Southern District of New York

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JOHN AFRIYIE, a former analyst at a Manhattan-based private investment fund (the “Fund”), was sentenced today in Manhattan federal court to 45 months in prison for committing insider trading.  AFRIYIE was convicted on January 30, 2017, following a jury trial before U.S. District Court Judge Paul A. Engelmayer, who also imposed today’s sentence.   

Manhattan U.S. Attorney Kim said: “On more than two dozen occasions, John Afriyie traded on material nonpublic information, and then used his own mother and destroyed emails to cover up his crimes. The heavy price of the illegal edge Afriyie sought was his liberty.”

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

In January 2016, Apollo Investment Management LLC (“Apollo”) contacted the Fund to discuss the possibility of the Fund providing debt financing for Apollo’s potential acquisition of ADT Corporation (“ADT”). The Fund entered into a non-disclosure agreement with Apollo and was granted access to confidential documents related to the ADT transaction. As an investment analyst at the Fund, AFRIYIE had access to the Fund’s network server, which maintained, among other things, electronic shared directory file folders containing material nonpublic information, including information about Apollo’s acquisition of ADT.

In violation of the Fund’s policies and in breach of his duties to the Fund, AFRIYIE repeatedly accessed material nonpublic information about Apollo’s pending acquisition of ADT in an electronic shared drive folder on the Fund’s network server. In approximately 28 separate transactions between January 28, 2016, and February 12, 2016, AFRIYIE purchased approximately 2,279 ADT call options for a total of $24,254 before the public announcement of that transaction. AFRIYIE purchased the ADT call options through a brokerage account that AFRIYIE controlled, but was held in the name of AFRIYIE’s mother. As cover for his criminal scheme, AFRIYIE repeatedly pretended to be his mother in recorded telephone calls with his broker.  AFRIYIE did not reveal his trades or the existence of the brokerage account to the Fund.

The public announcement of Apollo’s acquisition of ADT in February 2016 caused ADT shares to hit $39.64 per share, up from its value of $29.20 per share on the day AFRIYIE began purchasing ADT options.  Upon subsequently selling the ADT options, AFRIYIE generated more than $1.5 million in illicit profits.

In connection with his arrest, AFRIYIE lied to agents of the Federal Bureau of Investigation (“FBI”) about his ADT options trades and falsely claimed that his own voice on a recorded call with his broker was really his mother’s voice.  Following his arrest, AFRIYIE also attempted to delete the contents of an email account that he had used to communicate with his broker.

After the guilt phase of the trial had concluded, and based on AFRIYIE’s request, the jury also determined that $2,648,862.46 in seized funds were subject to forfeiture as proceeds of AFRIYIE’s crimes.    

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In addition to his prison term, AFRIYIE, 29, of Freehold, New Jersey, was sentenced to three years of supervised release, ordered to pay a forfeiture money judgment in the amount of $2,780,720.02, including the forfeiture of $2,705,128.66 in seized funds, and restitution to the Fund in an amount no less than $691,046.42, with a final restitution order to be entered within 90 days of sentencing.  AFRIYIE was remanded on January 23, 2017, after he refused to appear in court for trial, and he remains in custody. 

Mr. Kim praised the investigative work of the FBI and the Office’s Criminal Investigators.  He also thanked the Securities and Exchange Commission for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Edward A. Imperatore and Christine I. Magdo are in charge of the prosecution.  Assistant U.S. Attorney Jennifer L. Gachiri is handling the forfeiture aspects of this prosecution.

Joon H. Kim, 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 James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced charges against WANDY TEJADA for the June 11, 2016, murder of Jessica White, who was killed by a stray bullet while watching her children play in the playground of the John Adams Houses in the Bronx, New York. TEJADA, who was previously arrested, was charged in an Indictment returned yesterday by a federal grand jury. The case is assigned to Chief U.S. District Judge Colleen McMahon.

STIVEN SIRI-REYNOSO was previously arrested and indicted for his role in the murder of Ms. White.

Manhattan Acting U.S. Attorney Joon H. Kim said: “Our office has been committed to finding and prosecuting those involved in the senseless murder of Jessica White, who was killed while watching her children on a playground in the Bronx. Today’s indictment will not return Ms. White to her family, but we hope it provides some solace to know that the men who allegedly took her life will be held to account.”

FBI Assistant Director William F. Sweeney Jr. said: “This case clearly shows that the violence of street gangs affects innocent bystanders, not only those directly involved. While simply watching her children, a mother lost her life to selfish, careless violence. The alleged actions of these gang members demonstrate blatant disregard for the lives of the members of their communities. Eradicating street gangs remains among the top priorities of the New York Office, as we will not tolerate the destructive impact that they have on our residents.”

NYPD Police Commissioner James P. O'Neill said: "Our commitment to investigating crime—particularly a homicide as senseless as Jessica White—is unwavering. We will continue to pursue those who commit homicides, as senseless as the one alleged, with relentless focus."

According to the allegations in the Indictment[1] and statements made in court proceedings:

June 11, 2016, Jessica White was struck and killed by a stray bullet while sitting on a bench watching her three children play on a playground at the John Adams Houses where she lived. SIRI-REYNOSO, a member of the “Dominicans Don’t Play” or “DDP” street gang, was engaged in an ongoing gang dispute between the DDPs and the rival “Trinitarios” street gang involving among other things, SIRI-REYNOSO’s drug sales near the John Adams Houses. On the night of June 11, 2016, Trinitarios members tried to attack SIRI-REYNOSO. In retaliation, SIRI-REYNOSO sent TEJADA to shoot at the Trinitarios. One of the bullets fired by TEJADA struck and killed Jessica White.

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SIRI-REYNOSO, 24, and TEJADA, 17, both of the Bronx, are charged in an Indictment with one count of murder through the use of a firearm in connection with a crime of violence, and aiding and abetting the same. SIRI-REYNOSO faces a maximum penalty of death or life imprisonment, and TEJADA faces a maximum penalty of life imprisonment. 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 outstanding investigative work of the FBI and the NYPD.

The case is being handled by the Office’s Violent and Organized Crimes Unit. Assistant U.S. Attorney Drew Skinner is in charge of the prosecution.

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

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

Joon Kim, the Acting United States Attorney for the Southern District of New York, announced that Former New York City Police Officer MERLIN ALSTON, was sentenced this afternoon in Manhattan federal court to a prison term of 20 years for participating in a long-running conspiracy to distribute large quantities of cocaine in the Bronx while he was an active-duty police officer, as well as for using firearms to protect members of that conspiracy. ALSTON was sentenced by U.S. District Judge Colleen McMahon, who presided over a two-week jury trial last year at which ALSTON was convicted on all counts.

Acting U.S. Attorney Joon H. Kim stated: “Merlin Alston betrayed his city and his shield. Instead of serving and protecting the citizens of New York City, as he swore an oath to do, Alston served and protected drug dealers, participating in a long-running conspiracy to distribute cocaine in the Bronx. For his criminal betrayal that included sharing confidential police information with drug dealers, Alston was convicted by a jury and now sentenced to 20 years in federal prison.”

According to court papers and evidence admitted at trial:

From 2010 to 2014, ALSTON, who at the time was an active NYPD police officer, conspired with others to distribute large quantities of narcotics. ALSTON personally delivered approximately 40 kilograms of cocaine during that time, and in total members of his conspiracy delivered approximately 200 kilograms of cocaine. In addition, ALSTON provided armed security to a cocaine trafficker, using a shotgun and his NYPD service weapon to do so. ALSTON also provided confidential information about law enforcement operations, including arrests and surveillance, to several Bronx drug dealers.

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In addition to his prison sentence, ALSTON, 34, of the Bronx, was sentenced to five years of supervised release.

Mr. Kim praised the DEA, the FBI, the NYPD, and the New York State Police for their outstanding work in this investigation. He also thanked the Office of the Special Narcotics Prosecutor for the City of New York for its invaluable assistance.

The case is being prosecuted by the Office’s Narcotics Unit. Assistant U.S. Attorneys Jared Lenow and Thomas McKay are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York announced today that Yani Benjamin Rosenthal Hidalgo pled guilty in Manhattan federal court to engaging in monetary transactions in property derived from drug-trafficking offenses between 2004 and September 2015. ROSENTHAL, who surrendered in the United States on October 23, 2015, pled guilty before U.S. District Judge John G. Koeltl. During the course of the money laundering scheme, ROSENTHAL was Minister of the Presidency to a former President of Honduras between 2006 and 2007, a Honduran congressman between 2010 and 2014, and a candidate for President of Honduras in the 2009 and 2013 elections.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As he admitted today in Manhattan federal court, Yani Rosenthal, a formerly prominent Honduran politician and businessman, also moonlighted as a money launderer for a ruthlessly violent drug-trafficking organization known as the Cachiros. Now this former government official and two-time candidate for President of Honduras awaits sentencing before a U.S. federal judge for his contribution to the global drug crisis.”

According to the Indictment, other court filings, and statements made during court proceedings[1]:

ROSENTHAL and his co-defendants—including Jaime Rolando Rosenthal Oliva, ROSENTHAL’s father and a former Vice President and congressman in Honduras—used entities associated with a holding company controlled by the Rosenthal family, Inversiones Continental (Panama), S.A. de C.V. (“Inversiones Continental”), to launder drug proceeds for the Cachiros, a prolific and violent Honduran criminal syndicate that distributed huge quantities of cocaine before being dismantled by the Drug Enforcement Administration (“DEA”).

ROSENTHAL helped the Cachiros launder drug money and gain access to the international financial system through a variety of purported business ventures. ROSENTHAL enriched himself through this conduct based on fees paid by the drug traffickers he assisted, and by accepting additional bribes from drug traffickers that were styled as purported campaign contributions. Several aspects of the Cachiros money laundering scheme that ROSENTHAL participated in also received support from Fabio Porfirio Lobo, the son of a former President of Honduras. Lobo is scheduled to be sentenced on July 31, 2017 by U.S. District Judge Lorna G. Schofield in United States v. Lobo, No. 15 Cr. 174 (LGS), based on his conviction for participating in a conspiracy with members of the Cachiros and others to import cocaine into the United States.

One component of ROSENTHAL’s money laundering conduct involved a trade-based scheme in which the Cachiros established a company, Ganaderos Agricultores Del Norte S De RL De CV (“Ganaderos”), and used drug proceeds to purchase cattle at auctions in Honduras. ROSENTHAL and others used Empacadora Continental, S.A. de C.V. (“Empacadora”), a cattle- and meat-processing firm affiliated with Inversiones Continental, to purchase the narcotics-derived cattle from Ganaderos. ROSENTHAL acted as the Vice President of Empacadora between 2008 and 2015, and these transactions were part of a process that allowed the Cachiros to conceal the criminally derived nature of the Ganaderos assets, and to obtain fresh funds from Empacadora that could be used to promote Cachiros drug-trafficking activities and purchase other assets. Empacadora, in turn, further obfuscated the tainted nature of Ganaderos cattle by processing and exporting the meat to the United States, among other places.

ROSENTHAL and others also used Banco Continental, S.A. (“Banco Continental”), a Honduran bank controlled by his family and affiliated with Inversiones Continental, to process payments related to these transactions and provide financing for other Cachiros activities. For example, Banco Continental issued purported loans to the leaders of the Cachiros, which were sometimes repaid using either drug proceeds or additional drug-derived cattle from Ganaderos. The leaders of the Cachiros used money from Banco Continental, commingled with drug money, to fund additional businesses that were also used as money laundering front companies. Banco Continental helped the leaders of the Cachiros establish the Joya Grande Zoo in Honduras, and purchase equipment for a construction company, Inmobiliaria Rivera Maradiaga SA de CV; a mining concern, Minera Mi Esperanza SA; and an African palm oil plantation, Palma Del Bajo Aguan SA.

In connection with his guilty plea, ROSENTHAL agreed to forfeit $500,000, and to pay a $2.5 million fine. ROSENTHAL also remains designated as a Specially Designated Narcotics Trafficker pursuant to the Foreign Narcotics Kingpin Designation Act, along with Rosenthal Oliva, Yankel Antonio Rosenthal Coello (ROSENTHAL’s cousin and co-defendant), Inversiones Continental, Empacadora, and Banco Continental, among other entities, as announced in October 2015 by the United States Department of the Treasury, Office of Foreign Assets Control (“OFAC”).

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ROSENTHAL, 52, pled guilty to one count of engaging in monetary transactions in property derived from specified unlawful activity. The charge 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 a judge. Sentencing is scheduled for October 13, 2017 before Judge Koeltl.

Mr. Kim praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, New York Strike Force, and Tegucigalpa Country Office, as well as OFAC and the U.S. Department of Justice’s Office of International Affairs.

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

The charges contained in the Indictment against Jaime Rolando Rosenthal Oliva and Yankel Antonio Rosenthal Coello are merely accusations, and Rosenthal Oliva and Rosenthal Coello are presumed innocent unless and until proven guilty.

[1] The descriptions set forth below of conduct by co-defendants Jaime Rolando Rosenthal Oliva and Yankel Antonio Rosenthal Coello constitute only allegations, and every fact described should be treated as an allegation with respect to Rosenthal Oliva and Rosenthal Coello.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Raymond Donovan, Special Agent in Charge of the Special Operations Division of the United States Drug Enforcement Administration (“DEA”), announced that FAOUZI JABER, a/k/a “Excellence,” pled guilty to conspiring to provide material support to the Fuerzas Armadas Revolucionarias de Colombia (the “FARC”), a designated foreign terrorist organization.  JABER pled guilty earlier today in Manhattan federal court before U.S. Magistrate Judge Katherine H. Parker.

Acting U.S. Attorney Joon H. Kim said:  “Faouzi Jaber arranged to traffic millions of dollars’ worth of lethal weapons and narcotics in support of the FARC’s efforts to violently overthrow the government of Colombia and terrorize U.S. forces stationed there.  In a series of meetings that took him around the world, Jaber was willing to do whatever it took to help this foreign terrorist organization achieve its violent and undemocratic goals.  Our Office will continue to prosecute those who conspire to provide material support to the FARC and other dangerous terrorist organizations to the fullest extent of the law.”

DEA Special Agent in Charge Raymond Donovan said:  “DEA’s number one priority is going after individuals and organizations that pose a direct threat to the safety and security of the American people.  Faouzi Jaber demonstrated how willing he was to do business with some of the world’s most deadly terror networks that wish harm on innocent Americans and the rule of the law.  We must continue to attack these potentially deadly networks globally, no matter where they hide.”

According to the allegations contained in the Superseding Indictment, statements made during the plea proceeding, and other documents in the public record:

From the fall of 2012 through early 2014, JABER participated in a conspiracy to provide material support to the FARC, a guerilla group that, as of that time period, was dedicated to the violent overthrow of the democratically elected government of Colombia, had engaged in acts of violence against U.S. citizens and interests in Colombia and elsewhere, and was one of the world’s largest suppliers of cocaine.  JABER engaged in a series of meetings, in locations such as Accra, Ghana, and Warsaw, Poland, with individuals who identified themselves as representatives and associates of the FARC, but who were, in fact, confidential sources (the “CSes”) working for the DEA.  In the course of those meetings, which were recorded, JABER introduced the CSes to two of his associates, a weapons trafficker based in Ukraine and a narcotics trafficker based in West Africa, in furtherance of his efforts to assist the FARC.  Working together with those associates, during the meetings with the CSes, JABER agreed to provide weapons – including surface-to-air missiles, assault rifles, grenade launchers, and grenades – to the FARC, at a total price of over $8 million, with the understanding that those weapons would be used by the FARC against U.S. forces in Colombia.  JABER also agreed to assist the FARC with the transportation and storage of FARC-owned cocaine in West Africa, and with the laundering of cocaine proceeds for the FARC, including by moving the cocaine proceeds through bank accounts in New York.

In April 2014, JABER traveled to Prague, Czech Republic, to meet with certain of the CSes to continue negotiating and arranging the weapons and narcotics-trafficking transactions in support of the FARC.  On April 5, 2014, JABER was arrested in Prague by Czech authorities based on the charges in this case, at the request of U.S. authorities.  JABER was later extradited to the United States to face the charges against him.

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JABER, 61, of the Ivory Coast, pled guilty to one count of conspiring to provide material support and resources to a designated foreign terrorist organization, i.e., the FARC, which carries a maximum sentence of 15 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 November 8, 2017, at 4:00 p.m. before Chief U.S. District Judge Colleen McMahon. 

Mr. Kim praised the outstanding efforts of the DEA’s Special Operations Division and DEA’s Vienna, Austria Country Office; DEA’s Warsaw, Poland Country Office; DEA’s Accra, Ghana Country Office; and DEA’s New York Field Division.  Mr. Kim also thanked Czech law enforcement authorities, the Counterterrorism Section of the Department of Justice’s National Security Division, and the Department of Justice’s Office of International Affairs for their assistance.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorney George D. Turner is in charge of the prosecution.             

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the United States has settled a federal civil rights lawsuit against Defendants WEST-EX ASSOCIATES, INC. (“West-Ex”), and 505 CENTRAL AVENUE CORP. (“505 Central Ave.”), for discriminating on the basis of disability and refusing to provide reasonable accommodations, as required by the Fair Housing Act.    

Acting U.S. Attorney Joon H. Kim said:  “Every member of our society is entitled to equal access to housing and the independence and dignity that it provides. With this resolution, we again emphasize that condos, cooperatives, landlords, and property managers must provide reasonable accommodations to people with disabilities.”

The Fair Housing Act makes it unlawful to discriminate in the terms and conditions of the sale or rental of, or to otherwise make unavailable or deny, a dwelling based on the prospective buyer or renter’s disability.  The law also mandates that reasonable accommodations in rules, policies, practices, and services be provided when necessary to afford equal opportunity to housing to persons with disabilities. 

According to the allegations in the Complaint, filed in January 2017, 505 Central Ave. maintains a 155-unit housing cooperative located in White Plains called Thompkins Manor.  West-Ex acts as 505 Central Ave.’s property management company, and handles applications for housing at Thompkins Manor.  Between August 2013 and July 2014, West-Ex and 505 Central Ave. repeatedly denied the application of a 34-year-old individual (the “Complainant”) to purchase a one-bedroom unit at Thompkins Manor based on his disabilities.  The Complainant has suffered numerous heart attacks and lives with congenital heart problems, developmental language disorder, learning disorders, and depression.  The Complainant and his family requested that ownership of his unit be placed under a legal trust, which would assist the Complainant in managing the requirements of cooperative housing.  West-Ex and 505 Central Ave. unlawfully rejected this reasonable accommodation request on numerous occasions, summarily and without adequate explanation.  The Complaint further alleges that West-Ex, which acts as a management company for numerous other properties in Westchester County, engaged in a pattern and practice of discriminatory conduct by maintaining a stated policy of not considering requests for reasonable accommodations by applicants like the Complainant. Following Defendants’ unlawful denial of the Complainant’s application for housing, the Complainant was forced to continue living in a boarding house with abysmal conditions, grew increasingly depressed, and suffered another heart attack.   

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Under the terms of the Settlement Agreement, filed yesterday with an order resolving the case entered by U.S. District Judge Nelson S. Román, West-Ex and 505 Central Ave. must:

• Pay a total of $125,000, including compensatory damages and attorney’s fees to the Complainant and civil penalties to the United States;
• Adopt reasonable accommodation policies and application forms approved by the United States, which must be included with all future applications for housing handed out to prospective buyers; and

• Provide annual training regarding the Fair Housing Act and reasonable accommodation policies to all current and future employees and agents.

In addition, 505 Central Ave. must only employ property management companies with adequate reasonable accommodation policies in place, and West-Ex may not take any action as property manager for any other property that violates its newly adopted reasonable accommodation policy.  

The case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorney Stephen Cha-Kim is in charge of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the Office has filed a proposed order to dismiss the outstanding charges against JAVIER MARTIN-ARTAJO and JULIEN GROUT, two former derivatives traders at JPMorgan Chase & Company (“JPMorgan”).  MARTIN-ARTAJO and GROUT were indicted on September 16, 2013, for their alleged participation in a conspiracy to hide losses in a credit derivatives trading portfolio at JPMorgan.  MARTIN-ARTAJO, a Spanish citizen, and GROUT, a French citizen, have not appeared on these criminal charges.  On April 23, 2015, a court in Spain rejected the Government’s request to extradite MARTIN-ARTAJO, and a prior determination had been made that attempts to extradite GROUT from France would have been futile.  The motion to dismiss is subject to the approval of United States District Judge Lorna G. Schofield.

