frauds, law enforcement is following.  I want to thank the members of the NYPD’s Financial Crimes Task Force, working alongside our federal partners and prosecutors in the U.S. Attorney’s office, in the Southern District, for their success today in this important investigation.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “This Case is an excellent example of interagency cooperation and collaboration.  Those who choose to break the law will be swiftly brought to justice to answer for their crimes.”

USSS Assistant Special Agent-in-Charge Patrick Freaney said:  “The success of this investigation illustrates the commitment of the U.S. Secret Service in working with our law enforcement partners to confront the continued threat of cyber enabled financial crimes.  The Secret Service remains dedicated in actively pursuing those whose actions threaten the financial security of individuals, businesses, and the financial infrastructure of the United States.”

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “As alleged in the criminal complaint, these 15 defendants used an elaborate bank and wire fraud scheme to steal over $18 million from victim.  HSI New York will continue to work tirelessly to investigate criminals who target our citizens.  Through our law enforcement partnerships, to include the NYPD, USPIS and USSS as well as the prosecutors at the U.S. Attorney’s Office, Southern District of New York, HSI will work to help maintain the integrity of our financial systems.”

As alleged in the criminal Complaint:[1] 

OLADAYO OLADOKUN, FAROUK KUKOYI, BALDWIN OSUJI, HENRY OGBUOKIRI, JOSHUA HICKS, ANTHONY LEE NELSON, DERRICK BANKS, IBRAHIIMA DOUKOURE, JAMAR SKEETE, PAUL YAW OSEI JR., KOWAN POOLE, DARREL WILLIAMS, DARYL BARTLEY, GARNET STEVEN MURRAY-SESAY, a/k/a “Steven Garnet Murray-Sesay,” and ANDREW HEAVEN participated in an $18 million fraud scheme consisting of three key phases.  First, members of the conspiracy opened more than 60 business bank accounts using the real personal identifying information, including names and social security numbers, of identity theft victims.  Second, members of the conspiracy deposited money into these bank accounts that they obtained by defrauding victims.  Third, members of the conspiracy accessed the fraud proceeds by transferring the proceeds into other bank accounts or by withdrawing cash. 

Members of the conspiracy typically defrauded their victims in one of two ways.  In some instances, members of the conspiracy deposited stolen or forged checks.  For example, members of the conspiracy obtained three checks that had been mailed by a national sports league from New York, New York, and deposited those stolen checks into bank accounts that were opened in the names of the intended recipients.  In other instances, members of the conspiracy deceived victims into making electronic transfers.  For example, a member of the conspiracy posing as a victim’s financial adviser caused the victim to wire money from a bank branch in New York, New York, to a bank account controlled by members of the conspiracy. 

To date, law enforcement has identified more than 100 fraudulent transactions in furtherance of the scheme, totaling more than $18 million. 

*                *                *

All defendants – OLADOKUN, 46, KUKOYI, 33, OSUJI, 31, OGBUOKIRI, 32, HICKS, 24, NELSON, 28, BANKS, 27, DOUKOURE, 61, SKEETE, 36, OSEI, 32, POOLE, 29, WILLIAMS, 62, BARTLEY, 58, MURRAY-SESAY, 35, and HEAVEN, 49 – are charged with conspiracy to commit bank fraud and wire fraud, which carries a maximum sentence of 30 years in prison.  Seven defendants – OGBUOKIRI, HICKS, BANKS, POOLE, WILLIAMS, BARTLEY, and MURRAY-SESAY – are also charged with aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Berman praised the outstanding work of the Financial Crimes Task Force of the NYPD and the USSS, the Mail Theft Team of the USPIS, and the Dark Web and Crypto Currency Group of HSI.  Mr. Berman also thanked the Washington Field Office of the USSS for its assistance in the apprehension of the defendants. 

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein are 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 MARC A. SEEDORF pled guilty today to tax evasion before U.S. District Judge Cathy Seibel in White Plains federal court. 

U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, for years Marc Seedorf flouted his obligations under the law to file tax returns and to pay taxes.  This was conduct that would be shameful for anyone, and all the more so from an attorney and a member of the judiciary.  Now Seedorf awaits sentencing for his crime.”

IRS-CI Special Agent in Charge Jonathan D. Larsen said:  “As a Lewisboro Town Justice, Mr. Seedorf knows the consequences when laws are broken.  To maintain faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share.  IRS-CI, together with the Department of Justice, will investigate and prosecute those who break this country’s tax laws.”

According to the allegations contained in the Information:

During the relevant time period of 2009 through October 2019, SEEDORF was a Town Justice for the Town of Lewisboro, New York.  SEEDORF also received income from the private practice of law. 

SEEDORF did not file U.S. Individual Income Tax Returns for the tax years 2005 through 2015, despite being required to do so.  As a result of the income SEEDORF earned from 2005 through 2008, he incurred a federal income tax liability of approximately $323,000, including interest and penalties (“SEEDORF’s 2005 Through 2008 Tax Liability”).  As a result of the income SEEDORF earned from 2009 through 2013, he incurred a federal income tax liability of approximately $164,000, including interest and penalties (“SEEDORF’s 2009 Through 2013 Tax Liability”). 

