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Southern District of New York

Press releases recorded for this federal judicial district.

• U.S. Attorney Announces the Arrest of Five Individuals in Scheme to Steal Thousands of Checks from New York City Human Resources Administration

  2019-11-14 · Southern District of New York

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  Geoffrey S. Berman, 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”), Margaret Garnett, Commissioner of the New York City Department of Investigation (“DOI”), and Michael Schmidt, New York State Commissioner of Taxation and Finance (“DTF”), announced the indictment of five individuals in a scheme to steal and deposit more than 4,000 rent subsidy checks worth more than $2.7 million issued by the New York City Human Resources Administration (“HRA”), and the indictment of one person in a related scheme to defraud the New York State Department of Taxation and Finance.  SALIFOU CONDE, SEKHOU TOURE, and SYLVAIN GNALI GNAHORE were arrested on September 16, 2019.  ABRAHIM DUKURAY and ABOUBAKAR BAKAYOKO were arrested today and are expected to appear before U.S. Magistrate Judge Katharine H. Parker later today.  ALSENY KEITA remains at large.  The case is assigned to U.S. District Judge Valerie E. Caproni.

  U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants carried out a reverse Robin Hood scheme, stealing funds intended to aid those in need of financial assistance to line their own pockets.  The alleged thefts are an affront to the very notion of offering a helping hand; these people had their hands in the till.  Now they face serious criminal charges.”

  FBI Assistant Director William F. Sweeney Jr. said:  “Public assistance programs are established to help less fortunate families overcome their socio-economic challenges.  When the system is corrupted by any means, to include fraud against the agencies that provide the financial assistance, everyone loses out.  Not only is there less money available for those who need it most, but the taxpayers who fund these programs have been taken advantage of as well.  As alleged, those arrested for their role in this scheme took money that didn’t belong to them. They’ve since learned the consequences of their alleged actions.”

  DOI Commissioner Margaret Garnett said:  “The City’s Human Resources Administration relied on Salifou Conde to provide a service, delivering to HRA unclaimed rental supplement checks to ensure funds could be appropriately redistributed to New Yorkers.  Instead, the defendant allegedly used his access to steal thousands of checks, and with his co-conspirators, pocket millions in taxpayer dollars, according to the charges.  DOI is proud to work with its partners, including the U.S. Attorney for the Southern District, to uncover schemes to defraud the government and steal public funds.”

  Commissioner of Taxation and Finance Michael Schmidt said:  “Individuals who attempt to defraud New York State and illegally pocket money they’re not entitled to must be held accountable.  The fraudulent scheme alleged in this case unfairly places an additional tax burden on honest New Yorkers and will not be tolerated.  We’ll continue to work with all levels of law enforcement to ensure a level playing field for all taxpayers.”

  As alleged in the Indictment, which was unsealed today, and the previously filed criminal Complaints:[1] 

  HRA is an agency of the City of New York responsible for administering certain of the City’s public assistance programs.  Among other things, HRA provides rental assistance to individuals and families with social service and economic needs.  For individuals who qualify, HRA provides rental assistance by sending monthly rent supplement checks to landlords to cover a portion of the cost of documented expenses such as rent or storage costs.

  HRA rent supplement checks that are undeliverable are sent back to the same P.O. Box in New York, New York.  From there, a courier takes them from the P.O. Box back to HRA. CONDE took these undeliverable checks out of the mail.

  Since in or about 2015, more than 4,000 HRA rent supplement checks worth more than $2.7 million were fraudulently deposited into more than 50 bank accounts.  CONDE, DUKURAY, KEITA, TOURE, and BAKAYOKO were part of a scheme to open these accounts using fictitious identities, obtain HRA supplement checks that could not reach their destination, deposit the checks into bank accounts, and then quickly withdraw cash.

   GNAHORE was a member of a related scheme to obtain tax refund checks issued by the New York State Department of Taxation and Finance, manipulate the checks, deposit them in fraudulently opened bank accounts, and then quickly withdraw funds from those accounts.

  *                      *                      *

  CONDE, 29, DUKURAY, 40, KEITA, 37, TOURE, 35, BAKAYOKO, 32, and GNAHORE, 43, are each charged with one count of wire fraud, which carries a maximum punishment of 20 years in prison; one count of bank fraud, which carries a maximum punishment of 30 years in prison; and one count of conspiracy to commit wire fraud and bank fraud, which carries a maximum punishment of 30 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

  Mr. Berman praised the outstanding work of the FBI, DOI, and DTF.

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

   

  ---

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

  View the Original Release on justice.gov

• Two Former Executives of the China Subsidiary of a Multi-Level Marketing Company Charged for Scheme to Pay Foreign Bribes and Circumvent Internal Accounting Controls

  2019-11-14 · Southern District of New York

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  The former head of the China subsidiary of a publicly traded international multi-level marketing company (Company-1) and the former head of the external affairs department of the China subsidiary of the same company were charged today for their roles in a scheme to violate the anti-bribery and the internal control provisions of the Foreign Corrupt Practices Act (FCPA).    

  Yanliang Li, aka “Jerry Li,” 51, a citizen of China, the former head and managing director of the China subsidiary of Company-1, was charged with one count of conspiracy to violate the FCPA, one count of perjury and one count of destruction of records in federal investigations.  Hongwei Yang, aka “Mary Yang,” 51, also a citizen of China, the former head of the external affairs department of the China subsidiary of Company-1, was charged with one count of conspiracy to violate the FCPA.

  “Li and Yang allegedly led a brazen, decade-long corruption scheme, bribing foreign Chinese officials and then covering it up by providing false sworn testimony to the SEC and wiping clean computer files,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “The Department of Justice will continue to hold individuals accountable who undermine the integrity of our financial markets by participating in these corrupt bribery schemes.”

  “Li and Yang, both former top executives of a global multi-level marketing company headquartered in Los Angeles, allegedly approved the extensive and systematic payments of bribes to Chinese government officials over a 10-year period to promote and expand the company’s business in China and to avoid regulatory scrutiny in China,” said U.S. Attorney Geoffrey S. Berman of the Southern District of New York.  “Moreover, in an effort to obstruct the government’s investigation into this widespread corruption scheme, Li lied under oath about the bribe payments when interviewed by the SEC and also destroyed evidence.  This case signifies this office’s commitment to ensuring that companies operating in the U.S. do not gain an unfair advantage through corruption and illegal bribes of foreign officials.”

  According to the allegations in the indictment, from approximately 2007 through February 2017, Li, Yang and others agreed to pay, and paid bribes to Chinese officials for the purpose of obtaining and retaining licenses for Company-1 to operate as a direct-selling enterprise in provinces throughout China.  The conspirators also are alleged to have paid bribes to corruptly influence Chinese governmental investigations into Company-1’s compliance with Chinese laws and to corruptly influence Chinese state-owned and state-controlled media for the purpose of suppressing negative media reports about the company. 

  In order to carry out the scheme, Li, Yang and others allegedly obtained reimbursement for the bribes they paid to Chinese officials by submitting false and fraudulent expense claims designed to conceal the true nature of the expenditures at issue, thereby circumventing Company-1’s internal accounting controls.  In addition, Li made false statements under oath in sworn investigative testimony before the U.S. Securities and Exchange Commission in New York, New York. Additionally, the indictment alleges that during the course of the federal SEC and DOJ investigations Li, with knowledge of these investigations, installed a “Wiping Application” onto his Company-1 issued laptop, which enabled him to erase 200 files from the laptop in a manner that would render the deleted files unrecoverable.   

  The charges contained in the indictment are merely accusations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

  The FBI’s New York Field Office investigated this case.  Trial Attorney Jason Manning of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Joshua A. Naftalis and Scott A. Hartman of the Southern District of New York are prosecuting the 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/fcpa.

  To learn more about the government’s FCPA enforcement efforts, go to www.justice.gov/criminal/fraud/fcpa.

  View the Original Release on justice.gov

• Two Former Executives of China Subsidiary of International Multi-Level Marketing Company Charged in Manhattan Federal Court for Scheme to Pay Bribes and Circumvent Internal Accounting Controls

  2019-11-14 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York (“SDNY”), Assistant Attorney General Brian A. Benczkowski of the Criminal Division of the United States Department of Justice (“DOJ”), and William F. Sweeney Jr., Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of charges against YANLIANG LI, a/k/a “Jerry Li,” the former head and managing director of the China subsidiary (the “China Subsidiary”) of a publicly traded international multi-level marketing company (“Company-1”), and HONGWEI YANG, a/k/a “Mary Yang,” the former head of the external affairs department of the China Subsidiary, in connection with a scheme, from in or about 2007 through in or about February 2017, to pay bribes and circumvent Company-1’s internal accounting controls in violation of the Foreign Corrupt Practices Act (“FCPA”).  LI and YANG are each charged with one count of conspiring to violate the FCPA.  LI is also charged with one count of perjury and one count of destruction of records in federal investigations.  LI and YANG remain at large.  The case is assigned to U.S. District Judge Vernon S. Broderick. 

  U.S. Attorney Geoffrey S. Berman said:  “Li and Yang, both former top executives of a global multi-level marketing company headquartered in Los Angeles, allegedly approved the extensive and systematic payments of bribes to Chinese government officials over a ten-year period to promote and expand the company’s business in China and to avoid regulatory scrutiny in China.  Moreover, in an effort to obstruct the Government’s investigation into this widespread corruption scheme, Li lied under oath about the bribe payments when interviewed by the SEC and also destroyed evidence.  This case signifies this Office’s commitment to ensuring that companies operating in the U.S. do not gain an unfair advantage through corruption and illegal bribes of foreign officials.”

  Assistant Attorney General Benczkowski said:  “Today’s charges further demonstrate that the Department of Justice will hold accountable those who undermine the integrity of our financial markets by paying bribes and circumventing the internal controls of publicly traded companies.  Furthermore, these charges send a clear message that committing perjury and destroying records to thwart SEC and grand jury investigations will not be tolerated.” 

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

  Relevant Persons and Entities

  Company-1 was a publicly traded multi-level marketing company that sold health care, personal care, and other products in more than 90 countries around the world, including China.  Company-1 was headquartered in Los Angeles, California, and its shares traded on the New York Stock Exchange.  Company-1 conducted business operations in China through a group of wholly owned subsidiaries based in China (collectively, the “China Subsidiary”). 

  Company-1 operated as a multi-level marketing business, including in the United States, but multi-level marketing was prohibited under Chinese law.  Chinese law did, however, permit a company to engage in “direct selling” – selling a company’s products through independent sales representatives – subject to certain requirements.  In particular, as relevant here, before engaging in direct selling in any Chinese province, Chinese law required a company to obtain a direct-selling license from national authorities and local authorities in that province.  The China Subsidiary received its first direct-selling license in or about March 2007, and subsequently received additional direct-selling licenses for other Chinese provinces.  By in or about 2016, the China Subsidiary was responsible for approximately 20 percent of Company-1’s worldwide net sales, which exceeded $4 billion.   

  The China Subsidiary’s external affairs department (“EA”) was responsible for interfacing with Chinese governmental agencies and Chinese media entities, including Chinese government-owned media entities, on behalf of Company-1 in China.  EA employees frequently entertained Chinese government officials at meals and other events and provided gifts to Chinese government officials.  Between in or about 2007 and in or about 2016, the China Subsidiary reimbursed EA employees more than $25 million for entertaining and gift-giving to Chinese Government officials.

  From in or about 2004 through in or about December 2007, LI was the director of sales and/or sales vice president at the China Subsidiary.  From in or about December 2007 through in or about May 2017, LI was the managing director of the China Subsidiary, where LI was primarily responsible for many of the China Subsidiary’s day-to-day operations, including sales.  LI was Company-1’s most senior executive in China.  From in or about February 2006 through in or about May 2017, YANG was the head of EA.  LI was YANG’s direct supervisor. 

  Various Chinese provincial and central government officials at the Ministry of Commerce (collectively, “MOFCOM”) were responsible, at least in part, for issuing licenses required for companies, such as the China Subsidiary, to conduct direct selling in China.  Various Chinese provincial and central government officials of the State Administration for Industry and Commerce (collectively, “AIC”) were responsible, at least in part, for enforcing compliance with Chinese laws applicable to direct-selling companies, such as the China Subsidiary.  AIC had the authority to conduct investigations into direct-selling companies and to impose fines and other penalties against direct-selling companies, such as the China Subsidiary, that it deemed not to be in compliance with applicable laws.

  The Scheme to Pay Bribes and Circumvent Internal Accounting Controls

  From at least in or about 2007 through in or about February 2017, LI, YANG, and others participated in a scheme to pay bribes and to circumvent Company-1’s internal accounting controls.  The scheme involved, among other things, bribing Chinese government officials for the benefit of Company-1, obtaining reimbursements from Company-1 relating to the illicit bribes through fraudulent reimbursement requests, and circumventing Company-1’s internal accounting controls that were intended to prevent bribery and fraud.

  More specifically, LI, YANG, and others paid and agreed to pay bribes to Chinese government officials, including MOFCOM officials, AIC officials, and officials of a media company owned by the Chinese government, for the purpose of obtaining, retaining, and increasing Company-1’s business in China by, among other things, (1) obtaining and retaining the China Subsidiary’s licenses to operate as a direct-selling enterprise in provinces throughout China, (2) corruptly influencing Chinese governmental investigations into the China Subsidiary’s compliance with Chinese laws applicable to direct-selling enterprises, and (3) corruptly influencing Chinese state-owned and state-controlled media for the purpose of suppressing negative media reports about the China Subsidiary.

  In order to carry out the scheme, LI, YANG, and others obtained reimbursement for the bribes they paid to Chinese officials from the China Subsidiary through fraudulent expense claims designed to conceal the true nature of the expenditures at issue.  In doing so, LI, YANG, and others circumvented Company-1’s internal accounting controls related to EA’s expenditure on gifts and entertainment for Chinese government officials.  These internal accounting controls, among other things, prohibited the payment of bribes, established limits on the value, frequency, and nature of expenditures on government officials, and required EA employees to provide receipts and other specific information, including the names of the government officials involved, in order to obtain approval and reimbursement for their expenditures.  LI, YANG, and others agreed to, and did, submit and approve fraudulent reimbursement requests, obtain reimbursement for those fraudulent requests, and conceal their fraud from Company-1’s internal audit department.

  Perjury

  In or about 2013, the U.S. Securities and Exchange Commission (the “SEC”) opened a formal investigation into Company-1 for violations of the federal securities laws.  On or about October 20 and 21, 2016, LI testified under oath before the SEC in New York, New York, in connection with the SEC’s investigation of Company-1. 

  During his sworn testimony before the SEC, LI was asked whether he had offered any payment to any government officials at MOFCOM or AIC, and whether he was aware of any such payments offered by anyone at the China Subsidiary.  In response, LI, in sum and substance, falsely denied having knowledge of the China Subsidiary’s employees paying bribes or circumventing Company-1’s internal accounting controls.

  During LI’s sworn testimony before the SEC, SEC staff also played for LI audio recordings of LI, including (a) a recording of a conversation from in or about 2006 in which LI and YANG discussed LI’s approval of giving “red envelopes” – i.e., cash gifts – to AIC officials, and (b) a recording of a conversation from in or about March 2007 in which LI and YANG agreed to making bribe payments of 35,000 yuan to various Chinese government officials, including 10,000 yuan to an official whom LI identified as an AIC deputy director.  In response to questions posed to him by SEC staff regarding these recordings, LI, in sum and substance, again falsely denied having knowledge of the China Subsidiary’s employees paying bribes or circumventing Company-1’s internal accounting controls.

  The SEC also asked LI whether he had a personal email account, and whether he used any email account other than his Company-1 email account.  LI falsely stated, “No,” in response to both questions.  In truth and in fact, LI had a personal email account (the “LI Gmail Account”), LI had used the LI Gmail Account throughout 2016, and LI had sent multiple emails from the LI Gmail Account approximately 16 days prior to his testimony before the SEC.  LI had used the LI Gmail Account for, among other things, correspondence related to his work at the China Subsidiary.

  Destruction of Records in Federal Investigations

  In addition to the SEC’s investigation into Company-1, in or about 2013, a federal grand jury investigation in the Southern District of New York relating to Company-1 was also initiated. 

  LI received multiple notices from Company-1 attorneys informing him of his obligation to retain all Company-1 documents dating back to at least January 1, 2007, in connection with, among other things, pending U.S. governmental investigations and potential litigation.  Those directives were initially sent beginning in 2012 and remained in place up to and including at least through February 2017.  On or about January 20, 2017, Company-1 stated, in a public filing with the SEC, that, in sum and substance, the SEC had requested documents and other information related to Company-1’s anti-corruption compliance in China; Company-1 was undertaking its own review of that subject; and Company-1 had discussed these matters with the United States Department of Justice (the “DOJ”).  LI received emails in or about late January 2017 that informed him of the pending SEC and DOJ investigations. 

  On or about February 11, 2017, LI was informed he would be interviewed by Company-1 attorneys in connection with an internal investigation into potential misconduct at the China Subsidiary.  A few days later, on or about February 17, 2017, LI installed an application (the “Wiping Application”) onto the laptop that Company-1 had issued to him (the “LI Laptop”).  The Wiping Application enabled a user to erase files in a manner that would render the deleted files unrecoverable.  That same day, LI utilized the Wiping Application to delete approximately 200 files from the LI Laptop. 

  *                      *                      *

  LI, 51, a citizen of China, and YANG, 51, a citizen of China, were each charged with one count of conspiracy to violate the FCPA, which carries a maximum sentence of five years in prison.  LI was also charged with one count of perjury, which carries a maximum sentence of five years in prison, and one count of destruction of records in federal investigations, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentences would be determined by a judge.  

  Mr. Berman and Mr. Benczowski praised the outstanding work of the FBI and also thanked the SEC for its assistance and cooperation in this investigation. 

  This case is being handled by the Office’s Securities and Commodities Fraud Task Force and the FCPA Unit of the Fraud Section of DOJ’s Criminal Division.  Assistant United States Attorneys Joshua A. Naftalis and Scott A. Hartman, and Trial Attorney Jason Manning of the FCPA Unit, 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 texts of the Indictment and the descriptions of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.

  View the Original Release on justice.gov

• Massage Therapist Charged in White Plains Federal Court with Possession of Child Pornography

  2019-11-14 · Southern District of New York

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  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 Field Office of the Homeland Security Investigations (“HSI”) announced the arrest of GARY PAMPERIEN for possession of child pornography.  PAMPERIEN was arrested yesterday and presented before United States Magistrate Judge Lisa Margaret Smith. 

  U.S. Attorney Geoffrey S. Berman said:  “Child pornography victimizes society’s most innocent and vulnerable.  Massage therapist Gary Pamperien was arrested for allegedly possessing child pornography.  Sexualizing young children is despicable, and this Office and our law enforcement partners will continue to utilize all of the expertise and resources available to bring to justice those who possess child pornography.”

  HSI Special Agent-in Charge Peter C. Fitzhugh said:  “Pamperien allegedly purchased explicit photos of children, repeatedly victimizing each child with just the click of a button. Perhaps thinking he could conceal these heinous alleged acts, he allegedly used his work computer as a means to mask his identity.  HSI has a firm commitment to tracking down those perpetrators who exploit children to satisfy their own horrid desires and we will bring them to justice.”

  According to the allegations in the Complaint[1]:

  Between at least August 2017 and December 2018, PAMPERIEN, a massage therapist, purchased access to thousands of files containing child pornography through a password-protected, fee-based website hosted outside the United States.  The child pornography included depictions of nude prepubescent children posing lasciviously.  PAMPERIEN made his purchases from an IP address associated with a non-profit educational retreat center in Rhinebeck, New York, where PAMPERIEN has lived and worked.  Additionally, on November 13, 2019, law enforcement officers uncovered at least a dozen images and one video containing child pornography on a laptop belonging to PAMPERIEN.

  PAMPERIAN, 65, of Hicksville, New York, is charged with one count of possession of child pornography, which carries a maximum sentence of 10 years in prison or 20 years in prison if any image of child pornography involved in the offense involved a prepubescent minor or a minor who had not attained 12 years of age.  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.

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

  Mr. Berman praised Homeland Security Investigations for their outstanding investigative work. 

  This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Sam Adelsberg and Benjamin A. Gianforti are 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 below constitute only allegations, and every fact described should be treated as an allegation.

   

  View the Original Release on justice.gov

• Iranian Businessman Sentenced to 46 Months in Prison for Violating U.S. Sanctions by Exporting Carbon Fiber from the United States to Iran

  2019-11-14 · Southern District of New York

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  The Department of Justice announced that Behzad  Pourghannad was sentenced yesterday to 46 months in prison for participating in a conspiracy to export carbon fiber from the United States to Iran between 2008 and 2013.  Pourghannad pleaded guilty on Aug. 29, 2019,before United States Magistrate Judge Paul E. Davison.  United States District Judge Vincent L. Briccetti imposed yesterday’s sentence. 

  “Pourghannad falsified shipment documents and used front companies to export carbon fiber to Iran in violation of U.S. sanctions,” said Assistant Attorney of National Security John C. Demers.  “Carbon fiber is used by the Iranian Regime to further its nuclear, military, and aerospace programs.  We continue to thwart the efforts of the Iranian regime to evade our sanctions and work steadfastly with our international partners to investigate, prosecute and bring sanctions violators to justice.”

  "Behzad Pourghannad conspired to circumvent U.S. export controls on carbon fiber, a substance with numerous military and aerospace applications,” said U.S. Attorney Geoffrey Berman for the Southern District of New York. “The significant sentence Pourghannad received should send a message that such violations, which threaten our national security, will incur stiff penalties.”

  According to the Indictment and other documents filed in the case, including statements made during the plea and sentencing proceedings:

  Between 2008 and July 2013, Pourghannad and his two codefendants, Ali Reza Shokri and Farzin Faridmanesh, lived and worked in Iran.  During that period, they worked together to obtain carbon fiber from the United States and surreptitiously export it to Iran via third countries in violation of United States sanctions.  In particular, Shokri worked to procure many tons of carbon fiber from the United States; Pourghannad agreed to serve as the financial guarantor for large carbon fiber transactions; and Faridmanesh agreed to serve as the trans-shipper. Carbon fiber has a wide variety of uses, including in missiles, aerospace engineering, and gas centrifuges that enrich uranium. 

  In or about late 2007 and early 2008, Shokri and a Turkey-based co-conspirator (CC-2) successfully arranged for the illegal export and transshipment of carbon fiber from the United States to an Iranian company Shokri operated (Iranian Company-1).  Specifically, CC-2 contacted a United States supplier of carbon fiber, who in turn enlisted a third individual (Individual-1) for assistance with the transaction.  Through Individual-1, CC-2 purchased carbon fiber from the United States supplier and arranged for the shipment of the carbon fiber from the United States, through Europe and Dubai, United Arab Emirates, to Iranian Company-1 in Iran.

  In or about May 2009, Pourghannad and Shokri attempted to arrange another illegal purchase and transshipment of carbon fiber from the United States to Iran.  Specifically, Individual-1 returned a signed contract to Pourghannad for Shokri’s purchase of a large quantity of carbon fiber.  Individual-1 then purchased the carbon fiber from a United States supplier and arranged for the carbon fiber to be exported from the United States to a third country (Country-1), en route to Iran.  Country-1 authorities, however, interdicted the carbon fiber shipment before it could be trans-shipped to Iran.

  In or about 2013, Pourghannad, Shokri, and Faridmanesh again attempted to illegally procure and export carbon fiber from the United States to Iran.  In the 2013 transaction, Shokri and Pourghannad negotiated with Individual-1 for the purchase and trans-shipment to Iran of more than five tons of carbon fiber.  Faridmanesh and Pourghannad further agreed with Individual-1 that the carbon fiber would be trans-shipped from the United States to Iran through Tbilisi, Georgia, with Faridmanesh to serve as the trans-shipper.  Faridmanesh specifically instructed Individual-1 to change the shipping labels on the carbon fiber to reference “acrylic” or “polyester,” rather than “carbon fiber.”  Pourghannad provided Individual-1 with the bank guarantee that was to serve as surety for a portion of the carbon fiber.  In or about June 2013, Individual-1 informed Pourghannad, Shokri, and Faridmanesh that the carbon fiber would soon be shipped from Manhattan and that Individual-1 would replace the carbon fiber labels with shipping labels referencing “acrylic” to evade U.S. export controls.

  No one involved in these transactions obtained permission from the U.S. Department of Treasury, Office of Foreign Assets Control to export the carbon fiber from the United States. 

  Mr. Berman praised the investigative work of the FBI and the U.S. Department of Commerce, and thanked the U.S. Department of Justice’s National Security Division, Criminal Division's Office of International Affairs, the U.S. Marshals Service, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations for their assistance. 

  This case is being handled by the Office’s Terrorism and International Narcotics Unit, with assistance from the Counterintelligence and Export Control Section of the National Security Division.  Assistant U.S. Attorney Gillian Grossman and Trial Attorney Matthew McKenzie are in charge of the prosecution.

  View the Original Release on justice.gov

• Iranian Businessman Sentenced to 46 Months in Prison for Violating U.S. Sanctions by Exporting Carbon Fiber from the United States to Iran

  2019-11-14 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John C. Demers, the Assistant Attorney General for National Security, announced that BEHZAD POURGHANNAD was sentenced yesterday to 46 months in prison for participating in a conspiracy to export carbon fiber from the United States to Iran between 2008 and 2013.  POURGHANNAD pled guilty on August 29, 2019, before United States Magistrate Judge Paul E. Davison.  United States District Judge Vincent L. Briccetti imposed the sentence. 

  Manhattan U.S. Attorney Geoffrey Berman said: “Behzad Pourghannad conspired to circumvent U.S. export controls on carbon fiber, a substance with numerous military and aerospace applications.  The significant sentence Pourghannad received should send a message that such violations, which threaten our national security, will incur stiff penalties.”

  Assistant Attorney General John Demers said:  “Pourghannad falsified shipment documents and used front companies to export carbon fiber to Iran in violation of U.S. sanctions.   Carbon fiber is used by the Iranian Regime to further its nuclear, military, and aerospace programs.  We continue to thwart the efforts of the Iranian regime to evade our sanctions and work steadfastly with our international partners to investigate, prosecute and bring sanctions violators to justice.”

  According to the Indictment and other documents filed in the case, including statements made during the plea and sentencing proceedings:

  Between 2008 and July 2013, POURGHANNAD and his two codefendants, Ali Reza Shokri and Farzin Faridmanesh, lived and worked in Iran.  During that period, they worked together to obtain carbon fiber from the United States and surreptitiously export it to Iran via third countries in violation of United States sanctions.  In particular, Shokri worked to procure many tons of carbon fiber from the United States; POURGHANNAD agreed to serve as the financial guarantor for large carbon fiber transactions; and Faridmanesh agreed to serve as the trans-shipper.  Carbon fiber has a wide variety of uses, including in missiles, aerospace engineering, and gas centrifuges that enrich uranium. 

  In or about late 2007 and early 2008, Shokri and a Turkey-based co-conspirator (“CC-2”) successfully arranged for the illegal export and transshipment of carbon fiber from the United States to an Iranian company Shokri operated (“Iranian Company-1”).  Specifically, CC-2 contacted a United States supplier of carbon fiber, who in turn enlisted a third individual (“Individual-1”) for assistance with the transaction.  Through Individual-1, CC-2 purchased carbon fiber from the United States supplier and arranged for the shipment of the carbon fiber from the United States, through Europe and Dubai, United Arab Emirates, to Iranian Company-1 in Iran.

  In or about May 2009, POURGHANNAD and Shokri attempted to arrange another illegal purchase and transshipment of carbon fiber from the United States to Iran.  Specifically, Individual-1 returned a signed contract to POURGHANNAD for Shokri’s purchase of a large quantity of carbon fiber.  Individual-1 then purchased the carbon fiber from a United States supplier and arranged for the carbon fiber to be exported from the United States to a third country (“Country-1”), en route to Iran.  Country-1 authorities, however, interdicted the carbon fiber shipment before it could be trans-shipped to Iran.

  In or about 2013, POURGHANNAD, Shokri, and Faridmanesh again attempted illegally to procure and export carbon fiber from the United States to Iran.  In the 2013 transaction, Shokri and POURGHANNAD negotiated with Individual-1 for the purchase and transshipment to Iran of more than five tons of carbon fiber.  Faridmanesh and POURGHANNAD further agreed with Individual-1 that the carbon fiber would be trans-shipped from the United States to Iran through Tbilisi, Georgia, with Faridmanesh to serve as the trans-shipper.  Faridmanesh specifically instructed Individual-1 to change the shipping labels on the carbon fiber to reference “acrylic” or “polyester,” rather than “carbon fiber.”  POURGHANNAD provided Individual-1 with the bank guarantee that was to serve as surety for a portion of the carbon fiber.  In or about June 2013, Individual-1 informed POURGHANNAD, Shokri, and Faridmanesh that the carbon fiber would soon be shipped from Manhattan and that Individual-1 would replace the carbon fiber labels with shipping labels referencing “acrylic” to evade U.S. export controls.

  No one involved in these transactions obtained permission from the U.S. Department of Treasury, Office of Foreign Assets Control, to export the carbon fiber from the United States. 

