Southern District of New York

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), and William Cheung, the Acting Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the arrest of STEPHEN SHERAK in connection with a scheme to fraudulently deposit checks in various national banks, including a $3.3 million corporate tax refund check that SHERAK had fraudulently obtained.  SHERAK was arrested this morning and will be presented today in Manhattan federal court before U.S. Magistrate Judge Ona T. Wang. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Stephen Sherak deposited thousands of dollars’ worth of counterfeit checks into accounts for his own use.  Additionally, Sherak allegedly caused the filing of a falsified tax return that resulted in a $3.3 million fraudulent refund.  Thanks to the coordinated efforts of the NYPD and the IRS, Sherak will now have to answer for his alleged dishonest acts.” 

IRS-CI Acting Special Agent-in-Charge William Cheung said:  “Filing false tax returns to receive a fraudulent tax refund steals from all Americans.  IRS-CI Special Agents will investigate and bring these perpetrators to justice.”

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

From 2017 through June 2018, SHERAK deposited or attempted to deposit in several national banks approximately $270,000 worth of checks he knew to be counterfeit or that otherwise would not clear due to insufficient funds.

In addition, from February 2018 through May 2018, SHERAK caused the filing of a fraudulent corporate tax return for an entity SHERAK incorporated and controlled, Gavnet, Inc., by falsely claiming that his company had prepaid millions of dollars in taxes and was therefore owed a tax refund.  Upon receiving a tax refund check in the amount of approximately $3.3 million, SHERAK worked with others to open new bank accounts at a number of different financial institutions in order to deposit the refund check, before the fraud was ultimately detected.

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SHERAK, 41, of Philadelphia, Pennsylvania, is charged with one count of bank fraud, which carries a maximum sentence of 30 years in prison, and one count of conspiracy to commit theft of government funds, which carries a maximum sentence of five years in prison.  The statutory maximum penalties 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.

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that LAJBAR LAJAWARD KHAN, a/k/a “Haji Lajaward,” and AMAL SAID SAID ALAM SHAH, a/k/a “Haji Zar Mohammad,” were sentenced to 15 years and 131 months in prison, respectively, for conspiring to import large quantities of heroin into the United States, and for distributing heroin intending that the heroin would be imported into the United States.  On September 12, 2018, LAJAWARD was sentenced to 15 years in prison, and on September 17, 2018, SAID was sentenced to 131 months in prison.  LAJAWARD and SAID pled guilty to a Superseding Indictment on June 26, 2017, before U.S. District Judge Kimba M. Wood, who also imposed these sentences.

U.S. Attorney Geoffrey S. Berman said: “The defendants conspired and attempted to import heroin into the United States from Afghanistan.  Their ‘sample’ shipment alone was three kilograms of heroin, and they spoke of the ability to import a thousand kilos.  We will continue to work with the DEA and international law enforcement partners to curb the importation of potentially lethal heroin.”

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

LAJAWARD and SAID, two Afghan nationals, were part of a drug trafficking organization (the “DTO”) based in Afghanistan that produced and distributed large quantities of heroin.  Between approximately May 2014 and June 2015, LAJAWARD and SAID worked together in an effort to import large quantities of heroin – in the range of 1,000 kilograms – from Afghanistan into the United States. 

In August 2014, LAJAWARD began communicating by telephone with an individual he understood to be a New York-based narcotics trafficker, who was in fact an undercover agent of the DEA (the “UC”).  LAJAWARD, in sum and substance, told the UC that he was interested in supplying large quantities of high-quality heroin for importation into the United States, where it would be sold for millions of dollars.  In the course of the calls between LAJAWARD and the UC, LAJAWARD introduced the UC to one of LAJAWARD’s heroin-trafficking associates, SAID.

On October 30, 2014, LAJAWARD and the UC met in person in Dubai, United Arab Emirates.  In the course of that recorded meeting, in sum and substance, LAJAWARD continued to express his interest in supplying large quantities of heroin to the UC for importation into the United States, and LAJAWARD offered to supply a sample of heroin to the UC, as a test shipment to be sold in the United States.  In the months following that meeting in Dubai, in the course of recorded telephone calls with the UC, LAJAWARD and SAID arranged to supply a three-kilogram sample of heroin in Kabul, Afghanistan (the “Heroin Sample”).

During those recorded calls, LAJAWARD, SAID, and the UC agreed that the delivery of the three-kilogram Heroin Sample would occur in Kabul on or about January 15, 2015.  On that day, an undercover Afghan law enforcement officer, acting at the direction of the DEA and posing as an associate of the UC, met with LAJAWARD and one of LAJAWARD’s associates in Kabul and received delivery of the three-kilogram Heroin Sample.  In parallel, over 1,000 miles away in Dubai, the UC met with another associate of LAJAWARD to pay for the Heroin Sample, as had been arranged during recorded calls between the UC and LAJAWARD.  At that meeting, which was recorded, the UC paid $10,500 to the associate, at the direction of LAJAWARD, for the Heroin Sample. 

About two weeks later, on January 28, 2015, SAID met with the UC in Dubai.  During that recorded meeting, in sum and substance, SAID discussed the Heroin Sample that the DTO had recently supplied for importation into the United States, stated that the DTO was prepared to supply 1,000 kilograms of heroin to the UC, and indicated that it would take the DTO only about 15 days to produce 100 kilograms of heroin for shipment to the United States.

On April 2, 2015, SAID met again with the UC in Dubai.  During that recorded meeting, SAID and the UC negotiated additional details of the agreement for the DTO to supply massive quantities of heroin for importation into the United States, including that LAJAWARD and SAID would share in the profits generated from the sale of the heroin in the United States.  SAID also agreed, in sum and substance, that he and LAJAWARD would meet the UC in Thailand, for purposes of finalizing the heroin deal, and for LAJAWARD and SAID to receive their share of the profits generated from the purported sale in the United States of the three-kilogram Heroin Sample previously supplied by the DTO.

In June 2015, LAJAWARD and SAID traveled to Bangkok, Thailand, to meet with the UC.  On June 13, 2015, LAJAWARD and SAID were arrested in Bangkok by Thai authorities based on the charges in this case, at the request of U.S. authorities.  LAJAWARD and SAID were later brought to the United States to face the charges against them.

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In addition to the prison terms, LAJAWARD, 53, and SAID, 47, both of Afghanistan, were each sentenced to five years of supervised release. 

Mr. Berman praised the outstanding investigative work of the DEA’s Special Operations Division; the DEA’s Kabul, Dubai, Tokyo, and Bangkok Country Offices; the DEA’s New York Field Division; the CNP-A Sensitive Investigative Unit of the Afghan Ministry of the Interior; the Dubai Police Department and the Anti-Narcotics Unit of the Emirati Ministry of Interior; Japan’s National Police Agency and the Saitama Prefectural Police; Thailand’s Sensitive Investigative Unit of the Royal Thai Police Narcotics Suppression Bureau; Thailand’s Attorney General’s Office; Thailand’s Ministry of Foreign Affairs; INTERPOL; the U.S. Department of State; 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 Rebekah Donaleski and George D. Turner are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), and Donald Halmy, the Chief of the Peekskill Police Department, announced that EDWARD HOLLIMAN was sentenced to 135 months in prison for conspiring to distribute crack cocaine in Peekskill, New York, between 2013 and 2017.  Holliman pled guilty on April 24, 2018, before U.S. District Court Judge Cathy Seibel, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Edward Holliman used a housing project in Peekskill as his personal market, peddling his drugs with no regard to their addictive destruction.  Thanks to the coordinated efforts of the FBI and the Peekskill Police Department, Holliman’s marketplace is closed for good.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “The malignant creep of illegal drugs and violence into the once peaceful suburbs is a major focus of our FBI Westchester County Safe Streets Task Force.  Our goal is to build strong and lasting partnerships with local law enforcement agencies like Peekskill Police to be a force multiplier, stopping the dealers and pushers from further infecting the community.”

Peekskill Police Chief Donald Halmy said:  “Edward Holliman has been a persistent threat to the public safety of Peekskill residents and a major distributor of crack cocaine in Bohlmann Towers for the past 15 years.  His arrest and successful prosecution will surely serve to improve the quality of life of residents of the building.  I’d like to praise the City of Peekskill detective division, FBI Safe Streets Task Force and the Office of the United States Attorney for their tireless efforts in this investigation.”

According court filings and statements made at public court proceedings:

Over the course of many years, HOLLIMAN supplied and distributed crack cocaine in and around Bohlmann Towers, a large housing project in Peekskill, New York.  To facilitate his narcotics distribution business, HOLLIMAN had several “workers,” co-conspirators whom Holliman managed and supervised, and who distributed crack cocaine that HOLLIMAN supplied to them to users.  HOLLIMAN used his mother’s apartment in Bohlmann Towers to store crack cocaine.  During the execution of a search warrant at that apartment on the day of HOLLIMAN’s arrest in October 2017, law enforcement recovered more than 50 grams of cocaine belonging to HOLLIMAN.  Between 2013 and 2017, HOLLIMAN sold and distributed between 2.8 and 8.4 kilograms of crack cocaine as part of the charged conspiracy.

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In addition to the prison term, HOLLIMAN, 63, of Peekskill, New York, was sentenced to five years of supervised release and ordered to pay forfeiture in the amount of $30,000.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and the Peekskill Police Department. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorney Olga I. Zverovich is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that PETER B. JOHNSON was sentenced to 30 months in prison for leading a scheme to defraud a group of lenders (the “Banks”) by submitting false “borrowing base” reports designed to secure and maintain a $400 million line of credit for his family’s cocoa trading company, Transmar Commodity Group Ltd. (“Transmar” or the “Company”).  JOHNSON pled guilty on March 9, 2018, to one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution.  The sentence was imposed by United States District Judge Jed S. Rakoff.

U.S. Attorney Geoffrey S. Berman said:  “Peter B. Johnson conspired to defraud lenders by misrepresenting how much credit-eligible collateral his company had.  When the company went bankrupt, it owed its lenders over $360 million.  For his role in lying to lenders, Johnson has been sentenced to prison.”

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

Transmar was a closely held, family-run cocoa commodity trading company founded by the PETER B. JOHNSON’s father, Peter G. Johnson.  PETER B. JOHNSON was an officer of Transmar, as well as responsible for the operations of Transmar affiliate Euromar Commodities GMBH (“Euromar”). 

From at least 2014 through at least December 2016, Transmar maintained a credit facility from the Banks that varied from approximately $250 million to approximately $400 million.  To secure and maintain these hundreds of millions of dollars in credit, PETER B. JOHNSON, Peter G. Johnson, Transmar’s Vice President of Finance, Thomas Reich, and others schemed to misrepresent material information about Transmar’s finances, making it appear that Transmar had far more credit-eligible collateral than it actually had.

The scheme centered on periodic “borrowing base” reports (“BB Reports”) that the Banks required Transmar to submit, sometimes as frequently as weekly, as a condition to continued credit extension.  The BB Reports were supposed to accurately reflect and quantify those portions of Transmar’s collateral that qualified for financing under the terms of credit agreements between Transmar and the Banks. 

Beginning no later than 2014, Transmar employees, acting with JOHNSON’s knowledge and at his direction, manipulated the BB Reports and related documents to give the false impression that Transmar had sufficient eligible collateral to support the amount of credit the Banks were extending.  The manipulation involved, among other devices, counting inventory that Transmar had already sold or was otherwise ineligible for inclusion, counting accounts receivable for which Transmar had already received payment, recording fake accounts receivable, and arranging “circle” transactions through which amenable third-party intermediaries agreed to “buy” goods from Transmar with Transmar’s own money, funneled to the third parties through Euromar. 

Following the discovery of the fraud, Transmar filed for bankruptcy in December 2016.  At that time, the Company owed the Banks approximately $360 million.

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In addition to the prison term, PETER B. JOHNSON, 39, of Morristown, New Jersey, was also sentenced to two years of supervised release, and ordered to forfeit $1,790,000.

Peter G. Johnson, 69 of Harding Township, New Jersey was sentenced by Judge Rakoff on August 13, 2018 to three years in prison.

Thomas Reich, 60, of Montvale, New Jersey, pled guilty to the same offenses for his participation in the scheme to defraud the Banks.  He is scheduled to be sentenced on September 21, 2018.

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

This case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant U.S. Attorneys Benet J. Kearney and Daniel M. Tracer are in charge of the prosecution.   

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that VINCENT BRUNO pled guilty today before United States Magistrate Judge Paul E. Davison to attempting to kill, and conspiring to kill, a Bronx man in 2012.  In May 2017, BRUNO and 18 other members and associates of the Luchese Family of La Cosa Nostra were arrested and charged in a nine-count Indictment, for their involvement in offenses including racketeering, murder, attempted murder, narcotics trafficking, and gun crimes.  Since the unsealing of the Indictment, BRUNO and nine other defendants have pled guilty, and have been or will be sentenced by U.S. District Judge Cathy Seibel.

U.S. Attorney Geoffrey S. Berman said:  “Bruno’s attempt to murder a man at the behest of his mob superiors has ended where it should:  With Bruno behind bars.  We will continue to work with the FBI and our other partners in law enforcement to stamp out the remnants of La Cosa Nostra.”

According to the superseding information to which BRUNO pled guilty, his statements when pleading guilty, the allegations in the Indictment, and statements made in related court filings and proceedings:

In 2012, armed members and associates of the Bonanno Family of La Cosa Nostra forced their way into a Bronx social club controlled by the Luchese Family.  During the ensuing confrontation, one of the Bonanno Family associates (the “Associate”) acted in a manner that a leader of the Luchese Family, Steven L. Crea (“Crea Sr.”), perceived as a personal affront. To avenge this supposed offense, Crea Sr. ordered his son, Steven D. Crea (“Crea Jr.”), to have the Associate killed.  Crea Jr. passed the order to Paul Cassano Jr., a/k/a “Paulie Roast Beef,” and BRUNO.  On a subsequent night, BRUNO and Cassano travelled to the Associate’s Bronx residence.  There BRUNO, armed with a gun, tried to find the Associate in order to kill him, but failed.  The dispute between the rival families was then resolved before the murder was carried out.

In conjunction with this incident, Cassano pled guilty to attempted assault in aid of racketeering in 2017.   Crea Sr. and Crea Jr. are also charged with attempting to have the Associate killed and other crimes, and are scheduled to begin trial before Judge Seibel in 2019.

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BRUNO, 34, pled guilty to one count of attempted murder in aid of racketeering, and one count of conspiracy against the United States.  In total, the counts to which BRUNO pled guilty carry a maximum sentence of 15 years.  BRUNO will be sentenced before Judge Seibel.

The allegations contained in the Indictment as to Crea Sr., Crea Jr., and the other defendants who have not pled guilty are merely accusations, and these defendants are presumed unless and until proven guilty.

Mr. Berman praised the outstanding investigative work of the FBI’s Joint Organized Crime Task Force, which comprises agents and detectives of the FBI, NYPD, Homeland Security Investigations, and the Waterfront Commission of New York Harbor.  He also thanked the Queens County District Attorney’s Office.

The case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Scott Hartman, Hagan Scotten, and Jacqueline Kelly are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James D. Robnett, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the unsealing of an indictment charging RICHARD JOSEPHBERG with five counts of tax evasion and four counts of willful failure to file tax returns.  JOSEPHBERG was arrested earlier this morning and is expected to be presented and arraigned later this afternoon in Manhattan federal court before United States District Judge Richard J. Sullivan. 

U.S. Attorney Geoffrey S. Berman said:  “Richard Josephberg allegedly defrauded the IRS and evaded taxes by disguising more than $1.5 million in income as long-term capital gain.  He also allegedly failed to file tax returns for four years.  Working with IRS Criminal, we are determined to ensure that everyone meets his tax obligations.”

IRS-CI Special Agent in Charge James D. Robnett said:  “The IRS enforces the nation’s tax laws and Special Agents are experts at following the money through multiple entities and complex structures. People who create elaborate schemes designed to mislead the IRS run the very high risk of arrest and criminal prosecution.”

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

In late 2010, JOSEPHBERG began working for an investor relations firm (“Firm-1”) in Manhattan.  Through the owner of Firm-1, JOSEPHBERG secured a commission-based arrangement with another investment firm (“Firm-2”), which agreed to pay JOSEPHBERG a commission of approximately 15 percent of any profit generated by Firm-2 on financing deals originated by JOSEPHBERG.  For originating one such financing deal, JOSEPHBERG was entitled to commission payments totaling approximately $1.57 million in 2011.  After receiving payments totaling approximately $35,725 in his own name, JOSEPHBERG directed Firm-2 to issue the remaining the commission payments in the name of a newly formed nominee corporate entity called “Almorli Advisors Inc.”  JOSEPHBERG opened a new bank account in the name of Almorli Advisors Inc. (“Almorli Bank Account-1”), and deposited payments totaling approximately $1.53 million into that account.

In March 2012, while preparing to file 2011 federal income tax returns, JOSEPHBERG took steps to evade paying hundreds of thousands of dollars in federal income taxes by disguising and concealing the type of income that JOSEPHBERG had received from Firm-2.  On or about March 27, 2012, JOSEPHBERG formed a second entity called “Almorli Advisors NY LLC.”  JOSEPHBERG caused his accountant to prepare a false 2011 partnership income tax return, Form 1065, in the name of Almorli Advisors NY LLC (the “2011 Form 1065”), listing JOSEPHBERG as a 99 percent partner and JOSEPHBERG’s son as a one percent partner.  To evade a substantial part of the income taxes due and owing for 2011, JOSEPHBERG caused the 2011 Form 1065 falsely to report the commission payments from Firm-2, totaling approximately $1,574,922, as a long-term capital gain, rather than ordinary income.  JOSEPHBERG’s purported 99 percent share of this false long-term capital gain flowed through to JOSEPHBERG’s 2011 individual income tax return, Form 1040.  JOSEPHBERG’s fraudulent misclassification of this income resulted in a reported tax liability that was hundreds of thousands of dollars lower than the true tax liability because individual long-term capital gains were taxed at a significantly lower rate than ordinary income.   

JOSEPHBERG also engaged in a scheme to evade the assessment of federal income taxes for calendar years 2013 through 2016.  During those years, JOSEPHBERG received substantial income from performing consulting and other professional services.  Despite earning substantial income, JOSEPHBERG failed timely to file any federal income tax returns for the calendar years 2013 through 2016 until after IRS agents contacted JOSEPHBERG in May 2017.  In addition to not timely filing any tax returns, JOSEPHBERG took various affirmative steps to evade the assessment of taxes.  Among other things, JOSEPHBERG routed substantial amounts of income through Almorli Bank Account-1 and another bank account in the name of Almorli Advisors Inc., which bank accounts JOSEPHBERG controlled and used to pay for his personal expenses. 

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JOSEPHBERG, 71, of Greenwich, Connecticut, is charged with five counts of tax evasion, each of which carries a maximum sentence of five years in prison, and four counts of willful failure to file tax returns, each of which carries a maximum sentence of one year in prison. 

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

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

This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Olga I. Zverovich is in charge of the prosecution.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that CARSON MORRIS, a former New York State Correction Officer, was sentenced yesterday by U.S. District Judge Kenneth M. Karas to 40 months in prison for the November 12, 2013, beating of Kevin Moore, a 54-year-old inmate at the Downstate Correctional Facility in Fishkill, New York, and for falsifying records to cover up the beating.

MORRIS pled guilty on November 1, 2017, to assaulting Moore in violation of Moore’s rights under the United States Constitution by repeatedly striking him as he lay restrained on the floor.  Moore was hospitalized for approximately two weeks with multiple serious injuries from the beating, including facial bone fractures, five broken ribs, and a collapsed lung.  MORRIS also pled guilty to conspiring to violate Moore’s civil rights, as well as to falsifying and conspiring to falsify Department of Corrections and Community Supervision (“DOCCS”) records concerning the assault.

 Manhattan U.S. Attorney Geoffrey S. Berman said:  “Carson Morris participated in a brutal gang-style assault of inmate Kevin Moore, who lay defenseless on the prison floor begging for mercy.  Morris and other officers then made up a false cover story to hide what they did, repeatedly lying in Corrections Department records and even creating a phony injury.  All American citizens, including prisoners, are protected by the Constitution.  Correction officers are not above the law, and when they beat inmates in their custody and lie about it, they are criminals and will be punished as criminals.”

Four other former New York State Correction Officers were charged in connection with the assault and cover-up.  On November 20, 2017, Kathy Scott and George Santiago Jr. were convicted following a two-week jury trial of violating and conspiring to violate Moore’s Constitutional rights by repeatedly kicking and punching him as he law restrained on the floor; as well as falsifying and conspiring to falsify records in an attempt to cover up the beating.  On July 21, 2018, Judge Karas sentenced Scott, who was a sergeant and the commanding officer on the scene, to 100 months in prison, and Santiago to 87 months in prison.  Former Correction Officers Andrew Lowery and Donald Cosman pled guilty to the same charges pursuant to cooperation agreements with the United States on July 27, 2016, and August 31, 2016, respectively.  On July 25, 2018, U.S. District Judge Nelson S. Román sentenced Lowery to a three-year term of supervised release.  Cosman’s sentencing has not yet been scheduled.

According to the evidence introduced at trial:

On November 12, 2013, Kevin Moore, then 54 years old, was brought to the 1D Housing Unit at Downstate Correctional Facility to be housed overnight.  Moore objected to his cell assignment and a verbal dispute ensued between Moore and a group of corrections officers.  After Moore yelled, in sum and substance, “I’m a monster,” multiple officers, including MORRIS, forced Moore to the floor, restrained him, and then proceeded to assault Moore as he lay there, repeatedly punching and kicking Moore in the head and body.  At no time did Moore ever try to attack, touch, or even make a threatening gesture toward any of the officers.  While Moore lay defenseless on the floor, MORRIS repeatedly kneed, punched, and kicked Moore in the torso.  Santiago, who was wearing boots, delivered a soccer-style kick to Moore’s face and continued to strike Moore after Moore was handcuffed.  During the beating, Santiago laughed and taunted Moore, yelling “Who’s the monster now.” 

Scott, who was a sergeant and the supervising officer on the scene, was present for the entire beating and was legally required to stop the excessive force being used by her subordinates.  Instead of taking action to stop the unlawful violence, Scott encouraged it, ordering an officer to hold Moore down on the floor while other officers, including MORRIS, continued to knee, kick, and punch him.  During the beating, Moore repeatedly cried out in pain and begged the officers to stop hurting him.

Immediately after the beating, MORRIS and other officers, led by Scott, engaged in an elaborate cover-up of the crime they had committed.  They made up a false cover story that Moore had attacked Cosman and that MORRIS had to strike Moore once in the head to save his fellow officer.  To make this lie believable, the officers claimed that Moore had injured Cosman’s back by pushing him backward onto a table.  But because nothing of the sort had occurred, they created a phony injury.  Specifically, Santiago hit Cosman repeatedly on the back with a baton, MORRIS rubbed the area with his hand to make the baton marks look worse, and Scott photographed the fake injury.  Scott then prepared a false Use of Force Report describing the incident and incorporating the photos and false statements from herself and other officers, including MORRIS, and submitted the false report to her superiors.  Scott, Santiago, and MORRIS also pressured other officers to lie to investigators about what had occurred.

Moore was severely injured, suffering multiple facial fractures, five broken ribs, and a collapsed lung, among other injuries.  According to the medical evidence, Moore received at least four forceful blows to the face and torso, including one crushing strike to the right eye that was consistent with a kick from a boot.

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MORRIS, 33 of Coconut Creek, Florida, was sentenced to 40 months in prison and one year of supervised release.  MORRIS must surrender to the custody of the Bureau of Prisons on December 10, 2018.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the Special Agents at the United States Attorney’s Office.  Mr. Berman also thanked the DOCCS Office of Special Investigation and the Dutchess County District Attorney’s Office for their assistance in the investigation.

