Southern District of New York

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Dana Boente, Acting Assistant Attorney General for National Security, announced today that XU JIAQIANG pled guilty to economic espionage and theft of a trade secret, in connection with XU’s theft of proprietary source code from XU’s former employer, with the intent to benefit the National Health and Family Planning Commission of the People’s Republic of China. XU pled guilty earlier today to all six counts with which he was charged, before the U.S. District Judge Kenneth M. Karas in White Plains federal court.

Acting U.S. Attorney Joon H. Kim said: “Xu Jiaqiang admitted and pled guilty today to stealing high tech trade secrets from a U.S. employer, intending to benefit the Chinese government. What Xu did was not only a federal crime, but a threat to our national security and the American spirit of innovation. Our Office is committed to finding, arresting and holding accountable those who take advantage of American businesses by engaging in economic espionage.”

Acting Assistant Attorney General Dana Boente said: “Today, Xu pleaded guilty to stealing trade secrets from his former employer for his own profit and intending to benefit the People’s Republic of China. The Economic Espionage Act is a key tool in protecting our economic and security interests. The National Security Division will pursue and prosecute any individual who steals intellectual property from American businesses to benefit a foreign government.”

According to the allegations contained in the Complaint and the Superseding Indictment filed against XU, as well as statements made in related court filings and proceedings:

From November 2010 to May 2014, XU worked as a developer for a particular U.S. company (the “Victim Company”). As a developer, XU enjoyed access to certain proprietary software (the “Proprietary Software”), as well as that software’s underlying source code (the “Proprietary Source Code”). The Proprietary Software is a clustered file system developed and marketed by the Victim Company in the United States and other countries. A clustered file system facilitates faster computer performance by coordinating work among multiple servers. The Victim Company takes significant precautions to protect the Proprietary Source Code as a trade secret. Among other things, the Proprietary Source Code is stored behind a company firewall and can be accessed only by a small subset of the Victim Company’s employees. Before receiving Proprietary Source Code access, Victim Company employees must first request and receive approval from a particular Victim Company official. Victim Company employees must also agree in writing at both the outset and the conclusion of their employment that they will maintain the confidentiality of any proprietary information. The Victim Company takes these and other precautions in part because the Proprietary Software and the Proprietary Source Code are economically valuable, which value depends in part on the Proprietary Source Code’s secrecy.

In May 2014, XU voluntarily resigned from the Victim Company. XU subsequently communicated with one undercover law enforcement officer (“UC-1”), who posed as a financial investor aiming to start a large-data storage technology company, and another undercover law enforcement officer (“UC-2”), who posed as a project manager, working for UC-1. these communications, XU discussed his past experience with the Victim Company and indicated that he had experience with the Proprietary Software and the Proprietary Source Code. On March 6, 2015, XU sent UC-1 and UC-2 a code, which XU stated was a sample of XU’s prior work with the Victim Company. A Victim Company employee (“Employee-1”) later confirmed that the code sent by XU included proprietary Victim Company material that related to the Proprietary Source Code.

XU subsequently informed UC-2 that XU was willing to consider providing UC-2’s company with the Proprietary Source Code as a platform for UC-2’s company to facilitate the development of its own data storage system. XU informed UC-2 that if UC-2 set up several computers as a small network, then XU would remotely install the Proprietary Software so that UC-1 and UC-2 could test it and confirm its functionality.

In or around early August 2015, the FBI arranged for a computer network to be set up, consistent with XU’s specifications. Files were then remotely uploaded to the FBI-arranged computer network (the “Xu Upload”). Thereafter, on or about August 26, 2015, XU and UC-2 confirmed that UC-2 had received the Xu Upload. In September 2015, the FBI made the Xu Upload available to a Victim Company employee who has expertise regarding the Proprietary Software and the Proprietary Source Code (“Employee-2”). Based on Employee-2’s analysis of technical features of the Xu Upload, it appeared to Employee-2 that the Xu Upload contained a functioning copy of the Proprietary Software. It further appeared to Employee-2 that the Xu Upload had been built by someone with access to the Proprietary Source Code who was not working within the Victim Company or otherwise at the Victim Company’s direction.

