Southern District of New York
Press releases recorded for this federal judicial district.
Acting U.S. Attorney Settles Civil Rights Suit Against New York City for Violating the Americans with Disabilities ActRead the Press Release
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 alleging that the CITY OF NEW YORK (the “City”), and specifically the NEW YORK CITY POLICE DEPARTMENT (“NYPD”), violated the Americans with Disabilities Act of 1990 (“ADA”) through its medical disqualification of an HIV positive applicant for a Police Communications Technician position. The settlement agreement was entered today by U.S. District Judge Ronnie Abrams.
Acting U.S. Attorney Joon H. Kim said: “The ADA prohibits employers from denying job applicants employment opportunities on the basis of a disability or perceived disability. As a result of this lawsuit, the City of New York has acknowledged that HIV status is not a basis to deny an individual employment. We will continue to work to ensure that employers do not discriminate against job applicants with disabilities.”
According to the Complaint, filed in federal court in Manhattan on January 17, 2017, the applicant – who is HIV positive – applied for the position of Police Communications Technician. The applicant successfully underwent an initial screening process, which included a background check, and received a conditional offer of employment. Following receipt of the conditional offer of employment, the applicant was required to undergo a medical examination. Shortly after completion of the medical examination, the NYPD informed the applicant that he needed to submit additional paperwork, including a blood test. After the applicant submitted the requested paperwork, the NYPD disqualified him solely because of his “HIV low CD4 count.”
The NYPD’s failure to hire the applicant because of his HIV status was in clear violation of the ADA. ADA prohibits employers from discriminating against qualified individuals solely on the basis of a disability, such as being HIV positive, in the hiring process.
As part of the settlement, the City extended the applicant a conditional offer of employment, is paying the applicant $85,000, and acknowledges that its disqualification of the applicant based on his HIV low CD4 count was in error.
More information on the obligations of employers with respect to job applicants with disabilities is available at www.ada.gov and www.eeoc.gov.
Mr. Kim thanked the Equal Employment Opportunity Commission for its initial investigation of the Complaint.
The case is being handled by the Office’s Civil Rights Unit. Assistant United States Attorney Natasha Waglow Teleanu is in charge of the case.
Acting Manhattan U.S. Attorney Announces Compensation Program for Absolute Poker Victim PlayersRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the United States has retained the Garden City Group (“GCG”) to oversee a process for compensating eligible victims of a fraud committed by Absolute Poker against United States players who were unable to withdraw funds from Absolute Poker following the Office’s filing in 2011 of a civil money laundering and forfeiture action against Absolute Poker and others in United States v. PokerStars, et al.
GCG is already overseeing the claims process for eligible victims of the fraud committed by Full Tilt Poker against United States players, as described in both United States v. PokerStars, et al., and the indictment in the parallel criminal case, United States v. Bitar, et. al. To date, approximately $118 million has been paid to Full Tilt Poker fraud victims through that process.
Background
In July 2012, the United States entered into settlement agreements with Full Tilt Poker and PokerStars – two of the three online poker companies named as defendants in a civil forfeiture action brought by the United States alleging bank fraud, wire fraud, money laundering, and illegal gambling offenses. On July 16, 2013, the third online poker company named in the complaint, Absolute Poker, along with certain of its affiliates, entered into a settlement agreement in which they also agreed to the forfeiture of their assets. Under the terms of the July 2012 settlement with Full Tilt Poker, the company agreed to forfeit virtually all of its assets to the United States (the “Forfeited Full Tilt Assets”) in order to fully resolve the action. The amended complaint filed in that action alleged that Full Tilt Poker defrauded its players by misrepresenting to the public that player funds held by Full Tilt Poker were safe, secure, and available for withdrawal at any time. In reality, the company did not maintain funds sufficient to repay all of its players and instead used player funds to finance more than $400 million in dividend payments to Full Tilt Poker’s owners.
Under the terms of the settlement with PokerStars (the “PokerStars Settlement”), the company agreed, among other things, to forfeit $547 million to the United States (the “Forfeited Poker Funds”) and to assume Full Tilt Poker’s liability for the approximately $184 million owed by Full Tilt to foreign players. The PokerStars Settlement also provided that PokerStars will acquire the Forfeited Full Tilt Assets from the Government and also precludes PokerStars from offering online poker for real money in the United States unless and until it becomes permissible to do so under relevant law.
The Full Tilt Poker Claims Process
Pursuant to the regulations governing remission, the Department of Justice may use forfeited funds to compensate victims of a charged criminal offense or a related offense that was the underlying basis for forfeiture.
Using a portion of the Forfeited Poker Funds, the Department of Justice established a process (the “FTP Claims Process”) by which eligible U.S. victims of Full Tilt Poker were able to seek compensation for their losses. GCG was selected as Claims Administrator by the United States to process claims submitted by the U.S. Full Tilt fraud victims.
GCG is a class action settlement and bankruptcy administration company that has provided comprehensive legal administration services for nearly 30 years. GCG has worked on numerous complex administrations, including the U.S. Victims of State-Sponsored Terrorism Fund; the Gulf Coast Claims Facility; the Deepwater Horizon Economic and Property Damage Settlement; the Visa Check/MasterMoney Antitrust Litigation; the WorldCom Securities Litigation; and the IPO Securities Litigation.
The FTP Claims Process was announced in March 2013 and is winding down. GCG received and reviewed 53,220 claims submitted by U.S. Full Tilt fraud victims during the claims period. To date, 44,320 claims have been approved for payment and approximately $118,116,918.04 has been paid to U.S. Full Tilt fraud victims.
The Absolute Poker Claims Process
As alleged in the operative forfeiture complaints and indictments in this case, the three online poker companies, including Absolute Poker, and their principals, conspired with one another, and others, such as payment processors who worked with multiple poker companies, to carry out the offense conduct that served as the basis for the forfeiture of the Forfeited Poker Funds.
Additionally, the Department of Justice has concluded that players of Absolute Poker who were unable to recover their funds from Absolute Poker are similarly situated to the eligible victims of Full Tilt Poker, in that Absolute Poker, like Full Tilt Poker, did not maintain funds sufficient to repay all of its players.
Accordingly, remaining Forfeited Poker Funds will be used to fund a claims process for eligible Absolute Poker victims.
That victim claims process will begin shortly. Information about the claims administration will be posted on the dedicated website GCG has established in connection with the victim compensation process, www.AbsolutePokerClaims.com. Information is also available from the toll-free hotline number at (855) 907-3254.
This aspect of the matter is being handled by the Office’s Money Laundering and Asset Forfeiture Unit.
William T. “Billy” Walters Convicted in Manhattan Federal Court of Insider TradingRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that WILLIAM T. WALTERS, a/k/a “Billy,” was found guilty on all 10 counts of conspiracy, securities fraud, and wire fraud charges after a four-week trial before U.S. District Judge P. Kevin Castel relating to his scheme to commit insider trading from 2008 through 2014, principally relating to securities of Dean Foods Company (“Dean Foods” or the “Company”).
Acting U.S. Attorney Joon H. Kim said: “Today, Billy Walters lost his bet that he could cheat the securities markets on a massive scale and get away with it scot-free. As a unanimous jury swiftly found, Walters received inside information about Dean Foods for years – directly from one its board members – and illegally traded on it, netting over $43 million. Armed with his illegal edge, Walters made huge, perfectly-timed trades, at times accounting for over a third of the trading volume in Dean Foods stock. In engaging in his years-long stock fraud scheme, Walters underestimated law enforcement’s resolve to pursue and catch those who cheat the market. The integrity of the American financial markets is a bedrock principle upon which our economy and justice system relies, and this Office and our partners at the FBI are as committed as ever to protecting it.”
According to the allegations in the charging documents and statements made in court proceedings:
From 2008 through 2014, WALTERS and Thomas C. Davis, among others, participated in a scheme to commit insider trading principally related to securities of Dean Foods, a Fortune 500 company that is the largest processor and distributor of fresh milk in the United States. Davis pled guilty to insider trading, perjury, and obstruction of justice charges on May 16, 2016 and has been cooperating with the investigation.
From 2001 until August 7, 2015, Davis served as a member of the Board of Directors of Dean Foods (the “Board”), and regularly possessed material, nonpublic information about Dean Foods, including about the Company’s financial performance and results, comprising quarterly earnings results; contemplated and actual corporate transactions; and other significant corporate and strategic developments (the “Inside Information”). In furtherance of the scheme, Davis violated his duties of trust and confidence to Dean Foods by providing Inside Information to WALTERS in advance of public announcements. WALTERS, knowing that Davis owed duties of trust and confidence to the Company, used the Inside Information to execute profitable trades in Dean Foods stock. In total, WALTERS’ trading on the basis of Inside Information netted realized and unrealized profits of approximately $32 million and avoided additional losses of approximately $11 million. In return for Davis providing the Inside Information to WALTERS, WALTERS, among other things, provided capital to Davis for joint business ventures and made two loans to Davis for approximately $1 million in total, which Davis largely did not repay.
In furtherance of the scheme, and to avoid detection by law enforcement, WALTERS provided Davis with a prepaid cellular phone to use when passing Inside Information to WALTERS. Moreover, WALTERS further instructed Davis to use code words when discussing the Inside Information, including by referring to Dean Foods as the “Dallas Cowboys.”
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WALTERS, 70, of Las Vegas, Nevada, was convicted of one count of conspiracy to commit securities fraud, four counts of securities fraud, one count of conspiracy to commit wire fraud, and four counts of wire fraud. Count One carries a maximum sentence of five years in prison. Counts Two through 10 each carry a maximum sentence of 20 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence for WALTERS will be determined by the judge. WALTERS will be sentenced by Judge Castel on July 14, 2017.
Mr. Kim praised the work of the FBI and the Postal Inspection Service, and thanked the SEC and the Financial Industry Regulatory Authority (“FINRA”) for their assistance. He also thanked the Las Vegas offices of the FBI and the Internal Revenue Service, Criminal Investigation Division.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brooke E. Cucinella, Daniel S. Goldman, and Michael Ferrara are in charge of the prosecution.
Statement of Acting U.S. Attorney Joon H. Kim on the Conviction of William T. Walters for Insider TradingRead the Press Release
“Today, Billy Walters lost his bet that he could cheat the securities markets on a massive scale and get away with it scot-free. As a unanimous jury swiftly found, Walters received inside information about Dean Foods for years – directly from one its board members – and illegally traded on it, netting over $43 million. Armed with his illegal edge, Walters made huge, perfectly-timed trades, at times accounting for over a third of the trading volume in Dean Foods stock. In engaging in his years-long stock fraud scheme, Walters underestimated law enforcement’s resolve to pursue and catch those who cheat the market. The integrity of the American financial markets is a bedrock principle upon which our economy and justice system relies, and this Office and our partners at the FBI are as committed as ever to protecting it.”
Peruvian National Pleads Guilty in Manhattan Federal Court to Commodities and Wire Fraud for Running Million-Dollar Ponzi SchemeRead the Press Release
Joon H Kim, the Acting United States Attorney for the Southern District of New York, announced that PEDRO JARAMILLO, a/k/a “Enrique Jaramillo,” pled guilty in Manhattan federal court yesterday to commodities fraud and wire fraud stemming from his scheme to defraud more than two dozen investors, mostly retirees and professionals from Peru and countries in Latin America, of more than $1.2 million through a fraud scheme in which JARAMILLO solicited investments largely for the purported purpose of short-term commodity futures contracts but instead diverted the funds for his own purposes. As a result of their investments with JARAMILLO, investors have lost their life savings, retirement funds, and their homes.
Among other false and misleading statements, JARAMILLO represented to clients that he was an accomplished Wall Street commodities trader who partnered with a certain well-known international investment bank (the “Global Investment Bank”) to earn returns of 25 percent every 90 days for his investors. In fact, JARAMILLO utterly failed to invest monies as promised, had no partnership with the Global Investment Bank, and instead diverted the majority of investor funds to his own use through cash withdrawals, debit purchases, and by wiring funds offshore. The investor funds not diverted offshore or directly to JARAMILLO were used to repay earlier investors whose redemption requests could not be forestalled, in a Ponzi-like fashion.
JARAMILLO was arrested on December 2, 2016, and pled guilty yesterday before United States District Judge Laura Taylor Swain.
Acting U.S. Attorney Joon H. Kim said: “As he admitted, Pedro Jaramillo lured investors with the promise of guaranteed high returns, but the only one who profited was Jaramillo. He failed to invest funds as promised, and paid back early investors with funds from later investors. Many of the victims of his frauds lost their life savings. I want to thank the FBI for working with us to protect investors.”
According to the Complaint, the Indictment, and other statements made in open court:
From at least January 2014 to in or about December 2016, JARAMILLO solicited more than $1.2 million in investments from more than two dozen investors, primarily for the purported purpose of investing in commodity futures contracts, by falsely representing, orally and in writing, that investor monies would be invested in short-term commodities contracts with a guaranteed rate of return.
To help attract investors, JARAMILLO maintained an office on Wall Street (the “Wall Street Office”) where he met with prospective investors to tout his prior success and relationship with the Global Investment Bank. JARAMILLO also starred in a youtube.com video (the “Video”) set to the soundtrack of Frank Sinatra’s “New York, New York.” The Video featured a series of images of Wall Street, the New York Stock Exchange, and JARAMILLO in front of the Wall Street Office. In the video, JARAMILLO told prospective investors that he was a “proven winner” and “trusted partner” who would maintain individually managed and federally insured accounts for each client. JARAMILLO told prospective investors that these safeguards would ensure that prospective investors would “be protected against fraud and brokerage failure.”
In truth and in fact, JARAMILLO not only failed to create individual investment accounts, he also failed to use investor funds to make any legitimate investments, instead diverting the majority of funds to his own use, out of the country, or to repay earlier investors whose redemption requests could not be forestalled. In total, JARAMILLO diverted more than $700,000 to his own use in the form of cash withdrawals and debit card purchases used to fund his lifestyle, including thousands of dollars on three vacations to Disney World for JARAMILLO, family, and guests.
To hide his misappropriations and continue to fund his personal lifestyle, JARAMILLO also used new investor funds to pay back other investors in a Ponzi-like fashion. In total, since January 2014, JARAMILLO distributed more than $200,000 back to investors from funds deposited by new investors. During that time, JARAMILLO also diverted more than $100,000 of investor funds out of bank accounts he controlled in the United States to foreign bank accounts, including in Peru, where JARAMILLO is a citizen.
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JARAMILLO, 48, a Peruvian National who was residing in Queens, New York, before his arrest, pled guilty to one count of commodities fraud and one count of wire fraud. The commodities fraud count carries a maximum sentence of 10 years in prison and a maximum fine of $1 million, or twice the gross gain or loss from the offense. The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. The defendant, who has been detained since his arrest, will be sentenced at a future date by Judge Swain.
Mr. Kim praised the work of the Federal Bureau of Investigation. He also noted that the investigation is continuing.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Andrea M. Griswold is in charge of the prosecution.
Pakistani Man Pleads Guilty in Axact Diploma Mill ScamRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that UMAIR HAMID, a/k/a “Shah Khan,” a/k/a the “Shah,” pled guilty yesterday before U.S. District Judge Ronnie Abrams to conspiracy to commit wire fraud in connection with an international “diploma mill” scheme that collected tens of millions of dollars from thousands of customers. As alleged in the Indictment to which HAMID pled guilty and the related criminal Complaint, HAMID and his co-conspirators made false and fraudulent representations to consumers on websites and over the phone to trick them into enrolling in purported colleges and high schools, and issued fake diplomas upon receipt of upfront fees from consumers.
Acting U.S. Attorney Joon H. Kim said: “Operating from Pakistan, Umair Hamid helped fraudulently rake in millions of dollars from unwitting American consumers who paid to enroll in, and get degrees from, high schools and colleges that did not exist. As a result of his fraud, people who thought they were investing in an education received nothing more than worthless diplomas and a harsh lesson in the worldwide reach of deceit. Together with our partners at the FBI and the Postal Service, we will continue to work to protect consumers from scams that victimize our citizens.”
According to the allegations contained in the Indictment and the Complaint against HAMID, as well as other court filings in this matter:
The Axact Scheme
HAMID, using the aliases “Shah Khan” and the “Shah,” and others operated a massive education “diploma mill” through the Pakistani company “Axact,” which has described itself as one of the world’s leading information technology (“IT”) providers. Working on behalf of Axact, HAMID and others made misrepresentations to individuals across the world, including throughout the United States and in the Southern District of New York, in order to dupe these individuals into enrolling in supposed high schools, colleges, and other educational institutions. Consumers paid upfront fees to HAMID and his co-conspirators, believing that in return they would be enrolled in real educational courses and, eventually, receive legitimate degrees. Instead, after paying the upfront fees, consumers did not receive any legitimate instruction and were provided fake and worthless diplomas.
Axact promoted and claimed to have an affiliation with approximately 350 fictitious high schools and universities, which Axact advertised online to consumers as genuine schools. During certain time periods since 2014, Axact received approximately 5,000 phone calls per day from individuals seeking to purchase Axact products or enroll in educational institutions supposedly affiliated with Axact. At least some of those consumers appeared to believe that they were calling phone numbers associated with the respective schools. When consumers asked where the schools were located, sales representatives were instructed to give fictitious addresses.
Once a consumer paid for a school certificate or diploma that falsely reflected a completed course of study, Axact sales agents were trained to use sales techniques to persuade the consumer to purchase additional “accreditation” or “certifications” for such certificates or diplomas in order to make them appear more legitimate. Axact, through HAMID and his co-conspirators, falsely “accredited” purported colleges and other educational institutions by arranging to have diplomas from these phony educational institutions affixed with fake stamps supposedly bearing the seal and signature of the U.S. Secretary of State, as well as various state agencies and federal and state officials.
HAMID’s Role in the Scheme
HAMID served as Axact’s “Assistant Vice President of International Relations.” Among other things, HAMID made various false and fraudulent representations to consumers in order to sell fake diplomas. HAMID controlled websites of purported “schools” that (1) falsely represented that consumers who “enrolled” with the schools by paying tuition fees would receive online instruction and coursework, (2) sold bogus academic “accreditations” in exchange for additional fees, (3) falsely represented that the schools had been certified or accredited by various educational organizations, and (4) falsely represented that the schools’ degrees were valid and accepted by employers, including in the United States.
As a further part of the scheme, HAMID and a co-conspirator (1) opened bank accounts in the United States in the names of shell entities, effectively controlled by HAMID, that received funds transferred by consumers in exchange for fake diplomas, (2) transferred funds from those bank accounts to bank accounts associated with other entities located elsewhere in the United States and abroad, at the direction of HAMID, and (3) opened and operated an account to collect and distribute consumer funds obtained in connection with their fraudulent scheme.
In May 2015, Axact was shut down by Pakistani law enforcement, and certain individuals associated with Axact were prosecuted in Pakistan. Nevertheless, after May 2015, HAMID resumed his fraudulent business of selling fake diplomas to consumers in the United States for upfront fees based upon false and fraudulent representations. Most recently, HAMID traveled to the United States in 2016 in order to open a bank account used to collect money from defrauded consumers.
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HAMID, 31, of Karachi, Pakistan, pled guilty to one count of conspiracy to commit 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. HAMID is scheduled to be sentenced by Judge Abrams on July 21, 2017, at 3:00 p.m.
Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation and the U.S. Postal Inspection Service.
If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900. For additional information, go to http://www.usdoj.gov/usao/nys/victimwitness.html.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Edward A. Imperatore, Noah D. Solowiejczyk, and David Abramowicz are in charge of the prosecution.
Former CUNY School of Professional Services Budget Director Charged with Embezzlement and FraudRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Catherine Leahy Scott, New York State Inspector General, and Brian M. Hickey, the Special Agent-in-Charge of the Northeast Regional Office of the U.S. Department of Education Office of Inspector General (“ED-OIG”), announced today that CARMINE MARINO, the former budget and finance director of City University of New York’s School of Professional Services (“CUNY SPS”) was arrested this morning and charged in Manhattan federal court with embezzling funds from CUNY SPS. MARINO voluntarily surrendered to federal authorities this morning and will be presented this afternoon in Manhattan federal court.
Acting U.S. Attorney Joon H. Kim said: “As alleged, the former budget and finance director at CUNY SPS abused his position of trust, taking money that belonged to New York City college students for his own benefit. I want to thank our partners at the New York State Inspector General and Department of Education Office of Inspector General for their work to root out corruption at federally assisted New York schools.”
New York State Inspector General Catherine Leahy Scott said: “This arrest involving federal fraud and embezzlement charges against a former top university official underscores CUNY’s lack of supervision and appropriate controls, which unfortunately has been a consistent theme in my investigation of the CUNY system. I thank Acting U.S. Attorney Kim for prosecuting the case, and I will continue to work with current CUNY leadership and use all of the resources of my office to restore the trust among the student and taxpayers at large and to protect the integrity of the institution.”
ED-OIG Special Agent-in-Charge Brian M. Hickey said: “Today’s charges allege that Mr. Marino knowingly and willfully abused his positions of trust for personal gain. That is completely unacceptable. OIG Special Agents will continue to aggressively pursue those who seek to enrich themselves at the expense of our nation’s students. America’s students, their families, and taxpayers deserve nothing less.”
According to the allegations contained in the Complaint[1] unsealed today in Manhattan federal court and publicly available documents:
CARMINE MARNIO was in charge of finance and fiscal operations at CUNY SPS between 2007 and 2012, first as its Manager of Fiscal Operations, and then as its Director of Fiscal and Business Operations. In those roles, he controlled and oversaw CUNY SPS’s finances and bank accounts. In two separate but similar schemes, MARINO used his power over CUNY SPS’s finances to set up unauthorized bank accounts in CUNY SPS’s name, and to fund those accounts with money from CUNY SPS’s tuition account, among others. MARINO then used those unauthorized accounts, which only he knew about, to embezzle tens of thousands of dollars for his personal use.
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MARINO, 43, of Los Angeles, California, is charged with one count of embezzlement and misappropriation from a program receiving federal funds, which carries a maximum penalty of 10 years in prison, and two counts of bank fraud, each of which carries a maximum penalty of 30 years in prison.
The maximum potential sentences in these cases are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Kim praised the investigative work of the New York State Inspector General’s Office, ED-OIG, and the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York, and noted that the investigation is continuing.
The case is being prosecuted by the Office’s Public Corruption Unit. Assistant U.S. Attorney Eli J. Mark is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitutes only allegations, and every fact described should be treated as an allegation.
Computer Engineer Arrested for Theft of Proprietary Trading Code from His EmployerRead the Press Release
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 today that ZHENGQUAN ZHANG, a/k/a “Zheng Quan Zhang,” a/k/a “Jim Z. Zhang,” was charged with theft of trade secrets for his alleged theft of proprietary computer code concerning algorithmic trading models and trading platforms from his employer, a global financial services firm headquartered in New York, New York, that engages in the trading of publicly traded securities and other financial products (“Firm-1”). ZHANG was arrested this morning in Santa Clara, California, and was presented this afternoon in federal court in San Jose, California.
Acting U.S. Attorney Joon H. Kim said: “As alleged, Zhengquan Zhang went to great lengths to surreptitiously steal confidential computer code from his employer. Zhang allegedly installed code designed to steal his employer’s proprietary information and illegally accessed colleagues’ computer systems to further his theft. The theft charged here can happen to even the most sophisticated companies, but this arrest was made possible by the exemplary cooperation between the FBI and the victim company, which came forward promptly and alerted law enforcement of this alleged crime.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Proprietary computer code may not be a tangible asset that people can observe, but it is indeed one of the most critical assets that companies possess. Significant investments are made to develop code, safeguard it and use it to generate revenue. As we allege, Zhang misused his access to an employer’s computer system and proceeded to download and remove over three million files of data and computer code. The FBI is committed to enforcing laws that protect U.S. companies from the theft of trade secrets.”
