Southern District of New York

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of a complaint charging GARRETT KELSEY with sending threats to a Manhattan-based Jewish organization (the “Victim Organization”) by email and phone.  KELSEY was arrested in Cedar Rapids, Iowa, this morning and is expected to be presented before a Magistrate Judge in the Northern District of Iowa later today. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Garrett Kelsey repeatedly conveyed obscenity-laden and hate-filled threats to a Jewish organization by phone and email.  The alleged conduct is not protected speech.  As charged, the conduct – making interstate threats – is a federal crime punishable by years in prison.”

FBI Assistant Director William F. Sweeney Jr. said:  “The FBI will always follow threats that cross the line of free speech and threaten the safety of individuals and groups, especially when those threats are based on a religion or race.  The fact that Mr. Kelsey allegedly continued his threatening behavior even after being informed that his previous actions were not protected speech makes his actions more abhorrent.”

Police Commissioner James P. O’Neill said:  “The investigative efforts of New York City law enforcement are relentless and far-reaching.  Whenever individuals – wherever they are based – pose a threat, the NYPD and our partners will work tirelessly to keep people safe.  I thank our colleagues at the FBI and the Southern District for their partnership.”

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

In late May 2019, KELSEY made violent threats by phone and email to the Victim Organization.  On May 23, KELSEY called the Victim Organization and spoke briefly with one of its employees.  A short time later, KELSEY called that employee’s number back and left a voicemail for the Victim Organization stating, “My people have fucking slaughtered your fucking people before and we will do it again. And right now, you are giving us incentive to do that . . . . Filthy fucking Jews.” 

Later that same day, KELSEY sent the Victim Organization an email demanding that the Victim Organization remove a video about Nordic Neo-Nazis that the Victim Organization had uploaded to the Internet.  KELSEY wrote: “Everywhere Jews go in the world they cause trouble. You have 3 days to remove this video and offer an apology to the Asatru community or we will be taking action against your organization full of degenerates.”  “Asatru” appears to have been a reference to a religious movement recently linked to anti-Semitic and other racist groups.

The next day, KELSEY participated in a voluntary interview with law enforcement, during which he admitted to sending the threatening email and voicemail to the Victim Organization. 

Approximately one week after his voluntary law enforcement interview, KELSEY changed the cover photograph associated with his Facebook account.  The new cover photograph depicted Jewish residents of a ghetto in Warsaw, Poland, lined up facing a wall with their hands up.  Those residents were detained after an uprising during World War II and ultimately were transferred to Nazi concentration camps.

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KELSEY, 31, of Cedar Rapids, Iowa, is charged with one count of interstate transmission of threats to injure a person, which carries a maximum sentence of five years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department.  Mr. Berman also thanked the U.S. Attorney’s Office for the Northern District of Iowa.  Mr. Berman noted that the case is ongoing.

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

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

 

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

U.S. Attorney Geoffrey S. Berman said:  “Robert Morgenthau, the legendary U.S. Attorney and Manhattan District Attorney, passed away yesterday just 10 days shy of his 100th birthday.  Mr. Morgenthau’s contributions to law enforcement and to the Southern District of New York were extraordinary.  Among his many achievements during his tenure as U.S Attorney, Mr. Morgenthau created the Securities Fraud Unit and helped establish the framework for sophisticated, international investigations that still guides our career prosecutors.  Whether he was charging landmark public corruption or organized crime cases, Mr. Morgenthau worked tirelessly to instill public confidence in the integrity of the Office.

Mr. Morgenthau remained active and engaged until he passed.  Indeed, less than a year ago he was kind enough to join the Office in the repatriation of a Renoir painting stolen by the Nazis during WWII.  At that ceremony, which took place at the Robert Morgenthau wing of the Museum of Jewish Heritage, Mr. Morgenthau spoke movingly about the importance of bringing some measure of justice, even a half century later, to the victims of the Holocaust and their heirs.

Every day as I enter my office I pass a portrait of Mr. Morgenthau and I am inspired by his lifelong dedication to public service and the law.”

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Microsoft Magyarország Számítástechnikai Szolgáltató és Kereskedelmi Kft. (Microsoft Hungary), a wholly owned subsidiary of Microsoft Corporation, has agreed to pay a criminal penalty of more than $8.7 million to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) arising out of a bid rigging and bribery scheme in connection with the sale of Microsoft software licenses to Hungarian government agencies.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Geoffrey S. Berman of the Southern District of New York and Assistant Director Robert Johnson of the FBI’s Criminal Investigative Division made the announcement.

According to Microsoft Hungary’s admissions, beginning by at least 2013 and continuing until at least 2015, a senior executive and other employees of Microsoft Hungary participated in a scheme to inflate margins in the Microsoft sales channel in connection with the sale of Microsoft software licenses to Hungarian government agencies.  In furtherance of that scheme, Microsoft Hungary executives and employees falsely represented to Microsoft that steep discounts were necessary to conclude deals with resellers who bid for the opportunity to sell Microsoft licenses to government customers.  In actuality, the savings were not passed on to the government customers, but instead were used for corrupt purposes and were falsely recorded as “discounts” and stored in various tools and databases on Microsoft servers in the United States in violation of the Foreign Corrupt Practices Act. 

Microsoft Hungary entered into a nonprosecution agreement and agreed to pay a criminal penalty of $8,751,795 to resolve the matter.  The Department reached this resolution based on several factors.  Although Microsoft Hungary did not voluntarily self-disclose the misconduct, Microsoft Hungary received credit for its and Microsoft Corporation’s substantial cooperation with the Department’s investigation and for taking extensive remedial measures.  For example, Microsoft Hungary terminated four licensing partners and Microsoft Corporation has implemented an enhanced system of compliance and internal controls, company-wide, to address and mitigate corruption risks.  Accordingly, the criminal penalty reflects a 25 percent reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range for the company’s full cooperation and remediation.

In a related matter with the Securities and Exchange Commission (SEC), Microsoft Corporation agreed to pay to the SEC disgorgement and prejudgment interest totaling approximately $16,565,151 for conduct in Hungary.

The case is being investigated by the FBI’s New York Field Office. Trial Attorneys Derek J. Ettinger and Della Sentilles of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Sarah Lai of the Southern District of New York are handling 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.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced that Microsoft Magyarország Számítástechnikai Szolgáltató és Kereskedelmi Kft. (Microsoft Hungary), a wholly owned subsidiary of Microsoft Corporation, has agreed to pay a criminal fine of more than $8.7 million to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) arising out of a bid rigging and bribery scheme in connection with the sale of Microsoft software licenses to Hungarian government agencies and the false recording of the corrupt payments as legitimate customer discounts on Microsoft Corporation’s financial records.

U.S. Attorney Geoffrey S. Berman said:  “U.S. multinational corporations must have robust policies and practices to prevent their foreign subsidiaries from participating in bribery that result in false and misleading entries in the books and records of the parent company.  We will hold subsidiaries and, where appropriate, the parent corporations accountable wherever FCPA violations occur.”

FBI Assistant Director William F. Sweeney Jr. said:  “Microsoft Hungary created a conduit for illegal activity, one that permeated the layers of oversight put in place to protect against violations of the Foreign Corrupt Practices Act.  The $8.7 million penalty imposed today makes it abundantly clear that any alleged violation of the FCPA, whether on behalf of an individual or entity, will not be taken lightly.”

According to Microsoft Hungary’s admissions, Microsoft Hungary contracts with third party companies to sell licenses for Microsoft products to Hungarian government agencies.  These intermediaries purchase the licenses from Microsoft Hungary, then resell the licenses to the end customers.  Beginning at least 2013 and continuing until at least 2015, senior executives and other employees of Microsoft Hungary participated in a bribery and bid rigging scheme in connection with the sale of Microsoft software licenses to Hungarian government agencies.  In furtherance of that scheme, certain Microsoft Hungary executives and employees falsely represented to Microsoft that steep discounts were necessary to conclude deals with resellers who bid for the opportunity to sell Microsoft licenses to government customers.  As a result, those discounts were falsely recorded in Microsoft Corporation’s financial records as legitimate business expenses.  In actuality, the savings were not passed on to the government customers, but were used by the resellers, in part, to pay bribes to Hungarian government officials.  The tainted deals resulted in at least $14,586,325 in profits to Microsoft Corporation.

Microsoft Hungary entered into a nonprosecution agreement and agreed to pay a criminal fine of $8,751,795 to resolve the matter.  This resolution was based on several factors.  Although Microsoft Hungary did not voluntarily self-disclose the misconduct, Microsoft Hungary received credit for its and Microsoft Corporation’s substantial cooperation with the investigation and for taking extensive remedial measures.  For example, Microsoft Hungary terminated four licensing partners, and Microsoft Corporation has implemented an enhanced system of compliance and internal controls, company-wide, to address and mitigate corruption risks.  Accordingly, the criminal fine reflects a 25 percent reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range for the company’s full cooperation and remediation.

In a related matter with the Securities and Exchange Commission (SEC), Microsoft Corporation agreed to pay to the SEC disgorgement and prejudgment interest totaling approximately $16,565,151 for conduct including Hungary.

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

The case is being handled by the Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Sarah Lai is in charge of the prosecution, with support from Trial Attorneys Derek J. Ettinger and Della Sentilles of the Criminal Division’s Fraud Section.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that VINCENT ESPOSITO was sentenced today to 24 months in prison by U.S. District Judge Victor Marrero for conspiring to commit racketeering offenses with members and associates of the Genovese Crime Family of La Cosa Nostra.  Judge Marrero also imposed financial penalties, including approximately $3.8 million in forfeiture, a $20,000 fine, and restitution to be determined.  ESPOSITO previously pled guilty on April 10, 2019, before U.S. Magistrate Judge Sarah Netburn. 

U.S. Attorney Geoffrey S. Berman said:  “By his own admission, for more than a decade Vincent Esposito made millions with members of the Genovese Crime Family by extorting payments, demanding kickbacks, committing fraud, and instilling fear.  Today Esposito has been sentenced to prison for racketeering conspiracy.”

According to the Indictment and statements made during public court proceedings:

La Cosa Nostra, also known as the “Mob” or the “Mafia,” operates through entities known as “Families.”  One of the Families operating in the New York City area is the Genovese Crime Family.  For years, continuing until 2017, ESPOSITO conspired with other members and associates of the Genovese Crime Family to commit a wide range of crimes to enrich themselves, including multiple acts of extortion, honest services fraud, and bribery.  Among other things, ESPOSITO directed the long-running extortion of a union official (“Official-1”) for annual tribute payments of more than over $10,000, and had a number of lower-ranking members of the enterprise collect money and convey threats to Official-1 on Esposito’s behalf.  In another extortion scheme, ESPOSITO’s co-conspirators extorted a different union official (“Official-2”) and a financial adviser (the “Adviser”) for a cut of commissions made from union investments.

At the time of ESPOSITO’s arrest, the Federal Bureau of Investigation (“FBI”) executed a search warrant on his home and seized more than $3.8 million in U.S. currency hidden throughout the residence, along with an unregistered handgun, ammunition, brass knuckles, and lists of made members of the Genovese Crime Family.  Under the terms of his guilty plea, ESPOSITO agreed to forfeit the more than $3.8 million seized by the FBI as criminal proceeds resulting from the offense. 

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In addition to the prison term, ESPOSITO, 51, of New York, NY, was sentenced to three years of supervised release, and was ordered to forfeit $3,816,685.59 and to pay a fine of $20,000.

Mr. Berman praised the outstanding investigative work of the FBI, the U.S. Department of Labor’s Office of Inspector General and Office of Labor-Management Standards, the New York City Police Department, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Kimberly J. Ravener, Jared Lenow, and Jason M. Swergold are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Peter D. Lopez, Regional Administrator of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States has filed and simultaneously entered into two consent decrees settling a civil lawsuit against HOPEWELL PRECISION, INC. (“HOPEWELL”) and JOHN B. BUDD (collectively, the “Defendants”).  The lawsuit, brought pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) – commonly known as the Superfund statute – seeks to collect costs that EPA has incurred since March 2003 in connection with its cleanup of trichloroethene and other hazardous substances at the HOPEWELL Precision Superfund Site (the “Site”) in the Town of East Fishkill, Dutchess County, New York.  The two consent decrees (one against each Defendant) provide for a combined payment of $1,247,700 by the Defendants.

U.S. Attorney Geoffrey S. Berman said:  “Polluters must pay for the costs they have imposed on the community.  Together, these defendants released toxic chemicals into the environment, which then contaminated the nearby groundwater and adversely affected the surrounding neighborhoods.  Today’s lawsuit and consent decrees demonstrate that we will hold polluters responsible for their conduct.”

Regional Administrator Peter D. Lopez said:  “The Superfund program operates on the principle that polluters pay for cleanups, and this settlement allows EPA to recover some of the taxpayer money that was spent at this site to address the contamination.  Defendants’ actions led directly to contamination of groundwater, which migrated to people’s wells and caused hazardous vapors to seep into their homes.  EPA stepped in and took the necessary actions to protect residents in the area, initially by installing treatment systems at homes, and now we are working toward a permanent remedy through the creation and extension of a new public water supply system in the community.  This settlement, however, reimburses only a portion of the money EPA is spending at the site because of the limitations of the Defendants’ financial resources.”           

As alleged in the complaint filed today in federal court, since 1972, HOPEWELL has been engaged in the business of custom sheet metal and machining fabrication at two properties that, together with the surrounding area into which contamination has migrated, make up the Site.  BUDD owns one of the two properties and was the president and sole shareholder of HOPEWELL from 1972 until 1985, as well as the 80 percent owner from 1985 until 1991.  In connection with its operations, until approximately 1998, HOPEWELL used chemical solvents, including trichloroethene (“TCE”) and 1,1,1-trichloroethane (“1,1,1-TCA”), to clean and degrease machine parts, generating a hazardous solvent waste that was at times disposed into the ground behind the facility.  Additionally, during certain years, HOPEWELL employees poured paints and other chemicals into the ground behind the facility.  As a result of these operations, solvents including TCE and 1,1,1-TCA were released into the environment, including the structures and soils at the HOPEWELL properties, and they leached into the groundwater and migrated beyond the properties, affecting drinking wells and homes in an area extending approximately one-and-a-half miles from the properties.  EPA has incurred millions of dollars of costs in connection with cleaning up the Site.  Work continues at the Site, including restoration of the contaminated groundwater aquifer and construction of an alternative water supply to serve properties with private drinking water wells that have been or may be affected by the groundwater contamination.

In the consent decrees filed today, the Defendants admit and accept responsibility for the following:

• In connection with its operations, until 1998, HOPEWELL used a vapor degreasing machine to clean and degrease parts, and, until at least 1991, used TCE and 1,1,1-TCA in that machine.
• As a result of HOPEWELL’s operations while BUDD was its owner and president, solvents including TCE and 1,1,1 TCA were released into the environment, including the structures and soils at the HOPEWELL properties.   
• Contamination from the HOPEWELL properties has migrated beyond the properties into the area’s groundwater, contaminating approximately 66 private drinking water wells in the neighborhood as well as ponds in the path of the contaminated groundwater.

            Pursuant to the consent decrees, the Defendants will pay a total of $1,247,700 in costs incurred by EPA, consisting of $963,750 to be paid by BUDD and $283,950 to be paid by HOPEWELL.  These settlement amounts were based on a financial analysis of what the Defendants were capable of paying.

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The consent decrees will be lodged with the District Court for a period of at least 30 days before they are submitted for the Court’s approval, to provide public notice and to afford members of the public the opportunity to comment on the consent decrees.

This case is being handled by the Environmental Protection Unit of the Office’s Civil Division.  Assistant U.S. Attorneys Dominika Tarczynska and Rachael Doud are in charge of the case.

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 today of an Indictment charging RAKIM BROWN, a/k/a “Ra,” with the January 28, 2018, shooting of a woman in connection with a drug conspiracy, resulting in injuries to her face and leg.  BROWN will be presented and arraigned today before U.S. Magistrate Judge Kevin Nathaniel Fox.  The case is assigned to U.S. District Judge Sidney H. Stein. 

U.S. Attorney Geoffrey S. Berman said:  “Working with the NYPD and our other law enforcement partners, we will continue to investigate and prosecute drug trafficking and the violence that so often accompanies it.  The indictment of Rakim Brown for a drug-related shooting demonstrates that link between drugs and guns.”

NYPD Commissioner James P. O’Neill said:  “The NYPD and its law enforcement partners pursue – unrelentingly and with precision – those who carry guns and those who traffic illegal drugs.  I want to thank the investigators and prosecutors who worked to obtain today’s indictment.  Their work helps make our city safer.”

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

Between 2016 up to and including 2018, RAKIM BROWN, a/k/a “Ra,” was involved in a conspiracy to distribute crack cocaine.  Between April 2017 up to and including 2018, BROWN used, carried, and discharged a firearm during and in furtherance of that drug conspiracy, including on January 28, 2018, when, in connection with a dispute with a rival drug crew, he shot at a woman and caused injuries to her face and leg. 

*                      *                     *

BROWN, 24, of the Bronx, New York, is charged with one count of conspiracy to distribute crack cocaine, which carries a maximum sentence of 20 years in prison, and one count of using and carrying a firearm, which was brandished and discharged, in connection with the narcotics conspiracy, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 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 Attorney Danielle R. Sassoon is in charge of the prosecution.

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

        

 

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

Geoffrey S. Berman, 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 today of an Indictment charging ANTONIO MORA, a/k/a “Chucky,” and BRIAN MORA, a/k/a “Dottie,” with the September 17, 2018, shooting of a rival drug dealer in connection with a drug conspiracy, after pulling his daughter from his hands.  ANTONIO MORA will be presented today before U.S. Magistrate Judge Kevin Nathaniel Fox.  BRIAN MORA is already in federal custody.  The case is assigned to U.S. District Judge J. Paul Oetken. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Antonio and Brian Mora dealt heroin and crack cocaine in the Bronx.  During a dispute with a rival drug crew, the defendants allegedly ripped the victim’s daughter out of his arms before shooting him.  Thanks to our partners at the NYPD, the defendants now face federal charges for their brazen and callous crimes.”

NYPD Commissioner James P. O’Neill stated:  “This case illustrates the extreme violence that too often accompanies gang activity and the drug trade, and why we must be vigilant in keeping our communities safe.  I want to thank the law enforcement professionals whose hard work and dedication secured these federal indictments.”

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

Between 2016 and 2018, ANTONIO MORA and BRIAN MORA were involved in a conspiracy to distribute crack cocaine and heroin.  During that same time period, ANTONIO MORA and BRIAN MORA used, carried, and discharged a firearm during and in furtherance of that drug conspiracy, including on September 17, 2018, when, in connection with a dispute with a rival drug crew, they shot a man after they pulled his daughter from his arms. 

*                      *                     *

ANTONIO MORA, 25, of the Bronx, New York, and BRIAN MORA, 24, of the Bronx, New York, are each charged with one count of conspiracy to distribute crack cocaine and heroin and one count of using and carrying a firearm, which was brandished and discharged, in connection with the narcotics conspiracy, each of which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.

