Southern District of New York
Press releases recorded for this federal judicial district.
Doctor and Physical Therapist Found Guilty of Participating in $30 Million Scheme to Defraud Medicare and MedicaidRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that medical doctor PAUL J. MATHIEU and physical therapy doctor HATEM BEHIRY were each found guilty of participating in a $30 million scheme to defraud Medicare and the New York State Medicaid Program. The defendants were convicted following a six-week jury trial before U.S. District Judge Lorna G. Schofield.
U.S. Attorney Geoffrey S. Berman said: “These corrupt doctors betrayed their medical training, their professions, and their Medicare and Medicaid billing privileges. They chose not to heal, but to harm, the taxpaying public – the real victims of this scheme.”
According to the evidence presented during the trial and statements made in related court filings and proceedings:
Between 2007 and 2013, MATHIEU fraudulently posed as the owner of three of six medical clinics in Brooklyn (the “Clinics”), which were all in fact owned by co-conspirator Alexksandr Burman. During that time period, the Clinics fraudulently billed Medicare and Medicaid approximately $30 million for medical services and supplies that were medically unnecessary and/or not provided. Throughout this time period, MATHIEU fraudulently posed as the owner of three of those clinics, in order to satisfy a New York State law requirement that medical clinics must be owned and operated by a medical professional.
For the last three-and-a-half years of the scheme, MATHIEU also directly participated in the fraudulent billing practices of the Clinics, by visiting several of the Clinics on a weekly basis, where he would sign stacks of false and fraudulent medical charts, and issue referrals for expensive additional testing, occupational therapy, and physical therapy, including for physical therapy purportedly provided by defendant BEHIRY. During this time period, MATHIEU saw no patients at all, simply falsifying enormous stacks of phony medical records falsely stating that he had seen and treated such patients.
BEHIRY similarly participated in the fraudulent billing practices of the Clinics, by pretending to provide physical therapy to many of those same patients, most of whom were receiving cash kickbacks for coming to the Clinics. In fact, BEHIRY was engaged in an empty charade designed to create the appearance of physical therapy, while almost no therapy was actually being provided to many patients. To further the fraud, BEHIRY also prepared and oversaw the preparation of a huge quantity of phony medical and billing records. Among other things, BEHIRY completed thousands of fabricated reports, in which patients were described almost identically, and with little or no regard for actual medical conditions or needs. As with MATHIEU, many of the charts were for patients whom BEHIRY and his team had not evaluated or provided therapy to at all.
In addition to his role in the Clinics, MATHIEU also wrote unneeded prescriptions for adult diapers and other incontinence products, which were filled at Universal Supply Depot, a medical supply company also owned by Burman’s wife. MATHIEU was so prolific in this regard that, throughout the period of the fraud, he was regularly a top prescriber of adult diapers in the State of New York. MATHIEU continued to write such prescriptions, even after the Clinics were closed down because Medicare stopped paying any of the clinics’ claims.
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PAUL J. MATHIEU, 53, of Morristown, New Jersey, and HATEM BEHIRY, 51, of Brooklyn, New York, were each convicted of one count each of conspiracy to commit health care fraud, mail fraud, and wire fraud; and conspiracy to make false statements relating to a health care program; as well as the substantive offenses of health care fraud, mail fraud, and wire fraud. The conspiracy to commit health care fraud, mail fraud and wire count, and the substantive mail fraud and wire fraud counts each carry a maximum sentence of 20 years in prison. The substantive health care fraud count carries a maximum sentence of 10 years in prison, and the conspiracy to make false statements relating to health care carries a maximum sentence of five years in prison. Each count also carries a maximum fine of $250,000, or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the Court.
MATHIEU and BEHIRY bring to 15 the number of defendants convicted in this and related cases. The other defendants include: Aleksandr Burman, 57, the leader of the scheme, who was sentenced in a related case on May 8, 2017, to 120 months in prison; Marina Burman, 56, the former wife of Aleksandr Burman and the owner of Universal Supply Depot, was sentenced on May 17, 2018, to 36 months in prison; Mustak Y. Vaid, 45, a physician, was sentenced on August 1, 2018, to 18 months in prison; Ewald J. Antoine, 68, a physician, was sentenced on August 21, 2018, to 18 months in prison; Asher Oleg Kataev, 50, a Burman business partner, was sentenced on May 31, 2018, to 36 months in prison; Alla Tsirlin, 49, a Clinic office manager, was sentenced on June 5, 2018, to a year and a day in prison; and Edward Miselevich, 46, and Ivan Voychak, 39, Burman partners who jointly ran a related ambulette company, were sentenced on June 12, 2018, and July 19, 2018, respectively, to 36 months in prison each. In addition, Lina Zhitnik, 52, and Dina Cabana Rubenstein, 39, occupational therapists, Valery Volsky, 60, a bookkeeper, Olga Kharuk, 47, and Natalya Grabovskaya, 48, office managers, have each also pled guilty for their participation in this scheme and are awaiting sentencing.
Mr. Berman praised the outstanding work of the Federal Bureau of Investigation, the Office of the Inspector General of the U.S. Department of Health and Human Services, and the New York State Office of the Medicaid Inspector General.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys David Raymond Lewis, Stephen J. Ritchin, and Timothy V. Capozzi are in charge of the prosecution.
5 Estonian Residents Arrested for Conspiring to Import Carfentanil and Fentanyl into the United StatesRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Christopher T. Tersigni, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), today announced that Estonian residents JEVGENI BOKOV, VIKTOR LITVINTSUK, AMID MAGERRAMOV, NIKOLAI NIFTALIJEV, and VITALI VORONJUK have been charged in an Indictment filed in Manhattan federal court with narcotics trafficking and money laundering offenses, including conspiracy to import carfentanil and fentanyl into the United States. In the course of the investigation, law enforcement seized more than five kilograms of mixtures and substances containing carfentanil, representing one of the largest seizures of fentanyl analogue in the DEA’s history. The defendants were arrested in Estonia in September 2018, based on the charges in this case. Today, BOKOV, MAGERRAMOV, and VORONJUK were extradited to the United States, and they will be arraigned before U.S. Magistrate Judge Ona T. Wang this afternoon. LITVINTSUK was previously extradited to the United States and arraigned before U.S. Magistrate Judge Henry B. Pitman on February 6, 2019. NIFTALIJEV remains in custody in Estonia, where proceedings for his extradition to the United States are pending. The case has been assigned to U.S. District Judge J. Paul Oetken.
Manhattan U.S. Attorney Geoffrey S. Berman said: “The arrest of these five defendants for allegedly conspiring to traffic large quantities of carfentanil – a drug 1,000 times more potent than heroin – is yet another important case brought by this Office and the DEA in keeping deadly drugs out of our neighborhoods. A key component in battling the opioid epidemic is disrupting the supply chain, and today is another important step in that fight.”
Special Agent in Charge Christopher T. Tersigni said: “Fentanyl and carfentanil are extremely dangerous and deadly. Two milligrams of fentanyl, the amount of two grains of salt, can kill a person, and carfentanil is even more potent. We are pleased to see these individuals brought to justice as we continue to fight to keep this poison out of the United States.”
According to the allegations in the Indictment and the Complaints previously filed against the defendants:[1]
Between October 2017 and August 2018, the defendants conspired to import large quantities of carfentanil and fentanyl into the United States. Carfentanil is a fentanyl analogue approximately 1,000 times more potent than heroin, and is used commercially to sedate large animals, such as elephants. During that period, the defendants participated in a series of recorded meetings and telephone communications with an individual they understood to be affiliated with an international drug trafficking organization, for the purpose of arranging to import narcotics into the United States. That individual was, in fact, a confidential source working with the DEA (the “CS”). LITVINTSUK, MAGERRAMOV, NIFTALIJEV, and VORONJUK prepared and distributed a total of more than five kilograms of substances containing carfentanil for importation into the United States. In addition, BOKOV laundered hundreds of thousands of U.S. dollars, which he understood to be illicit narcotics proceeds, from Europe to the United States.
In mid-October 2017, MAGERRAMOV and BOKOV met together with the CS in a country in Eastern Europe (“Country-1”). During the meeting, the CS informed MAGERRAMOV and BOKOV that the CS was a member of a Colombian drug cartel that distributed narcotics in the United States and laundered the resulting proceeds. Several days later, on October 20, 2017, the CS met with BOKOV to discuss laundering money for the purported cartel. At the meeting, BOKOV agreed to transfer narcotics proceeds for the cartel from Europe to the United States. Between fall 2017 and spring 2018, the CS provided BOKOV with approximately €250,000 in cash, which BOKOV had been informed constituted narcotics proceeds, and BOKOV agreed to transfer the cash to a bank account in New York City, which was in fact controlled by the DEA. Over the course of multiple transactions, BOKOV transferred the funds, less a five percent commission, from Europe to the New York bank account.
Throughout late 2017 and early 2018, the CS also participated in a series of meetings with LITVINTSUK, MAGERRAMOV, NIFTALIJEV, and VORONJUK to discuss narcotics transactions. During the meetings, LITVINTSUK, MAGERRAMOV, NIFTALIJEV, and VORONJUK agreed to provide the CS with fentanyl in a country in Europe (“Country-2”), with the understanding that the fentanyl would be transported to the United States, mixed with heroin and other controlled substances, and sold to the cartel’s customers in New York City, among other places.
In May 2018, MAGERRAMOV coordinated the delivery of samples of carfentanil to the CS in Country-2. On May 9, 2018, MAGERRAMOV, NIFTALIJEV, and VORONJUK delivered three samples of narcotics to an agreed-upon location in Country-2. The three samples were seized by law enforcement, tested in a laboratory, and found to contain approximately 550 grams of mixtures and substances containing carfentanil. The CS later informed MAGERRAMOV that the three samples had been transported to the United States, that the purported cartel was satisfied with the quality of the narcotics, and that the CS wanted to purchase additional carfentanil from MAGERRAMOV and his associates.
In late May 2018, MAGERRAMOV arranged to have additional carfentanil delivered to the CS for importation into the United States. On May 30, 2018, VORONJUK delivered a package of narcotics to an agreed-upon location in Country-2. The package was seized by law enforcement, tested in a laboratory, and found to contain approximately 5.2 kilograms of mixtures and substances containing carfentanil. The CS subsequently reported to MAGERRAMOV that the carfentanil had been transported to the United States.
During June and July 2018, the CS continued to meet and communicate with the defendants about arranging additional narcotics transactions in the future and payment for the carfentanil that had been delivered. On July 17, 2018, the CS provided BOKOV with approximately $20,000, and BOKOV agreed to transfer that money to an account controlled by MAGERRAMOV, with the understanding that the $20,000 payment was for additional carfentanil that would be imported into the United States.
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BOKOV, 44, MAGERRAMOV, 38, NIFTALIJEV, 32, and VORONJUK, 36, all of Estonia, and LITVINTSUK, 39, of Russia, are charged with one count of conspiring to import 100 grams and more of carfentanil and 400 grams and more of fentanyl into the United States, and to manufacture and distribute 100 grams and more of carfentanil and 400 grams and more of fentanyl, intending that the narcotics would be imported into the United States. That charge carries a maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years’ imprisonment. LITVINTSUK, MAGERRAMOV, NIFTALIJEV, and VORONJUK are also charged with two counts of manufacturing and distributing 100 grams and more of carfentanil, intending that it would be imported into the United States, each of which carries a maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years in prison. BOKOV is further charged with two counts of money laundering, each of which carries a maximum sentence of 20 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Berman praised the outstanding efforts of the DEA’s Special Operations Division; the DEA’s Country Office in Copenhagen, Denmark; the United States Marshals Service; the U.S. Department of State, Diplomatic Security Service; the Estonia Central Criminal Police; the Estonia Office of the Prosecutor General; the Estonia Ministry of Justice; and the U.S. Department of Justice’s Office of International Affairs.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Shawn G. Crowley and George D. Turner are in charge of the prosecution.
The charges contained in the Indictment and Complaints are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the texts of the Indictment and Complaints charging the defendants constitute only allegations, and every fact described should be treated as an allegation.
U.S. Attorney’s Office Announces Conviction of Christian Dawkins and Merl Code for Bribing NCAA Division I Men’s College Basketball CoachesRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the conviction of CHRISTIAN DAWKINS and MERL CODE for conspiring to bribe various NCAA Division I men’s college basketball coaches. DAWKINS was additionally found guilty of a substantive count of bribery. The defendants were convicted after a two-and-a-half week trial before U.S. District Judge Edgardo Ramos.
DAWKINS and CODE were both previously convicted for their roles in a scheme to defraud an Adidas-sponsored university by funneling payments from Adidas to the family of a high-school college basketball player and then concealing those payments from the school.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Today, Christian Dawkins and Merl Code were found guilty a second time for their roles in corrupting the world of college basketball, in this case for conspiring to bribe multiple Division I men’s basketball coaches. And while their convictions mark the culmination of the criminal charges announced by this Office in September 2017, they should also make clear to those who might be tempted to engage in the sort of misconduct these prosecutions have only begun to expose: that bribery is a crime, one this Office is prepared to charge criminally and prosecute to the full extent of the law.”
According to the allegations contained in the Complaint, Indictment, Superseding Indictment, and evidence presented during the trial in Manhattan federal court:
Overview of the Scheme
DAWKINS and CODE agreed to pay bribes to various NCAA Division I men’s college basketball coaches in exchange for those coaches’ exerting their influence over the student-athletes that they coached in order to retain the services of DAWKINS and a new sports management business (the “Dawkins Company”) that he had recently started.
Prior to founding the Dawkins Company, from 2015 until May 2017, DAWKINS worked for a major sports agency recruiting high school and college basketball players as clients. In connection with his work for the sports agency, DAWKINS paid bribes to Lamont Evans, who at the time was an assistant coach at the University of South Carolina, in order for Evans to exert his official influence over student-athletes he coached to retain the services of the sports agency that employed DAWKINS. DAWKINS subsequently introduced Louis Martin Blazer III, a financial advisor who, unbeknownst to DAWKINS, was cooperating with the Government, and Munish Sood, another financial advisor, to Lamont Evans in order for them to continue paying bribes to him.
In May 2017, DAWKINS was terminated from his job at the sports agency and started the Dawkins Company with Munish Sood and another investor who, unbeknownst to DAWKINS, was an undercover law enforcement officer (“UC-1”). In order to recruit future clients, DAWKINS proposed, among other things, paying bribes to coaches at various NCAA Division I universities so that these coaches would steer their student-athletes to retain the services of the Dawkins Company. DAWKINS thereafter proposed paying bribes to Emanuel “Book” Richardson, an assistant coach at the University of Arizona. Soon thereafter, DAWKINS arranged for Richardson to travel to New York City in order to receive a $5,000 cash bribe. Weeks later, Richardson requested an additional $15,000 from DAWKINS, which Richardson said he would use in order to secure the commitment of a top high school basketball player to attend the University of Arizona, who Richardson would then steer to retain the services of DAWKINS and his company. DAWKINS arranged for UC-1 and Sood to pay Richardson an additional $15,000 cash bribe in New Jersey in July 2017.
In June 2017, DAWKINS introduced Sood, UC-1, and Blazer, among others, to MERL CODE, who at the time was a consultant for Adidas, in order for CODE to work with the Dawkins Company to recruit future clients. During the initial meeting, DAWKINS, CODE, Sood, Blazer, and UC-1 discussed, among other things, CODE’s ability to identify and connect the Dawkins Company with corrupt college basketball coaches willing to accept money. At the end of the meeting, CODE received a $5,000 cash payment from UC-1 on behalf of the Dawkins Company.
In July 2017, DAWKINS and CODE discussed by telephone, among other things, CODE introducing UC-1 to various men’s college basketball coaches at an upcoming recruiting event in Las Vegas, Nevada, and that CODE would be paid $5,000 for each men’s college basketball coach that he introduced to DAWKINS and UC-1. CODE later sent a text message to DAWKINS containing a list of coaches that CODE had set up meetings with in Las Vegas, including the dates and times of each of the meetings, for the purpose of DAWKINS and his company arranging to bribe them. In advance of the meetings, CODE advised UC-1 and DAWKINS that they should tell the coaches they would meet with that they would be available to provide them with money in the future, including with respect to any future financial needs these coaches had in connection with recruiting.
In Las Vegas, several coaches received cash bribes during their meetings with DAWKINS in exchange for agreeing to use their influence to steer players on their teams to the Dawkins Company. In particular, Anthony Bland, an assistant coach at the University of Southern California, and an assistant coach from Creighton University -- two of the coaches that were on the list of meetings that CODE sent to DAWKINS by text message -- met with DAWKINS, UC-1, and Blazer in Las Vegas in July 2017 and accepted cash bribes. During the meeting in Las Vegas, Bland accepted a cash bribe and confirmed that he would use his influence to steer student-athletes at the University of Southern California to retain the Dawkins Company. During the same trip to Las Vegas, DAWKINS, Blazer, and UC-1 also met with a third coach from Texas Christian University and paid this coach a cash bribe, as well.
After these meetings, and consistent with the bribery scheme, DAWKINS continued to discuss with these corrupt college coaches players that they could steer to DAWKINS and his new company. For example, in August 2017, Bland, facilitated meetings between DAWKINS, Sood, and the family members of a then-current student-athlete on the University of Southern California men’s basketball team, as well as a family member of a different student-athlete who was a rising freshman planning to play for the University of Southern California men’s basketball team the next season. During a meeting on the campus of the University of Southern California in August 2017, Bland also informed DAWKINS and Sood that if they continued to fund payments to family members of University of Southern California men’s college basketball players and recruits that Bland would use his position as an assistant coach in order to influence these players to retain the Dawkins Company.
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DAWKINS, 26, of Atlanta, Georgia, and CODE, 45, of Greer, South Carolina, were each convicted of one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison. DAWKINS was also convicted of a substantive bribery count, which carries a maximum sentence of 10 years in prison. DAWKINS and CODE were acquitted of the other charges in the Indictment. Both defendants will be sentenced before Judge Ramos at a future date.
Mr. Berman praised the work of the FBI and the Special Agents of the United States Attorney’s Office for the Southern District of New York.
The case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys Robert L. Boone, Noah Solowiejczyk, and Eli J. Mark are in charge of the prosecution.
Queens Immigration Attorney Sentenced to Five Years in Prison for Operating Asylum Fraud SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ANDREEA DUMITRU, a/k/a “Andreea Dumitru Parcalaboiu,” an immigration attorney based in Queens, New York, was sentenced to five years in prison in connection with her operation of a scheme to submit fraudulent asylum applications to United States immigration authorities. DUMITRU was convicted on November 19, 2018, of asylum fraud, making false statements to immigration authorities, and aggravated identity theft following a two-week trial before U.S. District Judge Lewis A. Kaplan, who imposed today’s sentence.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Using lies and forgery, Andreea Dumitru, an immigration attorney, cheated the nation’s asylum program. For her crimes, Dumitru will now spend five years in prison.”
According to the Superseding Indictment, other filings in Manhattan federal court, and the evidence presented at trial:
Between 2013 through 2017, DUMITRU operated a scheme to submit fraudulent I-589 Forms in connection with applications for asylum. Specifically, DUMITRU submitted more than 100 applications in which she knowingly made false statements and representations about, among other things, the applicants’ personal narratives of alleged persecution, criminal histories, and travel histories. DUMITRU deliberately fabricated detailed personal stories of purported mistreatment of her clients, forged her clients’ signatures, and falsely notarized affidavits.
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In addition to the prison term, DUMITRU, 43, of Queens, New York, was sentenced to one year of supervised release, and was ordered to forfeit $157,500.
Mr. Berman praised the outstanding investigative work of Homeland Security Investigations and United States Citizenship and Immigration Services, and thanked the Federal Bureau of Investigation and the United States Department of Justice’s Executive Office for Immigration Review for their assistance.
This case is being prosecuted by the Office’s General Crimes Unit. Assistant U.S. Attorneys Nicholas W. Chiuchiolo, Alison G. Moe, and Robert B. Sobelman are in charge of the prosecution.
Montana Man Charged in Connection with $43 Million Fraud SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing today of an Indictment charging TODD CAPSER with defrauding one financial institution of $43 million, and attempting to defraud at least nine other financial institutions of between $46 million and $52 million each. CAPSER was arrested earlier today in Billings, Montana, and will be presented before Magistrate Judge Timothy J. Cavan of the District of Montana later this afternoon. The case is assigned to U.S. District Judge J. Paul Oetken of the Southern District of New York.
U.S. Attorney Geoffrey S. Berman said: “Todd Capser, as alleged, managed to mislead a Canadian financial institution into lending him more than $43 million, and tried to mislead other financial institutions into lending him tens of millions of dollars more, by creating mountains of false evidence of his solvency to represent himself as a legitimate business owner. Capser is now in custody and faces significant time in prison for his alleged crimes.”
FBI Assistant Director William F. Sweeney Jr. said: “Despite the fact that this was a $43 million fraud scheme, the alleged illegal conduct was fairly simple. Omitting key information and falsifying loan documents are violations of federal law. To make matters worse, Capser went so far as to claim his daughter was terminally ill in an effort to explain behavior that would have otherwise attracted negative attention. Capser took a significant risk by conducting himself in this way. Unfortunately for him, he miscalculated the reward.”
As alleged in the Indictment unsealed today:[1]
From January 2016 through April 2019, CAPSER and CAPSER’s father (“CC-1”) 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 and CC-1 attempted to induce at least nine other Financial Institutions to loan between $46 million and $52 million each to refinance the original loan.
CAPSER and CC-1 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, CC-1, and their 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.
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CAPSER, 47, of Billings, Montana, has been charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison. CAPSER has also been charged with one count of aggravated identity theft, which carries a mandatory sentence of two years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
The charges in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Mr. Berman praised the outstanding investigative work of the FBI. He also thanked the FBI’s Billings Resident Agency 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.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Rashan Michel Pleads Guilty in Manhattan Federal Court to Bribing Former Division I Men’s Basketball Coach Chuck PersonRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that RASHAN MICHEL, the owner of a bespoke clothing business in Atlanta, Georgia, pled guilty in Manhattan federal court today to agreeing to facilitate bribes from a financial adviser to Chuck Connors Person (“Person”), a former Auburn University men’s basketball coach. The bribes were provided in exchange for Person using his influence over Auburn basketball players to retain MICHEL’s services and the services of the financial adviser paying the bribes. MICHEL pled guilty before U.S. District Judge Loretta A. Preska.
Manhattan U.S. Attorney Geoffrey S. Berman said: “As he admitted today, Rashan Michel was paid to facilitate bribe payments from a financial adviser to college basketball coaches. His corruption of the system was significant but, sadly, far from unique. Indeed, in the last year this Office has convicted nine defendants in connection with fraud or bribery in the world of college basketball. We will continue to pursue those who offer or take bribes to influence student-athletes without regard to their interest.”