As set forth in the proposed order, the Government sought charges in this matter based in part on the Government’s anticipated ability to call as a trial witness Bruno Iksil, a former colleague of the two defendants at JPMorgan.  Based on a review of recent statements and writings made by Iksil, however, the Government no longer believes that it can rely on the testimony of Iksil in prosecuting this case, even if the defendants appeared.  Based on these developments, among other factors, the Government has decided not to keep these charges pending, but rather to seek their dismissal at this time.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that WILLIAM BRACY, a/k/a “Rel,” was sentenced yesterday to a prison term of 396 months for his crimes as a member of the “Young Gunnaz” or “YGz” gang, including the April 16, 2012, murder of Moises Lora, a/k/a “Noah,” 16, during which BRACY and several other YGz gang members stomped Lora to death in a courtyard in the Melrose housing projects in the Bronx.  BRACY was sentenced in Manhattan federal court by United States District Judge Valerie E. Caproni, before whom he previously pled guilty.  For purposes of the sentencing, Judge Caproni found, following an evidentiary hearing held yesterday, that BRACY was one of the YGz members who kicked Lora while he lay on the pavement during the attack that resulted in Lora’s death.

Acting Manhattan U.S. Attorney Joon H. Kim said: “William Bracy and his fellow gang members stomped 90-pound, 16-year-old Moises Lora to death a few yards from a playground in a South Bronx housing complex. While we cannot bring Moises Lora back, we hope that his family finds justice, and a measure of solace, in today’s sentence. Together with our law enforcement partners, we will continue to aggressively prosecute all those who inflict this deadly violence on our communities.”

According to the charging and other documents filed in the case, as well as the evidence presented at BRACY’s presentencing hearing and statements made during BRACY’s guilty plea, sentencing proceedings, and other court proceedings in this case:

BRACY was a member of the Bronx-based street gang known as the YGz.  From at least 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 committing acts of violence, including the murder of rival gang members, rival drug traffickers, and innocent bystanders.  As part of his involvement in the YGz gang, BRACY participated in numerous acts of violence, as well as crack cocaine distribution, in the South Bronx. 

For example, as part of his involvement in the YGz gang, BRACY and several other YGz gang members murdered Moises Lora, a member of a rival gang, on April 16, 2012, in the South Bronx. On the date of the murder, a group of YGz members, including BRACY, got drunk, and began arguing among themselves about who had done the most violence for the YGz. This group of YGz members went to the territory of a rival gang in the Melrose housing projects to settle their dispute. Upon arriving at the Melrose projects, BRACY and other members of the YGz saw Lora and attacked him. During the attack, Lora’s skull was fractured in several places.  BRACY and the group left Lora to die. Following the stomping, BRACY and several of his confederates bragged to fellow YGz members about what they had done.

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BRACY, 23, of the Bronx, is the fourth defendant to be sentenced this year by Judge Caproni for participation in a YGz-related murder.  Judge Caproni sentenced BRACY’s co-defendant Anthony Scott, a/k/a “Tyson,” to 23 years in prison primarily for Scott’s role in shooting and killing Darrel Ledgister on June 27, 2009, in the South Bronx during an attempted robbery.  Judge Caproni sentenced BRACY’s co-defendant Paul Gilbert, a/k/a “2Fly Tay,” to more than 30 years in prison primarily for Gilbert’s role in the murder of Cody Dubose on September 27, 2014, near the Taft Houses in Manhattan during an attempted robbery.  Finally, Judge Caproni sentenced BRACY’s co-defendant Terrance Williams, a/k/a “TA,” to more than 33 years in prison primarily for Williams’s role in the murder of Curtis Smith on July 3, 2011, near the Jackson housing projects in the South Bronx.     

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, 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 that LEON ZINDER pled guilty to the interstate sale of stolen property in connection with his theft and attempted sale of more than a dozen works of art.  ZINDER pled guilty this morning in Manhattan federal court before U.S. Magistrate Judge Sarah Netburn. 

Acting U.S. Attorney Joon H. Kim said:  “As he admitted today, Leon Zinder stole works of art worth more than $600,000 from his former employer, which he then sought to sell through a flea market in Manhattan.  Thanks to the hard work and dedication of the FBI, nearly all of these works have been recovered, and will be returned to their rightful owner.”

FBI Assistant Director William F. Sweeney Jr. said:  “Today’s plea marks the end of Leon Zinder’s tall tales of discovering treasured art pieces that were really in fact stolen from his employer with the goal of reselling to profit himself. We applaud the art dealer who brought this case to our attention after realizing Zinder’s stories behind the art were really too good to be true.”

According to the charging documents filed in the case, as well as statements made during the plea proceeding:

From approximately July 2010 through April 2012, LEON ZINDER was employed as an art handler by a New York-based company that manages an extensive art collection consisting of thousands of individual artworks, including an extensive collection of Native-American and African ethnographic artwork (the “Company”).  During that time, ZINDER stole more than 70 works of art from facilities maintained by the Company. 

Beginning in approximately September of 2015 through October 2016, ZINDER sold, or attempted to sell, the stolen artwork through a consignment relationship with an art dealer who conducted his business through an outdoor flea market in lower Manhattan (the “Dealer”).  As part of his efforts to sell the stolen artwork, ZINDER falsely claimed he had obtained the works from the elderly widow of a sheriff in Phoenix, Arizona, and from a storage-unit close-out sale.

ZINDER attempted to sell more than a dozen of these works, worth more than $600,000, through the Dealer.  This included at least three items that ZINDER had stolen from the Company’s Greenwich, Connecticut, facility and transported to Manhattan: a Fang Reliquary Guardian Head statue valued at approximately $85,000; a Native-American Mask valued at approximately $75,000; and a Pende mask valued at approximately $5,000.

Eventually, the Dealer became aware that several of the artworks he had helped ZINDER to sell had been reported stolen by the Company.  At that point, the Dealer contacted the FBI and began assisting in the subsequent investigation, including turning over the majority of the stolen works to the FBI.

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ZINDER, 48, of Queens, New York, faces a maximum penalty of 10 years in prison and a maximum fine of $250,000, or twice the defendant’s gross gain or twice the victim’s gross loss resulting from the defendant’s conduct, whichever is greater.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as the defendant’s sentence will be determined by a judge.  ZINDER will to be sentenced by U.S. District Judge Kimba M. Wood on a date to be determined.

Mr. Kim thanked the FBI’s Art Crime Team for its outstanding work on this matter.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JON CRUZ, a former teacher and debate coach at the Bronx High School for Science, was sentenced today to seven years in prison for receiving images containing child pornography from minor teenage boys. CRUZ was initially arrested on March 6, 2015, and pled guilty on September 23, 2016, to one count of receipt of child pornography. He was sentenced today in federal court by U.S. District Court Judge P. Kevin Castel.

Acting U.S. Attorney Joon H. Kim said: “Jon Cruz, a high school teacher and debate coach, abused his position of trust and access to children in frightening way. He not only sought and purchased images of victims whom he knew to be underage, he also masqueraded online as one of his teen students to disguise his misdeeds. Today, he was sentenced to a lengthy prison term for his crimes. We will continue to do everything in our power to identify and stop those who solicit, produce and receive child pornography.”

According to the allegations contained in the Complaint and the Indictment as well as public court filings and statements made in connection with the plea and sentencing proceedings:

For years leading up to his arrest in March 2015, JON CRUZ, while employed as a teacher and debate coach at the Bronx High School for Science, engaged in multiple chats over a mobile communication application and social media service with minor victims from different states. CRUZ, who was aware of the victims’ ages, provided thousands of dollars in payments to the victims in exchange for nude and lascivious photographs of themselves. CRUZ often concealed his identity and posed as a teenager, using a photograph of a former student without that student’s knowledge, to create the online accounts he used to communicate with his victims.

* * *

In addition to his prison term, CRUZ, 34, of New York, New York, was sentenced to 10 years of supervised release, and ordered to provide $12,200 in restitution to his victims.

Mr. Kim thanked the Federal Bureau of Investigation for its work on the investigation. To report an incident involving the possession, distribution, receipt, or production of child pornography, file a report on the National Center for Missing & Exploited Children’s website at www.cybertipline.com, or call 1-800-843-5678. Your report will be forwarded to a law enforcement agency for investigation and action.

The case is being prosecuted by the Office’s General Crimes Crime Unit. Assistant U.S. Attorney Shawn Crowley is in charge of the prosecution.

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 James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment charging 13 defendants with various racketeering, narcotics, and firearms offenses, including the murder of Kelly Diaz on October 27, 2006.  The defendants are charged in connection with their membership in a robbery crew known as the “Hot Boys,” in Upper Manhattan.  The defendants will be presented in Manhattan federal court today before U.S. Magistrate Judge Sarah Netburn.  The case has been assigned to U.S. District Judge Valerie E. Caproni.

Acting U.S. Attorney Joon H. Kim stated: “As alleged, the ‘Hot Boys’ robbery crew terrorized victims for more than a decade, stealing all manner of drugs to sell on the streets of Washington Heights. When anyone got in their way, they allegedly resorted to violence, including the tragic murder of Kelly Diaz. Thanks to the dogged work of our partners in the FBI and NYPD, today’s arrests mark the end of the Hot Boys, and the beginning of justice for Diaz and his family.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. stated: “Our communities and country are facing a deadly epidemic of overdoses due to prescription and illegal drugs. Groups like the one rounded up in this case are allegedly using that epidemic to make money, and show their dominance through violence. The FBI and our law enforcement partners’ ultimate goal in these investigations is to go after the leadership of these enterprises, and to cut off the access to the substances that are killing people every day.”           

NYPD Commissioner James P. O’Neill stated:  “As alleged, these individuals were involved in a host of violent crimes including assault, robbery and murder.  The investigation of these crimes is the type of precision policing that has led to nearly 100 fewer shootings and more than 30 fewer homicides so far this year.  Thanks to the detectives, agents, and prosecutors whose work led to today’s racketeering charges.”

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

From 2006 up to 2017, in the Southern District of New York and elsewhere, STARLIN NUNEZ, a/k/a “Chino,” a/k/a “Lucky Star,” a/k/a “Junior,” RAMON MARTINEZ, a/k/a “Gordo,” ANDRE BELLIARD, a/k/a “Little Andy,” DAVID SANTIAGO, a/k/a “Bori,” SANDY CASTILLO, a/k/a “Fat Sandy,” ALVARADO DOMINGUEZ, a/k/a “Jochi,” STALIN CONTRERAS, a/k/a “Chaka,” WILFRED MEDINA, a/k/a “Papalin,” ALBERT BONILLA, a/k/a “Alski,” a/k/a “Biggie,” EDWIN ARAUJO, a/k/a “Charger Ed,” GUILLERMO ARAUJO, a/k/a “Jun,” SHAJONNY SANTANA, a/k/a “Giovanni,” a/k/a “G-Money,” and ESFRAIN SILVA, a/k/a “Boy,” were all members or associates of a racketeering enterprise known as the “Hot Boys.”  In order to fund the enterprise, protect its interests, and promote its standing, members and associates of the Hot Boys committed, conspired, attempted, and threatened to commit acts of violence, including murder, assault, robbery and burglary; they obtained, possessed, and used firearms, including by brandishing them; and they distributed and conspired to distribute controlled substances, including cocaine, heroin, marijuana, and various prescription drugs. 

During one robbery committed in furtherance of the Hot Boys enterprise, DOMINGUEZ, CONTRERAS, MEDINA, and BONILLA murdered, and aided and abetted the murder of, Kelly Diaz on October 27, 2006, who was shot and killed in his apartment in Washington Heights.

*                      *                      *         

BELLIARD, CONTRERAS, MEDINA, and SANTANA were taken into federal custody this morning, and will be presented in Manhattan federal court today before U.S. Magistrate Judge Sarah Netburn.  NUNEZ, SANTIAGO, DOMINGUEZ, EDWIN ARAUJO, GUILLERMO ARAUJO, and SILVA were already in custody on other charges.  MARTINEZ and BONILLA remain at large.

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

Mr. Kim praised the outstanding investigative work of the FBI and the NYPD, and thanked the Manhattan District Attorney’s Office for its assistance in this investigation.

This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Hagan Scotten, David W. Denton, Jr., and Justina Geraci 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

STARLIN NUNEZ,

RAMON MARTINEZ,

ANDRE BELLIARD,

DAVID SANTIAGO,

SANDY CASTILLO,

ALVARADO DOMINGUEZ,

STALIN CONTRERAS,

WILFRED MEDINA,

ALBERT BONILLA,

EDWIN ARAUJO,

GUILLERMO ARAUJO,

SHAJONNY SANTANA,

ESFRAIN SILVA

Life in prison

2

Murder in Aid of Racketeering

ALVARADO DOMINGUEZ,

STALIN CONTRERAS,

WILFRED MEDINA,

ALBERT BONILLA

Life in prison or death

3

Narcotics Conspiracy

STARLIN NUNEZ,

RAMON MARTINEZ,

ANDRE BELLIARD,

DAVID SANTIAGO,

SANDY CASTILLO,

ALVARADO DOMINGUEZ,

STALIN CONTRERAS,

WILFRED MEDINA,

ALBERT BONILLA,

EDWIN ARAUJO,

GUILLERMO ARAUJO,

SHAJONNY SANTANA,

ESFRAIN SILVA

Life in prison

Mandatory minimum of 10 years in prison

4

Use of Firearms Resulting in Death

ALVARADO DOMINGUEZ,

STALIN CONTRERAS,

WILFRED MEDINA,

ALBERT BONILLA

Life in prison or death

5

Using, Carrying, Possessing, and Brandishing Firearms

STARLIN NUNEZ,

RAMON MARTINEZ,

ANDRE BELLIARD,

DAVID SANTIAGO,

SANDY CASTILLO,

ALVARADO DOMINGUEZ,

STALIN CONTRERAS,

WILFRED MEDINA,

ALBERT BONILLA,

EDWIN ARAUJO,

GUILLERMO ARAUJO,

SHAJONNY SANTANA,

ESFRAIN SILVA

Life in prison

Mandatory minimum of seven 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 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 JAQUAN MCINTOSH, a/k/a “BJ,” a member of the violent “2Fly YGz” (“2Fly”), a violent street gang that operated in and around the Eastchester Gardens public housing development (“ECG”) in the Bronx, was sentenced today to 280 months in prison for his role in a 2013 murder of a boy on his seventeenth birthday at ECG and a shootout with rival gang members in 2012, during which three victims – including a 14-year-old girl caught in the crossfire – were shot in a Bronx park. MCINTOSH pled guilty on November 7, 2016, in Manhattan federal court before U.S. Magistrate Judge Sarah Netburn, MCINTOSH was sentenced today by U.S. District Court Judge Lewis Kaplan.

Acting U.S. Attorney Joon H. Kim said: “During a shootout in October 2013, Jaquan McIntosh, a member of the violent street gang operating in Eastchester Gardens, murdered a seventeen year-old on his birthday and also engaged in a 2012 shootout during which three victims, including a 14 year-old girl, were shot. Gang violence of the type McIntosh engaged in threatens the safety and security of all New Yorkers. We will continue to work with our law enforcement partners to prevent it and to bring to justice those who commit it.”

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

MCINTOSH was a member of 2Fly, a subset of the “Young Gunnaz,” or “YG” street gang, which operated throughout New York City. 2Fly was based in the Bronx, within and around ECG and in an area called the “Valley” or the “V,” which is in the vicinity of Gun Hill Road. ECG is a rectangular complex of residential buildings bordered by Burke, Adee, Yates, and Bouck Avenues, in the middle of which is a playground. The gang war between 2Fly and rival street gangs led to an enormous amount of fatal and non-fatal violence between 2007 and 2016 in the Northern Bronx, including shootings, stabbings, slashings, beatings, and robberies. Members and associates of 2Fly controlled the narcotics trade at ECG, which took place in the open air at the playground and in apartments at ECG. 2Fly primarily sold marijuana and crack cocaine, but also sold powder cocaine and prescription pills, such as oxycodone. 2Fly members and associates stored guns at the playground or in nearby apartments or cars in order to protect the narcotics business and for protection against rival gangs.

As part of his involvement in 2Fly, MCINTOSH murdered Donville Simpson on October 5, 2013 – Simpson’s seventeenth birthday – during a shootout at ECG with rival gang members. MCINTOSH also participated with other 2Fly members in a shootout with rival gang members on August 7, 2012, in a public park in the Bronx. Three victims were shot, including a 14-year-old girl caught in the crossfire.

MCINTOSH was arrested in this case as a result of a multi-year investigation by the New York City Police Department’s Bronx Gang Squad (the “Bronx Gang Squad”), U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Violent Gang Unit (“HSI”), the New York Field Division of the Drug Enforcement Administration (“DEA”), and the Joint Firearms Task Force of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) into gang violence in the Northern Bronx. On April 27, 2016, the Indictment captioned United States v. Laquan Parrish et al., 16 Cr. 212 (LAK) was unsealed, charging 57 members and associates of 2Fly with racketeering conspiracy, narcotics conspiracy, narcotics distribution, and/or firearms charges. To date, 54 of these defendants have pled guilty.

* * *

Mr. Kim praised the outstanding work of NYPD’s Bronx Homicide Squad, NYPD’s 49th Precinct Detective Squad, NYPD’s Bronx Gang Squad, HSI, DEA, and ATF. He also thanked the Bronx County District Attorney’s Office and the Department of Investigation, NYCHA Inspector General’s Office for their ongoing support in this investigation.

This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Rachel Maimin, Micah W.J. Smith, Hagan Scotten, Jessica Feinstein, and Drew Skinner are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and James P. O’Neill, Commissioner of the Police Department for the City of New York (“NYPD”), announced that KEVIN STERLING, a/k/a “Lion,” was sentenced to 37 years in prison and ALONZO VERNON, a/k/a “Zoe,” was sentenced to 35 years in prison today for the non-fatal shooting of a young woman who was an innocent bystander to a drug-related shooting, and for related crimes. They were each sentenced today in Manhattan federal court by U.S. District Court Judge Lewis A. Kaplan, who presided over a three-week jury trial in April 2017 at which STERLING and VERNON were convicted on all counts in the controlling indictment.

Acting U.S. Attorney Joon H. Kim said: “When a drug worker refused to pay a drug debt, Kevin Sterling and Alonzo Vernon hunted him down and Sterling shot at him, without any regard for his life or the lives of the innocent people nearby. One innocent bystander, a young woman in the wrong place at the wrong time, was shot and seriously injured, but thankfully lived. For their callous crimes, Sterling and Vernon will now serve lengthy prison sentences.”

According to the trial testimony and evidence as well as public court filings and statements made in connection with case:

STERLING and VERNON led a drug trafficking organization that brought crack cocaine and heroin from the Bronx to Ithaca, New York, to be sold at prices higher than the drugs would sell for in the Bronx. STERLING and VERNON recruited young men in the Bronx to sell drugs for them in Ithaca. Together with another member of the conspiracy, STERLING and VERNON provided drugs to their workers and collected their drug proceeds.

In about April or May 2015, VERNON informed one of their workers (“Victim-1”) that his money was “short” and that he owed more money. Victim-1 did not pay the claimed debt, and VERNON threatened to “f****[] him up” as a result.

On the night of May 31, 2016, STERLING saw Victim-1 on the street. VERNON and STERLING followed Victim-1 to the area of 219th Street and Willett Avenue in the Bronx in a car driven by VERNON. Victim-1 was on a porch with a group of friends. Next door, a young woman (“Victim-2”) was outside with her friends.

STERLING exited the car and pointed a gun at one of the group. Sterling shouted “where’s Melo?” – the street name used by Victim-1 – and shot once at Victim-1. He missed Victim-1 and hit Victim-2 in the elbow instead. The bullet shattered her elbow and entered her side. STERLING went back to the car, and VERNON drove him away. Victim-2 tried to run away and collapsed bleeding while her friend tied a tourniquet around her arm.

* * *

STERLING, 38, and VERNON, 39, both of the Bronx, New York, were each convicted after trial of conspiring to distribute and possess with the intent to distribute 280 grams and more of crack cocaine and 100 grams and more of heroin; discharging a firearm in connection with that drug trafficking crime, and aiding and abetting the same; and being felons in possession of ammunition. In addition to their prison terms, STERLING and VERNON were each sentenced to 10 years of supervised release.

Mr. Kim praised the outstanding investigative work of the New York City Police Department and thanked the U.S. Marshals Service, the City of Ithaca Police Department, and the Cornell University Police Department for their assistance.

The prosecution of this case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Drew Skinner and Justina Geraci are in charge of the case.

Note: The defendants in this case, Richard Usher; Rohan Ramchandani; and Christopher Ashton, were acquitted by a jury of the charges alleged in the indictment described in the press release below.

Three United Kingdom nationals and former traders of major banks voluntarily surrendered to the FBI and were arraigned on a charge arising from their alleged roles in a conspiracy to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange (FX) spot market, the Justice Department announced today.

A one-count indictment, filed in the U.S. District Court for the Southern District of New York on January 10, 2017, charges Richard Usher (former Head of G11 FX Trading-UK at an affiliate of The Royal Bank of Scotland plc, as well as former Managing Director at an affiliate of JPMorgan Chase & Co.), Rohan Ramchandani (former Managing Director and head of G10 FX spot trading at an affiliate of Citicorp) and Christopher Ashton (former Head of Spot FX at an affiliate of Barclays PLC) with conspiring to fix prices and rig bids for U.S. dollars and euros exchanged in the FX spot market.

