Southern District of New York

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today that ADRIAN BROOKS, a/k/a “Abee,” was arrested for his alleged role as the leader of a sex trafficking and prostitution enterprise that exploited and abused women and minor girls.  BROOKS was charged in an Indictment with sex trafficking of minors and sex trafficking by force, fraud, and coercion.  BROOKS was also charged with the use of interstate facilities and interstate travel to promote a prostitution enterprise.  BROOKS was arrested this morning and will be presented before U.S. Magistrate Judge Gorenstein in Manhattan federal court this afternoon.  The case has been assigned to U.S. District Judge William H. Pauley.   

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, Adrian Brooks used threats and violence to coerce underaged girls into performing sex acts for money, and then kept most of the money for himself.  For his reprehensible alleged crimes, Brooks will now face federal sex trafficking charges.  This Office remains committed to protecting vulnerable children from the sick world of commercial sex trafficking.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Brooks’s alleged acts are horrendous, preying on and exploiting minors. Cases like this are disgraceful examples of the worst in our society. Sadly, too often these types of crimes are unknown or ignored in our communities. The FBI simply won't tolerate this behavior. Our Child Exploitation and Human Trafficking Task Force will be relentless in pursuing those who target our youth.  I encourage anyone with knowledge of trafficking activity to step forward to help us make a difference”

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

Since at least 2014, BROOKS directed and conducted a criminal sex trafficking and prostitution enterprise (the “Sex Trafficking Enterprise”) that recruited and exploited minor girls, and then forced them to engage in commercial sex acts for his own profit by, among other things, using an online classifieds website called Backpage.com (“Backpage”).  BROOKS operated the Sex Trafficking Enterprise out of motels in the Bronx, New York, and Yonkers, New York, as well as on the streets of the Bronx.

To evade detection by law enforcement, the Sex Trafficking Enterprise’s advertisements often purported to be offering escorts.  However, such advertisements often signaled that they were, in fact, offering individuals for commercial sex acts through a variety of cues, including pictures of partially-clothed women in sexually suggestive poses, and coded language indicating that the people being offered would perform sex acts in exchange for money.

The victims of BROOKS’s Sex Trafficking Enterprise were typically forced to engage in commercial sex acts with multiple customers in a single day.  Customers typically paid for such commercial sex acts in cash.  BROOKS kept most or all of the profits from his Sex Trafficking Enterprise.

BROOKS forced certain of his victims to take prescription pain relievers, to which they became addicted.  In addition, BROOKS set rules for his victims, controlled their actions, and punished violations of his rules and disobedience through physical violence, among other things.

*                *                *

BROOKS is charged with one count of sex trafficking conspiracy, which carries a maximum sentence of life in prison; two counts of sex trafficking of a minor and by force, fraud, or coercion, each of which carries a maximum sentence of life in prison and a mandatory minimum sentence of 15 years in prison; and one count of use of interstate facilities and interstate travel to promote a prostitution enterprise, which carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Any individuals who believe they have information concerning ADRIAN BROOKS, a/k/a “Abee,” that may be relevant to the investigation, or information regarding other sex trafficking crimes, should contact the FBI at (212) 384-1000 or https://tips.fbi.gov/, or the New York City Police Department at (646) 610-7272.

The investigation was conducted through the New York Child Exploitation and Human Trafficking Task Force, a joint task force between the FBI and NYPD to combat human trafficking.  Mr. Kim praised the outstanding investigative work of the FBI and the NYPD.   Mr. Kim also thanked the Port Authority of New York and New Jersey - Youth Services Unit and the New York City Administration for Children’s Services for their assistance during the investigation.

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

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Leon Hayward, Acting Director, Field Operations, New York, U.S. Customs and Border Protection (“CBP”), and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today that the United States has settled civil fraud claims brought under the False Claims Act against NOTATIONS, INC. (“NOTATIONS”), a garment wholesaler based in Warminster, Pennsylvania, with a showroom in Manhattan.  As alleged in the Government’s complaint, NOTATIONS repeatedly ignored warning signs that its business partner, which imported garments from China, was engaged in a scheme to underpay customs duties owed on the imported garments it sold to NOTATIONS.  Pursuant to the settlement, NOTATIONS admits and accepts responsibility for failing to act in response to indications of fraudulent conduct, agrees to pay $1 million in damages, and agrees to implement measures designed to prevent future fraud by NOTATIONS or its business partners.  The stipulation of settlement was approved yesterday by United States District Judge Lewis A. Kaplan. 

Acting U.S. Attorney Joon H. Kim said:  “As this settlement makes evident, companies purchasing imported goods cannot turn a blind eye to fraud committed by their business partners.  We will be vigilant in holding accountable all parties who engage in or contribute to fraudulent conduct.” 

CBP Acting Director Leon Hayward said:  “As global supply chains grow more complex, it is important for American businesses to know their suppliers and be confident of their integrity.  The outcome of this case is a testament to the dedication of our partners in the United States Attorney’s Office, Homeland Security Investigations, and the men and women of CBP in enforcing our nation’s trade laws and holding accountable those perpetrating this type of fraud.”

HSI Special Agent in Charge Angel M. Melendez said:  “Evading the payment of customs duties to increase profit is not a victimless crime; it has a negative effect on the U.S. economy and law-abiding importers.  HSI special agents will continue to work diligently with the officers of CBP to locate these offenders and put an end to their fraudulent business practices.”

The Government’s complaint-in-intervention, filed last year, alleges that YINGSHUN GARMENTS, INC. (“YINGHSUN”), an importer of women’s apparel manufactured in China, and IMPORT GLOBAL DESIGNS INC. (“IMPORT GLOBAL”) and OLGREM LLC (“OLGREM”), successor entities to YINGSHUN, and MARIE ROGERS, an owner and/or officer of each entity, engaged in a double-invoice scheme whereby YINGSHUN (and later IMPORT GLOBAL and OLGREM) presented false and fraudulent invoices to CBP, showing prices for imported garments that were discounted by 75 percent or more, for the purpose of avoiding customs duties on the garments.  NOTATIONS, which was YINGSHUN’s biggest customer, aided the fraudulent scheme by ignoring warning signs that YINGSHUN’s irregular business practices were highly suggestive of fraud.

As part of the settlement, NOTATIONS agreed to pay $1 million in damages.  NOTATIONS also admits and accepts responsibility for its failure to take action in response to multiple warning signs that YINGSHUN, IMPORT GLOBAL, and OLGREM were undervaluing their imported goods and therefore paying less in import duties than they should have been paying.  NOTATIONS also has agreed to implement a written compliance policy, which will include measures to educate its employees on identifying red flags for fraud in import transactions, to monitor the conduct of its business partners who act as importers of overseas goods, and to report all potentially fraudulent conduct to CBP.   

This matter was initiated by a relator pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3729 et seq.  The Government’s claims against YINGSHUN, IMPORT GLOBAL, OLGREM, and MARIE ROGERS remain pending. 

*          *          *

Mr. Kim thanked CBP and HSI for their efforts and ongoing support and assistance with the case.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Ashan M. Benedict, the Special Agent-in-Charge of the New York Field Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of a complaint charging ALLANMON MAVUMKAL with a Hobbs Act robbery spree involving at least 10 livery cabs in the Bronx, Mt. Vernon, and Yonkers, during which MAVUMKAL robbed the cab drivers of cash, personal items, and their cabs at knife-point.  MAVUMKAL surrendered on October 1, 2017, and will be presented today in Manhattan federal court before the Honorable Gabriel W. Gorenstein.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, Allanmon Mavumkal preyed on innocent livery cab drivers who had the misfortune of responding to Mavumkal’s call for a ride.  Protecting hardworking New Yorkers from acts of violence is always a priority of this Office.” 

ATF Special Agent-in-Charge Ashan M. Benedict said:  “Mavumkal is alleged to have engaged in a pattern of armed robberies and carjackings of taxi drivers, extending from the Bronx to Mount Vernon and Yonkers.  Over the course of barely a month, he allegedly repeatedly preyed on hard working New Yorkers trying to do nothing more than to earn an honest living.  Today’s charges send a clear message that we and our law enforcement partners stand at the ready to bring violent offenders to justice.” 

NYPD Commissioner James P. O’Neill said:  "This series of violent robberies ended thanks to the hard work of investigators who worked diligently until this individual was identified and taken into custody. The NYPD will continue to work with our law enforcement partners to protect communities and ensure that this individual is held accountable for his actions."

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

On September 21, 2017, MAVUMKAL hailed a livery cab in the Bronx, and directed the driver to a particular destination.  After arriving at the drop-off location, MAVUMKAL threatened the driver with a large knife, which was captured on video from the cab, ordered the driver out of the cab, and then drove away in the cab. The investigation is continuing.

*          *          *

MAVUMKAL, 30, of Mount Vernon, New York, is charged with one count of Hobbs Act robbery, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900, or [email protected]. For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html.

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

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that MARYSE LIBURDI was sentenced today in Manhattan federal court to 49 months in prison for her scheme to defraud investors in a technology company founded and operated by LIBURDI out of more than $7 million.  LIBURDI was sentenced by U.S. District Judge Denise L. Cote, before whom she previously pled guilty.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Maryse Liburdi lied to investors about the condition of her company and used over a million dollars in investor funds to pay for her own rent, clothing, spas and salons.  For those crimes, today she received a sentence of 49 months in federal prison.”

According to the allegations in the Indictment to which LIBURDI pled guilty, a criminal complaint filed against LIBURDI, and statements made during the plea and other court proceeding proceedings:

Since at least in or about 2010, LIBURDI perpetrated a multi-year scheme to defraud individuals into investing in a technology company (the “Company”) founded and run by LIBURDI.  LIBURDI repeatedly made misrepresentations to investors about the Company’s revenue and assets, manipulated Company bank accounts to hide the Company’s true financial condition and, contrary to LIBURDI’s express promises to the investors, converted investor funds to her own use.

While LIBURDI repeatedly told investors that the Company had millions of dollars in revenue, the Company’s bank records show that, from at least 2008 until the Company ceased operating in January 2015, the Company earned little or no revenue.  Moreover, as reflected in the Company’s bank records, LIBURDI misappropriated investor funds, transferring over $1 million to her and her former husband’s bank accounts and to pay LIBURDI’s personal expenses, including luxury clothing.  For example, LIBURDI used funds from one victim investor for, among other things, transfers to a personal bank account in the name of LIBURDI and her former husband, rental payments for LIBURDI’s three-bedroom Manhattan apartment, payments for personal credit cards, and substantial personal expenditures on corporate credit cards, including, among other things, expenditures at various retail clothing, accessories, and cosmetics stores, salons and spas, and wine and liquor stores. 

In order to hide her scheme, LIBURDI manipulated the Company’s bank accounts by, on at least three occasions, writing checks for hundreds of thousands of dollars drawn on accounts with insufficient funds in order to fraudulently inflate the balance of a Company bank account and thereby hide the Company’s true cash balance from the investors.  For example, in October 2013, LIBURDI wrote and deposited into the Company’s bank account a $700,000 check drawn on a different account that had a balance of only about $2,000.  LIBURDI then falsely represented to the victims that the Company’s bank account held approximately $700,000 and showed investors a bank statement for the Company account listing the inflated balance.  As result of LIBURDI’s fraud, victim-investors in the Company lost more than $7 million.

*                *                *

In addition to the prison term, LIBURDI, 46, formerly of Victoria, Minnesota, and New York, New York, was sentenced to three years of supervised release, and was ordered to forfeit $7,069,904.46 and to pay $7,069,904.46 in restitution to the victims of her offense.

Mr. Kim praised the investigative work of the Federal Bureau of Investigation.  He also thanked Italian law enforcement authorities, including Interpol Rome, for their assistance in LIBURDI’s arrest, as well as the Department of Justice’s Attaché at the U.S. Embassy in Rome and the DOJ Office of International Affairs.

The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Elisha J. Kobre is in charge of the prosecution.           

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that DEBORAH KELLEY, a former managing director of institutional fixed income sales at a New York-based broker-dealer (the “Broker-Dealer”), was sentenced today in Manhattan federal court to three years’ probation, including six months of home confinement, for participating in a “pay-to-play” bribery scheme involving the New York State Common Retirement Fund (“NYSCRF”), the nation’s third largest public pension fund.   KELLEY pled guilty to conspiracy to commit securities fraud and honest services wire fraud on May 30, 2017, before U.S. District Court Judge J. Paul Oetken, who also imposed today’s sentence.   

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Deborah Kelley bribed an official with control over the investment of more than $50 billion in state pension fund assets.  She did so to direct business to her brokerage firm and to reap hundreds of thousands of dollars in additional commissions for herself.  Kelly now has been sentenced for defrauding New York pensioners and depriving them of the honest services of the pension administrator.”

According to the Indictment charging KELLEY, other filings in Manhattan federal court, and statements made during her sentencing proceeding:

The NYSCRF

The NYSCRF is a pension fund administered for the benefit of public employees of the State of New York.  From January 2014 through February 2016, Navnoor Kang served as Director of Fixed Income and Head of Portfolio Strategy for the NYSCRF.  In that capacity, Kang was responsible for investing more than $53 billion in fixed-income securities on behalf of the NYSCRF.  Kang owed a fiduciary duty to the NYSCRF and its members and beneficiaries, and was required to make investment decisions in their best interests and free of any conflict of interest.  New York State law and NYSCRF policies prohibited Kang and other NYSCRF employees from receiving any bribes, gifts, benefits, or consideration of any kind, as KELLEY well knew.

The Scheme to Steer NYSCRF Fixed-Income Business in Exchange for Secret Bribes

From 2014 through 2016, Kang, KELLEY, and others participated in a scheme to defraud the NYSCRF and its members and beneficiaries, and to deprive the NYSCRF of its intangible right to Kang’s honest services.  The scheme involved, among other things, an agreement among Kang, KELLEY, and others to pay Kang bribes – in the form of entertainment, travel, and lavish meals, among other things – in exchange for fixed-income business from the NYSCRF.  Such bribes were strictly forbidden by the NYSCRF, and were paid secretly and without any disclosure to the NYSCRF and its members and beneficiaries concerning the conflicts of interests inherent therein. 

In exchange for the bribes paid by KELLEY, Kang used his position as Director of Fixed Income and Head of Portfolio Strategy at the NYSCRF to promote the interests of KELLEY and her brokerage firm.  Kang, in exchange for the bribes he received, agreed to steer fixed-income business to the Broker-Dealer.  In so doing, Kang, with KELLEY’s knowledge and approval, breached his fiduciary duty to make investment decisions in the best interest of the NYSCRF and its members and beneficiaries, and free of conflict, and deprived the NYSCRF of its intangible right to Kang’s honest services.  

As KELLEY paid bribes to Kang, the Broker-Dealer’s fixed-income business with the NYSCRF skyrocketed.  The value of NYSCRF’s domestic bond transactions with the Broker-Dealer increased from zero in the fiscal year ending March 1, 2014, to approximately $156 million in the fiscal year ending March 1, 2015, and to approximately $179 million in the fiscal year ending March 1, 2016.  Kang’s trades resulted in the payment of more than a half-million dollars in commissions to the Broker-Dealer, of which KELLEY personally earned nearly $200,000.

Obstruction of Justice

In late 2015, the Securities and Exchange Commission (“SEC”) opened an investigation into the entertainment and benefits that KELLEY had provided Kang, and the SEC subpoenaed both KELLEY and Kang for their testimony.  In advance of their testimony, KELLEY and Kang agreed to align their stories and testify falsely before the SEC in order to conceal their scheme.  In late 2015 and early 2016, KELLEY and Kang each falsely testified under oath before the SEC about expenses KELLEY had paid for Kang.  

*          *          *

KELLEY, 58, of Piedmont, California, was also ordered to pay a fine of $50,000, to forfeit $187,991.19, and to complete 1000 hours of community service.  Restitution will be determined within 90 days of sentencing.

In December 2016, Gregg Schonhorn, a former a vice president of fixed income sales at another New York-based broker-dealer, pled guilty for his participation in the scheme.  Kang, against whom charges for conspiracy, securities fraud, honest services wire fraud, and obstruction of justice are currently pending, is presumed innocent unless and until proven guilty.  Kang is scheduled to proceed to trial on December 4, 2017.

Mr. Kim praised the investigative work of the Federal Bureau of Investigation and noted that the investigation is continuing.   He also thanked the SEC, which filed civil charges against Kang, KELLEY, and Schonhorn in a separate civil action, and the Office of Inspector General for the Office of the New York State Comptroller.

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

            Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Catherine Leahy Scott, New York State Inspector General, and Debbi Mayer, Assistant Special Agent in Charge of the U.S. Department of Education Office of Inspector General, Northeastern Regional Office (“ED-OIG”), announced today that MAMDOUH ABDEL-SAYED, a full-time, tenured lecturer at the City University of New York’s Medgar Evers College (“Medgar Evers College”), was arrested this morning and charged in Manhattan federal court with fraud, corruption, and obstruction offenses related to his selling of sham Medgar Evers College certificates that purported to represent the completion of health care courses at the College.  ABDEL-SAYED was arrested this morning and will be presented this afternoon in Manhattan federal court.    

            Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, a faculty member of Medgar Evers College abused his position to enrich himself by creating and selling fake certificates stating students had completed health care programs at the college.  In allegedly doing so, Abedel-Sayed out of greed put public health at risk.  I want to thank our partners at the New York State Inspector General and Department of Education Office of Inspector General for their continued efforts to root out corruption at federally funded New York schools.”

            New York State Inspector General Catherine Leahy Scott said:  “This defendant ignored repeated warnings and allegedly still brazenly abused the name and resources of his college employer to operate what amounted to his own fraudulent trade school on the grounds of the City University of New York.  He allegedly traded on the reputation of Medgar Evers College and pocketed all the fees students paid while undercutting legitimate schooling being performed by his colleagues across the campus.  I will continue my overarching and ongoing investigation into the management and oversight of CUNY campuses while diligently pursuing anyone, as in this case, who allegedly violates the trust of their public position.”

            ED-OIG Assistant Special Agent in Charge Debbi Mayer said:  “Today’s action alleges that Mr. Abdel-Sayed not only abused his position of trust for personal gain, but did so at the expense of students.  That is unacceptable.  OIG will continue to aggressively pursue those who misappropriate education funds for their own purposes.  America’s students and taxpayers deserve nothing less.”

            According to the allegations contained in the Complaint[1] unsealed today in Manhattan federal court and publicly available documents:

            MAMDOUH ABDEL-SAYED is a tenured lecturer in the Biology Department at Medgar Evers College.  From at least 2013 through 2017, without authorization from Medgar Evers College, ABDEL-SAYED purported to teach health care courses at the College on topics such as Electrocardiograms, Phlebotomy, and Sonography, and provided students with sham certificates of completion for the courses, in exchange for which ABDEL-SAYED charged fees of up to $1,000 per certificate, which money he kept for himself.  ABDEL-SAYED attempted to avoid scrutiny from the College’s security guards in conducting the unauthorized courses.    

            In addition to charging fees for the unauthorized courses and sham certificates, ABDEL-SAYED encouraged students to use the certificates in obtaining employment in the health care field, including at New York City-area hospitals.  When asked by employment agencies to verify the authenticity of the certificates, ABDEL-SAYED falsely informed the agencies that the certificates were issued by Medgar Evers College.  In fact, ABDEL-SAYED created the sham certificates himself, and provided them to students even if the students did not attend his unauthorized courses, so long as the students paid ABDEL-SAYED for the certificates.  In addition, ABDEL-SAYED distributed copies of purported national certification examinations – which he informed students on a recorded conversation it was “illegal” for them to possess – in order to assist the students in passing licensing examinations supposedly administered by the State for certain medical techniques. 

            After ABDEL-SAYED became aware of the investigation, he instructed an undercover law enforcement investigator, who had posed as a student and purchased several unauthorized certificates from him, to provide false information to federal law enforcement agents and to conceal those certificates from the agents.       

*                *                *

            ABDEL-SAYED, 68, of Kearny, New Jersey, is charged with one count of conversion from a program receiving federal funds and one count of soliciting bribes, each of which carries a maximum penalty of 10 years in prison, and one count of wire fraud, one count of mail fraud, and one count of obstruction of justice, each of which carry a maximum penalty of 20 years in prison.

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

            Mr. Kim praised the investigative work of the New York State Inspector General’s Office and ED-OIG. 

            The case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorney Eli J. Mark 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 below constitutes only allegations, and every fact described should be treated as an allegation.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, today announced the forfeiture of $48,238,116 in proceeds (the “Proceeds”) from the sale of the 144,336 Bitcoins that were recovered from Ross William Ulbricht’s laptop computer.  Ulbricht was found guilty in 2015, after a jury trial, of distributing narcotics, distributing narcotics by means of the Internet, conspiring to distribute narcotics, engaging in a continuing criminal enterprise, conspiring to commit computer hacking, conspiring to traffic in false identity documents, and conspiring to commit money laundering, in connection with his operation of the Silk Road underground website.  The Proceeds were the subject of a parallel civil forfeiture action filed in Manhattan federal court in 2013 seeking the forfeiture of all assets of Silk Road. United States District Judge Katherine Forrest entered a Stipulation and Order today in which Ulbricht withdrew his claim to the Proceeds, and the Proceeds were forfeited to the United States.

According to the evidence presented at Ublricht’s criminal trial, statements made during other public proceedings, and other court documents:

Ulbricht created Silk Road in January 2011, and owned and operated the underground website until it was shut down by law enforcement authorities in October 2013.  Silk Road emerged as the most sophisticated and extensive criminal marketplace on the Internet, serving as a sprawling black-market bazaar where unlawful goods and services, including illegal drugs of virtually all varieties, were bought and sold regularly by the site’s users.  While in operation, Silk Road was used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other unlawful goods and services to more than 100,000 buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions.

In connection with the investigation of Silk Road, the Government seized 144,336 Bitcoins derived from Silk Road’s illegal activities that were found on Ulbricht’s laptop computer.  These Bitcoins were ultimately sold by the United States Marshals Service pursuant to Court order for $48,238,116.

The civil forfeiture case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant United States Attorney Christine Magdo is in charge of the case.

United States Court of Appeals for the Second Circuit summary order below.  

UPDATE

The press release issued in this case on September 28, 2017, incorrectly identified Residential Home Mortgage Corp. as the settling defendant instead of Residential Home Funding Corp.  The defendant in this case is Residential Home Funding Corp. Residential Home Mortgage Corp. has no connection to this case and has not been accused of any wrongdoing.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Dane Narode, Associate General Counsel for Program Enforcement for the U.S. Department of Housing and Urban Development (“HUD”), and Christina Scaringi, the Special Agent in Charge of HUD’s Office of the Inspector General (“HUD-OIG”), Northeast Region, announced today that the United States has settled a civil mortgage fraud lawsuit against RESIDENTIAL HOME FUNDING CORP. (“RESIDENTIAL HOME FUNDING”) stemming from RESIDENTIAL HOME FUNDING’s participation in the Federal Housing Administration’s (“FHA”) Direct Endorsement Lender Program (“DEL Program”).  In the settlement, approved Monday by U.S. District Judge Jed S. Rakoff, RESIDENTIAL HOME FUNDING agreed to pay $1.67 million and admitted, acknowledged, and accepted responsibility for, among other things, failing to maintain a compliant quality control program and approving loans for FHA insurance that failed to meet the requirements established by HUD.  The settlement amount was based on RESIDENTIAL HOME FUNDING’s financial ability to pay after a review of the company’s financial records.  As part of the settlement, RESIDENTIAL HOME FUNDING also agreed to retain an independent compliance consultant to ensure its compliance with the HUD/FHA rules applicable to the DEL Program.