According to the Complaint, the Indictment, statements made in court, and publicly available documents:
In the fall of 2016, MICHEL, the founder and operator of a clothing store that specialized in making bespoke suits for professional athletes, met a financial adviser and business manager who, unbeknownst to MICHEL, was providing information to law enforcement (“CW-1”). MICHEL told CW-1 that MICHEL could introduce CW-1 to several college basketball coaches, including Person, who was then a men’s basketball coach at Auburn University, who would be willing to accept bribes from CW-1. MICHEL and CW-1 agreed to offer such bribes in return for the coaches’ agreeing to exert their influence over student-athletes to retain the services of Michel and CW-1 once the student-athletes entered the National Basketball Association (“NBA”).
In November 2016, MICHEL, who had a preexisting relationship with Person, arranged a meeting in Auburn, Alabama, to introduce CW-1 to Person and to broker the arrangement between CW-1 and Person whereby CW-1 would provide bribes to Person. At that meeting, in exchange for bribes, Person agreed to exert his influence over certain student-athletes Person coached at Auburn University to retain the services of CW-1 and MICHEL once those players entered the NBA. Over the next several months, in exchange for the bribes described above, Person did, in fact, arrange a meeting among CW-1, MICHEL and an Auburn student-athlete in Manhattan. At that meeting, Person falsely touted CW-1’s qualifications as a financial adviser and business manager without disclosing that Person was, in fact, being bribed to recommend CW-1 to the student-athlete. In connection with the bribery scheme, Person also steered the parent of a second student-athlete to CW-1.
In addition to brokering the bribery scheme with Person, MICHEL also solicited and received for himself tens of thousands of dollars in payments from CW-1 in exchange for introducing CW-1 to Person, and for promising to introduce CW-1 to other basketball coaches at NCAA Division I universities to engage in a similar bribery arrangement. Ultimately, MICHEL did introduce one member of a university athletics department to CW-1 for the purpose of engaging in a similar scheme. Working with MICHEL, CW-1 made payments to that individual, who in turn attempted to steer the parent of a student-athlete to CW-1.
In all, CW-1 paid more than $91,500 in bribes to Person, and paid MICHEL $24,000 for his role in the scheme.
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MICHEL, 44, of Atlanta, Georgia, pled guilty to one count of conspiracy to commit bribery. As a condition of his plea, MICHEL agreed to forfeit $24,000. The charge carries a maximum term of five years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. Sentencing is scheduled for September 18, 2019, before Judge Preska.
Mr. Berman praised the work of the Federal Bureau of Investigation and the Special Agents of the United States Attorney’s Office for the Southern District of New York.
The case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys Robert L. Boone, Aline R. Flodr, Noah Solowiejczyk, and Eli J. Mark are in charge of the prosecution.
Bronx Man Sentenced to 39 Months in Prison for Participating in Scheme to Take over Ride-Sharing Driver AccountsRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LOUIS PINA was sentenced to 39 months in prison for participating in a scheme to defraud drivers of two ride-sharing companies (“Company-1” and “Company-2”) by accessing those drivers’ accounts without authorization in order to divert driver funds to bank accounts controlled by PINA and other members of the scheme (the “Scheme”). PINA previously pled guilty to one count of conspiracy to commit access device fraud and one count of aggravated identity theft before U.S. District Judge Jed S. Rakoff, who imposed today’s sentence. PINA is the eighth defendant to have pled guilty in this case.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Louis Pina was a leader of a criminal consortium that deceived the drivers of two ride-sharing companies, enabling the criminals to access drivers’ accounts and steal millions of dollars. Hard-working men and women who worked long hours to make a living had their accounts hacked into and their hard-earned money stolen. Now Louis Pina is going to prison for his crimes.”
According to the Complaint, the Indictment to which PINA pled guilty, court filings, and statements made in public court proceedings:
PINA and his co-defendants defrauded livery drivers and ride-sharing companies using mobile ride-sharing applications. The Scheme targeted drivers associated with Company-1 and Company-2. Scheme members called Company-1 and Company-2 drivers posing as Company-1 and Company-2 representatives, and deceived the drivers into providing unique personal identifiers and other information that was then used to obtain unauthorized access into the online Company-1 and Company-2 driver accounts. Once members of the Scheme logged into Company-1 and Company-2 driver accounts without authorization, they altered information in those compromised accounts and diverted driver funds to bank accounts they controlled. PINA personally called Company-1 and Company-2 drivers to obtain their login credentials, hacked the accounts of Company-1 and Company-2 drivers, and recruited others into the Scheme. Scheme members compromised hundreds of Company-1 and Company-2 driver accounts and stole millions of dollars from Company-1 and Company-2 driver accounts.
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In addition to the prison term, Judge Rakoff ordered PINA, 24, of the Bronx, New York, to make court-ordered restitution in the amount of $198,663 to Company-1 and $243,112 to Company-2.
Mr. Berman praised the outstanding investigative work of the Special Agents of the United States Attorney’s Office for the Southern District of New York and the United States Secret Service. Mr. Berman further thanked the Westchester County District Attorney’s Office for their assistance and cooperation throughout this case, and also thanked the FBI’s Westchester County Safe Streets Task Force for their assistance.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Sheb Swett and Noah Solowiejczyk are in charge of the prosecution.
Westchester Man Sentenced to 19½ Years in White Plains Federal Court for Sex Trafficking of Minors and Child Pornography ProductionRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that VICTOR GONZALEZ was sentenced yesterday in White Plains federal court to 235 months in prison for sex trafficking of minors and production of child pornography. GONZALEZ pled guilty to these charges on January 24, 2019. United States District Judge Cathy Seibel imposed yesterday’s sentence.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Victor Gonzalez admitted to the reprehensible crimes of trafficking underage girls for his commercial benefit and producing child pornography of one of his victims. He will now serve over 19 years in prison, were he will not be able to harm any more children.”
FBI Assistant Director William F. Sweeney Jr. said: “It is our responsibility as a community to protect the vulnerable, and stop people like Mr. Gonzalez from ever harming girls again. However, the FBI needs your help and law enforcement cannot do this on our own. We work with dedicated detectives, community activists and charity organizations who do all they can to help these girls get away from these criminal and rebuild their lives. We also need help from the community. If you know of a young girl or boy in trouble, please contact the FBI at 212-384-1000.”
According to the Information and other filings in White Plains federal court:
From at least in or about 2014 to in or about June 2018, GONZALEZ engaged in the sex trafficking of three teenage girls (“Victim-1,” “Victim-2,” and “Victim-3”) for his own commercial benefit. GONZALEZ solicited Victim-1, who was approximately 14 or 15 years old, and Victim-2, who was approximately 15 or 16 years old, for sex in exchange for money. He met Victim-3, who was 17 years old, on an online dating website after he misrepresented himself as being in his 20’s. After establishing a relationship with each of the victims, GONZALEZ, using online services and the telephone, posted online advertisements for commercial sex services with the minor victims and arranged for the victims to engage in those services with adult men. He also transported the victims on numerous occasions to meet with those men in New York and Connecticut. GONZALEZ further sexually abused the victims himself. In addition, in or about January 2016, GONZALEZ produced a video containing child pornography of Victim-1, depicting GONZALEZ engaged in sexual activity with the victim.
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In addition to his prison term, GONZALEZ, 41, of Millwood, New York, was sentenced to 10 years of supervised release and restitution in an amount to be determined by the Court at a later date.
Mr. Berman praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, the Greenburgh Police Department, and the New Castle Police Department and thanked the Westchester County District Attorney’s Office and the White Plains Police Department for their assistance.
This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Jacqueline Kelly and Christopher Brumwell are in charge of the prosecution.
Manhattan Doctor Pleads Guilty to Illegally Distributing Oxycodone and Other DrugsRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOSEPH OLIVIERI, a physician who practiced in Manhattan, pled guilty today before U.S. District Judge Paul A. Crotty to participating in a conspiracy to illegally distribute oxycodone and other controlled substances. OLIVIERI’s co-defendant MATTHEW BRADY pled guilty on April 30, 2019, to his role in the conspiracy.
U.S. Attorney Geoffrey S. Berman said: “As he admitted today, Joseph Olivieri violated his oath to practice medicine for the sole purpose of improving his patients’ health and instead hid behind his medical license to sell addictive, dangerous narcotics. He put his peoples’ lives at risk to line his own pockets. He now faces time in prison for his crimes.”
According to the allegations in the Superseding Indictment, other court filings, and statements made during court proceedings:
OLIVIERI, a physician who practiced in New York, New York, participated in a five-year-long scheme to divert oxycodone and other controlled substances for illicit use. OLIVIERI was one of the top 15 prescribers of opioids in New York State during much of the diversion scheme. He prescribed over 250,000 pills of controlled substances, including highly addictive opioids such as oxycodone, oxymorphone, and morphine sulfate, to individuals he knew did not have a legitimate medical need for them. OLIVIERI was paid in cash for these prescriptions, often by other individuals, including co-defendant MATTHEW BRADY, who arranged with OLIVIERI for individuals posing as “patients” to obtain the prescriptions from OLIVIERI, and then collected the pills for their unlawful re-sale. Financial records show that OLIVIERI deposited more than $1 million in cash into his bank accounts during the scheme.
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OLIVIERI, 72, of Scranton, Pennsylvania, pled guilty to one count of conspiracy to distribute controlled substances outside the scope of professional practice and not for a legitimate medical purpose, which carries a maximum sentence of 20 years in prison. OLIVIERI is scheduled to be sentenced by Judge Crotty on August 5, 2019, at 11:00 a.m.
BRADY, 34, of Staten Island, New York, pled guilty on April 30, 2019, also before Judge Crotty, to one count of conspiracy to unlawfully distribute controlled substances, which carries a maximum sentence of 20 years in prison. BRADY is scheduled to be sentenced by Judge Crotty on July 30, 2019, at 11:30 a.m.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the defendants’ sentences will be determined by Judge Crotty.
Mr. Berman praised the outstanding investigative work of the New York City Police Department, United States Immigration and Customs Enforcement’s Homeland Security Investigations, the Federal Bureau of Investigation, and the Office of Inspector General of the United States Department of Health and Human Services.
The case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Tara La Morte, Robert B. Sobelman, and Daniel C. Richenthal are in charge of the prosecution.
Manhattan U.S. Attorney Announces Lawsuit Against Chestnut Petroleum Distributor, Inc., for Violations of the Resource Conservation and Recovery ActRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York (“SDNY”), and Peter D. Lopez, Regional Administrator of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States has filed a civil lawsuit against Chestnut Petroleum Distributor, Inc., and its affiliates CPD Energy Corp., CPD NY Energy Corp., Chestnut Mart of Gardiner, Inc., Chestnut Marts, Inc., Greenburgh Food Mart, Inc., Middletown Food Mart, Inc., and NJ Energy Corp. (collectively, “Defendants”), for violating the Resource Conservation and Recovery Act (“RCRA”) at 20 separate gas stations within the Southern District of New York and adjoining districts.
U.S. Attorney Geoffrey S. Berman stated: “As alleged in the complaint, Defendants repeatedly failed to comply with regulations designed to prevent gasoline leaks from threatening public health and the environment. Today’s lawsuit seeks to hold Defendants accountable for their conduct and ensure that the public is protected in the future.”
EPA Regional Administrator Peter D. Lopez said: “Failure to monitor and maintain tanks to prevent leaks can pose a serious safety risk, as the leaking underground tanks can release toxic components that can seep into the soil and the groundwater. This lawsuit seeks to hold the companies responsible for properly managing their tanks to reduce these risks where these gas stations are located.”
Petroleum products such as gasoline contain chemical compounds that pose substantial threats to human health. Service stations typically store gasoline in underground storage tanks. When operated conscientiously and monitored closely, underground storage tanks are a safe and effective means to store gasoline. But when those tanks are not subjected to basic operational safeguards, they can endanger the public and the environment, for example by leaking petroleum into the water supply, discharging toxic vapors into the air, or even triggering fires or explosions. EPA’s regulations under RCRA are designed to protect the public by requiring underground storage tank operators to reduce the likelihood of leaks, monitor for leaks so they can promptly be addressed, and maintain adequate insurance to conduct corrective action and compensate injured third parties when a leak occurs.
As alleged in the complaint filed in federal district court today, Defendants repeatedly violated RCRA and its related regulations at various times from 2011 to 2014. These violations included failing to perform release (i.e., leak or spill) detection, and failing to maintain and provide records of release detection monitoring. In some instances, Defendants failed to secure underground storage tanks that were temporarily closed, and failed to investigate or report suspected releases or unusual operating conditions. Defendants also failed at times to maintain insurance policies sufficient to take corrective action and compensate third parties for bodily injury and property damage caused by accidental releases arising from the operation of the underground storage tanks.
The lawsuit seeks injunctive relief and an order imposing civil penalties for Defendants’ violations.
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This case is being handled by the Office’s Environmental Protection Unit. Assistant United States Attorneys Christopher Connolly and Jennifer C. Simon are in charge of the case.
Arizona Man and Israeli Woman Charged in Connection with Providing Shadow Banking Services to Cryptocurrency ExchangesRead the Press Release
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 Jonathan D. Larsen, Acting Special Agent in Charge of the New York Office of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced the arrest today of REGINALD FOWLER on charges of bank fraud and operating an unlicensed money transmitting business. Bank fraud charges were also unsealed against co-conspirator RAVID YOSEF, who remains at large. FOWLER and YOSEF, who worked for several related companies that provided fiat-currency banking services to various cryptocurrency exchanges (the “Crypto Companies”), allegedly participated in a conspiracy in which FOWLER made numerous false and misleading statements to banks to open bank accounts that were used to receive deposits from individuals purchasing cryptocurrency, and in which FOWLER and YOSEF falsified electronic wire payment instructions to conceal the true nature of a voluminous cryptocurrency exchange business. Hundreds of millions of dollars flowed through the Crypto Companies’ accounts from banks located across the globe. FOWLER will be presented today in federal court in Phoenix, Arizona. The case is assigned to U.S. District Judge Andrew L. Carter Jr.
U.S. Attorney Geoffrey S. Berman said: “Reginald Fowler and Ravid Yosef allegedly ran a shadow bank that processed hundreds of millions of dollars of unregulated transactions on behalf of numerous cryptocurrency exchanges. Their organization allegedly skirted the anti-money laundering safeguards required of licensed institutions that ensure the U.S. financial system is not used for criminal purposes, and did so through lies and deceit. Thanks to the investigative work of the FBI and the IRS-CI, they will be prosecuted for their actions.”
FBI Assistant Director William F. Sweeney Jr. said: “Lying to banks and skirting the regulations put in place by the banking industry is a violation of federal law, a crime both Fowler and Yosef are charged with today. Taking it one step further, as alleged, Fowler himself directed the ebb and flow of significant amounts of money to and from these various bank accounts, despite the fact that he was not licensed to do so. May this be a reminder to all that there are consequences to engaging in fraudulent behavior and risky business practices.”
IRS-CI Acting Special Agent in Charge Jonathan D. Larsen said: “As this indictment shows, IRS-CI will continue to follow the money, no matter if it's virtual currency, to bring criminals to justice. This should serve as a warning to cyber-criminals who think they can hide behind virtual currency that IRS-CI is fully committed to unraveling these schemes.”
According to the allegations in the Indictment unsealed today[1]:
In or about 2018, REGINALD FOWLER, RAVID YOSEF, and others operated the Crypto Companies, and FOWLER opened and maintained bank accounts at various banks around the world on behalf of the Crypto Companies. One of the Crypto Companies markets itself as a company that allows clients to deposit and withdraw government-backed, or “fiat,” currency to numerous crypto exchanges, which are platforms where people can buy and sell cryptocurrency or “virtual currency.” Users of one particular crypto exchange (“Exchange-1”) deposited government-backed currency into a bank account of the Crypto Companies (“Account-1”) that was opened and maintained by FOWLER at a specific international bank (“Bank-1”). Although Exchange-1 advertised itself as providing required “know your customer” and anti-money laundering verification services in connection with Exchange-1’s platform, this was false with respect to the shadow banking services provided by FOWLER and YOSEF.
As described in the Indictment, FOWLER and YOSEF conspired to, and did, misrepresent the nature of the Crypto Companies’ business and falsely stated to Bank-1 that Account-1 would be used to process real estate investments. These misrepresentations also appeared on wire transfer instructions sent out from bank accounts opened and maintained by FOWLER and YOSEF, among others, on behalf of the Crypto Companies. Records from Bank-1 reveal that dozens of individuals from various countries wired millions of dollars into Account-1, and, at the same time, Account-1 also wired millions of dollars to other individuals and companies. Even though FOWLER was receiving and directing these monetary transactions, neither he nor any of the Crypto Companies were ever licensed as a money transmitting business, as required by federal law.
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FOWLER, 60, of Chandler, Arizona, and YOSEF, 36, of Tel Aviv, Israel, are each charged with one count of bank fraud and one count of conspiracy to commit bank fraud, each of which carries a maximum sentence of 30 years in prison. FOWLER is also charged with one count of operating an unlicensed money transmitting business and one count of conspiracy to do the same, each of which carries a maximum sentence of five years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Berman praised the outstanding investigative work of Special Agents from the FBI New York Money Laundering Investigations Squad and Special Agents from the IRS-CI.
The prosecution of this case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorneys Sheb Swett, David Zhou, and Jessica Fender are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Manhattan U.S. Attorney Announces Extradition of Pakistani Man for Attempted Heroin ImportationRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Christopher T. Tersigni, Special Agent in Charge of the United States Drug Enforcement Administration (“DEA”) Special Operations Division (“SOD”), announced today the extradition of MUHAMMAD KHALID KHAN for attempting to import heroin into the United States and laundering what he believed to be narcotics proceeds into the United States. KHAN was taken into custody by Nigerian authorities in Lagos, Nigeria, on February 9, 2019, and extradited to the United States today. He will be presented before United States Magistrate Judge Kevin Nathaniel Fox later today. An initial conference is scheduled before United States District Judge Vernon S. Broderick, to whom the case is assigned, for May 1, 2019.
U.S. Attorney Geoffrey Berman stated: “As alleged, Muhammad Khalid Khan was making high-level heroin deals to send multi-hundred kilogram shipments at a time to the United States. Unbeknownst to Khan, he was dealing with undercover law enforcement. The extradition of Khan from halfway around the world to face justice in New York is emblematic of this Office’s commitment to keep potentially deadly heroin out of our neighborhoods.”
DEA-SOD Special Agent in Charge Christopher T. Tersigni stated: “Khan’s extradition to the United States means he will no longer be able to ship poison into our communities. We look forward to bringing him to justice to answer for the crimes he is accused of.”
According to the allegations contained in the Complaint and Indictment,[1] which were unsealed today:
Beginning in October 2017, Khan, an Asia-based drug trafficker, began talking to and meeting with individuals who he believed were heroin traffickers interested in purchasing multi-kilogram quantities of heroin for importation into the United States and Australia. Those individuals were, in fact, an undercover foreign law enforcement agent, a confidential source working at the DEA’s direction, and an undercover DEA agent posing as a New York-based heroin distributor. Between approximately October 2017 and June 2018, Khan attempted to send hundreds of kilograms of heroin hidden in maritime shipping containers to New York City and Australia, and laundered hundreds of thousands of dollars of what he believed to be narcotics proceeds from Australia into the United States. In January 2018, Khan sold a four-kilogram heroin sample to the undercover agents, with the understanding that two kilograms of heroin would be sold in the United States, and two kilograms would be sold in Australia. Following the success of this sample shipment, KHAN planned to supply larger, multi-hundred kilogram quantities of heroin for importation to and distribution within the United States and Australia.
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The Indictment charges KHAN, 31, a citizen of Pakistan, in three counts: (1) attempting to import heroin into the United States, (2) international promotional money laundering, and (3) international concealment money laundering. If convicted, KHAN faces a maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years in prison on Count One, and a maximum sentence of 20 years on each of Counts Two and Three. The statutory minimum and maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Berman praised the outstanding investigative efforts of the DEA’s Special Operations Division’s Bilateral Investigations Unit, New York Field Division Organized Crime Drug Enforcement Strike Force, Financial Investigations Unit, and DEA Dallas Field Division; the DEA Dubai, Islamabad, Kabul, Lagos, New Delhi, and Canberra Country Offices, and the Sydney Resident Office; the United States Central Command; the Royal Canadian Mounted Police; the Government of Nigeria; and the Australian Criminal Intelligence Commission. The defendant’s arrest and subsequent extradition are also the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York and the Department of Justice’s Office of International Affairs.
The case is being prosecuted by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Rebekah Donaleski and Kimberly J. Ravener are in charge of the prosecution.
The allegations contained in the Complaint and the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and Indictment and the description of the Complaint and Indictment set forth below constitute only allegations and every fact described should be treated as an allegation.
Joseph Meli and James Siniscalchi Charged in Manhattan Federal Court with Securities and Wire Fraud for Participating in A Broadway Ticket Resale Investment Fraud SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JOSEPH MELI and JAMES SINISCALCHI were charged this morning with securities fraud, wire fraud, and conspiracy to commit securities and wire fraud, stemming from their participation in a fraudulent Broadway ticket investment scheme wherein MELI and SINISCALCHI purported to use investor funds to purchase tickets to Broadway shows for resale on the secondary market, but instead appropriated investment funds for their personal use.
SINISCALCHI was arrested this morning and is expected to be presented today in Magistrate Court before the Hon. Kevin N. Fox. MELI is presently incarcerated following his conviction in a prior federal case and will be presented when he arrives in the District.
U.S. Attorney Geoffrey S. Berman said: “As alleged, Joseph Meli and James Siniscalchi engaged in a scheme to defraud investors by lying about purported access to blocks of Broadway tickets. As alleged, the acting was all done by the defendants, who posed as legitimate businessmen but appropriated the money they said would be invested in theatre tickets.”
According to the Complaint[1] unsealed today in Manhattan federal court and the Indictment and statements made in court proceedings related to MELI’s prior conviction:
Beginning in at least March 2017 through in or about April 2018, MELI and SINISCALCHI falsely represented to partners in a business entity (the “Entertainment Company”), that MELI and SINISCALCHI owned a large number of tickets to live events, or intended to purchase a large number of tickets to live events, and would sell those tickets to the Entertainment Company using investor money the Entertainment Company had solicited for the purpose of reselling those tickets on the secondary market for profit. Representatives of the Entertainment Company, in reliance on statements made by MELI and SINISCALCHI, represented to investors that investor funds would be used to purchase bulk tickets to live shows, and promised investors a share of these profits. In fact, MELI and SINISCALCHI failed to invest the investor monies as promised, but rather diverted investor monies to their own personal use, including sending $455,000 to a close relative of MELI’s, and $105,000 to a residential management company that managed an apartment MELI was leasing.
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SINISCALCHI, 46, of New York, New York, and MELI, 44, of New York, New York, are each charged with one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, and one count of wire fraud. The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. The maximum potential sentences in this case 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 Special Agents from the U.S. Attorney’s Office for the Southern District of New York and thanked the Securities and Exchange Commission for its assistance.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Sarah Mortazavi is in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Former S&P Analyst Convicted in Insider Trading SchemesRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that SEBASTIAN PINTO-THOMAZ, a former credit ratings analyst at Standard & Poor’s, was convicted today of participating in two schemes to trade on material, nonpublic information in advance of the Sherwin-Williams Company’s acquisition of the Valspar Corporation, following a seven-day jury trial before U.S. District Judge Jed S. Rakoff.