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 Attorney Danielle R. Sassoon 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.

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JOSEPH SABELLA, a/k/a “Joe Valet,” was sentenced to 87 months in prison by U.S. District Judge Alvin K. Hellerstein for his role as a captain in the Bonanno Organized Crime Family of La Cosa Nostra.

Manhattan U.S. Attorney Geoffrey S. Berman stated:  “As he admitted in open court, Joseph Sabella was an active member of the Bonanno Crime Family who engaged in numerous racketeering acts.  He will now spend years in prison for his crimes.  Together with our law enforcement partners, we will continue to aggressively prosecute members of La Cosa Nostra who intimidate, threaten, and harm members of our community.”

According to the Indictment, documents filed in this case and statements made in related court proceedings:

La Cosa Nostra (“LCN”), also known as the “Mob” or the “Mafia,” operates through entities known as “Families.”  In the New York City area, there are five LCN Families, namely, the Bonanno Family, the Genovese Family, the Luchese Family, the Colombo Family, and the Gambino Family.  Members and associates of one La Cosa Nostra family at times work together with other La Cosa Nostra families in jointly undertaken criminal ventures.

The Bonanno Family, like other LCN Families, operates through a group of individuals known as “crews,” each of which is led by a “capo” or “captain.”  The crews are composed of “made” members, called “soldiers,” and trusted non-members called “associates.”  Above the capos are the highest-ranking members – the boss or acting boss, the underboss, and the consigliere, or counselor – who oversee the Family.

Between 2012 and January 2018, SABELLA acted as soldier and then captain in the Bonanno Family.  As a member of the Bonanno Family, SABELLA engaged in numerous racketeering acts, including extortion, fraud, and physical assaults.  In particular, SABELLA participated in the long-term extortion of a New York-based demolition company (“Company-1”) that netted the Bonanno Family thousands of dollars a year for nearly three decades.  SABELLA also participated in the physical assault of the owner of a strip club (“Victim-1”) and the subsequent extortion of Victim-1 out of his legitimate and illegitimate business interests.

SABELLA, 54, of Monroe, New Jersey, previously pled guilty on February 12, 2019, to conspiracy to commit racketeering.  As part of his guilty plea, SABELLA admitted to his involvement in the extortion of Company-1, the extortion of Victim-1, a large-scale, multi-year fraud at a construction site on Staten Island, and the physical assaults on Victim-1 and one of Sabella’s former business partners, all as part of his participation in the Bonanno Family.

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

This prosecution is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jason M. Swergold, Gina Castellano, and Jacob R. Fiddelman are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced the arrest and unsealing of a complaint charging HUGH BRIAN HANEY with money laundering, derived from the proceeds of his narcotics trafficking on the Dark Web site known as “Silk Road,” where illegal drugs and other illicit goods and services were regularly bought and sold by the site’s vendors and customers.  HANEY was arrested this morning near Columbus, Ohio, and was presented before a magistrate judge in the Southern District of Ohio.

U.S. Attorney Geoffrey S. Berman said:  “Working side by side with our law enforcement partners, our Office has shut down Silk Road, the secret online marketplace for illegal drugs, hacking services, and a whole host of other criminal activity.  As alleged, Hugh Haney used Silk Road as a means to sell drugs to people all over the world.  Then he allegedly laundered his profits – more than $19 million – through cryptocurrency.  Today’s arrest should be a warning to dealers peddling their drugs on the dark web that they cannot remain anonymous forever, especially when attempting to legitimize their illicit proceeds.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “In 2013, Silk Road was put out of business, and as a result of that, cyber criminals sought ways to continue their criminal activities and more importantly launder their illicit digital currency.  Haney was allegedly one of those criminals  who was still holding on to a stash of cyber gold.  HSI special agents employed blockchain analytics to uncover and seize bitcoins valued at $19 million and usher Haney out of the dark web shadows to face justice in the Southern District of New York.”

As alleged in the Complaint to be unsealed today[1]:

Silk Road was designed to be an online criminal marketplace 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 more than 100,000 buyers, and to launder hundreds of millions of dollars derived from these unlawful transactions. All told, the site generated sales revenue totaling more than approximately 9.5 million Bitcoins. 

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.  Agents and officers of the Drug Enforcement Administration made multiple controlled purchases of narcotics, including oxycontin, from Pharmville in 2011 and 2012.  Pursuant to a judicially authorized search of HANEY’s house in Ohio in 2018, agents with HSI found evidence that HANEY was a high-ranking member or administrator of Pharmville, involved in large-scale narcotics trafficking on Silk Road.

Because Silk Road’s payment system essentially involved a Bitcoin “bank” internal to the site, every user had to hold an account in order to conduct transactions on the site.  Vendors seeking to sell items, including narcotics, on Silk Road each had a Silk Road Bitcoin address, or multiple addresses, associated with the user’s Silk Road account.  Once a transaction was complete, a vendor who had been paid by another user through the transfer of the user’s Bitcoins could then withdraw Bitcoins from the vendor’s Silk Road Bitcoin address by sending them to a different Bitcoin address, outside Silk Road, such as the Bitcoin addresses the vendor personally controlled.

In 2017 and 2018, HANEY transferred Bitcoins representing narcotics proceeds he had earned through his control of Pharmville from Silk Road to an account held at a company involved in the exchange of Bitcoins and other digital currency (“Company-1”).  In correspondence with Company-1, HANEY claimed falsely that the source of these Bitcoins was his own “mining” of Bitcoins – which is the process by which new Bitcoins are created cryptographically – and from “individuals [he] met online,” while in truth and in fact, the Bitcoins were derived from transfers from Silk Road.  After HANEY transferred the Bitcoins to cash worth more than $19 million through Company-1, HSI seized the money pursuant to a judicially authorized seizure warrant from a custodial account at a bank (“Bank-1”) that was located in the Southern District of New York.

*              *             *

HANEY, 60, of Columbus, Ohio,  is charged with 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.

Mr. Berman praised the outstanding investigative work of HSI. 

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

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

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that ELIANA BAUTA, GERALDINE PEREZ, and ERIC GONZALES have been sentenced for their involvement in a scheme to steal over $300,000 in funds from the New York City Human Resources Administration (“HRA”).  BAUTA, who perpetrated the offenses in her capacity as an HRA employee, was sentenced today by U.S. District Judge Valerie E. Caproni to two years in prison.  PEREZ was previously sentenced by Judge Caproni to nine months in prison.  GONZALES was previously sentenced by Judge Caproni to two years of probation. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “The defendants have now been convicted of stealing money that was intended to be used to help some of New York’s neediest residents.  As this prosecution makes clear, we are committed to rooting out those who would abuse the public trust and to ensuring that funds from public programs go to their intended recipients, not the pockets of unscrupulous employees and their co-conspirators.”

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

HRA is an agency of the City of New York responsible for administering the majority of the City’s public assistance programs.  Among other things, HRA provides temporary, emergency cash assistance to individuals and families with social service and economic needs to assist them in reaching self-sufficiency.  The emergency assistance is funded by the federal government as well as by New York State and the City.

Since 2015, the New York City Department of Investigation ("DOI") has been investigating two related schemes in which an HRA employee – BAUTA – defrauded HRA and the City by using her position to commit public assistance fraud.  BAUTA worked as a Job Opportunity Specialist for HRA from approximately January 2008 to on or about May 23, 2018.  As a Job Opportunity Specialist, BAUTA was at various points responsible for interviewing benefits applicants, compiling and submitting applicants’ paperwork, and disbursing applicants’ benefits.

In the first of the two schemes, BAUTA caused the fraudulent issuance of emergency benefits funds to relatives and acquaintances, including GERALDINE PEREZ and ERIC GONZALES, among others, who in truth and in fact did not qualify for those funds.  For example, BAUTA altered a police report submitted by an actual HRA client by changing the name of the victim to a family member’s name, and then entered the doctored report into HRA systems in support of a request for benefits to be issued to that family member.  On another occasion, BAUTA submitted a request for emergency benefits to be issued to an individual after an alleged disaster, but no such disaster had occurred.  Both PEREZ and GONZALEZ were knowing recipients of such fraudulently issued funds and shared the proceeds with BAUTA.

In the second scheme, BAUTA obtained access to and misappropriated emergency benefits checks issued to actual HRA clients.  Instead of providing the checks to the legitimate clients in need of emergency funding, BAUTA gave them to PEREZ and GONZALES, among other of BAUTA’s relatives and associates, who deposited the checks in their own bank accounts and withdrew the funds, and then shared the proceeds with BAUTA.  In total, the two schemes resulted in losses to HRA of at least $309,000 in public funds.

In addition to obtaining stolen HRA checks into her bank account and the bank accounts of family members, PEREZ also deposited or caused to be deposited into these same accounts improperly obtained United States Treasury checks that were issued to other individuals as tax refunds.  In total, 23 such checks worth more than $91,000 were deposited into bank accounts of PEREZ and her family members and associates.  PEREZ then split the proceeds with a tax preparer who assisted in the scheme.

*                *                *

In addition to the prison term, BAUTA, 36, of the Bronx, New York, was sentenced to three years of supervised release, and was ordered to forfeit $256,348.46 and to pay $312,408.60 in restitution. 

PEREZ, 61, of the Bronx, New York, was sentenced by Judge Caproni on June 11, 2019, to nine months in prison and three years of supervised release (including six months of home detention), and was ordered to forfeit $233,259.34 and to pay $233,259.34 in restitution. 

GONZALES, 27, of the Bronx, New York, was sentenced by Judge Caproni on June 20, 2019, to two years of probation (including 150 hours per year of community service), and was ordered to forfeit $998.33 and to pay $37,767.64 in restitution.

Mr. Berman praised the investigative work of DOI and the Internal Revenue Service.  

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Paul Monteleoni and Catherine Ghosh are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, John Brown, Assistant Director of the FBI’s Counterintelligence Division, and William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the extradition of BEHZAD POURGHANNAD and the unsealing today of a three-count indictment charging POURGHANNAD, ALI REZA SHOKRI, and FARZIN FARIDMANESH with exporting carbon fiber from the United States to Iran.  POURGHANNAD, an Iranian national, was arrested on those charges on May 3, 2017, in Germany and was extradited to the U.S.  POURGHANNAD arrived in the Southern District of New York yesterday, and was presented today in White Plains federal court before U.S. Magistrate Judge Judith C. McCarthy.  SHOKRI and FARIDMANESH remain at large.

U.S. Attorney Geoffrey Berman stated:  “Carbon fiber has many aerospace and defense applications, and is strictly controlled to ensure that it doesn’t fall into the wrong hands.  Pourghannad and his co-defendants allegedly went to great lengths to circumvent these controls and the United States’ export laws.  Together with our law enforcement partners, we will continue to protect our nation’s assets and protect our national security.”

Assistant Attorney General John Demers said: “Pourghannad is alleged to have sought to procure for Iran large amounts of carbon fiber — a commodity that can be used in the enrichment of uranium.  U.S. sanctions exist to prevent behavior, like this, which endangers our country, and the Department is committed to vigorously enforcing them.  Pourghannad and others who would attempt to thwart these laws need to know that their actions, which benefit Iran’s destabilizing efforts and make Americans less safe, will not go unpunished.”

Assistant Director John Brown of the FBI’s Counterintelligence Division said:  “This case shows the FBI aggressively pursues those who allegedly break the law and violate sanctions against Iran.  Iran remains determined to acquire U.S. technology with military applications, and the FBI is just as determined to stop such illegal activity.  The charges against these three Iranian nationals, and the extradition of Mr. Pourghannad, demonstrate we take Iran's actions extremely seriously and will work with our partners to defeat them.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Iran’s continued pursuit of technology and materials to advance its nuclear program remains a threat to the US and the rest of the world.  The FBI New York and SDNY will continue to pursue these illicit proliferation activities, and bring the full investigative and law enforcement capabilities of the U.S. to bear on those who would help Iran advance its dangerous agenda.  If you aid Iran in its efforts, you will be held accountable.”

According to the allegations contained in the Indictment, unsealed in White Plains federal court[1]:

Between 2008 and July 2013, POURGHANNAD, SHOKRI, and FARIDMANESH lived and worked in Iran.  During that period, they worked together to obtain carbon fiber from the U.S. and surreptitiously export it to Iran via third countries.  In particular, SHOKRI worked to procure many tons of carbon fiber from the U.S.; 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 late 2007 and early 2008, SHOKRI and a Turkey-based co-conspirator (“CC-2”) successfully arranged for the illegal export and trans-shipment of carbon fiber from the U.S. to an Iranian company associated with SHOKRI (“Iranian Company-1”).  Specifically, CC-2 contacted a U.S. 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 U.S. supplier and arranged for the shipment of the carbon fiber from the U.S., through Europe and Dubai, United Arab Emirates, to Iranian Company-1, operated by SHOKRI, in Iran.

In May 2009, POURGHANNAD and SHOKRI attempted to arrange another illegal purchase and trans-shipment of carbon fiber from the U.S. 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 U.S. supplier and arranged for the carbon fiber to be exported from the U.S. 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 2013, POURGHANNAD, SHOKRI, and FARIDMANESH again attempted to illegally procure and export carbon fiber from the U.S. to Iran.  In the 2013 transaction, SHOKRI and POURGHANNAD negotiated with Individual-1 for the purchase and trans-shipment to Iran of more than 5 tons of carbon fiber.  FARIDMANESH and POURGHANNAD further agreed with Individual-1 that the carbon fiber would be trans-shipped from the U.S. 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 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 U.S. 

*                *                *

POURGHANNAD, 65, SHOKRI, 61, and FARIDMANESH, 48, all of whom are Iranian citizens, are each charged with one count of conspiracy to violate the International Emergency Economic Powers Act (“IEEPA”), which carries a maximum sentence of 20 years in prison, and two counts of violation and attempted violation of IEEPA, each of which also carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI, and thanked the New York Field Office of the U.S. Department of Commerce, the U.S. Department of Justice’s National Security Division and Office of International Affairs, the U.S. Marshals Service, Homeland Security Investigations, and Immigration and Customs Enforcement for their assistance.  Mr. Berman also thanked German law enforcement for their assistance in the arrest and apprehension of POURGHANNAD.

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 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.

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that a federal jury yesterday found LLOYD KIDD, a/k/a “Chris Kidd,” a/k/a “Gerard Agard,” a/k/a “Red,” guilty of sex trafficking of a minor and enticement of a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct, following a six-day jury trial before U.S. District Judge Victor Marrero.

Manhattan U.S. Attorney Geoffrey Berman said:  “Lloyd Kidd has rightly been convicted of the shameless and exploitive victimization of an underage girl.  Kidd preyed on a particularly vulnerable victim, recruiting a minor residing at a foster care facility.  He now awaits sentencing for his appalling crimes.”

According to the allegations contained in the Indictment and evidence presented during the trial in Manhattan federal court:

From at least in or about spring 2015 through at least February 2017, KIDD engaged in sex trafficking of a minor and enticement of a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct.  The defendant recruited, enticed, harbored, transported, provided, obtained, and maintained a minor victim (“Victim-1”) for the purpose of commercial sex.

The defendant recruited Victim-1 when she was living in a foster care facility in New York, New York.  The defendant used Backpage.com to post advertisements of Victim-1 for commercial sex, and then directed Victim-1 to meet customers to engage in commercial sex out of his apartment in Brooklyn, New York.  

In addition, the defendant produced sexually explicit images and a video recording of Victim-1 performing sexually explicit activities, which constituted child pornography.  The defendant used at least one of the sexually explicit images of Victim-1 to advertise her for commercial sex.    

This prosecution is part of an ongoing investigation that, including KIDD, has charged 19 defendants, set forth in eight indictments, for the sex trafficking of at least 13 minor girls and young adults in New York State’s social services system. 

*                *                *

KIDD, 28, of Brooklyn, New York, was convicted of one count of sex trafficking of a minor, which carries a mandatory minimum sentence of 10 years in prison and a statutory maximum sentence of life in prison, and one count of enticement of a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct, which carries a mandatory minimum sentence of 15 years and a statutory maximum sentence of 30 years.  The mandatory minimum sentences and maximum potential sentences are prescribed by Congress and are provided for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

KIDD will be sentenced by Judge Marrero on November 1, 2019. 

Any individuals who believe that they have information that may be relevant to this investigation should contact the Federal Bureau of Investigation (“FBI”) at 1-212-384-1000 or https://tips.fbi.gov/.

Mr. Berman thanked the FBI and the New York City Police Department for their outstanding work in this matter and, in particular, the New York Child Exploitation and Human Trafficking Task Force.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Mollie Bracewell, Elinor Tarlow, Jacob Gutwillig, and Sagar Ravi are in charge of the prosecution. 

Assistant Attorney General for National Security John C. Demers, U.S. Attorney Geoffrey S. Berman for the Southern District of New York, Assistant Director John Brown of the FBI’s Counterintelligence Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office announced the extradition of Behzad Pourghannad and the unsealing today of a three-count indictment charging Pourghannad, Ali Reza Shokri and Farzin Faridmanesh with exporting carbon fiber from the United States to Iran.  Pourghannad, an Iranian national, was arrested on those charges on May 3, 2017, in Germany and was extradited to the U.S.  Pourghannad arrived in the Southern District of New York yesterday, and was presented today in White Plains federal court before U.S. Magistrate Judge Judith C. McCarthy.  Shokri and Faridmanesh remain at large.

“Pourghannad is alleged to have sought to procure for Iran large amounts of carbon fiber — a commodity that can be used in the enrichment of uranium,” said Assistant Attorney General Demers.  “U.S. sanctions exist to prevent behavior, like this, which endangers our country, and the Department is committed to vigorously enforcing them.  Pourghannad and others who would attempt to thwart these laws need to know that their actions, which benefit Iran’s destabilizing efforts and make Americans less safe, will not go unpunished.”

“Carbon fiber has many aerospace and defense applications, and is strictly controlled to ensure that it doesn’t fall into the wrong hands,” said U.S. Attorney Geoffrey Berman.  “Pourghannad and his co-defendants allegedly went to great lengths to circumvent these controls and the United States’ export laws.  Together with our law enforcement partners, we will continue to protect our nation’s assets and protect our national security.”

“This case shows the FBI aggressively pursues those who break the law and violate sanctions against Iran,” said Assistant Director Brown.  “Iran remains determined to acquire U.S. technology with military applications, and the FBI is just as determined to stop such illegal activity.  The charges against these three Iranian nationals, and the extradition of Mr. Pourghannad, demonstrate we take Iran's actions extremely seriously and will work with our partners to defeat them.”

“Iran’s continued pursuit of technology and materials to advance its nuclear program remains a threat to the US and the rest of the world,” said Assistant Director in Charge Sweeney.  “The FBI New York and SDNY will continue to pursue these illicit proliferation activities, and bring the full investigative and law enforcement capabilities of the U.S. to bear on those who would help Iran advance its dangerous agenda.  If you aid Iran in its efforts, you will be held accountable.”

