Southern District of New York

United States Attorney for the Southern District of New York, Jay Clayton, announced that KEANO SAHUSILAWANI, a/k/a/ “Chino,” a/k/a “Bhino,” a/k/a “Bhino Shots,” was sentenced today to 10 years in prison for illegally possessing ammunition in connection with a June 12, 2024, shooting during which SAHUSILAWANI and an accomplice fired multiple shots on a residential street in the Bronx, New York, striking and injuring an innocent bystander.  SAHUSILAWANI previously pled guilty before U.S. District Judge Lewis J. Liman, who imposed yesterday’s sentence. 

“On June 12, 2024, Keano Sahusilawani and his accomplices fired several shots in an attempt to kill an intended target who was riding a bicycle down the street,” said U.S. Attorney Jay Clayton.  “Instead, they struck an innocent bystander and caused others to run in fear for their lives.  New Yorkers want gun-toting criminals off our streets, and the women and men of our Office are committed to delivering that.”

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

On the evening of June 12, 2024, three individuals emerged from an SUV parked along Morris Avenue in the Bronx, just north of 151st Street.  The three individuals—SAHUSILAWANI, who was unmasked and wearing a gray sweater; a second individual, who was masked up and wearing all black clothes (“Shooter-2”); and a third individual, who wore a black hoodie and light-colored pants (“CC-1”)—walked towards 151st Street.  A few minutes later, the three individuals turned north onto Courtlandt, with SAHUSILAWANI and CC-1 walking up one sidewalk of Courtlandt and Shooter-2 walking up the opposite sidewalk.

Coming from the opposite direction was someone riding a bicycle in the middle of Courtlandt Avenue (the “Intended Target”).  As the Intended Target got closer, SAHUSILAWANI pulled out a gun and quickly fired off multiple shots aimed at the Intended Target.  As SAHUSILAWANI finished shooting, Shooter-2 fired off one or more shots.  The Intended Target stumbled off his bike and was able to sprint away seemingly uninjured.  However, an innocent bystander was grazed by a bullet that broke the skin on the back of his right leg.  SAHUSILAWANI was not permitted to possess ammunition because of prior felony convictions for multiple gunpoint robberies, a knifepoint robbery, and criminal possession of a firearm.  At the time of the shooting, SAHUSILAWANI was also on parole for his state convictions.

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In addition to the prison term, SAHUSILAWANI, 25, of the Bronx, New York, was sentenced to three years of supervised release.      

Mr. Clayton praised the outstanding investigative work of the New York City Police Department, and thanked the Bureau of Alcohol, Tobacco, Firearms and Explosives for their assistance with the investigation.

The prosecution of this case is being handled by the Office’s Violent Organizations and Crime Unit.  Assistant U.S. Attorney Timothy Ly is in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, announced that HASSAN HUBBARD was sentenced today to 10 years in prison for trafficking firearms. HUBBARD previously pled guilty before U.S. District Judge Arun Subramanian, who imposed today’s sentence.

“New Yorkers have made clear they want illegal firearms out of their neighborhoods, and that’s what they deserve,” said U.S. Attorney Jay Clayton.  “Today’s lengthy sentence takes yet another provider of illegal automated weapons to gun-toting criminals off the streets of New York.  I commend the career prosecutors of this Office for their unwavering commitment to combatting the proliferation of illegal weapons and the havoc they wreak on our city.”

According to charging instruments and other public court filings:

In spring 2024, HUBBARD sold firearms and ammunition on multiple occasions to an undercover member of law enforcement from inside, or nearby, a Bronx apartment building.  The firearms HUBBARD sold included semiautomatic assault rifles, an untraceable “ghost gun,” and high-capacity magazines, along with over 800 rounds of ammunition.  Some of the firearms and ammunition HUBBARD sold are shown below:

In imposing the sentence, Judge Subramanian remarked upon the “important need to send a message that when firearm trafficking is detected, the penalties are significant.”

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In addition to his prison term, HUBBARD, 54, of the Bronx, New York, was sentenced to three years of supervised release. 

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

The case is being handled by the Office’s Violent Organizations and Crime Unit.  Assistant U.S. Attorneys Patrick R. Moroney, Ashley C. Nicolas, and Jared D. Hoffman are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, announced that JESUS ZAPATA, a/k/a “Jeezy,” a/k/a “Hendrix,” was sentenced today by U.S. District Judge J. Paul Oetken to 17 years in prison for his role as “Duarte,” or leader, of the violent gang Own Every Dollar (“OED”).

“This case reflects our efforts to dismantle violent gangs, with today’s sentence reinforcing that accountability reaches gang leaders, like Jesus Zapata, who directed and ordered violence that harmed New Yorkers and their quality of life,” said U.S. Attorney Jay Clayton.

As alleged in the Indictment and statements made in public filings and public court proceedings:

ZAPATA served as the “Duarte” of the violent OED gang, a subset of the Trinitarios gang based in and around the Washington Heights area of Manhattan.  The prosecution in this case has involved the convictions of 22 members of OED for five murders, more than 10 attempted murders, multiple robberies, and the control and operation of an extensive drug trafficking network that sold large quantities of fentanyl, heroin, cocaine, and crack cocaine. ZAPATA is being held responsible for committing and ordering a number of violent acts on Rikers Island, including three slashings in 2021, as well as for trafficking narcotics.

ZAPATA is the 21st defendant to be sentenced in the case, and the 11th defendant to be sentenced to a prison term of 10 or more years.

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In addition to the prison term, ZAPATA, 36, of New York, New York, was sentenced to five years of supervised release.      

Mr. Clayton praised the outstanding work of the New York City Police Department (“NYPD”), the Drug Enforcement Administration, and the New York Drug Enforcement Task Force.  Mr. Clayton also thanked the Manhattan District Attorney’s Office, the Bronx District Attorney’s Office, the Office of the Special Narcotics Prosecutor, the New York State Police, and the NYPD Task Force Officers assigned to this Office for their assistance in the investigation.

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Sarah L. Kushner, Kevin Mead, Ashley C. Nicolas, and Alexandra Messiter are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, and Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, announced the unsealing of an Indictment charging AHMAR GARCIA, a/k/a “OB,” and RAHEEM PATTERSON, a/k/a “Rah Rah,” with committing the murder of sixteen-year-old Nisayah Sanchez on September 29, 2021, as a result of a gang war that plagued the city throughout that year that cost the lives of multiple young men and boys throughout the Bronx.  They are also charged with an attempted murder and assault with a dangerous weapon which injured another victim during that same shooting.  PATTERSON is also charged with an attempted murder and assault with a dangerous weapon that occurred on December 2, 2021, when he shot at a rival gang member in Manhattan.

GARCIA and PATTERSON were each brought into federal custody from New York State custody where they had each been serving state sentences for other violent crimes.  The defendants will be presented before U.S. Magistrate Judge Sarah L. Cave later today.  The case is assigned to U.S. District Judge Paul A. Engelmayer.        

“These charges stem from a violent gang war that played out on the streets of New York and ended with the cold-blooded murder of sixteen-year-old Nisayah Sanchez,” said U.S. Attorney Jay Clayton.  “I want to thank the women and men of this Office and our law enforcement partners who never wavered in the over four years since Sanchez’s senseless murder.  Our Office will bring gun-toting criminals who threaten the safety of New Yorkers to justice.”

“As alleged, the defendants’ callous disregard for human life—brazenly carrying out an attack in broad daylight and then boasting about their crimes online—will not be tolerated,” said HSI Special Agent in Charge Ricky J. Patel.  “For too long, these criminal organizations have terrorized neighborhoods and placed innocent lives at risk—leaving families shattered and communities living in fear.  This indictment marks a decisive blow against the violent street gangs that have inflicted fear and devastation on our neighborhoods. HSI New York, the New York City Police Department, and the Southern District of New York are unwavering in our commitment to rooting out those who threaten the safety of our streets.”

“Ahmar Garcia and Raheem Patterson allegedly turned a gang rivalry into the killing of a 16-year-old boy on a Bronx street in broad daylight,” said NYPD Commissioner Jessica S. Tisch.  “That decision ended a young life, devastated a family, and put an entire community in danger. When violence is carried out this openly—and then celebrated—it demands a decisive response.  This case shows what focused enforcement and strong federal partnerships can accomplish, and why the NYPD will continue to pursue violent gangs before they can take another life.  I thank Homeland Security Investigations and the U.S. Attorney’s Office for the Southern District of New York for their partnership in bringing these charges.”

According to the allegations in the Indictment:[1]

Since at least 2019, two warring alliances of violent street gangs engaged in retaliatory shootings, resulting in multiple young men and boys being shot, injured, and killed.  After each shooting, the gangs glorified their acts of violence against their rivals, taunting them for their dead gang members, and promoting their own gangs and their allies via social media and through their rap videos.  These posts and videos in turn fueled the cycle of violence, where the rival gangs retaliated against each other for each shooting, taunt, or perceived slight.

Over the spring and summer of 2021, these two alliances engaged in a gang war that included multiple shootings against their enemies, real or perceived.  These shootings resulted in the deaths of multiple young men and boys throughout the Bronx.  On one side of this gang war was an alliance consisting principally of the MacBallers, the Drillys, and the 800 YGz gangs, which historically and generally aligned, collectively or through its individual members, with the Bloods.  On the other side of this gang war was an opposing alliance principally including the Sev Side, Third Side, and Reyway gangs, all neighborhood sets generally aligned with the Crips.

On September 29, 2021, in retaliation for the murders of their own gang members, and to promote their own standing in their respective gangs, members of the alliance of MacBallers, Drillys, and 800 YGz gangs,  including AHMAR GARCIA, a/k/a “OB,” and RAHEEM PATTERSON, a/k/a “Rah Rah,” shot and killed Nisayah Sanchez, a 16-year-old member of the rival Sev Side, Third Side, and Reyway gang alliance, by sneaking up beside Sanchez and shooting him to death on a Bronx street in broad daylight, while also shooting and injuring another rival gang member.

A little over two months later, on December 2, 2021, PATTERSON and another member of his gang alliance shot multiple times at a rival gang member in midtown Manhattan as the rival was leaving a restaurant.

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GARCIA, 25, and PATTERSON, 28, both of the Bronx, New York, are each charged (with respect to the September 29, 2021, shooting) with murder in aid of racketeering, which carries a mandatory sentence of life or death; conspiracy to commit murder in aid of racketeering, which carries a maximum sentence of 10 years in prison; attempted murder and assault with a dangerous weapon in aid of racketeering, which carries a maximum sentence of 20 years in prison; and discharging a firearm during an in relation to a crime of violence, which carries a maximum sentence of life in prison and a mandatory minimum of 10 years in prison.  PATTERSON is also charged (with respect to the December 2, 2021, shooting) with attempted murder and assault with a dangerous weapon in aid of racketeering, which carries a maximum sentence of 20 years in prison; and discharging a firearm during an in relation to a crime of violence, which carries a maximum sentence of life in prison and a mandatory minimum of 10 years in prison.

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

Mr. Clayton praised the outstanding investigative work of HSI and the NYPD. Mr. Clayton also thanked the Bronx County District Attorney’s Office for its assistance.

The case is being prosecuted by the Office’s Violent Organizations and Crimes Unit.  Assistant U.S. Attorneys Michael R. Herman and Patrick R. Moroney are in charge of the prosecution.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced that MATTHEW MELTON was extradited from the United Kingdom to face securities fraud and wire fraud charges.  The charges in the Indictment arise from an alleged scheme by MELTON to raise millions of dollars in investor money by falsely representing that his investment fund, “Price Physics,” was investing in futures contracts using a proprietary trading algorithm.  In fact, MELTON was operating a Ponzi scheme in which he used investor money to fund his luxury lifestyle and make payments to earlier investors.  MELTON arrived in the United States on December 19, 2025, and was presented on December 20, 2025, before Magistrate Judge Gary Stein.  MELTON’s case is assigned to U.S. District Court Judge Arun Subramanian.

“As alleged, Matthew Melton told investors he was using groundbreaking technology and cutting-edge trading techniques to generate record returns,” said U.S. Attorney Jay Clayton.  “In reality, Melton was allegedly operating one of the oldest scams around, taking new investors’ money to pay old investors and pocketing funds for himself along the way.  With the assistance of our dedicated law enforcement partners, our Office will continue to aggressively prosecute financial fraud and protect our markets.”

“This alleged scheme victimized many and caused millions of dollars in victim losses,” said FBI Assistant Director in Charge Christopher G. Raia.  “FBI New York is committed to eradicating all unlawful schemes fueling an unearned life of luxury by those who prey on others.  We remain focused on disrupting financial fraud operations and will continue to fiercely pursue those who seek to defraud others.”

According to the allegations contained in the Indictment and bail hearing:[1]

MELTON promoted an investment vehicle he called “Price Physics,” which purported to invest in futures contracts using a proprietary trading algorithm. He promised investors guaranteed returns of up to twelve percent per month, of which he said he would keep only two percent as compensation.  In reality, there was no proprietary trading algorithm, and MELTON invested almost none of the millions of dollars he raised.  The few times that MELTON did make trades, it was not in futures contracts, and the trading was generally unprofitable.  For the most part, instead of trading, MELTON used his investors’ money to pay his own personal expenses—including mortgage payments and sailing excursions—and to pay earlier investors in Ponzi-like fashion.

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MELTON, 61, of Boulder, Colorado, was charged with one count of securities fraud and one count of wire fraud, each of which carries a maximum term of 20 years in prison. 

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

Mr. Clayton praised the outstanding work of the FBI and thanked the Department of Justice’s Office of International Affairs for its assistance.  Mr. Clayton also thanked the U.S. Securities and Exchange Commission, which previously filed a separate civil action against MELTON.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorney Adam S. Hobson 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 descriptions of the Indictment constitute only allegations, and every fact described should be treated as an allegation.

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced today the filing of a Superseding Indictment charging EDWARD GENE SMITH with drugging a female victim (“Victim-1”) with the intent to rape her, sex trafficking another female victim (“Victim-2”), enticing Victim-2 to travel to engage in unlawful sexual activity, receipt and possession of child pornography, and obstruction of justice.  SMITH is detained, awaiting trial before U.S. District Judge Paul A. Engelmayer.  Trial is scheduled to begin on February 23, 2026.

“As alleged, Edward Gene Smith systematically preyed on vulnerable young women,” said U.S. Attorney Jay Clayton.  “He allegedly sexually assaulted young women, drugging and raping them, often recording his abuse in photographs and videos.  Smith also allegedly possessed horrific images and videos of child sexual abuse and, when the investigation closed in, attempted to obstruct justice by paying one of his victims to sign a false document.  New Yorkers want those who exploit and abuse vulnerable victims brought to justice and we are committed to doing so.  We encourage any additional victims to come forward by calling 1-800-CALL-FBI.”

“Smith targeted and abused vulnerable young women by drugging, raping, and sexually assaulting them before exploiting their image on an encrypted messaging platform, as alleged,” said FBI Assistant Director in Charge Christopher G. Raia.  “Our investigation also revealed alleged possession of child pornography and an attempt by Smith to obstruct justice.  As demonstrated today, the FBI remains relentless in our pursuit to root out those who prey on vulnerable victims and predators who defile the likeness of children through these heinous acts.”

According to the allegations contained in the Superseding Indictment and in other public statements and filings:[1]

From at least in or about 2019 to at least in or about April 2023, SMITH, a senior finance executive of a major U.S. bank, targeted young women on the Internet and enticed them to meet with him at his Central Park South residence and other locations.  On multiple occasions, SMITH drugged his victims without their consent or knowledge, sexually abused them while they were incapacitated or unconscious, and photographed or recorded his abuse.

At least on or about April 23, 2023, SMITH drugged and raped Victim-1 in his Central Park South residence.  SMITH then shared a video of himself digitally penetrating Victim-1, who was nude and incapacitated or unconscious, with others via an encrypted messaging platform, on a channel that was dedicated to sharing depictions of incapacitated or unconscious women in sexually exploitative positions.

Previously, in or about 2020, SMITH persuaded Victim-2, who SMITH had met a few months prior when Victim-2 was a college student, to relocate to New York City.  SMITH controlled her finances, social life, and activities, and repeatedly drugged and sexually assaulted her over the course of several months.

From at least in or about 2019 to at least in or about June 2024, SMITH also possessed and/or received a large volume of images and videos of children being sexually abused on his personal devices.

Finally, in or about August 2024, after a search warrant was executed at his residence, revealing that SMITH possessed child pornography on his electronic devices, SMITH paid a victim thousands of dollars to sign a false document in an attempt to obstruct the investigation.

If you have been victimized by the EDWARD GENE SMITH in any way or have any additional information about his alleged illegal behavior, please call the FBI at 1-800-CALL-FBI.

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SMITH, 50, of New York, New York, is charged with one count of distribution of a controlled substance with intent to commit rape, which carries a maximum sentence of 20 years in prison; one count of sex trafficking by force, fraud, or coercion, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of life in prison; one count of enticement to travel to engage in unlawful sexual activity, which carries a maximum sentence of 20 years in prison; one count of receipt of child pornography, which carries a mandatory minimum sentence of 5 years in prison and a maximum sentence of 20 years in prison; one count of possession of child pornography, which carries a maximum sentence of 20 years in prison; and one count of obstruction of justice, which carries a maximum sentence of 20 years in prison.

The minimum and 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. Clayton praised the outstanding work of the FBI.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Remy Grosbard, Rita Maxwell, Daniel Richenthal, and Joe Zabel are in charge of the prosecution.

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

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

Sean S. Buckley, Attorney for the United States, Acting under Authority Conferred by 28 U.S.C. § 515, announced today that ARLASA DAVIS was sentenced to twenty-four months in prison for her role in a sprawling fraud and bribery scheme that generated over $66 million in unauthorized transactions under the Supplemental Nutrition Assistance Program (“SNAP”)—colloquially known as food stamps.  DAVIS, a longtime employee of the United States Department of Agriculture (“USDA”), abused her position within the division responsible for identifying SNAP fraud to sell confidential government information to criminals.  DAVIS previously pled guilty to bribery and conspiracy to commit bribery before U.S. District Judge Jed S. Rakoff, who imposed today’s sentence.

“Arlasa Davis exploited her role as a government employee to enrich herself while undermining a program designed to help New York families in need,” said Attorney for the United States Sean S. Buckley. “This conviction and sentence send a clear message that exploitation of funds intended for families will result in serious consequences.”

According to the Indictment and statements made in public court proceedings and filings:

DAVIS worked within the USDA division responsible for identifying SNAP fraud. She abused her privileged access to federal systems to sell hundreds of Electronic Benefits Transfer (“EBT”) license numbers to co-conspirators.  DAVIS photographed handwritten lists of license numbers intended for qualifying stores with her personal cellphone and funneled them to an intermediary who sold them to co-conspirators, who in turn used those license numbers to fraudulently obtain EBT terminals for stores that were not authorized by the USDA to process SNAP transactions.  In return, DAVIS received substantial bribes that were disguised in communications as, among other things, “birthday gifts” and “flowers.”

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In addition to her prison term, DAVIS, 56, of Gardiner, New York, was sentenced to two years of supervised release.  DAVIS was also ordered to forfeit $48,470 and pay restitution of $36 million.

Mr. Buckley praised the outstanding investigative efforts of the USDA Office of Inspector General and the New York Field Office of the Federal Bureau of Investigation.

This matter is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Georgia V. Kostopoulos and Joe Zabel are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services Office of the Inspector General (“HHS-OIG”), Naomi D. Gruchacz, announced today that the United States has filed and settled a healthcare fraud lawsuit against NEW YORK-PRESBYTERIAN HUDSON VALLEY HOSPITAL (“NYPHV”), which, prior to 2015, was known as Hudson Valley Hospital Center (“Hudson Valley”).  The settlement resolves allegations that NYPHV improperly paid millions of dollars to a Westchester-based oncology practice (the “Oncology Practice”) to induce patient referrals to the hospital, which NYPHV then billed to Medicare and Medicaid.

Specifically, the Complaint alleges that in 2011 and 2012, NYPHV entered into three contracts with the Oncology Practice.  Together, those contracts provided that NYPHV would pay hundreds of thousands of dollars per year to the Oncology Practice in exchange for, among other things, work on a proposed melanoma center (the “Melanoma Center”), work on a proposed breast cancer center (the “Breast Center”), and the development and management of an intraoperative radiation therapy service line (the “IORT Service Line” and, collectively, with the agreements concerning the Melanoma Center and the Breast Center, the “Agreements”).  After entering into the Agreements, Hudson Valley and NYPHV subsequently made millions of dollars in payments to the Oncology Practice.  But in reality, many of these payments were not made in exchange for the services identified in the Agreements.  Instead, the Oncology Practice frequently failed to perform or document the central services identified in the Agreements.  All the while, NYPHV continued to receive referrals from the Oncology Practice that generated millions of dollars in reimbursements from Medicare and Medicaid.

Under the settlement approved today by U.S. District Judge Nelson S. Román, NYPHV agreed to pay a total sum of $6,836,764.30 plus interest, with $6,469,410.32 to be paid to the United States and the remainder to be paid to New York State.  As part of the settlement, NYPHV also admitted and accepted responsibility for certain conduct alleged by the Government in its complaint, including that NYPHV paid the Oncology Practice over $4 million pursuant to the Agreements for work that was either not performed or not performed as called for in the Agreements, or for which NYPHV lacks any time records.

“Hospitals and physicians are expected to make medical decisions based on the needs of their patients, not improper financial arrangements,” said U.S. Attorney Jay Clayton.  “When hospitals provide improper payments to induce patient referrals, they compromise the integrity of federal healthcare programs that serve New Yorkers.  We cannot afford corruption in our healthcare industry.”

“Violations of the Anti-Kickback Statute, like those alleged in this case, can improperly influence referral decisions and undermine the integrity of federal health care programs,” said HHS-OIG Special Agent in Charge Naomi D. Gruchacz.  “HHS-OIG is committed to safeguarding the integrity of federal health care programs and ensuring that provider decisions are not compromised by inducements.”

As alleged in the Government’s Complaint:

In 2011 and 2012, NYPHV entered into the three Agreements with the Oncology Practice.  The Agreements provided, respectively, that NYPHV would pay the Oncology Practice an annual fee in exchange for, among other things: one of the Oncology Practice’s physician principals (“Physician A”) serving as the Medical Director of a proposed Melanoma Center at the hospital (the “Melanoma Directorship Agreement”); the Oncology Practice’s other physician principal (“Physician B”) serving as the Medical Director of a proposed Breast Center at the hospital (the “Breast Center Directorship Agreement”); and the Oncology Practice developing, managing, marketing, and integrating the IORT Service Line as part of the hospital’s Department of Radiation Oncology (the “IORT Management Services Agreement”).  Each of the three Agreements expired in 2016.

By October 2016 at the latest, NYPHV was, or at minimum should have been, aware that the Oncology Practice was performing only a portion of the work called for under the IORT Management Services Agreement and was not performing the majority of the work being called for under the Melanoma Directorship Agreement.  In addition, despite the fact that all of the Agreements expired in 2016, NYPHV continued to pay the Oncology Practice the fees in the Agreements through 2019.

All told, between January 2011 and December 2019 (the “Covered Period”), NYPHV paid over $4 million in fees to the Oncology Practice in connection with the Agreements—including payments for work that was not performed—to induce the Oncology Practice to refer its patients to NYPHV for oncology-related medical services in violation of the Anti-Kickback Statute and the Stark Law.  As a result of this conduct, NYPHV submitted false claims for payment to Medicare and Medicaid for services provided to these patients in violation of the False Claims Act.

Under the settlement, NYPHV admitted, among other things, that:

• Between 2011 and 2019, Hudson Valley and NYPHV together paid the Oncology Practice over $4 million pursuant to the Agreements for work that was either not performed, not performed as called for in the Agreements, or for which NYPHV lacks any time records.  The Oncology Practice was required to submit these records to Hudson Valley, and later NYPHV, under the Melanoma and Breast Center Directorship Agreements.
• By October 2016, NYPHV was, or at minimum should have been, aware that the Oncology Practice was performing only a portion of the work called for under the IORT Management Services Agreement and was not performing the majority of the work being called for under the Melanoma Directorship Agreement.  Nevertheless, NYPHV continued paying the Oncology Practice its fees under each of these agreements for another three years.
• The Oncology Practice and Physician A never developed or established the Melanoma Center as envisioned by the Melanoma Directorship Agreement and, accordingly, Physician A did not perform the primary duties of a Medical Director as envisioned by the Melanoma Directorship Agreement.  Further, at least by 2012, Physician A did not provide 50 hours of work per month toward developing or establishing the Melanoma Center and NYPHV was unable to identify any time records from the Covered Period documenting Physician A’s or their designee’s work related to the Melanoma Directorship Agreement.

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

Mr. Clayton praised the outstanding investigative work of HHS-OIG.

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

Cholo Abdi Abdullah was sentenced to two consecutive life terms in prison following his conviction for multiple crimes that included conspiring to provide — and providing — material support to a foreign terrorist organization, and conspiring to murder U.S. nationals, commit aircraft piracy, destroy aircraft, and commit acts of terrorism transcending national boundaries. Today’s sentencing followed Abdullah’s conviction after a jury trial that concluded on Nov. 4, 2024.

“Today, justice has been served,” said Assistant Attorney General for National Security John A. Eisenberg.  “Abdullah, an al-Shabaab terrorist, sought to replicate the most horrific terrorist attack in our history, as he prepared to hijack a commercial airliner to take down a building on U.S. soil.  We thwarted this plot due to the relentless efforts of U.S. law enforcement and thereby likely saved many innocent lives.  His life sentence is a powerful reminder that those who plot attacks against the United States will be prosecuted and punished to the fullest extent of the law.”

“Cholo Abdi Abdullah was a highly trained al-Shabaab operative who was dedicated to recreating the horrific September 11 terrorist attacks on behalf of a vicious terrorist organization,” said U.S. Attorney Jay Clayton. “Abdullah pursued his commercial pilot license at a flight school in the Philippines while conducting extensive attack planning on how to hijack a commercial plane and crash it into a building in America. As he later admitted to the FBI, he was fully prepared to die in his terrorist attack. I commend the years of outstanding investigative work of the FBI and the career prosecutors of this Office who disrupted Abdullah’s murderous plot and brought him to face justice in a U.S. court. He will now spend [decades] behind bars, where he will not be able to harm innocent Americans.”

“Al Qaeda affiliated terrorist and trained pilot Cholo Abdullah was justly punished today for his plotting to commit a 9/11-style terrorist attack,” said Assistant Director in Charge Christopher G. Raia of the FB. “This case serves as reminder individuals still wish to inflict violence upon our country in the name of the terrorism. The FBI New York Joint Terrorism Task Force remains steadfast in its relentless determination to protect the American people from terrorists and their heinous desires.”

According to court documents and the evidence at trial:

al-Shabaab

Harakat al-Shabaab al-Mujahideen, commonly known as al-Shabaab, is a terrorist organization and al Qaeda affiliate based in Somalia and active in other locations in East Africa. Since its formation, al-Shabaab has relied on violence, including assassinations, suicide bombings, armed assaults on hotels, restaurants, beaches, and an array of civilian targets to pursue its goals. Those goals include al Qaeda’s broader objective to overthrow the U.S. government and create an Islamic caliphate. In 2012, the then-Emir of al-Shabaab swore allegiance to Ayman al Zawahiri, the then-Emir of al Qaeda who succeeded Osama bin Laden after his death in 2011, which led to al-Zawahiri announcing that al-Shabaab “will hereby merge into al Qa’ida.”. On February 26, 2008, the U.S. Secretary of State designated al-Shabaab as a foreign terrorist organization (“FTO”) under Section 219 of the Immigration and Nationality Act, and as a Specially Designated Global Terrorist under Section 1(b) of Executive Order 13224.