Acting Manhattan U.S. Attorney Kim said:  “We are committed to holding lenders accountable when they recklessly approve loans for FHA insurance and then fail to live up to their promises to HUD.  With this settlement, Residential Home Funding accepts responsibility for its conduct and will pay $1.67 million.”

HUD Associate General Counsel for Program Enforcement Dane Narode said:  “This case demonstrates HUD’s resolve in protecting the integrity of its mortgage insurance programs for the benefit of all Americans, especially first-time homebuyers.  We’re pleased that Residential Home Funding has accepted responsibility for its actions and has agreed to improve its training and quality control program.”  

HUD-OIG Special Agent in Charge Christina Scaringi said:  “This settlement with Residential Home Funding is the latest example of our continued commitment to hold mortgage industry professionals accountable for their actions.  HUD OIG’s Joint Civil Fraud Division and Office of Investigations will continue to work together with our partners at the U.S. Attorney’s Office to root out lenders who choose to use deceptive practices that ultimately cause FHA to suffer losses on mortgages that should never have been approved.”

The Government’s Complaint in this action alleged as follows:      

During the period 2006 through 2012 (“Covered Period”), RESIDENTIAL HOME FUNDING participated in the DEL Program.  As a DEL lender, RESIDENTIAL HOME FUNDING had the authority to originate, underwrite, and approve mortgages for FHA insurance.  If a DEL lender like RESIDENTIAL HOME FUNDING approved a loan for FHA insurance and the loan later defaulted, the holder of the loan could submit an insurance claim to HUD and HUD had to pay the costs associated with the default.  Throughout the Covered Period, HUD therefore required DEL lenders to follow HUD’s program rules, including its underwriting requirements and its requirement that lenders maintain a compliant quality control program.  A compliant quality control program must include procedures to ensure that the lender reviews loans for compliance with HUD requirements, promptly discloses to HUD all loans containing evidence of fraud or other serious underwriting problems, and conducts a full review of all loans that go into default within the first six payments (“early payment defaults”).  RESIDENTIAL HOME FUNDING failed to comply with all three of these basic requirements, and it also routinely approved loans for FHA insurance that did not meet HUD’s underwriting requirements.  Notwithstanding these failures, RESIDENTIAL HOME FUNDING continued to fraudulently certify to HUD, each year, that it “conforms to all HUD-FHA regulations necessary to maintain its HUD-FHA approval.”

            As part of the settlement, RESIDENTIAL HOME FUNDING has admitted, acknowledged, and accepted responsibility for the following misconduct during the Covered Period:

• RESIDENTIAL HOME FUNDING failed to conform to the HUD and FHA rules requiring DEL lenders to maintain a compliant quality control program by, among other things:

• • not taking action to address loans with underwriting deficiencies that were identified through RESIDENTIAL HOME FUNDING’s own quality assurance review process;

• • not reviewing early payment default loans; and

• • not reporting to HUD loans that were identified in RESIDENTIAL HOME FUNDING’s quality control reviews as having indicia of fraud or other serious deficiencies.

• Contrary to representations in RESIDENTIAL HOME FUNDING’s annual certifications, RESIDENTIAL HOME FUNDING did not conform to all applicable HUD and FHA regulations.

• RESIDENTIAL HOME FUNDING endorsed for FHA mortgage insurance loans that did not meet all underwriting requirements contained in HUD’s handbooks and mortgagee letters.

• RESIDENTIAL HOME FUNDING submitted to HUD and FHA loan-level certifications stating that loans were eligible for FHA mortgage insurance when in fact they were not.

*                      *                      *

Mr. Kim thanked HUD-OIG for its assistance in this case.

This case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Jessica Jean Hu and Elizabeth M. Tulis are in charge of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JASON MOYE, a/k/a “Tall Jay,” was sentenced this afternoon to a term of 444 months in prison, which must run consecutive to a prior prison sentence of five years, for his crimes as a high-ranking member of the “Young Gunnaz” or “YGz” gang, including the December 22, 2011, murder of Taisheem Ferguson, a/k/a “Trey,” 17.  MOYE was sentenced in Manhattan federal court by United States District Judge Valerie E. Caproni, before whom he previously pled guilty. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “A few days before Christmas in 2011, in broad daylight on a busy street, Moye ordered a fellow YGz gang member to shoot into a crowd, senselessly killing 17-year-old Taisheem Ferguson.  With today’s sentence, Moye has been held to account for this tragic murder and for his other crimes.  We hope that today’s sentence brings some consolation and justice to the victims of Moye’s crimes, in particular the family of Taisheem Ferguson.  Together with our law enforcement partners, we will continue to aggressively investigate and prosecute gang violence in our community.”

According to the charging and other documents filed in the case, and statements made during MOYE’s guilty plea and sentencing proceedings and other court proceedings in this case:

MOYE was a high-ranking member of the Bronx-based street gang known as the YGz.  From 2005 to 2016, members and associates of the YGz enriched themselves by committing robberies and by selling drugs, such as crack cocaine, heroin, and marijuana, and committed numerous acts of violence, including the murder of both rivals and innocent bystanders. 

As part of his involvement in the YGz gang, MOYE participated in numerous acts of violence in the South Bronx.  In particular, on the afternoon of December 22, 2011, MOYE ordered a member of the YGz to shoot into a crowd of rival gang members who were approaching them on Morris Avenue near 151st Street in the Bronx.  The YGz member fired several gunshots as directed, one of which killed Ferguson.

*                      *                     *

MOYE, 29, of the Bronx, is the sixth defendant to be sentenced this year by Judge Caproni for participation in a YGz-related murder.

Mr. Kim praised the outstanding work of the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration, and the New York City Police Department in the investigation of this case.  He also thanked the Bronx County District Attorney’s Office for their support in this case.

This case is being handled by this Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Samson Enzer, Gina M. Castellano, and Andrew C. Adams are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that KWAME INSAIDOO, the former executive director of United Block Association (“UBA”), a New York-based non-profit organization, was sentenced to 48 months in prison and his wife ROXANNA INSAIDOO was sentenced to 30 months in prison, in connection with their embezzlement of over $580,000 from UBA, defrauding their mortgage lender of approximately $200,000, and related crimes.  They were convicted on May 2, 2017, following a one-week jury trial before United States District Judge Valerie E. Caproni, who also imposed today’s sentence.

Acting U.S. Attorney Joon H. Kim said:  “As a Manhattan jury found, Kwame Insaidoo and Roxanna Insaidoo stole hundreds of thousands of dollars from a government-funded non-profit organization dedicated to serving senior citizens.  The Insaidoos enriched themselves and their family with taxpayer money that was supposed to support four senior centers in Upper Manhattan.  Now this husband-and-wife crime duo will serve time in prison for those crimes.”  

In imposing sentence, Judge Caproni stated that the “message has to be sent” that “it is not acceptable to steal money from the City that is designed for charitable goals to line your own pockets.”

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

UBA was a non-profit organization headquartered in New York, New York, that was controlled by KWAME INSAIDOO, its former Executive Director.  UBA had contracts with New York City through which it received taxpayer funds, including federal funds, to operate and provide healthy meals and programming to the elderly at four senior centers in Upper Manhattan.

As the jury found, KWAME INSAIDOO abused his authority as UBA’s Executive Director to embezzle, with the assistance of his wife, ROXANNA INSAIDOO, over $580,000 of UBA’s funds for his own benefit and that of his wife and son.  KWAME INSAIDOO and ROXANNA INSAIDOO concealed their embezzlement by laundering the money, in part, through a shell company that they had created.  KWAME INSAIDOO and ROXANNA INSAIDOO used the embezzled funds to pay for personal expenses, including the mortgage for their Long Island residence and the purchase of a Mercedes Benz and a Cadillac.  They also wired more than $300,000 to family members living abroad.    

In an effort to evade scrutiny regarding the embezzled funds, KWAME INSAIDOO repeatedly lied to the City, including to its auditors, in order to maintain UBA’s funding and to conceal the funds he and his wife had diverted to their shell company. 

In 2011, KWAME INSAIDOO and ROXANNA INSAIDOO also engaged in a scheme to defraud their mortgage lender in connection with a modification of their mortgage under the federally-sponsored Home Affordable Modification Program, by underreporting their income and assets, including the hundreds of thousands of dollars they had embezzled from UBA.  This scheme led to a write-off of almost $200,000 from KWAME INSAIDOO and ROXANNA INSAIDOO’s home mortgage.

*          *          *

In addition to the prison terms imposed today by Judge Caproni, KWAME INSAIDOO, 61, and ROXANNA INSAIDOO, 63, both of Bay Shore, Long Island, were ordered to forfeit a sum of $779,039.62.  

Mr. Kim praised the outstanding investigative work of the New York City Department of Investigation and the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York. 

The case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Eli J. Mark and David Zhou are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the arrest today of 10 individuals, including four Division I NCAA men’s basketball coaches and a senior executive at a major athletic apparel company (“Company-1”), in connection with two related fraud and corruption schemes.  In the first scheme, as alleged in the three Complaints unsealed today, college basketball coaches took cash bribes from athlete advisors, including business managers and financial advisors, in exchange for using their influence over college players under their control to pressure and direct those players and their families to retain the services of the advisors paying the bribes.  In the second scheme, a senior executive at Company-1, working in connection with corrupt advisors, funneled bribe payments to high school-aged players and their families to secure those players’ commitments to attend universities sponsored by Company-1, rather than universities sponsored by rival athletic apparel companies. 

The three Complaints unsealed today charge four coaches, CHUCK CONNORS PERSON, LAMONT EVANS, EMANUEL RICHARDSON, a/k/a “Book,” and ANTHONY BLAND, a/k/a “Tony”; three athlete advisors, CHRISTIAN DAWKINS, MUNISH SOOD, and RASHAN MICHEL; a senior executive at Company-1, JAMES GATTO, a/k/a “Jim,” along with two individuals affiliated with Company-1, MERL CODE and JONATHAN BRAD AUGUSTINE, with wire fraud, bribery, travel act, and conspiracy offenses.  The defendants were all arrested this morning in various parts of the country.  DAWKINS, SOOD, and AUGUSTINE are scheduled to appear before U.S. Magistrate James L. Cott in federal court later today.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “The picture of college basketball painted by the charges is not a pretty one – coaches at some of the nation’s top programs taking cash bribes, managers and advisors circling blue-chip prospects like coyotes, and employees of a global sportswear company funneling cash to families of high school recruits.  For the ten charged men, the madness of college basketball went well beyond the Big Dance in March.  Month after month, the defendants allegedly exploited the hoop dreams of student-athletes around the country, treating them as little more than opportunities to enrich themselves through bribery and fraud schemes.  The defendants’ alleged criminal conduct not only sullied the spirit of amateur athletics, but showed contempt for the thousands of players and coaches who follow the rules, and play the game the right way.”

FBI Assistant Director William F. Sweeney Jr. said:  “Today’s charges detail a corrupt practice in which highly rated high school and college basketball players were steered toward lucrative business deals with agents, advisors, and an international athletics apparel company.  As alleged, NCAA Division I and AAU coaches created a pay-to-play culture, agreeing to provide access to their most valuable players while also effectively exerting their influence over them.  Today’s arrests should also serve as a warning to those who conduct business this way in the world of college athletics.”
According to allegations contained in the three Complaints[1] unsealed today in Manhattan federal court, and other publicly available documents:

Overview of the Investigation

The charges in the Complaints result from a scheme involving bribery, corruption, and fraud in intercollegiate athletics.  Since 2015, the U.S. Attorney’s Office for the Southern District of New York and the FBI have been investigating the criminal influence of money on coaches and student-athletes who participate in intercollegiate basketball governed by the NCAA.  The investigation has revealed two related schemes.  In the first scheme (the “Coach Bribery Scheme”), athlete advisors – including financial advisors and business managers, among others – allegedly paid bribes to assistant and associate head basketball coaches at NCAA Division I universities, and sometimes directly to student-athletes at those universities, facilitated by the coaches.  In exchange for the bribes, the coaches agreed to pressure and exert influence over student-athletes under their control to retain the services of the bribe-payors once the athletes entered the National Basketball Association (“NBA”).  

In the second scheme (the “Company-1 Scheme”), athlete advisors working with high-level Company-1 employees, allegedly paid bribes to student-athletes playing at, or bound for, NCAA Division I universities, and to the families of such athletes.  These bribes were paid in exchange for a commitment by the athletes to matriculate at a specific university sponsored by Company-1, and a promise to ultimately sign agreements to be represented by the bribe-payors once the athletes entered the NBA.

Participants in both schemes allegedly took steps to conceal the illegal payments, including (i) funneling them to athletes and/or their families indirectly through surrogates and entities controlled by the scheme participants; and (ii) making or intending to make misrepresentations to the relevant universities regarding the involvement of student-athletes and coaches in the schemes, in violation of NCAA rules.

As described in the complaints, these schemes operated as a fraud on the universities involved, all of which provide scholarships to players and salaries to coaches with the understanding and expectation that the players and coaches are in full compliance with all relevant NCAA rules and regulations.  Moreover, these schemes subject the universities to substantial potential penalties by the NCAA, including, but not limited to, financial fines and penalties as well as the potential loss of eligibility to compete in various NCAA events. 

The Coach Bribery Schemes

The first scheme alleged in the Complaints entailed bribes by DAWKINS and SOOD, among others, to four men’s basketball coaches, PERSON, EVANS, RICHARDSON and BLAND, in exchange for the coaches’ agreement to direct players under their control, and the players’ families, to retain DAWKINS and SOOD once the players entered the NBA.  These corrupt arrangements, which turn on the coaches’ abuse of their positions of trust at the universities, are valuable both to the coaches, who receive cash bribes, and to the bribe-payors, for whom securing a future NBA player as a client can prove extremely profitable. 

Allegations Involving Chuck Person

Beginning in or around 2016, and continuing into 2017, PERSON, a former NBA player and the associate head coach at University-1, abused his coaching position at University-1 to solicit and obtain approximately $91,500 in bribe payments from a financial advisor and business manager for professional athletes, who, unbeknownst to PERSON, was providing information to law enforcement (“CW-1”).  In exchange for the bribes, PERSON agreed to direct certain University-1 basketball players to retain the services of CW-1 when those student-athletes entered the NBA.  The bribe payments initially were arranged by MICHEL, who had a preexisting relationship with PERSON and operated a clothing store that specialized in making bespoke suits for professional athletes.  Over the course of the scheme, PERSON did, in fact, arrange multiple meetings between CW-1 and players and/or their family members, in which he falsely touted CW-1’s qualifications without disclosing that he was being bribed to recommend CW-1.  For example, at one meeting, PERSON told the mother of a player at University-1 that CW-1 was PERSON’s own financial advisor and had also advised NBA Hall of Fame inductee (and University-1 alumnus) Charles Barkley, neither of which was true.  PERSON similarly told another player that CW-1 would purchase him a separate cell phone over which they could communicate so as to conceal the nature of the scheme.  

In addition to the bribe payments that PERSON solicited and received, PERSON also arranged for CW-1 to make payments directly to the families of the players PERSON was steering to CW-1.  PERSON further claimed to have given approximately $18,500 of the bribe money he received to the families of two student-athletes whom PERSON sought to steer to retain CW-1.

Allegations Involving Lamont Evans

Beginning in 2016, and continuing into 2017, EVANS solicited at least $22,000 from CW-1 and SOOD in exchange for EVANS’s agreement to exert his official influence over certain student-athletes that EVANS coached at two NCAA Division I universities, University-3 and University-4, to retain SOOD and CW-1’s business management and financial advisory services once those players entered the NBA.  In return, EVANS (who had received bribe payments from DAWKINS previously), promised SOOD and CW-1 that he would steer multiple specific players to retain their services.  Indeed, as a part of the scheme, EVANS arranged for CW-1 to meet with a student-athlete EVANS coached at University-4 (“Player-4”), and arranged for SOOD to meet with the mother of another student-athlete EVANS had previously coached at University-3, for the purpose of pressuring them to retain SOOD and CW-1.  Moreover, and in return for the bribe payments, EVANS falsely touted the services of SOOD and CW-1 to players and their families, telling Player-4, for example, that CW-1 was “my guy,” adding, falsely, that CW-1 “has helped me personally.  And I trust that,” and assuring Player-4 that “[i]t’s going to benefit you.  I promise you that.”  In explaining the benefit of bribing an assistant coach such as EVANS, DAWKINS explained to SOOD and CW-1 that because coaches like EVANS could not get “caught” receiving bribes because “his job is on the line,” EVANS and other corrupt coaches would have an incentive to “block” other athlete advisors from accessing the players under the coaches’ supervision and directing those players to the bribe-payors.

Allegations Involving Emanuel Richardson, a/k/a “Book”

Beginning in or around February 2017, and continuing through September 2017, DAWKINS and SOOD, along with two undercover law enforcement agents posing as financial backers of CW-1 (“UC-1” and “UC-2,” respectively), paid or facilitated the payment of $20,000 in bribes to RICHARDSON in return for RICHARDSON’s commitment to steer players under his control at University-4 to retain DAWKINS and SOOD’s services upon entering the NBA.  During that period, RICHARDSON repeatedly assured DAWKINS and SOOD that RICHARDSON would use his influence over players at Univeristy-4 to direct them to DAWKINS and SOOD, explaining, with respect to one particular player DAWKINS and SOOD sought to sign (“Player-6”), that Player-6 would be “insulated in who he talks to.”  RICHARDSON added, with respect to himself, that “you’re looking at the guy” whom Player-6 trusted.  RICHARDSON subsequently facilitated at least one meeting between DAWKINS, SOOD, and a representative of Player-6 for the purpose of having that representative commit the player to retain DAWKINS and SOOD’s business management and financial advisory services.  In addition, RICHARDSON appears to have provided a portion of the bribe money he received from DAWKINS, SOOD, UC-1, and UC-2 to at least one prospective high school basketball player (“Player-5”) in order to recruit that player to play for University-4. 

Allegations Involving Anthony Bland, a/k/a “Tony,”

Beginning in or around July 2017, and continuing into September 2017, DAWKINS and SOOD, working with UC-1, paid and/or facilitated the payment of at least $13,000 in bribes to BLAND in exchange for BLAND’s agreement to exert his official influence over certain student-athletes BLAND coached at University-5, to retain DAWKINS and SOOD’s business management and/or financial advisory services once those players entered the NBA.  In particular, as BLAND told DAWKINS and SOOD, in return for their bribe payments, “I definitely can get the players. . . .  And I can definitely mold the players and put them in the lap of you guys.”  In addition, and as part of the scheme, at BLAND’s direction DAWKINS and SOOD paid or facilitated the payment of an additional $9,000 directly to the families of two student-athletes at University-5.  In return, BLAND facilitated a meeting between DAWKINS and SOOD and a relative of a player currently attending University-5 (“Player-9”) for the purpose of pressuring Player-9 to retain DAWKINS and SOOD.

The Company-1 Scheme

In addition to the Coach Bribery Scheme described above, the investigation further revealed a second, related scheme.  In the second scheme, JAMES GATTO, a/k/a “Jim,” a high-level executive at Company-1, and MERL CODE, an individual affiliated with Company-1 and its high school and college basketball programs, conspired to pay high school basketball players or their families for commitments by those players to attend and play for aCompany-1-sponsored university, and to sign with Company-1 upon turning professional.  In addition, DAWKINS, SOOD, and JONATHAN BRAD AUGUSTINE brokered and facilitated the corrupt payments in exchange for a promise that the players also would retain the services of DAWKINS and SOOD upon turning professional. 

Specifically, in or around 2017, GATTO, CODE, DAWKINS, AUGUSTINE, and SOOD agreed to pay bribes to at least three high school basketball players or their families in the following manner:

Allegations Involving Player-10 and University-6

First, GATTO, CODE, DAWKINS, and SOOD worked together to funnel $100,000 from Company-1 to the family of a high school basketball player (“Player-10”) in exchange for Player-10’s commitment to play at an NCAA Division I university whose athletic programs are sponsored by Company-1 (“University-6”), and in further exchange for a commitment from Player-10 to retain DAWKINS and SOOD, and to sign with Company-1, once Player-10 joined the NBA.  DAWKINS told CW-1 and others on a recorded conversation that he did so at the request of a coach at University-6 (“Coach-2”), and call records show that GATTO spoke directly with Coach-2 multiple times in the days before Player-10 publicly committed to attending University-6. 

Moreover, because the payments to the family of Player-10 were both in violation of NCAA rules and illegal, they were disguised by GATTO, CODE, DAWKINS, and SOOD using fake purchase orders, invoices and related documents to make them appear to be payments from Company-1 to CODE’s company.  As CODE explained to DAWKINS, while such payments are sometimes made “off the books,” for this particular payment, GATTO and CODE had identified it to Company-1 as “as a payment to my team, to my organization, so it’s on the books, [but] it’s not on the books for what it’s actually for.”  Indeed, the money, once allocated by Company-1, was funneled back to DAWKINS to use to pay the father of Player-10 in cash.

Allegations Involving Player-11 and University-6

Second, DAWKINS and AUGUSTINE agreed to facilitate payments to the family of another high school basketball player (“Player-11”) in exchange for Player-11’s commitment to play at University-6 and ultimately to retain DAWKINS’s services.  While these payments were not directly funded by Company-1, they were made to benefit Company-1, which, as noted, sponsors University-6, and with the expectation that Company-1 would provide additional funding to AUGUSTINE in return.  AUGUSTINE noted, “all [Coach-2] has to do is pick up the phone and call somebody [and say] these are my guys, they’re taking care of us.” 

Because these payments from DAWKINS to Player-11’s family were both in violation of NCAA rules and illegal, AUGUSTINE suggested that the “easiest way” for DAWKINS to provide money for Player-11 and his family would be to send the money to AUGUSTINE’s “non-profit for the grassroots team,” although AUGUSTINE confirmed that he also would accept cash.

As DAWKINS subsequently explained to UC-2 in the context of providing such money to AUGUSTINE and others, “obviously some of it can’t be completely accounted for on paper because some of it is, whatever you want to call it, illegal.”

Allegations Involving Player-12 and University-7

Third, GATTO, CODE, DAWKINS, and AUGUSTINE agreed to make payments of as much as $150,000 from Company-1 to another high school basketball player (“Player-12”) in order to secure Player-12’s commitment to play at an NCAA Division I university whose athletic programs are also sponsored by Company-1 (“University-7”).  Because Player-12 played for an amateur team run by AUGUSTINE and sponsored by Company-1, AUGUSTINE, with the assistance of CODE and DAWKINS, attempted to broker the deal to secure Player-12’s commitment to attend University-7 rather than a school sponsored by a rival athletic apparel company.  In exchange for the payment, Player-12 similarly was expected to commit to retaining DAWKINS’s services and signing with Company-1 once Player-12 joined the NBA.

Much as with the payments to Player-10 described above, according to intercepted calls, GATTO stated that the payments from Company-1 to Player-12 were allegedly requested specifically by a coach at University-7 (“Coach-3”), who allegedly called GATTO directly and who, according to DAWKINS, CODE, and AUGUSTINE, “knows everything” and, in particular, “knows something’s gotta happen for” Player-12 to commit to attending University-7. 