According to the allegations contained in the Complaint unsealed today[1]:
Firm-1 uses proprietary algorithmic trading models to help it predict market movements and make trading decisions. In addition, Firm-1 uses proprietary trading platforms to create orders, automatically submit those orders to an exchange or market center, and execute orders. These trading models and trading platforms contribute substantially to Firm-1’s market share and profits, and their economic value depends, in part, on remaining undisclosed. Firm-1 accordingly has put in place substantial measures designed to protect the computer source code underlying its trading models and trading platforms (the “Source Code”), including the use of encryption keys to encrypt and decrypt portions of the Source Code, limits on employee access to the Source Code, and restrictions on employee use of file sharing websites and portable storage devices.
Beginning in March 2010, ZHANG was employed in technical roles within Firm-1 for which he was granted access to certain parts of Firm-1’s computer system. From December 2016 through March 2017, ZHANG took various steps to steal the Source Code. For example, ZHANG installed on Firm-1’s system computer code designed to look for encryption keys to gain access to portions of the Source Code. ZHANG also installed computer code designed to send data from Firm-1’s system to an external third-party software development site, which ZHANG accessed thousands of times from Firm-1’s system. ZHANG used an area of Firm-1’s computer system to store over 3 million files of data, including unencrypted portions of the Source Code, before sending it to the external site.
In addition, in late March 2017, ZHANG accessed parts of Firm-1’s computer system that he was not authorized to access. For example, ZHANG remotely accessed the computer desktops of certain quantitative analysts employed by Firm-1. ZHANG subsequently admitted to a supervisor that he did so without authorization, using software that he had modified in order to capture individuals’ usernames and passwords.
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ZHANG, 31, of Santa Clara, California, is charged with one count of theft of trade secrets, which carries a maximum sentence of 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. The maximum potential sentence in this case is prescribed by Congress and 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. He also thanked the San Jose office of the FBI as well as the Santa Clara and Palo Alto Police Departments for their assistance.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Eun Young Choi and Won S. Shin 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.
Ten Members of Westchester-Based Crew Charged in White Plains Federal Court with Robbery and Firearms Offenses, Among Other CrimesRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Anthony A. Scarpino, Jr., District Attorney for the County of Westchester, 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 an Indictment charging ten individuals with participating in a conspiracy to commit robberies, including at least nine robberies and attempted robberies that occurred in Westchester County and the Bronx, New York. The indictment also charges certain defendants with carrying, brandishing, and discharging firearms in connection with the robbery conspiracy, as well as other theft-related offenses.
Seven of the defendants charged were taken into custody today. Three defendants, JASON AUZA, GUILLERMO FERNANDEZ and KASEAN GALLOWAY, were already in state custody on other charges. All of the defendants arrested today will be presented before U.S. Magistrate Judge Paul E. Davison in White Plains federal court this afternoon.
Acting U.S. Attorney Joon H. Kim said: “As alleged, the ten defendants charged today went on a brazen crime spree across Westchester and the Bronx, robbing and attempting to rob at least nine businesses and drug dealers, often armed with guns. We are grateful to all of our law enforcement partners for their work in bringing the dangerous alleged crimes by this determined crew to an end.”
Westchester County District Attorney Anthony A. Scarpino, JR. said: “I applaud the outstanding police work that enabled us to apprehend these dangerous criminals. This inter-agency collaboration is critical to our efforts to bring down these gangs who have been terrorizing our citizens over the past two years.”
FBI Assistant Director-in-Charge William F. Sweeney, Jr. said: “As we allege, robberies and burglaries were the profit making ways of the 10 members of a loosely organized criminal charged group today. Sometimes armed, sometimes not, this crew varied their targets from commercial establishments to drug dealers. Getting criminal groups off our streets is the mission of the Westchester County Safe Streets Task Force and I’m proud to say today’s arrest meets that mission. I commend the FBI agents and the task force detectives and officers on their hard work and collaboration in bringing this investigation towards prosecution.”
According to the allegations in the Indictment and other publicly filed documents[1]:
From at least 2012 to in or about December 2016 ALEX AYALA, a/k/a “Al Bundy,” JASON AUZA, DENNIS BROWN, a/k/a “Bundles,” NELSON CARTAGENA, ANDRE EMILIEN, a/k/a “Dre,” ELBIO ESPAILLAT, a/k/a “LB,” GUILLERMO FERNANDEZ, a/k/a “Chino,” KESEAN GALLOWAY, a/k/a “K,” JOHN NASSAR, a/k/a “Mush,” a/k/a “Big Johnny,” and PAUL VALLARO, were members of a loosely organized criminal crew based primarily in Westchester County, New York (the “Crew”). Members of the Crew worked together to enrich themselves and their fellow Crew members through thefts, burglaries, and robberies, both armed and unarmed. From 2015 to December 2016, members of the Crew burglarized over 50 commercial establishments in Westchester, Rockland, Putnam, Dutchess, and Fairfield (CT) Counties. With respect to robberies, members of the Crew targeted both commercial establishments and drug dealers. Additionally, members of the Crew worked together to sell drugs, including drugs stolen from drug dealers during robberies and other thefts, and shared in the profits from those sales.
* * *
Count One of the Indictment charges AYALA, AUZA, BROWN, CARTAGENA, EMILIEN, ESPAILLAT, FERNANDEZ, GALLOWAY, and VALLARO with conspiring to commit Hobbs Act robberies. Count Two charges FERNANDEZ and NASSAR with robbing a pizzeria employee at gunpoint in the vicinity of Morsmere Avenue in Yonkers on October 5, 2012. Count three charges AYALA, AUZA, CARTAGENA, FERNANDEZ, GALLOWAY, and VALLARO with using and carrying firearms, some of which were brandished and discharged, during and in relation to the robbery conspiracy charged in Count One. Court Four charges FERNANDEZ and NASSAR with using, carrying and brandishing firearms during and in relation to the robbery charged in Count Two. Count Five charges CARTAGENA with transporting over $25,000 in stolen goods across state lines in connection with a commercial burglary in Connecticut on December 2, 2016. Count Six charges GALLOWAY with committing a carjacking in Yonkers on February 21, 2016.
Charts containing the names, ages, residences, charges, and maximum penalties for the defendants are set forth below. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Kim praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, which is comprised of agents and investigators from the FBI, the United States Probation Office, the Westchester County District Attorney’s Office, the Westchester County Department of Public Safety, the New York City Police Department, the City of Yonkers Police Department, the City of Peekskill Police Department, and the Mount Vernon Police Department.
Mr. Kim also thanked the following law enforcement agencies for their assistance: the Westchester County Department of Public Safety, the Bedford Police Department, the Irvington Police Department, the Greenburgh Police Department, the Yorktown Police Department, the Mount Pleasant Police Department, the Village of Pleasantville Police Department, the Clarkstown Police Department, Town of Kent Police Department, the Putnam County Sheriff's Office, the New York State Police, the Ridgefield (CT) Police Department, and the Danbury (CT) Police Department.
The case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Kathryn Martin and Scott Hartman, and Special Assistant U.S. Attorney Lauren Abinanti, of the Westchester County District Attorney’s Office, 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.
UNITED STATES v. AYALA, ET AL., 17 Cr. 202 (___)
DEFENDANT
AGE
CITY OF RESIDENCE
CHARGES
MAX SENT.
AYALA, ALEX
a/k/a “Al Bundy”
37
Bronx, NY
Hobbs Act Robbery Conspiracy
18 U.S.C. § 1951
Firearms Offense
18 U.S.C. § 924
20 Years
Life
AUZA, JASON
27
Yonkers, NY
Hobbs Act Robbery Conspiracy
18 U.S.C. § 1951
Firearms Offense
18 U.S.C. § 924
20 Years
Life
DENNIS BROWN
a/k/a “Bundles”
36
Yonkers, NY
Hobbs Act Robbery Conspiracy
18 U.S.C. § 1951
20 Years
NELSON CARTAGENA
30
Yonkers, NY
Hobbs Act Robbery Conspiracy
18 U.S.C. § 1951
Firearms Offense
18 U.S.C. § 924
Interstate Transportation of Stolen Property
18 U.S.C. § 2314
20 Years
Life
10 Years
ANDRE EMILIEN
a/k/a “Dre”
33
Yonkers, NY
Hobbs Act Robbery Conspiracy
18 U.S.C. § 1951
20 Years
ELBIO ESPAILLAT
a/k/a “LB”
42
Bronx, NY
Hobbs Act Robbery Conspiracy
18 U.S.C. § 1951
20 Years
GUILLERMO FERNANDEZ
a/k/a “Chino”
43
Yonkers, NY
Hobbs Act Robbery Conspiracy
18 U.S.C. § 1951
Hobbs Act Robbery
18 U.S.C. § 1951
Firearms Offense
18 U.S.C. § 924
20 Years
20 Years
Life
KASEAN GALLOWAY
a/k/a “K”
20
Yonkers, NY
Hobbs Act Robbery Conspiracy
18 U.S.C. § 1951
Firearms Offense
18 U.S.C. § 924
Carjacking
18 U.S.C. § 2119
20 Years
Life
15 Years
JOHN NASSAR
a/k/a “Mush”
a/k/a “Big Johnny”
42
Yonkers, NY
Hobbs Act Robbery
18 U.S.C. § 1951
Firearms Offense
18 U.S.C. § 924
20 Years
Life
PAUL VALLARO
39
Elmsford, NY
Hobbs Act Robbery Conspiracy
18 U.S.C. § 1951
Firearms Offense
18 U.S.C. § 924
20 Years
Life
[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.
Ten Arrested for Defrauding Victims Out of More Than $9 Million in DiamondsRead the Press Release
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”), Leon Hayward, Acting Director of the New York Field Office of U.S. Customs and Border Protection, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the arrests of GODEL SEZANAYEV a/k/a “Gary,” MARK MULLAKANDOV, ALBERT FOOZAILOV, IMANIL MURATOV a/k/a “Eddy,” MANASHE SEZANAYEV a/k/a “Michael,” NATHAN ITZCHAKI, ARKADIY ISRAILOV, ALI JAVIDNEZHAD, MARK NATANZON, SHOLOM MURATOV, MENACHEM ABRAMOV, and NIZAMUDEN AKBARI for their role in fraudulently obtaining millions of dollars in virtually untraceable diamonds from victim wholesalers. Ten of the defendants were arrested this morning and will be presented this afternoon before U.S. Magistrate Judge Andrew J. Peck in Manhattan federal court. JAVIDNEZHAD and AKBARI remain at large.
Acting Manhattan U.S. Attorney Joon H. Kim said: “The twelve charged defendants allegedly participated in a global conspiracy to defraud diamond dealers out of more than $9 million. Centered in Manhattan’s diamond district, America’s busiest hub in the diamond trade, the defendants allegedly took advantage of an industrywide system of credit and trust to obtain largely untraceable diamonds, and then, using various allegedly illegal schemes, refused to pay. We commend our law enforcement partners for their work in shutting this alleged criminal scheme down for good.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Diamonds have value worldwide so it comes as no surprise that an alleged organized ring would target diamond wholesalers in Manhattan's diamond district in a worldwide scheme. Using everything from forged documents to bad checks and tall tales, the group allegedly swindled more than $9 million from victim wholesalers. The FBI-NYPD-CBP Joint Eurasian Organized Crime Task Force is committed to rooting out organized crime groups- big or small-wherever we find them operating I want to commend the FBI agents, NYPD detectives, and CBP officers on their hard work and collaboration in bringing this investigation towards prosecution.”
NYPD Commissioner James P. O’Neill said: “As alleged, these defendants bought nine million in untraceable diamonds with bad checks, forged documents, and long stories to perpetuate their scheme. I want to thank the NYPD detectives, the FBI, the U.S. Customs and Border Protection and the Acting United States Attorney for the Southern District for their efforts to bring these defendants to justice.”
Acting CBP NY Field Office Director Leon Hayward said: “U.S. Customs and Border Protection is proud of the expertise we bring to support and assist investigations that result in the takedown of criminal enterprises. It is through interagency partnerships and collaborative efforts, like the one leading to today’s arrests, that law enforcement successfully combats today’s criminal organizations.”
According to the allegations in the Complaint unsealed today in Manhattan federal court:[1]
Since in or about 2015, the FBI has been investigating a series of predatory frauds perpetrated by a group of diamond merchants in New York City. This group swindles diamond wholesalers in a variety of ways, and then resells the ill-gotten diamonds through Manhattan’s diamond district. In order to avoid detection, the group focuses on obtaining small round stones called melee diamonds, which are virtually untraceable, as they do not bear the unique numerical identifiers common on larger stones.
The group uses a variety of methods to defraud its victims, including bad checks, false references, forged documents, and tall tales—all to convince its victims to part with their diamonds before receiving payment. The group’s most common technique is the “bust out”: first the group builds up credit and trust with a victim by paying for goods on delivery, and then, at the moment of maximum credit, the group walks away with the millions of dollars in diamonds, leaving the victim high and dry.
Once victims begin to realize their predicament, and begin to insist on payment, members of the group refuse and, instead, inform the wholesalers that their diamonds have been lost, or that another customer took the victim’s diamonds and has refused to pay, or that a different member of the group will repay the victim at some point in the future. Members of the group have even conditioned payment on the victim’s willingness to assist the group in still another fraud.
Among the schemes described in the Complaint:
From at least January 2015 to November 2016, GODEL SEZANAYEV a/k/a “Gary”, ALBERT FOOZAILOV, IMANIL MURATOV a/k/a “Eddy,” MANASHE SEZANAYEV a/k/a “Michael,” and ALI JAVIDNEZHAD deployed an ad hoc strategy to obtain as much of the diamond inventory of a wholesaler (“Victim-1”) as possible without full payment. The defendants’ scheme caused Victim-1 in excess of $2.4 million in losses.
In or about May 2015, GODEL SEZANAYEV a/k/a “Gary,” ARKADIY ISRAILOV, and NIZAMUDEN AKBARI conspired to defraud a jewelry merchant at a Las Vegas trade show.
From in or about December 2015 to December 2016, ALBERT FOOZAILOV, NATHAN ITZCHAKI, MARK MULLAKANDOV, MARK NATANZON, MENCHAM ABRAMOV, and SHOLOM MURATOV induced numerous victims in Mumbai, India (“Victim-2,” “Victim-3,” “Victim-4,” and “Victim-5”) to send diamonds by interstate carrier by purporting to agree to payment terms that they had no intention to, and did not, honor. The defendants caused these victims losses in excess of $7.44 million.
* * *
GODEL SEZANAYEV a/k/a “Gary,” 40, ALBERT FOOZAILOV, 53, IMANIL MURATOV a/k/a “Eddy,” 60, MANASHE SEZANAYEV a/k/a “Michael,” 34, ALI JAVIDNEZHAD, 51, ARKADIY ISRAILOV, 38, and NIZAMUDEN AKBARI, 56, are each charged with conspiring to commit wire fraud, which carries a maximum sentence of 20 years in prison. FOOZAILOV, NATHAN ITZCHAKI, 58, MARK MULLAKANDOV, 41, MARK NATANZON, 68, MENCHAM ABRAMOV, 31, and SHOLOM MURATOV, 35, are charged with conspiring to commit mail fraud, which also carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Kim praised the outstanding work of the FBI, the CBP, and the NYPD 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 Noah Falk and Andrew Thomas are in charge of the case.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Manhattan Man Sentenced in White Plains Federal Court to Six Years in Prison for Impersonating Federal Immigration Official to Defraud VictimsRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Keith Barwick, the Special Agent-in-Charge of U.S. Immigration and Customs Enforcement’s (“ICE”) Office of Professional Responsibility (“OPR”) Northeast, and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced that JUAN ANTHONY NIEVES was sentenced yesterday by U.S. District Judge Cathy Seibel to six years in prison for impersonating a federal immigration official to defraud victims in New York and Connecticut.
Acting Manhattan U.S. Attorney Joon H. Kim said: “Juan Nieves exploited vulnerable immigrants working toward U.S. citizenship by posing as a federal immigration officer, charging his victims fraudulent fees while providing no assistance. Nieves not only defrauded his victims of money but also undermined their trust in the immigration system. Today’s significant sentence is a clear message that this outrageous behavior will not be tolerated.”
OPR Special Agent-in-Charge Keith Barwick said: “This case identified an illegal scheme to extort victims—impersonating a U.S. Department of Homeland Security official undermines the confidence people have in their government and in law enforcement. We are committed to aggressively pursue impersonation cases. Having people come forward to report such schemes is crucial to deterring this type of fraud and preventing others from becoming victims.”
HSI Special Agent-in-Charge Angel M. Melendez said: “This law enforcement impersonator demanded thousands of dollars in fees by preying on members of his own community. The imitation of officers is not only illegal, but it also perpetuates a fear and panic within our city. The sentencing of Nieves demonstrates law enforcement’s commitment to locating and prosecuting these criminals so they can face the consequences of their actions.”
According to the Complaint and Information filed in White Plains federal court, as well as statements made in connection with the plea and sentencing proceedings:
NIEVES is not, and never has been, employed by the Department of Homeland Security. But in March 2015 and from November to December 2015, in Orange County, New York, and Hartford County, Connecticut, NIEVES posed as a federal immigration officer capable of providing assistance in the immigration matters of certain victims and their family members. NIEVES claimed that he was a “boss” or “chief” (“jefe” in Spanish) with United States Immigration; that he worked at 26 Federal Plaza in Manhattan and had numerous employees working for him; and that he signed the final paperwork that permits an individual to enter the United States or orders an individual to be deported.
NIEVES offered to help the victims and their family members with their immigration paperwork and in return demanded and received thousands of dollars in so-called fees. In connection with this purported help, NIEVES received from the victims and their family members legitimate immigration paperwork that they had completed, and he also took photos or made copies of their identification documents. NIEVES also engaged in a charade of purporting to contact, in the victims’ presence, one or more individuals who worked for him at U.S. Customs and Immigration Services to do certain work related to the victims’ applications.
In addition to the prison sentence, NIEVES, 49, of Manhattan, was sentenced to three years of supervised release. Judge Seibel also ordered NIEVES to forfeit $15,080 in ill-gotten gains and to pay $15,080 in restitution.
* * *
Mr. Kim praised the outstanding investigative work of OPR and HSI. Mr. Kim also thanked the U.S. Attorney’s Office for the District of Connecticut and the Village of Monroe, New York, Police Department for their assistance.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorney Won S. Shin is in charge of the prosecution.
Bronx Man Pleads Guilty in White Plains Federal Court in Connection with Fatal Carjackings of Two Livery Cab DriversRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that TAKIEM EWING, a/k/a “Mulla,” pled guilty to firearms offenses in connection with the fatal carjackings of two livery cab drivers: Maodo Kane, who was killed in the Bronx on August 5, 2014, and Aboubacar Bah, who was killed in the Bronx on August 12, 2014. EWING faces a mandatory minimum term of 35 years in prison and a maximum term of life in prison, and will be sentenced before United States District Judge Vincent L. Briccetti on July 12, 2017, at 10:00 a.m.
Acting Manhattan U.S. Attorney Joon H. Kim said: “On August 5, 2014, Maodo Kane, a livery cab driver, just trying to earn an honest living, was shot and killed during a carjacking in the Bronx. A week later, Aboubacar Bah, another innocent livery cab driver in the Bronx, was killed in another carjacking. Today, Takiem Ewing has admitted and pled guilty to his participation in these two senseless killings. I want to thank our partners at the FBI, the NYPD, and the City of Yonkers Police Department for their work in bringing Ewing to justice. And we hope that this conviction gives the victims’ friends and families a measure of justice.”
According to the Indictment and other documents filed in the case, as well as statements made during the plea proceedings:
On August 5, 2014, Ewing participated with others in the armed carjacking of Maodo Kane. During the course of the carjacking, one of the perpetrators discharged a gun and Kane was killed in the vicinity of Hunter Avenue, in the Bronx. Subsequently, on August 12, 2014, Ewing participated in the carjacking of Aboubacar Bah. Again, one of the perpetrators discharged a gun in the course of the carjacking, and Mr. Bah was killed in the vicinity of Bryant Avenue, in the Bronx.
Tyrone Felder, Kareem Martin, and Tommy Smalls have also been charged in connection with the carjackings and resulting deaths of Mr. Kane and Mr. Bah. Their trial is scheduled to begin before Judge Briccetti on February 19, 2018.
* * *
Mr. Kim praised the outstanding investigative work of the New York City Police Department (“NYPD”), the City of Yonkers Police Department, and the Federal Bureau of Investigation’s (“FBI”) Westchester County Safe Streets Task Force, which comprises agents and investigators from the FBI, the United States Probation Office, the Westchester County District Attorney’s Office, the Westchester County Department of Public Safety, the NYPD, the City of Yonkers Police Department, the City of Peekskill Police Department, and the Mount Vernon Police Department.
The case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Michael Gerber and Scott Hartman are in charge of the prosecution.
Immigration Attorney Charged in Manhattan Federal Court with Visa Fraud and Aggravated Identity TheftRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York and Terence S. Opiola, the Special Agent-in-Charge of the Newark Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today the arrest of CHARLES JASON LORE for visa fraud, aggravated identity theft, and mail fraud. LORE was arrested this morning and presented this afternoon in Manhattan federal court before U.S. Magistrate Judge Andrew J. Peck.
Acting Manhattan U.S. Attorney Joon H. Kim said: “Charles Lore, an immigration attorney, is alleged to have submitted fraudulent forms for over 150 clients, claiming a rare exception intended for individuals with extraordinary achievements in film and television. When approached by law enforcement about the unusually high number of exceptions he sought, Lore allegedly stole the identity of another attorney and filed almost 200 additional petitions for the same exception under the unsuspecting attorney’s name.”
HSI Special Agent-in-Charge Terence S. Opiola said: “Attorneys allegedly misrepresenting their role should be put on notice that their actions will be uncovered. I commend our special agents on a job well done.”
According to the allegations in the Complaint unsealed today in Manhattan federal court[1]:
Beginning in April 2011 through January 2015, LORE participated in a scheme to submit fraudulent I-129 Forms in connection with applications for temporary nonimmigrant worker visas, known as O-1 visas. Specifically, LORE submitted over 150 fraudulent “no-objection letters” from trade associations that represent actors, musicians, and artists in support of scores of O-1 visa petitions. United States Citizenship and Immigration Services relies on these letters in determining whether the applicant possesses the extraordinary ability, or has demonstrated the requisite achievement necessary to obtain an O-1 visa. In addition, after he was approached by law enforcement agents concerning an apparently fraudulent letter, LORE stole the identity of an unsuspecting lawyer, and submitted nearly 200 additional visa petitions in this victim’s name.
* * *
LORE, of Denville, New Jersey, is charged with one count of visa fraud, one count of aggravated identity theft, and one count of mail fraud. Mail fraud carries a maximum sentence of 20 years in prison; visa fraud carries a maximum sentence of 10 years in prison; and aggravated identity theft carries a mandatory sentence of two years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Kim praised the outstanding investigative work of HSI. He also praised the U.S. Citizenship and Immigration Services, Office of Fraud Detection and National Security, and the Department of State's Diplomatic Security Service for their assistance. He added that the investigation is ongoing.
The prosecution is being handled by the Office’s General Crimes Unit. Assistant United States Attorney Michael D. Longyear is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Former New York City Human Resources Administration Employee Sentenced in Manhattan Federal Court to More Than Seven Years in Prison for Fraud and Cocaine TraffickingRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that PETRONILA PERALTA, a/k/a “Petra,” a former employee with the New York City Human Resources Administration (“HRA”), was sentenced in Manhattan federal court to 90 months in prison for defrauding a public assistance program that she had administered during the time when she worked for HRA, resulting in the theft of more than $600,000 in public funds, and for trafficking more than 100 kilograms of cocaine following her separation from HRA. Sentence was imposed by U.S. District Judge Gregory H. Woods.
Acting U.S. Attorney Joon H. Kim stated: “Petronila Peralta not only trafficked in large quantities of cocaine, but also abused her position of trust by enriching herself and her co-conspirators at the expense of some of New York City’s neediest citizens. For her serious crimes, she has now been sentenced to over seven years in federal prison.”