According to the allegations contained in the Indictment, unsealed in White Plains federal court[1]:

Between 2008 and July 2013, Pourghannad, Shokri and Faridmanesh lived and worked in Iran.  During that period, they worked together to obtain carbon fiber from the U.S. and surreptitiously export it to Iran via third countries.  In particular, Shokri worked to procure many tons of carbon fiber from the U.S.; 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 late 2007 and early 2008, Shokri and a Turkey-based co-conspirator (CC-2) successfully arranged for the illegal export and trans-shipment of carbon fiber from the U.S. to an Iranian company associated with Shokri (Iranian Company-1).  Specifically, CC-2 contacted a U.S. 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 U.S. supplier and arranged for the shipment of the carbon fiber from the U.S., through Europe and Dubai, United Arab Emirates, to Iranian Company-1, operated by Shokri, in Iran.

In May 2009, Pourghannad and Shokri attempted to arrange another illegal purchase and trans-shipment of carbon fiber from the U.S. 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 U.S. supplier and arranged for the carbon fiber to be exported from the U.S. 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 2013, Pourghannad, Shokri, and Faridmanesh again attempted to illegally procure and export carbon fiber from the U.S. to Iran.  In the 2013 transaction, Shokri and Pourghannad negotiated with Individual-1 for the purchase and trans-shipment to Iran of more than 5 tons of carbon fiber.  Faridmanesh and Pourghannad further agreed with Individual-1 that the carbon fiber would be trans-shipped from the U.S. 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 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 U.S. 

*                *               *

Pourghannad, 65, Shokri, 61, and Faridmanesh, 48, all of whom are Iranian citizens, are each charged with one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA), which carries a maximum sentence of 20 years in prison, and two counts of violation and attempted violation of IEEPA, each of which also carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Demers and Mr. Berman praised the outstanding investigative work of the FBI, and thanked the New York Field Office of the U.S. Department of Commerce, the U.S. Department of Justice’s Office of International Affairs, the U.S. Marshals Service, Homeland Security Investigations, and Immigration and Customs Enforcement for their assistance.  Mr. Demers and Mr. Berman also thanked German law enforcement for their assistance in the arrest and apprehension of Pourghannad.

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 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.

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, Susan Bodine, Assistant Administrator for Enforcement and Compliance Assurance for the U.S. Environmental Protection Agency (“EPA”), and David Bernhardt, Secretary of the U.S. Department of the Interior (“DOI”), announced today that the United States has entered into a settlement agreement with the bankruptcy trustee for the estates of debtor MAGNESIUM CORPORATION OF AMERICA (“MAGCORP”) and RENCO METALS, INC. (“RENCO METALS”), resolving claims and liabilities related to environmental contamination at a former magnesium production facility in Rowley, Utah.  The settlement agreement remains subject to court approval.

U.S. Attorney Geoffrey S. Berman said:  “Polluters will be held to account, even in bankruptcy, for contaminating the environment.  As a result of today’s settlement, MagCorp and Renco Metals will pay more than $33 million to fund clean-up of the hazardous substances at the US Magnesium Superfund Site.”   

EPA Assistant Administrator for Enforcement and Compliance Assurance Susan Bodine said:  “Settlement of this long running litigation is a significant step forward in the effort to address the environmental issues at the U.S. Magnesium site.  The resources secured will help fund remediation of the site.”

DOI Secretary David Bernhardt said:  “At the Department of the Interior, we are focused on addressing environmental challenges, so we can provide the highest quality of life to all Americans.  If approved by the Court, the funding recovered through this settlement will be used to reclaim and restore access to 58,000 acres of BLM-managed public lands, which were damaged and abandoned by MagCorp over two decades ago.”     

In its proofs of claim filed in this bankruptcy, the United States asserted that MAGCORP and RENCO METALS (collectively, the “debtors”) were liable to EPA and DOI’s Bureau of Land Management (“BLM”) under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) (commonly known as the Superfund statute) for the cost of clean-up of hazardous substances released at a 4,525-acre site adjacent to the Great Salt Lake in Rowley, Utah, where MAGCORP had previously operated a magnesium production facility (the “US Magnesium Site”).  The United States also asserted on behalf of BLM and DOI’s Fish and Wildlife Service that the debtors were liable under CERCLA for natural resource damages caused by these hazardous substances; on behalf of EPA that the debtors were liable for civil penalties under the Resource Conservation and Recovery Act (“RCRA”); and on behalf of BLM that the debtors were liable for reclamation of land owned by the United States that MAGCORP used in connection with its operations.  Finally, the United States on behalf of BLM sought to recover from the debtors unpaid rent due in connection with a federal right-of-way and compensation for unpermitted removal of minerals from federal land. 

The settlement agreement filed in Manhattan Bankruptcy Court today substantially resolves these proofs of claim and, among other things, provides substantial funding for the remediation of the US Magnesium Site and affected federal land.  Pursuant to the agreement, the United States will receive allowed bankruptcy claims in the amount of $82,135,812, which is expected to result in a distribution of approximately $28.2 million dollars to fund remediation at the US Magnesium Site or reclamation of federal land used by MAGCORP in its operations, and more than $400,000 in compensation for natural resource damages, unpaid rent, and the unpermitted removal of minerals from federal land.  The agreement also secures the commitment of the current operator of the magnesium production facility, US Magnesium LLC, and its parent entities, to use more than $5.8 million that they are recovering from the debtors for environmental activities at the US Magnesium Site. 

*                *                *

The settlement agreement will be lodged with the Bankruptcy Court for a period of at least 30 days before it is submitted for the Court’s approval, to provide public notice and to afford members of the public the opportunity to comment on the settlement agreement.

Mr. Berman thanked the Environment and Natural Resources Division of the U.S. Department of Justice, EPA, DOI and the State of Utah for their assistance in this case.  

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that ROBERT ACOSTA and JOSE DIAZ were sentenced in Manhattan federal court today.  Both men were sentenced to life in prison for their roles in the December 22, 1997, murders for hire of Alex Ventura, 25, and Aneudis Almonte, 20, in the Bronx, New York.  The defendants were convicted following a three-week trial before U.S. District Judge P. Kevin Castel, who imposed today’s sentences.

U.S. Attorney Geoffrey S. Berman said:  “As the jury found, Acosta and Diaz committed two brutal murders in the Bronx more than 20 years ago.  As a result of the skill and determination of our law enforcement partners, the defendants will now spend the rest of their lives behind bars for their horrible crimes.”

According to the evidence presented during the trial:

In the 1990’s, ROBERT ACOSTA was the leader of a large-scale drug trafficking organization that distributed hundreds of kilograms of cocaine out of several buildings in northern Manhattan.  In the summer of 1997, the murder victims stole drug money from ACOSTA.  To retaliate, ACOSTA hired JOSE DIAZ to kill both men. 

On December 22, 1997, DIAZ and a co-conspirator (“CC-1”) lured the victims to an apartment building in the Bronx, ambushed them in a stairwell, and murdered them both.  CC-1 stabbed Almonte six times, including once in the chest.  DIAZ shot Ventura in the head from point-blank range.  In exchange for these murders, ACOSTA paid DIAZ approximately $12,000.

*                      *                      *

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Laurie A. Korenbaum, Michael K. Krouse, and Nicholas W. Chiuchiolo are in charge of the prosecution.

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 a superseding indictment charging THERYN JONES, a/k/a “Ty,” a/k/a “Old Man Ty,” a/k/a “Tyballa,” 42, GYANCARLOS ESPINAL, a/k/a “Fatboy,” a/k/a “Slime,” 25, and ARIUS HOPKINS, a/k/a “Scrappy,” a/k/a “Scrap,” 25, with the January 2, 2014, murder of Shaquille Malcolm, 20.  JONES was arraigned on the superseding indictment yesterday.  ESPINAL and HOPKINS were previously arraigned on the charges.  The case is assigned to United States District Judge Lewis A. Kaplan. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the superseding indictment, the defendants are responsible for the murder of 20-year-old Shaquille Malcolm.  Now, thanks to the outstanding work of our partners at the NYPD, the defendants have been charged with this terrible crime.”

NYPD Commissioner James P. O’Neill said:  “The ability of investigators to bring about justice for Shaquille Malcolm and closure to his family is paramount.  The identification and arrest of the suspects in this case was a team effort that is the result of the cooperation that exists between the NYPD and our law-enforcement partners.  I thank and commend the NYPD investigators and the prosecutors for the Southern District of New York for their work in this investigation.”

According to the Superseding Indictment[1]: 

In 2013 and 2014, JONES, ESPINAL, and HOPKINS were involved in the distribution of crack cocaine and heroin in the Allerton section of the Bronx.  Because Malcolm and others were encroaching on JONES’s drug territory, and because Malcolm had previously assaulted ESPINAL, JONES and ESPINAL paid HOPKINS and another person (“CC-1”) to murder Malcolm.  On January 2, 2014, HOPKINS and CC-1 shot Shaquille Malcolm multiple times in the stairwell of an apartment building located at 2818 Bronx Park East in the Bronx, New York.  Malcolm died at the scene.

*                      *                     *

The Superseding Indictment charges the defendants in three counts: using a firearm to commit murder in furtherance of a drug trafficking crime and aiding and abetting the same (Count One); murder while engaged in a conspiracy to distribute 280 grams and more of crack cocaine and aiding and abetting the same (Count Two); and conspiring to commit murder for hire (Count Three).  All three defendants face a maximum sentence of life in prison or death.  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 Michael K. Krouse and Danielle R. Sassoon are in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JON E. MONTROLL, a/k/a “Ukyo,” was sentenced yesterday by U.S. District Judge Richard M. Berman to 14 months in prison.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jon Montroll lied to his investors and, after his lies caught the attention of the SEC, lied to them, too.  The sentence he received serves as a reminder that this Office will not overlook those who violate their obligation to be honest with investors and the regulators working to protect them.”

According to the Information, the allegations in the Complaint, and statements made during the proceedings in Manhattan federal court:

JON E. MONTROLL operated two online bitcoin services:  WeExchange Australia, Pty. Ltd. (“WeExchange”) and BitFunder.com (“BitFunder”).  WeExchange functioned as a bitcoin depository and currency exchange service.  BitFunder facilitated the purchase and trading of virtual shares of business entities that listed their virtual shares on the BitFunder platform.

Between the launch of Bitfunder, in or about December 2012, and at least in or about July 2013, MONTROLL converted a portion of WeExchange users’ bitcoins to his personal use without the users’ knowledge or consent.  For example, MONTROLL exchanged numerous bitcoins taken from WeExchange into United States dollars, then spent those funds on personal expenses, such as travel and groceries.

Beginning on or about July 18, 2013, MONTROLL promoted a security referred to as “Ukyo.Loan.”  As described by MONTROLL in a public post about Ukyo.Loan, MONTROLL encouraged investors to “think of [Ukyo.Loan] as a sort of round-about investment” in BitFunder and WeExchange and, at the same time, described Ukyo.Loan as “a personal loan” and “for private investment purposes.”  MONTROLL further promised to pay purchasers of Ukyo.Loan daily interest on their investment and promised shares could be “redeemed at face value anytime upon request.”

During the summer of 2013, one or more individuals (the “Hackers”) exploited a weakness in the BitFunder programming code to cause BitFunder to credit the Hackers with profits they did not, in fact, earn (the “Exploit”).  As a result, the Hackers were able to wrongfully withdraw from WeExchange approximately 6,000 bitcoins, with the majority of those coins being wrongfully withdrawn between July 28, 2013, and July 31, 2013.  As a result of the Exploit, BitFunder and WeExchange lacked the bitcoins necessary to cover what MONTROLL owed to users.

Notwithstanding the scope of the Exploit, MONTROLL failed to disclose the Exploit to users of BitFunder and WeExchange, or investors in Ukyo.Loan.  Instead, MONTROLL continued to promote and sell Ukyo.Loan to customers and, on at least one occasion, falsely represented to customers that BitFunder was commercially successful.  As a result of his omissions and misrepresentations, MONTROLL raised approximately 978 bitcoins through Ukyo.Loan after his discovery of the Exploit.

The SEC’s New York Regional Office began an investigation into BitFunder and the Exploit.  During the course of the investigation, MONTROLL provided the SEC with a falsified screenshot purportedly documenting, among other things, the total number of bitcoins available to BitFunder users in the WeExchange Wallet as of October 13, 2013.  Additionally, during sworn investigative testimony on both November 14, 2013, and October 6, 2015, MONTROLL provided materially false and misleading answers to certain questions about, among other things, the timing of MONTROLL’s discovery of the Exploit.

*                *                *

In addition to a prison sentence, Judge Berman ordered MONTROLL, 38, of Saginaw, Texas, to serve three years of supervised release and to pay forfeiture in the amount of $167,480.

Mr. Berman praised the outstanding work of the Federal Bureau of Investigation.  He also thanked the Securities and Exchange Commission, which previously filed civil charges against MONTROLL in a separate action.

The prosecution of this case is being overseen by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorney Andrew Thomas is in charge of the case.

Audrey Strauss, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that ANILESH AHUJA, a/k/a “Neil,” the founder, chief executive officer, and chief investment officer of Premium Point Investments LP (“PPI”), a Manhattan-based investment firm that managed hedge funds, and JEREMY SHOR, a former trader at PPI, were found guilty today of securities fraud-related offenses.  AHUJA and SHOR were convicted after a six-week trial in Manhattan federal court presided over by U.S. District Judge Katherine Polk Failla, for their participation in a scheme to inflate the net asset value (“NAV”) reported to investors for hedge funds managed by PPI, by more than $100 million.

Ms. Strauss said:  “Investors in our markets must be able to count on the truth and accuracy of the information they receive from those they entrust with their money.  As the jury’s verdict reflects, Ahuja and Shor failed to live up to that fundamental responsibility and investors lost significant money as a result.” 

According to the Indictment and based on the evidence presented at trial:

Premium Point Investments

In or about 2008, AHUJA co-founded PPI, where he was the chief executive officer and chief investment officer.  PPI managed hedge funds focused primarily on structured credit products, including residential mortgage backed securities (“RMBS”).   PPI’s flagship mortgage credit fund (the “Hedge Fund”) was launched in or about October 2009.  A segregated ERISA fund held the same positions as the Mortgage Credit Fund.  In 2013, PPI launched a new fund (the “New Issue Fund”) that purchased and securitized pools of mortgages that were not issued or guaranteed by a government agency.  At various relevant times between 2008 and 2016, PPI managed billions in assets.  JEREMY SHOR was employed by PPI as a trader, where he focused on non-agency RMBS – i.e., RMBS securities that were not issued by a government agency.   

The Scheme to Mismark Securities 

From at least in or about 2014 through at least in or about 2016, AHUJA and SHOR participated in a scheme to defraud PPI’s investors and potential investors in the Hedge Fund and the New Issue Fund by deceptively mismarking each month the value of certain securities held in these funds, and thus fraudulently inflating the NAV of those funds as reported to investors and potential investors. 

PPI fraudulently obtained inflated quotes, including from corrupt brokers, and manipulated its valuation process to inflate the purported value of securities held by the funds.    The effect of the mismarking scheme was to materially overstate the reported NAV – at times by more than $100 million across the funds managed by PPI.  This benefited PPI in at least two ways.  First, PPI was able to charge its investors higher management and performance fees.  Second, the PPI was able to forestall redemptions by investors who would have requested a return of their funds had they known PPI’s true performance and operating health.

The mismarking scheme evolved as a result of demands by AHUJA that PPI maintain its track record of success and keep pace with the performance of peer funds, regardless of market conditions or the actual performance of the funds.  To achieve the goal of posting competitive returns, AHUJA, along with another partner, set an inflated “target” return for the Hedge Fund and New Issue Fund at the end of each month, which was at times based in part on the performance of peer funds.  The traders at PPI were then tasked with “reverse engineering” marks to meet the “targets.”

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AHUJA, 51, of New Rochelle, New York, and SHOR, 44, of New York, New York, were each found guilty on all four counts of the indictment: one count of conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison, and one count each of securities fraud, conspiracy to commit wire fraud, and wire fraud, each of which carries a maximum potential 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.

SHOR and AHUJA will be sentenced by Judge Failla at a future date.   

Ms. Strauss praised the work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Andrea M. Griswold, Joshua A. Naftalis, and Max Nicholas are in charge of the prosecution.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that ALAN KAUFMAN and TONY GEORGITON were arrested today and charged with bribery of a financial institution officer.  KAUFMAN and GEORGITON were charged with participating in a scheme in which KAUFMAN, who was then the chief executive officer of Melrose Credit Union (“Melrose CU”), accepted free housing and financing for the purchase of his personal residence from GEORGITON in exchange for the approval of millions of dollars in loans to GEORGITON’s companies at favorable terms.  KAUFMAN is also charged with accepting lavish vacations, including to Paris and Hawaii, as bribes from a media company, in exchange for Melrose CU purchasing increased advertising with that company.  The defendants are expected to be presented this afternoon before U.S. Magistrate Judge Henry B. Pitman.  The case is assigned to U.S. District Judge Lewis A. Kaplan.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Alan Kaufman conspired to take bribes from Tony Georgiton in exchange for favorable refinancing of millions of dollars of Melrose Credit Union loans to Georgiton’s companies.  In addition, Kaufman is alleged to have accepted Paris and Hawaii vacations in exchange for directing increased advertising payments to a media company.  Now, both Kaufman and Georgiton face criminal charges for their alleged self-dealing.”

FBI Assistant Director William F. Sweeney Jr. said:  “Lavish vacations, rent-free housing, and even naming rights to a ballroom were among the high-ticket items Kaufman received in this alleged scheme.  All of this was made possible through a series of illegal business dealings negotiated with Georgiton and a New York City-based media company – both of whom independently sought financial benefits of their own from Melrose Credit Union, where Kaufman served as chief executive officer.  Today’s charges highlight a series of fraudulent behaviors that raised red flags along the way.  The FBI will continue to be a major force in confronting those who think they can evade the law in order to make an easy profit.”

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

In 2010, GEORGITON purchased a home in Jericho, New York (the “Jericho Residence”), and permitted KAUFMAN to live in that home rent-free for over two years.  While KAUFMAN was living rent-free at the Jericho Residence, KAUFMAN personally approved the refinancing of over $60 million worth of loans at Melrose CU held by a company owned by GEORGITON with favorable terms.  The head of Melrose CU’s loan department refused to sign off on the loans given to GEORGITON because, among other things, he believed that the terms were too favorable and did not comply with Melrose CU’s loan policy.

In 2011, KAUFMAN sought approval from Melrose CU’s board of directors for Melrose CU to purchase the naming rights to a ballroom under construction in Astoria, Queens (the “Melrose Ballroom”).  That ballroom was owned by a company owned by GEORGITON.  KAUFMAN did not disclose to the Melrose board that he was living rent-free in a house owned by GEORGITON at the time he sought board approval for the naming rights acquisition.  Over the next four years, Melrose CU paid approximately $2 million to GEORGITON’s company for the naming rights to the Melrose Ballroom.