*                *                *

Defendant

Age

Hometown

Charges (Potential Maximum Term of Imprisonment)

Chuck Connors Person

53

Auburn, AL

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud, Wire fraud conspiracy; Travel Act conspiracy (80 years)

Rashan Michel

43

Smyrna, GA

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Wire fraud conspiracy; Travel Act conspiracy (80 years)

Lamont Evans

40

Stillwater, OK

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Conspiracy to commit wire fraud; Travel Act conspiracy (80 years)

Emanuel Richardson, a/k/a “Book”

44

Tucson, AZ

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Conspiracy to commit wire fraud; Travel Act conspiracy (80 years)

Anthony Bland, a/k/a “Tony”

37

Los Angeles, CA

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Conspiracy to commit wire fraud; Travel Act conspiracy (80 years)

Christian Dawkins

24

Atlanta, GA

Bribery conspiracy, Payments of bribes, Honest services fraud conspiracy, Honest services fraud (3 counts), Wire fraud conspiracy (2 counts), Wire fraud (2 counts), Travel Act conspiracy, Money laundering conspiracy (200 years)

Munish Sood

45

Trenton, NJ

Bribery conspiracy, Payments of bribes, Honest services fraud conspiracy, Honest services fraud (3 counts), Wire fraud conspiracy (2 counts), Wire fraud (2 counts), Travel Act conspiracy, Money laundering conspiracy (200 years)

James Gatto, a/k/a “Jim”

47

Wilsonville, OR

Wire fraud conspiracy, Wire fraud (2 counts), Money laundering conspiracy (80 years)

Merl Code

43

Greer, SC

Wire fraud conspiracy, Wire fraud (2 counts), Money laundering conspiracy (80 years)

Jonathan Brad Augustine

32

Winter Garden, FL

Wire fraud conspiracy, Wire fraud (2 counts), Money laundering conspiracy (80 years)

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

Mr. Kim praised the work of the FBI and the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York.

Anyone with information relevant to the investigation is asked to contact the FBI at the special phone number established to receive such information, (212) 384-2135.

The case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Robert Boone, Russell Capone, Edward B. Diskant, and Noah Solowiejczyk are in charge of the prosecution.

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

“The Second Circuit, while finding that the evidence was more than sufficient to convict Dean and Adam Skelos, held that a part of the jury instruction is no longer good law under the Supreme Court decision in McDonnell.  While we are disappointed in the decision and will weigh our appellate options, we look forward to a prompt retrial where we will have another opportunity to present the overwhelming evidence of Dean Skelos and Adam Skelos’s guilt and again give the public the justice it deserves.  Cleaning up corruption is never easy, and that is certainly true for corruption in New York State government.  But we are as committed as ever to doing everything we can to keep our government honest.  That is what we will do in this prosecution as well.”        

There will be a press conference today at noon to announce charges of fraud and corruption in college basketball.  Federal criminal charges have been brought against ten people, including four college basketball coaches, as well as managers, financial advisors, and representatives of a major international sportswear company.  The press conference will be livestreamed on Facebook @USAOSDNY. 

WHO:  

Joon H. Kim, Acting United States Attorney for the Southern District of New York

William F. Sweeney, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation

WHEN:  

Tuesday, September 26, 2017 at 12 p.m.

WHERE:

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

1 St. Andrew’s Plaza

New York, NY 10007

CONTACT:  

James Margolin, Dawn Dearden, Nicholas Biase

(212) 637-2600

NOTE:  

Please silence all cell phones, PDAs, and pagers before start of press conference.

DO NOT REPLY TO THIS MESSAGE.  IF YOU HAVE QUESTIONS, PLEASE CALL THE PRESS OFFICE AT (212) 637-2600

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that FADI EWIESS, a/k/a “Fadi Awise,” was sentenced today to three years in prison on wire fraud charges in connection with his participation in a scheme to defraud investors through the operation of a purported foreign exchange (“forex”) trading company called Golden Bridge FX.  EWIESS pled guilty on April 11, 2017, and was sentenced by United States District Judge Deborah A. Batts.  

Acting U.S. Attorney Joon H. Kim said:  “As he admitted at his plea, Fadi Ewiess lied to prospective investors about his company’s expertise in the foreign exchange markets, sending them forged ‘guarantees’ from New York banks to entice them to invest with him.  Ewiess and others raised more than $5 million from victims around the globe, but instead of investing it, he spent much of that money on gambling, personal expenses, and transfers to family members.  Today, Fadi Ewiess learned the price of his criminal conduct.”

According to the Complaint, Information, and statements made during court proceedings:

From in or about 2015 through in or about 2016, EWIESS operated a company called Golden Bridge FX (“Golden Bridge”).  Golden Bridge purported to host an online foreign currency trading platform that allowed customers to place bets on the direction with which particular currencies would move relative to others.  Investors using this platform either made investments themselves or authorized representatives from Golden Bridge to do so on their behalf.  In order to induce investments, EWIESS and others at Golden Bridge promised certain investors unrealistically high rates of return for managed accounts, and, in other instances, falsely told investors that their trading was guaranteed against losses by U.S. banks.  To substantiate these purported guarantees, EWIESS and others distributed forged documents that appeared to have been (but in actuality were not) issued by the relevant banks. 

EWIESS and others raised more than $5 million during the course of the scheme, with much of this money coming from investors in Saudi Arabia and other countries.  Over $2 million of that amount, moreover, was raised through the use of the fraudulent guarantees described above.  Instead of honoring these guarantees (or, indeed, placing any securities transactions at all), EWIESS spent millions of his investors’ money on personal expenses like travel and hotels, on gambling trips, and on transfers to his family members.  Other investor money was used to pay returns to investors so that they would invest or refer additional money to EWIESS and Golden Bridge, thereby allowing the scheme to continue. 

*                      *                      *

In addition to the prison sentence, EWIESS, 39, of Israel, was ordered to forfeit a sum of $2,105,619.91 and the contents of five bank accounts associated with the scheme. 

Mr. Kim praised the work of the Federal Bureau of Investigation in this investigation.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ANTHONY WEINER was sentenced today in Manhattan federal court to 21 months in prison for transferring obscene material to a minor.  WEINER pled guilty on May 19, 2017, before U.S. District Judge Loretta A. Preska.  Today’s sentence was imposed by U.S. District Judge Denise L. Cote. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Anthony Weiner, a former Congressman and candidate for Mayor, asked a girl who he knew to be 15 years old to display her naked body and engage in sexually explicit behavior for him online.  Justice demands that this type of conduct be prosecuted and punished with time in prison.  Today, Anthony Weiner received a just sentence that was appropriate for his crime.”

In sentencing ANTHONY WEINER, Judge Cote said:  “This is a serious crime that deserves serious punishment.”

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

Between January and March 2016, WEINER used online messaging and video chat applications to communicate with a minor girl he knew to be 15 years old (the “Minor Victim”) and to transfer obscene material to her.  Those communications began the evening of January 23, 2016, when the Minor Victim initiated contact with WEINER by sending him a direct message on Twitter.  That night, the Minor Victim and WEINER exchanged a series of messages.  Early in the exchange, the Minor Victim revealed to WEINER that she was in high school.  As their communications progressed, the Minor Victim made plain that she was a minor.  Despite that knowledge, WEINER participated in increasingly suggestive exchanges.  The exchanges occurred over Facebook messenger, Skype, Kik, Confide, and Snapchat, the latter three of which are messaging and photo-sharing applications that delete messages and images once viewed.    

Between February 17 and 23, 2016, WEINER and the Minor Victim participated in three video chat sessions on Skype.  The Minor Victim made clear during those chat sessions that she was not just a minor; she was, in fact, only 15 years old.    Nevertheless, during the latter two Skype sessions, on February 18 and 23, 2016, and in a Snapchat communication on March 9, 2016, the defendant used graphic and obscene language to ask the Minor Victim to display her naked body and touch herself, which she did.  He also sent an obscene message to the Minor Victim on Confide, describing what he would do to her if she were 18.  As part of these criminal exchanges, the defendant also sent the Minor Victim adult pornography, or a link thereto.  In approximately March 2016, after several months of intermittent exchanges, communications between the defendant and the Minor Victim largely stopped. 

*                *                *

In addition to the prison term, WEINER, 53, of New York, New York, was sentenced to three years of supervised release.

Mr. Kim praised and thanked the Federal Bureau of Investigation and the Special Victims Division of the New York City Police Department for their outstanding work.

The case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Amanda Kramer and Stephanie Lake are in charge of the prosecution.

A Florida resident was sentenced today in federal court in White Plains, New York to 18 months in prison, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Joon H. Kim for the Southern District of New York.

According to documents filed with the court, from February 2010 through March 2011, Damyon Shuler, 47, approached relatives and others and told them that he could claim slave reparations on their behalf by filing tax returns with the Internal Revenue Service (IRS), for which he charged a $4,000 to $5,000 fee.  Shuler then filed 30 returns with the IRS on behalf of other taxpayers, claiming bogus refunds of between $48,184 and $61,300 on each return.  To generate the fraudulent refunds, Shuler reported fake capital gains income and taxes paid on that income in the exact same amount.  He also attached to each return a form falsely reporting that a Treasury Department office or program identified as “Overpayment of Black Invest Taxes” had paid the taxes to the IRS.  To conceal that he prepared these returns, Shuler did not list himself as the preparer.  Shuler also filed a fraudulent 2009 income tax return for himself claiming a refund of $46,685 based on the same scheme.  In total, Shuler’s fraudulent refund scheme led to losses of more than $1.2 million.   

In addition to the term of prison imposed, U.S. District Court Judge Nelson S. Roman ordered Shuler to serve one year of supervised release and to pay restitution to the IRS in the amount of $1.18 million.  Shuler pleaded guilty in April to filing his own fraudulent return and filing a fraudulent return on behalf of another taxpayer.  

Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Kim thanked special agents of IRS Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Olga Zverovich and Assistant Chief Andrew Kameros of the Tax Division, who prosecuted the case.

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

Joon H. Kim, the Acting United States for the Southern District of New York, and Stuart M. Goldberg, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division, announced that DAMYON SHULER was sentenced today in White Plains federal court to 18 months in prison for filing false tax returns.  SHULER pled guilty in April before U.S. District Court Judge Nelson S. Román, who also imposed today’s sentence.

According to documents filed with the court, from February 2010 through March 2011, SHULER, 47, of Orange City, Florida, approached relatives and others and told them that he could claim slave reparations on their behalf by filing tax returns with the Internal Revenue Service (IRS), for which he charged a $4,000 to $5,000 fee.  SHULER then filed 30 returns with the IRS on behalf of other taxpayers, claiming bogus refunds of between $48,184 and $61,300 on each return. 

To generate the fraudulent refunds, SHULER reported fake capital gains income and taxes paid on that income in the exact same amount.  He also attached to each return a form falsely reporting that a Treasury Department office or program identified as “Overpayment of Black Invest Taxes” had paid the taxes to the IRS.  To conceal that he prepared these returns, SHULER did not list himself as the preparer.  SHULER also filed a fraudulent 2009 income tax return for himself claiming a refund of $46,685 based on the same scheme.  In total, SHULER’s fraudulent refund scheme led to losses of more than $1.2 million.   

In addition to the term of prison imposed, U.S. District Court Judge Nelson S. Román ordered SHULER to serve one year of supervised release and to pay restitution to the IRS in the amount of $1,180,150.

Mr. Kim thanked IRS Criminal Investigation for its work on the investigation.

Assistant U.S. Attorney Olga Zverovich of the Office’s White Plains Division and Assistant Chief Andrew Kameros of the Tax Division are in charge of the prosecution.

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

Stockholm-based Telia Company AB, an international telecommunications company that was formerly an issuer of publicly traded securities in the U.S., and its Uzbek subsidiary, Coscom LLC, entered into a global foreign bribery resolution and agreed to pay a combined total penalty of more than $965 million to resolve charges arising out of a scheme to pay bribes in Uzbekistan.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joon H. Kim of the Southern District of New York, Chief Don Fort of Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Patrick J. Lechleitner of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) Washington, D.C., Field Office made the announcement.

“This resolution underscores the Department’s continued and unwavering commitment to robust FCPA and white-collar criminal enforcement.  It also demonstrates the Department’s cooperative posture with its foreign counterparts to stamp out international corruption and to reach fair, appropriate and coordinated resolutions,” said Acting Assistant Attorney General Blanco.  “Foreign and domestic companies that pay bribes put honest companies at a disadvantage and distort the free and fair market and the rule of law.  Today’s resolution reflects the significant efforts of law enforcement, the Criminal Division and the U.S. Attorney’s Office for the Southern District of New York to bring such companies to justice, and to maintain a competitive and level playing field for companies to do business, create jobs and thrive.”

“Today, we announce one of the largest criminal corporate bribery and corruption resolutions ever, with penalties totaling just under a billion dollars,” said Acting U.S. Attorney Kim.   “Swedish telecom company Telia and its Uzbek subsidiary Coscom have admitted to paying, over many years, more than $331 million in bribes to an Uzbek government official.  Telia, whose securities traded publicly in New York, corruptly built a lucrative telecommunications business in Uzbekistan, using bribe payments wired around the world through accounts here in New York City.  If your securities trade on our exchanges and you use our banks to move ill-gotten money, then you have to abide by our country’s laws.  Telia and Coscom refused to do so, and they have been held accountable in Manhattan federal court today.”

“Today marks the second resolution of proceedings against corporate entities who have engaged in a global bribery scheme of government officials,” said Chief Fort.  “It also further demonstrates the dedication we have to identifying illegal financial transactions being used for bribery in the international community.  It is important that the global economy remain on a fair playing field and IRS-CI will remain committed in our efforts to dismantle these kinds of corrupt financial schemes.”

“Today’s resolution marks a win against a foreign corruption scheme where millions of dollars in bribery funds were paid to Uzbekistan officials and laundered through the U.S. financial system.” said Special Agent in Charge Lechleitner.  “HSI, working hand in hand with our partners at IRS Criminal Investigation, leveled the playing field for publicly traded companies by exposing these corrupt practices and helped the U.S. government collect nearly $275 million in criminal penalties”

Telia entered into a deferred prosecution agreement in connection with a criminal information filed today in the Southern District of New York charging the company with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA).   The case is assigned to U.S. District Judge George B. Daniels.  In addition, Coscom pleaded guilty and was sentenced by Judge Daniels on a one-count criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.  Pursuant to its agreement with the Department, Telia agreed to pay a total criminal penalty of $274,603,972 to the U.S., including a $500,000 criminal fine and $40 million in criminal forfeiture that Telia agreed to pay on behalf of Coscom.  Telia also agreed to implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals.

The U.S. Securities and Exchange Commission (SEC) and the Public Prosecution Service of the Netherlands (Openbaar Ministrie, or OM) announced separate settlements with Telia in connection with related proceedings.  Under the terms of its resolution with the SEC, Telia agreed to a total of $457,169,977 in disgorgement of profits and prejudgment interest, and the SEC agreed to credit any disgorged profits that Telia pays to the Swedish Prosecution Authority (SPA) or OM, up to half of the total.  Telia agreed to pay the OM a criminal penalty of $274,000,000 for a total criminal penalty of $548,603,972, and a total resolution amount of more than $1 billion.  The Department of Justice agreed to credit the criminal penalty paid to the OM as part of its agreement with the company.  The SEC agreed to credit the $40 million in forfeiture paid to the Department as part of its agreement with the company.  Thus, the combined total amount of criminal and regulatory penalties paid by Telia and Coscom to the U.S., Dutch, and Swedish authorities will be $965,773,949. 

According to the companies’ admissions, Telia and Coscom, through various managers and employees within Telia, Coscom and affiliated entities, paid approximately $331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecom industry.  The companies structured and concealed the bribes through various payments including to a shell company that certain Telia and Coscom management knew was beneficially owned by the foreign official.  The bribes were paid on multiple occasions between approximately 2007 and 2010, so that Telia could enter the Uzbek market and Coscom could gain valuable telecom assets and continue operating in Uzbekistan.  Certain Telia and Coscom management also contemplated structuring an additional bribe payment in late 2012, after Swedish media began reporting about Telia’s corrupt payments in Uzbekistan, Swedish authorities began a criminal investigation and Telia opened an internal investigation.

A number of significant factors contributed to the Department’s criminal resolution with the companies.  Among these, the companies received significant credit for their extensive remedial measures and cooperation with the Department’s investigation.  Specifically, the criminal penalty reflects a 25 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range.  However, the companies did not receive more significant mitigation credit, either in the penalty or the form of resolution, because the companies did not voluntarily self-disclose their misconduct to the Department.

The resolution, reached in coordination with the SEC and authorities in the Netherlands, marks the second such resolution by a major international telecommunciations provider for bribery in Uzbekistan.  On Feb. 18, 2016, Amsterdam-based VimpelCom Limited and its Uzbek subsidiary, Unitel LLC, also entered into resolutions with the Department of Justice and admitted to a conspiracy to make more than $114 million in bribery payments to the same Uzbek government official between 2006 and 2012.  The investigation has thus far yielded a combined total of over $1.76 billion in global fines and disgorgement, including over $500 million in criminal penalties to the Department of Justice.  In related actions, the Department has also filed civil complaints seeking the forfeiture of more than $850 million held in bank accounts in Switzerland, Belgium, Luxembourg and Ireland, which constitute bribe payments made by VimpelCom, Telia and a third telecommunications company, or funds involved in the laundering of those corrupt payments, to the Uzbek official. 

*          *          *

Law enforcement colleagues within the OM and the SPA provided significant cooperation and assistance in this matter.  Law enforcement colleagues in Austria, Belgium, Cyprus, France, Ireland, Latvia, Luxembourg, Norway, Switzerland, the Isle of Man and the United Kingdom have also provided valuable assistance.  The Criminal Division’s Office of International Affairs provided significant assistance, as well.  The SEC referred the matter to the Department and also provided extensive cooperation and assistance.

The IRS-CI and ICE-HSI are investigating the cases as part of the IRS Global Illicit Financial Team in Washington, D.C.  Senior Litigation Counsel Nicola J. Mrazek and Trial Attorney Ephraim Wernick of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Edward Imperatore of the Southern District of New York are prosecuting the criminal case, with substantial assistance from the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS).  MLARS Trial Attorney Michael Khoo is prosecuting the forfeiture case with substantial assistance from the Fraud Section and former MLARS Trial Attorney Marie M. Dalton, now an Assistant U.S. Attorney in the Western District of Washington. 

The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Individuals with information about possible proceeds of foreign corruption located in or laundered through the U.S. should contact federal law enforcement or send an email to [email protected].

Joon H. Kim, the Acting United States Attorney for the Southern District of New York (“SDNY”), Kenneth A. Blanco, the Acting Assistant Attorney General for the Criminal Division of the Department of Justice (“DOJ”), Don Fort, Chief of the Criminal Investigation Division, Internal Revenue Service (“IRS-CI”), and Patrick J. Lechleitner, Special Agent in Charge of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”) Washington, D.C., Field Office, announced today the filing of criminal charges against Telia Company AB (“Telia”), a multinational telecommunications company headquartered in Sweden, whose securities traded publicly in New York from 2002 until 2007, and its Uzbek subsidiary, Coscom LLC  (“Coscom”), for conspiring to violate the Foreign Corrupt Practices Act (“FCPA”) by paying more than $331 million in bribes to a government official in Uzbekistan. 

Mr. Kim also announced that in connection with the filed charges, Coscom pled guilty today before United States District Judge George B. Daniels, and SDNY and DOJ entered into a deferred prosecution agreement (“DPA”) with Telia.  Pursuant to the DPA, Telia admitted to participating in the charged conspiracy.  Telia will pay a total criminal penalty of $274,603,972 to the United States, which includes a $500,000 criminal fine and $40 million in criminal forfeiture that Telia agreed to pay on behalf of Coscom.  Telia also agreed to implement rigorous internal controls and cooperate fully with the Government’s ongoing investigation, including its investigation of individuals.

In related proceedings, Telia reached a settlement with the U.S. Securities and Exchange Commission (“SEC”) and the Public Prosecution Service of the Netherlands (“PPS”).  Under the terms of its civil resolution with the SEC, Telia agreed to pay $457,169,977 in disgorgement of profits and prejudgment interest.  Finally, Telia agreed to pay the PPS a criminal penalty of $274 million, which, together with the criminal penalty paid to the United States, yieldstotal criminal penalties of $548,603,972.  Because the SEC agreed to credit the $40 million paid in criminal forfeiture against the civil settlement amount, the total criminal and regulatory penalties to be paid by Telia is $965,773,949.

Acting U.S. Attorney Joon H. Kim said:  “Today, we announce one of the largest criminal corporate bribery and corruption resolutions ever, with penalties totaling just under a billion dollars.  Swedish telecom company Telia and its Uzbek subsidiary Coscom have admitted to paying, over many years, more than $331 million in bribes to an Uzbek government official.  Telia, whose securities traded publicly in New York, corruptly built a lucrative telecommunications business in Uzbekistan, using bribe payments wired around the world through accounts here in New York City.  If your securities trade on our exchanges and you use our banks to move ill-gotten money, then you have to abide by our country’s laws.  Telia and Coscom refused to do so, and they have been held accountable in Manhattan federal court today.” 

Acting Assistant Attorney General Kenneth A. Blanco said:  “This resolution underscores the Department’s continued and unwavering commitment to robust FCPA and white-collar criminal enforcement.  It also demonstrates the Department’s cooperative posture with its foreign counterparts to stamp out international corruption and to reach fair, appropriate and coordinated resolutions.  Foreign and domestic companies that pay bribes put honest companies at a disadvantage and distort the free and fair market and the rule of law.  Today’s resolution reflects the significant efforts of law enforcement, the Criminal Division and the U.S. Attorney’s Office for the Southern District of New York to bring such companies to justice, and to maintain a competitive and level playing field for companies to do business, create jobs and thrive.”

IRS-CI Chief Don Fort said:  “Today marks the second resolution of proceedings against corporate entities who have engaged in a global bribery scheme of government officials.  It also further demonstrates the dedication we have to identifying illegal financial transactions being used for bribery in the international community.  It is important that the global economy remain on a fair playing field and IRS-CI will remain committed in our efforts to dismantle these kinds of corrupt financial schemes.”

HSI Special Agent in Charge Patrick J. Lechleitner said:  “Today’s resolution marks a win against a foreign corruption scheme where millions of dollars in bribery funds were paid to Uzbekistan officials and laundered through the U.S. financial system.  HSI, working hand in hand with our partners at IRS Criminal Investigation, leveled the playing field for publicly traded companies by exposing these corrupt practices and helped the U.S. government collect nearly $275 million in criminal penalties.”

According to the allegations contained in the criminal Informations, which was filed today in Manhattan federal court, the statement of facts set forth in the DPA, and other publicly available information:

Between approximately 2007 and 2012, Telia and Coscom, through various executives, employees, and affiliated entities, paid more than $331 million in bribes to illegally obtain telecommunications business in Uzbekistan.  The bribes were paid to an Uzbek government official who was a close relative of a high-ranking government official and who exercised influence over Uzbek telecommunications industry regulators.  Telia and Coscom structured and concealed the bribes through various payments to a shell company that certain Telia and Coscom management knew was beneficially owned by the foreign official.  The bribes were paid on multiple occasions over a period of approximately five years so that Telia could enter the Uzbek market and Coscom could gain valuable telecom assets and continue operating in Uzbekistan. 

Under the direction and control of the Uzbek government official, more than $331 million in bribery proceeds were laundered through accounts held in various countries around the world.  The illicit funds were transmitted through financial institutions in the Southern District of New York before they were deposited into accounts in those countries.

This resolution, reached in coordination with the SEC and authorities in the Netherlands, marks the second such resolution by a major international telecommunciations provider for bribery in Uzbekistan.  On February 18, 2016, Amsterdam-based VimpelCom Limited and its Uzbek subsidiary, Unitel LLC, also entered into resolutions with the United States and admitted to a conspiracy to make more than $114 million in bribery payments to the same Uzbek government official between 2006 and 2012.  The investigation has thus far yielded a combined total of more than $1.76 billion in global fines and disgorgement, including more than $500 million in criminal penalties to the United States.  In related actions, the United States has also filed civil complaints seeking the forfeiture of more than $850 million held in bank accounts in Switzerland, Belgium, Luxembourg, and Ireland, which constitute bribe payments made by VimpelCom, Telia, and a third telecommunications company to the Uzbek official, or funds involved in the laundering of those corrupt payments. 