Since its designation, al-Shabaab has repeatedly declared its intent to target the West and kill Americans. In April 2008, for example, in response to the U.S. designation of al-Shabaab as an FTO, al-Shabaab released a statement expressly declaring its intent to target the U.S. The next month, in May 2008, al-Shabaab publicly declared that its fighters would “hunt the U.S. government,” and threatened that governments supporting the U.S. and Ethiopia should keep their citizens out of Somalia. Consistent with its threats, al-Shabaab has repeatedly engaged in mass-casualty attacks targeting Americans.

al-Shabaab’s “Operation Jerusalem Will Never Be Judaized” Campaign

In May 2018, al-Shabaab announced that it would participate in an al Qaeda-driven campaign to retaliate against the U.S. for its decision to move its embassy in Israel to Jerusalem, called “Operation ‘Al-Qudsu Lan Tuhawwad (Jerusalem will never be Judaized).’”. al-Shabaab subsequently claimed, in public statements, responsibility for multiple major terrorist attacks carried out under Operation “Jerusalem Will Never Be Judaized.”

One of al-Shabaab’s attacks was the Jan.15, 2019 assault on the DusitD2 hotel and office complex in Nairobi, Kenya (the “DusitD2 Attack”), which included, among other things, a suicide bomber detonating an explosive device in front of a U.S. citizen, killing him; and four other armed individuals attacking the hotel grounds with AK-47s and grenades, killing more than 20 additional people. al-Shabaab claimed responsibility for the attack, and i a propaganda video explained that the DusitD2 Attack was “successful, by the grace of Allah, and resulted in the deaths of more than 50 disbelievers, including Americans and other Western nationals.”

Abdullah Joins the al-Shabaab Aviation Plot to Re-Create the September 11 Terrorist Attacks

Abdullah joined al-Shabaab in 2015 and spent approximately a year at a series of safehouses in Somalia where he worked with high-ranking al-Shabaab members and received military-style training that included how to fire an AK-47 assault rifle and how to make different sized explosives. During his training, he was recruited by senior al-Shabaab operatives for a “greater plan,” one that was “bigger than the fighting and the explosives.”. Specifically, he agreed to join al-Shabaab’s international scheme to execute a mass-casualty terrorist attack, which would involve Abdullah training to become an airline pilot so that he could hijack a commercial plane and crash it into a building in the U.S.

Between October 2017 and July 2019, Abdullah became a student at a flight school in the Philippines and spent hundreds of hours training to become a commercial pilot. Abdullah’s flight school tuition was financed by al-Shabaab, which raises funds through an elaborate system of extortion in Somalia that it refers to as “taxation.”. Images of Abat the flight school Abdullah are displayed below, with the instructors’ faces redacted:

During his enrollment, Abdullah participated in multiple training programs for his private and commercial pilot licenses, as well as to obtain the required ratings necessary to fly commercial aircraft. These requirements included hundreds of hours of classroom instruction, work in flight simulators, hands-on flight training, and written examinations. At the time of his arrest in the Philippines in July 2019, Abdullah had completed all but one of the requirements for his commercial pilot licenses and had nearly completed the “instrument rating” required to get a job as a pilot with a major airline.

Abdullah Agreed to Murder U.S. Nationals for al-Shabaab

Following his arrest, Abdullah admitted to FBI agents that he was training to become a pilot on behalf of al-Shabaab so that he could hijack a plane. As part of his attack planning, he had researched certain transit visas that would allow him to enter the U.S., tested the feasibility of taking a knife on board an airplane, and admitted that he expected others to be killed or injured when he hijacked the plane. He himself expected to die in the attack.

While training at the flight school, Abdullah continued to research his attack plans. He searched online multiple times for information concerning airplane cockpit doors, as well as airline jobs, instructor training, and possible interview questions for airline jobs. In December 2018, he searched for information concerning security on airplanes, including whether air marshals are on every flight, and “Boeing 737 cockpit door.”. He visited websites discussing pilots carrying guns inside airplane cockpits, and viewed an article on how to open an airplane cockpit door from the outside.

In January 2019, ABDULLAH was briefed by his al-Shabaab handler about the DusitD2 Attack. His handler was a high-level al-Shabaab operative who coordinated the DusitD2 Attack and arranged for the use of a suicide bomber during the assault on the hotel and office complex. Abdullah admitted to FBI agents that his handler told him that his friend in al-Shabaab had died “for the cause” during the DusitD2 Attack, and that Abdullah and his handler used that as “encouragement” for him to become stronger. He then repeatedly searched online about the DusitD2 Attack, including for footage of the suicide blast. Just two days later, he accelerated his attack planning by researching “Delta flights,” and the “Tallest building in Atlanta,” specifically focusing on the Bank of America Plaza, a 55-story building standing 1,023 feet tall according to the website he visited as part of his research.

Throughout his flight training, Abdullah also provided his al-Shabaab handler with detailed progress reports that described his research and attack planning. In these reports, he described how he had taken flights to determine which airline seats had the best views of the flight deck door. He also compiled research on post-September 11 hijacking attempts and described how the “brothers during 9/11 did something completely unexpected in a more creative way, ‘study for piloting.’”. In that same report, he concluded that “the only successful hijack after 9/11 was the one of the Ethiopian Airlines and it is so because it was hijacked by the pilot himself.”. His progress report then described a list of “My ideas” that he created and arrived at for a successful hijacking operation. His number one idea was that “for a very successful mission, we need a pilot in the cockpit (which means I should apply for the airlines).”

Before Abdullah could complete his commercial pilot license training and carry out the final, deadly steps of the Aviation Plot, he was arrested, in July 2019, by authorities in the Philippines. He was transferred to U.S. custody in December 2020.

As a result of this conduct, on November 4, 2024, Abdullah was found guilty at trial of six counts: conspiring to provide material support to a foreign terrorist organization, which carries a maximum term of 20 years in prison; providing material support to a foreign terrorist organization, which carries a maximum penalty of 20 years in prison; conspiring to murder U.S. nationals abroad, which carries a maximum penalty of life in prison;. conspiring to commit aircraft piracy, which carries a mandatory minimum penalty of 20 years in prison and a maximum term of life in prison; conspiring to destroy aircraft, which carries a maximum penalty of 20 years in prison; and conspiring to commit acts of terrorism transcending national boundaries, which carries a maximum penalty f life in prison.

In addition to the prison term, Abdullah, 34, of Kenya, was sentenced to a lifetime of supervised release.

The National Security Division (NSD) praised the outstanding efforts of the FBI New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department. NSD also thanked the FBI Counterterrorism Division; the FBI Legal Attaché Offices in Nairobi, Kenya, and Manila, the Philippines; the FBI’s Hudson Valley Resident Agency; the New York State Police; the Counterterrorism Section of the Department of Justice’s National Security Division; the Office of International Affairs of the Department of Justice’s Criminal Division; the U.S. Department of Defense; the Kenyan Directorate of Criminal Investigations, including the Anti-Terrorism Police Unit and the Joint Terrorism Task Force-Kenya; the Office of the Director of Public Prosecutions in Kenya; the Philippine National Police; the Philippine Department of Justice; the Joint Terrorism Financial Investigations Group-Philippines; and the Philippine Bureau of Immigration, for their assistance.

This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Nicholas S. Bradley and Jonathan L. Bodansky are in charge of the prosecution, with assistance from paralegal specialist Sabrina Jim Munoz and trial attorney John Cella of the Counterterrorism Section of the National Security Division.

United States Attorney for the Southern District of New York, Jay Clayton, Assistant Attorney General for National Security, John A. Eisenberg, and Assistant Director in Charge of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced today that CHOLO ABDI ABDULLAH was sentenced to life in prison by U.S. District Judge Analisa Torres following his conviction for multiple crimes that included conspiring to provide—and providing—material support to a foreign terrorist organization, and conspiring to murder U.S. nationals, commit aircraft piracy, destroy aircraft, and commit acts of terrorism transcending national boundaries.  Today’s sentencing followed ABDULLAH’s conviction after a jury trial that concluded on November 4, 2024. 

“Cholo Abdi Abdullah was a highly trained al-Shabaab operative who was dedicated to recreating the horrific September 11 terrorist attacks on behalf of a vicious terrorist organization,” said U.S. Attorney Jay Clayton.  “Abdullah pursued his commercial pilot license at a flight school in the Philippines while conducting extensive attack planning on how to hijack a commercial plane and crash it into a building in America.  As he later admitted to the FBI, he was fully prepared to die in his terrorist attack.  I commend the years of outstanding investigative work of the FBI and the career prosecutors of this Office who disrupted Abdullah’s murderous plot and brought him to face justice in a U.S. court.  He will now spend life behind bars, where he will not be able to harm innocent Americans.”

“Today, justice has been served,” said Assistant Attorney General for National Security John A. Eisenberg.  “Abdullah, an al-Shabaab terrorist, sought to replicate the most horrific terrorist attack in our history, as he prepared to hijack a commercial airliner to take down a building on U.S. soil.  We thwarted this plot due to the relentless efforts of U.S. law enforcement and thereby likely saved many innocent lives.  His life sentence is a powerful reminder that those who plot attacks against the United States will be prosecuted and punished to the fullest extent of the law.”

“Al Qaeda affiliated terrorist and trained pilot Cholo Abdullah was justly punished today for his plotting to commit a 9/11-style terrorist attack,” said FBI Assistant Director in Charge Christopher G. Raia.  “This case serves as reminder individuals still wish to inflict violence upon our country in the name of the terrorism.  The FBI New York Joint Terrorism Task Force remains steadfast in its relentless determination to protect the American people from terrorists and their heinous desires.”

According to court documents and the evidence at trial:

al-Shabaab

Harakat al-Shabaab al-Mujahideen, commonly known as al-Shabaab, is a terrorist organization and al Qaeda affiliate based in Somalia and active in other locations in East Africa.  Since its formation, al-Shabaab has relied on violence, including assassinations, suicide bombings, armed assaults on hotels, restaurants, beaches, and an array of civilian targets to pursue its goals.  Those goals include al Qaeda’s broader objective to overthrow the U.S. government and create an Islamic caliphate.  In 2012, the then-Emir of al-Shabaab swore allegiance to Ayman al Zawahiri, the then-Emir of al Qaeda who succeeded Osama bin Laden after his death in 2011, which led to al-Zawahiri announcing that al-Shabaab “will hereby merge into al Qa’ida.”  On February 26, 2008, the U.S. Secretary of State designated al-Shabaab as a foreign terrorist organization (“FTO”) under Section 219 of the Immigration and Nationality Act, and as a Specially Designated Global Terrorist under Section 1(b) of Executive Order 13224.

Since its designation, al-Shabaab has repeatedly declared its intent to target the West and kill Americans.  In April 2008, for example, in response to the U.S. designation of al-Shabaab as an FTO, al-Shabaab released a statement expressly declaring its intent to target the U.S.  The next month, in May 2008, al-Shabaab publicly declared that its fighters would “hunt the U.S. government,” and threatened that governments supporting the U.S. and Ethiopia should keep their citizens out of Somalia. Consistent with its threats, al-Shabaab has repeatedly engaged in mass-casualty attacks targeting Americans.

al-Shabaab’s “Operation Jerusalem Will Never Be Judaized” Campaign

In May 2018, al-Shabaab announced that it would participate in an al Qaeda-driven campaign to retaliate against the U.S. for its decision to move its embassy in Israel to Jerusalem, called “Operation ‘Al-Qudsu Lan Tuhawwad (Jerusalem will never be Judaized).’”  al-Shabaab subsequently claimed, in public statements, responsibility for multiple major terrorist attacks carried out under Operation “Jerusalem Will Never Be Judaized.”

One of al-Shabaab’s attacks was the January 15, 2019 assault on the DusitD2 hotel and office complex in Nairobi, Kenya (the “DusitD2 Attack”), which included, among other things, a suicide bomber detonating an explosive device in front of a U.S. citizen, killing him; and four other armed individuals attacking the hotel grounds with AK-47s and grenades, killing more than 20 additional people.  al-Shabaab claimed responsibility for the attack, and in a propaganda video explained that the DusitD2 Attack was “successful, by the grace of Allah, and resulted in the deaths of more than 50 disbelievers, including Americans and other Western nationals.”

ABDULLAH Joins the al-Shabaab Aviation Plot to Re-Create the September 11 Terrorist Attacks

ABDULLAH joined al-Shabaab in 2015 and spent approximately a year at a series of safehouses in Somalia where he worked with high-ranking al-Shabaab members and received military-style training that included how to fire an AK-47 assault rifle and how to make different sized explosives.  During his training, ABDULLAH was recruited by senior al-Shabaab operatives for a “greater plan,” one that was “bigger than the fighting and the explosives.”  Specifically, ABDULLAH agreed to join al-Shabaab’s international scheme to execute a mass-casualty terrorist attack, which would involve ABDULLAH training to become an airline pilot so that he could hijack a commercial plane and crash it into a building in the U.S.

Between October 2017 and July 2019, ABDULLAH became a student at a flight school in the Philippines and spent hundreds of hours training to become a commercial pilot.  ABDULLAH’s flight school tuition was financed by al-Shabaab, which raises funds through an elaborate system of extortion in Somalia that it refers to as “taxation.”  Images of ABDULLAH at the flight school are displayed below, with the instructors’ faces redacted:

During his enrollment, ABDULLAH participated in multiple training programs for his private and commercial pilot licenses, as well as to obtain the required ratings necessary to fly commercial aircraft.  These requirements included hundreds of hours of classroom instruction, work in flight simulators, hands-on flight training, and written examinations.  At the time of his arrest in the Philippines in July 2019, ABDULLAH had completed all but one of the requirements for his commercial pilot licenses and had nearly completed the “instrument rating” required to get a job as a pilot with a major airline.

ABDULLAH Agreed to Murder U.S. Nationals for al-Shabaab

Following his arrest, ABDULLAH admitted to FBI agents that he was training to become a pilot on behalf of al-Shabaab so that he could hijack a plane.  As part of his attack planning, ABDULLAH had researched certain transit visas that would allow him to enter the U.S., tested the feasibility of taking a knife on board an airplane, and admitted that he expected others to be killed or injured when he hijacked the plane.  ABDULLAH himself expected to die in the attack.

While training at the flight school, ABDULLAH continued to research his attack plans.  ABDULLAH searched online multiple times for information concerning airplane cockpit doors, as well as airline jobs, instructor training, and possible interview questions for airline jobs.  In December 2018, ABDULLAH searched for information concerning security on airplanes, including whether air marshals are on every flight, and “Boeing 737 cockpit door.”  ABDULLAH visited websites discussing pilots carrying guns inside airplane cockpits, and viewed an article on how to open an airplane cockpit door from the outside.

In January 2019, ABDULLAH was briefed by his al-Shabaab handler about the DusitD2 Attack. ABDULLAH’s handler was a high-level al-Shabaab operative who coordinated the DusitD2 Attack and arranged for the use of a suicide bomber during the assault on the hotel and office complex.  ABDULLAH admitted to FBI agents that his handler told ABDULLAH that his friend in al-Shabaab had died “for the cause” during the DusitD2 Attack, and that ABDULLAH and his handler used that as “encouragement” for ABDULLAH to become stronger.  ABDULLAH then repeatedly searched online about the DusitD2 Attack, including for footage of the suicide blast.  Just two days later, ABDULLAH accelerated his attack planning by researching “Delta flights,” and the “Tallest building in Atlanta,” specifically focusing on the Bank of America Plaza, a 55-story building standing 1,023 feet tall according to the website ABDULLAH visited as part of his research.

Throughout his flight training, ABDULLAH also provided his al-Shabaab handler with detailed progress reports that described his research and attack planning.  In these reports, ABDULLAH described how he had taken flights to determine which airline seats had the best views of the flight deck door.  ABDULLAH also compiled research on post-September 11 hijacking attempts and described how the “brothers during 9/11 did something completely unexpected in a more creative way, ‘study for piloting.’”  In that same report, ABDULLAH concluded that “the only successful hijack after 9/11 was the one of the [E]thiopian [A]irlines and it is so because it was hijacked by the pilot himself.”  ABDULLAH’s progress report then described a list of “My ideas” that ABDULLAH created and arrived at for a successful hijacking operation.  His number one idea was that “for a very successful mission, we need a pilot in the cockpit (which means I should apply for the airlines).”

Before ABDULLAH could complete his commercial pilot license training and carry out the final, deadly steps of the Aviation Plot, he was arrested, in July 2019, by authorities in the Philippines.  He was transferred to U.S. custody in December 2020.

As a result of this conduct, on November 4, 2024, ABDULLAH was found guilty at trial of six counts: conspiring to provide material support to a foreign terrorist organization, which carries a maximum term of 20 years in prison; providing material support to a foreign terrorist organization, which carries a maximum term of 20 years in prison; conspiring to murder U.S. nationals abroad, which carries a maximum term of life in prison;  conspiring to commit aircraft piracy, which carries a mandatory minimum of 20 years in prison and a maximum term of life in prison; conspiring to destroy aircraft, which carries a maximum term of 20 years in prison; and conspiring to commit acts of terrorism transcending national boundaries, which carries a maximum sentence of life in prison.

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ABDULLAH, 35, of Kenya, was not sentenced to any supervised release.

Mr. Clayton praised the outstanding efforts of the FBI New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department.  Mr. Clayton also thanked the FBI Counterterrorism Division; the FBI Legal Attaché Offices in Nairobi, Kenya, and Manila, the Philippines; the FBI’s Hudson Valley Resident Agency; the New York State Police; the Counterterrorism Section of the Department of Justice’s National Security Division; the Office of International Affairs of the Department of Justice’s Criminal Division; the U.S. Department of Defense; the Kenyan Directorate of Criminal Investigations, including the Anti-Terrorism Police Unit and the Joint Terrorism Task Force-Kenya; the Office of the Director of Public Prosecutions in Kenya; the Philippine National Police; the Philippine Department of Justice; the Joint Terrorism Financial Investigations Group-Philippines; and the Philippine Bureau of Immigration, for their assistance.

This case is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Nicholas S. Bradley and Jonathan L. Bodansky are in charge of the prosecution, with assistance from paralegal specialist Sabrina Jim Munoz and trial attorney John Cella of the Counterterrorism Section of the National Security Division.

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the Eastern Regional Office of the U.S. Small Business Administration, Office of Inspector General (“SBA-OIG”), Amaleka McCall-Brathwaite, announced today that MARYMOUNT MANHATTAN COLLEGE (“MMC”) has agreed to pay $8,392,758.43 to resolve allegations that it violated the False Claims Act by falsely certifying that it was eligible for a Paycheck Protection Program (“PPP”) loan.  Under the settlement approved by U.S. District Judge J. Paul Oetken, MMC has admitted and accepted responsibility for conduct alleged in the Government’s Complaint, including that it was ineligible to receive the PPP loan due to the total number of individuals it employed.

The PPP, administered by the SBA, was created to assist small businesses nationwide adversely impacted by the COVID-19 pandemic.  Nonprofit 501(c)(3) organizations such as MMC were deemed eligible for PPP loans if they met certain requirements.  For example, when MMC applied in May 2020, 501(c)(3) organizations (like for-profit businesses) were generally required to have 500 or fewer employees.  MMC exceeded this size eligibility requirement.  The American Rescue Plan Act, enacted in March 2021, modified the size eligibility standard for 501(c)(3) nonprofit organizations to require that they have no more than 500 employees per physical location.  

“The Paycheck Protection Program was established to ease financial and economic strain caused by the pandemic by providing businesses with forgivable loans,” said U.S. Attorney Jay Clayton.  “But too many applicants applied for and received taxpayer money that they had no right to receive.  Our Office remains dedicated to holding those who improperly claim public funds accountable.”

“Entities that misrepresented their eligibility to obtain funds from SBA programs intended to support small businesses impacted by the COVID-19 pandemic undermined the integrity of these critical relief efforts,” said SBA-OIG Special Agent in Charge Amaleka McCall-Brathwaite.  “The SBA Office of Inspector General remains committed to identifying and addressing fraud within SBA programs and will continue to work closely with our law enforcement partners to hold accountable those who exploit these programs.”

As alleged in the Complaint filed in Manhattan federal court:

On or about May 7, 2020, MMC submitted, through its authorized representative, an application for a PPP loan to a financial institution.  MMC was approved for and received a PPP loan in the amount of $6,555,592.00.  In June 2021, MMC, through its authorized representative, applied for forgiveness of most of the PPP loan, and $6,197,696.64 of the PPP loan amount was ultimately forgiven.

MMC indicated on its PPP loan application that it had an average of 482 full-time equivalent employees each month.  MMC also certified, among other things, that it was eligible to receive the loan.

MMC submitted an appendix with its loan application that included audited financial statements (balance sheets, statements of activities, statements of cash flows, and notes to financial statements), tax returns and related schedules, and payroll records.  Within this lengthy appendix, there was a table reflecting that MMC’s full-time and part-time employees exceeded 500 for each month during 2019.  The appendix did not list the location at which the employees worked.

MMC actually employed well over 500 full-time and part-time employees at the time it submitted its loan application.  Further, it had more than 800 full-time and part-time employees for each month in 2019, including those months within the period relevant for determining PPP eligibility.

Under applicable law and regulations, full-time and part-time employees were counted equally for purposes of determining PPP loan eligibility.  The 482-employee total listed on the PPP loan application improperly counted MMC’s part-time employees as one-third of an employee.

When it applied for PPP loan forgiveness in June 2021, MMC misrepresented in its application that it had only 447 employees at the time of its PPP loan application.

MMC violated the False Claims Act by knowingly presenting and making, or causing to be presented and made, false claims and statements in connection with its submission of its PPP loan application and forgiveness application.  Specifically, MMC falsely certified its eligibility for the PPP loan because MMC employed more than 500 employees (in total and at a single location) and was thus ineligible for the loan it received.

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

Mr. Clayton praised the SBA’s Office of General Counsel for its assistance with this case.

The case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorney Mark Osmond is in charge of the case.

United States Attorney for the Southern District of New York, Jay Clayton, announced today that MARK ANGAROLA was sentenced to 38 months in prison for committing two extensive fraud crimes—an $8.3 million embezzlement scheme and a $668,000 tax evasion scheme.  In the embezzlement scheme, ANGAROLA exploited his management position at a tech company to fraudulently enrich himself, his family, and his friends.  Over the course of approximately nine years, ANGAROLA fraudulently billed personal expenses and hired his family and friends to no-show jobs.  In the tax evasion scheme, ANGAROLA did not declare income received from the embezzlement scheme and, for two years, filed no taxes at all.  ANGAROLA previously pled guilty to wire fraud conspiracy and tax evasion before U.S. District Judge Dale E. Ho, who imposed today’s sentence.  Four other members of the embezzlement conspiracy have also pled guilty to date.

“Mark Angarola was the ringleader of a long-running fraud scheme that betrayed the trust of his employer, treated its client like a personal slush fund, and caused millions of dollars in losses to his victims,” said U.S. Attorney Jay Clayton.  “He further harmed the broader community by brazenly evading taxes for years.  Angarola used his position to rip off his employers, clients, and hard-working, tax-paying Americans, and now he’s going to federal prison.”

According to the allegations contained in the Indictment, the Superseding Information to which ANGAROLA pled guilty, and statements made in public filings and in public court proceedings:

The Embezzlement Scheme

From approximately May 2010 through February 2019, ANGAROLA spearheaded a large fraud scheme to unlawfully enrich himself and his co-conspirators (the “Conspirators”) by submitting and causing to be submitted fraudulent invoices and expenses to an information technology (“IT”) services company (the “Contractor”), at which he was employed in a senior position.  In total, the embezzlement scheme caused a loss of more than $8 million.

ANGAROLA was a New York-based Global Account General Manager at the Contractor.  He was responsible for managing the Contractor’s relationship with a particular client, which was a subsidiary of a global financial institution (the “Client”).  The Contractor had a service contract with the Client, pursuant to which the Contractor provided IT support services to the Client at locations across the U.S. The Contractor subcontracted certain of this work to a technology solutions company (the “Subcontractor”).  Pursuant to the agreement between the Contractor and the Subcontractor (the “Subcontract”), the Subcontractor provided certain IT support services directly to the Client in the place of the Contractor.  Angarola was responsible for oversight of the Subcontractor’s performance on the Subcontract, which included approving payment to the Subcontractor on invoices submitted for work purportedly performed and expenses purportedly incurred in the Subcontractor’s performance on the Subcontract.

ANGAROLA abused his position to fraudulently enrich himself, his family, and his friends.  For instance, he arranged for the Subcontractor to hire certain of his family members, friends, and subordinates, despite the fact that these individuals lacked apparent qualifications to perform deskside IT work.  He arranged for the Subcontractor to hire, among others, his wife (a homemaker); his former college roommate (a police sergeant); and his close friends, including a construction manager and the construction manager’s wife, a schoolteacher.  Thereafter, various Conspirators falsely reported to the Subcontractor that they had performed work under the Subcontract and incurred business expenses. ANGAROLA himself personally benefitted from the scheme by circumventing the Contractor’s expense policies by disguising his personal expenses as purported business expenses under the Subcontract. The Subcontractor submitted invoices to the Contractor for the hours purportedly worked and business expenses purportedly incurred by several of the Conspirators, and ANGAROLA, in turn, caused the Contractor to pay the Subcontractor on these fraudulent invoices.  The purported business expenses incurred by several Conspirators, and ultimately paid for by the Contractor at the direction of ANGAROLA, included restaurant meals, hotel stays, transportation fees, a cruise, and gentlemen’s clubs.

Tax Evasion

ANGAROLA also furthered his lavish lifestyle, including his near-daily use of a limousine service, through tax evasion, resulting in a tax loss to the Internal Revenue Service (“IRS”) of approximately $668,000.  For four years, ANGAROLA failed to declare to the IRS the income he derived from his embezzlement scheme.  In two of those years, he did not even file any tax returns.

*                *                *

In addition to his prison term, ANGAROLA, 52, of Point Lookout, New York, was sentenced to three years of supervised release. ANGAROLA was also ordered to forfeit $2,679,445.26 and pay restitution in the amount of $9,023,444.96.

Mr. Clayton praised the outstanding investigative efforts of the Federal Bureau of Investigation, New York Field Office; the IRS-Criminal Investigation, New York Field Office; and the U.S. Department of Labor – Office of Inspector General, Northeast Regional Office.

This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Timothy V. Capozzi and Special Assistant U.S. Attorney Jorge Almonte are in charge of the prosecution.

            United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the Special Operations Division of the Drug Enforcement Administration (“DEA”), Louis A. D’Ambrosio, Co-Director of Joint Task Force Vulcan (“JTFV”), Jacob Warren, Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, Special Agent in Charge of the Houston Field Office of the FBI, Douglas Williams, and Special Agent in Charge of the Andean Division of the DEA, Eugene L. Crouch, announced today the unsealing of an Indictment charging HECTOR RUSTHENFORD GUERRERO FLORES, a/k/a “Niño Guerrero,” a/k/a “El Cejón,” a/k/a “El Innombrable,”[1] in connection with GUERRERO FLORES’s leadership role in Tren de Aragua (“TdA” or the “Enterprise”), a transnational criminal organization operating throughout North America, South America, and Europe, which has also been designated as a foreign terrorist organization.  GUERRERO FLORES is currently at large.  The U.S. Department of State is offering rewards of up to $5 million for information leading to the arrest and/or conviction of GUERRERO FLORES.  The case has been assigned to U.S. District Judge Andrew L. Carter, Jr.

“As alleged, Hector Rusthenford Guerrero Flores has been the mastermind of Tren de Aragua’s evolution from a Venezuelan prison gang into a transnational terrorist organization that committed countless acts of violence, extortion, and drug trafficking all over North America, South America, and Europe,” said U.S. Attorney Jay Clayton.  “In the Southern District of New York, we have now charged over 30 members or associates of Tren de Aragua with federal crimes, and we are committed to bankrupting the cartels and transnational gangs who flood our streets with deadly drugs and pursue death, violence and corruption as a way of life.  This is what New Yorkers want, and it is what they deserve.”

“Guerrero Flores operated Tren de Aragua like a multinational crime syndicate—laundering money through cryptocurrency, trafficking drugs by the ton, selling weapons of war, and orchestrating acts of terror across borders,” said DEA Special Agent in Charge Louis A. D’Ambrosio.  “He ran this empire from prison, shielded by corruption, and in collaboration with a narco-state cartel intent on flooding the United States with cocaine.  This case exemplifies today’s threat: criminal organizations that function like terrorists and terrorize like insurgents. DEA and our partners are dismantling them piece by piece—targeting their leadership, finances, weapons, and networks.”