U.S. Attorney Geoffrey Berman said: “Sebastian Pinto-Thomaz stole confidential information from his employer and passed it to two men he had known for years – and he did it for his own personal benefit. While the defendant attempted to blame his mother for this conduct at trial, as a unanimous jury found, it was Pinto-Thomaz who committed insider trading.”
According to the evidence presented during the trial and statements made in related court filings and proceedings:
Rating Evaluation Services and the Insider
When a company announces an acquisition, the acquiring company often seeks the opinion of a credit rating agency regarding the potential impact that the acquisition could have on the acquiring company’s creditworthiness. Therefore, companies often contact rating agencies before an acquisition is publicly announced. All the major rating agencies offer a service – sometimes known as a Rating Evaluation Service (“RES”) – that provides the company with a rating committee decision with respect to a proposed acquisition.
In March 2016, Standard and Poor’s (“S&P”), a credit rating agency in New York, New York, assigned SEBASTIAN PINTO-THOMAZ, a credit ratings analyst, to work on a RES for the Sherwin-Williams Company (“Sherwin-Williams”) in advance of its contemplated but unannounced acquisition of the Valspar Corporation (“Valspar”). In connection with this assignment, PINTO-THOMAZ received material, nonpublic information (the “Inside Information”) about Sherwin-Williams’s planned acquisition of Valspar prior to the public announcement of the acquisition. S&P’s written policies prohibited the unauthorized disclosure of confidential information, which included the Inside Information. During his tenure at S&P, PINTO-THOMAZ reviewed and certified his duties of loyalty and confidentiality to S&P and its clients.
The Insider Trading Scheme
In March 2016, PINTO-THOMAZ misappropriated the Inside Information about Sherwin-Williams’s acquisition of Valspar and passed it to Jeremy Millul, his friend, and Abell Oujaddou, his hairdresser, so that they could use it to make profitable trades in Valspar stock and options. On March 21, 2016, the first trading day after the public announcement of the acquisition, the price of Valspar stock increased approximately 23 percent over the prior day’s close.
Millul is a Manhattan jeweler who had a close personal friendship with PINTO-THOMAZ. After receiving a tip about the impending Valspar deal from PINTO-THOMAZ, Millul opened a brokerage account on March 13, 2016, and shortly thereafter purchased 480 shares of Valspar common stock. On March 18, 2016, the last trading day before the acquisition was publicly announced, Millul also purchased 75 out-of-the-money Valspar call options. After the acquisition was publicly announced, Millul sold his Valspar stock and options for approximately $106,806 in profits.
Oujaddou is a Manhattan hairstylist and salon owner who has known PINTO-THOMAZ for years, and who is close friends with PINTO-THOMAZ’s mother. During a haircut on March 8, 2016, or March 9, 2016, PINTO-THOMAZ provided Oujaddou with the Inside Information about the impending Valspar deal in exchange for a portion of his trading profits. Then, from March 10, 2016, through March 18, 2016, Oujaddou, who had never previously purchased Valspar or Sherwin-Williams securities, used the Inside Information he had received from PINTO-THOMAZ to purchase 8,630 shares of Valspar stock. After the acquisition was publicly announced, Oujaddou sold his Valspar shares for approximately $192,080 in profits. Following his successful trading, Oujaddou met PINTO-THOMAZ in the paint aisle of a hardware store and paid him a kickback.
Later, in June 2016, the Financial Industry Regulatory Authority (“FINRA”) sent S&P a list of individuals and entities that had traded in Valspar in advance of the public announcement of the acquisition (the “List”). S&P forwarded the List to its employees who had worked on the Sherwin-Williams RES, including PINTO-THOMAZ, asking the employees to respond by stating whether they had a past or present relationship with any individual or entity on the List. Although both Oujaddou and Millul were on the List, PINTO-THOMAZ denied having a relationship with anyone on the List.
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SEBASTIAN PINTO-THOMAZ, 32, of New York, New York, was convicted of two counts of conspiracy to commit securities fraud and two counts of securities fraud. The conspiracy counts each carry a maximum prison term of five years; the securities fraud counts each carry a maximum sentence of 20 years. The securities fraud charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court.
PINTO-THOMAZ is scheduled to be sentenced before Judge Rakoff on July 29, 2019, at 4:00 p.m.
Abell Oujaddou and Jeremy Millul each previously pled guilty and await sentencing before Judge Rakoff.
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 Christine I. Magdo and Andrew Thomas are in charge of the prosecution.
Nine Defendants Arrested in New York, Florida, and Texas for Multimillion-Dollar Wire Fraud SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James C. Spero, Special Agent in Charge of the Tampa, Florida, Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today that nine defendants, OLUWASEUN ADELEKAN, a/k/a “Sean Adelekan,” OLALEKAN DARAMOLA, SOLOMON ABUREKHANLEN, GBENGA OYENEYIN, ABIOLA OLAJUMOKE, TEMITOPE OMOTAYO, BRYAN EADIE, ALBERT LUCAS, and ADEMOLA ADEBOGUN, were arrested for defrauding businesses and individuals of more than $3.5 million through business email compromises, a Russian oil scam, and a romance scam.
U.S. Attorney Geoffrey S. Berman said: “As alleged, these defendants deployed three different email schemes to defraud their victims. The common denominator in all three schemes was the defendants’ alleged fleecing of their victims through fictitious online identities. The schemes allegedly earned the defendants $3.5 million – and also arrests on federal felony charges.”
HSI Special Agent-in-Charge James C. Spero said: “A transnational criminal organization allegedly conducting illicit domestic and international wire fraud has been dismantled thanks to the hard work of HSI Tampa and Special Agents from the U.S. Attorney’s Office for the Southern District of New York. This case illustrates the unique investigative authority and international reach of HSI.”
As alleged in the Indictment[1] unsealed today from at least in or about July 2016, up to and including the present, the defendants participated in a scheme to defraud businesses and individuals through several categories of false and misleading representations, including but not limited to:
- Sending victims email messages that appeared to be, but were not, from legitimate business counterparties that included instructions to the victims to wire payment to those seemingly legitimate business counterparties into bank accounts that were actually under the control of, and/or maintained by, ADELEKAN, DARAMOLA, ABUREKHANLEN, OYENEYIN, OLAJUMOKE, OMOTAYO, EADIE, LUCAS, and ADEBOGUN (the “Business Email Compromise Scam”);
- Sending email messages and text messages to at least one victim offering an opportunity to invest in oil stored in Russian oil tank farms conditioned on that victim wiring upfront payments into bank accounts purportedly affiliated with the purported oil investment but actually opened by and under the control of ABUREKHANLEN, OLAJUMOKE, and OYENEYIN (the “Russian Oil Scam”); and
- Sending email messages and text messages to at least one victim from an individual (or individuals) purporting to be a female with romantic intentions toward the victim requesting, further to establishing a romantic relationship, the wiring of payment into a bank account under the control of OMOTAYO (the “Romance Scam”).
In reliance on the foregoing false and misleading representations, the victims of the Business Email Scam, Russian Oil Scam, and Romance Scam wired or otherwise transferred in excess of $3.5 million into bank accounts opened in the names of shell companies and under the control of and/or maintained by the defendants.
ABUREKHANLEN was arrested yesterday, April 24, 2019, in the Bronx, New York, and will be presented before U.S. Magistrate Judge Henry B. Pitman today. ADELEKAN, OMOTAYO, LUCAS, EADIE, and ADEBOGUN were arrested earlier this morning in New York, New York, and will also be presented today before Judge Pitman. OLAJUMOKE and OYENEYIN were arrested earlier this morning in Florida and will be presented in the Southern District of Florida later today. DARAMOLA was arrested earlier this morning in Texas and will be presented in the Western District of Texas later today.
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The defendants are each charged in the Indictment with one count of conspiring to commit wire fraud. Each defendant faces a maximum potential sentence of 20 years in prison. A chart containing names, age, place of residence, and nationality of the defendants is set forth below.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Berman praised the outstanding investigative work of the Special Agents from the U.S. Attorney’s Office for the Southern District of New York and HSI.
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 Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Defendant
Age
Place of Residence
Oluwaseun “Sean” Adelekan
36
New York, New York
Olalaken Daramola
35
Austin, Texas
Solomon Aburekhanlen
32
New York, New York
Gbenga Oyeneyin
32
Aventura, Florida
Abiola Olajumoke
46
Aventura, Florida
Temitope Omotayo
36
New York, New York
Bryan Eadie
35
New York, New York
Albert Lucas
29
New York, New York
Ademola Adebogun
38
New York, New York
[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.
Operator of Online Retailer Sentenced in Manhattan Federal Court for Running Fraudulent Eyewear BusinessRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that VITALY BORKER was sentenced today in Manhattan federal court to two years in prison for one count of mail fraud, one count of wire fraud, and one count of conspiracy to commit mail and wire fraud in connection with his operation of the eyewear retail and repair website Opticsfast.com.
BORKER pled guilty on March 20, 2018, before U.S. District Judge Paul G. Gardephe, who imposed today’s sentence.
Manhattan U.S. Attorney Geoffrey S. Berman stated: “Vitaly Borker twice perpetrated criminal schemes involving the online sale and repair of eyewear, and today he was rightfully sentenced to prison for a second time. Perhaps his second stint in federal prison will impress upon this shady businessman that seeking to make money by fraud and intimidation is a path to prison and not success.”
According to allegations made in the Complaint and Indictment to which BORKER pled guilty, as well as statements made in court proceedings:
BORKER founded Opticsfast.com in 2011 as an e-commerce eyeglass retail and repair business. From at least 2011 through 2017, the defendant conducted a scheme to defraud individuals by inducing them to send their glasses to Opticsfast.com for repairs, then demanded exorbitant fees for repairs or return shipping, intimidated and harassed customers who requested refunds by subjecting them to a campaign of abusive emails and text messages, and threatened to discard glasses when customers disputed the fees. In furtherance of the scheme, the defendant posted material false statements on Opticsfast.com’s website, falsely claiming the company used in-house laboratories staffed by trained technicians to perform repair work. BORKER launched and operated Opticsfast.com after he was charged in a federal criminal case for his fraudulent operation of another eyewear retail and repair website, Decormyeyes.com, for which he was ultimately convicted and sentenced in a separate case. BORKER continued his involvement in Opticsfast.com from prison even after he was incarcerated, and following his release from prison.
* * *
BORKER, 42, of Brooklyn, New York, was sentenced to two years in prison, to be followed by three years of supervised release, a $50,000 fine, and a $300 special assessment.
Mr. Berman praised the outstanding investigative work of the New York Office of the U.S. Postal Inspection Service.
This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Sarah Mortazavi, Jeffrey Coffman, Danielle Sasoon, and Nicholas Roos are in charge of the prosecution.
Manhattan U.S. Attorney and DEA Announce Charges Against Rochester Drug Co-Operative and Two Executives for Unlawfully Distributing Controlled SubstancesRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Ray Donovan, the Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), announced today criminal charges against Rochester Drug Co-Operative, Inc. (“RDC”), one of the 10 largest pharmaceutical distributors in the United States; Laurence F. Doud III, the company’s former chief executive officer; and William Pietruszewski, the company’s former chief compliance officer, for unlawfully distributing oxycodone and fentanyl, and conspiring to defraud the DEA. Mr. Berman’s Office also filed a lawsuit against RDC for its knowing failure to comply with its legal obligation to report thousands of suspicious orders of controlled substances to the DEA.
Mr. Berman also announced an agreement (the “Agreement”) and consent decree under which RDC agreed to accept responsibility for its conduct by making admissions and stipulating to the accuracy of an extensive Statement of Facts, pay a $20 million penalty, reform and enhance its Controlled Substances Act compliance program, and submit to supervision by an independent monitor. Assuming RDC’s continued compliance with the Agreement, the Government has agreed to defer prosecution for a period of five years, after which time the Government will seek to dismiss the charges. The consent decree is subject to final approval by the court.
U.S. Attorney Geoffrey S. Berman said: “This prosecution is the first of its kind: executives of a pharmaceutical distributor and the distributor itself have been charged with drug trafficking, trafficking the same drugs that are fueling the opioid epidemic that is ravaging this country. Our Office will do everything in its power to combat this epidemic, from street-level dealers to the executives who illegally distribute drugs from their boardrooms.”
DEA Special Agent in Charge Ray Donovan said: “Today’s charges should send shock waves throughout the pharmaceutical industry reminding them of their role as gatekeepers of prescription medication. The distribution of life-saving medication is paramount to public health; similarly, so is identifying rogue members of the pharmaceutical and medical fields whose diversion contributes to the record-breaking drug overdoses in America. DEA investigates DEA Registrants who divert controlled pharmaceutical medication into the wrong hands for the wrong reason. This historic investigation unveiled a criminal element of denial in RDC’s compliance practices, and holds them accountable for their egregious non-compliance according to the law.”
According to the documents filed today in Manhattan federal court[1]:
Violations of the Federal Narcotics Laws
From 2012 through March 2017, as alleged, RDC knowingly and intentionally violated the federal narcotics laws by distributing dangerous, highly addictive opioids to pharmacy customers that it knew were being sold and used illicitly. At the direction of its senior management, including Doud and Pietruszewski, RDC supplied large quantities of oxycodone, fentanyl, and other dangerous opioids to pharmacy customers that its own compliance personnel determined were dispensing those drugs to individuals who had no legitimate medical need for them. RDC distributed controlled substances to those pharmacies even after identifying “red flags” of diversion, including dispensing highly abused controlled substances in large quantities; dispensing primarily controlled substances; dispensing quantities of controlled substances in amounts consistently higher than accepted medical standards; accepting a high percentage of cash for controlled substance prescriptions; dispensing to out-of-state patients; and filling controlled substances prescriptions issued by practitioners acting outside the scope of their medical practice, under investigation by law enforcement, or on RDC’s “watch list.” In addition, and at Doud’s direction, RDC frequently brought on pharmacy customers that had been terminated by other distributors.
RDC’s employees, including in conversations with Doud and Pietruszewski, described some of the company’s customers as “very suspicious,” and even characterized particular pharmacies as a “DEA investigation in the making” or “like a stick of dynamite waiting for [the] DEA to light the fuse.” Nonetheless, throughout the period in question, RDC, at the direction of Doud, increased its sales of oxycodone and fentanyl exponentially. From 2012 to 2016, RDC’s sales of oxycodone tablets grew from 4.7 million to 42.2 million – an increase of approximately 800 percent – and during the same period RDC’s fentanyl sales grew from approximately 63,000 dosages in 2012 to over 1.3 million in 2016 – an increase of approximately 2,000 percent. During that same time period, Doud’s compensation increased by over 125 percent, growing to over $1.5 million in 2016.
Conspiracy to Defraud the DEA
From 2012 through March 2017, as alleged, RDC took steps to conceal its illicit distribution of controlled substances from the DEA and other law enforcement authorities. Among other things, RDC made the deliberate decision not to investigate, monitor, or report to the DEA pharmacy customers that it knew were diverting controlled substances for illegitimate use. Because it knew that reporting these pharmacies would likely result in the DEA investigating and shutting down its customers, RDC’s senior management, including Doud, directed the company’s compliance department – and in particular Pietruszewski – not to report them, and instead to continue supplying those customers with dangerous controlled substances that the company knew were being dispensed and used for illicit purposes. Among other things, pursuant to Doud’s instructions, and contrary to the company’s representations to the DEA, RDC opened new customer accounts without conducting due diligence, and supplied those customers – some of whom had been terminated by other distributors – with dangerous controlled substances.
Additionally, RDC knowingly and willfully avoided filing suspicious order reports with the DEA as required by law. Between 2012 through 2016, the company identified approximately 8,300 potentially suspicious “orders of interest,” including thousands of oxycodone orders, but the company reported only four suspicious orders to the DEA. As alleged, RDC did not report suspicious orders in order to protect the profit being generated by customers dispensing large quantities of controlled substances. As a result, the DEA’s ability to identify and prevent the illicit dispensing of highly addictive controlled substances by several of RDC’s pharmacy customers was impeded.
* * *
ROCHESTER DRUG CO-OPERATIVE, INC., is a wholesale distributor of pharmaceutical products, including controlled substances, headquartered in Rochester, New York. It is one of the nation’s 10 largest distributors of pharmaceutical products – and the fourth largest in the New York area – with over 1,300 pharmacy customers and over $1 billion in revenue per year. RDC has been charged in an Information with conspiracy to violate the narcotics laws, conspiracy to defraud the United States, and willfully failing to file suspicious order reports. RDC has also been sued in a civil complaint for its failure to file suspicious order reports.
LAURENCE F. DOUD III, 75, of New Smyrna, Florida, has been charged with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years, and one count of conspiracy to defraud the United States, which carries a maximum prison term of five years.
WILLIAM PIETRUSZEWSKI, 53, of Oak Ridge, New Jersey, has been charged with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of life in prison and a mandatory minimum prison term of 10 years; one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison; and one count of willfully failing to file suspicious order reports with the DEA, which carries a maximum sentence of one year in prison. PIETRUSZEWSKI pled guilty to these charges, pursuant to a cooperation agreement, on April 19, 2019.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Berman praised the investigative work of the DEA’s Westchester Tactical Diversion Team, comprising Special Agents, Diversion Investigators, and Task Force Officers from the DEA, Westchester County Police Department, Town of Orangetown Police Department, Rockland County Sheriff’s Office, Woodbury Police Department, Yonkers Police Department, New Windsor Police Department, and Putnam County Sheriff’s Office.
The criminal cases are being handled by the Narcotics Unit of the Office’s Criminal Division. Assistant U.S. Attorneys Stephanie Lake, Louis Pellegrino, Nicolas Roos, and Alexandra Rothman are in charge of the prosecutions. The civil case against RDC is being handled by the Office’s Civil Division. Assistant U.S. Attorneys Jacob M. Bergman and Jeffrey K. Powell are in charge of the case.
The charges contained in the Doud Indictment and RDC Information are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment against Doud and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Members of Violent Bronx Gang Charged in Manhattan Federal Court with Racketeering, Narcotics, and Firearms OffensesRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing today of an Indictment charging 11 members and associates of the 2200 Morris Avenue Crew with various racketeering, firearms, and narcotics offenses, and charging an additional three defendants with narcotics and firearms offenses. ADONIS RAMIREZ, a/k/a “Frenchie,” is also charged with a September 28, 2017, attack on Charles DelToro that resulted in DelToro’s death on October 4, 2017.
Eight of the defendants, ADONIS RODRIGUEZ, a/k/a “Crazy,” a/k/a “Locotron,” JONATHAN ESPINAL, a/k/a “Twin,” DERIAN DEL CARMEN, a/k/a “Mel,” ELVIN PEREZ, a/k/a “Choco,” YISANDER RAMIREZ, a/k/a “Bean,” MARIO DELOSSANTOS, and DANIEL GONZALEZ were taken into custody last night and this morning. They will be presented and arraigned before U.S. Magistrate Judge Barbara C. Moses later today. Five of the defendants, ADONIS RAMIREZ, a/k/a “Frenchie,” DAVID GARCIA, a/k/a “Clippa,” BRANDON ESTEVEZ, a/k/a “Boppy,” JONATHAN MALDONADO, a/k/a “Tego,” and LOUIS RIVERA are currently incarcerated in state custody on other charges, and will be presented at a later date. JEFFREY ESTEVEZ, a/k/a “J,” was already in federal custody, having been previously charged in federal court with narcotics trafficking. JOSUE SANCHEZ, a/k/a “V,” remains at large. The case is assigned to U.S. District Judge Deborah A. Batts.
U.S. Attorney Geoffrey S. Berman said: “As alleged, members of the 2200 Morris Avenue Crew wreaked havoc in the Bronx, engaging in brazen acts of violence, including murder and multiple attempted murders, as well as narcotics trafficking. Thanks to the extraordinary work of the NYPD, the defendants will now face justice in federal court.”
As alleged in the Indictment unsealed today in Manhattan federal court[1]:
The 2200 Morris Avenue Crew was a criminal enterprise involved in committing numerous acts of violence, including shootings, robberies, and assaults in the Bronx. Members and associates of the 2200 Morris Avenue Crew engaged in violence to retaliate against rival gangs, to promote the standing and reputation of their gang, and to protect the gang’s narcotics business. Members and associates of the 2200 Morris Avenue Crew enriched themselves by selling drugs, such as heroin, crack cocaine, cocaine, and marijuana.
The Indictment charges BRANDON ESTEVEZ, ADONIS RAMIREZ, GARCIA, RODRIGUEZ, ESPINAL, DEL CARMEN, JEFFREY ESTEVEZ, MALDONADO, PEREZ, YISANDER RAMIREZ, and SANCHEZ with participating in a racketeering conspiracy. Count Two of the Indictment charges ADONIS RAMIREZ with the murder in aid of racketeering of Charles DelToro. Counts Three and Four charge BRANDON ESTEVEZ, MALDONADO, and PEREZ with participating in an attempted murder in aid of racketeering for a shooting of a rival gang member on February 11, 2018, and a related firearms offense. Counts Five and Six charge JEFFREY ESTEVEZ with participating in an attempted murder in aid of racketeering for a shooting on May 25, 2018, and a related firearms offense. Count Seven charges DEL CARMEN, MALDONADO, and RODRIGUEZ with attempted murder in aid of racketeering for a stabbing that occurred on June 19, 2018. Count Eight charges ESPINAL with attempted murder in aid of racketeering. Counts Nine and Ten charge SANCHEZ, YISANDER RAMIREZ, GARCIA, and DEL CARMEN with attempted murder in aid of racketeering for a shooting that occurred on March 24, 2019, and a related firearms offense. Count Eleven charges all of the defendants with a narcotics trafficking conspiracy. Count Twelve charges all of the defendants with possessing and using firearms in furtherance of the narcotics trafficking conspiracy charged in Count Eleven.
* * *
Charts containing the names, ages, charges, and maximum penalties for the defendants are set forth below. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Berman praised the outstanding investigative work of the NYPD. He also thanked the Special Agents of the United States Attorney’s Office for the Southern District of New York for their assistance in the investigation.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Karin Portlock and Jacob Warren are in charge of the prosecution.