On December 7, 2015, XU met with UC-2 at a hotel in White Plains, New York (the “Hotel”). XU stated, in sum and substance, that XU had used the Proprietary Source Code to make software to sell to customers, that XU knew the Proprietary Source Code to be the product of decades of work on the part of the Victim Company, and that XU had used the Proprietary Source Code to build a copy of the Proprietary Software, which XU had uploaded and installed on the UC Network (i.e., the Xu Upload). XU also indicated that XU knew the copy of the Proprietary Software that XU had installed on the UC Network contained information identifying the Proprietary Software as the Victim Company’s property, which could reveal the fact that the Proprietary Software had been built with the Proprietary Source Code without the Victim Company’s authorization. XU told UC-2 that XU could take steps to prevent detection of the Proprietary Software’s origins – i.e., that it had been built with stolen Proprietary Source Code – including writing computer scripts that would modify the Proprietary Source Code to conceal its origins.

Later on December 7, 2015, XU met with UC-1 and UC-2 at the Hotel. During that meeting, XU showed UC-2 a copy of what XU represented to be the Proprietary Source Code on XU’s laptop. XU noted to UC-2 a portion of the code that indicated it originated with the Victim Company as well as the date on which it had been copyrighted. XU also stated that XU had previously modified the Proprietary Source Code’s command interface to conceal the fact that the Proprietary Source Code originated with the Victim Company and identified multiple specific customers to whom XU had previously provided the Proprietary Software using XU’s stolen copy of the Proprietary Source Code.

* * *

XU, 31, formerly of Beijing, China, pled guilty to three counts of economic espionage, each of which carries a maximum sentence of 15 years in prison, and three counts of theft of a trade secret, each of which carries a maximum sentence of 10 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.

Xu's sentencing is scheduled for October 13, 2017.

Mr. Kim praised the FBI’s outstanding investigative efforts. He also thanked the U.S. Department of Justice’s National Security Division.

The case is being handled by the Office’s Terrorism and International Narcotics Unit and its White Plains Division. Assistant U.S. Attorneys Benjamin Allee, Ilan Graff, and Shane T. Stansbury, with assistance from Trial Attorney David Aaron of the National Security Division’s Counterintelligence and Export Control Section, are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”) announced that ANTHONY WEINER was charged with, and pled guilty to, transferring obscene material to a minor.  WEINER surrendered to the FBI in New York this morning, pled guilty before United States District Judge Loretta A. Preska, and was released on bail pending sentencing.  Sentencing has been scheduled for September 8, 2017, at 11 a.m.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Today, former Congressman Anthony Weiner admitted and pled guilty to sending sexually explicit images and directions to engage in sexual conduct to a girl he knew to be 15 years old. Weiner’s conduct was not only reprehensible, but a federal crime, one for which he is now convicted and will be sentenced. We thank the FBI and the NYPD for their work in this investigation.”

FBI Assistant Director in Charge William F. Sweeney Jr. said: “We work every day in the FBI and law enforcement to stop adults from preying on vulnerable children. Our partnership with the NYPD cannot be stressed enough in this case, and we would like to thank the Special Victims Unit for all the work and effort they put into this investigation.”

According to the Information filed in Manhattan federal court today and statements made in Court during today’s plea proceeding, between in or about January and March 2016, WEINER used online messaging and video chat applications to communicate with a minor girl he knew to be 15 years old (the “Minor Victim”).  In the course of those communications, WEINER transferred obscene material to the Minor Victim, including directions to engage in sexual conduct and sexually explicit images. 

*                *                *

WEINER, 52, of New York, New York, has pled guilty to one count of transferring obscenity to a minor, which carries a maximum sentence of 10 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the Judge.

Mr. Kim praised the investigative work of the Federal Bureau of Investigation and the Special Victims Division of the New York City Police Department.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today the filing of a criminal complaint charging CHITAKRA RAMUDIT, a/k/a “Lilian Ramudit,” LOUIS LITVIN, and MELISSA CHAN with conspiracy to commit bank fraud, bank fraud, and conspiracy to commit money laundering in a multimillion-dollar scheme to steal from a real estate company (“Company-1”), which was a client of a major retail bank in Manhattan at which RAMUDIT was a branch manager. LITVIN was Company-1’s chief financial officer, and CHAN was a bookkeeper for Company-1. RAMUDIT abused her position as a bank manager to help LITVIN and CHAN steal from Company-1, and RAMUDIT also separately stole more than $100,000 from two elderly account holders at the bank. RAMUDIT and CHAN were arrested and will be presented later today before the U.S. Magistrate Judge Gabriel W. Gorenstein. LITVIN was arrested in Florida this morning and was presented before a Magistrate Judge in the Southern District of Florida.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Chitrakra Ramudit, a former bank manager, allegedly abused her position to steal more than a million dollars from the bank’s customers, including elderly account holders. Together with Louis Litvin and Melissa Chan, who worked at a victim real estate company, Ramudit also worked to launder their fraud proceeds through various back office dealings. These defendants allegedly took advantage of their positions at the bank and the victim company to steal money and launder it through a series of opaque transactions.”