*                *                *

Coscom was charged with, and pled guilty to, one count of conspiring to violate the anti-bribery provisions of the FCPA.  Telia was charged in a one-count Information with conspiracy to violate the anti-bribery provisions of the FCPA.

Mr. Kim thanked the Fraud Section of the DOJ’s Criminal Division for their collaboration, and praised the efforts of IRS-CI, the IRS Global Illicit Financial Team, and HSI in the investigation.  He also thanked the SEC’s Division of Enforcement for its significant assistance and cooperation in the investigation.  Mr. Kim also thanked law enforcement colleagues within the PPS, the Swedish Prosecution Authority, and the Office of the Attorney General in Switzerland, as well as law enforcement colleagues in Austria, Belgium, Cyprus, France, Ireland, the Isle of Man, Latvia, Luxembourg, Norway, Switzerland, the Isle of Man, and the United Kingdom.  Mr. Kim also thanked the Department of Justice’s Office of International Affairs for its significant assistance in this matter.  The SEC referred the matter to the DOJ and also provided extensive cooperation and assistance.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the FCPA Unit of the Fraud Section of DOJ’s Criminal Division.  Assistant U.S. Attorney Edward A. Imperatore, Senior Litigation Counsel Nicola Mrazek, and Trial Attorney Ephraim Wernick are in charge of the prosecution.  MLARS Trial Attorney Michael Khoo is prosecuting the forfeiture case with substantial assistance from the Fraud Section and former MLARS Trial Attorney Marie M. Dalton, now an Assistant U.S. Attorney in the Western District of Washington. 

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JUAN MARTINEZ, a/k/a “KJ,” was sentenced today by United States District Judge Paul A. Engelmayer to a term of 30 years in prison for his participation in a racketeering conspiracy and in the murder of 16-year-old Ka’Shawn Phillips on September 5, 2005.  MARTINEZ was a member of the Yonkers faction of the violent Trinitarios gang (the “Trinitarios Gang”).

Acting Manhattan U.S. Attorney Joon H. Kim said:  “On a Labor Day weekend 12 years ago, Juan Martinez recruited a hit squad of his fellow Trinitarios Gang members to murder 16-year-old Ka’Shawn Phillips, who had earlier been involved in a fistfight with Martinez.  The Trinitarios Gang members recruited by Martinez brutally shot, beat, and stabbed Phillips to death in the middle of the street.  While nothing can bring Phillips back, we hope his family finds a measure of solace in the justice achieved by today’s sentence.  Together with our law enforcement partners, we will continue to aggressively prosecute all those who engage in these senseless acts of violence in our communities.”

In imposing sentence, Judge Engelmayer noted the “savagery of the attack,” and observed that Martinez was “personally responsible for the slaughter” of Phillips and that Martinez’s crime was “as wrongful and evil as a crime can be.”

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

The Trinitarios Gang was a violent gang that was formed in the New York state prison system in the early 1990s and subsequently spread to the streets.  JUAN MARTINEZ, a/k/a “KJ,” was a member of the Yonkers faction of the Trinitarios Gang.  On September 5, 2005, MARTINEZ – who was 30 years old at the time – was involved in a fistfight with Ka’Shawn Phillips at a pickup basketball game in Yonkers.  MARTINEZ retaliated first by attacking Phillips with a machete, and then by enlisting members of the Bronx faction of the Trinitarios Gang to attack Phillips.  Armed with guns, knives, and swords, a mob of Trinitarios Gang members shot, beat, and stabbed Phillips to death.  He was 16 years old.

*                *                  *

In addition to the prison term, MARTINEZ, 42, of Yonkers, New York, was sentenced to five years of supervised release. 

Since 2009, as part of “Operation Patria” and “Operation Green Haze,” this Office has charged at least a combined 149 members and associates of the Trinitarios Gang.

Mr. Kim praised the work of the New York City Police Department’s Bronx Gang Squad, the Bureau of Alcohol, Tobacco, Firearms, and Explosives’ Joint Firearms Task Force, the Drug Enforcement Administration, and Immigration and Customs Enforcement’s Homeland Security Investigations.

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Rachel Maimin and Micah W.J. Smith are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that CARLOS DJEMAL NEHMAD pled guilty to wire fraud in connection with a scheme to fraudulently obtain over $20 million in tax refunds from the government of Mexico by creating the appearance of legitimate business activity through the transfer of over $100 million through dozens of shell companies in the United States and Mexico.  DJEMAL’s plea was entered earlier today in Manhattan federal court before U.S. District Judge Alvin K. Hellerstein. 

Acting U.S. Attorney Joon H. Kim said:  “As the defendant admitted today, he led an international scheme that used dozens of shell companies in the United States to defraud the Mexican government of millions of dollars.  We are committed to holding accountable those who use the United States financial system to perpetrate fraud.” 

According to the allegations contained in the Indictment to which DJEMAL pled guilty, statements made during the plea and other court proceedings, and other documents in the public record:

Beginning in June 2011 through May 2016, DJEMAL orchestrated a scheme to defraud the Mexican government of tax revenue relating to Mexico’s value added tax (“VAT”).  The Mexican government imposes VAT on goods sold from one Mexican company to another; however, when certain goods (such as cellular phones) are exported from Mexico, the previously paid VAT is refunded to the exporter. DJEMAL created companies in Mexico and recruited individuals in the United States to create and control dozens of companies in the United States (“Front Companies”) purportedly doing business as importers and exporters of cellular phones in order for DJEMAL to fraudulently obtain VAT refunds from the Mexican government.

In order to carry out the scheme, DJEMAL caused Front Companies in Mexico to purchase outdated cellular phones from other companies seeking to sell outdated inventory. DJEMAL then caused these phones to be exported to Front Companies in the United States owned and operated by others he recruited to the scheme. During the export process, DJEMAL obtained fraudulent invoices and created export documents that falsely inflated the value of the phones being exported, thereby enabling him to fraudulently seek inflated VAT refunds from the Mexican tax authority.

Once the phones were shipped to the United States, they were transferred to one or more Front Companies in the United States only to be shipped back to a different Front Company in Mexico. Through this process, the phones were shipped repeatedly in a circular fashion between Front Companies controlled by DJEMAL and his co-conspirators in Mexico and the United States, enabling DJEMAL to obtain multiple fraudulent VAT refunds for the same phones.

In order to create the appearance of legitimate cell phone sales, each transfer of phones was generally accompanied by a transfer of funds to and from accounts held in the name of the relevant Front Companies. As part of the scheme, each co-conspirator who controlled a Front Company receiving funds as part of the scheme retained approximately 1 percent for his participation in the scheme.

Between approximately June 2011 to approximately May 2016, DJEMAL and his co-conspirators moved more than $100 million dollars through dozens of accounts maintained by Front Companies in this fashion, including through accounts maintained at a financial institution in the Southern District of New York, in order to obtain over $20 million in VAT refunds from the Mexican government.

*          *          *

DJEMAL, 56, of Mexico City, pled guilty to one count of wire fraud.  DJEMAL faces a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. Sentencing is scheduled for January 19, 2018, before Judge Hellerstein. As part of his plea, DJEMAL agreed to forfeit cash, artwork, and his shareholding in Investabank, a Mexican bank in which DJEMAL was part owner. 

Co-defendants Max Fraenkel and Daniel Blitzer previously pled guilty to wire fraud and money laundering and are cooperating with the government.  The cases of co-defendants Braulio Lopez and Roberto Moreno remain ongoing. 

Mr. Kim praised the outstanding work of the Internal Revenue Service, Criminal Investigations, the Department of Homeland Security, Homeland Security Investigations, the Mexican Tax Administration Service, and the Mexican Secretary of Finance and Public Credit for their investigative efforts and ongoing support and assistance with the case.

The prosecution of this case is being overseen by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant U.S. Attorneys Daniel M. Tracer and Kiersten A. Fletcher are in charge of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that TYRIN GAYLE, 24, was convicted today of racketeering, attempted murder, narcotics, and witness tampering charges, all in connection with his leadership of the Yellow Tape Money Gang in the City of Newburgh, New York.  The jury convicted GAYLE on all seven counts in the controlling indictment following a two-week trial before U.S. District Judge Cathy Seibel.    

Acting Manhattan U.S. Attorney Joon H. Kim stated:  “Gang leader Tyrin Gayle chose the name Yellow Tape Money Gang to glamorize the yellow tape surrounding the scenes of the gang’s many shootings and the money the gang raked in selling crack cocaine and heroin. As the jury found today, during his leadership of that gang, Gayle not only engaged in ruthless violence, shooting an innocent bystander in the stomach, but also used minors to sell drugs and carry the gang’s guns. With today’s verdict, Gayle has been held to account for his vicious crimes.”

According to court papers and evidence admitted at trial:

From 2015 to May 2016, TYRIN GAYLE led the Yellow Tape Money Gang, called “YTMG” for short, in the City of Newburgh.  Members of YTMG engaged in, among other things, shootings, crack cocaine distribution, and heroin distribution.  The gang’s adult members, including GAYLE, regularly used minors to sell their drugs, carry their guns, and commit their shootings.  During that same period, YTMG, whose territory centered around the intersection of William Street and Hasbrouck Street, engaged in a violent rivalry with another Newburgh street gang, known as Southside, whose territory centered around the intersection of South Street and Chambers Street.  On December 11, 2015, GAYLE and two other YTMG members drove to the intersection of South Street and Liberty Street, where they opened fire on Southside gang members in broad daylight.  At least one Southside member returned fire, causing the YTMG car to crash into a tree.  On February 21, 2016, in retaliation for a shooting of one YTMG member, GAYLE and others drove to the intersection of South Street and Chambers Street.  When GAYLE was unable to locate any Southside gang members in the area, he and his fellow gang members instead took aim at an innocent bystander who happened to be in Southside territory at the time.  During the ensuing drive-by shooting, that innocent bystander was shot in the abdomen.

For these and related activities, GAYLE was convicted of one count of racketeering conspiracy involving more than 280 grams of crack cocaine, which carries a maximum sentence of life; one count of attempted murder in aid of racketeering, which carries a maximum sentence of 10 years; one count of assault and attempted murder in aid of racketeering, which carries a maximum sentence of 20 years; one count of conspiracy to distribute more than 280 grams of crack cocaine, which carries a mandatory minimum sentence of 10 years and a maximum sentence of life; one count of using a minor in drug operations, which carries a maximum sentence of life; one count of possessing, brandishing, and discharging a firearm in furtherance of racketeering and narcotics conspiracies, which carries a mandatory minimum sentence of 10 years, to be served consecutively to any other sentence, and a maximum sentence of life; and attempted witness tampering, which carries a maximum sentence of 20 years.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

GAYLE is scheduled to be sentenced on January 16, 2018, before Judge Seibel.

Acting U.S. Attorney Kim praised the FBI, the ATF, the City of Newburgh Police Department, and the Town of Newburgh Police Department for their outstanding work in this investigation.  He also thanked the Orange County Sheriff’s Office, the Town of New Windsor Police Department, the New York State Police, and the Orange County District Attorney’s Office for their invaluable assistance with this case. 

The case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Maurene Comey, Jacqueline Kelly, and Lauren Schorr are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Charles Gardner, the Commissioner of the Yonkers Police Department (“Yonkers PD”), announced today the unsealing of a Superseding Indictment charging VIRGINIA BLANCO with participating in the robbery of a Wells Fargo Bank branch in Yonkers, New York, in October 2013, and with aiding and abetting the discharge of a firearm in furtherance of the robbery. BLANCO was arrested this morning and presented before U.S. Magistrate Judge Judith C. McCarthy.

Acting U.S. Attorney Joon H. Kim said: “As alleged, while working as a teller, Virginia Blanco secretly conspired to rob the bank. While not present for the actual robbery, Blanco allegedly played a key role, providing her co-conspirators with inside information to assist them. During the robbery, an alleged co-conspirator discharged two gunshots and the robbers made off with more than $300,000 in cash. Thanks to the tireless efforts of the FBI and the Yonkers Police Department, Virginia Blanco will now face justice.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Whatever motivated the suspect in this case to allegedly provide information to robbers so they could rob the bank she worked in, she now faces the prospect of a federal prison term. It was only luck that no one was injured or killed during this robbery. No amount of money can possibly be worth losing your freedom, because you won’t get away with it. The FBI Westchester Safe Streets Task Force isn’t going to stop looking for the money, and tracking down those responsible.”

According to the allegations in the Superseding Indictment[1], a Complaint previously filed against a co-defendant, and other statements in the public record:

In or about October 2013, BLANCO was working as a teller at a Wells Fargo Bank branch located at 500 Odell Avenue in Yonkers, New York (the “Wells Fargo Branch”). She conspired with co-defendant Giovanni Marte to rob the Wells Fargo Branch and provided critical information to Marte that allowed him and his co-conspirators to carry out the robbery successfully. The robbery took place on or about October 29, 2013. On that date, at approximately 3:17 p.m., Marte and three co-conspirators arrived at the Wells Fargo Branch. One co-conspirator remained in the car while Marte and two co-conspirators entered the bank. Marte and another robber each brandished a firearm and the third robber brandished a wood saw. During the robbery, Marte fired two shots but did not hit anyone. He accessed the vault, filled a bag with approximately $303,500 in cash, and fled the Wells Fargo Branch with the other robbers.

* * *

The Superseding Indictment charges VIRGINIA BLANCO, age 28, of Yonkers, New York, with conspiring to rob the Wells Fargo Branch in or about October 2013, robbing and aiding and abetting the robbery of the Wells Fargo Branch on or about October 29, 2013, and aiding and abetting the carrying and discharging of a firearm in furtherance of a violent crime. The maximum and mandatory minimum sentences are as follows: a maximum of five years in prison on Count One (conspiracy); a maximum of 20 years on Count Two (bank robbery); and a maximum of life in prison, with a mandatory minimum of 10 years, on Count Three (firearm offense).

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

Mr. Kim praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, which comprises agents and detectives of the FBI, United States Probation, the City of Yonkers Police Department, the City of Peekskill Police Department, the City of Mount Vernon Police Department, the New York City Police Department, the Westchester County Police, and the Westchester County District Attorney’s Office.

The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Douglas Zolkind is in charge of the prosecution.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced that BRANDON LISI was sentenced today to 38 months in prison for his role in a scheme to defraud at least four individual investors in real estate transactions of more than $1 million.  LISI pled guilty to conspiracy to commit wire fraud on April 3, 2017, for his role in the fraud.  LISI entered the guilty plea before U.S. District Judge Katherine Polk Failla, who imposed today’s sentence.

Acting U.S. Attorney Joon H. Kim said:  “As he previously admitted, Brandon Lisi, a former attorney, misled clients into investing over $1 million in real estate properties.  These investments yielded no profit for investors, because Lisi and his co-defendant simply pocketed the funds.  Now Brandon Lisi faces time in federal prison for his fraud.”  

FBI Assistant Director William F. Sweeney Jr. said:  “Financial crimes have the potential to turn lives upside down and inside out.  The victims in this case deserve to see justice served. As evidenced by today’s sentence, they will.  May this be a reminder to others that this type of behavior won’t go unpunished.”

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

LISI, a former attorney, and his co-conspirator, a practicing attorney, built relationships of trust with victim investors and then induced those investors to put money into fraudulent business deals.  Through the course of the scheme, LISI and his co-conspirator made false representations and failed to disclose material information to investors, all in an effort to induce them to hand their money over to invest in these purported deals.  LISI further caused another individual, acting at his direction, to make false statements in bankruptcy court in an effort to forestall foreclosure on one of the properties LISI had obtained.   Although LISI promised his victims large returns on their investments, he and his co‑conspirator used the invested funds for personal use, through substantial cash withdrawals, payments to relatives, and transfers to pay off personal debts.

Ultimately, the victims of this scheme lost nearly all of the money they had invested, which was more than $1 million in total.

*                *                *

In addition to the prison term, LISI, 43, of Melville, New York, was sentenced to three years of supervised release, and ordered to forfeit $1,438,358 and to pay $1,438,358 in restitution.

Mr. Kim praised and thanked the Federal Bureau of Investigation for their outstanding investigative work. 

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900.  For additional information, go to http://www.usdoj.gov/usao/nys/victimwitness.html.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Katherine Reilly, Noah Solowiejczyk, and Michael Lockard are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that JOHN EDWARD TAYLOR, a/k/a “Jay Taylor,” a/k/a “Josie Reeser,” pled guilty before U.S. District Judge Laura Taylor Swain to wire fraud and sending threatening communications, in connection with his seven-year scheme to defraud multiple victims into providing their personal identifying information, which Taylor then used to make hundreds of thousands of dollars in unauthorized purchases.  

Acting U.S. Attorney Joon H. Kim said:  “John Edward Taylor’s online dating profile read like a dream – a millionaire businessman looking for love.  But in reality, Taylor was using dating websites not to search for a girlfriend but for his next victim.  Taylor promised business opportunities and romantic relationships just to steal his victims’ identities and loot their bank accounts, and then threatened those who discovered what he was doing.  Now Taylor is facing time in federal prison for his fraudulent ways.”   

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

JOHN EDWARD TAYLOR, a/k/a “Jay Taylor,” a/k/a “Josie Reeser,” stole, or attempted to steal, money, credit, and personal information from more than a dozen women (the “Victims”) in cities across the country, including New York City, Chicago, Atlanta, and Philadelphia.

TAYLOR contacted Victims using online matchmaking and networking websites, such as Match.com, eHarmony, Craigslist, and Seeking Arrangement.  TAYLOR typically introduced himself as “Jay” and often falsely described himself as a wealthy businessman with oil and land interests in North Dakota.  To some Victims, TAYLOR feigned interest in hiring the Victims to work on a new business TAYLOR purported to be creating.  To other Victims, TAYLOR expressed an interest in a romantic and personal relationship.  To most Victims, TAYLOR purported to be interested in both a personal and a professional relationship.

Using a variety of false pretenses, TAYLOR obtained the Victims’ personal identifying information, often including birthdates, addresses, and bank and credit account numbers.  TAYLOR used the Victims’ personal identifying information to purchase goods, transfer funds, and open new accounts – all without authorization.  In certain circumstances, TAYLOR opened accounts without the Victims’ knowledge.  In other circumstances, TAYLOR opened accounts that he assured Victims were business accounts, but were, in fact, personal accounts in the Victims’ names, over which TAYLOR maintained exclusive control.

Often within a matter of months, Victims would discover thousands of dollars in unauthorized charges and transfers in their existing accounts, receive bills for accounts they had never created, or learn their existing accounts had been closed due to delinquency.

Independent of each other, multiple Victims confronted TAYLOR about his activities.  To some, TAYLOR responded with insults.  To others, TAYLOR responded with promises to repay the losses – and on at least one occasion attempted to repay one Victim with funds unlawfully obtained from another Victim.  On multiple occasions, TAYLOR threatened to transmit sexually explicit images of the Victims – which he had obtained as part of his purported romantic relationships with them – to the Victims’ employers if the Victims tried to collect their debts.

*          *          *

TAYLOR, 47, pled guilty to one count of wire fraud, which carries a maximum sentence of 30 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense, and one count of sending threatening interstate communications, which carries a maximum sentence of two years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense.  Taylor is scheduled to be sentenced by Judge Swain on January 4, 2018.

Mr. Kim praised the outstanding work of the Federal Bureau of Investigation for their investigative efforts and ongoing support and assistance with the case.

The prosecution of this case is being overseen by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Jonathan Rebold and Andrew Thomas are in charge of the case

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced the award of a judgment yesterday totaling $296,298,325 against the entities formerly known as ALLIED HOME MORTGAGE CAPITAL CORPORATION (“ALLIED CAPITAL”) and ALLIED HOME MORTGAGE CORPORATION (“ALLIED CORPORATION”) (collectively, “ALLIED”), and a judgment in the amount of $25,340,496 against ALLIED’s President and Chief Executive Officer JIM C. HODGE (“HODGE”), for over a decade of fraudulent misconduct while participating in the Federal Housing Administration (“FHA”) mortgage insurance program.  In November 2016, after a five-week trial in Houston, Texas, a unanimous jury found that ALLIED and HODGE violated the False Claims Act (“FCA”) and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), and caused over $92 million in damages to the United States.  The judgment, ordered by the district court on September 14, 2017, trebles the jury’s $92 million FCA verdict and imposes additional statutory penalties under the FCA and FIRREA as determined by the Court in light of ALLIED and HODGE’s misconduct.  The judgment was awarded by United States District Judge George C. Hanks Jr. of the Southern District of Texas, who presided over the trial.          

Under the FCA, damages are subject to mandatory trebling.  The FCA also provides for a per-violation penalty, which during the relevant time period was $5,500 to $11,000 for each violation, and FIRREA provides for a penalty of up to $1.1 million for each violation.  In addition to trebling the $92 million damages determined by the jury, the Court imposed a penalty of $10,000 for each violation of the FCA found by the jury, for a total of $12,950,000 in FCA penalties, and the maximum $1.1 million penalty for each violation of FIRREA, for a total of $6.6 million in FIRREA penalties.  Pursuant to the Court’s order, HODGE is liable for over $25 million in damages and penalties.  

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Jim Hodge and Allied defrauded a federal mortgage insurance program designed to help spread the dream of homeownership, and then lied about it repeatedly.  A jury saw through their lies, and now the Court has imposed millions of dollars in additional penalties.  This Office will continue to investigate and root out fraud in all of its forms.”

According to the evidence presented at trial, ALLIED and HODGE abused the FHA mortgage insurance program by falsely certifying that thousands of high risk, low quality loans were eligible for FHA insurance and then submitting insurance claims to FHA when any of those loans defaulted.  Specifically, ALLIED CAPITAL, with the knowledge and approval of HODGE, originated FHA-insured loans from more than one hundred “shadow” branch offices without the authorization of the United States Department of Housing and Urban Development (“HUD”), in order to evade oversight and disguise default rates.  In addition, ALLIED CORPORATION, as a participant in HUD’s Direct Endorsement Lender program, recklessly certified thousands of loans for FHA insurance that were in fact ineligible for insurance under HUD’s guidelines.  Finally, ALLIED and HODGE operated a dysfunctional quality control department that was not only unqualified and understaffed but also, at HODGE’s direction, submitted falsified quality control reports to HUD auditors and falsely certified that Allied was in compliance with HUD quality control guidelines.   

The United States filed a complaint-in-intervention in this lawsuit in November 2011.  At that time, the action was pending as a qui tam whistleblower lawsuit in the United States District Court for the Southern District of New York.  In September 2012, the action was transferred to the United States District Court for the Southern District of Texas.  The jury returned its verdict in favor of the government on November 30, 2016. 

*                *                *

Mr. Kim thanked the HUD Office of General Counsel and the HUD Office of the Inspector General for their extraordinary assistance with this case.    

This case is being handled by the Civil Frauds Unit of the United States Attorney’s Office for the Southern District of New York.  Assistant United States Attorneys Jeannette A. Vargas, Joseph N. Cordaro, Jean-David Barnea, Caleb Hayes-Deats, and Stephen Cha-Kim, who are designated as Special Assistant United States Attorneys for the Southern District of Texas for purposes of this matter, are in charge of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that PEDRO JARAMILLO, a/k/a “Enrique Jaramillo,” was sentenced today to 12 years in prison for commodities fraud and wire fraud charges stemming from his scheme to defraud more than two dozen investors, including retirees, working professionals and manual laborers from Peru and countries in Latin America, of more than $1.2 million through a Ponzi-like scheme.  Many of JARAMILLO’s victims, many of whom submitted letters to the Court or spoke at JARAMILLO’s sentencing, lost their life savings to JARAMILLO’s scheme, including their homes. 