The charge in the indictment carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than $1 million.

According to the indictment, from at least December 2007 through at least January 2013, Usher, Ramchandani and Ashton (along with unnamed co-conspirators) conspired to fix prices and rig bids for the euro – U.S. dollar currency pair. Called “the Cartel” or “the Mafia,” this group of traders carried out their conspiracy by participating in telephone calls and near-daily conversations in a private electronic chat room. Their anticompetitive behavior included colluding around the time of certain benchmark rates known as fixes, such as by coordinating their bidding/offering and trading to manipulate the price of the currency pair by the time of the fix or otherwise profit as a result of the fix price. The conspirators also coordinated their trading activities outside of fix times, such as by refraining from entering bids/offers or trading at certain times as a means of stabilizing or controlling price.

The charge in the indictment is merely an allegation, and the defendants are presumed innocent unless and until proven guilty.

This prosecution is being handled by the Antitrust Division’s New York Office and the FBI’s Washington Field Office. Anyone with information concerning price fixing or other anticompetitive conduct in the FX market should contact the Antitrust Division’s Citizen Complaint Center at (888) 647-3258, visit https://www.justice.gov/atr/report-violations or call the FBI tip line at (415) 553-7400.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the United States has settled a civil fraud lawsuit against VNS CHOICE, VNS CHOICE COMMUNITY CARE, and VISITING NURSE SERVICE OF NEW YORK (collectively, “VNS”) for improperly collecting monthly Medicaid payments for 365 Medicaid beneficiaries whom VNS Choice failed to timely disenroll from the VNS Choice Managed Long-Term Care Plan (“Choice MLTCP”). Most of the beneficiaries who should have been disenrolled from the Choice MLTCP were no longer receiving health care services from VNS. Under the terms of the settlement approved today by United States District Judge Ronnie Abrams, VNS Choice must pay a total sum of $4,392,150, with $1,756,860 going to the United States and the remaining amount to the State of New York. In the settlement, VNS admits that VNS Choice failed to timely disenroll 365 Choice MLTCP members and, as a result, received Medicaid payments to which it was not entitled.

Acting Manhattan U.S. Attorney Joon H. Kim said: “VNS Choice failed to timely disenroll individuals from its managed care plan and continued to collect Medicaid payments for their care, even when it provided no medical services to them. This Office is committed to holding accountable those who receive government health care program dollars to which they are not entitled.”

HHS-OIG Special Agent in Charge Scott J. Lampert said: “As State Medicaid Programs increasingly have moved to managed care arrangements, we have adapted our investigative tools accordingly. We will continue to work closely with our state and federal law enforcement partners to unravel these schemes, and hold health care providers accountable for the money they receive.”

VNS Choice administers a Managed Long-Term Care Plan for Medicaid beneficiaries pursuant to a contract with the New York State Department of Health (“MLTC Contract”). VNS Choice receives payments for each member enrolled in the Plan (called “capitation payments”) in exchange for arranging and providing certain community-based long-term care services, such as care management, skilled nursing services, physical therapy, speech therapy, occupational therapy, and preventive services. During the relevant period, VNS Choice received a monthly capitation payment of $3,800 to $4,200 for each Choice MLTC member.

The MLTC Contract sets forth various circumstances under which members must be disenrolled. For example, VNS Choice is required to disenroll Choice MLTCP members when it knows that a member no longer resides in the service area, a member has been absent from the service area for a specified number of consecutive days, a member is hospitalized for 45 consecutive days or longer, a member is no longer eligible to receive Medicaid benefits, or a member is deemed to be no longer eligible for managed long-term care. VNS Choice also must initiate disenrollment upon a member’s voluntary request.

As alleged in the United States’ Complaint filed in Manhattan federal court, VNS Choice failed to timely disenroll 365 Choice MLTCP members as required by the MLTC Contract and regulatory requirements during the period January 1, 2011, through March 31, 2015. In many instances, VNS Choice continued to collect capitation payments for several months after the date the member should have been disenrolled, during which time VNS Choice provided no health care services to the member. Approximately half of the 365 members moved out of VNS Choice’s service area or left the service area for extended periods of time. Other members notified VNS Choice of their desire to disenroll from the Choice MLTCP or repeatedly refused services but were not timely disenrolled. VNS Choice also failed to promptly disenroll members after determining that they no longer met managed long-term care eligibility criteria. Although VNS Choice eventually disenrolled the 365 members, it kept the Medicaid payments it had improperly received for these members while delaying their disenrollment.

As part of the settlement, VNS admits, acknowledges, and accepts responsibility for the following conduct:

• VNS Choice failed to identify and disenroll 365 Choice MLTCP members in a timely manner and, as a result, received monthly capitation payments to which it was not entitled.

   

• With respect to a number of these 365 Choice MLCTP Members, VNS Choice was aware at the time it ultimately disenrolled the members that the members should have been disenrolled earlier, but failed to repay Medicaid for the monthly capitation payments that VNS Choice had improperly received for those members.

In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act. The Government previously partially intervened in this whistleblower lawsuit and entered into a settlement with VNS to resolve allegations relating to the use of social adult day care centers to enroll ineligible members in the Choice MLTCP.

* * *

Mr. Kim thanked the Office of the Inspector General for HHS for its assistance. Kim also thanked the Medicaid Fraud Control Unit of the New York State Attorney General’s Office for its investigative efforts and work on the case.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced the plea today by DASHAWN HAWKINS, a/k/a “Jhonny Cash,” of New York, New York, to the sale of heroin and fentanyl that resulted in the overdose death of Colin Cameron, 29, of Manhattan, on September 2, 2016.  HAWKINS pled guilty earlier today before U.S. District Judge Gregory H. Woods in Manhattan federal court.

Acting Manhattan U.S. Attorney Joon H. Kim stated:  “As he admitted today, Dashawn Hawkins sold fentanyl-laced heroin that killed Colin Cameron, a young resident of New York City.  The opioid epidemic is devastating our communities, and this Office is committed to aggressively prosecuting dealers like Hawkins who fuel it.”

According to the charging documents filed in the case, as well as statements made during the plea proceedings and earlier court appearances:

On or about September 1, 2016, DASHAWN HAWKINS, a/k/a “Jhonny Cash,” sold a mixture of heroin and fentanyl to Colin Cameron.  The next morning, New York City Police Department officers responded to Cameron’s apartment on the Upper West Side, where they found Cameron dead from a drug overdose.  After identifying HAWKINS as the dealer who sold Cameron the fatal dose of drugs, the NYPD arrested HAWKINS on October 20, 2016, and searched his apartment.  During the search, officers found, among other things, additional bags of heroin and substances used to cut heroin, fentanyl packaging, and a short-barreled rifle with a high-capacity magazine loaded with 34 rounds of ammunition.

*              *             *

HAWKINS faces a maximum term of life in prison and a mandatory minimum term of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as the defendant’s sentence will be determined by a judge.  HAWKINS is scheduled to be sentenced on December 7, 2017, by the Honorable Gregory H. Woods, U.S. District Judge.

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

This matter is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Jason M. Swergold and Amanda L. Houle are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that WILLIAM COSME, a/k/a WILLIAM COSMO, was sentenced in Manhattan federal court today to 111 months in prison for orchestrating a scheme to defraud a Christian missionary school in South Korea of $5.5 million.  On March 21, 2017, a jury convicted COSME of wire fraud and aggravated identity theft following a one-week trial before U.S. District Judge Loretta A. Preska, who also imposed today’s sentence.

Acting Manhattan U.S. Attorney Joon H. Kim said: “William Cosme defrauded an international school in Korea of more than $5 million by telling a series of brazen lies, many that he continued to tell on the stand at trial. Instead of investing the school’s money meant for educating children as he had promised, Cosme spent it on himself, on a Lamborghini, Ferrari, gambling, and other personal expenses. Thanks to the hard work of the FBI, Cosme will now spend time in a federal prison.”

According to the Indictment and other filings in Manhattan federal court, statements made in connection with COSME’s sentencing proceedings, and evidence admitted at trial:

COSME purported to operate a “privately held, global, private equity family practice with a concentration on it’s [sic] own family’s private wealth management, commercial [real estate], physical gold trade and business consulting.”  COSME further claimed that the entity through which he did business “manage[d] family assets with a net asset value in excess of USD $11b on a global basis” and that his clientele included royalty and the families of royalty. 

In January 2011, COSME, acting through his company Cosmo Dabi International Trading Group Inc. (“Cosmo Dabi”), entered into an agreement with an international school located in South Korea (the “International School”) whereby Cosmo Dabi would lend the International School approximately $55 million and the International School would make a deposit of approximately $5.5 million (the “Equity Deposit”), which COSME would invest in order to generate funds to loan the International School.  The International School sought to use the proceeds of the loan to expand its operations in South Korea.

In January 2011, the International School sent by wire transfer approximately $5.5 million to an account maintained by COSME at a bank.

Thereafter, COSME transferred the funds that the International School had entrusted to him into other accounts, including accounts in his own name rather than that of his company.   From the other accounts, COSME began a run of unauthorized personal spending, including a Lamborghini costing nearly $314,000 (which itself was meant to secure COSME a preferred spot on a waiting list to purchase an even more expensive Lamborghini); a Ferrari costing nearly $287,000; a Cadillac Escalade; a sport utility vehicle for a family member of COSME’s; a 110-day gambling trip to Las Vegas; gaming losses while on that trip in excess of $200,000; paying for his girlfriend’s rent; and otherwise funding a lavish lifestyle.  All the while, COSME made a series of misrepresentations to the leadership of the International School as to why they had not been issued their promised loan payments, and devised and executed a sham audit process in order to convince the International School that they were in default of their agreement and that COSME could keep the school’s deposit for himself. 

*          *         *

In addition to his prison sentence, COSME, 51, of Jericho, New York, was sentenced to three years of supervised release and ordered to forfeit, among other things, the contents of two financial services accounts containing more than $2 million, as well as the luxury automobiles he purchased with the stolen funds.  Restitution was also ordered in the amount of $5.5 million.

Mr. Kim praised the outstanding efforts of Federal Bureau of Investigation in the investigation. 

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Noah D. Solowiejczyk 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, and Scott Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s (“HHS-OIG”) New York Region, announced today that the United States has settled its claims brought under the False Claims Act against NARCO FREEDOM, INC. (“NARCO FREEDOM”), a former operator of outpatient chemical dependency clinics, and separately has settled its claims against JOINING HANDS MANAGEMENT INC. (“JOINING HANDS”), an operator of short-term residences known as “three-quarter houses,” and DEVORAH HAIGLER, co-owner of JOINING HANDS. The consent orders were approved yesterday by U.S. District Judge John G. Koeltl. Pursuant to the settlement, the three defendants admit and accept responsibility for conduct alleged in the Government’s complaint-in-intervention, the United States will receive a $50.5 million allowed claim in the Narco Freedom bankruptcy proceeding, and Joining Hands and Haigler will pay $300,000 to the United States and the State of New York, the federal portion of which is $141,180.

Acting U.S. Attorney Joon H. Kim said: “Narco Freedom not only defrauded Medicaid, it also victimized vulnerable low-income patients who were attempting to recover from drug and alcohol addictions. Particularly in light of the opioid epidemic ravaging our communities, we will act aggressively to stop such abusive conduct.”

HHS-OIG Special Agent in Charge Scott J. Lampert said: “This settlement puts an end to a greed-fueled scheme that callously compromised patient care and took advantage of an extremely vulnerable population. Health providers engaging in such behaviors should contemplate facing Narco Freedom’s fate – exclusion from all government health programs.”

The complaint-in-intervention filed by the United States alleged three separate fraud schemes. First, the complaint alleged that NARCO FREEDOM, JOINING HANDS, HAIGLER, and others were engaged in a kickback scheme, whereby NARCO FREEDOM made monthly cash payments to JOINING HANDS in exchange for HAIGLER and others referring residents of JOINING HANDS’ three-quarter houses, almost all of whom were Medicaid recipients, to NARCO FREEDOM outpatient programs and enforcing attendance at those programs, for which NARCO FREEDOM billed Medicaid. Second, the complaint alleged that NARCO FREEDOM and others were engaged in a kickback scheme whereby NARCO FREEDOM provided below-cost housing in its own three-quarter houses, known as “Freedom Houses,” to induce residents of those houses to enroll in and attend NARCO FREEDOM’s outpatient programs, and then evicted the residents as soon as NARCO FREEDOM had collected the maximum available Medicaid funds. Both schemes exploited vulnerable individuals who were forced to comply with NARCO FREEDOM’s rules because they lacked stable housing options. Third, the complaint alleged that NARCO FREEDOM and others directed and paid employees of its outpatient program in Red Hook, Brooklyn, to create false treatment records for certain patients and to backdate records.

As part of the NARCO FREEDOM settlement, NARCO FREEDOM, which is currently in Chapter 7 bankruptcy, has agreed (through the Chapter 7 Trustee) that the United States has a general unsecured claim for damages in the amount of $50,509,440, which will be paid through the bankruptcy proceeding on a pro rata basis with other general unsecured creditors. As additional terms of the settlement, NARCO FREEDOM will be excluded from all federal health care programs for 50 years, and the Chapter 7 Trustee will take steps to dissolve NARCO FREEDOM. NARCO FREEDOM, through the Chapter 7 Trustee, also has admitted, acknowledged, and accepted responsibility for the following conduct:

• Between 2006 and 2014, NARCO FREEDOM operated short-term residences known as “Freedom Houses.” As a condition of residence at the Freedom Houses, NARCO FREEDOM required residents to enroll in and attend a NARCO FREEDOM outpatient program. One purpose of the Freedom Houses was to induce Medicaid recipients to use NARCO FREEDOM’s outpatient programs by providing those individuals with subsidized housing.

• Between 2008 and 2011, NARCO FREEDOM made monthly payments to operators of three-quarter houses pursuant to purported “lease agreements” executed by NARCO FREEDOM, but these payments were not actually part of a legitimate lease arrangement, and instead were paid to incentivize the operators to require the residents of their houses to attend NARCO FREEDOM outpatient programs.

• In 2010, NARCO FREEDOM directed and paid counselors employed in its outpatient treatment programs in Red Hook, Brooklyn, to perform “corrective action and maintenance” on patient records, which included creating records reflecting that counselors had treated certain patients that the counselors had not in fact treated; claims based upon these false records were submitted to and paid by Medicaid.

NARCO FREEDOM’s conduct also was the subject of a lawsuit brought by this Office in October of 2014, United States v. Narco Freedom, Inc., 14 Civ. 8593 (JGK), in which the United States obtained a temporary restraining order and preliminary injunction enjoining NARCO FREEDOM from using the Freedom Houses to induce people to enroll in outpatient treatment programs. That suit ultimately resulted in the Court appointing a temporary receiver who oversaw the transition of NARCO FREEDOM’s clinics and Freedom Houses to other health care providers.

As part of the JOINING HANDS and HAIGLER settlement, they must pay a total of $300,000 to resolve the United States’ claims along with related claims asserted by the State of New York, of which the federal portion is $141,180. JOINING HANDS and HAIGLER also are enjoined from making or receiving payments of any kind in exchange for referrals or recommendations for any medical care or service, and from requiring residents to provide information relating to enrollment or attendance at an outpatient program.

JOINING HANDS and HAIGLER also admitted, acknowledged, and accepted responsibility for conduct alleged in the Government’s complaint, including the following:

• In 2008, JOINING HANDS and NARCO FREEDOM reached an agreement whereby NARCO FREEDOM would make monthly payments to JOINING HANDS and in exchange, JOINING HANDS would refer individuals residing in its three-quarter houses to NARCO FREEDOM outpatient programs.

• HAIGLER was aware of, and consented to, this agreement.

• Between 2008 and 2011, pursuant to this agreement and subsequent agreements, NARCO FREEDOM made monthly payments to JOINING HANDS, in amounts ranging from $4,000 to $15,000 per month, per house.

   

  This case arose, in part, from a complaint filed under seal by whistleblowers under the False Claims Act.

   

* * *

Mr. Kim thanked HHS-OIG for its investigative efforts and ongoing support and assistance with the case.

The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorneys Kirti Vaidya Reddy and Cristine Irvin Phillips are in charge of the case.

“While we are disappointed by the Second Circuit’s decision, we respect it, and look forward to retrying the case. Although finding that the Supreme Court’s McDonnell decision issued after Silver’s conviction required a different legal instruction to the jury, the Second Circuit also held that the evidence presented at the trial was sufficient to prove all the crimes charged against Silver, even under the new legal standard. Although this decision puts on hold the justice that New Yorkers got upon Silver’s conviction, we look forward to presenting to another jury the evidence of decades-long corruption by one of the most powerful politicians in New York State history. Although it will be delayed, we do not expect justice to be denied.”

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and James D. Robnett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced the arrest of EARL SIMMONS, an internationally known recording artist, performer, and actor known professionally as “DMX” and “X,” for engaging in a multi-year scheme to conceal millions of dollars of income from the IRS and to avoid paying $1.7 million of tax liabilities.  SIMMONS surrendered to law enforcement agents today and will be presented tomorrow in Manhattan federal court before United States Magistrate Judge Andrew J. Peck

Acting U.S. Attorney Joon H. Kim said:  “For years, Earl Simmons, the recording artist and performer known as DMX, made millions from his chart-topping songs, concert performances and television shows.  But while raking in millions from his songs, including his 2003 hit ‘X Gon’ Give it to Ya,’ DMX didn’t give any of it to the IRS.  Far from it, DMX allegedly went out of his way to evade taxes, including by avoiding personal bank accounts, setting up accounts in other’s names and paying personal expenses largely in cash.  He even allegedly refused to tape the television show ‘Celebrity Couples Therapy’ until a properly issued check he was issued was reissued without withholding any taxes.  Celebrity rapper or not, all Americans must pay their taxes, and together with our partners at the IRS, we will pursue those who deliberately and criminally evade this basic obligation of citizenship.”

IRS-CI Special Agent in Charge James D. Robnett said:  “While most individuals file truthful tax returns and pay their taxes, the indictment against Mr. Simmons alleges various tax crimes, including that he failed to file personal tax returns for several years and did not pay his fair share of taxes.  IRS-Criminal Investigation will continue to focus our investigative efforts on those who try to conceal their income in order to evade their taxes.”

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

SIMMONS, known professionally as “DMX” or “X,” worked as a recording artist, performer, and actor.  Beginning in 1997, SIMMONS released a series of hip-hop albums that sold millions of records.  Many of his albums went platinum and occupied the top positions on musical charts.  During his career, SIMMONS has performed at venues across the United States and around the world, and has acted in motion pictures.

As a result of the income SIMMONS earned from sources including musical recordings and performances, from 2002 through 2005 he incurred federal income tax liabilities of approximately $1.7 million.  Those liabilities went unpaid, and in 2005, the IRS began efforts to collect SIMMONS’s unpaid tax liabilities. 

During the period from 2010 through 2015, SIMMONS earned over $2.3 million, but SIMMONS did not file personal income tax returns during that time period.  Instead, he orchestrated a scheme to evade payment of his outstanding tax liabilities, largely by maintaining a cash lifestyle, avoiding the use of a personal bank account, and using the bank accounts of nominees, including his business managers, to pay personal expenses.  For example, SIMMONS received hundreds of thousands of dollars of royalty income from his music recordings.  SIMMONS caused that income to be deposited into the bank accounts of his managers, who then disbursed it to him in cash or used it to pay his personal expenses.  SIMMONS also participated in the “Celebrity Couples Therapy” television show in 2011 and 2012 and was paid $125,000 for his participation.  When taxes were withheld from the check for the first installment of that fee by the producer, SIMMONS refused to tape the remainder of the television show until the check was reissued without withholding taxes.

SIMMONS took other steps to conceal his income from the IRS and others, including by filing a false affidavit in U.S. Bankruptcy Court that listed his income as “unknown” for 2011 and 2012, and as $10,000 for 2013.  In fact, SIMMONS received hundreds of thousands of dollars of income in each of those years.

*                             *                            *

SIMMONS, 46, of Yonkers, New York, is charged in 14 counts:  one count of corruptly endeavoring to obstruct and impede the due administration of Internal Revenue Laws, one count of evasion of payment of income taxes, six counts of evasion of assessment of income tax liability, and six counts of failure to file a U.S. individual income tax return.  Count One carries a maximum sentence of three years.  Counts Two through Eight each carry a maximum sentence of five years.  Counts Nine through Fourteen each carry a maximum sentence of one year.  The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

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

This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Richard Cooper is in charge of the prosecution.