The charges contained in the Indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
COUNT
CHARGE
DEFENDANTS
MAX. PENALTIES
1
Racketeering conspiracy
18 U.S.C. § 1962(d)
JEFFREY ESTEVEZ (24)
ADONIS RAMIREZ (24)
DAVID GARCIA (19)
ADONIS RODRIGUEZ (24)
JONATHAN ESPINAL (25) DERIAN DEL CARMEN (23) BRANDON ESTEVEZ (24)
JONATHAN MALDONADO (22)
ELVIN PEREZ (24)
YISANDER RAMIREZ (21)
JOSUE SANCHEZ (25)
Life in prison
2
Murder in aid of racketeering
18 U.S.C. § 1959
ADONIS RAMIREZ
Death or mandatory minimum of life in prison
3
Attempted murder in aid of racketeering
18 U.S.C. § 1959
BRANDON ESTEVEZ JONATHAN MALDONADO
ELVIN PEREZ
10 years in prison
4
Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a crime of violence, which firearm was discharged
18 U.S.C. § 924(c)
BRANDON ESTEVEZ JONATHAN MALDONADO
ELVIN PEREZ
Life in prison
Mandatory minimum of 10 years in prison
5
Attempted murder in aid of racketeering
18 U.S.C. § 1959
JEFFREY ESTEVEZ
10 years in prison
6
Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a crime of violence, which firearm was discharged
18 U.S.C. § 924(c)
JEFFREY ESTEVEZ
Life in prison
Mandatory minimum of 10 years in prison
7
Assault and attempted murder in aid of racketeering
18 U.S.C. § 1959
DERIAN DEL CARMEN
JONATHAN MALDONADO
ADONIS RODRIGUEZ
20 years in prison
8
Assault and attempted murder in aid of racketeering
18 U.S.C. § 1959
JONATHAN ESPINAL
20 years in prison
9
Attempted murder in aid of racketeering
18 U.S.C. § 1959
JOSUE SANCHEZ
YISANDER RAMIREZ
DAVID GARCIA
DERIAN DEL CARMEN
10 years in prison
10
Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a crime of violence, which firearm was discharged
18 U.S.C. § 924(c)
JOSUE SANCHEZ
YISANDER RAMIREZ
DAVID GARCIA
DERIAN DEL CARMEN
Life in prison
Mandatory minimum of 10 years in prison
11
Narcotics trafficking conspiracy
21 U.S.C. § 846
JEFFREY ESTEVEZ
ADONIS RAMIREZ
DAVID GARCIA
ADONIS RODRIGUEZ
JONATHAN ESPINAL
DERIAN DEL CARMEN BRANDON ESTEVEZ
JONATHAN MALDONADO
ELVIN PEREZ
YISANDER RAMIREZ
JOSUE SANCHEZ
MARIO DELOSSANTOS (52)
DANIEL GONZALEZ (22)
LOUIS RIVERA (53)
Life in prison
Mandatory minimum of 10 years in prison
12
Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a narcotics trafficking crime
18 U.S.C. § 924(c)
JEFFREY ESTEVEZ
ADONIS RAMIREZ
DAVID GARCIA
ADONIS RODRIGUEZ
JONATHAN ESPINAL
DERIAN DEL CARMEN BRANDON ESTEVEZ
JONATHAN MALDONADO
ELVIN PEREZ
YISANDER RAMIREZ
JOSUE SANCHEZ
MARIO DELOSSANTOS
DANIEL GONZALEZ
LOUIS RIVERA
Life in prison
Mandatory minimum of five years in prison
[1] As the introductory phrase signifies, the entirety of the text of the Indictment constitutes only allegations, and every fact described herein should be treated as an allegation.
Sex Trafficker Sentenced in Manhattan Federal Court to 30 Years in Prison for Victimizing Minor Girls and Adult Women for Nearly 20 YearsRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GREVY GERARD PIERRE-LOUIS, a/k/a “Cadillac Slim,” a/k/a “Caddy,” was sentenced to 30 years in prison for conspiracy to commit sex trafficking and conspiracy to transport minors interstate for the purpose of prostitution. PIERRE-LOUIS pled guilty on September 6, 2018 before Chief U.S. District Judge Colleen McMahon, who imposed today’s sentence.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Grevy Gerard Pierre-Louis spent almost 20 years engaged in depraved and extraordinarily violent sex trafficking of minor girls and adult women. As a result, he will now spend the next 30 years in prison. Our hope is that the brave survivors of the defendant’s heinous crimes will find a measure of justice in today’s sentence.”
Chief Judge Colleen McMahon called today’s sentence “just punishment for the ruination of all of those lives.”
According to the Indictment, Superseding Information, publicly-filed documents, and statements made in court:
Starting in 1998 and continuing through 2016, PIERRE-LOUIS compelled his victims to engage in prostitution through extreme violence, psychological and verbal abuse, coercion, and threats of violence to them and their family members. PIERRE-LOUIS victimized at least nine girls and women in numerous states, all for his own profit.
PIERRE-LOUIS employed a variety of criminal methods to compel his victims to engage in prostitution. He used physical violence, sexual assault, threats of physical violence, threats of deportation, emotional and psychological abuse, and threats against family members. For example, in addition to severe beatings and rapes, at various points he had his victims branded with tattoos; he hung one victim out a window; and he caused victims to kneel on dry rice so as to inflict severe pain. The defendant kept all of the proceeds of his victims’ trafficking.
* * *
In addition to the prison term, PIERRE-LOUIS, 47, of Queens, New York, was sentenced to 10 years of supervised release and ordered to pay restitution to his victims.
Mr. Berman praised the outstanding investigative work of the FBI. Mr. Berman also thanked the New York City Police Department, the U.S. Attorney’s Office for the Southern District of Florida, the Miami Field Office of the FBI, the United States Secret Service, the City of Miami Police Department, the Miami Beach Police Department, and the Miramar Police Department for their cooperation throughout the investigation.
The prosecution is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Amanda Kramer and Jessica K. Fender are in charge of the prosecution.
Guatemalan Presidential Candidate Charged with Conspiring to Import Cocaine into the United States and Related Firearms OffenseRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Adolphus P. Wright, Special Agent in Charge of the Miami Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that Guatemalan presidential candidate MARIO AMILCAR ESTRADA ORELLANA (“ESTRADA”) and JUAN PABLO GONZALEZ MAYORGA (“GONZALEZ”) have been charged in Manhattan federal court with conspiring to import cocaine into the United States and a related weapons offense of conspiring to use and possess machineguns. ESTRADA and GONZALEZ were arrested earlier today in Miami, Florida, and will appear tomorrow before United States Magistrate Judge Jonathan Goodman in Miami federal court.
Manhattan U.S. Attorney Geoffrey S. Berman said: “As alleged, Estrada and Gonzalez conspired to solicit Sinaloa Cartel money to finance a corrupt scheme to elect Estrada president of Guatemala. In return, the two allegedly promised to assist the cartel in using Guatemalan ports and airports to export tons of cocaine into the U.S. As further alleged, Estrada and Gonzalez attempted to arrange the assassinations of political rivals. Thanks to the DEA, Estrada stands no chance of election in Guatemala, but he and Gonzalez face justice in the United States.”
DEA Special Agent in Charge Adolphus P. Wright said: “The DEA Miami Field Division is very happy with the arrests of Mario Estrada Orellana and Juan Gonzalez Mayorga. Today’s action is the direct result of the strong partnership with our Guatemalan counterparts. Together with our international law enforcement partners, we will continue our efforts to keep illegal drug trafficking from corrupting the just political systems of our Central and South American neighbors, as we also endeavor to prevent such activity from harming the United States.”
As alleged in the Complaint unsealed today in federal court:[1]
Since in or about December 2018, the DEA has been investigating several individuals (the “Estrada Conspiracy”) who attempted to solicit funding from international drug cartels to support ESTRADA’s presidential campaign (the “Estrada Campaign”). During certain of these negotiations, members of the Estrada Conspiracy, including ESTRADA and GONZALEZ, interacted with purported members and associates of the Sinaloa Cartel – a powerful international drug-trafficking organization based in Mexico – who were, in fact, confidential sources (the “CSes”) acting at the DEA’s direction.
During the course of these meetings and other communications, some of which were video and audio recorded, ESTRADA and GONZALEZ requested millions of dollars in drug proceeds from the Sinaloa Cartel to support the Estrada Campaign. In exchange for financial support from the Sinaloa Cartel, ESTRADA and GONZALEZ agreed that if ESTRADA were elected president of Guatemala, ESTRADA would provide Guatemalan state-sponsored support to the Sinaloa Cartel’s drug trafficking activities. Among other things, ESTRADA and GONZALEZ agreed to provide the Sinaloa Cartel with unfettered access to Guatemalan airports and maritime shipping locations so that the cartel could transport ton quantities of cocaine through Guatemala and ultimately into the United States. ESTRADA also offered to appoint members of the Sinaloa Cartel to high-ranking government positions in Guatemala so that the CSes would be positioned to advance the Sinaloa Cartel’s drug trafficking activities.
ESTRADA and GONZALEZ also directed the CSes to hire hitmen to assassinate political rivals to ensure that ESTRADA was elected president of Guatemala. In particular, ESTRADA and GONZALEZ identified specific targets by name and agreed to provide the hitmen with firearms, including AK-47s, to carry out the murders.[2]
Origins of the Estrada Conspiracy
On or about January 6, 2019, one of the CSes (“CS-1”) met with GONZALEZ at his office in the vicinity of Guatemala City, Guatemala (the “January 6 Meeting”). During the January 6 Meeting, GONZALEZ explained to CS-1, in substance and in part, that GONZALEZ was an active member of a political party in Guatemala (“Party-1”), and that Party-1’s presidential candidate was ESTRADA. GONZALEZ told CS-1 that the Estrada Campaign needed drug cartel funding to compete in the upcoming presidential election, and he asked if CS-1 knew of any drug cartels that would be interested in providing such funding. GONZALEZ also stated that ESTRADA, if elected president of Guatemala, would use various government agencies to support the cartel’s drug trafficking activities in Guatemala. For example, GONZALEZ told CS-1 that, if a drug cartel provided funding to the Estrada Campaign and ESTRADA won, the Cartel would have direct influence on the appointed secretaries of the Interior, which oversees the police, and Defense, which oversees the military.
The next day, CS-1 met with GONZALEZ and ESTRADA in the vicinity of Guatemala City (the “January 10 Meeting”). During the January 10 Meeting, CS-1 told ESTRADA that CS-1’s contacts in the Sinaloa Cartel could provide funding, but that the cartel had concerns about whether ESTRADA could provide the cartel with access to the Government of Guatemala. ESTRADA responded that, if elected president, ESTRADA would appoint members of the Sinaloa Cartel to the Ministry of the Interior, the Ministry of Defense, and to positions controlling Guatemala’s seaports and airports. ESTRADA also asked that CS-1 provide the names of three potential candidates for each position so ESTRADA could choose between them.
The Defendants Meet Purported Sinaloa Cartel Representative CS-2
On or about February 7, 2019, GONZALEZ met with CS-1 and a second confidential source involved in this investigation (“CS-2”) in the vicinity of Guatemala City (the “February 7 Meeting”). The February 7 Meeting was audio and video recorded. During the February 7 Meeting, GONZALEZ asked, in substance and in part, whether CS-1 and CS-2 could assassinate certain other political rivals who were threats to win the election. GONZALEZ stated that it “wouldn’t be difficult” to kill a particular candidate because the candidate was “hated,” but cautioned that another candidate was “well protected.” GONZALEZ also stated that the Estrada Campaign “would pay you to do it” if the CSes carried out the requested murders.
The following day, on or about February 8, 2019, ESTRADA and GONZALEZ met with CS-1 and CS-2 in the vicinity of Guatemala City (the “February 8 Meeting”). This meeting was audio and video recorded. During the February 8 Meeting, ESTRADA told CS-1 and CS-2 that he could win the election if the Sinaloa Cartel provided the Estrada Campaign with approximately 10 to 12 million U.S. dollars. ESTRADA explained that he needed to deliver a sizeable amount of money to each of the 22 districts in Guatemala so that he could obtain the necessary votes in each district and that he was planning to hire an individual for approximately $2 million to help build the Estrada Campaign’s online presence.
CS-2 stated that, in exchange for the drug money, CS-2 wanted ESTRADA to help the Sinaloa Cartel transport cocaine through airports in Guatemala. CS-2 estimated that the Sinaloa Cartel would send approximately six cocaine-laden airplanes per month through Guatemala, each of which would carry multiple tons of cocaine, and that CS-2 would pay ESTRADA 10 percent of the approximate value of cocaine on each plane. ESTRADA agreed to assist the Sinaloa Cartel’s activities in exchange for campaign financing as proposed by CS-2. GONZALEZ and ESTRADA also again discussed assassinating political rivals, and ESTRADA provided CS-2 with the names of two individuals who were potential targets. ESTRADA also identified one individual to target first, and he noted that this assassination would be easy to complete because the target had many enemies in Guatemala.
February 2019 Meetings in Florida and Guatemala
On or about February 14, 2019, GONZALEZ met with CS-2 and an undercover officer (“UC-1”) in an undercover DEA warehouse (the “Warehouse”) in Florida (the “February 14 Meeting”). This meeting was audio and video recorded. During the February 14 Meeting, CS-2 introduced UC-1 to GONZALEZ as a hitman who was available for hire to carry out the assassinations proposed by GONZALEZ and ESTRADA.
GONZALEZ then discussed with CS-2 and UC-1, in substance and in part, the Estrada Campaign’s desire to assassinate certain political rivals. GONZALEZ identified the person he thought was easiest “to take out,” and stated that he wanted it done “as fast as possible.” GONZALEZ also promised to provide CS-2 and UC-1 with more information on their initial targets, and GONZALEZ told them that “we want to see the public reaction after the first two hits” before going forward with the others. GONZALEZ also told them that he could provide “lots of AK-47s” to carry out the job, and when UC-1 specified that he needed “3 AK-47s and 2 pistols,” GONZALEZ replied that “Mario [ESTRADA] will have everything ready for you.”
During the meeting, CS-2 and UC-1 also showed GONZALEZ approximately $5 million in supposed drug proceeds for the Estrada Campaign. GONZALEZ then placed a video call to ESTRADA. During that call, GONZALEZ handed the phone to CS-2, and CS-2 used GONZALEZ’s phone to show ESTRADA the Warehouse and purported bulk currency in various locations in the Warehouse.
On or about February 27, 2019, ESTRADA met with CS-1 and CS-2 on an undercover DEA yacht (the “UC Yacht”) in the vicinity of Miami, Florida (the “February 27 Meeting”). This meeting was audio and video recorded. During the February 27 Meeting, CS-2 and ESTRADA discussed, among other things, their agreement concerning how ESTRADA would support the Sinaloa Cartel’s drug trafficking if ESTRADA were elected president. ESTRADA stated, in substance and in part, that he was “convince[d] that I’m going to win [the election]” and that after he won, ESTRADA would support the cartel’s drug trafficking activities in Guatemala. In particular, ESTRADA agreed to accept the Sinaloa Cartel’s cocaine-laden planes at airports and ports in Guatemala. ESTRADA also agreed to appoint cartel members to key government positions. ESTRADA also told CS-2 that he no longer wanted CS-2 and UC-1 to move forward with the proposed assassinations. ESTRADA explained that someone else was going to assassinate one of the potential targets, and ESTRADA thought it would bring too many problems if they proceeded with the other assassinations.
March 2019 Meetings in Florida and Guatemala
On or about March 4, 2019, ESTRADA met with another individual (“CC-1”) and CS-1 at ESTRADA’s office in the vicinity of Guatemala City (the “March 4 Meeting”). This meeting was audio recorded. During the March 4 Meeting, ESTRADA stated, in substance and in part, that the Estrada Campaign urgently needed funds from the Sinaloa Cartel to pay its expenses. ESTRADA, CC-1, and CS-1 discussed how they could deliver the Cartel’s money to the Estrada Campaign in Guatemala. ESTRADA suggested that they use the UC Yacht to transport ESTRADA’s money. ESTRADA then took out a map, and demonstrated how the UC Yacht could travel from Miami, through Cuba, before arriving in Guatemala. CC-1 questioned whether law enforcement would detect the UC Yacht, and ESTRADA responded that those risks were mitigated by the fact that the UC Yacht was a luxury yacht, flying the American flag, and sailed by American citizens. ESTRADA further explained that it might be easier to buy a yacht than to pay the transportation fees they had been discussing.
On or about March 5, 2019, ESTRADA met again with CC-1 and CS-1 at ESTRADA’s office (the “March 5 Meeting”). This meeting was audio recorded. During the March 5 Meeting, ESTRADA stated, in substance and in part, that he was arranging for another crew to get involved to bring the balance of the money from the Sinaloa Cartel to Guatemala because ESTRADA had run out of money himself and his campaign was stalling. ESTRADA also stated that he was separately working with a drug trafficker based in Guatemala, who was also supporting ESTRADA’s bid for president. ESTRADA also told CS-1 that he heard that people from another drug cartel wanted to provide ESTRADA with funding as well.
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The Complaint charges ESTRADA, 58, and GONZALEZ, 50, in two counts: (1) conspiring to import cocaine into the United States and (2) conspiring to use and carry machine guns and destructive devices during, and to possess machine guns and destructive devices in furtherance of, the cocaine-importation conspiracy. If convicted, ESTRADA and GONZALEZ each face a mandatory minimum sentence of 10 years’ imprisonment and a maximum term of life imprisonment on Count One, and a maximum term of life imprisonment on Count Two.
The potential mandatory minimum and maximum sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Berman praised the outstanding efforts of the DEA’s Miami Field Office and its Guatemala Country Office, as well as the U.S. Department of Justice’s Office of International Affairs.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Mathew Laroche and Jason A. Richman are in charge of the prosecution.
The charges contained in the Complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
[2] The DEA promptly notified local authorities about these threats.
Bronx Man Sentenced to More Than 13 Years in Prison for Firearms and Narcotics TraffickingRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ALEXIS VALDEZ, a/k/a “Lil Rico,” was sentenced today to 160 months in prison for firearms and narcotics trafficking. VALDEZ and his co-conspirators sold seven guns, including an AK-47 assault rifle and a SKS assault rifle, a silencer, ammunition, and a bulletproof vest to undercover officers. VALDEZ pled guilty in Manhattan federal court in April 2018 to one count of conspiring to distribute heroin and crack cocaine and one count of unlicensed firearms dealing. U.S. District Judge Kimba M. Wood imposed today’s sentence.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Alexis Valdez sought to put illegal guns and drugs on the streets of New York City. For his crimes, he will serve more than 13 years in prison. We will continue to work with our law enforcement partners to investigate and prosecute those who would put the people of our city in danger.”
According to the allegations contained in the Indictment and statements made in related court filings and proceedings:
From 2016 to August 2017, VALDEZ and other members of a drug trafficking organization (“DTO”) sold narcotics near Hughes Avenue and East Tremont Avenue in the Bronx, New York (the “Hughes Avenue DTO”). VALDEZ personally sold crack cocaine to undercover officers on several occasions. Members of the Hughes Avenue DTO, including VALDEZ, are also members and associates of the “Rolling 30s” neighborhood set of the nationwide Crips street gang.
From October 2016 to May 2017, VALDEZ and two other men, who were both members of the Hughes Avenue DTO, sold firearms to undercover officers. Over the course of six sales, undercover officers purchased seven firearms, including an AK-47 assault rifle, a SKS assault rifle, a shotgun, and several handguns, including one firearm with a defaced serial number. VALDEZ and his co-conspirators also sold a silencer for a gun, ammunition, and a bulletproof vest to the undercover officers.
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In addition to the prison term, VALDEZ, 26, of the Bronx, New York, was sentenced to four years of supervised release. All nine members of the Hughes Avenue DTO charged in this case have pled guilty.
Mr. Berman praised the work of the New York City Police Department and the Drug Enforcement Administration in this investigation.
The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Drew Skinner and Anden Chow are in charge of the prosecution.
Two Florida Men Sentenced for Their Roles in Multimillion-Dollar Credit Card Fraud SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JAMES BECKISH and JOSEPH ANTHONY DEMARIA were sentenced to 48 and 36 months in prison, respectively, for their participation in a conspiracy to commit wire fraud in connection with a fraudulent scheme to place more than $7 million in unauthorized charges on the credit cards of thousands of consumers. BECKISH and DEMARIA were sentenced by United States District Judge Edgardo Ramos.
U.S. Attorney Geoffrey S. Berman said: “Beckish and Demaria operated a scheme in which they purported to sell dietary supplements to consumers online. In lieu of dietary supplements, consumers got nothing but headaches, credit card processors got ripped off, and Beckish and Demaria’s wallets got fatter. Now they have been sentenced to prison and ordered to repay the money they stole.”
According to the Complaint, the Information to which BECKISH and DEMARIA pled guilty, as well as court filings and statements made in public court proceedings:
Between 2013 and 2017, BECKISH, DEMARIA, and others participated in a fraudulent scheme to place recurring and unauthorized charges on thousands of victims’ credit cards. As part of the scheme, the defendants created dozens of shell companies that purported to sell dietary supplements and similar products called “nutraceuticals” over the internet. The defendants and their co-conspirators opened fraudulent bank accounts on behalf of the shell companies and applied for merchant accounts for the shell companies with credit card payment processors, sometimes by submitting fabricated records. The defendants then used their merchant accounts to place unauthorized and recurring charges on thousands of credit cards, often without shipping any product to the cardholders. As a result of the defendants’ criminal scheme, credit card processors paid millions of dollars in refunds for charges associated with the defendants’ companies in an attempt to refund affected consumers.
BECKISH and DEMARIA were the leaders and organizers of this criminal enterprise, controlling the shell companies, overseeing and directing the actions of their co-conspirators, and making the decisions regarding how the scheme would operate and how the conspirators would evade law enforcement detection.
In total, the defendant’s scheme resulted in at least $7,231,878 in fraudulent credit card charges over a one-year period.
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BECKISH and DEMARIA each pled guilty to one count of conspiracy to commit wire fraud on October 11, 2018. In addition to the prison terms, BECKISH and DEMARIA were each sentenced to three years of supervised release and ordered to forfeit $7,231,878 and pay the same amount in restitution.
Mr. Berman praised the investigative work of the United States Secret Service.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Danielle Sassoon, Olga Zverovich, and Michael McGinnis are in charge of the prosecution.
Tennessee Man Charged in Scheme to Defraud Consumers by Fraudulently Posing as an AttorneyRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of JOHN LAMBERT, a/k/a “Eric Pope,” for wire fraud and conspiracy to commit wire fraud. LAMBERT was arrested earlier today in Bristol, Tennessee, and was presented in the Eastern District of Tennessee.
U.S. Attorney Geoffrey S. Berman stated: “As alleged, John Lambert purported to be a high-powered attorney with an elite law school degree. However, as we allege, Lambert was just a wolf in sheep’s clothing, swindling his victims of their hard-earned money. Now, Lambert is in need of a real attorney as he must answer for his alleged crimes.”
FBI Assistant Director in Charge William F. Sweeney Jr. said: “People typically seek the assistance of an attorney when they feel they’ve been wronged or in preparation for a significant life event that involves financial planning. The fact that Lambert allegedly exploited those who believed he was advocating on their behalf makes his supposed criminal activity even more egregious. While he’s not at risk of losing a law license, it doesn’t mean there won’t be consequences for his actions.”
According to the allegations in the Complaint filed today[1]:
LAMBERT and at least one co-conspirator perpetrated a scheme to defraud consumers of legal advice and services by falsely representing through web-based platforms for freelancing services, websites, emails, phones calls, and other means, that they were experienced attorneys who had attended elite law schools, when in fact they were not attorneys and had never attended law school. Having misled their victims into believing they were highly qualified attorneys, LAMBERT and his co-conspirator then attempted to, and in some cases did, provide legal advice and services to their victims in exchange for which their victims paid money.