In imposing today’s sentence, Judge Laura Taylor Swain described JARAMMILLO’s conduct as “calculated and utterly despicable” and noted the “profoundly devastating impact” of the scheme on JARAMILLO’s victims. 

JARAMILLO was arrested on December 2, 2016, and has remained detained since that date.  On April 7, 2017, JARAMILLO pled guilty to commodities fraud and wire fraud charges before Judge Swain.

Acting U.S. Attorney Joon H. Kim said:  “Pedro Jaramillo lured investors with a slick video pitch complete with iconic New York scenes and music.  He purported to be ‘a proven winner’ who promised high returns but he was just a swindler, spending investors’ money on himself and to repay early investor redemptions.  Many victims – including retirees, working professionals, and manual laborers – lost their life savings, and Jaramillo now faces the substantial term in prison his crime merits.”

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

Beginning in at least January 2014 through in or about December 2016, JARAMILLO solicited more than $1.2 million in investments from more than two dozen investors, primarily for the purported purpose of investing in commodity futures contracts, by falsely representing, orally and in writing, that investor monies would be invested in short-term commodities contracts with a guaranteed rate of return.

To help attract investors, JARAMILLO maintained an office on Wall Street (the “Wall Street Office”) where he met with prospective investors to tout his prior success and relationship with a prominent international bank (the “Global Investment Bank”).  JARAMILLO also starred in a youtube.com video (the “Video”) set to the soundtrack of Frank Sinatra’s “New York, New York.”  The Video featured a series of images of Wall Street, the New York Stock Exchange, and JARAMILLO in front of the Wall Street Office.  In the video, JARAMILLO told prospective investors that he was a “proven winner” and “trusted partner” who would maintain individually managed and federally insured accounts for each client.  JARAMILLO told prospective investors that these safeguards would ensure that prospective investors would “be protected against fraud and brokerage failure.” 

In truth and in fact, JARAMILLO not only failed to create individual investment accounts, he failed to use investor funds to make any legitimate investments, instead diverting the majority of funds to his own use or to repay earlier investors whose redemption requests could not be forestalled.  In total, JARAMILLO diverted more than $700,000 to his own use in the form of cash withdrawals and debit card purchases used to fund his lifestyle, including thousands of dollars on three vacations to Disney World for JARAMILLO, family, and guests. 

To hide his misappropriations and continue to fund his personal lifestyle, JARAMILLO also used new investor funds to pay back other investors in a Ponzi-like fashion.  In total, since January 2014, JARAMILLO distributed more than $200,000 back to investors from funds deposited by new investors.  During that time, JARAMILLO also diverted more than $100,000 of investor funds out of bank accounts he controlled in the United States to foreign bank accounts, including in Peru where JARAMILLO is a citizen.

*                      *                      *

In addition to the 12-year prison sentence, JARAMILLO, 49, a Peruvian National who was residing in Queens, New York, before his arrest, was sentenced to 3 years of supervised release.  The Court further ordered JARAMILLO to forfeit the proceeds of the scheme and to pay restitution in an amount to be determined.

Mr. Kim praised the work of the Federal Bureau of Investigation. 

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that FRANCIS ASSIFUAH, a/k/a “Francis Assif,” was sentenced today to 33 months in prison for participating in a massive scheme to defraud consumers by placing unauthorized charges for text messaging services on their cell phone bills, through a practice known as “auto-subscribing.” Through their fraudulent scheme, ASSIFUAH and his co-conspirators charged millions of mobile phone customers $9.99 a month for unsolicited, recurring text messages about topics such as horoscopes, celebrity gossip, and trivia facts, without the customers’ knowledge or consent. The fraud resulted in the theft of over $100 million from consumers throughout the United States. ASSIFUAH pled guilty to his role in the fraud on February 7, 2017, and was sentenced today in Manhattan federal court by the Honorable Katherine B. Forrest.

To date, four additional defendants, Andrew Bachman, Lin Miao, Michael Pajackowski, and Erdolo Eromo, have pled guilty in connection with their participation in the fraud, and one additional defendant, Fraser Thompson, was convicted by a jury on September 5, 2017, following a three-week trial.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Francis Assifuah and his co-conspirators charged millions of cell phone customers for text message services they never signed up for, ultimately reaping more than $100 million from their scheme. Together with our law enforcement partners, we are committed to uncovering and prosecuting schemes that defraud consumers.”

According to the Indictment filed in Manhattan federal court, other court documents, and statements made in connection with ASSIFUAH’S guilty plea and sentencing:

ASSIFUAH is a former employee of Mobile Messenger, a mobile “aggregator” that compiled, or “aggregated,” charges for premium services – such as monthly horoscopes, celebrity gossip, and trivia facts – on consumers’ mobile phone bills. In the auto-subscribing scheme, Mobile Messenger worked with multiple different “content provider” companies, which sent consumers the unwanted text messages that ultimately resulted in the consumers being charged for services they had not authorized. Those content providers included a company called Tatto Media, which was operated by Miao; companies called CF Enterprises and DigiMobi, which were operated by Eugeni Tsvetnenko, a/k/a “Zhenya”; and a company called Bleam Technology, which was operated by ASSIFUAH.

While he was working at Mobile Messenger, ASSIFUAH worked with and befriended Eromo. In early 2012, Eromo approached Pajackowski, a fellow Mobile Messenger employee, and asked to participate more actively in the auto-subscribing activities that Pajackowski and others were engaging in with Tatto Media. After Pajackowski told Eromo there was no room for him in the Tatto Media auto-subscription, Pajackowski suggested that they recruit another content provider with technical expertise to help them expand the scheme. Eromo then met with ASSIFUAH at a trade show in Las Vegas and presented him with the plan to auto-subscribe, using Bleam Technology as the content provider. By the time Eromo returned from the Las Vegas trade show, ASSIFUAH had agreed to become involved in auto-subscribing. Shortly thereafter, Eromo, Pajackowski, and ASSIFUAH began to auto-subscribe consumers through Bleam Technology, using Mobile Messenger as the mobile aggregator.

The auto-subscription scheme, through all of the content providers that it involved, affected millions of consumers and generated over $100 million in criminal proceeds.

* * *

In addition to the prison sentence, ASSIFUAH, 44, of Las Vegas, Nevada, was sentenced to two years of supervised release.

Mr. Kim praised the investigative work of the Internal Revenue Service - Criminal Investigation, and the Federal Bureau of Investigation, and expressed his sincere gratitude to the Federal Trade Commission for their support and assistance with the investigation.

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900. For additional information, go to http://www.usdoj.gov/usao/nys/victimwitness.html.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Sarah E. Paul, Richard Cooper, and Jennifer L. Beidel are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of CRAIG ROFFMAN stemming from his possession of child pornography. ROFFMAN, who previously worked as a school teacher in Brooklyn, was arrested yesterday and presented before United States Magistrate Judge James C. Francis IV in Manhattan.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As alleged, Craig Roffman, a former teacher, was arrested yesterday in possession of thousands of electronic files containing child pornography. Together with the FBI, we are committed to protecting children by prosecuting those who sexually exploit them.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “How anyone can view a toddler or a baby in a sexual manner boggles the mind. Speaking as a parent to all other parents, we are the first line of defense for children who are barely able to feed themselves, let alone speak up when an adult abuses them in such grotesque ways. If you believe your child came into contact with this subject, please call the FBI immediately at 212-384-5000.”

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

On September 14, 2017, law enforcement agents executing a search warrant searched ROFFMAN’s apartment and recovered electronic and hard copies of child pornography, including but not limited to two thumb drives containing approximately 3,000 files of child pornography. The child pornography recovered from ROFFMAN’s residence includes images involving infants and numerous depictions of prepubescent children engaged in sexual activity with adults.

* * *

CRAIG ROFFMAN, 41, of Manhattan, New York, is charged with one count of possession of child pornography, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Any individuals who believe they have information concerning CRAIG ROFFMAN that may be relevant to the investigation should contact the United States Attorney’s Office through its toll-free hotline at 212-637-0650.

Mr. Kim praised the FBI for its outstanding investigative work.

This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorney Jessica Greenwood 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 below constitute only allegations and every fact described should be treated as an allegation.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Michael Greco, the United States Marshal for the Southern District of New York (“USMS”), announced that MICHAEL ARNSTEIN pled guilty today before U.S. District Judge Andrew L. Carter Jr. to one count of conspiracy to forge a federal judge’s signature.  ARNSTEIN is scheduled to be sentenced by Judge Carter on January 16, 2018. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As he admitted today, Michael Arnstein exploited the authority of the federal judiciary in a blatantly criminal scheme. By forging court orders and the signature of a U.S. District Judge, Arnstein was able to effectively erase websites critical of Arnstein’s business from its search results. Now Arnstein awaits sentencing in the same court he impersonated.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Arnstein’s attempts to remove any trace of unfavorable information about his business posted online sent him down a slippery slope.  Not only did he commit a federal crime by forging a judge’s signature in furtherance of his scheme, but he now finds himself back on the Internet.  This time, however, it’s a story no search engine can erase.”

U.S. Marshal Michael Greco said:  “The outstanding combination of investigative efforts by the FBI and U.S. Marshals Service enabled deputies and special agents to expose an egregious attempt at forgery and deception by Michael Arnstein.  The Deputy U.S. Marshals assigned to the Southern District of New York’s Protective Intelligence Unit work tirelessly to investigate any and all forms of inappropriate communications in order to thwart such schemes.  As always, the U.S. Marshals Service is committed to protecting the safety, security and integrity of our federal judiciary and court family.”     

According to the allegations contained in the Complaint, the felony Information to which ARNSTEIN pled guilty, and statements made during the plea proceeding and other court proceedings:

Between February 2014 and February 2017, ARNSTEIN engaged in a brazen scheme to submit counterfeit federal court orders to Google, Inc. (“Google”) in an effort to get websites containing unfavorable postings about ARNSTEIN’s business de-indexed from Google’s internet search results. In furtherance of this scheme, ARNSTEIN and others forged the signature of a United States District Judge for the Southern District of New York on over ten counterfeit court orders.  These counterfeit orders listed the websites containing purportedly defamatory information about ARNSTEIN’s business and ordered the removal of such information from the websites.  ARNSTEIN then submitted the counterfeit orders, which appeared to be valid on their face, to Google and requested that Google de-index the websites containing the purportedly defamatory information.  ARNSTEIN often succeeded in getting the websites de-indexed using the counterfeit court orders.   

*                *                *

ARNSTEIN, 40, of Kailua, Hawaii, pled guilty to one count of conspiracy to forge a judicial signature, which carries a maximum sentence of five years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation and the United States Marshals Service.  Mr. Kim also thanked Google for its helpful assistance in this investigation. 

The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Sheb Swett and Daniel S. Noble are in charge of the prosecution. 

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Angel M. Melendez, Special Agent in Charge of Homeland Security Investigations in New York City (“HSI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a Superseding Indictment charging WALSTON OWEN, a/k/a “Purpose,” RICHARD FELIZ, a/k/a “Dirt,” SHAQUILLE BAILEY, a/k/a “Shaq,” a/k/a “Jefe,” MIGUEL CABA, a/k/a “Miggs,” and NATHANIAL RODRIGUEZ, a/k/a “Cook,” with various crimes relating to racketeering, narcotics, and firearms offenses, including charges against FELIZ for the March 26, 2015, murder of Victor Chafla, an innocent bystander.  The defendants are charged as a result of their membership in the “Rollin’ 30s,” a subset of the nationwide Crips street gang.  Another individual, LEWIS TURNBULL, a/k/a “Lew,” was charged solely with a narcotics offense.  OWEN and COOK were arrested on these charges yesterday; FELIZ, BAILEY, TURNBULL, and CABA were already in federal custody on other charges.  OWEN and COOK will be presented in Manhattan federal court today before Chief Magistrate Judge Deborah Freeman.  The case is before United States District Judge Victor Marrero, and the defendants will be arraigned before Judge Marrero on September 14.

Acting U.S. Attorney Joon H. Kim said:  “As alleged in the superseding indictment, these defendants brought drugs and violence to the streets of our community, including the tragic murder of an innocent bystander, Victor Chafla. We commend the extraordinary efforts of our law enforcement partners to bring these defendants to justice, and express our hope that Mr. Chafla’s family and friends find some measure of justice in today’s charges.”

HSI Special Agent in Charge Angel M. Melendez said:  “These gang members are purported to have committed acts of violence, including murder and robbery, just to fund and protect its criminal enterprise, with one crew member alleged to have shot and killed an innocent bystander. These street gangs plague our community and HSI, with its longstanding partnership with the NYPD, will continue its efforts to rid our neighborhoods of such tormenters and ensure it’s known that they are not welcome.”

NYPD Commissioner O’Neill said:  “These alleged members of a Crips crew have been indicted on racketeering, narcotics and firearms-related charges.  One of the defendants is accused of shooting and killing an innocent bystander during a dispute with a rival gangmember in the Soundview section of the Bronx. These are serious offenses, and the type of violence we remain focused on that has led to significant reductions in crime.  I want to thank the members of the NYPD, the Southern District, and Homeland Security Investigations who have been working on this case.”

According to the allegations contained in the Indictment[1] and other documents in the public record, and statements made in court:

From 2013 to 2017, in the Southern District of New York and elsewhere, WALSTON OWEN, RICHARD FELIZ, SHAQUILLE BAILEY, MIGUEL CABA, and NATHANIAL RODRIGUEZ were members or associates of a racketeering enterprise known as the “Rollin’ 30s.”  In order to fund the enterprise, protect and expand its interests, and promote its standing, members and associates of the Rollin’ 30s committed, conspired, attempted, and threatened to commit acts of violence, including murder and robbery; they conspired to distribute and possess with intent to distribute narcotics; and they obtained, possessed, and used firearms, including by brandishing and discharging them.  LEWIS TURNBULL also conspired with certain members of the Rollin’ 30s to distribute and possess with intent to distribute crack cocaine and marijuana.

During a dispute with a member of an opposing crew, on March 26, 2015, FELIZ fired a gun in an attempt to kill that individual.  FELIZ instead hit an innocent bystander, Victor Chafla. Chafla died from his wounds a few days later.

*              *             *

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

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

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jessica Fender and Max Nicholas 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. 

Count

Charges

Defendants

Maximum Penalties

1

Racketeering Conspiracy

WALSTON OWEN,

RICHARD FELIZ, SHAQUILLE BAILEY, MIGUEL CABA, and NATHANIAL RODRIGUEZ

Life in prison (all defendants except FELIZ)

Life in prison or death (FELIZ)

2

Conspiracy To Commit Murder in Aid of Racketeering

RICHARD FELIZ

Life in prison

3

Murder in Aid of Racketeering

RICHARD FELIZ

Life in prison or death

4

Use of a Firearm Resulting in Death

RICHARD FELIZ

Life in prison or death

5

Using, Carrying, Possessing, Brandishing, and Discharging Firearms

WALSTON OWEN,

RICHARD FELIZ, SHAQUILLE BAILEY, MIGUEL CABA, and NATHANIAL RODRIGUEZ

Life in prison

Mandatory minimum of 10 years in prison

6

Narcotics Conspiracy

WALSTON OWEN,

RICHARD FELIZ, SHAQUILLE BAILEY, and LEWIS TURNBULL

Life in prison

Mandatory minimum of 10 years in prison

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Phillip R. Bartlett, the Inspector in Charge of the New York Division of the United States Postal Inspection Service (“USPIS”), announced today the unsealing of a Complaint charging VINCENT MAFFUCCI with mail fraud. The charge arises from an alleged fraudulent scheme whereby MAFFUCCI, a Las Vegas-based travel agent, collected over $240,000 from various parishes, including numerous parishes in and around Westchester County, New York, in connection with a tour he had organized to Europe for the Catholic Church’s World Youth Day in July and August 2016. Rather than use the money to pay for trip-related expenses, however, MAFFUCCI used more than $220,000 of the funds for his own personal expenses. MAFFUCCI was arrested this morning, and will be presented today before a United States Magistrate Judge, in the United States Courthouse in Las Vegas, Nevada.

Acting U.S. Attorney Joon H. Kim said: “Vincent Maffucci, a travel agent, allegedly collected over $240,000 from Westchester parishes, purportedly to organize a young people’s church tour to Europe. Instead of arranging the trip, Maffucci allegedly pocketed nearly all of the money and spent it on himself. Now Maffucci will face justice in federal court.”

USPIS Inspector in Charge Phillip R. Bartlett said: “Mr. Maffucci allegedly capitalized on the trust these organizations placed with him to get their youth to this faith-filled world event. He betrayed the trust of the faith community when he allegedly spent money to satisfy his personal needs, then lied about their refunds. Mr. Maffucci, however, got his first taste of karma when Postal Inspectors and their law enforcement partners uncovered his alleged faithless crimes, placed him under arrest and brought him before a Federal Magistrate Judge to answer to fraud charges.”

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

Every approximately two to three years, the Catholic Church organizes World Youth Day, an event for young people. Each World Youth Day is held in a different global location and attended by young people from around the world, including many people from Westchester County. World Youth Day (“WYD”) 2016 was held in Krakow, Poland.

Several parishes in and around Westchester County, New York, used a travel agency known as ITC Tours to organize their parishes’ WYD 2016 trips. VINCENT MAFFUCCI, the defendant, was the owner of ITC Tours and the person with whom the parishes dealt. In connection with the trip, MAFFUCCI provided a printed brochure, including an itinerary and a list of the various services provided in connection with the tour. Among other things, the tour was to include: “[r]ound trip airfare from JFK to Berlin returning from Budapest”; “Good 3 star hotels for 11 nights”; “Continental breakfast daily and 10 three course dinners”; “Entrance fees during sightseeing tours”; and “WYD and Solidarity fees estimated at $175.00 per person.” The brochure lists the “[c]ost per person” as “Triple $2919 Twin $3072 Single $3515.”

From in or about March 2014 until in or about June 2016, numerous parishes, including several in Westchester County, New York, sent, via Federal Express and United States mail, checks totaling approximately $240,000 to MAFFUCCI in Las Vegas, Nevada, as payment for their respective parishes’ tour participants.

Of the more than $240,000 MAFFUCCI collected for the WYD 2016 trip, he spent only $11,226 on the trip. MAFFUCCI used the remaining funds for his own personal expenses. Specifically, during the time period MAFFUCCI was soliciting and receiving checks for WYD 2016, he spent approximately $43,000 of the funds on dining, fuel, and clothing. In addition, MAFFUCCI withdrew over $94,000 in cash, and made transfers totaling over $83,000 to other bank accounts that he controlled.

In June 2016, the month before the WYD 2016 trip was to take place, MAFFUCCI cancelled the tour, citing, among other reasons, concerns about terrorism. MAFFUCCI promised full refunds to those who had already paid. To date, most of the tour participants have not received refunds from MAFFUCCI.

* * *

MAFFUCCI was arrested this morning and will be presented in federal court in Las Vegas before United States Magistrate Judge Carl W. Hoffman.

MAFFUCCI, 77, of Las Vegas, Nevada, is charged with one count of mail fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative efforts of the United States Postal Inspection Service and the Office’s criminal investigators. He also thanked the Westchester County District Attorney’s Office for their assistance in the investigation.

The case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Kathryn Martin is in charge of the prosecution.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that BRIAN COLL, a former New York City Correction Officer, was sentenced today by U.S. District Judge Loretta A. Preska to 30 years in prison for causing the death of Ronald Spear, a pre-trial detainee at Rikers Island, and for obstructing justice by covering up the true cause of Spear’s death.  COLL, then a correction officer on Rikers Island, was convicted following an eight-day jury trial of, among other charges, causing Spear’s death by repeatedly kicking him in the head while he was restrained and lying prone on the floor, in violation of his rights under the United States Constitution.  Spear died shortly after the attack.  COLL was arrested on a complaint on June 10, 2015, and has been in federal custody since that time. 

In imposing today’s sentence, Judge Preska stated:  “This is a serious offense that requires a serious punishment.  It is also a crime where deterrence is, in the Court's view, an important consideration.”

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Correction Officer Brian Coll brutally beat to death Ronald Spear, an ailing and vulnerable Rikers Island inmate.  As proven at trial, after Spear had been restrained by other correction officers and lay prone on the ground, Coll reared his leg back and kicked Spear in the head, over and over again.  What Officer Brian Coll did on December 19, 2012 – viciously beating to death a defenseless man – was a murderous crime, whether inside or outside prison.  And he has now been held accountable for it.  The protections of the U.S. Constitution extend to all of us, including those within our prison walls.  Today’s sentencing of Brian Coll reminds us all of that.”

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

Rikers Island is a jail complex located in the Bronx, New York, maintained by the New York City Department of Correction.  At the time of his death, Ronald Spear was a pretrial detainee incarcerated on Rikers Island in the North Infirmary Command, a facility housing detainees who, like Spear, have serious or chronic medical needs.  In the early morning hours of December 19, 2012, Spear left the housing area in the infirmary unit in an attempt to see the on-duty doctor but was stopped by COLL, who said that the doctor was not available to see him.  In an altercation that ensued, COLL punched Spear several times in the face and stomach, after which Spear was restrained by two other correction officers, Anthony Torres and Byron Taylor.  While Spear was lying prone on the ground and was still restrained, COLL repeatedly kicked Spear in the head, even after Torres attempted to shield Spear’s head with his hand and shouted at COLL to stop.  After COLL stopped kicking Spear, COLL lifted up Spear’s head, told him to remember who had done this to him, and then dropped Spear’s head to the ground.  Spear was pronounced dead at the scene shortly after the assault.

Spear’s autopsy was conducted at the Bronx Office of the Chief Medical Examiner (the “CME”).  The autopsy revealed that Spear had at least three recent contusions on his skull, and that he had suffered a “brain bleed” caused by blunt force trauma to the head, consistent with Spear being kicked in the head while he was lying prone on the ground.  The CME found that Spear had suffered a cardiac arrhythmia as a result of the head trauma.  The assault by COLL was therefore, as the jury found, the cause of Spear’s death.

After Spear’s death, COLL, Taylor, Torres, and others, covered up the true cause of Spear’s death by concocting a false story that turned Spear into the aggressor, falsely claiming that Spear had attacked COLL with a cane.  Specifically, COLL falsely claimed that Spear had attacked him with a cane, and Torres agreed to support this false version of events and further agreed not to not relay that COLL had repeatedly kicked Spear in the head.  Additionally, at Taylor’s request, COLL, Torres, and an additional correction officer agreed to claim falsely that Taylor was not present for the incident.  Consistent with their agreement, the conspirators filed false Use of Force reports with the Department of Correction and lied repeatedly to Department of Correction supervisors and investigators, and to the Bronx District Attorney’s Office.

COLL and his coconspirators propagated this false version of events after being advised by a Rikers captain to be consistent in the Use of Force reports that the officers were required to submit following Spear’s death.  Additionally, when no cane was recovered from the crime scene – potentially calling into doubt COLL’s claim that Spear had attacked him with a cane – another Rikers captain directed a correction officer to take a cane from a supply area and to pass it off to investigators as the cane used in the incident.  

*                      *                      *

BRIAN COLL, 47, of Smithtown, New York, was sentenced to 30 years in prison and five years of supervised release. 

Mr. Kim praised the investigative work of the Federal Bureau of Investigation and the Criminal Investigators at the United States Attorney’s Office.  Mr. Kim also thanked the New York City Department of Correction, Investigative Division, and the Bronx District Attorney’s Office for their assistance in the investigation.

This case is being handled by the Office’s Civil Rights and Public Corruption Units.  Assistant U.S. Attorneys Brooke E. Cucinella, Jeannette A. Vargas, and Martin S. Bell are in charge of the prosecution.   

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”) announced today the filing of a Superseding Indictment charging CHRISTOPHER LONDONIO with attempting to escape from the Metropolitan Detention Center (“MDC”), in Brooklyn.