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

RAMUDIT is a former branch manager at a major retail bank in Manhattan (“Bank-1”), with significant management authority and control over large financial transactions. RAMUDIT abused her position and authority to steal more than $1 million from client accounts, including accounts held by Company-1 and elderly individual account holders. RAMUDIT conspired with LITVIN, Company-1’s former CFO, and CHAN, a former Company-1 bookkeeper, to steal from Company-1. The defendants carried out their scheme through various means, including fraudulent wire transfers, unauthorized writing and cashing of cashier’s checks, and unauthorized withdrawals from Company-1’s accounts. The defendants laundered the illicit proceeds from these schemes through multiple bank accounts, and used the illicit proceeds to purchase various assets.

RAMUDIT appears to have received substantial kickbacks from LITVIN and CHAN for facilitating their theft from Company-1. For example, in 2010 and 2011, RAMUDIT conducted several transactions to help LITVIN and CHAN steal approximately $400,000 from Company-1, for which RAMUDIT received approximately $175,000 in payments to a bank account she controlled that was in the name of a family member. RAMUDIT also helped CHAN and LITVIN steal money by permitting them to cash or deposit Company-1’s checks. RAMUDIT would often personally cash Company-1’s checks for CHAN and CHAN would meet at RAMUDIT’s office to receive the cash from RAMUDIT. Some of the money CHAN stole was invested into a Brooklyn-based restaurant, in which RAMUDIT was also an investor.

LITVIN, who solely controlled Company-1’s payroll system, separately also stole more than $7 million from Company-1 through its payroll account with Bank-1. After LITVIN’s theft through the payroll system was discovered, he was fired by Company-1, and CHAN discussed unleashing a virus on Company-1’s computer systems to corrupt their files and cover up the crimes.

* * *

RAMUDIT, 56, of Queens, LITVIN, 63, of West Palm Beach, Florida, and CHAN, 38, of Queens, are each charged with conspiracy to commit bank fraud and bank fraud, each of which carries a maximum sentence of 30 years in prison, and conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison. RAMUDIT and LITVIN are each also separately charged with an additional count of bank fraud, which carries a maximum sentence of 30 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.

Acting U.S. Attorney Kim praised the work of the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York, and the agents of the Federal Bureau of Investigation.

This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Eli J. Mark and Jacob Warren 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 forth herein constitute only allegations, and every fact described should be treated as an allegation.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), announced today the unsealing of an Indictment charging 13 members of a Bronx-based drug trafficking organization with narcotics trafficking and firearms offenses. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, these defendants, many of them members of the violent and dangerous Crips street gang, used gun violence to control their territory in the North Bronx and to flood the streets with heroin, crack cocaine, and cocaine. Together with our partners at the FBI and NYPD, we are committed to making our city safer from drug-related violence.”    

FBI Assistant Director in Charge William F. Sweeney Jr. said:  “Our most important job as the FBI NY Metro Safe Streets Task Force is to protect the community from dangerous gangs that use threats and violence to maintain control. Gangs impact innocent people’s lives every day, people who often have no way to rid their neighborhoods of the dealers on the street corners. Our agents and investigators from our partner law enforcement agencies will be dogged in our pursuit of these criminals.”

NYPD Commissioner James P. O’Neill said:  “Today’s arrests are the latest example of the NYPD’s commitment to combatting narcotics trafficking and violent gun crimes.  The dismantling of this crew and the amount of evidence seized represents a significant blow to criminal networks operating in the Bronx. Thanks to FBI and U.S. Attorney in the Southern District—our partners on this and many other cases.”