According to the Complaint, Indictment, plea agreement, and other information in the public record:
HRA is an agency of the City of New York responsible for administering various public assistance programs. Among other things, HRA provides temporary help to individuals and families with social service and economic needs to assist them in reaching self-sufficiency. Its services include, among others, administering the federally funded Supplemental Nutrition Assistance Program (more commonly known as “food stamps”), administering the federally funded Temporary Aid to Needy Families Program, and providing rental assistance to low-income families and individuals.
Between 2005 and August 2014, PERALTA worked at HRA. Although PERALTA was supposed to provide economic support and employment-related services to persons in need, between approximately 2009 and 2011, PERALTA abused her position by fraudulently issuing certain public assistance benefits not to the individuals who were entitled to them, but rather to her co-conspirators. The scheme led by PERALTA resulted in the loss of more than approximately $600,000 in public funds. In addition, following her separation from HRA, between approximately January 2013 and March 2015, PERALTA received, and helped others to receive, through the mail more than 100 kilograms of cocaine meant for re-distribution. In handing down the sentence, Judge Woods called PERALTA the “lynchpin” of both the HRA fraud and the narcotics conspiracy.
* * *
In addition to the prison sentence, PERALTA, 53, of Bronx, New York, was ordered to pay $600,000 in restitution and $675,000 in forfeiture.
Acting U.S. Attorney Kim praised the work of the New York City Department of Investigation, the Drug Enforcement Administration, and the United States Postal Inspection Service.
The case is being prosecuted by the Office’s Public Corruption and Narcotics Units. Assistant U.S. Attorneys Daniel C. Richenthal and Shawn G. Crowley are in charge of the prosecution.
Staten Island Man Pleads Guilty in Manhattan Federal Court to Defrauding Investors of over $2 MillionRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that EDWARD J. SERVIDER, a/k/a “Nick Halden,” pled guilty to defrauding approximately 100 investors of over $2.4 million through his firm EJS Capital Management, LLC. SERVIDER pled guilty to one count of conspiracy to commit commodities fraud before U.S. District Judge Jed S. Rakoff.
Acting Manhattan U.S. Attorney Joon H. Kim said: “Edward Servider lured investors into his scheme by falsely telling them he had achieved high annual rates of return through his Forex trading. In fact, he never made a single trade or achieved any returns for any of his nearly 100 investor-clients. Instead, he used his investors’ money to pay for personal luxuries like hotels, cars, and an engagement ring. I want to thank the FBI for their great work in putting a stop to this fraud.”
According to allegations contained in the Complaint and the Indictment filed against SERVIDER and statements made in related court filings and proceedings:
In March 2013, SERVIDER set up a retail foreign currency exchange (“Forex”) trading firm, called EJS Capital Management, LLC (“EJS”), in Brooklyn. SERVIDER and his business partner (“CC-1”) ran EJS from March 2013 through July 2014. EJS employed salespeople (“cold callers”) who made unsolicited telephone calls to prospective investors. SERVIDER and the EJS cold callers told prospective investors that their funds would be used to trade in Forex transactions, and provided them with a “performance report” that falsely claimed that between 2010 and 2013, EJS had achieved gross annual returns for its investors of approximately 18 percent, 22 percent, 49 percent, and 77 percent (the “EJS Performance Report”). In truth, EJS had never conducted any trading or achieved any returns for its investors. To sustain the fraud, SERVIDER directed EJS employees to send account statements to the EJS investors, falsely showing positive returns on their investments.
In fact, instead of using the investor funds to execute Forex trading, the majority of the moneys was misappropriated and used to pay SERVIDER and CC-1’s personal expenses and purported business expenses for EJS. For example, SERVIDER used investor funds to purchase an engagement ring, to lease a BMW vehicle for his girlfriend, and to pay for hotel rooms, rental cars, and parking tickets.
* * *
SERVIDER, 29, pled guilty to one count of conspiracy to commit commodities fraud, which carries a maximum term of five years in prison and a maximum fine of the greatest of $250,000, twice the gross gain from the offense, or twice the gross loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
SERVIDER’s sentencing is scheduled for July 27, 2017, at 4:00 p.m.
Mr. Kim praised the work of the FBI, and thanked the U.S. Commodity Futures Trading Commission for its 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.
White Plains Accountant Pleads Guilty to $23 Million Tax Fraud SchemeRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JOSEPH CERVONE, a certified public accountant, pled guilty to tax fraud charges before the U.S. District Judge Nelson S. Román this morning. CERVONE pled guilty to one count of endeavoring to obstruct and impede the due administration of the internal revenue laws and one count of subscribing to false tax returns.
According to the Information previously filed in White Plains federal court and court proceedings:
From 2009 through 2012, CERVONE, a certified public accountant with an office in White Plains, obstructed and impeded the IRS by filing false tax returns claiming more than $23 million of energy and coal credits on behalf of his clients in order to obtain tax refunds. In addition, CERVONE also filed false tax returns for the tax years 2010 and 2011 that failed to report more than $500,000 in income.
* * *
CERVONE, 63, of White Plains, New York, is charged with one count of endeavoring to obstruct and impede the due administration of the internal revenue laws, and one count of subscribing to false tax returns, each of which carries a maximum sentence of three years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
CERVONE’s sentencing is scheduled for June 29, 2017.
Mr. Kim praised the outstanding efforts of the Internal Revenue Service, Criminal Investigation Division. He also thanked the U.S. Department of Justice’s Tax Division for its significant assistance in the investigation
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney John P. Collins Jr. is in charge of the prosecution.
Member of Bronx Gang Pleads Guilty to Murder and Racketeering ConspiracyRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that today ELIJAH DAVILA, a/k/a “Montana,” pled guilty to committing the murder of Pablo Beard, participating in racketeering and narcotics conspiracies, and committing a firearms offense, all in connection with a violent street gang known as the “Taylor Avenue Crew” or “Bugatti,” which is based primarily in and around the New York City Police Department’s 43rd Precinct in the Bronx, New York. As part of his guilty plea, DAVILA admitted to shooting and killing Pablo Beard, in the vicinity of Leland Avenue in the Bronx. DAVILA faces a mandatory minimum term of 40 years in prison and a maximum term of life in prison, and will be sentenced before United States District Judge Katherine Polk Failla on July 13, 2017.
Manhattan Acting U.S. Attorney Joon H. Kim said: “Elijah Davila and the Taylor Avenue Crew wrought havoc in their Bronx neighborhood, selling drugs and committing acts of violence. As he admitted today, as part of his racketeering and drug crimes, Davila murdered Pablo Beard. We are committed to bringing federal prosecutions like this one to reduce violent crime and drug dealing in our neighborhoods.”
According to the Indictment and other documents filed in the case, as well as statements made during the plea proceedings:
DAVILA was a member of the Bronx-based street gang known as the Taylor Avenue Crew or Bugatti, and in that capacity committed the murder of Beard. From at least 2008 to September 2015, members and associates of the Taylor Avenue Crew enriched themselves by selling drugs, such as “crack” cocaine, and committed acts of violence, including murder and attempted murder, against various people, including rival gang members, rival drug traffickers, and innocent bystanders. As part of this enterprise, members and associates of the Taylor Avenue Crew – including DAVILA – killed and attempted to kill others individuals. On March 3, 2015, DAVILA shot Beard to death in the vicinity of 1504 Leland Avenue.
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Mr. Kim praised the work of the New York City Police Department, the Drug Enforcement Administration, and Homeland Security Investigations. He also thanked the Bronx County District Attorney’s Office for their participation and support in this case.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Scott Hartman, Jessica Lonergan, and Jason Swergold are in charge of the prosecution.
Turkish Banker Arrested for Conspiring to Evade U.S. Sanctions Against Iran and Other OffensesRead the Press Release
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 Division of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a Complaint charging MEHMET HAKAN ATILLA with conspiring with others, including Reza Zarrab, a/k/a “Riza Sarraf,” to use the U.S. financial system to conduct transactions on behalf of the Government of Iran and other Iranian entities, which were barred by United States sanctions, and to defraud U.S. financial institutions by concealing the true nature of these transactions. ATILLA was arrested on March 27, 2017, and will be presented later today in Manhattan federal court before United States Magistrate Judge James C. Francis IV.
Acting U.S. Attorney Joon H. Kim stated: “As alleged, Mehmet Hakan Atilla, a Turkish banker, participated in a years-long scheme to violate American sanctions laws by helping Reza Zarrab, a major gold trader, use U.S. financial institutions to engage in prohibited financial transactions that illegally funneled millions of dollars to Iran. As alleged in the criminal complaint unsealed today, Atilla worked with Zarrab to create and use fraudulent documents to try to disguise prohibited Iranian financial transactions as food that would qualify under the humanitarian exception to the sanctions regime. United States sanctions are not mere requests or suggestions; they are the law. And those who use the American financial system to violate the sanctions laws, as Atilla is alleged to have done, will be investigated and prosecuted aggressively. I thank the FBI and the career prosecutors in my Office for their tireless work and dedication in this and other important investigations of alleged sanctions violators.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Iran continues to illustrate it will use whatever means necessary to evade sanctions and violate U.S. law. Our work in this case shows the unscrupulous behavior by exposing how the men charged allegedly moved massive amounts of money through U.S. banks disguised as humanitarian efforts to feed people in need. In this instance, they allegedly utilized a Turkish national and a financial institution that knowingly shielded the true nature of the transactions. The FBI and the U.S. Intelligence Community have dedicated investigators and analysts who won’t stop weeding out every action Iran takes to continue its alleged illegal activity.”
According to the allegations contained in the Complaint[1]:
Beginning in or about 1979, the President has repeatedly found that the situation in Iran constitutes an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States and declared a national emergency to deal with the threat. Pursuant to these presidential declarations, the United States has instituted a host of economic sanctions against Iran and Iranian entities pursuant to the International Emergency Economic Powers Act (the “IEEPA”). This sanctions regime prohibits, among other things, financial transactions involving the United States or United States persons that were intended for the Government or Iran or Iranian entities.
Specifically, ATILLA, Zarrab, and others protected and hid Zarrab’s ability to provide access to international financial networks, including U.S. financial institutions, to the Government of Iran, Iranian entities, and entities identified by the Department of the Treasury Office of Foreign Assets Control as Specially Designated Nationals (“SDNs“). They did so by, among other things, using the Turkish bank at which ATILLA acted as Deputy General Manager of International Banking (“Turkish Bank-1”) to engage in transactions that violated U.S. sanctions against Iran. In particular, they took steps to protect and hide Zarrab’s ability to supply currency and gold to the Government of Iran, Iranian entities, and SDNs using Turkish Bank-1 without subjecting Turkish Bank-1 to U.S. sanctions. As described in more detail in the Complaint, ATILLA, Zarrab, and others conspired to create and use false and fraudulent documents to disguise prohibited transactions for Iran and make those transactions falsely appear as transactions involving food and thus falling within humanitarian exceptions to the sanctions regime.
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MEHMET HAKAN ATILLA, 47, is a resident and citizen of Turkey. ATILLA is charged with conspiracies to violate the IEEPA and to commit bank fraud. The conspiracy to violate the IEEPA carries a maximum term of 20 years in prison. The bank fraud conspiracy count carries a maximum term of 30 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 and its New York Field Office, Counterintelligence Division, and the Department of Justice, National Security Division, Counterintelligence and Export Control Section. He also thanked U.S. Customs and Border Protection for their assistance in the arrest, and the Justice Department’s Office of International Affairs for its assistance on this case.
The prosecution of this case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys Michael D. Lockard, Sidhardha Kamaraju, and David W. Denton, Jr., and Special Assistant United States Attorney Dean Sovolos, are in charge of the prosecution, with assistance from Trial Attorney David Recker of the Counterintelligence and Export Control Section.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
Acting Manhattan U.S. Attorney and NYPD Commissioner Announce Arrest of Narcotics Dealer Responsible for Heroin Overdose Death in A Hospital Rehabilitation ClinicRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a complaint charging ANTHONY DODAJ with narcotics dealing that resulted in the heroin overdose death of a 41-year-old woman while the victim was a patient in a hospital rehabilitation clinic.
The complaint alleges that DODAJ participated in a conspiracy to distribute heroin, and that heroin distributed by DODAJ on January 1, 2016, resulted in the death of Ivy Katz in New York, New York. DODAJ was arrested this morning and presented today in Manhattan federal court before United States Magistrate Judge James C. Francis IV. DODAJ faces a mandatory minimum term of 20 years in prison.
Acting U.S. Attorney Joon H. Kim stated: “As alleged, Anthony Dodaj hand-delivered a fatal dose of heroin to a recovering addict inside a rehabilitation facility. Together with our partners at the NYPD, we will continue to prosecute those who prey on others’ addictions, as alleged here.”
NYPD Commissioner James P. O’Neill stated: “As alleged, the defendant preyed on the vulnerable – peddling poison to those seeking help. Today, the defendant finds himself under arrest with the possibility of spending the rest of his life in prison for the crimes alleged in the complaint.”
According to the complaint[1]:
From December 2016 up to January 2017, in the Southern District of New York and elsewhere, ANTHONY DODAJ and others conspired to sell heroin. As part of that conspiracy, on January 1, 2016, DODAJ delivered heroin to Ivy Katz, a 41-year-old recovering heroin addict. In mid-December 2016, Katz had voluntarily checked herself into an inpatient rehabilitation program for opioid dependence at a hospital located in New York, New York (the “Hospital”). On January 1, 2017, DODAJ entered the Hospital and met with Katz in the Hospital’s inpatient rehabilitation ward. Approximately 30 minutes after DODAJ left the Hospital, Katz was found comatose in her room with a needle containing heroin in her arm. Katz never regained consciousness, and ultimately died on January 16, 2017.
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DODAJ, 46, of the Bronx, New York, faces a maximum sentence of life in prison, and a mandatory minimum sentence of 20 years in prison.
The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by a 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 Attorney David W. Denton Jr. is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
U.S. Attorney’s Office for the Southern District of New York Recovers $3.7 Billion in Forfeitures and Civil Actions in Fiscal Year 2016Read the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the Office obtained recoveries of more than $1.4 billion in forfeiture actions, more than $2.2 billion in civil actions, and more than $31 million from restitution, criminal fines, and special assessments, between October 1, 2015, and September 30, 2016.
Manhattan Acting U.S. Attorney Joon H. Kim said: “The $3.7 billion in forfeitures, penalties, and fines for fiscal year 2016 recovered by this Office demonstrate that those who break the law or commit civil offenses will not be allowed to profit from their misconduct. We are committed to taking the profit out of crime and compensating victims whenever possible through our prosecutions and civil actions.”
Forfeitures
Forfeited funds are generally deposited into the Department of Justice Assets Forfeiture Fund (the “Assets Forfeiture Fund”) and the Department of Treasury Forfeiture Fund. The forfeited funds are used to restore money to crime victims and for a variety of law enforcement purposes.
General Motors
$900 million forfeited
In September 2015, the General Motors Company (“GM”) entered into a deferred prosecution agreement with this Office based on charges that GM concealed a potentially deadly safety defect from its U.S. regulator, the National Highway Traffic Safety Administration, and, in the process, misled consumers concerning the safety of certain of GM’s cars. Pursuant to the deferred prosecution agreement, GM, among other things, agreed to the forfeiture of $900 million to the United States, which was completed in 2015.
Bank Julius Baer
$219,250,000 forfeited
In February 2016, Bank Julius Baer & Co. Ltd. (“Julius Baer”), a Swiss bank headquartered in Zurich, entered into a deferred prosecution agreement with this Office based on charges that Julius Baer conspired with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide billions of dollars in offshore accounts from the IRS and to evade U.S. taxes on the income earned in those accounts. Pursuant to the deferred prosecution agreement, Julius Baer, among other things, agreed to the forfeiture of $219,250,000 to the United States.
PokerStars and Related Cases
$81,003,765 forfeited
In July 2012, the United States reached an agreement with the two largest online poker companies in the United States, Full Tilt Poker and PokerStars. The United States had brought a civil forfeiture and money laundering action against these companies and their assets. Under the terms of the settlement, Full Tilt Poker forfeited essentially all of its assets to the United States. PokerStars agreed to forfeit $547 million, to be paid in several installments, and to reimburse the approximately $184 million owed by Full Tilt Poker to foreign players. The settlement further provided that PokerStars would acquire the forfeited Full Tilt Poker assets from the United States. Fiscal Year 2016, $48 million was forfeited to the United States by PokerStars and more than $33 million was forfeited by other parties in related actions. To date, in excess of $1.3 billion has been forfeited in the PokerStars civil forfeiture action and related cases.
U.S. v. Tucker et al., and Related Cases
$48 million forfeited
In February 2016, this Office charged Scott Tucker and Jason Muir with violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and the Truth in Lending Act (“TILA”) for operating a $2 billion nationwide internet payday lending enterprise that systematically evaded state laws in order to charge illegal interest rates as high as 700% on loans. In connection with that investigation, on February 9, 2016, the United States entered into a non-prosecution agreement with two tribal corporations controlled by the Miami Tribe of Oklahoma, a Native American tribe. As part of that agreement, the tribal corporations agreed to the forfeiture of $48 million in criminal proceeds from Tucker’s payday lending enterprise that were held in tribal bank accounts.
VimpelCom
$40 million forfeited
In February 2016, VimpelCom Limited, an Amsterdam-based telecommunications company, entered into a deferred prosecution agreement with this Office and the Fraud Section of the Criminal Division of the Department of Justice based on charges that VimpelCom conspired to make bribe payments to a government official in Uzbekistan between 2006 and 2012. Pursuant to the deferred prosecution agreement, VimpelCom, among other things, agreed to forfeit $40 million to the United States.
Civil Actions and Restitution, Criminal Fines, and Special Assessments
U.S. v. Wells Fargo Bank, N.A. et al.
$1.2 billion collected
In April 2016, Wells Fargo Bank, N.A., settled a False Claims Act lawsuit brought by this Office alleging that Wells Fargo had engaged in reckless underwriting of Federal Housing Administration mortgage loans for nearly a decade. As part of the settlement, Wells Fargo paid $1.2 billion and admitted to certain conduct alleged in the complaint, and a Wells Fargo executive also made admissions.
U.S. v. CenterLight Healthcare, Inc. et al.
$46.7 million collected
In January 2016, this Office simultaneously filed a lawsuit against and entered into a settlement with CenterLight Healthcare, Inc., and CenterLight Health System, Inc. (collectively, “CenterLight”), resolving False Claims Act claims arising from the enrollment of ineligible members in CenterLight’s managed long-term care plan. Under the terms of the settlement, CenterLight paid a total of $46,751,086.74 to the Medicaid Program, $18,700,434.70 of which went to the United States. In addition, CenterLight was required to reform its business practices and admit to conduct alleged in the complaint.
U.S. ex rel. Krigstein v. Motives, Inc.
$13.375 million collected
In July 2016, this Office simultaneously filed a False Claims Act lawsuit and entered into a $13.375 million settlement with Motives, Incorporated, an importer of clothing, and Motives Far East and Motives China Limited, foreign manufacturers of clothing (collectively, “Motives”), for conspiring to underpay customs duties. (United States v. Motives, Inc., No. 13 Civ. 9030 (GBD)). As part of the settlement, Motives paid a total of $13.375 million and admitted to allegations in the complaint.
United States ex rel. Peikin et al. v. Salix Pharmaceuticals, Inc. and United States ex rel. Dhaliwal v. Salix Pharmaceuticals, Inc.
$54 million collected
In June 2016, this Office simultaneously sued and settled with Salix Pharmaceuticals, Inc. (“Salix”), a specialty pharmaceutical company. The settlement, in the amount of $54 million, resolved claims that Salix violated the Anti-Kickback Statute and False Claims Act by using its “speaker programs” as a mechanism to pay kickbacks to doctors to induce them to prescribe Salix drugs and medical devices that were reimbursed by federal health care programs. In connection with the settlement, Salix admitted to paying doctors to serve as “speakers” at events that were primarily social in nature, that were held at high-end restaurants, and where the “speakers” spent little or no time discussing the relevant Salix product.
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The Criminal Division’s Money Laundering and Asset Forfeiture Unit is led by Chief Sarah Eddy and Deputy Chief Alexander Wilson and handles all criminal and civil forfeiture actions for the Office. Civil recoveries are handled by the Office’s Civil Division, which is led by Jeffrey Oestericher. Criminal and civil collections are handled by the Civil Division’s Financial Litigation Unit, which is led by Kathleen Zebrowski.
For further information, the United States Attorneys’ Annual Statistical Reports can be found online at http://www.justice.gov/usao/reading_room/foiamanuals.html.
Investment Adviser and Broker Found Guilty in Manhattan Federal Court of Securities Fraud, Wire Fraud, Conspiracy and Aggravated Identity Theft ChargesRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that CHRISTOPHER CERVINO, a/k/a “Smitty,” and SHEIK F. KHAN, a/k/a “Abida Khan,” were found guilty yesterday afternoon in Manhattan federal court after a three-week jury trial before U.S. District Judge Andrew L. Carter, Jr. for their roles in a securities fraud scheme involving a publicly traded over-the-counter company called VGTel, Inc. (“VGTL”).
Acting U.S. Attorney Joon H. Kim said: “Yesterday, a unanimous jury found Sheik Khan, an investment adviser, and Christopher Cervino, a registered broker, guilty of securities fraud relating to a company called VGTel. The stock fraud scheme Khan and Cervino participated in defrauded 100 investors of more than $15 million, including nearly $5 million from Khan’s clients. For their roles in the scheme, Khan and Cervino now stand convicted of federal crimes.”
According to the Indictment, other filings in Manhattan federal court, and the evidence presented at trial:
The VGTL scheme was conceived and led by Edward Durante, a recidivist securities fraud defendant who pleaded guilty in August 2016 to various crimes related to VGTL, including conspiracy, securities fraud, money laundering and perjury. The defendants’ efforts to artificially inflate the market for VGTL increased the stock price from approximately $.25 per share in April 2012 to as much as $1.90, and dramatically inflated the trading volume, which increased the defendants’ abilities to raise private investments in VGTL. To compensate CERVINO for his efforts to control and manipulate the market in VGTL, Durante made at least two cash payments to CERVINO totaling $35,000, in addition to the substantial commissions Cervino received for executing trades in VGTL. For her part, KHAN received more than $400,000 from Durante, including more than $100,000 in payments for liquidating her clients’ investments in safe annuities so that the money could then be invested into VGTL. KHAN’s clients lost virtually the entirety of their investments in VGTL.
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CERVINO, 44, of Franklin Lakes, New Jersey, and KHAN, 50, of Las Vegas, Nevada, were each convicted of one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison; one count of securities fraud, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; and one count of wire fraud, which carries a maximum sentence of 20 years in prison. In addition to these charges, KHAN was also convicted of investment adviser fraud, which carries a maximum sentence of five years in prison, and aggravated identity theft crimes, which carries a mandatory sentence of two years in prison.
The statutory maximum 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 work of the Federal Bureau of Investigation and the U.S. Postal Inspection Service, and thanked the Securities and Exchange Commission for its assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Andrea M. Griswold, Rebecca Mermelstein, and Daniel Goldman are in charge of the prosecution.
Bloods Gang Member Sentenced in Manhattan Federal Court to 22 Years in Prison for 2006 MurderRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that LARRY GREEN, a/k/a “Mafia,” a/k/a “Maf,” was sentenced in Manhattan federal court to 22 years in prison, in connection with the 2006 drug-related murder of Shawn Williams, a/k/a “Showtime” (“Williams”) in Paterson, New Jersey. Sentenced was imposed by U.S. District Judge Laura Taylor Swain.
Acting U.S. Attorney Joon H. Kim said: “This case is yet another example of the senseless violence that often accompanies drug dealing on our city streets. Today, Larry Green was sentenced to 22 years in prison for murdering a rival drug dealer over a turf dispute in Paterson, New Jersey. This case exemplifies the determination of this Office and our law enforcement partners to ensure that even after 11 years, the perpetrator would be held responsible for this ruthless murder.”
GREEN previously pled guilty to participating in a conspiracy to distribute and possess with the intent to distribute more than one kilogram of heroin.