“For more than a decade, as alleged in the Indictment unsealed today, Nino Guerrero has led TdA from its inception as a prison gang in Venezuela to a transnational terrorist organization,” said JTFV Co-Director Jacob Warren.  “TdA has inflicted widespread harm in the United States through extortions, kidnappings, murders, drug trafficking, gun trafficking, prostitution, sex trafficking, robberies, bank burglaries, and money laundering.  The charges unsealed today in the Southern District of New York are directly in line with JTFV’s mission: a collaborative, whole of government effort, to destroy TdA.  We are grateful for our partnership with the U.S. Attorney’s Office for the Southern District of New York and our law enforcement partners who worked tirelessly to investigate and bring these important charges.”          

“As alleged, Niño Guerrero has for decades led one of the fastest-emerging foreign terrorist organizations to encroach upon American soil: Tren de Aragua,” said HSI Special Agent in Charge Ricky J. Patel.  “This reputed leader grew TdA from a Venezuela-based prison gang to the vile, vicious organization it has become.  Together with our partners, HSI and the HSTF New York will continue to wage an unyielding campaign against cartels, drug traffickers, and transnational criminal organizations who seek to sow destruction and death.  Together, we will ensure that no corners of their criminal empires are beyond the reach of justice.”

“Hector Guerrero Flores is the alleged leader of a Venezuelan foreign terrorist organization sowing violence, murder, and misery into communities and nations throughout the Western Hemisphere,” said FBI Houston Special Agent in Charge Douglas Williams.  “Under the leadership of Guerrero Flores, Tren de Aragua translates the suffering and death of thousands into profits for its members.  Tren de Aragua, under the guidance of Guerrero Flores, saw members commit murders; violent robberies; sex trafficking; and weapons and narcotics trafficking impacting communities across the United States.”

“DEA is unwavering in its mission to dismantle the command and control of Tren de Aragua, a designated foreign terrorist organization that thrives on drug trafficking and violence,” said Special Agent in Charge Eugene L. Crouch of the DEA Andean Division.  “For years, TdA has exploited corruption to expand its reach and evade justice, but those days are over. DEA is relentlessly targeting TdA’s leadership, financial networks, and infrastructure, and we will not rest until these individuals are brought to justice.  We are grateful to the Colombian National Police and the Colombian Attorney General’s Office for their invaluable partnership in this investigation.”

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

GUERRERO FLORES and others known and unknown were members and associates of TdA, a criminal organization that operated throughout North America, South America, and Europe, including in the United States, Venezuela, Colombia, Peru, Chile, Brazil, Mexico, and Spain.  TdA—literally meaning “Train from Aragua”—originated in the Venezuelan state of Aragua in the 2000s, and TdA used the Tocorón Prison in Aragua as a center of operations to orchestrate and conduct criminal activities.  TdA was largely composed of persons from South America, mostly from Venezuela.  In the following years, gang members and associates left Venezuela and spread throughout North, South, and Central America and Spain, which expanded TdA’s presence.

TdA members and associates established a presence in other countries in South America, Central America, and the United States by engaging in the following pattern of behavior: First, TdA members and associates infiltrated other countries by illegally crossing their borders and finding cities and other residential neighborhoods where they could easily establish control over civilian populations. Next, TdA members and associates committed crimes and other acts of terrorism to assert control over their territory and enrich themselves through extortions, kidnappings, robberies, murders, drug trafficking, prostitution, sex trafficking, and trafficking of guns, grenades, and ammunition.  Many of the crimes and acts of terrorism committed by TdA members and associates were ordered, directed, facilitated, or otherwise supported by TdA leadership in South America, including GUERRERO FLORES.  Finally, TdA members and associates would spread to other locations, forming cells with their own local leadership and structure.  TdA’s violent tactics often resulted in entire neighborhoods and apartment buildings being subject to TdA’s control.  TdA members and associates laundered the proceeds of their criminal activities, including through cryptocurrency, and transmitted a portion of the proceeds to TdA leadership in South America, including GUERRERO FLORES.

Through this pattern of behavior, TdA members and associates established a strong gang presence in other countries in South America, Central America, North America and Europe, like Colombia, Peru, Chile, Brazil, Mexico and Spain.  TdA members and associates also illegally crossed the border into the United States and established a presence in various parts of the country, including New York, Colorado, New Mexico, Texas, Nebraska, Illinois, and Florida.  As a result, TdA operated as a national and international criminal organization with its members and associates regularly conducting gang activities and acts of terrorism transcending national boundaries across the Western Hemisphere.

TdA members and associates also worked in concert with some of the largest cocaine trafficking organizations in the world, including the Cártel de los Soles, or “Cartel of the Suns.”  The Cártel de los Soles is and, at all relevant times, was, a Venezuelan drug-trafficking organization comprised of high-ranking Venezuelan government officials who corrupted the legitimate institutions of Venezuela to facilitate the importation of tons of cocaine into the United States, including through the use of maritime drug distribution routes with boats and ships carrying hundreds or thousands of kilograms of narcotics, including cocaine.  It is and was the goal of the Cártel de los Soles to “flood” the United States with cocaine, as it has sought to weaponize the drug and inflict its harmful and addictive effects on users in the United States.  Members and associates of the Cártel de los Soles have included, among others, the most powerful politicians in Venezuela, former military officials, and some of the largest and most violent cocaine traffickers in the world.  In turn, certain of these politicians have controlled the locations from which TdA grew in power and influence.  Members and associates of the Cártel de los Soles relied upon corruption and violence as they transported cocaine from Venezuela en route to the United States.  In Venezuela, politicians aided cocaine traffickers by offering them safe passage for their cocaine, protection from arrest, and, at times, the support of the police and military.  And Cártel de los Soles’s cocaine traffickers relied on violence throughout their cocaine distribution route—including the use of firearms, kidnappings, and murder—to protect their cocaine, their distribution networks, and themselves.

For over a decade, GUERRERO FLORES served as either the leader or co-leader of TdA, acting as the mastermind over TdA’s expansion across the Western Hemisphere. During much of that time, GUERRERO FLORES operated from Tocorón Prison, where the Venezuelan government allowed GUERRERO FLORES to control the day-to-day operations of the prison. Under GUERRERO FLORES’s direction, TdA members and associates engaged in a wide range of crimes, including extortions, kidnappings, murders, drug trafficking, gun trafficking, prostitution, sex trafficking, robberies, bank burglaries, and money laundering. GUERRERO FLORES and other high-level leaders of TdA would collect a “causa” or fee from income generated by lower-level members of TdA, thereby enriching themselves from income earned by other TdA members.  As the leader of TdA, while operating from Venezuela and elsewhere, GUERRERO FLORES ordered, directed, facilitated, and supported acts of violence and terrorism transcending national boundaries, including murders, kidnappings, extortions, and maiming against victims located inside and outside the United States.

GUERRERO FLORES and other members and leaders of TdA also worked with several of the largest cocaine traffickers in Venezuela to transport tons of cocaine from Venezuela for eventual distribution in the United States. GUERRERO FLORES both directed and personally facilitated the transportation of this cocaine by supplying teams of heavily armed individuals to protect and transport cocaine shipments for his trafficking partners and associates. These individuals were armed with, among other automatic weapons, AK-47s, MP5s, and AR-15s, as well as grenades.

The cocaine that GUERRERO FLORES helped distribute was manufactured in Colombia and Venezuela. The cocaine shipments were then transported from their point of origin and flown from clandestine airstrips or transported by maritime routes from Venezuela to Central America. From there, drug trafficking associates working with the Venezuelan distributors transported this cocaine north, through Mexico, and across the U.S. border. These drug trafficking associates included members of the largest, most violent, narcotics trafficking organizations in Mexico. At times, GUERRERO FLORES personally accompanied large cocaine loads as they were guarded by teams of armed men, en route to airports or airstrips for transport north and eventual distribution to the United States. GUERRERO FLORES was paid a fee per kilogram transported or received an interest in portions of these massive cocaine shipments in lieu of payment. The traffickers that GUERRERO FLORES worked with moved thousands of kilograms per shipment, multiple times per month, resulting in the distribution of hundreds of tons of cocaine to the United States.

In addition, GUERRERO FLORES also sold firearms to large-scale cocaine traffickers operating out of Venezuela. These traffickers purchased from GUERRERO FLORES automatic weapons including AK-47s, MP5s, and AR-15s, and then used the weapons they purchased from GUERRERO FLORES to protect their cocaine loads.

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GUERRERO FLORES, 42, of Venezuela, is charged with participating in a racketeering conspiracy, which carries a maximum sentence of 20 years in prison; conspiracy to provide material support to terrorists, which carries a maximum sentence of 15 years in prison; cocaine importation conspiracy, which carries a maximum sentence of life and a mandatory minimum of 10 years in prison; and using and carrying firearms, machineguns, and destructive devices in furtherance of drug trafficking, which carries a maximum sentence of life and a mandatory minimum of 30 years in prison.

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

Mr. Clayton praised the outstanding investigative work of DEA’s Bilateral Investigations Unit and Bogotá Country Office, HSI New York, FBI Houston, and the New York City Police Department.  Mr. Clayton also thanked Colombia’s Office of the Attorney General; Colombian National Police’s Unified Action Group for Liberty (“GAULA”); Araphoe County District Attorney’s Office; Aurora Police Department in Aurora, Colorado; New York/New Jersey Regional Fugitive Task Force of the U.S. Marshals Service (“USMS”); U.S. Customs and Border Protection’s National Gang Unit and New York Human Intelligence Division; U.S. Immigration and Customs Enforcement’s New York Enforcement and Removal Operations; Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”); the New York City Crime Analysis Center at the New York/New Jersey High Intensity Drug Trafficking Area; the Harris County Sheriff’s Office; and the Houston Police for their assistance with the investigation. 

This case is part of JTFV, which was created in 2019 to eradicate MS-13 and now expanded to target Tren de Aragua, and is comprised of U.S. Attorney’s Offices across the country. Those include Southern and Eastern Districts of New York; Eastern and Western Districts of North Carolina; Eastern and Western Districts of Virginia;  Southern District of Florida; Eastern District of Texas;  Western District of Oklahoma; Northern District of Indiana; and the District of Nevada; , as well as the as well as the Executive Office for U.S. Attorneys  Department of Justice’s National Security Division and the Criminal Division. Additionally, the FBI, DEA, HSI, ATF, USMS, and the Federal Bureau of Prisons are essential law enforcement partners with JTFV. The Justice Department’s Office of International Affairs and the Criminal Division’s Office of Judicial Attaché in Bogotá, Colombia, has also provided significant assistance.

This case is part of Operation Take Back America, a nationwide initiative that marshals the full resources of the Justice Department to repel the invasion of illegal immigration, achieve the total elimination of cartels and transnational criminal organizations, and protect our communities from the perpetrators of violent crime. Operation Take Back America streamlines efforts and resources from the Department’s Organized Crime Drug Enforcement Task Forces and Project Safe Neighborhood.

This case is being handled by the Office’s Violent Organizations & Crime Unit, National Security & International Narcotics Unit, and JTFV. Assistant U.S. Attorneys Nicholas S. Bradley, Andrew K. Chan, Kaylan E. Lasky, Henry L. Ross, Kevin T. Sullivan, Kyle A. Wirshba, and Jun Xiang are in charge of the prosecution, with assistance from Trial Attorneys Jason Harley and Josie Thomas from JTFV. 

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.

United States Attorney for the Southern District of New York, Jay Clayton, announced today that JOSE CESARI, a/k/a “Cry,” was sentenced to 63 months in prison for conspiring to commit—and committing—theft from interstate or foreign shipments.  Between approximately 2022 and 2024, CESARI led the “Beer Theft Enterprise,” a Bronx-based criminal organization focused on breaking into railyards and beverage distribution facilities throughout the Northeast and stealing beer—primarily Corona and Modelo, shipped from Mexico—to bring back to the Bronx to sell.  CESARI pled guilty in July 2025 before U.S. District Judge Edgardo Ramos, who imposed today’s sentence.

“Jose Cesari led an armed crew that repeatedly targeted railyards and warehouses, stealing massive quantities of beer and treating it like easy money,” said U.S. Attorney Jay Clayton.  “He took part in more than three dozen thefts and recruited others into the scheme.  No more.  Today’s sentence should send a message to anyone who thinks about stealing from businesses in the Southern District of New York: the women and men of this Office take these crimes seriously, and we will not tolerate them.”

According to the allegations in the Indictment and statements made in public court filings and proceedings:

Between July 2022 and April 2024, the Beer Theft Enterprise carried out dozens of beer thefts, which cumulatively resulted in losses to certain railroad and beverage distribution companies of at least hundreds of thousands of dollars.  During at least one of those thefts, the crew carried a gun.  In a typical theft, the Beer Theft Enterprise operated during the night.  The members of the Beer Theft Enterprise working on a particular night usually assembled in the Bronx before traveling to that night’s target railyard or beverage distribution facility.  Normally, the group brought at least one U-Haul box truck to the target railyard or warehouse to be filled with cases of stolen beer.  Once they arrived at their target location, members of the Beer Theft Enterprise typically broke into the railyard or warehouse, breached the railcar or area containing Corona or Modelo beer, and transported that beer—often hundreds of cases—to their waiting vehicles.  The Beer Theft Enterprise then took the stolen beer back to the Bronx, where it was inspected and made available for sale.  After assisting in a beer theft, each of the participating members of the Beer Theft Enterprise was typically paid hundreds of dollars for the night’s work. 

As the leader of the Beer Theft Enterprise, CESARI participated in more than three dozen beer thefts in Connecticut, Massachusetts, New Jersey, and New York, and recruited other members to the group.  CESARI acted brazenly and without regard for the law.  For example, as shown in the image recovered from CESARI’s phone below, CESARI had his picture taken in the midst of one particular beer theft, scaling a railcar filled with Corona beer and holding a yellow angle grinder: 

CESARI played a crucial role in ensuring the success of the Beer Theft Enterprise.  CESARI regularly used his Instagram account to recruit new members.  For instance, CESARI advertised on social media that he could provide a “police scanner” from the “precinct of your choice with the purchase of train method” and promised recruits “100k in ten days sorry not a month.”

CESARI also frequently bragged about how much money he made from his beer heists.  For example, as shown in the image below, CESARI posted to his Instagram account an image of himself in a Corona t-shirt, and boasted that, while some people “got rich off of corona virus [virus emoji],” he “got rich off coronas [train emoji],” referring to the Corona beer that he had stolen:

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In addition to the prison term, CESARI, 29, of the Bronx, New York, was sentenced to three years of supervised release.  He was also ordered to forfeit $473,710.52 in proceeds from his participation in the Beer Theft Enterprise and make restitution in the amount of $518,710.52.

Mr. Clayton praised the outstanding investigative work of the Federal Bureau of Investigation, the Port Authority Police Department, and the CSX Railroad Police Department. 

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Adam Z. Margulies and Joseph H. Rosenberg are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, announced that Magdaleno Mendoza was sentenced to 71 months in prison for his role in the large-scale cryptocurrency Ponzi scheme known as IcomTech and for reentering the United States illegally after having been deported.  MENDOZA pled guilty in July 2025 to conspiracy to commit wire fraud and illegal reentry before the Honorable Paul G. Gardephe, who imposed today’s sentence.

A number of MENDOZA’s co-conspirators—David Carmona, IcomTech’s founder; Marco Ruiz Ochoa, IcomTech’s purported CEO; Gustavo Rodriguez, IcomTech’s web developer; and David Brend, Juan Arellano, and Moses Valdez, all senior IcomTech promoters—have been convicted and sentenced separately for their roles in the IcomTech Ponzi scheme.

“As a senior promoter of IcomTech, Mendoza helped prey on Spanish-speaking victims who lacked investment experience, including our fellow New Yorkers,” said U.S. Attorney Jay Clayton.  “By exploiting trust and the promise of ‘crypto,’ he and his co-conspirators stole millions from working-class people.  Today’s sentence provides a measure of justice.”

According to the Indictment, public filings, and public court proceedings:

IcomTech, which launched in mid-2018, was a purported cryptocurrency mining and trading company that promised to earn its victim-investors (“Victims”) profits in exchange for their purchase of purported cryptocurrency-related investment products.  In reality, IcomTech was a multi-level marketing Ponzi scheme.  By at least December 2018, MENDOZA, who previously promoted at least two other similar cryptocurrency Ponzi schemes, was promoting IcomTech and recruiting victim-investors.  MENDOZA was one of the most senior promoters of IcomTech and was in regular contact with IcomTech’s founder, David Carmona. 

MENDOZA and the other promoters of IcomTech falsely promised their respective Victims, among other things, that profits from the company’s cryptocurrency trading and mining would result in guaranteed daily returns on Victims’ investments.  In reality, IcomTech did not engage in cryptocurrency trading or mining for its Investors, and MENDOZA and IcomTech’s other promoters used Victim funds to pay other Victims to further promote the scheme and enrich themselves. MENDOZA and other IcomTech promoters primarily targeted working-class, Spanish-speaking Victims who had little to no prior experience with cryptocurrency.

IcomTech promoters, including MENDOZA, traveled throughout the U.S., where they hosted lavish expos and small community presentations aimed at luring Victims to invest in the schemes, including in the Southern District of New York.  During larger-scale events, IcomTech promoters presented on purported investment products and the compensation plan, encouraged Victims to invest as a means of achieving financial freedom, and boasted about the amount of money they were earning.  IcomTech promoters often showed up in expensive cars and wearing luxury clothing as a way of exhibiting their purportedly legitimate success from IcomTech.  MENDOZA personally hosted IcomTech promotional events at his restaurant in the greater Los Angeles area, where he collected thousands in cash from his Victims as purported IcomTech investments.

Victims invested in IcomTech by purchasing investment products from promoters using cash, checks, wire transfers, and actual cryptocurrency.  Following a Victim’s investment, a Victim would be provided with access to an online portal where the Victim could monitor the purported returns.  While Victims saw “profits” accumulate on the online portal, most Victims were unable to withdraw any of these so-called profits and ultimately lost their entire investments.  By contrast, IcomTech’s promoters, including MENDOZA, siphoned off, in some cases, hundreds of thousands of dollars in Victim funds, which they withdrew as cash, spent on IcomTech promotional expenses, and used for personal expenditures such as luxury goods and real estate.

At least as early as August 2018, Victims who attempted to withdraw money from their online portal accounts had difficulty doing so and, when they complained to promoters, they were met with excuses, delays, and hidden fees, if they were able to make any withdrawals at all.  Despite these complaints, IcomTech promoters, including MENDOZA, continued to promote IcomTech and accept Victims’ investments.  As complaints mounted, IcomTech began offering a proprietary crypto-token for sale as a means of injecting liquidity into IcomTech.  Promoters of the scheme claimed that these tokens, known as “Icoms,” would eventually be worth a significant amount of money when they were accepted by companies for payment for goods and services.  This was false.  In reality, “Icoms” were essentially worthless and resulted in further financial loss to Victims. 

By in or about the end of 2019, IcomTech stopped making payments to Victims and IcomTech collapsed. After IcomTech, MENDOZA moved on to promote at least three other cryptocurrency Ponzi schemes. 

MENDOZA was residing in the United States illegally when he promoted IcomTech and the other cryptocurrency Ponzi schemes. He had been residing in the United States illegally for decades, and had previously been deported or removed four times, including once using a false identity.

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In addition to the prison sentence, MENDOZA, 56, a citizen of Mexico, was ordered to pay restitution to victims in the amount of $789,218.94 and forfeiture in the amount of $1,500,000.  He was also ordered to forfeit his interest in his residence in Downey, CA, which was purchased using proceeds from the crime.

Mr. Clayton praised the outstanding investigative work of Special Agents from Homeland Security Investigations’ El Dorado Task Force.  Mr. Clayton also thanked the Securities and Exchange Commission and the Commodity Futures Trading Commission for their assistance.

The case is being handled by the Office’s Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Michael D. Maimin, T. Josiah Pertz, and Cecilia E. Vogel are in charge of the prosecution. 

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced today the unsealing of an Indictment charging JAY LUCAS, the founder and managing partner of Lucas Brand Equity LLC (“LBE”), a private equity fund based in Manhattan, with securities fraud, investment adviser fraud, wire fraud, and money laundering.  The charges in the Indictment arise from an alleged scheme by LUCAS to raise more than $50 million from investors by falsely representing that their money would be invested in early-stage health and wellness companies, when in fact it was diverted to cover personal expenses, promote unrelated ventures, and make Ponzi-like payments to earlier investors.  LUCAS was arrested today and will be presented in the District of New Hampshire.  The case has been assigned to U.S. District Judge Jennifer L. Rochon.

“As alleged, Jay Lucas promised investors he would use their hard-earned money to grow wellness businesses, with everyone sharing in the profits,” said U.S. Attorney Jay Clayton.  “Instead, Lucas allegedly lied, frittered away investor money on personal vanity projects, and betrayed his obligations to his investors.  With the assistance of our dedicated law enforcement partners, our Office will continue to aggressively prosecute fraud in our public and private markets.”

“Jay Lucas allegedly systematically misappropriated millions of dollars from his investors, diverting their money to personal expenses, repayments to other investors, and his wife’s business,” said FBI Assistant Director in Charge Christopher G. Raia.  “As the fund’s managing partner, Lucas’s alleged deceit not only failed to sustain his company’s operations but also betrayed the trust of his clients and employees.  The FBI remains committed to investigating any business executive who abuses their authority to satisfy selfish interests at the cost of others.”

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

LUCAS is the founder and managing partner of LBE and three private funds: Lucas Brand Equity LP (“Fund One”), L.B. Equity Emerging Growth LP (“Fund Two”), and L.B. Equity Wellness Growth L.P. (“Fund Three”).  Since 2017, LUCAS has defrauded investors through fabricated credentials and systematic misappropriation of their funds.

LUCAS falsely claimed to have co-founded a well-known private equity firm, which he did not, eventually prompting a cease-and-desist demand from that firm’s lawyers.  He told investors that LBE’s “core strategy is to invest in these small to mid-size emerging brands, provide value-added services to differentiate them and catalyze growth to a sufficient scale for exit.”  In reality, LUCAS spent investor money on personal expenses including alimony, rent, a vanity newspaper project in his hometown, and political consultants.  He used new investor money to pay earlier investors in Ponzi-like fashion, enriching himself while starving the Funds and portfolio companies of capital.  LUCAS also funneled investor money to Immunocologie, a luxury skincare business run by LUCAS’s wife.  Most purported investments in Immunocologie went to “marketing” expenses, such as parties and trips to luxury resorts where LUCAS’s wife promoted “brand awareness.”  Investors were unaware that LUCAS was using their money to fund his wife’s social calendar, and many investors did not even know that the person operating Immunocologie was married to LUCAS.  Moreover, LUCAS arranged for LBE, not the Funds, to take majority ownership interest in Immunocologie, giving himself and not his clients an equity interest in the business.

LUCAS’s misconduct left the Funds chronically undercapitalized and unable to cover basic fund expenses, including salaries for LBE employees.  When LBE employees confronted LUCAS about his misuse of investor funds, he dismissed their complaints.  Internally, employees continued to express frustration about LUCAS’s misuse of investor money, writing that LUCAS’s spending was “not spending on LBE,” was “literally fraudulent,” and was “a huge betrayal of investor trust and most likely illegal.”  After multiple confrontations, employees feared pressing further would cost them their jobs.

As of the date of this Indictment, none of the Funds’ investments have paid off, and no investors have received returns.  The Funds and their portfolio companies have hemorrhaged cash and been unable to cover basic expenses while LUCAS and his family have taken the Funds’ money to serve their own interests.

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LUCAS, 71, of Portsmouth, New Hampshire, was charged in an Indictment with one count of securities fraud, one count of wire fraud, and one count of money laundering, each of which carries a maximum term of 20 years in prison, and one count of investment adviser fraud, which carries a maximum term of five years in prison. 

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

Mr. Clayton praised the outstanding work of the FBI.  Mr. Clayton also thanked the U.S. Securities and Exchange Commission for their assistance and cooperation in the investigation.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Adam S. Hobson and David J. Robles are in charge of the prosecution.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Field Office of Internal Revenue Service-Criminal Investigation (“IRS-CI”), Harry T. Chavis, Jr., announced today the unsealing of an Indictment charging STEVEN HOLTZ, ISRAEL PELLOT, and ALTON SCOTT with conspiracy to defraud the United States and aiding and assisting in the preparation and filing of false federal tax returns.  The charges relate to a tax fraud scheme operated by several tax return preparers of The Holtz Group, Inc. and Zirin Tax Company, Inc., doing business as SL Tax Centers (together, “The Holtz Group” or “Holtz Group”).  HOLTZ is the owner and chief executive officer of The Holtz Group and was the leader of the fraudulent scheme in which tax preparers at The Holtz Group, including HOLTZ, PELLOT, and SCOTT, falsified information on Holtz Group clients’ federal income tax returns in order to fraudulently reduce the tax liability of the clients and improperly increase the tax refunds they claimed from the Internal Revenue Service (“IRS”).  This, in turn, allowed HOLTZ to charge tax preparation fees that were, at times, tens of thousands of dollars and, in some instances, more than one hundred thousand dollars for certain clients.  The case has been assigned to U.S. District Judge Mary Kay Vyskocil.

“As alleged, Steven Holtz led a massive tax fraud scheme that deprived the American people of significant tax revenue,” said U.S. Attorney Jay Clayton. “The false tax returns Holtz and other tax preparers at the Holtz Group are alleged to have filed generated substantial refunds to which clients were not entitled and enormous fees for the firm.  According to the indictment, Holtz funded a lavish lifestyle, including homes in Manhattan and East Hampton, at the expense of the tens of millions of honest, hardworking American taxpayers.  Our Office will have zero tolerance for fraudsters who steal from the public to enrich themselves.”

“For more than a decade, Holtz used the backdrop of a successful and legitimate tax business to hide a fraud that concealed significant income from the IRS,” said IRS-CI Special Agent in Charge Harry T. Chavis, Jr.  “Holtz and his cohorts were creative in their alleged scheme, using various deductions and expenses to evade taxes for their clients.  While Holtz told his clients they should be happy to pay him rather than pay the government, he failed to remind them that the money to the government means benefits for the American people.  Now is the time that they each face justice for their alleged criminal acts.”

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

From at least in or about 2014 through at least in or about 2025, HOLTZ, PELLOT, SCOTT, and other co-conspirators executed a fraudulent scheme led by HOLTZ in which they falsified information on Holtz Group clients’ federal income tax returns.  Each year, Holtz Group clients—at least some of whom have professional degrees and annual income of hundreds of thousands of dollars—met with Holtz Group personnel at one of the Holtz Group’s offices (or, at times, remotely by videoconference and/or telephone).  At these meetings, and during the course of any necessary follow-up discussions, HOLTZ, PELLOT, SCOTT, or other Holtz Group personnel, prepared the clients’ tax returns.

HOLTZ, PELLOT, SCOTT, and others included materially false and fraudulent information on the Holtz Group clients’ tax returns in order to reduce the clients’ tax liabilities or increase their refunds.  The false items included on income tax returns for Holtz Group clients included inflated and fictitious deductions, including but not limited to: itemized deductions, such as charitable contributions and unreimbursed employee expenses; business expense deductions; capital losses, such as deductions for bad debt; losses and expenses from rental real estate businesses and unreimbursed partnership expenses; casualty and theft losses; losses from sales of business property; and losses from sales and other dispositions of capital assets.  These false items were reported on Schedules A, C, D, and E as well as other tax forms.  At times, the defendants also inflated and falsified clients’ income in order to improperly qualify clients for refundable Earned Income Tax Credits and/or fraudulently elected “head of household” filing status for married clients and other clients who did not qualify for that filing status, among other things. 

As the owner of The Holtz Group and its affiliated entities, HOLTZ trained PELLOT, SCOTT, and others on how to falsify tax returns to carry out the scheme.  For example, HOLTZ instructed PELLOT, SCOTT, and others to urge clients to set up business entities, such as partnerships and S Corporations, through the Holtz Group, for which clients paid additional fees.  HOLTZ then directed the return preparers to use these business entities to fraudulently claim additional tax deductions, such as deductions for unreimbursed partnership expenses, meals, travel, gifts, and other expenses.