At least six individual and corporate victims paid LAMBERT for purported legal advice and services on a wide range of subjects, including issues with their credit reports, drafting a will, corporate and intellectual property law, and a dispute with a former employee. One of the victims withdrew money from the victim’s 401(k) account to pay LAMBERT.
As alleged, LAMBERT used the alias “Eric Pope” when communicating with the victims, and falsely represented to at least some of them that he was an attorney at a law firm called “Pope and Dunn;” had attended an elite law school; was an expert in corporate, finance, and property law; had worked with hundreds of clients, including “tech moguls” and “entrepreneurs” in the United States and Europe; and was located in New York City. But according to the Complaint, LAMBERT was not and had never been an attorney, and was not located in New York City.
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LAMBERT, 23, of Bristol, Tennessee, has been charged with one count of wire fraud and one count of conspiracy to commit wire fraud, each of which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of LAMBERT will be determined by a judge.
The charges in the Complaint are merely accusations, and LAMBERT is presumed innocent unless and until proven guilty.
Mr. Berman praised the outstanding investigative work of Special Agents from the U.S. Attorney’s Office for the Southern District of New York and the FBI.
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.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
Former NYPD Officer Pleads Guilty to Fraudulently Obtaining Disability Benefits and Tax EvasionRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John F. Grasso, the Special Agent-in-Charge of the United States Social Security Administration, Office of the Inspector General, New York Field Division (“SSA-OIG”), and Jonathan D. Larsen, the Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced that GERARD SCPARTA, a former New York City Police Department (“NYPD”) officer, pled guilty to fraudulently obtaining over approximately $638,000 in disability benefits from the Social Security Administration (“SSA”) and underreporting income on his taxes by approximately $268,000. SCPARTA lied to the SSA about his disability, falsely represented to the SSA that he could not work due to disability, and failed to report earnings from employment as required. At the same time SCPARTA was collecting disability benefits, he earned a total of approximately $1.6 million working as a security guard and host at a strip club located in Manhattan. SCPARTA pled guilty before U.S. District Judge Alison J. Nathan.
Manhattan U.S. Attorney Geoffrey S. Berman said: “For two decades, former NYPD officer Gerard Scparta lied about being disabled to obtain over $638,000 in disability benefits through fraud, all while he was earning over $1.6 million as the host of a prominent strip club. In doing so, he stole money from truly disabled individuals who are dependent on this important source of public support. Then, not only did Scparta conceal his employment and income from the SSA by hiding behind a corporate entity purportedly owned by his wife, he also underreported his income to cheat on his taxes. Particularly today, on Tax Day, this case shows that such brazen fraud and tax evasion will be prosecuted to the fullest extent of the law.”
SSA-OIG Special Agent-in-Charge John F. Grasso said: “Today’s plea is the latest step in our continued and ongoing effort to bring to justice all individuals who commit Social Security Disability fraud and other crimes that stem from that act. I am very grateful for the efforts of our law enforcement partners involved in this investigation, to include the Internal Revenue Service Criminal Investigation Division, the New York City Department of Investigation and the continued commitment from the United States Attorney’s Office for the Southern District of New York. I strongly encourage the public to report suspected instances of Social Security fraud to the OIG’s Fraud Hotline at 1-800-269-0271 or http://oig.ssa.gov/report.”
IRS-CI Acting Special Agent in Charge Jonathan D. Larsen said: “The Special Agents of IRS-Criminal Investigation Division are sworn to protect the tax system and bring to justice those who would steal from the Treasury. An oath similar in nature to one Mr. Scparta swore to as a law enforcement officer.”
According to the allegations contained in the Complaint and Information filed in federal court:
The SSA administers Social Security Disability Insurance (“SSD”), a federal benefits program that provides monthly cash benefits to individuals who have worked in the past and paid into Social Security, but who can no longer engage in any substantial gainful activity due to medical disabilities. SSD is a disability benefit available only to individuals who have a qualifying disability and are unable to work in any profession. In order to receive SSD, a beneficiary must certify that he or she is incapable of performing any gainful activity due to disability. In addition, a beneficiary must report to the SSA all sources of income from work activity and any changes in the beneficiary’s medical condition, which are taken into account in determining whether the beneficiary is entitled to payments and the amount of those payments.
Between in or about 1986 and in or about 1997, SCPARTA worked as a police officer with the NYPD. In or about 1997, after reportedly sustaining an injury at the age of 32, SCPARTA was referred to an individual (“CC-1”) who helped him fraudulently obtain disability benefits. Specifically, CC-1 submitted SSD application materials signed by SCPARTA that falsely stated, among other things, that SCPARTA suffered from severe depression and anxiety, could not do anything around his house, and was unable to work in any capacity. In addition, CC-1 coached SCPARTA to make the same false statements to physicians who examined SCPARTA for the purpose of establishing his disability and submitting reports to the SSA. Based on these false statements and representations by SCPARTA in documents and reports submitted to the SSA, the SSA approved SCPARTA to receive disability benefits from in or about 1997 onward.
In addition to lying about his disability status and inability to work, SCPARTA falsely claimed on multiple forms submitted to the SSA that he did not work, and failed to report earnings from employment as required. In fact, from in or about April 2004 up to and including at least in or about December 2017, SCPARTA worked as a security guard and host at a strip club located in New York, New York (the “Strip Club”). From in or about 1997 up to and including in or about 2017, SCPARTA received a total of over approximately $638,000 in disability benefits for himself, his wife, and his children, during which time SCPARTA earned approximately $1.6 million from his work at the Strip Club.
Further, from in or about 2012 up to and including in or about 2017, SCPARTA engaged in tax evasion by concealing and attempting to conceal from the IRS the nature and extent of his income. Specifically, SCARPTA utilized a nominee company registered to his wife to report income that SCPARTA earned from the Strip Club and falsely underreported that income by a total of approximately $268,602 for the tax years 2012 through 2016.
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SCPARTA, 54, of Campbell Hall, New York, pled guilty to one count of theft of government property, which carries a maximum sentence of 10 years in prison, and one count of tax evasion, which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
As part of today’s guilty plea, SCPARTA agreed to forfeit the $638,586 in Social Security disability benefits he obtained fraudulently, file accurate amended personal tax returns, and pay past taxes due and owing to the IRS for tax years 2012 through 2016. SCPARTA is scheduled to be sentenced before Judge Nathan on July 16, 2019, at 12:45 p.m.
Mr. Berman praised the outstanding investigative work of the SSA-OIG and IRS-CI. Mr. Berman also thanked the Manhattan District Attorney’s Office and the New York City Department of Investigation for their assistance with the investigation.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Sagar K. Ravi is in charge of the prosecution.
Former Venezuelan Official Hugo Armando Carvajal Barrios Arrested in Spain in Connection with Drug-Trafficking ChargeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Christopher T. Tersigni, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), today announced that former Venezuelan official Hugo Armando Carvajal Barrios, a/k/a “El Pollo,” was arrested today in Madrid, Spain, based on an Interpol Notice related to the charge filed in Indictment 11 Cr. 205 in the Southern District of New York. The Indictment charges Carvajal with participating in a conspiracy to import cocaine into the United States, including a 5.6-ton shipment of cocaine transported from Venezuela to Mexico in April 2006.[1] The U.S. Attorney’s Office for the Southern District of New York plans to seek the extradition of Carvajal Barrios from Spain.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Hugo Armando Carvajal Barrios, a former high-ranking official of Venezuelan military intelligence, allegedly conspired with others to traffic more than five tons of cocaine into the United States since at least 2006. Barrios’s arrest exemplifies this Office’s resolve to bring those who contribute to the illicit global drug trade to justice. No matter the rank or level of influence of an individual, we will continue to pursue and prosecute those who bring deadly drugs into this country in a U.S. court of law.”
Special Agent in Charge Christopher T. Tersigni said: “Today’s arrest of Hugo Armando Carvajal Barrios is yet another example of DEA’s commitment to stemming the flow of dangerous illicit drugs into our country. Despite his status as a former government official in Venezuela, Carvajal Barrios is not above the law. The DEA is grateful to our international partners for their efforts in helping to bring this drug-trafficker to justice.
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Carvajal Barrios, 56, a Venezuelan national residing in Venezuela, among other places, is charged with conspiring to import cocaine into the United States. If convicted, Carvajal Barrios faces a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. The mandatory minimum and maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Berman praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit and Miami Field Division, Homeland Security Investigations, the U.S. Treasury Department Office of Foreign Assets Control, and the U.S. Department of Justice’s Office of International Affairs.
This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Emil J. Bove III, Amanda L. Houle, and Matthew J. Laroche, with assistance from Adam Fels of the U.S. Attorney’s Office for the Southern District of Florida.
[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.
Five Defendants Charged in White Plains Federal Court with Narcotics Trafficking in Dutchess CountyRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an indictment yesterday charging five defendants with allegedly engaging in the distribution of cocaine and cocaine base throughout the Southern District of New York. All five defendants were taken into federal custody on April 10 and April 11, 2019. The defendants were presented in White Plains federal court yesterday before United States Magistrate Paul E. Davison. This case is assigned to U.S. District Judge Kenneth M. Karas.
U.S. Attorney Geoffrey S. Berman said: “Our Office is committed to targeting, arresting, and prosecuting criminals that peddle addictive and dangerous drugs to our community. Thankfully, our law enforcement partners are just as dedicated to this important cause.”
FBI Assistant Director William F. Sweeney Jr. said: “The insidious spread of potentially deadly, illegal drugs harms the small towns outside of the city in the same way it harms the big city. No one is immune to the crime and violence that accompanies the drug trade. The FBI Hudson Valley Safe Streets Task Force would like to thank all the dedicated law enforcement agencies who took part in this and other investigations for their work in making our communities safer.”
As alleged in the Indictment unsealed today in White Plains federal court[1]:
From at least in or about 2016 up to and including in or about October 2018, in the Southern District of New York and elsewhere, RONALD MILLER, a/k/a “Solo,” JASON PARADIES, FRANK NESBITT, a/k/a “Nitty” COREY WEBB, and KIYON WEBB, conspired to distribute five kilograms and more of cocaine and 280 grams of cocaine base.
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The defendants RONALD MILLER, a/k/a “Solo,” JASON PARADIES, FRANK NESBITT, a/k/a “Nitty” COREY WEBB, and KIYON WEBB, face a maximum term of life in prison, and a mandatory term of 10 years in prison.
A chart containing the names of the defendants who were arrested and charged yesterday, and the charges and maximum penalties they face, is attached.
The statutory maximum sentences are prescribed by Congress and are provided here for information purposes only, as any sentencings of the defendants would be determined by the respective judges.
Mr. Berman praised the outstanding investigative work of the FBI Hudson Valley Safe Streets Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the New York State Police, the Dutchess County Sheriff’s Office, the City of Poughkeepsie Police Department, and the City of Kingston Police Department.
These case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Samuel L. Raymond and Courtney Heavey are in charge of the prosecutions.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
New Windsor Tax Preparer Charged with Tax Evasion and 83 Counts of Aiding and Assisting Preparation of False and Fraudulent Tax ReturnsRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Jonathan D. Larsen, the Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced today that EVERSLEY E. BARRETT, the owner of a tax preparation business named Eversley Tax, in New Windsor, New York, was charged with assisting the preparation of false and fraudulent tax returns and tax evasion. BARRETT surrendered to authorities this morning and was presented before U.S. Magistrate Judge Paul E. Davison in White Plains federal court.
According to the allegations contained in the Indictment unsealed today[1]:
From in or about 2012 through 2016, BARRETT’s tax preparation business prepared and submitted to the IRS, on average, over 700 tax returns each year. Some of these tax returns were false and fraudulent in that they contained various fabricated and fraudulently inflated items such as filing statuses, rental real estate losses, unreimbursed employee business expenses, gifts to charity, real estate-related expenses and application of certain tax credits. BARRETT’s inclusion of these false and fraudulent deductions led the returns to fraudulently claim refunds.
As alleged in the indictment, BARRETT also prepared and filed his own tax returns. From in or about 2012 through 2016, BARRETT’s tax returns also contained many of the same fabricated and fraudulently inflated items, such as filing statuses, rental real estate losses, unreimbursed employee expenses, gifts to charity and real estate-related expenses. In addition, BARRETT, who received many of his fees for his tax preparation services in cash, failed to report more than $300,000 in gross receipts for Eversley Tax for the tax years 2012 through 2015.
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BARRETT, 64, is charged in 84 counts. The first 83 counts charge him with aiding and assisting the preparation of false and fraudulent U.S. tax returns, each of which carries a maximum sentence of three years in prison and a maximum fine of $250,000. He is also charged with one count of attempting to evade or defeat tax, which carries a maximum sentence of five years in prison and a maximum fine of $250,000. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Berman praised IRS-CI for their outstanding work in the investigation.
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.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
Manhattan Doctor Indicted for Diverting Drugs and Causing Patient’s Overdose DeathRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing today of an Indictment in Manhattan federal court charging a doctor who practiced in Manhattan, GORDON FREEDMAN, with 16 counts of distributing oxycodone, fentanyl, and other controlled substances to a particular patient, including one count for distributing fentanyl that caused the patient’s death. FREEDMAN was arrested this morning, and is expected to be presented before U.S. Magistrate Judge Sarah Netburn in Manhattan federal court this afternoon.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Physicians take an oath to practice medicine for the sole purpose of improving their patients’ health. Instead, Gordon Freedman allegedly used his medical license to overprescribe dangerous opioids to a patient. When overprescribing deadly fentanyl for no legitimate medical purpose, it is just a matter of time before luck runs out – and in this case it has – as a patient of Freedman’s has allegedly suffered a fatal overdose as a result of Freedman’s alleged misconduct.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Everyone knows the inherent danger in buying and selling drugs on the street, but when doctors overprescribe legal substances in lethal quantities, they too contribute to the overall drug epidemic. These drugs pose a real threat to our society. We hope to send the message today that there’s no quick fix for doctors who hide behind their prescription pad—this is criminal activity, and it will be treated as such.”
As alleged in the Indictment[1] unsealed today in Manhattan federal court:
From in or about 2013 through in or about May 2017, FREEDMAN, who worked at and owned a private pain-management office on the Upper East Side of Manhattan and was an associate clinical professor at a large hospital in Manhattan, prescribed numerous controlled substances to a particular patient (“Patient-1”), including enormous quantities of oxycodone and fentanyl. For example, in 2013 alone, FREEDMAN prescribed Patient-1 approximately 85,427 oxycodone pills – an average of approximately 234 oxycodone pills per day – containing a total of approximately 2,422,435mg of oxycodone.
On or about April 13, 2017, FREEDMAN gave Patient-1 prescriptions for approximately 150 doses of a drug containing fentanyl, and for approximately 950 oxycodone pills containing approximately 30mg of oxycodone per pill. On or about May 4, 2017, Patient-1 died of a fentanyl overdose after ingesting a quantity of the drug prescribed by FREEDMAN on or about April 13, 2017.
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FREEDMAN, 58, of Mount Kisco, New York, is charged with one count of distributing controlled substances resulting in the death of another, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 20 years in prison. FREEDMAN is also charged with 15 counts of distributing controlled substances, each of which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.
In March 2018, FREEDMAN was indicted in a separate case, U.S. v. Gordon Freedman et al., 18 Cr. 217 (KMW), on charges of conspiracy to violate the Anti-Kickback Statute, violation of the Anti-Kickback Statute, and conspiracy to commit honest services wire fraud. Trial in that case is scheduled to begin November 4, 2019, before the Honorable Kimba M. Wood.
Mr. Berman praised the FBI and the New York City Police Department (“NYPD”) for their investigative efforts and ongoing support and assistance with the case.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Noah Solowiejczyk and David Abramowicz are in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Former New York City Human Resources Administration Employee and Two Others Plead Guilty to Scheme Involving Theft of Hundreds of Thousands in HRA FundsRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that ELIANA BAUTA pled guilty in Manhattan federal court to her involvement in a scheme to steal over $300,000 in funds from the New York City Human Resources Administration (“HRA”). BAUTA perpetrated the offenses in her capacity as an HRA employee. BAUTA pled guilty today before U.S. District Judge Valerie E. Caproni to federal program theft. BAUTA also pled guilty on March 25, 2019 before Judge Caproni to conspiring to commit wire fraud. Co-defendant GERALDINE PEREZ pled guilty before Judge Caproni on February 5, 2019, to her role in the HRA scheme and also to a separate fraudulent scheme involving more than $90,000 of stolen or fraudulently issued U.S. Treasury checks. Co-defendant ERIC GONZALES pled guilty before Judge Caproni on February 5, 2019, to misdemeanor bank theft.
Manhattan U.S. Attorney Geoffrey S. Berman said: “HRA employees like Eliana Bauta are trusted to use their positions to help people in need. Instead, as she has now admitted, Bauta egregiously abused that trust, working with her co-conspirators to steal hundreds of thousands of dollars intended for New York’s needy. As the guilty pleas in this case indicate, we remain vigilant in seeking out and prosecuting abuses of trust by City employees and remain committed to ensuring that federal and local funds go to their intended recipients.”
According to the Complaint, the Indictment, and statements made in the plea proceedings today and on February 5 and March 25, 2019:
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 City Department of Investigation-Office of Inspector General (“DOI-OIG”) 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 is alleged to have 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 is alleged to have 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.
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BAUTA, 35, of the Bronx, New York, pled guilty to one count of federal program theft, which carries a maximum potential sentence of 10 years in prison; and one count of conspiracy to commit wire fraud, which carries a maximum potential sentence of 20 years in prison.
PEREZ, 60, of the Bronx, New York, pled guilty to one count of conspiracy to commit federal program theft, which carries a maximum potential sentence of five years in prison; and one count of receiving stolen government money or property, which carries a maximum potential sentence of 10 years in prison.
GONZALES, 26, of the Bronx New York, pled guilty to one count of misdemeanor bank theft, which carries a maximum potential sentence of one year in prison.
The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge. BAUTA is scheduled to be sentenced before Judge Caproni on July 17, 2019. PEREZ is scheduled to be sentenced before Judge Caproni on May 16, 2019. GONZALES is scheduled to be sentenced before Judge Caproni on June 20, 2019.
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.
Bronx Man Convicted of Defacing African Burial Ground National Monument with Threatening Racial SlurRead the Press Release
Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today that IVAN NIEVES was convicted of vandalism for defacing a sign on the grounds of the African Burial Ground National Monument by writing a threatening racial slur on it. The conviction follows a bench trial before U.S. Magistrate Judge Ona T. Wang.
U.S. Attorney Geoffrey S. Berman said: “The protections of the First Amendment do not extend to defacing federal property. Ivan Nieves was rightly found guilty today for defacing the African Burial Ground National Monument with racial slurs.”
According to the evidence presented during the trial:
On the morning of November 1, 2018, NIEVES wrote “Kill N----rs” in large bold letters across the face of a signpost entitled “A Place of Remembrance” in front of the African Burial Ground National Monument, which is located at the corner of Duane Street and Elk Street in Manhattan. The monument commemorates the skeletal remains of approximately 15,000 African slaves who built the early City of New York. Those remains were discovered in 1991 buried 30 feet beneath the streets of the city across more than six acres in lower Manhattan.
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NIEVES, 57, of the Bronx, New York, was convicted of one count of vandalism, which carries a maximum penalty of six months in prison. NIEVES was acquitted of one count of disorderly conduct. 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. NIEVES is scheduled to be sentenced before Judge Wang on July 17, 2019, at 11:00 a.m.
Mr. Berman praised the outstanding investigative work of the Federal Protective Service, the New York City Police Department Hate Crimes Task Force, and the United States Park Police. Mr. Berman also thanked the National Park Service for its dedication and assistance.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Jacob R. Fiddelman and Sagar K. Ravi are in charge of the prosecution.
Vincent Esposito Pleads Guilty in Manhattan Federal Court to Racketeering ConspiracyRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Michael C. Mikulka, Special Agent-in-Charge, New York Region, U.S. Department of Labor, Office of Inspector General (“DOL-OIG”), and James P. O’Neill, Police Commissioner of the City of New York (“NYPD”), announced that VINCENT ESPOSITO pled guilty today to conspiring to commit racketeering offenses with members and associates of the Genovese Crime Family of La Cosa Nostra. ESPOSITO pled guilty before U.S. Magistrate Judge Sarah Netburn.
U.S. Attorney Geoffrey S. Berman said: “As he admitted today, 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. Thanks to an extensive investigation by our law enforcement partners, Esposito has been unmasked as a criminal and put out of business.”
FBI Assistant Director William F. Sweeney Jr. said: “The shakedown of union officials, racketeering and extortion may sound like throwback behavior of mobsters who operated decades ago. However, the bread and butter of the mafia is to make money, so the illegal enterprises they’ve always engaged in are being used even in the modern era. The FBI New York Organized Crime Task Force will investigate whatever illicit activity the mob chooses to pursue, in order to stop their criminal behavior.”
DOL-OIG Special Agent in Charge Michael C. Mikulka said: “Vincent Esposito engaged in a scheme to extort annual cash payments from a union official by threatening violence or the loss of their position if they did not give in to his extortionate demands. Esposito’s guilty plea affirms the U.S. Department of Labor Office of Inspector General’s commitment to protecting unions and their members from those who seek to exploit unions for their own personal gain. We will continue to work with our local and federal law enforcement partners to ensure unions can operate in a fair and just environment and function within the confines of federal law.”
Police Commissioner James P. O’Neill said: “The NYPD, its law enforcement partners and others in government are committed to eradicating organized crime in the City of New York. Associates of La Cosa Nostra – or any other enterprise that seeks to enrich its members through racketeering and the threat of violence – should know that investigators will build strong cases against them and they will be prosecuted. I want to thank the members of the NYPD, the FBI, the Southern District and the members of the U.S. Department of Labor’s Office of Inspector General and Office of Labor-Management Standards for their work on this case.”
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 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. As part of today’s guilty plea, ESPOSITO agreed to forfeit the more than $3.8 million seized by the FBI as criminal proceeds resulting from the offense.
Mr. Berman also announced that two other co-defendants, FRANK COGNETTA and VINCENT D’ACUNTO, both former union officials, previously pled guilty to conspiracy to commit racketeering. As part of the conspiracy, D’ACUNTO participated in the extortion of Official-1. Also as part of the conspiracy, COGNETTA engaged in various schemes to defraud his union of his honest services by, among other things, soliciting and accepting bribes and steering union benefit plans into investments in exchange for kickbacks, which resulted in more than $1 million in unlawful payments. Charges remain pending against two of ESPOSITO’s co-defendants, Steven Arena and Frank Giovinco, with trial scheduled for June 17, 2019, before U.S. District Court Judge Victor Marrero. The charges in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
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ESPOSITO, 51, pled guilty to one count of conspiracy to commit racketeering, which carries a maximum sentence of 20 years in prison. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. ESPOSITO’s sentencing is scheduled for July 10, 2019, before Judge Marrero.
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 NYPD, 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.