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

[1] As the introductory phase 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, announced that ANTHONY REDDICK, a/k/a “Ant Flocka,” pled guilty today in Manhattan federal court to his involvement in the “Young Gunnaz” or “YGz” gang by participating in the murder of Moises Lora, 16, during which REDDICK and several other YGz gang members stomped Lora to death in a courtyard in the Melrose housing projects in the Bronx on April 16, 2012.  REDDICK is scheduled to be sentenced later this year by United States District Judge Valerie E. Caproni, before whom REDDICK pled guilty.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Moises Lora was only 16 years old when Anthony Reddick and his fellow gang members brutally stomped Lora to death in a vicious attack.  Thanks to the tireless work of law enforcement, Reddick has now admitted his role in this brutal murder. Although we cannot bring Lora back, we hope that his family will find some small measure of solace in today’s guilty plea.”

According to the Indictment and other documents filed in the case, as well as statements made during REDDICK’s guilty plea and other court proceedings in this case:

REDDICK was a 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 committing acts of violence, including the murder of rival gang members, rival drug traffickers, and innocent bystanders. 

As part of his involvement in the YGz gang, REDDICK and several other YGz gang members murdered Lora, a member of a rival gang, on April 16, 2012, in the South Bronx.  Specifically, on the date of the murder, a group of YGz members, including REDDICK, got drunk, and began arguing among themselves about who had done the most for the YGz.  This group of YGz members went to the territory of a rival gang in the Melrose housing projects to settle their dispute.  Upon arriving at the Melrose projects, REDDICK and other members of the YGz saw Lora and attacked him.  During the attack, Lora’s skull was fractured in several places.  REDDICK and the group left Lora to die.  Following the stomping, REDDICK and several of his confederates bragged to fellow YGz members about what they had done.

* * *

REDDICK, 22, of the Bronx, pled guilty to one count of racketeering conspiracy, which carries a maximum sentence of life in prison.  REDDICK is the third defendant in United States v. Kareem Lanier, et al., 15 Cr. 537 (VEC), to plead guilty to participating in the stomping murder of Lora. 

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, 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 FEI YAN, who works as a post-doctoral associate at a major research university in Cambridge, Massachusetts, was arrested this morning at his residence in Cambridge and charged with insider trading. YAN made approximately $110,000 in connection with trading in options to buy the stock of Stillwater Mining Company, based on misappropriated material nonpublic information.

YAN was presented earlier today in federal court in Boston, Massachusetts.

Manhattan U.S. Attorney Joon H. Kim said: “As alleged, Fei Yan repeatedly traded on confidential corporate information obtained from his spouse, a lawyer at an international law firm. Armed with confidential information about a corporate acquisition his spouse was working on, Yan allegedly traded on that information over and over again during a three-week period. As alleged, some of these trades followed online research Yan conducted on how to avoid law enforcement detection, including an article entitled ‘Want to Commit Insider Trading? Here’s How Not to Do It.’ The answer to Yan’s online inquiry should have been clear, there is no proper way to commit insider trading.”

FBI Assistant Director-in-Charge William Sweeney said: “The charges, as described today, present a very specific timeline of events in which Fei Yan allegedly traded on inside information acquired from his spouse, who worked for a law firm representing a mining company in the middle of a major acquisition. But, as we allege today, Yan dug too deep. Researching how to evade detection, Yan allegedly used an Internet search engine as an accomplice. But it doesn’t take much to understand the rules against insider trading, or how to break them.”

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

YAN’s spouse (the “Spouse”) worked at the New York office of an international law firm (the “Law Firm”). In the summer of 2016, a mining company (the “Mining Company”) retained the Law Firm to represent it in negotiations to acquire Stillwater Mining Company, a publicly traded company whose shares trade on the New York Stock Exchange under the symbol “SWC.” On or about August 25, 2016, in connection with the Spouse’s work at the Law Firm, the Spouse learned of the negotiations between the Mining Company and Stillwater Mining and continued to work on the transaction through December 9, 2016, the date on which it was first publicly announced that the Mining Company was going to acquire Stillwater Mining. While working on the transaction during the fall of 2016, the Spouse had access to material nonpublic information regarding the potential acquisition.

The Law Firm required its employees, including the Spouse, to abide by a confidentiality policy, which prohibited disclosure of “information received from and about . . . clients . . . [and] other parties involved in transactions with clients.” In addition, YAN and the Spouse had a history, pattern, and practice of sharing confidences.

In early and mid-November 2016, the Spouse billed dozens of hours working on the potential merger between the Mining Company and Stillwater Mining, and YAN and Spouse were in frequent phone contact. During this period, YAN conducted internet searches for “yahoo swc” and “stillwater merger,” even though the Mining Company’s potential acquisition of Stillwater Mining had not yet been publicly announced.

On November 22, 2016, the Spouse participated in a Law Firm call regarding the potential acquisition. That same day, YAN, using a brokerage account he had previously set up in his mother’s name, bought 71 options to buy Stillwater Mining stock. The next day, YAN and the Spouse spoke twice. After these calls, YAN bought an additional 200 options to buy Stillwater Mining stock.

Negotiations between the Mining Company, represented by the Law Firm, and Stillwater Mining continued to progress, and the Spouse continued to work on the transaction. On December 1, 2016, after a 78-minute phone call with the Spouse the previous evening, YAN purchased an additional 100 Stillwater Mining options.

The following day, YAN conducted multiple internet searches and research related to mergers and acquisitions, including searches for “process of acquisition” and “company acquisition process.”

YAN and the Spouse also spoke on the phone multiple times on the night of December 5 and the early morning hours of December 6, 2016. Later on the morning of December 6, YAN bought an additional 341 Stillwater Mining options. Later that day, YAN conducted internet research related to insider trading. For example, YAN searched for “how sec detect unusual trade” and accessed at least three articles on financial websites related to insider trading. YAN also searched for the name of an individual who was charged in this District in May 2016 with insider trading.

The next day, shortly after speaking with the Spouse by phone for approximately 30 minutes, YAN conducted an internet search for “insider trading with international account” and, shortly thereafter, viewed articles entitled “U.S. Insider Trading Enforcement Goes Global” and “Want to Commit Insider Trading? Here’s How Not to Do It.” The following day, YAN bought an additional 54 Stillwater Mining options.

Early on the morning of December 9, 2016, it was publicly announced that the Mining Company would acquire Stillwater Mining for $18 per share. Beginning at approximately 9:33 a.m. Eastern time, minutes after the open of regular market trading. YAN sold the Stillwater Mining options he had previously purchased, resulting in a profit of approximately $109,420. Also that day, YAN conducted Internet searches for “insider trading cases,” and “insider trading options.”

* * *

YAN, 31, of Cambridge, Massachusetts, is charged with two counts of securities fraud and one count of wire fraud. The securities fraud counts carry a maximum sentence of 20 and 25 years in prison, respectively, and a maximum fine of $5 million and $250,000 respectively, 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 statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Mr. Kim praised the investigative work of the FBI and thanked the SEC, which has filed a separate civil action. Mr. Kim also thanked the FBI’s Boston Office and the U.S. Attorney’s Office for the District of Massachusetts for their assistance in this investigation. 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. Attorney Brendan F. Quigley is in charge of the prosecution.

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

[1] As the introductory phase 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 HAENA PARK was sentenced in Manhattan federal court to three years in prison for defrauding investors of more than $23 million. PARK pled guilty on January 13, 2017, to one count of commodities fraud before U.S. District Judge Ronnie Abrams, who also imposed today’s sentence.

Acting Manhattan U.S. Attorney Joon H. Kim stated: “Haena Park lied to investors about her expertise as a foreign exchange trader and about her returns. To conceal her scheme and to forestall redemptions, she fabricated account statements and also paid early investors with money from new investors. For defrauding her customers of more than $23 million – representing many investors’ life savings – Haena Park has been sentenced to significant prison time.”

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

From September 2009 through June 2016, PARK raised more than $23 million from more than 40 individual investors, purportedly for the purpose of trading in a variety of securities and commodities, including equities, futures, and off-exchange foreign currency (“forex”) transactions, through the use of her firms, Phaetra Capital Management LP and Argenta Group, LLC. In connection with the scheme, PARK made a series of false and misleading representations to investors, including that PARK was an accomplished forex trading adviser earning annualized returns as high as 48.9 percent for her investors. In truth and in fact, PARK was not an accomplished forex trader, her trading was consistently unsuccessful, and the trading results emailed to investors by PARK were false and did not reflect the trading losses actually incurred by PARK. Rather, from September 2009 through June 2016, PARK lost approximately $19.5 million of the $20 million that she traded, including in commissions and fees, principally in highly leveraged futures and forex transactions.

To prevent or forestall redemptions by investors, and to continue to raise money from investors to fund her scheme, PARK generated fictitious account statements, which she sent to investors on a monthly basis. Instead of accurately reporting the trading losses PARK was suffering, the account statements indicated that the investors were making money nearly every month. To hide her trading losses, PARK used new investor funds to pay back other investors in a Ponzi-like fashion. In total, PARK distributed approximately $3 million back to investors from funds deposited by new investors.

PARK defrauded many victims – including immigrants, the elderly, and disabled individuals – of nearly the entirety of their life savings.

* * *

In addition to her prison term, PARK, 41, of New York, New York, was sentenced to three years of supervised release and a forfeiture money judgment in the amount of $23,186,860. A restitution order will be entered within 90 days.

Mr. Kim praised the work of the Department of Homeland Security, Homeland Security Investigations and the El Dorado Task Force. He also thanked the Commodity Futures Trading Commission and the Securities and Exchange Commission for their assistance.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ANTHONY DELOSANGELES, a/k/a “Taco,” was sentenced today to over eight years in prison for selling heroin, some of which substantially contributed to the overdose death of one of DELOSANGELES’s customers. DELOSANGELES pled guilty on March 17, 2017, to one count of conspiracy to distribute more than 100 grams of heroin. He was sentenced today in White Plains federal court by U.S. District Court Judge Kenneth M. Karas.

Acting U.S. Attorney Joon H. Kim stated: “Anthony Delosangeles sold heroin to a young man he knew had just left a drug rehabilitation program. The same day, that young man used the heroin Delosangeles sold him, overdosed, and died. The epidemic of opioid abuse is devastating our communities, costing human lives, and ripping families apart. This Office will aggressively pursue cases against dealers who fuel this deadly epidemic.”

According to the Indictment filed in White Plains federal court as well as public court filings and statements made in connection with the plea and sentencing proceedings:

From at least in or about May 2015 up to and including in or about February 2016, in the Southern District of New York and elsewhere, DELOSANGELES and others conspired to sell at least 100 grams of heroin. One of the DELOSANGELES’s customers was a 25-year-old man named Thomas Cipollaro. On November 3, 2015, Mr. Cipollaro, who had just finished a period in a rehabilitation treatment center for his heroin addiction, texted DELOSANGELES, asking to buy heroin. During the ensuring text exchange, DELOSANGELES learned that Mr. Cipollaro had just completed a drug rehabilitation program and that Mr. Cipollaro planned to use the heroin he was about to purchase immediately. DELOSANGELES also bragged to Mr. Cipollaro that his heroin was particularly strong.

Later that same day, Mr. Cipollaro was found unresponsive in his car with 15 empty glassine baggies, consistent with bags used to package heroin, near his body. Despite efforts to revive him, Mr. Cipollaro remained in a coma for the next several days and then died. Autopsy and toxicology reports revealed that Mr. Cipollaro had heroin in his system, which substantially contributed to his death. Even after learning of Mr. Cipollaro’s overdose death, DELOSANGELES continued to sell heroin to customers in and around Westchester County, New York.

DELOSANGELES, 20, of Tarrytown, New York, has already served approximately 13 months of his sentence and will serve an additional 84 months in custody from the date of his sentencing. In addition to his prison term, DELOSANGELES was sentenced to four years of supervised release and forfeited approximately $30,000 in cash drug proceeds, which were seized during the investigation.

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation, the Drug Enforcement Administration, the Yorktown Police Department, the Westchester County District Attorney’s Office, and the Westchester County Department of Public Safety.

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

Joon H. Kim, 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 James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today the arrest of STIVEN SIRI-REYNOSO in connection with the June 11, 2016, murder of Jessica White in the vicinity of the John Adams Houses in the Bronx, New York.  The defendant was arrested this morning and is expected to be presented later today in Manhattan federal court before United States Magistrate Judge Andrew J. Peck.  The case is assigned to Chief United States District Judge Colleen McMahon.

*                      *                      *

SIRI-REYNOSO, 24, of the Bronx, is charged in an Indictment with one count of murder through the use of a firearm in connection with a crime of violence, and aiding and abetting the same.  He faces a maximum sentence of death or life in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the FBI, the NYPD, and the New York/New Jersey Regional Fugitive Task Force.

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorney Drew Johnson-Skinner is in charge of the prosecution.

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

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 Office of the New York Office of the Federal Bureau of Investigation (“FBI”), Scott J. Lampert, Special Agent in Charge of the New York Regional Office for the Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), and Dennis Rosen, Inspector General of the New York State Office of the Medicaid Inspector General (“OMIG”), announced today the unsealing of a criminal Complaint charging defendant SUNITA KUMAR with operating a health care fraud scheme utilizing two pharmacies in Brooklyn, New York, through which KUMAR submitted approximately $9 million in fraudulent claims to Medicaid and Medicare. KUMAR was arrested this morning and was presented in Manhattan federal court today before U.S. Magistrate Judge Andrew J. Peck.

Manhattan Acting U.S. Attorney Joon H. Kim said: “As alleged, Sunita Kumar defrauded Medicare and Medicaid, public programs to assist the indigent and the elderly, by submitting $9 million in fraudulent claims. She allegedly did so by inducing people to surrender their own prescriptions and forego their medications in exchange for kickbacks. Medicare and Medicaid provide critical health care for some of our most vulnerable citizens. Together with our law enforcement partners, we will aggressively pursue those who allegedly use public programs as a vehicle for illegal personal profit.”

FBI Assistant Director William F. Sweeney Jr. said: “Exploiting our federal and state health care programs places the economy at a significant disadvantage and threatens the stability of the health care industry overall. Because there’s no single, clearly identifiable victim, the public often finds these schemes incomparable to other, more explicit frauds. But everyone deserves to know that health care fraud alone costs this country tens of billions of dollars a year, not to mention the obvious health safety risks it presents. We will continue to confront this type of crime, and root it out, until it no longer exists.”

HHS-OIG Special Agent-in-Charge Scott J. Lampert said: “Prescription drug scams, such as the one alleged in this case, work to undermine our nation’s health care system. Today’s arrest coordinated with our law enforcement partners serve as a stern warning to pharmacy owners tempted to plunder government health programs meant to care for our most vulnerable citizens.”

Medicaid Inspector General Dennis Rosen said: “Exploiting the Medicaid program for personal gain by preying upon New York’s most-vulnerable populations is reprehensible. We will continue to work closely with our federal, state and local partners to hold wrongdoers fully accountable and protect the integrity of the Medicaid program.”

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

KUMAR – while owning one pharmacy herself and operating a second pharmacy, both located in Brooklyn, New York – conducted a multimillion-dollar scheme to defraud Medicare and Medicaid programs by fraudulently seeking reimbursements for prescription drugs. Specifically, KUMAR engaged in a scheme to obtain prescriptions for medications, for which her pharmacies billed and received reimbursement from Medicare and Medicaid, but which she did not actually dispense to customers. From in or about January 2015 through in or about December 2016, KUMAR obtained approximately $9 million in reimbursements from Medicare and Medicaid for prescription drugs that her pharmacies never actually dispensed. KUMAR defrauded Medicare and Medicaid into providing her pharmacies with these reimbursements by obtaining prescriptions from other individuals, who were willing to forego delivery of the medications in exchange for a share of the reimbursed proceeds, in the form of kickbacks paid by KUMAR.

* * *

KUMAR, 54, of Old Westbury, New York, is charged with one count of health care fraud, which carries a maximum sentence of 10 years in prison, and one count of paying illegal remuneration in the form of kickbacks, which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the investigative work of the FBI, HHS-OIG, and OMIG.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Christopher J. DiMase and Sarah E. Paul are in charge of the prosecution.

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

[1] As the introductory phase 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 MAURICE SESSUM, the co-owner and chief financial officer of Four Star Resolution (“Four Star”), a Buffalo, New York-based debt collection company, was sentenced in Manhattan federal court to 90 months in prison for orchestrating a scheme to coerce thousands of victims across the country, through misrepresentations and false threats, into paying a total of more than $31 million to Four Star to resolve debts these victims purportedly owed. All 14 individuals charged in connection with the Four Star scheme have been convicted. SESSUM pled guilty on November 18, 2016, to conspiracy to commit wire fraud and wire fraud before U.S. District Court Judge Katherine Polk Failla, who also imposed today’s sentence.

Acting U.S. Attorney Kim said: “Maurice Sessum was a driving force behind the largest criminal debt collection scheme ever prosecuted. Using outrageous threats and blatant lies to take advantage of vulnerable Americans, Sessum and his co-conspirators defrauded victims out of $31 million. For victimizing others to enrich himself, Sessum will now serve a significant term in federal prison.”

According to the Indictment and other filings in Manhattan federal court, and statements made in connection with SESSUM’s sentencing and other court proceedings:

Between 2010 and February 2015, SESSUM was the co-owner, chief financial officer, and chief operating officer of the Four Star. In that capacity, SESSUM, together with his co-defendant and co-owner, Travell Thomas, oversaw four debt collection offices operated by Four Star in Buffalo as well as a team of managers and debt collectors. As part of the scheme, SESSUM and Travell Thomas falsely inflated the balances of debts owed by consumers in Four Star’s debt collection software so that debt collectors could collect more money from the victims than the victims actually owed.

As co-owner of Four Star, SESSUM approved debt collection scripts that contained a variety of misrepresentations and instructed his collectors to make those misrepresentations to consumers over the telephone. At the direction of SESSUM and Thomas, Four Star’s debt collectors, using a variety of aliases, attempted to trick and coerce thousands of victims throughout the United States into paying millions of dollars in consumer debts through a variety of false statements and false threats, including that: (1) Four Star was affiliated with local government and law enforcement agencies, including the “county” and the district attorney’s office; (2) the consumers had committed criminal acts, such as “wire fraud” or “check fraud,” and if they did not pay the debt immediately, warrants or other process would be issued, at which point they would be arrested or hauled into court; (3) the victims would have their driver’s licenses suspended if they did not pay their debts immediately; (4) Four Star was a law firm or mediation firm and that Four Star’s employees were working with lawyers, a law firm, mediators, or arbitrators; and (5) a civil lawsuit would be filed, or was pending, against the victims for failing to pay their debts. SESSUM and Thomas also approved an abusive and coercive “mailing campaign,” in which Four Star sent mailers to victims across the country that purported to be from courts and government agencies.

In total, from about January 2010 through November 2014, Four Star collected more than $31 million from thousands of victims across the United States. Of the money that Four Star took in from victims, millions of dollars were paid in cash to SESSUM and Thomas, and hundreds of thousands of dollars were used to pay for SESSUM’s personal expenses, including for gambling and season tickets for professional sports games.

* * *

In addition to his prison term, SESSUM, 40, of Buffalo, New York, was sentenced to three years of supervised release, and ordered to forfeit $31 million.

In total, 14 individuals associated with Four Star have been charged and pled guilty to defrauding consumers as part of this debt collection scheme. In addition to SESSUM, co-owner and chief executive officer Travell Thomas, managers Jimmy Stokes, Tacoby Thomas, Heather Gasta, Mark Lavin, and John Salatino, and debt collectors Anthony Caba, Jessica Mann, Charles Starks, William Clark, Columbus Simmons, Michael Calandra, and Jennifer Sherk each pled guilty to conspiracy to commit wire fraud and wire fraud for their roles in the scheme.

Travell Thomas, Tacoby Thomas, Starks, Caba, Clark, Simmonds, Calandra, and Mann were sentenced by Judge Failla to prison terms of 100 months, 70 months, 37 months, 36 months, 30 months, 28 months, 15 months, and one year and one day, respectively. The sentencing of the other defendants who have pled guilty is pending.

Mr. Kim praised the efforts of the Office’s Criminal Investigators, who led the investigation of this matter. Mr. Kim also thanked the Federal Trade Commission for referring the case and for its assistance.

The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Edward A. Imperatore, Jennifer L. Beidel, and Jordan L. Estes are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), and George P. Beach II, the Superintendent of the New York State Police (“NYSP”), announced today the unsealing of a Complaint charging MARK CINA with mail fraud. The charge arises from an alleged fraudulent scheme whereby CINA embezzled millions of dollars from two companies where he was comptroller, over the course of at least approximately seven years. Cina was presented this morning before Honorable Lisa Margaret Smith, United States Magistrate Judge.

Acting U.S. Attorney Joon H. Kim said: “As alleged, Mark Cina, who was entrusted with the finances of two local manufacturers in Poughkeepsie, abused that trust to spend the companies’ money on himself. For years, Cina allegedly used company money to gamble, pay his rent, dine out, and fund a host of other personal expenses. I want to thank our partners at the State Police and the Postal Inspection Service for their work to uncover and stop this fraud.”