In early August 2012, SEEDORF received $1,524,116 in connection with the settlement of a civil lawsuit.  At SEEDORF’s request, the law firm that represented SEEDORF in the lawsuit (“Law Firm-1”) deposited the settlement proceeds into its attorney trust account, to be disbursed to SEEDORF at an unspecified later date.  In the following years, SEEDORF instructed Law Firm-1 to disburse portions of the settlement proceeds to accounts other than his personal bank account, including his law firm’s operating account, his law firm’s attorney trust account, and his brother-in-law’s personal account, in order to disguise the source of funds he used to make payments to the IRS and other creditors, and the existence of the remainder of the settlement proceeds.

From January 2010 through June 2013, the IRS attempted to collect SEEDORF’s 2005 Through 2008 Tax Liability, including by mailing letters to SEEDORF and requesting documents and records from SEEDORF.  SEEDORF failed to provide any records to the IRS or make any payment toward SEEDORF’s 2005 Through 2008 Tax Liability. 

In June 2013, after the IRS initiated a process to place a levy upon an investment account held by SEEDORF, he instructed Law Firm-1 to wire $400,000 of the settlement proceeds to his own law firm’s attorney trust account, from which he then paid his outstanding 2005 Through 2008 Tax Liability.  During a conversation with an IRS Revenue Officer concerning the source of these funds, SEEDORF falsely stated that he had borrowed the funds from his own law firm’s trust account.

During a December 2014 IRS interview, an IRS Revenue Agent asked SEEDORF whether he had received any non-taxable income during the period from 2009 through 2013.  During the interview, SEEDORF never disclosed the 2012 law suit settlement or the existence of the more than $540,000 of settlement proceeds that remained in Law Firm-1’s attorney trust account at that time.

SEEDORF 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.

SEEDORF is scheduled to be sentenced by Judge Seibel on March 24, 2020, at 2:30 p.m.

Mr. Berman praised the investigative work of the IRS-CI.

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

Telefonaktiebolaget LM Ericsson (Ericsson or the Company), a multinational telecommunications company headquartered in Stockholm, Sweden, has agreed to pay total penalties of more than $1 billion to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) arising out of the Company’s scheme to make and improperly record tens of millions of dollars in improper payments around the world.  This includes a criminal penalty of over $520 million and approximately $540 million to be paid to the U.S. Securities and Exchange Commission (SEC) in a related matter.  An Ericsson subsidiary pleaded guilty today for its role in the scheme. 

Ericsson entered into a deferred prosecution agreement with the department in connection with a criminal information filed today in the Southern District of New York charging the Company with conspiracies to violate the anti-bribery, books and records, and internal controls provisions of the FCPA.  The Ericsson subsidiary, Ericsson Egypt Ltd, pleaded guilty today in the Southern District of New York to a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA.  The case is assigned to U.S. District Judge Alison J. Nathan of the Southern District of New York.  Pursuant to its agreement with the department, Ericsson has committed to pay a total criminal penalty of $520,650,432 within 10 business days of the sentencing hearing, and has agreed to the imposition of an independent compliance monitor. 

“Ericsson’s corrupt conduct involved high-level executives and spanned 17 years and at least five countries, all in a misguided effort to increase profits,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Such wrongdoing called for a strong response from law enforcement, and through a tenacious effort with our partners in the Southern District of New York, the SEC, and the IRS, today’s action not only holds Ericsson accountable for these schemes, but should deter other companies from engaging in similar criminal conduct.”

“Today, Swedish telecom giant Ericsson has admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business,” said U.S. Attorney Geoffrey S. Berman of the Southern District of New York.  “Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks.’  Today’s guilty plea and surrender of over a billion dollars in combined penalties should communicate clearly to all corporate actors that doing business this way will not be tolerated.”

“Implementing strong compliance systems and internal controls are basic principles that international companies must follow to steer clear of illegal activity,” said Don Fort, Chief, IRS Criminal Investigation.  “Ericsson’s shortcomings in these areas made it easier for its executives and employees to pay bribes and falsify its books and records.  We will continue to pursue cases such as these in order to preserve a global commerce system free of corruption.”

According to admissions by Ericsson, beginning in 2000 and continuing until 2016, the Company conspired with others to violate the FCPA by engaging in a longstanding scheme to pay bribes, to falsify books and records and to fail to implement reasonable internal accounting controls.  Ericsson used third party agents and consultants to make bribe payments to government officials and/or to manage off-the-books slush funds.  These agents were often engaged through sham contracts and paid pursuant to false invoices, and the payments to them were improperly accounted for in Ericsson’s books and records.  The resolutions cover the Company’s criminal conduct in Djibouti, China, Vietnam, Indonesia and Kuwait. 

Between 2010 and 2014, Ericsson, via a subsidiary, made approximately $2.1 million in bribe payments to high-ranking government officials in Djibouti in order to obtain a contract with the state-owned telecommunications company valued at approximately €20.3 million to modernize the mobile networks system in Djibouti.  In order to effectuate the scheme, an Ericsson subsidiary entered into a sham contract with a consulting company and approved fake invoices to conceal the bribe payments.  Ericsson employees also completed a draft due diligence report that failed to disclose the spousal relationship between the owner of the consulting company and one of the high-ranking government officials.