According to the indictment previously filed in Manhattan federal court and public information:
GREEN, an enforcer of the Fruit Town Brims set of the Bloods street gang, was arrested on February 22, 2014, in Paterson, New Jersey. On March 17, 2016, GREEN pled guilty to participating in a conspiracy to distribute and possess with the intent to distribute more than one kilogram of heroin, from 2006 through 2014. GREEN admitted that, as part of the charged narcotics distribution offense, he and his co-conspirators were engaged in an ongoing dispute concerning, alia, drug distribution territory in Paterson. In connection with that ongoing dispute, on or about July 2, 2006, GREEN encountered Williams, who was inside a vehicle that was driving in the vicinity of 145 North Main Street, in Paterson. GREEN pulled out a firearm, and fired one shot at the vehicle, striking and killing Williams.
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Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation (“FBI”) Newark Division, the Paterson Police Department, the Passaic County Prosecutor’s Office, the Clifton Police Department, and the New Jersey State Police.
The Office’s Violent and Organized Crime Unit is overseeing the case. Assistant U.S. Attorney Justina L. Geraci is in charge of the prosecution.
Acting Manhattan U.S. Attorney Announces Settlement with American University of Beirut, Resolving Claims It Provided Material Support to Three Entities Designated Prohibited Parties Under U.S. LawRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Jonathan Schofield, Special Agent in Charge of the Office of Inspector General for the U.S. Agency for International Development (“USAID-OIG”), announced today the settlement of a civil fraud lawsuit against AMERICAN UNIVERSITY OF BEIRUT (“AUB”), a teaching-centered research university located in Beirut, Lebanon, that receives funding from USAID. The settlement resolves claims that during the period December 2007 through March 2016 (the “Covered Period”), AUB violated the federal False Claims Act (the “FCA”) by providing material support to three entities that had been included on the U.S. Office of Foreign Assets Control’s (“OFAC”) Specially Designated Nationals and Blocked Persons List (the “SDN List”). The SDN List is a list of individuals and entities, such as terrorists and narcotics traffickers, that have been identified as engaging in conduct antithetical to U.S. interests. The three SDN List entities at issue here are al Nour Radio, al Manar TV, and Jihad al-Binaa. Al Nour Radio and al Manar TV have been on the SDN List since March 2006, while Jihad al-Binaa has been on the SDN List since February 2007, and thus all three are prohibited parties under U.S. law. The Government’s Complaint alleges that AUB provided material support to those three SDN List entities by (1) providing specialized training on a variety of media topics to representatives of al Nour Radio and al Manar TV, and (2) including Jihad al-Binaa in a database that AUB maintained on its public website (the “NGO database”) for the stated purpose of connecting Non-Governmental Organizations (“NGOs”) with students and others interested in assisting them.
Today, U.S. District Court Judge J. Paul Oetken approved a settlement agreement to resolve the Government’s claims against AUB. Under the settlement, AUB is required to pay $700,000 to the United States and has revised its internal policies to ensure that, going forward, it complies with applicable U.S. laws. In addition, in connection with the settlement, AUB has admitted to and accepted responsibility for (1) holding journalism training workshops that were attended by representatives of entities that were prohibited parties under U.S. law, and (2) including in the NGO database an entity that was a prohibited party under U.S. law.
Acting Manhattan U.S. Attorney Joon H. Kim said: “For years, the American University of Beirut accepted grant money from USAID, but failed to take reasonable steps to ensure against providing material support to entities on the Treasury Department’s prohibited list. Without such proper safeguards, the University ended up providing training to entities that were prohibited parties under U.S. law. With today’s settlement, the University is being made to pay a financial penalty for its conduct, and importantly, it has admitted to its conduct and agreed to put proper precautions in place to ensure that it does not happen again.”
USAID-OIG Special Agent in Charge Jonathan Schofield said: “USAID OIG thanks the Southern District of New York for partnering so effectively to ensure the programs of USAID are executed safely and effectively. Implementers executing USAID’s critical programs around the world, regardless of the context, must remember that all contract regulations and applicable laws still apply to them. Too often, implementers and funding recipients report to USAID that they have taken necessary precautions or requisite steps – such as checking the SDN List – when in fact those actions were not undertaken or done properly. Today, we see once again that there are consequences for those who fail to live up to their obligations while executing their award or mandate under a USAID program.”
As alleged in the Government’s Complaint and set forth in the parties’ settlement agreement, both of which have been filed in Manhattan federal court:
Since at least 2007, AUB has received monetary grants from USAID to fund various university projects and programs. As a condition of receiving those grants, AUB submitted certifications to USAID each year in which it represented, inter alia, that it “has not provided, and will take all reasonable steps to ensure that it does not and will not knowingly provide, material support or resources to any individual or entity that commits, attempts to commit, advocates, facilitates, or participates in terrorist acts, or has committed, attempted to commit, facilitated, or participated in terrorist acts.” In these annual certifications, AUB further represented that “[b]efore providing any material support or resources to an individual or entity, [it] will verify that the individual or entity does not appear . . . on the [SDN List].” The annual certifications defined “material support and resources” to include, among other things, “training, expert advice or assistance, . . . [and] personnel.”
Notwithstanding the above-referenced certifications, during the Covered Period, AUB provided specialized training to al Nour Radio and al Manar TV. Specifically, AUB held three multi-day training workshops (in 2007, 2008 and 2009) during which it provided specialized training on a variety of media topics to a group of journalists that included representatives of al Nour Radio and al Manar TV. For example, one of the training workshops, titled “Citizen/Online Journalism,” was conducted over five days in December 2007, and consisted of two Internet and news media experts providing training to the attendees – one of whom was from al Nour Radio – on various topics, including the creation of online blogs; photo, audio and video editing and production; linking to other websites; podcasting; packaging stories for multimedia and different platforms; and presentation of final products. The three training workshops provided the two SDN List entities with knowledge and insight they could use to more effectively communicate their desired message and reach their target audience. At the time the three training workshops were conducted, AUB was on notice that they were being attended by representatives of al Nour Radio and al Manar TV.
In addition, during the Covered Period, AUB allowed Jihad al-Binaa to be included in the NGO database. This was also contrary to the above certifications, as it provided a mechanism for this SDN List entity to recruit persons interested in assisting it.
Because AUB provided specialized journalism training to representatives of two SDN List entities and included a third SDN List entity in the NGO database, its certifications to USAID during the Covered Period that it had not provided and would take all reasonable steps to ensure that it did not knowingly provide material support or resources to SDN List entities were false. As a result of those false certifications, AUB induced USAID to provide it with monetary grants that but for the false certifications, USAID would not have provided.
As part of the settlement, AUB admitted, acknowledged, and accepted responsibility for the following conduct:
- During the period 2007 through 2009, as part of its Journalism Training Program, AUB held on-campus workshops taught by experienced journalists, highly-regarded academics, and representatives from government organizations. The workshops were full-day events which typically took place over the course of several days.
- Three of the Journalism Training Program workshops that AUB held during the period 2007 through 2009 were conducted in a manner that was inconsistent with AUB’s certifications to USAID, in that they were attended by representatives of entities that were prohibited parties under U.S. law.
- During the Covered Period, AUB maintained a public website that included a database of NGOs. The purpose of this database was to connect students interested in engaging in social work with relevant NGOs.
- During the Covered Period, AUB included information in the NGO database that was inconsistent with its certifications to USAID. Specifically, AUB included in the NGO database an entity that was a prohibited party under U.S. law, along with contact information for that entity.
In connection with the settlement, AUB has also agreed to revise its internal policies to ensure that it complies with applicable U.S. laws and the terms of the grants it receives. Such revisions include revisions to its USAID Grant Compliance Policy and its Policy on Compliance with U.S. Economic Sanctions Programs to provide for additional training of AUB administrative and academic staff on compliance with applicable U.S. laws and grant terms; regular audits by an external auditor of AUB’s compliance with applicable U.S. laws and grant terms; and periodic reviews for purposes of making appropriate updates to relevant AUB internal policies and procedures. Moreover, upon request by USAID or any other U.S. agency that provides AUB with grants or any other type of funding, AUB shall provide such agency with, inter alia, a list of the administrative and academic staff who received the above-referenced training, together with a description of the training they received, as well as a written report, prepared by the external auditor, of the results of each of the above-referenced audits, and a description of any actions taken by AUB in response to such audits.
In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that previously had been filed under seal pursuant to the False Claims Act.
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Mr. Kim thanked USAID-OIG for its investigative efforts and assistance with the case.
The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Christopher B. Harwood is in charge of the case.
Founder of Non-Profit Organization Sentenced to 36 Months in Prison for Defrauding Parents of Abducted ChildrenRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that PETER SENESE, the Founding Director of the I CARE Foundation (“I CARE”), a purported non-profit organization allegedly dedicated to preventing child abduction and trafficking, was sentenced in Manhattan federal court today by U.S. District Naomi R. Buchwald to 36 months in prison for wire fraud and conspiracy to commit wire fraud. In connection with the scheme, SENESE defrauded parents of international abduction victims by falsely representing that he could find and return the children to the United States in exchange for payments to fund his purported international rescue operation. SENESE pled guilty September 8, 2016.
Manhattan Acting U.S. Attorney Joon H. Kim said: “In this most cruel and heartbreaking criminal scheme, Peter Senese preyed on the most vulnerable and desperate victims, anguished parents of abducted children. Senese did more than just steal his victims’ money – he robbed them of hope. For seeking personal profit out of others’ pain and tragedy, Senese has been convicted of federal crimes and will now do time in a federal prison. We hope this prosecution provides some measure of justice to those who were so callously victimized by Senese.”
As alleged in the Superseding Indictment and in other documents filed in federal court:
Between November 2013 and February 2015, on his websites (www.stopchildabduction.org and www.petersenese.com) and elsewhere, SENESE claimed falsely that I CARE was “a self-funded not-for-profit 501-C-3 corporation” that successfully “reunited numerous internationally kidnapped children” with their parents “while protecting an exponentially larger number of children from abduction.” SENESE credited I CARE’s success to the “great efforts, financial, legal, and investigative resources” of individuals associated with I CARE, including a team of former members of the U.S. Army component Delta Force. In one instance, SENESE represented to a parent-victim that he could recover her child from India, appearing on a local radio program with the parent-victim, and sending numerous text messages and emails to the parent-victim stating falsely that he was in a “remote location” in India, was communicating with her child, and that the child would be returned to the United States in a matter of hours or days. Though he never traveled overseas or communicated with the child, SENESE collected over $70,000 from the parent-victim.
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In addition to the prison sentence, SENESE, 51, of Brooklyn, New York, was ordered to pay restitution and forfeiture in the amount $85,100.
Mr. Kim praised the outstanding work of the FBI for its investigative efforts and ongoing support and assistance with the case.
The prosecution is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Jaimie L. Nawaday is in charge of the case.
Founder and Former CEO of Technology Firm Charged with Defrauding Investors Out of $6 MillionRead the Press Release
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 today the unsealing of an indictment charging MARYSE LIBURDI with defrauding investors out of more than $6 million through a technology company founded and operated by LIBURDI. The defendant was arrested by Italian authorities in Rome, Italy, in April 2016, and arrived in the Southern District of New York yesterday following her extradition. LIBURDI was arraigned this afternoon and the case has been assigned to U.S. District Judge Denise Cote.
Acting Manhattan U.S. Attorney Joon H. Kim said: “As alleged, Maryse Liburdi repeatedly lied to investors in her tech company, telling them the company was profitable when it was in fact generating no revenue. Rather than using investor money to operate her company, she was allegedly spending it on herself and her family, paying for personal expenses like spas and salons, wine, luxury clothing, and rental fees on a three-bedroom Manhattan apartment.”
FBI Assistant Director William F. Sweeney Jr. said: “We see this behavior time and time again--fraudsters intentionally misrepresenting a company's financials to lure investors down a path from which it's particularly hard to return. Today, Maryse Liburdi is charged with allegedly defrauding investors out of more than $6 million over the course of several years, all the while converting much of the money to her own personal and extravagant use. As long as this type of criminal activity continues to go on, we will continue to go after those responsible for it.”
According to the allegations contained in the criminal Complaint and Indictment filed against LIBURDI:[1]
Since at least in or about 2008, LIBURDI perpetrated a multi-year scheme to defraud individuals into investing more than $6 million 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 hundreds of thousands of dollars of investor funds to LIBURDI’s own use, including rent for LIBURDI’s Manhattan apartment and to purchase luxury clothing and other personal items.
While LIBURDI repeatedly told investors that the Company had millions of dollars in revenue, a review of the Company’s bank records shows 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.
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LIBURDI, 45, formerly of Victoria, Minnesota, and 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 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. He also thanked Italian law enforcement authorities, including Interpol Rome, for their assistance in the arrests, as well as the Department of Justice’s Attaché at the U.S. Embassy in Rome and the DOJ Office of International Affairs.
This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Elisha J. Kobre is in charge of the prosecution.
The charges contained in the Complaint and the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and Indictment and the description of the Complaint and Indictment set forth below constitute only allegations and every fact described should be treated as an allegation.
Six New Jersey Men Charged in Manhattan Federal Court in Telemarketing Fraud Scheme Targeting the ElderlyRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the arrest of ARASH KETABCHI, a/k/a “Zach Peterson,” ANDREW OWIMRIN, a/k/a “Andrew Owens, a/k/a “Jonathan Stewart,” WILLIAM SINCLAIR, MICHAEL FINOCCHIARO, a/k/a “Michael Foster,” ARIEL PERALTA, and JOSEPH McGOWAN for conspiring to commit wire fraud and money laundering. KETABCHI, OWIMRIN, SINCLAIR, FINOCCHIARO, PERALTA, and McGOWAN were arrested this morning and will be presented this afternoon before U.S. Magistrate Judge Henry B. Pitman in Manhattan federal court.
Acting Manhattan U.S. Attorney Joon H. Kim said: “As alleged, these defendants targeted the elderly, convincing them to ‘invest’ in their businesses with promises of financial returns. In fact, as alleged, these defendants never fulfilled their promises, and instead swindled their victims out of thousands of dollars. Thanks to the cooperative work of HSI and the NYPD, these defendants will now have to answer for their alleged criminal acts.”
HSI Special Agent-in-Charge Angel M. Melendez said: “For almost three years, these defendants allegedly targeted some of the most vulnerable in our society, the elderly, by running a fraudulent telemarketing scheme that bilked the victims out of several thousands of dollars. It is very important that individuals do their due diligence when deciding to invest with companies. If the promise on returns seems too good to be true, then it probably is.”
Police Commissioner James P. O’Neill said: “As alleged, the defendants targeted the elderly, promising big payoffs. Instead, ‘investors’ were victim to a purported business development scheme that stole from our most vulnerable. Today, the defendants find themselves under arrest and facing serious charges. Thanks to the detectives, agents, and prosecutors whose work resulted in today’s announcement.”
According to the allegations in the Complaint unsealed today in Manhattan federal court[1]:
Beginning in October 2013 through September 2016, KETABCHI, OWIMRIN, SINCLAIR, FINOCCHIARO, PERALTA, and McGOWAN operated a group of telemarketing companies (the “Telemarketing Companies”) that engaged in a fraudulent scheme (the “Telemarketing Scheme”), by which they promised to earn victims (the “Victims”) money in exchange for particular Victims making an initial cash “investment” in business development, website design, grant applications, or tax preparation services. Many Victims, the majority of whom are over 70 years old, “invested” thousands of dollars with the Telemarketing Companies, but did not earn any of the promised returns. When Victims of the Telemarketing Scheme sought refunds, or fought credit card charges, the Telemarketing Companies provided explanations and documentation to the credit card companies falsely representing that the Victims had received the promised services.
KETABCHI, OWIMRIN, SINCLAIR, FINOCCHIARO, PERALTA, and McGOWAN participated in the Telemarketing Scheme by, among other things, operating the interrelated Telemarketing Companies as set forth in the chart below:
Telemarketing Company
Defendants
A1 Business Consultants
Element Business Services
Elevated Business Consultants
Arash Ketabchi, a/k/a “Zach Peterson”
Andrew Owimrin, a/k/a “Andrew Owens,” a/k/a “Jonathan Stewart”
Olive Branch Marketing
Paramount Business Solutions
William Sinclair
Michael Finocchiaro, a/k/a “Michael Foster”
Carlyle Management Group
Ariel Peralta
Vanguard Business Solutions
Joseph McGowan
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KETABCHI, 43, of Wayne, New Jersey, OWIMRIN, 27, of Hackensack, New Jersey, SINCLAIR, 37, of Secaucus, New Jersey, FINOCCHIARO, 34, of East Rutherford, New Jersey, PERALTA, 31, of Cliffside Park, New Jersey, and McGOWAN, 31, of West New York, New Jersey, are each charged with one count of conspiring to commit wire fraud and one count of conspiring to commit money laundering, each of which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Kim praised the outstanding investigative work of HSI and the NYPD. He added that the investigation is ongoing.
The prosecution is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Kiersten A. Fletcher and Robert B. Sobelman are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
If you have any information regarding KETABCHI, OWIMRIN, SINCLAIR, FINOCCHIARO, PERALTA, or McGOWAN, or victims of the Telemarketing Companies, please report it by phone at 917-480-7167 or by email at [email protected].
[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.
Manhattan Energy Investor Sentenced to 70 Months in Prison for Evading over $45 Million of Income and Sales TaxesRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that MORRIS ZUKERMAN, a Manhattan businessman who owns companies involved in energy investments, was sentenced today to 70 months in prison for engaging in multi-year tax fraud schemes pursuant to which he evaded over $45 million in income taxes and other taxes. ZUKERMAN pled guilty on June 3, 2016, before United States District Judge Analisa Torres, who imposed today’s sentence.
Acting U.S. Attorney Joon H. Kim said: “While amassing a personal fortune through, among other things, the $130 million sale of his company, Morris Zuckerman cheated on his taxes for years, illegally scheming to evade almost every one of his tax liabilities. Through his criminal schemes, Zukerman deprived the public of over $45 million in taxes he rightfully owed. For brazenly cheating on his tax obligations – a duty that all Americans owe to each other – Zukerman will now spend significant time in a federal prison.”
According to the allegations in the Indictment to which ZUKERMAN pled guilty, other documents filed in Manhattan federal court, and statements made in court proceedings:
ZUKERMAN, the principal of M.E. Zukerman & Co. (“MEZCO”), an investment firm located in Manhattan, schemed to evade taxes based on income received from the January 2008 sale of a petroleum products company (the “Oil Company”) he co-owned (through a MEZCO subsidiary) with a public company. ZUKERMAN schemed to evade the reporting of the sale – which resulted in the receipt by the MEZCO subsidiary of $130 million in gross sales proceeds – by falsely telling his accountants in mid-2008 that he had transferred ownership of the MEZCO subsidiary to a family trust in early 2007. In support of the false story he gave to the accountants, ZUKERMAN created backdated documents such as promissory notes and a board resolution purporting to show the transfer of the subsidiary to his family trust in 2007. The false documents allowed ZUKERMAN to remove the MEZCO subsidiary from the consolidated tax reporting being handled by the accountants for MEZCO and thereby evade the reporting to the IRS of the sale of the Oil Company, as well as the payment of over $33 million in corporate income taxes.
Following the sale of the Oil Company, ZUKERMAN transferred the proceeds of the sale from the MEZCO subsidiary to his family trust, his personal bank accounts, and various corporations he controlled, including a company called Zukerman Investments. Between 2008 and 2013, ZUKERMAN directed that over $50 million of the funds transferred to Zukerman Investments be used to purchase paintings by European artists from the 15th through the 19th centuries (the “Old Master paintings”), which ZUKERMAN used to decorate his Upper East Side apartment and the apartments of two family members – Family Member-1 and Family Member-2.
In connection with the purchase of the Old Master paintings, ZUKERMAN schemed to defraud New York State of over $4.5 million of sales and use taxes by directing that the paintings, which were frequently purchased from galleries located blocks from ZUKERMAN’s Manhattan residence, be shipped by the galleries to ZUKERMAN’s corporate addresses located in Delaware and New Jersey, and transported immediately thereafter (sometimes within minutes), by ZUKERMAN and others, back to ZUKERMAN’s residence in New York – all without the payment to New York State of sales or use taxes.
ZUKERMAN also schemed to evade personal income taxes and to obstruct the IRS by (i) causing various tax return preparers to prepare U.S. Individual Income Tax Returns, Forms 1040, for ZUKERMAN and his wife, and for Family Member-1, Family Member-2, and Family Member-3, that claimed, in the aggregate, millions of dollars of false and fraudulent deductions and expenses, such as phony charitable contributions and investment interest expenses; (ii) diverting, for personal use, corporate assets from MEZCO and other corporate entities ZUKERMAN controlled by directing that hundreds of thousands of dollars of fees be paid between 2007 and 2013 to Family Member-1, Family Member-2, and Family Member-3, for which the family members performed little or no work; (iii) directing that corporate funds be used to pay compensation to, and health care insurance for, a household employee of ZUKERMAN, whom ZUKERMAN also caused to be falsely identified as a MEZCO employee to ZUKERMAN’s corporate health care provider when, in truth and fact, the household employee worked exclusively out of ZUKERMAN’s homes in New York City and Maine as a domestic employee; (iv) falsely under-reporting employment taxes through the payment of hundreds of thousands of dollars of cash and other wages to ZUKERMAN’s domestic employees; and (v) providing false information to the IRS during audits in an attempt to fraudulently convince IRS auditors and other IRS employees that the fraudulent claims made on his previously filed tax returns were accurate when, in truth, they were not.
The False Charitable Contribution Deductions for the 2009 & 2011 Tax Years
ZUKERMAN’s fraudulent charitable contribution deductions – totaling $1 million – arose out of a real estate transaction in 2009 and 2010, pursuant to which ZUKERMAN purchased approximately 240 acres of property on Black Island, a small island located off the coast of Maine, close to ZUKERMAN’s home on a nearby island. ZUKERMAN was enlisted to purchase the Black Island property by the Maine Coast Heritage Trust (“MCHT”), a Maine-based land conservation entity that was seeking to orchestrate the purchase, for conservation purposes. After considering making a charitable contribution to the MCHT to allow MCHT to purchase the property, ZUKERMAN decided instead to purchase the land as the outright owner for the benefit of himself and his family for $1 million through a newly formed limited liability company he solely owned. ZUKERMAN, however, falsely told his tax return preparer that the $1 million he paid for the property should be declared on his personal income tax returns as a charitable contribution to MCHT during the 2008 and 2010 tax years. ZUKERMAN subsequently signed the false 2008 and 2010 tax returns and caused them to be filed with the IRS.
The Audit Fraud
ZUKERMAN sought to defraud the IRS during three separate audits. In audits of his personal returns and that of a family member, ZUKERMAN provided his accountants with false documents and false information in an attempt to provide support for false items previously placed on individual tax returns by him. During an IRS audit of one of ZUKERMAN’s companies, ZUKERMAN attempted to obstruct the audit by utilizing two attorneys from a law firm in Washington, D.C., to convey a false factual narrative to an IRS Appeals Officer.
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In imposing ZUKERMAN’S sentence, Judge Torres stated: “Mr. Zukerman’s crimes were driven by unmitigated greed,” and that ZUKERMAN “thought himself to be above the law.”
In addition to the prison term, ZUKERMAN, 72, of New York, New York, was sentenced to three years of supervised release and ordered to pay a $37,547,951 in restitution to the IRS and New York State Department of taxation and finance. ZUKERMAN was also fined $10 million.
Mr. Kim praised the outstanding investigative work of the IRS and the U.S. Postal Inspection Service.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Special Assistant United States Attorney Stanley J. Okula, Jr. and Assistant United States Attorney Edward Imperatore are in charge of the prosecution.
Man Who Moved Drug Overdose Victim’s Unresponsive Body to Cover up Drug Crime Pleads Guilty to Being Accessory After the FactRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that MARC HENRY JOHNSON pled guilty today before U.S. District Judge Jesse M. Furman to acting as an accessory after the fact to a narcotics offense. As alleged in the Indictment to which JOHNSON pled guilty and the related criminal Complaint, JOHNSON helped move an unresponsive woman’s body out of a Manhattan apartment where the woman had overdosed on cocaine.