According to the Indictment[1] unsealed in Manhattan federal court and other publicly filed documents:

The members of the Davidson Avenue drug trafficking organization (the “Davidson Avenue DTO”) controlled narcotics trafficking on Davidson Avenue between West Tremont Avenue and West Burnside Avenue in the Bronx, New York (the “Davidson Block”).  From 2012 to May 2017, members of the Davidson Avenue DTO sold heroin, crack cocaine, and cocaine, among other illegal narcotics, on the Davidson Block, and prevented others from doing the same by the threat of violence.  

Members of the Davidson Avenue DTO are also members and associates of the “55” and “Wildcard” neighborhood sets of the nationwide Crips street gang.  Members of the Davidson Avenue DTO possessed firearms, and planned and engaged in acts of violence to, among other reasons, protect and maintain their drug business.  In particular, members of the Davidson Avenue DTO used their firearms in territory battles with members and associates of the rival Bloods gang, as well as during internal disputes over authority within the Crips sets that composed the DTO.

Count One of the Indictment charges OVED VEGA, a/k/a “O,” a/k/a “Mantha,” FRANKIE REYES, a/k/a “Biscuit,” HENRY MEJIA, a/k/a “Bigs,” FELIX CASTILLO, a/k/a “Spyder,” JUSTIN RODRIGUEZ, a/k/a “Poochie,” JESSICA GLENN, a/k/a “J,” GABRIEL CRUZ, a/k/a “Gabe,” ISIAH PEREZ, a/k/a “Izzy,” NOEL PEREZ, a/k/a “Lito,” ALFREDO RODRIGUEZ, a/k/a “Fetti,” MARKEEN JORDAN, a/k/a “Kingo,” STEFAN CROMARTIE, a/k/a “Stef,” and DAYQUAN SALAMAN, a/k/a “Domo Gz,” with participating in a conspiracy to distribute narcotics, including heroin, crack cocaine, and cocaine.

Count Two of the Indictment charges OVED VEGA, a/k/a “O,” a/k/a “Mantha,” FRANKIE REYES, a/k/a “Biscuit,” HENRY MEJIA, a/k/a “Bigs,” FELIX CASTILLO, a/k/a “Spyder,” JUSTIN RODRIGUEZ, a/k/a “Poochie,” JESSICA GLENN, a/k/a “J,” GABRIEL CRUZ, a/k/a “Gabe,” ISIAH PEREZ, a/k/a “Izzy,” NOEL PEREZ, a/k/a “Lito,” ALFREDO RODRIGUEZ, a/k/a “Fetti,” MARKEEN JORDAN, a/k/a “Kingo,” STEFAN CROMARTIE, a/k/a “Stef,” and DAYQUAN SALAMAN, a/k/a “Domo Gz,” with possessing and discharging firearms in furtherance of the narcotics conspiracy charged in Count One.

*                   *                  *

In a coordinated operation, 10 defendants were arrested in New York on Tuesday afternoon and earlier today.  They will be presented this afternoon in Manhattan federal court.  Defendant MARKEEN JORDAN was already in federal custody on a violation of supervised release.  Defendant DAYQUAN SALAMAN is in custody on state charges and will be transferred to federal custody.  FELIX CASTILLO remains at large.  Charts identifying each defendant, the charges, and the maximum penalties are attached to this release.

The case is assigned to U.S. District Judge Loretta A. Preska. 

Mr. Kim thanked the FBI and NYPD for their work on the investigation.

The Office’s Violent and Organized Crime Unit is overseeing the case.  Assistant U.S. Attorneys Gina Castellano and Hagan Scotten 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. Oved Vega et al.

Count

Charge

Defendant

Maximum Penalty

1

Conspiracy to Distribute Narcotics

OVED VEGA,

     a/k/a “O,”

     a/k/a “Mantha,”

FRANKIE REYES,

     a/k/a “Biscuit,"

HENRY MEJIA,

     a/k/a “Bigs,”

FELIX CASTILLO,

     a/k/a “Spyder,”

JUSTIN RODRIGUEZ,

     a/k/a “Poochie,”

JESSICA GLENN,

   a/k/a “J,”

GABRIEL CRUZ,

   a/k/a “Gabe,”

ISIAH PEREZ,

   a/k/a “Izzy,”

NOEL PEREZ,

   a/k/a “Lito,”

ALFREDO RODRIGUEZ,

   a/k/a “Fetti,”

MARKEEN JORDAN,

   a/k/a “Kingo,”