USPIS Inspector-in-Charge Philip R. Bartlett said: “As a Comptroller, Mr. Cina was placed in a position of trust. As alleged, he violated his employer’s trust when he decided to use company money to fund his lifestyle. He was promptly arrested by Postal Inspectors and will be brought to justice for his alleged thievery.”

NYSP Superintendent George P. Beach II said: “This arrest should serve as a reminder that those who choose to abuse their positions will be brought to justice. For years this suspect allegedly stole funds from a legitimate business, using the money for his own enjoyment and personal gain. I thank the U.S. Attorney’s Office for the Southern District of New York and the New York Office of the U.S. Postal Inspection Service for their continued partnerships. The State Police will continue to work with our law enforcement partners to end these types of crimes and hold accountable those who mistakenly think they can get away with these schemes.”

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

During all times relevant to the Complaint, two manufacturing companies were in operation, with plants located in the Town of Poughkeepsie (“Company-1” and “Company-2,” collectively the “Companies”). Company-1 designed and manufactured solar energy products such as solar-powered roof shingles. Company-1’s work included, for example, a solar-powered ring of lights encircling the top of MetLife Stadium, in New Jersey. Company-2 fabricated molded plastic.

The Companies were founded by an entrepreneur (“Victim-1”). During all times relevant to the Complaint, Victim-1 was the primary investor in and owner of the Companies.

In or about 2008, Victim-1 hired MARK CINA, the defendant, as a part-time bookkeeper for Company-1. In or about 2010, CINA became employed full-time for the Companies as comptroller. As comptroller, CINA was responsible for the day-to-day financial operations of the Companies. During some of the time period relevant to this Complaint, CINA had authority to sign checks for the Companies and to carry and use the Companies’ credit cards and ATM cards. CINA remained so employed until in or about August 2015, when he was terminated.

In or about September 2015, Victim-1 appeared at a New York State Police barracks in Dutchess County. Victim-1 reported, in part and substance, that a former employee of the Companies had stolen company funds. Thereafter, the New York State Police commenced an investigation, which federal law enforcement officers later joined. As summarized in the Complaint, the investigation yielded myriad evidence showing that CINA had defrauded Victim-1, via the Companies, of millions of dollars over the course of at least approximately seven years. CINA did so by, among other things, using the Companies’ funds for himself to gamble, pay his rent, drive rental cars, dine out, get his car washed, bail out an arrestee, and, in one instance, pay a phone charge for an inmate’s call.

According to, among other things, business and financial records obtained during the criminal investigation, and a forensic report prepared by an accounting firm, CINA made the following disbursements of the Companies’ funds, from in or about 2009 through in or about 2015, which were not authorized, and which had no apparent or recorded business purpose:

• Payments to a mini-mart (approximately $457,000)

• Payments to a gas station (approximately $180,000)

• Payment of CINA’s rent (approximately $25,000)

• Payment of CINA’s personal credit card bills (approximately $125,000)

• Checks payable to CINA (non-payroll) (approximately $599,000)

• Checks payable to cash (approximately $282,000)

• Cash withdrawals (approximately $825,000)

• Additional unauthorized charges (including charges to pharmacies, medical and dental facilities, a rental car company, a car wash facility, an inmate phone service, and for purported loans from family members of CINA)

* * *

CINA, 56, of Pleasant Valley, New York, 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, the New York State Police, the Internal Revenue Service, Criminal Investigation, and the Office’s criminal investigators. He also thanked the Dutchess County District Attorney’s Office for their assistance.

The case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Kathryn Martin and Benjamin Allee are 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, James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), 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”),  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 J. Hunt, the Special Agent-in-Charge of the New York Field Office of the U.S. Drug Enforcement Administration (“DEA”), announced that DOMINICK SHERLAND, a/k/a “D-Nick,” was charged today in a Superseding Indictment with the murder of Jeffrey Delmore, who was stabbed to death on May 15, 2010, at the age of 15.  SHERLAND, along with 62 others, was originally charged on April 27, 2016, with racketeering conspiracy, narcotics conspiracy, and firearms offenses in connection with his membership in the “Big Money Bosses” (“BMB”), a violent street gang that operated primarily on White Plains Road from 215th Street to 233rd Street in the Bronx.

Acting U.S. Attorney Joon H. Kim said:  “As alleged, Dominick Sherland mistook 15-year-old Jeffrey Delmore for a gang rival, and stabbed him to death in defense of gang turf.  This brutal and senseless murder ended a young life.  Thanks to the outstanding work of our law enforcement partners, we are one step closer to providing Jeffrey Delmore’s family with the justice they deserve.”

HSI SAC Angel Melendez said:  “Dominick Sherland is already facing trial for a slew of charges including narcotics distribution and racketeering, and now he faces charges of murder for allegedly stabbing a 15-year-old boy to death as he pled for his life.  The alleged heinous act of this individual certifies that our unrelenting efforts to crack down on gang activity and the ensuing violence are necessary, and HSI and its partners will not waiver in that resolve.”

ATF SAC Ashan M. Benedict said:  “The members of BMB, including the defendant, terrorized the streets of the Northern Bronx, committing numerous wanton acts of violence. The alleged homicide of an innocent victim mistaken as a member of a rival gang highlights the depth of the defendant’s alleged depravity and the senselessness of the violence the defendant and his criminal associates allegedly brought to the streets. Today’s charges demonstrate that our investigation has not stopped, and that we will continue to hold these gang members accountable to ensure they face justice for all the crimes they are alleged to have committed.”

DEA SAC James J. Hunt said:  “Drug trafficking and violent crime are synonymous with gang activity. It is not surprising that additional crimes were unearthed as a result of last year’s massive gang takedown targeting the 2Fly YGZ and the BMB. What are shocking and appalling are casualties of this gang war; including the murder of a teenage boy whose identity was mistaken.”

According to the Superseding Indictment[1] and other documents filed in the case, as well as public proceedings in this case:

BMB was a subset of the “Young Bosses,” or “YBz” street gang, which operates throughout New York City.  Between 2007 and 2016, members and associates of BMB committed numerous acts of violence against rival gang members in the Bronx – including murders, attempted murders, and armed robberies – and sold crack cocaine and marijuana.  

SHERLAND was a member of BMB.  On May 15, 2010, SHERLAND and a group of other BMB members encountered a group of people in the vicinity of Gun Hill Road in the Bronx who the BMB members believed were members of the rival 2Fly YGz (“2Fly”) gang, which was based at the Eastchester Gardens public housing development.  The BMB members mistook Delmore for a member of 2Fly.  SHERLAND stabbed Delmore to death as Delmore pled for his life.

* * *

SHERLAND, 25, of the Bronx, New York, was arrested on April 27, 2016, and has been detained pending trial.  In the Superseding Indictment, he is charged with murder in aid of racketeering, which carries a maximum sentence of life in prison; racketeering conspiracy, which carries a maximum sentence of life in prison; narcotics conspiracy, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison; possessing a firearm during the narcotics conspiracy, which carries a maximum sentence of life in prison and a mandatory minimum of five years in prison, which must run consecutively to any other sentence imposed; and discharging a firearm during the racketeering conspiracy, which carries a maximum of sentence of life in prison and a mandatory minimum of 25 years in prison, which must run consecutively to any other sentence imposed.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as the defendant’s sentence will be determined by the judge.  SHERLAND is scheduled for trial on November 6, 2017, before United States District Judge Alison J. Nathan.

SHERLAND was arrested in this case as a result of a multi-year investigation by the Bronx Gang Squad of the NYPD, the HSI Violent Gang Unit, the DEA, and the Joint Firearms Task Force of ATF into gang violence in the Northern Bronx. On April 27, 2016, Indictment S2 15 Cr. 95 (AJN) was unsealed, charging 63 members and associates of BMB, including SHERLAND, with racketeering conspiracy, narcotics conspiracy, narcotics distribution, and firearms charges.  To date, 49 of these defendants have pled guilty.  Also on April 27, 2016, Indictment S1 16 Cr. 212 (LAK) was unsealed, charging 57 members of 2Fly with the same offenses.  To date, 54 of these defendants have pled guilty.

Mr. Kim praised the outstanding work of the NYPD’s 49th Precinct Detective Squad, the NYPD’s Bronx Gang Squad, HSI, DEA, ATF, and the Department of Investigation, NYCHA Inspector General’s Office.  He also thanked the Bronx County District Attorney’s Office for their ongoing support in this investigation.

This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Rachel Maimin, Micah W.J. Smith, Hagan Scotten, Jessica Feinstein, and Drew Johnson-Skinner are in charge of the prosecution.

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment 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 William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a federal indictment charging LUIGI JAQUEZ, KARILIE HERRERA, a/k/a “Choco,” a/k/a “Choco Black,” and SACHA SANTIAGO with the June 24, 2008, murder of Maximiliano Campusano, 33.

Acting U.S. Attorney Joon H. Kim said:  “As alleged, Jaquez, Herrera, and Santiago planned the gunpoint robbery of Maximiliano Campusano, which ended in Campusano’s murder.  Thanks to the outstanding work of the FBI, the defendants have been arrested and charged with this terrible crime.  We will continue to work with our partners in law enforcement, no matter how much time passes, to hold murderers responsible for their crimes.” 

FBI Assistant Director-in-Charge William F. Sweeney Jr. stated:  “More than nine years has passed since Mr. Campusano was murdered, but time doesn’t change the fact that those responsible deserve to be brought to justice. We want the community we serve to know we are committed to tracking down and following all the evidence to solve crimes, no matter how much time it takes.”

According to the Indictment[1]: 

On June 24, 2008, JAQUEZ, HERRERA, and SANTIAGO planned to rob, and attempted to rob, Campusano, using a gun, in the vicinity of 20 Bogardus Place, New York, New York.  During the attempt to carry out the armed robbery, one of the charged defendants’ co-conspirators shot and killed Campusano. 

* * *

JAQUEZ, 28, and SANTIAGO, 25, both of Manhattan, New York, were arrested this morning by the FBI.  HERRERA, 26, also of Manhattan, New York, was taken into federal custody yesterday evening.  The defendants will be presented later today before Chief United States Magistrate Judge Debra Freeman.  The case has been assigned to United States District Judge Paul A. Crotty.

The sole count of the Indictment charges the defendants with use of a firearm in furtherance of a crime of violence resulting in the murder of Campusano, and aiding and abetting the same.  JAQUEZ faces a maximum sentence of life in prison or death.  HERRERA and SANTIAGO face a maximum sentence of life in prison.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.

Mr. Kim thanked the New York City Police Department’s 34th Precinct Detective Squad for its determined efforts in this investigation.

This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Sarah Krissoff, Hagan Scotten, and Douglas Zolkind are in charge of the prosecution.

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

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment 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, James J. Hunt, Special Agent in Charge of the U.S. Drug Enforcement Administration’s New York Field Division (“DEA”), and Charles Gardner, the Commissioner of the City of Yonkers Police Department (“YPD”), announced today the unsealing of an indictment and a complaint charging six defendants with allegedly engaging in the distribution of heroin throughout the Southern District of New York. Five defendants were taken into federal custody today, and will be presented in White Plains federal court this afternoon before United States Magistrate Lisa M. Smith. JAMES ODELL WHITTED remains at large.

Acting U.S. Attorney Joon H. Kim said: “As alleged, these defendants contributed to the rising tide of heroin that is plaguing suburb and city alike. Thanks to the excellent work of the DEA and the Yonkers Police Department, we hope to stem that tide and protect our communities from this epidemic.”

DEA Special Agent in Charge James J. Hunt said: “Gangs are actively capitalizing on opioid addiction by pushing potent heroin onto our streets. In this case, heroin was allegedly being trafficked throughout Yonkers, Westchester and Newburgh communities, increasing the risks of potential overdoses caused by opioids. I applaud the men and women of the Westchester Task Force and the US Attorney’s Office, Southern District of New York for their diligence in this investigation and commitment to safeguarding public health.”

Yonkers Police Commissioner Charles Gardner said: “These arrests will reduce the availability of heroin in our community and help fight the opioid epidemic we are experiencing. I would like to specifically thank the US Attorney’s Office for the Southern District of New York and the US DEA Westchester Task Force for their support and tenacious efforts in this investigation.”

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

From at least in or about February 2017 up to and including in or about June 2017, in the Southern District of New York and elsewhere, CHRISTOPHER COLEMAN, a/k/a “Fox,” JONATHAN ACQUINO, a/k/a “Jonathan Aquino,” a/k/a “Jonathan Harvey-Acquino,” a/k/a “Gotti,” JAMES ODELL WHITTED, a/k/a “Odell,” a/k/a “O,” LEIBYS MERCEDES, a/k/a “Celly,” a/k/a “Sonny,” BRANDEN JONES, a/k/a “Branden Mima,” a/k/a “Marlo,” conspired to distribute 100 grams and more of heroin.

As alleged in the Complaint unsealed today in White Plains federal court[2]:

LISA HENDERSON and COLEMAN conspired to distribute heroin. Specifically, HENDERSON assisted COLEMAN in packaging the heroin for resale and allowed COLEMAN to store narcotics trafficking paraphernalia in HENDERSON’s apartment.

* * *

The defendants COLEMAN, ACQUINO, WHITTED, MERCEDES, and JONES each face a maximum term of 40 years in prison, and a mandatory minimum term of five years in prison.

The defendant LISA HENDERSON faces a maximum term of 20 years in prison.

A chart containing the names of the defendants who were arrested and charged today, and the charges and maximum penalties they face, is attached.

The statutory maximum sentences are prescribed by Congress and are provided here for information purposes only, as any sentencings of the defendants would be determined by the respective judges.

Mr. Kim praised the outstanding investigative work of the DEA’s Westchester Resident Office and the Narcotics Unit of the City of Yonkers Police Department. The DEA’s Westchester Resident Office comprises agents and officers of the DEA, Westchester Police Department, New Rochelle Police Department, Yonkers Police Department, Mount Vernon Police Department, White Plains Police Department, and Port Chester Police Department. Mr. Kim also thanked the United States Marshals Service and the United States Probation Office for their assistance in taking the defendants into custody.

These cases are being handled by the Office’s White Plains Division. Assistant United States Attorneys Celia V. Cohen and Samuel L. Raymond are in charge of the prosecutions.

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

CHARGE(S)

DEFENDANTS

MAXIMUM PENALTIES

Narcotics conspiracy

(Conspiracy to distribute and possess with intent to distribute 100 grams and more of heroin.)

CHRISTOPHER COLEMAN, a/k/a “Fox”

JONATHAN ACQUINO, a/k/a “Jonathan Aquino,” a/k/a “Jonathan Harvey-Acquino,” a/k/a “Gotti”

JAMES ODELL WHITTED, a/k/a “Odell,” a/k/a “O”

LEIBYS MERCEDES, a/k/a “Celly,” a/k/a “Sonny”

BRANDEN JONES, a/k/a “Branden Mima,” a/k/a “Marlo”

40 years in prison

Mandatory minimum: 5 years in prison

Narcotics conspiracy

(Conspiracy to distribute and possess with intent to distribute heroin.)

LISA HENDERSON

20 years in prison

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

[2] 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, 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 unsealing of a criminal Complaint charging WILLIAM McFARLAND with wire fraud, in connection with a scheme to defraud investors in a company controlled by McFARLAND, Fyre Media LLC (“Fyre Media”), as well as a related entity responsible for organizing a music festival set to take place in the Bahamas (the “Fyre Festival”). McFARLAND was arrested today in New York, New York, and is expected to be presented before U.S. Magistrate Judge Kevin N. Fox tomorrow.

Acting Manhattan U.S. Attorney Joon Kim said: “As alleged, William McFarland promised a 'life changing' music festival but in actuality delivered a disaster. McFarland allegedly presented fake documents to induce investors to put over a million dollars into his company and the fiasco called the Fyre Festival. Thanks to the investigative efforts of the FBI, McFarland will now have to answer for his crimes.”

Assistant Director-in-Charge William F. Sweeney Jr. said: “Under McFarland's direction, Fyre Media created a promoter's marketplace for entertainment bidding. In addition to this initial business venture, McFarland went one step further in establishing a subsidiary of the company, Fyre Festival LLC. But in order to drive the success of both entities, as alleged, McFarland truly put on a show, misrepresenting the financial status of his businesses in order to rake in lucrative investment deals. In the end, the very public failure of the Fyre Festival signaled that something just wasn't right, as we allege in detail today.”

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

McFARLAND was the founder and Chief Executive Officer of Fyre Media. In 2016, McFARLAND started Fyre Media to build a digital app that would allow individuals organizing commercial events, such as concerts, to bid for artist and celebrity bookings at such events. According to Fyre Media documents provided to investors by McFARLAND, Fyre Media’s historical and projected revenue from at least April 2016 to November 2017 consisted solely of artist bookings. In late 2016, McFARLAND established a subsidiary of Fyre Media known as Fyre Festival LLC and began promoting the Fyre Festival. McFARLAND promoted the Fyre Festival in part by claiming that it would bring a global audience together to share a life changing experience. Ultimately, the Fyre Festival was widely deemed to have been a failure.

From in or about 2016 through in or about May 2017, McFARLAND perpetrated a scheme to defraud, inducing at least two individuals to invest approximately $1.2 million dollars in Fyre Media and an associated entity based on misrepresentations about Fyre Media’s revenue and income. In order to procure these investments, McFARLAND provided materially false information. For example, McFARLAND told investors that Fyre Media earned millions of dollars of revenue from thousands of artist bookings from at least July 2016 until April 2017. In reality, during that approximate time period, Fyre Media earned less than $60,000 in revenue from approximately 60 artist bookings.

In addition, McFARLAND provided at least one investor an altered stock ownership statement, in an effort to make it appear that McFARLAND could personally guarantee the investment. Specifically, McFARLAND provided an altered brokerage statement that purported to show that he owned shares of a specific stock worth over $2.5 million, when in reality he owned shares of that stock valued at less than $1,500.

* * *

McFARLAND, 25, of New York, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.

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

Mr. Kim praised the investigative work of the FBI’s New York Field Office, and thanked the Securities and Exchange Commission for their assistance.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Kristy J. Greenberg and Dina McLeod are in charge of the prosecution.

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

[1] As the introductory phase 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 a federal jury today found BRIAN BLOCK, the former chief financial officer of the publicly traded real estate investment trust (“REIT”) formerly known as American Realty Capital Partners (“ARCP”), guilty of inflating a key metric used to evaluate the financial performance of publicly traded REITs in ARCP’s filings with the U.S. Securities and Exchange Commission (the “SEC”).  BLOCK was convicted after a three-week trial before U.S. District Judge J. Paul Oetken.

BLOCK’s co-defendant, former chief accounting officer Lisa McAlister, pled guilty to securities fraud and related charges on June 29, 2016.           

Acting Manhattan U.S. Joon H. Kim said:  “As a unanimous jury found today, Brian Block, the former CFO of ARCP, intentionally misled investors by overstating the health and profitability of his company.  This trial revealed that when it looked like ARCP would not meet investors' expectations, Block made up numbers and fudged the books.  The integrity of our markets rests on the truth of the financial information provided to investors.  And those like Block who lie and manipulate the markets must be identified and held to account.”

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

In 2014, ARCP was a publicly traded REIT headquartered in Manhattan, New York.  ARCP’s securities traded under the symbol “ARCP” on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) exchange.

ARCP, like many REITs, measured its financial performance through metrics besides, or in addition to, traditional measurements of company performance calculated using Generally Accepted Accounting Principles (“GAAP”).  ARCP calculated and reported to the investing public a non-GAAP measure called adjusted funds from operations, or AFFO, which was designed to more accurately reflect ARCP’s cash flow and financial performance by presenting ARCP’s income before consideration of non-cash depreciation and amortization expense and by excluding certain one-time charges and expenses.  REITs such as ARCP commonly reported their AFFO figures, including AFFO per share, to the investing public and in filings with the SEC.  ARCP also provided forward-looking guidance to the investing public regarding their anticipated AFFO performance in upcoming time periods.      

Prior to the filing of ARCP’s Form 10-Q setting forth ARCP’s financial statements for the second quarter of 2014 (the “Second Quarter 10-Q”), BRIAN BLOCK, along with Lisa McAlister and others, came to understand that the method used by ARCP to calculate AFFO in the first quarter of 2014 and in certain previous quarters was erroneously inflated.  Another employee of ARCP (“CC-1”) had brought this methodological error to the attention of BLOCK, McAlister, and others shortly before the filing of ARCP’s first quarter 2014 10-Q (the “First Quarter 10-Q”), but no corrective change was made to the First Quarter 10-Q while the issue was under review.  Following the filing of the First Quarter 10-Q, CC-1 concluded, and advised BLOCK, McAlister, and others, that the reported AFFO per share calculation for the first quarter of 2014 was overstated by approximately $0.03 per share.  Instead of $0.26 per share, which was publicly reported by ARCP to its shareholders and the investing public, and which placed ARCP on track to meet its full-year AFFO per-share guidance, the correct AFFO for the first quarter of 2014 was $0.23 per share.  