  *                *                *           

  Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the U.S. Department of Commerce, and thanked the U.S. Department of Justice’s National Security Division and the Criminal Division’s Office of International Affairs, the U.S. Marshals Service, Homeland Security Investigations, and Immigration and Customs Enforcement for their assistance. 

  This case is being handled by the Office’s Terrorism and International Narcotics Unit, with assistance from the Counterintelligence and Export Control Section of the National Security Division.  Assistant United States Attorney Gillian Grossman and Trial Attorney Matthew McKenzie are in charge of the prosecution.

  View the Original Release on justice.gov

• Operator of Westchester Waste Disposal Business Pleads Guilty to Fraudulent Overbilling Scheme

  2019-11-13 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that RALPH MANCINI, the owner and operator of County Waste Management, a waste disposal business based in Harrison, New York, pled guilty today to mail fraud before U.S. Magistrate Judge Lisa Margaret Smith.  MANCINI admitted as part of his plea that he had defrauded numerous commercial customers by overbilling them for the waste collected and dumped on their behalf.

  U.S. Attorney Geoffrey S. Berman said:  “For more than eight years, Ralph Mancini, the owner and operator of County Waste Management, illegally overbilled local businesses that contracted with him to do their waste disposal.  Mancini has now pled guilty to hauling in over $800,000 from his victims, and faces serious time in prison.”

  According to the Information, other court documents, and statements made in Court, from in or about 2008 through 2016, MANCINI overbilled a total of approximately 17 commercial customers, including educational institutions, department stores, grocery stores, and other establishments, by more than $800,000.  MANCINI sent the fraudulent invoices by U.S. mail, which fabricated the tonnage of waste collected and thereby charged customers for waste services that had not actually been performed.

  *                *                *

  MANCINI, age 57, of Harrison, pleaded guilty to one count of mail fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

   MANCINI is scheduled to be sentenced by U.S. District Judge Nelson S. Román on February 14, 2020, at 11:00 a.m.

  Mr. Berman praised the investigative work of the Federal Bureau of Investigation.  He also thanked the Westchester County Department of Public Safety and the Westchester County Solid Waste Commission for their assistance in the investigation.

  This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Daniel Loss is in charge of the prosecution.

  View the Original Release on justice.gov

• Narcotics Dealer Charged in Manhattan Federal Court with Fentanyl Overdose Death

  2019-11-13 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Raymond P. Donovan, Special Agent in Charge of the New York Office of the Drug Enforcement Administration (“DEA”), Peter C. Fitzhugh, Special Agent in Charge of the New York Office of Homeland Security Investigations (“HSI”), Keith M. Corlett, Superintendent of the New York State Police (“NYSP”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced that a grand jury returned an Indictment today charging JEANLUC JOILES with distributing fentanyl that resulted in the death of 29-year-old Rachel Spiteri on or about June 19, 2019, in New York, New York.  JOILES and a co-defendant, JAIME ROSARIO JR., are also charged with participating in a conspiracy to traffic methamphetamine, fentanyl, and cocaine, and ROSARIO is charged with possessing firearms in connection with a drug trafficking offense.  JOILES and ROSARIO were previously charged by criminal complaints and arrested on October 15, 2019, and October 25, 2019, respectively.  Both defendants are detained.  The case is assigned to United States District Judge Loretta A. Preska.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Jeanluc Joiles sold the drugs that killed a young woman.  He and co-defendant Jaime Rosario Jr. allegedly conspired to traffic in a variety of potentially lethal drugs, and Rosario allegedly possessed guns in connection with that trafficking.  The potential penalties for these alleged crimes befit the seriousness of the allegations.”

  DEA Special Agent in Charge Raymond P. Donovan said:  “Earlier this month, DEA issued a national alert on counterfeit pill trafficking across America and how fatal overdoses follow its path.  Reiterating the warning, counterfeit pills threaten New York because they mimic legitimate prescription medication, but contain unregulated amounts of fentanyl.  I applaud the diligent efforts of the law enforcement community to bring justice to victims of drug traffickers and their families.”

  HSI Special Agent in Charge Peter C. Fitzhugh said:  “As alleged, these two men showed no regard for human life when they allegedly concocted and laced pills with fentanyl, which led to yet another needless death from an overdose.  HSI is committed to working with the DEA’s Strike Force and law enforcement partners to ensure that people who allegedly deal these poisons within our communities are arrested and prosecuted for their careless acts.”

  According to the allegations in the Indictment, underlying complaints, and information in the public record[1]:

  On June 20, 2019, Rachel Spiteri was found dead in her apartment in New York, New York.  Following an investigation by the NYPD and DEA, law enforcement agents identified JOILES as the dealer who sold Ms. Spiteri what she believed to be oxycodone pills, but in fact contained fentanyl and acetylfentanyl, a fentanyl analogue.  Following Ms. Spiteri’s death, law enforcement officers later purchased additional narcotics from both JOILES and ROSARIO, including fentanyl pills masquerading as oxycodone, and methamphetamine that was sold as cocaine. 

  On October 16, 2019, law enforcement officers executed a search warrant at ROSARIO’s apartment and found more than 500 grams of methamphetamine and cocaine, as well as four firearms.

  *                      *                      *

  JOILES, 36 of Queens, New York, is charged with conspiracy to traffic in narcotics and with distribution and possession with intent to distribute fentanyl resulting in death.  ROSARIO, 42, of Queens, New York, is charged with conspiracy to traffic in narcotics and with possession of firearms in connection with a drug trafficking offense.  A chart setting forth the maximum and mandatory minimum penalties for the defendants is set forth below.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

  Mr. Berman praised the outstanding investigative work of the DEA and the NYPD.  The charges are the result of an investigation by the New York Strike Force, a crime-fighting unit comprising federal, state, and local law enforcement agencies supported by the Organized Crime Drug Enforcement Task Force (OCDETF) and the New York/New Jersey High Intensity Drug Trafficking Area (HIDTA).  

  The Strike Force is housed at the DEA’s New York Division and includes agents and officers of the DEA, the NYPD, the New York State Police, Immigration and Customs Enforcement – Homeland Security Investigations, the U. S. Internal Revenue Service Criminal Investigation Division, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, U.S. Customs and Border Protection, U.S. Secret Service, the U.S. Marshals Service, New York National Guard, the Clarkstown Police Department, U.S. Coast Guard, Port Washington Police Department, and New York State Department of Corrections and Community Supervision.

  This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Daniel G. Nessim is in charge of the prosecution.

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

   

  Count

  Defendant(s)

  Maximum Penalties

  Conspiracy to distribute narcotics

  JEANLUC JOILES

   

  JAIME ROSARIO JR.

  Life; mandatory minimum term of 10 years in prison

  Distribution of Fentanyl Resulting in Death

  JEANLUC JOILES

  Life; mandatory minimum term of 20 years in prison

  Firearms Offense

  JAIME ROSARIO JR.

  Life; consecutive mandatory minimum term of five years in prison

                                                         

   

   

  ---

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

  View the Original Release on justice.gov

• U.S. Attorney’s Office Announces Opportunity for Victim Input to Court in Pending Motion by Bernard J. Ebbers for Sentence Reduction

  2019-11-12 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that, pursuant to an order issued by the Honorable Valerie E. Caproni, United States District Court Judge, victims of the securities fraud scheme relating to World Com that was carried out by Bernard J. Ebbers and others have the opportunity to provide the Court with their views regarding Ebbers’s pending motion for a sentence reduction.  A copy of the Court-approved notice to victims is attached (the “Notice”). 

  As set forth in the Notice, on July 13, 2005, defendant Bernard J. Ebbers was sentenced to a term of imprisonment of 25 years.  Ebbers began to serve this term of imprisonment on September 26, 2006.  Assuming credit for good conduct while incarcerated, Ebbers has an anticipated release date of approximately July 4, 2028. 

  On September 5, 2019, Ebbers filed a motion with the Court for a sentencing reduction pursuant to 18 U.S.C. § 3582 and the First Step Act.  The motion, which seeks Ebbers’s immediate release from prison, is based on Ebbers’s numerous medical conditions and his advanced age.  The Government has opposed Ebbers’s motion.  A copy of the briefs relating to Ebbers’s motion for a sentence reduction can be found at:

  https://www.justice.gov/usao-sdny/united-states-v-bernard-ebbers

  If you are a victim of Ebbers’s fraud and you wish to provide your views to Judge Caproni with respect to Ebbers’s motion for a sentence reduction, you may do so. 

  Please address any such correspondence to the Court, but send the correspondence to the Victim/Witness coordinator for the U.S. Attorney’s Office for the Southern District of New York (the “Office”) by email as follows:

  Ms. Wendy Olsen-Clancy

  Victim/Witness Coordinator

  United States Attorney’s Office

  Southern District of New York

  email:

  [email protected]

  The Office will then provide a copy of any correspondence received to the Court and counsel for Ebbers.  The Court has imposed a deadline of November 15, 2019 to receive any correspondence from victims.  Accordingly, to be considered by the Court, any such correspondence must be received by the United States Attorney’s Office by no later than November 14, 2019.

  View the Original Release on justice.gov

• Former Park Avenue Bank Director Mendel Zilberberg and Co-Conspirator Charged in $1.4 Million Bank Fraud

  2019-11-12 · Southern District of New York

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  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 Jay N. Lerner, Inspector General of the Federal Deposit Insurance Corporation (“FDIC”), announced today the unsealing of an Indictment charging attorney MENDEL ZILBERBERG, a former director of Park Avenue Bank (the “Bank”), and ARON FRIED with bank fraud and related charges for perpetrating a fraudulent scheme to obtain a $1.4 million loan from the Bank.  The defendants caused the Bank to issue the loan to a straw borrower on the basis of false statements and misrepresentations, when in fact the defendants received and used the loan proceeds, resulting in a loss of over $1 million to the Bank when the loan defaulted.  ZILBERBERG was also separately charged with embezzlement and misappropriation of Bank funds while he was a director and insider of the Bank.  ZILBERBERG and FRIED were arrested this morning and will be presented later today before U.S. Magistrate Judge Katharine H. Parker.  The case has been assigned to U.S. District Judge George B. Daniels.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Mendel Zilberberg and Aron Fried conspired with another to defraud the bank where Zilberberg served as a director.  In a textbook case of self-dealing and breach of fiduciary duty, Zilberberg allegedly exploited his position at the bank to grease the skids for a loan given under blatantly false pretenses, a huge chunk of the proceeds of which he himself dipped into.”

  FBI Assistant Director-in-Charge William F. Sweeney Jr said:  “As alleged, when Fried and his co-conspirator realized they wouldn’t be able to secure a loan the traditional way – by legitimately obtaining the money from an authorized financial institution – they brought a straw borrower and bank director into their circle to effectively carry out the fraudulent activity.  As alleged, Mendel Zilberberg, the bank’s director, played a key role in carrying out this scheme, driving the loan through the approval process while shrouding the details in secrecy.  When the bank realized a loss of more than $1 million, the defendants allegedly walked away with the money from the defaulted loan.  Making false statements and misrepresentations on a loan application is a federal crime, a lesson those charged today have learned the hard way. Furthermore, bank insiders, of all people, should model the legal and ethical obligations of the financial institutions they serve, instead of breaking the law.”

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

  In or about 2009, ARON FRIED and a co-conspirator not named in the Indictment (“CC-1”) sought to obtain a fraudulent loan from the Bank in Manhattan in order to finance an investment in a home health care business.  However, knowing that CC-1 would not be credit-worthy and had a criminal record, FRIED and CC-1 used a straw borrower (the “Straw Borrower”) for the loan application who was recruited by CC-1.  To effectuate the scheme, FRIED and CC-1 partnered with MENDEL ZILBERBERG, then a director of the Bank, who had the power to personally shepherd the fraudulent loan through the Bank’s approval process and guard it from scrutiny.  Together, the defendants concocted a false premise for the loan, supported the loan application with false representations, and set up pass-through bank accounts to funnel the proceeds of the fraudulent loan to themselves.  Specifically, the defendants made or otherwise caused false statements to be made to the Bank regarding, among other things, (a) that the borrower on the loan was the Straw Borrower, when in fact the actual borrowers and beneficiaries of the loan were ZILBERBERG, FRIED, and CC-1; and (b) that the purpose of the loan was for business investments by the Straw Borrower, when in fact the actual purpose of the loan was to benefit ZILBERBERG, FRIED, and CC-1.  

  Based on the false representations made to the Bank and ZILBERBERG’s involvement in the loan approval process, the Bank issued a $1.4 million loan to the Straw Borrower, which was quickly disbursed to the defendants through multiple bank accounts and transfers.  In total, ZILBERBERG received at least approximately $466,000 of the loan proceeds, FRIED received at least approximately $434,000 of the loan proceeds, and CC-1 received the remainder of the loan proceeds.  The loan ultimately defaulted, resulting in a loss of over $1 million.

  *                *                *

  ZILBERBERG, 61 of Monsey, New York, and FRIED, 46 of Toms River, New Jersey, are each charged with one count of conspiracy to commit bank fraud, one count of bank fraud, and one count of making false statements to a bank, each of which carries a maximum sentence of 30 years in prison, as well as one count of conspiracy to make false statements to a bank, which carries a maximum sentence of five years in prison.  ZILBERBERG is also charged with one count of embezzlement and misappropriation of bank funds, which carries a maximum sentence of 30 years in prison.  The maximum potential 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 the investigative work of the FBI and the FDIC, Office of the Inspector General, and noted that the investigation remains ongoing.  Mr. Berman also thanked the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”) and the New York State Department of Financial Services for their assistance with the investigation.

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

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

   

  ---

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

  View the Original Release on justice.gov

• Manhattan U.S. Attorney Announces $12.3 Million Settlement with Lenox Hill Hospital for Submitting Fraudulent Medicare Claims for Urology Procedures and Hospital Services

  2019-11-08 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”) New York Regional Office, announced today that the United States filed and settled a civil fraud lawsuit against LENOX HILL HOSPITAL (“Lenox Hill”) and its corporate parent NORTHWELL HEALTH, INC. (“Northwell”) (together, “Defendants”).  The Government’s Complaint-in-Intervention (the “Complaint”) alleges that Defendants violated the False Claims Act by fraudulently billing Medicare for healthcare services that did not comply with Medicare law.  The Complaint specifically alleges that in conjunction with Defendants’ employment of Lenox Hill’s former chair of the Department of Urology, David B. Samadi (“Samadi”), Defendants submitted claims for: (1) endoscopic procedures that were performed, at least in part, by insufficiently supervised medical residents; (2) robotic surgeries for which, at some point during the surgery, Samadi left the patient improperly unattended in order to supervise a different surgery; (3) medically unnecessary hospital services; and (4) designated health services referred to Lenox Hill by Samadi when his compensation arrangement violated the federal Stark Law. 

  Under the settlement, approved by U.S. District Judge Denise Cote, Defendants agreed to pay $12.3 million to resolve the allegations in the Complaint.  As part of the settlement, Defendants also admitted, acknowledged, and accepted responsibility for conduct alleged in the Complaint, including that “Defendants’ practices resulted in the submission of several million dollars of inappropriate claims to Medicare.”

  Manhattan U.S. Attorney Geoffrey S. Berman said: “Patients put great trust in hospitals, particularly when it comes to surgery.  Hospitals cannot pay surgeons for their referrals, and they cannot run their operating rooms like assembly lines.  Defendants prioritized maximizing their own revenues over regulatory compliance.  This Office will not tolerate such behavior, and today’s settlement makes clear that the Government will hold hospitals accountable when they engage in such misconduct.”

  HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Lenox Hill Hospital elected to increase their profits by paying handsomely for referrals without any regard to patient care – ultimately violating Medicare rules and regulations.  The Medicare program is designed to protect both beneficiaries and taxpayers.  We will continue working with our law enforcement partners to enforce these rules.”    

  As alleged in the Complaint, from July 2013 through June 2018 (the “Covered Period”), Samadi oversaw Lenox Hill’s Department of Urology, including the training of its medical residents.  During Samadi’s tenure, Defendants encouraged and facilitated surgical practices that violated Medicare’s rules and regulations that govern a teaching physician’s presence and availability during both endoscopy and high-risk, complex surgery.  Although Medicare allows teaching institutions to utilize medical residents in the provision of surgical care, the law requires that a board certified senior surgeon provide adequate supervision.  Throughout the Covered Period, in order to maximize the revenues that Samadi generated for Lenox Hill, Defendants allowed Samadi to engage in an overlapping surgical practice wherein he was insufficiently available to provide the supervisory oversight required by Medicare.  Specifically, Defendants would schedule Samadi to perform two separate surgeries, one endoscopic and one robotic, at the exact same time.  During the course of the two surgeries, a medical resident would remain with the patient undergoing an endoscopic procedure or operation.  Meanwhile, Samadi himself would travel back and forth between the endoscopic room, and an adjacent operating room in which Samadi conducted high-risk, complex, surgeries utilizing a surgical robot.  This practice not only violated Medicare law, it also violated Northwell’s own resident supervision policy – and it resulted in Defendants’ submission of false claims.  Moreover, Samadi’s patients were never informed that their surgeries were scheduled to overlap with another of Samadi’s scheduled surgeries.

  Samadi’s operating room practices also resulted in the submission of medically unnecessary claims.  In a further effort to maximize Samadi’s availability to perform revenue-generating surgeries, Defendants allowed Samadi to perform minor diagnostic procedures in a Lenox Hill operating room.  Operating room services, such as the services provided by operating room nurses and/or anesthesiologists, were medically unnecessary in the case of these minor procedures.  Nonetheless, in conjunction with the minor diagnostic procedures that Samadi’s patients underwent in a Lenox Hill operating room, Defendants submitted claims to Medicare for the medically unnecessary operating room services provided.  These unnecessary services were also ineligible for Medicare reimbursement.

  Lastly, Defendants submitted claims for health services that violated the Stark Law.  The Stark Law is a federal law that prohibits a hospital from receiving Medicare reimbursement for services referred by a physician with whom the hospital has a prohibited financial relationship.  The law is intended to prevent conflicts of interest in physician referrals.  Throughout the Covered Period, Defendants paid Samadi a guaranteed salary of over two million dollars each year, as well as an annual incentive bonus of an additional two to five million dollars each year.  This compensation grossly exceeded fair market value because it factored in the value of Samadi’s referrals to Lenox Hill.  In addition, in calculating Samadi’s incentive bonus, Lenox Hill included revenues from services not personally performed by Samadi.  This inclusion of non-personally performed services in a physician’s incentive compensation also violated the Stark Law.  Given these facts, Samadi and Lenox Hill had a prohibited financial relationship under the Stark Law throughout the Covered Period.  Defendants therefore were not permitted to submit to Medicare reimbursement claims for the health services referred to them by Samadi.

  As part of the settlement, Defendants admitted conduct alleged in the Complaint, including that:

  • At the time of Samadi’s recruitment and hiring, Defendants prepared internal documents that contained analyses of Samadi’s future referrals to Lenox Hill for designated health services.  These documents projected revenues of over four million dollars a year attributable to Samadi’s future referrals.  These documents also projected that, without taking into account these revenues, Lenox Hill would operate Samadi’s medical practice at a loss of over one million dollars each year.

   

  • Throughout the Covered Period, taking into account only the value of Samadi’s own collections, Lenox Hill operated Samadi’s medical practice at a loss of over one million dollars each year.

   

  • From October 2016 through at least July 1, 2017, Northwell had an internal policy stating that “[w]hen a Teaching Physician is not present during non-Critical non-Key Portions of the procedure and is participating in another surgical procedure, he/she must arrange for another qualified surgeon to immediately assist the resident in the other case should the need arise.”  The policy further stated, under the section titled “Teaching Physician Requirements for Endoscopy,” that “[t]he Teaching Physician must be present in the room for the entire viewing from the time the scope is inserted to the time the scope is removed.”

   

  • During much of the Covered Period, Samadi performed surgical operations and procedures at Lenox Hill in the following manner:
    • Samadi performed procedures in two operating rooms – OR 21 and OR 25, and sequenced the order of procedures such that portions of procedures performed in OR 21 overlapped with procedures performed in OR 25, and vice versa. 
    • During the portions of OR 21 and OR 25 procedures that overlapped, Samadi generally performed complex, robotic surgical procedures in OR 25, and residents assigned to be supervised by Samadi performed endoscopic operations and procedures in OR 21.
    • Samadi rarely designated another attending urologist to assist in OR 21 for the portions of the procedure from which Samadi himself was absent because of his participation in another surgical procedure occurring in OR 25.
    • In instances when Samadi stepped away from a procedure in OR 25 to supervise a procedure in OR 21, Samadi would freeze or pause the robotic equipment in OR 25 and leave the patient under the care of the anesthesiologist, operating room staff, and, in some instances, a urology resident.  No other attending urologist was present in OR 25 for the portion of time that Samadi was absent, even though the surgery had not yet concluded.  Samadi also did not inform any other attending urologist of the specific times during a surgery when he was absent from OR 25.
    • It was not Samadi’s personal practice to inform his patients when their surgeries were scheduled to overlap with another of Samadi’s scheduled surgeries.
       
  • Samadi performed cystograms and cystoscopies on patients in OR 21 in certain instances when it was not medically necessary to perform these procedures in an operating room setting.  Lenox Hill submitted to Medicare claims for payment associated with the services rendered by operating room staff in conjunction with these procedures.

   

  • Defendants’ practices resulted in the submission of several million dollars of inappropriate claims to Medicare.

   

  Mr. Berman praised the outstanding investigative work of HHS-OIG.  This case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Jessica Jean Hu and Arastu K. Chaudhury are in charge of the case.

  View the Original Release on justice.gov

• U.S. Attorney Announces the Arrest of 27 Individuals, Including NYPD Employees, for A Massive Bribery Scheme Relating to No-Fault Automobile Insurance Policies

  2019-11-07 · Southern District of New York

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  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”), Anthony A. Scarpino Jr., the Westchester County District Attorney, Keith M. Corlett, Superintendent of the New York State Police (“NYSP”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced the arrest today of 27 individuals – including five 911 operators and a uniformed police officer employed by the New York City Police Department (“the NYPD Defendants”) – in connection with a multimillion-dollar scheme to commit bribery and violate the Health Insurance Portability and Accountability Act (“HIPAA”) (the “No-Fault Scheme”).  Twenty-three of the 27 defendants were arrested this morning in New York and New Jersey and are scheduled to appear before U.S. Magistrate Gabriel Gorenstein in federal court later today.  Defendant LATIFAH ABDUL-KHALIQ will be presented today before a U.S. Magistrate Judge in North Carolina, and defendant KOURTNEI WILLIAMS will be presented today before a U.S. Magistrate Judge in Miami, Florida.  Defendant LEON BLUE, a/k/a “Boochie,” is in custody in New Jersey and will be presented in Manhattan at a later date.  Defendant TARA ROSE, a/k/a “Christine Waters,” a/k/a “Christine Hinds,” a/k/a “Taylor Hinds,” was also arrested this morning, and will be presented in Manhattan at a later date.  The case is assigned to U.S. District Judge Paul G. Gardephe.

  As part of the scheme, the alleged ringleader, defendant ANTHONY ROSE, a/k/a “Todd Chambers,” and his co-conspirators bribed 911 operators, medical personnel, and police officers for the confidential information of tens of thousands of motor vehicle accident victims.  Using this information, ROSE and his co-conspirators contacted victims, lied to them, and steered them to clinics and lawyers handpicked by ROSE and his associates. These clinics and lawyers then paid ROSE kickbacks for these referrals, which ROSE distributed to co-conspirators as payments and bribes.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “Anthony Rose and his associates masterminded a brazen scheme that involved bribing 911 operators, medical personnel, and police officers for the confidential information of tens of thousands of motor vehicle accident victims.  These actions have undermined the integrity of our emergency and medical first responders.  This Office is committed to rooting out corruption wherever it is found, and will not rest until those who seek to profit by corrupting our public institutions are bought to justice.” 

  FBI Assistant Director William F. Sweeney Jr. said:  “The charges alleged in today’s indictment describe a scheme that blatantly violated HIPAA laws and actively targeted those the act was established to protect. May today’s arrests be a reminder to everyone that capitalizing on the pain and suffering of others won’t win you any favors in the court of law.”

  Westchester District Attorney Anthony A. Scarpino Jr. said:  “This five-year-long collaborative investigation, initiated by my Office and the New York State Police, is significant as it has exposed the systematic flaws in the no-fault insurance laws and those who seek to abuse them.  My Office is committed to uncovering fraud and prosecuting those who profit by abuse.  The nature of this fraud and bribery results in higher insurance premiums and unnecessary medical costs which impacts us all.  Hopefully, this prosecution will act as a deterrent to those who seek to profit illegally by gaming the system.  I want to thank our law enforcement partners – U.S. Attorney Berman and the Southern District, the New York State Police, the National Insurance Crime Bureau, New York State Department of Financial Services and the F.B.I. – in rooting out this extensive corruption and bringing those responsible to justice.” 

  State Police Superintendent Keith M. Corlett said:  “It is unconscionable for any entrusted public official to use their authority or position as a public servant to take advantage of others, especially in the manner alleged.  I commend our State Police members and all of our law enforcement partners for their outstanding investigative work on this case.  It sends a clear message that no one is above the law, and such alleged abuse of power, especially when it involves the manipulation of victims, will not be tolerated.”

  NYPD Commissioner James P. O’Neill said: “Corruption, in all forms, is intolerable within the NYPD and we continue to work with our law enforcement partners to expose these sorts of schemes. Insurance fraud costs companies and policy holders millions upon millions of dollars a year and I want to thank the FBI, the U.S. Attorney’s Office in the Southern District of New York, the New York State Police, the National Insurance Crime Bureau, the NYC Department of Financial Services, the Westchester County D.A.’s office and our NYPD investigators who brought justice for victims in this case.”

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

  Background of the Scheme

  The charges in the Indictment result from a multi-year investigation of a widespread bribery, corruption, and kickback scheme relating to New York and New Jersey no fault automobile insurance.  Since 2017, the U.S. Attorney’s Office for the Southern District of New York, the FBI, and the Westchester County District Attorney’s Office have been investigating a criminal enterprise that utilizes the New York and New Jersey no-fault automobile insurance regime to earn millions of dollars in illegal profits.

  New York and New Jersey no-fault insurance laws require a driver’s automobile insurance company to pay automobile insurance claims automatically for certain types of motor vehicle accidents, provided the claim is legitimate, and is below a particular injury or damages threshold.  Pursuant to these requirements, insurance companies will often pay medical service providers directly for the treatment they provide to automobile accident victims, without the need to bill the victims themselves.  This process resolves automobile claims without apportioning blame or fault for the accident, thereby avoiding protracted disputes, and the costs associated with an extended investigation of the accident.  ANTHONY ROSE, a/k/a “Todd Chambers,” and his associates, exploited these procedures by bribing individuals with access to confidential information about motor vehicle accident victims, using this information to contact victims under false pretenses, and steering these victims to seek treatment at medical clinics and legal representation from lawyers who were willing to pay kickbacks for the referrals.   

  Since at least in or about 2014, ROSE and his co-conspirators have bribed as many as 50 people, whom they called “lead sources” who, at the time they accepted the bribes, were working for federally funded hospitals (the “Hospital Defendants”), the NYPD (the “NYPD Defendants”), and other entities.  ROSE paid these lead sources as much as $4,000 per month, and continuously worked to identify new lead sources, largely through word of mouth, and through the extensive corrupt network he established.  Lead sources were paid in cash and “off the books.” In return, these lead sources unlawfully disclosed protected, confidential information to ROSE and his co-conspirators including victims’ names, contact information, and medical information.

  After receiving the confidential victim information from the lead sources, ROSE and his associates provided the information to co-conspirators working at Rose’s Call Center (the “Call Center Defendants”) located in Brooklyn, New York.  The Call Center was staffed with 10 to 15 “employees,” who contacted the accident victims on a daily basis and steered them to seek medical treatment at clinics and law firms handpicked by ROSE.  The Call Center Defendants followed a pre-established “script” during these communications.  Among other things, the Call Center Defendants falsely told accident victims that they were calling from an organization affiliated with the New York Department of Transportation, and that their organization had obtained the victims’ contact information through a so-called Personal Injury Hotline. The Call Center Defendants also brazenly lied that they were calling to protect victims from people who obtain victims’ information illegally and mislead victims into seeking treatment with certain providers.  In actuality, the true perpetrators of these illegal acts were none other than ROSE and his co-conspirators.

  In selecting which motor vehicle accident victims to call, ROSE instructed the Call Center Conspirators to target victims from low-income neighborhoods because, in ROSE’s view, these individuals could be more easily brought into the scheme. 

  Scope and Participants In the Scheme

  From at least in or about 2014 to the present, ROSE and his co-conspirators illegally steered more than 6,000 motor vehicle accident victims to participating clinics and lawyers, who paid kickbacks in return for the referrals.  In addition, this figure is a fraction of the number of actual accident victims whose confidential information was unlawfully disclosed as part of the No-Fault Scheme.  The Call Center Conspirators successfully induced approximately 1 in 10 accident victims to seek treatment or representation from participating clinics and lawyers. Thus, the No-Fault Scheme resulted in the improper disclosure of the confidential information of at least 60,000 motor vehicle accident victims. ROSE and co-conspirators further earned, on average, approximately $3,000 per successful referral.