This case is being handled by the Office’s Civil Rights Unit and the White Plains Division.  Assistant U.S. Attorneys Andrew Dember and Pierre Armand are in charge of the prosecution.

Robert Khuzami, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced today that DAVID BLASZCZAK, a political intelligence consultant, was sentenced to 12 months and one day in prison; CHRISTOPHER WORRALL, a government employee at the Centers for Medicare and Medicaid Services (“CMS”), was sentenced to 20 months in prison; and THEODORE HUBER and ROBERT OLAN, two partners and analysts at Deerfield Management Company, L.P., a healthcare-focused hedge fund in New York, New York (“Deerfield”), were each sentenced to 36 months in prison, respectively, in connection with their convictions following a four-week jury trial. 

BLASZCZAK, WORRALL, HUBER, and OLAN each participated in a scheme to obtain confidential information from CMS, which was then used execute profitable trades at Deerfield.  Specifically, as part of the scheme, BLASZCZAK obtained confidential and nonpublic information from CMS employees, including his friend, CHRISTOPHER WORRALL, who worked at CMS, and who breached his duties as a CMS employee by providing confidential information to BLASZCZAK.  BLASZCZAK then provided this material nonpublic information in advance of market-moving CMS announcements to employees at Deefield, including HUBER, OLAN, and Jordan Fogel, who recommended trades on the basis of the information.  Fogel, a former partner and analyst at Deerfield, previously pled guilty and is cooperating with the Government.  As a result of these trades, Deerfield reaped more than $7 million in profits.

In a separate scheme, BLASZCZAK also obtained confidential and nonpublic CMS information about cuts in CMS’s reimbursement rates for home health providers, and provided that information to Christopher Plaford, a portfolio manager at Visium Asset Management, L.P., another healthcare-focused hedge fund in New York, New York (“Visium”).  Plaford then used BLASZCZAK’s information to execute trades, resulting in approximately $330,000 in profits.  Plaford has previously pled guilty to this conduct and is also cooperating with the Government. 

Deputy U.S. Attorney Robert Khuzami said:  “Blaszczak, Worrall, Huber, and Olan conspired to steal highly sensitive and confidential government information and profit from that theft.  This scheme was carried out through Blaszczak’s purported ‘political intelligence’ firm, but nothing about this scheme was intelligent.  When you steal confidential information from the Government and use it to make illicit millions in the stock market, you will get caught.”           

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

CMS

CMS, a component of the United States Department of Health and Human Services (“HHS”), administers Medicare and Medicaid, among other things.  CMS is also responsible for setting Medicare reimbursement rates for healthcare providers.  CMS spends more than $1 trillion annually and pays approximately one-third of the country’s health expenditures.  Accordingly, CMS rulemaking decisions, including decisions that affect how much the federal government will pay to reimburse medical providers for services rendered, have a substantial, market-moving impact on publicly traded companies that depend on government healthcare spending. 

WORRALL began working at CMS in or about 1999.  Beginning in January 2012, WORRALL worked in the Director’s Office for the Center for Medicare (“CM”), which gave WORRALL broad access to CMS’s confidential deliberations about upcoming reimbursement decisions.  WORRALL also served as a project manager for a confidential CMS database that contained CMS’s most up-to-date claims data that CMS used to inform its decision-making. 

David Blaszczak

At all relevant times, BLASZCZAK served as a consultant at a number of Washington, D.C.-based firms that, in exchange for a fee, provided so-called “political intelligence,” which included analysis about how changes in Government reimbursement rates would impact publicly traded healthcare-related companies.  Before becoming a political intelligence consultant, BLASZCZAK worked at CMS, eventually serving as a special assistant to the CMS Administrator.  BLASZCZAK met WORRALL while the two worked at CMS. 

As a former CMS employee, BLASZCZAK was well aware of CMS’s rules governing the dissemination of nonpublic information. 

Deerfield Management Company, L.P. 

At all relevant times, Deerfield managed multiple hedge funds specializing in healthcare-related investments.  As of 2017, Deerfield had more than $7 billion in assets under management.  HUBER, OLAN, and Fogel were partners and analysts at Deerfield, where their job was to analyze investment decisions and recommend potentially profitable trades for Deerfield.  Deerfield’s compliance manual prohibited its employees from committing insider trading.  

The Scheme to Convert and Use Confidential CMS Information 

The Scheme

From at least in or about 2009 through in or about 2014, BLASZCZAK, WORRALL, HUBER, OLAN, Fogel, and others participated in a scheme to convert to their own use confidential and material nonpublic information from CMS concerning, among other things, CMS’s internal deliberations regarding coverage and reimbursement decisions.           

During this time period, Deerfield retained BLASZCZAK as a consultant who provided political intelligence related to, among other things, the content, likelihood, and timing of CMS reimbursement decisions.  As part of the scheme, HUBER, OLAN, and Fogel encouraged BLASZCZAK to obtain confidential and material nonpublic information from CMS insiders.  As HUBER, OLAN, and Fogel knew, these CMS insiders included BLASZCZAK’s former colleagues with whom he had close personal relationships, who were prohibited from disclosing such information to CMS outsiders.

BLASZCZAK obtained material nonpublic information from his close friend and former CMS colleague WORRALL.  BLASZCZAK and WORRALL were friends since their time working together at CMS.  BLASZCZAK also frequently offered to help WORRALL find lucrative private sector employment opportunities, in exchange for WORRALL giving BLASZCZAK confidential government information.  

BLASZCZAK conveyed the information obtained from WORRALL to HUBER, OLAN, and Fogel, who – knowing that BLASZCZAK had obtained the information improperly from a CMS insider – used the information to trade.  In exchange for being provided with this inside information, HUBER, OLAN, and Fogel caused Deerfield to pay BLASZCZAK more than $800,000 in consulting fees.

The Verdict 

The jury found BLASZCZAK guilty of 10 counts, HUBER and OLAN guilty of five counts each, and WORRALL guilty of two counts.  Specifically, with respect to Count One (conspiracy to convert government property, to commit securities fraud, and to defraud the United States relating to Deerfield) and Count Two (conspiracy to commit wire fraud and securities fraud relating to Deerfield), the jury found BLASZCZAK, HUBER, and OLAN guilty.  With respect to Count Three (conversion of government property) and Count Nine (wire fraud), the jury found all four defendants guilty.  With respect to Count Ten (securities fraud), the jury found BLASZCZAK, HUBER, and OLAN guilty. With respect to Count Thirteen (conversion of government property), Count Fifteen (wire fraud), Count Sixteen (securities fraud), Count Seventeen (conspiracy to convert government property and to defraud the United States relating to Visium), and Count Eighteen (conversion of government property), the jury found BLASZCZAK guilty on each count.

*                      *                      *

In addition to his prison sentence, BLASZCZAK, 42, of Isle of Palms, South Carolina, was sentenced to two years of supervised release, including one year of home confinement, and ordered to forfeit $727,500 and pay restitution to CMS in the amount of $1,644.26.

WORRALL, 40, of Linthicum Heights, Maryland, was sentenced to one year of supervised release, and ordered to pay restitution to CMS in the amount of $1,644.26.

HUBER, 56, of Westport, Connecticut, was sentenced to two years of supervised release, and ordered to forfeit $87,078, pay restitution to CMS in the amount of $1,644.26, and pay a fine of $1.25 million.

OLAN, 47, of Rumson, New Jersey, was sentenced to two years of supervised release, and ordered to forfeit $98,244, pay restitution to CMS in the amount of $1,644.26, and pay a fine of $1.25 million.

Mr. Khuzami praised the work of the Federal Bureau of Investigation and U.S. Department of Health and Human Services, Office of the Inspector General, and thanked the Securities and Exchange Commission for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Ian McGinley and Joshua A. Naftalis are in charge of the prosecution.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that the United States Attorney’s Office for the Southern District of New York has extended the deadline for receiving applications from qualified individuals to serve as Court-appointed monitor in connection with a proposed consent decree submitted to the Court for approval in the case of United States v. New York City Housing Authority, 18 Civ. 5213 (WHP).  Specifically, applications will be accepted until the date that the Court enters the proposed consent decree.

Applications will continue to be considered on a rolling basis as they are submitted, and applicants are encouraged to submit applications as soon as possible.  In addition, individuals who have already submitted applications are invited to supplement those applications as appropriate.

Pursuant to the terms of the consent decree, the Government will propose a monitor for approval by the Court.  As set forth at greater length in the proposed consent decree, the monitor will be responsible for the remediation of extensive health and safety deficiencies in NYCHA housing, as well as oversight and reform of NYCHA management, controls, and operations.  

The application and related materials, and instructions for submission, are available at https://www.justice.gov/usao-sdny/monitors-receivers-claims-administrators. 

The consent decree remains subject to review and approval by the Court.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeny Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the return to its rightful owner of a painting looted by the Nazis during World War II.  The painting, Deux Femmes Dans Un Jardin, painted in 1919 by Pierre Auguste Renoir (the “Renoir”), was stolen by the Nazis from a bank vault in Paris in 1941.  Mme. Sylvie Sulitzer, the last remaining heir of her grandfather Alfred Weinberger, a prominent art collector in pre-war Paris from whom the Renoir was stolen, received the work today during a ceremony at the Museum of Jewish Heritage in New York City.

Manhattan U.S. Attorney Geoffrey Berman said:  “Today, as we celebrate the just return of this painting to its rightful owner, we also remember the uniqueness of the Holocaust and reaffirm our commitment to ensure that the words ‘never forget, never again’ never ring hollow.  Hopefully this event brings some measure of justice to Madame Sylvie Sulitzer and her family.”  

FBI Assistant Director-in-Charge William F. Sweeny Jr. said:  “The atrocities that took place during World War II at the hands of the Nazis cannot be summed up in a few words.  They murdered, tortured, and plundered during their attempt to take over Europe and the world.  In the process, they also carried out smaller acts of evil behavior, stealing hundreds of thousands of these pieces of priceless artwork.  Some of those pieces are lost to our culture forever.  However, we take a bit of pride in returning a painting looted during the war, and helping repair some of the destruction decades ago.”

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 meticulously registered and identified those artworks – even photographing them – thereby leaving behind a detailed record of the works that they stole.

In December 1941, during the Nazi occupation of Paris, the ERR seized the Renoir, along with numerous other works, from a bank vault where Alfred Weinberger had stored his collection when he fled Paris at the outset of the war.  In the decades that followed, Mr. Weinberger sought to recover his property, registering his claim to the Renoir with the French restitution authorities in 1947 and the German restitution authorities in 1958.

The Renoir resurfaced after the war at an art sale in Johannesburg, South Africa, in 1975.  It subsequently found its way to London, where it was sold again in 1977, and then appeared at a sale in Zurich, Switzerland, in 1999.  Ultimately, the Renoir found its way to Christie’s Gallery in New York, where it was put up for auction by a private collector in 2013.  It was then that Mme. Sulitzer learned of the pending sale and made a claim to the work as part of her grandfather’s collection.  Christie’s alerted the FBI, and ultimately the purported owner of the work voluntarily agreed to relinquish its claim.  The U.S. Attorney’s Office and the FBI are now returning the painting to Mme. Sulitzer.

Mr. Berman thanked the FBI’s Art Crime Team for their assistance. 

The case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant U.S. Attorney Noah Falk is in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, James J. Hunt, the Special Agent-in-Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), and George P. Beach II, the Superintendent of the New York State Police (“NYSP”), announced the unsealing today of a Superseding Indictment charging 10 members and associates of Manhattan robbery crews with racketeering, narcotics, robbery, burglary, and firearms offenses.  Six of the charged defendants are members of a street gang known as the 200, operating in and around northern Manhattan.  One of those defendants is also charged with the 2014 murder of Orlando Rivera in furtherance of the 200 gang.

A total of five defendants were taken into custody today; one other defendant was already in federal custody.  Five of the 10 defendants will be presented and arraigned before U.S. Magistrate Judge Kevin N. Fox later today.  The case is assigned to U.S. District Judge Laura Taylor Swain.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged in the Indictment, the defendants wreaked havoc on their northern Manhattan neighborhood for years through a litany of crimes that harmed local businesses, injured robbery victims, and killed an innocent man.    Thanks to the extraordinary work of the DEA, the NYPD, and the State Police, the defendants will now face justice for their crimes.” 

DEA Special Agent-in-Charge James J. Hunt said:  “DEA’s investigations have a knack for exposing violent crime; evident in our arrests of MS-13 members, Trinitarios, Sinaloa Cartel members and today’s 200 Crew.  The 200 Crew’s alleged reign of terror is responsible for a rap sheet of crimes ranging from robbery to racketeering and murder.  I commend the New York Drug Enforcement Task Force REDRUM unit and U.S. Attorney’s Office Southern District of New York on today’s arrests.”  

NYPD Commissioner James P. O’Neill said:  “Dismantling violent street gangs and ending the criminal activities that support them will always be a priority for the NYPD and our law enforcement partners.  I thank the detectives, special agents, and others involved in this important case, and commend the DEA and the Southern District for sharing our vision of a New York City in which all those we serve become more safe each year, and feel more safe in every neighborhood, as well.”

NYSP Superintendent George P. Beach II said:  “These charges are a direct result of the hard work and cooperation among law enforcement at all levels and I applaud all of our partners for their dedication to fighting organized crime.  The disruption of this alleged illegal operation serves as a strong reminder that gang and related activities such as racketeering, drug trafficking, burglary, and the violence that is perpetuated by such crimes, will not be tolerated.”

As alleged in the Superseding Indictment unsealed today in Manhattan federal court and in other court papers[1]:

From 2014 through September 2018, in the Southern District of New York and elsewhere, MILTON CHARDON, a/k/a “Blanquito,” CHRISTIAN PABON, a/k/a “Banga,” BRYAN CASTILLO, a/k/a “True,” GEORGE CITRONELLE, a/k/a “CY,” a/k/a “BY,” JEREMY ESTEVEZ, a/k/a “Jerm Racks,” and YASMIL FERTIDES, a/k/a “Little Half,” were all members and associates of the 200 street gang. In order to fund the gang, protect its territory, and promote its standing, members of the 200 engaged in, among other things, narcotics trafficking, robbery, and other acts of violence, including murder.  200 members sold heroin, cocaine, marijuana, and OxyContin in the gang’s territory, possessed shared firearms, and engaged in shootings as part of their gang membership. 

In particular, on October 2, 2014, PABON murdered Orlando Rivera in the vicinity of 1653 Saint Nicholas Avenue in Manhattan, in order to maintain and increase his status in the 200 gang.  Additionally, on December 17, 2015, CHARDON and FERTIDES shot at and attempted to kill an individual in the vicinity of the intersection of Sickles Street and Sherman Avenue in Manhattan, and on November 21, 2016, CITRONELLE shot at victims of a robbery he carried out with other 200 members and associates in the vicinity of the intersection of Academy Street and Nagle Avenue in Manhattan.

Members of the 200 gang also participated with others in a conspiracy to commit robberies, a conspiracy to commit pharmacy burglaries, and a conspiracy to distribute oxycodone, all between 2011 and 2018.  CHARDON and FERTIDES participated in these conspiracies with SAMANTHA BATISTA, NOEL MARTINEZ, a/k/a “Crazy,” DOMINGO TOLENTINO, a/k/a “Juvi,” and JUAN CALDERON, a/k/a “Priva.”  BATISTA, MARTINEZ, and TOLENTINO robbed a marijuana dealer on or about November 8, 2016, at 510 West 188th Street in Manhattan, during which a firearm was discharged.  The pharmacies that the crew targeted included a pharmacy in the vicinity of 1985 University Avenue in the Bronx, which CHARDON and CALDERON targeted on October 8, 2016; a pharmacy in the vicinity of 1985 University Avenue in the Bronx, which FERTIDES and CALDERON targeted on June 15, 2017; and a pharmacy in the vicinity of 212 Nagle Avenue in Manhattan, which CHARDON, TOLENTINO, and CALDERON targeted on October 10, 2016.

*          *          *

Defendants CHARDON, CASTILLO, CITRONELLE, MARTINEZ, and CALDERON were arrested in New York yesterday and today.  They will be arraigned later this afternoon in Manhattan federal court.  FERTIDES will be arraigned September 21, 2018, before Judge Swain.

Charts containing the names, charges, and maximum and minimum 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 DEA’s New York Drug Enforcement Task Force, comprising agents and officers of the DEA, NYPD, and NYSP, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.  Mr. Berman also thanked the Manhattan District Attorney’s Office for its assistance in the investigation.

The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Hagan Scotten, Margaret Graham, Maurene Comey, and Karin Portlock 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

MAXIMUM AND MINIMUM PENALTIES

1

Racketeering

Conspiracy

18 U.S.C. § 1962(d) 

MILTON CHARDON, 25

CHRISTIAN PABON, 26

BRYAN CASTILLO, 23

GEORGE CITRONELLE, 23

JEREMY ESTEVEZ, 21

YASMIL FERTIDES, 29

Maximum (Pabon):

Life

Maximum

(other defendants):

20 years in prison

2

Murder in Aid of

Racketeering

18 U.S.C. §§ 1959(a)(1) and 2

CHRISTIAN PABON

Minimum:

Death, or Life in prison

3

Causing Death through Use of a Firearm

18 U.S.C. §§ 924(j) and 2

CHRISTIAN PABON

Maximum:

Death, or Life in prison

Minimum:

5 years in prison

4

Violent Crime in Aid of Racketeering

18 U.S.C. §§ 1959(a)(5) and 2

MILTON CHARDON

YASMIL FERTIDES

Maximum:

10 years in prison

5

Firearms Offense

18 U.S.C. §§ 924(c)(1)(A)(iii) and 2

MILTON CHARDON

YASMIL FERTIDES

Maximum:

Life in prison

Minimum:

10 years in prison

6

Violent Crime in Aid of Racketeering

18 U.S.C. §§ 1959(a)(6) and 2

GEORGE CITRONELLE

Maximum:

3 years in prison

7

Firearms Offense

18 U.S.C. §§ 924(c)(1)(A)(iii) and 2

GEORGE CITRONELLE

Maximum:

Life in prison

Minimum:

10 years in prison

8

Narcotics

Conspiracy

21 U.S.C. § 846

MILTON CHARDON

GEORGE CITRONELLE

YASMIL FERTIDES

Maximum (Fertides):

Life in prison

Minimum (Fertides):

10 years in prison

Maximum

(other defendants):

40 years in prison

Minimum

(other defendants):

5 years in prison

9

Robbery Conspiracy

18 U.S.C. § 1951

MILTON CHARDON

YASMIL FERTIDES

SAMANTHA BATISTA, 26

NOEL MARTINEZ, 23

DOMINGO TOLENTINO, 24

JUAN CALDERON, 29

Maximum:

20 years in prison

10

Robbery

18 U.S.S. §§ 1951 and 2

SAMANTHA BATISTA

NOEL MARTINEZ

DOMINGO TOLENTINO

Maximum:

20 years in prison

11

Firearms Offense

18 U.S.C. §§ 924(c)(1)(A)(iii) and 2

SAMANTHA BATISTA

NOEL MARTINEZ

DOMINGO TOLENTINO

Maximum:

Life in prison

Minimum:

10 years in prison

12

Narcotics Conspiracy

21 U.S.C. § 846

SAMANTHA BATISTA

NOEL MARTINEZ

DOMINGO TOLENTINO

Maximum:

5 years in prison

13

Pharmacy Burglary Conspiracy

18 U.S.C. § 2118(d)

MILTON CHARDON

YASMIL FERTIDES

SAMANTHA BATISTA

NOEL MARTINEZ

DOMINGO TOLENTINO

JUAN CALDERON

Maximum:

20 years in prison

14

Narcotics Conspiracy

21 U.S.C. § 846

MILTON CHARDON

YASMIL FERTIDES

SAMANTHA BATISTA

NOEL MARTINEZ

DOMINGO TOLENTINO

JUAN CALDERON

Maximum:

20 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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ONYEKACHI EMMANUEL OPARA was sentenced today in Manhattan federal court to 60 months in prison based upon OPARA’s participation in fraudulent business email compromise scams that targeted thousands of victims in the United States and around the world.  Through these scams, OPARA and his co-conspirators attempted to defraud victims of over $25 million.  On April 11, 2018, OPARA pled guilty to conspiracy to commit wire fraud and wire fraud before U.S. District Judge Paul A. Crotty, who imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “From halfway around the world, Onyekachi Emmanuel Opara ran a global email scam business that victimized thousands of people out of millions of dollars.  The global reach of our Office and the FBI ensured that Opara will serve time in the United States for his crimes.”       

According to the allegations in the Indictment to which OPARA pled guilty and statements made at the plea and sentencing proceedings:

Between 2014 and 2016, OPARA and his co-defendant, David Chukwuneke Adindu (“Adindu”), participated in multiple business email compromise (“BEC”) scams that targeted thousands of victims around the world, including in the United States, the United Kingdom, Australia, Switzerland, Sweden, New Zealand, and Singapore.  OPARA sent bogus emails to employees of the victim companies directing that funds be transferred to specified bank accounts.  The emails purported to be from supervisors at those companies or from third party vendors with whom the companies did business.  In reality, the emails were either sent from email accounts with domain names very similar to those of the companies and vendors, or the metadata for the emails was modified to make it appear as if the emails had been sent from legitimate email addresses.  After victims transferred the funds as directed in the bogus emails, the funds were quickly withdrawn or transferred to other bank accounts controlled by scheme participants.  In total, the BEC scam participants attempted to steal more than $25 million from victims around the world.

In furtherance of the BEC scams, OPARA created accounts on dating websites and entered into online romantic relationships with individuals in the United States by portraying himself as a young attractive woman named “Barbara.”  “Barbara” would then instruct these individuals in the United States to send their money overseas and/or to receive money from BEC scams and forward the proceeds to other scheme participants located overseas.  For example, one victim with whom OPARA struck up a romantic relationship sent over $600,000 of the victim’s own money to bank accounts controlled by scheme participants at OPARA’s direction.  OPARA also attempted to recruit at least 14 other individuals via dating websites to receive funds from BEC scams into their bank accounts and then transfer the proceeds to overseas bank accounts. 

OPARA was arrested on December 22, 2016, in Johannesburg, South Africa, and was extradited to the Southern District of New York on January 26, 2018. 

*                *                *

In addition to the prison term, OPARA, 30, of Lagos, Nigeria, was sentenced to two years of supervised release and was ordered to pay $2.5 million in restitution. 

On June 20, 2017, Adindu pled guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit identity theft.  On December 14, 2017, Judge Crotty sentenced Adindu to 41 months in prison and ordered him to pay approximately $1.4 million in restitution.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked Oath’s E-Crime Investigations Team, the National Prosecuting Authority for South Africa, the South African Police Service, and the United States Marshals Service.  Mr. Berman noted that the investigation is ongoing.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Andrew K. Chan and Daniel Loss are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney, Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and David E. Beach, Special Agent in Charge of the U.S. Secret Service New York Field Office (“USSS”) announced today that ANDREI TYURIN, a/k/a “Andrei Tiurin,” was extradited from the country of Georgia.  TYURIN was arrested by Georgian authorities at the request of the United States for charges arising from his participation in a massive computer hacking campaign targeting U.S. financial institutions, brokerage firms, financial news publishers, and other American companies.  These hacks included the largest theft of customer data from a U.S. financial institution in history.  TYURIN is charged with committing these crimes with Gery Shalon, a/k/a “Garri Shalelashvili,” a/k/a “Gabriel,” a/k/a “Gabi,” a/k/a “Phillipe Mousset,” a/k/a “Christopher Engeham”; Joshua Samuel Aaron, a/k/a “Mike Shields”; and Ziv Orenstein, a/k/a “Aviv Stein,” a/k/a “John Avery,” in furtherance of securities market manipulation, illegal online gambling, and payment processing fraud schemes perpetrated by Shalon, Aaron, Orenstein, and their co-conspirators. 