Acting U.S. Attorney Joon H. Kim said: “Marc Henry Johnson’s immediate response to seeing a dying overdose victim should have been to summon help. Instead, Johnson helped his cocaine dealer cover up the drug crime by moving the victim’s body. In this time of a growing overdose epidemic, today’s guilty plea should serve as a reminder that the proper response to a potential drug overdose is to immediately call 911, not to delay to help cover for the drug dealer.”
According to the allegations contained in the Indictment and the Complaint against JOHNSON and codefendant James Holder:
JOHNSON regularly bought cocaine from Holder, who lived in and sold cocaine from a third-floor apartment in Chelsea. During the night of October 3, 2015, and the early morning hours of October 4, 2015, JOHNSON met with a 38-year-old woman (“Individual-1”) and others at a bar in Manhattan. Individual-1 had been using cocaine before JOHNSON arrived. Later, JOHNSON and Individual-1 left the bar together in a taxi. They arrived at Holder’s apartment building at approximately 4:25 a.m., and walked upstairs to Holder’s apartment. Hours later, JOHNSON and Holder dragged Individual-1’s apparently unconscious body into the building’s first-floor vestibule. Holder then left the building, and JOHNSON called 911 to summon an ambulance. JOHNSON declined to provide his name to the 911 operator, and he did not identify Individual-1, or describe his relationship to her, or explain what had happened to her and why she needed medical assistance. Emergency Medical Technicians (“EMTs”) responded and found Individual-1 unresponsive in the Chelsea building’s vestibule. JOHNSON left the building soon after the EMTs arrived.
Individual-1 was taken to a hospital and pronounced dead later on October 4, 2015. Her death was caused by, among other things, cocaine use.
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JOHNSON pled guilty to one count of acting as an accessory after the fact to the offense of maintaining a drug-involved premises. The accessory-after-the-fact offense carries a maximum sentence of 10 years in prison. JOHNSON is scheduled to be sentenced by Judge Furman on June 26, 2016.
Holder pled guilty before Judge Furman on December 12, 2016, to maintaining a drug-involved premises, which carries a maximum sentence of 20 years in prison. Holder is scheduled to be sentenced by Judge Furman on May 4, 2017, at 3:00 p.m.
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 U.S. Drug Enforcement Administration’s (DEA) New York Organized Crime Drug Enforcement Strike Force, which comprises agents and officers of the DEA, the New York City Police Department, Immigration and Customs Enforcement – Homeland Security Investigations (HSI), the New York State Police, the U. S. Internal Revenue Service Criminal Investigation Division, the Federal Bureau of Investigation, U.S. Secret Service, the U.S. Marshal Service, New York National Guard, the New York Department of Taxation and Finance, the Rockland County Sheriff’s Office, the Clarkstown Police Department, Port Washington Police Department, and New York State Department of Corrections and Community Supervision. The Strike Force is partially funded by the New York/New Jersey High Intensity Drug Trafficking Area (HIDTA), which is a federally funded crime fighting initiative.
The case is being prosecuted by the Office’s Narcotics Unit. Assistant U.S. Attorneys Margaret Garnett and David Abramowicz are in charge of the prosecution.
Long Island Man Found Guilty of Defrauding South Korean School of over $5 MillionRead the Press Release
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 found guilty today in Manhattan federal court in connection with a scheme to defraud a Christian missionary school in South Korea of $5.5 million dollars. The jury convicted COSME on both counts with which he was charged following a one-week trial before U.S. District Judge Loretta A. Preska.
Acting Manhattan U.S. Attorney Joon H. Kim said: “As a unanimous jury swiftly concluded after trial, William Cosme duped and defrauded a South Korean international school out of $5.5 million, money the school needed to carry out its mission of educating children. Cosme then took this stolen money and spent it lavishly on himself, including on a Lamborghini, a Ferrari, and a Cadillac Escalade, not to mention a 110-day gambling spree in Las Vegas. Cosme now faces time in a federal prison for his brazen crimes.”
According to the Indictment, other filings in Manhattan federal court, 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. None of those claims was true.
In about January 2011, COSME, acting through his company Cosmo Dabi International Trading Group Inc. (“Cosmo Dabi”), entered into an agreement with a Christian missionary 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 purchasing 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 failed to invest the $5.5 million as he had promised, and made a series of misrepresentations to the leadership of the International School as to why they had not been issued their promised loan payments. COSME also 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 connection with his fraud on the International School, COSME also used, without authorization, the identities of two individuals by falsely representing to the International School that these individuals were officers of Cosmo Dabi.
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COSME, 51, resides in Jericho, New York. He faces a minimum sentence of two years in prison for his conviction for aggravated identity theft, and a maximum sentence of 20 years in prison for his wire fraud conviction. COSME also faces a maximum term of three years of supervised release and a fine of the greatest of $250,000, or twice the gross pecuniary gain derived from the offense or twice the gross pecuniary loss to the victim. COSME’s sentencing is set for June 21, 2017, before the Honorable Loretta A. Preska.
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 efforts of Federal Bureau of Investigation in the investigation.
The case is being prosecuted 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.
Lithuanian Man Arrested for Theft of over $100 Million in Fraudulent Email Compromise Scheme Against Multinational Internet CompaniesRead the Press Release
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 criminal charges against EVALDAS RIMASAUSKAS for orchestrating a fraudulent business email compromise scheme that induced two U.S.-based internet companies (the “Victim Companies”) to wire a total of over $100 million to bank accounts controlled by RIMASAUSKAS. RIMASAUSKAS was arrested late last week by authorities in Lithuania on the basis of a provisional arrest warrant. The case has been assigned to U.S. District George B. Daniels.
Acting U.S. Attorney Joon H. Kim said: “From half a world away, Evaldas Rimasauskas allegedly targeted multinational internet companies and tricked their agents and employees into wiring over $100 million to overseas bank accounts under his control. This case should serve as a wake-up call to all companies – even the most sophisticated – that they too can be victims of phishing attacks by cyber criminals. And this arrest should serve as a warning to all cyber criminals that we will work to track them down, wherever they are, to hold them accountable. The charges and arrest in this case were made possible thanks to the terrific work of the FBI and the cooperation of the victim companies and their financial institutions. We thank the companies and their banks for acting quickly, coming forward promptly, and cooperating with law enforcement; it led not only to the charges announced today, but also the recovery of much of the stolen funds.”
FBI Assistant Director William F. Sweeney Jr. said: “As alleged, Evaldas Rimasauskas carried out a business email compromise scheme creatively targeting two very specific victim companies. He was initially successful, acquiring over $100 million in proceeds that he wired to various bank accounts worldwide. But his footprint would eventually lead investigators to the truth, and today we expose his lies. Criminals continue to commit a wide variety of crimes online, and significant cyber data breaches have had a negative impact across a variety of industries. The FBI will continue to work with our domestic and international partners to pursue criminals who engage in this type of activity, wherever they may be hiding.”
According to the allegations contained in the Indictment unsealed today[1]:
From at least in or around 2013 through in or about 2015, RIMASAUSKAS orchestrated a fraudulent scheme designed to deceive the Victim Companies, including a multinational technology company and a multinational online social media company, into wiring funds to bank accounts controlled by RIMASAUSKAS. Specifically, RIMASAUSKAS registered and incorporated a company in Latvia (“Company-2”) which bore the same name as an Asian-based computer hardware manufacturer (“Company-1”), and opened, maintained, and controlled various accounts at banks located in Latvia and Cyprus in the name of Company-2. Thereafter, fraudulent phishing emails were sent to employees and agents of the Victim Companies, which regularly conducted multimillion-dollar transactions with Company-1, directing that money the Victim Companies owed Company-1 for legitimate goods and services be sent to Company-2’s bank accounts in Latvia and Cyprus, which were controlled by RIMASAUSKAS. These emails purported to be from employees and agents of Company-1, and were sent from email accounts that were designed to create the false appearance that they were sent by employees and agents of Company-1, but in truth and in fact, were neither sent nor authorized by Company-1. This scheme succeeded in deceiving the Victim Companies into complying with the fraudulent wiring instructions.
After the Victim Companies wired funds intended for Company-1 to Company-2’s bank accounts in Latvia and Cyprus, RIMASAUSKAS caused the stolen funds to be quickly wired into different bank accounts in various locations throughout the world, including Latvia, Cyprus, Slovakia, Lithuania, Hungary, and Hong Kong. RIMASAUSKAS also caused forged invoices, contracts, and letters that falsely appeared to have been executed and signed by executives and agents of the Victim Companies, and which bore false corporate stamps embossed with the Victim Companies’ names, to be submitted to banks in support of the large volume of funds that were fraudulently transmitted via wire transfer.
Through these false and deceptive representations over the course of the scheme, RIMASAUSKAS, the defendant, caused the Victim Companies to transfer a total of over $100,000,000 in U.S. currency from the Victim Companies’ bank accounts to Company-2’s bank accounts.
* * *
RIMASAUSKAS, 48, of Vilnius, Lithuania, is charged with one count of wire fraud and three counts of money laundering, each of which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory minimum sentence of two 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, and thanked the Prosecutor General’s Office of the Republic of Lithuania, the Lithuanian Criminal Police Bureau, the Vilnius District Prosecutor’s Office and the Economic Crime Investigation Board of Vilnius County Police Headquarters for their assistance in the investigation and arrests, as well as the Department of Justice’s Office of International Affairs.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Eun Young Choi is in charge of the prosecution. Assistant U.S. Attorney Edward Diskant is handling the forfeiture aspects of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Acting Manhattan U.S. Attorney Announces the Arrest of Chukwuemeka Okparaeke for Conspiracy to Distribute Analogues of Fentanyl on the DarknetRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Phillip R. Bartlett, the Inspector in Charge of the New York Division of the United States Postal Inspection Service (“USPIS”), and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced the arrest of CHUKWUEMEKA OKPARAEKE for conspiracy to distribute large quantities of an analogue of fentanyl. Fentanyl and its analogues are synthetic opioids that are significantly stronger than heroin, and are major contributors to overdose fatalities.
Acting U.S. Attorney Joon H. Kim said: “The defendant’s alleged scheme combined one of the gravest current threats to public health – highly addictive and potentially lethal opioids – with a very modern criminal tool – the darknet. Okparaeke allegedly sold fentanyl-like controlled substances through an online black market to conceal the nature of the transactions and his identity. I want to thank our partners at the U.S. Postal Service for bringing Okparaeke’s alleged criminal exploitation out of the dark.”
USPIS Inspector in Charge Phillip R. Bartlett said: “Opioids such as fentanyl have become a public health crisis robbing many of productive futures and their very lives. Postal Inspectors have always made it their mission to protect the public and the U. S. Postal Service from these alleged drug traffickers, putting an end to their criminal enterprise through their misuse of the U. S. Mail.”
HSI Special Agent in Charge Angel M. Melendez said: “The defendant used an online black marketplace known as the ‘darknet’ to acquire large amounts of fentanyl which is a major factor in the large increase in overdose fatalities in our area. Describing himself as a darknet drug trafficker, this arrest shows that the darknet is no longer a secret place for criminals to conduct illegal activity while evading law enforcement.”
According to the allegations contained in the Complaint[1] charging OKPARAEKE:
Using the United States Postal Service, OKPARAEKE engaged in a conspiracy to receive and traffic kilograms of fentanyl analogues throughout the United States. During the operation of the conspiracy, OKPARAEKE received massive quantities of fentanyl analogues from suppliers abroad, repackaged the analogues into smaller quantities, and shipped them to customers using post offices throughout the New York-New Jersey area. To transact with customers and coordinate his sales, OKPARAEKE used an online black marketplace on the “darknet,” accessible only through a special software program that allows users to mask their identities through a process of encryption and decryption between numerous peer-to-peer connections. He used extensive measures to conceal his identity, including measures to encrypt his internet traffic and communications sent from his cellphone. Under an alter ego, he boasted about his exploits as a darknet drug trafficker online, where he also posted a short story detailing his criminal activities and his success at evading law enforcement.
* * *
OKPARAEKE, 28, is charged with one count of conspiracy to distribute large quantities of an analogue of fentanyl, which carries a maximum sentence of life in prison and a mandatory minimum sentence 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.
OKPARAEKE was arrested today in Kearny, New Jersey, and will be presented later today before the Honorable Lisa M. Smith in United States District Court in White Plains, New York.
Mr. Kim praised the outstanding investigative work of the USPIS, HSI, the Fairfax County Police Department in Fairfax County, Virginia, the Office of the Attorney General in Virginia, and the Middletown Police Department. Mr. Kim thanked the Fairfax County Police Department for its significant contributions to the investigation and for its assistance in the arrest and apprehension of the defendant.
The case is being prosecuted by the Office’s White Plains Division. Assistant United States Attorney Gillian Grossman is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
Acting Manhattan U.S. Attorney and FBI Announce Charges Against Correction Officer in Rikers Island AssaultRead the Press Release
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 criminal charges against RODINY CALYPSO, a New York City Correction Officer, in the assault of an inmate at Rikers Island. CALYPSO was charged with repeatedly punching and elbowing the inmate in the head and face without physical provocation while the inmate was handcuffed behind his back, in violation of his rights under the United States Constitution, and with filing a false report in order to cover up the incident. CALYPSO was arrested this afternoon on charges contained in a criminal Complaint and is expected to be presented in federal court later today.
Acting Manhattan U.S. Attorney Joon H. Kim said: “Rodiny Calypso allegedly violated a Rikers Island inmate’s constitutional rights by viciously beating him – without physical provocation – while the inmate was restrained in handcuffs. As we have said before, the protections of our Constitution extend to those in prisons, and this Office will remain vigilant about protecting the rights of all, including those confined within the walls of Rikers Island.”
FBI Assistant Director William F. Sweeney Jr. said: “Today, Rodiny Calypso, a New York City Correction Officer, is charged with subjecting an inmate to cruel, unnecessary, and inappropriate punishment—behavior that simply won’t be tolerated. The rules that apply to the appropriate use of force are specific and clear, and the vast majority of those within the law enforcement community are quick to adhere to them. Today’s charges not only defend the rights of all prisoners to be afforded proper treatment under the law, but also the reputation of those within the criminal justice system who uphold the rule of law; if you don’t, you’ll swiftly be removed from serving in any official capacity.”
According to the Complaint[1] unsealed today in Manhattan federal court:
Rikers Island is a jail complex, located in the Bronx, New York, maintained by the New York City Department of Correction. At the time of his assault, the inmate (“Inmate-1”) was housed in pretrial detention in the Otis Bantum Correctional Center (“OBCC”), a facility that houses, among other inmates, inmates in need of maximum security. Inmate-1 was housed in Dorm 5 North, a dormitory area within the OBCC in which inmates were generally kept in solitary confinement in individual cells for 23 hours per day. The shower facilities within Dorm 5 North were individual stalls, to be occupied by one inmate at a time, and to which inmates were brought handcuffed, then uncuffed through a port in the shower stall door, and then handcuffed again through the port before being brought out of the stalls by correction officers.
The Assault and Cover-Up
Shortly before noon on February 27, 2014, CALYPSO relieved another correction officer at 5 North while Inmate-1 was in the shower. Inmate-1 and CALYPSO had an extended verbal exchange, during which CALYPSO picked up some personal items Inmate-1 had dropped outside of the door through the port. At one point, CALYPSO stepped away from the door and spoke to a fellow correction officer one level down within the dorm area. That person left the dorm area and returned with another officer (“Officer-1”), who looked up at the shower area.
CALYPSO rear-cuffed Inmate-1 for removal and briefly looked down in the direction of the other officer. CALYPSO then opened the door to the shower stall and immediately punched Inmate-1 several times in the face. He followed Inmate-1 into the shower area, where he put Inmate-1 into a headlock and punched him several more times in the head. CALYPSO began to lose his footing at this point, and clung to Inmate-1’s side. Officer-1 arrived in the stall at this point. As Officer-1 restrained Inmate-1, CALYPSO regained his footing and elbowed Inmate-1 repeatedly – approximately five times – in the head. As a result of the assault, Inmate-1 suffered lacerations to his face and the back of his head. The entire assault was captured on surveillance video and witnessed by multiple inmates whose cells were positioned opposite the shower area.
The New York City Department of Correction issues directives governing the circumstances under which the use of force against inmates is appropriate. Under these directives, force is to be used as a last resort, when an inmate in restraints is still dangerous to himself and others. Among other things, the directives prohibit: the use of more force than is necessary to restrain an inmate, control a situation, or protect oneself or others; the use of force out of proportion to the threat posed by an inmate at the time; the use of blows where a control hold, grasping, or pushing would suffice to restrain the inmate; the direction of blows to the head if the use of such blows is otherwise avoidable; and multiple strikes, punches, or kicks where a single blow would be sufficient to stop an inmate’s attack.
After the assault, CALYPSO filled out a “Use of Force Report” form on which he was supposed to report the circumstances of that assault. In that Use of Force Report, CALYPSO attempted to justify his conduct by falsely stating that Inmate-1 had spit on him and attempted to spit on him again. He also mischaracterized and misstated portions of the assault, omitting the punches he delivered while holding Inmate-1 in a headlock and claiming that he had hit CALYPSO in the “upper torso” area.
* * *
RODINY CALYPSO, 38, of Springfield Gardens, New York, is charged with one count of deprivation of rights under color of law, which carries a maximum sentence of 10 years in prison, and one count of filing false forms, which carries a maximum sentence of 20 years in prison. CALYPSO faces a maximum sentence of 30 years in prison.
Mr. Kim praised the investigative work of the FBI. Mr. Kim also thanked the New York City Department of Investigation, the New York City Department of Correction, Investigative Division, and the Bronx District Attorney’s Office for their assistance in the investigation, which remains ongoing.
This case is being handled by the Office’s Civil Rights and Public Corruption Units. Assistant U.S. Attorneys Tara M. La Morte and Martin S. Bell are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations and every fact described should be treated as an allegation.
Former Chairman and Ceo of Credit Union and Operator of Unlawful Bitcoin Exchange Found Guilty in Manhattan Federal Court of Bribery and Fraud SchemeRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that TREVON GROSS, the former Chairman and CEO of Helping Other People Excel Federal Credit Union (“HOPE FCU”), located in Lakewood, New Jersey, and YURI LEBEDEV, a former member of HOPE FCU’s Board of Directors and a former employee of Coin.mx, an internet-based Bitcoin exchange, were found guilty today in Manhattan federal court, in connection with a bribery scheme to take over control of HOPE FCU and a fraud scheme in furtherance of the operations of Coin.mx. The jury convicted GROSS and LEBEDEV on all counts with which they were charged in the controlling indictment following a four-week trial before U.S. District Judge Alison J. Nathan.
Acting Manhattan U.S. Attorney Joon H. Kim said: “As a unanimous jury found today, Yuri Lebedev and others at Coin.mx, an unlawful Bitcoin exchange, tricked banks into processing millions of dollars in transactions by hiding the true nature of their business. When the banks caught on to their scheme, Lebedev and others bribed Trevon Gross so they could have a captive credit union to process those transactions, undermining the credit union’s safety and solvency. Despite elaborate efforts to hide their schemes, the defendants’ conduct was exposed at trial and found for what they were, federal crimes.”
According to the Indictment, other filings in Manhattan federal court, and evidence admitted at trial:
The Unlawful Bitcoin Exchange
Between 2013 and July 2015, LEBEDEV helped operate Coin.mx, an unlawful internet-based Bitcoin exchange, along with Anthony Murgio, the founder of Coin.mx. LEBEDEV and his co-conspirators engaged in substantial efforts to evade detection of their unlawful Bitcoin exchange by operating through a phony front company called “Collectables Club.” Coin.mx 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. LEBEDEV 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. Through the illegal Coin.mx scheme, LEBEDEV 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, LEBEDEV, Murgio, and their 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 GROSS’s direction to bank accounts in the name of a church where GROSS served as the pastor, Murgio, LEBEDEV, and their co-conspirators took control of HOPE FCU. With GROSS’s assistance, Murgio installed LEBEDEV and 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, including LEBEDEV. Thereafter, GROSS, LEBEDEV, and others worked to run tens of millions of dollars of ACH (Automated Clearing House) transactions through the credit union without adequate controls, thus putting its financial condition at risk.
GROSS, LEBEDEV, Murgio, and their co-conspirators also obstructed an examination of HOPE FCU by the National Credit Union Administration (“NCUA”) and made false statements to the NCUA in order to perpetuate LEBEDEV and 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.
* * *
LEBEDEV, 39, of St. John’s, Florida, and GROSS, 52, of Jackson, New Jersey, were found guilty of one count of making corrupt payments to an officer of a financial institution and one count of receipt of corrupt payments by an officer of a financial institution, respectively, each of which carries a maximum sentence of 30 years in prison. LEBEDEV and GROSS also were each found guilty of participation in a conspiracy to make and receive corrupt payments, as well as to obstruct the examination of the NCUA and make false statements to the NCUA, which carries a maximum sentence of five years in prison. LEBEDEV was also found guilty of one count of wire fraud, one count of bank fraud, and one count of conspiracy to commit wire and bank fraud, each of which carries a maximum sentence of 30 years in prison. Their sentencings are set for July 20, 2017, before the Honorable Alison J. Nathan.
All four of LEBEDEV and GROSS’s co-defendants, including Anthony Murgio, have pled guilty and are awaiting sentence.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Kim praised the outstanding investigative work of the FBI and the Secret Service. He also thanked the NCUA for its assistance with the investigation and prosecution.
The case is being prosecuted 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.
Six Members and Associates of the Hells Angels Charged in White Plains Federal Court with Racketeering, Narcotics, and Money Laundering OffensesRead the Press Release
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 Division of the Federal Bureau of Investigation (“FBI’), announced the unsealing of an Indictment charging six members and associates of the Hells Angels with various racketeering, narcotics, and money laundering offenses, including the assault of a rival gang member with a hammer.
THOMAS SCHMIDT, JOSEPH KAPLAN, JOHN CALVACCHIO, JEFF AMATO, and GARY PAGANELLI were taken into federal custody this morning and were presented before United States Magistrate Judge Judith C. McCarthy. MICHAEL PICCIONE was taken into federal custody this morning near Los Angeles, California, and will be presented later today before a magistrate judge in the Central District of California. The case has been assigned to U.S. District Judge Cathy Seibel.
Acting U.S. Attorney Joon H. Kim said: “As alleged, through the sale of cocaine, oxycodone, and marijuana and their violent conflict with rival gangs, members of the New Roc Hells Angels wreaked havoc on the streets of Westchester, Putnam, and Dutchess counties. Together with our law enforcement partners, we are determined to combat gang and drug violence throughout the Southern District of New York.”
FBI Assistant Director William F. Sweeney Jr. said: “Violent gangs such as the Hells Angels often use violence and intimidation as a means to establish themselves or protect their ‘turf.’ In this case they allegedly used those tactics by attacking a rival gang member with a hammer in the middle of a restaurant and placing innocent people in danger. Regardless of the name these men operate under, the FBI Westchester Safe Streets Gang Task Force works daily to remove these alleged violent members of our society and to create a safer community for everyone.”
As alleged in the Indictment unsealed today in White Plains federal court[1] and in court proceedings:
The New Roc Hells Angels were a criminal enterprise that operated principally in and around Westchester, Putnam, and Dutchess counties, from at least 2008 up to and including August 2014. The New Roc Hells Angels’ objectives included narcotics trafficking, extortion, money laundering, contraband cigarettes, prostitution, and altered motor vehicle parts.
Members and associates of the New Roc Hells Angels engaged in acts of violence against rival gang members. One of these acts was a December 2012 gang assault committed against a rival motorcycle gang – the Diablos – where members and associates of the New Roc Hells Angels beat a member of the Diablos on the head with a hammer at a restaurant in Poughkeepsie, New York, while innocent bystanders were dining. This violent act was to retaliate against the Diablos, who had encroached on the territory controlled by the New Roc Hells Angels, and otherwise to promote the standing and reputation of the New Roc Hells Angels among rival gangs.