In 2013, KAUFMAN purchased the Jericho Residence from GEORGITON, with financing that largely came from GEORGITON.  To purchase the Jericho Residence, KAUFMAN took out a $200,000 loan from Melrose CU co-signed by GEORGITON and secured by GEORGITON’s shares in Melrose CU.  GEORGITON also gave KAUFMAN a $240,000 unsecured personal loan.  GEORGITON has never made a demand for payment on that personal loan and KAUFMAN has never made a payment on that personal loan.

In addition, from in or about 2010 through in or about 2015, KAUFMAN solicited and accepted lavish vacations and other gifts worth tens of thousands of dollars from a media company located in New York, New York (“Media Company-1”), in exchange for KAUFMAN’s approval of increased advertising spending by Melrose CU with Media Company-1.  For example, in 2010, Media Company-1 paid for KAUFMAN and his girlfriend, who also worked at Melrose CU, to fly to Paris, France, and stay at the Four Seasons George V Paris.  In 2012, Media Company-1 paid for KAUFMAN and his girlfriend to fly to Maui, Hawaii, and stay at the Four Seasons in Wailea.  In 2013, Media Company-1 paid for KAUFMAN and his girlfriend to attend the Super Bowl in New Orleans.

KAUFMAN did not seek approval for these vendor-paid trips from the Melrose CU board, nor did he disclose these vendor-paid trips to the Melrose CU board, in violation of Melrose CU’s anti-bribery policy.

        

*                *                *

 

KAUFMAN is charged with one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison, and two counts of bribery of a financial institution officer, each of which carries a maximum sentence of 30 years in prison.  GEORGITON is charged with one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison, and one count of bribery of a financial institution officer, which carries a maximum sentence of 30 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding work of the FBI.  He also thanked the National Credit Union Administration for their efforts and ongoing support and assistance with the case.

The case is being handled by the Office’s Complex Frauds Unit, and Assistant U.S. Attorney Dina McLeod 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.

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, 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 indictment and arrest of DONALD BLAKSTAD for his participation in a scheme to trade on inside information that was misappropriated from Illumina, Inc. (“Illumina”), a San Diego-based biotechnology company whose stock trades on NASDAQ.  BLAKSTAD’s scheme yielded more than $6 million in illegal profits.

Mr. Berman also announced today the unsealing of charges against MARTHA BUSTOS, a certified public accountant formerly employed by Illumina, who pled guilty on June 28, 2019, and is cooperating with the Government.

BLAKSTAD was arrested this morning in San Diego, California, and will be presented today before United States Magistrate Judge William V. Gallo of the U.S. District Court for the Southern District of California.  In a separate action, the Securities and Exchange Commission (“SEC”) filed civil charges against BLAKSTAD and BUSTOS.

U.S. Attorney Geoffrey S. Berman said:  “Donald Blakstad allegedly used his connections to gather inside information that he and his associates then traded on, to the tune of more than $6 million in profits.  Trading stocks based on stolen information strikes at the foundation of our nation’s financial markets and today’s arrest and charges are part of our ongoing commitment to protecting the integrity of those markets.”

FBI Assistant Director-in-Charge Sweeney said:  “Those who base trading decisions on proprietary information they shouldn’t have access to are not only engaging in a practice that’s unfair, but also illegal.  Blakstad’s arrest today once again highlights the FBI’s ongoing efforts to eradicate this unlawful behavior and preserve the integrity of our financial markets.”

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

BLAKSTAD was the owner and principal of an investment fund known as Midcontinental Petroleum Inc., which purported to be in the business of soliciting investments in the oil and gas industry.  BUSTOS was a certified public accountant who worked in Illumina’s accounting department.  By virtue of her employment at Illumina, BUSTOS had access to material nonpublic information about Illumina’s financial condition, including its earnings. 

On multiple occasions, from 2016 through 2018, BLAKSTAD obtained inside information about Illumina’s financial condition from BUSTOS before Illumina publicly announced its quarterly financial results.  As BLAKSTAD knew, BUSTOS owed a duty to keep inside information about Illumina confidential. 

BLAKSTAD, aware of BUSTOS’s breach of duty to Illumina, used this inside information to make profitable trades in Illumina securities.  At times, BLAKSTAD tipped his associates so that they could trade Illumina stock and options based on the inside information.  At other times, in order to avoid detection, BLAKSTAD arranged for his associates to purchase Illumina securities for BLAKSTAD’s benefit in accounts controlled by his associates. 

Following the public announcement of Illumina’s earnings, BLAKSTAD and his associates sold the Illumina securities at a significant profit, sometimes exceeding more than 2,000 percent.  In total, BLAKSTAD and his associates made more than $6 million in profits from purchasing and selling Illumina securities. 

*                    *                    *

BLAKSTAD, 60, of San Diego, California, is charged with the offenses set forth in the chart attached to this release.  

On June 28, 2019, BUSTOS, 31, of San Diego, California, pled guilty in Manhattan federal court before Magistrate Judge Gabriel W. Gorenstein to three counts: conspiracy to commit securities fraud, securities fraud, and conspiracy to commit wire fraud.  The maximum sentences for each charge are included in the attached chart. 

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

Mr. Berman praised the work of the FBI, and thanked the SEC for its assistance.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Edward A. Imperatore and Brendan F. Quigley are in charge of the prosecution.

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

Count

Charge

Maximum Penalties

1

Conspiracy to Commit Securities Fraud (18 U.S.C. § 371)

 

Five years in prison and a $250,000 fine or twice the gross gain or loss from the offense

2

Securities Fraud (15 U.S.C. §§ 78j(b) & 78ff; 17 C.F.R. § 240.10b-5; 18 U.S.C. § 2)

20 years in prison and a $5,000,000 fine or twice the gross gain or loss from the offense

3

Securities Fraud (15 U.S.C. §§ 78j(b) & 78ff; 17 C.F.R. § 240.10b-5; 18 U.S.C. § 2)

20 years in prison and a $5,000,000 fine or twice the gross gain or loss from the offense

4

Conspiracy to Commit Wire Fraud (18 U.S.C. § 1349)

20 years in prison and a $250,000 fine or twice the gross gain or loss from the offense

5

Wire Fraud (18 U.S.C.  §§ 1343 & 2)

20 years in prison and a $250,000 fine or twice the gross gain or loss from the offense

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced that JEFFREY EPSTEIN was arrested Saturday and charged with sex trafficking of minors and conspiracy to commit sex trafficking of minors.  The indictment unsealed today alleges that, between 2002 through 2005, EPSTEIN sexually exploited and abused dozens of underage girls by enticing them to engage in sex acts with him in exchange for money.  Epstein allegedly worked with several employees and associates to ensure that he had a steady supply of minor victims to abuse, and paid several of those victims themselves to recruit other underage girls to engage in similar sex acts for money.  He committed these offenses in locations including New York, New York, and Palm Beach, Florida.  EPSTEIN is expected to be presented in Manhattan federal court this afternoon before U.S. Magistrate Judge Henry B. Pitman.  The case is assigned to U.S. District Judge Richard M. Berman.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Jeffrey Epstein abused underage girls for years, operating a scheme in which girls he victimized would recruit others for Epstein to exploit and abuse.  Epstein exploited girls who were vulnerable to abuse, enticed them with cash payments, and escalated his conduct to include sex acts, often occurring at his residence on the Upper East Side of Manhattan.  While the charged conduct is from a number of years ago, the victims – then children and now young women – are no less entitled to their day in court.  My Office is proud to stand up for these victims by bringing this indictment.”

FBI Assistant Director William F. Sweeney Jr. said:  “We are asking anyone who may have been victimized by Jeffrey Epstein, or anyone who may have information about his alleged criminal behavior, to please call us.  The number is 1-800-CALL-FBI.  We want to hear from you, regardless of the age you are now, or whatever age you were then, no matter where the incident took place.  The bravery it takes to call us might empower others to speak out about the crimes committed against them.  It is important to remember there was never, nor will there ever be an excuse for this type of behavior.  In the eyes of the FBI, the victims will always come first.”

NYPD Commissioner James P. O’Neill said:  “Today’s charges serve as a warning to individuals who continue to prey upon some of our society’s most vulnerable population: we are coming for you.  I thank and commend the U.S. Attorney’s Office for the Southern District and the FBI for their tireless efforts to ensure child predators are taken off our streets.  The NYPD will continue to work with our law enforcement partners to eradicate the trafficking of children in our city and nation and work to bring justice to victims of these heinous crimes.”

If you believe you are a victim of the sexual abuse perpetrated by Jeffrey Epstein, please contact the FBI at 1-800-CALL FBI, and reference this case.

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

From at least 2002 through at least 2005, JEFFREY EPSTEIN enticed and recruited, and caused to be enticed and recruited, dozens of minor girls to visit his mansion in New York, New York (the “New York Residence”), and his estate in Palm Beach, Florida (the “Palm Beach Residence”), to engage in sex acts with him, after which he would give the victims hundreds of dollars in cash.  In order to maintain and increase his supply of victims, EPSTEIN also paid certain victims to recruit additional underage girls whom he could similarly abuse.  In this way, EPSTEIN created a vast network of underage victims for him to sexually exploit, often on a daily basis, in locations including New York and Palm Beach.

EPSTEIN’s victims were as young as 14 at the time he abused them, and were, for various reasons, often particularly vulnerable to exploitation.  Moreover, EPSTEIN knew that many of his victims were under 18, including because, in some instances, victims expressly told him they were underage.

In creating and maintaining this network of minor victims in multiple states to abuse and exploit sexually, EPSTEIN worked with others, including employees and associates who facilitated his conduct by, among other things, contacting victims and scheduling their sexual encounters with EPSTEIN at the New York Residence and at the Palm Beach Residence.

In both New York and Florida, EPSTEIN perpetuated this abuse in similar ways.  Victims were initially recruited to provide “massages” to EPSTEIN, which became increasingly sexual in nature and would typically include one or more sex acts.  EPSTEIN paid his victims hundreds of dollars in cash for each encounter.

In particular, during encounters at the New York Residence, victims would be taken to a room where they would perform a massage on EPSTEIN, during which EPSTEIN would frequently escalate the nature and scope of physical contact with his victims to include, among other things, sex acts such as groping and direct and indirect contact with the victims’ genitals.  In connection with the encounters, EPSTEIN, or one of his employees or associates, typically paid each victim hundreds of dollars in cash.  Once minor victims were recruited, EPSTEIN or his employees or associates would contact victims to schedule appointments for “massages.”  As a result, many victims were abused by EPSTEIN on multiple subsequent occasions.

To further enable him to abuse underage girls, EPSTEIN asked and enticed certain of his victims to recruit additional minor girls to perform “massages” and similarly engage in sex acts with EPSTEIN.  When a victim would recruit another underage girl for EPSTEIN, he paid both the victim-recruiter and the new victim hundreds of dollars in cash.  Through these victim-recruiters, EPSTEIN maintained a steady supply of new victims to exploit, and gained access to dozens of additional underage girls to abuse.

*                      *                      *

JEFFREY EPSTEIN, 66, is charged with one count of sex trafficking of minors, which carries a maximum sentence of 40 years in prison, and one count of conspiracy to engage in sex trafficking of minors, which carries a maximum sentence of five years in prison.

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

Mr. Berman praised the outstanding investigative work of the FBI and the NYPD.  He also thanked the U.S. Customs and Border Protection for their assistance.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Alex Rossmiller, Alison Moe, and Maurene Comey are in charge of the prosecution, with assistance from the Office’s Human Trafficking Co-Coordinator, Abigail Kurland.

The charges contained in the Indictment are merely accusations.  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 herein, constitute only allegations, and every fact described therein should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James P. O’Neill, Police Commissioner of the City of New York (“NYPD”), announced today the unsealing of a superseding indictment and the arrest of EDUARDO RODRIGUEZ, a police officer with the NYPD, for conspiring to commit bank and loan fraud, as well as making false statements to federal law enforcement officers.  RODRIGUEZ was arrested this morning and will be presented this afternoon before U.S. Magistrate Judge Barbara C. Moses.  The case is assigned to U.S. District Judge William H. Pauley III.

U.S. Attorney Geoffrey S. Berman stated:  “As alleged, Eduardo Rodriguez, an officer with the New York Police Department, misled a financial institution about his intentions for a loan.  Instead of using the loan proceeds for a car, he allegedly used the money for other purposes.  If anything, law enforcement officers should be held to a higher standard than the general public.  At a minimum, they should be expected to obey the law.”

NYPD Commissioner James P. O’Neill said:  “There is no place in the NYPD for criminal or unethical behavior.  NYPD officers swear an oath to uphold the law and protect the public. If an officer fails to uphold this oath, they must be held accountable.”

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

In June 2017, RODRIGUEZ agreed with at least two other individuals (identified in the Superseding Indictment as CC-1 and CC-2) to submit an application to a lending institution (“Lender-1”) for an automobile loan for the express – but false – purpose of financing RODRIGUEZ’s purchase of a vehicle from a real automobile dealer that RODRIGUEZ did not own and never intended to own.  In connection with that application, Lender-1 issued to RODRIGUEZ a loan (“Loan-1”) and, specifically, a check representing the proceeds of that loan.  RODRIGUEZ, in turn, endorsed that check and provided it to CC-1 and CC-2 with the understanding they would deposit and withdraw money against that check for RODRIGUEZ’s enrichment.

In March 2018, USPIS inspectors interviewed RODRIGUEZ, and he falsely denied any involvement in applying for, or any knowledge about, Loan-1. 

In April 2018, RODRIGUEZ was again interviewed by federal law enforcement officers.  Although RODRIGUEZ admitted during that interview that he did, in fact, endorse the check issued in connection with Loan-1, RODRIGUEZ claimed to have endorsed the check and provided it to CC-1 and CC-2 for the purpose of CC-1 and/or CC-2 returning the check to Lender-1.  That statement was false: as noted, RODRIGUEZ endorsed the check not for the purpose of returning it to Lender-1 but to obtain proceeds from Loan-1.  Similarly, although RODRIGUEZ admitted during the April 2018 interview that he did, in fact, work with CC-1 to obtain Loan-1, RODRIGUEZ denied any previous relationship with CC-1, stating in substance and in part that CC-1 had contacted RODRIGUEZ without any prior prompting by RODRIGUEZ.  That statement was false: RODRIGUEZ had a prior business relationship with CC-1 dating back to at least December 2015 and had been in substantial telephone contact long before when he claimed he first met CC-1.

*                *                *

RODRIGUEZ, 41, of Goshen, New York, is charged with one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison; one count of conspiracy to commit loan fraud, which carries a maximum sentence of five years in prison; and one count of making false statements, which carries a maximum sentence of five years in prison.

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

Mr. Berman praised the outstanding investigative work of the U.S. Postal Inspection Service and the Internal Affairs Bureau of the NYPD. 

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Daniel H. Wolf is in charge of the prosecution.

The charges contained in the Superseding 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 Superseding Indictment and the description of the Superseding Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that TODD CAPSER pled guilty this morning before U.S. District Judge J. Paul Oetken to one count of wire fraud, in connection with a $43 million fraud scheme. 

U.S. Attorney Geoffrey S. Berman said:  “Todd Capser purported to be a legitimate businessman and convinced a Canadian financial institution to lend him more than $43 million.  But the loan was based on a mountain of false information from Capser.  Then, to further his fraud, Capser attempted to induce other financial institutions to loan him additional money.  Today, Capser admitted his guilt and now faces significant time in prison for his crimes.”

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

From January 2016 through April 2019, CAPSER perpetrated a scheme to defraud a financial institution based in Toronto, Canada (“Financial Institution-1”), by inducing it, through false and misleading representations and omissions, to loan approximately $43.3 million to an entity incorporated by CAPSER (“Capser Entity-1”), for the purchase of two chemical and oil tankers (the “Tankers”).

After obtaining the loan from Financial Institution-1 and purchasing the Tankers, CAPSER attempted to induce at least nine other Financial Institutions to loan between $46 and $52 million each to refinance the original loan.

CAPSER fraudulently induced Financial Institution-1 to make the $43 million loan, and attempted to induce the other Financial Institutions to make the $46 million to $52 million refinancing loans, through, among other things: (a) fraudulently obtaining documents from a company that provides wealth management services to private clients (“Trust Company‑1”); (b) altering the Trust Company-1 documents, and forging additional Trust Company-1 documents, to make it appear as though CC-1 held an investment portfolio at Trust Company-1 composed of securities worth tens of millions of dollars, which could serve as collateral for the loans; (c) sending the altered and forged Trust Company-1 documents to certain of the Financial Institutions; (d) creating fake email accounts for employees of Trust Company-1, and sending emails from those accounts to certain of the Financial Institutions to make it appear as though CC-1 held an investment portfolio at Trust Company-1 composed of securities worth tens of millions of dollars; and (e) making false and misleading representations and omissions about the financial assets of CAPSER and his family to certain of the Financial Institutions, including falsely claiming to own a cattle company and ranch.

In addition, in an effort to engender sympathy, deflect questions, and explain suspicious behavior, CAPSER falsely represented to certain of the Financial Institutions that his daughter was terminally ill with cancer.

*                *                *

CAPSER, 47, of Billings, Montana, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  CAPSER is scheduled to be sentenced by Judge Oetken on November 8, 2019.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation (“FBI”).  He also thanked the Billings Resident Agency of the FBI’s Salt Lake City Field Office and the United States Attorney’s Office for the District of Montana for their assistance with the investigation.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GARY TURNER was sentenced to 27 years in prison for the April 2018 murder of 17-year-old Samuel Ozuna.  TURNER was sentenced in Manhattan federal court by United States District Judge Jesse M. Furman, before whom TURNER previously pled guilty.

U.S. Attorney Geoffrey S. Berman said:  “Gary Turner killed Samuel Ozuna in order to keep his membership in a crew operating in the Carver Houses in East Harlem.  For this callous crime, Turner will now spend decades in prison.  We thank our partners at the NYPD for their outstanding work on this case.”

According to the Indictment, other filings in Manhattan federal court, and statements made in court proceedings:

On April 24, 2018, TURNER shot and killed Samuel Ozuna in the vicinity of the George Washington Carver Houses (the “Carver Houses”) on 104th Street in East Harlem.  On that night, TURNER, a member of a crew operating in the Carver Houses, was inside the lobby of a building in the Carver Houses when he learned that individuals whom he understood to be from the nearby Washington Houses were coming to the area.  TURNER’s crew was engaged in a rivalry with a crew from the Washington Houses.  Soon thereafter, approximately four individuals, including Mr. Ozuna, ran toward the Carver Houses building, and as they approached, TURNER fired multiple shots in their direction.  TURNER continued to fire as they fled.  TURNER’s gunshots struck and killed Mr. Ozuna.                      

*                *                *

In addition to his prison term, TURNER, 25, was sentenced to five years of supervised release.