TYURIN, a Russian citizen, arrived in the Southern District of New York earlier today, and will be presented this afternoon in Manhattan federal court before United States Magistrate Judge Henry B. Pitman.  TYURIN is expected to appear before United States District Judge Laura Taylor Swain on September 25, 2018, at 2:00 PM. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Andrei Tyurin, a Russian national, is alleged to have participated in a global hacking campaign that targeted major financial institutions, brokerage firms, news agencies, and other companies.  Tyurin’s alleged hacking activities were so prolific, they lay claim to the largest theft of U.S. customer data from a single financial institution in history, accounting for a staggering 80 million-plus victims.  As Americans increasingly turn to online banking, theft of online personal information can cause devastating effects on their financial wellbeing, sometimes taking years to recover.  Today’s extradition marks a significant milestone for law enforcement in the fight against cyber intrusions targeting our critical financial institutions.”

FBI Assistant Director William F. Sweeney Jr. said:  “Andrei Tyurin allegedly engaged in a long-running effort to hack into the systems of U.S. based financial institutions, brokerage firms and financial news publishers, all from the perceived safety of operating outside our borders.  As alleged, his illegal acts included the historically largest theft of customer data from a U.S. financial institution.  Today’s charges and extradition should serve as a lesson to all those who would conspire to engage in similar activity that the FBI and our partners will continue to bring these hackers to justice, regardless of where they may hide.  I’d like to specifically thank our partners with the United States Secret Service, whose collaboration was crucial to seeing this case to fruition.”

U.S. Secret Service Special Agent in Charge David E. Beach said:  “This case represents the core of the U.S. Secret Service’s integrated mission to secure our nation’s cyber related financial infrastructure and protect our nation’s leadership.  The collaboration between the Secret Service New York Field Office Electronic Crimes Task Force, FBI New York Office Cyber Division and our global law enforcement partners demonstrates the commitment to combating cyber-enabled financial crimes and ensuring those responsible are held accountable.”

According to the allegations contained in the superseding indictments unsealed today in Manhattan federal court[1], other filings in this case, and statements made during court proceedings:

From approximately 2012 to mid-2015, TYURIN engaged in an extensive computer hacking campaign targeting financial institutions, brokerage firms, and financial news publishers in the United States, including the theft of personal information of over 100 million customers of the victim companies.  TYURIN’s hack of one financial institution headquartered in Manhattan resulted in the theft of personal information of over 80 million customers, making it the largest theft of customer data from a U.S. financial institution in history.  TYURIN engaged in these crimes at the direction of Shalon and in furtherance of other criminal schemes overseen and operated by Shalon and his co-conspirators, including securities fraud schemes in the United States.  For example, in an effort artificially to inflate the price of certain stocks publicly traded in the United States, Shalon and his co-conspirators marketed the stocks in a deceptive and misleading manner to customers of the victim companies whose contact information TYURIN stole in the intrusions.

In addition to the U.S. financial sector hacks, TYURIN also conducted cyberattacks against numerous U.S. and foreign companies in furtherance of various criminal enterprises operated by Shalon and his co-conspirators, including unlawful internet gambling businesses and international payment processors.  Nearly all of these illegal businesses, like the securities market manipulation schemes, exploited the fruits of TYURIN’s computer hacking campaigns.  Through these various criminal schemes, TYURIN, Shalon, and their co-conspirators obtained hundreds of millions of dollars in illicit proceeds.

*                *                *

TYURIN, 35, of Moscow, Russia, is charged with one count of conspiracy to commit computer hacking, which carries a maximum prison term of five years; one count of wire fraud, which carries a maximum prison term of 30 years; four counts of computer hacking, each of which carries a maximum prison term of five years; one count of conspiracy to commit securities fraud, which carries a maximum prison term of five years; one count of conspiracy to violate the Unlawful Internet Gambling Enforcement Act, which carries a maximum prison term of five years; one count of conspiracy to commit wire fraud and bank fraud, which carries a maximum prison term of 30 years; and aggravated identity theft, which carries a mandatory consecutive term of imprisonment of two years. 

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 Judge Swain.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the U.S. Secret Service, and expressed his sincere gratitude to the Chief Prosecutor’s Office of Georgia and the Ministry of Justice of Georgia for their support and assistance with the extradition proceedings.  He also thanked the Securities and Exchange Commission, Homeland Security Investigations, the Financial Industry Regulatory Authority, the Office of International Affairs of the U.S. Department of Justice for its assistance with the extradition, and the Financial Services Information Sharing and Analysis Center, which significantly aided the investigation by facilitating information-sharing among the victim institutions.

The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Eun Young Choi, Noah Solowiejczyk, and Sarah Lai are in charge of the prosecution.  Assistant U.S. Attorney Daniel Tracer is in charge of the forfeiture aspects of the case.

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

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

Robert Khuzami, Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that GARY HIRST was sentenced today by U.S. District Judge Ronnie Abrams to 8 years imprisonment for defrauding a Native American tribal entity and numerous pension fund investors of tens of millions of dollars in connection with the issuance of bonds by the tribal entity.  HIRST pled guilty May 15, 2018, to conspiracy to commit securities fraud, securities fraud, investment adviser fraud, and conspiracy to commit investment adviser fraud before U.S. Magistrate Judge Barbara Moses. 

Attorney for the United States Robert Khuzami said:  “This complex and brazen securities fraud scheme lined the pockets of Gary Hirst and his co-defendants but left the Native American tribal entity, the Wakpamni Lake Community Corporation $60 million in debt.  Hirst, who is already in prison for a separate securities scheme prosecuted by this Office, now faces additional time behind bars for this criminal conspiracy.”

According to the allegations contained in the Indictment filed against HIRST and statements made in related court filings and proceedings, including the trial of co-defendants John Galanis, Devon Archer, and Bevan Cooney:

From March 2014 through April 2016, HIRST, Jason Galanis, John Galanis, Devon Archer, Bevan Cooney, Michelle Morton, and Hugh Dunkerley, engaged in a fraudulent scheme to misappropriate the proceeds of bonds issued by the Wakpamni Lake Community Corporation (“WLCC”), a Native American tribal entity (the “Tribal Bonds”), and to use funds in the accounts of clients of asset management firms controlled by HIRST, Morton, and others to purchase the Tribal Bonds, which the clients were then unable to redeem or sell because the bonds were illiquid and lacked a ready secondary market.

The WLCC was convinced to issue the Tribal Bonds through false and fraudulent representations by John Galanis.  Simultaneously, Jason Galanis, with the backing of Archer and Cooney, worked to acquire Hughes Capital Management (“Hughes”), a registered investment adviser.  HIRST and Morton were installed as Hughes’s chief investment officer and chief executive officer, respectively.  Within weeks of taking control of Hughes, HIRST and Morton placed the entire $28 million first series of Tribal Bonds with Hughes clients but failed to disclose material facts about the Tribal Bonds, including that the Tribal Bonds fell outside the investment parameters set forth in the investment advisory contracts of certain Hughes clients.  Indeed, HIRST himself signed the trade tickets to purchase the bonds after other employees of Hughes refused to do so.  In addition, Hughes’s clients were not told about substantial conflicts of interest with respect to the issuance and placement of the Tribal Bonds before the Tribal Bonds were purchased on these clients’ behalf. 

The defendants and their co-conspirators then misappropriated the proceeds of the first Tribal Bond issuance.  Specifically, although the Tribal Bonds were supposed to be invested in an annuity, the proceeds were deposited into an account opened by HIRST and over which both HIRST and Dunkerley had signatory authority.  HIRST and Dunkerley, at the direction of Jason Galanis, then transferred significant amounts of the bond proceeds from that account to support the defendants’ business and personal interests.  Jason Galanis, for example, used a portion of the proceeds of the first Tribal Bond issuance to finance the purchase of a $10 million luxury apartment in Tribeca.  John Galanis, similarly, secretly received $2.35 million in proceeds of the first bond issuance, which he spent on a variety of personal expenses and luxury items, including cars, jewelry, and hotel expenses. 

In addition, after John Galanis induced the WLCC to issue a second round of Tribal Bonds, Archer and Cooney used $20 million of bond proceeds from the first issuance to buy the entirety of the second issuance.  As a result of the use of recycled proceeds to purchase additional issuances of Tribal Bonds, the face amount of Tribal Bonds outstanding increased and the amount of interest payable by the WLCC increased, but the actual bond proceeds available for investment on behalf of the WLCC did not increase.  The bonds purchased by Archer and Cooney were then used to meet net capital requirements at two broker dealers in which Archer and Cooney had interests.  Cooney also obtained a $1.2 million loan based on his purported ownership of the bonds, which he subsequently failed to repay.  In addition, millions of dollars in bond proceeds from the bond issuances were used to finance the acquisition of companies that the defendants and their co-conspirators acquired as part of a strategy to build a financial conglomerate.

In the spring of 2015, John Galanis induced the WLCC to issue an additional $16 million worth of Tribal Bonds.  Simultaneously, Jason Galanis, Archer, and others – in consultation with HIRST – purchased a second investment adviser, Atlantic Asset Management (“Atlantic”), and installed Morton as the chief executive officer.  Within days of obtaining control of Atlantic, Morton placed the entirety of the $16 million Tribal Bond with an Atlantic client, without the client’s consent and without disclosing the fact that the Tribal Bonds were outside the client’s investment parameters and that numerous conflicts of interest existed.  The proceeds of the $16 million issuance were again not invested in an annuity as promised, but instead were diverted, among other things, to finance the defendants’ acquisition of another company in furtherance of their plan to build a financial conglomerate and to make payments to one of the broker dealers in which Archer and Cooney had interests.  HIRST also directed that significant portions of the bond proceeds be funneled through other secret accounts and used to purchase significant portions of a technology stock’s IPO – which was itself secretly controlled by several of the defendants.

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In addition to the prison term, GARY HIRST, 66, was sentenced to 3 years of supervised release.  HIRST was also ordered to forfeit $1.3 million and to make restitution in the amount of $43,785,176.

Jason Galanis, who pled guilty to conspiracy to commit securities fraud, securities fraud, and investment adviser fraud, was sentenced to a term of 173 months in prison on August 11, 2017.  Michelle Morton, who pled guilty to conspiracy to commit securities fraud and investment adviser fraud, is scheduled to be sentenced on November 30, 2018.  John Galanis, who was convicted at trial of conspiracy to commit securities fraud and securities fraud, is scheduled to be sentenced on November 2, 2018.  Devon Archer and Bevan Cooney, who were convicted at trial of conspiracy to commit securities fraud and securities fraud, are scheduled to be sentenced on November 9, 2018.  Hugh Dunkerley, who pled guilty to conspiracy to commit securities fraud, two counts of securities fraud, bankruptcy fraud, and falsification of records with the intent to obstruct a government investigation, is scheduled to be sentenced on March 8, 2019.

This conviction represents HIRST’s second conviction in this District in a little more than a year.  On August 3, 2017, following his conviction at trial, HIRST was sentenced by U.S. District Judge P. Kevin Castel to 78 months in prison in connection with his participation in a scheme to manipulate the market for Gerova Financial Group, Ltd., a publicly traded company listed on the New York Stock Exchange, and to defraud the shareholders of that company. 

Mr. Khuzami praised the work of the U.S. Postal Inspection Service and the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Rebecca Mermelstein, Brendan F. Quigley, and Negar Tekeei are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that AVTANDIL KHURTSIDZE, a former world boxing champion and the chief enforcer for Razhden Shulaya, was sentenced to 10 years in prison by United States District Judge Katherine B. Forrest, following KHURTSIDZE’s conviction in June on charges of racketeering and fraud conspiracy.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Avtandil Khurtsidze, a former middleweight boxing champion and heavyweight enforcer for the Shulaya Enterprise – a massive ‘elite’ criminal enterprise of the former Soviet Union – was convicted of intimidating and punishing associates of the organization.  Thanks to our dedicated law enforcement partners around the globe, Khurtzide’s reign of extortion and violence has been halted, as he is now sentenced to 10 years in federal prison.”

According to the Indictments filed in Manhattan federal court, previous court filings, and statements made at public court proceedings:

The Shulaya Enterprise was an organized criminal group operating under the direction and protection of Razhden Shulaya, a/k/a “Brother,” a/k/a “Roma,” a “vor v zakone” or “vor,” which are Russian phrases translated roughly as “Thief-in-Law” or “Thief,” and which refer to an order of elite criminals from the former Soviet Union who receive tribute from other criminals, offer protection, and use their recognized status as vor to adjudicate disputes among lower-level criminals.  As a vor, Shulaya had substantial influence in the criminal underworld and offered assistance to and protection of the members and associates of the Shulaya Enterprise.  Those members and associates, and Shulaya himself, engaged in widespread criminal activities, including acts of violence, extortion, the operation of illegal gambling businesses, fraud on various casinos, identity theft, credit card frauds, trafficking in large quantities of stolen goods, money laundering through a fraudulently established vodka import-export company, payment of bribes to local law enforcement officers, and the operation of a Brooklyn-based brothel.

The Shulaya Enterprise operated through groups of individuals, often with overlapping members or associates, dedicated to particular criminal tasks.  While many of these crews were based in New York City, the Shulaya Enterprise had operations in various locations throughout the United States (including in New Jersey, Pennsylvania, Florida, and Nevada) and abroad.  Most members and associates of the Shulaya Enterprise were born in the former Soviet Union and many maintained substantial ties to Georgia, Ukraine, and the Russian Federation, including regular travel to those countries, communication with associates in those countries, and the transfer of criminal proceeds to individuals in those countries.

AVTANDIL KHURTSIDZE, formerly a middleweight boxing champion, acted as Shulaya’s chief enforcer and, as such, engaged in multiple acts of extortion and violence.  KHURTSIDZE was captured on video twice assaulting others in service of the Shulaya Enterprise, participated in recorded acts of extortion of gambling debts, and planned additional acts of violence with Shulaya targeting associates of the Shulaya Enterprise whom KHURTSIDZE and Shulaya perceived as having disrespected Shulaya’s status as a vor.

KHURTSIDZE also participated in a scheme to defraud casinos by targeting particular models of electronic slot machines using a complicated algorithm designed to predict the behavior of those machines.  Shulaya and other members of the Enterprise obtained the technology used to commit that fraud through violence, including through the 2014 kidnapping of a software engineer in Las Vegas.  KHURTSIDZE, working at Shulaya’s direction, then assisted in refining that technology by training lower-level members of the Shulaya Enterprise to execute this casino scam using smartphones and software developed by the Shulaya Enterprise.

Following a two-week trial before the Honorable Katherine B. Forrest, KHURTSIDZE was found guilty of one count of racketeering conspiracy and one count of wire fraud conspiracy.      

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In addition to the prison term, KHURTSIDZE, 38, of Kutaisi, Republic of Georgia, was sentenced to two years of supervised release

Mr. Berman praised the outstanding work of the Federal Bureau of Investigation and its Eurasian Organized Crime Squad, as well as U.S. Customs and Border Protection, and the New York City Police Department for their investigative efforts and ongoing support and assistance with the case.

The prosecution of this case is being overseen by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Andrew C. Adams, Andrew Thomas, and Andrew Chan are in charge of the case.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that ROBERTO RODRIGUEZ pled guilty today before United States Magistrate Judge Henry B. Pitman to conspiracy to commit securities fraud and fraud in connection with a tender offer for his role in an insider trading scheme involving material nonpublic information misappropriated from an investment bank by Daniel Rivas, a former employee at the bank.  In August 2017, RODRIGUEZ, Michael Siva, Rodolfo Sablon, and Jeffrey Rogiers were arrested and charged in a 54-count Indictment for their involvement in three insider trading schemes, all stemming from securities trades based on information misappropriated by Rivas.  Rivas and an additional participant, James Moodhe, had previously pled guilty and are cooperating with the Government in this investigation.  Since the unsealing of the Indictment, Sablon, Zoquier, and Rogiers, in addition to RODRIGUEZ, have pled guilty and will be sentenced by U.S. District Judge Alison J. Nathan.[1]

U.S. Attorney Geoffrey S. Berman said:  “As Roberto Rodriguez admitted today, he traded on confidential corporate information stolen by his longtime friend Daniel Rivas, reaping millions of dollars in illegal profits.  Further, Rodriguez and another conspirator, Rodolfo Sablon, planned to use these illicit proceeds as seed money to start their own investment fund, intending to give an ownership stake to Rivas.  Our Office is committed to identifying and prosecuting insider trading networks that undermine our nation’s securities markets.”

According to the allegations contained in the Indictment filed against RODRIGUEZ 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 Rodriguez Tipping Chain

RODRIGUEZ was a member of the second of three tipping chains outlined in the Indictment.  In this tipping chain, Rivas passed inside information to RODRIGUEZ, a childhood friend of Rivas with whom Rivas had maintained a close relationship as adults, and Sablon. 

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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RODRIGUEZ, 33, of Miami, Florida, pled guilty to one count of conspiracy to commit securities fraud and fraud in connection with a tender offer (Count 21), which carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  RODRIGUEZ will be sentenced before Judge Nathan. 

The allegations contained in the Indictment as to Michael Siva, the sole defendant who had not pleaded guilty, are merely accusations, and he is presumed innocent unless and until proven guilty.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for their assistance.  He added that the investigation is continuing.

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.  

[1] As for the defendant who has not pled guilty (Michael Siva), the charges described herein constitute only allegations, and Siva is presumed innocent unless and until proven guilty.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that TYRONE FELDER, a/k/a “Man Man,” was found guilty of participating in the fatal carjackings of two livery cab drivers: Maodo Kane, who was killed in the Bronx on August 5, 2014, and Aboubacar Bah, who was killed in the Bronx on August 12, 2014.  FELDER was also found guilty of participating in two armed robberies in Yonkers on August 5, 2014, as well as firearms offenses related to the carjackings and the robberies.  The jury convicted FELDER yesterday on all nine counts of the Indictment following a two-week trial before U.S. District Judge Vincent L. Briccetti.

U.S. Attorney Geoffrey S. Berman said:  “Tyrone Felder’s days of reckless and deadly violence are over.  This unanimous verdict means that Felder will spend the rest of his life in prison, but it will not bring back the two men that Felder murdered.”

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

On August 5, 2014, FELDER participated in the armed carjacking of Maodo Kane.  During the course of the carjacking, FELDER shot and killed Mr. Kane in the vicinity of Hunter Avenue, in the Bronx.  FELDER then used the stolen car to participate in two gunpoint robberies of businesses in Yonkers.  Subsequently, on August 12, 2014, FELDER participated in the carjacking of Aboubacar Bah.  During the course of the carjacking, FELDER shot and killed Mr. Bah in the vicinity of Bryant Avenue, in the Bronx.

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FELDER, 29, was found guilty of two counts of carjacking resulting in death, two counts of robbery, four counts of firearms possession, and one count of conspiracy to commit robbery.  FELDER faces a maximum potential sentence of life in prison and a mandatory minimum sentence of 100 years in prison, which must run consecutively to any other term of imprisonment imposed.  FELDER is scheduled to be sentenced by Judge Briccetti on January 18, 2019.

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. 

Mr. Berman praised the outstanding investigative work of the New York City Police Department, the City of Yonkers Police Department, and the Federal Bureau of Investigation’s Westchester County Safe Streets Task Force.

The case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Hagan Scotten, Anden Chow, Scott Hartman, Michael Gerber, and Celia Cohen are in charge of the prosecution.

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,” pled guilty yesterday before Chief United States District Judge Colleen McMahon to conspiracy to commit sex trafficking and conspiracy to transport minors interstate for the purpose of prostitution. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “The defendant spent most of his adult life profiting from his victimization of girls and women through extreme physical and psychological abuse.  All the while, he bragged about being a pimp and a player.  Thanks to the extraordinary work of the FBI, the defendant’s so-called game is now over, and he will face the consequences of his actions.  We can only hope that the defendant’s guilty plea brings some measure of justice for the survivors of his vicious crimes.”

According to the Indictment, Superseding Information, publicly-filed documents, and statements made in court:

Starting in or about 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 girls and women in numerous states, all for his own profit. 

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PIERRE-LOUIS, 46, of Queens, New York, was arrested on August 17, 2016, and has been in federal custody since.  PIERRE-LOUIS pled guilty to one count of conspiracy to commit sex trafficking, which carries a maximum sentence of life in prison; and one count of conspiracy to transport minors interstate for the purpose of prostitution, which carries a mandatory minimum sentence of ten years in prison, and a maximum sentence of life 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.

PIERRE-LOUIS is scheduled to be sentenced by Judge McMahon on December 12, 2018.

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.

A New York-licensed attorney and former partner at a New York law firm pleaded guilty today to conspiracy to defraud the United States and tax evasion arising from a scheme to embezzle millions of dollars from a deceased client’s estate, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Geoffrey S. Berman for the Southern District of New York.

“The fiduciary duty that a lawyer owes to a client is paramount to the practice of law,” said Principal Deputy Assistant Attorney General Zuckerman. “The Justice Department will prosecute and seek just punishment against any attorney who victimizes their clients for their own personal gain.”

“As he admitted in court today, Steven Etkind violated the law, the canons of his profession, and the trust of his client by stealing more than $3.5 million from the client’s estate,” said U.S. Attorney Berman. “Etkind now awaits sentencing for his crimes.”

According to court documents and statements made in court, Steven M. Etkind was a partner at a New York law firm’s tax, trusts and estates group and a Certified Public Accountant.  Etkind performed legal work for a successful entrepreneur client, who passed away in 2008, naming Etkind as the co-executor of his $35 million estate.

The client’s will directed the creation of two charitable trust private foundations, funded with assets from the client’s estate, for the sole purpose of donating to 501(c)(3) charitable organizations, including those aimed at assisting Jewish-sponsored organizations.  Etkind was named co-trustee of these trusts. 

Beginning in 2009, Etkind and his co-conspirator set up a phony charitable organization, the United Jewish Education Foundation (UJEF), and used it to steal more than $3.5 million from these charitable trusts.  As part of the conspiracy, Etkind directed that donations from the trusts be first made to legitimate Jewish charitable organizations in order to give the disbursements the appearance of legitimate donations.  Etkind and his co-conspirator then redirected the funds to accounts of UJEF, the phony charity that his co-conspirator controlled. 

Etkind subsequently directed his co-conspirator to write checks, totaling $327,500, to a bank account in the name of JE Capital Holding Corp., a nominee corporate entity that Etkind controlled exclusively.  Etkind further directed more than $3 million to be used in 2010 to purchase a 6,300 square-foot home with a swimming pool in Southampton, New York.  The Southampton property was purchased for the use and enjoyment of Etkind and his family.  Etkind later transferred title of the property to JE Trust, a nominee trust he controlled. 

To conceal his embezzlement, Etkind filed, and caused to be filed, fraudulent personal, corporate, and charitable trust returns with the Internal Revenue Service (IRS).  During the course of a subsequent audit of UJEF by the IRS Tax Exempt & Government Entities Division, Etkind and his co-conspirator made several false and misleading statements, including about the true ownership of the Southampton Property.         

United States District Judge John G. Koelt scheduled Etkind's sentencing for January 18, 2019.  Etkind faces a statutory maximum sentence of five years in prison on the conspiracy charge and five years in prison for tax evasion.  He also faces a period of supervised release, restitution, and monetary penalties. 

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Berman praised the outstanding efforts by special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorneys Jorge Almonte and Jack A. Morgan of the Tax Division, who are prosecuting the case, as well as the IRS’s Tax Exempt & Government Entities Division for their assistance in the investigation.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Richard E. Zuckerman, the Principal Deputy Assistant Attorney General for the Tax Division of the Department of Justice, announced that STEVEN M. ETKIND, a New York-licensed attorney and a Certified Public Accountant, pled guilty today to conspiracy to defraud the United States and tax evasion arising from a scheme to embezzle millions of dollars from a deceased client’s estate.  ETKIND pled guilty before United States District Judge John G. Koeltl.