Count One of the Indictment charges THOMAS SCHMIDT, the former Vice-President of the New Roc Hells Angels, with participating in a racketeering conspiracy.
Count Two charges SCHMIDT and JOSEPH KAPLAN with assault in aid of racketeering activity in connection with the December 2012 assault of a member of a rival gang.
Count Three charges SCHMIDT, MICHALE PICCIONE, JOHN CALVACCHIO, JEFF AMATO, and GARY PAGANELLI with participating in a narcotics conspiracy, in connection with the distribution of cocaine, oxycodone, and marijuana.
Count Four charges SCHMIDT and PICCIONE with conspiracy to commit money laundering.
Count Five charges PAGANELLI with possessing with intent to distribute and distributing cocaine.
Count Six charges AMATO with possessing with intent to distribute and distributing methamphetamine.
* * *
Charts containing the names, ages, residences, charges, and maximum penalties for the defendants are set forth below. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Kim praised the outstanding investigative work of the FBI.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorney John P. Collins Jr. is in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
COUNT
CHARGE
DEFENDANTS
MAX. PENALTIES
1
Racketeering conspiracy
18 U.S.C. § 1962(d)
THOMAS SCHMIDT
Life in prison
Mandatory minimum of 10 years in prison
2
Assault in aid of racketeering activity
18 U.S.C. §§ 1959(a)(3)
THOMAS SCHMIDT
JOSEPH KAPLAN
20 years in prison
3
Narcotics conspiracy
21 U.S.C. § 846
THOMAS SCHMIDT
MICHAEL PICCIONE
JOHN CALVACCHIO
JEFF AMATO
GARY PAGANELLI
Life in prison
Mandatory minimum of 10 years in prison
4
Money Laundering
Conspiracy
18 U.S.C. § 1956(h)
THOMAS SCHMIDT
MICHAEL PICCIONE
20 years in prison
5
Possessing with Intent to Distribute and Distributing Cocaine
21 U.S.C. § 841(a)(1) & (b)(1)(C)
GARY PAGANELLI
20 years in prison
6
Possessing with Intent to Distribute and Distributing Methamphetamine
21 U.S.C. § 841(a)(1) & (b)(1)(C)
JEFF AMATO
20 years in prison
DEFENDANT
AGE
RESIDENCE
THOMAS SCHMIDT
52
Staten Island, NY
JOSEPH KAPLAN
30
Valhalla, NY
MICHAEL PICCIONE
33
Arieta, CA
JOHN CALVACCHIO, a/k/a “Uncle”
53
Kent, NY
JEFF AMATO
50
Mamaroneck, NY
GARY PAGANELLI
47
Cortlandt Manor, NY
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Robert Pizarro and Juan Rivera Charged in Violent Robbery and Kidnapping of Bronx Man, Which Resulted in Man’s DeathRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, James J. Hunt, Special Agent-in-Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), George P. Beach II, the Superintendent of the New York State Police (“NYSP”), and James P. O’Neill, the Police Commissioner of the City of New York (“NYPD”), announced the arrest of ROBERT PIZARRO and JUAN RIVERA on charges of kidnapping conspiracy, kidnapping resulting in death, robbery conspiracy, robbery, and firearms offenses. The defendants have been remanded and remain in custody.
Manhattan Acting U.S. Attorney Joon H. Kim said: “As alleged, Robert Pizarro and Juan Rivera robbed, terrorized, and ultimately killed 36-year-old Robert Bishun. Today’s arrests mark the end of an exhaustive investigation by the DEA, the NYPD, and the New York State Police, and the beginning of justice for Bishun’s family.”
DEA Special Agent in Charge of the New York Field Division James J. Hunt said: “This investigation led law enforcement through a violent series of events leading to a murder by strangulation. The New York Drug Enforcement Task Force’s REDRUM Group and the U.S. Southern District of New York identified the alleged crimes committed by Pizarro and Rivera and worked collaboratively to arrest them today.”
NYSP Superintendent George P. Beach II said: “I applaud the hard work of our law enforcement partners on the DEA New York Drug Enforcement Task Force. Through solid police work, two suspects have been put behind bars and two dangerous men are off of our streets. These men not only allegedly kidnapped a man from his business, robbing him of hard earned money – but they ultimately took his life. We look forward to continuing our strong partnership with the Task Force, and bringing those who commit these heinous types of crimes, to justice.”
NYPD Commissioner James P. O’Neill said: “As alleged, the brazen violence carried out by the defendants named in this indictment demonstrates a blatant disregard for both the law and human life. I commend the prosecutors, investigators, and agents who diligently brought this case to its swift conclusion.”
According to the allegations contained in the Indictment[1] and other documents in the public record, and statements made in court:
On September 20, 2016, PIZARRO and RIVERA robbed Robert Bishun at gunpoint in his auto body shop in the Bronx. They then kidnapped Bishun, forcing him into his own car, and driving it away. Bishun’s body was found several hours later in the back seat of his car. The Office of the Chief Medical Examiner of New York City concluded that the cause of Bishun’s death was strangulation.
On a prior occasion, in January 2015, PIZARRO robbed Robert Bishun at gunpoint at the same auto body shop, taking approximately $10,000 cash from Bishun.
* * *
PIZARRO, 37, of the Bronx, and RIVERA, 39, of the Bronx, are each charged with one count of kidnapping conspiracy, which carries a maximum sentence of life in prison; one count of kidnapping resulting in death, which carries a maximum sentence of death; one count of robbery conspiracy, which carries a maximum sentence of 20 years in prison; and one count of use of a firearm, which carries a maximum sentence of life in prison. PIZARRO is also charged with one count of robbery related to his January 2015 robbery of Bishun, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by a judge
Mr. Kim praised the investigative efforts of the DEA New York Drug Enforcement Task Force, which comprises agents and officers of the DEA, NYPD, and NYSP.
The case is being prosecuted by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Margaret Graham, Jessica Fender, and Jared Lenow are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Former Neighborhood Patrol Leader Sentenced to 32 Months in Prison for Bribing Nypd Police Officers to Approve and Expedite Gun Licenses for ClientsRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ALEX LICHTENSTEIN, a/k/a “Shaya,” was sentenced in Manhattan federal court today to 32 months in prison for bribery and conspiracy to commit bribery in connection with his payment of tens of thousands of dollars in cash bribes to New York City Police Department (“NYPD”) officers in exchange for the officers’ approval and expediting of gun licenses for LICHTENSTEIN’s paying clients. LICHTENSTEIN, who previously pled guilty, was sentenced today by the United States District Judge Sidney H. Stein.
Acting Manhattan U.S. Attorney Joon H. Kim said: “By engaging in an egregious scheme to trade cash for gun licenses, Alex Lichtenstein and his co-defendants in the New York City Police Department corrupted the sensitive process of evaluating gun license applications in New York City. Today’s sentence shows that individuals who so brazenly abuse the public’s trust in law enforcement – whether they are the officers receiving bribes or the citizens paying them – will be held to account for their crimes.”
As alleged in the Superseding Indictment against LICHTENSTEIN and established in connection with LICHTENSTEIN’s sentencing proceedings:
LICHTENSTEIN, who previously served as a leader in the Shomrim, a neighborhood patrol in Borough Park, Brooklyn, started a business in 2013 expediting gun license applications for clients. In return for a fee ranging from $10,000 to $16,000 per application, LICHTENSTEIN purportedly assisted his clients in navigating the gun licensing process within the NYPD. However, rather than provide legitimate services for his exorbitant fees, LICHTENSTEIN instead bribed two officers in the NYPD’s Licensing Division to ensure success for nearly all of his clients’ applications. In particular, LICHTENSTEIN paid co-defendant Sergeant David Villanueva of the Licensing Division between hundreds of dollars and $1,000 per application, and Villanueva in turn provided some of the bribe money to co-defendant Richard Ochetal, another NYPD officer in the Licensing Division who participated in the approval of applications submitted by LICHTENSTEIN’s clients. In exchange for this cash, as well as other perks such as liquor and limousine rides, Villanueva and Ochetal approved the gun license applications sought by LICHTENSTEIN’s clients without conducting the requisite diligence on his clients. As a result, Villanueva and Ochetal approved gun licenses for individuals with criminal histories, including at least one with a previous felony conviction, histories of domestic violence, and other factors that would otherwise have resulted in rejections by the Police Department. Villanueva and Ochetal also approved licenses for individuals to carry concealed guns for business-related reasons, when in fact such individuals had no legitimate basis on which to claim the need for such licenses. In total, LICHTENSTEIN made at least between $150,000 and $250,000 from his clients, a portion of which he remitted to Villanueva and Ochetal as bribes.
In April 2016, after having been banned by the Licensing Division due to rumors regarding his significant fees, LICHTENSTEIN attempted to bribe another police officer to help him get his clients’ applications reviewed by the Licensing Division and approved. In a recorded conversation, LICHTENSTEIN offered the NYPD officer $6,000 per application in exchange for the officer’s assistance with the Licensing Division. Rather than accept LICHTENSTEIN’s proposal, the officer reported this contact to the Police Department, ultimately leading to LICHTENSTEIN’s arrest.
* * *
In addition to the prison term, LICHTENSTEIN, 45, of Pomona, New York, was sentenced to three years of supervised release and was ordered to forfeit $230,000.
Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation and the New York City Police Department’s Internal Affairs Bureau.
The prosecution is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys Russell Capone, Kan M. Nawaday, Lauren B. Schorr, and Martin Bell are in charge of the prosecution.
Acting U.S. Attorney Joon H. Kim Statement on the Investigation into City Hall FundraisingRead the Press Release
“In response to allegations of misconduct, this Office, along with the FBI, has been investigating fundraising by and on behalf of Mayor Bill de Blasio for his 2013 election campaign, the Campaign for One New York, and the 2014 State Senate effort. We have conducted a thorough investigation into several circumstances in which Mayor de Blasio and others acting on his behalf solicited donations from individuals who sought official favors from the City, after which the Mayor made or directed inquiries to relevant City agencies on behalf of those donors. In considering whether to charge individuals with serious public corruption crimes, we take into account, among other things, the high burden of proof, the clarity of existing law, any recent changes in the law, and the particular difficulty in proving criminal intent in corruption schemes where there is no evidence of personal profit. After careful deliberation, given the totality of the circumstances here and absent additional evidence, we do not intend to bring federal criminal charges against the Mayor or those acting on his behalf relating to the fundraising efforts in question. Although it is rare that we issue a public statement about the status of an investigation, we believe it appropriate in this case at this time, in order not to unduly influence the upcoming campaign and Mayoral election.”
Investment Adviser Sentenced in Manhattan Federal Court for Insider Trading Scheme Involving Pharmaceutical Industry StocksRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that DAVID HOBSON, a former investment adviser, was sentenced to six months in prison for engaging in a scheme to commit insider trading in connection with deals involving a pharmaceutical company (the “Pharma Company”) at which Michael Maciocio, HOBSON’s friend, client and co-conspirator, worked. HOBSON pled guilty on October 25, 2016, to one count of conspiracy to commit securities fraud and one count of securities fraud before United States District Judge Laura T. Swain, who also imposed today’s sentence.
Acting U.S. Attorney Joon H. Kim said: “David Hobson used his relationship with a childhood friend to obtain inside information, and then traded on that information, making hundreds of thousands of dollars in illegal profits. The securities market must be free and fair for all, and our Office’s commitment to investigating and prosecuting insider trading remains firm.”
According to the allegations contained in the Indictment filed against HOBSON and his co-conspirator and statements made in related court filings and proceedings:
From May 2008 through April 2014, HOBSON and Maciocio participated in a scheme to commit insider trading in advance of, and in connection with, acquisitions and transactions under consideration by the Pharma Company. HOBSON and Maciocio were childhood friends and HOBSON had served as Maciocio’s investment adviser and broker for many years.
Maciocio learned about the impending transactions through his role as a master planner in the Active Pharmaceutical Ingredient Supply Chain Group at the Pharma Company. In that role, Maciocio was tasked with evaluating manufacturing demands and capacity within the Pharma Company and was consulted about potential acquisitions to assist in determining whether the Pharma Company would be able to manufacture any new product in-house. Although Maciocio was not typically provided with the names of the companies targeted for acquisition, he used the inside information he received – including the Pharma Company’s code names for the acquisitions, the drug indications, the dosages, the phases of any clinical trials, and the chemical structure of the drugs – to uncover the true identities of the target companies. At times, HOBSON assisted Maciocio in determining the identities of these target companies based on the inside information Maciocio had obtained as part of his job.
Having learned about these impending transactions, Maciocio, in breach of fiduciary duties and other duties of trust and confidence owed to the Pharma Company, traded on his own behalf and tipped HOBSON, so that HOBSON could use the information to trade for both himself and for Maciocio. HOBSON also used the inside information to trade on behalf of some of his other investment advisory clients.
HOBSON used the inside information that he received from Maciocio to make profitable trades in, among other securities: Medivation, Inc., Ardea Biosciences, Inc., and Furiex Pharmaceuticals, Inc. As a result of the scheme, HOBSON reaped approximately $165,000 in ill-gotten gains for himself, $40,000 for Maciocio, and nearly $150,000 for certain of HOBSON’s other clients.
* * *
In addition to the term of imprisonment, HOBSON, 48, of Providence, Rhode Island, was sentenced to two years of supervised release and was ordered to forfeit $385,664.39.
Maciocio, 47, pled guilty to one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, and two counts of securities fraud on May 20, 2016. His sentencing has not yet been scheduled.
Mr. Kim praised the work of the Federal Bureau of Investigation, and thanked the U.S. Securities and Exchange Commission.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Aimee Hector and Rebecca Mermelstein are in charge of the prosecution.
49 Members and Associates of Two Bronx Drug Distribution Organizations Charged in Federal Court with Narcotics, Robbery, and Firearms OffensesRead the Press Release
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Darcel D. Clark, the Bronx County District Attorney, James O’Neill, the Commissioner of the New York City Police Department (“NYPD”), Angel M. Melendez, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), and James J. Hunt, Special Agent-in-Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), today announced the unsealing of two Indictments charging 49 members of two Bronx-based drug distribution organizations, with various narcotics, robbery, and firearms offenses, including the murder of Jose Morales on December 11, 2016.
Fifteen defendants associated with a drug distribution organization operating primarily on East 175th Street and Monroe Avenue in the Bronx are charged in United States v. James Felton, et al., which has been assigned to U.S. District Judge William H. Pauley. The defendants taken into federal custody today were presented before Magistrate Judges Barbara C. Moses and Henry B. Pitman. Three defendants, JAMES FELTON, JAMES DIAZ, and ANDRE FELTON, are currently incarcerated in federal custody on related charges and will be arraigned on the Indictment before Judge Pauley on March 23, 2017.
Thirty-four defendants associated with a drug distribution organization operating primarily on Weeks Avenue and East 176th Street in the Bronx are charged in United States v. Edwin Romero, et al., which has been assigned to U.S. District Judge Loretta A. Preska. The defendants taken into federal custody today were presented before Magistrate Judges Barbara C. Moses and Henry B. Pitman.
Manhattan Acting U.S. Attorney Joon H. Kim said: “Dozens of alleged members of two drug distribution organizations have been charged with peddling potentially lethal drugs. Many are also charged with committing violent crimes, including four who allegedly murdered Jose Morales in furtherance of their drug business. All New Yorkers are entitled to the peaceful enjoyment of their homes, free from the devastating effects of drugs and the violence that can accompany drug trafficking. Together with our law enforcement partners, we will continue to work to return the neighborhoods of the Bronx to the law-abiding people who live in them.”
Bronx District Attorney Darcel D. Clark said: “This case crystallizes how drug dealing’s attendant violence devastates our neighborhoods. These two organizations held the Mount Hope area in a vise grip of numerous street shootings, including at least one murder. In our fight against heroin and other drugs, we must always remain focused on the community residents who are victimized by these vicious traffickers.”
Police Commissioner James P. O’Neill said: “Today’s arrests are the latest example of drug dealing that led to violence, including armed robberies and a murder in the Bronx, as alleged. This type of precision policing is leading to further reductions in crime beyond last year’s all-time low. Many thanks to the detectives, agents, and the prosecutors in the Southern District we so often work with and whose diligence resulted in the leveling of these serious drug trafficking charges today.”
HSI Special Agent-in-Charge Angel M. Melendez said: “Today the law enforcement community in New York struck a serious blow to violent drug distribution organizations that operate in our city. Two such organizations allegedly flooded the community of Mount Hope in the Bronx with heroin, crack cocaine, fear and death. This is yet another step in our efforts to bring peace and hope to our communities by removing the alleged leadership and rank-and-file members of these organizations, putting an end to their menacing criminal conduct.”
DEA Special Agent in Charge of the New York Field Division James J. Hunt said: “Guns, violence and turf wars plague neighborhoods that drug dealers have turned into battlefields. Today, law enforcement has reclaimed the Mount Hope section of the Bronx by arresting dozens of alleged members of two drug trafficking organizations. DEA Agents working with HSI, NYPD, the Bronx District Attorney’s Office and the SDNY U.S. Attorney’s Office identified and dismantled these crews allegedly responsible for fueling drug addiction and drug-related violence.”
The Indictments[1] arise from a joint investigation by HSI, the DEA, and the NYPD into two violent drug trafficking organizations that operated in the 46th Precinct in the Bronx. Members of these drug trafficking organizations sold crack cocaine, cocaine, heroin, and marijuana, and they possessed and used firearms to further their drug trafficking activities.
Count One of the Indictment in U.S. v. James Felton, et al., unsealed today in Manhattan federal court, charges JAMES FELTON, JAMES DIAZ, ANDRE FELTON, EZEKIEL BURLEY, URIAH BROWN, BRADFORD CANNON, WILLIE REEVES, HAROLD FIELDS, ROBERT BRENT, DASHAUN MCDONALD, MATTHEW TORRES, TYRONE TURNER, KENDRICK MCCRAY, GINGER DIAZ, and JOSE SANDOVAL with conspiring to distribute and possess with intent to distribute crack cocaine, cocaine, heroin, and marijuana.
Counts Two charges JAMES FELTON, DIAZ, ANDRE FELTON, and BURLEY with the murder of Jose Morales, which occurred on December 11, 2016, in the vicinity of East 175th Street and Weeks Avenue, in the course of a narcotics conspiracy.
Count Three charges JAMES FELTON, DIAZ, ANDRE FELTON, and BURLEY with using, carrying, possessing, brandishing, and discharging a firearm during and in relation to a narcotics conspiracy, resulting in the death of Jose Morales on December 11, 2016.
Count Four charges JAMES FELTON, DIAZ, and BURLEY with using, carrying, possessing, brandishing, and discharging a firearm during and in relation to a narcotics conspiracy, on dates other than December 11, 2016.
Count Five charges BROWN, CANNON, REEVES, FIELDS, BRENT, MCDONALD, TORRES, TURNER, MCCRAY, DIAZ, and SANDOVAL with using, carrying, possessing, brandishing, and discharging firearms during and in relation to a narcotics conspiracy.
Count One of the Indictment in U.S. v. Edwin Romero, et al., unsealed today in Manhattan federal court, charges EDWIN ROMERO, RAFAEL ROMERO, FRANCIS PALUZZI, LUIS GONZALEZ, ANIBAL GONZALEZ, CARLOS MOTA, ELIMANUEL DIAZ, PEDRO OLIVO, ADRIAN SANCHEZ, DARYL SIMON, JEFFREY FERNANDEZ, JUAN VALDEZ, WILLIE TUCKER, KASAN NOBLE, DAMIAN SAUNDERS, DANIEL JEFFERSON, DERECK JEFFERSON, WAYNE SCOTT, ERIC RIVERA, MICHAEL MARTINEZ, MAXAMILLION MERCADO, KAREEM SIMMONDS, ALEXANDER PENA, ANTHONY CLASE, CARLOS ACOSTA, CHRISTOPHER RODRIGUEZ, GABRIEL GONZALEZ, JESUS MATA, NANA OWUSU, ROBERTO RAMIREZ, WILPHER RODRIGUEZ, YAWILIS RODRIGUEZ, JESUS ABAD, and ANGEL GUANCE with conspiring to distribute and possess with intent to distribute crack cocaine, cocaine, heroin, and marijuana.
Count Two charges EDWIN ROMERO, SANCHEZ, VALDEZ, TUCKER, and YAWILIS RODRIGUEZ with conspiring to commit robbery.
Count Three charges EDWIN ROMERO, RAFAEL ROMERO, FRANCIS PALUZZI, LUIS GONZALEZ, ANIBAL GONZALEZ, CARLOS MOTA, ELIMANUEL DIAZ, PEDRO OLIVO, ADRIAN SANCHEZ, DARYL SIMON, JEFFREY FERNANDEZ, JUAN VALDEZ, WILLIE TUCKER, KASAN NOBLE, DAMIAN SAUNDERS, DANIEL JEFFERSON, DERECK JEFFERSON, WAYNE SCOTT, ERIC RIVERA, MICHAEL MARTINEZ, KAREEM SIMMONDS, ALEXANDER PENA, ANTHONY CLASE, CARLOS ACOSTA, CHRISTOPHER RODRIGUEZ, GABRIEL GONZALEZ, JESUS MATA, NANA OWUSU, ROBERTO RAMIREZ, WILPHER RODRIGUEZ, YAWILIS RODRIGUEZ, JESUS ABAD, and ANGEL GUANCE with using, carrying, possessing, brandishing, and discharging a firearm during and in relation to a narcotics conspiracy.
Count Four charges EDWIN ROMERO with using, carrying, possessing, brandishing, and discharging a firearm during and in relation to a crime of violence.
* * *
Charts containing the names, ages, residences, 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 NYPD, HSI, and DEA, and expressed gratitude for the coordinated efforts of the NYPD’s Detective Bureau, including the Bronx Violent Crime Squad, the 46th Precinct Detectives Squad, and the Bronx Homicide Task Force. Mr. Kim also expressed gratitude to the Bronx District Attorney’s Office for its partnership in this investigation.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Frank Balsamello, Matthew Laroche, Anden Chow, and Michael Krouse, and Special Assistant United States Attorney Matthew Hellman (cross-designated from the Bronx District Attorney’s Office) are in charge of the prosecution.