Husband of Former Employee of New Jersey Bank Sentenced to 27 Months in Prison for Stealing Client Information and FundsRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that two defendants have been sentenced to prison by U.S. District Judge Gregory H. Woods in connection with a scheme to steal client information and funds from a bank. SECONEY BROWN and ANTOINETTE MITCHELL-BROWN, who are married, previously pled guilty to participating in a conspiracy to commit bank fraud.
U.S. Attorney Geoffrey S. Berman said: “Antoinette Mitchell-Brown stole client information from a bank at which she was employed and, with the help of her husband, Seconey Brown, used that information in an attempt to steal hundreds of thousands of dollars from the bank customers. Now, they have been sentenced to prison.”
According to the allegations in the Indictment filed in connection with this case, other filings in Manhattan federal court, and statements made at the sentencing hearings in this case:
From September 2016 until December 2016, BROWN and MITCHELL-BROWN engaged in a scheme to fraudulently obtain funds from more than 25 accounts at Bank-1, at which MITCHELL-BROWN was then employed. In furtherance of the scheme, MITCHELL-BROWN stole victims’ bank account information from her employer and used that information to, among other things, write checks for thousands of dollars from victims’ accounts and initiate wire transfers from victims’ accounts to bank accounts controlled by members of the scheme. BROWN, among other things, paid members of the scheme or otherwise induced other individuals (some of whom provided unwitting assistance) to cash or deposit the fraudulent checks from MITCHELL-BROWN, and to provide the proceeds to BROWN, or, at BROWN’s direction, other individuals. In total, the defendants’ scheme fraudulently obtained almost $100,000 and attempted to obtain at least an additional $660,000.
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In addition to the prison term, BROWN, 26, of East Orange, New Jersey, was sentenced to 2 years of supervised release, and was ordered to pay $93,123.14 in restitution.
MITCHELL-BROWN, 42, of East Orange, New Jersey, was sentenced by Judge Woods on April 4, 2019, to 366 days in prison and two years of supervised release, and was ordered to pay $93,123.14 in restitution.
Mr. Berman praised the outstanding investigative work of the FDIC Office of Inspector General and the United States Postal Inspection Service. Mr. Berman also thanked U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the East Orange Police Department for their assistance in the investigation.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Louis A. Pellegrino and Robert B. Sobelman are in charge of the prosecution.
4 Members of Middletown Drug Trafficking Organization Arrested for Distributing HeroinRead the Press Release
Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today the unsealing of an indictment charging four defendants with a multi-year conspiracy to distribute one kilogram or more of heroin in or around Middletown, New York. Three defendants were arrested today in Orange County, New York, and were presented this afternoon before U.S. Magistrate Judge Paul E. Davison, who ordered the defendants held without bail. One additional defendant was arrested today in the Eastern District of Pennsylvania and was presented in federal court in that district.
As alleged in the Indictment,[1] from at least in or about 2015 up to and including in or about 2018, LUIS ORTIZ, a/k/a “Colla,” FELIX VELEZ, CARMEN TORRES, a/k/a “Evaliz,” and JOSE COLON conspired to distribute one kilogram and more of a mixture and substance containing a detectable amount of heroin.
The defendants each face a maximum sentence of life imprisonment, and a mandatory minimum term of 10 years in prison. 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 respective judges.
Mr. Berman praised the outstanding investigative work of the FBI, the New York State Police, the City of Middletown Police Department, and the Orange County Sheriff’s Office.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorney Emily Deininger is in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment set forth herein constitute only of allegations, and every fact described should be treated as an allegation.
Former Director of Financial Aid at New York Graduate School and Two Former Students Sentenced to Prison for Bribery and Kickback SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that MELANIE WILLIAMS-BETHEA, the former director of financial aid at Teachers College, Columbia University, and two former Teachers College students, MAWULI HORMEKU and CARMEN CANTY, were sentenced to prison terms for their respective roles in illicitly obtaining hundreds of thousands of dollars from Teachers College through a years-long bribery and kickback scheme. WILLIAMS-BETHEA was sentenced today by U.S. District Judge Alison J. Nathan, who previously sentenced HORMEKU and CANTY. The defendants received the following sentences:
MELANIE WILLIAMS-BETHEA
40 months in prison
MAWULI HORMEKU
12 months and one day in prison
CARMEN CANTY
3 months in prison
WILLIAMS-BETHEA pled guilty to conspiracy to commit bribery on October 17, 2018; HORMEKU pled guilty to committing bribery on July 26, 2018; and CANTY pled guilty to committing bribery on July 31, 2018. Two additional students who participated in the scheme, ANNICE KPANA and KYLA THOMAS, also have pled guilty and are scheduled to be sentenced later this month.
U.S. Attorney Geoffrey S. Berman said: “These defendants exploited and stole from an institution of higher learning, taking money that was intended to help provide opportunities for individuals training to teach future generations. They cumulatively pocketed more than $2 million, and their prison sentences reflect the significant harm caused by their conduct.”
According to the Indictment, other filings in Manhattan federal court, and evidence presented in court at the sentencings:
From 2008 through 2017, the defendants engaged in bribery and kickback schemes resulting in the loss of more than $2 million from Teachers College. WILLIAMS-BETHEA, who was employed by Teachers College as the director of financial aid during the relevant time period, perpetrated the scheme by approving aid payments to HORMEKU, CANTY, KPANA, and THOMAS (collectively, the “Students”) far in excess of their actual need, and then obtaining portions of the unjustified aid allotments she approved as kickback payments from the Students.
Specifically, WILLIAMS-BETHEA approved excessive “cost of attendance” figures for the Students that did not comport with their actual needs or costs of living, which had the effect of increasing the amount of financial aid they were eligible to receive, and by then approving stipends for the Students up to – and at times exceeding – these inflated amounts. To facilitate some of the stipends, WILLIAMS-BETHEA created fraudulent stipend request forms for financial awards to the Students, which gave the appearance that professors or other administrators had requested stipends, when in fact they had not, and then approved the fraudulently requested stipends herself.
After WILLIAMS-BETHEA facilitated these awards of unjustified financial aid, HORMEKU, CANTY, KPANA, and THOMAS paid WILLIAMS-BETHEA nearly $1 million in kickbacks.
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In addition to the prison terms, Judge Nathan ordered WILLIAMS-BETHEA, 49, to pay restitution and forfeiture in the amount of $2,067,349; ordered HORMEKU, 39, to pay restitution and forfeiture in the amount of $620,010; and ordered CANTY, 40, to pay restitution and forfeiture in the amount of $166,105.
Mr. Berman praised the investigative work of the Department of Education, Office of the Inspector General in this investigation.
This case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Thomas McKay and Alex Rossmiller are in charge of the prosecution.
Unlicensed Dentist Sentenced to 2 Years in Prison for Healthcare Fraud, Conspiracy to Commit Healthcare Fraud, and Conspiracy to Violate the Anti-Kickback StatuteRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LUIS OMAR VARGAS, an unlicensed dentist, was sentenced to two years in prison for defrauding health insurance companies by billing for false claims, billing for claims performed by him as an unlicensed provider, and for conspiring to pay kickbacks to his patients. VARGAS was convicted after two-week jury trial before U.S. District Judge Ronnie Abrams, who imposed today’s sentence.
U.S. Attorney Geoffrey S. Berman said: “Luis Omar Vargas and his co-defendants devised a scheme to defraud insurance companies by charging them for services never performed. In addition, Vargas, who is not a licensed dentist, charged insurance companies for services he was not even licensed to perform. Now Vargas will spend time in prison for his financial crimes.”
According to allegations in the Indictment and evidence introduced at trial:
From 2012 through November 2017, in the Southern District of New York and elsewhere, VARGAS and others conspired and participated in a scheme to defraud insurance providers of more than $2 million. VARGAS and others induced patients to be seen at a dental clinic on the Upper West Side of Manhattan by offering patients a $25 cash kickback. Once the patients were in the door, VARGAS and his co-conspirators charged insurance companies for services that were never performed and for services performed by VARGAS that he was not licensed to perform.
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In addition to the prison term, VARGAS, 46, of Roselle, New Jersey, was sentenced to two years of supervised release and ordered to pay $959,150 in restitution.
Co-defendant Dr. Mehmet Dikengil, 71, pled guilty on September 13, 2018, to one count of conspiracy to commit mail fraud, one count of health care fraud, and one count of conspiracy to violate the Anti-Kickback statute, and was sentenced on January 25, 2019, to two years in prison. Anna Jones, 60, pled guilty on August 14, 2018, to one count of theft of government funds, and was sentenced on February 14, 2019, to three years of probation.
Mr. Berman praised the outstanding investigative work of the U.S. Department of Health and Human Services-Office of Inspector General in this investigation.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Alexandra N. Rothman, Ryan B. Finkel, and Kristy J. Greenberg are in charge of the prosecution.
Real Estate Developer Sentenced to 6 Years in Prison for Defrauding Investors Out of $58 Million in Years-Long Real Estate Investment SchemeRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that MICHAEL D’ALESSIO was sentenced to 72 months in prison for operating a years-long scheme to defraud investors in his luxury real estate development projects in Manhattan, the Hamptons, Westchester, and elsewhere, and for making false claims and concealing assets in connection with his bankruptcy case. D’ALESSIO pled guilty on November 8, 2018, before U.S. District Judge Jesse M. Furman, who imposed today’s sentence.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Michael D’Alessio promised investors that he would develop and build luxury properties that would yield big returns. When the real estate market took a downturn, D’Alessio resorted to fraud. In the end, all he built was a Ponzi scheme that he used to rip off his investors of their hard-earned life savings to the tune of $58 million. Today, D’Alessio was sentenced to six years in prison for this brazen fraud. Others who would consider funding a life of luxury with the proceeds of fraud should take heed. We will continue to work with our law enforcement partners to see that such fraud is met with justice, and that those who would commit such crimes understand that crime doesn’t pay.”
According to the Indictment, Superseding Information, and statements made in court filings and proceedings:
D’ALESSIO, a real estate developer and general contractor, served as the president and chief executive officer of a real estate investment and development firm specializing in the design, construction, and management of both residential and commercial real estate properties (“Company-1”). D’ALESSIO and Company-1 developed, and purported to develop, luxury residential real estate properties in Manhattan, the Hamptons, Westchester, and elsewhere.
D’ALESSIO typically followed the same pattern in each real estate investment project: he sought investments by offering for sale shares in a newly formed limited liability company (“LLC”) named after the location of the parcel of real estate to be developed and sold (the “Target Property”). In exchange for a purchase of shares in the LLC, D’ALESSIO promised a guaranteed monthly interest payment and a share in the profits from the sale of the Target Property. In soliciting investors, D’ALESSIO made numerous representations to potential investors, including that investor funds would be used only to develop the relevant Target Property and to cover related business expenses of the relevant LLC.
However, in reality, from 2015 through April 2018, D’ALESSIO misappropriated investor funds for his own use and benefit, and made other material misrepresentations. For example, in the case of a purported luxury condominium development on the Upper East Side, D’Alessio represented to investors that the building would be delivered to him vacant. In reality, however, and as D’Alessio knew, the property was inhabited by rent-controlled tenants who could not be easily evicted. In contrast to his representations of a speedy development project and a viable investment opportunity, no substantial changes could be made to the property while those tenants remained in occupancy.
Upon receiving investor funds, D’ALESSIO typically channeled those funds through a series of bank accounts held in the names of shell companies owned and controlled by D’ALESSIO. D’ALESSIO then used much of those investor funds for his own benefit, including to pay off debts and prior investors, and to fund significant gambling and other personal expenses. D’ALESSIO took steps to conceal his fraud, including deceiving investors regarding the progress of various real estate projects and using money raised from investors to make monthly payments to investors in different projects in the manner of a Ponzi scheme. D’ALESSIO defrauded investors out of approximately $58 million.
In 2018, D’ALESSIO went into involuntary bankruptcy under Chapter 7 of Title 11 of the United States Code. In connection with this bankruptcy proceeding, captioned In re Michael D’Alessio, No. 18-22552 (Bankr. S.D.N.Y.), D’ALESSIO submitted forms that fraudulently omitted money and property belonging to his estate, and made a false declaration under penalty of perjury concerning his money and property. Specifically, at the time of D’Alessio’s arrest in August 2018, law enforcement agents found $44,000 in cash, including $30,000 in a gym bag alongside a firearm. Following the arrest, law enforcement agents also learned about a bank account controlled by D’Alessio — which had not been reported in the bankruptcy — that carried a cash balance of $3,047.16. D’Alessio’s cell phone also contained text messages between D’Alessio and another individual in which D’Alessio stated: “I need some of my money tomorrow for Italy” and “I need my 100k I gave you to hold.” All together, D’Alessio concealed at least $143,047.16 from the Bankruptcy Court.
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In addition to the prison term, D’ALESSIO, 53, of New York, New York, was sentenced to three years of supervised release and order to pay forfeiture in the amount of $58,090,047.
Mr. Berman praised the investigative work of the Federal Bureau of Investigation.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Amanda Kramer and Daniel G. Nessim are in charge of the prosecution.
Radio Talk Show Host Craig Carton Sentenced to 42 Months in Prison for Securities and Wire FraudRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that CRAIG CARTON was sentenced to 42 months in prison for securities fraud, wire fraud, and conspiracy to commit those offenses. CARTON was convicted after a one-week trial before Chief U.S. District Judge Colleen McMahon, who imposed today’s sentence.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Radio personality Craig Carton solicited investments for his ticket buying scheme by claiming to have an in with the operator of two New York-area arenas and a major concert promotion company. He talked of his ability to buy blocks of tickets to live events and sell them for a profit on the secondary market. But the talk-show host was all talk. Carton’s purported agreements to buy blocks of tickets were part of an elaborate fiction. Today he has learned that the price of defrauding investors is a term in prison.”
As set forth in the Complaint, Indictment, and the evidence presented at trial:
CARTON and Joseph Meli worked together to induce investors to provide them with millions of dollars, based on representations that the investor funds would be used to purchase blocks of tickets to concerts, which would then be resold on the secondary market. CARTON and Meli purportedly had access to those blocks of tickets based on agreements that Meli had with a company that promotes live music and entertainment events (the “Concert Promotion Company”) and that CARTON had with a company that operates two arenas in the New York metropolitan area (the “Sports and Entertainment Company”). In fact, neither the Concert Promotion Company nor the Sports and Entertainment Company had any such agreement with CARTON, co-defendant Michael Wright, Meli, or any entity associated with them. After receiving the investor funds, CARTON, Wright, and Meli misappropriated those funds, using them to, among other things, pay personal debts and repay prior investors as part of a Ponzi-like scheme.
In the fall of 2016, CARTON, Wright, and Meli exchanged emails and text messages regarding their existing debts. On September 5, 2016, for example, Wright emailed CARTON and Meli, “for the sake of our conversation tomorrow,” and outlined “the debt past due and due next week.” Wright listed several apparent creditors, to whom he, Meli, and/or CARTON were personally indebted for over $1 million. Wright listed eight possible options for repaying the debt, including “Run to Costa Rica, change name, and start life all over again – may not be an option.” CARTON responded to Wright and Meli, stating “don’t forget I have $1m coming tomorrow from ticket investor[.] will need to be discussed how to handle.” On September 7, 2016, CARTON emailed Wright and Meli, referenced a potential investor (“Investor-1”) in an upcoming holiday concert tour, and suggested “borrow[ing] against projected profits” on that investment.
Later in the fall of 2016, CARTON began negotiating with a hedge fund (the “Hedge Fund”) regarding a transaction in which the Hedge Fund would extend CARTON capital to finance CARTON’s purchase of event tickets, which CARTON would then resell at a profit. In early December 2016, Meli texted CARTON and Wright and discussed using the Hedge Fund’s capital “to repay debts,” and not for the purchase of tickets.
The next day, December 7, 2016, CARTON emailed the Hedge Fund five agreements between (i) Meli and a company controlled by Meli (the “Meli Entity”) and (ii) the Concert Promotion Company. In each of the purported agreements, the Concert Promotion Company agreed to sell the Meli Entity up $10 million worth of tickets to different concert tours. However, these agreements were fraudulent and had not, in fact, been entered into by the Concert Promotion Company.
The following day, the Hedge Fund and CARTON executed the revolving loan agreement (the “Revolving Loan Agreement”), under which the Hedge Fund agreed to provide CARTON with up to $10 million, for the purpose of funding investments in the purchase of tickets for events. The Revolving Loan Agreement provided, in sum and substance, that the proceeds of the loan would be used only to purchase tickets pursuant to agreements for the acquisition of tickets, including the agreements with the Concert Promotion Company, and for limited business expenses. The Hedge Fund would receive a share of the profits from the resale of the tickets.
The Hedge Fund then sent $700,000 to the Meli Entity to finance the purchase of tickets pursuant to the agreements between the Meli Entity and the Concert Promotion Company. Meli, however, then sent this money to a bank account controlled by Wright, who then, on December 12, sent $200,000 to CARTON’s personal bank account (the “CARTON Bank Account”), which CARTON then wired to a casino. Also on December 12, Wright sent another $500,000 to an individual who had previously lent CARTON $500,000, which was due to be repaid that day.
Later in December 2016, the Hedge Fund sent an additional $1.9 million to the Meli Entity, to finance the purchase of tickets pursuant to agreements between the Meli Entity and the Concert Promotion Company. Once again, the Concert Promotion Company had not entered into any such agreements. Meli, Wright, and CARTON engaged in text messages regarding the disposition of these funds. Some of the money was used by Meli to repay two individuals who had previously invested with Meli in a related scheme involving the purported investment in the resale of tickets, and by CARTON to pay casinos and to pay Investor-1 a purported return on an earlier investment in a ticket-related venture, among other things.
CARTON also induced the Hedge Fund to wire $2 million to the Sports and Entertainment Company, based on a purported agreement CARTON purportedly had with the Sports and Entertainment Company (the “Sports and Entertainment Company Agreement”). The Sports and Entertainment Company Agreement purportedly gave an entity controlled by CARTON (the “CARTON Entity”) the right to purchase $2 million of tickets to concerts at one of the venues operated by the Sports and Entertainment Company. CARTON, among other things, sent the Hedge Fund a copy of the Sports and Entertainment Company Agreement that purportedly had been signed by the chief executive officer of the Sports and Entertainment Company. However, this agreement was fraudulent and had never been entered into by the Sports and Entertainment Company or signed by the chief executive officer.
On December 20, 2016, when the Hedge Fund wired the $2 million to the Sports and Entertainment Company, CARTON contacted the Sports and Entertainment Company and told them, in sum and substance, that the wire had been sent in error and should be sent to the bank account for an entity operated by CARTON and Wright, for which Wright is the signatory. After the money was rewired to that account, Wright wired $966,000 to Wright’s personal bank account and $700,000 to the CARTON Bank Account. CARTON then wired approximately $188,000 from the CARTON Bank Account, including at least $133,000 in wires to several casinos.
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In addition to the prison term, CARTON, 50, of New York, New York, was sentenced to three years of supervised release and ordered to pay $4,835,186.56 in restitution and to forfeit $4,590,000. CARTON’S co-defendant, Michael Wright, pled guilty on September 27, 2018, to one count of wire fraud and was sentenced to 21 months in prison.
Joseph Meli pled guilty to securities fraud in October 2017 and is currently serving a 78-month sentence imposed by U.S. District Judge Kimba M. Wood in April 2018.
Mr. Berman praised the investigative work of the Federal Bureau of Investigation and thanked the Boston Regional Office of the U.S. Securities and Exchange Commission.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brendan F. Quigley and Elisha J. Kobre are in charge of the prosecution.
Florida Man Sentenced for $2 Million Insider Trading Scheme Based on Confidential Information Misappropriated from an Investment BankRead the Press Release
Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today that RODOLFO SABLON, a/k/a “Rudy,” was sentenced to six months in prison for his role in an insider trading scheme based on material nonpublic information misappropriated from an investment bank by Daniel Rivas, a former employee at the bank. In July 2018, SABLON pled guilty to conspiracy to commit securities fraud and fraud before U.S. Magistrate Judge Debra Freeman. U.S. District Judge Alison J. Nathan imposed today’s sentence.
U.S. Attorney Geoffrey S. Berman said: “Today’s sentencing of Rodolfo Sablon closes the book on this multimillion-dollar, multi-pronged insider trading scheme. Sablon and his co-defendants acted as though the securities laws that are designed to keep our nation’s marketplace fair did not apply to them. However, as they all have learned, our office is committed to identifying and prosecuting these types of insider trading networks.”
According to the allegations contained in the Indictment filed against SABLON and his co-conspirators, and statements made in related court filings and proceedings:
The Investment Bank and Rivas
From August 2013 through May 2017, Rivas was employed as a technology consultant in the Research and Capital Markets Technology Group of an investment bank (the “Investment Bank”). In this role, Rivas had access to an internal, proprietary system maintained by the Investment Bank (the “Deal Tracking System”) containing material nonpublic information (“Inside Information”) about potential and unannounced merger and acquisition transactions, including tender offers, involving the Investment Bank. The Investment Bank’s written policies prohibited the unauthorized disclosure of confidential information, which included Inside Information. Rivas had a duty, among other obligations, to maintain the confidentiality of all of the Investment Bank’s confidential information, including the Inside Information.
Overview of Insider Trading Schemes
From August 2014 through April 2017, Rivas violated the duties of confidentiality he owed to the Investment Bank by serially misappropriating material nonpublic information from the Investment Bank’s Deal Tracking System and passing that information along to friends so that they could utilize it to make profitable trades. On more than 50 occasions between August 2014 and April 2017, Rivas provided Inside Information about contemplated but unannounced merger and acquisition (“M&A”) transactions and tender offer transactions involving clients and prospective clients of the Investment Bank to friends who used that information to purchase and sell securities. In total, the insider trading based on Inside Information misappropriated by Rivas resulted in illicit profits of more than $5 million through trading in more than two dozen securities. The Inside Information was passed through three tipping chains.
The Sablon Tipping Chain
SABLON was a member of the second of three tipping chains outlined in the Indictment. In this tipping chain, Rivas passed inside information to SABLON and co-defendant Roberto Rodriguez, a childhood friend of Rivas with whom Rodriguez had maintained a close relationship as adults.
Since 2014, Rodriguez lived and worked in Miami, Florida, with SABLON, with whom he was also friends. In 2015, Rodriguez introduced Rivas to SABLON. Rivas and SABLON then communicated with each other directly and developed an independent relationship.
In the fall of 2015, Rivas disclosed to Rodriguez that Rivas had access to Inside Information by virtue of his position as a corporate insider at an Investment Bank. At Rodriguez’s request, Rivas also agreed to share Inside Information with SABLON. While Rivas had originally agreed to divulge Inside Information to Rodriguez because of their history of friendship, Rivas also learned that Rodriguez and SABLON intended to start an investment fund with the proceeds of the insider trading scheme. Rivas understood that in exchange for the Inside Information Rivas was providing to Rodriguez and SABLON, Rivas would be invited to join the investment fund as a partner once it was successfully launched.
At first, Rivas communicated with Rodriguez and SABLON primarily via phone and text message. As the scheme progressed, however, Rodriguez and SABLON increased their efforts to hide their illegal activity. On several occasions, Rivas met personally with Rodriguez and/or SABLON in Miami in order to provide them with Inside Information. Rivas also provided Rodriguez and SABLON with Inside Information using an encrypted mobile messaging application (the “Messaging App”), which allows users to set a timer to messages to irretrievably “self-destruct.”