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

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Lauren B. Schorr and Jacob Warren are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ERNESTO LOPEZ, a New York-licensed medical doctor who wrote thousands of medically unnecessary prescriptions for oxycodone and fentanyl over an approximately three-year period, was sentenced today in Manhattan federal court to five years in prison.  LOPEZ was previously found guilty, in February 2019, of conspiring to distribute narcotics and distribution of narcotics after a jury trial before United States District Judge Denise L. Cote, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman stated:  “Today’s sentence serves as a message that a doctor who doles out narcotics without regard to his patients’ medical needs and addictions is no more than a drug dealer.  Lopez will serve a substantial sentence for his reprehensible conduct, having betrayed the public’s and his patients’ trust for his own financial gain.”

According to the allegations contained in the Complaint, Indictment, Superseding Indictment, evidence presented during the trial, and statements made in Manhattan federal court:

Oxycodone and fentanyl are highly addictive, narcotic opioids that are used to treat severe pain conditions.  Oxycodone prescriptions are in high demand and have significant cash value to drug dealers, who sell them on the street for large amounts of money.  For example, 30-milligram oxycodone tablets have a current street value of approximately $20 to $30 per pill in New York City, with street prices even higher in other parts of the country.  Thus, a single prescription for 120 30-milligram tablets of oxycodone can net an illicit distributor $2,400 in cash or more.  Fentanyl patches are also commonly abused and sold for cash on the street by drug dealers.  Because it is so potent, fentanyl frequently results in overdoses that can lead to respiratory depression and death.   

From approximately 2015 until his arrest in November 2017, LOPEZ operated medical clinics located in New York, New York; Jackson Heights, New York; and Franklin Square, New York, where LOPEZ wrote thousands of prescriptions for large quantities of oxycodone and fentanyl in exchange for cash payments.  In total, LOPEZ wrote prescriptions for nearly one million oxycodone pills, with a street value of approximately $20 million.  LOPEZ typically charged $200 to $300 in cash for patient visits, despite the fact that nearly 80 percent of his patients maintained health insurance.  During many of these visits, LOPEZ performed no meaningful physical examination of patients and did not attempt to diagnose them.  LOPEZ prescribed large quantities of oxycodone, most frequently 120 30-milligram tablets, and fentanyl patches, often to patients who demonstrated clear signs of drug addiction and whose test results showed that they were not taking – and therefore were redistributing – the oxycodone he prescribed.

In addition to prescribing medically unnecessary oxycodone and fentanyl patches, LOPEZ also prescribed to many patients a fentanyl-based spray intended to treat breakthrough cancer pain, for which those patients had no legitimate medical need.  In connection with those prescriptions, LOPEZ submitted an application to INSYS Therapeutics to join a “speaker’s program,” wherein doctors received payments in exchange for prescribing the fentanyl-based spray to patients.

At the time of LOPEZ’s arrest, agents recovered hundreds of fentanyl sprays and patches from the closet of his residence, along with approximately $729,000 in cash.    

*              *             *

In addition to the prison sentence, LOPEZ, 76, of Flushing, New York, was sentenced to three years of supervised release, was ordered to pay a fine in the amount of $50,000, and was ordered to forfeit $1,400,000.   

Mr. Berman praised the outstanding investigative work of the DEA’s New York Tactical Diversion Squad.  Mr. Berman also thanked the New York City Police Department, the Department of Health and Human Services, the New York City Department of Investigation, the New York State Office of the Medicaid Inspector General, the New York City Human Resources Administration, the Nassau County Police Department and Asset Forfeiture Unit, the Nassau County District Attorney’s Office, the New York County District Attorney’s Office, and the New York State Department of Financial Services for their work on the investigation.

Parts of this case were conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership between federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations and those primarily responsible for the nation’s illegal drug supply.

This matter is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Nicholas Folly, Elizabeth Hanft, Michael McGinnis, and Daniel Richenthal are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field 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 a superseding federal indictment charging JAHSON FEVERIE, a/k/a “Jah,” with racketeering conspiracy, including the September 27, 2016, murder of Yunior Manion, 21, in the Bronx, New York.

U.S. Attorney Geoffrey Berman said:  “As alleged, the defendant was a member of a violent gang who killed an innocent young man in a pointless, gang-related dispute.  We thank the FBI and the NYPD for their outstanding work investigating this terrible murder.  We will continue our efforts with our law enforcement partners to prevent such senseless acts of violence.”

FBI Assistant Director William F. Sweeney Jr. said:  “No one deserves to be killed at the hands of someone else, but Yunior Manion was innocently standing on the street and got caught in a gang war crossfire.  He lost his life over drugs and guns.  The FBI New York Metro Safe Streets Task Force won’t let the violence and crime these gangs thrive on go unchecked.  We will use every method necessary to stop these criminals and restore safety in the communities they have terrorized.”

NYPD Commissioner James P. O’Neill said:  “The individual arrested in this case allegedly took the life of an innocent bystander while recklessly discharging a firearm at a rival gang member.  The NYPD and our partners in law enforcement will continue to target gun violence and street gangs by dismantling their networks and taking dangerous criminals off our streets.”

According to the Indictment[1]: 

FEVERIE is a member of the “Wild Card” set of the Crips gang.  Members of the gang sold drugs and used guns to further the aims of the Wild Cards.  On September 27, 2016, FEVERIE fired a gun at rival gang members.  FEVERIE instead hit and killed Yunior Manion, an innocent bystander.

*                      *                     *

FEVERIE, 18, of the Bronx, New York, was arrested this morning in the Bronx, New York, and presented and arraigned before U.S. Magistrate Judge Barbara C. Moses.  This case is assigned to U.S. District Judge Loretta A. Preska.

FEVERIE is charged with conspiring to commit racketeering through the commission of various criminal acts, including murder, in violation of Title 18, United States Code, Section 1962(d), which carries a maximum term of life in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

The prosecution of this case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Adam Hobson, Gina Castellano, and Hagan Scotten are in charge of the prosecution.

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LEONARD MATHEWS was sentenced to 17 years in prison for ordering a shooting that left three people injured, and for distributing crack cocaine.  MATHEWS was convicted of assault with a dangerous weapon in aid of racketeering, as well as firearms, ammunition, and crack cocaine distribution offenses following a seven-day jury trial in October 2018.  The sentence was imposed by U.S. District Judge J. Paul Oetken.

According to allegations in the Indictment and evidence introduced at trial:

MATHEWS is a leader, or “big homie,” in the Gangsta Milla Bloods, or “GMB,” a subset of the United Bloods Nation gang that operates in the Bronx and engages in racketeering activity, including narcotics distribution.  On October 20, 2017, MATHEWS ordered a subordinate gang member to shoot someone with whom MATHEWS previously had a physical altercation.  The shooting resulted in the injury of three innocent bystanders on Morris Avenue between East Kingsbridge Road and East 196th Street in the Bronx.  On the night of the shooting, following a closed-door meeting with MATHEWS and other members of the gang, the same Bloods foot soldier that MATHEWS ordered to do the shooting stabbed and left for dead one of the principal witnesses to the shooting.

*              *             *

Judge Oetken sentenced MATHEWS, 27, of the Bronx, New York, to 84 months in prison on one count of aiding and abetting or willfully causing assault with a dangerous weapon in aid of racketeering, one count of aiding and abetting or willfully causing the possession of ammunition by a felon, and one count of distribution and possession with intent to distribute crack cocaine.  In addition, Judge Oetken sentenced MATHEWS to a mandatory minimum sentence of 10 years in prison for one count of aiding and abetting or willfully causing the discharge of a firearm during and in relation to a crime of violence, to be served consecutively to the 84-month sentence imposed on the other counts.

Mr. Berman praised the investigative efforts of the Bronx Violent Crimes Squad of the New York City Police Department.

The case is being prosecuted by the Office’s General Crimes Unit.  Assistant United States Attorneys Justin V. Rodriguez, Dominic A. Gentile, and Emil J. Bove III are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations, announced today the unsealing of a Complaint in Manhattan federal court charging PAUL A. RINFRET with securities fraud and wire fraud charges.  The Complaint alleges that RINFRET engaged in a years-long scheme to defraud investors by selling limited partnership interests in an entity through which RINFRET purported to trade in futures contracts relating to the S&P 500 utilizing a bespoke algorithm he had developed.  RINFRET allegedly touted extremely high returns on his trading.  In truth and in fact, as alleged, RINFRET simply stole most of the investors’ money in order to fund his lavish lifestyle.  RINFRET was arrested this morning in Manhasset, New York, and will be presented this afternoon before Magistrate Judge Robert W. Lehrburger in Manhattan federal court. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Paul Rinfret deceived investors at every step:  He lied about his past returns to get them to invest.  He lied about having invested all of their money, when he was actually spending much of it on things like jewelry, cars, and a Hamptons vacation home.  He lied about how their money was growing.  His alleged lies stop today.  We will work tirelessly with our law enforcement partners to stop this kind of alleged Ponzi scheme in its tracks and bring defendants like Rinfret to justice.” 

Special Agent-in-Charge Melendez said:  “As alleged, Paul Rinfret willfully and continually defrauded his investors, the very people he was tasked with serving, in a multimillion-dollar Ponzi scheme that served to enrich only him.  The special agents of our El Dorado Task Force will continue to expose such fraud at the national and international levels and assure that such financial predators are brought to justice.”

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

From at least 2016 through 2019, RINFRET engaged in a scheme to defraud potential and actual investors in an entity called Plandome Partners L.P. for his own personal gain and for the gain of his family members.  RINFRET offered potential investors the ability to invest in Plandome Partners through the purchase of limited partnership interests.  In soliciting investments, RINFRET falsely represented to potential and actual investors (the “Victims”) that he would use all of their investment funds to trade futures contracts tied to the Standard & Poor’s 500 index using a propriety trading algorithm he had developed, taking for himself a fee equivalent to 25% of the net profits on the trades. 

Through his fraudulent scheme, RINFRET obtained more than $19 million in total from approximately six Victims on the false claim that he would utilize their investment funds for trading.  RINFRET’s lies and misrepresentations were varied and many.  For example, RINFRET claimed that Plandome Partners traded through certain brokerage accounts, one of which simply did not exist, and two of which were not open at a time when RINFRET claimed to be trading in those accounts. 

Further, RINFRET used only a small portion of the Victims’ invested funds to engage in actual trading.  Instead, RINFRET used most of the Victims’ money to purchase luxury goods and high-end vacation rentals for himself and family members.  For example, RINFRET used the Plandome Partners account to spend almost $50,000 on a luxury Hamptons vacation rental, more than $40,000 on jewelry, and tens of thousands of dollars on the event venue where his son held his engagement party. 

When RINFRET did actually engage in trading with Victims’ funds, he generated losses.  But, to prevent his Victims from seeking a return of their money, and to induce additional investments, RINFRET falsely reported excellent investment performance results to the Victims through false and fraudulent monthly account statements that RINFRET typically emailed to the Victims.  RINFRET also sent fabricated brokerage account statements to the Victims. 

*                *                *

RINFRET, 70, of Manhasset, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of securities fraud, which carries a maximum sentence of 20 years in prison.  The statutory maximum and minimum 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 Complaint should call the United States Attorney’s Office at 866-874-8900.

Mr. Berman praised the investigative work of the New York Field Office of Homeland Security Investigations.  He also thanked the Newark Field Office of Homeland Security Investigations, under the direction of Special Agent-in-Charge Brian Michael.  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 Robert L. Boone and Amanda Kramer are in charge of the prosecution.

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ROBERT MERLO was sentenced today to 42 months in prison and STEPHEN DECKER was sentenced on June 12, 2019, to 57 months in prison for participating in a scheme to steal more than $2 million in stock certificates from the apartment of a deceased Manhattan woman, open a brokerage account in her name in order to liquidate the stocks, and then use those stolen assets to attempt to purchase over $2 million worth of gold coins.  MERLO was convicted of conspiracy to commit wire fraud, wire fraud, and aggravated identity theft after a four-day trial in March 2019.  DECKER pled guilty to the same charges in January 2019. The sentence was imposed by U.S. District Judge Lewis A. Kaplan.  

U.S. Attorney Geoffrey S. Berman said:  “Robert Merlo and Stephen Decker engaged in a conspiracy to steal stock certificates from a deceased woman, liquidate them, and convert the proceeds for themselves.  Their conduct was the financial equivalent of grave-robbing, and the sentences they received reflect the seriousness of their crimes.”

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

From approximately March 2016 to February 2017, MERLO and DECKER engaged in a scheme with others known and unknown designed to steal over $2 million from a deceased Manhattan woman (the “Victim”).  As part of the scheme, DECKER and another co-conspirator, who both worked in the Victim’s building, stole stock certificates valued at over $2 million from the Victim’s Manhattan apartment after the Victim’s death.  DECKER approached MERLO, a New Jersey-based insurance agent and DECKER’s longtime friend, to find a way to monetize the stock certificates.  In August 2016, MERLO and DECKER agreed with others to make false representations to a financial institution (“Company-1”) in order to open a brokerage account (the “Account”) in the Victim’s name, deposit the stolen stock certificates into the Account, and sell the shares in the brokerage account, resulting in a cash balance of over $2 million.  MERLO agreed to help launder the cash balance in the brokerage account, approaching several individuals to carry out his plan.  MERLO, DECKER, and their co-conspirators then attempted to purchase $2 million in gold coins using the assets in the Account.  MERLO, DECKER, and the other co-conspirators met several times over the course of months and communicated using prepaid or “burner” phones regarding the fraudulent scheme. 

*                *                *

Judge Kaplan sentenced MERLO, 55, of Secaucus, New Jersey, to a mandatory minimum sentence of two years in prison on the aggravated identity theft count and 18 months in prison on the remaining counts, to be served consecutively to the two-year term of imprisonment.  In addition, Judge Kaplan ordered restitution in the amount of $75,000; the balance of the over $2 million in proceeds from the stolen stock certificates were previously recovered, as a result of the  investigation by the Federal Bureau of Investigation “FBI”), and returned to the Victim’s estate.   

Judge Kaplan sentenced DECKER, 61, of Secaucus, New Jersey, to a mandatory minimum sentence of two years in prison on the aggravated identity theft count and 33 months in prison on the remaining counts, to be served consecutively to the two-year term of imprisonment.

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

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Cecilia Vogel, Sarah Mortazavi, Dina McLeod, and Alexandra Rothman are in charge of the prosecution.

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’s New York Region (“HHS-OIG”), announced today that the United States filed and settled a civil fraud lawsuit against FUSION PHYSICAL THERAPY AND SPORTS WELLNESS, P.C. (“FUSION”), and its founder and CEO, CAROLYN SUE MAZUR (“MAZUR”), alleging that FUSION and MAZUR violated the False Claims Act by fraudulently billing Medicare for physical therapy services that were not reimbursable under that program.  Specifically, FUSION and MAZUR falsely claimed to Medicare that various services had been provided or supervised by a physical therapist who was credentialed in the Medicare program and therefore authorized to bill Medicare for reimbursement when, in fact, the services were provided or supervised by other non-credentialed personnel.  Under the settlement, approved yesterday by U.S. District Judge Ronnie Abrams, FUSION and MAZUR admitted to the wrongful conduct and agreed to pay $37,500.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Medicare requires all health care providers accurately to report information relating to claimed services.  This requirement is critical to ensure quality of care and patient safety.  Fusion Physical Therapy side-stepped this rule by lying to Medicare about who actually provided the services, and is now being held accountable.”   

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Health care professionals are expected to bill the taxpayer-funded Medicare program correctly.  Along with our law enforcement partners, HHS-OIG will continue to ensure individuals and entities billing federal health care programs do so in an honest manner.”

According to the Government’s Complaint-in-Intervention, MAZUR and FUSION knew that Medicare rules prohibited them from billing Medicare for services performed or supervised by non-credentialed physical therapists.  MAZUR and FUSION also knew that Medicare rules prohibited them from misrepresenting to Medicare the individual physical therapist who had provided the services underlying a claim for reimbursement.  In spite of this knowledge, FUSION and MAZUR billed Medicare for services that had been rendered by non-credentialed providers and made false representations regarding the true identity of the providers who rendered the services.

As part of the settlement, MAZUR and FUSION agreed to pay $37,500 and admitted that:

• Defendants understood that they were prohibited by Medicare rules from submitting claims for reimbursement for certain professional services provided by a healthcare provider other than the individual associated with the National Provider Identifier (“NPI”) listed on each claim.
   
• Defendants also understood that, in order to receive reimbursement from Medicare for physical therapy services, the physical therapist listed on each relevant claim must be enrolled as a provider in the Medicare program at the time the services are rendered.
   
• Defendants submitted to Medicare false claims for services that had been performed by physical therapists other than the physical therapist whose NPI was listed on the claim.
   
• In some cases, the physical therapist who actually provided the claimed services was not enrolled as a Medicare provider at the time the claimed services were rendered.
   

*                *                *

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 Charles S. Jacob and Jessica Jean Hu are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Michael C. Mikulka, Special Agent-in-Charge of the U.S. Department of Labor, Office of Inspector General, New York Region (“DOL-OIG”), Andriana Vamvakas, New York Regional Director, U.S. Department of Labor Office of Labor-Management Standards (“DOL-OLMS”), and Margaret Garnett, Commissioner, New York City Department of Investigation (“DOI”), announced today the unsealing of an Indictment charging leaders of two local chapters of the United Brotherhood of Carpenters and Joiners of America (the “Union”) with accepting tens of thousands of dollars in cash bribes in return for guaranteeing admission to hundreds of prospective union members.  SALVATORE TAGLIAFERRO, the president of the Local 926 chapter of the Union, and JOHN DEFALCO, the vice president of the Local 157 chapter of the Union, were each charged with one count of honest services wire fraud, one count of conversion of union assets, and one count of conspiracy, in connection with their involvement in a scheme to solicit cash bribes in exchange for union membership.  DEFALCO was also charged with one count of witness tampering and one count of obstruction of justice, in connection with his attempts to interfere with the investigation of the scheme.  TAGLIAFERRO and DEFALCO, who were arrested this morning, are expected to be presented later today.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants abused their leadership positions to line their pockets at the expense of their union and its members, whose interests they were duty bound to protect.  By allegedly demanding and accepting cash bribes in return for union membership, the defendants not only betrayed their union, but personally profited off the needs of those seeking work.  The charges announced today reflect our tireless commitment to working with our law enforcement partners to root out corruption in union leadership and our commitment to bringing to justice those who corrupt their positions.”

DOL-OIG Special Agent-in-Charge Michael Mikulka said:  “An important mission of the Office of Inspector General is to investigate allegations relating to labor racketeering and corruption in labor unions.  We will continue to work with our law enforcement partners to investigate these types of allegations.”

DOL-OLMS New York Regional Director Andriana Vamvakas said:  “Safeguarding financial integrity and combatting financial malfeasance in labor unions is a very high priority for OLMS.  This indictment sends a clear message that OLMS will fully investigate and seek justice when anyone attempts to use their union position for personal financial gain at the expense of union members.”