STEFAN CROMARTIE,

   a/k/a “Stef,”

DAYQUAN SALAMAN,

   a/k/a “Domo Gz,”

Life in prison with a mandatory minimum of 10 years in prison

2

Discharge of Firearms in Furtherance of Narcotics Trafficking

OVED VEGA,

     a/k/a “O,”

     a/k/a “Mantha,”

FRANKIE REYES,

     a/k/a “Biscuit,"

HENRY MEJIA,

     a/k/a “Bigs,”

FELIX CASTILLO,

     a/k/a “Spyder,”

JUSTIN RODRIGUEZ,

     a/k/a “Poochie,”

JESSICA GLENN,

   a/k/a “J,”

GABRIEL CRUZ,

   a/k/a “Gabe,”

ISIAH PEREZ,

   a/k/a “Izzy,”

NOEL PEREZ,

   a/k/a “Lito,”

ALFREDO RODRIGUEZ,

   a/k/a “Fetti,”

MARKEEN JORDAN,

   a/k/a “Kingo,”

STEFAN CROMARTIE,

   a/k/a “Stef,”

DAYQUAN SALAMAN,

   a/k/a “Domo Gz,”

Life in prison with a mandatory minimum of 10 years in prison

Defendants

Age

Oved Vega

39

Frankie Reyes

22

Henry Mejia

37

Felix Castillo

29

Justin Rodriguez

24

Jessica Glenn

33

Gabriel Cruz

23

Isiah Perez

29

Noel Perez

32

Alfredo Rodriguez

26

Markeen Jordan

24

Stefan Cromartie

18

Dayquan Salaman

25

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that JOHN FARCHIONE, a former customer operations manager of a public utility company (the “Public Utility”), and LOUIS BENDEL, who ran a business purporting to assist customers with payments to the Public Utility, were arrested this morning and charged with honest services fraud, bank fraud, mail fraud, aggravated identity theft, and conspiracy, for their roles in a scheme to defraud the Public Utility and its customers out of more than $3.8 million.  BENDEL was presented today before U.S. Magistrate Judge Gabriel W. Gorenstein.  FARCHIONE was arrested in Maine this morning and was presented in federal court there today.

Acting U.S. Attorney Joon H. Kim said:  “John Farchione, an employee of a public utility, and Louis Bendel, the owner of a payment processing vendor, allegedly stole more than $3.8 million from the public utility and its customers. As alleged, instead of providing the fair and honest services the public deserves and the law requires, the defendants instead looked to the public utility as a vehicle to satisfy their personal greed. We thank our partners at the FBI for protecting New York’s public utilities and their customers.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Farchione, aided by his inside knowledge of the billing and payment process of the public utility for which he worked, found a way to exploit procedures in furtherance of a scheme abetted by Bendel.  Bendel, whose job it was to remit customer payments to the utility company, allegedly conspired with Farchione to subvert the system, allowing for their personal enrichment to the detriment of the company and its consumers.  The right to honest services is something every member of the public should enjoy, and those who stand in the way will most certainly be held accountable.”

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

From at least in or about 2005, up to and including in or about November 2016, FARCHIONE and BENDEL engaged in fraudulent schemes resulting in the theft of more than $3.8 million from the Public Utility and its customers.

FARCHIONE, who was employed by the Public Utility as a manager in Customer Operations during the relevant time period, devised and implemented the scheme, using his knowledge of the Public Utility’s billing and payment processes.  FARCHIONE carried out the scheme with BENDEL, who operated a business that aggregated payments from customers of the Public Utility for the purpose of passing such payments on to the Public Utility.  FARCHIONE and BENDEL effected the fraud in part through conspiring to submit fraudulent checks and payments to the Public Utility, in amounts owed by customers who provided cash to BENDEL believing he would submit those payments to the Public Utility on their behalf. 

In fact, however, FARCHIONE and BENDEL kept the customer cash for themselves and submitted fraudulent checks to the Public Utility that purported to convey aggregated payments by multiple customers of the Public Utility.  FARCHIONE, by virtue of his position as an employee of the Public Utility, was able to conceal the nature of the fraudulent checks, and thereby perpetuate the fraudulent scheme, through his knowledge of and access to the Public Utility’s account payment system.