In China, between 2000 and 2016, Ericsson subsidiaries caused tens of millions of dollars to be paid to various agents, consultants and service providers, a portion of which was used to fund a travel expense account in China that covered gifts, travel and entertainment for foreign officials, including customers from state-owned telecommunications companies.  Ericsson used the travel expense account to win business with Chinese state-owned customers.  In addition, between 2013 and 2016, Ericsson subsidiaries made payments of approximately $31.5 million to third party service providers pursuant to sham contracts for services that were never performed.  The purpose of these payments was to allow Ericsson’s subsidiaries in China to continue to use and pay third party agents in China in contravention of Ericsson’s policies and procedures.  Ericsson knowingly mischaracterized these payments and improperly recorded them in its books and records.

In Vietnam, between 2012 and 2015, Ericsson subsidiaries made approximately $4.8 million in payments to a consulting company in order to create off-the-books slush funds, associated with Ericsson’s customers in Vietnam, that were used to make payments to third parties who would not be able to pass Ericsson’s due diligence processes.  Ericsson knowingly mischaracterized these payments and improperly recorded them in Ericsson’s books and records.  Similarly, in Indonesia, between 2012 and 2015, an Ericsson subsidiary made approximately $45 million in payments to a consulting company in order to create off-the-books slush funds, and concealed the payments on Ericsson’s books and records.

In Kuwait, between 2011 and 2013, an Ericsson subsidiary promised a payment of approximately $450,000 to a consulting company at the request of a sales agent, and then entered into a sham contract with the consulting company and approved a fake invoice for services that were never performed in order to conceal the payment.  The sales agent provided an Ericsson employee with inside information about a tender for the modernization of a state-owned telecommunications company’s radio access network in Kuwait.  An Ericsson subsidiary was awarded the contract valued at approximately $182 million; Ericsson subsequently made the $450,000 payment to the consulting company and improperly recorded it in its books.

As part of the deferred prosecution agreement, Ericsson has agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals; to enhance its compliance program; and to retain an independent compliance monitor for three years.

The department reached this resolution with Ericsson based on a number of factors, including the Company’s failure to voluntarily disclose the conduct to the department and the nature and seriousness of the offense, which included FCPA violations in five countries and the involvement of high-level executives at the Company.  Ericsson received partial credit for its cooperation with the department’s investigation, which included conducting a thorough internal investigation, making regular factual presentations to the department, voluntarily making foreign-based employees available for interviews in the United States, producing extensive documentation and disclosing some conduct of which the department was previously unaware. 

Ericsson did not receive full credit for cooperation and remediation because it did not disclose allegations of corruption with respect to two relevant matters; it produced certain materials in an untimely manner; and it did not fully remediate, including by failing to take adequate disciplinary measures with respect to certain employees involved in the misconduct.  The Company has been enhancing and committed to further enhance its compliance program and internal accounting controls.  Accordingly, the total criminal penalty reflects a 15 percent reduction off the bottom of the applicable United States Sentencing Guidelines fine range.

In the related matter, Ericsson agreed to pay to the SEC disgorgement and prejudgment interest totaling approximately $540 million.

The case is being investigated by IRS-CI.  Acting Assistant Chief Andrew Gentin and Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Abramowicz of the Southern District of New York are prosecuting the case.  The Criminal Division’s Office of International Affairs provided assistance.

The department appreciates the significant cooperation provided by the SEC and law enforcement authorities in Sweden in this case.

The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York (“SDNY”), Brian A. Benczkowski, the Assistant Attorney General for the Criminal Division of the Department of Justice (“DOJ”), and Don Fort, Chief of the Criminal Investigation Division, Internal Revenue Service (“IRS-CI”), announced today the filing of criminal charges against TELEFONAKTIEBOLAGET LM ERICSSON (“ERICSSON”), a multinational telecommunications company headquartered in Sweden, and its subsidiary ERICSSON EGYPT LTD. (“ERICSSON EGYPT”) for conspiring to violate the Foreign Corrupt Practices Act (“FCPA”) by bribing government officials, falsifying books and records, and failing to implement reasonable internal accounting controls.  The resolutions cover criminal conduct in Djibouti, China, Vietnam, Indonesia, and Kuwait. 

Mr. Berman also announced that in connection with the filed charges, ERICSSON EGYPT pled guilty today before United States District Judge Alison J. Nathan, and SDNY and DOJ entered into a deferred prosecution agreement (“DPA”) with ERICSSON.  Pursuant to the DPA, ERICSSON admitted to participating in the charged conspiracy.  ERICSSON will pay a total criminal penalty of $520,650,432 to the United States, which includes a $9,520,000 criminal fine that ERICSSON agreed to pay on behalf of ERICSSON EGYPT.  ERICSSON also agreed to implement rigorous internal controls, retain an independent compliance monitor for a term of three years, and cooperate fully with the Government in any ongoing investigations.