The Holtz Group based the fees charged to the clients on the amount of purported “tax savings” the firm supposedly generated for clients.  HOLTZ used these purported “tax savings” to justify The Holtz Group’s fees, which were as high as tens of thousands or even more than one hundred thousand dollars for certain clients.  For example, after billing a fee of $175,000 for preparing a client’s 2021 return, HOLTZ emailed the client explaining that the fee charged “is 25% of the tax savings.  Always has been . . . I realize the bill is very high but honestly you sou [sic] should be happy to pay me that rather than paying the government what you owed them . . . [T]he fee is determined by the tax savings, not by your earnings.”  In the same exchange, HOLTZ later went on to state: “You really aren’t paying my fee. The IRS is.”

By filing fraudulent returns on behalf of numerous Holtz Group clients, HOLTZ, PELLOT, SCOTT, and others defrauded the IRS of tax revenue and generated significant revenue for The Holtz Group.  This significant revenue facilitated HOLTZ’s lavish lifestyle, including use of homes in Manhattan and East Hampton.

*               *                *

Steven Holtz, 63, of New York, New York, and East Hampton, New York, is charged with one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison, and 30 counts of aiding and assisting in the preparation of false and fraudulent U.S. individual income tax returns, each of which carries a maximum sentence of three years in prison.

Israel Pellot, 50, of Ormond Beach, Florida, is charged with one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison, and 9 counts of aiding and assisting in the preparation of false and fraudulent U.S. individual income tax returns, each of which carries a maximum sentence of three years in prison.

Alton Scott, 33, of Brooklyn, New York, is charged with one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison, and 13 counts of aiding and assisting in the preparation of false and fraudulent U.S. individual income tax returns, each of which carries a maximum sentence of three years in prison.

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

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

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit and the Department of Justice, Criminal Division, Tax Section.  Assistant U.S. Attorney Matthew Weinberg, Southern District of New York, and Assistant Deputy Chief Jorge Almonte and Trial Attorney Alexandra K. Fleszar of the Criminal Division’s Tax Section are in charge of the prosecution.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced today the unsealing of a Complaint charging KEVIN SETO, a U.S. Customs and Border Protection Officer (“CBP”), and HIU KIT DAVID CHONG, a/k/a “Hk David,” a former administrator at a private research university, in connection with a bribery scheme that involved SETO accepting bribes and gratuities from CHONG and others in exchange for disseminating confidential law enforcement and immigration information and providing special treatment while processing the entry of foreign nationals and other individuals into the United States at JFK Airport in Queens, New York.  SETO was arrested yesterday afternoon and will be presented today before U.S. Magistrate Judge Gary Stein.  CHONG was arrested this morning and will be presented later today in the Central District of California.

“New Yorkers trust and rely on the integrity of our U.S. Customs and Border Protection Officers, who are tasked with the critical mission of safeguarding and protecting our borders,” said U.S. Attorney Jay Clayton.  “As alleged, Kevin Seto breached that trust and jeopardized the safety of our borders by accepting bribes and gratuities from Hiu Kit David Chong and others in exchange for access to confidential law enforcement and immigration information and special treatment for foreign nationals and others entering the United States at JFK Airport.  These charges highlight this Office’s commitment to pursuing those, including members of law enforcement, who seek to profit by abusing their positions of public trust.”   

“Kevin Seto, a CBP officer, allegedly accepted bribes in exchange for providing others with confidential law enforcement information and expediting the entry process for various visitors, to include foreign nationals,” said FBI Assistant Director in Charge Christopher G. Raia.  “Seto’s alleged participation exposed sensitive information to unauthorized recipients and leveraged his access to bypass travel regulations.  The FBI will never tolerate any individual who abuses their authority to prioritize personal financial gain over the security of our country’s borders.”

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

From at least in or about 2018 through at least in or about 2024, SETO, a CBP officer stationed at JFK International Airport, and Henry Yau, who was a Supervisory Detention and Deportation Officer with Immigration and Customs Enforcement (“ICE”),[2] participated in a scheme to obtain bribes and gratuities from friends and acquaintances in exchange for disseminating confidential law enforcement and immigration information and processing the entry of foreign nationals and other individuals into the United States.  One of the individuals who paid bribes and gratuities to SETO and Yau in exchange for such benefits was CHONG, who was an Assistant Director in the Office of Graduate Admissions at a private research university based in Southern California (“University-1”) between in or about September 2008 and in or around March 2016.[3]

For example, SETO and Yau disseminated confidential law enforcement and immigration information—from password-protected law enforcement databases to which they had access as law enforcement officers working within the United States Department of Homeland Security (“DHS”)—to CHONG on multiple occasions, either relating to CHONG himself or foreign nationals that CHONG was seeking to assist with entry into the United States.  The information that SETO and Yau disclosed to CHONG included confidential information regarding the status of a criminal investigation into CHONG. Additionally, SETO on multiple occasions facilitated the entry into the United States of CHONG or other individuals at CHONG’s request at JFK Airport, following international travel, allowing CHONG and these other individuals to bypass long lines at passport control and take advantage of expedited screening.

In exchange for these benefits from SETO and Yau, CHONG provided a subsidized hotel suite and various goods to SETO and offered to pay cash to Yau.  In addition to CHONG, SETO and Yau also improperly provided confidential law enforcement and immigration information and/or assistance with entry into the United States to a variety of other foreign nationals and United States citizens.  On at least two occasions, SETO provided entry assistance to individuals for the explicit purpose of bypassing secondary inspections or the payment of applicable duties on goods that the individuals purchased abroad.  In exchange for providing these benefits, SETO and Yau were offered, among other things, cash payments, dinners at expensive restaurants, and top-shelf bottles of alcohol.

*                *                *

SETO, 38, of Queens, New York, and CHONG, 41, of El Monte, California, are each charged with conspiracy to receive and accept bribes and gratuities, which carries a maximum sentence of five years in prison; conspiracy to convert government records and property and disclose agency records containing individually identifiable information, which carries a maximum sentence of one year in prison; and identity theft conspiracy, which carries a maximum sentence of 15 years in prison.  SETO is also charged with obstruction of justice, which carries a maximum sentence of 20 years in prison; and making false statements to law enforcement, which carries a maximum sentence of five years in prison.

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

Mr. Clayton praised the outstanding investigative work of the FBI.  Mr. Clayton also thanked CBP’s Office of Professional Responsibility and the DHS Office of Inspector General for their assistance with the investigation.  

This case is being handled by the Office’s Public Corruption Unit and Violent Organizations & Crime Unit.  Assistant U.S. Attorneys Andrew K. Chan, James Ligtenberg, and Ni Qian 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.

[2] On December 12, 2024, Yau was charged by a grand jury sitting in the Southern District of New York with one count of identity theft conspiracy, in violation of 18 U.S.C. § 1028(f); four counts of conspiracy to convert records and property of the United States and disclose agency records containing individually identifiable information, in violation of 18 U.S.C. § 371; one count of conversion of records and property of the United States, in violation of 18 U.S.C. § 641; and one count of disclosure of agency records containing individually identifiable information, in violation of 5 U.S.C. § 552a(i)(1).  See United States v. Henry Yau, S8 23 Cr. 572 (CM), Dkt. 50 (S.D.N.Y. Dec. 12, 2024).  The charges against Yau, which remain pending, are merely accusations and Yau is presumed innocent unless and until proven guilty

[3] On or about June 15, 2020, CHONG pleaded guilty in the United States District Court for the Central District of California to wire fraud in connection with a scheme to obtain graduate school admission slots for unqualified Chinese nationals at University-1 in exchange for thousands of dollars in cash.  On or about September 17, 2020, CHONG was sentenced to one year of probation.  See United States v. Hiu Kit David Chong, 20 Cr. 171 (MWF) (C.D. Cal.).

United States Attorney for the Southern District of New York, Jay Clayton, Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, and Special Agent in Charge of the New York Regional Office of the Federal Deposit Insurance Corporation’s Office of Inspector General (“FDIC-OIG”), Patricia Tarasca, announced today the unsealing of an Indictment charging DANIEL CHU, the founder and former CEO of Tricolor Holdings LLC, with orchestrating a years-long financial crimes enterprise that defrauded multiple banks and other private credit providers.  CHU and DAVID GOODGAME, Tricolor’s former COO, are also charged with bank fraud and wire fraud offenses in connection with schemes to fraudulently double-pledge collateral to multiple lenders and manipulate the characteristics of collateral to make ineligible, near-worthless assets appear to meet lender requirements.  Both defendants were arrested today.  CHU will be presented later today in the Southern District of Florida, and GOODGAME will be presented tomorrow in the Northern District of Texas.  

Also unsealed today are the guilty pleas of JEROME KOLLAR, Tricolor’s former CFO, and AMERYN SEIBOLD, a former finance executive at Tricolor, in connection with their participation in the conspiracy.  KOLLAR and SEIBOLD pled guilty to fraud charges before U.S. District Judge Lewis J. Liman on December 16, 2025.  Both are cooperating with the Government.

“As alleged in the indictment, CEO Daniel Chu was the leader of an elaborate scheme to defraud creditors of Tricolor,” said U.S. Attorney Jay Clayton.  “At his direction, Tricolor repeatedly lied to banks and other credit providers, including by falsifying auto-loan data and ‘double pledging’ collateral.  Fraud became an integral component of Tricolor’s business strategy.  The resulting billion-dollar collapse harmed banks, investors, employees and customers.  It also undermines confidence in our financial system.  New Yorkers and all Americans want continuing criminal enterprises shut down and their leaders brought to justice whether they are on our streets or in our markets.”

“These four executives allegedly conspired to defraud lenders based on bogus collateral,” said FBI Assistant Director in Charge Christopher G. Raia.  “The defendants’ alleged manipulation not only ripped off multiple banks but also violated the integrity of our credit markets.  The FBI will never tolerate any company that makes fraud part of its business.”

“As alleged, the defendants in this case participated in a years-long fraudulent scheme that deceived the lenders of Tricolor,” said FDIC-OIG Special Agent in Charge Patricia Tarasca.  “The FDIC-OIG stands firm in its commitment to working with our law enforcement partners to investigate all allegations of fraud that target financial institutions, as we seek to preserve the integrity of our Nation’s financial system.”

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

From in or about 2018 through in or about 2025, CHU, GOODGAME, KOLLAR, and SEIBOLD conspired to defraud the lenders and asset-backed securities investors of Tricolor Holdings, LLC and its affiliates (“Tricolor”), a subprime auto retailer and financing company.  CHU, Tricolor’s founder and chief executive officer; GOODGAME, Tricolor’s chief operating officer; and others operated Tricolor through systematic fraud.  At CHU’s direction, multiple Tricolor executives repeatedly double-pledged collateral to multiple lenders and manipulated the characteristics of collateral to make ineligible, near-worthless assets appear to meet lender requirements.  By in or about August 2025, Tricolor had pledged approximately $2.2 billion of collateral to lenders and investors, but Tricolor had only approximately $1.4 billion of real collateral.  The difference—consisting of approximately $800 million in bogus collateral—resulted from the series of schemes and the conspiracy in which CHU, GOODGAME, KOLLAR, SEIBOLD, and others participated. Over time, this series of fraudulent schemes had a profound effect on Tricolor, which obtained hundreds of millions of dollars in cash advances; on CHU, who used a portion of the funds to enrich himself; and on Tricolor’s lenders, who extended billions in loans based on fabricated data and false statements.

In or about the summer of 2025, lenders confronted CHU and others at Tricolor about problems with Tricolor’s collateral.  In a series of secretly recorded phone calls, CHU and his conspirators concocted plans to conceal or explain away the fraud.  For example, on or about August 17, 2025, CHU proposed blaming certain loan data discrepancies on fictitious deferment policies.  CHU acknowledged, however, that “where we would have an issue is if, if they sent an auditor and they said, pull this up on your screen, right, that would be a problem.”  KOLLAR agreed, stating, “Yes. That would be bad.”  These efforts to conceal failed.

Unable to explain or excuse Tricolor’s fraud, CHU turned his sights on blaming others.  On another recorded phone call, CHU compared Tricolor’s circumstances to the circumstances of Enron, the energy trading firm that collapsed into bankruptcy following the discovery of accounting fraud and other misconduct.  Specifically, CHU and others discussed the possibility that they could blame the banks for ignoring red flags and use that threat as leverage to extract a favorable settlement.  CHU proposed using artificial intelligence tools to search for key words that GOODGAME could use in a discussion with a lender.  After another participant described an Enron-related litigation, CHU stated: “Enron obviously has a nice ring to it, right? <laugh>, I mean, Enron, Enron raises the blood pressure of the lender when they see that <laugh>.  It, it has to, right? I’m not— […] Cause who wants to be thrown in the category?”  CHU later said, “That Enron case is fucking perfect, I think.”

CHU, recognizing that Tricolor was, in his words, “basically history,” turned his attention to extracting millions of dollars from the company.  As Tricolor approached collapse, and after CHU observed that the company was “definitely insolvent,” he directed KOLLAR to pay him the final installments of a $15 million bonus.  On or about August 19 and 20, 2025—roughly three weeks before Tricolor placed more than 1,000 employees on unpaid leaves of absence and before the company filed for bankruptcy—CHU received two payments from Tricolor totaling $6.25 million.  CHU used some of this money to purchase a multimillion-dollar property in Beverly Hills, California on or about August 27, 2025.

Unable to maintain its access to loans, and unable to sustain its business without substantial cash, Tricolor filed for Chapter 7 bankruptcy on September 10, 2025.  By that time, the company’s largest lenders had advanced and were owed more than $900 million as a result of the fraudulent double-pledging and collateral manipulation schemes that CHU had orchestrated, and in which GOODGAME had knowingly participated as the company’s chief operating officer, for years.

*               *                *

A chart containing the names, ages, residences, charges, and maximum penalties for the defendants is attached.

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

Mr. Clayton praised the outstanding work of the FBI and the FDIC-OIG.  Mr. Clayton also thanked the U.S. Securities and Exchange Commission for its assistance and cooperation in the investigation.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Micah F. Fergenson and Justin V. Rodriguez 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.

Defendant,

Age, and

Residence

CHU,

62,

Miami,

FL

Continuing Financial Crimes Enterprise, 18 U.S.C. § 225 (Count One)

Conspiracy to Commit Bank Fraud and Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1349 (Count Two)

Bank Fraud, 18 U.S.C. § 1344 (Count Three)

Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1343 (Count Four)

Life in prison

Mandatory minimum sentence of 10 years in prison

30 years in prison

30 years in prison

30 years in prison

GOODGAME,

49,

Waxahachie,

TX

Conspiracy to Commit Bank Fraud and Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1349 (Count Two)

Bank Fraud, 18 U.S.C. § 1344 (Count Three)

Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1343 (Count Four)

30 years in prison

30 years in prison

30 years in prison

KOLLAR,

62,

Shady Shores,

TX

Conspiracy to Commit Bank Fraud and Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1349 (Count One)

Bank Fraud, 18 U.S.C. § 1344 (Count Two)

Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1343 (Count Three)

False Statements to Financial Institutions, 18 U.S.C. § 1014 (Count Four)

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

Securities Fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Six)

Destruction of Records, 18 U.S.C. § 1519 (Count Seven)

30 years in prison

30 years in prison

30 years in prison

30 years in prison

Five years in prison

20 years in prison

20 years in prison

SEIBOLD,

31,

Princeton,

TX

Conspiracy to Commit Bank Fraud and Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1349 (Count One)

Bank Fraud, 18 U.S.C. § 1344 (Count Two)

Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1343 (Count Three)

False Statements to Financial Institutions, 18 U.S.C. § 1014 (Count Four)

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

Securities Fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Six)

Destruction of Records, 18 U.S.C. § 1519 (Count Seven)

30 years in prison

30 years in prison

30 years in prison

30 years in prison

Five years in prison

20 years in prison

20 years in prison

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

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced the unsealing of an Indictment today charging 12 members of an East Harlem-based narcotics trafficking organization with conspiring to distribute narcotics and with possessing firearms in furtherance of the narcotics trafficking conspiracy stemming from their conduct in and around the “Johnson  Houses”—a  colloquial name  for  the James  Weldon  Johnson Residential Community, a public housing development under the control of the New York City Housing Authority (“NYCHA”).  BRIAN GONZALEZ, a/k/a “Bmakk,” BRIAN NIN, a/k/a “BDot,” IRA BOYCE, a/k/a “Zaza,” JOSE HERNANDEZ, JAHDEEN WILLIAMS, PERCY CARRION, CAESAR HERNANDEZ, and QUADIR DAVONISH, a/k/a “Skii Dotty” were arrested today and will be presented before U.S. Magistrate Judge Gary Stein.  BRYAN COWAN, a/k/a “Chapo,” was previously in custody.  JAFFARI HOPWAH, a/k/a “Baby Wuu,” DANIEL JONES, a/k/a “D Cash,” and RICHARD FARQUHARSON, a/k/a “Smooth” remain at large. This case has been assigned to U.S. District Judge Sideny H. Stein.

“As alleged in the Indictment, these defendants distributed substantial quantities of narcotics into the community, putting lives in danger,” said U.S. Attorney Jay Clayton.  “These defendants degraded the quality of life for Johnson Houses residents and the surrounding community by selling drugs in common areas including lobbies, courtyards, and a children’s playground.  New York City residents should be able to live in NYCHA complexes, free from the dangers of drugs and guns.  Thanks to the extraordinary work of our partners at the FBI and NYPD, the defendants now face federal charges for their crimes and the Johnson Houses are safer.”

“For years, these 12 defendants allegedly utilized the Johnson Houses to facilitate their open-air drug market and generate an illicit revenue stream,” said FBI Assistant Director in Charge Christopher G. Raia.  “This joint investigation with NYPD Manhattan North Narcotics dismantled an alleged trafficking conspiracy disrupting the safety of a public housing development with a continual revolving door of drugs and firearms.  During the nationwide initiative, Coast to Coast, our local Operation Empire Heat takedown reflects the FBI’s steadfast commitment to coordinating with our local law enforcement partners to protect innocent New Yorkers from the unlawful activities of any criminal organization.”

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

From at least in or about 2022 up to and including December 2025 in the Southern District of New York and elsewhere, GONZALEZ, NIN, COWAN, HOPWAH, BOYCE, JOSE HERNANDEZ, JONES, WILLIAMS, FARQUHARSON, CARRION, CAESAR HERNANDEZ, and DAVONISH, used a building within the Johnson Houses—and that building’s adjoining courtyard—as an open drug market in which they sold a variety of controlled substances, including crack cocaine and fentanyl, to customers who streamed into the building to buy the drugs.  They did this by occupying the building’s lobby at all hours of the day and night, often holding cross-body bags or fanny packs where drug products would be stored. At times, the drug products were also kept in a building mailbox.  Members of the conspiracy also exploited other parts of the building to facilitate their business.  They used specific apartments to package and store drugs, and they used utility boxes throughout the building stairwells to stash their drug products, drug paraphernalia (such as syringes), and firearms.

In addition to possessing and storing firearms in communal locations, such as building utility boxes, some members of the conspiracy also carried firearms at and around the building, and on several occasions, a member of the conspiracy brandished and discharged a firearm within, or in the vicinity of, the Johnson Houses. 

Several members of the conspiracy have been arrested at least once in recent years on state charges based on their possession of narcotics that were packaged for sale and/or possession of a firearm.  The drug business in and around the building nevertheless continued unabated. 

During simultaneous arrests and searches conducted today law enforcement agents seized the following items, among other things:

• a Building “stash” apartment: five firearms, two of which were “long” guns, capsules, bags, and baggies of suspected narcotics, and various drug paraphernalia and mixing material.
• NIN’s apartment: one firearm, one magazine, and two boxes of ammunition.
• CAESAR HERNANDEZ’s apartment: a large bag of suspected cocaine, a gun-cleaning kit, and a .40-caliber shell casing. 

Below is a picture of the “long” guns that were seized.

*               *                *

All defendants are charged with conspiracy to distribute and possess with intent to distribute 280 grams or more of cocaine base (“crack”), 40 grams or more of fentanyl, and quantities of heroin and cocaine, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.  The defendants are also charged with possessing firearms in furtherance of the narcotics trafficking offense, which carries a mandatory minimum sentence of five years in prison to be served consecutively to any other sentence imposed, and a maximum sentence of life in prison.

A chart containing the names of the defendants, their ages, and places of residence is set forth below.

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

The prosecution of this case is being handled by the Office’s Violent Organizations and Crime Unit.  Assistant U.S. Attorneys Frank J. Balsamello and Diarra Guthrie 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.

Name

Age

Place of Residence

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

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Field Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), Bryan DiGirolamo, and Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, announced the unsealing of an Indictment charging DAVID MALDONADO in connection with a November 14, 2025, daytime shooting in which MALDONADO fired 12 rounds from a machine gun on a public street in the Bronx. MALDONADO was arrested and presented today before U.S. Magistrate Judge Gary Stein.  The case is assigned to U.S. District Judge Jed S. Rakoff.

"As alleged, David Maldonado used a machine gun conversion device to spray bullets on a Bronx street,” said U.S. Attorney Jay Clayton. “New Yorkers want brazen, gun toting criminals off our streets and we hear them.  Thanks to the prompt response of our law enforcement partners, Maldonado will now have to answer for his alleged crimes.”

“The ATF/NYPD Crime Gun Enforcement Team is committed to keeping illegal machine guns out of the hands of criminals and away from our communities,” said ATF Special Agent in Charge Bryan DiGirolamo.  “We thank the New York City Police Department and the US Attorney’s Office for the Southern District of New York for their continued partnership in keeping the public safe.”

“David Maldonado allegedly put New Yorkers at serious risk when he fired a fully automatic ghost gun in broad daylight on a public street, while NYPD detectives were nearby,” said NYPD Commissioner Jessica S. Tisch.  “Our detectives did exactly what they do best—they ran toward the danger, moved quickly to stop the threat, and our streets are safer because of their actions.  I thank the NYPD investigators, our partners at the ATF, and the U.S. Attorney’s Office for their continued work to hold violent offenders accountable.”

As alleged in the Indictment, and in public statements made in public court proceedings:[1]

On or about November 14, 2025, at around 4:00 p.m., MALDONADO, who has been previously convicted of multiple felony offenses, discharged a machine gun in the vicinity of East 170th Street and Third Avenue in the Bronx, including two shots that struck a nearby vehicle. 

Detectives of the NYPD, who were in the vicinity of the gunshots, spotted and promptly apprehended MALDONADO, who was in possession of an unserialized Polymer 80, model PF940C, 9x19mm caliber firearm, also known as a “ghost gun.”  During the shooting, MALDONADO used a semi-automatic handgun with an illegal machine gun conversion device installed, which converted his firearm into a fully automatic machine gun capable of shooting more than one shot with a single pull of the trigger.  Photographs of the firearm and magazine seized from MALDONADO and the conversion device that was installed on the pistol slide are below:

*               *                *

MALDONADO, 53, of New York, New York, is charged with one count of possession of ammunition after felony conviction, which carries a maximum sentence of 15 years in prison; and one count of possession of a machine gun, which carries a maximum sentence of 10 years in prison. 

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

Mr. Clayton praised the outstanding investigative work of the NYPD and the ATF.

This case is being handled by the Office’s Violent Organizations & Crime Unit.  Assistant U.S. Attorney Brandon D. Harper 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.

United States Attorney for the Southern District of New York, Jay Clayton, announced that KEVIN PEREZ, a/k/a “Kay Flock,” was sentenced today to 30 years in prison for committing violent crimes as the leader of a Bronx-based gang, known as “Sev Side/DOA.”  In March 2025, a jury convicted PEREZ of racketeering conspiracy, attempted murder and assault with a deadly weapon in aid of racketeering, and a firearm discharge offense following a two-week trial before U.S. District Judge Lewis J. Liman, who imposed today’s sentence.

“Kevin Perez used violence and fame to fuel fear and intimidation across the Bronx,” said U.S. Attorney Jay Clayton.  “Perez and his gang members carried out a string of shootings that struck both rival gang members and innocent bystanders.  Perez also used his platform as a prominent rapper to celebrate his violence: threatening his rivals, bragging about his shootings, and taunting his victims.  His brazen actions unleashed a series of back-and-forth retaliatory shootings that killed and injured far too many people in the Bronx.  Thanks to the hard work of the women and men of this Office and our law enforcement partners, today’s sentence brings New Yorkers what they want: violent, gun-toting gang leaders off our streets.”  

According to the indictment, public court filings, and the evidence presented at PEREZ’s trial:

Since at least 2020, PEREZ was the leader of a gang based on East 187th Street in the Bronx, known as Sev Side/DOA, which is short for “Dumping on” (shooting) “Anything” or “Dead on Arrival.”  Members of the gang committed violence against gang rivals to protect their territory, enhance the reputation and wealth of Sev Side/DOA, and increase their status within the gang.  The gang primarily supported itself through bank and wire fraud, which in turn funded PEREZ’s music career.

Throughout 2020 and until his arrest in late 2021, PEREZ and his co-conspirators carried out a string of shootings.  The violence included a June 20, 2020, shooting in which a gang rival was struck in the jaw and several other victims were hit.  Days after the shooting, PEREZ and his co-conspirators put out a music video that bragged about the shooting.  PEREZ was also held responsible for attempted murders on June 26, 2020; August 10, 2020; and November 10, 2021, which collectively resulted in multiple people being shot.  The evidence also showed that, while committing this violence, PEREZ used his status as a recognized “drill rap” artist to celebrate his gang’s crimes. PEREZ put out songs—several of which received millions of views—that glorified his violence, threatened more of it, and taunted rival gang members who had been murdered.

In imposing today’s sentence, Judge Liman remarked that the defendant “taunted, celebrated, and created a culture of violence” and that the harm the defendant caused “was immense.”

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In addition to his prison term, PEREZ, 22, of the Bronx, New York, was sentenced to five years of supervised release. 

Mr. Clayton praised the outstanding investigative work of the New York City Police Department and Department of Homeland Security – Homeland Security Investigations, and also thanked the New York County District Attorney’s Office for its assistance.

The case is being handled by the Office’s Violent Organizations and Crime Unit.  Assistant U.S. Attorneys Ni Qian, Michael R. Herman, Patrick R. Moroney, Elizabeth A. Espinosa, and Jim Ligtenberg are in charge of the prosecution, with the assistance of Paralegal Specialists Ananya Sankar and David Naguib.

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation, Christopher G. Raia, announced today the unsealing of an Indictment charging GIOVANNI PENNETTA, the manager of Sestante Capital LLC (“Sestante”), a Manhattan-based investment adviser and private equity firm, with securities fraud, wire fraud, and aggravated identity theft. The charges in the Indictment arise from an alleged scheme by PENNETTA to fraudulently induce multiple investment clients to part with millions of dollars in exchange for economic exposure to shares of non-public companies.  PENNETTA was arrested on Sunday afternoon at John F. Kennedy International Airport and will be presented today before U.S. Magistrate Judge Gary Stein.  The case has been assigned to U.S. District Judge Jed S. Rakoff.

“As alleged, Giovanni Pennetta took advantage of investors by promising access to private, pre-IPO companies he did not control and never had access to,” said U.S. Attorney Jay Clayton.  “American investors deserve honesty in all markets, including the private investment markets.  When someone lies to investors and pockets their money instead, this Office and our law enforcement partners will step in to protect investors and the integrity of our markets.”

“Giovanni Pennetta allegedly stole millions of dollars from clients attempting to expand their own businesses with lies about his economic access and influence,” said FBI Assistant Director in Charge Christopher G. Raia.  “Pennetta allegedly abused his managerial position to attract potential victims before moving their intended investment funds from their wallets to his own.  The FBI maintains its unwavering stance against any business managers deceiving others to selfishly enrich themselves.”

As alleged in the Indictment unsealed today in Manhattan federal court:

PENNETTA is the managing member of Sestante, which is based in Manhattan.  Sestante, in turn, is the managing member of, and an investment adviser to, NextGenTech Investments LLC (“NextGenTech”), a private fund that purports to offer investors economic exposure to equity securities through membership interests in series controlled by the fund.