DOI Commissioner Margaret Garnett said:  “These defendants allegedly conspired to sell sought-after union memberships for thousands of dollars, giving those who paid the steep price unearned access to coveted union construction projects and other exclusive benefits while the defendants collected the cash, according to the charges. Organized labor must be safeguarded from corruption that attempts to undermine its mission to protect the rights of working New Yorkers. DOI was proud to assist its partners at the Office of the U.S. Attorney for the Southern District of New York, the U.S. Department of Labor and the U.S. Department of Labor Inspector General in investigating this case.”

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

From at least in or about 2017 up through and including in or about June 2019, TAGLIAFERRO and DEFALCO abused their positions as officers of local chapters of the Union by soliciting and accepting cash bribes from prospective Union members in exchange for securing the bribe payers’ admission to the Union.  In particular, DEFALCO and other co-conspirators identified prospective members and solicited cash payments from them, often in the amount of $1,500.  Then, once prospective members made the payments, DEFALCO sent those individuals’ names to TAGLIAFERRO, who used his authority as president of the Local 926 to ensure that they were accepted into the Local 926 and received Union membership cards, even though many such bribe payers did not have Union jobs and were not eligible for admission to the Union.  Hundreds of new members were admitted to the Local 926 as a result of this scheme.  DEFALCO and TAGLIAFERRO shared the bribe payments and made at least tens of thousands of dollars from the scheme.

DEFALCO and TAGLIAFERRO also took numerous steps to conceal their conduct from investigators, and DEFALCO attempted to tamper with witnesses and obstruct the federal investigation.  Among other things, DEFALCO pressured one co-conspirator to sign an affidavit falsely exculpating him and directed that co-conspirator falsely to exculpate DEFALCO, TAGLIAFERRO, and others if questioned.  DEFALCO and TAGLIAFERRO also discussed a false cover story to explain the involvement of another co-conspirator in the scheme, and DEFALCO instructed that co-conspirator to repeat this false cover story to a federal grand jury investing his conduct.  DEFALCO also instructed a co-conspirator to delete incriminating text messages between them that were responsive to a federal grand jury subpoena served on the co-co-conspirator.

*                *                *

TAGLIAFERRO, 54, of Staten Island, New York, and DEFALCO, 51, of Secaucus, New Jersey, each are charged with one count of conspiracy, which carries a maximum sentence of five years in prison; one count of conversion of union assets, which carries a maximum sentence of five years in prison; and one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison.  DEFALCO alone is also charged with one count of witness tampering and one count of obstruction of justice, each of which carries a maximum penalty of 20 years in prison.

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

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

Mr. Berman praised the investigative work of DOL-OIG, DOL-OLMS, and DOI.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Jarrod Schaeffer and Thomas McKay are in charge of the prosecution.

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that TODD SCHLIFSTEIN, a doctor who practiced in Manhattan, pled guilty today to conspiracy to violate the Anti-Kickback Statute, in connection with a scheme to prescribe Subsys, a potent fentanyl-based spray, in exchange for bribes and kickbacks from Subsys’s manufacturer, Insys Therapeutics.  SCHLIFSTEIN pled guilty before U.S. Magistrate Judge Sarah Netburn.  The case is assigned to U.S. District Judge Kimba M. Wood.

U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Todd Schlifstein prescribed patients a powerful fentanyl drug in exchange for bribes and kickbacks from the drug’s manufacturer.  This case shows that doctors who let illegal payments corrupt their medical judgment will be held accountable.”

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

The Insys Speakers Bureau

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

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

SCHILFSTEIN’s Participation in the Scheme

SCHLIFSTEIN, a doctor certified in physical medicine and rehabilitation, worked at a medical office in Manhattan.  From in or about March 2014 until in or about September 2015, SCHLIFSTEIN received approximately $127,100 in Speaker Program fees from Insys in exchange for prescribing large volumes of Subsys.  SCHLIFSTEIN became approximately the 19th-highest prescriber of Subsys nationally in the second quarter of 2015, accounting for approximately $593,373 in total net sales of the drug during that quarter.

*                *                *

SCHILFSTEIN, 50, of New York, New York, pled guilty to one count of conspiracy to violate the Anti-Kickback Statute, which carries a maximum sentence of five years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  SCHLIFSTEIN is scheduled to be sentenced by Judge Wood on September 26, 2019.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation, and thanked the Department of Health and Human Service’s Office of Inspector General for its participation in the investigation.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JASON POLANCO, a/k/a “Jin,” a/k/a “Wolfman,” was found guilty today of the August 31, 2014, murder of Shawn Ross, a/k/a “S.B.,” on Decatur Avenue in the Bronx, as well as participating in a narcotics conspiracy, a robbery conspiracy, the robbery of a Citgo gas station in the Bronx, and the discharge of a firearm in connection with the Citgo robbery.   A jury convicted POLANCO today on all six counts of the Indictment following a one-week trial before U.S. District Judge Paul A. Engelmayer.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “This morning, a unanimous jury found that Jason Polanco is a drug dealer, a robber, and a killer.  We hope that the family of Shawn Ross finds a measure of justice in today’s verdict.  We thank the NYPD, ATF, and DEA for their outstanding work on this case, and for their invaluable partnership with our office.”

According to the allegations contained in the Indictment and the evidence presented in court during the trial:

On August 31, 2014, POLANCO shot and killed Shawn Ross, a/k/a “S.B.,” in connection with POLANCO’s membership in a drug crew that controlled drug sales on Decatur Avenue between 194th and 195th Streets in the Bronx.  This drug crew was responsible for distributing over a kilogram of heroin, as well as quantities of marijuana, from at least 2011 through 2015.  In 2014 and 2015, POLANCO and other members of the crew also committed a string of armed robberies of businesses across Manhattan and the Bronx, including the robbery of a Citgo gas station on Pelham Parkway in the Bronx.  During the Citgo robbery, POLANCO carried a loaded firearm, which he fired just feet away from a customer.

*                      *                     *

POLANCO, 29, was found guilty of one count of participating in a conspiracy to distribute and to possess with intent to distribute one kilogram and more of heroin and quantities of marijuana, in violation of 21 U.S.C. §§ 841(b)(1)(A), 841(b)(1)(D), and 846, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life; one count of murder through the use of a firearm, in violation of 18 U.S.C. § 924(j), which carries a mandatory minimum sentence of five years in prison and a maximum sentence of life; one count of murder while engaged in a narcotics offense, in violation of 21 U.S.C. § 848(e), which carries a mandatory minimum sentence of 20 years in prison and a maximum sentence of life; one count of participating in a conspiracy to commit Hobbs Act robberies, in violation of 18 U.S.C. § 1951, which carries a maximum sentence of 20 years in prison; one count of committing a Hobbs Act robbery, in violation of 18 U.S.C. § 1951, which carries a maximum sentence of 20 years in prison; and one count of discharging a firearm in connection with the robbery, in violation of 18 U.S.C. § 924(c)(1)(A)(iii), which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life.

Mr. Berman praised the outstanding investigative work of the New York City Police Department, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the U.S. Drug Enforcement Administration.

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Celia V. Cohen, Danielle R. Sassoon, and Gina Castellano are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that STEVEN L. HENNING, a certified public accountant who was a partner at a Manhattan accounting firm, pled guilty today to participating in two wire fraud schemes.  In the first, he falsely claimed to have entered into multimillion-dollar intellectual property deals and defrauded investors out of $2 million.  In the second, he falsely claimed to have entered into client engagements and defrauded an employer out of over $270,000. 

U.S. Attorney Geoffrey S. Berman said:  “Steven Henning admitted today that he defrauded investors and then continued committing crime by defrauding an employer who hired him after he left his partnership at a Manhattan accounting firm.  Through the frauds, he stole over $2.2 million.  He will now have to answer for his actions.”

According to the Information filed today to which HENNING pled guilty, as well as other public information, HENNING, a CPA at a Manhattan accounting firm, established his own firm called OpportunIP, which he allegedly told victims was a company specializing in assisting other entities in taking intellectual property to the market.  Henning induced victims to invest in OpportunIP by providing them with false documents showing OpportunIP’s involvement in multi-million dollar transactions that would reap millions of dollars in future profits.  Ultimately, the victims learned that the deals did not exist and they were victims of an alleged scheme to defraud them out of millions of dollars.

As further alleged in the information, after leaving the Manhattan accounting firm, HENNING sought employment with a firm in Chicago, Illinois (the “Chicago Firm”).  He induced the Chicago firm to hire him and provide him with $240,000 in draw payments based on false and fraudulent statements, including by sending the Chicago Firm fraudulent contracts.

*                *                *

HENNING, 58, pled guilty to two counts of wire fraud, which carry a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  Sentencing before Judge Cathy Seibel has been scheduled for October 18, 2019.

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

Mr. Berman praised the outstanding investigative work of the U. S. Postal Inspection Service and the SEC Office of Inspector General.

The case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorney Margery B. Feinzig is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that HARBIR PARMAR was sentenced in White Plains federal court to three years in prison for kidnapping and wire fraud.  PARMAR pled guilty on March 11, 2019, before U.S. District Judge Vincent L. Briccetti, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Many people rely on rideshare apps to navigate New York safely.  But when a woman hailed an ridesharing car driven by Harbir Parmar, her ride home took a turn for the worst.  With Parmar’s lengthy prison term, he will no longer be able to take advantage of ridesharing customers.”

According to the Indictment and statements made during today’s plea proceedings:

On February 21, 2018, PARMAR, who worked as a driver for a ridesharing company (“Company-1”), picked up an individual (“Victim-1”) in New York, New York, who sought to be driven to White Plains, New York.  After Victim-1 fell asleep in the backseat of the vehicle, PARMAR changed Victim-1’s destination in Company-1’s mobile application to an address in Boston, Massachusetts, and proceeded to drive toward that location.  When Victim-1 awoke, the vehicle was in Connecticut.  Victim-1 requested that she be taken to White Plains or to the police station, but PARMAR refused.  PARMAR instead dropped Victim-1 off on the side of I-95 in Branford, Connecticut.  Victim-1 went to a nearby convenience store where she sought assistance.    

In addition, from December 2016 through February 2018, PARMAR sent false information about the destinations of Company-1’s customers through Company-1’s mobile application on several occasions.  At times, he also sent false information about the application of a cleaning fee to be applied to the accounts of Company-1’s customers.  In these instances, customers of Company-1 filed complaints with Company-1 about being overcharged for their rides.  These instances have resulted in thousands of dollars in improper charges to the accounts of Company-1’s customers. 

*             *             *

In addition to the prison term, PARMAR, 25, of Howard Beach, New York, was sentenced to three years of supervised release and ordered to pay $3,642 in restitution and forfeiture.

Mr. Berman praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, which comprises investigators from the FBI, U.S. Probation Office, New York State police, Westchester County Department of Public Safety, Westchester County District Attorney’s Office, the New York City Police Department, Yonkers Police Department, Greenburgh Police Department, Mount Vernon Police Department, and the Peekskill Police Department.    

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Angel M. Melendez, Special Agent-in-Charge of the New York Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today that five stolen architectural drawings created in 1896 of a historic synagogue in the city of Lodz, Poland (the “Drawings”), will be returned to the Polish government.  The Drawings were taken out of a larger set housed at the Polish state archive in Lodz in around 1999, and the identity of the thief or thieves remains unknown.

U.S. Attorney Geoffrey S. Berman said:  “A part of Poland’s cultural heritage and historical record were stolen from their state archive 20 years ago.  Now, thanks to a New York couple who are doing the right thing, and to HSI for doing its typically excellent work in this field, these important drawings are being returned to the government of Poland.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “On the heels of the 75th anniversary of D-Day, returning these drawings to Poland that represent a piece of human history the Nazis attempted to erase underscores the importance of preserving our world history through cultural patrimony for future generations.  We continue to pursue criminals who steal and traffic property that belongs to the peoples of the world, while returning those items found to their rightful owners, in this case, Poland.”

The ink-and-watercolor Drawings depict the interior, exterior facades, and floor plans of the Stara Synagogue, which used to stand on Wolborska Street in Lodz.  The Stara Synagogue was originally built in 1809 and moved to a new building around 1859 and 1861.  The Drawings were made by the prominent Lodz architect Adolf Zeligson in connection with significant renovations to the synagogue that began in around 1897.  The Stara Synagogue was later burned down during the Nazi occupation in around 1939, and no trace remains.     

Almost 10 years after the theft, the Drawings were put up for sale by an international auction house and were purchased by a Manhattan couple, Meredith Berkman and Daniel Mintz. After Ms. Berkman and Mr. Mintz were informed that the Drawings had been stolen from the Polish state archive, they readily and voluntarily agreed to turn over the Drawings to HSI so that they could be returned to Poland. 

The U.S. Attorney’s Office and HSI are now sending the Drawings back to the Polish government.

*                *                *

Mr. Berman thanked HSI’s Cultural Property, Art, and Antiquities Group for their handling of the investigation.  He also thanked Ms. Berkman and Mr. Mintz for their assistance and cooperation.  The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorney David Zhou is in charge of the case.          

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Police Commissioner of the City to New York (“NYPD”), today announced the unsealing of two Indictments charging DAVID ESPINAL, a/k/a “D-Block,” and MICHAEL CASTILLO, a/k/a “Squirrel,” with murder for hire and the March 10, 2011, murder of Hector Arias in the Bronx, New York. 

ESPINAL was taken into custody this morning in the Eastern District of Pennsylvania and will be presented in federal court in that District today.  CASTILLO was taking into custody this morning in the Northern District of Texas and will be presented in federal court in that District today.  This case is assigned to U.S. District Judge John G. Koeltl.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, eight years ago, David Espinal and Michael Castillo reduced the value of a man’s life to a dollar figure.  Their arrests today show that the passage of time does not insulate alleged murderers from investigation, apprehension, and prosecution. We hope that brings some measure of relief to the family of Hector Arias.”

FBI Assistant Director William F. Sweeney Jr. said:  “Mr. Espinal was so deadly serious about selling marijuana, he allegedly hatched a plan to kill a rival.  He and the man he’s accused of hiring to carry out the murder have been on the run since 2011.  They most likely believed they were in the clear, thinking no one was looking for them after all these years.  The FBI Westchester County Safe Streets Task Force and our law enforcement partners don’t let time stand in the way of catching alleged murderers and bringing them to justice.”

Police Commissioner James P. O’Neill said:  “Today’s charges are evidence that NYPD investigators do not forget victims, and they do not ever forget the justice that is owed to those victims’ families.  All New Yorkers deserve to be safe, and to feel safe.  The NYPD and our colleagues at the U.S. Attorney’s Office for the Southern District will stop at nothing until every street, in every neighborhood of New York City, is as safe as our safest streets are today.”

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

In or around March 2011, ESPINAL hired CASTILLO to murder Hector Arias.  On March 10, 2011, CASTILLO carried out the plan and murdered Arias by shooting him in the vicinity of 712 East Gun Hill Road in the Bronx, New York.  ESPINAL paid CASTILLO for murdering Arias.  The murder plot arose out of a conspiracy to distribute marijuana.

*                      *                     *                                           

A chart containing the names of the defendants charged in the Indictments, and the charges and maximum and minimum penalties they face, is attached.  The statutory maximum and minimum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI in this case.  Mr. Berman also thanked the NYPD and the United States Probation Office for their assistance in the investigation.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jamie Bagliebter, Maurene Comey, Scott Hartman, and Jacqueline Kelly are in charge of the prosecutions.

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

United States v. David Espinal, 19 Cr. 428

United States v. Michael Castillo, S1 19 Cr. 428

CHARGE(S)

DEFENDANT(S)

MAXIMUM PENALTIES

Murder for Hire

DAVID ESPINAL (age 44)

MICHAEL CASTILLO (age 36)

Life in prison or death

 

Mandatory minimum: Life in prison

Murder through Use of a Firearm

DAVID ESPINAL

MICHAEL CASTILLO

Life in prison or death

 

Mandatory minimum:

5 years in prison

Travel Act Murder

DAVID ESPINAL

MICHAEL CASTILLO

Life in prison

 

 

---

 

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that IBRAHIM ISSA, a/k/a “Tony Issa,” was sentenced today in Manhattan federal court to 60 months in prison.  ISSA was previously found guilty in December 2018 of bribery of public officials and tax fraud after a federal jury trial before Chief United States District Judge Colleen McMahon, who imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “Ibrahim Issa bribed Postal Service managers with cash, lavish meals, gifts, and trips in exchange for lucrative vehicle maintenance and repair jobs on Postal Service vehicles.  Then, to compound the felony, Issa evaded both corporate and personal income taxes.”

According to the allegations contained in the Complaint, Indictment, and Superseding Indictment, evidence presented during the trial, and statements made in Manhattan federal court:

From at least in or about 2012 up to and including in or about August 2016, ISSA, who owned and operated numerous auto repair and maintenance companies in the New York area and elsewhere, paid bribes to United States Postal Service Vehicle Maintenance Facility (“VMF”) managers in order to obtain work repairing and maintaining vehicles belonging to the Postal Service.  ISSA provided cash, gifts, lavish meals, and trips to these VMF managers in exchange for receiving work for his companies.  As a result of some of these bribes, ISSA received millions of dollars in fees from the Postal Service. 

In addition, from at least in or about 2012 up to and including in or about August 2016, ISSA conspired with others to evade paying federal income taxes for his auto repair and maintenance companies by misreporting income and expenses to the IRS.  ISSA also signed and subscribed to false personal income tax returns.  As a result of ISSA’s tax fraud through his companies and personally, ISSA failed to pay hundreds of thousands of dollars in taxes due and owing.

*              *             *

In addition to the prison sentence, ISSA, 57, of New York, New York, was sentenced to three years of supervised release, and was ordered to pay restitution to the IRS in the amount of $557,176.     

Mr. Berman praised the outstanding work of the United States Postal Service Office of the Inspector General and the Internal Revenue Service.

This matter is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Kyle Wirshba, Elizabeth Hanft, and Noah Solowiejczyk are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that REDHWAN SALEH was sentenced to 63 months in prison for his participation in an arson in the Bronx, New York.  SALEH was convicted following a four-day trial before the Honorable William H. Pauley III, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Today, New York City deli owner Redhwan Saleh learned that his attempt to burn down his competition – literally – comes at a steep price: more than five years in prison.”

According to allegations in the Superseding Indictment, other filings in Manhattan federal court, and the evidence presented at trial:

SALEH owned a deli near the intersection of 242nd Street and Broadway in the Riverdale section of the Bronx.  After SALEH learned that a competing deli was about to open a few stores down from his, SALEH paid three men, including co-defendant Antoine Bostick, to set the new deli on fire.  On September 11, 2016, a few weeks before the new deli opened, Bostick climbed onto the new deli’s roof, poured gasoline down the vent pipe, and lit the gas on fire.  The new deli and a neighboring store both suffered extensive fire damage and the new deli’s opening was substantially delayed.

*              *             *

In addition to the prison term, SALEH, 38, of Brooklyn, New York, was sentenced to three years of supervised release and ordered to pay $50,000 in restitution.

Bostick, 32, of New Rochelle, New York, was convicted of conspiracy to commit arson and was sentenced by Judge Pauley on March 15, 2019, to 50 months in prison and ordered to pay $50,000 in restitution.