In related proceedings, ERICSSON reached a settlement with the U.S. Securities and Exchange Commission (“SEC”).  Under the terms of its civil resolution with the SEC, ERICSSON agreed to pay $539,920,000 in disgorgement of profits and prejudgment interest, which, together with the criminal penalty paid to the United States, yields total criminal and regulatory penalties to be paid by ERICSSON of $1,060,570,432.

U.S. Attorney Geoffrey S. Berman said:  “Today Swedish telecom giant Ericsson has admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business.  Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks.’  Today’s guilty plea and surrender of over a billion dollars in combined penalties should communicate clearly to all corporate actors that doing business this way will not be tolerated.”

Assistant Attorney General Brian A. Benczkowski said:  “Ericsson’s corrupt conduct involved high-level executives and spanned 17 years and at least five countries, all in a misguided effort to increase profits.  Such wrongdoing called for a strong response from law enforcement, and through a tenacious effort with our partners in the Southern District of New York, the SEC, and the IRS, today’s action not only holds Ericsson accountable for these schemes, but should deter other companies from engaging in similar criminal conduct.”

IRS Criminal Investigation Chief Don Fort said:  “Implementing strong compliance systems and internal controls are basic principles that international companies must follow to steer clear of illegal activity.  Ericsson’s shortcomings in these areas made it easier for its executives and employees to pay bribes and falsify its books and records.  We will continue to pursue cases such as these in order to preserve a global commerce system free of corruption.”

According to the allegations contained in the criminal Informations, which were filed today in Manhattan federal court, the statement of facts set forth in the DPA, and other publicly available information:

From approximately 2000 to 2016, ERICSSON and ERICSSON EGYPT, through various executives, employees, and affiliated entities, used third-party agents and consultants to bribe foreign government officials and/or manage off-the-books slush funds in countries where it pursued contracts to conduct telecommunications business.  The agents were often engaged through sham contracts and paid pursuant to false invoices, with those payments accounted for improperly in ERICSSON’s books and records.

In Djibouti, from approximately 2010 to 2014, ERICSSON, via subsidiaries, paid approximately $2.1 million in bribes to high-ranking government officials in order to obtain a contract valued at approximately €20.3 million.  To conceal the bribe payments, an ERICSSON subsidiary entered into a sham contract with a consulting company and approved fake invoices to conceal the bribe payments, and ERICSSON employees completed a draft due diligence report that failed to disclose that the owner of the consulting company was married to a high-ranking official in Djibouti’s government.

In China, from approximately 2000 to 2016, ERICSSON, via subsidiaries, paid various agents, consultants, and service providers tens of millions of dollars, a portion of which was used to fund an expense account that covered gifts, travel, and entertainment for foreign officials.  ERICSSON used the expense account to win business with Chinese state-owned customers.  In addition, from approximately 2013 to 2016, ERICSSON subsidiaries paid third-party service providers approximately $31.5 million pursuant to sham contracts for services that were never performed.  The payments were intended to allow ERICSSON’s subsidiaries to continue to use and pay third-party agents in China in contravention of ERICSSON’s policies and procedures.  ERICSSON knowingly mischaracterized the payments and improperly recorded them in its books and records.

In Vietnam, from approximately 2012 to 2015, ERICSSON, via subsidiaries, paid a consulting company approximately $4.8 million in order to create off-the-books slush funds.  The slush funds were then used to make payments to third parties who would not be able to pass ERICSSON’s due diligence processes.  ERICSSON knowingly mischaracterized these payments, which were made pursuant to sham contracts for services that were never performed, and improperly recorded them in ERICSSON’s books and records. 

In Indonesia, from approximately 2012 to 2015, ERICSON, via a subsidiary, paid a consulting company approximately $45 million in order to create off-the-books slush funds.  ERICSSON took active steps to conceal the payments, which were made pursuant to sham contracts for services that were never performed.

In Kuwait, from approximately 2011 to 2013, ERICSSON, via a subsidiary, paid a consulting company approximately $450,000 at the request of a sales agent who had given ERICSSON inside information about the bidding process for a lucrative contract with a state-owned telecommunications company.  ERICSSON made the payment after one of its subsidiaries was awarded the contract, which was valued at approximately $182 million.  The payment was made pursuant to a sham contract for services that were never performed.

*                *                *

ERICSSON EGYPT was charged with, and pled guilty to, one count of conspiring to violate the anti-bribery provisions of the FCPA.  ERICSSON was charged in a two-count Information with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the internal-controls and books-and-records provisions of the FCPA.

Mr. Berman thanked the Fraud Section of the DOJ’s Criminal Division for its collaboration, and praised the investigative efforts of IRS-CI and law enforcement authorities in Sweden.  He also thanked the SEC’s Division of Enforcement for its significant assistance and cooperation in the investigation.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the FCPA Unit of the Fraud Section of DOJ’s Criminal Division.  Assistant U.S. Attorneys David Abramowicz and Won S. Shin, and Acting Assistant Chief Andrew Gentin and Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section, are in charge of the prosecution.