Manhattan U.S. Attorney Berman said:  “As he admitted in court today, Steven Etkind violated the law, the canons of his profession, and the trust of his client by stealing more than $3.5 million from the client’s estate.  Etkind now awaits sentencing for his crimes.”

Principal DAAG Zuckerman said:  “The fiduciary duty that a lawyer owes to a client is paramount to the practice of law.  The Justice Department will prosecute and seek just punishment against any attorney who victimizes their clients for their own personal gain.”

According to the allegations contained in the Indictment to which ETKIND pled guilty and statements made in court:

ETKIND was a partner at a New York law firm and served as head of the law firm’s Tax, Trusts, and Estates practice group.  ETKIND performed legal work for a successful entrepreneur client who, prior to his death in 2008, named ETKIND as co-executor of his $35 million estate.

The client’s will directed the creation of two charitable trust private foundations, funded with assets from the client’s estate, for the sole purpose of donating to 501(c)(3) charitable organizations, including those aimed at assisting Jewish-sponsored organizations.  ETKIND was named co-trustee of these trusts. 

Beginning in 2009, ETKIND and his co-conspirator set up a phony charitable organization, the United Jewish Education Foundation (“UJEF”), and used it to steal more than $3.5 million from these charitable trusts.  As part of the conspiracy, ETKIND directed that donations from the trusts be first made to legitimate Jewish charitable organizations in order to give the disbursements the appearance of legitimate donations.  ETKIND and his co-conspirator then redirected the funds to accounts of UJEF, the phony charity that his co-conspirator controlled. 

ETKIND subsequently directed his co-conspirator to write checks, totaling $327,500, to a bank account in the name of JE Capital Holding Corp., a nominee corporate entity that ETKIND controlled exclusively.  ETKIND further directed more than $3 million to be used in 2010 to purchase a 6,300 square-foot home with a swimming pool in Southampton, New York.  The Southampton property was purchased for the use and enjoyment of ETKIND and his family.  ETKIND later transferred title of the property to JE Trust, a nominee trust he controlled. 

To conceal his embezzlement, ETKIND filed, and caused to be filed, fraudulent personal, corporate, and charitable trust returns with the Internal Revenue Service (“IRS”).  During the course of a subsequent audit of UJEF by the IRS Tax Exempt & Government Entities Division, ETKIND and his co-conspirator made several false and misleading statements, including about the true ownership of the Southampton Property.          

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ETKIND, 56, of New York, New York, pled guilty to one count of conspiracy to defraud the United States and one count of tax evasion, each of which carries a maximum sentence of five years in prison.  As part of the plea agreement, ETKIND agreed to pay restitution in the amount of $1,208,245 to the IRS, which represents the additional tax due and owing as a result of ETKIND’s filing of false individual income tax returns for the 2009 and 2010 calendar years.  Sentencing is scheduled for January 18, 2019, before Judge Koeltl.

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 Judge Koeltl.

Mr. Berman and Mr. Zuckerman praised the outstanding efforts by special agents of IRS Criminal Investigation.  Mr. Berman also thanked the U.S. Department of Justice’s Tax Division and the IRS’s Tax Exempt & Government Entities Division for their assistance in the investigation. 

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Special Assistant United States Attorneys Jorge Almonte and Jack A. Morgan (of the Tax Division) are in charge of the prosecution. 

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website, https://www.justice.gov/tax.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James D. Robnett, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today MARY BOONE, a Manhattan art gallery owner, pled guilty to charges arising from her filing of federal income tax returns that falsely claimed approximately $1.6 million in personal expenses as tax deductible business expenses in 2011.  BOONE pled guilty before U.S. District Judge Alvin K. Hellerstein. 

U.S. Attorney Geoffrey S. Berman said:  “Mary Boone, a Manhattan art gallery owner, admitted to cheating the U.S. tax system by blatantly lying about her expenses and playing a shell game with bank accounts to hide her true assets.  While tax evasion may seem like a victimless crime, it isn’t; all Americans must pay their taxes.  And as Boone has learned, tax laws are not abstract.”

IRS-CI Special Agent-in-Charge James D. Robnett said:  “Operating a Manhattan art gallery did not entitle Mary Boone to evade paying her taxes.  It is a felony offense that carries severe consequences.  By falsely claiming millions of dollars of personal expenses as business expenses, Ms. Boone cheated all Americans, since law abiding citizens are expected to pay their fair share.”

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

BOONE owns and operates an art gallery (the “Gallery”) with two locations in Manhattan, New York.  At all relevant times, BOONE operated the Gallery as a partnership and was solely responsible for the Gallery’s finances.  In 2011, BOONE held a 90 percent partnership interest in the Gallery.  

In 2012, BOONE caused her accountant to file false and fraudulent 2011 federal income tax returns for the Gallery and for BOONE individually.  BOONE caused the Gallery’s 2011 partnership return, Form 1065, to report a false business loss of approximately $52,521, whereas, in reality, the Gallery made a profit of approximately $3.7 million in 2011.  BOONE perpetrated this tax fraud in part by using business funds to pay for over $1.6 million in personal expenses and then falsely claiming these personal expenses as business deductions.  For example, in 2011, BOONE issued approximately $800,000 in business checks to pay for the remodeling of BOONE’s Manhattan apartment, as well as approximately $120,000 more in business checks to pay for rent and other expenses for a second Manhattan apartment where BOONE lived while the remodeling was underway.  In order to conceal the personal nature of these and other expenses, and thereby evade income taxes, BOONE falsely characterized approximately $1.6 million in personal expenses as tax deductible business expenses in handwritten check registers that BOONE provided to her accountant.  For example, BOONE falsely characterized a $500,000 payment to a contractor for remodeling BOONE’s apartment as “commission.” 

BOONE also caused the 2011 Form 1065 to report a false business loss by artificially inflating the Gallery’s stated expenses and, to a lesser degree, the Gallery’s stated income.  BOONE did so by, among other things, providing check registers to her accountant that falsely characterized transactions such as bank transfers as income or expenses.  For example, in 2011, BOONE transferred approximately $9.5 million from one business bank account to another, and falsely characterized these bank transfers as tax deductible business expenses, such as commissions to artists.

Through this conduct, BOONE also caused her 2011 individual income tax return, Form 1040, to be materially false.  Instead of reporting BOONE’s partnership share of the Gallery’s $3.7 million profit, BOONE’s 2011 Form 1040 reported BOONE’s personal income as limited to a payment of approximately $50,000 and interest income of approximately $60,000, and offset that reported income by BOONE’s share of the Gallery’s false reported business loss.  Through this scheme, BOONE evaded over $1.2 million in federal taxes and reported a false tax liability of merely $335 on the Form 1040. 

BOONE engaged in similar tax fraud schemes for the calendar years 2009 and 2010.  In all, BOONE caused the IRS losses totaling over $3 million, not including penalties and interest.

*                *                *

BOONE, 66, of New York, New York, pled guilty to two counts of filing a false federal income tax return, each of which carries a maximum sentence of three years in prison.  BOONE has agreed to pay restitution to the IRS in the amount of at least $3,097,160, which represents the additional tax due and owing as a result of BOONE’s filing of false individual and corporate income tax returns for the calendar years 2009, 2010, and 2011.  Sentencing is scheduled for January 18, 2019, at 11 a.m. before Judge Hellerstein.

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

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

This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Olga I. Zverovich is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Angel M. Melendez, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), James J. Hunt, Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), today announced the unsealing of a superseding indictment charging five defendants with various racketeering and narcotics offenses.  Three defendants are charged in connection with their roles in the August 2, 2009, murder of Derrick Moore, 22, in the Bronx.

One of the defendants, LUIS ORTIZ, 41, was presented last week before United States Magistrate Judge Barbara C. Moses.  Two of the defendants, HECTOR MARRERO, 27, and PETER GONZALEZ, 29, were arrested this morning and will be presented later today before United States Magistrate Judge Henry B. Pitman.  The remaining two defendants, STEVEN BROWN, 39, and RAFAEL REYES, 37, are already in federal custody on other charges, and will be presented at a later date.  The case has been assigned to United States District Judge Katherine Polk Failla.

Manhattan U.S. Attorney Geoffrey Berman said:  “As alleged in the superseding indictment, members of the Taylor Avenue and Creston Avenue Crews wreaked havoc on the streets of New York.  On August 2, 2009, that violence resulted in the murder of Derrick Moore.  He was 22 years old.  Today, thanks to the dedication and perseverance of the NYPD, the DEA, and HSI, the defendants face charges for their alleged crimes.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “The members of these two crews are alleged to have been in involved in a slew of illegal activity ranging from drug trafficking to committing murder.  We have seen the violence of street gangs bleed out into our communities, pushing their deadly drugs and committing violent acts. Strong collaborative efforts and information sharing are the foundation for law enforcement in New York to be more effective in ridding the streets of these alleged criminals.”

DEA Special Agent-In-Charge James J. Hunt said:  “This investigation linked a brutal crime to members of a drug gang, which exemplifies the relationship between drug trafficking and violence.  I commend our law enforcement partners on their hard work and collaboration.” 

According to the allegations contained in the superseding indictment[1] and statements made in court:

The Taylor Avenue Crew was a criminal enterprise that operated principally in and around Taylor Avenue in the Bronx, New York, from at least 2007 up to and including 2015.  Members of the Taylor Avenue Crew sold crack cocaine and committed acts of violence in that area.

The Creston Avenue Crew was a criminal enterprise that operated principally in and around Creston Avenue in the Bronx, New York, from at least 2003 up to and including 2011.  Members of the Creston Avenue Crew sold cocaine and marijuana, and committed acts of violence, in that area.           

Members of the Taylor and Creston Avenue Crews associated with each other and assisted each other by, among other things, carrying out acts of violence on each other’s behalf upon request by the leaders of the respective crews.  One such act of violence was the murder of Derrick Moore on August 2, 2009.  This murder was committed by Creston Avenue Crew members RAFAEL REYES and LUIS ORTIZ to assist Taylor Avenue Crew member STEVEN BROWN.

*                *                *

Count One of the Indictment charges BROWN with murder in aid of racketeering activity.  Count Two of the Indictment charges REYES and ORTIZ with murder in aid of racketeering activity.  Count Three of the Indictment charges BROWN, REYES, and ORTIZ with murder in connection with a drug crime.  Count Four charges BROWN, REYES, and ORTIZ with murder through the use of a firearm.  Counts One through Four all relate to the murder of Derrick Moore.

Count Five of the Indictment charges MARRERO and GONZALEZ with participating in a conspiracy to distribute crack cocaine.

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

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

Assistant U.S. Attorneys Maurene Comey, Jessica Lonergan, and Jason Swergold are in charge of the prosecution.  The case is being handled by the Office’s Violent and Organized Crime Unit.

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

COUNT

CHARGE

DEFENDANTS

PENALTIES

1

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

STEVEN BROWN

Mandatory minimum of life in prison

2

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

RAFAEL REYES

LUIS ORTIZ

Mandatory minimum of life in prison

3

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

STEVEN BROWN

RAFAEL REYES

LUIS ORTIZ

Maximum: life in prison

Minimum:  20 years in prison

4

Murder through use of a firearm

18 U.S.C. § 9249(j)

STEVEN BROWN

RAFAEL REYES

LUIS ORTIZ

Maximum: life in prison

Minimum: 5 years in prison

5

Narcotics conspiracy

21 U.S.C. § 846

HECTOR MARRERO

PETER GONZALEZ

Maximum: Life in prison

Minimum: 10 years in prison

[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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment in Manhattan federal court charging MICHAEL D’ALESSIO with wire fraud in connection with his years-long scheme to defraud investors in luxury real estate development projects in Manhattan, the Hamptons, Westchester, and elsewhere. D’ALESSIO was arrested this morning in New York, New York, and will be presented this afternoon before Magistrate Judge Barbara C. Moses in Manhattan federal court.  The case is assigned to U.S. District Judge Jessie M. Furman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Michael D’Alessio, former president and CEO of a real estate development firm, allegedly sought investments to develop specific real estate projects. In reality, D’Alessio allegedly comingled investor funds and used them to pay his own debt, fund his own gambling, and pay personal expenses. Michael D’Alessio has lost his alleged gamble to swindle his investors, as he now faces significant time in federal prison.” 

Assistant Director-in-Charge Sweeney said: “Investors believed they would get a return on their money, so they put their faith in Mr. D’Alessio.  Instead of growing those investments, he allegedly used the money for his gambling problem and to pay off his debts.  Even though he attempted to use money from one project to pay monthly installments to investors in another project, investor funds were not used for their stated purpose. Now he will face justice, and the FBI New York will work tirelessly to get investors’ money back.”

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

A career real estate developer and general contractor, D’ALESSIO 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. 

In truth and in fact, and contrary to the representations that he made to investors, from at least in or about 2015 through in or about April 2018, D’ALESSIO misappropriated investor funds for his own use and benefit.  Upon receiving investor funds, D’ALESSIO channeled those funds through a series of bank accounts held in the name of shell companies owned and controlled by D’ALESSIO.  D’ALESSIO then used those investor funds for his own benefit, including to pay off debts, and to fund significant gambling and other personal expenses.  D’ALESSIO took additional steps to conceal his fraud, including deceiving investors regarding the progress of development on real estate projects and raising money from new investors to make monthly payments to investors in different projects in the manner of a Ponzi scheme. 

D’ALESSIO, 52, of New York, New York, is charged with committing wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

*                      *                      *

Mr. Berman praised the 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.

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

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

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”), Scott J. Lampert, Special Agent in Charge of the New York Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), Thomas P. DiNapoli, the New York State Comptroller, and Carl E. DuBolis, Orange County Sheriff, announced the unsealing today of an indictment charging JAMES SPINA, JEFFREY SPINA, ANDREA GROSSMAN, and KIMBERLY SPINA with participating in a widespread health care fraud scheme through their fraudulent operation of Dolson Avenue Medical (“DAM” or the “Practice”), a multi-disciplinary medical clinic located in Middletown, New York.  The defendants were all arrested today, and presented in federal district court in White Plains.  This case has been assigned to U.S. District Court Judge Kenneth M. Karas.

Berman also today announced the guilty plea of CHARLES BAGLEY, a licensed medical doctor formerly affiliated with DAM and other businesses, to conspiracy to commit health care fraud, charged in a separate Information unsealed today. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these four defendants purported to run a legitimate medical clinic that provides care and rehabilitation to patients.  Instead, the defendants allegedly put aside their medical and fiduciary obligations for greed, attempting to bilk insurance companies and federally-funded Medicare out of more than $80 million.  Thanks to the coordinated efforts of federal and state investigative agencies, the defendants will have to answer for their alleged crimes.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Patients go to a doctor hoping they will help them get better.  The subjects in this investigation allegedly performed treatments patients didn’t need, double billed for procedures and up-coded. The FBI New York agents and our law enforcement partners uncovered tens of millions of dollars in losses.  This type of fraud eventually ends up costing all patients more money when they seek medical attention.  We will continue to work tirelessly to stop health care fraudsters hoping to make millions while the patients they should be treating continue to suffer.”

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “This indictment should serve as a warning to any health care provider that dares to put personal profit ahead of proper patient care.  HHS-OIG, along with our law enforcement partners, will continue to aggressively pursue those who seek to undermine the federally funded health care programs intended for our most vulnerable Americans.”

New York State Comptroller Thomas P. DiNapoli said:  “The Spinas and their associates allegedly swindled tens of millions of dollars by fraudulently billing health insurers including the NYS Health Insurance Program and the State Insurance Fund.  An alleged theft of this magnitude is appalling when so many hard-working people experience rising health care costs.  Now, their alleged scams have been exposed, thanks to my partnership with U.S. Attorney Berman, the FBI, the U.S. Department of Health and Human Services Inspector General and the Orange County Sheriff's Office.”

Orange County Sheriff Carl E. DuBois said:  "The Orange County Sheriff’s Office is dedicated to the collaboration with its federal partners in combating crime in the region.  We are committed to our partnership with the FBI in the relentless pursuit of justice."

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

From 2011 through September 2017, DAM was a registered medical service corporation in New York State that purported to provide a variety of pain management and rehabilitation services including physical medicine and rehabilitation, chiropractic services, physical therapy, diagnostic testing, and acupuncture.  DAM primarily provided treatment services from its clinic located at 201 Dolson Avenue, Middletown, New York.

In addition to DAM, at least eight other corporations, including four other medical corporations, billed Medicare and other health insurance providers (the “Insurance Providers”) from 201 Dolson Avenue (the “Associated Businesses”).  On paper, DAM and the Associated Businesses appeared to be separate entities owned by multiple different qualified individuals.  But in reality, JAMES SPINA and JEFFREY SPINA, who are doctors of chiropractic - not medical doctors - were the true owners and operators of the different medical service corporations.

According to the indictment, JAMES SPINA and JEFFREY SPINA, together with GROSSMAN, made all corporate decisions for DAM and the Associated Businesses.  In particular, JAMES SPINA and JEFFREY SPINA ran the day-to-day operations of the businesses.  They controlled payroll, the hiring and firing of employees, corporate expenses, like employee compensation and rent, and billing to Insurance Providers.  Further, JAMES SPINA and JEFFREY SPINA were the financial beneficiaries of DAM and its Associated Businesses. 

JAMES SPINA and JEFFREY SPINA, however, went to great lengths to conceal their control and ownership of DAM and the Associated Businesses.  In particular, JAMES SPINA and JEFFREY SPINA recruited medical doctors and other professionals to serve as the nominee owners of DAM and the Associated Businesses.  JAMES SPINA and JEFFREY SPINA further concealed their ownership of DAM and the Associated Businesses by transferring revenues of these companies into other companies they owned.  To further disguise these transfers, JAMES SPINA and JEFFREY SPINA drafted fake lease and marketing agreements between DAM and the Associated Businesses and purported real estate and marketing companies they owned and referred to the payments as “rent” or “marketing fees.”  The defendants also used phony and non-existent addresses for the corporations so that it would appear that DAM and the Associated Businesses were operating out of separate locations.

As alleged, in operating the multiple fraudulent businesses, JAMES SPINA and JEFFREY SPINA, routinely showed little, if any, regard for which medical services or treatments were medically necessary, or even whether the services were actually provided to patients, and instead operated DAM and billed Insurance Providers to maximize DAM’s reimbursements and ultimately, their own profits.  In particular, JAMES SPINA and JEFFREY SPINA, with assistance from GROSSMAN, the bookkeeper for DAM and its Associated Businesses, and KIMBERLY SPINA, an administrator at the Practice: (a) submitted and caused to be submitted claims to Insurance Providers for medically unnecessary services and procedures; (b) submitted and caused to be submitted claims to Insurance Providers for medical services that were not rendered; (c) double billed, i.e., submitted and caused to be submitted multiple claims for the same service to two different Insurance Providers; (d) altered and fabricated medical records; and (e) obstructed and impeded audits by Medicare and other Insurance Providers to conceal their fraud.

As a consequence of the above-described scheme, the majority of the claims submitted by DAM and the Associated Businesses to Medicare and other Insurance Providers were false and fraudulent.  The submitted claims during the relevant time period totaled more than $80,000,000, resulting in losses of tens of millions of dollars. 

As alleged in a separate Information filed today in White Plains federal court:

CHARLES BAGLEY, a licensed medical doctor affiliated with DAM and the Associated

Businesses, participated in the health care fraud scheme, whereby BAGLEY, a licensed medical doctor, agreed with others to submit, and cause to be submitted, false claims to Medicare and other health care benefit programs to obtain reimbursement to which he and his co-conspirators were not entitled. 

*                *                *

BAGLEY, 69, of Great Neck, New York, pled guilty today to one count of conspiracy to commit health care fraud, which carries a maximum sentence of 10 years in prison.  The defendant will be sentenced at a future date.  The case is assigned to United States District Judge Nelson S. Román.

JAMES SPINA, 59, of Middletown, New York, JEFFREY SPINA, 56, of Middletown, New York, ANDREA GROSSMAN, 59, of Loch Sheldrake, New York, and KIMBERLY SPINA, 54, of Woodbourne, New York, are each charged with one count of conspiring to commit health care fraud and one count of health care fraud, each of which carries a maximum sentence of 10 years in prison.   In addition, JAMES SPINA and JEFFREY SPINA are charged with one count of obstructing and impeding a federal audit, with carries a maximum sentence of five years in prison.

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

Manhattan U.S. Attorney Geoffrey S. Berman praised the outstanding investigative work of the FBI, HHS-OIG, the New York State Office of the State Comptroller, and the Orange County Sheriff’s Office.  He also thanked the Orange County District Attorney’s Office, the Sullivan County District Attorney’s Office, the National Insurance Crime Bureau, Liberty Mutual Insurance, and USAA Insurance for their assistance.

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Kathryn Martin and Emily Deininger 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 Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney, Assistant Director in Charge, Federal Bureau of Investigation (the “FBI”), David L. Hunt, Inspector General of the Federal Communications Commission (the “FCC-OIG”), and Thomas P. Zugibe, the District Attorney for Rockland County, announced today the return of an Indictment charging SIMON GOLDBRENER, a/k/a “Simon Goldbrenner,” a/k/a “Shimon Goldbrenner,” PERETZ KLEIN, SUSAN KLEIN, a/k/a “Suri Klein,” BEN KLEIN, a/k/a “Benzion Klein,” a/k/a “Benzi Klein,” MOSHE SCHWARTZ, SHOLEM STEINBERG, and ARON MELBER, a/k/a “Aharon Melber,” with conspiracy to commit wire fraud and wire fraud charges in connection with the federal program known as “E‑rate,” which provides subsidies for affordable telecommunications equipment and related services to qualified schools This case has been assigned to United States District Judge Kenneth M. Karas.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, for years, these defendants stole money from the E‑rate program, billing the E-rate program for equipment and services which were not in fact provided. The defendants allegedly fraudulently obtained millions of dollars in E rate funds to which they were not entitled, and which should lawfully have been spent to help provide access to technology to educate underprivileged children. This indictment is important not only because fraudsters should be held to account for their crimes, but also because the next generation of students should have access to telecommunication services, internet access, and related equipment, irrespective of their means and in spite of the fact that people like the defendants seek to line their own pockets at the expense of underprivileged children.”

FBI Assistant Director in Charge William F. Sweeney said:  “Schools have to fight for every dollar these days to supply their students with the high-tech, expensive equipment and technology they need in this day and age to succeed in life. The suspects in this investigation allegedly used funding from a program designed to give underprivileged schools internet access to pad their own bank accounts.  To add insult to injury, school officials, who see the day-to-day struggle to even find money for pencils and paper, were allegedly involved in the scheme.  The FBI and our law enforcement partners will hold these criminals accountable, and stop others from defrauding not only the government and tax payers, but students who depend on these programs to get a better education.”

Rockland County District Attorney Thomas P. Zugibe said:  “These individuals concocted a scheme that not only defrauded taxpayers, but also deprived local students of access to affordable technology equipment and Internet service. In short, the defendants are accused of shamelessly stealing millions of federal dollars earmarked to broaden young minds. The Rockland County District Attorney's Office will continue to work collaboratively with the U.S. Attorney and FBI to root out fraud and abuse - especially misconduct that impacts children. Offenders must be dealt with swiftly to prevent further fraud of this magnitude from occurring.”

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

The E‑rate distributes funds to schools and libraries mostly serving economically disadvantaged children, so that those institutions can afford needed telecommunication services, internet access, and related equipment. Over 30,000 applications from schools and libraries seeking funds to serve economically disadvantaged children were received each year during the relevant time period; every year, requests for E‑rate funds have exceeded funds available. In order to obtain those funds, educational institutions certify that they are purchasing equipment and services from a private vendor; if approved, the program defrays the cost by up to 90%. The educational institution is supposed to enter into an open bidding process in order to select a vendor, and the educational institution and vendor submit a series of certifications that they comply with a number of requirements of the E‑rate program. A school applying for E‑rate funds may employ a consultant, but that consultant must be independent of the vendors competing to sell E‑rate funded equipment and services.