  ROSE and the co-conspirators went to elaborate lengths to conceal the No-Fault Scheme from law enforcement.  Among other deceptive tactics, the co-conspirators generally referred to one another only by aliases;  used “burner” phones with temporary and unidentifiable phone numbers, switched their phone every 60 days; set up numerous fictitious companies; corresponded through encrypted mobile applications; and utilized concealed spreadsheets, which tracked the bribe payments to lead sources, in secret email accounts that co-conspirators could access remotely.  The members of the conspiracy also assigned unique code names to each lead source, such as “J1,” “P2,” and “G6,” and used these code names to refer to lead sources during communications rather than using their true names. 

  The Indictment, unsealed today, charges ROSE and the Hospital Defendants with conspiracy to violate the Travel Act, unlawful disclosure of protected health care information, and bribery.  Six other leaders of the conspiracy, including members of ROSE’s family, and the five Call Center Defendants were charged with conspiracy to violate the Travel Act.  In addition, the six NYPD Defendants were charged with conspiracy to violate the Travel Act and bribery.  The names of the defendants, the charges against them, and other information is set forth below.  

  *                *                *

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

  Mr. Berman praised the work of the FBI, the New York State Police, the New York City Police Department, the New York City Department of Financial Services, the Westchester County District Attorney’s Office, and the National Insurance Crime Bureau.  Mr. Berman noted that the investigation is ongoing.

  This case is being handled by the Office’s Complex Frauds and Cybercrime Unit, and the White Plains Division.  Assistant United States Attorneys Mathew Andrews, Louis A. Pellegrino, Celia Cohen, and Courtney Heavey are in charge of the prosecution.

   

  ---

  [1] As the introductory phrase signifies, the entirety of the texts 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.

   

  Defendant

  Age

  Hometown

  Charges (Potential Maximum Term of Imprisonment)

  ANTHONY ROSE,

  a/k/a “Todd Chambers” 

  51

  Jamaica, New York

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

   

   

  JELANI WRAY,

  a/k/a “Lani”

  a/k/a “J.R.” 

  35

  Brooklyn, New York

   

   

  Travel Act Conspiracy.

  (5 years)

   

   

  NATHANIEL COLES,

  a/k/a “Nat”

   

  66

  Cortlandt Manor, New York

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

   

  TARA ROSE,

  a/k/a “Christine Waters,”     

  a/k/a “Christine Hinds,”     

  a/k/a “Taylor Hinds”

  48

  Jamaica, New York

  Travel Act Conspiracy.

  (5 years)

   

  ANTHONY ROSE, Jr.,

  a/k/a “Sean Wells”

  32

  Cambria Heights, New York

   

   

  Travel Act conspiracy, federal programs bribery.

  (15 years)

   

   

  CHRISTINA GARCIA,

  a/k/a “Cindy”

  35

  Jersey City, New Jersey

   

   

  Travel Act Conspiracy.

  (5 years)

   

   

  LUIS VILELLA,

  a/k/a “Angel Martinez”

  32

  Bronx, New York

   

   

  Travel Act Conspiracy.

  (5 years)

   

   

  LEON BLUE,

  a/k/a “Boochie”

  54

  Brooklyn, New York

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

   

  CLARENCE FACEY,

  a/k/a “Face”

  34

  Brooklyn, New York

   

   

  Travel Act Conspiracy.

  (5 years)

   

   

   

  ANA RIVERA,

  a/k/a “Melissa Ramos”

    

  41

  Woodhaven, New York

   

   

  Travel Act Conspiracy.

  (5 years)

   

   

   

  DEJAHNEA BROWN,

  a/k/a “Michelle Williams”

   

  29

  Saint Albans, New York

   

   

  Travel Act Conspiracy.

  (5 years)

   

   

   

  TONYA THOMAS,

  a/k/a “Karen Schwartz”

   

  48

  Brooklyn, New York

   

   

  Travel Act Conspiracy.

  (5 years)

   

   

   

  ANGELA MELECIO,

  a/k/a “Angie,”

  a/k/a “P5”

   

  40

  Amityville, New York

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

   

   

  STEPHANIE PASCAL,

  a/k/a “Steph,”

  a/k/a “P2”

   

  47

  Brooklyn, New York

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

   

  MAKEBA SIMMONS

   

  29

  Bridgeport, Connecticut

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

   

   

  EDWARD ABAYEV,

  a/k/a “Eddie”

   

  51

  Staten Island, New York

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

   

   

  GRACIELA BORRERO,

  a/k/a “Grace,”

  a/k/a “P8”

   

  42

   

  Brooklyn, New York

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

   

   

  BARRINGTON REID,

  a/k/a “P9”

   

  60

  Bronx, New York

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

   

   

  TONJA LEWIS,

  a/k/a “J1”

   

  53

  Belleville, New Jersey

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

   

   

  RAYMOND PARKER,

  a/k/a “Andre”

  a/k/a “J2”

   

  41

  Newark, New Jersey

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

  BERLISA BRYAN,

  a/k/a “Lisa”

   

  53

  Edison, New Jersey

   

   

  Travel Act conspiracy, Wrongful disclosure of healthcare information, federal programs bribery.

  (25 years)

   

  ANGELA MYERS,

  a/k/a “Angie”

   

  37

  Brooklyn, New York

   

   

  Travel Act conspiracy, federal programs bribery.

  (15 years)

   

   

   

  LATIFAH ABDUL-KHALIQ

   

  47

  Raleigh,  North Carolina

   

   

  Travel Act conspiracy, federal programs bribery.

  (15 years)

   

   

   

  SHAKEEMA FOSTER

   

  27

  Brooklyn, New York

   

   

  Travel Act conspiracy, federal programs bribery.

  (15 years)

   

   

   

  KOURTNEI WILLIAMS

   

  33

  Brooklyn, New York

   

   

  Travel Act conspiracy, federal programs bribery.

  (15 years)

   

   

   

   

  MAKKAH SHABAZZ, a/k/a “Mecca”

   

  43

  Long Island City, New York

   

   

  Travel Act conspiracy, federal programs bribery.

  (15 years)

   

   

   

  YANIRIS DELEON, a/k/a “Jen”

             

  29

  New York, New York

   

   

  Travel Act conspiracy, federal programs bribery.

  (15 years)

   

   

   

   

   

  View the Original Release on justice.gov

• Manhattan U.S. Attorney Announces Settlement of Lawsuit Against Spinal Implant Company, Its CEO, and Another Executive for Paying Millions of Dollars in Kickbacks to Surgeons

  2019-11-07 · Southern District of New York

  Read the Press Release

  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 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 settled a civil healthcare fraud lawsuit against LIFE SPINE INC. (“LIFE SPINE”), MICHAEL BUTLER (“BUTLER”), the founder, president, and chief executive officer of LIFE SPINE, and RICHARD GREIBER (“GREIBER”), the vice president of business development of LIFE SPINE, alleging that LIFE SPINE paid kickbacks in the form of millions of dollars of consulting fees, royalties, and intellectual property acquisition fees to surgeons to induce them to use LIFE SPINE’s spinal implants, devices, and equipment.  The surgeons who received these kickbacks accounted for approximately half of Life Spine’s domestic sales of spinal products from 2012 through 2018.  In the settlement, LIFE SPINE agreed to pay $5.5 million, BUTLER agreed to pay $375,000, and GREIBER agreed to pay $115,000.  Each defendant also made admissions and acknowledged and accepted responsibility for conduct alleged in the Government’s complaint as described further below.  The amounts paid by LIFE SPINE and GREIBER under the settlement are based on the Office’s assessment of their ability to pay based on the financial information they provided.

  The settlement was approved by U.S. District Judge Jed S. Rakoff.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “The settlement reflects this Office’s commitment to stopping companies like Life Spine, and the individuals who run them, from engaging in unlawful kickback schemes.  Such conduct seriously undermines the public’s confidence in medical treatment decisions made by doctors whose judgment may be compromised by illegal kickbacks.  This Office will continue vigorously to pursue companies and individuals who pay health care providers to induce them to use their products or services.”

  HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Medical treatment should be based on the patient’s best interest and not on illegal kickbacks.  We will continue working with our law enforcement partners to protect patients and taxpayers from individuals who place profits before the needs of patients.”   

  According to the Complaint filed in Manhattan federal court: 

  LIFE SPINE is a Delaware corporation with its principal place of business in Huntley, Illinois.  LIFE SPINE designs, develops, manufactures, and markets medical devices and equipment primarily used in spinal surgeries performed by orthopedic surgeons and neurosurgeons, including implants and instruments (“Life Spine Products”). 

  LIFE SPINE paid surgeons to induce them to use Life Spine Products during their surgeries.  LIFE SPINE aggressively recruited surgeons who had the potential to use a high volume of Life Spine Products to enter into agreements to serve as paid consultants and/or to transfer their patents and patent applications to LIFE SPINE in exchange for payments and promised support from LIFE SPINE to bring the surgeons’ new products to market.  These agreements took different forms, including agreements under which the surgeons were purportedly paid to provide training and/or educational services; agreements under which the surgeons were purportedly paid to provide input on new products and then would receive royalties on future sales of the product; and agreements under which the surgeons were paid large up-front acquisition fees for their patents/patent applications and then would receive royalties on the sales of any products developed based on the patents.  LIFE SPINE tied these agreements and the associated payments – as well as the company’s continued commitment to devote resources to the surgeons’ product development projects – to the surgeons’ usage of Life Spine Products.  

  The kickback scheme was successful and these surgeons used Life Spine Products during procedures performed on Medicare and Medicaid patients, which resulted in the submission of kickback-tainted false claims to Medicare and Medicaid.

  As part of the settlement, LIFE SPINE admits, acknowledges, and accepts responsibility for the following conduct: 

  • Between 2012 and 2018 (the “relevant period”), LIFE SPINE entered into agreements with dozens of surgeons and paid these surgeons, and entities owned in whole or in part by the surgeons, millions in consulting fees, royalties, and intellectual property (“IP”) acquisition payments.  Most of the surgeons who received these payments substantially increased their usage of Life Spine Products after entering into agreements with LIFE SPINE.
  • Many of the surgeons who received consulting fees, royalties, and IP acquisition payments were high-volume users of Life Spine Products.  Approximately 21 of the top 30 users of Life Spine Products during the relevant period received consulting fees, royalties, and/or IP acquisition payments.  In addition, approximately half of LIFE SPINE’s domestic sales of spinal products during the relevant period were attributable to surgeries performed by surgeons who received consulting fees, royalties, and IP acquisition payments from LIFE SPINE. 
  • During the relevant period, LIFE SPINE generated reports for management that reflected both the payments made to surgeons and the surgeons’ usage of Life Spine Products during a given time period.  On one occasion a report included an “ROI” column that calculated LIFE SPINE’s return on investment by dividing the sales revenue associated with each surgeon’s usage of Life Spine Products by the total amount paid to that surgeon in consulting fees and royalties during the same period.  When surgeons’ usage decreased, senior sales managers would contact the surgeons, or their distributors, to urge the surgeons to use Life Spine Products more frequently.

  BUTLER admits, acknowledges, and accepts responsibility for the following conduct: 

  • BUTLER was involved in identifying and retaining some of the surgeons who served as paid consultants for LIFE SPINE.  He reviewed many of the patents that LIFE SPINE considered purchasing from surgeons and was involved in some of the negotiation of the terms of the IP purchase agreements, in some instances including the initial acquisition fee and royalty rates. 
  • On multiple occasions, BUTLER received reports that reflected both the payments made to surgeons and the surgeons’ usage of Life Spine Products during a given time period.   When surgeons’ usage of Life Spine Products decreased, on occasion, BUTLER would contact the surgeons, or their distributors, to encourage them to increase their usage of Life Spine Products.

  GREIBER admits, acknowledges, and accepts responsibility for the following conduct:

  • GREIBER was one of the LIFE SPINE managers responsible for reviewing the qualifications of, selecting, and approving surgeons who served as paid consultants for LIFE SPINE. 
  • LIFE SPINE entered into an IP purchase agreement under which LIFE SPINE licensed a patent for a static compression plate owned by a company associated with a surgeon who wanted to develop the product and bring it to market.  GREIBER was one of the two LIFE SPINE managers who signed the agreement on behalf of LIFE SPINE.  LIFE SPINE spent hundreds of thousands of dollars to attempt to develop and bring the compression plate to market but encountered a number of setbacks.  The surgeon accounted for over $3.7 million in Life Spine Product sales from 2012 through 2016. 
  • In 2016, GREIBER participated in two discussions with the surgeon during which LIFE SPINE’s continued funding of the project and the surgeon’s recent decreased usage of Life Spine Products were discussed.  During the calls, while discussing the funding of the compression plate, GREIBER suggested that the surgeon should increase his usage of Life Spine Products.  On one call, GREIBER asked the surgeon to consider using Life Spine “more vigorously” than he recently had been.  Later in the discussion, the surgeon suggested that the company and he “renew our vows to each other.” 

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

  Mr. Berman thanked the FBI and HHS-OIG for their assistance with the case.

  The case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Jennifer Jude, Jeffrey K. Powell, Lara K. Eshkenazi, and Rachael Doud are in charge of the case.

  View the Original Release on justice.gov

• Florida Man Pleads Guilty in Scheme to Acquire Valuable Artworks Fraudulently Using Stolen Identities

  2019-11-07 · Southern District of New York

  Read the Press Release

  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 ANTONIO DIMARCO pled guilty in Manhattan federal court today to participating in a conspiracy to commit wire fraud, based on his attempt to fraudulently acquire millions of dollars’ worth of artworks from art galleries, auction houses, and private collectors from around the world.  U.S. District Judge Valerie E. Caproni presided over the defendant’s guilty plea.

  U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, Antonio DiMarco was a serial swindler, using stolen identities to access auctions, place winning bids on multimillion-dollar artworks, and defraud lenders and insurers into believing that he owned artworks he never actually acquired.  Now the self-portrait DiMarco painted has been revealed to be a sham.”

  FBI Assistant Director William F. Sweeney Jr. said:  “Allegedly preying on an elderly woman, stealing her identity and using her financial information to commit a crime is simply despicable behavior.  Mr. DiMarco is accused of trying to get money based on the value of artwork he didn’t own, and in his attempts he is alleged to have caused the victims in this investigation millions of dollars in losses.  Whether it’s a scheme to steal a few dollars, or millions in precious works of art, criminals deserve to face justice and pay for their crimes.”

  As alleged in the underlying Complaint, Indictment, public filings, and statements made in open court:

  From at least as early as November 2017 through and including October 2018, DIMARCO and a co-conspirator attempted to acquire millions of dollars’ worth of artworks from around the world using a variety of methods, including through appropriating the identity and financial information of a particular victim, and creating and presenting a multitude of fraudulent documents. 

  For example, in November 2017, DIMARCO attempted to purchase artworks by Mark Rothko and Ad Reinhardt at an auction house located in New York, New York.  DIMARCO obtained access to the auction through the use of an elderly victim’s identity documents, including her passport, and bank account information showing that the victim held liquid assets in excess of $7,000,000.  DIMARCO and his co-conspirator further presented false information indicating that the victim had authorized DIMARCO to bid on her behalf, when in reality, the victim knew nothing about DIMARCO’s plan to purchase artworks in her name.  DIMARCO won the auction, bidding close to $6,500,000 for the Rothko work, and $1,155,000 for the Reinhardt work.  However, because DIMARCO in fact lacked funds to pay for the art, the auction house suffered a loss of close to $1,400,000.

  Continuing throughout late 2017 through at least May 2018, DIMARCO and his co-conspirator attempted to purchase artworks from approximately 20 galleries and collectors throughout the world.  Indeed, DIMARCO and his co-conspirator entered into completed sales agreements for more than 60 artworks totaling in excess of $150,000,000.  Among other works, DIMARCO entered into a contract for a $16,500,000 Matisse painting.  None of these works was ever paid for, yet to entice the galleries and collectors to continue to hold the artwork for DIMARCO and his co-conspirator, they provided strings of false excuses for non-payment.  This caused galleries and collectors to suffer monetary losses.

  Having failed to obtain valuable artworks that he had contracted to buy but never paid for, DIMARCO then began to seek out ways to monetize artworks that he had not acquired. DIMARCO created a series of false documents designed to deceive financiers and insurers into believing that in fact he owned the artworks.  DIMARCO did this in hopes of obtaining funds based on the value of those artworks.  DIMARCO was arrested in the course of executing this scheme, after having arranged a showing of high-value artwork he convinced others that he owned.

  Through his plea today, DIMARCO further acknowledged two additional frauds conducted in the midst of the art scheme: a ploy to deprive a victim of hundreds of thousands of dollars through false representations concerning the purposes for providing the funds, and a scheme to purchase a high-end property in Manhattan using a fraudulently altered bank statement.    

  *              *             *

  DIMARCO, 43, of Florida, was arrested on December 6, 2018, by law enforcement authorities in Florida, and subsequently transferred to federal custody.  DIMARCO pled guilty to one count of conspiring to commit wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

  DIMARCO is scheduled to be sentenced by Judge Caproni on February 7, 2020.

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

  These cases are being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Noah Falk, Tara M. La Morte, and Abigail S. Kurland are in charge of the prosecution.

  View the Original Release on justice.gov

• Rockland County Man Charged with Running Multimillion-Dollar Ponzi and Embezzlement Schemes

  2019-11-06 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and Philip R. Bartlett, Inspector-in-Charge of the New York Field Division of the United States Postal Inspection Service (“USPIS”), announced today the unsealing of an Indictment in Manhattan federal court charging RULESS PIERRE with securities fraud, wire fraud, and structuring charges.  The Indictment alleges that PIERRE engaged in two separate fraud schemes.  In the first scheme, PIERRE, as the owner of his own consulting firm, R. Pierre Consulting Group LLC (“RPCG”), solicited money from investors by falsely promising them that he would earn a 20% return on their initial investment every 60 days through stock trading.  In truth and in fact, PIERRE lost most of the money he traded on behalf of his investors, while falsely reporting to investors that their funds were growing as promised.  Also contrary to his representations, PIERRE secretly used investor funds to purchase luxury vehicles and even a fast food franchise for himself.  He also used funds from new investors to make payments to other investors to avoid his scheme being detected.  Through his lies, PIERRE obtained over $2 million from over 100 investors.  In the second scheme, PIERRE defrauded his former employers, two hotels, by regularly embezzling funds out of bank accounts belonging to those hotels and then depositing those funds through structured transactions, into bank accounts PIERRE controlled.  In total, PIERRE stole over $400,000 from the hotels.  PIERRE was arrested yesterday in Nanuet, New York, and will be presented this afternoon before Chief Magistrate Judge Gabriel W. Gorenstein in Manhattan federal court. 

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Ruless Pierre engaged in two separate schemes.  In one scheme, Pierre allegedly promised an improbable 20% return on investors’ money, every 60 days, through stock trading.  In reality, Pierre’s stock trading consistently generated losses for investors, and Pierre secretly used investors’ funds for his own personal use, including the purchase of luxury cars and even a fast food franchise.  In another scheme, Pierre simply stole money from his former employers, brazenly moving money from their bank accounts to his personal bank accounts.  Thanks to the outstanding efforts of our law enforcement partners, Pierre’s schemes have come to an end, and he now faces serious time in federal prison.” 

  Special Agent-in-Charge Fitzhugh said:  “It is alleged Pierre perpetrated a securities fraud and embezzlement scheme that swindled investors out of millions of dollars and misappropriated even more from his employers’ business.  He then flashed his illicit gains by buying high-end luxury vehicles and his own fast food franchise.  Pierre’s deceptive business practices left more than a hundred victims in its wake, but HSI and its law enforcement partners have put an end to his criminal acts, leaving him to face the consequences for his actions.”

  Inspector-in-Charge Bartlett said:  “Mr. Pierre used his ties to the Haitian community, his trusted reputation in that community, and convincing pitch to target and cheat hundreds of victims in an illegal Investment Ponzi scheme. Postal Inspectors remind consumers if an investment promises unusually high returns, it’s likely bogus. Don’t let greed override common sense.”

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

  The Investment Fraud Scheme

  From at least November 2016 through October 2019, PIERRE solicited money from investors of RPCG by falsely promising them that he would earn a 20% return on their initial investment every 60 days through stock trading.  The investments were memorialized in documents known as “Investment Promissory Notes.”  These investment contracts generally promised that the investor would be paid 20% interest every 60 days and that the investor could withdraw all funds from the investment with 30 days’ notice.  Based on these documents and the false representations of PIERRE, the investors understood that their principal and interest were guaranteed.   

  During the course of the investment fraud scheme, PIERRE fraudulently obtained at least $2,049,230 from over 100 investors.  After receiving money from investors, PIERRE deposited the money into one of his personal bank accounts or bank accounts of RPCG.  PIERRE then transferred the money to trading accounts, where he engaged in unprofitable day trading.  From November 2016 through February 2019, PIERRE’s day trading generated approximately $1.4 million in losses.  Despite these losses, PIERRE repeatedly and falsely represented to investors, including in investment statements containing fictitious balances, that the trading was profitable and that their investments were growing as promised.  In addition to simply losing their money, PIERRE also used investors’ funds to purchase luxury vehicles and a fast food franchise for himself.  Additionally, PIERRE further concealed the truth from investors by using money obtained from new investors to make redemption payments to previous investors, in Ponzi-like fashion.

  The Embezzlement Fraud Scheme

  In the second scheme alleged in the Indictment, PIERRE is charged with embezzling money from his former employers.  From approximately 2007 until February 2016, PIERRE was the director of finance for two different hotels, which were owned by the same company (“Company-1”).  One hotel was located in the Palisades, New York (“Hotel-1”), while the other was located in Armonk, New York (“Hotel-2”) (collectively, “the Hotels”).  As the director of finance, PIERRE was the signatory on several bank accounts held in the name of the management company that managed the Hotels (“Management Company-1”). 

  In February 2016, Company-1 sold Hotel-1, and the management of Hotel-1 was transferred from Management Company-1 to another management company (“Management Company-2”).  Subsequently, Management Company-2 opened new bank accounts to operate Hotel-1 (the “New Operating Accounts”).  However, the Legacy Operating Accounts for Hotel-1 remained open until in or about 2019.  PIERRE took advantage of the existence of the Legacy Operating Accounts, and his position as director of finance for Hotel-1, by regularly writing checks payable to “cash” or “petty cash” from one of Hotel-1’s Legacy Operating Accounts.  PIERRE generally wrote the checks for under $10,000 in order to avoid triggering the filing of currency transaction reports for transactions in excess of $10,000.  PIERRE continued to work for Hotel-1 as the director of finance from February 2016 through August 2018.

  In 2017, the management of Hotel-2 was transferred from Management Company-1 to Management Company-2.  PIERRE stopped working for Hotel-2 in February 2016, before it changed management.  Nevertheless, after PIERRE’s employment with Hotel-2 ended, he regularly transferred money from the Legacy Operating Accounts of Hotel-2 to the Legacy Operating Accounts of Hotel-1.  PIERRE then wrote himself checks payable to cash from those funds.    

  PIERRE continued using the Legacy Operating Accounts for Hotel-1 and Hotel-2 even after his employment with Management Company-2 terminated in or about August 2018, thus ending his association with either Hotel.  For example, from August 2018 through March 2019, PIERRE wrote approximately 94 checks to “cash” or “petty cash” from one of the Legacy Operating Accounts for Hotel-1, for a total of approximately $403,890.  The memo lines for the checks falsely stated that the checks were “reimbursements” connected to Hotel-1.

  In addition, from March 2017 through 2019, PIERRE deposited large amounts of cash into his personal bank accounts in amounts that were generally less than $10,000.  The deposits were conducted at various bank locations and typically took place on the same day, consecutive days, or within a short period of time.  For example, in just seven months, from June 2018 through December 2018, PIERRE deposited approximately $225,612, through 138 cash deposits all under $10,000, into a bank account in the name of RPCG.

  PIERRE, 50, of Nanuet, New York, is charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison, one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of structuring, 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.

  Anyone with information about the crimes charged in the Indictment should call the United States Attorney’s Office at 866-874-8900.

  *                      *                      *

  Mr. Berman praised the investigative work of Homeland Security Investigations.  Mr. Berman also thanked the United States Postal Inspection Service, the United States Internal Revenue Service, the New York City Police Department, and the New York City Sherriff’s Office, which assisted in the investigation.  Mr. Berman also thanked the Securities and Exchange Commission, which has brought and filed a civil enforcement action against the defendant. 

  This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jordan Estes and Robert L. Boone are in charge of the prosecution.

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

   

  ---

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

  View the Original Release on justice.gov

• President of Purported Intergovernmental Organization Indicted for Cryptocurrency Scheme

  2019-11-06 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), today announced charges against ASA SAINT CLAIR for his participation in an investment scheme tied to a purported digital coin offering called IGOBIT.  SAINT CLAIR allegedly participated in a scheme to defraud victims into providing loans tied to the launch of IGOBIT by World Sports Alliance, a purported intergovernmental organization focused on promoting international development through sports, and falsely promised investors guaranteed returns and an ownership interest in IGOBIT.

  The case has been assigned to U.S. District Judge P. Kevin Castel.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Asa Saint Clair used World Sports Alliance, a sham affiliate of the United Nations, as a vehicle to defraud lenders.  Saint Clair allegedly defrauded investors in IGOBIT, a digital currency he claimed WSA was developing, but which turned out to be the fraudulent bait with which to lure victim investors.  What’s real is the felony charge Saint Clair now faces.”

  Special Agent-in-Charge Fitzhugh said:  “Saint Claire allegedly touted his company as promoting the values of sports and peace for a better world, yet defrauded all those who invested in his sham company.  As alleged, Saint Claire used the money he earned through deceit to fund a lavish lifestyle for him and his family.  Through the HSI New York El Dorado Task Force and its strong partnerships, Saint Claire will face time for his actions, and it won’t be in the luxury or comfort he has grown accustomed to.”

  According to the allegations in the Indictment unsealed late yesterday in Manhattan federal court[1] and the previously filed Complaint:

  From 2017 through September 2019, SAINT CLAIR solicited investors for the launch of IGOBIT through promised investment returns and representations about World Sports Alliance’s development projects around the world.  World Sports Alliance did not in fact participate in any international development projects and SAINT CLAIR did not dedicate investor funds to IGOBIT.  Instead, SAINT CLAIR diverted those funds to other entities controlled by him and members of his family, as well as to pay his personal expenses, including dinners at Manhattan restaurants, airline tickets, and online shopping.

  *                      *                     *

  SAINT CLAIR, 47, of New York, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

  Mr. Berman praised the outstanding work of HSI on this investigation.

  This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Kiersten A. Fletcher and Tara M. La Morte are in charge of the prosecution. 

   

  ---

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

  View the Original Release on justice.gov

• Dark Web Narcotics Trafficker Pleads Guilty to Laundering More Than $19 Million

  2019-11-06 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that HUGH BRIAN HANEY pled guilty in Manhattan federal court today to money laundering charges, based on his attempt to launder the proceeds of a narcotics trafficking operation that HANEY ran on the Dark Web site known as “Silk Road.”  U.S. District Judge Jed S. Rakoff presided over the defendant’s guilty plea.

  U.S. Attorney Geoffrey S. Berman said:  “Hugh Haney used Silk Road as a means to sell drugs to people all over the world.  Then he laundered more than $19 million in profits through cryptocurrency.  Peddling drugs on the Dark Web does not provide anonymity forever, as Hugh Haney can attest.”

  As alleged in the underlying Complaint, Indictment and statements made in open court:

  Silk Road was an online criminal marketplace designed to be outside the reach of law enforcement or governmental regulation.  All transactions on Silk Road could be completed only through use of the cryptocurrency Bitcoin.  During its two-and-a-half years in operation, Silk Road was used by several thousand drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to well over 100,000 buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions.  Law enforcement shut down Silk Road in or about October 2013. 

  One prominent narcotics vendor on Silk Road was called “Pharmville.”  The operators of Pharmville supplied a dedicated community of individuals who often traded illicit narcotics.  Pursuant to a judicially authorized warrant of HANEY’s house in Ohio in 2018, law enforcement agents found evidence that HANEY was a high-ranking member of Pharmville, involved in large-scale narcotics trafficking on Silk Road.  Among the documents found on a computer in HANEY’s house was a document entitled “HBH DAILY TO DO LIST,” which, among other things, referred to Silk Road, Pharmville, and large-scale narcotics trafficking, including of the deadly opioid fentanyl.

  In 2017 and 2018, HANEY transferred Bitcoins representing narcotics proceeds that he had earned through his control of Pharmville from Bitcoin addresses connected to Silk Road to an account HANEY controlled at a company involved in the exchange of Bitcoins and other digital currency (“Company-1”).  In correspondence with Company-1, HANEY falsely claimed that he had legitimately earned these Bitcoins through cryptographically creating them and from fair transfers with others, while in reality the Bitcoin were derived from transfers from Silk Road.  After HANEY transferred the Bitcoins to cash worth more than $19 million through Company-1, law enforcement seized the money pursuant to a judicially authorized seizure warrant from a custodial account at a bank (“Bank-1”).

  *              *             *

  HANEY, 61, of Ohio, was arrested July 18, 2019, and has been in federal custody since.  HANEY pled guilty to one count of concealment money laundering, which carries a maximum sentence of 20 years in prison, and one count of engaging in a financial transaction in criminally derived property, which carries a maximum sentence of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

  HANEY is scheduled to be sentenced by Judge Rakoff on is February 12, 2020.