The charges contained in the Indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
United States v. James Felton, et al., S2 17 Cr. 21 (WHP)
COUNT
CHARGE
DEFENDANTS
MAX. PENALTIES
1
Narcotics conspiracy
21 U.S.C. § 846
JAMES FELTON
JAMES DIAZ
ANDRE FELTON
EZEKIEL BURLEY
URIAH BROWN
BRADFORD CANNON
WILLIE REEVES
HAROLD FIELDS
ROBERT BRENT
DASHAUN MCDONALD
MATTHEW TORRES
TYRONE TURNER
KENDRICK MCCRAY
GINGER DIAZ
JOSE SANDOVAL
Life in prison
Mandatory minimum of 10 years in prison
2
Murder while engaged in a narcotics conspiracy
21 U.S.C. § 848(e)(1)(A); 18 U.S.C. § 2
JAMES FELTON
JAMES DIAZ
ANDRE FELTON
EZEKIEL BURLEY
Life in prison or death
Mandatory minimum of 20 years in prison
3
Using, carrying, possessing, brandishing, and discharging firearms, causing death
18 U.S.C. §§ 924(j)(1) and 2
JAMES FELTON
JAMES DIAZ
ANDRE FELTON
EZEKIEL BURLEY
Life in prison or death
4
Using, carrying, possessing, brandishing, and discharging firearms
18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), (iii), 924(c)(1)(C)(i), and 2JAMES FELTON
JAMES DIAZ
EZEKIEL BURLEY
Life in prison
Mandatory minimum of 10 years in prison for DIAZ and BURLEY
Mandatory minimum of 25 years in prison for JAMES FELTON
5
Using, carrying, possessing, brandishing, and discharging firearms
18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), and (iii), 2URIAH BROWN
BRADFORD CANNON
WILLIE REEVES
HAROLD FIELDS
ROBERT BRENT
DASHAUN MCDONALD
MATTHEW TORRES
TYRONE TURNER
KENDRICK MCCRAY
GINGER DIAZ
JOSE SANDOVAL
Life in prison
Mandatory minimum of 10 years in prison
DEFENDANT
AGE
RESIDENCE
JAMES FELTON
47
Bronx, New York
JAMES DIAZ,
a/k/a “Chunky”
24
Bronx, New York
ANDRE FELTON,
a/k/a “Dre”
39
Mount Vernon, New York
EZEKIEL BURLEY,
a/k/a “Ezekiel McCall”
a/k/a “Zeke”
a/k/a “Ziggy”
23
Bronx, New York
URIAH BROWN,
a/k/a “Scooter”
42
Bronx, New York
BRADFORD CANNON,
a/k/a “Brad”
46
Bronx, New York
WILLIE REEVES,
a/k/a “Willie Reed”
a/k/a “Willow”
30
Bronx, New York
HAROLD FIELDS,
a/k/a “Howie”
a/k/a “HD”
38
Bronx, New York
ROBERT BRENT,
a/k/a “Ready”
45
Brooklyn, New York
DASHAUN MCDONALD,
a/k/a “Dayday”
27
Bronx, New York
MATTHEW TORRES,
a/k/a “Mac Mittens”
a/k/a “Green Eyes”
33
Bronx, New York
TYRONE TURNER,
a/k/a “Skrap”
32
Bronx, New York
KENDRICK MCCRAY,
a/k/a “Kenny”
43
Bronx, New York
GINGER DIAZ,
a/k/a “George”
30
Bronx, New York
JOSE SANDOVAL,
a/k/a “Shorty”
41
Bronx, New York
United States v. Edwin Romero, et al., S1 17 Cr. 123 (LAP)
COUNT
CHARGE
DEFENDANTS
MAX. PENALTIES
1
Narcotics conspiracy
21 U.S.C. § 846
EDWIN ROMERO
RAFAEL ROMERO
FRANCIS PALUZZI
LUIS GONZALEZ
ANIBAL GONZALEZ
CARLOS MOTA
ELIMANUEL DIAZ
PEDRO OLIVO
ADRIAN SANCHEZ
DARYL SIMON
JEFFREY FERNANDEZ
JUAN VALDEZ
WILLIE TUCKER
KASAN NOBLE
DAMIAN SAUNDERS
DANIEL JEFFERSON
DERECK JEFFERSON
WAYNE SCOTT
ERIC RIVERA
MICHAEL MARTINEZ
MAXAMILLION MERCADO
KAREEM SIMMONDS
ALEXANDER PENA
ANTHONY CLASE
CARLOS ACOSTA
CHRISTOPHER RODRIGUEZ
GABRIEL GONZALEZ
JESUS MATA
NANA OWUSU
ROBERTO RAMIREZ
WILPHER RODRIGUEZ
YAWILIS RODRIGUEZ
JESUS ABAD
ANGEL GUANCE
Life in prison
Mandatory minimum of 10 years in prison
2
Robbery conspiracy
18 U.S.C. § 1951
EDWIN ROMERO
ADRIAN SANCHEZ
JUAN VALDEZ
WILLIE TUCKER
YAWILIS RODRIGUEZ
20 years in prison
3
Using, carrying, possessing, brandishing, and discharging firearms
18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), and (iii), 2EDWIN ROMERO
RAFAEL ROMERO
FRANCIS PALUZZI
LUIS GONZALEZ
ANIBAL GONZALEZ
CARLOS MOTA
ELIMANUEL DIAZ
PEDRO OLIVO
ADRIAN SANCHEZ
DARYL SIMON
JEFFREY FERNANDEZ
JUAN VALDEZ
WILLIE TUCKER
KASAN NOBLE
DAMIAN SAUNDERS
DANIEL JEFFERSON
DERECK JEFFERSON
WAYNE SCOTT
ERIC RIVERA
MICHAEL MARTINEZ
KAREEM SIMMONDS
ALEXANDER PENA
ANTHONY CLASE
CARLOS ACOSTA
CHRISTOPHER RODRIGUEZ
GABRIEL GONZALEZ
JESUS MATA
NANA OWUSU
ROBERTO RAMIREZ
WILPHER RODRIGUEZ
YAWILIS RODRIGUEZ
JESUS ABAD
ANGEL GUANCE
Life in prison
Mandatory minimum of 10 years in prison
4
Using, carrying, possessing, brandishing, and discharging firearms
18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), (iii), 924(c)(1)(C)(i), and 2EDWIN ROMERO
Life in prison
Mandatory minimum of 25 years in prison
DEFENDANT
AGE
RESIDENCE
EDWIN ROMERO,
a/k/a “Yones”
a/k/a “Yoni”
35
Bronx, New York
RAFAEL ROMERO,
a/k/a “Kodi”
34
Bronx, New York
FRANCIS PALUZZI,
a/k/a “Fetty”
27
Bronx, New York
LUIS GONZALEZ,
a/k/a “Tili”
a/k/a “Bori”
39
Bronx, New York
ANIBAL GONZALEZ,
a/k/a “Foli”
34
Bronx, New York
CARLOS MOTA,
a/k/a “Culebra”
a/k/a “Snake”
47
Bronx, New York
ELIMANUEL DIAZ,
a/k/a “Lima”
27
Bronx, New York
PEDRO OLIVO,
a/k/a “Pito”
24
Bronx, New York
ADRIAN SANCHEZ,
a/k/a “Pachi”
23
Bronx, New York
DARYL SIMON,
a/k/a “D-Money”
19
Bronx, New York
JEFFREY FERNANDEZ,
a/k/a “Jefe”
19
Bronx, New York
JUAN VALDEZ,
a/k/a “Sito”
21
Bronx, New York
WILLIE TUCKER,
a/k/a “Big Will”
a/k/a “BJ”
a/k/a “BG”
38
Bronx, New York
KASAN NOBLE,
a/k/a “Kay Kay”
40
Bronx, New York
DAMIAN SAUNDERS,
a/k/a “Floss”
37
Bronx, New York
DANIEL JEFFERSON,
a/k/a “Ace”
30
Bronx, New York
DERECK JEFFERSON,
a/k/a “Bang”
28
Bronx, New York
WAYNE SCOTT,
a/k/a “Punch”
37
Bronx, New York
ERIC RIVERA,
a/k/a “Chucky”
a/k/a “Chuck Dollarz”
24
Bronx, New York
MICHAEL MARTINEZ
26
Bronx, New York
MAXAMILLION MERCADO,
a/k/a “Bully”
24
Bronx, New York
KAREEM SIMMONDS,
a/k/a “Kareem Simmons”
a/k/a “Black”
40
Bronx, New York
ALEXANDER PENA,
a/k/a “Green Eyes”
20
Bronx, New York
ANTHONY CLASE,
a/k/a “Ant”
30
Bronx, New York
CARLOS ACOSTA,
a/k/a “Greg”
23
Bronx, New York
CHRISTOPHER RODRIGUEZ,
a/k/a “Dread”
21
Bronx, New York
GABRIEL GONZALEZ,
a/k/a “Gabi”
a/k/a “Baldy”
40
Bronx, New York
JESUS MATA,
a/k/a “Junior”
a/k/a “Jay”
20
Bronx, New York
NANA OWUSU,
a/k/a “Africa”
19
Bronx, New York
ROBERTO RAMIREZ
29
Bronx, New York
WILPHER RODRIGUEZ
23
Bronx, New York
YAWILIS RODRIGUEZ,
a/k/a “Will”
22
Bronx, New York
JESUS ABAD,
a/k/a “Rojo”
26
Bronx, New York
ANGEL GUANCE,
a/k/a “Chico”
a/k/a “All In”
27
Bronx, New York
[1] As the introductory phrase signifies, the entirety of the text of the Indictments, and the description of the Indictments set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
U.S. Attorney Charges Registered Sexual Offender in Westchester County with Sexual Exploitation of A MinorRead the Press Release
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 Division of the Federal Bureau of Investigation (“FBI”), announced the arrest and filing of charges against DAVID OHNMACHT, a 36-year-old registered sexual offender in Westchester, New York. The Amended Complaint filed yesterday in White Plains federal court charges that OHNMACHT persuaded a 14-year-old girl (“Victim-1”) to engage in sexually explicit activity, video it, and transmit it, via Instagram, to OHNMACHT. The Amended Complaint also charges that OHNMCHT engaged in that conduct while being someone required to register as a sexual offender. OHNMACHT was presented yesterday before U.S. Magistrate Judge Judith McCarthy in White Plains federal court and detained without bail.
If convicted, OHNMACHT faces a mandatory minimum sentence of 35 years in prison and a maximum sentence of 50 years in prison.
Acting U.S. Attorney Joon H. Kim said: “David Ohnmacht allegedly convinced a 14-year-old girl to send him sexually explicit videos of herself and threatened to release it to her friends if she did not send more. It is one of law enforcement’s most important missions to protect children from this type of allegedly predatory conduct.”
FBI Assistant Director William F. Sweeney Jr. said: “Our job as law enforcement is to protect people from criminals, but our job gets harder as more predators approach children and take advantage of them. Those alleged predators have more access in this digital age than they’ve ever had before, but as parents we have to be the first line of defense by talking with them and making sure they know the dangers that lurk online. The alleged subject in this case is what parents fear the most, a known sexual predator making contact with their child. Our jobs may get harder, but that won’t stop us from going after and stopping criminals from preying on our children.”
According to the Amended Complaint filed today in White Plains federal court[1]:
From November 2016 through February 2017, OHNMACHT communicated online via Instagram with a 14-year-old girl (“Victim-1”) and convinced Victim-1 to take and transmit sexually explicit videos of Victim-1 to OHNMACHT.
OHNMACHT utilized the screen names “Dannyw290” and “little.kitty.love” during his communications with Victim-1. OHNMACHT told Victim-1 that if she did not make and transmit additional videos, he would expose Victim-1’s prior videos to her friends on Instagram.
OHNMACHT was convicted on August 19, 2003, in Westchester County Court of multiple sexual abuse and sexual assault charges including Sexual Abuse in the Third Degree, Possessing an Obscene Sexual Performance by a Child less than 16 years old, Rape in the First Degree, Use of a Child less than 17 years of age in a sexual performance, Possessing a Sexual Performance by a child less than 16 years of age, Sexual Abuse in the First Degree, Promoting a Sexual Performance by a child less than 17 years of age, and Sodomy, Intercourse, Forcible Compulsion. OHNMACHT was sentenced to a term of imprisonment of 40 months to ten years. He served approximately nine years in prison and was released on or about November 1, 2011. OHNMACHT then began a five-year term of post-release supervision with New York State Parole that ended on or about November 1, 2016.
OHNMACHT’s prior convictions involved four different victims, who ranged in age from 13 to 15. As a result of his convictions, OHNMACHT was required to register with the New York State Sex Offender Registry.
OHNMACHT was arrested yesterday morning in Katonah, New York.
Mr. Kim praised the efforts of the FBI. He also thanked the FBI’s Wilmington, North Carolina, Resident Agency, the New Hanover County Sheriff’s Office in Wilmington, North Carolina, and the Bedford, New York, Police Department in connection with this investigation.
Mr. Kim stated that the investigation is ongoing. Any individuals with relevant information concerning DAVID OHNMACHT and any individuals who may have encountered someone using the user names “Dannyw290” or “little.kitty.love” should contact the FBI at (914) 925-3700.
The prosecution is being handled by the Office’s White Plains Division. Assistant United States Attorney Marcia S. Cohen is in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Amended Complaint and the description of the Amended Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Statement by U.S. Attorney Preet BhararaRead the Press Release
“Today, I was fired from my position as U.S. Attorney for the Southern District of New York. Serving my country as U.S. Attorney here for the past seven years will forever be the greatest honor of my professional life, no matter what else I do or how long I live. One hallmark of justice is absolute independence, and that was my touchstone every day that I served. I want to thank the amazing people of the Southern District of New York, the greatest public servants in the world, for everything they do each day in pursuit of justice. They will continue to do the great work of the Office under the leadership of Joon H. Kim, the current Deputy U.S. Attorney, who will serve as Acting U.S. Attorney.”
Statement by U.S. Attorney Preet BhararaRead the Press Release
“Today, I was fired from my position as U.S. Attorney for the Southern District of New York. Serving my country as U.S. Attorney here for the past seven years will forever be the greatest honor of my professional life, no matter what else I do or how long I live. One hallmark of justice is absolute independence, and that was my touchstone every day that I served. I want to thank the amazing people of the Southern District of New York, the greatest public servants in the world, for everything they do each day in pursuit of justice. They will continue to do the great work of the Office under the leadership of Joon H. Kim, the current Deputy U.S. Attorney, who will serve as Acting U.S. Attorney.”
Manhattan U.S. Attorney Announces Extradition of Defendant Charged with Fraud and Money Laundering in Connection with Deceiving Homeowners into Selling Their HomesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), and Maria T. Vullo, Financial Services Superintendent for the New York State Department of Financial Services (“DFS”), announced today the extradition from Ukraine of HERZEL MEIRI, who was indicted on March 16, 2016, on fraud and money laundering charges in connection with a scheme to fraudulently induce distressed homeowners to sell their homes to a company he owned and controlled. MEIRI, who arrived in the District yesterday, had been arrested by Ukrainian authorities on October 27, 2016. He will be arraigned in front of Magistrate Judge Ronald L. Ellis today. The case is assigned to United States District Judge Edgardo Ramos. MEIRI was the seventh defendant to be indicted in connection with the scheme.
U.S. Attorney Preet Bharara said: “Herzel Meiri allegedly concocted a callous scheme to swindle desperate homeowners out of their homes. As alleged, Meiri lied to his victims, who thought that they were getting the financial help they needed but instead were being tricked into signing over their homes. Thanks to our law enforcement partners – the FBI, SIGTARP, and DFS – Meiri is now in U.S. custody and will have to answer for his alleged crimes.”
Assistant Director-in-Charge William F. Sweeney Jr. said: “When desperate homeowners fall prey to false relief schemes, their vulnerabilities are often exploited by those who seek to benefit from their misfortune. As alleged, Meiri’s behavior caused serious damage to struggling families who unknowingly funded his extravagant scheme. The FBI continues to support partnerships within the financial industry and law enforcement as we work together to combat this serious crime.”
Special Inspector General for TARP Christy Goldsmith Romero said: “Herzel Meiri is charged with preying on struggling homeowners trying to avoid foreclosure. Meiri and his co-conspirators allegedly promised victims mortgage modifications when in fact they were swindling them out of their homes. SIGTARP thanks U.S. Attorney Bharara, Superintendent Vullo, and the FBI for their commitment to protecting taxpayers from TARP-related crime.”
DFS Financial Services Superintendent Maria T. Vullo said: “These allegations paint the portrait of a con artist who cold-heartedly preyed on financially distressed homeowners – some of whom are among our most vulnerable – to satisfy his selfish greed. The Department of Financial Services is proud to have worked with our fellow law enforcement partners in helping to bring this defendant to justice.”
According to the allegations in the Fourth Superseding Indictment, which was unsealed in November 2016, as well as the Complaints previously filed in this action[1]:
Since at least 2013, MEIRI and his co-defendants have defrauded distressed homeowners throughout the Bronx, Brooklyn, and Queens. MEIRI and others falsely represented to these homeowners – some of whom were elderly or in poor health – that they could assist them with a loan modification or similar relief from foreclosure that would allow the homeowners to save their homes. But rather than actually assisting these homeowners, the defendants deceived them into selling their homes to Launch Development LLC (“Launch Development”), a for-profit real estate company owned and controlled by MEIRI.
MEIRI and others lured victims through Homeowners Assistance Service of New York (“HASNY”), which purported to provide assistance to homeowners who were seeking to avoid foreclosure of their homes. As part of the scheme, MEIRI directed employees of Launch Development to solicit owners of distressed properties and invite them to meet with HASNY representatives so that they could learn more about avoiding foreclosure and saving their homes.
When a homeowner arrived at the HASNY office, he or she met with a co-conspirator, who typically advised the homeowner that HASNY could assist him or her with a loan modification. In other cases, the homeowner was advised that a loan modification could not be completed, but that the homeowner could engage in a type of short sale in which the homeowner would sell the property to a third party, Launch Development, and then within approximately 90 days arrange for a relative of the homeowner to repurchase the property from Launch Development. Homeowners were typically advised that they could remain in their homes throughout the entire process. At the closing that followed, a homeowner who had been led to believe that he or she was about to receive a loan modification or transfer the property to a trusted relative was encouraged to sign documents presented by another co-conspirator, which in some cases were blank. Unbeknownst to the homeowners, by signing the documents, they were selling to Launch Development the homes they had hoped to save. Homeowners often were then forced to vacate their homes soon thereafter, and Launch Development re-sold many of the homes, which were purchased at fraudulently deflated prices, for an enormous profit.
In addition, MEIRI and a co-conspirator transferred the proceeds of the home sales from Launch Development to other companies MEIRI owned and controlled, falsely describing the transfers as, among other things, rent payments. The proceeds were ultimately transferred back to Launch Development or spent on luxury items for MEIRI.
MEIRI is charged with one count of conspiracy to commit wire fraud and bank fraud and one count of conspiracy to commit bank fraud, each of which carries a maximum term of 30 years in prison. In addition, MEIRI is charged with two counts of money laundering, one of which carries a maximum term of 20 years in prison and one of which carries a maximum term of 10 years in prison, and one count of conspiracy to commit money laundering, which carries a maximum term 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. Bharara praised the outstanding work of the FBI, SIGTARP, and DFS for their investigative efforts and ongoing support and assistance with the case.
The prosecution of this case is being overseen by the Office’s General Crimes Unit. Assistant U.S. Attorneys Jaimie L. Nawaday and Andrew Thomas are in charge of the case.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the Complaints, and the description of the Indictment and the Complaints set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Eight Members and Associates of Bronx Street Gang Charged in Manhattan Federal Court with Racketeering, Narcotics, and Firearms OffensesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Angel M. Melendez, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), James J. Hunt, Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), today announced the unsealing of an Indictment charging eight members of a Bronx-based street gang, the Beach Avenue Crew, with various racketeering, firearms, and narcotics offenses, including the attempted murders of a rival gang member and rival drug trafficker.
Five of the eight defendants, JEAN BAPTISTE LESSAGE, DAVID BUCKHANON, JAMMAL LINDO, JALEEL BARON, and KYLE MULLINGS, were taken into federal custody yesterday or this morning and will be presented and arraigned before United States Magistrate Judge Ronald L. Ellis today. ALI HAMILTON, is currently incarcerated in federal custody on related charges, and was arraigned today before Judge Ellis. NORMAN EDWARDS was taken into federal custody this morning in Allentown, Pennsylvania, and will be presented later today before a magistrate judge in the Eastern District of Pennsylvania. MAURICE SIMMONS remains at large. The case has been assigned to U.S. District Judge Laura Taylor Swain.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, through the sale of crack cocaine and their violent conflict with rival crews, the Beach Avenue Crew wreaked havoc on the streets of the Bronx. We and our law enforcement partners are determined to combat alleged gang and drug violence in the Bronx through charges like those brought today.”
HSI Special Agent-in-Charge Angel M. Melendez said: “The Beach Avenue Crew has allegedly tormented our city streets for nearly a decade. These arrests mean there are fewer alleged gang bangers wreaking havoc, dealing drugs and committing crimes in our communities. HSI is committed to working closely with its law enforcement partners to keep violent street gangs at bay and our neighborhoods safe.”
DEA Special Agent in Charge James J. Hunt said: “Shootings, turf wars and murders are means to an end for drug crews controlling their distribution strongholds. Allegedly, the Beach Avenue Crew were the bullies of the neighborhood selling crack and imposing domineering threats on rival drug gangs and innocent neighbors in the Bronx. These arrests have taken more violent criminals off the streets in order to make our communities safe from drug and gun violence.”
Police Commissioner James P. O’Neill said: “The defendants attempted to control their drug turf through gun violence allegedly carried out across the Bronx, endangering the lives of everyone around them, as alleged in the indictment. We will be relentless in pursuing those who carry out violence. I commend the detectives, agents and prosecutors whose work resulted in these arrests and the unsealing of this indictment.”
As alleged in the Indictment unsealed today in Manhattan federal court[1]:
The Beach Avenue Crew was a criminal enterprise that operated principally in and around the Bronx, New York, from at least 2009 up to and including February 2017. One of the Beach Avenue Crew’s principal objectives was to sell cocaine base, commonly known as “crack cocaine,” primarily in and around Beach Avenue in the Bronx. The Beach Avenue Crew controlled crack cocaine sales within this area by prohibiting and preventing non-members, outsiders, and rival narcotics dealers from distributing crack cocaine in the area controlled by the Enterprise.
Members and associates of the Beach Avenue Crew engaged in acts of violence against rival gang members from nearby crews, and rival drug dealers who encroached on the Beach Avenue Crew’s territory. These acts of violence included assaults and attempted murder, and were committed to protect the Beach Avenue Crew’s drug territory, to retaliate against members of rival gangs who had encroached on the territory controlled by the Beach Avenue Crew, and to otherwise promote the standing and reputation of the Beach Avenue Crew amongst rival gangs.
The violence perpetrated by the Beach Avenue Crew included at least two attempted murders. On or about August 2, 2016, JAMMAL LINDO, JEAN BAPTISTE LESSAGE, and JALEEL BARON shot at a rival drug trafficker and another individual (“Victim-1”), resulting in bodily injury to Victim-1. On or about May 5, 2015, ALI HAMILTON shot at a member of a rival crew on Leland Avenue in the Bronx, causing bodily injury to another individual standing nearby.
Count One of the Indictment charges ALI HAMILTON, JEAN BAPTISTE LESSAGE, DAVID BUCKHANON, JAMMAL LINDO, MAURICE SIMMONS, NORMAN EDWARDS, JALEEL BARON, and KYLE MULLINGS with participating in a racketeering conspiracy.
Counts Two charges HAMILTON with assault and attempted murder in aid of racketeering activity in connection with the May 2015 shooting at a member of a rival crew.
Count Three charges LINDO, LESSAGE, and BARON with assault and attempted murder in aid of racketeering activity in connection with the August 2016 shooting at a rival drug trafficker.
Count Four charges HAMILTON, LESSAGE, BUCKHANON, LINDO, SIMMONS, EDWARDS, BARON, and MULLINGS with participating in a narcotics conspiracy, in connection with their distribution of crack cocaine in and around Beach Avenue.
Count Five charges HAMILTON, LESSAGE, BUCKHANON, LINDO, SIMMONS, EDWARDS, BARON, and MULLINGS with a firearms offense in connection with the racketeering conspiracy charged in Count One and the narcotics conspiracy charged in Count Four.
Count Six charges HAMILTON with being a convicted felon in possession of a firearm.
* * *
Charts containing the names, ages, residences, charges, and maximum penalties for the defendants are set forth below. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Bharara praised the outstanding investigative work of HSI, the DEA, and the NYPD.