Additionally, FARCHIONE and BENDEL conspired to create fraudulent positive balances on certain customer accounts associated with BENDEL, causing the Public Utility to issue unearned account refunds, the proceeds of which were obtained and shared by FARCHIONE and BENDEL.

*                      *                      *

FARCHIONE, 64, of Queens, and BENDEL, 69, of Seaford, Long Island, are each charged with one count of honest services fraud, which carries a maximum sentence of 20 years in prison; mail fraud, which carries a maximum sentence of 20 years in prison; bank fraud, which carries a maximum sentence of 30 years in prison; conspiracy to commit honest services fraud, mail fraud, and bank fraud, which carries a maximum sentence of 30 years in prison; and aggravated identity theft in connection with the fraudulent schemes, which carries a mandatory sentence of two years in prison, to be served consecutively to any other sentence imposed.

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

Mr. Kim praised the investigative work of the FBI in this investigation.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorney Alex Rossmiller is in charge of the prosecution.

[1] The charges contained in the Complaint are merely accusations, and FARCHIONE and BENDEL are presumed innocent unless and until proven guilty.

Joon Kim, the Acting United States Attorney for the Southern District of New York, Darcel D. Clark, the Bronx County District Attorney, 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 P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today the arrest of OLIVER SOHNGEN, a/k/a “Helmuth Moss,” a/k/a “Stephan Weierbach.”  SOHNGEN is charged with conspiracy to commit sex trafficking of minors, sex trafficking of minors, attempted sex trafficking of minors, and attempted inducement of minors to engage in sexual activity.  SOHNGEN was arrested this morning and presented today before U.S. Magistrate Judge Gabriel W. Gorenstein in Manhattan federal court.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Oliver Sohngen, a music school teacher, allegedly engaged in disturbing, predatory conduct: preying on minor girls for sex. He allegedly had sexual contact with minor girls at least twice, and attempted to engage in sex trafficking of girls under the age of 14. Together with our partners at HSI, NYPD, and the Bronx District Attorney, we are committed to working to protect our most vulnerable victims, children, from sexual exploitation.”

Bronx District Attorney Darcel D. Clark said:  “This defendant came to the Bronx to allegedly engage in the dehumanizing treatment of girls ensnared in sex trafficking, even allegedly trying to arrange sexual encounters with girls as young as 8 years old.  We have a duty to protect our vulnerable youth, and with our partners in the Manhattan U.S. Attorney’s Office, we will prosecute to the fullest extent of the law anyone who supports this cruel exploitation.”

HSI Special Agent in Charge Angel M. Melendez said:  “It is unfathomable that Sohngen, who runs a music school, allegedly paid a pimp hundreds of dollars to arrange sexual encounters with underage girls. We at HSI remain committed to working together with our law enforcement partners to keep our children safe and ridding our neighborhoods of these dangerous sexual predators.”

Police Commissioner James P. O’Neill said:  “The trafficking of minors for the purpose of sex is a deeply disturbing and reprehensible crime.  We remain resolute in working along with our law enforcement partners to identify, apprehend, and prosecute those individuals who prey upon our most innocent victims. I commend the detectives and agents involved in this investigation and the US Attorney’s Office, Southern District for their efforts that resulted in these arrests.”

According to the allegations in the Complaint[1]:

Between March 2013 and November 2013, SOHNGEN exchanged text messages with a co-conspirator to arrange paid sexual encounters with minor girls ranging in age from 8 to 17.  On at least two occasions, SOHNGEN engaged in sexual contact with minor girls at the co-conspirator’s apartment in the Bronx, New York.  In addition, between November 2015 and January 2016, SOHNGEN participated in recorded telephone conversations with an undercover NYPD officer who was posing as a 15-year-old girl.  SOHNGEN proposed to meet with the purported 15-year-old girl in order to engage in sexual conduct.

*                      *                     *

OHNGEN, 52, of Queens, New York, is charged with one count of conspiracy to engage in sex trafficking of minors, which carries a maximum term of life in prison, as well as two counts of sex trafficking of minors under the age of 18, each which carries a mandatory minimum term of 10 years in prison and a maximum of life in prison; three counts of attempted sex trafficking of minors under the age of 14, each of which carries a mandatory minimum term of 15 years in prison and a maximum of life in prison; and two counts of attempted inducement of minors under the age of 18 to engage in sexual activity, each of which carries a mandatory minimum term of 10 years in prison and a maximum of life 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 and the NYPD, and expressed gratitude for the efforts of HSI’s New York Trafficking in Persons Unit and the NYPD’s Vice Enforcement Division Major Case Team.  Mr. Kim also expressed gratitude to the Bronx County District Attorney’s Office for its partnership in this investigation.   