  Mr. Berman praised the outstanding investigative work of the Department of Homeland Security, Homeland Security Investigations. 

  These cases are being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Tara M. La Morte and Samuel L. Raymond are in charge of the prosecutions.

  View the Original Release on justice.gov

• Former Head of Pakistani Drug Trafficking Network Sentenced to 15 Years in Prison for Narcotics Offenses

  2019-11-05 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that SHAHBAZ KHAN (“KHAN”) was sentenced to 15 years for conspiring and attempting to import massive quantities of heroin into the United States.  KHAN was taken into custody by Liberian authorities on December 1, 2016, and expelled to the United States later that day, based on a pending Complaint in this District.  He previously pled guilty before U.S. District Judge Lorna G. Schofield, who imposed today’s sentence.    

  U.S. Attorney Geoffrey S. Berman stated:  “Shahbaz Khan was an international drug kingpin who distributed staggering quantities of narcotics from southwest Asia to countries throughout the world.  In 2016, he agreed to transport tens of thousands of kilograms of heroin to New York City.  Today’s sentence shows that we will continue to seek justice against those who flood our communities with heroin and other deadly, highly addictive drugs that fuel the opioid epidemic plaguing this city.”

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

  KHAN, a Pakistani national, was the leader of a drug trafficking organization (the “DTO”) based in Afghanistan and Pakistan that produced and distributed massive quantities of narcotics around the world.  In 2007, KHAN was designated a Narcotics Kingpin under the Foreign Narcotics Kingpin Designation Act by then-President George W. Bush.  In total, KHAN and the DTO distributed hundreds of tons of drugs. 

  Between approximately August and December 2016, KHAN conspired to send tens of thousands of kilograms of heroin hidden in maritime shipping containers and air cargo shipments to New York City.  KHAN spent weeks negotiating the shipments with individuals he understood to be customers of the DTO, who were in fact confidential sources (the “CSes”) working for the Drug Enforcement Administration (the “DEA”).  The CSes told KHAN that they worked with a New York City-based drug trafficker – who, unbeknownst to KHAN, was a DEA undercover agent (“UC-1”) – and that UC-1 was looking for a new source of supply for large quantities of heroin.  In August 2016, the CSes told KHAN that UC-1 was interested in purchasing up to 300 kilograms of heroin per week from KHAN and the DTO.  KHAN bragged to the CSes about his decades-long experience in international drug trafficking, including that he had once transported 114 tons of drugs in a single year, including 64 tons of hashish. 

  Within weeks of first meeting the CSes, KHAN traveled to the Maldives to meet with UC-1 and the CSes.  During the course of these meetings, KHAN explained the various ways that he could transport heroin to UC-1.  KHAN suggested, for example, that he could ship heroin from Pakistan to a transshipment point in Africa, where UC-1 would receive the heroin and have it shipped to the United States.  KHAN further explained that he could ship narcotics “wherever” UC-1 wanted, and emphasized that “if you tell me America, I will send it to America.”

  In October 2016, KHAN provided a five-kilogram sample of high-quality heroin to the CSes in Kabul, Afghanistan.  Within weeks of providing the sample, KHAN traveled to Liberia to meet with UC-1 and to examine a supposed warehouse that could serve as a transshipment point for their future heroin deals.  While in transit to Liberia, KHAN explained to UC-1 that he could ship up to 10,000 kilograms at a time, and that it was just as easy for him to ship 10,000 kilograms as it was to ship 1,000 kilograms.  Once KHAN landed in Liberia, he was arrested and expelled to the United States.   

  *                *                *

  In addition to the prison term, KHAN, 71, was sentenced to five years of supervised release.

  Mr. Berman praised the outstanding investigative efforts of the DEA’s Special Operations Division’s Bilateral Investigations Unit; the DEA Accra, Canberra, Sydney, Dubai, Islamabad, Kabul, Nairobi, and New Delhi Country Offices; the DEA New York Organized Crime Drug Enforcement Task Force Financial Investigative Team; the Government of Liberia; the Liberian Drug Enforcement Agency; the DEA Nairobi Country Office Kenyan Vetted Unit; the Australian Criminal Intelligence Commission; and the Maldives Police Service. 

  The case is being prosecuted by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Shawn G. Crowley, Rebekah Donaleski, and Jason A. Richman are in charge of the prosecution.

  View the Original Release on justice.gov

• Bronx Gang Member Charged with 2015 Murder

  2019-11-05 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Raymond Donovan, the Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an indictment charging JOSE RODRIGUEZ, a/k/a “Hov,” a/k/a “Hov Goon,” with murder in aid of racketeering, conspiracy to commit murder in aid of racketeering, and firearms offenses in connection with the murder of Daquan Cooper on June 25, 2015, in the Bronx.  RODRIGUEZ was already in federal custody serving a sentence for other charges. RODRIGUEZ will be presented later today before U.S. Magistrate Judge Gabriel W. Gorenstein.  The case is assigned to U.S. District Judge Alvin K. Hellerstein.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged in the indictment, Jose Rodriguez and others were responsible for the cold-blooded murder of Daquan Cooper in the Parkchester neighborhood of the Bronx in 2015.  We commend the extraordinary efforts of our law enforcement partners to bring this defendant to justice.”           

  HSI Special Agent in Charge Peter C. Fitzhugh said:  “Rodriguez allegedly ran with a gang whose calling card was violence and drug trafficking, and he is now charged with murder in aid of racketeering for his involvement in a 2015 homicide.  As alleged, he may have thought he was in the clear four years later, but strong law enforcement partnerships ensure that no one will get away with murder.  You commit a crime, you will be arrested and you will be prosecuted.”

  DEA Special Agent in Charge Raymond Donovan said:  “Too often we see murder as a byproduct of gang violence and drug trafficking.  This investigation is a result of combined law enforcement efforts to thwart violent crime and bring answers to victims’ families.” 

  NYPD Commissioner James P. O’Neill said:  “Our obligation is not just to ensure that New Yorkers in every neighborhood are safe, but that they feel safe.  To that end, our work identifying and dismantling gangs and crews, and preventing the violence so often associated with their activities, continues to be of paramount importance.  I thank our NYPD investigators, and our law enforcement partners in the U.S. Attorney’s Office for the Southern District, HSI, and the DEA, for their dedication and vital work in this case.”

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

  RODRIGUEZ was a member or associate of a racketeering enterprise known as the Beach Avenue Crew, a criminal organization whose members and associates engaged in, among other things, murder, attempted murder, and narcotics trafficking. 

  On June 25, 2015, RODRIGUEZ and others murdered Daquan Cooper in the vicinity of 1595 Unionport Road in the Parkchester neighborhood of the Bronx.                

  *                *                *

  RODRIGUEZ, 27, from the Bronx, New York, is charged with one count of murder in aid of racketeering, which carries a maximum sentence of death or life in prison, and a mandatory minimum sentence of life in prison; one count of conspiracy to commit murder in aid of racketeering, which carries a maximum sentence of 10 years in prison; one count of murder through use of a firearm, which carries a maximum sentence of death or life in prison, and a mandatory minimum sentence of five years in prison; and one count of being a felon in possession of ammunition, which carries a maximum sentence of 10 years in prison. 

  Mr. Berman praised the investigative work of HSI, DEA, and the NYPD.  Mr. Berman added that the investigation is continuing.

  This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Maurene Comey, Jacob Warren, and Andrew K. Chan are in charge of the prosecution.

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

   

  ---

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

  View the Original Release on justice.gov

• New Jersey Man Charged in White Plains Federal Court with Narcotics Trafficking Resulting in Death

  2019-11-01 · Southern District of New York

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  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”), Keith M. Corlett, Superintendent of the New York State Police (“NYSP”), and William Worden, Chief of the Port Jervis Police Department (“PJPD”), announced today an indictment charging ROBERT CIERVO with selling fentanyl and heroin that resulted in the death of a 36-year-old Orange County resident ("the Victim"). 

  The indictment alleges that on or about July 3, 2019, CIERVO distributed heroin and fentanyl that resulted in the death of the Victim.  The indictment also alleges that CIERVO participated in a conspiracy to distribute heroin and fentanyl between October 2018 and September 2019. The grand jury returned the indictment on October 29, 2019, and CIERVO was arraigned today before United States Magistrate Judge Paul E. Davison.

  CIERVO previously was arrested on September 29, 2019, and charged by complaint in White Plains federal court with participating in a conspiracy to distribute heroin and fentanyl with MARGARET FLOOD, 38, of Sparrow Bush, New York, ROBERT FLOOD, 39, of Sparrow Bush, New York, and TRAVIS HOPPER, 24, of Matamoras, Pennsylvania.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “Robert Ciervo allegedly sold the fentanyl that killed an Orange County resident.  Now he faces prosecution for that crime and drug distribution conspiracy.  Thanks to the Port Jervis Police Department, the FBI, and the State Police for their tireless efforts to stem the tide of lethal opioids.”

  FBI Assistant Director William F. Sweeney Jr. said:  “Those who engage in the distribution of illegal drugs destroy our communities and ruin lives, and as we allege here today, the heroin and fentanyl Ciervo distributed indeed resulted in the victim's death.  This is another sad example of the reality we face – sellers pushing heroin laced with fentanyl to create a more powerful, and in this case, deadly high.  The FBI’s Hudson Valley Safe Streets Task Force, along with our federal, state, and local partners, will be relentless in doing everything we can to protect our communities from the scourge of these deadly substances.”

  NYSP Superintendent Keith M. Corlett said:  “This indictment is the result of the dedication of law enforcement partners at all levels to stem the tide of drugs and drug related violence on our streets.  This defendant allegedly knowingly sold highly addictive substances to an individual that, sadly, resulted in the individual’s death.  The sale of drugs such as fentanyl and heroin perpetuate a cycle of substance abuse which poses a significant threat to safety and quality of life within our communities, and it will not be tolerated.  I commend our members and our law enforcement partners for their hard work in bringing this individual to justice.”

  PJPD Chief William J. Worden said:  “The City of Port Jervis has been directly affected by the opiate epidemic and have tragically lost too many residents from fatal heroin/fentanyl related overdoses.  The Port Jervis City Police Department is committed to working with our law enforcement partners to combat the illicit sales of heroin and fentanyl that are harming our community and hold illicit narcotics traffickers legally accountable for their actions.”

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

  CIERVO participated in a conspiracy to distribute more than one kilogram of heroin and more than 40 gram of mixtures and substances containing fentanyl, between October 2018 and September 2019.  In addition, on or about July 3, 2019, CIERVO distributed such substances to the Victim, and the Victim's use of the substances resulted in his death.

  *              *             *

  CIERVO, 25, of Montague, New Jersey, has been charged with participating in a conspiracy to distribute narcotics, which distribution resulted in the death of another.  This charge carries a maximum sentence of life in prison, and a mandatory minimum 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 sentence for the defendant will be determined by the judge.

  Mr. Berman praised the outstanding work of the FBI, the Port Jervis Police Department, and the New York State Police for their investigative efforts and ongoing support and assistance with the case.

  The prosecution of this case is being overseen by the Office’s White Plains Division. Assistant U.S. Attorney Lindsey Keenan is in charge of the case.

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

   

  ---

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

  View the Original Release on justice.gov

• Manhattan U.S. Attorney Settles Fraud Suit Against Ahern Painting Contractors for False Statements About Disadvantaged Business Participation on Federal Construction Projects

  2019-11-01 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Douglas Shoemaker, regional Special Agent-in-Charge of the United States Department of Transportation Office of Inspector General (“USDOT-OIG”), Margaret Garnett, the Commissioner of the New York City Department of Investigation (“DOI”), and Carolyn Pokorny, Inspector General of the Metropolitan Transportation Authority (“MTA-OIG”), announced today that the United States has settled civil fraud claims against New York-area painting contractor AHERN PAINTING CONTRACTORS CO. (“AHERN”).  The settlement resolves the United States’ allegations in a False Claims Act lawsuit that AHERN fraudulently obtained payments on two federally funded construction projects by misrepresenting compliance with Disadvantaged Business Enterprise (“DBE”) rules, which require participation of businesses owned by women and minorities.  Specifically, the United States alleged that AHERN misrepresented that co-defendant TOWER MAINTENANCE CORP. (“TOWER”), a certified DBE, was solely performing millions of dollars of work on the two projects when in fact much of that work was performed by co-defendant SPECTRUM PAINTING CORP. (“SPECTRUM”), a non-DBE.  As part of the settlement approved by U.S. District Judge Deborah A. Batts, AHERN admits and accepts responsibility for conduct alleged in the Government’s complaint and agrees to pay $3 million to the United States.  The case against defendants TOWER and SPECTRUM is ongoing.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “Contractors who exploit the Disadvantaged Business Enterprise program to unlawfully obtain millions of dollars in federal funding will be held to account.  Today’s settlement reflects this Office’s commitment to root out fraud in federally funded contracts, so that legitimate minority- and women-owned businesses can participate in public construction projects.”

  USDOT-OIG regional Special Agent-in-Charge Douglas Shoemaker said:  “Today’s settlement is a positive step on the way to closing the chapter on this egregious fraud scheme involving federally funded contracts administered through the New York City Department of Transportation and the Metropolitan Transportation Authority.  While the damage to the integrity of DOT’s DBE program in this instance has been done, it only serves to strengthen our resolve in pursuing those whose greed prevents the legitimate participation of disadvantaged businesses in federal contracting on public transportation projects.” 

  DOI Commissioner Margaret Garnett said:  “Today’s multimillion-dollar settlement demonstrates that law enforcement has its sights on exposing fraud by companies that exploit City and Federal programs aimed at increasing the participation of disadvantaged businesses in public construction projects.  DOI and its partners will continue to protect the integrity and effectiveness of these programs with investigations that uncover and deter dishonest conduct.”

  MTA Inspector General Carolyn Pokorny said:  “Disadvantaged Business Enterprise regulations enable honest competition in construction contracts by ensuring an equal and inclusive playing field for all.  Today’s DBE fraud settlement highlights the commitment of the Office of the MTA Inspector General, along with all of our prosecutorial and investigative partners, towards prohibiting and rooting out discrimination.”

  As alleged in the complaint filed in Manhattan federal court on March 2, 2019, AHERN was a contractor on two federally funded steel painting projects to renovate the Brooklyn Bridge and Queens Plaza.  Contracts for both projects required AHERN to hire DBEs to do a percentage of the work involved and adhere to the DBE regulations.  Instead of hiring qualified DBEs to perform the allotted DBE work, AHERN allowed SPECTRUM and TOWER to use TOWER’s status as a DBE to take credit for millions of dollars of work performed, managed, and supervised by non-DBE SPECTRUM.  To conceal this scheme, SPECTRUM employees repeatedly identified themselves as TOWER employees in documents that AHERN passed along to supervisors on the project.  AHERN and TOWER repeatedly submitted false statements and records to NYC-DOT and MTA misrepresenting that TOWER alone did all of the work allocated to DBEs and that TOWER did not hire a subcontractor to perform any of that work.

  As part of the settlement, AHERN admits, acknowledges, and accepts responsibility for conduct alleged in the complaint as described below:

  • Over the course of the Brooklyn Bridge and Queens Plaza projects, AHERN was aware of the following facts regarding the involvement of SPECTRUM, a non-DBE, in the projects:

   

  • In March 2010, AHERN’s superintendent met with a TOWER manager and a SPECTRUM manager to do a walk-through of the Brooklyn Bridge worksite.  AHERN’s superintendent understood that the SPECTRUM manager would assist TOWER in preparing the bid TOWER submitted for its work as a DBE subcontractor on the Brooklyn Bridge Project;

   

  • • In documents that AHERN received from TOWER and then submitted to Skanska in 2010, TOWER identified the individual who AHERN knew to be a SPECTRUM manager as a “TOWER VP” or as a TOWER employee working on the Brooklyn Bridge Project.  In documents AHERN received from TOWER and then submitted to the MTA in 2011, TOWER identified the individual AHERN knew to be a SPECTRUM manager as TOWER’s superintendent for the Queens Plaza Project; 

   

  • • Throughout the Brooklyn Bridge and Queens Plaza Projects, AHERN managers communicated directly with the SPECTRUM manager regarding the management and supervision of the projects, including scheduling and inspecting TOWER’s DBE work, ordering materials for TOWER’s DBE work, and payment for TOWER’s DBE work.  An AHERN executive also communicated directly with SPECTRUM’s owner regarding the Brooklyn Bridge and Queens Plaza Projects.

   

  • AHERN recklessly disregarded facts showing that SPECTRUM managed and supervised TOWER’s DBE work on the Brooklyn Bridge and Queens Plaza Projects.

   

  • • AHERN failed to seek clarification regarding the financial and other arrangements between TOWER and SPECTRUM or request a copy of any contract or agreement between TOWER and SPECTRUM regarding SPECTRUM’s role.  If AHERN had done so, and TOWER had responded truthfully, AHERN would have learned that TOWER and SPECTRUM had entered into written agreements specifying that SPECTRUM would provide project management support and furnish equipment on the Brooklyn Bridge and Queens Plaza Projects, that TOWER and SPECTRUM would split any profits from the TOWER DBE work on the Brooklyn Bridge and Queens Plaza Projects, and that in addition to the SPECTRUM manager, two other individuals AHERN believed to be TOWER managers were in fact employed by SPECTRUM.

   

  • • AHERN failed to assess whether SPECTRUM’s actual involvement in the projects was substantial enough to jeopardize TOWER’s standing as a DBE performing a “commercially useful function” under the applicable DBE regulations.

  Mr. Berman praised the outstanding investigative work of the USDOT-OIG, DOI, and MTA-OIG. 

  This case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Mónica P. Folch, Li Yu, and David J. Kennedy are in charge of this case.

  View the Original Release on justice.gov

• Bronx Man Sentenced to More Than 12 Years in Prison for Conspiring to Distribute Narcotics on the Dark Web

  2019-11-01 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LUIS FERNANDEZ was sentenced to 151 months in prison for participating in a conspiracy to distribute carfentanil, fentanyl, and a fentanyl analogue over the “dark web,” and for possessing a firearm after being convicted of a felony.  Fentanyl is a synthetic opioid that is significantly stronger than heroin, and carfentanil is a fentanyl analogue that is approximately 100 times stronger than fentanyl.  FERNANDEZ was also ordered to forfeit $269,623 in narcotics proceeds.  FERNANDEZ pled guilty on July 30, 2019, before U.S. District Judge Denise L. Cote, who imposed today’s sentence. 

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “Luis Fernandez and his co-defendant Richard Castro sold large quantities of fentanyl and carfentanil to hundreds of individuals across the country, including over the dark web.  Today’s sentence should be another clear reminder that any short-term profits from drug dealing are not worth the long-term price.”

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

  From at least in or about November 2015 through March 2019, FERNANDEZ and his co-defendant Richard Castro[1] conspired to distribute carfentanil, fentanyl, and phenyl fentanyl (an analogue of fentanyl).  For most of this period, the conspiracy dealt drugs over the dark web, using the monikers “Chemsusa”, “Chems_usa”, and “Chemical_usa.”  Castro was an operator of these online monikers and the leader of this conspiracy.  On one dark web marketplace, Dream Market, Castro boasted that he had completed more than 3,200 transactions on other dark web markets, including more than 1,800 on AlphaBay.  The customer feedback for “Chemsusa” included, “Extremely potent and definitely the real Carf,” as well as “The Carfent is unbelievably well synthesized, keep up the amazing work.”  In June 2018, Castro, using the “Chemsusa” moniker, informed customers that he was moving his business off of dark web marketplaces and would accept purchase requests for narcotics only via encrypted email.  To learn the off-market email address, “Chems_usa” required willing customers to pay a fee.  An undercover law enforcement officer paid this fee, obtained the encrypted email address, and placed orders with Castro.  Castro’s customers paid him in Bitcoin.

  FERNANDEZ managed the conspiracy’s stash house, packaged narcotics, and shipped the narcotics via U.S. mail from the New York City area to hundreds of individuals throughout the United States.  For example, in early March 2019, FERNANDEZ was observed dropping several envelopes in a mailbox in Coney Island, New York; law enforcement seized and searched these envelopes, each of which contained carfentanil. 

  In mid-March 2019, law enforcement searched FERNANDEZ’s residence in the Bronx, New York.  During this search, officers found, among other things, the following evidence in FERNANDEZ’s bedroom: (1) mailing labels similar to those found on packages connected to the conspiracy, (2) addresses of customers who had received packages from the conspiracy, and (3) approximately 78 grams of fentanyl analogues and 307.5 grams of u-47700 (an opioid analgesic that is approximately 7.5 times more potent than morphine).  Law enforcement also recovered a fumigation mask and rubber gloves.  In a different bedroom of FERNANDEZ’s residence, law enforcement recovered a Model R-73 handgun.  Because FERNANDEZ had previously been convicted of a felony (stemming from his sale of cocaine), he was legally prohibited from possessing this handgun.

  *                *                *

  In imposing sentence, the Court stated that the defendant played a “critical” role in the conspiracy and that he was responsible for “shipping death.”

  In addition to his prison term, FERNANDEZ, 42, of the Bronx, was sentenced to four years of supervised release.

  Mr. Berman praised the Federal Bureau of Investigation, the U.S. Postal Inspection Service, and the New York City Police Department for their outstanding investigative work.  Mr. Berman also thanked the Internal Revenue Service and the Orange County, Florida, Sheriff’s Office for their valuable assistance.  

  This matter is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Michael D. Neff, Aline R. Flodr, and Ryan B. Finkel are in charge of the prosecution.

   

  ---

  [1] Castro pled guilty to money laundering and narcotics distribution conspiracy on July 25, 2019.  

  View the Original Release on justice.gov

• 6 Mexican Nationals Plead Guilty to International Sex Trafficking Offenses

  2019-11-01 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that EFRAIN GRANADOS-CORONA, a/k/a “Chavito,” a/k/a “Cepillo,” pled guilty today before U.S. District Judge Andrew L. Carter to sex trafficking by use of force, fraud, or coercion.  Five additional defendants in this case – JULIO SAINZ-FLORES, a/k/a “Rogelio,” JUAN ROMERO-GRANADOS, a/k/a “Chegoya,” a/k/a “El Guero,” ALAN ROMERO-GRANADOS, a/k/a “El Flaco,” PEDRO ROJAS-ROMERO, and EMILIO ROJAS-ROMERO – pled guilty to sex trafficking offenses last month before U.S. District Judge Andrew L. Carter.

  U.S. Attorney Geoffrey S. Berman said:  “These defendants systematically preyed on innocent women and girls in Mexico, smuggled them into the United States, and forced them into prostitution – depriving them of their freedom and dignity.  The devastation to these victims caused by the defendants is beyond comprehension.  With the defendants’ guilty pleas, we seek to deliver justice for the victims, and to deter others from engaging in this reprehensible conduct.”

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

  EFRAIN GRANADOS-CORONA, a/k/a “Chavito,” a/k/a “Cepillo,” JULIO SAINZ-FLORES, a/k/a “Rogelio,” JUAN ROMERO-GRANADOS, a/k/a “Chegoya,” a/k/a “El Guero,” ALAN ROMERO-GRANADOS, a/k/a “El Flaco,” PEDRO ROJAS-ROMERO, and EMILIO ROJAS-ROMERO, the defendants, are members of an international sex trafficking organization (the “STO”).  Many of the members of the STO are related by blood, marriage and community. 

  Between at least in or about 2000 and 2016, members of the STO (the “Traffickers”) have used false promises, physical and sexual violence, threats of the same, lies, and coercion to force and coerce adult and minor women (the “Victims”) to work in prostitution in both Mexico and the United States.

  In most cases, a Trafficker enticed a Victim – frequently a minor – in Mexico.  The Trafficker then used multiple means to isolate the Victim from her family.  In some cases, the Trafficker used romantic promises to induce the Victim to leave her family and live with him.  In other cases, the Trafficker raped the Victim, making it difficult for her to return to her family due to the associated stigma of the rape.  Once a Victim was separated from her family, the Trafficker frequently monitored her communications, kept her locked in an apartment, left her without food, and engaged in physical or sexual violence against the Victim.  Traffickers often told Victims that the Traffickers owed a significant debt and that the Victim must work in prostitution to assist in repaying the debt.  Traffickers typically began forcing the Victims to work in prostitution in Mexico.  Victims were often required to see at least 20 to 40 customers per day.  Traffickers monitored the number of clients a Victim saw by surveilling the Victim, communicating with brothel workers, and by counting the number of condoms provided to a Victim.  Traffickers typically required the Victims to turn over all of the prostitution proceeds to the Traffickers. 

  After a Victim worked in prostitution in Mexico for some time, Traffickers typically arranged for the Victim to be smuggled into the United States.  Members of the STO assisted one another in making smuggling arrangements.  In many cases, multiple Traffickers and multiple Victims were smuggled into the United States together.  In other cases, one Trafficker remained in Mexico while arranging for a Victim to be smuggled together with another Trafficker and other Victims.

  Once in the United States, the members of the STO generally maintained their Victims at one of several shared apartments in New York City.  Victims living in the same apartment were frequently forbidden to communicate with one another.  Once in the United States, Traffickers continued to use physical and sexual violence, threats of the same, lies, and coercion to force the Victims to work in prostitution. 

  In most cases, the Trafficker or another member of the STO provided a Victim with contact information with which to find work.  The Victims typically worked weeklong shifts either in a brothel, or in a “delivery service.”  In a delivery service, the Victim was delivered to a customer’s home by a “driver.”  These brothels and delivery services were located both within New York and in surrounding states, including but not limited to Connecticut, Maryland, Virginia, New Jersey, and Delaware.

  Generally, each customer paid $30-35 for 15 minutes of sex.  Of that, half of the money typically went to the driver (in the case of a delivery service) or to the brothel.  The other $15 went to the Victim, who was then typically forced to give all of the proceeds to the Trafficker.  When a Trafficker was unavailable, a Victim might also give the proceeds to another member of the STO.

  The Traffickers then frequently sent, or had their Victims send, some of the prostitution proceeds to Traffickers’ family members and associates in Mexico by wire transfer.  Such transfers provided financial assistance to the Traffickers’ families and provided financial support to the Traffickers themselves if they returned to Mexico. 

  *                      *                     *                      

  EFRAIN GRANADOS-CORONA, 43, of Mexico, pled guilty to sex trafficking by force, fraud, and coercion, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of life imprisonment.

  JULIO SAINZ-FLORES, 37, of Mexico, pled guilty to sex trafficking of a minor, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life imprisonment.

  JUAN ROMERO-GRANADOS, 33, ALAN ROMERO-GRANADOS, 28, PEDRO ROJAS-ROMERO, 40, and EMILIO ROJAS-ROMERO, 37, all of Mexico, pled guilty to conspiring to commit sex trafficking by force, fraud, and coercion, which carries a maximum sentence of life imprisonment.

  The defendants are scheduled to be sentenced by Judge Carter in early 2020.

  The prosecution is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Jacqueline C. Kelly and Elinor L. Tarlow are in charge of the prosecution.

  View the Original Release on justice.gov

• Staten Island Man Sentenced to 12 Years for Illegally Distributing Oxycodone

  2019-10-30 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that Vito Gallicchio, 50, a Staten Island resident, was sentenced yesterday to 144 months in prison for conspiring to distribute oxycodone.  GALLICCHIO was also ordered to forfeit $2,190,840 in drug proceeds he obtained during the period of the conspiracy.  GALLICCHIO pled guilty in Manhattan federal court on October 18, 2018, before United States District Judge Andrew L. Carter, who imposed GALLICCHIO’s sentence.    

  U.S. Attorney Geoffrey S. Berman said:  “Vito Gallicchio sold hundreds of thousands of oxycodone pills on the streets of New York, and masterminded a ring of purported ‘patients’ who faked injuries to get pills.  As Gallicchio’s sentence makes clear, those who fuel the opioid epidemic face prosecution and stiff sentences.”

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

  Oxycodone is a highly addictive, narcotic opioid that is used to treat severe and chronic pain conditions.  Oxycodone prescriptions are in high demand and have significant cash value to drug dealers.  In fact, oxycodone tablets can be resold on the street for thousands of dollars.  For example, 30-milligram oxycodone tablets have a current street value of approximately $30 per tablet in New York City, with street prices even higher in other parts of the country. 

  From at least approximately January 2012 until his arrest in 2017, GALLICCHIO obtained medically unnecessary oxycodone prescriptions from Dr. David Taylor, who operated a medical clinic in Staten Island, New York, and was subsequently convicted of conspiring to distribute oxycodone.  GALLICCHIO traded cash and other gifts, such as liquor, in exchange for Dr. Taylor writing prescriptions for GALLICCHIO and his crew.  During approximately the same period, GALLICCHIO filled the medically unnecessary prescriptions at a Staten Island pharmacy, and also purchased wholesale quantities of oxycodone from the pharmacist without prescriptions.  GALLICCHIO subsequently sold the oxycodone pills for millions of dollars in profit, which he used to make significant renovations on his home and purchase several expensive cars, including, a Corvette, a Lincoln Navigator, a Lincoln LS, a Jeep Grand Cherokee, and a Bentley. 

  At the sentencing proceeding, Judge Carter found Gallicchio was responsible for distributing more than 180,000 30-milligram oxycodone pills and that he obstructed justice by seeking to intimidate at least two government witnesses.    

  *                      *                     *

  GALLICCHIO’s co-defendant, David Taylor, is scheduled to be sentenced on January 16, 2020.  