The Department of Justice announced today that Sajmir Alimehmeti, aka “Abdul Qawii,” 26, was sentenced to 22 years in prison based on convictions for attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS), and attempting to fraudulently procure a U.S. passport to facilitate an act of international terrorism.  Alimehmeti pleaded guilty on Feb. 21, 2018, before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

“Alimehmeti was determined to support ISIS.  He attempted to travel overseas to support the terrorist group, he assisted another person he believed to be a fellow ISIS supporter to prepare to purportedly travel to join ISIS, he lied on his passport application so he could get a clean passport to ease his efforts to travel overseas to join ISIS, and while in pretrial detention, he conspired with another terrorist to spread ISIS propaganda.  With today’s sentence, he is being held accountable for his crimes,” said Assistant Attorney General for National Security John C. Demers.  “The National Security Division will continue to work with our partners to identify, disrupt and hold accountable those who seek to provide material support to designated foreign terrorist organizations.  I want to thank the agents, analysts, and prosecutors who are responsible for this case.”

“Bronx resident Sajmir Alimehmeti took the position of an adversary to the United States and its values.  Alimehmeti’s contempt for the U.S. led him to travel overseas to support ISIS’s terror campaign, eventually purchasing military-type weapons and assisting another to get travel documents, equipment, and encryption technology to fight with ISIS in Syria,” said U.S. Attorney Geoffrey S. Berman for the Southern District of New York.  “Even after his incarceration, Alimemehti continued his supportive conduct for ISIS by working with convicted Chelsea bomber Ahmad Khan Rahimi, to distribute ISIS propaganda in prison.  I sincerely commend our law enforcement partners for their commitment to detecting and apprehending those who support the disruption of American life through brazen acts of terrorism.” 

“Sajmir Alimehmeti was so committed to supporting and furthering the ISIS agenda, that when his multiple attempts to travel overseas raised enough red flags to deny him entry, he turned to assisting someone he thought shared his same objective. Unbeknownst to him, however, that someone was an undercover employee,” said FBI Assistant Director-in-Charge William F. Sweeney Jr. “Today’s sentencing is a welcome end to this case, and another successful outcome for the many agents, detectives, and analysts on FBI’s JTTF in New York. Their work and our extensive partnerships are essential to keeping New York City and the nation safe.”

“Sajmir Alimehmeti betrayed the country he called home by trying to travel overseas to join ISIS, a brutal terrorist group at war with the United States,” said NYPD Police Commissioner Dermot F. Shea. “When that failed, Alimehmeti deliberately assisted another individual he believed was traveling to join ISIS. At the same time, the investigation revealed he was acquiring tactical knives, handcuffs and equipment indicative of efforts to prepare for an attack here in New York City. This case is another example of the relentless efforts of the Joint Terrorism Task Force and the NYPD’s Intelligence Bureau to prevent terrorism before it occurs.”

As reflected in the criminal Complaint, Superseding Indictment, court filings, and statements during court proceedings:

In October 2014, Alimehmeti attempted to enter the United Kingdom but was denied entry after U.K. authorities found camouflage clothing and nunchucks in his luggage.  About two months later, in December 2014, Alimehmeti was again denied entry into the United Kingdom, this time after U.K. authorities found that his cellphone contained images of ISIS flags.  Further forensic examination of the contents of the cellphone and Alimehmeti’s laptop computer showed numerous indicia of Alimehmeti’s support for ISIS, including a photograph of Alimehmeti with an ISIS flag in the background, images of ISIS fighters in the Middle East, a photograph of Alimehmeti making a gesture of support for ISIS, various files relating to jihad and martyrdom, and an online messaging exchange in which Alimehmeti attempted to assist another ISIS supporter to travel to Syria to join ISIS, by providing contact information for an ISIS affiliate who could facilitate the travel.

After returning to the United States, Alimehmeti continued to support ISIS.  Among other things, Alimehmeti displayed an ISIS flag in his apartment in the Bronx and, in the course of recorded meetings with undercover law enforcement employees, Alimehmeti played multiple pro-ISIS propaganda videos on his computer and his cellphone, including videos of ISIS fighters decapitating prisoners, and Alimehmeti also indicated that he was interested in radicalizing other individuals in the Bronx area.  Alimehmeti also made repeated purchases of combat knives and other military-type equipment, including masks, handcuffs, a pocket chainsaw, a wire pocket saw, and a rucksack designed for tactical combat.  Alimehmeti stockpiled such equipment at his apartment in the Bronx.

In October 2015, Alimehmeti applied for a U.S. passport, falsely claiming in the application that his previous passport had been lost.  Alimehmeti later told an undercover law enforcement employee that his prior passport had not been lost and, instead, that he was applying for a new passport because he believed the rejection stamps in his existing passport resulting from his attempted entries into the United Kingdom would make it difficult to travel to ISIS territory. 

In May 2016, Alimehmeti attempted to assist an individual who was purportedly traveling from New York to Syria to train and fight with ISIS but who was actually an undercover law enforcement employee (the “UC”).  On May 17, 2016, Alimehmeti met with the UC in Manhattan.  Alimehmeti helped the UC locate stores so the UC could purchase supplies to use while traveling to, and fighting with, ISIS, including a cellphone, boots, a compass, a bag, and a flashlight, among other items.  Alimehmeti then brought the UC to a hotel in Queens so the UC could purportedly meet with an individual who was preparing travel documents that the UC would use to travel to Syria to join ISIS.  Alimehmeti gave the UC a piece of paper with his name and contact information, and asked the UC to provide that information to the purported document facilitator.  Alimeheti explained that he wanted to travel to Syria and join ISIS, stating “I’m ready to . . . go with you man . . . you know I would.  I’m done with this place.”  After leaving the hotel in Queens, Alimeheti brought the UC to JFK Airport, via public transportation, so the UC could begin the purported journey to ISIS.