This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jessica Lonergan, Scott Hartman, and Jason Swergold 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
CHARGE
DEFENDANTS
MAX. PENALTIES
1
Racketeering conspiracy
18 U.S.C. § 1962(d)
ALI HAMILTON
JEAN BAPTISTE LESSAGE
DAVID BUCKHANON
JAMMAL LINDO
MAURICE SIMMONS
NORMAN EDWARDS
JALEEL BARON
KYLE MULLINGS
20 years in prison
2
Assault and attempted murder in aid of racketeering activity
18 U.S.C. §§ 1959(a)(3) and 1959 (a)(5)
ALI HAMILTON
20 years in prison
3
Assault and attempted murder in aid of racketeering activity
18 U.S.C. §§ 1959(a)(3) and 1959 (a)(5)
JAMMAL LINDO
JEAN BPATISTE LESSAGE
JALEEL BARON
20 years in prison
4
Narcotics conspiracy
21 U.S.C. § 846
ALI HAMILTON
JEAN BAPTISTE LESSAGE
DAVID BUCKHANON
JAMMAL LINDO
MAURICE SIMMONS
NORMAN EDWARDS
JALEEL BARON
KYLE MULLINGS
Life in prison
Mandatory minimum of 10 years in prison
5
Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a crime of violence or drug trafficking crime
924(c)(1)(A)(iii)
ALI HAMILTON
JEAN BAPTISTE LESSAGE
DAVID BUCKHANON
JAMMAL LINDO
MAURICE SIMMONS
NORMAN EDWARDS
JALEEL BARON
KYLE MULLINGS
Life in prison
Mandatory minimum of 10 years in prison
6
Felon in possession of a firearm
18 U.S.C. § 922(g)(1)
ALI HAMILTON
10 years in prison
DEFENDANT
AGE
RESIDENCE
ALI HAMILTON
a/k/a “Smiley”
24
Bronx, NY
JEAN BAPTISTE LESSAGE
a/k/a “Usher”
35
Bronx, NY
DAVID BUCKHANON
a/k/a “Mase”
30
Bronx, NY
JAMMAL LINDO
a/k/a “Poppy,” a/k/a “Ghost”
23
Bronx, NY
MAURICE SIMMONS
a/k/a “Momoneybagz”
24
Bronx, NY
NORMAN EDWARDS
a/k/a “Hollywood”
25
Lehigh County, PA
JALEEL BARON
a/k/a “Jah,” a/k/a “Youngin”
24
Westchester County, NY
KYLE MULLINGS
a/k/a “Kase”
22
Bronx, NY
[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.
Personal Injury and Medical Malpractice Lawyer Charged with Tax EvasionRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Kathy Enstrom, Acting Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today that HERBERT LINDENBAUM, a Manhattan personal injury and medical malpractice attorney, voluntarily surrendered today in Manhattan federal court. LINDENBAUM is charged in a six-count Indictment with engaging in a nearly two-decade-long tax evasion scheme that involved his failure to pay more than $3.3 million in back taxes, penalties, fees, and interest to the IRS.
Mr. Bharara said: “As an attorney, Herbert Lindenbaum should have known better. But as alleged, rather than abide by the law, Lindenbaum engaged in a nearly two-decade scheme to divert and evade millions of dollar in taxes.”
IRS-CI Acting Special Agent-in-Charge Kathy Enstrom said: “As alleged in the indictment, Mr. Lindenbaum intentionally evaded his tax obligations for well over a decade, failing to pay millions he owed in taxes. Fulfilling individual tax obligations is a legal requirement and those who willfully evade that responsibility will be prosecuted.”
According to the allegations in the Indictment[1] returned today in Manhattan federal court:
From 1999 through the present, HERBERT LINDENBAUM has been a personal injury and medical malpractice lawyer in New York, New York. For tax years 1999 through 2013, LINDENBAUM reported to the IRS that he owed taxes of more than $2.5 million, but voluntarily paid to the IRS only $85,000. Including penalties, fees, and interest, LINDENBAUM currently owes the IRS more than $3.3 million.
To evade paying the IRS, LINDENBAUM engaged in at least five tactics to conceal the extent of his and his law firms’ income from the IRS. First, LINDENBAUM caused business checks for his legal work to be deposited directly into his wife’s personal bank accounts.
Second, LINDENBAUM used his law firms’ bank accounts like his own personal coffers by paying his personal expenses directly from those accounts. He paid approximately $85,000 in alimony, $75,000 in personal loan repayments, $425,000 in apartment rental and utility payments, $25,000 in luxury car payments and parking expenses, $50,000 in tuition and other expenses for his children, and $10,000 in medical expenses directly from his business bank accounts. Some of these business bank accounts were Interest on Lawyer, or “IOLA,” accounts. New York law requires that IOLA accounts hold only client funds. Still, LINDENBAUM used at least two IOLA accounts to pay his personal expenses.
Third, LINDENBAUM paid his son and his wife nearly $150,000 for work for his law firms that they did not actually perform. Fourth, LINDENBAUM cashed checks totaling more than $325,000 made payable to himself from his business accounts.
Finally, in September 2010, the IRS levied two of LINDENBAUM’s business bank accounts, which permitted the IRS to take involuntary payments of LINDENBAUM’s tax liabilities from those accounts. To avoid this levy, LINDENBAUM opened at least two personal bank accounts and deposited more than $160,000 of business receipts into those accounts.
LINDENBAUM’s actions over the course of nearly 20 years have prevented the IRS from collecting the more than $3.3 million that he owed the IRS.
* * *
LINDENBAUM, 78, of New York, New York, was arraigned in Manhattan federal court today before Magistrate Judge Ronald L. Ellis. The case is assigned to United States District Judge Paul A. Crotty.
LINDENBAUM, who was charged with one count each of obstructing the IRS and tax evasion, and four counts of failure to pay the IRS, faces the following penalties if convicted:
Statute Violated
Counts
Description
Maximum Sentence
26 U.S.C. § 7201
1
Tax Evasion
Five years in prison
18 U.S.C. § 7203
2 to 5
Failure to pay taxes – 2010 to 2013 tax years
One year in prison on each count
26 U.S.C. § 7212(a)
6
Corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue Laws
Three years in prison
The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the Court.
Mr. Bharara praised the outstanding investigative work of the IRS.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Jennifer L. Beidel is in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Long Island Business-Owner Sentenced for Diverting over $1.6 Million from His Companies and Evading TaxesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JOSEPH CICCARELLA was sentenced last Friday to 18 months in prison for evading taxes on over $1.6 million that he siphoned from construction-related companies he owned to use for personal purposes. Through the scheme, CICCARELLA evaded over $280,000 in personal income taxes owed to the Internal Revenue Service (“IRS”). CICCARELLA pled guilty on November 3, 2016, before United States District Judge Alvin K. Hellerstein, who imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Joseph Ciccarella used his companies and third party vendors as a means to funnel over $1.6 million for his own use without paying his proper share of taxes on that money. Ciccarella would issue checks from his companies claiming they were corporate expenses when in fact they were sham checks that would simply be cashed and be returned to him for his use. For his tax fraud scheme, Ciccrealla will now face 18 months in federal prison. We thank the IRS Criminal Investigation for the terrific work on this case.”
According to the allegations in the Information to which CICCARELLA pled guilty, other documents filed in Manhattan federal court, and statements made in court proceedings:
CICCARELLA was the owner of two New York companies involved in the heating, ventilation, and air conditioning business – BSI Consulting (“BSI”) and KMS Mechanical (“KMS”). During the period 2009-2012, CICCARELLA drew numerous checks on the bank accounts of BSI and KMS and made them payable to third party corporate entities, even though those third party companies performed no services for, and provided no goods to, CICCARELLA’s companies. Instead, CICCARELLA had entered into a corrupt arrangement with the owners of the payee companies that the checks he drew on the accounts of BSI and KMS would be cashed at check cashers in the New York metropolitan area and the cash returned to CICCARELLA, less a fee CICCARELLA paid to the third parties for cashing the checks.
Between 2009 and 2012, CICCARELLA siphoned over $1.6 million from BSI and KMS in this fashion, which monies he caused to be falsely listed on the books and tax returns of those companies as “cost of goods sold.” CICCARELLA did not pay taxes on the funds he siphoned from his companies even though he used those funds for personal purposes, such as to provide funding for a separate set of companies he owned, as well as to pay for personal expenses.
* * *
In addition to his prison term, CICCARELLA, 54, of Glen Head, New York, was sentenced to three years of supervised release and ordered to pay a $100,000 fine. CICCARELLA had previously paid the $284,000 in restitution that was due the IRS.
Mr. Bharara praised the investigative work of the IRS, Criminal Investigations.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Special Assistant United States Attorney Stanley J. Okula Jr. is in charge of prosecution.
Former Treasurer of Mahopac Volunteer Fire Department Pleads Guilty to Fraud, Tax, Obstruction of Justice, and False Statement Charges Arising from His Embezzlement of More Than $5.6 MillionRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that MICHAEL KLEIN, the former treasurer of the Mahopac Volunteer Fire Department (“MVFD”), pled guilty today to wire fraud, subscription to false tax returns, obstruction of the grand jury, and false statement charges before U.S. District Judge Cathy Seibel.
U.S. Attorney Preet Bharara stated: “Michael Klein admitted today what we alleged – for over a decade, he violated the trust of his fellow volunteer fire fighters and used the Mahopac Volunteer Fire Department funds as his own slush fund. Klein took advantage of his position as the fire department’s treasurer and spent department money on himself, including paying for a yacht, a Florida home, jewelry, and an antique fire truck.”
According to the allegations contained in the Indictment filed against KLEIN and statements made in related court filings and proceedings:
MICHAEL KLEIN was first elected treasurer of the MVFD in 2001. From January 2002 to September 2015, KLEIN embezzled MVFD funds under his control by writing checks to the two businesses he owned, Abbie Graphic Services, Ltd. (“Abbie Graphic”), and Buckshollow Emergency Equipment Corp. (“BEEC”). KLEIN then deposited the checks to bank accounts held by Abbie Graphic or BEEC. He entered these checks into the MVFD’s books as having been made payable to various vendors, other than Abbie Graphic or BEEC, that sold firefighting equipment or services used by fire departments.
KLEIN embezzled more than $5.6 million by writing approximately 275 checks over a period of more than 13 years. He used the money to purchase, among other things, a 55’ Neptunus motor yacht named “K’Bam,” a second residence in Palm City, Florida, an antique fire truck, and jewelry. He also used the money to support Abbie Graphic and BEEC. KLEIN also failed to report most of this income on his personal tax returns for the period from 2009 through 2014, thereby subscribing to false tax returns for each of those years.
Following law enforcement’s discovery of KLEIN’s embezzlement in September 2015, KLEIN obstructed the grand jury’s investigation of his conduct by making false statements regarding his finances and by concealing and dissipating assets. For example, KLEIN sold K’Bam for $138,868 even though he had purchased it for $260,000, listed it for sale for $229,000, and rejected an offer he received for $175,000. KLEIN also gave the United States Attorney a financial statement in which he falsely claimed, among other things, that BEEC had a delinquent loan of $275,000, and that, as a result of that loan, a lien was filed against KLEIN’s Florida property. KLEIN also concealed the proceeds he received from the sale of a Corvette by giving the money to a relative for deposit to her bank account and then arranging for the relative to pay his household bills. KLEIN also concealed an antique fire truck to prevent law enforcement from seizing it.
KLEIN, 48, of Mahopac, New York, and Palm City, Florida, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison; six counts of subscribing to false tax returns, each of which carries a maximum sentence of three years in prison; one count of obstructing the grand jury’s investigation, which carries a maximum sentence of 20 years in prison; and one count of making false statements to the United States Attorney, which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the sentence will be determined by the court.
In pleading guilty, KLEIN agreed to forfeit to the United States a sum of $5,675,360.49, his residence in Palm City, Florida, his equity in his yacht club in Palm City, Florida, cash held in various bank accounts, a 1931 American LaFrance antique fire engine, proceeds of a life insurance policy, a 2000 13' Nautica vessel with an outboard motor, and a 2005 Eliminator trailer.
Klein is scheduled to be sentenced by Judge Cathy Seibel on June 21, 2017, at 2:30 p.m.
Mr. Bharara praised the outstanding investigative work of the Internal Revenue Service, Criminal Investigations, the Federal Bureau of Investigation, the New York State Comptroller, and the New York State Police. He thanked the Putnam County District Attorney’s Office for its assistance in the investigation.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Andrew Dember, Maurene Comey, Michael Maimin, James McMahon, Lauren Schorr, and Olga Zverovich are in charge of the prosecution.
Former Executive Director of the Ramapo Local Development Corporation Pleads Guilty to Securities Fraud and Conspiracy ChargesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that N. AARON TROODLER, the former Executive Director of the Ramapo Local Development Corporation (“RLDC”), pled guilty today before U.S. District Judge Cathy Seibel to conspiring with Ramapo Town Supervisor Christopher St. Lawrence to commit securities fraud as a result of a scheme to defraud investors in municipal bonds issued by the RLDC and the Town of Ramapo (the “Town”). This case is believed to be the first conviction for federal securities fraud in connection with municipal bond issuances.
U.S. Attorney Preet Bharara said: “As we said at the time of his arrest, N. Aaron Troodler defrauded both the citizens of Ramapo and thousands of investors around the country, helping to sell over $150 million of municipal bonds on fabricated financials. Today, Troodler has admitted to committing securities fraud. This guilty plea, in what we believe to be the first municipal bond-related criminal securities fraud prosecution, is a big step in policing and bringing accountability to the $3.7 trillion municipal bond market.”
According to the allegations contained in the Superseding Information to which TROODLER pled guilty today and the related Indictment of TROODLER’s co-conspirator, Town Supervisor Christopher St. Lawrence:
As of August 2015, the Town had more than $128 million in outstanding bonds that had been issued for various municipal purposes, while the RLDC, a corporation created and owned by the Town under state law, had issued $25 million in bonds to pay for the construction of Provident Bank Park (now Palisades Credit Union Park), a minor league baseball stadium in Ramapo.
The Indictment and Superseding Information charge that St. Lawrence and TROODLER lied to investors in the Town’s and RLDC’s bonds in order to conceal the deteriorating state of the Town’s finances and the inability of the RLDC to make scheduled payments of principal and interest to holders of its bonds from its own money.
While the fraud predated the construction of the stadium, the Town’s financial problems were caused largely by the $58 million total cost of the stadium. The Town paid more than half of that cost, despite the rejection of the Town’s guarantee of bonds to pay for construction of the stadium in a Town-wide referendum in 2010 and St. Lawrence’s public statements that no public money would be used to pay for the stadium.
The defendants lied to investors primarily by making up false assets in the Town’s General Fund. The General Fund is the Town’s primary operating fund. The accumulated difference over time between how much money the Town receives in taxes and fees and how much it spends in a year is the fund’s balance. The fund balance is a cushion that can be spent during difficult financial times. The size of the fund balance relative to the amount of the fund’s revenue and trends in a town’s General Fund balance over time are the primary indicators of the town’s financial health.
The Indictment alleges that St. Lawrence lied to the RLDC’s bond rating service in January 2013 when he told them in a telephone call that the 2012 fund balance would remain unchanged from the 2011 balance. Immediately after that call ended, St. Lawrence told Town employees “to do [an upcoming] refinancing of the short term debt as fast as possible because . . . we’re going to have to all be magicians to get to some of those numbers.”
The Indictment and the Superseding Information also allege that St. Lawrence and TROODLER told investors in the Town’s and RLDC’s bonds that the RLDC was making the payments on its bonds from its operating revenue, meaning money it was making from its ordinary business of running the baseball stadium and selling condominiums at a development it had built. That was important to investors because it led them to believe that the Town would not have to pay off the RLDC’s $25 million bonds. It also made the RLDC’s bonds look less risky. The RLDC actually made those payments from money TROODLER borrowed from the bank or money TROODLER obtained from the Town at St. Lawrence’s direction.
When the RLDC issued $25 million in bonds to build the stadium building itself in 2011, St. Lawrence inflated the size of the Town’s General Fund by including a false $3.6 million receivable in the General Fund. The Town’s financial condition was important to investors in the RLDC’s bonds because the Town guaranteed the payments of principal and interest on the bonds. Without that fake asset, the General Fund’s balance would have been negative in that year.
In addition, St. Lawrence inflated the General Fund with another fake receivable for $3.08 million from 2010 through 2015. It first went on the Town’s books when the RLDC agreed to buy property known as The Hamlets from the Town for $3.08 million. That sale never closed because the land turned out to be a habitat for rattlesnakes. Rather than take the receivable off the Town’s books – and reduce the size of the General Fund balance by $3.08 million, thereby creating a negative balance – St. Lawrence claimed the receivable had to do with the RLDC’s purchase of another property from the Town that had already taken place. To keep it on the books, St. Lawrence then caused the Town Attorney to tell the Town’s auditors over a period of years that the receivable would be paid back within a year, which was required if the receivable was going to stay in the General Fund. Without this fake receivable alone, the Town’s General Fund balance would have been negative for years.
In May 2013, the Federal Bureau of Investigation (“FBI”) searched Town Hall in connection with this investigation. Less than 10 days later, St. Lawrence inflated another receivable in the General Fund – this one for money from the Federal Emergency Management Agency (“FEMA”) to reimburse the Town for expenses from Hurricanes Irene and Sandy. St. Lawrence claimed that the Town was going to receive $3.145 million from FEMA when the Town hadn’t even submitted those claims to FEMA yet. Without St. Lawrence’s inflation of this receivable alone, the projected General Fund balance for 2012 would have been negative when the Town sold bonds in May 2013.
Finally, the Indictment alleges that St. Lawrence also inflated the General Fund balance by making more than $12 million in transfers from the Town’s Ambulance Fund to the General Fund from 2009 to 2014. The group of properties in Ramapo that pays into the Ambulance Fund is different from the group of properties that pays into the General Fund. Under state law, transfers between funds with different tax bases can only be loans. St. Lawrence told the auditors that the two funds had the same tax base to justify the transfers.
* * *
TROODLER, 42, of Bala Cynwyd, Pennsylvania, pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison, and one count of conspiracy, which carries a maximum sentence of five years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
TROODLER is scheduled to be sentenced by Judge Seibel on September 18, 2017, at 3:30 p.m.
The charges against Christopher St. Lawrence contained in the Indictment are merely accusations, and he is presumed innocent unless and until proven guilty.
Mr. Bharara praised the investigative work of the FBI and the Rockland County District Attorney’s Office. He also thanked the U.S. Securities and Exchange Commission for their assistance in the investigation.
This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys James McMahon, Daniel Loss, and Stephen J. Ritchin are in charge of the prosecution.
Cyberstalking Charge Brought in Manhattan Federal Court Against Missouri Man for A Pattern of Harrassment Involving Threats to Jewish Community CentersRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”) and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a complaint charging JUAN THOMPSON with cyberstalking a particular woman (“Victim-1”), by, among other things, communicating threats to Jewish Community Centers (“JCCs”) in Victim-1’s name. THOMPSON was arrested in St. Louis, Missouri, this morning and is expected to be presented there later today.
U.S. Attorney Preet Bharara said: “Everyone deserves to be free from fear and discrimination based on religion, race, or ethnicity; that is fundamental to who we are as a nation. Together with the FBI and the NYPD, we have been investigating the recent threats made on Jewish Community Centers in New York and around the country. Today, we have charged Juan Thompson with allegedly stalking a former romantic interest by, among other things, making bomb threats in her name to Jewish Community Centers and to the Anti-Defamation League. Threats of violence targeting people and places based on religion or race – whatever the motivation – are unacceptable, un-American, and criminal. We are committed to pursuing and prosecuting those who foment fear and hate through such criminal threats.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Thompson’s alleged pattern of harassment not only involved the defamation of his female victim, but his threats intimidated an entire community. The FBI and our partners take these crimes seriously. I would also like to thank the NYPD and the New York State Police, who continue to work shoulder to shoulder with us as we investigate and track down every single threat and work together to achieve justice for our communities that have been victimized by these threats.”
Police Commissioner James P. O’Neill said: “We will continue to pursue those who peddle fear, making false claims about serious crimes. As alleged, the defendant caused havoc, expending hundreds of hours of police and law enforcement resources to respond to and investigate these threats. I’m grateful for the collaboration between the NYPD detectives, FBI agents, and prosecutors whose cross-country investigation led to this morning’s arrest.”
According to the allegations in the Complaint unsealed today in Manhattan federal court[1]:
In recent months, the FBI and this Office have been investigating a series of threats across the country principally targeting JCCs, schools, and other organizations that provide service to and on behalf of the Jewish community (the “JCC Threats”). Based on the investigation, THOMPSON appears to have made at least eight of the JCC Threats as part of a sustained campaign to harass and intimidate Victim-1. THOMPSON’s harassment of Victim-1 appears to have begun shortly after their romantic relationship ended and to have included, among other things, defamatory emails and faxes to Victim-1’s employer, false reports of criminal activity by Victim-1, and JCC Threats in Victim-1’s name.
In July 2016, an email was sent to Victim-1’s employer that made false allegations about Victim-1, including that she had broken the law, using an internet protocol (“IP”) address that THOMPSON had previously used to access his social media account. On October 15, 2016, an IP address that traced back to THOMPSON’s residence was used to report falsely that Victim-1 possessed child pornography. When confronted by law enforcement on November 22, 2016, THOMPSON claimed that his email account had been hacked a few weeks earlier.
In January and February 2017, THOMPSON appears to have made at least eight JCC Threats as part of his campaign of harassment against Victim-1. For instance, on or about February 21, 2017, the Anti-Defamation League (“ADL”) received an emailed threat at their midtown Manhattan office, which indicated that “[Victim-1’s name and birthdate] is behind the bomb threats against jews. She lives in nyc and is making more bomb threats tomorrow.” The next day, the ADL received a phone call claiming that explosive material had been placed in the ADL’s midtown Manhattan office.
Some of THOMPSON’s JCC Threats appear to have been made in his own name, as part of an effort to claim that Victim-1 was trying to frame THOMPSON for a crime. For instance, on or about February 7, 2017, a JCC in Manhattan received an emailed bomb threat from an anonymous email account, which stated: “Juan Thompson [THOMPSON’s birthday] put two bombs in the office of the Jewish center today. He wants to create Jewish newtown tomorrow.” The email’s use of the phrase “Jewish newtown” appeared to refer to a December 2012 school shooting in Newtown, Connecticut, in which a gunman murdered 26 victims, including 20 children.
In February 2017, a Twitter account that appears to be used by THOMPSON (the “Thompson Twitter Account”) was used to accuse Victim-1 of responsibility for the JCC Threats and claim that Victim-1 was trying to frame THOMPSON for her crimes. For instance, on February 24, 2017, the Thompson Twitter Account posted: “[s]he [Victim-1], though I can’t prove it, even sent a bomb threat in my name to a Jewish center, which was odd given her antisemitic statements. I got a visit from the FBI. So now I’m battling the racist FBI and this vile, evil, racist white woman.” On February 26, 2017, the Thompson Twitter Account posted “The hatred of Jews goes across all demos. Ask NYC’s [Victim-1’s employer]. They employ a filthy anti-Semite in [Victim-1]. These ppl are evil.”
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THOMPSON, 31, of Saint Louis, Missouri, is charged with one count of cyberstalking, which carries a maximum sentence of five years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the outstanding investigative work of the FBI and the New York City Police Department, as well as the United States Secret Service, the St. Louis Police Department, the U.S. Attorney’s Office for the Eastern District of Missouri, and the Computer Crime and Intellectual Property Section of the United States Department of Justice for their ongoing investigative assistance. This investigation, as well as investigations into the other threats made to the Jewish community organizations in New York City are ongoing.
The prosecution is being handled by the Office’s Terrorism & International Narcotics Unit and the General Crimes Unit. Assistant U.S. Attorney Jacob Warren is in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Bronx Man Convicted in Manhattan Federal Court of 2013 Double Murder of Two CousinsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that ORANE NELSON, a/k/a “Amaze,” 28, was convicted today of 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 narcotics conspiracy and firearms possession charges. At the time of their murders, Jennifer Rivera was 20 and Jason Rivera was 30. The jury convicted NELSON on all four counts in the controlling indictment following a two-week trial before U.S. District Judge Denise L. Cote.
U.S. Attorney Preet Bharara stated: “Orane Nelson executed two people in cold blood over a drug debt. He killed Jason Rivera over a drug debt, and Jennifer Rivera – a 20-year-old college student who had nothing to do with that drug debt – just because she was there. Today’s unanimous jury verdict finding Nelson guilty on all counts ensures Nelson will be held to account for his violent and callous crimes.”
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 20-year-old 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.
For these activities, NELSON was convicted of one count of conspiracy to distribute narcotics, which carries a mandatory minimum sentence of 10 years in prison and a maximum of life, one count of possession of firearms in furtherance of a narcotics conspiracy, which carries a mandatory minimum sentence of five years in prison and a maximum of life, to be served consecutively, and two counts of causing the death of another through use of a firearm, each of which carries a mandatory minimum sentence of 25 years in prison and a maximum of life, to be served consecutively. 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.
NELSON is scheduled to be sentenced on June 23, 2017, before Judge Cote.
U.S. Attorney Bharara 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.