  Mr. Berman praised the investigative work of the DEA Tactical Diversion Squad in New York, which comprises agents and officers from the DEA, the New York City Police Department, the New York State Police, Town of Orangetown Police Department, Rockland County Drug Task Force, Westchester County Police Department, and New York City Department of Investigation.  He also acknowledged the assistance of the Department of Health & Human Services. 

  The case is being prosecuted by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Kiersten A. Fletcher, Justin Rodriguez, and Nicolas Roos are in charge of the prosecution. 

  View the Original Release on justice.gov

• Manhattan Man Pleads Guilty to Sex Trafficking

  2019-10-28 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that WILLIAM BAZEMORE pled guilty today to sex trafficking of a female victim by force, fraud, or coercion.  BAZEMORE pled guilty before U.S. District Judge Analisa Torres.  

  U.S. Attorney Geoffrey S. Berman said:  “William Bazemore used violence and coercion to force a woman to engage in commercial sex for his own profit.  With Bazemore’s guilty plea today, we seek to deliver justice for a victim of sex trafficking and exploitation, and to deter others from engaging in this heinous criminal conduct.”

  According to the Indictment, as well as statements made during BAZEMORE’s plea proceeding:

  In or about 2017, BAZEMORE was the leader of a criminal enterprise (the “Organization”) involved in various criminal acts, including drug distribution and sex trafficking, in and around New York City, Maine, and Connecticut.  Members and associates of the Organization transported heroin and crack cocaine between New York, Connecticut, and Maine, at times using women suffering from drug addiction as drug couriers to secrete drugs on their persons and transport drugs and drug proceeds in vehicles controlled by the Organization.  In addition, BAZEMORE and other members and associates of the Organization used force and coercion to cause a female drug customer (“Victim-1”) to engage in commercial sex for their financial gain, and took actions to prevent Victim-1 and others from cooperating with law enforcement against the Organization.  

  *                      *                     *           

  BAZEMORE, 39, of New York, New York, was arrested on March 3, 2019, while in state custody in Maine, and has been in federal custody since.  BAZEMORE pled guilty to one count of sex trafficking by force, fraud, or coercion, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 15 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.

  BAZEMORE is scheduled to be sentenced by Judge Torres on March 12, 2020.

  BAZEMORE’s co-defendant, Warren Bryant, is scheduled for trial on December 9, 2019. 

  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 U.S. Attorney’s Office for the Southern District of New York.

  This case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jacqueline Kelly, Danielle Sassoon, and Lauren Schorr Potter are in charge of the prosecution.

   

  View the Original Release on justice.gov

• Four Individuals Who Operated Queens Medical Clinic Convicted for Illegally Distributing Oxycodone

  2019-10-25 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOHN F. GARGAN and LOREN PIQUANT were convicted Wednesday after a two-week jury trial for conspiring together and with others to unlawfully distribute oxycodone from a medical clinic in Queens, New York.  DANTE A. CUBANGBANG and MICHAEL KELLERMAN previously pled guilty to narcotics, health care fraud, and money laundering charges in connection with their participation in the oxycodone distribution scheme at that same clinic.  From 2012 to 2018, CUBANGBANG, a physician, and GARGAN, a nurse practitioner, prescribed over 6.3 million oxycodone 30-milligram pills to individuals they knew did not need the oxycodone for any legitimate medical reason.  The vast majority of these pills were diverted and sold to others on the street. 

  U.S. Attorney Geoffrey S. Berman said:  “These health professionals should have been the first line of defense against opioid abuse, but instead they were drug dealers operating out of a medical clinic.  They hid behind their medical licenses and positions within the clinic to sell addictive, dangerous narcotics.  This Office will do everything in its power to bring to justice anyone responsible for fueling the opioid epidemic that has taken so many lives.”    

  According to the evidence presented during the trial and other court documents:                  

  Oxycodone is a highly addictive and dangerous opioid narcotic, which is often diverted and sold to individuals who do not have a legitimate medical need for the drug.  The most lucrative pill for street sales is the 30-milligram (“mg”) oxycodone pill, which is fast-acting and powerful.  CUBANGBANG and GARGAN were medical professionals who had the authority to prescribe controlled substances, including oxycodone.

  CUBANGBANG, GARGAN, KELLERMAN, and PIQUANT worked out of a medical clinic in Queens, known as EPOH Medical P.C. (“EPOH”).  Although the defendants tried to make EPOH appear as a legitimate medical clinic, in reality, it was a pill mill that was prescribing medically unnecessary oxycodone 30 mg pills on a massive scale. 

  EPOH had approximately 600 “patients.”  These patients traveled from all five boroughs of New York City, from other counties in New York, and even from other states, to obtain medically unnecessary oxycodone.  There were typically large crowds of patients in EPOH’s waiting area, and patients often had to wait hours to be seen for their “office visit.”  The visit itself lasted no more than a few minutes and involved no physical examinations or questions about pain.  Patients were required to pay $300 in cash for this visit and, in return, they received a prescription for as many as 180 oxycodone 30 mg pills each month.  Most of these prescriptions was paid for by Medicare or Medicaid.  From just the $300 patient visit fee, EPOH generated approximately $2 million in cash each year. 

  The vast majority of the patients seen at EPOH had no medical need for the oxycodone 30 mg pills they were prescribed, and those pills were either abused or sold.  Testimony at trial established that these purported patients sold their pills for up to $19 per pill to individuals who would then resell them to street-level drug dealers.  From 2012 to 2018, CUBANGBANG and GARGAN together prescribed over 6.3 million oxycodone 30 mg pills to individuals they knew did not need the pills for any legitimate medical reason.  At approximately $19 per pill, the value of these illegally obtained pills prescribed by CUBANGBANG and GARGAN at EPOH was approximately $120 million.  PIQUANT, who worked as a receptionist at EPOH, personally sold hundreds of oxycodone 30 mg pills each month.  PIQUANT obtained most of these pills through prescriptions that GARGAN wrote to PIQUANT, to members of PIQUANT’s family, and to PIQUANT’s neighbors.  PIQUANT also recruited purported patients for the clinic.   

  *                      *                      *           

  CUBANGBANG, 51, of Queens, and KELLERMAN, 55, of Queens, each pled guilty to one count of narcotics distribution conspiracy, which carries a maximum sentence of 20 years in prison; one count of health care fraud conspiracy, which carries a maximum sentence of 10 years in prison; and one count of money laundering conspiracy, which carries a maximum sentence of 20 years in prison.

  GARGAN, 63, of New York, New York, and PIQUANT, 38, of the Bronx, New York, each were convicted at trial of one count of narcotics distribution conspiracy, 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 the judge.

  Mr. Berman praised the outstanding investigative work of the Drug Enforcement Administration’s (“DEA”) New York Tactical Diversion Squad, the U.S. Department of Health and Human Services-Office of the Inspector General, the Internal Revenue Service, and the New York City Police Department (“NYPD”).  DEA’s Tactical Diversion Squad (Group TDS-NY) comprises agents and officers from the DEA, the NYPD, the New York State Police, New York State Department of Financial Services, and New York City Department of Investigation.

  This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Michael Kim Krouse, Juliana N. Murray, Sheb Swett, and Louis A. Pellegrino III are in charge of the prosecution.

  View the Original Release on justice.gov

• Bronx Gang Member Charged with Murder

  2019-10-25 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), and Margaret Garnett, Commissioner of the New York City Department of Investigation (“DOI”), announced today the unsealing of a superseding indictment charging MARQUIS YOHANIS, a/k/a “DG,” with murder in aid of racketeering, conspiracy to commit murder in aid of racketeering, and a firearms offense in connection with the murder of Nelson Ramos on January 6, 2019, in the Bronx.  Robert Wilson, a/k/a “Ro,” Kevin Crosby, a/k/a “Sama,” and Yefrel Brito, a/k/a “Mini,” were previously arrested on charges related to the murder of Nelson Ramos and are already in federal custody.

  YOHANIS was arrested yesterday morning and will be presented today in the South Paris District Court in Maine.  The case is assigned to U.S. District Judge Jesse M. Furman.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged in the indictment, Marquis Yohanis, along with his co-defendants, are responsible for the cold-blooded murder of Nelson Ramos earlier this year.  We commend the extraordinary efforts of our law enforcement partners to bring these defendants to justice.”           

  HSI Special Agent-in Charge Peter C. Fitzhugh said:  “Mr. Yohanis and his co-defendants would stop at nothing to expand their violent criminal enterprise, including murder, as alleged in court documents.  Working hand in hand with our law enforcement partners at the NYPD and DOI along with the United States Attorney’s Office in the Southern District of New York made today’s arrest possible.  We will always be more determined than criminals are to evade us in bringing them to justice.  Hopefully the arrest of Mr. Yohanis’s will begin a path to healing for all those impacted by his crimes.” 

  DOI Commissioner Margaret Garnett said:  “This arrest is another important step in holding accountable those individuals who endanger our City’s neighborhoods and the people who live there.  This investigation reflects the strong impact that law enforcement partnership has on protecting all New Yorkers and rooting out violent crime.”

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

  Wilson and Crosby are members or associates of a racketeering enterprise known as the Stevenson Commons Crew.  In order to fund the enterprise, protect and expand its interests, and promote its standing, members and associates of the Stevenson Commons Crew committed, conspired, attempted, and threatened to commit acts of violence against rival gangs, including murder and robbery; conspired to distribute and possess with intent to distribute narcotics; and obtained, possessed and used firearms, including by brandishing and discharging them. 

  Brito and YOHANIS are members or associates of a racketeering enterprise known as Sex Money Murder, a criminal organization whose members and associates engaged in, among other things, murder, attempted murder, and narcotics trafficking. 

  On January 6, 2019, Wilson, Crosby, Brito, and Yohanis murdered Nelson Ramos in the vicinity of 800 Soundview Avenue in the Bronx, New York.                

  *                *                *

  YOHANIS, 19, from the Bronx, New York, is charged with one count of murder and assault with a deadly weapon in aid of racketeering, which carries a maximum sentence of death or life in prison, and a mandatory minimum sentence of life in prison; one count of conspiracy to commit murder in aid of racketeering, which carries a maximum sentence of 10 years in prison; and one count of murder through use of a firearm, which carries a maximum sentence of death or life in prison, and a mandatory minimum sentence of five years in prison. 

  Mr. Berman praised the investigative work of HSI, the NYPD, and DOI.

  This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Andrew K. Chan and Justin V. Rodriguez are in charge of the prosecution.

   

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

   

  ---

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

  View the Original Release on justice.gov

• 13 Members and Associates of Mac Baller Brims Charged with Racketeering, Narcotics, and Firearms Offenses

  2019-10-24 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, James O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), today announced the unsealing of an Indictment charging 13 members and associates of the Mac Baller Brims gang that operated in and around the Mount Hope section of the Bronx with racketeering, narcotics, and firearms offenses, including five attempted murders between September 2018 and July 2019. 

  Of the 13 defendants, eight – DERRICK CASADO, a/k/a “Big Bank,” a/k/a “Papa D,” JUSTIN COLON, a/k/a “Lindo,” MICHAEL ROWE, a/k/a “MJ,” CARLOS RIVERA, a/k/a “Nug,” JAHUAN POLLARD, a/k/a “Flip,” CARLOS ROSARIO, a/k/a “Baby Bottle,” a/k/a “Carlito,” a/k/a “Barlito,” a/k/a “Barlos,” JUAN TEJADA, a/k/a “Gotti,” and CHRISTIAN LIVERMAN – were taken into federal custody in New York earlier today.  They were presented before Magistrate Judge Debra Freeman today.  Defendant DAVON MCCULLOUGH, a/k/a “Yung,” a/k/a “Dayday,” was also taken into federal custody in Virginia earlier today, and he was to be presented before Magistrate Judge Lawrence R. Leonard today.  Two other defendants – DARRELL LAWRENCE, a/k/a “Capo,” and GIBRIL DARBOE, a/k/a “Mouse,” a/k/a “G Money” – are currently in state custody in Maine on related charges and will be presented in the District of Maine on a later date.  The case has been assigned to U.S. District Judge J. Paul Oetken.    

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants wreaked havoc on the Mount Hope section of the Bronx, through acts of violence and narcotics trafficking as members of the Mac Baller Brims.  Thanks to the outstanding work of our law enforcement partners at the NYPD, HSI, and DEA, the defendants now face federal charges for these very serious crimes.”

  Police Commissioner James O’Neill said:  “This case highlights the NYPD’s relentless pursuit of those few individuals who drive the worst kinds of violence and disorder.  Our success reflects how New Yorkers share in our responsibility to keep families and neighborhoods safe to aid us in reducing crime beyond our record-lows.  I want to commend our partners in the U.S. Attorney’s Office for the Southern District, and the members of Homeland Security Investigations, and the DEA, for working together to dismantle a group allegedly responsible for shootings, robberies, drug-dealing, and more.” 

  HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “This investigation exemplifies law enforcement partnerships prevailing over a criminal enterprise only looking to benefit from chaos.  HSI will not back down and will not stop our fight to secure our communities and our nation from violence and narcotics distribution.  Criminal organizations like the Mac Baller Brims should take note that combined law enforcement efforts like this investigation with HSI, the NYPD and DEA along with the United States Attorney’s Office in the Southern District of New York only thrive our resolve to end their existence and eliminate any financial gains they hope to profit.”

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

  The Mac Baller Brims were a criminal enterprise, and their members and associates committed numerous acts of violence, including shootings, in and around the Bronx.  They engaged in such acts to preserve and protect their power, territory, and profits, and to promote and enhance the gang and its criminal activities.  Members of the gang also enriched themselves by committing robberies and by selling drugs, such as crack cocaine, heroin, fentanyl, cocaine, oxycodone, and marijuana, including in New York and in Maine.  While conducting their drug business, members and associates of the gang used, carried, and possessed firearms, and members of the gang brandished and fired those guns on multiple occasions since 2017.           

  Count One of the Indictment charges DARRELL LAWRENCE, DAVON MCCULLOUGH, GIBRIL DARBOE, DERRICK CASADO, JUSTIN COLON, MICHAEL ROWE, CARLOS RIVERA, JAHUAN POLLARD, CARLOS ROSARIO, DAVONTE GARCIA, and JOSE NOUEL with conspiring to conduct and participate in the conduct and affairs of the Mac Ballers enterprise through a pattern of racketeering activity, including through acts involving murder, robbery, and narcotics distribution.

  Counts Two and Three charge ROWE with assault and attempted murder in aid of racketeering in connection with a September 14, 2018, shooting, and a related firearms offense.

  Counts Four and Five charge COLON with assault and attempted murder in aid of racketeering in connection with a March 9, 2019, shooting, and a related firearms offense.

  Counts Six and Seven charge CASADO with assault and attempted murder in aid of racketeering in connection with a May 17, 2019, shooting, and a related firearms offense.

  Counts Eight and Nine charge ROSARIO with assault and attempted murder in aid of racketeering in connection with a July 18, 2019, attempted shooting, and a related firearms offense.

  Counts Ten and Eleven charge ROSARIO with assault and attempted murder in aid of racketeering in connection with a July 20, 2019, shooting, and a related firearms offense.

  Count Twelve charges LAWRENCE, MCCULLOUGH, DARBOE, CASADO, COLON, ROWE, RIVERA, POLLARD, ROSARIO, GARCIA, and NOUEL, as well as JUAN TEJADA and CHRISTIAN LIVERMAN, with conspiring to distribute and possess with intent to distribute crack cocaine, heroin, fentanyl, cocaine, oxycodone, and marijuana.

  Count Thirteen charges LAWRENCE, MCCULLOUGH, DARBOE, CASADO, COLON, ROWE, RIVERA, POLLARD, ROSARIO, GARCIA, NOUEL, TEJADA and LIVERMAN with using, carrying, possessing, brandishing, and discharging firearms during and in relation to a narcotics conspiracy.

  *                      *                     *

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

  Mr. Berman praised the outstanding work of the NYPD and HSI on this investigation, and thanked the Drug Enforcement Administration for its assistance.

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

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

  ---

  [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.

  COUNT

  CHARGE

  DEFENDANTS

  MAX. PENALTIES

  1

  Racketeering conspiracy

   

  18 U.S.C. § 1962(d)

  DARRELL LAWRENCE

  DAVON MCCULLOUGH

  GIBRIL DARBOE

  DERRICK CASADO

  JUSTIN COLON

  MICHAEL ROWE

  CARLOS RIVERA

  JAHUAN POLLARD

  CARLOS ROSARIO

  DAVONTE GARCIA

  JOSE NOUEL

  Life in prison

  2

  Assault and attempted murder in aid of racketeering

   

  18 U.S.C. §§ 1959 and 2

  MICHAEL ROWE

  20 years in prison

  3

  Using, carrying, possessing, brandishing, and discharging a firearm

   

  18 U.S.C.
  §§ 924(c)(1)(A)(i), (ii), (iii), and 2

  MICHAEL ROWE

  Life in prison

   

  Mandatory minimum of 10 years in prison

  4

  Assault and attempted murder in aid of racketeering

   

  18 U.S.C. §§ 1959 and 2

  JUSTIN COLON

   

  20 years in prison

  5

  Using, carrying, possessing, brandishing, and discharging a firearm

   

  18 U.S.C.
  §§ 924(c)(1)(A)(i), (ii), (iii), and 2

  JUSTIN COLON

  Life in prison

   

  Mandatory minimum of 10 years in prison

  6

  Assault and attempted murder in aid of racketeering

   

  18 U.S.C. §§ 1959 and 2

  DERRICK CASADO

   

  20 years in prison

  7

  Using, carrying, possessing, brandishing, and discharging a firearm

   

  18 U.S.C.
  §§ 924(c)(1)(A)(i), (ii), (iii), and 2

  DERRICK CASADO

   

  Life in prison

   

  Mandatory minimum of 10 years in prison

  8

  Assault and attempted murder in aid of racketeering

   

  18 U.S.C. §§ 1959 and 2

  CARLOS ROSARIO

  20 years in prison

  9

  Using, carrying, possessing, and brandishing a firearm

   

  18 U.S.C.
  §§ 924(c)(1)(A)(i), (ii), and 2

  CARLOS ROSARIO

  Life in prison

   

  Mandatory minimum of 7 years in prison

  10

  Assault and attempted murder in aid of racketeering

   

  18 U.S.C. §§ 1959 and 2

  CARLOS ROSARIO

  20 years in prison

  11

  Using, carrying, possessing, brandishing, and discharging a firearm

   

  18 U.S.C.
  §§ 924(c)(1)(A)(i), (ii), (iii), and 2

  CARLOS ROSARIO

  Life in prison

   

  Mandatory minimum of 10 years in prison

  12

  Narcotics conspiracy

   

  21 U.S.C. § 846

  DARRELL LAWRENCE

  DAVON MCCULLOUGH

  GIBRIL DARBOE

  DERRICK CASADO

  JUSTIN COLON

  MICHAEL ROWE

  CARLOS RIVERA

  JAHUAN POLLARD

  CARLOS ROSARIO

  DAVONTE GARCIA

  JOSE NOUEL

  JUAN TEJADA

  CHRISTIAN LIVERMAN

  Life in prison

   

  Mandatory minimum of 10 years in prison

  13

  Using, carrying, possessing, brandishing, and discharging firearms

   

  18 U.S.C.
  §§ 924(c)(1)(A)(i), (ii), (iii), and 2

  DARRELL LAWRENCE

  DAVON MCCULLOUGH

  GIBRIL DARBOE

  DERRICK CASADO

  JUSTIN COLON

  MICHAEL ROWE

  CARLOS RIVERA

  JAHUAN POLLARD

  CARLOS ROSARIO

  DAVONTE GARCIA

  JOSE NOUEL

  JUAN TEJADA

  CHRISTIAN LIVERMAN

  Life in prison

   

  Mandatory minimum of 10 years in prison

   

   

  DEFENDANT

  AGE

  RESIDENCE

  DARRELL LAWRENCE,
  a/k/a “Capo”

  29

  Bronx, New York

  DAVON MCCULLOUGH,
  a/k/a “Yung,” a/k/a “Dayday”

  32

  Newport News, Virginia

  GIBRIL DARBOE,
  a/k/a “Mouse,” a/k/a “G Money”

  22

  Bronx, New York

  DERRICK CASADO,
  a/k/a “Big Bank,” a/k/a “Papa D”

  19

  Bronx, New York

  JUSTIN COLON,
  a/k/a “Lindo”

  20

  Bronx, New York

  MICHAEL ROWE,
  a/k/a “MJ”

  19

  Bronx, New York

  CARLOS RIVERA,
  a/k/a “Nug”

  18

  Bronx, New York

  JAHUAN POLLARD,
  a/k/a “Flip”

  18

  Bronx, New York

  CARLOS ROSARIO,
  a/k/a “Baby Bottle,”
  a/k/a “Carlito,”
  a/k/a “Barlito,”
  a/k/a “Barlos”

  18

  Bronx, New York

  DAVONTE GARCIA,
  a/k/a “VT”

  22

  Bronx, New York

  JOSE NOUEL,
  a/k/a “Tutu”

  22

  Bronx, New York

  JUAN TEJADA,
  a/k/a “Gotti”

  19

  Bronx, New York

  CHRISTIAN LIVERMAN

  27

  Bronx, New York

   

  View the Original Release on justice.gov

• Six Members of Global Insider Trading Ring Charged in Manhattan Federal Court

  2019-10-22 · Southern District of New York

  Read the Press Release

  Audrey Strauss, Attorney for the United States acting under authority conferred by 28 U.S.C. § 515, 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 four indictments and the arrests of three members of a wide-ranging international insider trading ring.  BRYAN COHEN, an investment banker based in New York, and TELEMAQUE LAVIDAS, the son of a member of the board of directors of Ariad Pharmaceuticals, Inc. (“Ariad”), which, until 2017, was a Boston-based publicly traded company, were both arrested on Friday in Manhattan.  JOSEPH EL-KHOURI, a securities trader, was arrested yesterday in the United Kingdom, and the United States Government will be seeking his extradition to the United States.  BENJAMIN TAYLOR and DARINA WINDSOR, former investment bankers who worked in London, as well as GEORGIOS NIKAS, a securities trader who also owns various business interests in Europe and the United States, including a chain of Greek restaurants in New York, remain at large.

  Deputy U.S. Attorney Audrey Strauss said:  “The insider trading charges announced today lay bare a long-running international scheme stretching over the course of years, whose participants earned tens of millions of dollars in illicit profits from illegally trading on stolen inside information.  Our Office, along with our law enforcement partners, will vigorously prosecute those who steal such information and the traders who profit off of it.”   

  FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, the indictments announced today detail very deliberate activity by both current and former investment bankers, securities traders, and even the son of a corporate board member to illegally profit from receiving or providing advanced knowledge of nonpublic information about publicly traded companies.  When one has access to material, nonpublic information, they’re afforded significant knowledge that could give them a competitive edge in stock and options trading.  Exploiting this knowledge is illegal, and the FBI will continue to investigate and prosecute those who cheat the system in this way.” 

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

  The defendants charged were members of a global insider trading ring.  As part of the ring’s illicit conduct, insiders at multiple investment banks obtained material, nonpublic information (“MNPI”) about publicly traded companies and provided that information, sometimes through middlemen, to securities traders who paid for that information in order to place timely, profitable securities trades based on that MNPI.  Members of this ring took steps to evade detection by law enforcement, including by using unregistered “burner” cellphones and encrypted applications to communicate.  In total, the stolen MNPI was used by securities traders to earn tens of millions of dollars in illegal profits.  The charges announced today include charges against investment banking insiders, a close relative of a corporate insider, as well as securities traders who traded on the MNPI.

  Investment Bankers Benjamin Taylor and Darina Windsor

  Between 2012 and 2016, BENJAMIN TAYLOR and DARINA WINDSOR were investment bankers working in the London offices of two global investment banking advisory firms (“Investment Bank A” and “Investment Bank B,” respectively).  By virtue of their employment at those firms, they had access to MNPI relating to corporate transactions involving clients of Investment Bank A and Investment Bank B, and were able to access computer files relating both to transactions to which they were assigned, and those to which they were not assigned.  Both TAYLOR and WINDSOR were required to keep that MNPI strictly confidential, and they regularly attested that they were complying with their employers’ policies prohibiting insider trading.

  Notwithstanding those attestations, TAYLOR and WINDSOR violated their duties of trust and confidence by stealing MNPI from their investment bank employers relating to numerous corporate transactions.  Specifically, TAYLOR stole information from Investment Bank A and sold it to middlemen, and WINDSOR stole information from Investment Bank B and provided it to TAYLOR, who sold it to the same middlemen.  TAYLOR and WINDSOR knew that the MNPI they had stolen would be sold to securities traders, who would be able to execute profitable securities transactions in advance of the MNPI becoming public.  TAYLOR and WINDSOR received from the middlemen over $1 million of benefits, including cash, expensive trips, and luxury watches, for the MNPI they provided. 

  In total, TAYLOR and WINDSOR provided the middlemen with information about approximately 16 different corporate transactions, all relating to companies whose securities were listed on United States exchanges.  The MNPI that TAYLOR and WINDSOR stole, and then sold, yielded tens of millions of dollars of illicit profits, including by securities traders residing in Switzerland and the United Kingdom.

  TAYLOR, who passed the MNPI to the middlemen, used encrypted messaging applications and unregistered “burner” cellphones to communicate with other members of the scheme and arrange in-person meetings to discuss their scheme.  One of the securities traders who received the MNPI that TAYLOR and WINDSOR stole occasionally purchased the relevant securities and then provided the MNPI to journalists for the purpose of causing them to write news stories relating to the MNPI that could influence a company’s stock price.

  The indictment charging TAYLOR and WINDSOR has been assigned to United States District Judge Vernon S. Broderick.

  Investment Banker Bryan Cohen

  COHEN is an investment banker working in the investment banking division of a global investment banking advisory firm (“Investment Bank C”).  By virtue of his employment at Investment Bank C, 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 C, 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 C and passed it to a European securities trader in order to trade based on the MNPI.  COHEN informed the securities trader both about corporate acquisitions as well as 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 C, COHEN received benefits, including cash, from the securities trader.

  COHEN took steps to conceal his scheme, including communicating through “burner” cellphones and receiving cash in person and through intermediaries.

  The indictment charging COHEN has been assigned to United States District Judge William H. Pauley III.

  Securities Trader Joseph El-Khouri

  EL-KHOURI is a securities trader who resides in London, England.  Between February and October 2015, he provided cash, gifts, and other benefits, including travel and expensive hotel stays, to a middleman, in exchange for obtaining MNPI about corporate transactions that had been stolen by TAYLOR and WINDSOR and provided to the middleman in exchange for cash and gifts, part of which were used to compensate TAYLOR and WINDSOR for providing that information.  In total, EL-KHOURI placed trades in the stocks of at least six companies based on the MNPI and prior to the companies announcing their acquisitions to the public, and generated nearly $2 million in illicit profits from those trades.

  EL-KHOURI and the middleman regularly communicated both in person and by phone about their scheme, including by using encrypted messaging applications and “burner” phones that they destroyed and replaced on a regular basis, in order to avoid detection by law enforcement. 

  The indictment charging EL-KHOURI has been assigned to United States District Judge John G. Koeltl.

  Securities Trader Georgios Nikas and Telemaque Lavidas

  NIKAS’s Trading Based on MNPI Stolen from Investment Banks

  NIKAS is a securities trader who also owns various business interests in Europe and the United States, including a chain of Greek restaurants in New York.  NIKAS received MNPI concerning acquisitions and potential acquisitions of publicly traded companies from another securities trader in the scheme.  NIKAS knew that the MNPI was obtained from insiders at investment banks who breached their duties in stealing and passing on the information.

  NIKAS began trading with the other securities trader based on MNPI that had been collected from investment banking insiders in 2010.  From December 2012 through 2017, they obtained MNPI from TAYLOR, WINDSOR, and COHEN, all of whom had stolen the MNPI from their respective investment banks.  NIKAS then executed securities trades, both in his own name and in a purported hedge fund that he and the other securities trader used to trade based on the stolen MNPI.  NIKAS ultimately placed trades in the securities of at least 12 companies, which were listed on United States exchanges, based on stolen MNPI, and reaped millions of dollars in profits.

  NIKAS and others involved in the scheme also took numerous steps to conceal their activity, including using multiple “burner” cellphones to communicate with each other.  COHEN even picked up the “burner” cellphones that he used to communicate with other members of the scheme from a restaurant owned and operated by NIKAS in New York.

  NIKAS’s Trading Based on MNPI Obtained from Lavidas and Stolen from Ariad

  NIKAS also obtained MNPI concerning Ariad from LAVIDAS, the relative of a corporate insider.  NIKAS and LAVIDAS together engaged in a scheme, beginning in 2013, to steal confidential inside information from Ariad, a biotechnology company headquartered in Boston that was marketing Iclusig, a drug for treatment of leukemia, for their personal use.  NIKAS and LAVIDAS were friends, and NIKAS also had a personal relationship with a member of the board of directors of Ariad (“Director-1”), who was LAVIDAS’s father.  LAVIDAS used his connection to Director-1 to obtain MNPI about Ariad and then provided that information to NIKAS, who reaped millions of dollars in profits by trading based on that MNPI.  NIKAS also provided the MNPI to another securities trader in the scheme, who also reaped substantial profits by trading on the information.  During the course of the conspiracy, NIKAS paid LAVIDAS in exchange for the MNPI.