Following Alimehmeti’s arrest on the charges in this case in May 2016, the FBI executed a search of Alimehmeti’s Bronx apartment pursuant to a judicially authorized search warrant.  The FBI found in the apartment, among other things, an ISIS flag that was displayed on a wall in the apartment.

In 2017, while Alimehmeti was incarcerated and awaiting trial, law enforcement learned that Alimehmeti had worked with Ahmad Khan Rahimi inside the prison to aggregate and distribute terrorist propaganda that was part of the evidence in their respective cases and produced to them during discovery.  Rahimi was sentenced to life in prison, in February 2018, for planting a series of bombs in New York and New Jersey in September 2016.  Law enforcement also intercepted a letter that Alimhemeti sent to Rahimi, after their propaganda-distribution scheme inside the jail was thwarted, in which Alimehmeti referred to himself as the “ISIS balla,” indicated that he had destroyed evidence of their propaganda distribution efforts, and expressed hope that both convicted terrorists would ultimately achieve so-called martyrdom through another act of terrorism.

In addition to the prison term, Alimehmeti was also sentenced to five years supervised release.

Assistant Attorney General Demers and Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department, the NYPD’s Intelligence Division, the Department of Justice’s Office of International Affairs, the Albania State Police, and the Metropolitan Police Service’s Counter Terrorism Command of London, United Kingdom. 

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Emil J. Bove III and George D. Turner are in charge of the case, with assistance from Trial Attorney Joseph Attias of the National Security Division’s Counterterrorism Section.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dermot F. Shea, Commissioner of the New York City Police Department (“NYPD”), announced today that SAJMIR ALIMEHMETI, a/k/a “Abdul Qawii,” was sentenced to 22 years in prison based on convictions for attempting to provide material support to the Islamic State of Iraq and al-Sham (“ISIS”), and for attempting to fraudulently procure a U.S. passport to facilitate an act of international terrorism.  ALIMEHMETI pled guilty on February 21, 2018, before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Bronx resident Sajmir Alimehmeti took the position of an adversary to the United States and its values.  Alimehmeti’s contempt for the U.S. led him to travel overseas to support ISIS’s terror campaign, eventually purchasing military-type weapons and assisting another to get travel documents, equipment, and encryption technology to fight with ISIS in Syria.  Even after his incarceration, Alimemehti continued his supportive conduct for ISIS by working with convicted Chelsea bomber Ahmad Khan Rahimi, to distribute ISIS propaganda in prison.  I sincerely commend our law enforcement partners for their commitment to detecting and apprehending those who support the disruption of American life through brazen acts of terrorism.” 

Assistant Attorney General John C. Demers said:  “Alimehmeti was determined to support ISIS.  He attempted to travel overseas to support the terrorist group, he assisted another person he believed to be a fellow ISIS supporter to prepare to purportedly travel to join ISIS, he lied on his passport application so he could get a clean passport to ease his efforts to travel overseas to join ISIS, and while in pretrial detention, he conspired with another terrorist to spread ISIS propaganda.  With today’s sentence, he is being held accountable for his crimes.  The National Security Division will continue to work with our partners to identify, disrupt and hold accountable those who seek to provide material support to designated foreign terrorist organizations.  I want to thank the agents, analysts, and prosecutors who are responsible for this case.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Sajmir Alimehmeti was so committed to supporting and furthering the ISIS agenda, that when his multiple attempts to travel overseas raised enough red flags to deny him entry, he turned to assisting someone he thought shared his same objective.  Unbeknownst to him, however, that someone was an undercover employee.  Today’s sentencing is a welcome end to this case, and another successful outcome for the many agents, detectives, and analysts on FBI’s JTTF in New York.  Their work and our extensive partnerships are essential to keeping New York City and the nation safe.”

NYPD Commissioner Dermot F. Shea said:  “Sajmir Alimehmeti betrayed the country he called home by trying to travel overseas to join ISIS, a brutal terrorist group at war with the United States.  When that failed, Alimehmeti deliberately assisted another individual he believed was traveling to join ISIS.  At the same time, the investigation revealed he was acquiring tactical knives, handcuffs and equipment indicative of efforts to prepare for an attack here in New York City.  This case is another example of the relentless efforts of the Joint Terrorism Task Force and the NYPD’s Intelligence Bureau to prevent terrorism before it occurs.”