In addition to SALEH and Bostick, two other individuals have been convicted in connection with this case.  Arthur Cherry pled guilty to conspiracy to commit arson and arson and was sentenced by Judge Pauley on March 15, 2019, to time served, three years of supervised release, and ordered to pay $50,000 in restitution.  Richard Sanchez pled guilty to conspiracy to commit arson and was sentenced by Judge Pauley on February 1, 2019, to 28 months in prison, three years of supervised release, and ordered to pay $50,000 in restitution.

Mr. Berman praised the investigative efforts of the Strategic Explosive and Arson Response Task Force of the Bureau of Alcohol, Tobacco, Firearms and Explosives, the New York Police Department, and the Fire Department of New York.

The case is being prosecuted by the Office’s General Crimes Unit.  Assistant United States Attorneys Adam S. Hobson and Thomas McKay are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JAMES FELTON was found guilty of the June 11, 2016, murder of Marvin Harris, whom FELTON shot 13 times, as well as the December 11, 2016, murder of Jose Morales, whom FELTON shot in the head.  FELTON was also found guilty of conspiring to distribute crack cocaine, heroin, cocaine, and marijuana, and related firearms offenses.  FELTON was convicted following a one-week trial before U.S. District Judge William H. Pauley III.

U.S. Attorney Geoffrey S. Berman said:  “James Felton brutally executed two men on the streets of the Bronx as part of his efforts to control the drug trade in his community.  Now Felton stands convicted of his crimes.  We thank our partners at Homeland Security Investigations and the New York City Police Department for their extraordinary work on this case.”

According to the allegations in the Indictment and the evidence presented in court during the trial:

Between 2010 and 2017, FELTON was a member of a long-running narcotics conspiracy and criminal enterprise centered around 240 East 175th Street in the Bronx, New York.  On June 11, 2016, at the corner of East 175th Street and Monroe Avenue in the Bronx, FELTON shot Marvin Harris 13 times, killing him, after Harris insulted FELTON and challenged FELTON’s status within the drug territory.  Six months later, at the corner of East 175th Street and Weeks Avenue, one block away from the scene of the Harris murder, FELTON shot rival drug dealer Edwin Romero four times, then shot Jose Morales in the head, killing him.

FELTON also committed other firearms offenses in connection with his membership in the drug conspiracy and criminal enterprise.

*                      *                      *

FELTON, 50, of the Bronx, was convicted of conspiring to distribute at least 280 grams of crack cocaine and quantities of heroin, cocaine, and marijuana; two counts of murder through use of a firearm; two counts of murder while engaged in a narcotics conspiracy; two counts of murder in aid of racketeering; using, carrying, possessing, brandishing, and discharging firearms in relation to a drug trafficking crime, on occasions other than the Harris and Morales murders; and four counts of possessing a firearm or ammunition after sustaining a felony conviction.  FELTON faces a mandatory minimum sentence of life imprisonment plus an additional mandatory minimum sentence of 75 years in prison, which must run consecutively to any other term of imprisonment imposed.  

FELTON is scheduled to be sentenced before Judge Pauley on October 4, 2019.

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

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Frank Balsamello, Matthew Hellman, and Anden Chow are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, the Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced that GEORGE PAPADAKOS, the former Director of Finance of the Greek Orthodox Archdiocese of America (“GOAA”), pled guilty today to embezzling more than $60,000 of GOAA funds for personal expenses.  PAPADAKOS surrendered this morning and pled guilty before U.S. Magistrate Judge Sarah Netburn.  PAPADAKOS’s case is assigned to U.S. District Judge Richard M. Berman.

U.S. Attorney Geoffrey S. Berman stated:  “As Director of Finance of the Greek Orthodox Church, George Papadakos was supposed to serve his Church, not himself.  As he admitted today, he embezzled from the Church for nearly six years.  For this sin, he faces the possibility of time in a federal prison.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “Mr. Papadakos used his position at the Greek Orthodox Archdiocese of America to steal from the hand who employed him.  Today’s plea is a reflection that Karma always comes from a higher authority and justice escapes no one.”

According to the allegations in the Information to which PAPADAKOS pled guilty, as well as statements made in court during the plea proceeding:

Between 2012 and September 2017, PAPADAKOS, the Director of Finance for GOAA, repeatedly embezzled from GOAA.  He charged approximately $66,499 to a corporate credit card for personal expenses without GOAA’s authorization.  These personal expenditures included charges for home improvements, clothing, a gym membership, iTunes, and medical bills.  During the period of PAPADAKOS’s embezzlement, GOAA was enduring financial difficulties.

*              *             *

PAPADAKOS, 52, of Westfield, New Jersey, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  Under the terms of his plea agreement, PAPADAKOS has agreed to both forfeiture and restitution of $66,499.

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. 

PAPADAKOS is scheduled to appear before Judge Berman on June 24, 2019, at 11:00 a.m., in part to set a schedule for PAPADAKOS’s sentencing proceeding.

Mr. Berman praised USPIS for its outstanding work on this case and noted that the investigation is ongoing.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that ELIZABETH ANN PIERCE, the former chief executive officer (“CEO”) of Quintillion, a telecommunications company in Alaska, was sentenced today in Manhattan federal court to 60 months in prison for defrauding investors in New York of more than $270 million during her time as CEO.  PIERCE previously pled guilty before U.S. District Judge Edgardo Ramos, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Elizabeth Ann Pierce, the then-CEO of Quintillion, placed her ambition above the law.  In order to raise over $270 million to build a fiber optic cable system in northern Alaska, she repeatedly lied to her investors and forged the signatures of her customers’ executives on fake revenue contracts.  When her scheme started to unravel, she tried to delay exposure with yet more lies and forged documents.  She will now serve five years in prison for her crime.”

According to the Complaint, the Indictment, statements made in court, and publicly available documents:

Until July 2017, PIERCE was the chief executive officer of Quintillion, a telecommunications company based in Anchorage, Alaska, that built, operates, and markets a high-speed fiber optic cable system (the “Quintillion System”).  The Quintillion System consists of three segments: a subsea segment that spans the Alaskan Arctic, a terrestrial segment that runs north to south along the Dalton Highway, and a land-based network of fibers that connects the subsea and terrestrial segments.  The Quintillion System is connected to the lower 48 states through other existing networks.

Between May 2015 and July 2017, PIERCE engaged in a scheme to induce two New York-based investment companies to provide more than $270 million to construct the Quintillion System by providing them with eight forged broadband capacity sales contracts and related order forms under which Quintillion would obtain guaranteed revenue once the Quintillion System was built (the “Fake Revenue Agreements”).  Under the Fake Revenue Agreements, four telecommunications services companies appeared to have made binding commitments to purchase specific wholesale quantities of capacity from Quintillion at specified prices.  The cumulative value of the Fake Revenue Agreements was approximately $1 billion over the life of the Fake Revenue Agreements.  In reality, the Fake Revenue Agreements were completely worthless because PIERCE had forged the counterparties’ signatures.

Certain of the Fake Revenue Agreements never existed at all, while others were falsified versions of genuine revenue agreements.  PIERCE fabricated the terms of the false versions of the agreements to make them more favorable to Quintillion and, therefore, more appealing to investors than the genuine agreements.  For example, under one of the Fake Revenue Agreements, the customer purportedly agreed to buy from Quintillion increasing quantities of gigabits per second of capacity over a period of 20 years.  That agreement, if genuine, would have assured Quintillion hundreds of millions of dollars in future revenue.  In reality, negotiations over that deal had ended unsuccessfully, a fact that PIERCE never disclosed to the investors.  Under another Fake Revenue Agreement, the customer purportedly agreed to buy a fixed, predetermined amount of capacity from Quintillion regardless of subsequent market conditions.  In truth, that customer was not obligated to buy any capacity.

Over the course of the scheme, PIERCE tried to cover up her fraud, by continuing to negotiate with the telecommunications companies in hopes of reaching agreements identical to the ones she forged.  Her efforts were mostly unsuccessful.  PIERCE completely failed to secure any revenue contract with one of those telecommunications companies, and the agreements she reached with the other three companies contained less favorable terms for Quintillion than the Fake Revenue Agreements, such as a smaller mandatory capacity purchase commitment, or no commitment at all.  PIERCE hid these genuine, but inferior, contracts from the investment companies and her own staff.  When Quintillion and the investment companies ultimately discovered the fraud in mid-2017, they learned that the real contracts PIERCE actually negotiated would generate only a fraction of the anticipated guaranteed revenue of the Fake Revenue Agreements she forged.

As part of PIERCE’s overall scheme, she also swindled two individual investors (together, the “Individual Victims”) out of a total of $365,000.  PIERCE led these individuals to believe that they would acquire ownership interests in Quintillion when, in fact, she used half of one victim’s money and all of the other victim’s investment for her own personal benefit.  These individuals have received no shares and none of their money back from PIERCE.

After the terrestrial system was built, PIERCE attempted to prevent the discovery of the Fake Revenue Agreements by accelerating the timing of incoming payments under certain genuine agreements to make those payments appear to be based on the Fake Revenue Agreements.  PIERCE also sought to prevent Quintillion from invoicing one of the customers that had no real contract with Quintillion by fabricating email correspondence that gave the impression she was terminating a contractual relationship, when in fact no such relationship existed.  PIERCE’s scheme started to unravel when another customer disputed invoices that it received from Quintillion pursuant to one of the Fake Revenue Agreements.  Shortly thereafter, in the midst of Quintillion’s internal investigation, PIERCE abruptly resigned.  Quintillion self-reported PIERCE’s conduct to the Department of Justice.

*                *                *

In addition to her term of imprisonment, PIERCE, age 55, now of Austin, Texas, was sentenced to three years of supervised release, and was ordered to forfeit $896,698.00 and all of her interests in Quintillion and a property in Texas.  PIERCE will also be subject to a restitution order to her victims to be entered at a later date.

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

This case is prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Sarah Lai and Vladislav Vainberg are in charge of the prosecution.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JACQUELINE GRAHAM was convicted at trial on Wednesday, June 12, 2019, of participating in a conspiracy to commit bank fraud, wire fraud, and mail fraud in connection with a fraudulent debt-elimination scheme to defraud homeowners and banks.  GRAHAM was found guilty of the one count she faced after a two-week trial before U.S. District Judge Nelson S. Román.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jacqueline Graham preyed on vulnerable homeowners who could not afford their mortgage payments during a time of crisis in the housing market.  Because of her greed, these homeowners ended up financially worse off than when they found her.  We will continue to work with our law enforcement partners to bring to justice those who victimize the vulnerable.”

According to the Indictment in the case and the evidence presented at trial:

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

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

In order to effectuate the scheme, GRAHAM, Lewis, and Ruzza involved others, including Rocco Cermele, who was Terra’s director of operations and who recruited clients, among other duties; Paula Guadagno, who did real estate title work for, and filed discharges on behalf of, Terra; and Anthony Vigna, a lawyer and CPA who worked in Terra’s offices.

To profit from their scheme, GRAHAM and her co-conspirators charged various fees to Terra’s clients.

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

*                *                *

GRAHAM, 53, formerly of Levittown, Pennsylvania, was convicted of one count of conspiracy to commit bank fraud, wire fraud, and mail fraud.  The count carries a maximum sentence of 30 years in prison.  

Lewis, 67, formerly of Alaska and Washington State, pled guilty to one count of wire fraud relating to the Terra scheme, which carries a maximum sentence of 20 years in prison.

Vigna, 61, of Thornwood, New York, pled guilty to one count of participating in a conspiracy to commit bank fraud, wire fraud, and mail fraud relating to the Terra scheme, which carries a maximum sentence of five years in prison.

Cermele, 56, of Yonkers, New York, pled guilty to one count of participating in a conspiracy to commit mail, wire, and bank fraud, and one count of wire fraud, each relating to the Terra scheme, each of which carries a maximum potential sentence of 30 years in prison, and three additional counts of wire fraud relating to other crimes, each of which carries a maximum potential sentence of 20 years in prison.

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

All defendants are awaiting sentencing.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that DAVID WAGNER and MARC LAWRENCE were arrested this morning on securities fraud and wire fraud charges stemming from their operation of a number of corporate entities (collectively referred to as “Downing”) as a Ponzi-like scheme.  WAGNER and LAWRENCE solicited over $8 million from investors through materially false and misleading statements regarding, among other things, Downing’s financial condition, use of investor proceeds, sources of funding, ability to pay salaries to employee-investors, and investment portfolio.  Then, WAGNER and LAWRENCE misappropriated a significant portion of those funds and used them for, among other things, the payment of management fees, the repayment of prior investors, and personal expenses.   WAGNER was arraigned earlier today in the United States District Court for the District of Rhode Island and LAWRENCE will be presented later today in the United States District Court for the Middle District of Florida.  The case has been assigned to U.S. District Judge Ronnie Abrams.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, David Wagner and Marc Lawrence were no more scrupulous than practitioners of three-card Monte or the shell game, but for much higher stakes.  They allegedly offered employee-investors the opportunity to get in on the ground floor of a multimillion-dollar venture capital business, but what the employee-investors really got was fleeced.  Now Wagner and Lawrence are in custody and facing serious criminal charges.”

FBI Assistant Director William F. Sweeney Jr. said:  “Wagner and Lawrence sought money up front from employee investors who believed their principals were acting in good faith.  It turns out, as we allege, they were not.  The ones who stood to lose the most in this scheme knew the least about the risks they were taking.  Illegal investment schemes of any kind will ultimately be faced with intense scrutiny, especially those that aim to capitalize on the losses of others.”

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

From at least in or about December 2013 through at least in or about 2017, WAGNER, the chief executive officer of Downing, and LAWRENCE, the president of several Downing entities, solicited investments in Downing, a purported venture capital firm that would invest in healthcare start-ups referred to as “portfolio companies” and provide sales, operations, and management expertise to the portfolio companies in order to bring their products to market and generate returns for Downing investors, who also worked for Downing (the “employee-investors”).  WAGNER and LAWRENCE, and others acting at their direction, solicited more than approximately $8 million in investments in Downing from employee-investors located across the United States, including in the Southern District of New York, as a requirement of employment with Downing. 

After making the required investment of between $150,000 and $250,000 in Downing and starting their employment at Downing, employee-investors soon learned, among other things, that contrary to representations made by WAGNER and LAWRENCE, and others acting at their direction, Downing did not have access to millions of dollars in funding, often could not make payroll, had virtually no products to sell, and that employee-investors were the overwhelming source of funding.  Employee-investors also learned that WAGNER and LAWRENCE had misrepresented the companies in Downing’s portfolio, their product readiness, and ability to generate revenue.  While the particular formulation of these misrepresentations shifted over time, WAGNER and LAWRENCE systematically sought and obtained employee-investor money through materially false and misleading statements. 

Beginning in or about May 2016, after several employee-investors had brought lawsuits against WAGNER, LAWRENCE, and several Downing entities, alleging claims based on, among other things, fraud, WAGNER and LAWRENCE continued the scheme by recruiting employee-investors into a new company called Cliniflow Technologies, LLC (“Cliniflow”), through materially false and misleading statements about Cliniflow’s cash reserves, portfolio companies, and exposure to litigation.  In fact, Cliniflow purportedly held majority ownership in the same primary portfolio company as other Downing entities and was simply a new name used by WAGNER and LAWRENCE to solicit investments from new employee-investors that was not tainted by the lawsuits filed against Downing entities.  A majority of the over $1.5 million raised by WAGNER and LAWRENCE through Cliniflow was transferred to other Downing entities and used to pay for, among other things, WAGNER’s personal expenses and the repayment of prior investors.

Finally, in or about January 2017, WAGNER obtained a $400,000 loan and $100,000 grant from the Connecticut Department of Economic and Community Development (“CTDECD”) for Cliniflow on the basis of materially false statements made by WAGNER to the CTDECD.  WAGNER transferred a majority of the funds obtained from the State of Connecticut, which were required to be used for Cliniflow’s purported relocation from New York to Connecticut, to other Downing entities and also used a portion of the funds to purchase a luxury car for his daughter.

*                      *                      *

WAGNER, 54, of East Greenwich, Rhode Island, and LAWRENCE, 54, of St. Petersburg, Florida, are each charged in five counts – namely, two counts of securities fraud, one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, and one count of wire fraud.  Conspiracy to commit securities fraud carries a maximum sentence of five years in prison.  Each of other charges 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 sentencings of the defendants will be determined by the judge.

Mr. Berman praised the work of the FBI, and thanked the United States Securities and Exchange Commission and the Enforcement Section of the Massachusetts Securities Division for their assistance. 

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Jilan J. Kamal 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.

 

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

Geoffrey S. Berman, 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 the unsealing of a federal indictment charging VANCE COLLINS, a/k/a “Big AK,” 50, and RAMON RAMIREZ, a/k/a “Obendy,” 48, with hiring a hitman to murder an individual believed to be having an affair with RAMIREZ’s wife.  COLLINS was arrested this morning in the Bronx and RAMIREZ was arrested this morning in Staten Island.  The target of their murder-for-hire plan was not killed.  Both defendants were presented this afternoon before United States Magistrate Judge Katharine H. Parker and detained.  The case has been assigned to United States District Judge P. Kevin Castel.

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the indictment, Vance Collins and Ramon Ramirez put a price on another human’s life when they hired someone to kill a person believed to be having an affair with Ramirez’s spouse.  Thanks to the work of our remarkable law enforcement partners, Collins and Ramirez now stand charged in federal court for their alleged roles in this terrible crime.”

FBI Assistant Director William F. Sweeney Jr. said:  “Murder-for-hire cases are more common than one might think, and the FBI has a number of investigative resources and federal laws we can tap into to help us prevent these potential crimes.  But the fact that the plan allegedly concocted by Collins and Ramirez was ultimately unsuccessful shouldn’t overshadow the gravity of this situation – the intent was the same, regardless of the outcome.”    

According to the allegations in the Indictment[1]:

In or about late 2017, COLLINS and RAMIREZ hired another person to murder a man believed to be having an affair with RAMIREZ’s wife, and conspired to carry out this murder-for-hire plot from 2017 through 2018, in violation of 18 U.S.C. §§ 1958 and 2.  Each charge in the two-count indictment carries a maximum penalty of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

*                      *                     *

Mr. Berman praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force, which comprises agents and task force officers from the FBI, Bureau of Alcohol, Tobacco, Firearms and Explosives, United States Probation Office, New York State Police, New York City Police Department, Mount Vernon Police Department, Yonkers Police Department, Greenburgh Police Department, Peekskill Police Department, Westchester County Police Department, and Westchester County District Attorney’s Office. 

This case is being handled by the Office’s Violent and Organized Crime Unit and White Plains Division.  Assistant United States Attorneys Christopher Brumwell and Celia V. Cohen are in charge of the prosecution.               