PERETZ KLEIN, SUSAN KLEIN, BEN KLEIN, and SHOLEM STEINBERG (collectively, the “Vendor Defendants”) held themselves out as vendors to schools participating in the E‑rate program. Corporations controlled by the Vendor Defendants requested over $35 million in E‑rate funds, and received over $14 million in E‑rate funds, from in or about 2010 to in or about 2016.

SIMON GOLDBRENER and MOSHE SCHWARTZ (collectively, the “Consultant Defendants”) held themselves out as consultants who assisted educational institutions that desired to participate in the E rate program. The Consultant Defendants, and individuals acting at their direction, completed and filed E‑rate documents that resulted in the payment of millions of dollars in E‑rate funds to the Vendor Defendants.

ARON MELBER is an official at a private religious school in Rockland County, New York. MELBER and his school have participated in the E‑rate program with certain of the Vendor Defendants and Consultant Defendants, and filed certifications purporting to have obtained authorized E‑rate funded equipment and services from Vendor Defendants selected through a fair and open bidding process. From in or about 2009 through in or about 2015, MELBER’s school received over one million dollars in E‑rate funds.

From at least 2009 up to and including 2016, certain private religious schools, including MELBER’s school, sought and received E‑rate funds for the purpose of paying the Vendor Defendants for equipment and services that the schools, the Vendor Defendants, and the Consultant Defendants falsely claimed the Vendor Defendants had provided to the schools.

However, the schools never received millions of dollars’ worth of these items and services. In other cases, the schools, Vendor Defendants, and Consultant Defendants requested hundreds of thousands of dollars of sophisticated technology that served no real purpose for the student population. For example, from 2009 through 2015, one day care center that served toddlers from the ages of 2 through 4 requested over $700,000—nearly $500,000 of which was ultimately funded—for equipment and services—including video conferencing and distance learning, a “media master system,” sophisticated telecommunications systems supporting at least 23 lines, and high-speed internet—from companies controlled by PERETZ KLEIN and SUSAN KLEIN, using the Consultant Defendants as their consultants. In still other instances the schools received equipment and services that fulfilled the functions for which the schools had requested E‑rate funds (such as providing the school with internet access), but the schools, Vendor Defendants, and Consultant Defendants materially overbilled the E‑rate program for the items provided, in order to enrich themselves at the expense of the underprivileged children the program was designed to serve.

As alleged, the defendants also perverted the fair and open bidding process required by the E‑rate program. The Consultant Defendants—who held themselves out in filings as independent consultants working for the schools, but, in truth, worked with and for the Vendor Defendants—and the Vendor Defendants presented the schools with forms to sign or certify, awarding E‑rate funded contracts to the Vendor Defendants. As a result of false and misleading E‑rate filings, the Vendor Defendants received millions of dollars in E‑rate funds for equipment and services that the Vendor Defendants did not in fact provide and which the schools did not use, and the Consultant Defendants accepted payments totaling hundreds of thousands of dollars from the Vendor Defendants, despite falsely presenting themselves as independent of the Vendor Defendants.

In return for their participation in the scheme to defraud the E‑rate program, certain schools and school officials received a variety of improper benefits from the Vendor Defendants, including: a percentage of the funds fraudulently obtained from E‑rate for equipment and services that were not in fact provided to the schools; free items paid for with E‑rate funds but not authorized by the program, such as cellphones for school employees’ personal use and alarm systems and security equipment (which the E‑rate program does not authorize) installed at the schools; and free services for which the E‑rate program authorizes partial reimbursement (such as internet access) but for which the Schools did not—contrary to their statements in filings—make any payment at all.

The defendants and the counts with which they are charged in the Superseding Indictment are set forth in the attached list.

* * *

Mr. Berman thanked the FBI, the FCC-OIG, and the Rockland County District Attorney’s Office for their outstanding work on the investigation. This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Michael D. Maimin, Hagan Scotten, and Vladislav Vainberg 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.

18-296                                                                                                                                                                                                             ###

United States v. Simon Goldbrener, et al.

Defendant

Age

Residence

Charges and Maximum Penalties

Simon Goldbrener

55

Monsey, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (three counts): 20 years in prison per count

Peretz Klein

64

Spring Valley, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Susan Klein

57

Spring Valley, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Ben Klein

39

Monsey, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Moshe Schwartz

45

Monroe, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Sholem Steinberg

39

Monsey, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (two counts): 20 years in prison per count

Aron Melber

42

Monsey, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

[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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOEL BRANFORD, a/k/a “Joel Bransord,” a/k/a “Jose Cabeza,” was sentenced on August 27, 2018, by U.S. District Judge Gregory H. Woods to 168 months in prison for conspiring to import cocaine into the United States.  BRANFORD pled guilty before Judge Woods on June 22, 2017.

According to the Indictment filed in Manhattan federal court, previous court filings, and statements made at public court proceedings:

In January 2010, BRANFORD, who had previously fled the United States to Panama, conspired to import more than 100 kilograms of cocaine via a container ship to be sent to the Port of New York-New Jersey.  In January 2010, law enforcement officers intercepted the container and found inside more than approximately 100 kilograms of cocaine.  On January 29, 2010, law enforcement authorities intercepted, pursuant to a Court-authorized wiretap, a telephone conversation during which BRANFORD threatened a co-conspirator, whom BRANFORD believed had stolen the shipment that was seized by law enforcement.  Throughout 2010, Panamanian law enforcement intercepted calls by BRANFORD, during which BRANFORD regularly discussed making large shipments of narcotics in containers. 

BRANFORD also used weapons in the course of his narcotics trafficking business.  In July 2010, Panamanian law enforcement searched BRANFORD’s residence and vehicle and found two firearms, four magazines, and 223 bullets, along with 21 cellphones.  Previously, in 2003, law enforcement officers searched BRANFORD’s home in Virginia, where he lived at the time, and recovered two firearms, including a semi-automatic submachine gun, and two bullet-proof vests, as well as cocaine.

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In addition to his prison sentence, BRANFORD, 46, was sentenced to five years of supervised release. 

Mr. Berman praised the investigative work of the Drug Enforcement Administration, including the High Intensity Drug Trafficking Areas Program and the Special Operations Division, as well as the Department of Homeland Security – Homeland Security Investigations, and thanked the Customs and Border Protection, the Port Authority of New York/New Jersey, and the Waterfront Commission of New York/New Jersey for their assistance in this investigation.  Mr. Berman also thanked DEA’s Panama City, San Jose (Costa Rica), and Belgium Country Offices, the Department of Justice’s Office of International Affairs, and the Panamanian National Police for their cooperation and assistance.

This matter is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys David Abramowicz, Amanda Houle, and Matthew Podolsky are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that MARCOS ELIAS, a Brazilian citizen and resident, was extradited from Switzerland.  In June 2018, ELIAS traveled to Switzerland and was arrested on the basis of a provisional arrest warrant for participating in a scheme to fraudulently obtain more than $750,000 at financial institutions headquartered in Manhattan using false representations and the stolen identities of Brazilian account holders at those institutions.  ELIAS arrived in the Southern District of New York this afternoon, and will be presented today in Manhattan federal court before U.S. Magistrate Judge Barbara C. Moses.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Brazilian Marcos Elias stole over $750,000 from a Manhattan financial institution through a sophisticated wire fraud scheme involving a front company in Panama and a bank account in Luxembourg.  Thanks to the extraordinary work of the FBI, today’s extradition shows that defendants who target American financial institutions from abroad will be subject to the long arm of American justice.”

FBI Assistant Director William F. Sweeney Jr. said:  “People all over the world fear having their identities stolen by criminals who use the information to break the law.  Pretending to be an employee of the account holder, the suspect allegedly stole hundreds of thousands of dollars that didn’t belong to him.  He’s now been brought back to the United States to face justice, and return the money he stole.”

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

Since at least 2012, a Brazilian company (the “Client”) held an account at a financial institution headquartered in Manhattan (the “Firm”).  Beginning in June 2014, ELIAS was in correspondence with a Senior Vice President at the Firm (the “Firm Employee”) regarding the Client’s account.  The Firm Employee then began receiving emails purportedly from an employee of the Client (the “Client”) instructing the Firm Employee to transfer the Client’s money to a bank account in Luxembourg (the “Luxembourg Account”) that appeared to be in the name of the Client.  Those emails were later determined to have been sent from an email address created the same day that was never used by the Client Employee and contained bogus wire instructions with the forged signature of the Client Employee.  As a result of the false documentation provided to the Firm Employee, on July 15, 2014, the Firm transferred the approximately $752,000 from the Client’s account at the Firm to the Luxembourg Account (the “Fraudulent Transfer”), believing it to be a legitimate transfer requested by the Client.

In actuality, the Client did not authorize the Fraudulent Transfer, did not have any bank or brokerage accounts in Luxembourg, and did not send the emails to the Firm Employee requesting the transfer.  Instead, the Luxembourg Account that received the Fraudulent Transfer was beneficially owned by ELIAS and opened in the name of a company formed in Panama the week prior to the Fraudulent Transfer.  The Luxembourg Account was held in the name of a company containing the name of the Client in order to create the false impression that the Client’s funds were being transferred to an account beneficially owned by the Client when in fact such account was beneficially owned by ELIAS.

In addition to the scheme to defraud the Firm, ELIAS also attempted to fraudulently obtain money from a second financial institution headquartered in Manhattan using the name and purported passport of an account holder without authority.

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ELIAS, 47, of São Paulo, Brazil, is charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 30 years; one count of wire fraud, which carries a maximum sentence of 30 years; one count of receipt of stolen property, which carries a maximum sentence of 10 years; and two counts of aggravated identity theft, which each carry a mandatory consecutive minimum sentence of two years.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI.  Mr. Berman also thanked Switzerland’s Federal Office of Justice and the Zurich Police (Kantonspolizei Zürich), and the U.S. Department of Justice’s Office of International Affairs, for their assistance with the extradition, and noted that the investigation is continuing.

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

The charges contained in the Complaint and Indictment are merely accusations.  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 Indictment and their description set forth below constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, James J. Hunt, the Special Agent-in-Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced additional charges in a Superseding Indictment against a member of the “MacBallas” gang based in the Andrew Jackson and Melrose Houses in the Bronx.  In the Superseding Indictment, which was returned today, NATHANIEL FLUDD, a/k/a “Juntao,” is charged with the September 15, 2011, murder of Jose Webster, a/k/a “Spillz.”

FLUDD and a co-defendant were previously charged with the 2011 murder of Daniel Delgado in an Indictment unsealed on June 27, 2018.  That Indictment also charges 20 members and associates of the MacBallas with racketeering, narcotics trafficking, robbery, and firearms offenses. In addition to the new charges related to the Webster murder, the Superseding Indictment re-alleges the charges that had previously been brought in the Indictment against FLUDD and 19 others. The case is assigned to U.S. District Judge Denise L. Cote.  FLUDD and the 19 other defendants will be arraigned on the new charges later in the week.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Jose Webster was murdered in 2011 by Nathaniel Fludd and other members of the violent MacBallas gang. We thank our law enforcement partners for their extraordinary efforts investigating this murder. With their help, we will continue our efforts to eradicate this senseless gang violence from our communities.”

DEA Special Agent-in-Charge James J. Hunt said:  “The comprehensive investigations into gang-related crime have an uncanny knack for uncovering and linking additional crimes to defendants. In this case, we identified not just one, but two murders committed by one of the gang members, Nathaniel Fludd.  I commend the agents, detectives, and prosecutors for their diligent work on this investigation.”

Mr. Berman praised the outstanding investigative work of the NYPD’s Bronx Violent Crimes Squad and the New York Field Division of the DEA.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the guilty plea of VICTOR CASADO to his role in a scheme to smuggle contraband into the Metropolitan Correctional Center (“MCC”), a Manhattan detention facility that houses federal inmates, in exchange for cash bribes.  CASADO, a former federal correctional officer, pled guilty to one count of conspiracy to commit bribery and to introduce contraband into prison before U.S. District Judge Richard J. Sullivan.

U.S. Attorney Geoffrey S. Berman said:  “As a correctional officer, Victor Casado’s duty was to ensure the security of the Metropolitan Correctional Center and the safety of inmates in his care.  Instead of honoring that duty, he betrayed it, taking bribes to smuggle contraband into a jail that houses federal inmates.  This Office will continue to stop the corruption of our criminal justice system by those entrusted with supervising incarcerated individuals and keeping them safe.”

According to the Information and Complaint filed in this case, other public filings, and statements made during the plea proceeding:

CASADO was employed as a correctional officer at the MCC from 2012 until his resignation in July 2018.

On multiple occasions in 2016 and 2017, CASADO smuggled cellphones, alcohol, over-the-counter medications, and food into the MCC in exchange for bribe payments from inmates.  These bribes were funneled to CASADO by non-incarcerated relatives or associates of the inmates, either in cash or by wire transfer.  For example, on multiple occasions, CASADO received bribes from an inmate (“Inmate-1”), transferred by one of Inmate-1’s attorneys, totaling more than $25,000, in exchange for smuggling alcohol and cellphones, among other contraband, into the MCC for Inmate-1.  Additionally, CASADO also requested and received thousands of dollars in payments from another inmate (“Inmate-5”), which were delivered to CASADO by Inmate-5’s relatives and a paralegal who represented him.  Inmate-5 paid CASADO at CASADO’s insistence, ostensibly to fund travel by CASADO to the Dominican Republic.

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CASADO, 35, of the Bronx, New York, pled guilty to one count of conspiracy to commit bribery and to introduce contraband into prison.  The charge carries a maximum term of five years in prison.  CASADO is scheduled to be sentenced by Judge Sullivan on January 11, 2019.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the Department of Justice, Office of Inspector General.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Guido Modano, Special Agent-in-Charge of the New York Field Office of the Department of Justice Office of the Inspector General (“DOJ OIG”) announced today the unsealing of a criminal Complaint in Manhattan federal court charging federal correctional officer DARIO QUIRUMBAY with taking a bribe in exchange for smuggling contraband into the Metropolitan Correctional Center (“MCC”), a Manhattan detention facility that houses federal inmates. QUIRUMBAY was arrested this morning and will be presented today before Magistrate Judge Robert W. Lehrburger.

U.S. Attorney Geoffrey S. Berman said: “As alleged, Dario Quirumbay abused the trust placed in him by the Department of Justice and used his position to enrich himself by smuggling prohibited contraband inside a correctional facility in exchange for cash. Now he finds himself on the other side of the law.”

DOJ OIG Special Agent-in-Charge Guido Modano said:  “Corruption has no place in our federal correctional system and will not be tolerated.  The OIG is committed to investigating allegations of corrupt employees within the Federal Bureau of Prisons and the Department of Justice.”               

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

QUIRUMBAY has been employed as a correctional officer at the MCC since 2016.

QUIRUMBAY, in exchange for approximately $1,000, agreed to smuggle two cellphones into the MCC and also provided an inmate with alcohol.  QUIRUMBAY met with a relative of one of the inmates in his custody to retrieve his cash bribe and two Apple iPhones, which QUIRUMBAY then delivered to an inmate inside the MCC. 

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QUIRUMBAY, 29, of Jersey City, New Jersey, has been charged in the Complaint with one count of conspiracy to commit bribery and to provide contraband in a prison, which carries a maximum prison term of five years; one count of bribery, which carries a maximum prison term of 15 years; one count of providing contraband in a prison, which carries a maximum prison term of one year; one count of conspiracy to commit honest services wire fraud, which carries a maximum prison term of 20 years.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Brian A. Benczkowski, Assistant Attorney General for the Criminal Division, announced that DAVID WALDMAN pled guilty today to conducting an extensive cyberstalking and threats campaign that targeted a woman he dated for several months in 2014.  WALDMAN pled guilty before U.S. Magistrate Court Judge Robert W. Lehrburger.

Beginning in April 2014 and shortly after WALDMAN and the victim ended their relationship, WALDMAN began an extensive cyberstalking campaign that continued intermittently until the date of WALDMAN’s arrest.  Over the course of almost four years, WALDMAN sent the victim hundreds of text messages, voicemail messages, and email messages, and made voluminous posts on a variety of online platforms, in which he claimed, among other assertions, that she had been diagnosed with bipolar and narcissistic personality disorder, used drugs, and fabricated claims that she had been a victim of child sexual abuse.  In his online communications, WALDMAN also repeatedly threatened to show up at the victim’s apartment and office and threatened to injure, torture, and sexually assault her.  WALDMAN also sent email messages to the victim’s employers, accusing her of being a “habitual drug user,” and claiming that he would sue her for defamation, theft, illegal trespass, violating HIPAA, and engaging in other “illegal behaviors.” 

Over the course of the alleged cyberstalking campaign, the victim obtained multiple state court orders of protection against WALDMAN.

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WALDMAN, 49, of Inwood, New York, pled guilty to one count of cyberstalking, which carries a maximum sentence of five years.  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 Special Agents with the United States Attorney’s Office for the Southern District of New York.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Nicholas Chiuchiolo and Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section are in charge of the prosecution.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), and Thomas P. DiNapoli, New York State Comptroller, announced that a federal grand jury in White Plains, New York returned an Indictment yesterday charging GUY PARISI, a Westchester attorney, with conspiracy, mail fraud and false statements.  These charges arise from PARISI’s attempt to embezzle funds from a decedent’s estate for which he served as a court-appointed administrator.  PARISI was arrested yesterday morning and was presented before the United States District Judge Paul E. Davison

U.S. Attorney Geoffrey S. Berman said:  “Guy Parisi, a Westchester attorney, allegedly embezzled funds from an estate which he was a court-appointed fiduciary. Parisi allegedly shirked his responsibilities to the estate in order to serve his own greed. Now he faces justice in a criminal court.”

Inspector-in-Charge Peter R. Rendina said:  “Mr. Parisi allegedly took advantage of the trust given to him by his client, when instead of doing the right thing, he created a company to greedily enrich himself of fees he would not lawfully be entitled to receive. Postal Inspectors and their law enforcement partners uphold the truth and those who do not must face justice.”

Comptroller Thomas P. DiNapoli said:  “Instead of protecting the interests of the estate, Mr. Parisi abused the trust placed in him by allegedly attempting to pocket millions of dollars meant for the beneficiaries by using a fictitious company.  Thanks to my ongoing partnerships with United States Attorney Geoffrey Berman and the United States Postal Inspection Service, he will now be held accountable for his actions.  My office will continue to work with law enforcement across the State to protect unclaimed funds in our custody.”

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

PARISI, an attorney in Westchester County, was appointed administrator of the estate of a former resident of Mt. Vernon, in or about April 2017.  His duties as administrator included collecting the assets of the estate.  As an administrator, PARISI had a fiduciary duty to the estate and to the decedent’s son, the sole beneficiary of his father’s will.  New York law provided for a fee for estate administrators like PARISI based on a percentage of the value of the estate’s assets.

A substantial part of the estate’s assets escheated to the State of New York as abandoned property between 2000 and 2008, when the estate was first presented to the Surrogate’s Court.  These assets were held in the custody of the New York State Comptroller.

In or about June 2017, PARISI, on behalf of the estate, retained Stokes Asset Recovery Services (“Stokes”) as the estate’s abandoned property location service in exchange for a fee of fifteen percent of the value of the estate’s assets held by the Comptroller, which is the maximum fee allowed by New York law.  PARISI did not disclose, and actively concealed, that Stokes was owned by his relative, and that he and the relative had formed Stokes less than two weeks before he notified the Comptroller of his retention of Stokes, as he was required to do under New York law.  PARISI and the relative named Stokes after a Southampton, New York, street on which PARISI owned a waterfront vacation home.  At the time he retained Stokes, PARISI knew that the estate’s assets held by the Comptroller were worth several million dollars.

PARISI was interviewed by a Postal Inspector in or about November 2017.  He falsely told the Postal Inspector that he had worked with Stokes in the past and that Stokes’s fee was five percent of the value of the assets held by the Comptroller.

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PARISI, 71, of Rye, New York, is charged with one count of conspiracy, which carries a maximum sentence of five years in prison; one count of mail fraud, which carries a maximum sentence of 20 years in prison; and one count of making a false statement, 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 the sentence will be determined by the court.

Mr. Berman praised the outstanding investigative work of the Postal Inspection Service and the New York State Comptroller. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorney James McMahon 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 Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Robert Khuzami, Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James D. Robnett, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the guilty plea of MICHAEL COHEN to charges of tax evasion, making false statements to a federally-insured bank, and campaign finance violations.  The plea was entered followed the filing of an eight-count criminal information, which alleged that COHEN concealed more than $4 million in personal income from the IRS, made false statements to a federally-insured financial institution in connection with a $500,000 home equity loan, and, in 2016, caused $280,000 in payments to be made to silence two women who otherwise planned to speak publicly about their alleged affairs with a presidential candidate, thereby intending to influence the 2016 presidential election.  COHEN pled guilty today before U.S. District Judge William H. Pauley III.

Attorney for the United States Robert Khuzami said:  “Michael Cohen is a lawyer who, rather than setting an example of respect for the law, instead chose to break the law, repeatedly over many years and in a variety of ways.  His day of reckoning serves as a reminder that we are a nation of laws, with one set of rules that applies equally to everyone.”   

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “This investigation uncovered crimes of fraud, deception and evasion, conducted through a string of financial transactions that were carefully constructed and concealed to protect a variety of interests.  But as we all know, the truth can only remain hidden for so long before the FBI brings it to light.  We are all expected to follow the rule of law, and the public expects us - the FBI - to enforce the law equally.  Today, Mr. Cohen has been reminded of this important lesson, as he acknowledged with his guilty plea.”

IRS-CI Special Agent-in-Charge James D. Robnett said:  “Today’s guilty plea exemplifies IRS Special Agents' rigorous pursuit of tax evasion and sends the clear message that the tax laws apply to everybody. Mr. Cohen’s greed to hide his income from the IRS cheats all the honest taxpayers, and we should not expect law abiding citizens to foot the bill for those who circumvent the system to evade paying their fair share.”

According to the allegations in the Information unsealed today as well as statements made in Manhattan federal court:

From 2007 through January 2017, COHEN was an attorney and employee of a Manhattan-based real estate company (the “Company”).  COHEN held the title of “Executive Vice President” and “Special Counsel” to the owner of the Company (“Individual-1”).  In January 2017, COHEN left the Company and began holding himself out as the “personal attorney” to Individual-1, who by that time had become the President of the United States.

In addition to working for and earning income from the Organization, at all times relevant to this Information, COHEN owned taxi medallions in New York City and Chicago worth millions of dollars.  COHEN owned these taxi medallions as investments and leased the medallions to operators who paid COHEN a portion of the operating income.

The Tax Evasion Scheme

In late 2013, COHEN retained an accountant (“Accountant-1”) for the purpose of handling COHEN’s personal and entity tax returns.  After being retained, Accountant-1 filed amended 2011 and 2012 Form 1040 tax returns with the Internal Revenue Service (“IRS”).  For tax years 2013 through 2016, Accountant-1 prepared individual returns for COHEN and returns for COHEN’s medallion and real estate entities.  To confirm he had reviewed and approved these returns, both COHEN and his wife signed a Form 8879 for tax years 2013 through 2016, and filed manually for tax year 2012.  Between 2012 and the end of 2016, COHEN earned more than $2.4 million in income from a series of personal loans made by COHEN to a taxi operator to whom COHEN leased certain of his Chicago taxi medallions (“Taxi Operator-1”), none of which he disclosed to the IRS. 