As reflected in the criminal Complaint, Superseding Indictment, court filings, and statements during court proceedings:

In October 2014, ALIMEHMETI attempted to enter the United Kingdom but was denied entry after U.K. authorities found camouflage clothing and nunchucks in his luggage.  Approximately two months later, in December 2014, ALIMEHMETI was again denied entry into the United Kingdom, this time after U.K. authorities found that his cellphone contained images of ISIS flags.  Further forensic examination of the contents of the cellphone and ALIMEHMETI’s laptop computer showed numerous indicia of ALIMEHMETI’s support for ISIS, including a photograph of ALIMEHMETI with an ISIS flag in the background, images of ISIS fighters in the Middle East, a photograph of ALIMEHMETI making a gesture of support for ISIS, various files relating to jihad and martyrdom, and an online messaging exchange in which ALIMEHMETI attempted to assist another ISIS supporter to travel to Syria to join ISIS by providing contact information for an ISIS affiliate who could facilitate the travel.

After returning to the United States, ALIMEHMETI continued to support ISIS.  Among other things, ALIMEHMETI displayed an ISIS flag in his apartment in the Bronx and, in the course of recorded meetings with undercover law enforcement employees, ALIMEHMETI played multiple pro-ISIS propaganda videos on his computer and his cellphone, including videos of ISIS fighters decapitating prisoners, and ALIMEHMETI also indicated that he was interested in radicalizing other individuals in the Bronx area.  ALIMEHMETI also made repeated purchases of combat knives and other military-type equipment, including masks, handcuffs, a pocket chainsaw, a wire pocket saw, and a rucksack designed for tactical combat.  ALIMEHMETI stockpiled such equipment at his apartment in the Bronx.

In October 2015, ALIMEHMETI applied for a U.S. passport, falsely claiming in the application that his previous passport had been lost.  ALIMEHMETI later told an undercover law enforcement employee that his prior passport had not been lost and, instead, that he was applying for a new passport because he believed the rejection stamps in his existing passport resulting from his attempted entries into the United Kingdom would make it difficult to travel to ISIS territory. 

In May 2016, ALIMEHMETI attempted to assist an individual who was purportedly traveling from New York to Syria to train and fight with ISIS but who was actually an undercover law enforcement employee (the “UC”).  On May 17, 2016, ALIMEHMETI met with the UC in Manhattan.  ALIMEHMETI helped the UC locate stores so the UC could purchase supplies to use while traveling to, and fighting with, ISIS, including a cellphone, boots, a compass, a bag, and a flashlight, among other items.  ALIMEHMETI then brought the UC to a hotel in Queens so the UC could purportedly meet with an individual who was preparing travel documents that the UC would use to travel to Syria to join ISIS.  ALIMEHMETI gave the UC a piece of paper with his name and contact information, and asked the UC to provide that information to the purported document facilitator.  ALIMEHETI explained that he wanted to travel to Syria and join ISIS, stating “I’m ready to . . . go with you man . . . you know I would.  I’m done with this place.”  After leaving the hotel in Queens, ALIMEHETI brought the UC to JFK Airport, via public transportation, so the UC could begin the purported journey to ISIS.

Following ALIMEHMETI’s arrest on the charges in this case in May 2016, the FBI executed a search of ALIMEHMETI’s Bronx apartment pursuant to a judicially authorized search warrant.  The FBI found in the apartment, among other things, an ISIS flag that was displayed on a wall in the apartment.

In 2017, while ALIMEHMETI was incarcerated and awaiting trial, law enforcement learned that ALIMEHMETI had worked with Ahmad Khan Rahimi inside the prison to aggregate and distribute terrorist propaganda that was part of the evidence in their respective cases and produced to them during discovery.  Rahimi was sentenced to life in prison, in February 2018, for planting a series of bombs in New York and New Jersey in September 2016.  Law enforcement also intercepted a letter that ALIMHEMETI sent to Rahimi, after their propaganda-distribution scheme inside the jail was thwarted, in which ALIMEHMETI referred to himself as the “ISIS balla,” indicated that he had destroyed evidence of their propaganda distribution efforts, and expressed hope that both convicted terrorists would ultimately achieve so-called martyrdom through another act of terrorism.

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In addition to the prison term, ALIMEHMETI, 26, of the Bronx, was also sentenced to five years of supervised release. 

Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state and local agencies; the NYPD’s Intelligence Division; the Department of Justice’s Office of International Affairs; the Albania State Police; and the Metropolitan Police Service’s Counter Terrorism Command of London, United Kingdom.  Mr. Berman also thanked the Counterterrorism Section of the Department of Justice’s National Security Division.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Emil J. Bove III and George D. Turner are in charge of the case, with assistance from Trial Attorney Joseph Attias of the National Security Division’s Counterterrorism Section.     

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the arrest of PATRICK EDWIN GORYCHKA for distributing child pornography.  GORYCHKA was arrested yesterday and presented before U.S. Magistrate Judge Judith McCarthy in White Plains federal court and released on bail.

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

In October 2019, the Federal Bureau of Investigation (“FBI”) received information from an FBI Online Undercover Employee (“UC-1”) concerning UC-1’s communications with an individual using the Kik user name “epg84” (“User-1”) in a Kik chat room known to be frequented by individuals with a sexual interest in children.  UC-1 identified himself as a 48-year-old uncle who had engaged in sex acts with his niece.  User-1, who identified himself as “Eric G.,” asked UC-1 for photos of UC-1’s niece.  UC-1 told User-1 that UC-1 had met a “pedo mom” (“UC-2”) in New York.  UC-1 told User-1 that “she keeps kids of illegals while they work for a couple weeks” and “makes some $ on the side.”  User-1 stated, “Omg that’s hot” and asked UC-1 to connect him to UC-2.   