Despite his knowledge of a material error in ARCP’s previous filings with the SEC, BRIAN BLOCK took no steps to advise the Audit Committee of ARCP’s Board of Directors, or ARCP’s outside auditors, of the error in the First Quarter 10-Q.  Moreover, BLOCK, McAlister, and CC-1 then knowingly facilitated the use of the same materially misleading calculations in ARCP’s Second Quarter 10-Q.  For example, on or about July 24, 2014, a draft of ARCP’s Second Quarter 10-Q was circulated to members of ARCP’s Audit Committee.  The draft included an AFFO calculation for the six-month period ending June 30, 2014, that incorporated AFFO figures from the first quarter of 2014 that BLOCK, McAlister, and CC-1 knew to be erroneously inflated.

On or about July 28, 2014, BLOCK met with McAlister and CC-1 in his office in Manhattan for the purpose of finalizing the financial figures that were to be included in ARCP’s Second Quarter 10-Q.  Utilization of a proper method to calculate ARCP’s second quarter 2014 AFFO would have exposed that the reported AFFO and AFFO per share figures from the first quarter were inflated.  Accordingly, during the meeting, BLOCK, McAlister, and CC-1 inserted into a spreadsheet BLOCK was using to calculate AFFO and AFFO per share for the first and second quarters of 2014 and for the first six months of 2014 (“YTD 2014”) figures that fraudulently inflated the AFFO and AFFO per share calculations that were to be included in the Second Quarter 10-Q and the related ARCP press release.  The fraudulent numbers BLOCK, McAlister, and CC-1 used to inflate the AFFO and AFFO per share figures had no basis in fact, were without documentary support, and did not tie to ARCP’s general ledger accounting system, as BLOCK knew and understood at the time.  The fraudulent numbers included in the spreadsheet prepared by BLOCK were then incorporated into ARCP’s Second Quarter 10-Q, which was filed with the SEC the following day.  As a result of the manipulative efforts of BLOCK, McAlister, and CC-1, ARCP’s SEC filings included AFFO and AFFO per share figures for the second quarter of 2014 and for the first six months of 2014 that were fraudulently inflated.    

The Second Quarter 10-Q was signed by, among others, BRIAN BLOCK.  Additionally, on a certification accompanying the 10-Q, BLOCK falsely certified, among other things, that the Second Quarter 10-Q did not contain any materially untrue statements or material omissions.  He further falsely certified that he had disclosed to ARCP’s auditors and the audit committee of its board of directors: “Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.”  In a second certification accompanying the 10-Q, BLOCK falsely certified that: “The quarterly report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.”

With regard to YTD 2014 specifically, the fraud resulted in an intended overstatement of AFFO by approximately $13 million and an intended overstatement of AFFO per share by approximately $0.03, or approximately 5% of total AFFO per share.  By reporting AFFO per share of $0.24 in the second quarter, after having reported AFFO per share of $0.26 in the first quarter, BRIAN BLOCK and his co-conspirators misled ARCP’s shareholders and the investing public by falsely representing that ARCP’s AFFO per share for the first six months of 2014 was consistent with analysts’ expectations and on track to meet ARCP’s guidance for AFFO per share for calendar year 2014, when in fact, they were not.

*                *                *

BRIAN BLOCK, 44, of Hatfield, Pennsylvania, was convicted of one count of conspiracy to commit securities fraud and other offenses (Count One), one count of securities fraud (Count Two), two counts of making false filings with the SEC (Counts Three and Four), and two counts of submitting false certifications along with required filings with the SEC (Counts Five and Six).  The securities fraud, false filings charges, and false certification charges each carry a maximum prison term of 20 years.  The charge of conspiracy carries a maximum prison term of five 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 defendants will be determined by a judge. 

Mr. Kim praised the investigative work of the FBI and also thanked the SEC.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais, Edward Imperatore, and Daniel Tehrani 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., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a criminal Complaint in Manhattan federal court charging RENWICK HADDOW, a British citizen, with engaging in schemes to defraud victims by soliciting, through material misrepresentations, and misappropriating investments in companies created by HADDOW called Bitcoin Store Inc. (“Bitcoin Store”) and Bar Works Inc. (“Bar Works”) as well as related entities HADDOW controlled.  HADDOW remains at large.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, Renwick Haddow misled investors about critical facts, including the performance and operations of companies he controlled, in order to get them to invest more than $36 million.  Haddow also allegedly used the alias ‘Jonathan Black’ to disguise his connection to the companies, and then allegedly misappropriated investors’ money for his own use.  Along with our partners at the FBI and SEC, we will continue to root out fraud schemes perpetrated on investors.”

Assistant Director-in-Charge William F. Sweeney Jr. said:  “While seeking investor funding for his purported start-up companies, Haddow allegedly misrepresented key elements of their performance, operations, and management. The alleged twisting of facts not only involved concealing his financial interests, but also his true identity.  And just as Haddow adopted an alias to hide behind, so, too, did he disguise the true state of the businesses he controlled.  But, as alleged, it appears it was all smoke and mirrors—until today.”

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

RENWICK HADDOW is a citizen of the United Kingdom  From November 2014 through June 2017, HADDOW solicited investments in start-up companies he created and controlled, including Bitcoin Store — a purported online platform for purchasing, selling, and storing the digital currency known as “Bitcoin”—and Bar Works, which purports to be a company that adapts former restaurants, bar premises, and other locations into co-working spaces. When doing so, HADDOW made material misrepresentations about, among other things, the management, operations, and historical performance of those companies.

For example, HADDOW concealed his interest in Bitcoin Store and fabricated the purported “experienced team of leading investment professionals” working at the company.  In connection with Bar Works, HADDOW adopted the alias “Jonathan Black” to further hide his role in the schemes.  HADDOW claimed that “Jonathan Black” had an extensive background in finance and had a role in setting up “Car Share,” a car-sharing app.

HADDOW solicited investments through his control of InCrowd Equity Inc. (“InCrowd”), which represented itself as a type of crowdfunding portal through which investors could purchase shares of start-ups supposedly vetted by InCrowd.  HADDOW did so without disclosing to investors that he had an ownership interest in both InCrowd, on the one hand, and Bitcoin Store and Bar Works, on the other.  HADDOW also misappropriated without permission funds purportedly invested in Bitcoin Store and Bar Works for his own use and the use of others.

*                      *                      *

RENWICK HADDOW, 48, of the United Kingdom, has been charged in the Complaint with two counts of wire fraud — one relating to the Bitcoin Store scheme and the other relating to the Bar Works scheme.  Each charge carries a maximum prison term of 20 years.

Mr. Kim praised the investigative work of the FBI and thanked the Securities and Exchange Commission, which has brought civil actions against the defendant, for its assistance.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Vladislav Vainberg, Justin V. Rodriguez, and Brooke E. Cucinella are in charge of the prosecution.   

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

“For over a decade, hiding in plain sight, this 36-story Manhattan office tower secretly served as a front for the Iranian government and as a gateway for millions of dollars to be funneled to Iran in clear violation of U.S. sanctions laws. In this trial, 650 Fifth Avenue’s secret was laid bare for all to see, and today’s jury verdict affirms what we have been alleging since 2008: that through all the efforts to sanction and isolate Iran, a state sponsor of terrorism, the owners of 650 Fifth Avenue gave the Iranian government a critical foothold in the very heart of Manhattan through which Iran successfully circumvented U.S. economic sanctions. The jury’s verdict finding forfeitable a building valued at over $500 million dollars, as well as other real estate and funds, represents the largest civil forfeiture jury verdict and the largest terrorism-related civil forfeiture in U.S. history. This verdict not only vindicates the exemplary work of all the career prosecutors and law enforcement partners who have doggedly pursued this case for almost a decade, but importantly, it also allows for substantial recovery for victims of Iran-sponsored terrorism.”

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, the Commissioner of the New York City Police Department (“NYPD”), announced the plea by KENNETH RUDGE, of the Bronx, New York, to firearms charges including RUDGE’s use of a firearm in the murder of Nelson Dubon on January 21, 2016.

As part of his guilty plea, RUDGE admitted to shooting and killing Nelson Dubon, a victim of RUDGE’s robbery plot, on Park Avenue near 187th Street at an underground billiards hall, in the course of a narcotics-related robbery. RUDGE further admitted using other firearms in the course of his criminal activities with the YNR drug crew between 2012 and January 2016. RUDGE faces a maximum term of life in prison and a mandatory minimum term of 35 years in prison. RUDGE is scheduled to be sentenced later this year by the Honorable Kimba M. Wood, U.S. District Judge.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As he admitted in court today, Kenneth Rudge repeatedly engaged in gun violence in furtherance of his drug trafficking, including the murder of Nelson Dubon. Four days after the murder, Rudge pistol-whipped a livery driver in a robbery attempt. And even after his arrest, Rudge tried to have fellow gang members find and silence a witness to the murder. Now, thanks to the work of the NYPD and the ATF, Rudge awaits sentencing for his murderous conduct.”

ATF Special Agent in Charge Ashan M. Benedict said: “The defendant engaged in a gratuitous spree of violent crimes including multiple armed robberies and a homicide. is committed to targeting the most violent offenders and their co-conspirators for federal prosecution. I commend the outstanding work of the Special Agents, NYPD Detectives, and Assistant United States Attorneys in securing today’s plea and the prosecution of the defendant’s criminal associates. The residents of New York City are safer today because of their efforts.”

NYPD Commissioner James P. O’Neill said: “We remain deeply focused on those who commit violence and carry firearms in New York City. That focus is no more evident than today’s guilty plea in a 2016 murder of Nelson Dubon in Washington Heights. Thanks to the detectives, agents, and prosecutors who have worked on this case and whose work has resulted in the unprecedented reduction in violence in New York City so far this year.”

According to the charging documents filed in the case, as well as statements made during the plea proceedings and earlier court appearances:

Since at least 2012, a group of young men and women living in the vicinity of 188th Street and Webster Avenue, and referring to itself as “YNR,” engaged in a conspiracy to distribute crack cocaine and heroin to addicts in that area. YNR managed to bring large quantities of crack cocaine and heroin into its neighborhood and to inflict mindless and, ultimately, deadly violence on its community.

RUDGE personally participated in multiple acts of drug-related violence, including:: 1) a robbery in or about 2015, of a marijuana dealer in that marijuana dealer’s apartment, during which a victim was pistol-whipped by one of RUDGE’s co-conspirators; 2) a robbery, in or about 2015, of a marijuana dealer, resulting in a shooting by RUDGE and others to thwart the victim’s attempt to retaliate for that robbery; 3) an attempted armed robbery, on or about January 21, 2016, of a marijuana stash apartment; and 4) a robbery, on or about January 21, 2016, of a narcotics dealer and others located inside a billiards club, during which RUDGE shot and killed Nelson Dubon.

Following his arrest by the NYPD in connection with the murder of Dubon, RUDGE attempted to influence and silence witnesses against him, including by attempting to have other YNR members find and silence an eyewitness to the murder. RUDGE also continued his firearms use and violence in the days after the murder of Dubon, including through the pistol-whipping of a livery cab driver in a failed attempt to rob that person of his fares on or about January 25, 2016, in the Bronx.

* * *

Mr. Kim praised the outstanding work of the NYPD and ATF for their investigative efforts and ongoing support and assistance with the case.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and David E. Beach, Special Agent-in-Charge of the New York Field Office of the U.S. Secret Service (“USSS”), announced today the unsealing of charges against JAMES BECKISH, RICHARD WITCHER, JAMES TONER, PETER O’BRIEN, and JOSEPH ANTHONY DEMARIA for their respective roles in operating a series of companies between 2013 and 2016 that were used as a cover to place approximately $28 million of unauthorized charges on thousands of consumers’ credit cards.  The websites of the defendants’ companies purported to sell products like dietary supplements but, in reality, were primarily used to repeatedly bill consumers who never ordered their products, or even if they did, almost never received them.  All of the defendants were arrested today and presented before Magistrate Judges in the District of New Jersey, the Middle District of Florida, and the Southern District of Florida.

Acting Manhattan U.S. Attorney Joon H. Kim said: “These defendants allegedly created and operated more than 100 companies that specialized in one service: ripping off consumers and credit card companies.  By allegedly billing consumers for dietary supplements they didn’t order or receive, the defendants reaped millions of dollars, affecting thousands of consumers and leaving credit companies holding the bag.  Thanks to the U.S. Secret Service, this scheme is over.”

Secret Service Special Agent-in-Charge David E. Beach said:  “The Secret Service is committed to aggressively investigating these offenses.  Emerging technologies and cyber capabilities enable criminal networks to evolve and significantly impact financial markets. This case is another example of the transnational investigative capabilities of the United States Secret Service. Our developed partnerships with other federal, state and local law enforcement agencies as well as private sector stakeholders, enables us to focus our resources to uncover, investigate and prevent these crimes more effectively.”

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

Between 2013 and 2016, BECKISH, WITCHER, TONER, O’BRIEN, DEMARIA and others, created and operated more than 100 companies that purported to sell dietary supplements and similar products called “nutraceuticals.”  Although the companies were purportedly distinct, they nonetheless marketed similar products on websites that contained similar photographs, were hosted by the same entity, had similar typographical errors, and used the same or nearly identical JavaScript coding.  These websites were used by the defendants and others to serve as justification for unauthorized and recurring charges that were placed on tens of thousands of credit card numbers that the defendants had illicitly purchased or obtained, or had acquired from consumers who had attempted to order the products in question.  For example, in one email between TONER and BECKISH in October 2013, TONER stated that they could simply charge unsuspecting customers by falsely “say[ing] they opted in online for something.”  In total, more than $28 million in fraudulent charges were placed during the duration of the scheme.  

BECKISH, WITCHER, TONER, O’BRIEN, DEMARIA, and others created these different companies and websites, moreover, because they knew that credit card processors would stop doing business with them over time as consumers noticed the unauthorized charges and sought refunds.  These refunds, called “chargebacks” by credit card processors, are generally low for legitimate businesses but reached extremely high percentages for many of the companies associated with the defendants’ scheme.  In certain instances, the chargeback rates quickly approached or even exceeded 20 percent – that is, consumers were seeking refunds of more than 20 percent of the charges placed by certain of the defendants’ companies.  Credit card processors, in turn, paid millions of dollars in refunds for fraudulent charges associated with the defendants’ companies between 2013 and 2016 in attempts to refund affected consumers.

* * *

BECKISH, WITCHER, TONER, O’BRIEN, DEMARIA are each charged with one count of conspiring to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.  In addition, they each are charged with one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison.  The charges also carry a maximum fine of $250,000, or twice the gross gain or loss from the offenses. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.

Mr. Kim praised the investigative work of the USSS and expressed his gratitude for the assistance of the Offices of the United States Attorney in the District of New Jersey, the Southern District of Florida, and the Middle District of Florida.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Danielle Sassoon and Robert Allen 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 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 Melinda K. Plaisier, Associate Commissioner for Regulatory Affairs of the Food and Drug Administration (“FDA”), announced today the filing of a Complaint and the entry of a Consent Decree against defendants SMOKEHOUSE OF NEW YORK, LLC (“Smokehouse”), its director of operations, BRETT H. PORTIER (“Portier”), and its president and owner, PANAGIOTA SOUBLIS (“Soublis”), for violations of the Food, Drug, and Cosmetic Act and related food-safety regulations at Smokehouse’s Mamaroneck facility, where the defendants prepare and sell fish products and other specialty foods to consumers across the country. 

Acting U.S. Attorney Joon H. Kim stated:  “We will not let businesses put profits over public health.  Smokehouse, Portier, and Soublis have repeatedly put their customers at risk of severe illness.  Our Complaint and today’s Consent Decree hold them accountable and require them to clean up their operations and protect the public.”

FDA Associate Commissioner for Regulatory Affairs Melinda K. Plaisier said:  “The Smokehouse of NY has had several opportunities to come into compliance with the law.  Through the use of modern technology, the FDA was able to establish that the company has resident strains of Listeria in its facility that it has consistently failed to eradicate.  Conditions like these are unacceptable and the FDA took action to protect Americans.” 

According to the Complaint filed Monday in White Plains federal court:

Listeria monocytogenes (“Listeria”) is a bacterium that can be very harmful to human health.  In the general population, it can cause severe flu-like symptoms and, in extreme cases, confusion, loss of balance, and convulsions.  For pregnant women, it can cause miscarriage, stillbirth, premature delivery, or life-threatening infection of the newborn.

The defendants have repeatedly failed to operate their packaged fish business in compliance with food and safety standards set by FDA.  As a result, the FDA has repeatedly found Listeria in their facility.  Although the defendants previously have proposed to undertake corrective measures to address the Listeria problems at their facility, they have failed to fix the problem:  An FDA inspection conducted between March 8 and April 5, 2017, again found Listeria at various locations within the facility, including on direct food-contact surfaces. 

*                *                *

In the Consent Decree entered today, Smokehouse, Portier, and Soublis admit, acknowledge, and accept responsibility for the following:

• The defendants failed to manufacture, package, and store food under conditions and controls necessary to minimize the potential for microorganism growth and contamination.

• At each of five inspections conducted by FDA between 2011 and 2015, FDA found Listeria in the facility, including on a food-contact surface and in packaged, ready-to-eat food.

• Following the 2011-2015 inspections, the defendants took a number of corrective actions that they stated would address the conditions found by investigators.

• However, during an FDA inspection between March 8 and April 5, 2017, FDA again found Listeria at the facility, including on food-contact surfaces, including a stainless steel table where food is processed and on a plastic tray used interchangeably to hold raw and finished products.

Pursuant to the Consent Decree, Smokehouse, Portier, and Soublis are enjoined from receiving, preparing, processing, packing, labeling, holding, and/or distributing articles of food until they (1) clean and sanitize their facility; (2) implement appropriate pathogen control and other food safety plans; and (3) implement training programs on proper food hygiene and sanitation for all its employees.  Additionally, the Consent Decree requires Smokehouse, Portier, and Soublis to destroy their current stock of processed food and recall certain food previously sold by them.  The defendants are subject to additional actions by the FDA, including mandated future recalls and shut downs, as well as liquidated damages and costs to cover future necessary inspections and other monitoring actions, if they violate the provisions of the Consent Decree.

Mr. Kim thanked the FDA for its work leading to the Complaint.

This case is being handled by the Office’s Environmental Protection Unit.  Assistant United States Attorney Stephen Cha-Kim is in charge of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that a federal jury today found the 36-story office building at 650 Fifth Avenue (the “Building”), worth at least $500 million, and other real property and bank accounts forfeitable to the United States as proceeds of violations of the Iran sanctions and property involved in laundering the proceeds of those sanctions violations.  The jury’s verdict, which represents the largest civil forfeiture jury verdict and the largest terrorism-related civil forfeiture in United States history, came after a five-week trial before the Honorable Katherine B. Forrest.

Acting U.S. Attorney Joon H. Kim said:  “For over a decade, hiding in plain sight, this 36-story Manhattan office tower secretly served as a front for the Iranian government and as a gateway for millions of dollars to be funneled to Iran in clear violation of U.S. sanctions laws.  In this trial, 650 Fifth Avenue’s secret was laid bare for all to see, and today’s jury verdict affirms what we have been alleging since 2008: that through all the efforts to sanction and isolate Iran, a state sponsor of terrorism, the owners of 650 Fifth Avenue gave the Iranian government a critical foothold in the very heart of Manhattan through which Iran successfully circumvented U.S. economic sanctions.  The jury’s verdict finding forfeitable a building valued at over $500 million dollars, as well as other real estate and funds, represents the largest civil forfeiture jury verdict and the largest terrorism-related civil forfeiture in U.S. history.  This verdict not only vindicates the exemplary work of all the career prosecutors and law enforcement partners who have doggedly pursued this case for almost a decade, but importantly, it also allows for substantial recovery for victims of Iran-sponsored terrorism.”

According to the allegations contained in the Complaint, Amended Complaint, and other filings in this case, and the evidence presented in Court during the trial:

Overview

The International Emergency Economic Powers Act (AIEEPA@) confers upon the President the authority to take certain actions, defined in 50 U.S.C. Section 1702, in response to declared national emergencies.  Since 1995, the President has declared national emergencies with respect to the actions and policies of the Government of Iran through a series of Executive Orders.  The Treasury Department’s Iranian Transactions Regulations (“ITR”), and Weapons of Mass Destruction Proliferators Sanctions Regulations, implement these Executive Orders.  Pursuant to these Orders, and regulations, the provision of services to the Iranian Government has been illegal since 1995.

From before 1995 until the filing of the Government’s civil forfeiture action in 2008, the Alavi Foundation (“Alavi”), Assa Corp. (“Assa”), and the 650 Fifth Avenue Company, a partnership between Alavi and Assa to own the Building (the “Partnership”) were controlled by and provided numerous services to the Government of Iran, including managing the Building for the Iranian Government, running a charitable organization for the Iranian Government, and transferring rental income funds from the Partnership to Bank Melli, an Iranian owned government bank.