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Frank Balsamello and Michael Krouse are in charge of the prosecution, with assistance from Bronx County Assistant District Attorney Meagan Powers.

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.

Joon H. Kim, Acting United States Attorney for the Southern District of New York, announced that ONEIL DASILVA, a/k/a “Soxx,” a/k/a “Bobby Soxx,” an associate of the violent Big Money Bosses (“BMB”) street gang, was sentenced today to 15 years in prison in connection with a shooting in 2011 at a backyard party in the Bronx, New York, during which eight people were shot, including a 13-year-old girl and a 14-year-old girl.  DASILVA pled guilty on December 8, 2016, before United States District Judge Alison J. Nathan, who also imposed today’s sentence.

Acting U.S. Attorney Joon H. Kim said:  “Oneil Dasilva, a Big Money Boss gang associate, terrorized his neighborhood in the Bronx, engaging in a reckless shooting spree that led to eight people, including two young teenagers, getting shot. For his crimes, Dasilva will now spend 15 years in a federal prison. Gang and gun violence must be confronted forcefully, as we did in this case with our law enforcement partners.”

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

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

As part of his involvement in with BMB, on September 4, 2011, DASILVA opened fire at a backyard barbeque in the vicinity of 221st Street in the Bronx.  Eight people were shot, including a 13-year-old girl and a 14-year-old girl.  All of the victims survived.  

DASILVA was arrested in this case as a result of a multi-year investigation by the New York City Police Department’s Bronx Gang Squad (the “Bronx Gang Squad”), U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Violent Gang Unit (“HSI”), the New York Field Division of the Drug Enforcement Administration (“DEA”), and the Joint Firearms Task Force of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) into gang violence in the Northern Bronx. DASILVA was charged in an Indictment unsealed on April 27, 2016 (United States v. Nico Burrell et al., 15 Cr. 95), charging 63 members and associates of BMB with racketeering conspiracy, narcotics conspiracy, narcotics distribution, and/or firearms charges.  To date, 47 of these defendants have pled guilty.

* * *

Mr. Kim praised the outstanding work of the NYPD’s Bronx Gang Squad, HSI, DEA, and ATF.  

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the United States has settled a money laundering and civil forfeiture action against assets of 11 corporations, including some that own luxury residential and high-end commercial real estate in Manhattan. The Government’s complaint alleged that the defendant corporations laundered some proceeds of a $230 million Russian tax refund fraud scheme involving corrupt Russian officials that was uncovered by Sergei Magnitsky, a Russian lawyer who died in pretrial detention in Moscow under suspicious circumstances and was posthumously prosecuted by Russia.

In the stipulation of settlement filed with U.S. District Judge William H. Pauley III today, which is still subject to approval by the Court, one of the defendant corporations, Prevezon Holdings Ltd., agrees to pay $5,896,333.65 to resolve the Government’s claims against all defendants. This payment represents triple the value of the proceeds that the Government alleged could be traced directly from the Russian treasury fraud to the defendants ($1,965,444.55), and more than ten times the amount of proceeds the Government alleged could be traced directly to property in New York (approximately $582,000).

Acting Manhattan U.S. Attorney Joon H. Kim said: “We will not allow the U.S. financial system to be used to launder the proceeds of crimes committed anywhere – here in the U.S., in Russia, or anywhere else. Under the terms of this settlement, the defendants have agreed to pay not just what we alleged flowed to them from the Russian treasury fraud, but three times that amount, and roughly 10 times the money we alleged could be traced directly into U.S. accounts and real estate.”

The Government’s lawsuit alleged as follows:

In 2007, a Russian criminal organization engaged in an elaborate tax refund fraud scheme resulting in a fraudulently obtained tax refund of approximately $230 million from the Russian treasury. As part of the fraud scheme, members of the organization stole the corporate identities of portfolio companies of the Hermitage Fund, a foreign investment fund operating in Russia. The organization’s members then used these stolen identities to make fraudulent claims for tax refunds.