From 2019 through the present, PENNETTA repeatedly misrepresented to victims that he had access to shares of private companies and could offer investment interests in those shares through NextGenTech.  When investors transferred money to PENNETTA, however, he accepted the victims’ funds but did not provide them with the investment interests he had promised because, in fact, PENNETTA did not have access to the shares and had intentionally misled investors when he had told them otherwise.

Many of PENNETTA’s misrepresentations centered around his access to shares of Anduril Industries, Inc. (“Anduril”), a private defense technology company.  Invoking supposed connections with individuals associated with Anduril, PENNETTA represented to victims that he had access to Anduril shares and offered to sell his victims economic exposure to those shares by having them purchase membership interests in particular series of NextGenTech.  In furtherance of this scheme, PENNETTA provided his victims with falsified documents purporting to show his access to Anduril shares and that particular series of NextGenTech offered exposure to Anduril shares.

PENNETTA’s representations were false.  In fact, PENNETTA did not have access to Anduril shares, and NextGenTech did not have exposure to Anduril shares. The victims who paid NextGenTech millions of dollars based on PENNETTA’s promises received no economic exposure to Anduril shares whatsoever. Instead, PENNETTA transferred much of the victims’ funds to his personal bank account.

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PENNETTA, 50, of New York, New York and Italy, is charged with securities fraud and wire fraud, each of which carries a maximum sentence of 20 years in prison, and aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison. 

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

Mr. Clayton praised the outstanding work of the FBI and the U.S. Securities and Exchange Commission.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Alexandra N. Rothman and Samuel P. Rothschild are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, announced the guilty plea today of NATHAN AUSTAD, a/k/a “Snoopy,” in connection with a scheme to hack thousands of user accounts at a fantasy sports and betting website (the “Betting Website”) and sell access to those accounts in order to steal hundreds of thousands of dollars from the true users, including victims in the Southern District of New York.  AUSTAD pled guilty today to conspiracy to commit computer intrusion before U.S. District Judge Ronnie Abrams.

“Today’s guilty plea shows our Office’s commitment to holding cybercriminals who hack and steal from our citizens to account,” said U.S. Attorney Jay Clayton.  “Austad and his co-defendants robbed their victims, including New Yorkers, and shamelessly sold their private account information online.  Let this be a warning: hackers and cybercriminals who target New Yorkers will be brought to justice.  The women and men of our Office are watching and are committed to protecting the public from cyber intrusions, theft, and the online criminal markets that enable them.”

According to the charging documents and statements made in public filings and public court proceedings:

On or about November 18, 2022, AUSTAD and others launched a “credential stuffing attack” on the Betting Website.  During a credential stuffing attack, a cyber threat actor collects stolen credentials, or username and password pairs, obtained from other large-scale data breaches of other companies, which can often be purchased on the dark web.  The threat actor then systematically attempts to use those stolen credentials to obtain unauthorized access to accounts held by the same user with other companies and providers in order to compromise accounts where the user has maintained the same password.  Here, in connection with the attack on the Betting Website, AUSTAD and his co-conspirators made a series of attempts to log into the Betting Website user accounts using a large list of stolen credentials.

AUSTAD and his co-conspirators successfully compromised approximately 60,000 user accounts at the Betting Website (the “Victim Accounts”) through the credential stuffing attack.  In some instances, AUSTAD and his co-conspirators were able to add a new payment method of their own on the account (i.e., to a newly added financial account belonging to the hacker) and then use it to withdraw all the existing funds in the Victim Account to themselves, thus stealing the funds in each affected Victim Account.  Using this method, AUSTAD and others stole approximately $600,000 from approximately 1,600 Victim Accounts on the Betting Website.

Access to the Victim Accounts was also sold on various websites that traffic in stolen accounts, which are frequently referred to as “Shops.”  AUSTAD directly controlled and profited from his own shop, which was named after the character Snoopy from the Peanuts comic strip.  A photo of AUSTAD’s Shop website with victim companies redacted is below:

On or about December 2, 2022, AUSTAD messaged about the existence of this investigation, “everyone shouldve been prepared for this before cashing out lol,” and a co-conspirator replied, “lol fbi can’t do shit.”  On or about May 19, 2023, AUSTAD messaged about the existence of this investigation, “like we didnt know the risk when we started lol . . . everyone knows their committing fraud.”

AUSTAD also controlled cryptocurrency accounts that received cryptocurrency worth approximately $465,000, including proceeds of his crimes.

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AUSTAD, 21, of Farmington, Minnesota, pled guilty to one count of conspiring to commit computer intrusion, which carries a maximum sentence of five years in prison.

The maximum potential sentence is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  AUSTAD is scheduled to be sentenced by Judge Abrams on April 10, 2026.

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

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Kevin Mead and Micah Fergenson are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, announced that a jury found DWAYNE PULLIAM guilty today of Travel Act murder, participating in a conspiracy to distribute and possess with intent to distribute crack cocaine and heroin, and the distribution and possession with intent to distribute crack cocaine and heroin.  PULLIAM was found guilty following a one-week trial before U.S. District Judge Philip M. Halpern.

“In Carmel, New York, Dwayne Pulliam, a local drug dealer and employee of a drug rehabilitation center who had previously been convicted of and served over two decades for murder, killed one of his customers—Lori Lynn Campbell—whom he suspected of stealing crack cocaine from his business, and then drove her body to North Carolina, where he buried her in a shallow grave in the woods,” said U.S. Attorney Jay Clayton.  “With its verdict, the jury has held Pulliam responsible for Campbell’s murder, as well as for the harm that he sowed in both New York and Connecticut with his shameless dealing of crack and heroin.  This should serve as a lesson: if you commit a crime—if you commit a murder—law enforcement will pursue you relentlessly, and the career prosecutors of this Office and our law enforcement partners are committed to investigating and prosecuting these righteous cases.  If any member of the public has information that they wish to share with us about any unsolved murder, then we encourage you to come forward.”

According to the Indictment, public court filings, and the evidence presented at trial:

PULLIAM had a lengthy criminal history, including convictions in North Carolina in 1981 for breaking and entering and larceny and assault on a female, in 1985 for assault with a deadly weapon with intent to kill, in 1988 for possession of a firearm by a felon and trafficking cocaine, in 1992 for assault on a female and hit-and-run, and in New York in 1999 for intentional murder, for which PULLIAM was sentenced to 15 years to life in prison and released to lifetime parole on December 1, 2020.

After his release from prison, PULLIAM, who used the nickname “Doc,” got a job at a drug rehabilitation facility in Carmel, New York.  He also began distributing retail quantities of crack cocaine in New York and Connecticut, including for both money and sexual favors.  Additionally, he would use his customers as workers, paying them in drugs.

On or about March 28, 2022, Lori Lynn Campbell—one of PULLIAM’s customers—was at PULLIAM’s apartment in Carmel, New York.  PULLIAM suspected that Campbell was stealing crack from him and his business and “tested” her by leaving a small amount of crack cocaine in a room with her.  When PULLIAM returned, the crack was gone, and he confronted Campbell.  When Campbell tried to leave and to scream, PULLIAM strangled Campbell to death.  As PULLIAM later told one of his customers/workers, he “stopped her from screaming.”

PULLIAM picked up one of his customers/workers—who, among other things, would drive PULLIAM in return for drugs—and had the driver move Campbell’s car.  PULLIAM then brought his driver back to his apartment and showed the driver Campbell’s body, saying “there’s the culprit.”  PULLIAM, cajoling the driver with the promise of more drugs and threatening the driver’s family, got the driver to help him move Campbell’s body.  When PULLIAM put Campbell’s body in the trunk of his car, he used enough force to break one of her vertebrae.  PULLIAM then made his driver accompany him to North Carolina, where PULLIAM wrapped Campbell’s body in a plastic sheet, covered it with sulfur powder, and buried it in a shallow grave.  After PULLIAM and his driver returned to New York and Connecticut, PULLIAM continued selling drugs until he was arrested in this case.

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PULLIAM, 63, of Carmel, New York, was convicted of Travel Act murder, participating in a conspiracy to distribute and possess with intent to distribute heroin and 28 grams and more of crack cocaine, and distribution and possession with intent to distribute heroin and crack cocaine.  The Travel Act murder count carries a maximum sentence of life in prison, the narcotics conspiracy count carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison, and the narcotics count carries a maximum sentence of 20 years in prison.

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

Mr. Clayton praised the outstanding work of the Federal Bureau of Investigation and the Putnam County Sheriff’s Office, which also supported the prosecution through trial.  He also thanked the Danbury, Connecticut, Police Department, the Connecticut State Police, the Alamance County, North Carolina Sheriff’s Office, and the Caswell County, North Carolina Police Department.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Michael D. Maimin and T. Josiah Pertz are in charge of the prosecution, with the assistance of Paralegal Specialists Allison Tull and Casey Wilcox.

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), Naomi Gruchacz, and Assistant Director in Charge of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced today the filing of an Information charging NOSSON SKLAR, a/k/a “Nathan Sklar,” with engaging in a scheme to defraud health benefit programs through the submission of more than $20 million in fraudulent claims.  SKLAR also entered a guilty plea to the Information in a proceeding today before U.S. District Judge Nelson S. Román, to whom the case has been assigned.

“As he admitted today in court, Nosson Sklar spent years submitting millions of dollars in fraudulent medical claims to various health benefit programs,” said U.S. Attorney Jay Clayton.  “New Yorkers rely on honest billing to access care, and our Office will hold accountable those who drive up costs through criminal deception.”

“The defendant in this case brazenly submitted false claims to receive funds for rehabilitation services that were never provided under a doctor’s care,” said HHS-OIG Special Agent in Charge Naomi Gruchacz.  “HHS-OIG will continue to work with our law enforcement partners to hold accountable individuals who, to satisfy their own greed, exploit federal health care programs.”

“Nosson Sklar defrauded health care programs of more than $20 million by submitting illegitimate claims with forged unauthorized physician signatures,” said FBI Assistant Director in Charge Christopher G. Raia.  “Sklar, in his capacity as owner and CEO, violated the integrity of his company and a doctor at the expense of our healthcare system.  The FBI will always hold accountable anyone who abuses their position to bill for ghost services just to turn a profit.”

According to the Information, the Complaint previously filed against SKLAR, and other filings and statements made in court:        

SKLAR was the owner and chief executive officer of a company that operated a series of physical rehabilitation facilities around New York City (the “Rehabilitation Company”).  Between at least January 2020 and in or about July 2024, SKLAR submitted or caused others to submit more than $20 million in claims for medical services to various health care benefit programs, asserting that those services were rendered by a physician who worked with the Rehabilitation Company (“Victim-1”).  But that was false.  Victim-1 did not provide those services, did not work with the Rehabilitation Company during that time, and did not authorize SKLAR to submit bills in his name.

In or about July 2024, Victim-1 spoke with SKLAR on at least two occasions about the fraudulent bills.  During those conversations, SKLAR admitted that he had committed “fraud” by billing under Victim-1’s name, and that he did it “because [of] the money.”

Between at least in or about January 2020 and in or about July 2024, SKLAR caused more than $20 million in claims to be submitted to three separate health benefit programs (the “Health Plans”), which listed Victim-1 as having been the rendering provider for the Rehabilitation Company.  Approximately $12.4 million of those claims were eventually paid by the Health Plans.

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SKLAR, 56, of New York, New York, pled guilty to one count of health care fraud, which carries a maximum sentence of 10 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 defendant will be determined by a judge.

Mr. Clayton praised the investigative work of HHS-OIG and FBI.

This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Jorja N. Knauer and David A. Markewitz are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, announced today the conviction of CARL ERIK RINSCH, a Los Angeles-based director and writer, for his role in a fraudulent scheme to steal $11 million from a subscription video on-demand streaming service (“Streaming Company-1”) in connection with a planned science fiction television show called “White Horse,” and then laundering that money.  The defendant was found guilty following a one-week trial before U.S. District Judge Jed S. Rakoff and is scheduled to be sentenced on April 17, 2026.

“Carl Erik Rinsch took $11 million meant for a TV show and gambled it on speculative stock options and crypto transactions,” said U.S. Attorney Jay Clayton.  “Today’s conviction shows that when someone steals from investors, we will follow the money and hold them accountable.”

As reflected in the Indictment, public filings, and the evidence presented at trial:

RINSCH is a film and television writer and director who partially completed a science fiction television show called “White Horse.”  In 2018, RINSCH reached an agreement with Streaming Company-1 in which Streaming Company-1 would both pay RINSCH for the existing episodes of White Horse and also fund completion of the rest of the show.  Between 2018 and 2019, Streaming Company-1 paid approximately $44 million for White Horse.

Between late 2019 and early 2020, RINSCH demanded even more money from Streaming Company-1 to complete White Horse.  Streaming Company-1 ultimately agreed to pay another $11 million and transferred those funds to a company RINSCH controlled on or about March 6, 2020.  The entirety of those funds was to be spent on the completion of White Horse.

But RINSCH did not use those funds to complete White Horse.  Instead, within days, RINSCH began transferring the funds he received through a number of different bank accounts before consolidating them in a personal brokerage account.  RINSCH then used those funds to make a number of personal and speculative purchases of securities.  His trading was unsuccessful, and in less than two months after receiving $11 million from Streaming Company-1, RINSCH had lost more than half of those funds.

Even after losing most of the $11 million, RINSCH still did not spend the remaining funds he had stolen on White Horse.  Instead, he used the money to speculate on cryptocurrency, and on personal expenses and luxury items, including at least $1.7 million on credit card bills; at least $3.3 million on furniture, antiques, and mattresses; at least $387,000 on a Swiss watch; and at least $2.4 million on five Rolls Royces and a red Ferrari.

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RINSCH, 48, of Los Angeles, California, was convicted of one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of money laundering, which carries a maximum sentence of 20 years in prison; and five counts of engaging in monetary transactions in property derived from specified unlawful activity, each of which carries a maximum sentence of 10 years in prison. 

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

Mr. Clayton praised the outstanding work of the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation. 

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Timothy V. Capozzi, Jackie Delligatti, David A. Markewitz, Kevin Mead, and Adam Sowlati are in charge of the prosecution with assistance from Paralegal Specialists Maria Larracuente and William Coleman.

United States Attorney for the Southern District of New York, Jay Clayton, announced today that DO HYEONG KWON was sentenced to 15 years in prison for committing wire fraud and conspiring to commit securities fraud, commodities fraud, and wire fraud in connection with KWON’s fraud centered around Terraform Labs PTE, Ltd. (“Terraform”), and the cryptocurrencies launched by Terraform.  KWON was extradited on December 31, 2024, and pled guilty in August 2025 before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

“Do Kwon devised elaborate schemes to mislead investors and inflate the value of Terraform’s cryptocurrencies for his own benefit,” said U.S. Attorney Jay Clayton.  “When his crimes caught up to him, Kwon embarked on a deceptive public relations campaign to cover up his fraud, laundered the proceeds of his illegal schemes, and sought to purchase political protection in foreign countries to evade criminal prosecution. Let there be no mistake, fraud is fraud whether it takes place on our streets, in our securities markets, or in our emerging and important digital asset ecosystem, and no matter where in the world criminals may seek refuge, the women and men of the Southern District of New York will relentlessly pursue justice for investors and protect the integrity of financial markets.”

According to the allegations in the Superseding Indictment and statements made in public court filings and proceedings:

From at least in or about 2018, up to and including in or about 2022, KWON orchestrated schemes to defraud purchasers of cryptocurrencies created and issued by Terraform.  Terraform was a blockchain and cryptocurrency company co-founded by KWON in 2018. Terraform distinguished the Terra blockchain from other competing blockchains by issuing so-called algorithmic stablecoins pursuant to what it called the “Terra Protocol.”  According to KWON and others, Terraform stablecoins maintained a steady value even under changing market conditions.  In or around September 2020, Terraform publicly announced the launch of Terraform’s stablecoin pegged to the U.S. dollar, TerraUSD (“UST”).  Terraform promotional materials claimed that, under the Terra Protocol, one UST could always be exchanged for $1 worth of LUNA, the Terra blockchain’s native token. Conversely, $1 worth of LUNA could always be exchanged for one UST.

KWON claimed that Terraform had used blockchain technology to create a self-contained, decentralized financial world with its own money, payment system, stock market, and savings bank.  KWON presented Terraform as having developed functioning, reliable financial technologies on the cutting edge of a movement towards “decentralized finance” (or “DeFi”), in that Terraform’s products purportedly operated largely through automated mechanisms and economic incentives, and that Terraform’s systems were governed by their users rather than by KWON and his associates and subordinates.

In fact, core Terraform products did not work as KWON advertised and were manipulated to create the illusion of a functioning and decentralized financial system in order to lure investors.  KWON engaged in this deceptive conduct in order to pump up the value of Terraform’s cryptocurrencies, which KWON and entities he controlled (a) possessed in large amounts and (b) sold to investors in exchange for billions of dollars’ worth of other assets.

The misrepresentations that KWON made in furtherance of his schemes to defraud included the following:

1. The Stablecoin Misrepresentations: KWON lied about the effectiveness of the system that lay at the heart of Terraform’s cryptocurrency empire, the “Terra Protocol,” which purportedly used a computer algorithm to maintain the value of Terraform’s so-called “stablecoin” pegged to the U.S. dollar, TerraUSD (“UST”), at a value of $1 for one UST.  Beginning at least in or about 2020, KWON and his associates advertised the Terra Protocol, including the economic incentives it created in the market, as sufficient on its own to maintain parity between one UST and one U.S. dollar.  In particular, KWON claimed that the Terra Protocol on its own had caused the successful restoration of UST’s $1 value after it dropped below 92 cents in or about May 2021.  That was a lie.  In truth, after the Terra Protocol on its own failed to cause the restoration of UST’s $1 peg in May 2021, KWON reached an agreement with executives at a high-frequency trading firm (the “Trading Firm”) to have the Trading Firm purchase large amounts of UST to artificially support UST’s $1 peg.  UST’s $1 peg was restored in May 2021 only after the Trading Firm strategically purchased millions of dollars of UST for the purpose of artificially propping up the peg.
2. The LFG Misrepresentations:  KWON lied about the governance of the Luna Foundation Guard Ltd. (the “LFG”), a purportedly independent body the creation of which KWON publicly announced in or about January 2022.  KWON claimed that the LFG was managed by a governing body that operated independently of Terraform and was tasked with deploying billions of dollars’ worth of financial reserves to defend UST’s peg.  In truth, KWON simultaneously controlled both the LFG and Terraform at all relevant times following the creation of the LFG; operated the LFG as an arm of Terraform rather than as an independent entity; repeatedly made significant financial decisions for the LFG without the prior approval of its governing body; and treated the LFG’s funds as interchangeable with Terraform’s funds when it suited KWON’s interests, resulting in KWON misappropriating hundreds of millions of dollars in assets from the LFG. KWON and others acting at his direction then sought to launder those misappropriated funds using a variety of transactions designed to conceal and disguise the nature, location, source, ownership, and control of the funds.
3. The Mirror Misrepresentations: KWON lied about the control, operation, and extent of user adoption of an investing application on the Terra blockchain called Mirror Protocol (“Mirror”), that purportedly allowed for the creation, buying, and selling of synthetic versions of stocks listed on United States securities exchanges.  KWON claimed that Mirror operated in a decentralized manner and that he and Terraform played no role in Mirror’s governance.  In truth, KWON and Terraform secretly maintained control over Mirror, and used automated trading bots to manipulate the prices of synthetic assets issued by Mirror.  KWON funded those manipulative trading bots in part by using a supply of one billion stablecoins that he created at the genesis of the Terra blockchain (the “Genesis Stablecoins”).  KWON also caused Terraform to inflate key user metrics to deceive investors about the extent of Mirror’s adoption and decentralization.
4. The Chai Misrepresentations: KWON falsely claimed that the Terra blockchain was being used to process billions of dollars in financial transactions for the Korean payment-processing application Chai.  KWON pointed to Chai’s purported use of the Terra blockchain as evidence that Terra had “real world” applications or uses, as distinct from competing cryptocurrency platforms.  In truth, Chai processed transactions through traditional financial processing networks, not the Terra blockchain.  To create the illusion that Chai processed transactions through the Terra blockchain, KWON and his co-conspirators used an automated process that copied transactions onto the Terra blockchain.  KWON used the Genesis Stablecoins in part to fund these fraudulent efforts.
5. The Genesis Coin Misrepresentations: When the Terra blockchain was first established in or about 2019, KWON arranged for it to have a preexisting supply of approximately one billion Terra stablecoins (the Genesis Stablecoins).  KWON provided limited, shifting, and knowingly false disclosures to investors about the Genesis Stablecoins.  Rather than using the Genesis Stablecoins solely for the purposes set forth in disclosures to investors, KWON used the Genesis Stablecoins for fraudulent purposes, such as funding (i) fake Chai blockchain transactions and (ii) trading bots to manipulate the prices of synthetic assets issued by Mirror.

Enticed, in part, by the fraudulent claims of KWON, both institutional and retail investors flocked to the Terra blockchain, such that, at its peak in the spring of 2022, the total market value of all UST and another Terraform cryptocurrency, LUNA, exceeded $50 billion.  KWON solicited and obtained investments from several investment firms in the United States and other locations, with the investments primarily consisting of agreements for the purchase or loan of Terraform’s cryptocurrencies built on the Terra blockchain.  Much of this growth followed KWON’s brazen deceptions about Terraform and its technology, including efforts by KWON and his associates to paper over UST’s vulnerabilities in May 2021 by secretly manipulating the market for UST.

By May 2022, UST’s peg began to break again.  By this time, the UST market was approximately nine times larger in terms of market capitalization and more than eight times larger in terms of daily trading volume relative to one year prior, in May 2021, when KWON sought to deceptively manipulate UST to maintain its $1 value.  While KWON was able to cover up the weaknesses of the Terra Protocol in May 2021, he was not able to do so in May 2022 when the market had expanded substantially.  As a result, UST and LUNA crashed, resulting in over $40 billion worth in investor losses.

After the crash of UST and LUNA in May 2022, and the initiation of government investigations in multiple jurisdictions into the crash, KWON sought to continue Terraform’s business operations and made public remarks about being in “full cooperation” with law enforcement inquiries.  In truth, KWON sought to evade accountability.  In a recorded conversation with an associate in or about August 2022, for example, KWON stated, in substance and in part, that his strategy with law enforcement investigating the crash of UST and LUNA was to “tell them to fuck off,” and that he had been taking steps to obtain “political protection” from multiple countries and was “pretty comfortable” that he would not be extradited to face criminal charges.

On or about March 23, 2023, KWON was arrested in Montenegro for trying to use a fraudulent passport.

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In addition to the prison term, KWON, 34, of the Republic of Korea, was ordered to forfeit over $19 million in proceeds from his illegal schemes, including his interest in Terraform and its cryptocurrencies.

Mr. Clayton praised the investigative work of the Federal Bureau of Investigation (“FBI”), FBI’s Virtual Assets Unit, FBI’s Economic Crimes Unit, FBI’s International Operations Division, and the Department of Justice’s Office of International Affairs for their assistance.  Mr. Clayton further thanked the U.S. Securities and Exchange Commission, which previously conducted a separate civil action against KWON.  Mr. Clayton commended the Ministry of Justice of the Republic of Montenegro and the Ministry of Justice of the Republic of Korea for their cooperation and assistance in this matter.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Marguerite B. Colson, Sarah Mortazavi, and Kimberly Ravener are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, Commissioner of the New York City Department of Investigation (“DOI”), Jocelyn E. Strauber, Special Agent in Charge of the New York Regional Office of the Federal Deposit Insurance Corporation’s Office of Inspector General (“FDIC-OIG”), Patricia Tarasca, and Special Agent in Charge of the New York Field Office of Internal Revenue Service-Criminal Investigation (“IRS-CI”), Harry T. Chavis, Jr., announced today the unsealing of an Indictment charging ANTHONY TEPEDINO—the founder, chief executive officer (“CEO”), and owner of a telecommunications construction and engineering company (the “Construction Company”) based in New Jersey—with commercial bribery, fraud, and witness tampering offenses.  TEPEDINO was arrested this morning and will be presented today before U.S. Magistrate Judge Barbara Moses.  The case is assigned to U.S. District Judge Richard M. Berman.

“As alleged, Anthony Tepedino turned a major construction company into his personal cash machine, stealing from companies that serve New Yorkers, bribing insiders, and lying to banks to keep the scheme alive,” said U.S. Attorney Jay Clayton.  “Fraud and corruption hurt real people in this city, and we will hold accountable any executive who abuses the trust placed in them.”

"Anthony Tepedino allegedly stole millions of dollars from his own company by fabricating fake businesses, invoices, and even a story to conceal his misconduct,” said FBI Assistant Director in Charge Christopher G. Raia.  “Rather than serve the best interest of his company, Tepedino allegedly abused his rank as CEO and founder to mislead trusted customers and steer their money into his private accounts.  The FBI will continue to investigate those who exploit their authoritative position to defraud others for personal profits.”

“As alleged, this defendant engaged in various fraud schemes, stealing millions of dollars from a company he founded and controlled through the use of shell companies and fake documents, and using some of those stolen funds to make commercial bribe payments to a co-conspirator in exchange for steering new contracts, also worth millions, to his company,” said DOI Commissioner Jocelyn E. Strauber.  “I thank the U.S. Attorney’s Office for the Southern District of New York and our federal law enforcement partners for their work on this important investigation.”

“The FDIC-OIG is pleased to join our law enforcement colleagues in announcing this indictment,” said FDIC-OIG Special Agent in Charge Patricia Tarasca.  “The charges reflected in this indictment reinforce the FDIC-OIG’s commitment to investigating allegations of fraud, bribery, and other crimes, as we seek to preserve the integrity of our Nation’s financial system.”

“The allegations against Tepedino paint a rainbow of fraud and criminal acts over more than half a decade,” said IRS-CI Special Agent in Charge Harry T. Chavis, Jr.  “Bribery, bank fraud, and stealing from his own company are on the list of ways he’s alleged to have funded his life of luxury.  IRS-CI continues to partner in investigations and use its financial expertise to subject alleged conduct like Tepedino’s to justice.”

As alleged in the Indictment:[1]

From at least in or about 2018 through in or about 2024, TEPEDINO—the CEO, founder, and sole shareholder of the Construction Company—engaged in a series of schemes to defraud the Construction Company’s largest customer (the “Victim Company”), its largest creditor (the “Victim Bank”), and the Construction Company itself.  To carry out these schemes, TEPEDINO and others formed shell companies, created fake invoices, and looted the Construction Company of more than $5 million. TEPEDINO then used some of those proceeds to bribe an employee of the Victim Company and to make millions of dollars in payments to himself, his relatives, and to his creditors.

The Construction Company was in operation for over a decade and eventually grew to earn up to hundreds of millions of dollars in revenue annually and to employ more than 500 people.  TEPEDINO abused his position as the head of the Construction Company to steal from the company, fund a lavish lifestyle, and commit commercial bribery, bank fraud, wire fraud, and aggravated identity theft. 

Beginning in or about 2018, TEPEDINO and a co-conspirator (“CC-1”) submitted false invoices to the Construction Company to generate fraudulent payments to a non-operational shell company (“Shell Company-1”) controlled by CC-1. To conceal their scheme, TEPEDINO and CC-1 falsely claimed Shell Company-1 was owned by a third party (“Individual-1”) and had CC-1 impersonate Individual-1 when communicating with the Construction Company on behalf of Shell Company-1.  This scheme continued until at least in or about September 2024, by which time TEPEDINO and CC-1 had stolen at least $5 million from the Construction Company. 

From in or about 2020 through in or about September 2024, TEPEDINO used some of the money he stole from the Construction Company to fund more than $1 million in commercial bribe payments to a second co-conspirator (“CC-2”), who was a senior manager at the Victim Company.  These bribe payments were made in exchange for CC-2 steering new contracts worth millions of dollars to the Construction Company, assigning work to the Construction Company, and approving invoices submitted by the Construction Company.  In total, the Victim Company paid the Construction Company more than $300 million during the approximately four years that Tepedino was bribing CC-2.