LONDONIO has been detained at the MDC since February 2017 in connection with murder and racketeering charges pending in White Plains federal court.  The Superseding Indictment re-alleges previously filed charges against LONDONIO and 18 other members and associates of the Luchese Family of La Cosa Nostra, who are charged with racketeering, murder, narcotics offenses, and firearms offenses.  LONDONIO will be arraigned on the new charge at the next pretrial conference, which is currently scheduled for September 20, 2017.  The case is assigned to United States District Judge Cathy Seibel.

Acting U.S. Attorney Joon H. Kim said:  “Already detained on racketeering and murder charges, Luchese soldier Christopher Londonio, allegedly hatched a scheme to break out of federal prison with a hacksaw blade and a rope made from tied-up bedsheets. Although sounding like a script for a made-for-tv movie, the charges allege yet another serious federal crime against Londonio. As alleged, with this latest chapter in his years-long life in the mob, Londonio adds to the string of crimes he must now face, in a criminal justice system he was desperately seeking to escape.”

FBI Assistant Director William F. Sweeney Jr. said:  “Someone facing federal charges of murder, extortion, racketeering, and a litany of other crimes may feel a certain desperation to attempt breaking out of jail to avoid justice.  However, the outlandish choice of dental floss, and even allegedly asking a priest to assist in the escape defies comprehension.  The attempts didn't work, and now the subject in this case faces even more charges for his alleged criminal behavior.”

According to the allegations in the Superseding Indictment[1] and other documents in the public record:

In or about June 2017, LONDONIO and another detainee concocted a plan to escape from the MDC.  In furtherance of the plan, LONDONIO used dental floss as a cutting tool to tamper with a window in the facility.  He also planned to solicit a priest to smuggle a saw blade into the facility, and secretly stockpiled a large number of sheets and blankets, intending to use them as a rope to aid in his escape.  The plan was foiled after a fellow detainee reported the escape plan to the authorities.

La Cosa Nostra or “the Mafia” is a criminal organization composed of leaders, members, and associates who work together and coordinate to engage in a multitude of criminal activities.  In addition to the attempted escape charge, the Superseding Indictment alleges that from at least in or about 2000 up to and including in or about 2017, MATTHEW MADONNA, STEVEN CREA, Sr., a/k/a “Wonder Boy,” JOSEPH DINAPOLI, STEVEN CREA, Jr., DOMINIC TRUSCELLO, JOHN CASTELUCCI, a/k/a “Big John,” TINDARO CORSO, a/k/a “Tino,” JOSEPH VENICE, JAMES MAFFUCCI, a/k/a “Jimmy the Jew,” JOSEPH DATELLO, a/k/a “Big Joe,” a/k/a “Joey Glasses,” PAUL CASSANO, a/k/a “Paulie Roast Beef,” CHRISTOPHER LONDONIO, TERRENCE CALDWELL, a/k/a “T,” VINCENT BRUNO, BRIAN VAUGHAN, CARMINE GARCIA, a/k/a “Spanish Carmine,” RICHARD O’CONNOR, ROBERT CAMILLI, and JOHN INCATASCIATO, along with other members and associates of La Cosa Nostra, committed a wide array of crimes in connection with their association with the mafia, including murder, attempted murder, assault, robbery, extortion, gambling, narcotics trafficking, witness tampering, fraud, money laundering, and trafficking in contraband cigarettes. 

*          *          *

LONDONIO, 43, is a resident of Hartsdale, New York.  The attempted escape charge, a violation of Title 18, United States Code, Section 751(a), carries a maximum prison term of five years.  A chart containing the ages, residency information, and charges against all of the defendants named in the Superseding Indictment, as well as the maximum penalties they face, is attached.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the Special Investigative Services of the Bureau of Prisons and the FBI’s Joint Organized Crime Task Force, which is composed of agents and detectives of the FBI, NYPD, Homeland Security Investigations, and the Waterfront Commission of New York Harbor.  He added that the investigation is continuing.

Assistant U.S. Attorneys Scott Hartman, Hagan Scotten, and Jacqueline Kelly are in charge of the prosecution.  The case is being handled by the Office’s Violent and Organized Crime Unit and White Plains Division.

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

United States v. Mathew Madonna, et al., S3 17 Cr. 89 (CS)

DEFENDANT

AGE

CITY OF RESIDENCE

CHARGES

MAX SENT.

Madonna, Matthew

81

Incarcerated

18 U.S.C. § 924(c)

18 U.S.C. § 924(j)

18 U.S.C. § 1959(a)(1)

18 U.S.C. § 1959(a)(5)

18 U.S.C. § 1962(d)

Life or the death penalty

Crea, Sr., Steven

69

Crestwood, NY

18 U.S.C. § 924(c)

18 U.S.C. § 924(j)

18 U.S.C. § 1959(a)(1)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1959(a)(5)

18 U.S.C. § 1962(d)

Life or the death penalty

DiNapoli, Joseph

81

Bronx, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

Life

Crea, Jr., Steven

45

New Rochelle, NY

18 U.S.C. § 924(c)

18 U.S.C. § 924(j)

18 U.S.C. § 1959(a)(1)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1959(a)(5)

18 U.S.C. § 1962(d)

Life or the death penalty

Truscello, Dominic

83

Staten Island, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

Life

Castelucci, John

57

Staten Island, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

Life

Corso, Tindaro

56

Staten Island, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

Life

Venice, Joseph

56

Yonkers, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

Life

Maffucci, James

69

Manhattan, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

21 U.S.C.  § 846

Life

Datello, Joseph

66

Staten Island, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1962(d)

21 U.S.C.  § 846

Life

Londonio, Christopher

43

Incarcerated

18 U.S.C. § 751(a)

18 U.S.C. § 924(c)

18 U.S.C. § 924(j)

18 U.S.C. § 1959(a)(1)

18 U.S.C. § 1959(a)(5)

18 U.S.C. § 1962(d)

21 U.S.C. § 846

Life or the death penalty

Cassano, Paul

38

Yonkers, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1962(d)

Life

Caldwell, Terrence

59

Incarcerated

18 U.S.C. § 924(c)

18 U.S.C. § 924(j)

18 U.S.C. § 1959(a)(1)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1959(a)(5)

18 U.S.C. § 1962(d)

Life or the death penalty

Bruno, Vincent

33

Incarcerated

18 U.S.C. § 924(c)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1962(d)

Life

Vaughan, Brian

51

Matawan, NJ

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

21 U.S.C.  § 846

Life

Garcia, Carmine

65

Hawthorne, NJ

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

21 U.S.C.  § 846

Life

O’Connor, Richard

63

Staten Island, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

21 U.S.C.  § 846

Life

Camilli, Robert

60

Briarcliff Manor, NY

18 U.S.C. § 1962(d)

20 Years

Incatasciato, John

42

Elmsford, NY

18 U.S.C. § 1962(d)

20 Years

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JESUS RODRIGUEZ-JIMENEZ pled guilty in Manhattan federal court before United States District Judge Katherine B. Forrest to money laundering and conspiracy offenses in relation to RODRIGUEZ-JIMENEZ’s leadership of an international money laundering business working on behalf of drug cartels in Mexico and Central America.  Through a web of front companies, shell bank accounts, and money couriers based in the United States and Europe, RODRIGUEZ-JIMENEZ successfully laundered in excess of $250 million in furtherance of those cartels’ narcotics trafficking activities. 

Under RODRIGUEZ-JIMENEZ’s plea agreement with this Office, he faces a stipulated Guidelines sentence of 30 years in prison under the United States Sentencing Guidelines, which is also the maximum potential sentence.  RODRIGUEZ-JIMENEZ is scheduled to be sentenced by Judge Forrest later this year.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As he admitted in Manhattan federal court today, Jesus Rodriguez-Jimenez led an international money laundering operation that handled the proceeds of cocaine and heroin trafficking by Mexican and Central American cartels.  Using front companies, sham bank accounts, and money drops in several U.S. cities, the Rodriguez-Jimenez organization laundered more than a quarter of a billion dollars in illegal drug trafficking proceeds.  Thanks to the efforts of the DEA and IRS, Rodriguez-Jimenez now awaits sentencing for his crimes.”

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

Since July 2013, the U.S. Drug Enforcement Administration (“DEA”) has been investigating JESUS RODRIGUEZ-JIMENEZ’s international money laundering organization and its cartel clients, which together have been involved in trafficking hundreds of kilograms of cocaine and heroin, among other narcotics, and laundering narcotics proceeds through a variety of methods, including through one or more seemingly “legitimate” corporations under their control.  RODRIGUEZ-JIMENEZ and his organization have ties to Panama, Mexico, Italy, Spain, and the United States, among other locations.

RODRIGUEZ-JIMENEZ, as the leader of a network of front companies created in Mexico and Las Vegas, Nevada, among other places, controlled numerous sham bank accounts opened under the names of those businesses.  Using those fronts for cover, RODRIGUEZ-JIMENZ received large amounts of drug proceeds in the form of cash in the United States and elsewhere, deposited that cash into the sham bank accounts controlled by his organization, and transmitted that cash via a series of domestic and international wire transfers to members and associates of his cartel clients.  As part of his involvement in this laundering activity, RODRIGUEZ-JIMENEZ orchestrated the delivery of narcotics proceeds to money launderers in the United States, including through the delivery of hundreds of thousands of dollars in single-day “money drops” in New York, Philadelphia, Atlanta, Chicago, and Las Vegas.

RODRIGUEZ-JIMENZ and multiple other members of his organization were included in two Indictments filed in June and November 2016 – 16 Cr. 644 (KBF) – now before Judge Forrest, in which all of the defendants were charged with money laundering conspiracy for participation in RODRIGUEZ-JIMENEZ’s organization, and various of the defendants were also charged with participation in narcotics trafficking.    

* * *

Acting U.S. Attorney Kim praised the outstanding work of the Las Vegas Division of the DEA and the Las Vegas Office of the Internal Revenue Service, Criminal Investigation, in the investigation of this case.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Dana J. Boente, Acting Assistant Attorney General for National Security, announced that MAALIK ALIM JONES pled guilty today before U.S. District Judge Paul G. Gardephe to conspiring to provide material support to al Shabaab, a designated Foreign Terrorist Organization based in Somalia, conspiring to receive military training from al Shabaab, and carrying and using an AK-47 machine gun, rocket-propelled grenades, and other destructive devices in furtherance of his support for al Shabaab. In 2011, JONES, a United States citizen, traveled to Somalia, where he took up arms and provided military support to al Shabaab for approximately four years.

Acting U.S. Attorney Joon H. Kim said: “As he admitted in court today, Maalik Jones traveled to Somalia, was trained by al Shabaab in the use of an AK-47 and rocket-propelled grenades, and took up arms for four years as a terrorist fighter. For his allegiance to this lawless, terrorist organization that vows to destroy America and its values, Maalik Jones been held to account in an American court of law. All that is left is for him to be sentenced for his crimes.”

Acting Assistant Attorney General Dana J. Boente said: “Jones pleaded guilty to conspiring to provide material support to al Shabaab, by traveling abroad to join and fight on behalf of the foreign terrorist organization for four years. I want to thank the many prosecutors, agents, and analysts who made this result possible.”

According to the Complaint, the Indictment, the Superseding Information, and statements made in court proceedings, including today’s guilty plea:

In February 2008, the U.S. Department of State designated al Shabaab as a Foreign Terrorist Organization. Al Shabaab has used violent means – including targeted assassinations of civilians and journalists, and the use of improvised explosive devices, rockets, mortars, and automatic weapons – to, among other things, destabilize the government of Somalia, quell the Somali population, and force the withdrawal of foreign troops in Somalia. A former leader of al Shabaab, whose exhortations were echoed by the leadership of al Qaeda, called for foreign fighters to join al Shabaab in a “holy war” in Somalia. As a result of al Shabaab’s recruitment efforts, men from other countries – including the U.S. – have traveled to Somalia to engage in violent jihad.

Since al Shabaab’s designation as a Foreign Terrorist Organization in February 2008, it has made several public statements demonstrating its intent to harm U.S. interests. For example, in or about April 2008, al Shabaab released a statement declaring a campaign against the U.S. Similarly, after an al Shabaab member was killed in May 2008, al Shabaab leaders announced that the mujahideen would “hunt the U.S. government” and that governments supporting the U.S. and Ethiopia should keep their citizens out of Somalia. In April 2009, al Shabaab claimed responsibility for mortar attacks against a U.S. congressman who had been visiting Somalia, and in February 2012, the then-Emir of al Shabaab swore allegiance to Ayman al-Zawahiri, the Emir of al Qaeda, stating that al Shabaab “will hereby merge into al Qa’ida.”

Al Shabaab also maintains a specialized fighting force, known as Jaysh Ayman, that is responsible for carrying out commando-style attacks and cross-border raids in which fighters, among other things, travel across the land border between Somalia and Kenya to target individuals and conduct attacks against civilian and military targets in Kenya. Among the attacks executed by Jaysh Ayman fighters are: (i) a June 16, 2014, attack in which al Shabaab fighters opened fire in a hotel bar in Mpekatoni, Kenya, killing approximately 40 people; (ii) a July 2014 attack in Hindi, Kenya, in which approximately 12 al Shabaab fighters opened fire at a trading center and set fire to government buildings and a church, killing nine people; and (iii) a June 14, 2015, attack in which al Shabaab fighters ambushed a Kenyan Defense Force base in Lamu County, Kenya, using various weapons, including AK-47 rifles and rocket-propelled grenades and killing two Kenyan Defense Force soldiers (the “Lamu Attack”).

In or about July 2011, JONES left Baltimore, Maryland, with the intent to join al Shabaab in Somalia. JONES traveled to New York City, from where he flew via commercial aircraft to Kenya, with stopovers in Morocco and the United Arab Emirates. After arriving in Kenya, JONES traveled by land from Kenya to Somalia, which is a common travel route for foreign fighters traveling to Somalia to join al Shabaab.

In Somalia, JONES joined al Shabaab and was a member of the terrorist organization for approximately four years. During this time, JONES trained, worked, and fought with al Shabaab in Somalia. Among other things, JONES received three months of military training at an al Shabaab training camp, where he learned, among other things, how to operate an AK-47 assault rifle and rocket-propelled grenades. Upon completion of this training, JONES also was assigned to al Shabaab’s specialized fighting force, Jaysh Ayman, and participated in combat against soldiers of the Kenyan government on behalf of al Shabaab.

In particular, after joining Jaysh Ayman, JONES and his Jaysh Ayman unit participated in a battle in Afmadow, Somalia, against Kenyan government soldiers. JONES, armed with an AK-47 rifle, engaged in the fighting until he was injured by a missile and then hospitalized. After his release from the hospital, JONES returned to his service with al Shabaab and, in particular, Jaysh Ayman.

JONES has appeared with other al Shabaab fighters in videos that were recovered from an al Shabaab fighter who participated in and was killed during the aforementioned Lamu Attack. In one of the videos, JONES possessed a firearm, and is seen with several al Shabaab fighters. The al Shabaab fighters are depicted greeting each other, hugging each other, and carrying firearms.

On or about December 7, 2015, JONES was taken into custody by Somali authorities while he was attempting to procure a boat to depart Somalia for Yemen.

* * *

JONES, 32, a United States citizen who resided in Maryland until 2011, pled guilty to one count of conspiring to provide material support to al Shabaab; one count of conspiring to receive military training from a designated foreign terrorist organization; and one count of possessing, carrying, and using a machine gun and other destructive devices during and in relation to a crime of violence. The material support count carries a maximum sentence of 15 years in prison. The military training count carries a maximum sentence of five years in prison. The machine gun count carries a maximum sentence of life in prison, with a mandatory minimum sentence of 30 years in prison, which must run consecutively to any other sentence. The minimum and maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court. JONES, who has been detained since his arrest in December 2015, will be sentenced by Judge Gardephe on January 25, 2018.

Mr. Kim praised the investigative work of the FBI’s New York Joint Terrorism Task Force – which principally consists of agents from the FBI and detectives from the New York City Police Department. He also thanked the U.S. Department of Justice’s National Security Division and Office of International Affairs, and the U.S. Department of State, for their assistance.

This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys Andrew J. DeFilippis and Shawn G. Crowley, and Trial Attorney Raj Parekh of the National Security Division’s Counterterrorism Section, are in charge of the prosecution.

Maalik Alim Jones, 32, a U.S. citizen who resided in Maryland until 2011, pleaded guilty to conspiring to provide material support to al Shabaab, a designated foreign terrorist organization based in Somalia, conspiring to receive military training from al Shabaab, and carrying and using an AK-47 machine gun, rocket-propelled grenades and other weapons in furtherance of his support for al Shabaab. 

Acting Assistant Attorney General for National Security Dana J. Boente and Acting U.S. Attorney Joon H. Kim for the Southern District of New York made the announcement.  U.S. District Judge Paul G. Gardephe presided over the hearing.

“Jones pleaded guilty to conspiring to provide material support to al Shabaab, by traveling abroad to join and fight on behalf of the foreign terrorist organization for four years,” said Acting Assistant Attorney General Boente.  “I want to thank the many prosecutors, agents, and analysts who made this result possible.”

“As he admitted in court today, Maalik Jones traveled to Somalia, was trained by al Shabaab in the use of an AK-47 and rocket-propelled grenades and took up arms for four years as a terrorist fighter,” said Acting U.S. Attorney Kim  “For his allegiance to this lawless, terrorist organization that vows to destroy America and its values, Maalik Jones been held to account in an American court of law.  All that is left is for him to be sentenced for his crimes.”

According to the Complaint, the Indictment, the Superseding Information, and statements made in court proceedings, including today’s guilty plea:

In 2011, Jones traveled via commercial aircraft from New York to Kenya, with stopovers in Morocco and the United Arab Emirates. After arriving in Kenya, Jones traveled by land from Kenya to Somalia where he trained, worked and fought with al Shabaab in Somalia. Among other things, Jones received military training at an al Shabaab training camp, where he learned to operate an AK-47 assault rifle and rocket-propelled grenades. Jones also became a member of al Shabaab’s specialized fighting force, Jaysh Ayman, and participated in combat against soldiers of the Kenyan government on behalf of al Shabaab.

In particular, after joining Jaysh Ayman, Jones and his Jaysh Ayman unit participated in a battle in Afmadow, Somalia, against Kenyan government soldiers.  Jones, armed with an AK-47 rifle, engaged in the fighting until he was injured by a missile and then hospitalized.  After his release from the hospital, Jones returned to his service with al Shabaab and, in particular, Jaysh Ayman.

The material support count carries a maximum sentence of 15 years in prison.  The military training count carries a maximum sentence of 5 years in prison.  The machinegun count carries a maximum sentence of life in prison, with a mandatory minimum sentence of 30 years in prison, which must run consecutively to any other sentence.  The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes.  The sentencing of the defendant will be determined by the court after considering the advisory Sentencing Guidelines and other statutory factors.  Jones, who has been detained since his arrest in December 2015, will be sentenced by Judge Gardephe on Jan. 25, 2018.

Mr. Boente and Mr. Kim praised the investigative work of the FBI’s New York Joint Terrorism Task Force – which principally consists of agents from the FBI and detectives from the New York City Police Department.  He also thanked the U.S. Department of Justice’s National Security Division and Office of International Affairs, and the U.S. Department of State, for their assistance. 

Assistant U.S. Attorneys Andrew J. DeFilippis and Shawn G. Crowley of the Southern District of New York, and Trial Attorney Raj Parekh of the National Security Division’s Counterterrorism Section are prosecuting this case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that EDWARD DIAZ was sentenced in White Plains federal court to 210 months in prison on one count stemming from his sexual exploitation of a minor, related child pornography offenses, and attempts to hinder the federal investigation concerning his criminal conduct. DIAZ, 60, of Campbell Hall, New York, pled guilty on March 9, 2017, before United States District Judge Vincent L. Briccetti, who also imposed today’s sentence.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Edward Diaz sexually abused a child, and then kept digital images depicting that abuse. For his predatory conduct, Diaz received the significant prison term his crime deserves.”

According to the allegations contained in the Complaint, the Indictment filed against DIAZ, and statements made in court filings and proceedings in open court:

On or about April 1, 2016, DIAZ used his personal email account to send himself an email attaching three images depicting child pornography. DIAZ’s internet service provider flagged the email as potentially containing child pornography and provided it to the National Center for Missing and Exploited Children (“NCMEC”). A NCMEC representative reviewed the email and at least one of the attachments, indicated the presence of child pornography, and notified the United States Postal Inspection Service (“USPIS”).

On the morning of June 13, 2016, USPIS agents interviewed DIAZ at his home. During the interview, the agents observed a laptop located in DIAZ’s bedroom. DIAZ denied using the laptop to view child pornography. The USPIS agents left DIAZ’s residence and returned later that day with a search warrant. Upon their return, the agents learned that DIAZ had left the residence and taken the laptop with him. USPIS agents contacted DIAZ and convinced him to return. When asked about the laptop, however, DIAZ initially stated that he did not own a laptop and finally stated that he took the laptop to a repair shop, which he declined to identify. The laptop has not been recovered.

During the subsequent search of DIAZ’s residence, USPIS agents recovered a Secure Digital (“SD”) card. The SD card, which was provided to the Federal Bureau of Investigation (“FBI”) for forensic analysis, revealed the existence of five previously deleted images that appeared to contain child pornography. Specifically, the images depicted, among other things, a pre-pubescent girl engaged in a sex act with DIAZ.

In addition to the prison term, DIAZ was sentenced to supervised release for life.

* * *

Mr. Kim praised the extraordinary investigative work of the Postal Inspection Service and the FBI.

This case is being handled by the Office’s White Plains Division. Assistant United States Attorney Christopher J. Clore is in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that HAMLET PERALTA was sentenced by United States District Judge Katherine B. Forrest to five years in prison for running a multimillion-dollar Ponzi scheme to obtain money from investors by fraudulently representing that he was using their investments to further a profitable, multimillion-dollar wholesale liquor business.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Hamlet Peralta swindled millions of dollars from unsuspecting investors who trusted him because of his reputation in the community as a business owner and restaurateur. Peralta deceived investor after investor through bald lies and forged documents, enticing them with high returns on investments he never made. Instead, Peralta used his victims’ money to pay earlier investors and to line his own pockets.”

According to the Complaint and Indictment filed in Manhattan federal court and today’s sentencing proceeding:

From 2013 through 2014, PERALTA solicited more than $12 million from multiple investors by falsely representing that the investors’ money would be used to engage in wholesale liquor distribution for a profit. He made these promises both orally and in written contracts. To bolster the supposed bona fides of his fictitious business, he provided investors with forged invoices and other documentation, purporting to establish the high volume of liquor he both bought from licensed wholesalers in New York and sold to wholesale and retail clients for a profit.

In truth and in fact, however, PERALTA misappropriated the millions of dollars in investments he received. He took out much of the money in cash and used some of it both to support his lifestyle and to rehabilitate a failing restaurant he owned. Because PERALTA purchased very little liquor and had no profits with which to pay back investors, he then began borrowing large sums of money from new investors on the false promise that he was investing that money in the liquor business, instead using that money to repay prior investors.

In or about 2013, for example, PERALTA told a prospective investor (“Investor-1”), who was a frequent customer at PERALTA’s restaurant and who had become friendly with PERALTA, that he (PERALTA) owned a separate business called West 125th Street Liquors and that he had been approved as an exclusive wine distributor to a major national restaurant supply company (the “Restaurant Supply Company”) that was beginning a wholesale wine business. PERALTA told the investor that he would receive significant interest on his investments, based on profits from the wholesale liquor distribution business. In truth and in fact, however, PERALTA did not own West 125th Street Liquors, and he had not been approved to be a distributor for the Restaurant Supply Company. deed, neither PERALTA nor West 125th Street Liquors had ever supplied anything to the Restaurant Supply Company. PERALTA also provided vestor-1 with fake documentation on the Restaurant Supply Company’s letterhead, falsely representing that the Restaurant Supply Company would be electronically transferring $1,826,350 to PERALTA within seven days.