Alavi and the Building

Alavi is a New York non‑profit organization originally created by the Shah of Iran in the 1970s, under the name the Pahlavi Foundation, to pursue Iran’s charitable interests in the United States.  The Building was constructed in the 1970s by Alavi, financed by a substantial loan from Bank Melli Iran (“Bank Melli”).

Following the Iranian revolution of 1979, the Islamic Republic of Iran established the Bonyad Mostazafan, also known as the Bonyad Mostazafan va Janbazan (“Bonyad Mostazafan”), to centralize, take possession of, and manage property expropriated by the revolutionary government.  The Bonyad Mostazafan was created in or about March 1979 by order of the Ayatollah Khomeini and approved by the Revolutionary Council of the Islamic Republic of Iran, and is controlled by the government of Iran.  The Bonyad Mostazafan sought to take control of the Shah’s property, including the assets of the Pahlavi Foundation.  The Bonyad Mostazafan reports directly to the Ayatollah.  The Bonyad Mostazafan assumed control of Alavi shortly after the revolution.

The Creation of Assa and the Partnership

In 1989, Alavi and Bank Melli formed the Partnership in order to avoid paying federal taxes on rental income from the Building.  Bank Melli’s ownership interest in the Partnership, however, was disguised through the creation of two shell companies.  Alavi transferred 35 percent of the Partnership to Assa, an entity wholly owned by Assa Co. Ltd. Assa Co. Ltd. is a Jersey, Channel Islands, United Kingdom, entity owned by Iranian citizens who represent the interests of Bank Melli.  In conjunction with the transfer of the 35 percent interest in the Partnership to Assa, Bank Melli cancelled its loan on the Building. Several years later Assa received an additional 5 percent, leaving Alavi owning 60 percent of the Partnership, and Bank Melli owning 40 percent of the Partnership, through Assa and Assa Co. Ltd.

The decision to convert Bank Melli’s mortgage on the Building into a partnership interest in the Partnership was discussed and approved by high-level Iranian government officials.  Among others, the head of the Bonyad Mostazafan (also the Deputy Prime Minister of Iran), the Office of the Prime Minister of Iran, the director of the Central Bank of Iran, and the general director of Bank Melli, as well as other Bonyad Mostazafan and Bank Melli officials, discussed and approved the partnership between Alavi and Bank Melli.  After Alavi and Assa Corp. entered into the partnership agreement, a Bonyad Mostazafan official forwarded the agreement to the head of the Bonyad Mostazafan, noting that “the partnership is based on prior agreements between the Ministry of Finance, Bank Melli Iran, and the Bonyad Mostazafan, with the only change being the building will be valued at two million dollars less than as previously agreed. . . .”

The Partnership continued to distribute rental income from the Building to Bank Melli, concealed by the use of Assa as an intermediary, after it became illegal with the imposition of Iranian sanctions in 1995.

The Government of Iran’s Continued Control over Alavi

The Iranian Government’s control of Alavi continued after the creation of the Partnership and the imposition of the sanctions against Iran.

In 1991, the Supreme Leader of Iran, the Ayatollah Ruhollah Khomeini ordered that control of Alavi be transferred from the Bonyad Mostazafan to the Iranian Ambassador to the United Nations.  According to the minutes of a May 16, 1991, board meeting held in Zurich, Switzerland, the head of the Bonyad Mostazafan explained that, as directed by the Supreme Leader, several board members were to resign.  In a letter, Alavi’s president described how, a few days later, Ambassador Kamal Kharrazi called the president and another board member to his office.  The Ambassador said that “the Foundation from here on out is under the oversight of Haj Agha, not Mr. Rafighdoost [then the head of the Bonyad Mostazafan]. . . . [F]rom now on, the role of the Managing Director and the role of the Board of Directors will be just a formality and he [the Ambassador] will be conducting all of its [the Foundation’s] affairs.”  The president of Alavi then wrote a letter to the Ayatollah cautioning that although the Ambassador’s “appointment to a position of responsibility connected to the Foundation’s affairs presents enormous political, security, and economic dangers, we feel assured that the Supreme Leader has made this decision with discernment, unique insight, and a thorough knowledge of all pertaining aspects.”  In July 1991, the president resigned his position and he was replaced that August by an individual who served as president until the summer of 2007.

In 1992, Alavi’s new president met in New York and in Tehran with Bank Melli officials concerning $1.7 million in real estate taxes owed by the Partnership and $2.2 million in unpaid distributions owed by the partnership to Assa.  The Tehran meeting was attended by a Bank Melli board member, the head of Bank Melli’s Overseas Network Supervisory Department, the head of Bank Melli’s New York branch, and the head of Bank Melli’s Foreign Affairs.  The head of the board of directors and managing director of Bank Melli forwarded the minutes of the Tehran meeting to the head of the Bonyad Mostazafan along with a cover letter stating, among other things, that “It is hoped that your firm instructions and the extra attention of the brothers from that esteemed Foundation, who are responsible for the Alavi Foundation of New York, will resolve the partnership’s mutual problems quickly . . . .”

Iranian Ambassadors to the U.N. continued to direct the affairs of Alavi and to attend meetings of Alavi’s board.  In the late 1990s, two Bank Melli employees sought Ambassador Kharrazi’s permission for Assa to sell its interest in the Partnership. The Ambassador informed Bank Melli that the Building would be sold when the real estate market improved.  In 2004, Ambassador Javad Zarif directed Alavi to settle a lawsuit that threatened to expose Assa’s ownership by Bank Melli and Alavi’s relationship with the Government of Iran for $4 million, and then caused these settlement proceeds to be distributed through other New York real estate companies to officials at Iranian Embassies in Europe.

In October 2007, Alavi Foundation board members met with Ambassador Mohammad Khazaee and a former Iranian government official to address issues relating to the Building’s management and Alavi’s charitable services.  According to notes taken by a board member, the Ambassador stated, among other things, that it was necessary to increase the profit from the Building; the Ambassador was worried about Assa’s 40 percent share; the Foundation should only allocate to Shiites; and that the Ambassador would determine the composition of the board.  The Ambassador ordered a study about the possibility of increasing the Foundation’s revenue and profit, stating that a business plan and comparative analysis had to be done.  The Ambassador instructed: “I have to definitely see the proposed allocations before a final decision is reached. I have to be kept informed and I have to be able to state my opinion in order for you to make a decision.”  The Ambassador told the board members that “[i]f there is an issue that needs to be conveyed to Tehran, let me know, I will convey it.”

On December 19, 2008, Farshid Jahedi, who at the time was the president of Alavi, was arrested for obstruction of justice for allegedly destroying documents required to be produced under a grand jury subpoena concerning Alavi’s relationship with Bank Melli Iran and the ownership of the Building. Jahedi pled guilty to obstruction of justice on December 30, 2009.

The Complaints and the Jury Verdict

On December 17, 2008, this Office filed a civil Complaint seeking forfeiture of the 40 percent interest held by Assa in the Partnership.  In the Amended Complaint, filed on November 12, 2009, the United States sought to forfeit all right, title and interest in the Partnership, including Alavi’s 60 percent interest in the company.  The United States also sought to forfeit the contents of bank accounts held by the Partnership, Alavi, and Assa, as well as other real properties owned by Alavi.

After a five-week trial, the jury found that both IEEPA violations and money laundering had been committed, and that all but one of the defendant properties were fully or partially forfeitable as result.  Specifically, the jury found the Building and Alavi’s share in the 650 Fifth Avenue Partnership, along with the contents of bank accounts containing in excess of a million dollars, forfeitable in their entirety as a result of their involvement in money laundering. The jury also found certain portions of properties owned by Alavi in Queens, New York; Houston, Texas; Carmichael, California; and Rockville, Maryland partially forfeitable to the United States as proceeds of IEEPA violations and properties traceable to properties involved in money laundering, in the following amounts:

Alavi Foundation Property

Percentage Found Forfeitable

Queens, NY

44%

Houston, TX

15%

Rockville, MD (two properties)

17%

Carmichael, CA

7%

The jury also found Alavi’s share in the 650 Fifth Avenue Partnership entirely forfeitable, and the Building partially forfeitable, as the proceeds of an IEEPA violation in addition to both being entirely forfeitable as property involved in money laundering.

Judge Forrest had previously ruled, on September 11, 2013, that Assa was a front company for Bank Melli Iran and that Assa’s interests in the Partnership and the Building also subject to forfeiture.

Claims against the defendant properties brought by private parties holding terrorism-related judgments against the Government of Iran were also resolved against Alavi and the 650 Fifth Avenue Partnership in a separate ruling issued by Judge Forrest today.

*             *             *

Mr. Kim praised the investigative work of the Federal Bureau of Investigation (“FBI”), the Internal Revenue Service - Criminal Investigation Division, the New York FBI Joint Terrorism Task Force, and the Police Department of the City of New York.  He also thanked the Counterterrorism Section of the Department of Justice National Security Division and the Manhattan District Attorney’s Office for their assistance in this case.

This case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant United States Attorneys Michael D. Lockard, Martin S. Bell, and Daniel M. Tracer are in charge of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ORANE NELSON, a/k/a “Amaze,” 28, was sentenced this morning in Manhattan federal court to a prison term of 65 years for murdering Jennifer Rivera and Jason Rivera on January 16, 2013, in the Bronx, in connection with a dispute over a drug debt, as well as for narcotics conspiracy and firearms possession charges.  At the time of the murders, Jennifer Rivera was 20 years old, and Jason Rivera was 30.  NELSON was sentenced by U.S. District Judge Denise L. Cote, who presided over a two-week jury trial earlier this year at which NELSON was convicted on all counts in the controlling indictment.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Orane Nelson executed two people in cold blood, including a young woman who was murdered simply because she was a witness to Nelson’s crimes. For his terrible crime, Nelson has been sentenced to 65 years in federal prison. Although this prosecution and sentence will not bring the victims back to their families, we and our law enforcement partners at the FBI and the NYPD hope that it brings some measure of justice to them.”

According to court papers and evidence admitted at trial:

From 2011 to 2013, ORANE NELSON, a/k/a “Amaze,” was a crack dealer in the Bronx who also carried guns to protect his drug business.  In January 2013, NELSON had a dispute with Jason Rivera over a drug debt owed by NELSON.  Following the dispute, NELSON decided to murder Jason Rivera, and lured Jason Rivera out to a location in the Bronx with the promise of money to be paid for the debt owed.  Jason Rivera brought along his cousin, Jennifer Rivera, who was not involved in any drug trafficking activities, to pick up the money promised by NELSON.  Shortly after midnight, NELSON and an accomplice entered Jason Rivera’s vehicle, and minutes later executed both Jason Rivera and Jennifer Rivera by shooting them each in the head at close range.  Jennifer was killed because she was a witness to the murder of Jason Rivera.

Acting U.S. Attorney Kim praised the FBI and the NYPD for their outstanding work in this investigation.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Jared Lenow and Jessica Feinstein are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ANTHONY R. MURGIO was sentenced today by U.S. District Judge Alison J. Nathan to 66 months in prison for charges associated with operating Coin.mx, an internet-based Bitcoin exchange, through which MURGIO processed more than $10 million in illegal Bitcoin transactions. MURGIO pled guilty on January 9, 2017, to conspiring to operate an unlicensed money transmitting business, conspiring to commit wire fraud and bank fraud, and conspiring to obstruct an examination of the Helping Other People Excel Federal Credit Union (“HOPE FCU”) by the National Credit Union Administration (“NCUA”) in furtherance of the illegal Coin.mx scheme.

Acting U.S. Attorney Joon H. Kim said: “Anthony Murgio’s criminal business model consisted of a phony front company hiding an illegal internet Bitcoin exchange. Murgio laundered money, lied to banks, and took over a federal credit union to further his scheme. Murgio’s was an age-old fraud by new age means. And for his crimes, the court has sentenced him to over five years in federal prison.”

According to the Superseding Indictment to which MURGIO pled guilty, statements made during the plea and sentencing proceedings, and evidence admitted at a trial of two co-defendants:

The Unlawful Bitcoin Exchange

Between 2013 and July 2015, MURGIO knowingly operated Coin.mx, an unlawful internet-based Bitcoin exchange that he had founded, in violation of federal anti-money laundering laws and regulations, including those requiring money services businesses like Coin.mx to meet state licensing and federal registration requirements set forth by the United States Treasury Department. MURGIO and his co-conspirators engaged in substantial efforts to evade detection of their unlawful Bitcoin exchange by operating through a phony front company called the “Collectables Club.” MURGIO used the Collectables Club to open financial accounts in order to trick financial institutions into believing the unlawful Bitcoin exchange was simply a members-only association of individuals who discussed, bought, and sold collectible items and memorabilia.

In addition to lying to banks to open accounts, MURGIO and his co-conspirators deceived financial institutions by deliberately misidentifying and miscoding Coin.mx customers’ credit and debit card transactions, in violation of bank and credit card company rules and regulations. MURGIO and his co-conspirators also instructed Coin.mx customers to mislead banks about the nature of the credit and debit card transactions the customers executed through Coin.mx. For example, MURGIO and his co-conspirators caused customers to mislead banks by reporting that the transactions in which they engaged with Coin.mx were for collectibles items, when in reality they were for Bitcoin. Through the illegal Coin.mx scheme, MURGIO and his co-conspirators caused more than $10 million in Bitcoin-related transactions to be processed illegally through financial institutions.

The Federal Credit Union Scheme

In 2014, in an effort further to evade scrutiny from financial institutions about the nature of the business engaged in by Coin.mx, MURGIO and his co-conspirators gained control of HOPE FCU, a federal credit union in New Jersey with primarily low-income members. After making more than $150,000 in illegal bribes at the direction of Trevon Gross, the then-chairman and CEO of HOPE FCU, MURGIO and his co-conspirators took control of HOPE FCU. With Gross’s assistance, MURGIO installed various co-conspirators on HOPE FCU’s board of directors and transferred Coin.mx’s banking operations to HOPE FCU. Gross also ceded operational control of the credit union to the board members installed by MURGIO. Thereafter, MURGIO and others worked to process tens of millions of dollars of Automated Clearing House (“ACH”) transactions through the credit union without adequate controls, thus putting its financial condition at risk.

MURGIO and his co-conspirators also obstructed an examination of HOPE FCU by the NCUA and made false statements to the NCUA in order to perpetuate MURGIO’s control of the credit union. These included deliberately failing to disclose the bribe payments; misrepresenting the location of Coin.mx-affiliated businesses, including the “Collectables Club,” so as to claim that they were eligible to be members of the credit union and to serve as Board members; and manipulating the accounting at HOPE FCU so as to hide its true financial condition and the fact that it was processing tens of millions of dollars of transactions without adequate controls. HOPE FCU was operated as a captive bank by MURGIO and his co-conspirators until the end of 2014.

In October 2015, the NCUA placed HOPE FCU into conservatorship, and subsequently liquidation.

* * *

In addition to the prison sentence, MURGIO, 33, of Tampa, Florida, was sentenced to three years of supervised release.

All five of MURGIO’s co-defendants have been convicted and have been sentenced or are awaiting sentence by Judge Nathan.

Jose M. Freundt pled guilty on October 13, 2016, to operating an unlicensed money transmitting business, conspiring to operate an unlicensed money transmitting business, making corrupt payments to an officer of a financial institution, conspiring to make corrupt payments to an officer of a financial institution, wire fraud, and conspiring to commit wire fraud. Freundt is scheduled to be sentenced on September 15, 2017.

Michael J. Murgio pled guilty on October 27, 2016, to conspiring to obstruct an NCUA examination of a financial institution, and was sentenced on January 27, 2017, to one year of probation and a $12,000 fine.

Ricardo Hill pled guilty on January 17, 2017, to operating an unlicensed money transmitting business; conspiring to operate an unlicensed money transmitting business; making corrupt payments to an officer of a financial institution; conspiring to make corrupt payments to an officer of a financial institution, to receive corrupt payments by an officer of a financial institution, to obstruct an NCUA examination of a financial institution, and to make false statements to the NCUA; wire fraud; bank fraud; and conspiring to commit wire fraud and bank fraud. Hill is scheduled to be sentenced on July 17, 2017.

Trevon Gross and Yuri Lebedev were convicted after trial by a jury on March 17, 2017, of conspiring to make corrupt payments to an officer of a financial institution, to receive corrupt payments by an officer of a financial institution, to obstruct an NCUA examination of a financial institution, and to make false statements to the NCUA. Gross was also convicted of the receipt of corrupt payments by an officer of a financial institution. Lebedev was also convicted of making corrupt payments to an officer of a financial institution, wire fraud, bank fraud, and conspiring to commit wire fraud and bank fraud. Gross and Lebedev are scheduled to be sentenced on September 1, 2017.

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation and the United States Secret Service. He also thanked the NCUA for its assistance with the investigation and prosecution.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Eun Young Choi, Daniel S. Noble, and Won S. Shin are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York,  Irving Picard, the Securities Investor Protection Act (“SIPA”) Trustee, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), today announced the recovery of more than $23 million in assets from the Estates of Andrew and Mark Madoff, and from Mark Madoff’s widow, Stephanie Mack, representing funds transferred to them by Bernard Madoff.  A Stipulation and Order of Settlement effecting the recovery was signed yesterday by U.S. District Judge P. Kevin Castel.  The assets will be liquidated and distributed to victims either through the Madoff Victim Fund, which was established by the Department of Justice, or through the BLMIS Customer Fund, which is administered and the SIPA Trustee.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “To date, this Office has recovered more than $9 billion in funds for victims of Bernard Madoff’s fraud. Today’s agreement, one of the final pieces in the Government’s eight-year effort to provide justice for Madoff’s victims, demonstrates our commitment not only to holding wrongdoers accountable, but also compensating victims of criminal fraud.”

SIPA Trustee Irving Picard said:  “Today’s announcement is the culmination of years of ongoing investigations by our legal teams and our negotiations with the Madoff family. The outcome marks another significant milestone in the eight years of the Madoff Recovery Initiative, during which we have recovered or reached agreements to recover more than $11.5 billion and distributed more than $9 billion to Madoff’s victims.”

FBI Assistant Director William F. Sweeney Jr. said:  “The investment scheme of Madoff’s was so devastating to so many investors who trusted his firm with their money. Today’s announcement of more than $23 million recovered is another small step we can take to try to make things right for the victims of Madoff’s massive Ponzi scheme.”

According to the Stipulation and Order of Settlement (the “Stipulation”) and other documents filed in connection with the criminal and civil forfeiture cases relating to the Madoff fraud:

For decades, Bernard L. Madoff (“MADOFF”) used his position as Chairman of Bernard L. Madoff Investment Securities (“BLMIS”), the investment advisory business he founded in 1960, to steal billions from his clients.  On March 12, 2009, MADOFF pled guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family, and select members of his inner circle. 

MADOFF’s sons, Andrew and Mark Madoff (“ANDREW” and “MARK”), worked for MADOFF at BLMIS, amassing substantial assets from their employment there.  To fuel their luxurious lifestyle, MADOFF frequently provided money to members of his family, including millions of dollars to ANDREW and MARK.  As part of these transfers, ANDREW and MARK issued a series of seven promissory notes, with face value of $28.15 million in total (the “Notes”), to MADOFF, promising to repay the money provided by MADOFF, with interest, after the period of years specified in each Note.  Included in this amount is one Note for $6.5 million that was co-signed by MARK’s wife, Stephanie Mack (“MACK”).   

Following MADOFF’s arrest, his property was seized.  On June 29, 2009, United States District Judge Denny Chin sentenced MADOFF to 150 years in prison for running the largest fraudulent scheme in history.  Describing MADOFF’s crimes as “extraordinarily evil,” Judge Chin ordered MADOFF to forfeit $170,799,000,000 as part of MADOFF’s sentence.  In a final order of forfeiture dated February 16, 2016, Judge Chin ordered the Notes forfeited to the United States.

MARK passed away in 2010, and ANDREW passed away in 2014.  The Stipulation resolves the Government’s claims against the Estates of ANDREW and MARK (the “ESTATES”) and MACK based on the Notes, as well as various claims asserted against them by the SIPA Trustee.  Pursuant to the terms of the Stipulation, the agreement must also be approved by U.S. Bankruptcy Judge Stuart M. Bernstein, who oversees the SIPA Trustee’s efforts in bankruptcy court. 

The Stipulation requires the ESTATES and MACK to relinquish cash, securities, and liquid assets worth a total of more than $23 million, as well as various interests in additional corporate assets held by the ESTATES.  These additional corporate assets will be liquidated and the proceeds added to the total recovery.  The total recovery will be split evenly between the Government and the SIPA Trustee, and then distributed to victims of the Madoff fraud. 