In order to maximize the illicit profits that could be earned using Rivas’s Inside Information, Rodriguez and SABLON, in consultation with Rivas, initiated an aggressive strategy of purchasing short-term, out-of-the money call options. In total, from 2015 through April 2017, Rodriguez and SABLON earned more than $2 million in illicit profits through insider trading in more than two dozen securities based on Inside Information divulged by Rivas.
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In addition to the prison term, SABLON, 39, of Miami, Florida, was sentenced to two years of supervised release, including six months in a community confinement center. SABLON was also ordered to pay $923,566 in forfeiture and a $5,000 fine.
Co-defendant Siva pled guilty on October 18, 2018, to one count of conspiracy to commit securities fraud and fraud and was sentenced to 18 months in prison on February 22, 2019. Co-defendant Rodriguez pled guilty on September 7, 2018, to conspiracy to commit securities fraud and fraud and was sentenced to one year and one day in prison. Co-defendant Jhonatan Zoquier pled guilty on August 6, 2018, to conspiracy to commit securities fraud and was sentenced to three months in prison. Co-defendant Jeffrey Rogiers pled guilty on August 13, 2018, to conspiracy to commit securities fraud and was sentenced to three months in prison.
Mr. Berman praised the investigative work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for their assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Andrea M. Griswold and Samson Enzer are in charge of the prosecution.
Eight Men Sentenced to Prison in Connection with Telemarketing Fraud Scheme Targeting the ElderlyRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that eight defendants have been sentenced in connection with their participation in a scheme to defraud victims – many of whom were elderly – by soliciting payments over the telephone. ARASH KETABCHI, a/k/a “Zach Peterson,” RAYMOND QUILES, CHRISTOPHER WILSON, a/k/a “Eric Fields,” JACK KAVNER, a/k/a “Bob Wiley,” a/k/a “Phil Powers,” JOSEPH McGOWAN, and ANTHONY MEDEIROS pled guilty in 2018. ANDREW OWIMRIN, a/k/a “Andrew Owens,” a/k/a “Jonathan Stewart,” and SHAHRAM KETABCHI, a/k/a “Steve Ketabchi,” were convicted following a 12-day trial before United States District Judge Sidney H. Stein.
U.S. Attorney Geoffrey S. Berman said: “Motivated by greed and the possibility of a quick payday, these defendants aggressively targeted the elderly and other vulnerable victims by convincing them to invest their money in various businesses. In reality, these so-called opportunities were just fraudulent schemes to steal victims’ money. Now, they have all been sentenced to prison.”
According to the allegations in the complaint and indictments filed in connection with this case, other filings in Manhattan federal court, and evidence presented at the trial of OWIMRIN and SHAHRAM KETABCHI:
Beginning in October 2013 through March 2017, ARASH KETABCHI, WILSON, KAVNER, McGOWAN, and others operated a group of telemarketing companies (the “Telemarketing Companies”) that engaged in a fraudulent scheme (the “Telemarketing Scheme”), by which they promised to earn victims (the “Victims”) money in exchange for particular Victims making an initial cash “investment” in business development, website design, grant applications, or tax preparation services. Many Victims, the majority of whom are over 70 years old, “invested” thousands of dollars with the Telemarketing Companies, but did not earn any of the promised returns. When Victims of the Telemarketing Scheme sought refunds, or fought credit card charges, the Telemarketing Companies provided explanations and documentation to the credit card companies falsely representing that the Victims had received the promised services. QUILES operated a company that provided so-called “fulfillment” services for the Telemarketing Companies, whereby QUILES’s company would send nominal items, such as boilerplate pamphlets, to Victims in order to help the Telemarketing Companies falsely demonstrate to credit card companies that they had provided services to the Victims. OWIMRIN and MEDEIROS worked as sales representatives for the Telemarketing Companies. SHAHRAM KETABCHI was responsible for, among other things, the submission of documents to the credit card companies in order to challenge the Victims’ attempts to recover their funds.
Five other individuals have pled guilty in connection with this case, and await sentencing:
Defendant Name
Companies
Count(s) of Conviction
William Sinclair
Olive Branch Marketing,
Paramount Business Solutions
Wire Fraud and Conspiracy to Commit Wire Fraud
(18 U.S.C. §§ 1343, 1349)
Conspiracy to Commit Money Laundering
(18 U.S.C. § 1956(h))
Michael Finocchiaro
Olive Branch Marketing,
Paramount Business Solutions
Wire Fraud and Conspiracy to Commit Wire Fraud
(18 U.S.C. §§ 1343, 1349)
Conspiracy to Commit Money Laundering
(18 U.S.C. § 1956(h))
Narcotics Conspiracy
(21 U.S.C. § 846)
Daniel Quirk
Carlyle Management Group,
Vanguard Business Solutions
Wire Fraud and Conspiracy to Commit Wire Fraud
(18 U.S.C. §§ 1343, 1349)
Conspiracy to Commit Money Laundering
(18 U.S.C. § 1956(h))
Narcotics Conspiracy
(21 U.S.C. § 846)
Peter DiQuarto
Olive Branch Marketing,
Carlyle Management Group,
Vanguard Business Solutions.
A1 Business Consultants
Wire Fraud and Conspiracy to Commit Wire Fraud
(18 U.S.C. §§ 1343, 1349)
Conspiracy to Commit Money Laundering
(18 U.S.C. § 1956(h))
Narcotics Conspiracy
(21 U.S.C. § 846)
Brooke Marcus
First Trend,
Tri-Star,
Elite Business Services
Conspiracy to Commit Wire Fraud
(18 U.S.C. § 1349)
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ARASH KETABCHI, 45, of Wayne, New Jersey, was sentenced by Judge Stein on March 27, 2019, to 87 months in prison and three years of supervised release, and ordered to forfeit $1,059,803.84 and to pay $563,427.99 in restitution.
RAYMOND QUILES, 41, of Old Bridge, New Jersey, was sentenced by Judge Stein on March 27, 2019, to 366 days in prison and three years of supervised release, ordered to perform 480 hours of community service, and to forfeit $542,673.30.
CHRISTOPHER WILSON, 33, of Teaneck, New Jersey, was sentenced by Judge Stein on April 3, 2019, to 78 months in prison and three years of supervised release, and ordered to forfeit $485,818.84 and to pay $397,850.80 in restitution.
JACK KAVNER, 32, of West New York, New Jersey, was sentenced by Judge Stein on April 3, 2019, to 51 months in prison and three years of supervised release, and ordered to forfeit $150,000 and to pay $1,705,586.05 in restitution.
JOSEPH McGOWAN, 32, of Port Chester, New York, was sentenced by Judge Stein on April 3, 2019, to 72 months in prison and three years of supervised release, and ordered to forfeit $1,763,582.05 and to pay $1,705,586.05 in restitution.
ANDREW OWIMRIN, 29, of Montvale, New Jersey, was sentenced by Judge Stein on March 27, 2019, to 52 months in prison and three years of supervised release, and ordered to forfeit $100,000.
SHAHRAM KETABCHI, 48, of Rancho Mission Viejo, California, was sentenced by Judge Stein on March 28, 2019, to four months in prison, three years of supervised release, including six months of home confinement, and 480 hours of community service. SHAHRAM KETABCHI was also ordered to forfeit $30,825 and to pay $563,427.99 in restitution.
ANTHONY MEDEIROS, 38, of Bloomfield, New Jersey, was sentenced by U.S. District Court Judge Nelson S. Román on September 11, 2018, to 66 months in prison and three years of supervised release.
Mr. Berman praised the outstanding investigative work of the Department of Homeland Security, Homeland Security Investigations, and the New York City Police Department.
The prosecution is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Kiersten A. Fletcher, Benet J. Kearney, and Robert B. Sobelman are in charge of the prosecution.
If you believe you have been a victim of these telemarketing companies: A1 Business Consultants, Elevated Business Consultants, Element Business Services, Prestige Worldwide Enterprises, Olive Branch Marketing, CTO Consulting, Carlyle Management Group, or Vanguard Business Solutions, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the U.S. Attorney’s Office for the Southern District of New York, at 866-874-8900 or [email protected]. You may also report it to Detective Christopher Bastos of the New York City Police Department at 917-480-7167 or [email protected].
California Man Sentenced to 32 Years in Prison for Overseeing Cross-Country Drug Trafficking Organization and the Kidnapping and Murder of One of Its MembersRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JOSE RAMON ONTIVEROS, a dual citizen of the United States and Mexico, was sentenced to 32 years in prison by United States District Judge Gregory H. Woods for running a drug trafficking organization that shipped hundreds of kilograms of cocaine across the United States, and arranged for the kidnapping, torture, and murder of Oscar Contreras, a member of the organization, in August 2012.
Manhattan U.S. Attorney Geoffrey S. Berman stated: “For years, Jose Ramon Ontiveros ran a drug trafficking organization that flooded New York City with large amounts of cocaine. When the organization’s operations were threatened by the apparent theft of drug proceeds by one of its workers, Ontiveros and others responded with brutal violence that resulted in the torture and death of Oscar Contreras. Today’s sentence sends a message that we will aggressively prosecute those who engage in drug trafficking and violence, and we hope the sentence brings a small measure of comfort to Mr. Contreras’s family.”
According to documents filed in this case and statements made in related court proceedings:
From in or about 2008 through in or about February 2013, ONTIVEROS, 57, oversaw a drug trafficking organization (the “DTO”) based out of California that shipped large amounts of cocaine to New York City and other parts of the East Coast. The DTO was supplied by the Sinaloa Cartel in Mexico, and transported the cocaine from California to the East Coast using hidden compartments in tractor trailers. ONTIVEROS not only oversaw the DTO’s operations in the United States, but also served as the go-between between members of the Sinaloa Cartel in Mexico and the DTO. Between 2008 and 2013, the DTO shipped over 450 kilograms of cocaine to the East Coast, and brought back millions of dollars in drug proceeds.
In or about August 2012, the DTO suspected that one of its drivers, Oscar Contreras, had stolen approximately $1 million in drug proceeds from the DTO. ONTIVEROS and other members of the DTO arranged for Contreras to be kidnapped and tortured by a local street gang (the “Street Gang”) in Ontario, California, in order to locate the missing money. Contreras was brutally tortured for several days before being killed by members of the Street Gang.
ONTIVEROS previously pled guilty on September 5, 2018, to conspiracy to distribute and possess with intent to distribute five kilograms and more of cocaine. As part of his guilty plea, ONTIVEROS admitted that he and other members of the DTO agreed to kidnap and torture Contreras, and that in the course of being tortured, Contreras was murdered.
Mr. Berman praised the outstanding investigative work of the Drug Enforcement Administration. He also thanked the San Bernardino County District Attorney’s Office and the Ontario Police Department for their participation and support in this investigation and prosecution.
This prosecution is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Jason M. Swergold, Benet Kearney, and Michael Longyear are in charge of the prosecution.
Former Reality Television Series “Bad Girl” Sentenced to 1 Year in PrisonRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that SHANNADE CLERMONT was sentenced to one year in prison for making and attempting more than $20,000 in fraudulent charges using debit card information she stole from a man who died during the course of a prostitution date with her. CLERMONT pled guilty to one count of wire fraud in November 2018 before U.S. District Judge Naomi Reice Buchwald, who also presided over today’s sentencing.
U.S. Attorney Geoffrey S. Berman said: “Former reality TV ‘Bad Girl’ Shannade Clermont lived up to her on-screen persona, as she admitted to stealing the debit card information from a man she visited for a prostitution date in his Manhattan apartment. When the man died of an overdose, instead of notifying the authorities or calling for help, Clermont callously chose to use the man’s debit card information to make tens of thousands of dollars in illegal purchases. As Shannade Clermont has now learned, her real-life bad behavior has real-life consequences, and has now landed her in federal prison.”
According to the allegations contained in the Complaint and Indictment to which CLERMONT pled guilty and other filings in the case:
The New York City Police Department (“NYPD”) and the United States Attorney’s Office for the Southern District of New York had been investigating the overdose death of a male individual (the “Victim”), who was found dead on the morning of February 1, 2017, in his apartment at 250 East 53rd Street in Manhattan, New York (the “Victim Apartment”). During the course of that investigation, law enforcement learned that CLERMONT visited the Victim for a prostitution date at the Victim Apartment the previous evening (January 31, 2017), and stole the information for two debit cards in his wallet. CLERMONT admitted that she stole the debit card information after the Victim passed out during the prostitution date. CLERMONT then used the stolen debit card information to make or attempt to make more than $20,000 in fraudulent purchases during the months following the Victim’s death, including to pay her rent and phone bills, to purchase flights, and to make several online purchases of thousands of dollars of luxury clothing and other merchandise, including, among other items, Valentino shoes, a Phillip Plein jacket, Beats headphones, as well as a gift certificate at a beauty salon.
CLERMONT also created and used a fake email account in the Victim’s name to falsely represent to third parties that she was the Victim, in order to commit fraud using the Victim’s identity. Specifically, on April 3, 2017, approximately two months after the Victim’s death, the fake email account was used to register an account with Western Union in the name of the Victim, which was used to initiate a fraudulent money transfer of $1,000 from the Victim to CLERMONT.
In an interview by law enforcement after she was arrested, Clermont stated, in substance and in part, that she committed this crime at least in part due to the stress of keeping up her public image.
* * *
In addition to the prison sentence, CLERMONT, 25, of Los Angeles, California, was sentenced to three years of supervised release and ordered to forfeit $5,775.27 and pay $4,696.40 in restitution.
Mr. Berman praised the outstanding investigative work of the NYPD.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Sagar K. Ravi is in charge of the prosecution.
Leader of ‘Nine Trey Gangsta Bloods’ Pleads Guilty to Racketeering and Narcotics Offenses in Manhattan Federal CourtRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JAMEL JONES, a/k/a “Mel Murda,” pled guilty today in Manhattan federal court to racketeering and narcotics offenses as part of his participation in the Nine Trey Gangsta Bloods (“Nine Trey”). U.S. District Judge Paul A. Engelmayer presided over the defendant’s guilty plea.
U.S. Attorney Geoffrey S. Berman said: “Today, Jamel Jones admitted in open court to his involvement in Nine Trey and distributing drugs for the gang. We will continue to work with our law enforcement partners to keep our communities safe and vigorously investigate and prosecute those who bring violence and drugs into our communities.”
As alleged in the Indictment and statements made in open court:
Nine Trey was a criminal enterprise involved in committing numerous acts of violence, including shootings, robberies, and assaults in and around Manhattan and Brooklyn. Members and associates of Nine Trey engaged in violence to retaliate against rival gangs, to promote the standing and reputation of Nine Trey, and to protect the gang’s narcotics business. Members and associates of Nine Trey enriched themselves by committing robberies and selling drugs, such as heroin, fentanyl, furanyl fentanyl, MDMA, dibutylone, and marijuana.
* * *
JONES, 38, of Brooklyn, pled guilty to one count of racketeering conspiracy for his involvement in Nine Trey, which carries a maximum sentence of 20 years in prison; and one count of participating in a narcotics distribution conspiracy, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 40 years in prison. JONES’S sentencing has been scheduled for July 17, 2019, at 2:30 p.m. before Judge Engelmayer.
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 New York City Police Department, Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Michael Longyear, Jacob Warren, Jonathan Rebold, and Sebastian Swett are in charge of the prosecution.
Bronx Man Sentenced to Life in Prison in Connection with Fatal Carjackings of Two Livery Cab DriversRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that TYRONE FELDER, a/k/a “Man Man,” was sentenced to life in prison plus 34 years for killing two livery cab drivers during fatal carjackings: Maodo Kane, whom FELDER killed in the Bronx on August 5, 2014, and Aboubacar Bah, whom FELDER killed in the Bronx on August 12, 2014. FELDER was also sentenced for participating in two armed robberies in Yonkers on August 5, 2014, as well as firearms offenses related to the carjackings and the robberies. A jury found FELDER guilty on September 6, 2018, after a trial before U.S. District Judge Vincent L. Briccetti, who also imposed today’s sentence.
United States Attorney Geoffrey S. Berman said: “Tyrone Felder cruelly killed two innocent men who were simply trying to earn an honest living. The swift action of the FBI, the NYPD, and the Yonkers Police Department stopped him before he could kill again. Now Felder will spend the rest of his life behind bars.”
In pronouncing the sentence, Judge Briccetti said he was “astonished by the audacity and brutality” of FELDER’s crimes.
According to the allegations contained in the Indictment and the evidence presented in court during the trial:
On August 5, 2014, FELDER and three other men carjacked Maodo Kane in order to steal his cab. FELDER and his crew forced Mr. Kane to drive to an isolated street near Hunter Avenue in the Bronx. After another carjacker pulled Mr. Kane from his vehicle, FELDER shot Mr. Kane once in the back of his head, killing him. FELDER’s crew then used the stolen car to commit two gunpoint robberies of businesses in Yonkers.
Subsequently, on August 12, 2014, the same crew carjacked Aboubacar Bah, again to steal his car to use in robberies. When Mr. Bah resisted, FELDER shot him in the back of the head inside his vehicle on Bryant Avenue in the Bronx. Mr. Bah’s vehicle careened down the street, crashing into parked cars before coming to a stop. FELDER and his crew pulled Mr. Bah’s body from the car and drove off in the vehicle, intending to commit further robberies. The carjackers soon abandoned the cab and their plans because they believed police were onto them.
The Federal Bureau of Investigation (“FBI”), the New York City Police Department (“NYPD”), and Yonkers Police Department caught FELDER and his crew several days later. Among other investigative techniques, the special agents and detectives working the case gathered surveillance video from dozens of cameras in the Bronx and Yonkers, piecing together the crew’s movements during their crimes.
* * *
FELDER’s co-defendants, Kareem Martin, a/k/a “Jamal Walker,” Takiem Ewing, a/k/a “Mulla,” and Tommy Smalls, a/k/a “Tommy Guns,” previously pled guilty to participating in the fatal carjackings described above and await sentencing by Judge Briccetti.
Mr. Berman praised the outstanding investigative work of the NYPD, the City of Yonkers Police Department, and the FBI’s Westchester County Safe Streets Task Force.
The case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Michael Gerber, Scott Hartman, Hagan Scotten, Anden Chow, and Celia Cohen are in charge of the prosecution.
Bronx High School Teacher Charged with Possession and Distribution of Child PornographyRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the Homeland Security Investigations (“HSI”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the arrest of JONATHAN SCHWEITZER for possession and distribution of child pornography. SCHWEITZER was arrested today and presented before United States Magistrate Judge Robert W. Lehrburger.
U.S. Attorney Geoffrey S. Berman said: “As alleged, Jonathan Schweitzer received, possessed, and distributed child pornography, including depictions of young children. The allegations are particularly disturbing in light of Schweitzer’s position as a school teacher. We will continue to work with our law enforcement partners to protect children.”
Special Agent-in Charge Angel M. Melendez said: “Schweitzer works in a position of trust, responsible for teaching the young people of New York City for more than a decade. Yet, he is alleged to have shared and received child pornography in various dark-web chatrooms. The abuse and exploitation of children for viewing pleasure is abhorrent, and we will seek to arrest those predators so that they face justice for their actions.”
Police Commissioner James P. O’Neill said: “This individual allegedly violated his professional trust as a teacher to commit one of the most heinous crimes imaginable. I’d like to thank our local, state and federal law enforcement partners involved in this case for their hard work and diligence to ensure that those allegedly responsible for these egregious offenses are held accountable for their actions.”
According to the allegations in the Complaint filed today[1]:
Between at least February 2019 and March 2019, SCHWEITZER, who is employed as a teacher at a high school located in the Bronx, used a peer-to-peer file sharing network to share approximately 10 unique video files known to contain child pornography. The child pornography included depictions of prepubescent children engaged in sexual activity with other children or adults. On April 3, 2019, law enforcement officers executed a search warrant at SCHWEITZER’S apartment and recovered his laptop computer, which contained numerous files containing child pornography.
SCHWEITZER, 41, of the Bronx, New York, is charged with one count of distribution and receipt of child pornography, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison, and one count of possession of child pornography, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
The charges in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
Mr. Berman praised the New York City Police Department and Homeland Security Investigations for their outstanding investigative work.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorney Elizabeth A. Espinosa is in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
New York Man Sentenced in Manhattan Federal Court to 20 Years in Prison for Attempting to Provide and Conspiring to Provide Material Support to ISISRead the Press Release
Adam Raishani, aka “Saddam Mohamed Raishani,” 32, of the Bronx, New York, was sentenced to 20 years in prison to be followed by 20 years of supervised release for attempting to provide and conspiring to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization.
Assistant Attorney General for National Security John C. Demers and U.S. Attorney Geoffrey S. Berman for the Southern District of New York made the announcement. Raishani pleaded guilty to a Superseding Information on Nov. 14, 2018, before U.S. District Judge Ronnie Abrams, who also imposed today’s sentence.
“Raishani tried to leave his young family to travel overseas to join ISIS,” said Assistant Attorney General Demers. “Fortunately, he was arrested before he could leave the country. Raishani is the latest in the long line of would-be terrorists whom we have arrested and prosecuted before they could accomplish their mission to provide material support to ISIS overseas. I commend the agents, analysts, and prosecutors who are responsible for this result.”
“Adam Raishani may be a U.S. citizen, but he pledged his allegiance to the Islamic State of Iraq and al-Sham, the terrorist organization that seeks to destroy the ideals inherent to America,” said U.S. Attorney Berman. “In his efforts to show support to the organization, he helped another man make a trip to the Middle East so that he could join and train. Then, a year later, Raishani decided to follow him, leaving Raishani’s wife and child behind in the United States. Thankfully law enforcement was there to arrest him before he could make his dream of jihad a reality. Now, Raishani will spend the next 20 years of his life behind bars for his treachery.”
According to the Superseding Information, other court filings, and statements made during court proceedings:
Beginning in the fall of 2015, Raishani conspired with another ISIS supporter (CC-1) to provide material support and resources to ISIS. Raishani and CC-1 agreed to travel overseas to join and wage jihad for ISIS, with CC-1 to depart first. On Oct. 30, 2015, CC-1 departed from JFK Airport for Istanbul, Turkey, where he planned to cross into Syria to join and fight for ISIS. Raishani helped coordinate CC-1’s transportation from the Bronx, New York, to John F. Kennedy International Airport (JFK Airport), and Raishani accompanied CC-1 from the Bronx to JFK Airport.
Raishani continued communicating with CC-1 following CC-1’s departure, using an encrypted email application in an effort to avoid law enforcement detection. For example, on Jan. 2, 2016, Raishani sent an email to CC-1 stating: “Glad tidings brother. Its [sic] been some time since your voyage. I pray to Allah The ALL MIGHTY to grant you success. Until next time.”[1] On April 1, 2016, Raishani sent another email to CC-1 stating: “I hope Allah has bestowed you what you were seeking. . . . May Allah grant you sincere and clean intentions and make you among the righteous in Janatal Firdaus [a reference to Islamic paradise]. . . . Please return this email and respond to what we agreed upon before your departure. Until next time.” On May 3, 2016, CC-1 responded to Raishani, indicating that he had succeeded in joining the Islamic State. CC-1 informed Raishani that CC-1 was “fine and well,” that CC-1 “wished you [Raishani] were here with me,” and that “here we are living with izza [honor].”