While defrauding the Construction Company and bribing CC-2, TEPEDINO also committed bank fraud.  From in or about late 2021 through early 2022, TEPEDINO sought more than $18 million in commercial credit from the Victim Bank on behalf of the Construction Company.  As part of this credit application, TEPEDINO made and caused to be made false statements and omissions regarding the Construction Company’s relationship with Shell Company-1 and his dealings with CC-2. 

Finally, to conceal his offense conduct from law enforcement, in or about September 2024 and thereafter, TEPEDINO attempted to engage in witness tampering by seeking to cause CC-1 and CC-2 to adopt false exculpatory narratives to explain their criminal conduct.

*               *                *

TEPEDINO, 61, of Manalapan, New Jersey, is charged with one count of conspiracy to commit wire fraud and honest services wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison; one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison; one count of bank fraud, which carries a maximum sentence of 30 years in prison; and one count of witness tampering, which carries a maximum sentence of 20 years in prison. 

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

Mr. Clayton praised the outstanding investigative work of the FBI, DOI, FDIC-OIG, IRS-CI, and the Special Agents and Task Force Officers of the U.S. Attorney’s Office for the Southern District of New York.

The prosecution of this case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Jessica Greenwood, Matthew King, and Daniel H. Wolf are in charge of the prosecution.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, announced that a jury returned a guilty verdict against ANTHONY WALLACE for kidnapping a minor, coercion and enticement of a minor to engage in illegal sex, transportation of a minor across state lines to engage in illegal sex, and possession and production of child pornography.  WALLACE was convicted following a week-long jury trial before U.S. District Judge Mary Kay Vyskocil.

“Anthony Wallace used lies, threats, and violence to sexually abuse a 15-year-old minor victim over the course of a month, ultimately bringing the victim to the Bronx where he forced her to stay with him in a barricaded apartment,” said U.S. Attorney Jay Clayton.  “The victim eventually was able to escape and alert law enforcement, and I commend her for her bravery.  Our Office remains unwavering in our commitment to protecting children and ensuring that those who harm them face the full weight of the justice system.”

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

In March 2024, WALLACE met a 15-year-old girl (the “Minor Victim”) in Binghamton, New York.  Over the next four weeks, WALLACE subjected the Minor Victim to escalating physical, sexual, and psychological abuse.  At first, WALLACE kept the Minor Victim against her will in an apartment in Binghamton.  There, WALLACE assaulted the Minor Victim and forced her to disguise her appearance by dyeing her hair and wearing a mask.  WALLACE also gave the Minor Victim a steady stream of drugs, including methamphetamine and marijuana.  While in Binghamton, WALLACE created child pornography of the Minor Victim, which he kept on his cellphone.

On April 1, 2024, WALLACE transported the Minor Victim from Binghamton, New York, across state lines, ultimately bringing her to the Bronx, New York, where he kept her in a barricaded apartment.  While in the Bronx, WALLACE continued to physically assault the Minor Victim and forcibly raped her.

On April 4, 2024, the Minor Victim escaped through the window of the Bronx apartment while WALLACE was sleeping.  The Minor Victim immediately called 911 and was eventually returned home to her parents.

*                *                *

WALLACE, 32, of the Bronx, New York, was convicted of kidnapping a minor, which carries a mandatory minimum sentence of 20 years in prison and a maximum sentence of life in prison; coercion and enticement of a minor to engage in illegal sex, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; transportation of a minor across state lines to engage in illegal sex, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; possession of child pornography, which carries a maximum sentence of 10 years in prison; and production of child pornography, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison.

The minimum and maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  WALLACE is scheduled to be sentenced on April 23, 2026.

Mr. Clayton praised the outstanding investigative work of the Federal Bureau of Investigation’s Child Exploitation and Human Trafficking Task Force and the New York City Police Department.  He also thanked the Broome County Sheriff’s Office for their assistance in this investigation.

The prosecution is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Ariana L. Bloom, Remy Grosbard, Joseph H. Rosenberg, and Alexandra N. Rothman are in charge of the prosecution, with the assistance of Paralegal Specialists Samantha Roberts and Benjamin Coolman.

United States Attorney for the Southern District of New York, Jay Clayton, United States Attorney for the Eastern District of New York, Joseph Nocella, Jr., Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, Special Agent in Charge of the New York Field Office of Internal Revenue Service Criminal Investigation (“IRS-CI”), Harry T. Chavis, Jr., and Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, joined federal partners on Dec. 10 to announce the establishment of the Homeland Security Task Force (“HSTF”) New York.

Co-led by HSI and the FBI, the HSTF New York will serve as a first-of-its-kind task force that utilizes a whole-of-government approach to identify, disrupt and dismantle criminal cartels, foreign gangs, and transnational criminal organizations (“TCOs”) in New York and throughout the United States.

“We hear what New Yorkers want: they want our parks, schools, housing developments, subways, and streets to be safe and feel safe,” said U.S. Attorney Jay Clayton.  “Together with our federal partners and the NYPD, the Southern District is committed to delivering safe streets and a better quality of life for all New Yorkers.  In the last year, we have collectively investigated and charged: members of Tren de Aragua and many other brutally violent gangs with murders, sex trafficking, and narcotics distribution; over a dozen narco-terrorists and members of state-sponsored drug cartels with narcotics distribution; foreign nationals with fentanyl distribution; and most recently, 18 defendants in a wide narcotics sweep aimed at cleaning up Washington Square Park.  The women and men of the SDNY are actively engaged in similar matters and are committed to making New York safer each and every day.”

“The historic collaboration of this Task Force strengthens the mission to protect our citizens by standing between our Districts and the transnational criminal organizations, human smugglers, and cybercriminals who target us with drug trafficking, violence, and economic harm,” said U.S. Attorney Joseph Nocella, Jr.

“FBI New York proudly stands alongside our federal, state, and local partners to co-lead with HSI New York the New York Homeland Security Task Force,” said FBI Assistant Director in Charge Christopher G. Raia.  “By bringing the full force of the federal government, this task force will dismantle designated terrorist enterprises who are responsible for trafficking lethal drugs and weapons into our communities.  Through unified partnership, we will continue to defend the homeland from evolving threats, safeguard critical infrastructure, and strengthen national resilience.”

“The people of this city deserve to know that special agents and investigators at every level of law enforcement are standing side-by-side and collaborating under one roof, so that New Yorkers may go about their lives safely and comfortably,” said HSI Special Agent in Charge Ricky J. Patel.  “The HSTF New York and HSI, as its co-leader, are driving coordinated investigations that strike at the heart of criminal networks and schemes both here and abroad.  With unity as our strength and coordination as our advantage, we will outpace, outsmart, and outmaneuver transnational criminal organizations at every turn.”

“We are proud to have entered into this agreement with the New York Homeland Security Task Force as a partner and as the third agency on the Executive Committee,” said IRS-CI Special Agent in Charge Harry T. Chavis, Jr.  “Whether it is money laundering, Bank Secrecy Act violations, a complex financial fraud, or leveraging our tax authority, we will continue working in tandem with all the agencies under the HSTF umbrella to take criminals off the street and dismantle transnational criminal organizations.  Special Agents with IRS Criminal Investigation have long been known for lending their financial and tax expertise to complex investigations.  With this agreement, our special agents will continue to proactively leverage our knowledge and unique skills for the betterment of this new team.”

The mission of the HSTF is to identify and target for prosecution transnational criminal organizations engaged in diverse criminal schemes involving a myriad of federal violations both within the United States and throughout the world.  Violations include, but are not limited to drug trafficking, money laundering, weapons trafficking, human trafficking, alien smuggling, homicide, extortion, kidnapping, weapons trafficking, and other TCO- related violations where there is or may be a federal investigative interest.

HSTF New York will primarily focus on investigating TCO Foreign Terrorist Organizations (“FTOs”), and is working towards the disruption and full dismantlement of these criminal organizations, combining the full strength of the investigative and intelligence forces of the U.S. government.  One key component of the HSTF is the ability to combine information from our intelligence community partners with our law enforcement investigations to increase our effectiveness in combatting and dismantling the threat.

This task force model allows state, local, and federal law enforcement to extend our reach, share intelligence in real time, and target these threats at every level.

HSTF New York is comprised of law enforcement personnel from state and local law enforcement, including the NYPD, and federal entities from the U.S. Department of Homeland Security, the Department of Justice, the Department of Treasury, the Department of State, the Department of War, the Office of the Director of National Intelligence, and the Department of Labor.  Participating agencies include the Bureau of Alcohol, Tobacco, Firearms and Explosives; Diplomatic Security Service; the Drug Enforcement Administration; the New York City Police Department (NYPD); U.S. Citizenship and Immigration Services; U.S. Coast Guard; U.S. Customs and Border Protection; U.S. Marshals Service – Eastern District of New York; U.S. Marshals Service – Southern District of New York; U.S. Postal Inspection Service; and the U.S. Secret Service.

*                *                *

More About the Homeland Security Task Force (“HSTF”)

Homeland Security Task Forces (“HSTFs”) nationwide arrested more than 3,200 foreign terrorists, narcotraffickers, and gangbangers, and seized more than 91 metric tons of narcotics off American streets between August 25 and October 7 alone.

Prior to the creation of HSTF, the federal government had 1,000 competing task forces focused on transnational criminal organizations.  Since January, HSTF has established a new system and force in all 50 states and U.S. territories while coordinating and implementing operations with federal, state, local, tribal, and territorial law enforcement partners.  Department of War and Intelligence Community partners are also providing HSTF with logistics, intelligence, and operational support.

On August 25, HSTF officially launched its effort to protect the Homeland with a September Surge encompassing 400 operations nationwide. In just 43 days, HSTF’s nationwide operations resulted in 3,266 arrests and seizures including:

• 1,041 Sinaloa members,
• 856 Cartel Jalisco Nuevo Genaracion (“CJNG”) members,
• 641 MS-13 members,
• 456 Tren de Aragua members,
• 1,067 weapons
• More than $3,250,000 in currency
• Approximately 91 metric tons of narcotics

The HSTF will absorb several key components of the Organized Crime Drug Enforcement Task Force (“OCDETF”), which has now been retired, to serve as the foundation of the HSTFs, to include critical databases previously utilized by OCDETF, OCDETF Strike Force infrastructure, partnerships, and funding.

HSTFs differ from Safe Street Task Forces (“SSTF”) by focusing on combating multijurisdictional TCOs operating across national borders, while the SSTF will continue to focus on targeting domestic gangs and violence reduction efforts in partnership with state and local law enforcement.  When feasible, SSTF investigations could be enhanced by HSTF resources for maximum impact.

HSTFs differ from Joint Terrorism Task Forces (“JTTF”) by focusing on combating multijurisdictional cartel and international gang TCOs operating across national borders with the ultimate goal to disrupt and dismantle these organizations through prosecution while JTTF will continue to focus on protecting the homeland from foreign and domestic, ideological-based terrorism. 

United States Attorney for the Southern District of New York, Jay Clayton, announced that DANIEL BATISTA was sentenced today by U.S. District Judge Jesse M. Furman to 18 years in prison for enticing a minor and possessing child pornography.  BATISTA previously pled guilty on July 9, 2025, before U.S. Magistrate Judge Sarah L. Cave. 

“Daniel Batista paid a mother to create child pornography of her own daughter,” said U.S. Attorney Jay Clayton.  “He then used that child pornography both to gratify himself and to try to convince other parents to do the same.  Today, the victims, families, and all New Yorkers get justice.  Batista’s sentence reflects the seriousness of his crimes and our commitment to combat child sexual exploitation.” 

According to the allegations in the Information, public filings, and statements made in public court proceedings:       

In February 2024, while BATISTA was on probation following his guilty plea to forcibly touching the sexual or intimate parts of a 14-year-old girl on an MTA bus under New York penal law, BATISTA’s probation officers discovered more than a dozen deleted videos and images of child pornography on his cellphone. Several of the images depicted a particular prepubescent victim (“Minor Victim-1”).  Further investigation revealed that, in approximately January and February 2024, BATISTA paid the mother of Minor Victim-1 over $1,000 to produce child pornography of Minor Victim-1 and send it to BATISTA.  In addition, voice messages on BATISTA’s cellphone showed that BATISTA sometimes communicated directly with Minor Victim-1 and encouraged Minor Victim‑1 to make videos touching herself to send to BATISTA. BATISTA sent two images of child pornography depicting Minor Victim-1 to another parent to try to persuade that parent to produce child pornography of that parent’s children.

*                *                *

In addition to the prison term, BATISTA, 57, a citizen of the Dominican Republic, was sentenced to 10 years of supervised release.

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

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Joseph H. Rosenberg is in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced the arrest of NIGEL TRENH in connection with a bomb hoax that resulted in the evacuation of a college dormitory in the Southern District of New York in August.  TRENH was arrested by the FBI on December 8, 2025, in Los Angeles and presented before U.S. Magistrate Judge Steve Kim in the Central District of California.  He will make his initial appearance in White Plains federal court on December 18, 2025. 

“As alleged, Nigel Trenh used social media to spread false information about a bomb and active shooter on a college campus, forcing an evacuation of students, family members, and college staff on their move-in day,” said U.S. Attorney Jay Clayton. “Hoaxes related to explosives and violence sow fear and panic, and waste limited law enforcement and emergency resources.”               

“Nigel Trenh allegedly posted misleading warnings of a bomb and active shooter at his former college, resulting in the full evacuation of a dormitory and first responders rushing to an empty scene,” said FBI Assistant Director in Charge Christopher G. Raia.  “Trenh’s alleged hoax unnecessarily incited fear on one of our local campuses and diverted law enforcement resources from legitimate calls.  May this arrest serve as a deterrent to others; the FBI is committed to investigating any individual who cries wolf about mass violence, regardless of where they may be located.”

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

TRENH, a former student at a college in the Southern District of New York (“College-1”), published the following anonymous post on August 29, 2025, on the social media platform Fizz, which warned of a bomb in the third-floor restroom of a College-1 dormitory and an active shooter on campus: 

When College-1 students saw the post on the morning of August 29, 2025, they reported it to College-1 security personnel, who in turn reported it to local law enforcement.  Within minutes, law enforcement officers from multiple agencies responded to the report and converged on campus, evacuating the dormitory to conduct a full sweep of the premises with the support of K9 units.  This sweep ultimately confirmed that the post was a hoax. 

As alleged, the August 29 Fizz post was part of a broader pattern of unsolicited threatening and/or harassing communications sent by TRENH to College-1 personnel, including e-mails and messages making express reference to on-campus violence and school shootings.  TRENH’s communications continued even after he was questioned by federal law enforcement officers regarding the August 29 bomb hoax.   

*                *                *

TRENH, 22, of Los Angeles, California, is charged with maliciously conveying false information involving an explosive, which carries a maximum sentence of 10 years in prison, and false information and a hoax involving explosives and firearms, which carries a maximum sentence of five years in prison. 

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

Mr. Clayton praised the outstanding investigative work of the FBI New York Office Hudson Valley Safe Streets Task Force, together with the Town of Poughkeepsie Police Department, the Dutchess County Sheriff’s Office, the City of Poughkeepsie Police Department, the New York State Police, and the FBI’s Los Angeles Field Office.                

The prosecution is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney John Sarlitto 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.

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), Bryan DiGirolamo, announced the arrest of JYEREONNE RANSOM and KENNETH CRUTE in connection with a string of armed robberies in Mount Vernon and New York, New York.  RANSOM and CRUTE were arrested on December 6, 2025, and presented today in White Plains federal court before U.S. Magistrate Judge Judith C. McCarthy, who ordered them detained.

"As alleged, over the course of three weeks in November, Jyereonne Ransom and Kenneth Crute carried out a series of gunpoint robberies,” said U.S. Attorney Jay Clayton.  “When offenders choose gun violence in New York, we will work to get them off the street using our robust federal investigative tools and partnerships, and they will be charged with serious federal crimes, often carrying mandatory minimums and consecutive sentences, so that they remain off the street.”

“These arrests stem directly from the strong collaboration between ATF NY’s Hudson Valley Field Office and the Mount Vernon Police Department,” said ATF Special Agent in Charge Bryan DiGirolamo.  “By combining our expertise and resources, we were able to swiftly stop a pattern of armed robberies that threatened innocent lives.  Our agencies remain firmly committed to safeguarding our communities, and the U.S. Attorney’s Office for the Southern District of New York will now take the case forward.  This type of violence creates fear within the community, and we refuse to tolerate it.  We will persist in doing everything we can to reduce violent gun crime in our streets.”

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

RANSOM and CRUTE committed a string of robberies between November 10, 2025, and November 29, 2025, including: a November 10, 2025, gunpoint robbery of a restaurant in upper Manhattan; a November 12, 2025, gunpoint robbery of a restaurant in Mount Vernon; a November 19, 2025, gunpoint robbery of a gas station in Mount Vernon; and a November 29, 2025, robbery of a restaurant in Mount Vernon.

*               *                *

RANSOM, 19, of New York, New York, is charged with conspiracy to commit Hobbs Act robbery and four counts of Hobbs Act robbery, each of which carries a maximum sentence of 20 years in prison; and three counts of brandishing a firearm in furtherance of a crime of violence, each of which carries an additional mandatory minimum sentence of seven years in prison and must be served consecutively to any other prison terms imposed.     

CRUTE, 18, of New York, New York, is charged with conspiracy to commit Hobbs Act robbery and three counts of Hobbs Act robbery, each of which carries a maximum sentence of 20 years in prison; and two counts of brandishing a firearm in furtherance of a crime of violence, each of which carries an additional mandatory minimum sentence of seven years in prison and must be served consecutively to any other prison terms imposed.     

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

Mr. Clayton praised the outstanding investigative work of the ATF Hudson Valley Field Office, the City of Mount Vernon Police Department, the New York City Police Department, and the Westchester County Department of Public Safety.

The case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Jake Sidransky 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.

United States Attorney for the Southern District of New York, Jay Clayton, announced that HUGO RODRIGUEZ, a/k/a “Juice,” was sentenced today by U.S. District Judge J. Paul Oetken to 15 years in prison for his role as “Duarte,” or leader, of the violent gang Own Every Dollar (“OED”). 

“Too many New York neighborhoods are plagued by gang violence and drug trafficking,” said U.S. Attorney Jay Clayton.  “New Yorkers deserve better.  The women and men of our Office will continue to target gun violence and drug trafficking.”

As alleged in the Indictment and statements made in public filings and public court proceedings:

RODRIGUEZ served as the “Duarte” of OED, a subset of the Trinitarios gang based in and around the Washington Heights area of Manhattan.  The prosecution in this case has involved the convictions of 22 members of OED for five murders, more than 10 attempted murders, multiple robberies, and the control and operation of an extensive drug trafficking network that sold large quantities of fentanyl, heroin, cocaine, and crack cocaine.

RODRIGUEZ served time for New York state convictions involving a shooting and the possession of dangerous contraband while in jail.  While on parole after his release, he attempted to murder a gang rival in broad daylight in Washington Heights on August 12, 2021.  He also engaged in a gunpoint robbery on February 14, 2022, in Washington Heights, in which a victim was pistol-whipped, and trafficked narcotics, including heroin, while on parole.

Since his August 1, 2022, arrest in this case, he has been detained pretrial in federal prison.  During that time, he has been sanctioned for fighting, testing positive for methamphetamine, and possessing an 11-inch shiv.  He has also been separately prosecuted and convicted by the U.S. Attorney’s Office for the Eastern District of New York for a jail assault.

For much of his time in OED, RODRIGUEZ held the role of “Duarte,” which is the highest leadership role in the gang.

*               *                *

In addition to the prison term, RODRIGUEZ, 29, of Brooklyn, New York, was sentenced to five years of supervised release.

Mr. Clayton praised the outstanding work of the New York City Police Department, the Drug Enforcement Administration, and the New York Drug Enforcement Task Force.  Mr. Clayton also thanked the Manhattan District Attorney’s Office, the Bronx District Attorney’s Office, the Office of the Special Narcotics Prosecutor, the New York State Police, and the NYPD Task Force Officers assigned to this Office for their assistance in the investigation.

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Sarah L. Kushner, Kevin Mead, Ashley C. Nicolas, and Alexandra Messiter are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), Bryan DiGirolamo, Commissioner of the New York City Fire Department (“FDNY”), Robert S. Tucker, and Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, announced the filing of a Complaint charging HIRAM CARRERO with arson resulting in injury to another person in connection with a December 1, 2025, incident in Midtown Manhattan.  CARRERO was presented today before U.S. Magistrate Judge Robert W. Lehrburger.

“As alleged, Hiram Carrero committed a horrific arson, starting a fire inside of a New York City subway car where a victim was sleeping,” said U.S. Attorney Jay Clayton.  “As a result of that arson, the victim has suffered severe injuries.  The New York City subway is the heart of our City, with millions of people who live and work here relying on it every day.  New Yorkers have the right to be safe and feel safe when they ride the subway, and our Office is committed to that result.”

“The swift arrest in this case demonstrates what is possible when our agencies work as one,” said ATF Special Agent in Charge Bryan DiGirolamo.  “ATF New York Special Agents, the NYPD Detectives, and FDNY Fire Marshals brought their unique strengths to bear to identify and locate the suspect responsible for this violent act.  The ATF NY Arson and Explosives Task Force is dedicated to protecting this city, and we will continue working with our partners to bring justice to those who threaten public safety.  Our partnership with the Southern District of New York remains central to seeking justice.”

“This alleged outrageous and senseless attack received an immediate response from our elite joint task force,” said FDNY Commissioner Robert S. Tucker.  “Our Fire Marshals worked side by side with our partners in the NYPD and ATF to identify and apprehend this suspect quickly.  Their work has removed a dangerous individual from the streets of New York City and the FDNY will continue to work closely with our public safety partners to keep New Yorkers safe.”

“Hiram Carrero showed a complete disregard for human life when he allegedly set a sleeping New Yorker on fire inside a subway car,” said NYPD Commissioner Jessica S. Tisch.  “This attack is among the most serious acts of violence a person can commit, and it has no place in our city—above or below ground.  This case also reflects the exceptional work of the NYPD’s Detective Bureau, whose investigators worked closely with our federal partners to identify the individual responsible.  And it comes at a time when the last five months have been the safest for subway riders in recorded history.  I am grateful to our detectives, our responding officers, and the U.S. Attorney’s Office for their swift and coordinated work on this case.”

According to the allegations in the Complaint and statements made in open Court:

At approximately 3:03 a.m., CARRERO entered a northbound train at the 34th Street – Penn Station subway stop. He picked up a piece of paper from the subway car (depicted in the screenshot below), lit it on fire near where the victim was sleeping, and jumped out of the car just as the doors were closing.

Video from inside the train car shows that as the train traveled north towards the 42nd Street – Times Square subway stop, the fire flared up, engulfing the victim’s legs and a portion of the train car in flames.  When the train arrived at 42nd Street – Times Square, the victim emerged, burning from the train (depicted in a screenshot below).

Law enforcement partners on the platform responded to the victim immediately and extinguished the fire.  The victim was rushed to the hospital in critical condition.

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CARRERO, 18, is charged with arson resulting in injury to another person, which carries a mandatory minimum sentence of seven years in prison and a maximum sentence of 40 years in prison.

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

Mr. Clayton praised the outstanding investigative work of the ATF and NYPD, and the FDNY Fire Marshals.  Mr. Clayton also thanked the United States Marshals Service for their assistance in this case.

The prosecution is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Cameron Molis 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.

United States Attorney for the Southern District of New York, Jay Clayton, Administrator of the Drug Enforcement Administration (“DEA”), Terrance C. Cole, and Special Agent in Charge of the New York Field Office of Internal Revenue Service Criminal Investigation ("IRS-CI"), Harry T. Chavis, Jr., announced today the unsealing of an Indictment charging PAUL CAMPO and ROBERT SENSI with narcoterrorism, terrorism, narcotics distribution, and money laundering charges. CAMPO and SENSI were arrested yesterday afternoon in New York. The case has been assigned to U.S. District Judge Paul G. Gardephe.

“As alleged, Paul Campo and Robert Sensi conspired to assist CJNG, one of the most notorious Mexican cartels that is responsible for countless deaths through violence and drug trafficking in the United States and Mexico,” said U.S. Attorney Jay Clayton.  “As part of that support, the defendants laundered hundreds of thousands of dollars they believed to be CJNG drug proceeds, agreed to launder millions more, and even agreed to use their financial expertise to facilitate cocaine trafficking right here in New York City.  By participating in this scheme, Campo betrayed the mission he was entrusted with pursuing for his 25-year career with the DEA. CJNG is a violent and corrupting criminal enterprise that New Yorkers want broken. I commend the extraordinary efforts of the DEA in aggressively pursuing CJNG and those who support their deadly and corrupt efforts, no matter who they may be.”

“The indictment of former Special Agent Paul Campo sends a powerful message: those who betray the public trust—past or present—will be held to account to the fullest extent of the law,” said DEA Administrator Terrance C. Cole.  “The alleged conduct occurred after he left DEA and was unrelated to his official duties here, but any former agent who chooses to engage in criminal activity dishonors the men and women who serve with integrity and undermines the public’s confidence in law enforcement.  We will not look the other way simply because someone once wore this badge.  There is no tolerance and no excuse for this kind of betrayal.”

“It’s alleged Campo betrayed the public’s trust in support of a violent organization like CJNG, but today's indictment demonstrates that criminals who traffic in narcotics and launder illegitimate profits can't evade detection from IRS Criminal Investigation and our law enforcement partners,” said IRS-CI Special Agent in Charge Harry T. Chavis, Jr. “This is a significant step towards holding the Campo and his coconspirator accountable for their role in conspiring to hide millions of dollars gained from narcotics distribution.”

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

CJNG is a Mexico-based transnational criminal group overseen by Nemesio Ruben “El Mencho” Oseguera-Cervantes that controls a significant portion of the narcotics trafficking trade. CJNG illicitly transports cocaine, methamphetamine, fentanyl, and other controlled substances into the United States.  CJNG also engages in money laundering and other criminal activities, including acts of violence and intimidation.  On February 20, 2025, the United States Secretary of State designated CJNG as a Foreign Terrorist Organization under Section 219 of the Immigration and Nationality Act.

PAUL CAMPO worked for the DEA for approximately 25 years, first as a Special Agent in New York and eventually rising to become a high-level DEA official, specifically the Deputy Chief of the Office of Financial Operations.  CAMPO retired from DEA in or about January 2016.  

In late 2024, ROBERT SENSI began meeting with a confidential source working at the direction of law enforcement (“CS-1”), who was posing as a member of CJNG.  SENSI told CS-1 that he had a friend who used to be in charge of DEA’s financial operations who could assist CJNG by laundering narcotics proceeds and providing CS-1 with sensitive DEA information about sources and investigations.

After these initial meetings, CAMPO and SENSI together met with CS-1 on several occasions.  During these conversations, CAMPO and SENSI agreed to launder money for CS‑1 by, among other things, converting cash into cryptocurrency and making investments in real estate.  CAMPO and SENSI further advised CS-1 about fentanyl production and explored procuring commercial drones and military-grade weapons and equipment for CJNG, including AR-15 semi-automatic rifles, M4 carbines, M16 rifles, grenade launchers, and rocket-propelled grenades.  As part of these discussions, CAMPO and SENSI often boasted about and relied heavily on CAMPO’s prior federal law enforcement experience and expertise regarding financial investigations and drug cartels.

Regarding the drones, in one meeting, CS‑1 explained to CAMPO, “what we do with the drones, we put explosives and we just send it over there, boom”; in another conversation, CS‑1 asked SENSI how much C-4 explosive the drones could carry, to which SENSI responded, in sum and substance, approximately six kilograms, which is enough to “blow up the whole f------ . . . I don’t want to say.”

As part of the scheme, CAMPO and SENSI agreed to launder approximately $12,000,000 of CJNG narcotics proceeds; laundered approximately $750,000 by converting cash into cryptocurrency; and provided a payment for approximately 220 kilograms of cocaine on the understanding that the payment would trigger the distribution and sale of the narcotics worth approximately $5,000,000, for which CAMPO and SENSI would (i) receive directly a portion of the narcotics proceeds as profit; and (ii) receive a further commission upon the laundering of the balance of the narcotics proceeds.