Investor-1 provided PERALTA with more than $3.5 million over the course of the next year, a substantial portion of which was used to pay back other investors. Ultimately, PERALTA owed Investor-1 approximately $2 million. In all, PERALTA, who obtained approximately $12 million from investors, failed to pay back more than $5 million of that money.

* * *

In addition to his prison term, PERALTA, 37, of the Bronx, New York, was sentenced to three years of supervised release, and ordered to forfeit $5,079,000 and to pay restitution of $5,079,000.

Mr. Kim praised the investigative work of the Federal Bureau of Investigation and the NYPD Internal Affairs Bureau.

This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys Kan M. Nawaday, Russell Capone, Martin S. Bell, and Lauren Schorr are in charge of the prosecution.

A grand jury returned a superseding indictment today charging Adam Raishani, aka, “Saddam Mohamed Raishani,” 30, of the Bronx, N.Y., with conspiring to provide, providing and attempting to provide, and aiding and abetting the provision and attempted provision of material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization, by allegedly facilitating another ISIS supporter’s travel to join ISIS overseas.  Raishani had already been charged, in an Indictment filed on June 29, with attempting to provide material support to ISIS, by allegedly attempting to travel abroad to join ISIS himself. 

Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Joon H. Kim for the Southern District of New York, Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office and Commissioner James P. O’Neill of the NYPD made the announcement.  The case is assigned to U.S. District Judge Gregory H. Woods.

Raishani was arrested on June 21, at John F. Kennedy International Airport (JFK) in Queens, N.Y., as he allegedly attempted to travel overseas to join ISIS.  The Superseding Indictment adds charges against Raishani for allegedly facilitating another individual’s travel to join ISIS abroad in the fall of 2015. 

“According to the charges, Raishani conspired to provide material support to ISIS and helped another individual travel to join the designated terrorist organization before attempting to do the same,” said Acting Assistant Attorney General Boente. “The National Security Division’s highest priority is countering terrorist threats, and we will continue to work to stem the flow of foreign fighters abroad and bring to justice those who conspire to provide material support to designated foreign terrorist organizations. I would like to thank all of the agents, analysts and prosecutors who are responsible for this case.”

“As alleged, Adam Raishani provided material support to ISIS by helping a co-conspirator travel abroad to fight for that terrorist organization,” said Acting U.S. Attorney Kim.  “A year later, Raishani himself attempted to travel overseas to join ISIS.   Fortunately through the outstanding work of law enforcement, Raishani’s travel plans were detected and thwarted before he was able to inflict any further harm.”

“As we allege, Raishani not only provided support to another individual located in the US who was determined to join ISIS overseas, but arranged for his departure, and expressed disappointment for not being able to travel with that individual at that time,” said Assistant Director in Charge Sweeney, Jr.  “Along with our partners on the Joint Terrorism Task Force, we'll continue to identify those who support terrorist organizations and their agenda in any way, as we’ve done here today”

 “Over the past several weeks, there have been a number of defendants charged with helping others travel to Syria or prepare to engage in their own Jihad,” said Commissioner O’Neill. “This is the latest – troubling – example. My thanks for the detectives and agents whose investigation on the original Joint Terrorism Task Force here in Manhattan led to today’s arrests.”

As alleged in the Superseding Indictment filed today and the criminal Complaint initially filed against Raishani:

Beginning in at least the fall of 2015, Raishani conspired with another ISIS supporter (CC-1) to provide material support to ISIS by means of CC-1 traveling abroad to join and fight for ISIS.  On or about Oct. 30, 2015, CC-1 departed from JFK Airport for Istanbul, Turkey.  Raishani arranged for the transportation of CC-1 from the Bronx, New York, to JFK Airport, and Raishani accompanied CC-1 from the Bronx to JFK Airport.

Raishani continued communicating with CC-1 following CC-1’s departure.  For example, on or about Jan. 2, 2016, Raishani sent an email to CC-1 stating:  “Glad tidings brother. Its [sic] been some time since your voyage. I pray to Allah The ALL MIGHTY to grant you success. Until next time."  On or about April 1, 2016, Raishani sent another email to CC-1 stating:  “I hope Allah has bestowed you what you were seeking. . . . May Allah grant you sincere and clean intentions and make you among the righteous in Janatal Firdaus [a reference to Islamic paradise]. . . . Please return this email and respond to what we agreed upon before your departure. Until next time.”  On or about May 3, 2016, CC-1 responded to Raishani, informing Raishani that CC-1 was “fine and well,” that CC-1 “wished you [Raishani] were here with me,” and that “here we are living with izza [honor].”

Also in May 2016, CC-1 posted content on a particular social media application (“Application-1”) indicating that CC-1 was living in the Islamic State and fighting on its behalf.  For example, CC-1 sent messages to another user of Application-1 stating:  “I’m living in the Islamic state safely and secure by the permission of Allah,” “[h]ere we are fighting the kuffars [non-believers],” and “I left the land of kuffars now I’m living in the khilafah [the caliphate].”  CC-1 also posted a photograph on Application-1 that shows CC-1 carrying an assault rifle and a flag representative of ISIS. 

Between January and June of 2017, Raishani engaged in a series of meetings with an individual who was, unbeknownst to Raishani, a confidential source working at the direction of law enforcement (the CS).  In the course of those meetings, Raishani admitted to the CS that, some time ago, he had helped another person to travel overseas to join the Islamic State.  Raishani told the CS, among other things, that he took that person to JFK Airport and gave him money on the day of his departure for the Islamic State.  Raishani expressed regret to the CS at not having traveled himself to join ISIS at that time, and Raishani revealed that, as of April 2017, he was actively planning to travel abroad to join and serve ISIS.  Raishani indicated that he aspired to join ISIS in Syria and that he aimed to travel before the end of Ramadan, an Islamic holy month that ran from approximately May 26 through June 24 of this year.  In June 2017, Raishani made preparations to leave, including by paying off debts and purchasing clothing that he intended to wear for training with ISIS overseas.  On June 21, Raishani attempted to board a flight bound for Turkey (via Portugal) at JFK Airport, where he was arrested by the FBI.

***

Raishani is charged with allegedly conspiring to provide, providing and attempting to provide, and aiding and abetting the provision and attempted provision of material support to a designated foreign terrorist organization, each count carries a maximum sentence of 20 years in prison.  The charges contained in the Superseding Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.  The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court after considering the advisory Sentencing Guidelines and other statutory factors.

Mr. Boente and Mr. Kim praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD, and the NYPD’s Intelligence Division.  Mr. Kim also thanked the Counterterrorism Section of the Department of Justice’s National Security Division, as well as the New York Office of U.S. Customs and Border Protection.

Assistant U.S. Attorneys George D. Turner, Sidhardha Kamaraju and Jane Kim of the Southern District of New York, and Trial Attorney Kevin C. Nunnally of the Counterterrorism Section of the National Security Division are prosecuting the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Dana J. Boente, the Acting Assistant Attorney General for National Security, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), announced the filing of a Superseding Indictment charging ADAM RAISHANI, a/k/a “Saddam Mohamed Raishani,” with conspiring to provide, providing and attempting to provide, and aiding and abetting the provision and attempted provision of material support to the Islamic State of Iraq and al-Sham (“ISIS” or the “Islamic State”), a designated foreign terrorist organization, by allegedly facilitating another ISIS supporter’s travel to join ISIS overseas.  RAISHANI had already been charged, in an Indictment filed on June 29, 2017, with attempting to provide material support to ISIS, by allegedly attempting to travel abroad to join ISIS himself.  RAISHANI was arrested on June 21, 2017, at John F. Kennedy International Airport (“JFK Airport”) in Queens, New York, as he allegedly attempted to travel overseas to join ISIS.  The Superseding Indictment adds charges against RAISHANI for allegedly agreeing to facilitate, and facilitating another individual’s travel to join ISIS abroad in the fall of 2015.  The case is assigned to U.S. District Judge Gregory H. Woods.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, Adam Raishani provided material support to ISIS by helping a co-conspirator travel abroad to fight for that terrorist organization.  A year later, Raishani himself attempted to travel overseas to join ISIS.   Fortunately through the outstanding work of law enforcement, Raishani’s travel plans were detected and thwarted before he was able to inflict any further harm.”

Acting Assistant Attorney General J. Dana Boente said:  “According to the charges, Raishani conspired to provide material support to ISIS and helped another individual travel to join the designated terrorist organization before attempting to do the same. The National Security Division’s highest priority is countering terrorist threats, and we will continue to work to stem the flow of foreign fighters abroad and bring to justice those who conspire to provide material support to designated foreign terrorist organizations. I would like to thank all of the agents, analysts and prosecutors who are responsible for this case.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “As we allege, Raishani not only provided support to another individual located in the US who was determined to join ISIS overseas, but arranged for his departure, and expressed disappointment for not being able to travel with that individual at that time. Along with our partners on the Joint Terrorism Task Force, we'll continue to identify those who support terrorist organizations and their agenda in any way, as we've done here today.”

NYPD Commissioner James P. O’Neill said:  “Over the past several weeks, there have been a number of defendants charged with helping others travel to Syria or prepare to engage in their own Jihad,” said Police Commissioner James P. O’Neill. “This is the latest—troubling—example. My thanks for the detectives and agents whose investigation on the original Joint Terrorism Task Force here in Manhattan led to today’s arrests.”

As alleged in the Superseding Indictment filed today in Manhattan federal court and the criminal Complaint[1] initially filed against RAISHANI:

Beginning in at least the fall of 2015, RAISHANI conspired with another ISIS supporter (“CC-1”) to provide material support to ISIS by means of CC-1 traveling abroad to join and fight for ISIS.  On or about October 30, 2015, CC-1 departed from JFK Airport for Istanbul, Turkey.  RAISHANI arranged for the transportation of CC-1 from the Bronx, New York, to JFK Airport, and RAISHANI accompanied CC-1 from the Bronx to JFK Airport.

RAISHANI continued communicating with CC-1 following CC-1’s departure.  For example, on or about January 2, 2016, RAISHANI sent an email to CC-1 stating:  “Glad tidings brother. Its [sic] been some time since your voyage. I pray to Allah The ALL MIGHTY to grant you success. Until next time.”[2]  On or about April 1, 2016, RAISHANI sent another email to CC-1 stating:  “I hope Allah has bestowed you what you were seeking. . . . May Allah grant you sincere and clean intentions and make you among the righteous in Janatal Firdaus [a reference to Islamic paradise]. . . . Please return this email and respond to what we agreed upon before your departure. Until next time.”  On or about May 3, 2016, CC-1 responded to RAISHANI, informing RAISHANI that CC-1 was “fine and well,” that CC-1 “wished you [RAISHANI] were here with me,” and that “here we are living with izza [honor].”

Also in May 2016, CC-1 posted content on a particular social media application (“Application-1”) indicating that CC-1 was living in the Islamic State and fighting on its behalf.  For example, CC-1 sent messages to another user of Application-1 stating:  “I’m living in the Islamic state safely and secure by the permission of Allah,” “[h]ere we are fighting the kuffars [non-believers],” and “I left the land of kuffars now I’m living in the khilafah [the caliphate].”  CC-1 also posted a photograph on Application-1 that shows CC-1 carrying an assault rifle and a flag representative of ISIS. 

Between January and June of 2017, RAISHANI engaged in a series of meetings with an individual who was, unbeknownst to RAISHANI, a confidential source working at the direction of law enforcement (the “CS”).  In the course of those meetings, RAISHANI admitted to the CS that, some time ago, he had helped another person to travel overseas to join the Islamic State.  RAISHANI told the CS, among other things, that he took that person to JFK Airport and gave him money on the day of his departure for the Islamic State.  RAISHANI expressed regret to the CS at not having traveled himself to join ISIS at that time, and RAISHANI revealed that, as of April 2017, he was actively planning to travel abroad to join and serve ISIS.  RAISHANI indicated that he aspired to join ISIS in Syria and that he aimed to travel before the end of Ramadan, an Islamic holy month that ran from approximately May 26 through June 24 of this year.  In June 2017, RAISHANI made preparations to leave, including by paying off debts and purchasing clothing that he intended to wear for training with ISIS overseas.  On June 21, 2017, RAISHANI attempted to board a flight bound for Turkey (via Portugal) at JFK Airport, where he was arrested by the FBI and the NYPD.

     *                      *                      *

RAISHANI, 30, of the Bronx, New York, is charged in the Superseding Indictment with three counts of violating Title 18, United States Code, Section 2339B, by allegedly conspiring to provide, providing and attempting to provide, and aiding and abetting the provision and attempted provision of material support to a designated foreign terrorist organization.  Each count carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Kim praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD, and the NYPD’s Intelligence Division.  Mr. Kim also thanked the Counterterrorism Section of the Department of Justice’s National Security Division, as well as the New York Office of U.S. Customs and Border Protection.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys George D. Turner, Sidhardha Kamaraju, and Jane Kim are in charge of the prosecution, with assistance from Trial Attorney Kevin C. Nunnally of the Counterterrorism Section.

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 Complaint, and the descriptions of the Superseding Indictment and Complaint set forth below, are only allegations, and every fact described should be treated as an allegation.

[2] Communications and conversations discussed herein are described in substance and in part.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that CRAIG CARTON and MICHAEL WRIGHT were arrested this morning and charged with securities fraud, wire fraud, and conspiracy to commit those offenses.

As alleged, CARTON, WRIGHT, and another individual (“CC-1”) worked together to induce investors to provide them with millions of dollars, based on representations that the investor funds would be used to purchase blocks of tickets to concerts, which would then be re-sold on the secondary market. CARTON and CC-1 purportedly had access to those blocks of tickets based on agreements that CC-1 had with a company that promotes live music and entertainment events (the “Concert Promotion Company”) and that CARTON had with a company that operates two arenas in the New York metropolitan area (the “Sports and Entertainment Company”). In fact, neither the Concert Promotion Company nor the Sports and Entertainment Company had any such agreement with CARTON, WRIGHT, or CC-1, or any entity associated with them. After receiving the investor funds, CARTON, WRIGHT, and CC-1 misappropriated those funds, using them to, among other things, pay personal debts and repay prior investors as part of a Ponzi-like scheme.

CARTON and WRIGHT will be presented later today in Manhattan federal court.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As alleged, Craig Carton and Michael Wright deceived investors and raised millions of dollars through misrepresentation and outright lies. Their schemes were allegedly propped up by phony contracts with two companies to purchase blocks of concert tickets, when in fact, Carton and Wright had no deals to purchase any tickets at all. As alleged, behind all the talk, the Wright and Carton show was just a sham, designed to fleece investors out of millions ultimately to be spent on payments to casinos and to pay off other personal debt.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Carton and Wright thought they could get off easy by allegedly paying off their debts with other people’s money. They then attempted to pay off investors with money that would eventually become future debt, as alleged. We see this time and time again, the rise and fall of a Ponzi scheme destined for failure. The truth is, the time will come when your luck runs out. Unfortunately for those arrested today, that time is now.”

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

In the fall of 2016, CARTON, WRIGHT, and CC-1 exchanged emails and text messages regarding their existing debts. On September 5, 2016, for example, WRIGHT emailed CARTON and CC-1, “for the sake of our conversation tomorrow,” and outlined “the debt past due and due next week.” WRIGHT listed several apparent creditors, to whom he, CC-1, and/or CARTON were personally indebted for over a million dollars. WRIGHT listed eight possible options for repaying the debt, including “Run to Costa Rica, change name, and start life all over again – may not be an option.” CARTON responded to WRIGHT and CC-1, stating “don’t forget I have $1m coming tomorrow from ticket investor[.] will need to be discussed how to handle.” On September 7, 2016, CARTON emailed WRIGHT and CC-1, referenced a potential investor (“Investor-1”) in an upcoming holiday concert tour, and suggested “borrow[ing] against projected profits” on that investment.

Later in the fall of 2016, CARTON began negotiating with a hedge fund (the “Hedge Fund”) regarding a transaction in which the Hedge Fund would extend CARTON capital to finance CARTON’s purchase of event tickets, which CARTON would then re-sell at a profit. In early December 2016, CC-1 texted CARTON and WRIGHT and discussed using the Hedge Fund’s capital “to repay debts,” and not for the purchase of tickets.

The next day, December 7, 2016, CARTON emailed the Hedge Fund five agreements between (i) CC-1 and a company controlled by CC-1 (the “CC-1 Entity”) and (ii) the Concert Promotion Company. In each of the purported agreements, the Concert Promotion Company agreed to sell the CC-1 Entity up $10 million worth of tickets to different concert tours. However, as alleged, these agreements were fraudulent and had not, in fact been entered into by the Concert Promotion Company.

The following day, the Hedge Fund and CARTON executed the revolving loan agreement (the “Revolving Loan Agreement”), under which the Hedge Fund agreed to provide CARTON with up to $10 million, for the purpose of funding investments in the purchase of tickets for events. The Revolving Loan Agreement provided, in sum and substance, that the proceeds of the loan would be used only to purchase tickets pursuant to agreements for the acquisition of tickets, including the agreements with the Concert Promotion Company and for limited business expenses. The Hedge Fund would receive a share of the profits from the resale of the tickets.

The Hedge Fund then sent $700,000 to the CC-1 Entity to finance the purchase of tickets pursuant to the agreements between the CC-1 Entity and the Concert Promotion Company. CC-1, however, then sent this money to a bank account controlled by WRIGHT, who then, on December 12, sent $200,000 to CARTON’s personal bank account (the “CARTON Bank Account”), which CARTON then wired to a casino. Also on December 12, WRIGHT sent another $500,000 to an individual who had previously lent CARTON $500,000, which was due to be repaid that day.

Later in December 2016, the Hedge Fund sent an additional $1.9 million to the CC-1 Entity, to finance the purchase of tickets pursuant to agreements between the CC-1 Entity and the Concert Promotion Company. Once again, the Concert Promotion Company had not entered into any such agreements. CC-1, WRIGHT, and CARTON engaged in text messages regarding the disposition of these funds. Some of the money was used by CC-1 to repay two individuals who had previously invested with CC-1 in a related scheme involving the purported investment in the resale of tickets, and by CARTON to pay casinos and to pay Investor-1 a purported return on an earlier investment in a ticket-related venture.

CARTON also induced the Hedge Fund to wire $2 million to the Sports and Entertainment Company, based purportedly on an agreement he had with the Sports and Entertainment Company (the “Sports and Entertainment Company Agreement”). The Sports and Entertainment Company Agreement purportedly gave an entity controlled by CARTON (the “CARTON Entity”) the right to purchase $2 million of tickets to concerts at one of the venues operated by the Sports and Entertainment Company. CARTON, among other things, sent the Hedge Fund a copy of the Sports and Entertainment Company Agreement that purportedly had been signed by the chief executive officer of the Sports and Entertainment Company. However, this agreement was fraudulent and had never been entered into by the Sports and Entertainment Company or signed by the chief executive officer.

On December 20, 2016, when the Hedge Fund wired the $2 million to the Sports and Entertainment Company, CARTON contacted the Sports and Entertainment Company and told them, in sum and substance, that the wire had been sent in error and should be sent to the bank account for an entity operated by CARTON and WRIGHT, for which WRIGHT is the signatory. After the money was rewired to that account, WRIGHT wired $966,000 to WRIGHT’s personal bank account and $700,000 to the CARTON Bank Account. CARTON then wired approximately $188,000 from the CARTON Bank Account, including at least $133,000 in wires to several casinos.

* * *

CARTON, 48, of New York, New York, and WRIGHT, 41, of Upper Saddle River, New Jersey, are each charged with one count of conspiracy to commit securities fraud and wire fraud, one count of wire fraud, and one count of securities fraud. The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Kim praised the investigative work of the FBI and thanked the Boston Regional Office of the U.S. Securities and Exchange Commission, which has filed civil charges against CARTON and CC-1 in a separate action. He added that the FBI’s investigation is ongoing.

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

The allegations 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.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Dana Boente, the Acting Assistant Attorney General for National Security, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the filing of a superseding Indictment charging MEHMET ZAFER CAGLAYAN, a/k/a “Abi,” SULEYMAN ASLAN, LEVENT BALKAN, and ABDULLAH HAPPANI with conspiring to use the U.S. financial system to conduct hundreds of millions of dollars’ worth of transactions on behalf of the Government of Iran and other Iranian entities, which were barred by United States sanctions; lying to U.S. government officials about those transactions; laundering funds in connection with those illegal transactions, including millions of dollars in bribe payments to CAGLAYAN, ASLAN, and others used to facilitate the scheme; and defrauding several financial institutions by concealing the true nature of these transactions. The superseding Indictment further alleges that CAGLAYAN’s co-defendants – REZA ZARRAB, a/k/a “Riza Sarraf,” MEHMET HAKAN ATILLA, MOHAMMAD ZARRAB, a/k/a “Can Sarraf,” a/k/a “Kartalsmd,” CAMELIA JAMSHIDY, a/k/a “Kamelia Jamshidy,” and HOSSEIN NAJAFZADEH, who previously were charged in this case with the same offenses – participated in the same overarching scheme to violate and evade prohibitions against Iran’s access to the U.S. financial system. The case is assigned to United States District Judge Richard M. Berman.

REZA ZARRAB was arrested on March 19, 2016, and ATILLA was arrested on March 27, 2017. REZA ZARRAB and ATILLA are scheduled to begin trial on October 30, 2017, before Judge Berman. CAGLAYAN, ASLAN, BALKAN, HAPPANI, MOHAMMAD ZARRAB, JAMSHIDY, and NAJAFZADEH remain at large.

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

The scheme functioned largely by using the Turkish government-owned bank (“Turkish Bank-1”) at which ASLAN was the General Manager, ATILLA was the Deputy General Manager of International Banking, and BALKAN was an Assistant Deputy Manager for International Banking, to engage in transactions that violated U.S. sanctions against Iran. The defendants used Turkish Bank-1 to facilitate REZA ZARRAB’s ability to use his network of companies to supply currency and gold to the Government of Iran, Iranian entities, and SDNs using Turkish Bank-1, while concealing Turkish Bank-1’s role in the violation of U.S. sanctions from regulators. HAPPANI was an employee of REZA ZARRAB’s and assisted him in operating the scheme through this network of companies. CAGLAYAN, who was serving as Minister of the Economy in Turkey at all times relevant to the Superseding Indictment, received tens of millions of dollars’ worth of bribes in cash and jewelry from the proceeds of the scheme to provide services to the Government of Iran and to conceal those services from U.S. government officials. Using his position as Minister of the Economy, CAGLAYAN directed other members of the scheme, including officers of Turkish Bank-1, to engage in certain types of deceptive transactions, approved the steps taken by other members to implement the scheme, and protected the scheme from competitors as well as from scrutiny. As a result of this scheme, the co-conspirators induced U.S. banks to unknowingly process international financial transactions in violation of the IEEPA.