As a further part of the scheme to evade paying income taxes, COHEN also concealed more than $1.3 million in income he received from another taxi operator to whom COHEN leased certain of his New York medallions (“Taxi Operator-2”).  This income took two forms.  First, COHEN did not report the substantial majority of a bonus payment of at least $870,000, which was made by Taxi Operator-2 in 2012 to induce COHEN to allow Taxi Operator-2 to operate certain of COHEN’s medallions.  Second, between 2012 and 2016, COHEN concealed nearly $1 million in taxable income he received from Taxi Operator-2’s operation of certain of COHEN’s taxi medallions.

To ensure the concealment of this additional operator income, COHEN arranged to receive a portion of the medallion income personally, as opposed to having the income paid to COHEN’s medallion entities.  Paying the medallion entities would have alerted Accountant-1, who prepared the returns for those entities, to the existence of the income such that it would have been included on COHEN’s tax returns.  

As a further part of his scheme to evade taxes, COHEN also hid the following additional sources of income from Accountant-1 and the IRS:

• A $100,000 payment received, in 2014, for brokering the sale of a piece of property in a private aviation community in Ocala, Florida.
• Approximately $30,000 in profit made, in 2014, for brokering the sale of a Birkin Bag, a highly coveted French handbag that retails for between $11,900 to $300,000, depending on the type of leather or animal skin used. 
• More than $200,000 in consulting income earned in 2016 from an assisted living company purportedly for COHEN’s “consulting” on real estate and other projects.

In total, COHEN failed to report more than $4 million in income, resulting in the avoidance of taxes of more than $1.4 million due to the IRS.

False Statements to a Bank

In 2010, COHEN, through companies he controlled, executed a $6.4 million promissory note with a bank (“Bank-1”), collateralized by COHEN’s taxi medallions and personally guaranteed by COHEN.  A year later, in 2011, COHEN personally obtained a $6 million line of credit from Bank-1 (the “Line of Credit”), also collateralized by his taxi medallions.  By February 2013, COHEN had increased the Line of Credit from $6 million to $14 million, thereby increasing COHEN’s personal medallion liabilities at Bank-1 to more than $20 million. 

In November 2014, COHEN refinanced his medallion debt at Bank-1 with another bank (“Bank-2”), who shared the debt with a New York-based credit union (the “Credit Union”).  The transaction was structured as a package of individual loans to the entities that owned COHEN’s New York medallions.  Following the loans’ closing, COHEN’s medallion debt at Bank-1 was paid off with funds from Bank-2 and the Credit Union, and the Line of Credit with Bank-1 was closed.

In 2013, in connection with a successful application for a mortgage from another Bank (“Bank-3”) for his Park Avenue condominium (the “2013 Application”), COHEN disclosed only the $6.4 million medallion loan he had with Bank-1 at the time.  As noted above, COHEN also had a larger, $14 million Line of Credit with Bank-1 secured by his medallions, which COHEN did not disclose in the 2013 Application.  

In February 2015, COHEN, in an attempt to secure financing from Bank-3 to purchase a summer home for approximately $8.5 million, again concealed the $14 million Line of Credit.  Specifically, in connection with this proposed transaction, Bank-3 obtained a 2014 personal financial statement COHEN had provided to Bank-2 while refinancing his medallion debt.  Bank-3 questioned COHEN about the $14 million Line of Credit reflected on that personal financial statement, because COHEN had omitted that debt from the 2013 Application to Bank-3.  COHEN misled Bank-3, stating, in writing, that the $14 million Line of Credit was undrawn and that he would close it.  In truth and in fact, COHEN had effectively overdrawn the Line of Credit, having swapped it out for a fully drawn, larger loan shared by Bank-2 and the Credit Union upon refinancing his medallion debt.  When Bank-3 informed COHEN that it would only provide financing if COHEN closed the Line of Credit, COHEN lied again, misleadingly stating in an email: “The medallion line was closed in the middle of November 2014.” 

In December 2015, COHEN contacted Bank-3 to apply for a home equity line of credit (“HELOC”).  In so doing, COHEN again significantly understated his medallion debt.  Specifically, in the HELOC application, COHEN, together with his wife, represented a positive net worth of more than $40 million, again omitting the $14 million in medallion debt with Bank-2 and the Credit Union.  Because COHEN had previously confirmed in writing to Bank-3 that the $14 million Line of Credit had been closed, Bank-3 had no reason to question COHEN about the omission of this liability on the HELOC application.  In addition, in seeking the HELOC, COHEN substantially and materially understated his monthly expenses to Bank-3 by omitting at least $70,000 in monthly interest payments due to Bank-2 on the true amount of his medallion debt. 

In April 2016, Bank-3 approved COHEN for a $500,000 HELOC.  By fraudulently concealing truthful information about his financial condition, COHEN obtained a HELOC that Bank-3 would otherwise not have approved. 

Campaign Finance Violations

The Federal Election Campaign Act of 1971, as amended, Title 52, United States Code, Section 30101, et seq., (the “Election Act”), regulates the influence of money on politics.  At all relevant times, the Election Act set certain limitations and prohibitions, among them: (a) individual contributions to any presidential candidate, including expenditures coordinated with a candidate or his political committee, were limited to $2,700 per election, and presidential candidates and their committees were prohibited from accepting contributions from individuals in excess of this limit; and (b) Corporations were prohibited from making contributions directly to presidential candidates, including expenditures coordinated with candidates or their committees, and candidates were prohibited from accepting corporate contributions.

On June 16, 2015, Individual-1 began his presidential campaign.  While COHEN continued to work at the Company and did not have a formal title with the campaign, he had a campaign email address and, at various times, advised the campaign, including on matters of interest to the press, and made televised and media appearances on behalf of the campaign. 

In August 2015, the Chairman and Chief Executive of Corporation-1, a media company that  owns, among other things, a popular tabloid magazine  (“Chairman-1” and “Magazine-1,” respectively”), in coordination with COHEN and one or more members of the campaign, offered to help deal with negative stories about Individual-1’s relationships with women by, among other things, assisting the campaign in identifying such stories so they could be purchased and their publication avoided.  Chairman-1 agreed to keep COHEN apprised of any such negative stories.

Consistent with the agreement described above, Corporation-1 advised COHEN of negative stories during the course of the campaign, and COHEN, with the assistance of Corporation-1, was able to arrange for the purchase of two stories so as to suppress them and prevent them from influencing the election.

First, in June 2016, a model and actress (“Woman-1”) began attempting to sell her story of her alleged extramarital affair with Individual-1 that had taken place in 2006 and 2007, knowing the story would be of considerable value because of the election.  Woman-1 retained an attorney (“Attorney-1”), who in turn contacted the editor-in-chief of Magazine-1 (“Editor-1”), and offered to sell Woman-1’s story to Magazine-1.  Chairman-1 and Editor-1 informed COHEN of the story. At COHEN’s urging and subject to COHEN’s promise that Corporation-1 would be reimbursed, Editor-1 ultimately began negotiating for the purchase of the story.

On August 5, 2016, Corporation-1 entered into an agreement with Woman-1 to acquire her “limited life rights” to the story of her relationship with “any then-married man,” in exchange for $150,000 and a commitment to feature her on two magazine covers and publish more than 100 magazine articles authored by her.  Despite the cover and article features to the agreement, its principal purpose, as understood by those involved, including COHEN, was to suppress Woman-1’s story so as to prevent it from influencing the election.       

Between late August 2016 and September 2016, COHEN agreed with Chairman-1 to assign the rights to the non-disclosure portion of Corporation-1’s agreement with Woman-1 to COHEN for $125,000.  COHEN incorporated a shell entity called “Resolution Consultants LLC” for use in the transaction.  Both Chairman-1 and COHEN ultimately signed the agreement, and a consultant for Corporation-1, using his own shell entity, provided COHEN with an invoice for the payment of $125,000.  However, in early October 2016, after the assignment agreement was signed but before COHEN had paid the $125,000, Chairman-1 contacted COHEN and told him, in substance, that the deal was off and that COHEN should tear up the assignment agreement.   

Second, on October 8, 2016, an agent for an adult film actress (“Woman-2”) informed Editor-1 that Woman-2 was willing to make public statements and confirm on the record her alleged past affair with Individual-1.  Chairman-1 and Editor-1 then contacted COHEN and put him in touch with Attorney-1, who was also representing Woman-2.  Over the course of the next few days, COHEN negotiated a $130,000 agreement with Attorney-1 to himself purchase Woman-2’s silence, and received a signed confidential settlement agreement and a separate side letter agreement from Attorney-1. 

COHEN did not immediately execute the agreement, nor did he pay Woman-2.  On the evening of October 25, 2016, with no deal with Woman-2 finalized, Attorney-1 told Editor-1 that Woman-2 was close to completing a deal with another outlet to make her story public.  Editor-1, in turn, texted COHEN that “[w]e have to coordinate something on the matter [Attorney-1 is] calling you about or it could look awfully bad for everyone.”  Chairman-1 and Editor-1 then called COHEN through an encrypted telephone application.  COHEN agreed to make the payment, and then called Attorney-1 to finalize the deal.

The next day, on October 26, 2016, COHEN emailed an incorporating service to obtain the corporate formation documents for another shell corporation, Essential Consultants LLC, which COHEN had incorporated a few days prior.  Later that afternoon, COHEN drew down $131,000 from the fraudulently obtained HELOC and requested that it be deposited into a bank account COHEN had just opened in the name of Essential Consultants.  The next morning, on October 27, 2016, COHEN went to Bank-3 and wired approximately $130,000 from Essential Consultants to Attorney-1.  On the bank form to complete the wire, COHEN falsely indicated that the “purpose of wire being sent” was “retainer.”  On November 1, 2016, COHEN received from Attorney-1 copies of the final, signed confidential settlement agreement and side letter agreement.

COHEN caused and made the payments described herein in order to influence the 2016 presidential election.  In so doing, he coordinated with one or more members of the campaign, including through meetings and phone calls, about the fact, nature, and timing of the payments.  As a result of the payments solicited and made by COHEN, neither Woman-1 nor Woman-2 spoke to the press prior to the election.

In January 2017, COHEN in seeking reimbursement for election-related expenses, presented executives of the Company with a copy of a bank statement from the Essential Consultants bank account, which reflected the $130,000 payment COHEN had made to the bank account of Attorney-1 in order to keep Woman-2 silent in advance of the election, plus a $35 wire fee, adding, in handwriting, an additional “$50,000.”  The $50,000 represented a claimed payment for “tech services,” which in fact related to work COHEN had solicited from a technology company during and in connection with the campaign.  COHEN added these amounts to a sum of $180,035.  After receiving this document, executives of the Company “grossed up” for tax purposes COHEN’s requested reimbursement of $180,000 to $360,000, and then added a bonus of $60,000 so that COHEN would be paid $420,000 in total.  Executives of the Company also determined that the $420,000 would be paid to COHEN in monthly amounts of $35,000 over the course of 12 months, and that COHEN should send invoices for these payments.        

On February 14, 2017, COHEN sent an executive of the Company (“Executive-1”) the first of his monthly invoices, requesting “[p]ursuant to [a] retainer agreement, . . . payment for services rendered for the months of January and February, 2017.”  The invoice listed $35,000 for each of those two months.  Executive-1 forwarded the invoice to another executive of the Company (“Executive-2”) the same day by email, and it was approved.  Executive-1 forwarded that email to another employee at the Company, stating: “Please pay from the Trust. Post to legal expenses. Put ‘retainer for the months of January and February 2017’ in the description.”

Throughout 2017, COHEN sent to one or more representatives of the Company monthly invoices, which stated, “Pursuant to the retainer agreement, kindly remit payment for services rendered for” the relevant month in 2017, and sought $35,000 per month.  The Company accounted for these payments as legal expenses.  In truth and in fact, there was no such retainer agreement, and the monthly invoices COHEN submitted were not in connection with any legal services he had provided in 2017.

During 2017, pursuant to the invoices described above, COHEN received monthly $35,000 reimbursement checks, totaling $420,000.   

*                      *                      *

COHEN, 51, of NEW YORK, NEW YORK, pleaded guilty to five counts of willful tax evasion; one count of making false statements to a bank; one count of causing an unlawful campaign contribution; and one count of making an excessive campaign contribution.

COHEN’S sentencing is scheduled for December 12 at 11 a.m.

A chart identifying the charges and the maximum penalties applicable to COHEN is below.

Count

Charge

Maximum Penalty

1-5

Tax Evasion

5 years in prison

6

Making false statements to a federally insured bank

30 years in prison

7

Causing an unlawful corporate contribution

5 years in prison

8

Making an excessive campaign contribution

5 years in prison

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

Mr. Khuzami praised the work of the FBI, the IRS, and the Special Agents of the U.S. Attorney’s Office. 

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Andrea M. Griswold, Rachel Maimin, Thomas McKay, and Nicolas Roos are in charge of the prosecution.  

Geoffrey S.  Berman, the United States Attorney for the Southern District of New York, announced that physician EWALD J. ANTOINE was sentenced today by U.S. District Judge Lorna G. Schofield to one year and one day in prison for his participation in a $30 million scheme to defraud Medicare and the New York State Medicaid Program.  ANTOINE falsely posed as the owner of two medical clinics, which were actually owned by a corrupt businessman, and falsely claimed that he had examined and treated hundreds of patients whom he had not in fact seen.  ANTOINE pled guilty on January 11, 2018, to health care fraud and conspiracy to commit health care fraud, mail fraud, and wire fraud.   

U.S. Attorney Geoffrey S. Berman said:  “The Medicare and Medicaid programs are intended to provide essential medical services to the elderly and the needy, not to enrich corrupt doctors and other fraudsters.  The real victims in this case are U.S. taxpayers and needy patients with legitimate medical needs.  Today’s sentence sends a strong message that those who cheat Medicare and Medicaid, including physicians who abuse their licenses and professional oaths, will be held accountable.”

According to the Indictment and other documents filed in federal court, as well as statements made during ANTOINE’s plea proceeding and sentencing:

Between 2007 and 2013, Aleksandr Burman owned and operated six medical clinics in Brooklyn (the “Clinics”) that fraudulently billed Medicare and Medicaid approximately $30 million for medical services and supplies that were not provided, were provided without regard to medical necessity, or were otherwise fraudulently billed.  Under New York State law, medical clinics must be owned and operated by a medical professional.  To circumvent this requirement, Burman, who was not a medical professional, hired doctors to pose as the nominal owners of each of the Clinics.  ANTOINE was one of those doctors, agreeing to sign a variety of fraudulent documents that falsely represented to banks, Medicare, Medicaid, and others that ANTOINE was the sole owner of Sunlight Medical and Psychiatric Services, P.C., and Coney Island Medical Services, P.C., two of the six Clinics.  ANTOINE and his co-conspirators also helped prepare false medical records to support fraudulent reimbursement claims submitted to Medicare and Medicaid.  ANTOINE signed medical charts falsely stating that he had examined patients, and wrote prescriptions and referrals for medically unnecessary and/or non-existent tests and supplies.

*          *          *

In addition to the prison term, ANTOINE, 67, of Valley Stream, New York, was sentenced to three years of supervised release.  Judge Schofield also ordered ANTOINE to pay restitution of $1,825,544 and to forfeit $269,412 in ill-gotten gains.

ANTOINE is the eighth defendant, and the second physician, who has been sentenced after pleading guilty in this case and a related case. The other defendants include:  Aleksandr Burman, the leader of the scheme, who was sentenced in a related case on May 8, 2017, to 10 years in prison; Marina Burman, the former wife of Aleksandr Burman and the owner of a related medical supply company, sentenced on May 17, 2018, to three years in prison; Mustak Y. Vaid, a physician sentenced on August 1, 2018, to 18 months in prison; Asher Oleg Kataev, a Burman business partner, sentenced on May 31, 2018, to three years in prison; Alla Tsirlin, a Clinic office manager, sentenced on June 5, 2018, to one year and one day in prison; and Edward Miselevich and Ivan Voychak, Burman’s partners who jointly ran a related ambulette company, sentenced on June 12 and July 19, 2018, respectively, to three years in prison each.

Three additional defendants – a doctor (Paul J. Mathieu), a physical therapist (Hatem Behiry), and an occupational therapist (Lina Zhitnik) – are scheduled to go to trial before Judge Schofield on November 26, 2018.  These three remaining defendants are presumed innocent unless and until proven guilty.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, David M. Hoovler, the Orange County District Attorney, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and John Ewanciw, the Chief of the City of Middletown Police, today announced the unsealing of indictments charging a total of 19 members and associates of two rival street gangs operating in Middletown New York:  Guap Gang and Coke Wave Boys.  The gangs are charged in separate courts Six Guap Gang members are charged in federal court with narcotics conspiracy and firearms offenses in United States v. John McGuigan, et al., 18 Cr. 585 (the “Guap Gang Indictment”).  Thirteen “Coke Wave Boys” members or associates are charged in Orange County Courts with offenses including murder, conspiracy, narcotics and weapons offenses.

Three defendants—JOHN McGUIGAN, DUANE KIRBY, and DESMEN AGOSTO— were taken into federal custody yesterday morning.  They were presented in White Plains federal court yesterday before U.S. Magistrate Judge Paul E. Davison.  One defendant, CHRISTOPHER SHELP, remains at large.  CHRISTOPHER ANDERSON and DARIUS MONROE were previously in federal custody and will be transported to White Plains federal court to be arraigned on the Guap Gang Indictment in the coming days.

U.S. Attorney Geoffrey S. Berman stated:  “To protect their drug territory, these alleged rival gang members sowed fear in the community by acquiring and using guns to escalate their feud.  Today’s arrests are a product of continued cooperation between federal, state, and local partners to stamp out gang violence and stem the tide of drugs in Middletown.”

Orange County District Attorney David M. Hoovler stated:  “We will not tolerate the rise of violent street gangs hoping to profit from the devastation that narcotics are already wreaking on our communities. The murder of Coree White is further proof that where there is organized narcotics dealing, gun violence inevitably follows. I commend the City of Middletown Police Department for recognizing the connection between violence and organized narcotics activity.  Only through the coordinated efforts of various law enforcement agencies can we stem the rise of narcotics gangs. I thank the New York State Police, Orange County Sheriff’s Office Special Operations Group, and the Bureau of Alcohol, Tobacco, Firearms and Explosives for partnering with the City of Middletown Police Department, and my office, in the investigation of “Coke Wave” and their associates. I commend the Federal Bureau of Investigation and the United States Attorney’s Office for the Southern District of New York for their investigation and prosecution of members of the “Guap Gang,” and thank them for working with us to make Middletown safer.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. stated:  “Most fear the violent streets gangs in the bigger cities in our area, but these criminal enterprises have now infected the small towns outside the cities hoping to control territory.  The FBI Hudson Valley Safe Streets Task Force has been working hand-in-hand with our law enforcement partners in Orange County, and Middletown, NY to stop these gangs by taking out the leadership, and sending a message to others who want to fill that hole - they will face the same fate.”

City of Middletown Police Chief John Ewanciw stated:  “The alleged crimes of the individuals charged in today’s indictments are understandably very disturbing to the residents of the City of Middletown.   For too long, the Coke Wave Boys and Guap Gang engaged in violent and dangerous activities that threatened the safety of our community, and it was their reckless disregard for human life that resulted in the death of Coree White on August 17, 2017.  I will not stand for this type of violence in our City, and I am committed to continuing our work with our partners on the federal, state, and local levels to ensure that these types of gangs are eradicated from our community.  I would like to thank the family of Coree White for their patience and support during this in-depth and complex investigation.  I would also like to thank the men and women of my agency, as well as those of all the other partner agencies, for their hard-work and dedication in seeing this investigation to its conclusion.  Our work undoubtedly does not end here today, however, the City of Middletown is a safer community because of the arrests and indictments made during ‘Operation Wipeout.’”

Middletown Sheriff Carl E. DuBois stated:  “I have been committed to the FBI Safe Streets Task Force and as a result of this commitment our communities are safer today.”

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

From about 2016 to the present, JOHN McGUIGAN, a/k/a “Jack,” a/k/a “Rico,” a/k/a “White Boy,” DUANE KIRBY, a/k/a “Ace,” a/k/a “Eddie,” a/k/a “Flea,” a/k/a “Montana,” DESMEN AGOSTO, a/k/a “Feddi Green,” CHRISTOPHER ANDERSON, a/k/a “Bo,” a/k/a “Drama,” DARIUS MONROE, a/k/a “Boosie,” a/k/a “Loso,” and CHRISTOPHER SHELP, a/k/a “Silence,” agreed to violate the narcotics laws of the United States by distributing and possessing with the intent to distribute heroin in and around Middletown, New York.

Additionally, McGUIGAN and KIRBY used and carried a firearm in furtherance of the drug trafficking crime.  MONROE also illegally possessed a firearm after having been previously convicted of a felony. 

*                      *                     *

A chart outlining the charges against the federal defendants is below.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the sentence will be determined by the court.

Mr. Berman praised the outstanding investigative work of the FBI, the City of Middletown Police Department, and the New York State Troopers.  Mr. Berman thanked the Orange County District Attorney’s Office for its invaluable partnership in the case. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Gillian Grossman and Allison Nichols are in charge of the prosecution.

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

CHARGE(S)

DEFENDANT(S)

MAXIMUM PENALTIES

Narcotics conspiracy

(Conspiracy to distribute and possess with intent to distribute 1 kilogram and more of heroin.)

JOHN McGUIGAN, 28 years old

    a/k/a “Jack,”

    a/k/a “Rico,”

    a/k/a “White Boy,”

DUANE KIRBY, 29 years old

    a/k/a “Ace,”

    a/k/a “Eddie,”

    a/k/a “Flea,”

    a/k/a “Montana,”

DESMEN AGOSTO, 29 years old

    a/k/a “Feddi Green,”

CHRISTOPHER ANDERSON, 27 years old

    a/k/a “Bo,”

    a/k/a “Drama,”

DARIUS MONROE, 28 years old

    a/k/a “Boosie,”

    a/k/a “Loso,” and

CHRISTOPHER SHELP, 25 years old

    a/k/a “Silence”

Life in prison

Mandatory minimum: 10 years in prison

Possession of a Firearm in Furtherance of a Drug Trafficking Crime

JOHN McGUIGAN,

    a/k/a “Jack,”

    a/k/a “Rico,”

    a/k/a “White Boy,” and

DUANE KIRBY,

    a/k/a “Ace,”

    a/k/a “Eddie,”

    a/k/a “Flea,”

    a/k/a “Montana”

Life in prison

Mandatory minimum: five years in prison, to be imposed consecutively to any other sentence

Felon in Possession of a Firearm

DARIUS MONROE,

    a/k/a “Boosie,”

    a/k/a “Loso,”

10 years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that the United States has reached a settlement with the City of New York (“the City”), the New York City Department of Correction (“DOC”), and the New York City Health and Hospitals Corporation (“HHC”) to resolve its investigation into violations of Title II of the Americans with Disabilities Act.  Under the agreement, the City, DOC, and HHC must provide inmates with disabilities equal access to services, programs, and activities by, among other things, timely providing inmates with needed accommodations, including auxiliary aids and services, assistive devices, and medical equipment.  In addition, DOC has agreed to make hundreds of architectural modifications to the Rikers Island units that house inmates with significant mobility and visual impairments and to DOC’s visitation areas to bring these facilities into compliance with applicable accessibility standards.      

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For too long, the City has been violating the ADA by depriving inmates with disabilities of their right to have equal access to services, programs, and activities available in the jail setting, and by failing to make its visitation areas fully accessible to individuals with disabilities.  Through this agreement, the City has committed to providing needed accommodations to inmates with disabilities, as well as making visitation areas more accessible to members of the public with disabilities.” 