  Specifically, on four separate occasions from 2013 through 2015, Director-1 became aware of MNPI relating to Ariad, and disclosed that information to LAVIDAS, who in turn disclosed it to NIKAS so that NIKAS could trade on it.  Those four occasions included an announcement that the European Commission was expected to approve the marketing of Iclusig in or about early July 2013; concerns raised by the U.S. Food and Drug Administration (“FDA”) regarding clinical trials for Iclusig in or about September and October 2013; the resumption of marketing and distribution of Iclusig in the United States in or about November and December 2013; and a confidential offer to acquire Ariad by another company in or about the summer of 2015.  In each instance, after NIKAS received the MNPI from LAVIDAS, he executed securities trades based on the MNPI, and then profited after the news was publicly announced.

  The indictment charging NIKAS and LAVIDAS has been assigned to United States District Judge Denise Cote.

  *                      *                      *

  A chart listing the age, place of residence, and charges for each of the six charged defendants is attached.  Various of the defendants are charged with conspiracy to commit securities fraud and fraud in connection with a tender offer, which carries a statutory maximum sentence of five years in prison, conspiracy to commit wire fraud and securities fraud, which carries a statutory maximum sentence of 20 years in prison, securities fraud pursuant to Title 15 of the United States Code, which carries a statutory maximum of 20 years in prison, fraud in connection with a tender offer, which carries a statutory maximum of 20 years in prison, wire fraud, which carries a statutory maximum of 20 years in prison, and securities fraud pursuant to Title 18 of the United States Code, which carries a statutory maximum of 25 years in prison.

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

  Ms. Strauss praised the 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.  The Justice Department’s Office of International Affairs of the Department’s Criminal Division assisted in the investigation.

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

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

  United States v. Benjamin Taylor and Darina Windsor, S7 19 Cr. 184 (VSB)

  United States v. Bryan Cohen, 19 Cr. 741 (WHP)

  United States v. Joseph El-Khouri, 19 Cr. 652 (JGK)

  United States v. Georgios Nikas and Telemaque Lavidas, 19 Cr. 716 (DLC)

  Name

  Age

  Place of residence

  Charges

  Number of counts

  Benjamin Taylor

  35

  France

  18 U.S.C. § 371 (conspiracy to commit securities fraud and fraud in connection with a tender offer)

   

  18 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

   

  15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 (securities fraud)

   

  15 U.S.C. §§ 78n(e) and 78ff, 17 C.F.R. §§ 240.14e-3(a) and 240.14e-3(d) (fraud in connection with a tender offer)

   

  18 U.S.C. § 1343 (wire fraud)

   

  18 U.S.C. § 1348 (securities fraud)

   

  1

   

  1

   

  16

   

  5

   

  16

   

  1

  Darina Windsor

  32

  Thailand

  18 U.S.C. § 371 (conspiracy to commit securities fraud and fraud in connection with a tender offer)

   

  18 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

   

  15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 (securities fraud)

   

  15 U.S.C. §§ 78n(e) and 78ff, 17 C.F.R. §§ 240.14e-3(a) and 240.14e-3(d) (fraud in connection with a tender offer)

   

  18 U.S.C. § 1343 (wire fraud)

   

  18 U.S.C. § 1348 (securities fraud)

   

  1

   

  1

   

   

  13

   

  5

   

  13

   

  1

  Bryan Cohen

  33

  New York, New York

  18 U.S.C. § 371 (conspiracy to commit securities fraud)

   

  18 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

   

  1

   

  1

  Joseph El-Khouri

  52

  London, United Kingdom

  18 U.S.C. § 371 (conspiracy to commit securities fraud and fraud in connection with a tender offer)

   

  18 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

   

  15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 (securities fraud)

   

  15 U.S.C. §§ 78n(e) and 78ff, 17 C.F.R. §§ 240.14e-3(a) and 240.14e-3(d) (fraud in connection with a tender offer)

   

  18 U.S.C. § 1343 (wire fraud)

   

  18 U.S.C. § 1348 (securities fraud)

   

  1

   

  1

   

  6

   

   

  2

   

  6

   

  1

  Georgios Nikas,

    a/k/a “George Nikas”

  54

  New York, New York

  Greece

  18 U.S.C. § 371 (conspiracy to commit securities fraud)

   

  18 U.S.C. § 371 (conspiracy to commit securities fraud and fraud in connection with a tender offer)

   

  18 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

   

  15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 (securities fraud)

   

  15 U.S.C. §§ 78n(e) and 78ff, 17 C.F.R. §§ 240.14e-3(a) and 240.14e-3(d) (fraud in connection with a tender offer)

   

  18 U.S.C. § 1343 (wire fraud)

   

  18 U.S.C. § 1348 (securities fraud)

   

   

  1

   

  1

   

  2

   

   

  11

   

  3

   

  11

   

  2

  Telemaque Lavidas

  38

  New York, New York

  Greece

  18 U.S.C. § 371 (conspiracy to commit securities fraud)

   

  8 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

   

  15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 (securities fraud)

   

  18 U.S.C. § 1343 (wire fraud)

   

  18 U.S.C. § 1348 (securities fraud)

   

  1

   

  1

   

  3

   

  3

   

  1

   

   

   

  ---

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

  View the Original Release on justice.gov

• Financial Adviser Pleads Guilty to Running A Multimillion-Dollar Ponzi Scheme

  2019-10-22 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JAMES T. BOOTH pled guilty to securities fraud in connection with his years-long scheme to defraud customers of his financial services firm, Booth Financial Associates (“Booth Financial”), of nearly $5 million through a variety of lies and misrepresentations.  BOOTH pled guilty before U.S. District Judge John G. Koeltl.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “Booth bilked some 40 clients of nearly $5 million by convincing them that he would deliver solid and secure returns on their investments.  Instead, Booth delivered lies and deceit.  Today, Booth has admitted to his scheme and now faces a prison term for his lies.” 

  According to the allegations contained in the Indictment:

  From 2013 through 2019, BOOTH solicited money from clients of Booth Financial and falsely promised to invest their money in securities offered outside of their ordinary advisory and brokerage accounts.  Specifically, BOOTH directed certain of his clients to write checks or wire money to an entity named “Insurance Trends, Inc.”  Instead of investing his clients’ funds, BOOTH, who controlled the bank account of Insurance Trends, Inc., subsequently misappropriated his clients’ funds to pay his personal and business expenses.

  In total, BOOTH raised approximately $4.9 million from approximately 40 investors.  BOOTH lured many of his victims with false promises of safe investments with high returns.  For example:           

  • BOOTH convinced a recently widowed elderly investor (“Investor-1”) to move money she had received from her late husband’s pension into Insurance Trends, Inc.  BOOTH falsely promised Investor-1 that she would have $1 million by the time she was 100 years old.  As a result of BOOTH’s false assurances, Investor-1 invested more than $600,000 with BOOTH.

   

  • BOOTH similarly convinced another investor (“Investor-2”) to move his money into an investment product that, according to BOOTH, would never lose its principal and would grow with the market.  Based on this false representation, Investor-2 moved money he had set aside for his child’s college expenses, at least approximately $60,000, to BOOTH.  BOOTH subsequently failed to provide Investor-2 with documentation of his investment or to allow Investor-2 to redeem his investment.

   

  • BOOTH convinced another elderly investor (“Investor-3”) to withdraw money from an annuity established for the care of his disabled sibling, approximately $18,000, and invest that money with BOOTH.  Investor-3 gave the money to BOOTH with the understanding that BOOTH would invest that money for the benefit of Investor-3’s sibling’s continued care.

  To prevent investors from seeking a return of their money, and to induce additional investments, BOOTH provided investors with fabricated account statements that falsely indicated that BOOTH had purchased certain securities on their behalf and that those investments had generated a profit.  BOOTH further concealed the truth from investors by using money obtained from new investors to make redemption payments to previous investors, in a Ponzi-like fashion.

  *                      *                      *

  BOOTH, 74, of Norwalk, Connecticut, pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

  BOOTH is scheduled to be sentenced by Judge Koeltl on February 21, 2020.           

  Mr. Berman praised the outstanding work of Homeland Security Investigations and also thanked the New York City Police Department, which assisted in the investigation. 

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

  View the Original Release on justice.gov

• Yonkers Man Charged with Attempted Murder of A Special Deputy United States Marshal

  2019-10-21 · Southern District of New York

  Read the Press Release

  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”), Michael Greco, the United States Marshal for the Southern District of New York (“USMS”), and John Mueller, Commissioner of the Yonkers Police Department (“YPD”), announced charges today against MICHAEL CABON for attempting to murder a federal law enforcement officer.  The defendant was presented in White Plains federal court this afternoon before United States Magistrate Judge Lisa Margaret Smith.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendant brazenly used deadly force against law enforcement seeking to effectuate a routine warrant.  This incident is a solemn reminder of the dangers our law enforcement partners face each and every day.  We will work tirelessly to ensure that those who put them in harm’s way face justice.”

  FBI Assistant Director William F. Sweeney Jr. said:  “People in this country break the law every day, and as law enforcement we are charged with investigating those crimes and holding those criminal accountable.  We assume the physical risks when carrying out court ordered actions, but no one should lose their lives while those actions take place.  I’m relieved this situation did not turn deadly which is a credit to the professionalism of the arresting officers and agents who were on scene.”

  United States Marshal Michael Greco said:  “This incident involving members of the U.S. Marshals NY/NJ Regional Fugitive Task Force, highlights the inherent dangers often facing our deputies and task force officers in the performance of their duties.  Nevertheless, these courageous and dedicated law enforcement officers continue to uphold their sworn duty in the pursuit of justice without hesitation.”

  Yonkers Police Commissioner John Mueller said:  “Every officer knows the risks and dangers inherent to law enforcement work but still goes out every day into the world to do the complex and difficult job of keeping us safe. When an officer is assaulted, it is an attack upon our community, our residents, our society, and will be met with swift justice. I am grateful and relieved that the victim will recover and extremely proud of him and the officers at scene; despite being faced with deadly force, they took the defendant into custody and delivered him into the criminal justice system where he must now answer for his acts.”

  As alleged in the Complaint[1]:

  On October 18, 2019, a joint operation between the U.S. Marshals New York/New Jersey Regional Fugitive Task Force and local law enforcement sought to arrest CABON on a bench warrant issued by a Yonkers City Court Judge.  In the course of that arrest, CABON wielded knives in both hands and attempted to stab arresting officers, including a Special Deputy United States Marshal (“Victim-1”).  CABON successfully stabbed Victim-1 before being restrained and arrested by other officers.  Victim-1 was immediately rushed to a nearby hospital and treated for his injuries. 

  *                *                *

  CABON, 29, of Yonkers, New York, is charged with one count of attempting to murder a federal officer and one count of using a deadly weapon to interfere with the performance of a federal officer’s official duties.  Each count carries a maximum sentence of 20 years in prison.

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

  Mr. Berman praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, which comprises Special Agents and Task Force Officers from the FBI, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, U.S. Probation, New York State Police, New York City Police Department, Westchester County Police Department, Westchester County District Attorney’s Office, Yonkers Police Department, Mount Vernon Police Department, Peekskill Police Department, Greenburgh Police Department and New Rochelle Police Department.  He also thanked the Westchester County District Attorney’s Office for their assistance.

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

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

   

  ---

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

  View the Original Release on justice.gov

• Staten Island Doctor Pleads Guilty to Illegally Distributing Oxycodone

  2019-10-21 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that NKANGA NKANGA, a Staten Island physician, pled guilty to illegally distributing oxycodone and other controlled substances.  NKANGA pled guilty before United States Magistrate Judge Debra Freeman to narcotics conspiracy and distribution charges.  NKANGA will be sentenced by United States District Judge Jesse M. Furman, to whom the case is assigned.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Nkanga Nkanga violated the law and the oath of his profession by knowingly selling prescriptions for dangerous opioids to people who did not need them.  Indeed, he sold prescriptions to people he had reason to believe were addicted to these potentially lethal drugs.  Now he awaits sentencing for his role as a drug dealer masquerading as a doctor.”

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

  From at least 2013 until late 2018, in exchange for cash payments, NKANGA wrote hundreds of oxycodone and other controlled substances prescriptions for patients he knew had no legitimate medical need for them, some of whom displayed visible signs of drug addiction.  NKANGA wrote prescriptions for these highly addictive substances without conducting any physical examination, or seeing patients in an examination room.  NKANGA wrote prescriptions in the names of patients who did not even visit his medical office.  On one occasion, for instance, NKANGA asked a patient, “[H]ow many people are you representing today,” and then wrote prescriptions in the names of multiple people, even though three were not present.  NKANGA regularly prescribed over 100 oxycodone pills per patient per month until mid-2018, when he reduced all patients’ monthly allotment, telling one patient he was “very worried” about scrutiny from law enforcement.  

  *                *                *

  NKANGA, 66, of Staten Island, New York, pled guilty to one count of conspiracy to distribute controlled substances and four counts of distribution of controlled substances.  Each count 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 defendant will be determined by the judge.

  Sentencing before Judge Furman is scheduled for January 30, 2020, at 3:30 p.m.

  Mr. Berman praised the outstanding investigative work of the Drug Enforcement Administration’s (“DEA”) New York Tactical Diversion Squad, the U.S. Department of Health and Human Services-Office of the Inspector General, and the New York City Police Department (“NYPD”).  DEA’s Tactical Diversion Squad (Group TDS-NY) comprises agents and officers from the DEA, the NYPD, the New York State Police, New York State Department of Financial Services, and New York City Department of Investigation.

  This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Nicolas Roos, Jacob R. Fiddelman, and Cecilia E. Vogel are in charge of the prosecution. 

  View the Original Release on justice.gov

• Manhattan U.S. Attorney Announces Forfeiture of North Korean Cargo Vessel

  2019-10-21 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John C. Demers, Assistant Attorney General for National Security, announced today the entry of a judgment of forfeiture regarding the M/V Wise Honest (the “Wise Honest”), a 17,061-ton, single-hull bulk carrier ship flagged in the Democratic People’s Republic of Korea (“DPRK” or “North Korea”).  The Wise Honest, one of the largest North Korean-flagged vessels, was used to conduct large illicit shipments of coal from North Korea and to import heavy machinery back to the DPRK.  Payments for maintenance, equipment, and improvements of the Wise Honest were made in U.S. dollars through unwitting U.S. banks, in violation of U.S. law and United Nations Security Council resolutions. 

  U.S. Attorney Geoffrey S. Berman said:  “Today’s judgment of forfeiture finalizes the U.S. government’s seizure of the Wise Honest and officially takes this North Korean vessel out of commission.  It will no longer be used to further a criminal scheme.  Using the full set of tools at our disposal, we will continue to investigate and prosecute attempts to evade U.S. sanctions, including by the North Korean regime.”

  Assistant Attorney General for National Security John C. Demers said:  “This order of forfeiture sinks the Wise Honest’s career as one of North Korea’s largest sanctions-busting vessels.  The Department of Justice will continue to pursue other property used to violate U.S. and international sanctions, around the globe, with the cooperation of our international partners.”

  According to documents filed in Manhattan federal court:

  Pursuant to the International Emergency Economic Powers Act (“IEEPA”) and the North Korea Sanctions and Policy Enhancement Act of 2016 (“NKSPEA”), the DPRK and individuals or entities that the Department of the Treasury, Office of Foreign Assets Control (“OFAC”) has determined are involved in the facilitation of proliferation of weapons of mass destruction (“WMDs”) are prohibited from engaging in transactions with U.S. persons, involving U.S.-origin goods, or using the U.S. financial system.  The United Nations Security Council has similarly prohibited the provision of goods, technology, and services to North Korea, including the sale, supply, or transfer of coal.

  From November 2016 through April 2018, the Wise Honest was used by Korea Songi Shipping Company, an affiliate of Korea Songi General Trading Corporation – which, in 2017, OFAC determined was “subordinate to the [Korean People’s Army] and involved in exporting North Korean coal” – and one of Korea Songi Shipping Company’s representatives, Kwon Chol Nam, to export coal from North Korea to foreign purchasers and import machinery to North Korea (the “Korea Songi Scheme”). 

  On March 14, 2018, the Wise Honest was loaded with coal in Nampo, North Korea.  On April 2, 2018, Indonesian maritime authorities intercepted and detained the Wise Honest.  Although maritime regulations require vessels like the Wise Honest engaged in international voyages to operate an automatic identification system (“AIS”) capable of providing information about the vessel to other ships and to coastal authorities, and despite its March 2018 voyage from North Korea, the Wise Honest had not broadcast an AIS signal since August 4, 2017. 

  Participants in the Korea Songi Scheme additionally attempted to conceal the Wise Honest’s DPRK affiliation by falsely listing the Wise Honest’s nationality or the origin of the illicit coal on board the vessel in shipping documentation, for example, as from Tanzania or Russia.

  In connection with Korea Songi Scheme, Kwon paid for numerous improvements, equipment purchases, and service expenditures for the Wise Honest in U.S. dollars through U.S. financial institutions.  Such transfers constitute a provision of services by U.S. banks to both the sender and recipient of the funds, and U.S. law prohibits banks from providing such services to North Korean parties.  In connection with the March 2018 shipment of coal on board the Wise Honest alone, payments totaling more than $750,000 were transmitted through accounts at a U.S. financial institution.

  On May 9, 2019, the U.S. Attorney’s Office filed a civil forfeiture complaint against the Wise Honest, which had previously been seized pursuant to a warrant issued in the Southern District of New York.  Today’s judgment of forfeiture was ordered by U.S. District Judge P. Kevin Castel. 

  *                      *                     *

  Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and its New York Field Office, Counterintelligence Division, and thanked the Department of Justice’s Money Laundering and Asset Recovery Section’s Program Operations Unit and Office of International Affairs, the U.S. Coast Guard, and the Department of State for their assistance.

  Mr. Berman also thanked Fred and Cindy Warmbier, the parents of the late Otto Warmbier, for their willingness to voluntarily withdraw their claim in the action in order to facilitate the forfeiture of the Wise Honest.

  The case is being handled by the Office’s Terrorism and International Narcotics Unit and Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys David W. Denton Jr. and Benet J. Kearney are in charge of the case, with assistance from Trial Attorney Christian Ford of the Counterintelligence and Export Control Section. 

   

  View the Original Release on justice.gov

• Department of Justice Announces Forfeiture of North Korean Cargo Vessel

  2019-10-21 · Southern District of New York

  Read the Press Release

  The Department of Justice today announced the entry of a judgment of forfeiture regarding the M/V Wise Honest (the “Wise Honest”), a 17,061-ton, single-hull bulk carrier ship registered in the Democratic People’s Republic of Korea (“DPRK” or “North Korea”).  The Wise Honest, one of North Korea’s largest bulk carriers, was used to illicitly ship coal from North Korea and to deliver heavy machinery back to the DPRK.  Payments for maintenance, equipment and improvements of the Wise Honest were made in U.S. dollars through unwitting U.S. banks.  This conduct violates longstanding U.S. law and United Nations Security Council resolutions.  

  “This order of forfeiture sinks the Wise Honest’s career as one of North Korea’s largest sanctions-busting vessels,” said Assistant Attorney General for National Security John C. Demers.  “The Department of Justice will continue to pursue other property used to violate U.S. and international sanctions, around the globe, with the cooperation of our international partners.”​

  ​“Today’s judgment of forfeiture finalizes the U.S. government’s seizure of the Wise Honest and officially takes this North Korean vessel out of commission,” said U.S. Attorney Geoffrey S. Berman for the Southern District of New York.  “It will no longer be used to further a criminal scheme.  Using the full set of tools at our disposal, we will continue to investigate and prosecute attempts to evade U.S. sanctions, including by the North Korean regime.”

  ​According to documents filed in Manhattan federal court:

  ​Pursuant to the International Emergency Economic Powers Act (IEEPA) and the North Korea Sanctions and Policy Enhancement Act of 2016 (NKSPEA), the DPRK and individuals or entities that the Department of the Treasury, Office of Foreign Assets Control (OFAC) has determined are involved in the facilitation of proliferation of weapons of mass destruction (WMDs) are prohibited from engaging in transactions with U.S. persons, involving U.S.-origin goods, or using the U.S. financial system.  The United Nations Security Council has similarly prohibited the provision of goods, technology, and services to North Korea, and the sale, supply, or transfer of coal from North Korea.

  ​From at least November 2016 through April 2018, the Wise Honest was used by Korea Songi Shipping Company, an affiliate of Korea Songi General Trading Corporation, to export coal from North Korea to foreign purchasers and import machinery to North Korea (the “Korea Songi Scheme”).  On June 1, 2017, OFAC designated Songi Trading Company pursuant to Executive 13722 for its involvement in the sale, supply, or transfer of coal from North Korea.  OFAC also determined Songi Trading Company was a subordinate of the Korean People’s Army.

  ​On or about March 14, 2018, the Wise Honest was loaded with coal in Nampo, North Korea.  On or about April 2, 2018, foreign maritime authorities intercepted and detained the Wise Honest.  Maritime regulations require vessels like the Wise Honest engaged in international voyages to operate an automatic identification system (AIS) capable of providing information about the vessel to other ships and coastal authorities.  However, despite its March 2018 voyage from North Korea, the Wise Honest had not broadcast an AIS signal since Aug. 4, 2017.  

  ​Participants in the Korea Songi Scheme attempted to conceal the Wise Honest’s DPRK affiliation by falsely listing different countries for the Wise Honest’s nationality and the origin of the illicit coal in shipping documentation.

  ​In connection with Korea Songi Scheme, Kwon Chol Nam, one of Korea Songi Shipping Company’s Representatives, paid for numerous improvements, equipment purchases, and service expenditures for the Wise Honest in U.S. dollars through U.S. financial institutions.  Such transfers constitute a provision of services, and longstanding U.S. law prohibits banks from providing such services to North Korean parties.  Payments totaling more than $750,000 were transmitted through accounts at a U.S. financial institution in connection with the March 2018 shipment of coal on board the Wise Honest.

  ​On May 9, 2019, the United States Attorney’s Office for the Southern District of New York filed a civil forfeiture complaint against the Wise Honest, which had previously been seized pursuant to a warrant issued in the Southern District of New York.  Today’s judgment of forfeiture, which was ordered by the Honorable P. Kevin Castel of the Southern District of New York, confirms the U.S. Government’s ownership of the Wise Honest.  

  Assistant Attorney General Demers and U.S. Attorney Berman praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and thanked the Department of Justice’s Money Laundering and Asset Recovery Section and Office of International Affairs; the United States Coast Guard; and the Department of State for their assistance.

  Assistant Attorney General Demers and U.S. Attorney Berman also thanked Fred and Cindy Warmbier, the parents of the late Otto Warmbier, for their willingness voluntarily to withdraw their claim in the action in order to facilitate the forfeiture of the Wise Honest.

  ​The case is being handled by Assistant U.S. Attorneys David W. Denton, Jr. and Benet J. Kearney of the U.S. Attorney’s Office for Southern District of New York, and Trial Attorney Christian Ford of the National Security Division’s Counterintelligence and Export Control Section.    

  View the Original Release on justice.gov

• Former Honduran Congressman Tony Hernández Convicted in Manhattan Federal Court of Conspiring to Import Cocaine into the United States and Related Firearms and False-Statements Offenses

  2019-10-18 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Wendy C. Woolcock, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that a jury returned a guilty verdict against JUAN ANTONIO HERNÁNDEZ ALVARADO, a/k/a “Tony Hernández” (“HERNÁNDEZ”) on all four counts in the Superseding Indictment, which included cocaine-importation, weapons, and false-statements offenses.  HERNÁNDEZ is scheduled to be sentenced on January 17, 2020.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “Former Honduran congressman Tony Hernandez was involved in all stages of the trafficking through Honduras of multi-ton loads of cocaine that were destined for the U.S.  Hernandez bribed law enforcement officials to protect drug shipments, solicited large bribes from major drug traffickers, and arranged machinegun-toting security for cocaine shipments.  Today, Hernandez stands convicted of his crimes and faces the possibility of a lengthy prison sentence.”

  DEA Special Agent in Charge Wendy C. Woolcock said:  “This conviction serves as a warning to all those who traffic illegal drugs into our country with complete disregard for human life.  The United States will not tolerate any individual or organization that seeks to gain profit through violence and corruption.  The DEA will continue to stand with its partners to pursue justice regardless of social status.  No one is exempt from being held accountable for predatory criminal activity.”

  As reflected in the Superseding Indictment and the evidence presented at trial:

  HERNÁNDEZ is a former member of the National Congress of Honduras, the brother of the current President of Honduras, and a large-scale drug trafficker who worked with other drug traffickers in, among other places, Colombia, Honduras, and Mexico, to import cocaine into the United States.  From at least in or about 2004, up to and including in or about 2018, HERNÁNDEZ helped process, receive, transport, and distribute multi-ton loads of cocaine that arrived in Honduras via planes, helicopters, and go-fast vessels.  HERNÁNDEZ controlled cocaine laboratories in Honduras and Colombia, at which some of his cocaine was stamped with the symbol “TH,” i.e., “Tony Hernández.”  HERNÁNDEZ also coordinated and, at times, participated in providing heavily armed security for cocaine shipments transported within Honduras, including by members of the Honduran National Police and drug traffickers armed with machineguns and other weapons.  HERNÁNDEZ also used members of the Honduran National Police to coordinate the drug-related murder of Franklin Arita in 2011, and he used drug-trafficking associates to murder a drug worker known as “Chino” in 2013.  In connection with these activities, HERNÁNDEZ participated in the importation of almost 200,000 kilograms of cocaine into the United States. 

  HERNÁNDEZ made millions of dollars through his cocaine trafficking, and he funneled millions of dollars of drug proceeds to National Party campaigns to impact Honduran presidential elections in 2009, 2013, and 2017.  Between 2010 and at least 2013, one of HERNÁNDEZ’s principal co-conspirators was former Sinaloa Cartel leader Joaquín Archivaldo Guzmán Loera, a/k/a “Chapo.”  During that period, HERNÁNDEZ helped Guzmán Loera with numerous large cocaine shipments and delivered a $1 million bribe from Guzmán Loera to HERNÁNDEZ’s brother in connection with the 2013 national elections in Honduras.      

  *                *                *

  HERNÁNDEZ, 42, was convicted on four counts:  (1) conspiring to import cocaine into the United States, which carries a mandatory minimum prison term of 10 years and a maximum prison term of life; (2) using and carrying machine guns during, and possessing machine guns in furtherance of, the cocaine-importation conspiracy, which carries a mandatory consecutive prison term of 30 years; (3) conspiring to use and carry machine guns during, and to possess machine guns in furtherance of, the cocaine-importation conspiracy, which carries a maximum prison term of life; and (4) making false statements to federal agents, which carries a maximum prison term of five years.

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

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

  View the Original Release on justice.gov

• Manhattan U.S. Attorney Sues Orange County Horse Racing Training Center over Violations of Federal Clean Water Act

  2019-10-17 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Peter Lopez, Regional Administrator of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States has filed a civil lawsuit against MARK FORD, MARK FORD STABLES, INC., MARK FORD STAGE ROAD PROPERTY, INC., and FORD EQUINE, LTD. (collectively, “Defendants”), seeking injunctive relief and civil penalties for violations of the Clean Water Act (“CWA”) in connection with Defendants’ construction and operation of a horse racing training facility in Orange County.

  U.S. Attorney Geoffrey S. Berman said:  “The defendants violated the laws protecting our Nation’s wetlands and have repeatedly discharged waste from their horse training facility into the waters of the United States.  This lawsuit will hold the defendants accountable for violating our environmental laws and require them to remedy the significant damage they have caused to federal wetlands.”

  EPA Regional Administrator Peter Lopez stated:  “EPA is taking this action to enforce the Clean Water Act and protect America’s wetlands.  The defendants in this case showed a disregard for the law, resulting in the destruction of federal wetlands, among other violations.”  

  According to the Complaint filed today in White Plains federal court:

  Defendants own and operate a 76-acre horse racing training center and stables on two adjacent properties in the Town of Wallkill in Orange County, New York.  From 2007 to 2017, Defendants destroyed existing federal wetlands and rerouted streams in the course of building a horse racing training center at both properties.  In addition, Defendants have operated a concentrated animal feeding operation without a permit, allowing horse washwater and process wastewater to be discharged into waters of the United States.  Defendants also violated the terms of a stormwater construction general permit during construction work at one of the properties from January 2016 to February 2017. 

  *                *                *

  This case is being handled by the Office’s Environmental Protection Unit.  Assistant United States Attorney Tomoko Onozawa is in charge of the case.

  View the Original Release on justice.gov

• Manhattan Man Charged with 1995 Double Murder

  2019-10-17 · Southern District of New York

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  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 Division of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment charging RAMON SOLLA, a/k/a “Ray,” a/k/a “RB,” with the March 3, 1995, murders of Ricky Santiago and Christopher Torro,  a/k/a “Christopher Rossy,” in New York, New York.  SOLLA was arrested today and will be presented this afternoon before U.S. Magistrate Judge Stewart D. Aaron.  This case is assigned to U.S. District Judge Colleen McMahon.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “For more than two decades, the families of Ricky Santiago and Christopher Torro have been waiting for justice.  Thanks to the extraordinary efforts of the FBI and the NYPD, Ramon Solla will now face justice for his alleged role in the brutal murder of two teenage boys.  We hope today’s arrest brings some measure of comfort to the victims’ families.” 

  FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Decades have gone by since these young boys were murdered, but the detectives and agents working the case never gave up on finding the killer who pulled the trigger.  The fact that we have an alleged suspect in handcuffs today is a testament to their dedication, hard work, and our strong partnerships with the NYPD through the FBI New York Metro Safe Streets Task Force and working with the NYPD Cold Case Squad.  Time doesn’t wear away the guilt of anyone who takes a human life, and it doesn’t erode our determination to find those responsible.”

  NYPD Commissioner James P. O’Neill said:  “The ability of investigators to bring justice for these two victims and provide a sense of closure to their loved ones is paramount.  The identification and arrest of the suspect in this case would not have been possible without the collaboration between the NYPD and our law-enforcement partners.  I thank the U.S. Attorney for the Southern District of New York, the FBI, and the hardworking members of the NYPD, who efforts resulted in this arrest.”

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

  On March 3, 1995, on the rooftop of 250 East 105th Street in New York, New York, SOLLA shot and killed both Ricky Santiago, 17, and Christopher Torro, 17.  SOLLA committed both murders in furtherance of a conspiracy to distribute more than one kilogram of heroin.

  *                *                *

  SOLLA, 45, of New York, New York, is charged with two counts of using a firearm to commit murder, each of which carries a maximum sentence of life in prison or death, and a mandatory minimum sentence of five years in prison, and with two counts of murder in furtherance of a drug crime, each of which carries a maximum sentence of life in prison or death, and a mandatory minimum sentence of 20 years in prison.  The maximum and minimum 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 investigative work of the FBI and the NYPD.

  The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Maurene Comey and Allison Nichols 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 description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.

  View the Original Release on justice.gov

• Leader of Nine Trey Gangsta Bloods Sentenced to More Than 11 Years in Prison

  2019-10-17 · Southern District of New York

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  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JAMEL JONES, a/k/a “Mel Murda,” was sentenced to 135 months in prison in connection with his participation in the Nine Trey Gangsta Bloods (“Nine Trey”) and the distribution of narcotics, including heroin and fentanyl.  JONES pled guilty on April 3, 2019, before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

  U.S. Attorney Geoffrey S. Berman said:  “Under Jamel Jones’s leadership, the Nine Trey gang acted with impunity to ensure their narcotics business remained intact, including shootings, assaults, and robberies.  Now, Jones faces more than a decade behind bars for his role and involvement in this violent gang.”

  According to court documents and the evidence presented at the trial of JONES’ co-defendants:

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

  The leadership structure of Nine Trey is divided into two parts: the Prison Lineup, which consists of incarcerated members, and the Street Lineup, which consists of members who are not incarcerated.  JONES was the Godfather of the Street Lineup.

  JONES pled guilty to one count of racketeering conspiracy for his participation in the Nine Trey enterprise and to one count of conspiracy to distribute and possess with intent to distribute ten grams and more of an analogue of fentanyl.

  *                *                *

  In addition to the prison term, JONES, 39, of Brooklyn, New York, was sentenced to five years of supervised release and ordered to forfeit $10,000.   

  Mr. Berman praised the outstanding investigative work of the New York City Police Department, Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

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

  View the Original Release on justice.gov

• Bronx Man Charged with 2011 Murder

  2019-10-17 · Southern District of New York

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  Geoffrey S. Berman, United States Attorney for the Southern District of New York, and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment charging RANDY MARTINEZ, a/k/a “Rampage,” with the October 17, 2011, murder of Davon Jackson.  MARTINEZ was presented today before U.S. Magistrate Judge Stewart D. Aaron.  This case is assigned to U.S. District Judge Naomi Reice Buchwald.   

  U.S. Attorney Geoffrey S. Berman said: “As alleged in the Indictment, Randy Martinez exchanged gunfire with members of a rival gang, during which 16-year-old Davon Jackson was shot in the head and killed.  On the eight-year anniversary of Jackson’s death, the defendant now faces prosecution for this terrible crime, thanks to the persistence of our partners at the NYPD.”

  NYPD Commissioner James P. O’Neill stated:  “Today’s indictment comes eight years to the day after a 16-year-old was struck by gunfire and killed in the Bronx.  The NYPD will never tolerate gangs and the violence that they are too often responsible for.  I thank the detectives and our law enforcement partners for their tireless work in this case.”

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

  MARTINEZ was a member of the Young Gunnaz, a violent gang operating in the Bronx, New York, that engaged in narcotics trafficking and acts of violence, including murder and attempted murder.  On October 17, 2011, MARTINEZ exchanged gunfire with members of a rival gang in the vicinity of 146th Street and Third Avenue in the Bronx, New York, during which Davon Jackson, 16, was shot in the head and killed. 

  *                      *                     *

  Martinez, 28, of the Bronx, New York, is charged with one count of murder in aid of racketeering, which carries a maximum sentence of life in prison or death, and a mandatory minimum sentence of life in prison, and one count of using a firearm to commit murder in furtherance of a crime of violence and aiding and abetting the same, which carries a maximum sentence of life in prison or death, and a mandatory minimum sentence of five years in prison.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

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

  This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Samson Enzer and Danielle R. Sassoon are in charge of the prosecution.

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

   

  ---

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

  View the Original Release on justice.gov

• U.S. Attorney Announces Multiple Charges Against Bronx Tax Preparer

  2019-10-16 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the 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 the arrest of LORENZO ALMANZAR for preparing fraudulent tax returns containing more than $400,000 in fraudulent deductions and making false statements to federal agents.  ALMANZAR was presented in Manhattan federal court today before U.S. Magistrate Judge Stewart D. Aaron. 

  U.S. Attorney Geoffrey S. Berman said:  “As alleged, Lorenzo Almanzar used his accounting skills to bilk the government of thousands of dollars.  Almanzar now faces 30 counts of criminal tax charges, and the possibility of time behind bars.”

  IRS-CI New York Special Agent in Charge Jonathan D. Larsen said:  “Well-intentioned taxpayers can be victimized by tax return preparers who mislead people into taking credits or deductions they aren’t entitled to in order to increase their fee or burnish their reputation.  As Almanzar learned today when he was arrested, there are serious consequences for allegedly defrauding his clients.  IRS-CI special agents are committed to identifying and prosecuting unscrupulous tax return preparers.”

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

  From 2014 through 2017, ALMANZAR owned and operated a business called Future International Corp. (“Future”) in the Bronx, New York, which purported to offer tax preparation services.  As alleged in the Complaint, ALMANZAR prepared fraudulent returns that fabricated and falsely overstated various items, including, among other things, medical expenses, charitable expenses, and unreimbursed employee business expenses.  Additionally, ALMANZAR made false statements to federal agents during the course of their investigation into those fraudulent returns.

  ALMANZAR prepared multiple fraudulent tax returns containing more than $400,000 in fraudulent deductions, which resulted in a tax loss of at least $57,000.

  *                *                *

  ALMANZAR, 63, of White Plains, New York, is charged with 30 counts of aiding and assisting the preparation of false and fraudulent tax returns, each of which carries a maximum sentence of three years in prison, and one count of making false statements to federal agents, 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 a judge.

  Mr. Berman praised the outstanding investigative work of Special Agents from IRS-CI.  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.

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

   

  ---

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

  View the Original Release on justice.gov

• Manhattan U.S. Attorney Files Civil Rights Suit Against Real Estate Firm and Developer for Designing and Constructing 68 Rental Apartment Buildings with Inaccessible Conditions

  2019-10-16 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that the United States has filed a federal civil rights lawsuit against real estate firm ATLANTIC DEVELOPMENT GROUP, LLC (“ATLANTIC”), and its principal, PETER FINE, for engaging in a pattern or practice of violations of the accessible design and construction requirements of the Fair Housing Act (“FHA”).  Specifically, the United States alleges that ATLANTIC and FINE have designed and constructed more than 6,000 apartments in 68 rental buildings throughout the Bronx, Manhattan, and Westchester County that do not comply with the FHA’s accessibility requirements.  The lawsuit seeks a court order directing ATLANTIC and FINE to retrofit these buildings to make them accessible to people with disabilities, to make changes to policies and procedures, and to compensate individuals who suffered discrimination due to the inaccessible conditions.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “The Fair Housing Act’s accessibility provisions were enacted to ensure that people with disabilities are not consigned to second-class status when it comes to housing.  These rights under the FHA apply equally to residents who live in affordable housing as those living in luxury high-rises.  With today’s lawsuit, real estate firms and developers in this District – including developers of affordable housing like Atlantic and Fine – should know that this Office will continue to use all available tools to enforce the FHA’s promise of accessibility in housing for people with disabilities.”

  The FHA’s accessible design and construction provisions require multifamily housing complexes constructed after January 1991 to have basic features accessible to persons with disabilities.  According to the Complaint, ATLANTIC and FINE failed to comply with the FHA’s accessibility requirements in designing and constructing 68 rental buildings that contain more than 6,000 apartments.  As alleged in the Complaint, the inaccessible conditions include, among others:

  • Excessively high thresholds at building entrances and entrances to common use areas like community rooms;
  • Entrance ramps that lack handrails on both sides;
  • Insufficient clear floor space in bathrooms within individual apartments;
  • Insufficient widths between sinks or refrigerators and opposing ranges or counters in kitchens within individual apartments;
  • Excessively high thresholds at entrances to individual apartments and within individual apartments; and
  • Common use bathrooms that lack pipe insulation and toilet grab-bars.

             

  The Complaint also alleges that these types of inaccessible conditions recur throughout the rental buildings developed by ATLANTIC and FINE across more than 15 years and involving multiple architects.  Further, according the Complaint, many of the rental buildings at issue are designated for low-income residents, and FINE, through ATLANTIC, earned substantial profits from those developments on account of having received so-called 421-a tax exemption certificates for developing low-income rental properties.

  Due to the inaccessible conditions at the rental buildings they designed and constructed, the Complaint alleges that ATLANTIC and FINE engaged in a pattern or practice of resistance to the full enjoyment of rights protected by the FHA and in denying such rights to people with disabilities.  The Complaint seeks a court order directing ATLANTIC and FINE to retrofit the individual apartments as well as the public and common use areas in the 68 rental buildings so that they are accessible, to adopt policies and procedures to ensure FHA compliance in future constructions, and to compensate people who suffered discrimination due to the inaccessible conditions.

  People who believe they may have experienced discrimination due to the inaccessible conditions at the 68 rental buildings developed by ATLANTIC and FINE may contact the Civil Rights Complaint Line at (212) 637-0840, use the Civil Rights Complaint Form available on the United States Attorney’s Office’s website http://www.justice.gov/usao/nys/civilrights.html, or send a written report to:

  U.S. Attorney’s Office, Southern District of New York

  86 Chambers Street, 3rd Floor

  New York, New York 10007

  Attention: Chief, Civil Rights Unit

  The case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorneys Li Yu, Jacob Lillywhite, Steven Kochevar, and Natasha Teleanu are in charge of the case.

  View the Original Release on justice.gov

• MS-13 Leaders Charged with Racketeering, Narcotics, and Firearms Offenses

  2019-10-16 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging AMILCAR ROMERO, a/k/a “Soldado,” JAIME SANTANA, a/k/a “Smiley,” JOSE GARCIA, a/k/a “Tricky,” and ALEXANDER RIVERA, a/k/a “Extrano,” with racketeering conspiracy and narcotics distribution conspiracy.  CRISTIAN GUERRERO-MELGARES, a/k/a “Enigma,” and GUSTAVO LLEVANO-RIVERA are charged in the narcotics conspiracy count.  Several defendants also face firearms charges.

  GARCIA, GUERRERO-MELGARES, and RIVERA were arrested this morning and will be presented today before Magistrate Judge Stewart D. Aaron.  SANTANA was arrested last night and will be presented today in the Middle District of Tennessee.  ROMERO is currently in state custody in California on other charges and will be transferred to federal custody in New York and presented at a later date.  LLEVANO-RIVERA remains at large.  The case is assigned to U.S. District Judge William H. Pauley III.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “The defendants in this case include alleged leaders of the L.A. Program of MS-13, operating across the United States.  They and their co-defendants are alleged to have engaged in acts of violence, narcotics distribution, and the use of firearms.  Thanks to our remarkable partners at HSI and the NYPD, the defendants now face federal charges for these very serious crimes.”

  HSI Special Agent-in Charge Peter C. Fitzhugh said:  “Today, three high ranking members of MS-13 were arrested for various charges, including, racketeering, drug distribution and firearms offenses.  These three gang members allegedly utilized violence and intimidation in order to further their criminal enterprise.  HSI New York and our other field offices around the country continue to work with our local law enforcement partners to combat MS-13.  It is only through these coordinated efforts that we will be able to disrupt and ultimately dismantle this gang.”

  NYPD Commissioner James P. O’Neill said:  “Targeting gangs and crews, and preventing the violence so often associated with their illegal activities, continues to be among the highest priorities for the NYPD and our law enforcement partners.  By precisely targeting the relatively small percentage of individuals responsible for committing much of the violence in New York, we are making the safest large city in America even safer.  We remain relentless in our efforts to identify, arrest, and prosecute anyone who allegedly involves themselves in such criminal behavior.”

  According to the allegations in the Indictment unsealed today in Manhattan federal

  court as well as court filings[1]:

  ROMERO, SANTANA, GARCIA, and RIVERA are members of a transnational racketeering enterprise known as Mara Salvatrucha, or MS-13, which operates throughout North and Central America, including in El Salvador, Mexico, New York, California, Texas, Virginia, Tennessee, and North Carolina.  In order to enrich the enterprise, protect and expand its criminal operations, enforce discipline among its members, and retaliate against members of rival gangs, members and associates of MS-13 committed, conspired, attempted, and threatened to commit acts of violence; distributed and possessed with intent to distribute narcotics, including methamphetamine and cocaine; and obtained, possessed and used firearms.

  MS-13 is organized into chapters called “cliques.”  Groups of cliques, in turn, are aligned as “programs.”  Each program is governed by a group of senior gang leaders known as the “table.”  ROMERO, SANTANA, and GARCIA are high-ranking members of the table of the “L.A. Program” of MS-13.

  *                *                *

  ROMERO, 50, SANTANA, 39, GARCIA, 31, and RIVERA, 31, are charged with one count of racketeering conspiracy, which carries a statutory maximum sentence of life in prison. Those four defendants, as well as GUERRERO-MELGARES, 32, and LLEVANO-RIVERA, 23, are charged with one count of conspiracy to distribute and possess with intent to distribute: (i) 50 grams and more of methamphetamine, (ii) 500 grams and more of mixtures and substances containing a detectable amount of methamphetamine, and (iii) mixtures and substances containing a detectable amount of cocaine, which carries a statutory maximum sentence of life in prison, and a mandatory minimum sentence of 10 years in prison. SANTANA, GARCIA, and GUERRERO-MELGARES are charged with possessing, carrying, and using firearms during, in relation to, and in furtherance of, the narcotics conspiracy, which carries a statutory maximum sentence of life in prison, and a mandatory minimum sentence of five years in prison.  SANTANA and RIVERA are charged with possessing firearms while unlawfully or illegally in the United States, which carries a statutory maximum sentence of 10 years in prison.

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

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

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

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

   

  ---

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

  View the Original Release on justice.gov

• Former President of Labor Union Pleads Guilty to Demanding and Accepting Bribes

  2019-10-16 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GLENN BLICHT, the former president of a labor union (the “Union”), pled guilty today to violating the Taft-Hartley Act by demanding and accepting approximately $150,000 in bribe payments from an employer (the “Employer”).  In exchange for these bribes, BLICHT did not represent Union members’ interests.  BLICHT pled guilty before United States District Judge Analisa Torres, to whom BLICHT’s case is assigned.

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “As the president of a labor union, Glenn Blicht’s duty was to fight for his union members.  Instead, for many years, he demanded and accepted bribes – and in return, he sold out his union members.  Our Office is committed to prosecuting those who abuse positions of trust for their own gain.”

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

  From 2009 through the present, BLICHT served as an officer of the Union, including as its president for many years.  In that role, BLICHT had a duty to act in the best interests of the Union and its members, including by avoiding personal financial conflicts of interest with the Union.  Nevertheless, BLICHT demanded and received cash payments from the Employer, which employed a number of members of the Union.  In exchange for these bribes, BLICHT declined to file arbitration claims on behalf of Union members.  In total, BLICHT received approximately $150,000 in bribes from the Employer over approximately 10 years. 

  In communications, a number of which were recorded, BLICHT repeatedly referred to the bribe payments as “tickets,” in which each ticket equaled a $1,000 bribe.  BLICHT instructed an official of the Employer (the “Official”) as to the number of “tickets” to pay BLICHT each time.  Indeed, during the past year, the Official met with BLICHT several times and paid him bribes on approximately four occasions, at the direction of law enforcement.  Each of these meetings was recorded.  For instance, on July 26, 2019, BLICHT received a $10,000 cash bribe from the Official at a restaurant in New York, New York; BLICHT was arrested outside this restaurant, in possession of the $10,000 bribe.

  *                *                *

  BLICHT, 57, of Wilton, Connecticut, pled guilty to one count of demanding or receiving prohibited payments as a labor union official, which carries a maximum sentence of five years in prison.  Under the terms of his plea agreement, BLICHT has agreed to a 13-year ban, which generally prohibits him from, among other things, being employed by a labor union or employee benefit plan, pursuant to Title 29, United States Code, Sections 504 and 1111.  BLICHT has also agreed to forfeit $150,000 and to pay restitution.  The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

  Sentencing before Judge Torres is scheduled for February 12, 2020, at 3:00 p.m.

  Mr. Berman praised the Department of Labor’s Office of Inspector General and Employee Benefits Security Administration, the Internal Revenue Service-Criminal Investigation Division, and the Federal Bureau of Investigation for their outstanding work on the investigation.  Mr. Berman also thanked the Department of Justice’s Labor-Management Racketeering Unit of the Organized Crime and Gang Section for their assistance in this case.

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

  View the Original Release on justice.gov

• Turkish Bank Charged in Manhattan Federal Court for Its Participation in a Multibillion-Dollar Iranian Sanctions Evasion Scheme

  2019-10-15 · Southern District of New York

  Read the Press Release

  The Department of Justice announced that TÜRKİYE HALK BANKASI A.S., aka “Halkbank,” was charged today in a six-count indictment with fraud, money laundering, and sanctions offenses related to the bank’s participation in a multibillion-dollar scheme to evade U.S. sanctions on Iran.  The case is assigned to United States District Judge Richard M. Berman. 

  “Halkbank, a Turkish state-owned bank, allegedly conspired to undermine the United States Iran sanctions regime by illegally giving Iran access to billions of dollars’ worth of funds, all while deceiving U.S. regulators about the scheme,” said Assistant Attorney General for National Security John C. Demers. “This is one of the most serious Iran sanctions violations we have seen, and no business should profit from evading our laws or risking our national security.”

  “The facts that emerged at the full, fair, and public trial of Halkbank’s deputy general manager, which culminated in a jury’s January 2018 guilty verdict against him, illustrated senior Halkbank management’s participation in this brazen scheme to circumvent our nation’s Iran sanctions regime," said U.S. Attorney Geoffrey S. Berman.  "As alleged in today’s indictment, Halkbank’s systemic participation in the illicit movement of billions of dollars’ worth of Iranian oil revenue was designed and executed by senior bank officials.  The bank’s audacious conduct was supported and protected by high-ranking Turkish government officials, some of whom received millions of dollars in bribes to promote and protect the scheme.  Halkbank will now have to answer for its conduct in an American court.” 

  “As we allege today, Halkbank, a Turkish financial institution whose majority shareholder is the government of Turkey, willfully engaged in deceptive activities designed to evade U.S. sanctions against Iran," said FBI Assistant Director-in-Charge William F. Sweeney Jr.   "Halkbank illegally facilitated the illicit transfer of billions of dollars to benefit Iran, and for far too long the bank and its leaders willfully deceived the United States to shield their actions from scrutiny.  That deception ends today.  The FBI will aggressively pursue those who intentionally violate U.S. sanctions laws and attempt to undercut our national security.”  

  According to the allegations in the indictment, returned today in Manhattan federal court:

  From approximately 2012, up to and including approximately 2016, TÜRKİYE HALK BANKASI A.S. (Halkbank) was a foreign financial institution organized under the laws of and headquartered in Turkey.  The majority of Halkbank’s shares are owned by the Government of Turkey.  Halkbank and its officers, agents, and co-conspirators directly and indirectly used money service businesses and front companies in Iran, Turkey, the United Arab Emirates, and elsewhere to violate and to evade and avoid prohibitions against Iran’s access to the U.S. financial system, restrictions on the use of proceeds of Iranian oil and gas sales, and restrictions on the supply of gold to the Government of Iran and to Iranian entities and persons.  Halkbank knowingly facilitated the scheme, participated in the design of fraudulent transactions intended to deceive U.S. regulators and foreign banks, and lied to U.S. regulators about Halkbank’s involvement.

  High-ranking government officials in Iran and Turkey participated in and protected this scheme.  Some officials received bribes worth tens of millions of dollars paid from the proceeds of the scheme so that they would promote the scheme, protect the participants, and help to shield the scheme from the scrutiny of U.S. regulators.

  The proceeds of Iran’s sale of oil and gas to Turkey’s national oil company and gas company, among others, were deposited at Halkbank, in accounts in the names of the Central Bank of Iran, the National Iranian Oil Company (NIOC), and the National Iranian Gas Company.  During the relevant time period, Halkbank was the sole repository of proceeds from the sale of Iranian oil by NIOC to Turkey.  Because of U.S. sanctions against Iran and the anti-money laundering policies of U.S. banks, it was difficult for Iran to access these funds in order to transfer them back to Iran or to use them for international financial transfers for the benefit of Iranian government agencies and banks.  As of in or about 2012, billions of dollars’ worth of funds had accumulated in NIOC and the Central Bank of Iran’s accounts at Halkbank.

  Halkbank participated in several types of illicit transactions for the benefit of Iran that, if discovered, would have exposed the bank to sanctions under U.S. law, including (i) allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold for the benefit of the Government of Iran; (ii) allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold that was not exported to Iran, in violation of the so-called “bilateral trade” rule; and (iii) facilitating transactions fraudulently designed to appear to be purchases of food and medicine by Iranian customers, in order to appear to fall within the so-called “humanitarian exception” to certain sanctions against the Government of Iran, when in fact no purchases of food or medicine actually occurred.  Through these methods, Halkbank illicitly transferred approximately $20 billion worth of otherwise restricted Iranian funds.

  Senior Halkbank officers acting within the scope of their employment and for the benefit of Halkbank concealed the true nature of these transactions from officials with the U.S. Department of the Treasury so that Halkbank could supply billions of dollars’ worth of services to the Government of Iran without risking being sanctioned by the United States and losing its ability to hold correspondent accounts with U.S. financial institutions.

  The purpose and effect of the scheme in which Halkbank participated was to create a pool of Iranian oil funds in Turkey and the United Arab Emirates held in the names of front companies, which concealed the funds’ Iranian nexus.  From there, the funds were used to make international payments on behalf of the Government of Iran and Iranian banks, including transfers in U.S. dollars that passed through the U.S. financial system in violation of U.S. sanctions laws.

  Halkbank is charged with (1) conspiracy to defraud the United States, (2) conspiracy to violate the International Emergency Economic Powers Act (IEEPA), (3) bank fraud, (4) conspiracy to commit bank fraud, (5) money laundering, and (6) conspiracy to commit money laundering.

  The Department of Justice has previously charged nine individual defendants, including bank employees, the former Turkish Minister of the Economy, and other participants in the scheme.   See S4 15 Cr. 867 (RMB).  On Oct. 26, 2017, Reza Zarrab pled guilty to the seven counts with which he was charged.  On Jan. 3, 2018, a jury convicted former Halkbank deputy general manager Memet Hakkan Atilla of five of the six counts with which he was charged, following a five-week jury trial.   The remaining individual defendants are fugitives. 

  Assistant Attorney General Demers and U.S. Attorney Berman praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and the Department of Justice, National Security Division, Counterintelligence and Export Control Section. 

  This case is being handled by the Office’s Terrorism and International Narcotics Unit and Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Michael D. Lockard, Sidhardha Kamaraju, David W. Denton Jr., Jonathan Rebold, and Kiersten Fletcher 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.

  View the Original Release on justice.gov

• Turkish Bank Charged in Manhattan Federal Court for Its Participation in A Multibillion-Dollar Iranian Sanctions Evasion Scheme

  2019-10-15 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, and William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that TÜRKİYE HALK BANKASI A.S., a/k/a “Halkbank,” was charged today in a six-count Indictment with fraud, money laundering, and sanctions offenses related to the bank’s participation in a multibillion-dollar scheme to evade U.S. sanctions on Iran.  The case is assigned to United States District Judge Richard M. Berman. 

  U.S. Attorney Geoffrey S. Berman stated:  “The facts that emerged at the full, fair, and public trial of Halkbank’s deputy general manager, which culminated in a jury’s January 2018 guilty verdict against him, illustrated senior Halkbank management’s participation in this brazen scheme to circumvent our nation’s Iran sanctions regime.  As alleged in today’s indictment, Halkbank’s systemic participation in the illicit movement of billions of dollars’ worth of Iranian oil revenue was designed and executed by senior bank officials.  The bank’s audacious conduct was supported and protected by high-ranking Turkish government officials, some of whom received millions of dollars in bribes to promote and protect the scheme.  Halkbank will now have to answer for its conduct in an American court.” 

  Assistant Attorney General for National Security John C. Demers said:  “Halkbank, a Turkish state-owned bank, allegedly conspired to undermine the United States Iran sanctions regime by illegally giving Iran access to billions of dollars’ worth of funds, all while deceiving U.S. regulators about the scheme.  This is one of the most serious Iran sanctions violations we have seen, and no business should profit from evading our laws or risking our national security.”

  FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “As we allege today, Halkbank, a Turkish financial institution whose majority shareholder is the government of Turkey, willfully engaged in deceptive activities designed to evade U.S. sanctions against Iran.  Halkbank illegally facilitated the illicit transfer of billions of dollars to benefit Iran, and for far too long the bank and its leaders willfully deceived the United States to shield their actions from scrutiny.  That deception ends today.  The FBI will aggressively pursue those who intentionally violate U.S. sanctions laws and attempt to undercut our national security.”  

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

  From approximately 2012, up to and including approximately 2016, TÜRKİYE HALK BANKASI A.S. (“Halkbank”) was a foreign financial institution organized under the laws of and headquartered in Turkey.  The majority of Halkbank’s shares are owned by the Government of Turkey.  Halkbank and its officers, agents, and co-conspirators directly and indirectly used money service businesses and front companies in Iran, Turkey, the United Arab Emirates, and elsewhere to violate and to evade and avoid prohibitions against Iran’s access to the U.S. financial system, restrictions on the use of proceeds of Iranian oil and gas sales, and restrictions on the supply of gold to the Government of Iran and to Iranian entities and persons.  Halkbank knowingly facilitated the scheme, participated in the design of fraudulent transactions intended to deceive U.S. regulators and foreign banks, and lied to U.S. regulators about Halkbank’s involvement.

  High-ranking government officials in Iran and Turkey participated in and protected this scheme.  Some officials received bribes worth tens of millions of dollars paid from the proceeds of the scheme so that they would promote the scheme, protect the participants, and help to shield the scheme from the scrutiny of U.S. regulators.

  The proceeds of Iran’s sale of oil and gas to Turkey’s national oil company and gas company, among others, were deposited at Halkbank, in accounts in the names of the Central Bank of Iran, the National Iranian Oil Company (“NIOC”), and the National Iranian Gas Company.  During the relevant time period, Halkbank was the sole repository of proceeds from the sale of Iranian oil by NIOC to Turkey.  Because of U.S. sanctions against Iran and the anti-money laundering policies of U.S. banks, it was difficult for Iran to access these funds in order to transfer them back to Iran or to use them for international financial transfers for the benefit of Iranian government agencies and banks.  As of in or about 2012, billions of dollars’ worth of funds had accumulated in NIOC and the Central Bank of Iran’s accounts at Halkbank.

  Halkbank participated in several types of illicit transactions for the benefit of Iran that, if discovered, would have exposed the bank to sanctions under U.S. law, including (i) allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold for the benefit of the Government of Iran; (ii) allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold that was not exported to Iran, in violation of the so-called “bilateral trade” rule; and (iii) facilitating transactions fraudulently designed to appear to be purchases of food and medicine by Iranian customers, in order to appear to fall within the so-called “humanitarian exception” to certain sanctions against the Government of Iran, when in fact no purchases of food or medicine actually occurred.  Through these methods, Halkbank illicitly transferred approximately $20 billion worth of otherwise restricted Iranian funds.

  Senior Halkbank officers, acting within the scope of their employment and for the benefit of Halkbank, concealed the true nature of these transactions from officials with the U.S. Department of the Treasury so that Halkbank could supply billions of dollars’ worth of services to the Government of Iran without risking being sanctioned by the United States and losing its ability to hold correspondent accounts with U.S. financial institutions.

  The purpose and effect of the scheme in which Halkbank participated was to create a pool of Iranian oil funds in Turkey and the United Arab Emirates held in the names of front companies, which concealed the funds’ Iranian nexus.  From there, the funds were used to make international payments on behalf of the Government of Iran and Iranian banks, including transfers in U.S. dollars that passed through the U.S. financial system in violation of U.S. sanctions laws.