Also in May 2016, CC-1 posted content on a particular social media application (Application-1) indicating that CC-1 was living in the Islamic State and fighting on its behalf. For example, CC-1 sent messages to another user of Application-1 stating: “I’m living in the Islamic state safely and secure by the permission of Allah,” “[h]ere we are fighting the kuffars [non-believers],” and “I left the land of kuffars now I’m living in the khilafah [the caliphate].” CC-1 also posted a photograph on Application-1 that shows CC-1 carrying an assault rifle and the flag of ISIS.
Between January and June of 2017, Raishani had a series of meetings with individuals who were, unbeknownst to Raishani, a confidential source working at the direction of law enforcement and an undercover law enforcement officer. In the course of those meetings, Raishani admitted that he had previously helped another person (CC-1) travel overseas to join ISIS, and stated that he intended to travel overseas to join ISIS himself. During those meetings, Raishani also downloaded and viewed violent ISIS propaganda videos, and expressed his desire to wage jihad on behalf of ISIS and his belief that the Quran can be read to justify the violence, including beheadings, perpetrated by ISIS.
By April 2017, Raishani was actively planning to travel abroad to join ISIS. Raishani indicated that he aspired to join ISIS in Syria and that he aimed to travel before the end of Ramadan, an Islamic holy month that ran from approximately May 26 through June 24 of 2017. In June 2017, Raishani made preparations to leave, including by paying off debts and purchasing clothing that he intended to wear for training with ISIS overseas. Raishani indicated his intention to meet an ISIS member in Turkey, who would facilitate Raishani’s joining the terrorist organization in Syria. In the course of communications with an undercover law enforcement officer, Raishani conveyed that he was prepared to die, to martyr himself, for ISIS. On June 21, 2017, Raishani attempted to board a flight bound for Turkey (via Portugal) at JFK Airport, at which point law enforcement officers arrested him.
Following Raishani’s arrest, the FBI searched Raishani’s Bronx residence pursuant to a search warrant. Among the evidence recovered was a letter from Raishani addressed to members of his family, which the FBI found in a safe in Raishani’s bedroom. In the letter, Raishani – who left behind his wife and young son when he attempted to travel to Syria to join ISIS – advised his wife that she could still choose to “[j]oin” him in the Islamic State, and he expressed regret that she did not share his radical views and that he had been unable to convince her to accompany him to join ISIS. Raishani also wrote: “Do Not Divulge this document and other documents that I have giv[en] to you to the authorities. Do not believe their plots. Do not divulge my absences but instead say I went to do volunteering outside the country with my medical skills and health background.”
* * *
In addition to the prison term, Raishani, 32, of the Bronx, New York, was sentenced to 20 years of supervised release.
Mr. Demers and Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD, and the NYPD’s Intelligence Division. Mr. Demers and Mr. Berman also thanked the New York Office of U.S. Customs and Border Protection.
Assistant U.S. Attorneys Sidhardha Kamaraju, Jane Kim, and George D. Turner are in charge of the prosecution, with assistance from Trial Attorney Kevin C. Nunnally of the Counterterrorism Section.
[1] Communications and conversations discussed herein are described in substance and in part.
Manhattan U.S. Attorney Announces Return to Its Rightful Owners of Old Master Painting Stolen by NazisRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the return to its rightful owner of a painting looted by the Nazis during World War II. The piece, A Scholar Sharpening His Quill, painted in 1639 by Salomon Koninck (the “Painting”), was stolen from the children and heirs of renowned Jewish art collector Adolphe Schloss. Schloss was a prominent Jewish art collector in Paris whose large collection of Old Master paintings (the “Schloss Collection”) was regarded as among the most significant private collections of Dutch and Flemish paintings assembled in prewar France.
Manhattan U.S. Attorney Geoffrey Berman said: “The campaign of cultural plunder that the Nazis directed against millions of innocent Jews was sadistic and unjust. That is why restitution in this case is more than returning a material good, but restoring a physical part of lost heritage. After nearly 80 years of being lost, this painting has been found and we are returning it to the Schloss family.”
During World War II, the Nazis created a division known as the Einsatzstab Reichleiter Rosenberg (the “ERR”) in order to “study” Jewish life and culture as part of the Nazis’ propagandist mission against the Jews. Principally, the ERR confiscated artworks and other cultural holdings of “the enemies of the Reich” on a massive scale, and registered and identified those artworks – even photographing them – thereby leaving behind a detailed record of the works that they stole. ERR records and photographs of art and cultural artifacts looted by the Nazis are digitized and available in an online database created by the Conference on Jewish Material Claims Against Germany, and this database includes a photograph of the Painting taken by the ERR during World War II.
Upon the outbreak of World War II in 1939, the Schloss heirs moved the Schloss Collection from Paris to Chateau de Chambon, a township in Southern France, in an attempt to protect the collection from looting by the Nazis. Due to its value and significance, the ERR made substantial efforts to locate and loot the Schloss Collection. In 1943, the Schloss Collection was ultimately looted by the ERR from its holding place in Chateau de Chambon. The Nazis took 262 paintings from the Schloss Collection, including the Painting, and transported them to a depot located at the Jeu de Paume, a prewar museum in Paris that was operated by the ERR during the war. Ultimately, the Painting was selected by the Nazis to be transported to the the “Führerbau,” Hitler’s headquarters in Munich, from where it and many other paintings disappeared in the aftermath of the war.
The Painting resurfaced in November 2017, when a Chilean private collector (the “Consignor”) attempted to sell the painting through a New York-based auction house. When the Painting arrived in New York from Chile, it was determined that it was the same Painting that came from the Schloss collection and had been looted by the Nazis. When the Consignor was informed of this, the Consignor stated that her father had purchased the Painting from Walter Andreas Hofer in Munich in 1952. Hofer was Hermann Göring’s chief purchasing agent and as such was a key player in the confiscation and looting of Jewish art collections during the Nazi era. In 1950, after being tried in absentia by a French military tribunal for his role in art plundering during World War II, Hofer was found guilty and sentenced to 10 years in prison.
The United States Attorney’s office filed a complaint seeking civil forfeiture of the painting on October 19, 2018, and Judge George B. Daniels entered a judgment of forfeiture on March 11, 2019. The United States today returns the painting to the Schloss heirs, and welcomes two members of the family to New York to accept the painting.
Mr. Berman thanked the FBI’s Art Crime Team for their assistance.
The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant U.S. Attorney Thane Rehn is in charge of the case.
Bronx Man Sentenced in Manhattan Federal Court to 20 Years in Prison for Attempting to Provide and Conspiring to Provide Material Support to ISISRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John C. Demers, the Assistant Attorney General for National Security, announced that ADAM RAISHANI, a/k/a “Saddam Mohamed Raishani,” was sentenced to 20 years in prison for attempting to provide and conspiring to provide material support to the Islamic State of Iraq and al-Sham (“ISIS”). RAISHANI pled guilty to a Superseding Information on November 14, 2018, before U.S. District Judge Ronnie Abrams, who also imposed today’s sentence.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Adam Raishani may be a U.S. citizen, but he pledged his allegiance to the Islamic State of Iraq and al-Sham, the terrorist organization that seeks to destroy the ideals inherent to America. In his efforts to show support to the organization, he helped another man make a trip to the Middle East so that he could join and train. Then, a year later, Raishani decided to follow him, leaving Raishani’s wife and child behind in the United States. Thankfully law enforcement was there to arrest him before he could make his dream of jihad a reality. Now, Raishani will spend the next 20 years of his life behind bars for his treachery.”
Assistant Attorney General John C. Demers said: “Raishani tried to leave his young family to travel overseas to join ISIS. Fortunately, he was arrested before he could leave the country. Raishani is the latest in the long line of would-be terrorists whom we have arrested and prosecuted before they could accomplish their mission to provide material support to ISIS overseas. I commend the agents, analysts, and prosecutors who are responsible for this result.”
According to the Superseding Information, other court filings, and statements made during court proceedings:
Beginning in the fall of 2015, RAISHANI conspired with another ISIS supporter (“CC-1”) to provide material support and resources to ISIS. RAISHANI and CC-1 agreed to travel overseas to join and wage jihad for ISIS, with CC-1 to depart first. On October 30, 2015, CC-1 departed from JFK Airport for Istanbul, Turkey, where he planned to cross into Syria to join and fight for ISIS. RAISHANI helped coordinate CC-1’s transportation from the Bronx, New York, to John F. Kennedy International Airport (“JFK Airport”), and RAISHANI accompanied CC-1 from the Bronx to JFK Airport.
RAISHANI continued communicating with CC-1 following CC-1’s departure, using an encrypted email application in an effort to avoid law enforcement detection. For example, on January 2, 2016, RAISHANI sent an email to CC-1 stating: “Glad tidings brother. Its [sic] been some time since your voyage. I pray to Allah The ALL MIGHTY to grant you success. Until next time.”[1] On April 1, 2016, RAISHANI sent another email to CC-1 stating: “I hope Allah has bestowed you what you were seeking. . . . May Allah grant you sincere and clean intentions and make you among the righteous in Janatal Firdaus [a reference to Islamic paradise]. . . . Please return this email and respond to what we agreed upon before your departure. Until next time.” On May 3, 2016, CC-1 responded to RAISHANI, indicating that he had succeeded in joining the Islamic State. CC-1 informed RAISHANI that CC-1 was “fine and well,” that CC-1 “wished you [RAISHANI] were here with me,” and that “here we are living with izza [honor].”
Also in May 2016, CC-1 posted content on a particular social media application (“Application-1”) indicating that CC-1 was living in the Islamic State and fighting on its behalf. For example, CC-1 sent messages to another user of Application-1 stating: “I’m living in the Islamic state safely and secure by the permission of Allah,” “[h]ere we are fighting the kuffars [non-believers],” and “I left the land of kuffars now I’m living in the khilafah [the caliphate].” CC-1 also posted a photograph on Application-1 that shows CC-1 carrying an assault rifle and the flag of ISIS.
Between January and June of 2017, RAISHANI had a series of meetings with individuals who were, unbeknownst to RAISHANI, a confidential source working at the direction of law enforcement and an undercover law enforcement officer. In the course of those meetings, RAISHANI admitted that he had previously helped another person (CC-1) travel overseas to join ISIS, and stated that he intended to travel overseas to join ISIS himself. During those meetings, RAISHANI also downloaded and viewed violent ISIS propaganda videos, and expressed his desire to wage jihad on behalf of ISIS and his belief that the Quran can be read to justify the violence, including beheadings, perpetrated by ISIS.
By April 2017, RAISHANI was actively planning to travel abroad to join ISIS. RAISHANI indicated that he aspired to join ISIS in Syria and that he aimed to travel before the end of Ramadan, an Islamic holy month that ran from approximately May 26 through June 24 of 2017. In June 2017, RAISHANI made preparations to leave, including by paying off debts and purchasing clothing that he intended to wear for training with ISIS overseas. RAISHANI indicated his intention to meet an ISIS member in Turkey, who would facilitate RAISHANI’s joining the terrorist organization in Syria. In the course of communications with an undercover law enforcement officer, RAISHANI conveyed that he was prepared to die, to martyr himself, for ISIS. On June 21, 2017, RAISHANI attempted to board a flight bound for Turkey (via Portugal) at JFK Airport, at which point law enforcement officers arrested him.
Following RAISHANI’s arrest, the FBI searched RAISHANI’s Bronx residence pursuant to a search warrant. Among the evidence recovered was a letter from RAISHANI addressed to members of his family, which the FBI found in a safe in RAISHANI’s bedroom. In the letter, RAISHANI – who left behind his wife and young son when he attempted to travel to Syria to join ISIS – advised his wife that she could still choose to “[j]oin” him in the Islamic State, and he expressed regret that she did not share his radical views and that he had been unable to convince her to accompany him to join ISIS. RAISHANI also wrote: “Do Not Divulge this document and other documents that I have giv[en] to you to the authorities. Do not believe their plots. Do not divulge my absences but instead say I went to do volunteering outside the country with my medical skills and health background.”
* * *
In addition to the prison term, RAISHANI, 32, of the Bronx, New York, was sentenced to 20 years of supervised release.
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 NYPD, and the NYPD’s Intelligence Division. Mr. Berman also thanked the Counterterrorism Section of the Department of Justice’s National Security Division, as well as the New York Office of U.S. Customs and Border Protection.
This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Sidhardha Kamaraju, Jane Kim, and George D. Turner are in charge of the prosecution, with assistance from Trial Attorney Kevin Nunnally of the Counterterrorism Section.
[1] Communications and conversations discussed herein are described in substance and in part.
Two Men Convicted of 1997 Double Murder in the BronxRead the Press Release
Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that ROBERT ACOSTA and JOSE DIAZ were convicted of the December 22, 1997, murders of Alex Ventura, 25, and Aneudis Almonte, 20. The convictions follow a three-week trial before U.S. District Judge Kevin P. Castel.
U.S. Attorney Geoffrey S. Berman said: “More than two decades ago, two young men were brutally murdered in a Bronx stairwell. Although the case went cold, members of the NYPD and the FBI worked tirelessly to solve it. A unanimous jury has now held Acosta and Diaz responsible for this terrible crime.”
According to the evidence presented during the trial:
In the 1990s, 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 more than $200,000 in drug money from a stash apartment that belonged to ACOSTA. To retaliate, ACOSTA hired 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 20-year-old Almonte six times, including once in the chest. DIAZ shot Ventura, 25, in the head from point-blank range. In exchange for these murders, ACOSTA paid DIAZ $12,000.
* * *
ACOSTA, 47, of Yonkers, New York was convicted of murder while engaged in a conspiracy to distribute five or more kilograms of cocaine (Counts One and Two), conspiracy to commit murder for hire (Count Three), and murder for hire (Counts Four and Five). DIAZ, 53, of the Bronx, New York was convicted of conspiracy to commit murder for hire (Count Three), murder for hire (Counts Four and Five), and the use of a firearm to commit murder in furtherance of a crime of violence (Count Six). ACOSTA and DIAZ each face a mandatory sentence of life in prison.
Mr. Berman praised the outstanding investigative work of the NYPD and FBI.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Laurie A. Korenbaum, Michael K. Krouse, and Nicholas W. Chiuchiolo are in charge of the prosecution.
Manhattan Jeweler Pleads Guilty to Insider TradingRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JEREMY MILLUL pled guilty to participating in a scheme to trade on material, nonpublic information in advance of the Sherwin-Williams Company’s acquisition of the Valspar Corporation. MILLUL pled guilty to one count of conspiracy to commit securities fraud before U.S. District Judge Jed S. Rakoff.
U.S. Attorney Geoffrey Berman said: “As he admitted today, Manhattan jeweler Jeremy Millul received inside information about a publicly traded stock from a friend who worked as an analyst for a credit rating agency. Millul then used that information to make illegal trades which earned him over $100,000 in illicit gains. The integrity of financial institutions is critical to ensuring that the stock-buying public is trading in a fair market. We will continue to aggressively prosecute those who share and utilize nonpublic information for their own personal gain.”
According to the allegations contained in the Complaint and Indictment filed against MILLUL and his co-conspirators, and statements made in related court filings and proceedings:[1]
Rating Evaluation Services and the Insider
When a company announces an acquisition, the acquiring company’s credit rating agency often evaluates, and ultimately issues a press release relating to, the impact that the acquisition could have on the acquiring company’s credit rating. Therefore, companies often contact rating agencies before an acquisition is publicly announced in order to secure the rating agency’s views on how a possible acquisition could impact a company’s credit rating. All the major rating agencies offer a service – sometimes known as a Rating Evaluation Service (“RES”) – that provides the company with a rating committee decision with respect to a proposed acquisition.
In March 2016, a credit rating agency in Manhattan (the “Firm”) assigned a credit ratings analyst (the “Analyst”), to work on an RES for the Sherwin-Williams Company (“Sherwin-Williams”) in advance of its contemplated but unannounced acquisition of the Valspar Corporation (“Valspar”). In connection with this assignment, the Analyst had access to material, nonpublic information (the “Inside Information”) about Sherwin-Williams’ acquisition of Valspar prior to the public announcement of the acquisition. The Firm’s written policies prohibited the unauthorized disclosure of confidential information, which included the Inside Information. During his tenure at the Firm, the Analyst reviewed and certified his duties of loyalty and confidentiality to the Firm and its clients.
The Insider Trading Scheme
In March 2016, the Analyst misappropriated the Inside Information about Sherwin-Williams’ acquisition of Valspar and passed it to MILLUL and Abell Oujaddou so that they could use it to make profitable trades. On March 21, 2016, the first trading day after the public announcement of the acquisition, the price of Valspar stock increased approximately 23 percent over the prior day’s close.
MILLUL is a Manhattan jeweler who had a close personal friendship with the Analyst, as well as with a member of the Analyst’s immediate family. The Analyst repeatedly provided MILLUL with Inside Information about the Valspar acquisition. Although MILLUL had never owned a brokerage account in the United States and had never traded in U.S. securities prior to March 2016, he opened a brokerage account on March 13, 2016, and shortly thereafter purchased 480 shares of Valspar common stock. On March 18, 2016, the last trading day before the acquisition was publicly announced, MILLUL also purchased 75 out-of-the-money Valspar call options. After the acquisition was publicly announced, MILLUL sold his Valspar stock and options for approximately $106,806 in profits.
* * *
JEREMY MILLUL, 32, of New York, New York, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. The maximum potential sentence in this case is prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court.
MILLUL is scheduled to be sentenced before Judge Rakoff on July 30, 2019 at 4:00 p.m.
Abell Oujaddou previously pled guilty and awaits sentencing before U.S. District Judge Jed S. Rakoff.
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 Christine I. Magdo and Andrew Thomas are in charge of the prosecution.
[1] As for the defendant who has pled not guilty, the description of the charges set forth herein constitute only allegations.
Leaders of the ‘Blood Hound Brims’ Gang Convicted in Federal Court of Racketeering, Narcotics, and Firearms OffensesRead the Press Release
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that LATIQUE JOHNSON, a/k/a “La Brim,” a/k/a “Straight 2 Business,” a/k/a “Breezy,” a/k/a “Boss Dog,” BRANDON GREEN, a/k/a “Light,” a/k/a “Moneywell,” and DONNELL MURRAY, a/k/a “Don P,” were found guilty yesterday of racketeering conspiracy, narcotics trafficking conspiracy, and firearms offenses in connection with their membership in the “Blood Hound Brims” (“BHB”), a violent street and prison gang that operated in New York City, upstate New York, Pennsylvania, and elsewhere. In addition, JOHNSON and MURRAY were found guilty of committing assault in aid of racketeering for a 2012 shooting at a fast food restaurant in the Bronx involving an AK-47 firearm. JOHNSON was found guilty of attempted murder in aid of racketeering for ordering a 2012 shooting of rival gang members in the Bronx. The convictions followed a five-week trial before the Honorable Paul G. Gardephe.
U.S. Attorney Geoffrey S. Berman said: “Latique Johnson, Brandon Green, and Donnell Murray were leaders of the Blood Hound Brims, a ruthless gang, and were responsible for extensive narcotics trafficking and terrible violence. They now stand convicted of their crimes, and will no longer be able to inflict harm on the people of this city.”
According to court documents and the evidence at trial:
BHB was a criminal enterprise that operated principally in the greater New York area, from 2005 to 2016. BHB was a faction of the Bloods street gang, which operates nationwide, and is under the New York Blood Brim Army (“NYBBA”). The BHB operated within and around various locations in New York, including New York City, Westchester County, Elmira, and in Pennsylvania, as well as within and outside federal and state penal systems.
The BHB used a hierarchical structure that was organized, in part, by geography, including New York City, and that was maintained, in part, through the payment of dues. The founder and leader of the Gang was JOHNSON, and other members and associates of the BHB referred to JOHNSON as the “Godfather.” The Gang was divided into several “pedigrees,” each of which had its own leadership structure which was approved by JOHNSON. Other leadership positions included, among others, treasurers who collected dues from members of a particular pedigree, and individuals who performed security and disciplinary functions for the pedigree. In addition to JOHNSON, GREEN, and MURRAY all held leadership positions within the Gang at different times.
Members of the BHB had regular meetings, sometimes called “pow wows” or “9-11s,” at which members were required to pay dues. Some of the meetings were among members of a particular pedigree, and other meetings were for all members of the Enterprise. Word of the meetings was disseminated via text message, word-of-mouth, and flyers. The BHB’s business, including rivalries with other gangs, shootings, the arrest of gang members, guns, and drugs, was regularly discussed at these meetings. “Kitty dues” – money that paid for commissary funds, lawyers, guns, and drugs, and that served as tribute to JOHNSON – were collected at these meetings. The BHB maintained its own rules and constitution that new members were required to learn. Members of the BHB also used code words and secret phrases to communicate with each other both while in prison and on the street in order to avoid detection by law enforcement.
One of the BHB’s principal objectives was to sell cocaine base, commonly known as “crack cocaine,” powder cocaine, and heroin, which members and associates of the BHB sold throughout the greater New York area and in Pennsylvania.
Members and associates of the BHB engaged in multiple acts of violence against rival gangs. These acts of violence included assaults and attempted murders, and were committed to protect the Gang’s drug territory, to retaliate against members of rival gangs who had encroached on the territory controlled by the BHB, and to otherwise promote the standing and reputation of the Gang vis-à-vis rival gangs. These acts of violence also included assaults and attempted murders against members and associates of the BHB itself, as part of internal power struggles within the Gang.
For example, on January 28, 2012, in the Bronx, New York, JOHNSON, aided and abetted by MURRAY, used an AK-47 assault rifle to fire into a restaurant where rival gang members were gathered, injuring two individuals who survived the shooting. The violence continued in fall of 2012 when JOHNSON ordered the shooting of two other members of a rival gang, who survived.
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A chart providing more information regarding the charges and potential penalties is set forth below. The statutory penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation, the New York City Police Department, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.
This case is being prosecuted by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jessica Feinstein, Allison Nichols, and Andrew Chan are in charge of the prosecution.
COUNT
DEFENDANT
MAXIMUM PENALTY
Count One: Racketeering Conspiracy
LATIQUE JOHNSON, 39, of the Bronx, New York
BRANDON GREEN, 36, of the Bronx, New York
DONNELL MURRAY. 39, of the Bronx, New York
Life in prison
Life in prison
20 years in prison
Count Two: Assault in aid of racketeering
JOHNSON
MURRAY
20 years in prison
20 years in prison
Count Three: Attempted murder in aid of racketeering
JOHNSON
10 years in prison
Count Four: Narcotics conspiracy
JOHNSON
GREEN
MURRAY
Life in prison
Life in prison
20 years in prison
Count Five: Firearms offense
JOHNSON
GREEN
MURRAY
Life in prison
Life in prison
Life in prison