The Government’s portion will be distributed to victims through the Madoff Victim Fund.  The Madoff Victim Fund is funded through recoveries by the U.S. Attorney’s Office in various criminal and civil forfeiture actions, and is overseen by Richard Breeden, the former Chairman of the United States Securities and Exchange Commission, in his capacity as Special Master appointed by the Department of Justice to assist in connection with the victim remission proceedings. 

Mr. Kim praised the work of the Federal Bureau of Investigation and the SIPA Trustee.    

The case is being handled by the Office’s Tax and Bankruptcy Unit and Money Laundering and Asset Forfeiture Unit.  Assistant United States Attorneys Jonathan Cohen, Louis A. Pellegrino, and Niketh Velamoor are in charge of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that TERRANCE WILLIAMS, a/k/a “TA,” was sentenced this afternoon in Manhattan federal court to a prison term of 399 months for his crimes as a member of the “Young Gunnaz” or “YGz” gang, including the murder of Curtis Smith on June 3, 2011, in the Bronx.  WILLIAMS was sentenced by U.S. District Judge Valerie E. Caproni, before whom he previously pled guilty.

Acting Manhattan U.S. Attorney Joon H. Kim said: “In broad daylight, Terrance Williams shot and killed Curtis Smith, a 23-year-old man, ending the life of an innocent bystander who was simply in the wrong place at the wrong time. We hope that the victim’s family finds justice, and a measure of solace, in this prosecution and today’s sentence. Together with our law enforcement partners, we will continue aggressively to prosecute those who bring violence to our communities.”

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

WILLIAMS was a member of the Bronx-based street gang known as the YGz.  From at least 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 committing acts of violence, including the murder of rival gang members, rival drug traffickers, and innocent bystanders.  As part of his involvement in the YGz gang, WILLIAMS participated in numerous acts of violence, as well as crack cocaine distribution, in the South Bronx. 

In particular, on July 3, 2011, WILLIAMS shot a rival gang member in the stomach and arm, in broad daylight, in front of a bodega on the corner of 158th Street and Park Avenue while numerous bystanders were outside for cookouts and celebrations leading up to the 4th of July holiday.  Moments later, while WILLIAMS was fleeing from the area, he fired gunshots at a group of bystanders, including Curtis Smith.  WILLIAMS shot Smith in the head, and Smith died several days later. 

* * *

WILLIAMS, 24, of the Bronx, is the third defendant to be sentenced this year by Judge Caproni for participation in a YGz-related murder.  Judge Caproni sentenced WILLIAMS’s co-defendant Anthony Scott, a/k/a “Tyson,” to 23 years in prison primarily for Scott’s role in shooting and killing Darrel Ledgister on June 27, 2009, in the South Bronx during an attempted robbery.  Judge Caproni also sentenced WILLIAMS’s co-defendants Paul Gilbert, a/k/a “2Fly Tay,” to more than 30 years in prison primarily for Gilbert’s role in the murder of Cody Dubose on September 27, 2014, near the Taft Houses in Manhattan during an attempted robbery.     

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 LAJBAR LAJAWARD KHAN, a/k/a “Haji Lajaward,” and AMAL SAID SAID ALAM SHAH, a/k/a “Haji Zar Mohammad,” pled guilty to conspiring to import heroin into the United States, and to distributing heroin intending that the heroin would be imported into the United States. LAJAWARD and SAID pled guilty earlier today to a Superseding Indictment in Manhattan federal court before U.S. District Judge Kimba M. Wood.

Acting U.S. Attorney Joon H. Kim said: “As these two defendants admitted today, they conspired and attempted to import heroin into the United States from Afghanistan. Indeed, as the investigation revealed, they intended to import so much heroin into the United States from Afghanistan that their ‘sample’ shipment, meant as a test run for future shipments to the U.S., was three kilograms of heroin. We will continue to work with the DEA to curb the importation of heroin, a lethal drug that plagues every community right now.”

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

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

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

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

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

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

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

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

* * *

LAJAWARD, 52, of Afghanistan, and SAID, 46, also of Afghanistan, each pled guilty to one count of conspiring to import one kilogram and more of heroin into the United States, and to one count of distributing or attempting to distribute one kilogram and more of heroin, knowing and intending that it would be imported into the United States. LAJAWARD and SAID each face a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge. Sentencing is scheduled for November 1, 2017, at 3:30 p.m., before Judge Wood.

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

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Rebekah Donaleski and George D. Turner are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that a federal jury late yesterday found COREY BROWN guilty of murder in aid of racketeering, conspiracy to commit murder in aid of racketeering, racketeering conspiracy, and firearms charges, and found JOSNEL RODRIGUEZ guilty of conspiracy to commit murder in aid of racketeering and racketeering conspiracy.   

Acting U.S. Attorney Joon H. Kim said:  “As a unanimous jury found after trial, Corey Brown ordered the murder of Vincent Davis, a rival gang member, and Josnel Rodriguez participated in that murder. Sex Money Murder has terrorized residents of the Bronx with years of drug dealing, gang violence, and murder. This prosecution ensures that Brown and Rodriguez will no longer be able to do so. We will continue to be relentless in working to make our communities safer by investigating and prosecuting gang violence.”   

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

Between 2011 and 2016, BROWN and RODRIGUEZ were members of Sex Money Murder, a gang that operates mainly in and around several housing developments in the Bronx, New York. Sex Money Murder (“SMM”) members enriched themselves by selling drugs, such as crack cocaine, cocaine, heroin, and marijuana, and engaged in acts of violence, including murder.  BROWN, who was a leader of Sex Money Murder, ordered the murder of fellow gang member Vincent Davis.  On or about July 15, 2012, JOSNEL RODRIGUEZ and another SMM member participated in the murder of Vincent Davis, in the vicinity of 566 Pugsley Avenue, Bronx, New York, in order to maintain, and increase, their standing within SMM. 

Mr. Kim thanked the Federal Bureau of Investigation and the New York City Police Department for their work on the investigation.   

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Margaret Graham, Brooke Cucinella, and Jordan Estes are in charge of the prosecution. 

Saddam Mohamed Raishani, a/k/a “Adam Raishani,” 30, of the Bronx was arrested last night at John F. Kennedy International Airport (“JFK Airport”) in Queens, New York. Raishani was charged by a criminal Complaint earlier today with attempting to provide material support to the Islamic State of Iraq and al-Sham (“ISIS” or the “Islamic State”), a designated foreign terrorist organization. Raishani is expected to be presented later today before Magistrate Judge James L. Cott in Manhattan federal court.

Acting Assistant Attorney General for National Security Dana 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.

“According to the complaint, Raishani attempted to travel overseas to join ISIS and to provide material support to the designated terrorist organization,” 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 attempt 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, Saddam Mohamed Raishani, a Bronx man, plotted to travel to Syria to join and train with the terrorist organization ISIS,” said Acting Manhattan U.S. Attorney Kim. “Having already helped another man make that trip to ISIS’s heartland, Raishani allegedly acted on his own desire to wage violent jihad, planning to leave his family and life in New York City for the battlefields of the Middle East. Thanks to the excellent work of the FBI and NYPD, Raishani’s alleged plan to support this deadly terrorist organization was cut short at the airport and now he will face federal terrorism charges.”

“This case is another alleged instance of the nature of the terrorism threat and its reach into communities here at home,” said Assistant Director in Charge Sweeney Jr. “It is also a great example of the coordination which exists among local and federal law enforcement partners who work together to stop these alleged threats and interdict individuals allegedly determined on joining a terrorist organization intent on conducting violence around the globe. The FBI’s JTTF will continue to work with our partners, both here and abroad, to prevent acts of terrorism.”

“As we have seen many times before, allegedly attempting to join a designated terrorist organization usually has one outcome: arrest,” said Commissioner O’Neill. “Thank you to the NYPD detectives and FBI agents who, through the original Joint Terrorism Task Force, remain relentless in their focus to keep New York City safe.”

As alleged in the criminal Complaint,[1] filed today in Manhattan federal court:

In January 2017, Raishani contacted an individual who was, unbeknownst to Raishani, a confidential source working at the direction of law enforcement (the “CS”). During a meeting with the CS, Raishani told the CS that Raishani had a friend (“Person-1”), who had left New York to join the Islamic State some time ago.[2] Raishani told the CS that prior to Person-1’s departure, Raishani took Person-1 shopping to buy supplies to bring to the Islamic State. Riashani also said to the CS that, on the day of Person-1’s departure, Raishani gave money to Person-1 and drove Person-1 to JFK Airport. In later meetings with the CS, Raishani expressed his regret at not having traveled with Person-1 to join ISIS. Raishani also indicated his desire to wage jihad and his belief that the Quran can be read to justify the violence, including beheadings, engaged in by ISIS.   

As part of the investigation, the CS introduced Raishani to an undercover law enforcement officer (“UC-1”), who was posing as an individual who wanted to travel abroad to fight for ISIS. During meetings with the CS and UC-1, Raishani expressed his desire to travel abroad to join ISIS. For example, Raishani stated that he had been in contact with other ISIS supporters and no longer felt comfortable in the United States. He also showed UC-1 a video that appeared to depict ISIS supporters discussing their desire to travel overseas to join ISIS and its ongoing fight. Raishani further showed the CS and UC-1 an ISIS video that appeared to depict ISIS members in Yemen killing civilians who did not support ISIS.   

In addition, Raishani advised the CS and UC-1 as to how they could avoid detection by law enforcement. For example, Raishani advised the CS to cover the camera on the CS’s computer and turn off the computer’s microphone when watching pro-ISIS videos online.  Raishani also advised the CS to use a particular Internet browser (the “Browser”) to hide their online activity, and explained that he used the Browser to watch ISIS and jihadi videos online.  Furthermore, Raishani himself put on gloves when using a laptop and viewing pro-ISIS and pro-jihadi videos online. Moreover, Raishani told UC-1 that if they traveled together to join ISIS, Raishani, a home health aide, could pose as a nurse and UC-1 could pose as a refugee aid worker, in order to cross international borders without being stopped and questioned by authorities. Finally, Raishani told the CS and UC-1 that he (Raishani) had to be careful because he believed that federal authorities were monitoring his activities.

By April 2017, Raishani was actively planning to travel abroad to join ISIS. The CS told Raishani that, through a family acquaintance, the CS might be able to obtain contact information for an ISIS affiliate capable of facilitating travel to join ISIS. In reality, the purported facilitator was an FBI employee acting in an undercover capacity (“UC-2”). In May 2017, Raishani contacted UC-2 and said that he had previously helped another individual travel to join ISIS.  Raishani further told UC-2 that he was seeking guidance for his own “hijrah,” an Arabic term normally used to refer to migration, but which is also used by ISIS supporters to refer to traveling overseas to join ISIS and engage in jihad. In subsequent conversations with the CS, UC-1, and/or UC-2, Raishani stated that he aspired to travel to Syria to join ISIS and that he aimed to travel before the end of Ramadan, an Islamic holy month that runs from approximately May 26 through June 24 this year. He indicated that he would be in contact with UC-2 about his travel. Raishani also stated that if he is “locked up,” he will not care, as “Allah will reward [him] for attempting jihad.”

In June 2017, Raishani told the CS that he was making preparations to leave, including paying off his remaining debts. Subsequently, Raishani and UC-1 purchased clothing that they intended to wear for their training with ISIS. Earlier this week, Raishani revealed to UC-2 his (Raishani’s) intention to meet an ISIS member in Turkey in the next few days, who would facilitate Raishani’s joining the terrorist organization. Raishani also purchased an airline ticket for a flight scheduled to depart on June 21, 2017, from JFK Airport to Istanbul, Turkey, via Lisbon, Portugal. On June 21, 2017, Raishani traveled to JFK Airport, where he was arrested by the FBI after he attempted to board that flight to Lisbon.             *                      *                      *

Raishani, is charged with one count of attempting to provide material support to a designated foreign terrorist organization, 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 a judge. The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

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.

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 National Security Division’s Counterterrorism Section.

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the 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., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the filing of a criminal complaint charging MICHAEL WRIGHT with commodities fraud and wire fraud in connection with WRIGHT’s operation of an investment company, Wright Time Capital Group (“WTCG”). WRIGHT is alleged to have misrepresented to investors the trading performance of WTCG, and, after acquiring investor funds, misappropriating a large portion of those funds for his personal benefit. Additionally, after losing most of the funds he actually invested in foreign currency (“forex”) transactions, WRIGHT allegedly began operating WTCG as a Ponzi scheme, using funds obtained from investors to make payments to other investors. WRIGHT was arrested this morning and will be presented before the U.S. Magistrate Judge James L. Cott later today.

Acting U.S. Attorney Joon H. Kim said: “As alleged, Michael Wright used his investment company as a personal piggy bank and issued fraudulent account statements to cover up foreign exchange trading losses, ultimately operating a classic Ponzi scheme. Thanks to the dedicated work of the FBI, Wright's alleged scheme has been brought to an end and he will now be held to account.”

FBI Assistant Director William F. Sweeney Jr. said: “Wright allegedly lured investors to Wright Time Capital Group by falsely representing his trading performance. Most of the currency received was used for his personal benefit; some of it was actually invested in foreign currency transactions. But when this money was eventually lost, he created another layer in his litany of crimes—a Ponzi scheme. For anyone who thinks they can manipulate people’s investments in this way, we remind you today that’s simply not the case.”

According to the Complaint[1]:

WRIGHT started WTCG in January 2011, and ultimately obtained more than $400,000 from various investors (the “Victims”). While WRIGHT did initially conduct some forex trades on behalf of the Victims, he then began to steal their money, using it to cover his personal expenses, including hotel and travel expenses. From the outset of WTCG, WRIGHT misrepresented to WTCG’s investors the gains he had achieved. WRIGHT claimed in statements to Victims that he had achieved double-digit gains for them through forex trading in WTCG’s first six months of existence. In reality, however, WRIGHT earned little to no money through his forex trading. WRIGHT also operated WTCG as a Ponzi scheme by using the Victims’ funds to make payments to other Victims who were demanding the return of their investments.

* * *

WRIGHT, 30, of Rockville Centre, New York, was arrested this morning in New Jersey. WRIGHT was charged with commodities fraud, which carries a maximum sentence of 10 years in prison, and wire fraud, which carries a maximumsentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the efforts of the FBI in this investigation.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorney Jacob Warren 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 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, today announced that MARYSE LIBURDI pled guilty to defrauding investors in a technology company founded and operated by LIBURDI. As a result of LIBURDI’s fraud, the victim-investors lost more than $6 million. LIBURDI pled guilty earlier today in Manhattan federal court before United States District Judge Denise L. Cote, who is scheduled to sentence LIBURDI on September 29, 2017, at 10:00 a.m.

Acting U.S. Attorney Joon H. Kim said: “For at least five years, while her company earned little or no revenue, Maryse Liburdi, the founder and former CEO of a technology company, lied to investors about her company’s success and converted the funds they invested to her own use. In this way, Liburdi stole more than $1 million, and used it to pay rent on her Manhattan apartment, purchase luxury clothing, and pay spa bills. We are committed to fully enforcing the laws that ensure that executives are truthful with investors.”

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 $6 million.

* * *

LIBURDI, 45, formerly of Victoria, Minnesota, and New York, New York, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison and three years of supervised release. 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 investigative work of the FBI. 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 a federal jury today found former Hoboken, New Jersey, City Council President and attorney CHRISTOPHER CAMPOS guilty of bank and wire fraud and conspiracy to commit bank and wire fraud. CAMPOS and his co-conspirators fraudulently obtained millions of dollars in car loans by using at least 20 straw buyers to acquire more than 200 new automobiles based on false representations that, among other things, the straw buyers would use the cars for their personal use when, in truth and in fact, CAMPOS and his co-conspirators obtained the vehicles in order to lease as livery cabs. The week-long trial took place before U.S. District Judge Valerie E. Caproni, who is scheduled to sentence CAMPOS on September 20, 2017.

CAMPOS’s co-defendant, Julio Alvarez, pled guilty to bank and wire fraud and conspiracy to commit bank and wire fraud on June 9, 2017. Alvarez is scheduled to be sentenced on September 8, 2017, before Judge Caproni.

Acting Manhattan U.S. Attorney Joon H. Kim stated: “As a unanimous jury found, Christopher Campos, an attorney and former Hoboken City Council President, defrauded lenders out of millions of dollars. He recruited straw buyers to obtain loans for cars supposedly for ‘personal use,’ when in fact they made up a fleet of over 200 vehicles Campos and his co-conspirators leased to livery drivers. Campos now awaits sentencing for this massive fraud.”

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

Between approximately October 2012 and September 2013, CAMPOS and Alvarez, among others, orchestrated a scheme to fraudulently obtain new automobiles that they intended to lease to livery cab drivers. In order to secure financing in connection with the purchase of these new cars, CAMPOS and other co-conspirators enlisted and aided individuals with good credit histories (“straw buyers”) to submit fraudulent car loan applications to numerous lenders. In order to obtain the new vehicles, CAMPOS and other co-conspirators sent straw buyers to several car dealerships located throughout the New York City area, where dealership employees helped straw buyers submit fraudulent loan applications.

The auto loan applications submitted by the straw buyers falsely represented that the vehicles would be used for the buyers’ personal use, rather than as part of the defendants’ leasing business. In addition, in many cases, the car loan applications misrepresented personal information about the straw buyers, including their incomes and assets. CAMPOS also caused financing applications to be sent to multiple financial institutions at the same time so that the lenders would not know that the straw buyers were incurring obligations to other lenders in connection with the purchase of multiple new automobiles.

In total, the scheme carried out by CAMPOS, Alvarez, and others involved at least approximately 20 straw buyers, the purchase of more than approximately 200 new vehicles, and more than $7 million in fraudulently obtained loans from a variety of financial institutions. Most of the loans ultimately went into default.

* * *

CAMPOS, 40, of Palisades Park, New Jersey, was convicted of conspiracy to commit bank and wire fraud, bank fraud, and wire fraud. The conspiracy and bank fraud charges each carry a maximum sentence of 30 years in prison and the wire fraud charge carries a maximum sentence of 20 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the FBI. Mr. Kim also thanked the National Insurance Crime Bureau, the New York Automobile Insurance Plan, and the New York State Department of Motor Vehicles for their substantial assistance in the investigation and trial.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Dina McLeod, Sagar K. Ravi, and Niketh Velamoor are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, James J. Hunt, Special Agent in Charge of the U.S. Drug Enforcement Administration’s New York Division (“DEA”), James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Scott J. Lampert, Special Agent in Charge of the New York Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced the unsealing of an indictment charging of DAVID TAYLOR, a state-licensed doctor, with writing medically unnecessary prescriptions for oxycodone over a five-year period. In addition to TAYLOR, VITO GALLICCHIO, and DANIEL GARCIA were arrested on charges that, from January 2012 through at least June 2017, they conspired with TAYLOR to distribute oxycodone. All three defendants are expected to be presented before U.S. Magistrate Judge James L. Cott later today. The case has been assigned to United States District Court Judge Andrew L. Carter, Jr.

Acting Manhattan U.S. Attorney Joon Kim said: “As the opioid epidemic wreaks havoc on too many of our communities, for years, Dr. David Taylor and his co-conspirators allegedly wrote prescriptions for and distributed medically unnecessary oxycodone. Doctors should be advancing the health of our citizens, not allegedly fueling the biggest health crisis facing the country, the opioid abuse epidemic. We are committed to holding accountable everyone involving in the illegal distribution of opioids, including allegedly corrupt doctors.”

DEA Special Agent-in-Charge James J. Hunt said: “It is alleged that millions of dollars’ worth of pain medication was diverted onto the streets of Staten Island, enabling addiction and overdoses on the borough. These arrests will impact Staten Island’s opioid market by shutting down an illicit pill distribution operation located at the heart of the borough, along Hylan Boulevard.”

NYPD Commissioner James P. O’Neill said: “As alleged, the defendants distributed Oxycodone for at least five years, at the expense of those addicted to these pain killers. The NYPD will aggressively pursue those who distribute illegal prescription drugs.”

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

From January 2012 through at least June 2017, in the Southern District of New York and elsewhere, DAVID TAYLOR, VITO GALLICCHIO, and DANIEL GARCIA, and others conspired to distribute and possess with the intent to distribute oxycodone.

* * *

TAYLOR, 74, GALLICCHIO, 48, and GARCIA, 57, are charged with one count of conspiring to distribute and possess with intent to distribute oxycodone. This offense carries a maximum sentence of 20 years in prison. The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the DEA’s Tactical Diversion Squad (Group TDS-NY), which comprises agents and officers from the DEA, the NYPD, the New York State Police, New York State Department of Financial Services, and New York City Department of Investigation. He also acknowledged the assistance of HHS-OIG and the National Insurance Crime Bureau.

The case is being prosecuted by the Office’s Narcotics Unit. Assistant U.S. Attorneys Kiersten A. Fletcher and Dina Y. McLeod are in charge of the prosecution.

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

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