  *                *                *

  Halkbank is charged with (1) conspiracy to defraud the United States, (2) conspiracy to violate the International Emergency Economic Powers Act (“IEEPA”), (3) bank fraud, (4) conspiracy to commit bank fraud, (5) money laundering, and (6) conspiracy to commit money laundering.

  The Office has previously charged nine individual defendants, including bank employees, the former Turkish Minister of the Economy, and other participants in the scheme.   See S4 15 Cr. 867 (RMB).  On October 26, 2017, Reza Zarrab pled guilty to the seven counts with which he was charged.  On January 3, 2018, a jury convicted former Halkbank deputy general manager Memet Hakkan Atilla of five of the six counts with which he was charged, following a five-week jury trial.   The remaining individual defendants are fugitives. 

  Mr. Berman praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and the Department of Justice, National Security Division, Counterintelligence and Export Control Section. 

  This case is being handled by the Office’s Terrorism and International Narcotics Unit and Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Michael D. Lockard, Sidhardha Kamaraju, David W. Denton Jr., Jonathan Rebold, and Kiersten Fletcher are in charge of the prosecution.

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

   

  ---

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

  View the Original Release on justice.gov

• Staten Island Heroin Dealer Sentenced to 23 Years in Prison for Overdose Death of 26-Year-Old Man

  2019-10-15 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that PAUL VAN MANEN was sentenced today to 23 years in prison for conspiring to distribute heroin and fentanyl that resulted in the death of Michael Ogno, a 26-year-old man from Staten Island, New York, and the serious bodily injury of another individual.  A unanimous jury convicted VAN MANEN in May 2019 after an eight-day trial before United States District Judge Paul A. Crotty. 

  U.S. Attorney Geoffrey S. Berman said:  “Paul Van Manen peddled the fentanyl-laced heroin that caused the death of Michael Ogno.  He made that sale fully aware that the same formulation had caused a nonfatal overdose just two months prior.  The lengthy sentence should send a message to those who sell lethal drugs like fentanyl.”

  According to court documents and the evidence at trial:

  From at least in or about 2013 up to and including in or about January 2018, VAN MANEN sold heroin, including heroin laced with fentanyl, to customers on Staten Island and in New Jersey.  On October 4, 2017, VAN MANEN drove a co-conspirator (“CC-1”) to Brooklyn, New York, where they both obtained heroin from the conspiracy’s primary supplier, Medin Kosic.  The next morning, CC-1 overdosed after using some of the narcotics, which were subsequently found to be laced with fentanyl.  Despite knowing about this overdose, VAN MANEN continued to sell heroin – including heroin laced with fentanyl – to members of the Staten Island community.  On December 1, 2017, VAN MANEN sold heroin to Michael Ogno, a 26-year-old resident of Staten Island.  Ogno used the heroin, which again was laced with fentanyl, and died from an overdose.  VAN MANEN continued to sell heroin after Ogno’s death. 

  *                      *                     * 

  In addition to the prison sentence, PAUL VAN MANEN, 51, of Staten Island and South Amboy, New Jersey, was sentenced to five years of supervised release. 

  U.S. Attorney Geoffrey S. Berman praised the outstanding work of the New York Drug Enforcement Administration Strike Force, the New York City Police Department, and the Richmond County District Attorney’s Office. 

  This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Catherine Ghosh, Ryan Finkel, Jessica Fender, and Stephanie Lake are in charge of the prosecution.

  View the Original Release on justice.gov

• Former PCAOB Employee Sentenced for Scheme to Steal Confidential PCAOB Information

  2019-10-11 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JEFFREY WADA, a former employee of the Public Company Accounting Oversight Board (the “PCAOB”), was sentenced today to nine months in prison for participating in a scheme to defraud the PCAOB by obtaining, disseminating, and using confidential lists of which KPMG audits the PCAOB would be reviewing so that KPMG could improve its performance in PCAOB inspections.  Wada was convicted of wire fraud charges in March 2019 following a month-long trial before U.S. District Judge J. Paul Oetken, who imposed today’s sentence. 

  Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jeffrey Wada violated not just the terms of his employment with the PCAOB but also the law when he provided confidential information about upcoming audit reviews to co-conspirators at KPMG.  Wada hoped to secure a job at KPMG.  What he got was a nine-month prison sentence.” 

  According to the evidence presented at trial:

  The PCAOB is a nonprofit corporation overseen by the SEC that inspects the audit work performed by registered accounting firms (“Auditors”) with respect to the financial statements of publicly traded companies (“Issuers”).  The PCAOB inspects the largest U.S. accounting firms on an annual basis.  As part of the inspection process, the PCAOB chooses a selection of audits performed by the accounting firm for a closer review, commonly referred to as an inspection.  Until shortly before an inspection occurs, the PCAOB does not disclose which audits are being inspected, or the focus areas for those inspections, because it wants to ensure that an Auditor does not perform additional work or modify its work papers in anticipation of an inspection.  Following the completion of an inspection, the PCAOB issues an Inspection Report containing any negative findings or “comments” with respect to both the specific audits reviewed and the accounting firm more generally. 

  KPMG is one of the largest accounting firms in the world.  In recent years, KPMG fared poorly in PCAOB inspections and in 2014 received approximately twice as many comments as its competitor firms.  By at least in or about 2015, KPMG was engaged in efforts to improve its performance in PCAOB inspections, including but not limited to recruiting and hiring former PCAOB personnel.   

  KPMG’s efforts to improve inspection results, however, were not limited to legitimate means.  Instead, between 2015 and 2017, KPMG executives worked to illicitly acquire valuable confidential PCAOB information concerning which KPMG audits would be inspected in an effort to game the system and improve inspection results. 

  WADA was an Inspections Leader at the PCAOB, who was obligated to keep confidential the PCAOB’s nonpublic information.  WADA joined the conspiracy in the fall of 2015 and began passing confidential information to KPMG.  In March 2016, WADA provided Cynthia Holder, a KPMG employee, with confidential information on certain of the PCAOB’s 2016 inspection selections.  Holder, in turn, provided the 2016 inspection selections to Sweet, who passed them to KPMG executives David Middendorf, Thomas Whittle, and David Britt.  Middendorf, Whittle, Sweet, and Britt then agreed to launch a stealth program to “re-review” the audits that had been selected, and agreed to keep their stealth re-reviews within their “circle of trust.”  In order to cover up their illicit conduct, other KPMG engagement partners were given a false explanation for the re-reviews.  The stealth re-review program allowed KPMG to strengthen its work papers, and, in some cases, identify deficiencies or perform new audit work that had not been done during the live audit.

  In January 2017, WADA, who had been passed over for promotion at the PCAOB, again stole valuable confidential PCAOB information, misappropriating a preliminary list of confidential 2017 inspection selections for KPMG audits and passing it on to Holder, referring to it in a voicemail as the “grocery list.”  At the same time, WADA provided Holder with his resume and sought her assistance in helping him to acquire employment at KPMG.  Sweet shared the preliminary inspection selections provided by WADA with Whittle, who in turn shared it with Middendorf, who approved its use to improve the audits on the list.

  In February 2017, WADA texted Holder saying “I have the grocery list. . . . All the things you’ll need for the year.”  WADA then spoke to Holder and provided her with the full confidential 2017 final inspection selections.  Holder again shared the stolen information with Sweet, who shared it with Middendorf, Whittle, and Britt, so that it could be acted upon to improve the audits on the list. 

  In 2017, a KPMG partner who received early notice that her engagement was on the confidential 2017 inspection list reported the matter to her supervisor.  The matter was ultimately reported to KPMG’s Office of General Counsel.    

  *                      *                      *

  In addition to a prison sentence, WADA, 55, of Tustin, California, was sentenced to three years of supervised release.  Restitution amount was deferred to a later date.   

  Mr. Berman praised the investigative work of the United States Postal Inspection Service and also thanked the Securities and Exchange Commission. 

  This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Rebecca Mermelstein, Jordan Estes, Margaret Graham, and Martin Bell are in charge of the prosecution.

  View the Original Release on justice.gov

• CEO of Credit Card Processing Company Charged in $19 Million Credit Card Laundering Scheme

  2019-10-11 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced a superseding indictment today against BRANDON BECKER, the former CEO of CardReady, LLC (“CardReady”), on charges of fraudulently operating a credit card laundering scheme that enabled access to the credit card system for certain deceptive businesses, including an underlying telemarketing scheme.  From about 2012 through 2015, according to the Indictment, the telemarketing scheme raised over $19 million from thousands of customers who received cold calls promising to reduce their overall debt burdens for fees of up to $1,495.  The scheme resulted in many complaints of fraud and deceptive tactics and requests for millions of dollars in refunds and chargebacks.  The charges include that, from approximately 2012 through 2015, BECKER and his co-conspirators enabled the scheme by creating dozens of sham merchant accounts and false merchant applications, defrauding an associated credit card processing company and a federally insured bank into processing more than $19 million in payments for the scheme.

  BECKER was originally arrested at Los Angeles International Airport on September 22, 2019.  He is scheduled to appear for arraignment on the instant charges on October 17, 2019, before United States District Judge Loretta A. Preska.

  U.S. Attorney Berman said:  “As our society relies ever more on credit cards and electronic payments, both individual citizens and corporations have every right to expect truthfulness and fair dealing in the marketplace – not fraud and deceit.”

  FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “People cringe when they see a telemarketer calling because they fear being scammed.  This investigation is proof that fear isn’t misplaced.  It also shows those who are allegedly scamming innocent victims aren’t getting away with their crimes.  The FBI and our law enforcement partners are paying attention, and maybe one day the phone ringing won’t mean people losing their money.”

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

  BECKER, was the CEO of CardReady, a Los-Angeles based company acting as a sales agent in the credit card processing industry.  As part of its business as a sales agent, CardReady found merchants who wanted credit card processing services, and submitted merchant applications on behalf of those merchants to an Independent Sales Organization (“ISO”), referred to in the Indictment as the “New York ISO.”  The New York ISO then evaluated the merchant applications, and referred acceptable merchant accounts for processing up the chain to Payment Processor-1 and to Bank-1.  Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases by customers who had used credit cards.

  In or about 2012, BECKER negotiated a deal with the principal of Telemarketer-1 to provide credit card processing for Telemarketer-1.  Under this deal, CardReady would retain approximately one-third of Telemarketer-1’s credit card sale transactions in exchange for providing Telemarketer-1 access to the credit card processing network.  For roughly the next two years, Telemarketer-1 was engaged in a marketing scheme in which it cold-called customers and offered services, including debt consolidation and interest-rate reduction, which were prohibited by the applicable guidelines from Bank-1 and other associated processing entities (the “Guidelines”), and which – as BECKER knew – would produce chargebacks from dissatisfied customers far in excess of the number and rate of chargebacks permitted under the Guidelines.

  In securing payment card processing for Telemarketer-1, BECKER concealed that Telemarketer-1 was the true underlying merchant.  Instead, BECKER and his co-conspirators, over a period of more than 20 months, created approximately 26 sham merchant companies, each headed by a “signer” (the “Sham Merchants” and the “Sham Merchant Accounts”).  The 26 signers for the 26 Sham Merchants typically had no business of their own, and lacked knowledge of Telemarketer-1’s business.  In return for signing the paperwork provided to them, the signers were paid a nominal fee from CardReady.  BECKER and his co-conspirators prepared and coordinated fraudulent merchant applications for each of the Sham Merchants, through merchant applications that falsely described the Sham Merchants to make them look like legitimate independent businesses and to make it more likely that the associated Sham Merchant Account would be approved for processing by the New York ISO, Payment Processor-1, and Bank-1.  The merchant application for each Sham Merchant also concealed the Sham Merchant’s true association with Telemarketer-1.

  By steering Telemarketer-1’s payment processing through these Sham Merchant Accounts, BECKER accomplished a number of fraudulent purposes.  First, the use of these Sham Merchant Accounts made it possible for Telemarketer-1 and other high-risk merchants to conceal their identities from Payment Processor-1 and Bank-1 and to maintain payment card processing.  This was particularly relevant, as Payment Processor-1 repeatedly required CardReady to close individual Sham Merchant Accounts because of excessive chargebacks and reports of sales of prohibited services.  BECKER then caused CardReady to quickly replace the closed Sham Merchant Accounts with new Sham Merchant Accounts, precluding Payment Processor-1 from shutting down its processing of Telemarketer-1 and other high-risk merchants.  Second, the fraudulent processing scheme enabled Telemarketer-1 and other high-risk merchants to spread out their charges, refunds, and chargebacks across multiple Sham Merchant Accounts.  This enabled them to evade chargeback monitoring programs operated by Bank-1, Payment Processor-1, and the New York ISO.

  *                      *                      *

  BECKER, 48, of Los Angeles, California, is charged in four counts, conspiracy to commit wire fraud and bank fraud, conspiracy to make false statements to a bank, wire fraud, and bank fraud.  Counts One and Four carry maximum sentences of 30 years in prison, and maximum fines of $1 million or twice the gross gain or loss from the offense.  Counts Two and Three carry maximum sentences of 20 years in prison, and maximum fines of $250,000 or twice the gross gain or loss from the offense.  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 extraordinary work of the FBI and thanked the Federal Trade Commission for its invaluable assistance.

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

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

   

  ---

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

  View the Original Release on justice.gov

• Brooklyn Supreme Court Justice and Former Chair of Board of Directors of Municipal Credit Union Charged with Obstruction of Justice

  2019-10-11 · Southern District of New York

  Read the Press Release

  Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today that SYLVIA ASH, presiding judge of the Kings County Supreme Court, Commercial Division, and former chair of the board of directors of Municipal Credit Union (“MCU”), was charged in Manhattan federal court with conspiracy to obstruct justice and obstruction of justice, arising from a scheme to seek to influence and impede an ongoing federal investigation into fraud and corruption at MCU, a non-profit, multibillion-dollar financial institution.  U.S. Attorney Berman also announced today that Joseph Guagliardo, a/k/a “Joseph Gagliardo,” a former New York City Police Department Officer and former member of MCU’s supervisory committee, was charged separately with embezzlement, fraud, and controlled substance offenses arising from abuse of his position as a member of the supervisory committee.  Guagliardo was arrested in Brooklyn, New York, yesterday afternoon and was presented before U.S. Magistrate Judge Ona T. Wang in Manhattan federal court.  ASH was arrested at LaGuardia Airport this morning and is expected to appear before Magistrate Judge Wang in Manhattan federal court this afternoon.

  U.S. Attorney Geoffrey S. Berman said:  “The charges announced today reflect the latest in our ongoing work to uncover criminal conduct at the highest levels of MCU, a multibillion-dollar, federally insured credit union.  As alleged, Sylvia Ash, a sitting state court judge, took repeated steps to obstruct a federal investigation into significant financial misconduct at MCU during Ash’s tenure as chair of the board of directors.  Joseph Guagliardo allegedly abused his position as an MCU supervisory committee member to enrich himself and his family.”

  According to the allegations contained in the two Complaints unsealed today in Manhattan federal court, publicly available information, and prior court filings:[1]

  Municipal Credit Union

  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.

  At all relevant times, MCU was supposed to be overseen by a board of directors (the “Board”) and a supervisory committee (the “Supervisory Committee”), each of which was composed of volunteer members of MCU, who were not to be compensated.  According to New York banking law, the Supervisory Committee’s duties included supervision of the actions of MCU’s Board 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.”

  ASH

  ASH is a New York State Supreme Court Justice in Kings County.  ASH has served as a judge in the New York State court system since at least approximately 2006, first as a Kings County Civil Court Judge, and, commencing in 2011, as a Kings County Supreme Court Justice.  In or about January 2016, ASH was appointed to be the presiding judge in the Kings County Supreme Court’s Commercial Division.

  ASH served on MCU’s Board from in or about May 2008 until on or about August 15, 2016, when she resigned.  ASH also served as a trustee of MCU’s pension plan, a position from which she resigned on or about October 31, 2016.  From in or about May 2015 until her resignation from the Board, ASH served as the chair of the Board.

  Guagliardo

  GUAGLIARDO is a former officer with the New York City Police Department, who retired in or about 1989.  In or about 1993, GUAGLIARDO joined the Supervisory Committee of MCU, a volunteer position, 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 in or about 2008.  While he was a Supervisory Committee member, GUAGLIARDO sought to and did use his position to oversee aspects of MCU’s security and fraud department, including serving in the role of vice president of MCU’s security and fraud department while that position was vacant.

  Kam Wong

  From on or about at least 2007 until on or about June 12, 2018, Kam Wong served as MCU’s chief executive officer (“CEO”) and president.  On or about May 8, 2018, Wong was charged and arrested by the United States Attorney’s Office for the Southern District of New York, and, on or about June 12, 2018, Wong was terminated by MCU.  On or about December 2, 2018, Wong pled guilty to a multimillion-dollar embezzlement from MCU, and acknowledged, in his written plea agreement, among other things, endeavoring to obstruct and impede and obstructing and impeding the administration of justice with respect to the criminal investigation into this matter, and agreeing with one or more others to do the same.

  ASH’s Alleged Obstruction of Justice

  From at least in or about 2012 through 2016, while serving as an MCU Board member and while Wong was CEO, ASH received annually tens of thousands of dollars in reimbursements and other benefits from MCU, including airfare, hotels, food and entertainment expenses for her and a guest to attend conferences domestically and abroad, as well as payment for phone and cable bills, and electronic devices.  Even after her resignation from the Board, Wong continued to provide or cause MCU to provide ASH with benefits, such as Apple devices. 

  In or about January 2018, after Wong had been approached by federal law enforcement agents investigating potential financial misconduct by Wong involving MCU and in an attempt to protect Wong, ASH agreed to and did sign a false and misleading memorandum purporting to explain and justify millions of dollars in payments that Wong had received from MCU, which was then provided by Wong to law enforcement officers.

  Subsequently, ASH agreed to and did continue to seek to influence and impede the federal investigation in multiple ways, including by (i) concealing and deleting relevant text messages and email messages and wiping her MCU-issued Apple iPhone in a further effort to destroy and impair the availability of evidence that had been sought by federal grand jury subpoenas, and (ii) making false and misleading statements to federal law enforcement officers in interviews conducted as part of a federal criminal investigation.

              GUAGLIARDO’s Alleged Embezzlement, Fraud, and Unlawful Provision of Controlled Substances to Wong

  GUAGLIARDO engaged in a long-running scheme to defraud MCU, with the agreement and assistance of, among others, Wong.  Among other things, GUAGLIARDO defrauded and embezzled from MCU by causing it to direct more than $250,000 to a purported security company created and controlled by GUAGLIARDO, but operated in another’s name, which did little to no real work for MCU.  GUAGLIARDO also defrauded and embezzled from MCU by over-billing for 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 and concealing these offenses, GUAGLIARDO participated in a scheme to unlawfully distribute controlled substances to Wong, 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 doctor affiliated with the New York City Police Department.

  *                *                *

  ASH, 62, of Brooklyn, New York, is charged with one count of conspiracy to obstruct justice, which carries a maximum penalty of five years in prison; and two counts of obstruction of justice, each of which carries a maximum penalty of 20 years in prison.

  GUAGLIARDO, 62, of Brooklyn, New York, is separately charged with one count of conspiracy to embezzle from a federal credit union, which carries a maximum penalty of five years in prison; one count of embezzlement, one count of conspiracy to defraud a financial institution, and one count of defrauding a financial institution, each of which carries a maximum penalty of 30 years in prison; and one count of conspiracy to distribute controlled substances, and one count of distribution of controlled substances, each of which carries a maximum penalty of 20 years in prison.  

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

  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 New York City Police Department 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.

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

   

  ---

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

  View the Original Release on justice.gov

• Lev Parnas and Igor Fruman Charged with Conspiring to Violate Straw and Foreign Donor Bans

  2019-10-10 · Southern District of New York

  Read the Press Release

  Defendants Orchestrated Scheme to Advance Their Business Interests and the Political Interests of At Least One Ukrainian Government Official Through Contributions and Donations to Multiple Candidates and Campaign Committees in Violation of Campaign Finance Laws; Two Others Charged in Foreign Donor Scheme

  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 that LEV PARNAS, IGOR FRUMAN, DAVID CORREIA and ANDREY KUKUSHKIN were charged in a four-count indictment alleging that each of the defendants conspired to violate the ban on foreign donations and contributions in connection with federal and state elections.  In addition, PARNAS and FRUMAN were charged with conspiring to make contributions in connection with federal elections in the names of others, and with making false statements to and falsifying records to obstruct the administration of a matter within the jurisdiction of the Federal Election Commission (“FEC”).  PARNAS and FRUMAN were arrested yesterday evening at Washington Dulles International Airport and will be presented at 2:00 p.m. this afternoon before U.S. Magistrate Judge Michael S. Nachmanoff in the Eastern District of Virginia.  KUKUSHKIN was arrested yesterday in California and will be presented at 10:30 a.m. Pacific Time before U.S. Magistrate Judge Jacqueline Scott Corley in the Northern District of California.  CORREIA remains at large.  The case is assigned to U.S. District Judge J. Paul Oetken in the Southern District of New York.

  U.S. Attorney Geoffrey S. Berman said:  “As alleged in the Indictment, the defendants broke the law to gain political influence while avoiding disclosure of who was actually making the donations and where the money was coming from.  They sought political influence not only to advance their own financial interests but to advance the political interests of at least one foreign official – a Ukrainian government official who sought the dismissal of the U.S. ambassador to Ukraine.  Protecting the integrity of our elections – and protecting our elections from unlawful foreign influence – are core functions of our campaign finance laws.  And as this Office has made clear, we will not hesitate to investigate and prosecute those who engage in criminal conduct that draws into question the integrity of our political process.”

  FBI Assistant Director William F. Sweeney Jr. said:  “Campaign finance laws exist for a reason.  The American people expect and deserve an election process that hasn’t been corrupted by the influence of foreign interests, and the public has the right to know the true source of campaign contributions.  These allegations aren’t about some technicality, a civil violation, or an error on a form.  This investigation is about corrupt behavior and deliberate law breaking.  The FBI takes the obligation to tackle corruption seriously – there are no exceptions to this rule.”

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

  Through its election laws, Congress prohibits foreign nationals from making contributions, donations, and certain expenditures in connection with federal, state, and local elections.  The election laws also prohibit individuals from using straw donors to make legal contributions in their own names, rather than in the name of the true source of the funds.  The purpose of these laws is to prevent the electoral system from illegal foreign influence, and to further inform candidates, their campaign committees, federal regulators and the public of the true sources of contributions.  In or about 2018, the defendants violated these laws by, among other things, agreeing to facilitate foreign donations to federal and state candidates, and agreeing to make straw donations to federal candidates in an effort to conceal true sources of the funds. 

  The Straw Donor Scheme

  In or about March 2018, PARNAS and FRUMAN began attending political fundraising events in connection with federal elections and making substantial contributions to candidates, joint fundraising committees, and independent expenditure committees with the purpose of enhancing their influence in political circles and gaining access to politicians.  PARNAS and FRUMAN, who had no significant prior history of political donations, sought to advance their personal financial interests and the political interests of at least one Ukrainian government official with whom they were working.

  In or about May 2018, to obtain access to exclusive political events and gain influence with politicians, PARNAS and FRUMAN made a $325,000 contribution to an independent expenditure committee (“Committee-1”) and a $15,000 contribution to a second independent expenditure committee (“Committee-2”).  Despite the fact that the FEC forms for these contributions required PARNAS and FRUMAN to disclose the true donor of the funds, they falsely reported that the contributions came from Global Energy Producers (“GEP”), a purported liquefied natural gas (“LNG”) import-export business that was incorporated by FRUMAN and PARNAS around the time the contributions were made.  In truth and in fact, the donations to Committee-1 and Committee-2 did not come from GEP funds.  Rather, the donations came from a private lending transaction between FRUMAN and third parties, and never passed through a GEP account.  PARNAS and FRUMAN deliberately made the contributions in GEP’s name in order to evade federal reporting requirements and to conceal that they were the true source of the contributions, including so as to hide from creditors the fact that they had access to funding.  When media reports about the GEP contributions first surfaced, an individual working with PARNAS remarked, “[t]his is what happens when you become visible . . . the buzzards descend,” to which PARNAS responded, “[t]hat’s why we need to stay under the radar. . . .” 

  Among other donations alleged to have been made in furtherance of the scheme, in or about May and June 2018, PARNAS and FRUMAN committed to raise $20,000 or more for a then-sitting U.S. Congressman (“Congressman-1”).  At and around the same time PARNAS and FRUMAN committed to raising those funds for Congressman-1, PARNAS met with Congressman-1 and sought Congressman-1’s assistance in causing the U.S. Government to remove or recall the then-U.S. Ambassador to Ukraine (the “Ambassador”).  PARNAS’s efforts to remove the Ambassador were conducted, at least in part, at the request of one or more Ukrainian government officials.  Moreover, in an effort to reach their contribution commitment to Congressman-1 and further their political goals, in or about June 2018, after FRUMAN had already made a maximum $2,700 contribution to Congressman-1, FRUMAN paid for another maximum $2,700 contribution to Congressman-1 that was made and reported in PARNAS’s name.

  In response to a complaint filed with the FEC regarding the $325,000 contribution to Committee-1, and to further conceal the true source of the funds used to make certain of their donations, in or about October 2018, PARNAS and FRUMAN submitted sworn affidavits to the FEC that contained false statements, including that the contribution to Committee-1 “was made with GEP funds for GEP purposes” and that  “GEP is a real business enterprise funded with substantial bona fide capital investment; its major purpose is energy trading, not political activity.”

  The Foreign Donor Scheme

  Beginning in or around July 2018, PARNAS, FRUMAN, CORREIA, and KUKUSHKIN made plans to form a recreational marijuana business (the “Business Venture”) that would be funded by Foreign National-1, a Russian national, and required gaining access to retail marijuana licenses in particular states, including Nevada (the “Business Venture”).  To further the Business Venture, PARNAS, FRUMAN, CORREIA, and KUKUSHKIN planned to use Foreign National-1 as a source of funding for donations and contributions to state and federal candidates and politicians in Nevada, New York, and other states to facilitate acquisitions of retail marijuana licenses. 

  In or about September and October 2018, CORREIA drafted a table of political donations and contributions, which was subsequently circulated to the defendants and Foreign National-1.  The table described a “multi-state license strategy” to make between $1million and $2 million in political contributions to federal and state political committees.  The table also included a “funding” schedule of two $500,000 transfers.  Foreign National-1 then arranged for two $500,000 wires on or about September 18, 2018, and October 16, 2018, to be sent from overseas accounts to a U.S. corporate bank account controlled by FRUMAN and another individual. 

  PARNAS, FRUMAN, CORREIA, and KUKUSHKIN then used those funds transferred by Foreign National-1, in part, to attempt to gain influence and the appearance of influence with politicians and candidates.  For example, on or about October 20, 2018, PARNAS, FRUMAN, and KUKUSHKIN attended a campaign rally for a candidate for a statewide office in Nevada (“Candidate-1”), at which a different Nevada state candidate was present (“Candidate-2”). Following that event, on or about November 1, 2018, a donation in the amount of $10,000 was made to Candidate-2 in FRUMAN’s name, but it was funded with funds from Foreign National-1.  On or about November 1, 2018, a donation in the amount of $10,000 was made to Candidate-1 in FRUMAN’s name, but it was funded with funds from Foreign National-1.  On or about November 4, 2018, PARNAS asked KUKUSHKIN to arrange for additional funding from Foreign National-1 to make an additional donation to Candidate-1, to which KUKUSHKIN responded that the $1 million Foreign National-1 had already provided to GEP was “in order to cover all the donations whatsoever.”  Further communications confirm the defendants’ use of foreign funds – and, in particular, funds from Foreign National-1 – to make the donations described above.  For example, on or about October 30, 2018, Foreign National-1 wrote to PARNAS, FRUMAN, and KUKUSHKIN that he had “fulfilled all my obligations completely,” including “500 [for] Nevada” in order to “work on obtaining licenses [in] these states.”  KUKUSHKIN similarly noted in response that “Money transferred by [Foreign National-1] to [GEP] was to support the very specific people & states (per [FRUMAN’s] table) in order to obtain green light for licensing.” 

  Although PARNAS, FRUMAN, CORREIA, and Foreign National-1 continued to meet into the spring of 2019, the Business Venture did not come to fruition.

  *                      *                      *

  PARNAS, 47, FRUMAN, 53, CORREIA, 44, all Florida residents, and KUKUSHKIN, 46, a California resident, are each charged with one count of conspiring to violate the ban on foreign donations and contributions in connection with federal and state elections, which carries a maximum sentence of five years in prison.  PARNAS and FRUMAN are also each charged with one count of conspiring to make contributions in connection with federal elections in the names of others, which carries a maximum sentence of five years in prison; one count of making false statements, which carries a maximum sentence of five years in prison; and one count of falsifying records to obstruct the administration of a matter within the jurisdiction of the FEC, which carries a maximum sentence of 20 years in prison.

  The statutory maximum and mandatory penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.

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

  This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Rebekah Donaleski and Nicolas Roos are in charge of the prosecution.

  The charges contained in the Indictment are merely accusations.  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 therein should be treated as an allegation.

  View the Original Release on justice.gov