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CAMPO, 61, of Oakton, Virginia, and SENSI, 75, of Boca Raton, Florida, are each charged with one count of conspiring to commit narcoterrorism, which carries a mandatory minimum sentence of 20 years in prison and a maximum sentence of life in prison; one count of conspiring to distribute and possess with intent to distribute cocaine, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; one count of conspiring to provide material support and resources to CJNG, a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; and one count of conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison. 

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

Mr. Clayton also expressed appreciation for the assistance of the U.S. Attorney’s Offices for the Southern District of Florida, Eastern District of North Carolina, and Eastern District of Virginia, and the Department of Justice’s National Security Division, Counterterrorism Section.

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorney Varun A. Gumaste is in charge of the prosecution, with assistance from Trial Attorney James Donnelly of the Counterterrorism Section.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, and Administrator of the Drug Enforcement Administration (“DEA”), Terrance C. Cole, announced that MIDENCE OQUELI MARTINEZ TURCIOS, a former Honduran military official and congressman, was sentenced today to 262 months in prison for conspiring to import cocaine into the United States and for his participation in multiple related acts of violence.  MARTINEZ TURCIOS previously pled guilty to one count of cocaine importation conspiracy and was sentenced by U.S. District Judge Lewis A. Kaplan, who presided over MARTINEZ TURCIOS’s December 2024 Fatico hearing.

“For years, Midence Oqueli Martinez Turcios partnered with violent drug traffickers and other corrupt officials to send tons of cocaine to the United States,” said U.S. Attorney Jay Clayton.  “He will now rightfully spend decades in prison.  I thank the career prosecutors of this Office and our steadfast partners at the DEA’s Special Operations Division, Bilateral Investigations Unit, for their commitment to holding accountable those who abuse their positions to flood this country with cocaine.”

“Martinez Turcios abused the trust of the Honduran people and the responsibilities of elected office,” said DEA Administrator Terrance C. Cole.  “Instead of serving his country, he turned a seat in the Honduran Congress into a channel for cartel influence, allowing violence and cocaine to flow into communities in Honduras and across the United States.  When public officials, regardless of where they are, choose to stand with the cartels, they become part of the threat we are sworn to confront.  Today’s sentence sends a clear message: those who betray their oath and enable cartel violence will be brought to justice.”

As reflected in the charging instruments and other public filings, statements in public court proceedings in this and related prosecutions, and evidence presented at the December 2024 Fatico hearing:

MARTINEZ TURCIOS was a key member of the Cachiros, which was one of the largest and most violent drug trafficking organizations in Honduras, responsible for trafficking more than 100 tons of cocaine to the United States between approximately 2003 and 2013 and dozens of drug-related murders.  The Cachiros trafficked ton-quantities of cocaine by relying upon, among others, corrupt Honduran government, military, and police officials at the highest levels in Honduras, who were paid bribes in exchange for protecting the Cachiros’s drug shipments and providing them with sensitive military and law enforcement information.  To facilitate their drug trafficking operation, the Cachiros also relied upon hitmen from the notorious street gang La Mara Salvatrucha, or “MS-13,” to protect drug shipments and carry out murders.

MARTINEZ TURCIOS began partnering with the Cachiros in approximately 2003.  Over the next decade, MARTINEZ TURCIOS, who previously served in the Honduran military and was related to the leaders of the Cachiros, carried out acts of violence alongside the Cachiros.  For example, in 2006, when MARTINEZ TURCIOS was not appointed to be Minister of Security—a position that would have allowed him to further support the Cachiros’s drug operation—he ordered the murder of the Honduran politician who failed to deliver on his promise to appoint MARTINEZ TURCIOS to that position.  Shortly thereafter, MARTINEZ TURCIOS also ordered the murder of a Honduran journalist who had spoken publicly about MARTINEZ TURCIOS’s association with the Cachiros—a request that resulted in not only the murder of the journalist, but also the journalist’s significant other.  On other occasions, in 2008 and 2011, MARTINEZ TURCIOS himself pulled the trigger in shootings that killed multiple victims who had taken actions adverse to the Cachiros’s interests.  Prior to killing one of those victims, MARTINEZ TURCIOS tortured the victim by putting a rope around the victim’s neck and choking him, as well as putting pins in his fingertips.  MARTINEZ TURCIOS also participated in the 2012 kidnapping of a drug rival who was later tortured and murdered.

Between approximately 2009 and 2014, while MARTINEZ TURCIOS served as a congressman in Honduras, he also worked directly with the Cachiros to receive ton-quantity cocaine shipments at clandestine airstrips located throughout Honduras.  Once the Cachiros’s cocaine shipments arrived by aircraft at clandestine airstrips, MARTINEZ TURCIOS led teams of armed men as they transported cocaine shipments across Honduras on its way to the United States.  MARTINEZ TURCIOS also used his military experience to train MS-13 hitmen on how to transport and protect the Cachiros’s cocaine shipments.  And, finally, MARTINEZ TURCIOS abused his elected position to facilitate the Cachiros’s laundering of drug proceeds by serving as a nominal owner for one of the Cachiros’s front companies, Ganaderos, thus providing the company with an appearance of legitimacy. 

MARTINEZ TURCIOS’s involvement in narco-corruption and support for the Cachiros continued even after U.S. authorities had publicly identified the Cachiros as a major drug cartel.  Indeed, in January 2014, after the U.S. Department of Treasury’s Office of Foreign Assets Control sanctioned the Cachiros and several of their front companies, including Ganaderos, MARTINEZ TURCIOS participated in a meeting with a group of violent drug traffickers and corrupt Honduran politicians.  The purpose of the meeting was to align their efforts and support a particular political candidate for President of the Honduran National Congress who could continue protecting their drug trafficking interests.  The meeting, which was video recorded, was yet another example of the systemic narco-corruption that MARTINEZ TURCIOS and his co-conspirators helped perpetuate in Honduras during that time.

*                *                *

In addition to the prison term, MARTINEZ TURCIOS, 65, was sentenced to five years of supervised release.

Mr. Clayton praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, and Tegucigalpa Country Office, as well as the U.S. Department of Justice’s Office of International Affairs for securing the arrest and March 2023 extradition from Honduras of MARTINEZ TURCIOS.

This case is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Jacob H. Gutwillig and David J. Robles are in charge of the prosecution. 

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services Office of the Inspector General (“HHS-OIG”), Naomi D. Gruchacz, Acting Special Agent in Charge of the Northeast Field Office of the Defense Criminal Investigative Service (“DCIS”), Christopher M. Silvestro, and Special Agent in Charge of the U.S. Office of Personnel Management Office of the Inspector General (“OPM-OIG”), Derek M. Holt, announced that the United States has filed and settled a healthcare fraud lawsuit against national retail pharmacy chain CVS PHARMACY, INC. (“CVS”).  The settlement resolves allegations that, from 2010 through 2020, CVS violated the False Claims Act in connection with its billing and dispensing of insulin pens to patients enrolled in Government healthcare programs (“GHPs”), including Medicare, Medicaid, TRICARE, and the Federal Employees Health Benefits Program.  Specifically, the Government alleges that CVS improperly requested and received GHP reimbursement for premature refills, dispensed more insulin pens than patients needed according to their prescriptions, and falsely under-reported the days-of-supply of insulin that its pharmacies dispensed. 

Under the settlement approved by U.S. District Judge John G. Koeltl, CVS agreed to pay a total sum of $37.76 million, with $24,446,240 to be paid to the United States and the remainder to be paid to various states.  As part of the settlement, CVS also admitted and accepted responsibility for certain conduct alleged by the Government in its complaint, including that GHPs paid CVS substantial amounts for insulin pen refills that were ineligible for reimbursement and CVS pharmacies dispensed more insulin to GHP beneficiaries than they needed.

“CVS engaged in a decade-long practice of repeatedly prematurely refilling insulin prescriptions for patients and improperly billing government healthcare programs for more insulin than patients needed,” said U.S. Attorney Jay Clayton.  “These programs rely on pharmacies to follow appropriate refill schedules and to accurately report the amount of medicine dispensed, which CVS pharmacies frequently failed to do.  This settlement reflects our continued commitment to holding pharmacies to account, enforcing rules designed to keep costs down, and protecting taxpayer dollars.”      

“Companies that participate in federal health care programs are required to obey laws meant to protect the integrity of program funds, including the responsibility to bill only for services and supplies eligible for reimbursement,” said HHS-OIG Special Agent in Charge Naomi D. Gruchacz.  “Working closely with our law enforcement partners, HHS-OIG will continue to investigate allegations of improper billing to safeguard our taxpayer-funded federal healt​hcare system and the millions of enrollees who rely on its programs.”

“Investigating false claims against TRICARE, the healthcare system for military members and their families, is a top priority for the Defense Criminal Investigative Service, the criminal investigative arm of the Department of Defense’s Office of Inspector General,” said DCIS Acting Special Agent in Charge Christopher M. Silvestro.  “This announcement underscores our commitment to working with our law enforcement partners and the Department of Justice to protect TRICARE against unwarranted and fraudulent expenses.”

“Knowingly submitting claims for medically unnecessary insulin refills exploits benefits that federal employees rely on to manage their health, increasing the cost of care and wasting taxpayer dollars,” said OPM-OIG Special Agent in Charge Derek M. Holt.  “We thank our agents, law enforcement partners, and the Department of Justice for their dedication to investigating and pursuing these improper billing practices that undermine the Federal Employees Health Benefits Program.”

Insulin pens (hard plastic, pen-shaped cases containing syringes filled with insulin solution) are a common way for diabetic patients to self-administer insulin.  During the relevant period, manufacturers frequently distributed insulin pens in five-pen cartons with each pen containing 300 units (3 mL) of insulin solution.  Insulin prescriptions must set forth the “directions for use,” which typically designate both how much insulin to administer and the frequency and/or timing of when to administer it.

When pharmacies seek reimbursement from GHPs for insulin pens, they are required to report, among other data, the “quantity dispensed” and the “days-of-supply.”  The “quantity dispensed” means the total amount of medication dispensed to a patient when the pharmacy fills the prescription, and the “days-of-supply” refers to the number of days that the quantity dispensed is expected to last if taken as directed by the prescriber.  Typically, pharmacists calculate days-of-supply by dividing the total quantity of medication dispensed by the patient’s “daily dose,” i.e., the amount of medication that the prescriber directs the patient to use each day.

GHP plans, and pharmacy benefit managers (“PBMs”) working on their behalf, typically set limits on the days-of-supply that a pharmacy may dispense when filling prescriptions (such as a 30-day supply), and reject reimbursement claims for fills that exceed those limits.  GHPs and PBMs also deny reimbursement for prematurely refilled prescriptions—refills dispensed before the beneficiary would have consumed a substantial portion of the previously-dispensed quantity of medication if taken as prescribed.  PBMs use automated processes to review claims for reimbursement submitted by pharmacies and deny claims that are submitted too far in advance of the expected refill date.  The ability of PBMs to detect and reject reimbursement claims for premature refills depends on pharmacies complying with their obligations to accurately report days-of-supply data.

Dispensing insulin in full cartons containing five pens can exceed applicable days-of-supply limits, resulting in claim rejections.  PBMs developed rules to address reimbursement when dispensing medications like insulin in the smallest commercially-available container would exceed the days-of-supply limit.  Some PBMs required pharmacies to seek an override of the limit and then to resubmit the claim reporting the accurate days-of-supply actually dispensed so the PBM could verify when the next refill would be needed.  Other PBMs permitted pharmacies to submit claims reporting the maximum days-of-supply allowed, even if that number was lower than the actual supply dispensed.  Importantly, however, those PBMs still required pharmacies to track and use the actual days-of-supply dispensed to determine when patients would actually need a refill.  All PBMs prohibited pharmacies from seeking reimbursement for premature refills, regardless of container size.  

As alleged in the Government’s Complaint:

From January 1, 2010, through December 31, 2020 (the “Covered Period”), CVS violated the FCA by knowingly submitting, or causing to be submitted, false claims to GHPs for reimbursement for insulin pens where CVS: dispensed more insulin to GHP beneficiaries than was specified by their prescriptions and refilled GHP beneficiary prescriptions substantially before GHP beneficiaries needed the refills; falsely under-reported the days-of-supply for the insulin refills, which often prevented PBMs from detecting that the refills were premature; and failed to comply with applicable rules when refilling insulin prescriptions requiring pharmacies to calculate refill dates using the actual days-of-supply dispensed. 

To fill insulin prescriptions as quickly as possible and to ensure that reimbursement claims for insulin pens were not rejected, CVS instructed its pharmacy staff simply to report the maximum days-of-supply allowed under the beneficiary’s plan when dispensing full insulin pen cartons, which was often lower than the actual days-of-supply dispensed.  Many CVS pharmacies did not internally document and use the actual days-of-supply dispensed to determine when patients could next refill their prescription.  To the contrary, CVS’ dispensing software calculated refill dates automatically based on inaccurate days-of-supply data reported to the PBM.  As a result, CVS pharmacy staff repeatedly refilled prescriptions prematurely, dispensing substantially more insulin to GHP beneficiaries than they actually needed and substantially sooner than they needed it according to their prescriptions. As a result, some GHP beneficiaries accumulated large quantities of unused insulin, which was both wasteful and potentially dangerous as insulin can expire.

CVS management was well aware that it was over-dispensing insulin.  PBMs conducted periodic audits of CVS pharmacies and repeatedly found violations of the dispensing rules, including reporting invalid days-of-supply data, refilling insulin pen prescriptions too soon, and dispensing insulin pens in excess of the quantities authorized by the prescription.  PBMs issued chargebacks to CVS based on these violations.  For several years, CVS management knew that insulin pens were among the drug products most frequently subject to chargebacks for premature refills.   Yet, despite these audit findings, CVS failed to take necessary steps to address this long-standing problem during the Covered Period.

Under the settlement, CVS admitted, among other things, that:

• During much of the covered period, many CVS pharmacies did not break open insulin pen cartons when dispensing insulin pens. As a result, at times, CVS pharmacies dispensed amounts of insulin that exceeded applicable days-of-supply limits.  When a claim for reimbursement was rejected for exceeding the limit, some CVS pharmacies did not obtain overrides and re-submit the claim listing the actual days-of-supply dispensed as required by some PBMs.  Instead, CVS pharmacies often reported the maximum days-of-supply allowed under the beneficiary’s insurance plan for insulin pens when resubmitting the claim, which was lower than the actual days-of-supply dispensed.  While certain PBMs allowed this practice because the carton was the smallest commercially-available container for the medication, CVS pharmacies at times did not adhere to the appropriate refill intervals for patients that were to be based on the actual days-of-supply dispensed.
• During much of the covered period, CVS customers with insulin-pen prescriptions who enrolled in CVS’ optional auto-refill program received automatic prompts notifying them that their refilled prescriptions were available to be picked up.  CVS’ auto-refill logic calculated prescription refill dates based on the days-of-supply data recorded by pharmacy staff and sent customers refill notifications based on those dates.  When pharmacy staff recorded days-of-supply numbers that were lower than the actual days-of-supply dispensed, the system would at times calculate refill dates for patients that were premature.  As a result, some CVS pharmacies dispensed insulin pen refills to GHP beneficiaries before the beneficiaries needed more insulin and before the GHP plan or PBM would have approved such refills for reimbursement.
• At times during the covered period, GHPs and the payors working on their behalf paid CVS substantial amounts for insulin pen refills that were ineligible for reimbursement, and CVS pharmacies dispensed more insulin to GHP beneficiaries than they needed.

In connection with the filing of the lawsuit and settlement, the Government joined five private whistleblower lawsuits that had previously been filed under seal pursuant to the False Claims Act.

Mr. Clayton praised the outstanding investigative work of the HHS-OIG, DOD-OIG, OPM-OIG, the Department of Veterans Affairs OIG, and the U.S. Postal Service OIG.

This case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Pierre Armand is in charge of the case. 

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, announced that FAISIL McCANTS pled guilty today before U.S. District Judge Jed S. Rakoff to possessing and brandishing a machine gun in connection with an August 27, 2025, daytime armed robbery and shooting in which McCANTS fired 15 rounds on a public street in East Harlem, striking and killing a 69-year-old woman.  McCANTS is scheduled to be sentenced on March 31, 2026, at 3:00 p.m.

“Faisil McCants fired 15 bullets in a matter of seconds in the middle of the day, killing a 69-year-old innocent woman who was doing nothing more than standing by her walker on an East Harlem street,” said U.S. Attorney Jay Clayton.  “This type of senseless violence cannot and will not be tolerated.  The people of this City expect and deserve to be able to walk our streets without fear.  Thanks to the swift and tireless work of our partners at HSI and the NYPD, McCants will now face justice for his August 2025 crime.  His plea today underscores our Office’s unwavering commitment to investigating and prosecuting those who use guns to destroy communities and lives.”    

“Nearly three months ago, Robin Wright’s life was cut short in what can only be described as a senseless, avoidable, and absolutely unacceptable tragedy,” said HSI Special Agent in Charge Ricky J. Patel.  “With today’s guilty plea, an admitted violent criminal will spend decades in prison with no choice but to relive the events—and the decisions—that landed him there, while an innocent woman’s grieving family prepares for their first holiday season without her.  Protecting New Yorkers is non-negotiable, and HSI New York, alongside our law enforcement partners, will use every tool at our disposal in doing just that.”

As alleged in public court filings, statements in public court proceedings, and the charging documents in the case:

On or about August 27, 2025, shortly before 12:30 p.m., McCANTS and two co-conspirators (“CC-1” and “CC-2”) robbed a drug dealer (“Individual-1”) near East 109th Street and Madison Avenue in Manhattan, New York.  During the robbery, McCANTS and his co-conspirators got into a physical altercation with Individual-1 before both McCANTS and CC-1 grabbed backpacks from Individual-1—which contained marijuana—and then fled north on Madison Avenue, turning onto East 110th Street.

McCANTS pulled a black firearm (equipped with a machine-gun conversion device) out of his right sweatshirt pocket and fired 15 shots in quick succession in the general direction of Individual-1.  A photograph of McCants firing is below:

A 69-year-old woman (the “Victim”) standing with a walker on the northwest corner of East 110th Street and Madison Avenue—in the direction that McCANTS shot the firearm—was struck by gunfire.  The Victim was transported to the hospital, where she was pronounced dead.

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McCANTS, 18, of New York, New York, pled guilty to one count of use, carrying, and possession of a machine gun, which carries a mandatory minimum sentence of 30 years in prison and a maximum sentence of life in prison. 

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

Mr. Clayton praised the outstanding investigative work of Homeland Security Investigations and the New York City Police Department.  He also thanked the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Marshals Service, the New York State Department of Corrections and Community Supervision, the New York State Board of Parole, the Manhattan District Attorney’s Office, and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York.

This case is being handled by the Office’s Violent Organizations & Crime Unit.  Assistant U.S. Attorneys Alexandra S. Messiter, Kathryn Wheelock, and Brandon D. Harper are in charge of the prosecution.   

United States Attorney for the Southern District of New York, Jay Clayton, announced that DAVID SMOTHERMON was sentenced today by U.S. District Judge Alvin K. Hellerstein to three years in prison.  In May 2025, SMOTHERMON pled guilty to one count of wire fraud in connection with a scheme to defraud his employer by hiding trading losses. 

“David Smothermon engaged in a fraudulent scheme that always ends badly: he concealed trading losses and inflated performance, induced his firm to award him a $15 million bonus, and when the losses were discovered, his firm was devastated,” said U.S. Attorney Jay Clayton.  “That devastation cost hundreds of jobs, including in New York.  Our Office has no tolerance for insiders who like to enrich themselves at the expense of our fellow New Yorkers.”   

As reflected in the Indictment and other court filings:

From 2005 through early September 2016, SMOTHERMON worked for a privately owned firm, headquartered in Manhattan, that engaged in the international marketing, distribution, and trading of commodities products (the “Company”).  SMOTHERMON was the Chief Executive Officer of a subsidiary of the Company, based in Houston, Texas, specializing in the trading of liquefied petroleum gas or “LPG” (the “Subsidiary”).  SMOTHERMON was also on the Board of Directors of the Company. The Subsidiary engaged in two forms of LPG trading: entering into and executing contracts for the purchase and sale of barrels of LPG (the “Physical Trading”) and trading financial derivative products related to LPG in an over-the-counter market (the “Financial Trading”).

From at least in or about December 2015 up to and including in or about September 2016, SMOTHERMON caused false entries to be made into an electronic accounting system used by the Company in an effort to hide substantial trading losses.  Specifically, SMOTHERMON falsely inflated the marks, i.e., the values he assigned to individual trading positions in the Financial Trading book, and he directed other individuals to alter the terms of Physical Trading contracts in the company’s accounting system to make it appear as though those contracts were substantially more profitable than they were. In doing so, SMOTHERMON concealed over $240 million in trading losses.  SMOTHERMON took these steps in order to obtain a large, discretionary bonus that he knew the Company was considering in early 2016.  Ultimately, in May 2016, the Company awarded SMOTHERMON a bonus of approximately $15 million, of which approximately $11.6 million was paid immediately in cash.

In late August 2016, SMOTHERMON was contacted by a senior Company executive to alert him that the Company had unearthed a discrepancy between a Physical Trading contract and what was entered into the accounting system.  Thereafter, on or about September 1, 2016, SMOTHERMON resigned from the Company and admitted to a Company executive that he had been mispricing his trading book.  The Company ultimately concluded that SMOTHERMON had concealed more than $240 million in trading losses.  Upon this discovery, the Company realized considerable losses that resulted in the significant downsizing of the company and the layoffs of hundreds of employees.

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In addition to the prison term, SMOTHERMON, 55, of Houston, Texas, was sentenced to three years of supervised release and ordered to forfeit $11,600,000 and pay restitution in the amount of $19,550,081.  As a condition of his plea agreement, SMOTHERMON paid $8 million of this restitution amount in May 2025, after entering his guilty plea.  SMOTHERMON also paid an additional $300,000 prior to sentencing.

Mr. Clayton praised the investigative work of the Federal Bureau of Investigation in this case.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Qais Ghafary and Matthew Weinberg are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, Commissioner of the New York City Department of Investigation (“DOI”), Jocelyn E. Strauber, Acting Inspector General of the U.S. Department of Housing and Urban Development, Office of Inspector General (“HUD-OIG”), Brian D. Harrison, Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, Special Agent in Charge of the Northeast Region of the U.S. Department of Labor, Office of Inspector General (“DOL-OIG”), Jonathan Mellone, and Special Agent in Charge of the New York Field Office of Internal Revenue Service – Criminal Investigation (“IRS-CI”), Harry T. Chavis, announced that all 70 employees of the New York City Housing Authority (“NYCHA”) who were arrested and charged in February 2024 have now been convicted of bribery, fraud, or extortion offenses. 

Of the 70 defendants charged in February 2024 with accepting bribes in exchange for awarding NYCHA repair contracts, three defendants were convicted after jury trials, 56 defendants pled guilty to felony offenses, and 11 defendants pled guilty to misdemeanor offenses.  Sentencings are ongoing, but sentences imposed to date range up to 48 months in prison.  The defendants were collectively responsible for accepting over $2.1 million in bribes in exchange for awarding NYCHA contracts worth over $15 million.  As a result of the convictions, the defendants will collectively pay over $2.1 million in restitution to NYCHA and will forfeit over $2 million in criminal proceeds.        

“Today’s plea of the 70th and final NYCHA pay-for-play contracting scheme defendant marks an important milestone in one of the largest single-day corruption cases in the history of the Justice Department,” said U.S. Attorney Jay Clayton.  “All 70 charged defendants have now been convicted for attempting to criminally leverage the contracting process of work for affordable housing for New Yorkers to line their own pockets.  NYCHA residents deserve better.  New Yorkers deserve better.  This broad and swift action demonstrates our Office’s commitment to combatting corruption in our nation’s largest public housing authority—home to 1 in every 17 New York City residents.”            

“Today, the last of the 70 NYCHA employees charged with bribery and extortion in connection with the awarding of micro-purchase contracts pled guilty, closing the chapter on an investigation in which DOI and our federal partners exposed widespread corruption that touched almost one-third of NYCHA’s 365 developments in each of the five boroughs,” said DOI Commissioner Jocelyn E. Strauber.  “All the defendants, many of them supervisors, now have taken responsibility for separate schemes that, in total, involved more than $15 million in no-bid contracts, awarded in exchange for the payment of more than $2.1 million in bribes to employees who chose to serve themselves instead of the residents of NYCHA, driving up costs of maintenance and improvements in a public housing system dependent on scarce resources.  To date, approximately $2 million in restitution to NYCHA and nearly $2 million in forfeiture has been ordered.  Equally important, DOI’s 14 recommendations to improve controls with respect to NYCHA’s micro-purchase contracting have been implemented – three of which were similar to DOI’s 2021 recommendations that were rejected by NYCHA.  I thank the U.S. Attorney’s Office for the Southern District of New York and our federal law enforcement partners for their commitment to thwart corruption that drains public housing resources, and NYCHA for the implementation of much-needed contracting reforms.”

“Today’s final guilty plea is an important milestone in bringing to an end the egregious pay-to-play bribery scheme that wasted millions of dollars that should have benefited HUD tenants in New York and raised serious questions about the integrity of NYCHA operations,” said HUD-OIG Acting Inspector General Brian D. Harrison.  “All 70 of the NYCHA employees who failed to uphold the basic duty of not stealing from public housing have now admitted guilt or been found guilty at trial within two years of indictment, a testament to the investigative excellence of HUD OIG and its law enforcement partners.  We are grateful to the U.S. Attorney’s Office for its support and prosecutions in this case and know that this sends a clear signal to corrupt public officials that they will be held accountable.”

“Nearly two years ago, HSI New York and our law enforcement partners announced a sweeping investigation that uncovered a brazen corruption and extortion scheme that marked the largest number of federal bribery charges in a single day in history,” said HSI Special Agent in Charge Ricky J. Patel.  “Today’s guilty plea is the latest step in exposing a scheme that exploited NYCHA’s operations, shortchanged its communities, and siphoned trust and resources from NYCHA residents—New Yorkers who deserve better.  Working in lockstep with our federal, state, and local law enforcement counterparts, HSI will keep pressing forward to protect New Yorkers and ensure that anyone who attempts to jeopardize their well-being faces decisive consequences.”

“An important part of the mission of DOL-OIG is to investigate fraud and other federal crimes involving matters within the jurisdiction of the Office of Inspector General,” said DOL-OIG Special Agent in Charge Jonathan Mellone.  “The seventy convictions obtained in this investigation send a clear message that public corruption will not be tolerated.  We are committed to working closely with our law enforcement partners to investigate those who exploit governmental programs and the American workers.”

“IRS-CI will continually use its unique expertise in tax and finance to find leverage in assisting with complex investigations,” said IRS-CI Special Agent in Charge Harry T. Chavis.  “We are proud to build on our law enforcement partnerships to continue to bring criminals to justice.”

According to information contained in court filings and public court proceedings, including as proven at trial:

NYCHA is the largest public housing authority in the country, providing housing to 1 in 17 New Yorkers in 335 developments across the City and receiving over $1.5 billion in federal funding from the U.S. Department of Housing and Urban Development every year.  When repairs or construction work require the use of outside contractors, services must typically be purchased via a bidding process.  However, at all times relevant to the cases referenced above, when the value of a contract was under a certain threshold (up to $10,000), designated staff at NYCHA developments could hire a contractor of their choosing without soliciting multiple bids.  This “no-bid” process was faster than the general NYCHA procurement process, and selection of the contractor required approval of only the designated staff at the development where the work was to be performed.

The defendants, all of whom were NYCHA employees during the time of the relevant conduct, demanded and received cash in exchange for NYCHA contracts by either requiring contractors to pay up front in order to be awarded the contracts or requiring payment after the contractor finished the work and needed a NYCHA employee to sign off on the completed job so the contractor could receive payment from NYCHA.  The defendants typically demanded approximately 10% to 20% of the contract value—between $500 and $2,000 depending on the size of the contract—but some defendants demanded even higher amounts.

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Mr. Clayton praised the outstanding investigative work of DOI, HUD-OIG, HSI, DOL-OIG, and IRS-CI, which work together collaboratively as part of the HSI Document and Benefit Fraud Task Force, as well as the special agents and task force officers of the U.S. Attorney’s Office for the Southern District of New York.  Mr. Clayton also expressed appreciation for the cooperation and support of NYCHA’s senior executive leadership.