 

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[1] As the introductory phase 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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the indictment of ROLAND MATHYS for his participation in a scheme to trade on material, nonpublic information (the “Inside Information”) regarding a tender offer by Sanofi, S.A (“Sanofi”) for Bioverativ, Inc. (“Bioverativ”).  After the tender offer was announced, MATHYS’s trading yielded over $4.7 million in illegal profits.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Roland Mathys engaged in insider trading, and profited to the tune of nearly $5 million – until his scheme was exposed.  He allegedly used confidential information about a pending acquisition of a company to purchase call options in that company, knowing that the value of these options would balloon after the acquisition was publicly announced.  Working with the FBI and the SEC, we remain committed to policing the marketplace to take the profit out of cheating.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Every time someone engages in insider trading, they illegally stack investment odds in their favor.  Mathys’s alleged behavior is not only dishonorable, but illegal.  While this type of activity might initially prove profitable, in the long run there’s nothing to be gained.”

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

Background of Sanofi’s Tender Offer for Bioverativ

On November 3, 2017, Sanofi, a multinational pharmaceutical company headquartered in Paris, France, delivered to Bioverativ, a multinational biotechnology company headquartered in Waltham, Massachusetts, a non-binding proposal offering to acquire all outstanding shares of Bioverativ at a price of $98.50 per share in cash.  Bioverativ specialized in the development and commercialization of therapies for the treatment of hemophilia, and its stock was traded under the ticker symbol “BIVV” on the NASDAQ Stock Exchange.  On December 5, 2017, Sanofi and Bioverativ entered into a confidentiality agreement regarding the acquisition negotiations.  On December 18, 2017, representatives of Sanofi and Bioverativ met in New York, New York, for a management presentation, which included a review of Bioverativ’s business, products and pipeline, operations, and projections.  On January 4, 2018, Sanofi indicated that it would be willing to pursue an acquisition of Bioverativ at a price of $105 per share, subject to Sanofi’s successful completion of due diligence and Bioverativ’s agreement to engage exclusively with Sanofi.  On January 6, 2018, Sanofi and Bioverativ executed an exclusivity agreement, which provided Sanofi with the right, through January 26, 2018, to negotiate exclusively the potential acquisition of all the outstanding shares of Bioverativ at the price of $105 per share.

The Sanofi Executive Acquires Inside Information About the Acquisition of Bioverativ and Discloses it to his Family Member

By January 7, 2018, Individual-1, in connection with his employment as an executive vice president at Sanofi, learned that an acquisition of Bioverativ by Sanofi was being negotiated, that such an acquisition was likely to happen, and that such an acquisition would take place in the near future, which Inside Information he had a duty to keep confidential.  On or about January 8, 2018, during a telephone conversation, Individual-1 disclosed to his family member, Individual-2, Inside Information regarding Sanofi’s planned acquisition of Bioverativ. Specifically, Individual-1 told Individual-2, in sum and substance, that Sanofi was acquiring a Boston-based biotech company involved in developing a hemophilia drug.

Individual-2 Discloses Inside Information about the Acquisition of Bioverativ to MATHYS

Between January 8, 2018, and January 12, 2018, Individual-2 disclosed to his friend MATHYS Inside Information regarding Sanofi’s planned acquisition and the fact that Individual-2 had learned the Inside Information from Individual-1.  Based on MATHYS’s prior dealings with Individual-1, MATHYS knew that Individual-1 was an executive vice president at Sanofi.

From January 12, 2018, through on January 19, 2018, MATHYS purchased approximately 1,607 Bioverativ call option contracts, all with an expiration date of February 16, 2018, for a total purchase price of approximately $170,071.  MATHYS’s purchases constituted a significant percentage of the trading in Bioverativ call options on each day, as shown in the table below.

Date of purchase

Number of call option contracts purchased

Strike price

Average premium paid

Percentage

of trading

by MATHYS

1/12/18

342

$65

$2.44

75%

1/12/18

370

$70

$0.79

82%

1/12/18

100

$75

$0.59

96%

1/16/18

100

$75

$0.80

97%

1/17/18

20

$65

$2.29

32.2%

1/17/18

100

$75

$0.50

95%

1/18/18

300

$75

$0.59

100%

1/19/18

275

$75

$0.56

50%

 

The Acquisition is Announced, and Bioverativ’s Share Price Increases by Approximately 62%

On the evening of Sunday, January 21, 2018, Sanofi and Bioverativ entered into a merger agreement (the “Merger Agreement”).  Pursuant to the Merger Agreement, Sanofi would commence a tender offer no later than 15 business days after the date of the Merger Agreement, to acquire all of the outstanding shares of common stock of Bioverativ, at a purchase price of $105.00 per share (the “Tender Offer”), which represented a premium of approximately 64% over Bioverativ’s closing price the prior trading day.

On the morning of Monday, January 22, 2018, prior to the opening of the financial markets in Paris and New York, Sanofi and Bioverativ issued a joint press release announcing the signing of the Merger Agreement (the “Announcement”).

On January 22, 2018, following the Announcement, Bioverativ shares opened trading at $104.21 per share, reached an intra-day high of $104.30 per share, and closed at $103.79 per share, an increase of approximately 62% over the closing price on the prior trading day.  Since Bioverativ shares had begun trading on the NASDAQ in January 2017, they had never closed at or above $64.12.

MATHYS’s Insider Trading Generates an Illicit Profit of Over $4.7 Million

On January 22, 2018, MATHYS sold all the Bioverativ call option contracts that had a strike price of $65 or $70, for a net profit of approximately $2,518,622.70.  On January 23 and 26, 2018, he sold 325 Bioverativ call option contracts with a strike price of $75, for a net profit of approximately $711,000.81.

On January 26, 2018, at the request of his relationship manager at Credit Suisse, Ltd. (the “Relationship Manager”), MATHYS executed a declaration in which he represented that his transactions in Bioverativ call options were based only on publicly available information and/or personal market analysis, and that no Inside Information was used.  MATHYS also stated to the Relationship Manager that MATHYS was extremely surprised by the developments relating to Bioverativ, that he had nothing to do with Bioverativ or Sanofi, and that he did not have any information relating to Bioverativ’s acquisition when he purchased Bioverativ options.  

On February 8, 2018, the Securities and Exchange Commission (the “SEC”) obtained a preliminary injunction freezing the approximately $3,229,623.51 in proceeds that MATHYS had generated from selling a portion of the Bioverativ call options (the “Preliminary Injunction”).  On February 16, 2018, pursuant to a court order, the SEC directed the liquidation of the remaining 550 Bioverativ call option contracts, which resulted in net profits of approximately $1,568,732.47, which were also frozen pursuant to the Preliminary Injunction.

Between February 8, 2018, and February 10, 2018, MATHYS acknowledged to Individual-2, in sum and substance, that MATHYS had traded in Bioverativ based on the Inside Information that MATHYS had obtained from Individual-2.

*                    *                    *

MATHYS, 32, is a citizen and resident of Switzerland.

MATHYS is charged with one count of fraud in connection with a tender offer, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million.  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 would be determined by the Court.  The case has been assigned to U.S. District Judge Denise Cote.

Mr. Berman praised the work of the FBI, and thanked the SEC for its assistance.

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

The allegations 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 herein, constitute only allegations, and every fact described therein should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, David Bernhardt, the United States Secretary of the Interior, and Christopher T. Tersigni, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that MOAZU KROMAH, a/k/a “Ayoub,” a/k/a “Ayuba,” a/k/a “Kampala Man,” AMARA CHERIF, a/k/a “Bamba Issiaka,” MANSUR MOHAMED SURUR, a/k/a “Mansour,” and ABDI HUSSEIN AHMED, a/k/a “Abu Khadi,” were charged in an indictment for participating in a conspiracy to traffic in rhinoceros horns and elephant ivory, both protected wildlife species, valued at more than $7 million that involved the illegal poaching of more than approximately 35 rhinoceros and more than approximately 100 elephants.  In addition, KROMAH, CHERIF, and SURUR were charged with conspiracy to commit money laundering, and SURUR and AHMED were charged with participating in a conspiracy to distribute and possess with intent to distribute more than 10 kilograms of heroin.  KROMAH, a citizen of Liberia, was arrested in Uganda on June 12, 2019, and expelled to the United States.  He was arraigned before U.S. Magistrate Judge Katharine H. Parker earlier today and detained.  CHERIF, a citizen of Guinea, was arrested in Senegal on June 7, 2019, and remains in custody in Senegal pending a process through which his extradition, deportation or other lawful removal to the United States is being considered by Senegalese authorities.  SURUR and AHMED, both citizens of Kenya, remain fugitives.  The case has been assigned to U.S. District Judge Gregory H. Woods.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants are members of an international conspiracy to traffic in not only heroin but also rhino horns and elephant ivory.  The alleged enterprise, responsible for the illegal slaughter of dozens of rhinos and more than 100 elephants, was as destructive to protected species as it was lucrative.  The excellent work of the Fish and Wildlife Service and the DEA has put the brakes on an operation that allegedly peddled dead protected species and potentially deadly narcotics.”           

Secretary of the Interior David Bernhardt said:  “Wildlife trafficking will not be tolerated. It is often intertwined with other major types of criminal activity including conspiracy, smuggling, money laundering and narcotics – all of which are included in the indictment today.  The U.S. Department of the Interior remains committed to combating the illegal wildlife trade through the END Wildlife Trafficking Act and the President’s Executive Order on Transnational Organized Crime.  I would like to thank the U.S. Fish and Wildlife Service Office of Law Enforcement, U.S. Attorney’s Office, U.S. Department of Justice, and others who help bring wildlife traffickers, and other criminals, to justice.  Together, we can protect some of the world’s most iconic species while ensuring the safety and livelihood of the American people.”  

DEA Special Agent in Charge Christopher T. Tersigni said:  “DEA’s global investigations with our foreign counterparts often involve transnational criminal networks involved in a wide array of unlawful acts – from drug trafficking to conspiring to commit acts of terror to international money laundering to human trafficking – that undermine the rule of law everywhere.  These suspected criminal masterminds not only conspired to traffic huge amounts of heroin to New York, but also directed a multimillion-dollar poaching scheme to traffic in rhinoceros horns and elephant ivory – both endangered wildlife species.  DEA investigations throughout the world consistently illustrate the lengths and heinous acts these global criminal individuals and networks will commit to further their illicit enterprises.”

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

KROMAH, CHERIF, SURUR, and AHMED were members of a transnational criminal enterprise (the “Enterprise”) based in Uganda and surrounding countries that was engaged in the large-scale trafficking and smuggling of rhinoceros horns and elephant ivory, both protected wildlife species.  Trade involving endangered or threatened species violates several U.S. laws, as well as international treaties implemented by certain U.S. laws.

From at least in or about December 2012 through at least in or about May 2019, KROMAH, CHERIF, SURUR, and AHMED conspired to transport, distribute, sell, and smuggle at least approximately 190 kilograms of rhinoceros horns and at least approximately 10 tons of elephant ivory from or involving various countries in East Africa, including Uganda, the Democratic Republic of the Congo, Guinea, Kenya, Mozambique, Senegal, and Tanzania, to buyers located in the United States and countries in Southeast Asia.  Such weights of rhinoceros horn and elephant ivory are estimated to have involved the illegal poaching of more than approximately 35 rhinoceros and more than approximately 100 elephants.  In total, the estimated average retail value of the rhinoceros horn involved in the conspiracy was at least approximately $3.4 million, and the estimated average retail value of the elephant ivory involved in the conspiracy was at least approximately $4 million.

Typically, the defendants exported and agreed to export the rhinoceros horns and elephant ivory for delivery to foreign buyers, including those represented to be in Manhattan, in packaging that concealed the rhinoceros horns and elephant ivory in, among other things, pieces of art such as African masks and statues.  The defendants received and deposited payments from foreign customers that were sent in the form of international wire transfers, some which were sent through U.S. financial institutions, and paid in cash.

On a number of occasions, KROMAH, SURUR, and AHMED met with a confidential source (“CS-1”), both together and separately, concerning potential purchases of elephant ivory and rhinoceros horn.  During these meetings and at other times via phone calls and an electronic messaging application, CS-1 discussed with KROMAH, SURUR, and AHMED, in substance and in part, the terms of the sale, including the price, weight, or size of the rhinoceros horns, payment, destination, and delivery options.  CS-1 also discussed with CHERIF via phone calls and electronic messages, in substance and in part, the terms of the sales, as well as how to send payment for the rhinoceros horns from a United States bank account located in Manhattan.  On or about March 16, 2018, law enforcement agents intercepted a package containing a black rhinoceros horn sold by the defendants to CS-1 that was intended for a buyer represented to be in Manhattan.  From in or about March 2018 through in or about May 2018, the defendants offered to sell CS-1 additional rhinoceros horns of varying weights, including horns weighing up to seven kilograms.  On or about July 17, 2018, law enforcement agents intercepted a package containing two white rhinoceros horns sold by the defendants to CS-1 that was intended for a buyer represented to be in Manhattan.  

Separately, from at least in or about August 2018 through at least in or about May 2019, SURUR and AHMED conspired to distribute and possess with intent to distribute more than approximately 10 kilograms of heroin to a buyer represented to be located in New York.

                                                            *                      *                      *

KROMAH, 49, CHERIF, 54, SURUR, 59, and AHMED, 56, are each charged with one count of conspiracy to commit wildlife trafficking and two counts of wildlife trafficking, each of  which carries a maximum sentence of five years in prison.  KROMAH, CHERIF, and SURUR are also each charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years.  Finally, SURUR and AHMED are each charged with one count of conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin, which carries a maximum sentence of life imprisonment, and a mandatory minimum sentence of 10 years’ imprisonment.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the United States Fish and Wildlife Service and the DEA, and he thanked law enforcement authorities and conservation partners in Uganda for their assistance in the investigation.  Mr. Berman also thanked the U.S. Department of Justice’s Office of International Affairs for their assistance and noted that the investigation is continuing. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Sagar K. Ravi and Jarrod L. Schaeffer 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 its description set forth below constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, Angel M. Melendez, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), and James P. O’Neill, the Police Commissioner of the City of New York (“NYPD”), announced that CLAUDIUS ENGLISH was convicted yesterday of multiple counts of sex trafficking minors, attempted sex trafficking of minors as young as 8 years old, kidnapping of a minor, and using a firearm to commit the kidnapping.

U.S. Attorney Geoffrey S. Berman said:  “As a unanimous jury determined without hesitation, Claudius English engaged in a predatory reign of terror and exploitation of children – girls as young as 8 years old.  Thanks to HSI and the NYPD, English now awaits a lengthy prison sentence.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “English chose a business of preying on children as young at 8 and exploiting their innocence, forcing them to have sex with his already established clientele.  He carried out his predatory acts and targeted minors on the internet, once again highlighting the importance of internet safety.  The heinous acts of this individual robbed his victims of their childhood, and this guilty verdict will ensure that he faces time for his criminal actions.”

NYPD Commissioner James P. O’Neill said:  “The NYPD is committed to ensuring child predators are taken off our streets; we will continue working tirelessly to bring them to justice.  We remain committed to working with our law enforcement partners to ensure that individuals who engage in these reprehensible crimes are held accountable for the misery and anguish they cause.”

According to the evidence presented during the trial:

In 2013, CLAUDIUS ENGLISH sex trafficked multiple minor victims out of his apartment in the Bronx.  ENGLISH used the Internet to find, recruit, and lure minor victims to his apartment, where he photographed them in sexually suggestive poses.  ENGLISH then sent these photographs to his regular clients, and created advertisements that he posted on Backpage.  ENGLISH arranged for his clients to pay for sex with at least four minor victims who testified at trial.  Additionally, for one of his clients, ENGLISH took substantial steps to obtain and sex traffic girls as young as 13, 11, and 8. 

On November 15, 2013, ENGLISH lured a 14-year-old girl from New Jersey to his apartment for the purpose of selling her for sex.  When the victim resisted and said she wanted to leave, ENGLISH pointed a loaded gun at her head and refused.  After several hours, the victim convinced ENGLISH to accompany her outside.  Even though ENGLISH brought his gun with him, the victim ran away and called 911.  NYPD officers responded promptly enough that the victim was able to lead them back to ENGLISH’s apartment, where ENGLISH was caught trying to flee. 

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ENGLISH, 45, of Bronx, New York, was convicted of conspiracy to commit sex trafficking of minors (COUNT ONE), four counts of sex trafficking of minors (COUNTS TWO, THREE, FOUR, and EIGHT), three counts of attempted sex trafficking of minors (COUNTS FIVE, SIX, and SEVEN), kidnapping a minor (COUNT NINE), and the use of a firearm in furtherance of the kidnapping (COUNT TEN).  ENGLISH faces a statutory maximum sentence of life, and a mandatory minimum sentence of 27 years. 

Mr. Berman praised the outstanding investigative work of HSI and NYPD, and expressed gratitude for the efforts of HSI’s New York Trafficking in Persons Unit.  Mr. Berman also expressed gratitude to the Bronx County District Attorney’s Office.   

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Michael K. Krouse, Ni Qian, and Frank Balsamello are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that WOOJAE JUNG, a/k/a “Steve Jung,” was sentenced in Manhattan federal court by U.S. District Judge Lewis A. Kaplan to three months in prison for insider trading.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Woojae Jung used material nonpublic information stolen from his investment bank employer to net nearly $130,000 in illegal gains.  His conviction and sentence signal that those who aim to profit by stealing confidential information from their employers and clients will be held accountable.  Our Office will continue to fight insider trading to protect the integrity of the marketplace.”

According to the Indictment, the allegations in the Complaint, and statements made during the proceedings in Manhattan federal court:

WOOJAE JUNG, a/k/a “Steve Jung,” worked at an investment bank (the “Investment Bank”) that provided, among other services, financing and consulting to clients in connection with mergers, acquisitions, and corporate restructurings.  The Investment Bank has offices around the world, including in New York, New York, and San Francisco, California.  JUNG was a vice president.  In his role as a vice president at the Investment Bank, JUNG had access to, among other materials, electronic files maintained on the Investment Bank’s computer server, including files containing material nonpublic information (“MNPI”) relating to various clients.

JUNG used his position at the Investment Bank to obtain MNPI about a number of the Investment Bank’s clients and then, in multiple instances, JUNG used that MNPI to execute profitable securities trades.  In an effort to conceal this illicit trading, JUNG conducted these illegal trades through a brokerage account held in the name of another person (the “Brokerage Account”).  In contravention of his employer’s rules about outside investment accounts, including that such accounts be disclosed to the Investment Bank, JUNG secretly accessed, used, and traded in the Brokerage Account repeatedly between in or about 2015 and in or about 2017, including on hundreds of occasions when the account was accessed through IP addresses subscribed in JUNG’s name.

Over the course of the scheme JUNG traded in the securities of at least 10 companies based on MNPI and made more than approximately $130,000.

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In addition to the prison sentence, Judge Kaplan sentenced JUNG, 38, of San Francisco, California, to two years of supervised release and ordered him to pay a $30,000 fine and to forfeit $130,000.

Mr. Berman praised the outstanding work of the Federal Bureau of Investigation.  He also thanked the Securities and Exchange Commission, which previously filed civil charges against JUNG in a separate action.

The prosecution of this case is being overseen by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorney Andrew Thomas is in charge of the case.