As part of its investigation, the Office conducted on-site inspections of (a) the North Infirmary Command Annex, including the unit where DOC houses male inmates with significant mobility and visual impairments; (b) the area of Rose M. Singer Center where DOC houses female inmates with significant mobility and visual impairments and the common areas used by these inmates; and (c) the Central Visits Control Building and the visitation areas of each of the jails operated by DOC.  The Office also reviewed DOC’s ADA policies and training, records relating to requests for accommodations submitted by or on behalf of inmates, and information concerning the availability of programs and services at City jails. 

The Office identified widespread violations of applicable architectural accessibility standards for each of the facilities inspected.  In addition, the Office found that DOC failed to consistently:  (a) timely and adequately respond to accommodation requests from inmates with disabilities; (b) place inmates with mobility and visual impairments in accessible housing areas; (c) provide inmates with mobility impairments with access to appropriate mobility devices; and (d) ensure that hearing impaired inmates have equal access to telecommunications services.

The out-of-court settlement agreement requires the City, DOC, and HHC to:

• Complete hundreds of architectural modifications to the facilities that were inspected.  The City will retain an independent architect to determine whether the required modifications have been performed and comply with applicable standards.
• Provide appropriate auxiliary aids and services to inmates who are deaf, have hearing loss, have speech disabilities, are blind, or have low vision.
• Provide safe and appropriate assistive devices and medical equipment to meet the needs of inmates with disabilities.
• Promptly address complaints concerning the functioning or condition of any auxiliary aid, assistive device, or medical equipment.
• Provide inmates who are deaf, have hearing loss, or have speech disabilities with access to a TTY device, a hearing aid compatible telephone, the New York Relay Service, and, within three years, a Video Relay Service or an alternative way to communicate via a video link.
• Evaluate new inmates to determine whether they have any physical, mental, intellectual, or developmental disabilities and are in need of an accommodation.
• Place inmates with vision or mobility disabilities in accessible housing units where they will have access to all areas of the facility that inmates are permitted to use, including but not limited to common housing areas, recreational areas, worship areas, libraries, dining areas, visitation areas, medical treatment areas, mental health treatment areas, and areas where educational or vocational programs are offered.
• Promptly respond to requests by or on behalf of inmates to be transferred to more accessible housing.
• Adopt and implement a new policy governing how requests for accommodations and ADA complaints are submitted, processed, reviewed, resolved, and tracked.
• Maintain a computerized system to accurately track information concerning requests for accommodations and ADA complaints. 
• Develop and provide new ADA training to DOC and HHC staff.
• Submit bi-annual compliance reports to the U.S. Attorney’s Office.

*                      *                     *

This case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorneys Jeffrey K. Powell and Lara Eshkenazi are in charge of the case.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that RUBIN MOYE, a/k/a “Nut,” a high-ranking member of the Crips gang, was sentenced to 192 months in prison for the unlawful possession of a firearm and for ordering the assault of an individual he believed might testify against him.  MOYE was convicted on April 28, 2017, following a one-week jury trial before U.S. District Judge George B. Daniels, who also imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Rubin Moye illegally carried a loaded gun in the Bronx, and after he was caught red-handed, he ordered the violent assault of a suspected witness.  Together with our law enforcement partners, we will aggressively prosecute those who threaten our communities with illegal guns.  And we will not tolerate efforts to threaten or retaliate against witnesses who speak up about these crimes.”

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

On March 3, 2016, MOYE, a high-ranking member of the Crips gang, unlawfully possessed a loaded .38 caliber Taurus revolver (“the Firearm”) while driving in the Bronx, New York.  When MOYE failed to signal a right turn, two New York City Police Department (“NYPD”) officers conducted a routine traffic stop of MOYE’s vehicle.  MOYE, who was driving without a license, could not produce identification.  The officers asked MOYE to step out of the car and patted him down, discovering the Firearm inside MOYE’s pants.  MOYE possessed the Firearm despite having previously been convicted of two felonies, including a conviction for manslaughter in 1999 stemming from an incident in which MOYE shot several individuals, killing one and wounding two others. 

MOYE was subsequently charged with being a felon in possession of a firearm, in violation of Title 18, United States Code, Section 922(g)(1), and he proceeded to trial in January 2017.  In connection with that trial, which resulted in a hung jury, MOYE ordered inmates to assault an incarcerated individual (the “Victim”) who MOYE anticipated might testify against him at trial.  As a result, during MOYE’s first trial, the Victim was violently attacked by two other inmates.

MOYE was retried in April 2017 and found guilty of the firearms offense, as well as of witness intimidation, in violation of Title 18, United States Code, Section 1512(a)(2), and of witness retaliation, in violation of Title 18, United States Code, Section 1513(a)(2). 

*                *                *

In addition to the prison term, MOYE, 35, of the Bronx, New York, was sentenced to five years of supervised release. 

Mr. Berman praised the outstanding investigative efforts of the New York City Police Department, including members of the 43rd Precinct Anti-Crime Unit and the Violent Crimes Squad, and the Federal Bureau of Prisons.  He also thanked the Office of the Bronx County District Attorney for its assistance. 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that SALVATORE DELLIGATTI was sentenced today in Manhattan federal court to 25 years in prison for conspiring to participate in the Genovese Organized Crime Family of La Cosa Nostra through a pattern of racketeering activity, conspiring and attempting to commit murder in aid of racketeering, conspiring to commit murder-for-hire, and other related offenses.  DELLIGATTI, 42, was previously convicted by a jury following a three-week trial, and was sentenced in Manhattan federal court by the U.S. District Judge Katherine B. Forrest.

U.S. Attorney Geoffrey S. Berman said:  “Salvatore Delligatti, an associate of the Genovese Crime Family, recruited individuals to ambush and kill his intended victim, even providing them with a gun and getaway car.  Now, thanks to the outstanding work of our law enforcement partners, Delligatti will spend 25 years in prison.”

According to court papers filed in Manhattan federal court, other public filings, and the evidence presented in court during the trial:

From at least in or about 2010 through in or about 2015, DELLIGATTI was an associate of the Genovese Organized Crime Family of La Cosa Nostra.  During this period, DELLIGATTI conspired with others to participate in and conduct the affairs of the Genovese Family through a pattern of racketeering activity that included a murder conspiracy, an extortion conspiracy, and the operation of an illegal sports betting business.  In particular, in May and June 2014, DELLIGATTI hired several individuals from the Bronx to ambush DELLIGATTI’s intended victim outside the victim’s home in Queens.  DELLIGATTI offered to pay the individuals several thousand dollars for the murder, and provided them with, among other things, a loaded .38 caliber revolver and a getaway vehicle.  As a result of wiretap surveillance of DELLIGATTI by the Nassau County Police Department and the Nassau County District Attorney’s Office, the individuals hired by DELLIGATTI were apprehended just a few blocks from the intended victim’s residence on June 8, 2014.

*                *                *

Mr. Berman praised the outstanding investigative work of the Nassau County Police Department and the Federal Bureau of Investigation.  He also thanked the Nassau County District Attorney’s Office, the Diplomatic Security Service of the United States Department of State, 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 United States Attorneys Samson Enzer, Jordan Estes, and Jason Swergold are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the guilty plea of PAUL DEAN, to his role in a scheme to obtain approval of gun licenses by the New York City Police Department (“NYPD”) License Division in exchange for cash payments and non-monetary bribes.  DEAN, once second-in-command of the License Division, pled guilty to one count of conspiracy to commit bribery before U.S. District Judge Edgardo Ramos.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Paul Dean betrayed his duty as a former leader within the New York City Police Department to protect and serve the public.  Instead of assuring the integrity of the License Division he oversaw – a division charged with protecting the public safety by restricting access to firearms – he sought to corrupt it by bribing the very officers once under his command.  This Office will continue to stop such corruption which undermines the public’s confidence in the law enforcement officers and institutions sworn to serve us all.”

According to the Indictment and Complaint filed in this case, other public filings, and statements made during the plea proceeding:

DEAN was a member of the NYPD from 1994 through 2016, and was assigned to the License Division from 2008 through 2016.  DEAN, a lieutenant, was one of the highest-ranking members of the License Division and, from approximately November 2014 through November 2015, regularly ran the day-to-day operations of the License Division.  Robert Espinel was a member of the NYPD from 1995 through his retirement in 2016, and was assigned to the License Division from 2011 through 2016. 

From at least 2013 through 2016, multiple NYPD officers in the License Division serving under DEAN’s command, including David Villanueva and Richard Ochetal, solicited and accepted bribes from gun license expediters in exchange for providing assistance to the expediters’ clients in obtaining gun licenses quickly and often with little to no diligence.  They obtained bribes from at least three expediters: Gaetano Valastro, a/k/a “Guy,” Frank Soohoo, and Alex Lichtenstein, a/k/a “Shaya.”  Valastro was a former NYPD detective who retired in 1999, and who operated a gun store out of which he sold guns, gun paraphernalia, and gun safety courses.

The bribes included cash payments, paid vacations, food and liquor, the services of prostitutes, and free guns, among other things.  In exchange, Villanueva, Ochetal, and the other officers approved, expedited, and upgraded licenses for clients of Valastro, Lichtenstein, and Soohoo.  They did so by foregoing standard License Division diligence, including by failing to interview the applicants and failing to investigate the business-based need for applicants to carry guns.  They approved licenses for individuals with substantial criminal histories, including arrests and convictions for crimes involving weapons or violence, and for individuals with histories of domestic violence.

In 2015, dissatisfied with the fact that private gun expediters were profiting thousands of dollars per gun license applicant when DEAN and others did the work to approve those applications, DEAN and Espinel decided to retire and go into the expediting business themselves.  In order to ensure the success of their business, DEAN and Espinel planned to bribe Villanueva and Ochetal, who were still in the License Division, to enable their clients to get special treatment.  They also agreed with Valastro to run their expediting and bribery scheme out of Valastro’s gun store.  According to the plan, Valastro would benefit from the scheme because DEAN and Espinel would steer successful applicants to Valastro’s store to buy guns.  They also tried to corner the expediting market by forcing other expediters to work through them.  DEAN and Espinel attempted to coerce Frank Soohoo, another gun license expediter, into sharing his expediting clients with them by threatening to use their influence in the License Division to shut down Soohoo’s expediting business if Soohoo refused to work with, and make payments to, DEAN and Espinel.

*                *                *

DEAN, 44, of Wantagh, New York, pled guilty to one count of conspiracy to commit bribery.  The charge carries a maximum term of five years in prison.  DEAN is scheduled to be sentenced by Judge Ramos on November 15, 2018.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the New York City Police Department, Internal Affairs Bureau.

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Russell Capone and Kimberly Ravener are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and David E. Beach, Special Agent in Charge of the New York Field Office of the United States Secret Service (“USSS”), announced charges today against six individuals in a fraud conspiracy from December 2017 through July 2018.  BRIAN CAPELLAN, NELSON ALBA DEJESUS, JEAN MEDINA, JONTHAN MORA, JESUS ALBERTO REMOND, EMMANOL DIONIS BAEZ RODRIGUEZ, and their associates allegedly engaged in a scheme to fraudulently obtain cellular phones from a cellular phone provider by accessing victim accounts online and adding names as authorized users of the accounts.  Five defendants were arrested in the Southern District of New York and will be presented today before United States Magistrate Judge Paul E. Davison.  DEJESUS remains at large.

U.S. Attorney Geoffrey S. Berman said:  “The defendants allegedly accessed cellphone user accounts to fraudulently obtain cellphones worth more than $750,000.  Thanks to the Secret Service, the defendants’ mobile phone scam has been immobilized.”

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

From at least in or about December 2017 through and including July 2018, BRIAN CAPELLAN, NELSON ALBA DEJESUS, JEAN MEDINA, JONTHAN MORA, JESUS ALBERTO REMOND, and EMMANOL DIONIS BAEZ RODRIGUEZ, together and with others, perpetrated a scheme to fraudulently obtain cellular phones.  During the scheme, the defendants added their names as authorized users on existing accounts with a telecommunications company that provides cellular telephone services (the “Victim Accounts”).  The registered owners of these Victim Accounts did not know or authorize these additions.  Once the names were added as authorized users, the defendants purchased cellular phones in person as part of a handset upgrade and charged the cost of the cellular phones to the Victim Accounts.  The six defendants alone are responsible for over $750,000 in losses for their roles in the scheme. 

*                *                *

CAPELLAN, 22, of the Bronx, New York, DEJESUS, 25, of Yonkers, New York, MEDINA, 19, of the Bronx, New York, MORA, 27, of the Bronx, New York, REMOND, 27, of the Bronx, New York, and BAEZ RODRIGUEZ, 31, of Hollywood, Florida, are each charged with one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of New York Field Office Electronic Crimes Task Force of the United States Secret Service and the Special Agents of the U.S. Attorney’s Office, as well as the DEA New York Drug Enforcement Task Force, for their assistance. 

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), and Shawn Harris, Commissioner of the Mount Vernon Police Department (“MVPD”), announced today the unsealing of a complaint charging two defendants with allegedly engaging in carjacking and, in furtherance of the carjacking, possessing, brandishing, and discharging firearms.  The defendants, CHESTER BROWN and TRAVIS SINCLAIR, were presented in White Plains federal court this afternoon before United States Magistrate Judge Paul E. Davison and ordered detained.  BROWN was taken into federal custody on August 15; SINCLAIR was previously in federal custody based on prior pending criminal charges.

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

On or about July 27, 2018, BROWN and SINCLAIR, the defendants, entered a car in Mount Vernon carrying guns.  The defendants threatened and punched the driver; BROWN hit the driver with his gun, which discharged.  When the driver ran from his vehicle, at least one of the defendants fired gun shots toward him.  These shots injured a person sitting in another car. 

*                      *                     * 

BROWN and SINCLAIR each face a maximum term of life in prison, and a mandatory term of 10 years 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.

Mr. Berman praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force and the Mount Vernon Police Department.

These cases are being handled by the Office’s White Plains Division.  Assistant United States Attorneys Jamie Bagliebter and Samuel L. Raymond are in charge of the prosecution.

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

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

“Norman Seabrook was once one of the most powerful union leaders in this City.  Today he stands convicted of taking a $60,000 bribe to invest $20 million of his union members’ money in a fund that ultimately went belly-up, losing $19 million.  Seabrook’s is the fifth major public corruption conviction by our Office in as many months:  the governor’s right-hand man, the Speaker of the New York State Assembly, the Senate Majority Leader, and the key executive in the Buffalo Billion case.  I commend the hard-working members of the FBI who worked on all of these investigations, and the career prosecutors of this office who prosecuted this case: Martin Bell, Lara Pomerantz, and the chief of our public corruption unit, Russell Capone.  As long as there are public servants who put self-interest above the people they are sworn to serve, public corruption will remain a top priority of this Office.”

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JAMEL GODDARD, a/k/a “Payroll,” was sentenced today by United States District Judge Loretta A. Preska to 292 months in prison for his role as the leader of a sex trafficking conspiracy.  GODDARD pled guilty on February 26, 2018, to one count of conspiracy to commit sex trafficking of a minor.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For years, Jamel Goddard preyed on vulnerable victims and exploited them for financial gain.  For his brazen and violent conduct, Goddard now faces a substantial prison term.  Today’s sentence should serve as a powerful message to the sex trafficking industry that such reprehensible conduct will not be tolerated.”

According to the Indictment filed in Manhattan federal court, previous court filings, and statements made at public court proceedings:

Between approximately 2012 until approximately July 2017, GODDARD operated and led a sex trafficking and prostitution enterprise (the “Enterprise”) that recruited vulnerable women and a 15-year-old girl and subsequently exploited them for GODDARD’s personal financial gain.  GODDARD typically recruited victims who lacked education, a stable home, and family support.  He required the women he trafficked to engage in sex acts with multiple customers in a single day, operating from hotel rooms in the Bronx, Brooklyn, upstate New York, New Jersey, Connecticut, Rhode Island, and Florida, and using classifieds websites to advertise for commercial sex.  GODDARD kept all or most of the victims’ earnings, which sometimes amounted to thousands of dollars in a single day, for himself.

Throughout the course of the Enterprise, GODDARD employed physical violence and threats of force to exert control over his victims.  On multiple occasions, GODDARD hit or punched victims for, among other things: being, in GODDARD’s view, disrespectful; owing GODDARD money; or holding back their earnings from commercial sex from GODDARD.

During prior periods of imprisonment, GODDARD continued to operate the Enterprise while incarcerated, communicating directives and threats to his victims by phone.  On one such occasion, GODDARD warned a victim to “watch what I do when I get out.”

*              *             *

In addition to his prison sentence, GODDARD, 32, was sentenced to 10 years of supervised release. 

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

This matter is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Elizabeth A. Hanft, Sagar K. Ravi, and Alexandra N. Rothman are in charge of the prosecution.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that JESUS RODRIGUEZ-JIMENEZ was sentenced today to 30 years in prison by United States District Judge Katherine B. Forrest in Manhattan federal court.  RODRIGUEZ-JIMENEZ ran an international money laundering business with ties to Mexico, Italy, Hungary, Panama, and China, facilitating the movement of hundreds of millions of dollars in drug proceeds on behalf of drug cartels in Mexico and Central America.  Through a web of front companies, shell bank accounts, and money couriers throughout the United States and Europe, RODRIGUEZ-JIMENEZ successfully laundered in excess of $250 million, directly facilitating the trafficking of massive quantities of narcotics throughout the world. 

U.S. Attorney Geoffrey S. Berman said:  “Jesus Rodriguez-Jimenez led an international money laundering operation that handled the proceeds of cocaine and heroin trafficking by Mexican and Central American cartels.  The Rodriguez-Jimenez organization laundered more than a quarter of a billion dollars in illegal drug trafficking proceeds through front companies, sham bank accounts, and money drops in several U.S. cities.  Thanks to the efforts of the DEA, Rodriguez-Jimenez will now spend considerable time in prison for his crimes.”

According to the charging and other documents filed in the case, as well as statements made during RODRIGUEZ-JIMENEZ’s sentencing proceeding:

Since July 2013, the U.S. Drug Enforcement Administration (“DEA”) has been investigating JESUS RODRIGUEZ-JIMENEZ’s international money laundering organization and its cartel clients, which together have been involved in trafficking hundreds of kilograms of cocaine and heroin, among other narcotics, and laundering narcotics proceeds through a variety of methods, including through a network of shell corporations under their control.  To date, the investigation has resulted in charges against eight defendants, including the successful extradition of alleged high-level money launderer Filippo Magni from Italy earlier this summer. 

Through a network of front companies, couriers, and his own armored car company, RODRIGUEZ-JIMENEZ succeeded in repatriating millions of drug dollars from the streets of New York, Chicago, Detroit, Philadelphia, and other cities across the United States, back to cartel interests in Mexico.  By introducing these drug dollars into the banking system, RODRIGUEZ-JIMENEZ was able to move money wherever the cartel interests directed it, including repatriating this value to Mexico through trade-based money laundering:  At the direction of his cartel clients, RODRIGUEZ-JIMENEZ would wire drug dollars to companies in China, Hong Kong, and Taiwan.  These companies would, in turn, ship merchandise to Mexico or other drug producing countries.  There, merchants would accept the shipment of goods, and pay a reduced price, in local currency, to the cartels.  In this way, RODRIGUEZ-JIMENEZ turned street cash in the United States into value in Mexico.

RODRIGUEZ-JIMENEZ controlled his laundering empire through fear and intimidation.  For example, in July 2015, pursuant to the investigation, the DEA seized $100,000 in drug money in Atlanta from Organization courier Sergio Urbina (ultimately a co-defendant of RODRIGUEZ-JIMENEZ).  When he learned of the seizure, RODRIGUEZ-JIMENEZ ordered Urbina to come to Monterrey, Mexico, to explain himself.  After enduring a multiple-day interrogation by RODRIGUEZ-JIMENEZ’s underlings, complete with the administration of a false polygraph test, RODRIGUEZ-JIMENEZ coerced Urbina to execute a false promissory note that RODRIGUEZ-JIMENEZ later used to try to hold Urbina liable for the value of the seizure – even commencing a fraudulent civil action against Urbina, which RODRIGUEZ-JIMENEZ continued to pursue from jail.

In total, RODRIGUEZ-JIMENZ laundered at least $250 million on behalf of the cartels during the course of the scheme.

*                      *                     *

In addition to the prison term, RODRIGUEZ-JIMENZ, 47, of Monterrey, Mexico, was ordered to forfeit $284 million in laundered funds.

Mr. Berman praised the outstanding work of the Las Vegas Division of the DEA and the Las Vegas Office of the Internal Revenue Service, Criminal Investigation, in the investigation of this case.

This case is being handled by this Office’s Money Laundering and Asset Forfeiture Unit.  Assistant United States Attorneys Andrew C. Adams and Noah Falk are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Richard E. Zuckerman, the Principal Deputy Assistant Attorney General for the Tax Division of the Department of Justice, and Don Fort, Chief, Internal Revenue Service-Criminal Investigation (“IRS-CI”), announced the filing of criminal charges against ZÜRCHER KANTONALBANK (“ZKB”), a financial institution headquartered in Zurich, Switzerland.  ZKB is charged with conspiring to help U.S. taxpayer-clients evade their U.S. tax obligations, file false federal tax returns, and otherwise hide hundreds of millions of dollars in offshore bank accounts held at ZKB.

Mr. Berman also announced a deferred prosecution agreement with ZKB (the “Agreement”), under which ZKB admitted to its unlawful conduct in assisting U.S. taxpayer-clients in violating their legal duties.  The admissions are contained in a detailed Statement of Facts attached to the Agreement.  The Agreement requires ZKB to pay a total of $98.5 million.  The $98.5 million figure reflects, in part, a credit given to ZKB because of its cooperation in this case.  However, the amount of ZKB’s cooperation credit was reduced by the Government due to ZKB’s actions, as described in the Statement of Facts, in dissuading two indicted ZKB bankers from cooperating with U.S. authorities for years after their indictment.  Those indicted bankers, STEPHAN FELLMANN and CHRISTOF REIST, also pled guilty today. 

The criminal charge against ZKB is contained in an Information (the “Information”) alleging one count of conspiracy to willfully and knowingly (1) defraud the IRS, (2) file false federal income tax returns, and (3) evade federal income taxes.  If ZKB abides by all of the terms of the Agreement, the Government will defer prosecution on the Information for three years and then seek to dismiss the charges. 

ZKB has also agreed to provide ongoing assistance to the Department of Justice, including providing detailed information about accounts in which U.S. taxpayers have a direct or indirect interest, including detailed information as to other banks that transferred funds into those accounts or that accepted funds when the ZKB accounts were closed.  In addition, ZKB has agreed to cooperate with prosecutors in making treaty requests to Switzerland or other countries for account information.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “ZKB and two of its bankers have admitted to conspiring to assist U.S. taxpayers in evading their tax obligations.  The bank enabled taxpayers to hide accounts from the IRS and actively sought to win the business of Americans looking to evade taxes.  After doing so, ZKB dissuaded the two bankers from cooperating with U.S. authorities, which has today resulted in a reduction in the bank’s cooperation credit.  The substantial financial penalties imposed on the bank, and the two bankers’ pleas, should make clear that helping U.S. taxpayers to be tax evaders will not be tolerated.”

Principal Deputy Assistant Attorney General Richard E. Zuckerman said:  “ZKB and the other defendants in this case knew that U.S. taxpayers were maintaining undisclosed ‘black money’ accounts at ZKB in order to avoid their tax obligations and did nothing to prevent it.  Today’s agreement and guilty pleas send a clear message that this type of conduct will not be tolerated.  The Department will continue to work with our partners at IRS-CI to prosecute financial institutions and individuals that conspire to defraud the United States.”

IRS-CI Chief Don Fort said:  “Today’s resolution with ZKB and the guilty pleas of two bank employees send a strong message of enforcement and commitment to the international banking community as well as U.S. taxpayers.  When individuals and entities hide behind shell corporations and anonymous bank accounts, they are not only cheating the U.S. government, they are cheating the honest taxpaying citizens who are obeying the law and doing the right thing.”        