Thereafter, UC-2, going by the name “Jane,” and User-1 engaged in numerous communications from in or about October 31, 2019, through in or about November 16, 2019.  During these communications, User-1 said he was interested in “preteens” and told UC-2, “I heard that you could potentially facilitate certain things.”  User-1 said that he was interested in a “similar setup” as UC-1 and told UC-2, “I have money.” 

On November 2, 2019, User-1 transmitted two links to Mega, a New Zealand-based cloud storage platform that permits users to store and share ESI, including images and videos. [2]  Both links contained numerous images and videos of children engaging in sexually explicit activity.

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GORYCHKA, 37, of New Windsor, New York, is charged with one count of distribution and receipt of child pornography, which carries a minimum sentence of five years in prison and a maximum sentence of 20 years in prison.  The statutory minimum and maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the efforts of the FBI, West Point’s Criminal Investigation Division, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Town of New Windsor Police Department, in connection with this investigation.  He added that the investigation is ongoing.                     

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

 

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

[2] With respect to Mega, a user can send a link to a Mega cloud account to another person.  Once the link to the Mega cloud account is transmitted, the person who clicks on the link to the cloud account can access, view, and download the files contained in that Mega cloud account.

 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the conviction in Manhattan federal court of GORDON FREEDMAN for participating in a scheme to receive bribes and kickbacks in the form of fees for sham educational programs (“Speaker Programs”) from Insys Therapeutics, Inc. (“Insys”) in exchange for prescribing millions of dollars’ worth of Subsys, a potent fentanyl-based spray manufactured by Insys, among other offenses.  The jury convicted FREEDMAN today on three counts, following a three-week trial before the U.S. District Judge Kimba M. Wood.

U.S. Attorney Geoffrey S. Berman stated:  “Today’s conviction, in addition to the prior guilty pleas in this case of four other prominent Manhattan doctors, underscores that this Office will hold any physician accountable when that physician’s medical judgment is compromised by the corrupting influence of money.  As a jury of his peers has now found, Dr. Gordon Freedman sold out his patients by prescribing a powerful and dangerous fentanyl opioid in exchange for bribes from the pharmaceutical company that manufactured that drug.”

As reflected in the Indictment, documents previously filed in the case, and evidence introduced at trial:

Insys manufactured Subsys, a powerful painkiller approximately 50 to 100 times more potent than morphine.  The FDA approved Subsys only for the management of breakthrough pain in cancer patients.  Prescriptions of Subsys typically cost thousands of dollars each month, and Medicare and Medicaid, as well as commercial insurers, reimbursed prescriptions written by FREEDMAN.

In or about August 2012, Insys launched a “Speakers Bureau,” purportedly aimed at educating practitioners about Subsys.  In reality, however, Insys used its Speakers Bureau to induce doctors to prescribe large volumes of Subsys by paying them Speaker Program fees.  At each Speaker Program, speakers were supposed to conduct a slide presentation for other health care practitioners regarding Subsys.  However, many of the Speaker Programs led by the speakers paid by Insys were predominantly social affairs where no educational presentation about Subsys occurred.  Attendance sign-in sheets for the Speaker Programs were frequently forged by adding the names and signatures of health care practitioners who had not actually been present.

FREEDMAN was a doctor certified in pain management and anesthesiology who owned a private pain management office on Manhattan’s Upper East Side.  FREEDMAN, who was also an Associate Clinical Professor at a large hospital in Manhattan (“Hospital-1”), received approximately $308,600 in Speaker Program fees from Insys in exchange for prescribing large volumes of Subsys. 

In March 2013, a Regional Sales Manager for Insys sent an email to FREEDMAN informing him that he would receive more Speaker Programs in the coming months because Insys wanted prescriptions of Subsys to increase, and urging FREEDMAN to put more patients on Subsys.  FREEDMAN responded, in part, “Got it,” and significantly increased his Subsys prescriptions in the following months, during which he received approximately $33,600 in Speaker Program fees. 

In 2014, FREEDMAN’s prescriptions of Subsys rose even further, and he was the fourth-highest prescriber of Subsys nationally in the final quarter of 2014, accounting for approximately $1,132,287 in overall net sales of Subsys in that quarter alone.  During 2014, FREEDMAN was the highest-paid Insys Speaker in the nation, receiving approximately $143,000. 

*                *                *

FREEDMAN, 59, who resides in Mount Kisco, New York, was found guilty of one count of conspiracy to violate the Anti-Kickback Statute, which carries a maximum term of five years in prison, one count of violating the Anti-Kickback Statute, which carries a maximum term of 10 years in prison, and one count of conspiracy to commit honest services wire fraud, which carries a maximum term of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  FREEDMAN is scheduled to appear for sentencing before Judge Wood on March 19, 2020.

Mr. Berman praised the investigative work of the FBI, and thanked HHS OIG and the New York City Police Department for their participation in the investigation. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Noah Solowiejczyk, David Abramowicz, and Katherine Reilly are in charge of the prosecution.