These cases are handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Jerry J. Fang, Jacob R. Fiddelman, Meredith Foster, Catherine Ghosh, and Justin Horton are in charge of the prosecutions, and Assistant U.S. Attorneys Emily Deininger, Jane Kim, Benjamin Burkett, Matthew J. King, and Amanda C. Weingarten also handled individual cases.

United States Attorney for the Southern District of New York, Jay Clayton, announced that MARIO POWELL was sentenced by U.S. District Judge John P. Cronan to 97 months in prison for assaulting a corrections officer with a contraband weapon on May 30, 2020, while incarcerated at the Metropolitan Correctional Center, New York (“MCC”).  In September 2025, POWELL was convicted of assaulting a corrections officer with a deadly and dangerous weapon and possession of prison contraband following a five-day trial before Judge Cronan.

“Mario Powell brazenly ambushed a corrections officer at the Metropolitan Correction Center in New York City, trying to slit his throat,” said U.S. Attorney Jay Clayton.  “This sentence shows that violence in our corrections facilities will trigger meaningful consequences.”

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

On May 30, 2020, at the MCC, POWELL forcibly assaulted a corrections officer with a deadly and dangerous weapon and, in doing so, lacerated the officer’s neck.  In order to commit the attack, POWELL obtained and possessed a weapon made of razor blades.

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In addition to the prison term, POWELL, 34, of the Bronx, New York, was sentenced to three years of supervised release.

Mr. Clayton thanked former MCC staff for their assistance and praised the outstanding investigative work of the Federal Bureau of Investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Thomas John Wright, Henry L. Ross, and Leslie B. Arffa are in charge of the prosecution.

Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, Nicolas Roos announced today the sentencings of KEONNE RODRIGUEZ and WILLIAM LONERGAN HILL, the co-founders of Samourai Wallet (“Samourai”), a cryptocurrency mixer that facilitated over $237 million in illegal transactions.  RODRIGUEZ, the Chief Executive Officer of Samourai, and HILL, the Chief Technology Officer, participated in a conspiracy to operate a money transmitting business in which they knowingly transmitted criminal proceeds.  The over $237 million dollars of criminal proceeds laundered through Samourai came from, among other things, drug trafficking, darknet marketplaces, cyber-intrusions, frauds, sanctioned jurisdictions, murder-for-hire schemes, and a child pornography website.  RODRIGUEZ and HILL were respectively sentenced to five and four years in prison.  U.S. District Judge Denise L. Cote sentenced RODRIGUEZ on November 6, 2025, and HILL on November 19, 2025. 

“The sentences the defendants received send a clear message that laundering known criminal proceeds—regardless of the technology used or whether the proceeds are in the form of fiat or cryptocurrency—will face serious consequences,” said Attorney for the United States Nicolas Roos.  “These sentences reflect the harmful impact that money laundering services have on victims by making it virtually impossible for victims to recover their stolen funds. Our office will continue to work tirelessly to hold accountable those who profit by helping criminals hide their criminal proceeds.”

According to the Indictment, other public filings, and statements made in court:

Beginning around 2015, RODRIGUEZ and HILL began developing Samourai, a mobile application that was designed and operated as a service for transmitting criminal proceeds.  The defendants engineered Samourai around two services specifically intended to conceal the nature of illicit transactions. The first, a Bitcoin mixing service known as “Whirlpool,” coordinated batches of Bitcoin exchanges between groups of Samourai users.  Through this process, the original source of particular Bitcoin holdings became obscured within the blockchain’s transactional record, effectively preventing law enforcement agencies and cryptocurrency exchanges from tracing funds back to their origins.  The second service, called “Ricochet,” enabled users to introduce additional and unnecessary intermediate transactions—known as “hops”—between sending and receiving addresses.  This feature served a similar obfuscation purpose, making it substantially more difficult for monitoring entities to establish connections between cryptocurrency transfers and potential illicit activities.  The scale of these operations was considerable: from Ricochet’s launch in 2017 and Whirlpool’s inception in 2019, more than 80,000 Bitcoin—valued at over $2 billion at the time—passed through these services.  Samourai collected fees for both services, estimated to have a total value of more than $6 million.

RODRIGUEZ and HILL actively promoted Samourai to criminal users and encouraged criminal activity.  HILL marketed Samourai as a transmittal service for criminal proceeds on Dread, a darknet forum dedicated to discussing illegal marketplace activities.  In one exchange on that platform, a user asked about the most “secure methods to clean dirty BTC” to make it “untraceable, clean” and ensure the user would “never get caught.”  HILL responded by writing that “Samourai Whirlpool is a much better option” than a competitor service to “clean dirty BTC.”  Similarly, in July 2020, RODRIGUEZ engaged in a Twitter exchange in which he personally encouraged the hackers of a social media platform to “feed” and “send” the criminal proceeds into Samourai’s Whirlpool.  When the hackers ultimately used a different cryptocurrency mixing service to launder the proceeds of the hack, RODRIGUEZ and HILL expressed their disappointment.

The defendants also had a clear understanding that Samourai was, in fact, used for money laundering.  In a WhatsApp exchange, when asked to explain the concept of “mixing,” RODRIGUEZ described the process as “money laundering for bitcoin.”  The defendant’s own marketing materials acknowledged that customers would include “Dark/Grey Market participants” moving proceeds from “illicit activity.”

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In addition to their terms of prison, RODRIGUEZ, 37, of Harmony, Pennsylvania, and HILL, 67, a U.S. national who was arrested in Portugal at the request of the United States, were each sentenced to three years of supervised release.  Judge Cote also ordered that RODRIGUEZ and HILL each pay a fine of $250,000.  RODRIGUEZ and HILL have paid a total of $6,367,139.69 in forfeiture, representing the fees Samourai earned, in satisfaction of an order to forfeit $237,832,360.55, the larger sum representing the total traceable criminal proceeds for which Samourai executed transactions. 

Mr. Roos praised the investigative work of Internal Revenue Service-Criminal Investigation and the Federal Bureau of Investigation (“FBI”).  He also acknowledged the assistance of the Justice Department’s Office of International Affairs, Europol, the Portuguese Judicial Police, the Procuradoria-Geral da República, the Icelandic Police, and the FBI Field Office in Pittsburgh for their assistance in the investigation of this case.

The Justice Department’s Office of International Affairs provided substantial assistance to secure the July 2024 extradition from Portugal of HILL.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorneys Andrew K. Chan, David R. Felton, and Cecilia Vogel are in charge of the prosecution. 

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), Frank A. Tarentino, announced today the unsealing of Complaints charging MUJAHED ALI and QUIRINO GARCIA DIAZ with conspiracy to distribute narcotics.  The defendants were arrested yesterday in Manhattan, and GARCIA DIAZ was arrested at their Inwood smoke shop, from which they sold drug traffickers a variety of drug paraphernalia, including cutting agents—i.e., substances added to narcotics to increase their volume (and thus their saleable quantity) and to modify their effects.  The investigation of the smoke shop led agents to multiple large-scale narcotics mills and other drug operations in Manhattan, the Bronx, and New Jersey and the seizures of large volumes of fentanyl, cocaine, and methamphetamine, as well as multiple firearms.  The defendants will be presented today before U.S. Magistrate Judge Katharine H. Parker.

“Businesses, small or large, that engage in drug trafficking will be brought to justice,” said U.S. Attorney Jay Clayton.  “As alleged, this Inwood smoke shop helped traffickers pump lethal narcotics into our city.  New Yorkers want this stopped and we hear them.”

“Once again, we see the reckless lengths individuals are willing to go as they conspire, distribute, and profit from the sale of fentanyl, a drug that is singlehandedly destroying our communities and devastating families,” said DEA Special Agent in Charge Frank A. Tarentino.  “The alleged use of a smoke shop to conceal their narcotics trafficking, which in turn led to the discovery of six drug mills, underscores their willingness to sacrifice the safety of our neighborhoods for personal gain.  Illicit narcotic mills have no place in our communities, and the DEA will continue to do everything we can to eliminate these operations and hold those responsible accountable for their actions.”  

According to the allegations contained in the Complaints:

Between in or about August 2024 and in or about October 2025, ALI, GARCIA DIAZ, and others used the Inwood smoke shop to sell cutting agents and drug paraphernalia to drug traffickers, who would then use the smoke shop’s products to increase their quantities of narcotics and package them for sale.  ALI, GARCIA DIAZ, and their co-conspirators sold cutting agents to an undercover officer who explicitly indicated that he was purchasing those substances to mix with narcotics, including cocaine and heroin. ALI and his co-conspirators also gave suggestions on which cutting agents to use with certain types of narcotics. For example, on one occasion, ALI suggested that an undercover officer purchase and use a particular cutting agent, fish scale, to mix with the undercover officer’s cocaine because fish scale would make his drug product “shine the most.”

Over the course of the approximately 14-month period during which ALI, GARCIA DIAZ, and their co-conspirators sold cutting agents and drug paraphernalia from the Inwood smoke shop, law enforcement investigated customers who had appeared to purchase cutting agents and/or drug paraphernalia from the shop and identified at least six narcotics mills as well as other locations where narcotics were being stored.  This led to the arrests of at least eight drug traffickers, including owners and operators of narcotics mills, and the seizure of bulk quantities of narcotics, including fentanyl, cocaine, and methamphetamine, in addition to multiple firearms and ammunition that the traffickers possessed in connection with their drug businesses.

Below are photographs of certain of the narcotics mills that ALI, GARCIA DIAZ, and their co-conspirators supplied with cutting agents and/or drug paraphernalia sold out of the Inwood smoke shop:

Fentanyl Seized from a Manhattan Narcotics Mill Searched on August 14, 2024

Fentanyl and Heroin Seized from a Bronx Narcotics Mill on August 27, 2024

Fentanyl Seized from a Bronx Narcotics Mill on September 11, 2024

Cocaine Seized from a Bronx Narcotics Mill on September 16, 2024

Fentanyl Seized from a New Jersey Narcotics Mill on October 16, 2024 

Fentanyl, Methamphetamine, Cocaine, Three Loaded Firearms, and Ammunition Seized from a Bronx Narcotics Mill on August 11, 2025

Following the defendants’ arrests, law enforcement searched the Inwood smoke shop and a storage unit next to the shop that was used by the defendants. Inside the storage unit, law enforcement found a room full of narcotics cutting agents and another room full of drug paraphernalia and equipment used to mix, press, and package narcotics, including three kilogram presses used to press narcotics powder into kilogram-sized bricks, numerous sifters, grinders, scales, and hundreds of thousands of glassine envelopes, small vials, and small plastic bags, all commonly used to package narcotics.  Below are photographs of the room containing narcotics cutting agents: 

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ALI, 41, a citizen of the United States and Yemen, and GARCIA DIAZ, 35, a citizen of Mexico, are each charged with one count of conspiracy to distribute narcotics, which carries a maximum sentence of life 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 a judge.

Mr. Clayton praised the outstanding investigative work of the DEA’s New York Field Division.

The case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorney Connie L. Dang is in charge of the prosecution.

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

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced today the unsealing of an Indictment charging DEREK WACHOB with wire fraud in connection with his multi-year scheme to defraud individual investors, a bank, an investment firm, and at least two steel pipe distributors of at least $66 million.  WACHOB was arrested today in Sapulpa, Oklahoma, and will be presented this afternoon in the Northern District of Oklahoma.  The case is assigned to U.S. District Judge J. Paul Oetken.

“Derek Wachob claimed to be a billionaire and successful CEO, but as alleged, that image was built on lies,” said U.S. Attorney Jay Clayton.  “He stole more than $66 million from a range of victims that included some of his closest friends, then used those funds to maintain a lifestyle of expensive cars, vacation homes, private jets, helicopters, and yachts.  The steel industry is a pillar of our manufacturing community, where honest and hard-working success is to be celebrated, but there is no place for fraud.  This Office will work relentlessly to bring high-flying fraudsters to justice.”

“Derek Wachob allegedly stole at least $66 million from investors, including some of his closest friends, and financial institutions to secretly fund his failing company and extravagant lifestyle through false promises of profitable business ventures,” said FBI Assistant Director in Charge Christopher G. Raia.  “Wachob allegedly abused his authority as CEO to entice his targets with a mirage of success while shrouding the truth in deceit.  The FBI remains committed to investigating any business leader who siphons from the accounts of trusting victims for personal enrichment.”

As alleged in the Indictment:[1]

From at least in or about October 2022 through in or about August 2024, WACHOB—the Chief Executive Officer of a large manufacturer of steel pipes based in Sapulpa, Oklahoma (“Company-1”)—engaged in a scheme to defraud individual investors, a bank, an investment firm, and at least two steel pipe distributors of at least $66 million.  To obtain money from each of the victims, WACHOB lied and misled the victims by, among other things, falsely claiming to offer purported business opportunities based on future steel purchases that WACHOB pledged to make.  WACHOB used these misrepresentations to take millions of dollars from even some of his closest friends.  Instead of using the victims’ money as promised, WACHOB spent the funds to maintain his extravagant lifestyle of expensive cars, vacation homes, private jets, helicopters, and yachts, and prop up Company-1, which was struggling financially and in debt.

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WACHOB, 53, of Sapulpa, Oklahoma, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.

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

Mr. Clayton praised the outstanding work of the FBI.  Mr. Clayton also thanked the U.S. Attorney’s Office for the Northern District of Oklahoma for its assistance.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Danielle Kudla and Adam Sowlati are in charge of the prosecution.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, announced the unsealing of an Indictment charging THOMAS DOYLE, a/k/a “AJ” or “Austin Doyle,” with wire fraud in connection with an alleged scheme by DOYLE to defraud the owner of the painting “Mother and Child on a Hammock” by the 19th-century French Realist painter Gustave Courbet.  DOYLE was previously convicted in the Southern District of New York in 2011 of a separate art-related fraud.  DOYLE was arrested yesterday morning in Norwalk, Connecticut, and presented in the Southern District of New York.  The case has been assigned to U.S. District Judge Arun Subramanian. 

“The art market is largely based on trust,” said U.S. Attorney Jay Clayton.  “As alleged, Thomas Doyle breached that trust by telling the owner of a valuable painting a series of brazen lies to trick the owner into giving him the painting so he could keep the profits from the sale of the painting for himself.  The women and men of the Southern District of New York and our law enforcement partners will continue to work diligently to root out this type of bad actor.”

As alleged in the Indictment unsealed yesterday in Manhattan federal court:

Between December 2022 and March 2025, DOYLE defrauded an art dealer (“Victim-1”) in connection with the sale of the painting “Mother and Child on a Hammock” (the “Hammock”) by Gustave Courbet.  In December 2022, DOYLE introduced himself to Victim-1 over email, representing himself to be in the business of buying and selling art.  Over the next few years, DOYLE and Victim-1 communicated over email and WhatsApp Messenger regarding artworks, and DOYLE made various misrepresentations to Victim-1 about himself, including falsely stating that he managed the “art side” of a family trust with assets worth billions of dollars.

In June 2024, DOYLE and Victim-1 began discussing the Hammock, which Victim-1 owned and was selling.  Victim-1 agreed to let DOYLE take custody of the Hammock to facilitate its viewing by a potential buyer.

In or about July 2024, DOYLE told Victim-1 that he had a potential buyer for the Hammock, and Victim-1 authorized DOYLE to sell the painting on his behalf for $550,000.  By early August 2024, DOYLE falsely informed Victim-1 that he had sold the Hammock for that price.

Instead, DOYLE’s associate (“Associate-1”), acting on DOYLE’s behalf, offered the Hammock for consignment to a Manhattan gallery (“Gallery-1”).  DOYLE provided Associate-1  with a false provenance for the Hammock that was passed on to Gallery-1, stating, among other things, that the Hammock had been purchased from Victim-1 in 2019.  Gallery-1 sold the Hammock on October 1, 2024, for $125,000 to an art collector.  On October 3, 2024, Gallery-1 wired $115,000, which were the sale proceeds of the Hammock minus commission, to Associate-1.  That same day, Associate-1 paid DOYLE $109,250 for the Hammock.

DOYLE never remitted to Victim-1 any proceeds from the sale of the Hammock.  By February 2025, DOYLE had spent all the proceeds from the sale of the Hammock on personal expenses and his own debts.  DOYLE subsequently falsely blamed his failure to pay Victim-1 on the purported buyer, fraudulently claiming the buyer had yet to pay when in fact DOYLE had been paid and was spending the proceeds of the Hammock sale.

On March 4, 2025, DOYLE admitted by email to Victim-1 that DOYLE had “betrayed” and “lied” to Victim-1 about the Hammock.

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DOYLE, 68, of Connecticut, is charged with one count of wire fraud, which carries a maximum prison term of 20 years.

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

Mr. Clayton praised the outstanding work of the Federal Bureau of Investigation’s Art Crime Team.

This case is being handled by the Office’s Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorney Cecilia Vogel is in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, and Superintendent of the New York State Police (“NYSP”), Steven G. James, announced the unsealing of a Complaint charging eight defendants in connection with operating a years-long stolen car ring involving more than approximately 100 stolen cars, primarily Honda, Acura, and Jeep vehicles, worth approximately millions of dollars.  The defendants are charged with conspiracy to possess and sell stolen vehicles, wire fraud, and conspiracy to commit wire fraud.  Six of the defendants were arrested yesterday and presented in Manhattan federal court before U.S. Magistrate Judge Robyn F. Tarnofsky.

“New Yorkers have every right to expect safety and security on our streets and in our homes,” said U.S. Attorney Jay Clayton.  “New Yorkers are smart.  They know that car theft rings and other fraud schemes inflict great harm on their victims and cost all of us.  As alleged, the eight men charged stole cars from the streets of New York, time and again, and trafficked them to unsuspecting buyers along the East Coast, causing millions of dollars in losses.  Yesterday’s arrests reinforce that when thieves prey upon hardworking New Yorkers, the women and men of the SDNY and our law enforcement partners will bring them to justice on behalf of all law-abiding New Yorkers.”

“This announcement highlights HSI New York's unwavering commitment to ensuring a safer community and to pursuing all individuals and co-conspirators allegedly tied to this auto theft ring,” said HSI Special Agent in Charge Ricky J. Patel.  “This is not a victimless crime; a stolen car disrupts daily life and inflicts lasting harm on innocent New Yorkers, robbing them of their sense of security and stability.  The public deserves to know their neighborhoods are safe, that they can park their vehicles without fear, and that their hard-earned purchases are protected.  HSI New York, in collaboration with our law enforcement partners, will continue to identify, dismantle, and deter the criminal networks that exploit our neighborhoods and threaten our livelihoods.”

“Hondas continue to represent a significant number of auto thefts in New York City, and the NYPD is doing exactly what we do best to combat crime: finding the criminals responsible and stopping their illegal operations,” said NYPD Commissioner Jessica S. Tisch.  “Through precision policing and a multi-year investigation, the world’s greatest detectives dismantled this massive criminal ring – and I want to thank the NYPD investigators for their commitment to this case, as well as HSI and the U.S. Attorney’s Office for their continued partnership.”

“Through collaboration among law enforcement partners at all levels, we have intercepted a highly organized car theft operation that was responsible for victimizing car buyers across the East Coast,” said NYSP Superintendent Steven G. James.  “The defendants had no regard for the financial damage they inflicted or for the safety of the victims.  I commend the efforts of all those involved in bringing this criminal activity to an end and for the outstanding work that led to the charges in this case.”

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

From approximately March 2022 through November 2025, the defendants and others conspired to steal cars—primarily those parked on the street in the Bronx or Queens, New York—and sell them to unsuspecting buyers across the East Coast.  After stealing the cars, the defendants and their co-conspirators stashed them in so-called lay-up spots for a cooling-off period to avoid law enforcement detection. Meanwhile, they took steps to disguise the fact that the cars had been stolen.  They altered the cars’ Vehicle Identification Numbers (“VINs”) and then obtained services for the cars—often an oil change—using the new, fake VINs.  This allowed the defendants to obtain vehicle history reports that appeared to show genuine maintenance and other activity, thereby helping the defendants to trick purchasers into believing that the car was not stolen.  The defendants then offered to sell the stolen cars, generally starting on a social media platform that allows users to buy and sell products and then completing the sale in person. 

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PEDRO MANUEL LOPEZ MARTE, 38, of the Bronx, New York; JERRY LOPEZ PAULINO, 33, of the Bronx; SERGIO DIAZ RAMIREZ, 35, of the Bronx; PEDRO ROJAS, 62, of the Bronx; JUSTIN MARTHA, 24, of the Bronx; ERICK ROJAS CRUZ, 27, of the Bronx; JOSE FERREIRA, 48, of the Bronx; and RONALD ARIAS SANTOS, 30, of Hempstead, New York, are each charged with one count of conspiracy to possess and sell stolen vehicles, which carries a maximum sentence of five years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; and one count of wire fraud, which carries a maximum sentence of 20 years in prison.

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

Mr. Clayton praised the efforts of the NYPD Auto Crime Division Major Case Team, the special agents and task force officers from the HSI New York Seaport Trade Group, and the NYSP Auto Theft Unit.

The case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney James Mandilk 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.

“Our pre-IPO markets are important to investors, entrepreneurs, and our economy.  Their integrity is critical to our continued leadership in technology, healthcare, energy, and other key industries.  A unanimous jury has found that Michael Castillero, Francine Lanaia, and Brian Martinsen committed securities fraud, wire fraud, and investment adviser fraud through their firm, StraightPath Venture Partners.  The defendants used high-pressure sales tactics, false and misleading disclosures, and hidden exorbitant fees to defraud retail investors seeking to invest in private companies that had not yet had initial public offerings.  I commend the career prosecutors and law enforcement agents for their work to protect investors in this important marketplace.  We and our law enforcement partners are focused on our pre-IPO markets and our listed small cap markets.  Our message is clear:  marketing and trading in less well-known securities does not give you a pass to commit fraud.”

Jay Clayton, the United States Attorney for the Southern District of New York, Christopher G. Raia, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Jessica S. Tisch, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging ANDREW NGUYEN, a former NYPD officer, with bribery, narcotics, firearms, and robbery offenses in connection with NGUYEN’s alleged participation in a drug trafficking enterprise while NGUYEN was an officer with the NYPD. NGUYEN was arrested this morning and was presented today before U.S. Magistrate Judge Henry J. Ricardo. The case is assigned to U.S. District Judge Analisa Torres.

“The NYPD is the most professional and most effective police department in the world,” said U.S. Attorney Jay Clayton. “New Yorkers rely on and trust the women and men of the NYPD. As alleged, Andrew Nguyen not only breached that trust for profit, but he also committed crimes against his fellow New Yorkers. New Yorkers, including our thousands of dedicated NYPD officers, want him brought to justice.”

Assistant Director in Charge Raia said: “Andrew Nguyen allegedly levied his official position as an NYPD officer to accept more than $30,000 in bribes in exchange for transporting narcotics and providing unauthorized armed protection to their illicit operations. Nguyen’s alleged support to a drug trafficking enterprise directly violated the oath he swore to uphold as well as the public’s trust. While the vast majority of our NYPD partners are deeply committed to honoring their duty to protect and serve, the FBI will never tolerate those who besmirch the badge for personal profit.”

“The NYPD holds its officers to the highest standards, and it’s an affront to our department when someone so blatantly abuses the public’s trust,” said NYPD Commissioner Tisch. “Andrew Nguyen allegedly endangered the communities he was sworn to protect and put his fellow officers’ lives in danger. The NYPD has zero tolerance for corruption of any kind, and I thank the members of the department who investigated this case and our partners in the FBI and U.S. Attorney’s Office for their support in rooting out this misconduct.”

As alleged in the Indictment and in statements made in court:

For approximately three years, between at least in or about 2020 and at least in or about November 2023, NGUYEN repeatedly abused his position as a police officer in the NYPD by soliciting and accepting tens of thousands of dollars in bribe payments in exchange for assisting another individual (“CC-1”) with the operation of CC-1’s drug trafficking enterprise.

First, NGUYEN transported drugs, including approximately eight kilograms of cocaine, for CC-1 while NGUYEN was armed with a firearm, including a 9‑millimeter Glock Model 26 pistol, which was NGUYEN’s NYPD-authorized off-duty firearm, and in possession of NYPD credentials and an NYPD parking placard, which NGUYEN planned to use to evade arrest in the event he was pulled over by other members of the NYPD or, in the case of his firearm, to protect CC-1 if violence occurred.

Second, NGUYEN drove CC-1 to drug meetings, again while possessing a firearm, including his NYPD-authorized off-duty firearm, NYPD credentials, and an NYPD parking placard

Third, NGUYEN queried names of other drug dealers in NYPD databases at the request of CC-1, provided that confidential information to CC‑1, and, at least once, offered to arrest one of those drug dealers for CC-1 in exchange for payment.

Fourth, NGUYEN, in exchange for payment from CC-1, used an NYPD vehicle to conduct an unsanctioned car stop of CC-1, during which NGUYEN purported to seize drugs and drug proceeds from CC-1. Following the car stop, NGUYEN submitted false reports to the NYPD regarding the car stop, to help CC-1 avoid repayment of a drug-trafficking-related debt.

Fifth, NGUYEN expressed a willingness to, in exchange for payment from an associate of CC-1 (“CC-2”), kidnap two drug dealers who owed money to CC-2 by conducting an unsanctioned arrest of those individuals, although this plan never came to fruition. 

Sixth, NGUYEN conspired with CC-1 and another criminal associate of CC-1 (“CC-3”) to rob a drug-money courier under the guise of NGUYEN conducting another unsanctioned car stop, although NGUYEN and his co-conspirators did not carry out their agreement to commit the robbery.

In addition, in or about November and December 2023, law enforcement conducted an undercover operation during which NGUYEN transported what NGUYEN believed to be five kilograms of cocaine in exchange for $5,000 from CC-1. In truth, the “drugs” were sham and NGUYEN had obtained them from an undercover law enforcement officer whom NGUYEN believed was a drug dealer.   

Overall, NGUYEN, who was at all relevant times an officer in the NYPD, accepted more than $30,000 in bribe payments from CC-1 (and solicited tens of thousands of dollars in additional bribes) in connection with NGUYEN’s participation in CC-1’s drug trafficking enterprise.

At the time of NGUYEN’s arrest earlier today, law enforcement searched NGUYEN’s home pursuant to a judicially authorized search warrant. During that search, a number of firearms and ammunition were found in plain view, including: (i) a Glock 19 pistol that was fully loaded with hollow-point ammunition; (ii) two AR-15-style rifles; (iii) a short-barreled rifle; (iv) a fully loaded high-capacity drum magazine containing 60 rounds of ammunition; (v) several AR-15-style magazines loaded with ammunition; and (vi) substantial amounts of other ammunition, including additional hollow-point ammunition.

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NGUYEN, 41, of Harriman, New York, is charged with (i) one count of honest services wire fraud, which carries a maximum sentence of twenty years in prison; (ii) one count of conspiracy to commit honest services wire fraud, which carries a maximum sentence of twenty years in prison; (iii) one count of conspiracy to solicit and receive a bribe, which carries a maximum sentence of five years in prison; (iv) one count of solicitation and receipt of a bribe, which carries a maximum sentence of ten years in prison; (v) one count of conspiracy to distribute and possess with intent to distribute (a) 5 kilograms and more of mixtures and substances containing a detectable amount of cocaine and (b) marijuana, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; (vi) one count of possession of a firearm in furtherance of a drug trafficking offense, which carries a mandatory minimum sentence of 5 years in prison, which must be served consecutively to any other term of in prison, and a maximum sentence of life in prison; (vii) one count of conspiracy to commit Hobbs Act robbery, which carries a maximum sentence of 20 years in prison; and (viii) one count of attempted distribution and possession with intent to distribute 5 kilograms and more of mixtures and substances containing a detectable amount of cocaine, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.

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

Mr. Clayton praised the outstanding investigative work of the FBI and the NYPD’s Internal Affairs Bureau.

The case is being handled by the Office’s Public Corruption Unit and Narcotics Unit. Assistant United States Attorneys Matthew J. King and Jonathan Rebold are in charge of the prosecution.

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