According to the Information, statements made during the proceedings today, and other documents filed in Manhattan federal court, including the Statement of Facts to the Agreement:

The Offense Conduct

From at least in or about 2002 through in or about 2009, ZKB helped certain U.S. taxpayers with accounts at ZKB evade their U.S. tax obligations, file false federal tax returns with the IRS, and otherwise hide accounts held at ZKB from the IRS (hereinafter, “undeclared accounts”).  ZKB did so by opening and maintaining undeclared accounts for U.S. taxpayers at ZKB, and by allowing third-party asset managers to open undeclared accounts for U.S. taxpayers at ZKB.  ZKB held approximately 2,000 undeclared accounts on behalf of U.S. taxpayer-clients, who collectively evaded over $39 million in U.S. taxes, between 2002 and 2013.

In furtherance of a scheme to help U.S. taxpayers hide assets from the IRS and evade taxes, ZKB undertook, among other actions, the following:

• ZKB entered into approximately 349 “code word agreements” with U.S. taxpayer-clients under which the bank agreed not to identify the U.S. taxpayers by name on bank documents, but rather to identify the U.S. taxpayers by code name, in order to reduce the risk that U.S. tax authorities would learn the identities of the U.S. taxpayers.  ZKB understood that a primary reason why U.S. taxpayers sought these “code word” accounts was to evade detection by U.S. tax authorities.
   
• ZKB opened and maintained accounts for many U.S. taxpayer-clients held in the name of non-U.S. corporations, foundations, trusts, or other legal entities (collectively, “structures”), thereby helping those U.S. taxpayers conceal their beneficial ownership of the accounts.  Some of the structures had no business purpose (“sham structures”), but rather, existed solely for the purpose of helping ZKB’s U.S. taxpayer-clients hide their offshore assets.
   
• ZKB agreed to hold bank statements and other mail relating to approximately 750 accounts of U.S. domiciled taxpayer-clients at ZKB’s offices in Switzerland, rather than send them to U.S. taxpayer-clients in the United States, which helped ensure that documents reflecting the existence of the accounts remained outside the United States and beyond the reach of U.S. tax authorities.
   
• ZKB solicited new business through the website www.swiss-bank-accounts.com, which was operated by a third party, and which resulted in the opening of accounts at ZKB for U.S. taxpayer-clients whose accounts were undeclared.

ZKB knew that certain U.S. taxpayer-clients were maintaining undeclared accounts at ZKB in order to evade their U.S. tax obligations, in violation of U.S. law.  ZKB understood the legal prohibitions regarding tax evasion to be distinct from ZKB’s obligations under its Qualified Intermediary Agreement.  Certain ZKB bankers commonly used the term “Schwarzgeld” – German for “black money” – internally to refer to undeclared accounts, including those held by U.S. citizens.  Until the middle of 2008, ZKB did not prevent any U.S. persons from opening an account if they refused to fill out a Form W-9, even though ZKB knew that such accounts were, or were highly likely to be, undeclared.  Indeed, in May 2006, internal ZKB documents explicitly discussed the profitability of “[n]on-disclosed U.S. persons.”

At its high-water mark in 2008, ZKB had approximately $794 million in assets under management relating to undeclared accounts held by U.S. taxpayer-clients.  From 2002 through 2013, ZKB earned approximately $21 million in profits on approximately $24 million gross revenues from its undeclared U.S. taxpayer accounts, including accounts held through structures.   

In early 2008, U.S. enforcement actions against the Swiss banking institution UBS became public.  In or about July 2008, UBS announced that it would cease providing cross-border private banking services to U.S.-domiciled clients.  Rather than immediately closing down its own U.S. taxpayer undeclared accounts as a result of the UBS investigation, ZKB, through its external asset manager (“EAM”) desk, instead treated UBS’s decision to stop accepting U.S. taxpayer-clients as a business opportunity, and actively sought to increase its U.S. taxpayer-client base.  ZKB gained many U.S. taxpayer-clients through EAMs working with the bank.

However, in 2008 and 2009, at the same time as ZKB’s EAM Desk proactively sought to increase its U.S. taxpayer-client base, ZKB also began implementing a number of measures that gradually limited securities accounts held by U.S. taxpayer-clients.  At first the restrictions applied only to former UBS clients, but ZKB expanded its restrictions over time.  By June of 2009, ZKB decided to close its business with all U.S. domiciled clients holding securities accounts, and in 2011, ZKB decided to exit its business with all remaining U.S.-domiciled customers.  By 2012, ZKB had closed virtually all accounts held by U.S. domiciled taxpayers, and for those U.S. clients domiciled outside of the U.S., ZKB sought a Form W-9 and proof of U.S. tax compliance.  ZKB has now terminated all U.S. cross-border business.

Indictment of ZKB Employees and ZKB’s Response to the Indictment

Despite ZKB’s cooperation with the Government in this case, the Government views the actions of ZKB with respect to indicted bankers FELLMANN and REIST, described in the Statement of Facts, as inconsistent with a policy of full cooperation.  Those actions, accordingly, have reduced the amount of cooperation credit afforded by the Government to ZKB.

In December 2012, three ZKB bankers – FELLMANN, REIST, and Otto Hüppi – were charged in the Southern District of New York with conspiracy to defraud the United States and the IRS for their role in ZKB’s offense.  Although ZKB retained independent U.S. counsel for the bankers, beginning in 2013 and continuing through 2015, ZKB’s in-house counsel and, at times, ZKB employees from the Human Resources department and other departments, regularly met with FELLMANN and REIST.  At those meetings, which were not attended by FELLMANN and REIST’s independent U.S. counsel, ZKB, among other things, made statements that caused FELLMANN and REIST to feel dissuaded from reaching out to the U.S. Attorney’s Office in order to explore the possibility of cooperating.  In addition, ZKB’s in-house counsel suggested to FELLMANN that he did not have any information of value to contribute to the U.S. Attorney’s Office’s ongoing investigation.  Furthermore, based on conversations with ZKB, FELLMANN and REIST felt that their continued employment at ZKB and ZKB’s ongoing payment of their legal fees would be threatened should they take steps that were viewed by ZKB as inconsistent with the bank’s own interests.  Due in part to these discussions with ZKB, FELLMANN and REIST did not seek to cooperate with the investigation until the summer of 2015, approximately two and a half years after being indicted.

            *                *                *

FELLMANN, 53, a Swiss citizen, and REIST, 60, a Swiss citizen, each pled guilty to one count of conspiracy to willfully fail to file returns, supply information, or pay tax.  FELLMANN and REIST each face a maximum sentence of one year in prison.  The statutory maximum sentence is prescribed by Congress and is provided here for information purposes only, as any sentences imposed on the defendants will be determined by the judge.

FELLMANN and REIST are each scheduled to be sentenced before U.S. District Judge J. Paul Oetken on November 30, 2018.

Hüppi remains a fugitive.

Mr. Berman praised the outstanding investigative work of IRS-CI, and thanked the Justice Department’s Tax Division for its assistance in the investigation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Sarah E. Paul, Noah Solowiejczyk, and Andrew D. Beaty are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that PETER G. JOHNSON was sentenced to 36 months in prison for leading a scheme to defraud a group of lenders (the “Banks”) by submitting false “borrowing base” reports designed to secure and maintain a $400 million line of credit for his cocoa trading company, Transmar Commodity Group Ltd. (“Transmar” or the “Company”).  JOHNSON pled guilty on March 9, 2018, to one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution.  The sentence was imposed by United States District Judge Jed S. Rakoff.

U.S. Attorney Geoffrey S. Berman said:  “Peter G. Johnson, CEO of Transmar, a commodities trading company specializing in cocoa trading, previously admitted to his role in a scheme to defraud the banks which extended high lines of credit to Transmar.  Johnson and his co-defendants fudged the company’s required reports, which banks used to gauge the amount they extended Transmar, to make the company seem financially healthier, thus receiving higher credit than deserved.  All told, Johnson’s scheme led to the bankruptcy of Transmar, unpaid debt of over $350 million, and now he has been sentenced to 36 months in prison time.”

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

Transmar was a closely-held, family-run cocoa commodity trading company.  PETER G. JOHNSON was Transmar’s founder, President, and chief executive officer. 

From at least 2014 through at least December 2016, Transmar maintained a credit facility from the Banks that varied from approximately $250 million to approximately $400 million.  To secure and maintain these hundreds of millions of dollars in credit, PETER G. JOHNSON, his son, Peter B. Johnson, Transmar’s Vice President of Finance, Thomas Reich, and others schemed to misrepresent material information about Transmar’s finances, making it appear that Transmar had far more credit-eligible collateral than it actually had.

The scheme centered on periodic “borrowing base” reports (“BB Reports”) that the Banks required Transmar to submit, sometimes as frequently as weekly, as a condition to continued credit extension.  The BB Reports were supposed to accurately reflect and quantify those portions of Transmar’s collateral that qualified for financing under the terms of credit agreements between Transmar and the Banks. 

Beginning no later than 2014, Transmar employees, acting with JOHNSON’s knowledge and at his direction, manipulated the BB Reports and related documents to give the false impression that Transmar had sufficient eligible collateral to support the amount of credit the Banks were extending.  The manipulation involved, among other devices, counting inventory that Transmar had already sold or was otherwise ineligible for inclusion, counting accounts receivable for which Transmar had already received payment, recording fake accounts receivable, and arranging “circle” transactions through which amenable third-party intermediaries agreed to “buy” goods from Transmar with Transmar’s own money, funneled to the third parties through Euromar Commodities GMBH, Transmar’s affiliate.

Following the discovery of the fraud, Transmar filed for bankruptcy in December 2016.  At that time, the Company owed the Banks approximately $360 million.
                                                                                                                                                                   

*                      *                      *           

In addition to the prison term, JOHNSON, 69, of Harding Township, New Jersey, was sentenced to two years of supervised release.

Peter B. Johnson, 39, of Morristown, New Jersey, and Thomas Reich, 60, of Montvale, New Jersey, each pled guilty to the same offenses for their participation in the scheme to defraud the Banks.  They are scheduled to be sentenced on September 17 and 21, 2018, respectively.

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

This case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant U.S. Attorneys Benet J. Kearney and Daniel M. Tracer are in charge of the prosecution.   

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that JEFFREY ROGIERS pled guilty today before United States District Judge Alison J. Nathan to conspiracy to commit securities fraud and fraud in connection with a tender offer for his role in an insider trading scheme relating to material nonpublic information misappropriated from an investment bank by Daniel Rivas, a former employee at the bank.  In August 2017, ROGIERS, as well as Michael Siva, Roberto Rodriguez, Rodolfo Sablon, and Jhonatan Zoquier, were arrested and charged in a 54-count Indictment for their involvement in three overlapping insider trading chains, all stemming from information misappropriated by Rivas.  Prior to the unsealing of the Indictment last year, Rivas and another participant in the scheme, James Moodhe, pled guilty and both have been cooperating with the Government in this investigation.  Since the unsealing of the Indictment, Sablon and Zoquier, in addition to ROGIERS, have pled guilty and will be sentenced by Judge Nathan.[1] 

U.S. Attorney Geoffrey S. Berman said:  “Jeffrey Rogiers traded on stolen confidential corporate information that he received, through a friend, from an insider at an investment bank in order to generate illicit profits.  Our Office and our law enforcement partners remain committed to identifying and prosecuting those who engage in such abuses of our nation’s securities markets.”

According to the allegations contained in the Indictment filed against ROGIERS 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 the 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 the misappropriated Inside Information 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 Rogiers Tipping Chain

With respect to ROGIERS, Rivas passed inside information to his close friend Zoquier, who passed inside information to his close friend ROGIERS. 

From at least 2013 through August 2017, Rivas and Zoquier, who lives and works in New Jersey, had a close relationship.  ROGIERS lived and worked in California as a computer and network security analyst and had a close relationship with Zoquier.  In or about 2013, Zoquier introduced Rivas to ROGIERS.  In or about 2015, at Zoquier’s request, Rivas and ROGIERS met in person and Rivas explained to ROGIERS the nature of the Inside Information to which he had access.  Between at least in or about March 2016 and in or about April 2017, Rivas repeatedly provided Zoquier with Inside Information misappropriated from the Investment Bank so that Zoquier could execute profitable trades.  Beginning in approximately March 2016, Zoquier began sharing the Inside Information he received from Rivas with ROGIERS so that ROGIERS could execute profitable trades for himself.  Throughout the time that ROGIERS was obtaining Inside Information from Zoquier, ROGIERS understood that Rivas was the source of the Inside Information.  In addition to trading himself, ROGIERS also caused at least one other individual to execute profitable trades based on the Inside Information. 

In total, Zoquier and ROGIERS caused trades generating more than $200,000 in illicit profits based on Rivas’s Inside Information.

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ROGIERS, 34, of Oakland, California, pled guilty to one count of conspiracy to commit securities fraud and fraud in connection with a tender offer (Count Thirty-Nine of the Indictment), which carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain from the offense.  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.  ROGIERS will be sentenced before United States District Alison J. Nathan later this year. 

Sablon and Zoquier, two of the co-defendants named in the Indictment along with ROGIERS, have also pled guilty and will be sentenced by Judge Nathan.  Any trial of the remaining co-defendants, Siva and Rodriguez, will occur next year before Judge Nathan, on charges of conspiracy to commit securities fraud and fraud in connection with a tender offer, conspiracy to commit wire fraud, multiple counts of securities fraud, and tender offer fraud.  The allegations contained in the Indictment as to those defendants are merely accusations, and they are presumed innocent unless and until proven guilty.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its assistance.  He added that the investigation is continuing.

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

[1] As for the defendants who have not pled guilty (Michael Siva and Roberto Rodriguez), the charges described herein constitute only allegations.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Ashan M. Benedict, the Special Agent-in-Charge of the New York Field Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Daniel A. Nigro, the Commissioner of the New York City Fire Department (“FDNY”), announced today the arrest of JAMAL DEESE in connection with a string of arsons in New York, which occurred from August 5, 2018, through August 7, 2018.  DEESE was arrested yesterday evening, and was presented today in Manhattan federal court before the U.S. Magistrate Judge Katharine H. Parker.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Jamal Deese set more than a dozen fires in midtown Manhattan locations during a three-day span.  His alleged serial arsons threatened public safety and necessitated the deployment of valuable firefighting and law enforcement resources.  Thanks to the work of the ATF, NYPD, and FDNY, Deese is in custody and will be prosecuted.” 

ATF Special Agent-in-Charge Ashan M. Benedict said:  “The defendant’s alleged conduct placed New Yorkers, commuters, and visitors at extreme and indiscriminate risk of injury or worse, and had the potential to cause extensive damage to businesses and property.  While we are fortunate that there were no known injuries, the defendant will nonetheless face the consequences for his alleged arson spree.  I’d like to thank the members of ATF’s SEAR Task Force and the U.S. Attorney’s Office for their efforts thus far in this investigation.”

NYPD Commissioner James P. O’Neill said:  “The potential for serious injury or death was very real as Jamal Deese allegedly went on a spree across a swath of Midtown Manhattan.  Fortunately, the collaborative efforts of our city and federal partners stopped him before further mayhem could occur.  Today’s arrest is the result of the type of quick and effective investigative work performed each day in New York City.”

FDNY Commissioner Daniel A. Nigro said:  “I’m proud of the outstanding collaborative investigation by the Arson Response Task Force to apprehend an individual whose alleged crimes needlessly put many lives in danger.  Arson is a dangerous, potentially deadly crime; and thanks to our Fire Marshals, NYPD Detectives and ATF agents, an alleged serial arsonist has been stopped before anyone could be injured.”

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

From August 5, 2018, through August 7, 2018, DEESE set trashcan fires in the bathrooms of at least four midtown restaurants.  He also set trashcan fires outside and inside the Amtrak terminal at Penn Station.  During the course of his arson spree, DEESE ignited at least 14 fires at Penn Station and in the restaurants.  DEESE was apprehended when he returned to one of the restaurants in which he had previously ignited a fire.

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DEESE, 24, of Brooklyn, New York, is charged with four counts of arson, each of which carries a mandatory minimum sentence of five years in prison and a maximum 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.

Mr. Berman praised the outstanding investigative work of ATF, NYPD, FDNY, and the Strategic Explosive and Arson Response Task Force. 

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Angel M. Melendez, the Special Agent in Charge of the New York Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced charges today against 12 individuals involved in a nationwide fraud conspiracy from 2014 to the present: ISAAC CONCEPCION AQUINO, a/k/a “Kaka,” MARIO DIAZ, a/k/a “Memin,” TOMAS GUILLEN, a/k/a “Diddy,” RONNIE DE LEON, JOSE ARGELIS DIAZ, JOEL PENA, JHONATAN DIAZ, a/k/a “Nino,” EDDY MORROBEL, RUDDY SANCHEZ, MICHAEL ROQUE, RAYNIEL ROBLES, and JOANDRA TEJADA GONZALEZ.  In connection with the fraud, the defendants and their associates improperly accessed more than 3,300 customers’ cellphone accounts, fraudulently obtained more than 1,200 cellphones, and caused losses exceeding $1 million.  Six defendants were arrested in the Southern District of New York and will be presented today before Magistrate Judge Katharine H. Parker: MARIO DIAZ, a/k/a “Memin,” TOMAS GUILLEN, a/k/a “Diddy,” JOSE ARGELIS DIAZ, JHONATAN DIAZ, a/k/a “Nino,” EDDY MORROBEL, and RAYNIEL ROBLES.  In addition, RONNIE DE LEON was arrested this morning in Ohio and will be presented this afternoon, in the Southern District of Ohio, before Chief Magistrate Judge Elizabeth A. Preston Deavers.

The following defendants remain un-apprehended at this time: ISAAC CONCEPCION AQUINO, a/k/a “Kaka,” JOEL PENA, RUDDY SANCHEZ, MICHAEL ROQUE, and JOANDRA TEJADA GONZALEZ.

U.S. Attorney Geoffrey S. Berman said:  “The defendants allegedly engaged in a sophisticated nationwide conspiracy to hack into the accounts of ordinary people and exploit those accounts for their own gain, obtaining valuable electronic devices at others’ expense.  The defendants allegedly perpetrated their scheme through various means, including buying victims’ account information over the dark web.  Thanks to the dedicated work of our partners at HSI, this alleged ring of cellphone fraudsters will now face the call of justice.”

HSI Special Agent in Charge Melendez said:  “Those arrested today were allegedly part of a fraud network operating in New York, the Dominican Republic and the Darknet.  Their activities left a trail of unsuspecting victims across the United States and cost businesses significant losses.  They traveled to 30 states to obtain cellphones that were later sold through fencing operations in the Bronx. Telecommunications fraud is a huge business and where there is a profit to be made by criminals, HSI’s longstanding El Dorado Task Force will follow the money to bring those perpetrators to justice.”

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

From at least 2014 to the present, a group of individuals (the “Fraud Ring”) perpetrated a wide-ranging scheme to obtain valuable, new electronic devices – primarily iPhones, but also iPads, tablets, and watches – at others’ expense.  During the course of the conspiracy, the Fraud Ring fraudulently obtained more than $1 million worth of devices.  To facilitate the scheme, the Fraud Ring traveled to at least 30 different states, but often brought or shipped the fraudulently obtained cellphones back to the Bronx, where they regularly sold them.

The Fraud Ring regularly engaged in intrusions into existing customers’ accounts with cellular service companies and obtained new phones or “upgrade” phones by paying only a small fee in the store, while charging the vast majority of the purchase price to existing customers’ accounts, without the consent or knowledge of these existing customers.  The scheme’s victims therefore included both customers, whose identities were stolen and/or whose accounts were accessed without authorization, and cellphone service providers, which typically bore financial losses for fraudulently obtained devices.

The Fraud Ring used various mechanisms to perpetrate their scheme, including buying cellphone customers’ personal identifying information (“PII”) over the dark web; phishing, in which the Fraud Ring sent a link to cellphone customers that, if pressed, allowed the Fraud Ring to hack into the customers’ accounts; using fraudulent identifications to persuade retail store employees that conspirators were someone else; and opening accounts using social security numbers that appeared to match conspirators’ names but in fact belonged to victims.

During the course of the investigation, HSI executed a search warrant on a suspected hub of the Fraud Ring in Mt. Vernon, New York (the “Residence”).  Law enforcement encountered six of the 12 charged defendants in the Residence and seized (among other things) approximately 47 electronic devices, including 12 computers.  Two IP addresses associated with the Residence were used to access at least approximately 3,300 cellphone company customer accounts, and to fraudulently purchase at least approximately 1,294 cellphones.  The seized computers contained various indicators of involvement in the fraud, including:

• A 15-minute-long “How-to” video, which detailed the steps necessary to commit cellphone fraud, including how to use victim PII to fraudulently purchase devices;
• Many indicators that the computers had accessed the darkweb, several websites where victim PII is sold (sometimes for as little as $3), and cryptocurrency exchanges, including for Bitcoin; and
• Numerous Google searches in furtherance of the fraud (e.g., “best buy upgrade checker phone,” “att activate phone,” “verizon.com check order status,” “check my order status sprint,” “add authorized user last name,” “California driver license number format,” “Utah driver license photo,” and “most common last names for Spanish rich people”).

*                *                *

Each of the 12 defendants is charged with one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory minimum penalty of two years in prison, which must run consecutively to any other term of imprisonment imposed.  The maximum and mandatory minimum 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.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Michael D. Neff and Brett M. Kalikow are in charge of the prosecution.

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

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that JAMIE FRIERSON was found guilty of five robberies in connection with a robbery spree in Manhattan, during which thousands of dollars were stolen.  FRIERSON was convicted after a three-day trial before U.S. District Judge Analisa Torres.

U.S. Attorney Geoffrey S. Berman said:  “Jaime Frierson went on a one-man crime spree, brazenly attempting to rob five Manhattan banks in broad daylight in less than two weeks. Frierson threatened the lives of bank tellers to get away with thousands of dollars in cash, endangering the safety of New Yorkers and traumatizing bank employees.  This swift verdict shows that our community will not stand for these acts.”

According to the allegations in the Complaint and evidence at trial:

On August 16, 2017, FRIERSON entered a bank in midtown Manhattan and handed a bank teller a note claiming that he had a gun, demanding money, and threatening violence.  In response, the teller gave FRIERSON approximately $1,500 in United States currency.  Frierson then fled.

On August 18, 2017, FRIERSON entered a bank on the Upper West Side of Manhattan and handed a bank teller a note claiming he had a gun, demanding money, and threatening violence.  After FRIERSON was unable to obtain any money, he fled the bank.

On August 24, 2017, FRIERSON entered a bank on the Upper West Side of Manhattan and handed a bank teller a note claiming he had a gun, demanding money, and threatening to kill bank employees.  In response, the teller gave FRIERSON approximately $2,000 in United States currency.  FRIERSON then fled.

On August 29, 2017, FRIERSON entered a bank in Harlem and handed a bank teller two notes claiming he had a gun, demanding money, and threatening to kill bank employees.  After FRIERSON was unable to obtain any money, he fled the bank.

On August 29, 2017, FRIERSON entered a bank on the Upper West Side of Manhattan and handed a bank teller a note claiming that he was armed, demanding money, and threatening to kill bank employees.   In response, the teller gave FRIERSON over $8,000 in United States currency.  FRIERSON then fled.

*                *                *

FRIERSON, 47, of New York, New York, was convicted of three counts of robbery and two counts of attempted robbery.  FRIERSON is facing a maximum sentence of 20 years in prison on each count, and is scheduled to be sentenced on December 10, 2018, before Judge Torres.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and the New York City Police Department.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Aline R. Flodr, Sheb Swett, and Sagar K. Ravi are in charge of the prosecution.