                                                                                          *     *     *

CAGLAYAN, 59, is a resident and citizen of Turkey. REZA ZARRAB, 33, is a resident of Turkey and dual citizen of Turkey and Iran. ASLAN, 47, ATILLA, 47, BALKAN, 56, and HAPPANI, 42, are residents and citizens of Turkey. MOHAMMAD ZARRAB, 39, is REZA ZARRAB’s brother and is a resident of Turkey and dual citizen of Turkey and Iran. JAMSHIDY, 31, is a resident of Turkey and dual citizen of Turkey and Iran. NAJAFZADEH, 67, is a resident of Iran and the UAE and a citizen of Iran. Each defendant is charged with conspiracies to defraud the United States, to violate the IEEPA, to commit bank fraud, and to commit money laundering, as well as substantive counts of bank fraud and money laundering. The conspiracy to defraud the United States count carries a maximum term of imprisonment of five years. The conspiracy to violate the IEEPA, money laundering conspiracy, and substantive money laundering counts each carry a maximum term of imprisonment of 20 years. The bank fraud counts each carry a maximum term of imprisonment of 30 years. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

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

The prosecution of this case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys Michael D. Lockard, Sidhardha Kamaraju, and David W. Denton, Jr., and Special Assistant United States Attorney Dean C. Sovolos, are in charge of the prosecution, with assistance from Trial Attorneys Elizabeth Cannon and David Recker of the Counterintelligence and Export Control Section.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Carl J. Kotowski, the Special Agent-in-Charge of the New Jersey Division of the Drug Enforcement Administration (“DEA”), announced that MAURICE MALIN pled guilty today before U.S. Magistrate Judge Andrew J. Peck to conspiring to illegally sell over 5 million prescription Butalbital pills to customers across the United States who did not have valid prescriptions for the drugs. MALIN also agreed today to forfeit $9 million to the United States, which represented his proceeds from the illegal scheme. MALIN’s case is before U.S. District Judge Kimba M. Wood.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As Maurice Malin admitted today in court, he made millions of dollars illegally dispensing drugs over the Internet to customers who had no valid prescriptions and had never seen a doctor. Pharmacists entrusted with the sale of controlled substances must safeguard the health of consumers, not scheme to profit from illegal drug sales.”

DEA Special Agent-in-Charge Carl J. Kotowski said: “Unfortunately, this is another example of a pharmacist who was more interested in making fast money than he was in helping the public. His actions help to erode the public’s trust in those in positions of responsibility.”

According to the allegations contained in the Complaint and the Information filed against MALIN and statements made in court filings and proceedings, including at today’s guilty plea:

MAURICE MALIN, the defendant, was a licensed pharmacist who operated pharmacies in the Bronx, New York (the “Malin Pharmacies”). Between at least March 2014 and July 2016, MALIN engaged in a scheme to dispense Butalbital, a Schedule III controlled substance, to customers who had not consulted with a physician and did not possess a valid prescription for the drug. Specifically, customers ordered Butalbital pills by filling out online medical questionnaires that typically posed a series of “yes” or “no” questions (the “Prescription Websites”). Customers ordered the drugs on the Prescription Websites without ever seeing or speaking to a physician or medical practitioner and without obtaining a valid prescription.

After the orders were placed by customers on the Prescription Websites, these orders were then sent to pharmacies, including the Malin Pharmacies, that dispensed the prescription drugs to customers. The Malin Pharmacies filled the prescriptions for customers who had placed orders via the Prescription Websites, and then sent the drugs, specifically Butalbital, through the mail to customers located across the United States. Customers paid for the drugs by, among other means, money orders made out to business entities associated with the Malin Pharmacies and MALIN.

During the course of the investigation, undercover agents made numerous purchases of Butalbital on the Prescription Websites that were fulfilled by the Malin Pharmacies. In certain instances, MALIN’s name was listed as the fulfilling pharmacist on the Butalbital bottles agents received. In addition, many of the bottles that were received as a result of the undercover buys did not bear the name of any doctor who had prescribed the Butalbital, and instead repeated the name of the patient in the location on the label where the doctor’s name should have appeared had there been a valid prescription. MALIN was also captured on recorded phone calls with undercover agents acknowledging that he was aware that customers who placed orders on the Prescription Websites had not met with or consulted with a physician prior to placing their online order.

MALIN was arrested on August 10, 2016.

* * *

MALIN, 83, of Suffern, New York, pled guilty today to conspiring to distribute and possess with the intent to distribute a controlled substance, which carries a maximum term of 10 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. MALIN’s sentencing date will be set by Judge Wood. In connection with his guilty plea, MALIN agreed to forfeit to the United States $9 million and certain specific property including funds in bank accounts and real property representing the proceeds of the scheme.

Mr. Kim praised the outstanding work of the DEA New Jersey Division in the investigation and thanked the U.S. Postal Inspection Service and the U.S. Food and Drug Administration for their assistance.

The case is being handled by the Office’s Narcotics Unit. Assistant U.S. Attorneys Drew Skinner and Noah Solowiejczyk are in charge of the prosecution. Assistant U.S. Attorney Noah Falk of the Office’s Money Laundering and Asset Forfeiture Unit is in charge of the forfeiture aspects of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that FABIO PORFIRIO LOBO was sentenced to 288 months in prison for conspiring to import cocaine into the United States.  LOBO pled guilty on May 16, 2016, before U.S. District Judge Lorna G. Schofield, who imposed today’s sentence.  LOBO’s father, Porfirio Lobo, served as president of Honduras between 2010 and 2014.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “By his own admission, Fabio Lobo conspired to import huge quantities of cocaine into the U.S.  To assist traffickers and enrich himself, Lobo used his father’s position and his own connections to bring drug traffickers together with corrupt police and government officials.  Now, Fabio Lobo has been sentenced to the substantial prison term his crimes merit.”

According to the Indictment, other court filings, evidence presented during a sentencing hearing held on March 6 and 16, 2017, and statements made during other court proceedings: 

Before and while LOBO’s father was president of Honduras, LOBO used his and his father’s reputation and political network to broker corrupt connections between large-scale Honduran drug traffickers and individuals within the Honduran government, including high-level officials such as sitting Honduran congressmen as well as customs, military, and law enforcement personnel.  By managing security and what LOBO described during a recorded meeting as “logistics” for these criminals, LOBO facilitated and participated in extensive cocaine trafficking with strong support from multiple elements of the Honduran government. 

LOBO’s participation in drug trafficking began as early as 2009.  During that year, while LOBO’s father was running for president of Honduras, LOBO’s father began receiving bribes from members of a drug-trafficking organization known as the Cachiros, which was a prolific and violent criminal syndicate that relied on connections to politicians, military personnel, and law enforcement to transport cocaine to, within, and from Honduras.  The leaders of the Cachiros paid Porfirio Lobo over approximately $500,000 in exchange for, among other things, political protection from law enforcement investigations, prevention of extradition to the United States, and awards of contracts by Honduran government agencies to money-laundering front companies controlled by the Cachiros. 

LOBO was introduced to the Cachiros initially as an individual who was willing to facilitate the award of Honduran government contracts to the Cachiros’ front companies, which were used to increase the appearance of their legitimacy and to launder drug proceeds.  LOBO soon began protecting and supporting the Cachiros by acting as a conduit to Honduran officials capable of preventing interference with their drug trafficking operations.  Between five and eight times, the Cachiros provided LOBO with advance notice of incoming drug loads so that LOBO would be available in the event of any interference with the shipments. 

In 2012, LOBO participated more directly in the violent drug trafficking of the Cachiros.  LOBO proposed to the Cachiros receiving cocaine-laden aircraft at locations in the Olancho Department of Honduras, and he personally helped escort two loads of drugs with an aggregate quantity of approximately 1.4 metric tons of cocaine.  In connection with the transportation of those cocaine shipments, LOBO brought members of the Honduran military, who were armed with an AR-15 machine gun as well as pistols, for security, and LOBO personally rode with one of the leaders of the Cachiros so that LOBO would be able to place calls to Honduran officials in the event of any law enforcement interference.  For his participation, LOBO received, among other things, approximately $70,000 in cash, an armored vehicle, and an AR-15 machine gun.   

LOBO also assisted drug traffickers other than the Cachiros.  In approximately 2012, LOBO assisted a maritime drug trafficking venture at Puerto Cortes, a large commercial port on the north coast of Honduras near the Honduras-Guatemala border, involving Fredy Renan Najera Montoya (a Honduran congressman), a Honduran customs official, a high-ranking member of Mexico’s Sinaloa Cartel, Carlos Lobo (another Honduran drug trafficker who is not related to LOBO), and others.  LOBO made at least approximately $50,000 for participating in meetings regarding the shipments.  LOBO also used his political access to protect and assist Carlos Lobo by helping him try to recover seized assets in exchange for approximately $100,000.   

Beginning in or about 2013, the Drug Enforcement Administration (“DEA”) captured some of LOBO’s drug trafficking activities on tape after the leaders of the Cachiros started to covertly provide information and assistance to the United States government.  Following public financial sanctions and asset seizures targeting the Cachiros in September 2013, LOBO stepped in to help coordinate on behalf of the Cachiros the receipt, protection, and transportation of a multi-ton load of cocaine for purported representatives of now-detained alleged Mexican kingpin Joaquin Archivaldo Guzman Loera, a/k/a “El Chapo.”  Expecting to make millions of dollars for a shipment of approximately 3,000 kilograms of cocaine, LOBO met with confidential sources acting at the direction of the DEA (the “CSes”), agreed to provide military and “logistics” support to these purported drug traffickers, and facilitated introductions to at least two Honduran military officials. 

LOBO also introduced the CSes to Honduran police officials who agreed to participate in the cocaine transaction by providing security and logistical support for the transportation of the cocaine through Honduras (the “Honduran National Police Defendants”).  In June 2014, LOBO, the CSes, and six of the Honduran National Police Defendants participated in a recorded meeting in Honduras.  During the meeting, the Honduran National Police Defendants placed a map of Honduras on a table and described to LOBO and the CSes the Honduran law enforcement presence along potential shipment routes for the cocaine.  In exchange for their assistance, the Honduran National Police Defendants requested new phones for communications, vehicles to use, a pool of $200,000 for bribes to other officials, and bribes of $100,000 per person for themselves.  Later in 2015, in consensually recorded calls and emails between LOBO and one of the Cachiros, LOBO agreed to travel to Haiti for the purpose of receiving payment from the proceeds of the cocaine transaction with the CSes.  LOBO subsequently traveled to Haiti in May 2015 and was arrested.

Seven of the Honduran National Police Defendants, including, among others, MARIO GUILLERMO MEJIA VARGAS (“VARGAS”), CARLOS JOSE ZAVALA VELASQUEZ (“VELASQUEZ”), and VICTOR OSWALDO LOPEZ FLORES (“FLORES”), were subsequently indicted by a grand jury in the Southern District of New York for firearms and/or drug trafficking offenses.  On July 11, 2016, Vargas, Velasquez, and Flores waived extradition in Honduras and surrendered voluntarily in Manhattan.  FLORES, VELASQUEZ, and VARGAS have since pled guilty in federal court to conspiring to import cocaine into the United States, and they await sentencing by Judge Schofield.   

*                *                *

In addition to the prison term, LOBO, 46, was ordered to pay a $50,000 fine and to forfeit $266,667, which represents the proceeds he received from his drug trafficking offense.         

Mr. Kim praised the outstanding efforts of the Special Operations Division of the DEA Bilateral Investigations Unit, New York Strike Force, and Tegucigalpa Country Office.  Mr. Kim also thanked the DEA’s Port-au-Prince Country Office, the Government of the Republic of Haiti and its Bureau de Lutte Contre le Trafic Illicite de Stupefiants, and the U.S. Department of Justice’s Office of International Affairs for their ongoing assistance. 

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

The charges against Honduran National Police defendants Ludwig Criss Zelaya Romero, Juan Manuel Avila Meza, and Carlos Alberto Valladares Zuniga are merely accusations, and these defendants are presumed innocent unless and until proven guilty.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that DAVID KEITH, a/k/a “David Wright,” a/k/a “David Lee Keith,” a/k/a “David Lee,” a/k/a “Lee David,” was sentenced today in Manhattan federal court to 168 years in prison on five counts stemming from his sexual exploitation of minors, related child pornography offenses, and making false statements to a federal agent concerning his abuse of children. KEITH, 39, of the Bronx, New York, pled guilty on November 29, 2016, before United States District Judge Alison J. Nathan, who also imposed today’s sentence.

Acting Manhattan U.S. Attorney Joon H. Kim said: “For his predatory crimes that included luring a girl as young as 9 years old into his van to make sexually explicit videos and even threatening to harm another if she reported his sexual assault, David Keith has received a lengthy prison sentence. Protecting children from sexual exploitation is, and will remain, one of the most important missions of this Office.”

According to the allegations contained in the Complaint, the Indictment filed against KEITH, and statements made in court filings and proceedings in open court:

On at least one occasion in 2013, KEITH produced child pornography during his sexual abuse of a child. Specifically, on October 13, 2013, KEITH approached three girls on the street in Queens, each of whom was approximately 12 years old, falsely presented himself as part of the entertainment industry, and encouraged the girls to model for him. KEITH induced one of the girls to enter his vehicle, where he video-recorded, among other things, himself engaging in coercive sexual conduct with her. KEITH threatened to harm the victim if she reported the assault, and told her that he had been watching her.

Just one day earlier, on or about October 12, 2013, KEITH video-recorded another young girl, approximately 8 or 9 years old, in his vehicle as he caused her to remove some of her clothing so that he could record her exposed genitals.

In addition, for a period of at least two years, KEITH downloaded and possessed thousands of images and videos depicting child pornography.

During the investigation, KEITH made statements to federal agents claiming that he had been elsewhere on October 12 and 13, 2013, and was not the individual who abused the children. Those statements were proven false.

* * *

Mr. Kim praised the extraordinary investigative work of the Federal Bureau of Investigation, and thanked the New York City Police Department Special Victims Unit and the Town of Poughkeepsie Police Department for invaluable assistance in the investigation.

This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Matthew Podolsky and Stephen Ritchin are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”),, announced today the arrest of JAMIE FRIERSON in connection a robbery spree involving at least seven banks in Manhattan, during which thousands of dollars were stolen.  FRIERSON was arrested on August 30, 2017, and was presented today in Manhattan federal court before the Honorable Kevin Nathaniel Fox, where he was held without bail.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, Jaime Frierson went on a one-man crime spree, brazenly attempting to rob seven Manhattan banks in broad daylight in less than two weeks. Frierson allegedly threatened the lives of bank tellers to get away with thousands of dollars in cash. This alleged conduct endangered the safety of New Yorkers and traumatized bank employees, and I commend our partners at the FBI for their terrific work in apprehending this defendant.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “We have to assume as law enforcement that anyone who allegedly threatens violence during a bank robbery is capable of carrying out that threat. No one can predict an alleged criminal’s behavior, and the uncertainty increases the urgency to solve the robberies. The FBI/NYPD Violent Crimes Task Force worked tirelessly tracking down the suspect in this alleged crime spree to prevent someone getting hurt in the next one.”

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

On August 29, 2017, at approximately 3 o’clock in the afternoon, FRIERSON entered a bank on the Upper West Side of Manhattan, and handed a bank teller a note claiming that he was armed, demanding money, and threatening to kill the teller.  In response, the teller gave FRIERSON over $8,000 in United States currency.  FRIERSON then fled.  In addition, between August 16 and August 29, 2017, FRIERSON robbed or attempted to rob six other banks in Manhattan, during which he used a similar modus operandi.

*          *          *

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

Acting U.S. Attorney Kim praised the outstanding investigative work of the Federal Bureau of Investigation and New York Police Department’s Violent Crimes Task Force.

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

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

[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.

Fuyi Sun, aka “Frank,” 53, a citizen of the People’s Republic of China (China), was sentenced today to three years in prison for violating the International Emergency Economic Powers Act (IEEPA) in connection with a scheme to illegally export to China, without a license, high-grade carbon fiber, which is used primarily in aerospace and military applications.  Sun pleaded guilty on April 21.

Acting Assistant Attorney General for National Security Dana J. Boente and Acting U.S. Attorney Joon H. Kim for the Southern District of New York made the announcement.  U.S. District Judge Alvin K. Hellerstein issued the sentence.

“Today, Sun is being held accountable for attempting to procure high grade carbon fiber – a material which has dual aerospace and defense applications – for a source he identified as the Chinese military,” said Acting Assistant Attorney General Boente.  “Identifying and prosecuting those who seek to violate IEEPA and other laws designed to protect our strategic commodities from those who may wish us harm remains a top priority of the National Security Division.”

“For nearly five years, Fuyi Sun tried to skirt U.S. export laws to obtain high-grade carbon fiber for the Chinese government. He spent thousands of dollars and took years of covert actions to avoid detection of his plan to purchase this highly protected material,” said Acting U.S. Attorney Kim. “Unbeknownst to Sun, however, he wasn’t making a deal with an unscrupulous company – he was dealing with undercover federal law enforcement agents, who foiled his clandestine plot.”

According to the allegations contained in the Complaint and Indictment filed against Sun, and statements made in court filings and proceedings in open court:

Since approximately 2011, Sun has attempted to acquire extremely high-grade carbon fiber, including Toray type M60JB-3000-50B carbon fiber (M60 Carbon Fiber).  M60 Carbon Fiber has applications in aerospace technologies, unmanned aerial vehicles (commonly known as drones) and other government defense applications.  Accordingly, M60 Carbon Fiber is strictly controlled for nuclear non-proliferation and anti-terrorism reasons.  As part of these restrictions, the export of M60 Carbon Fiber to China without a license is prohibited.

In furtherance of his attempts to illegally export M60 Carbon Fiber from the U.S. to China without a license, Sun contacted what he believed was a distributor of carbon fiber – but which was, in fact, an undercover entity created by the Department of Homeland Security, Homeland Security Investigations (HSI) and “staffed” by HSI undercover special agents (the UC Company).  Sun inquired about purchasing the M60 Carbon Fiber without the required license.  In the course of his years-long communications with the undercover agents and UC Company, Sun suggested various security measures that he believed would protect them from “U.S. intelligence.”  Among other such measures, at one point, Sun instructed the undercover agents to use the term “banana” instead of “carbon fiber” in their communications.  Consequently, soon thereafter he inquired about purchasing 450 kilograms of “banana” for more than $62,000.  In order to avoid detection, Sun also suggested removing the identifying barcodes for the M60 Carbon Fiber, prior to transshipment, and further suggested that they identify the M60 Carbon Fiber as “acrylic fiber” in customs documents.

On April 11, 2016, Sun traveled from China to New York for the purpose of purchasing M60 Carbon Fiber from the UC Company.  During meetings with the undercover agents on April 11 and 12, among other things, Sun repeatedly suggested that the Chinese military was the ultimate end-user for the M60 Carbon Fiber he sought to acquire from the UC Company, and claimed to have personally worked in the Chinese missile program.  Sun further asserted that he maintained a close relationship with the Chinese military, had a sophisticated understanding of the Chinese military’s need for carbon fiber, and suggested that he would be supplying the M60 Carbon Fiber to the Chinese military or to institutions closely associated with it. 

On April 12, 2016, Sun agreed to purchase two cases of M60 Carbon Fiber from the UC Company.  On that date, Sun paid the undercover agents purporting to represent the UC Company $23,000 in cash for the carbon fiber, as well as an additional $2,000 as compensation for the risk he believed the UC Company was taking to illegally export the carbon fiber to China without a license.  Sun was arrested the next day.

***

Mr. Boente and Mr. Kim praised the extraordinary investigative work of the New York Field Office of the Department of Homeland Security, Homeland Security Investigations; the New York Field Office of the Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and the Northeast Field Office of the Department of Defense, Defense Criminal Investigative Service.  Mr. Kim also thanked the Counterintelligence and Export Control Section of the National Security Division.

Assistant U.S. Attorneys Matthew Podolsky, Patrick Egan and Nick Lewin of the Southern District of New York, and Trial Attorney David Recker of the Counterintelligence and Export Control Section of the National Security Division are prosecuting the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Dana J. Boente, the Acting Assistant Attorney General for the National Security Division of the Department of Justice (“NSD”), announced that FUYI SUN, a/k/a “Frank,” a citizen of the People’s Republic of China (“China”), was sentenced today in Manhattan federal court to three years in prison for violating the International Emergency Economic Powers Act (“IEEPA”) in connection with a scheme to illegally export to China, without a license, high-grade carbon fiber, which is used primarily in aerospace and military applications.  SUN pled guilty on April 21, 2017, before United States District Judge Alvin K. Hellerstein, who also imposed today’s sentence. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “For nearly five years, Fuyi Sun tried to skirt U.S. export laws to obtain high-grade carbon fiber for the Chinese government.  He spent thousands of dollars and took years of covert actions to avoid detection of his plan to purchase this highly protected material.  Unbeknownst to Sun, however, he wasn’t making a deal with an unscrupulous company– he was dealing with undercover federal law enforcement agents, who foiled his clandestine plot.”

NSD Acting Assistant Attorney General Dana J. Boente said:  “Today, Sun is being held accountable for attempting to procure high grade carbon fiber – a material which has dual aerospace and defense applications – for a source he identified as the Chinese military.  Identifying and prosecuting those who seek to violate IEEPA and other laws designed to protect our strategic commodities from those who may wish us harm remains a top priority of the National Security Division.”

According to the allegations contained in the Complaint and Indictment filed against SUN, and statements made in court filings and proceedings in open court:

Since approximately 2011, SUN has attempted to acquire extremely high-grade carbon fiber, including Toray type M60JB-3000-50B carbon fiber (“M60 Carbon Fiber”).  M60 Carbon Fiber has applications in aerospace technologies, unmanned aerial vehicles (commonly known as “drones”), and other government defense applications.  Accordingly, M60 Carbon Fiber is strictly controlled for nuclear non-proliferation and anti-terrorism reasons.  As part of these restrictions, the sale of M60 Carbon Fiber to China without a license is prohibited.

In furtherance of his attempts to illegally export M60 Carbon Fiber from the United States to China without a license, SUN contacted what he believed was a distributor of carbon fiber – but which was, in fact, an undercover entity created by the Department of Homeland Security, Homeland Security Investigations (“HSI”) and “staffed” by HSI undercover special agents (the “UC Company”).  SUN inquired about purchasing the M60 Carbon Fiber without the required license.  In the course of his years-long communications with the undercover agents and UC Company, SUN repeatedly suggested various security measures that he believed would protect them from “U.S. intelligence.”  Among other such measures, at one point, SUN instructed the undercover agents to use the term “banana” instead of “carbon fiber” in their communications.  Consequently, soon thereafter he inquired about purchasing 450 kilograms of “banana” for more than $62,000.  In order to avoid detection, SUN also suggested removing the identifying barcodes for the M60 Carbon Fiber, prior to transshipment, and further suggested that they identify the M60 Carbon Fiber as “acrylic fiber” in customs documents.

On April 11, 2016, SUN traveled from China to New York for the purpose of purchasing M60 Carbon Fiber from the UC Company.  During meetings with the undercover agents on April 11 and 12, among other things, SUN suggested that the Chinese military was the ultimate end-user for the M60 Carbon Fiber he sought to acquire from the UC Company, and claimed to have personally worked in the Chinese missile program.  SUN further asserted that he maintained a close relationship with the Chinese military, had a sophisticated understanding of the Chinese military’s need for carbon fiber, and suggested that he would be supplying the M60 Carbon Fiber to the Chinese military or to institutions closely associated with it. 

On April 12, 2016, SUN agreed to purchase two cases of M60 Carbon Fiber from the UC Company.  On that date, SUN paid the undercover agents purporting to represent the UC Company $23,000 in cash for the carbon fiber, as well as an additional $2,000 as compensation for the risk he believed the UC Company was taking to illegally export the carbon fiber to China without a license.  SUN was arrested the next day.

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SUN, 53, is from Shanghai, China. 

Mr. Kim and Mr. Boente praised the extraordinary investigative work of the New York Field Office of the Department of Homeland Security, Homeland Security Investigations; the New York Field US Department of Commerce, Office of Export Enforcement, New York Field Office; and the Northeast Field Office of the Department of Defense, Defense Criminal Investigative Service.  Mr. Kim also thanked the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit and its Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Matthew Podolsky, Patrick Egan, and Nick Lewin are in charge of the prosecution, with assistance from Trial Attorney David Recker of the Counterintelligence and Export Control Section.