In order to procure the refunds, the criminal organization fraudulently re-registered the Hermitage companies in the names of members of the organization, and then orchestrated sham lawsuits against these companies. These sham lawsuits involved members of the organization as both the plaintiffs (representing sham commercial counterparties suing the Hermitage companies) and the defendants (purporting to represent the Hermitage companies). In each case, the members of the organization purporting to represent the Hermitage companies confessed full liability in court, leading the courts to award large money judgments to the plaintiffs.

The purpose of the sham lawsuits was to fraudulently generate money judgments against the Hermitage companies. Members of the organization purporting to represent the Hermitage companies then used those money judgments to seek tax refunds. The basis of these refund requests was that the money judgments constituted losses eliminating the profits the Hermitage companies had earned, and thus the Hermitage companies were entitled to a refund of the taxes that had been paid on these profits. The requested refunds totaled 5.4 billion rubles, or approximately $230 million.

Members of the organization who were officials at two Russian tax offices corruptly approved the requests within one business day, and approximately $230 million was disbursed to members of the organization, purportedly on behalf of the Hermitage companies, two days later.

After perpetrating this fraud, members of the organization undertook illegal actions in order to conceal this fraud and retaliate against individuals who attempted to expose it. After learning of the lawsuits against its portfolio companies, Hermitage retained attorneys, including Russian lawyer Sergei Magnitsky, to investigate. Magnitsky and other attorneys for Hermitage uncovered the refund fraud scheme, and the complicity of Russian governmental officials in it, and were subject to retaliatory criminal proceedings against them. Magnitsky was arrested and died approximately a year later in pretrial detention. An independent Russian human rights council concluded that Magnitsky’s arrest and detention were illegal, that Magnitsky was denied necessary medical care in custody, that he was beaten by eight guards with rubber batons on the last day of his life, and that the ambulance crew that was called to treat him as he was dying was deliberately kept outside of his cell for more than an hour until he was dead.

Members of the criminal organization, and associates of those members, have also engaged in a broad pattern of money laundering in order to conceal the proceeds of the fraud scheme. In a complex series of transfers through shell corporations, the $230 million from the Russian treasury was laundered into numerous accounts in Russia and other countries. A portion of the funds stolen from the Russian treasury passed through several shell companies into Prevezon Holdings, Ltd., a Cyprus-based real estate corporation that is a defendant in the forfeiture action. Prevezon Holdings laundered these fraud proceeds into its real estate holdings, including investment in multiple units of high-end commercial space and luxury apartments in Manhattan, and created multiple other corporations, also subject to the forfeiture action, to hold these properties.

* * *

A chart listing the companies named as defendants in the lawsuit is attached.

Mr. Kim praised the outstanding investigative work of ICE HSI New York’s El Dorado Task Force.

This case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit. Assistant United States Attorneys Paul M. Monteleoni, Cristine Irvin Phillips, and Tara M. LaMorte are in charge of the case.

Prevezon Holdings, Ltd.

Prevezon Alexander, LLC

Prevezon Soho USA, LLC

Prevezon Seven USA, LLC

Prevezon Pine USA, LLC

Prevezon 1711 USA, LLC

Prevezon 1810, LLC

Prevezon 2009 USA, LLC

Prevezon 2011 USA, LLC

Ferencoi Investments, Ltd.

Kolevins Ltd.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that RANDY CROWELL, a/k/a “Roger,” was sentenced today to 60 months in prison for fraudulently distributing, through his Utah-based wholesale distribution company, more than $100 million worth of prescription drugs obtained through a nationwide black market. The defendant distributed the drugs in question, which were predominantly used to treat HIV/AIDS, to pharmacies, where they were dispensed to unsuspecting patients. As part of his sentence, CROWELL also agreed to forfeit more than $13 million in personal profits from the scheme and was ordered to pay an additional $65 million in restitution to Medicaid. CROWELL pled guilty on January 6, 2017, to one count of conspiracy to commit healthcare fraud before United States District Judge Edgardo Ramos, who also imposed today’s sentence.

Acting Manhattan U.S. Attorney Joon H. Kim said: “For more than two years, Randy Crowell personally profited from perverting a system designed to ensure patients receive safe and effective medication. He victimized healthcare companies and government benefit programs, as well as countless people suffering from life-threatening illnesses. The recipients of Crowell’s black market medications had no way to know that the medicines they purchased at pharmacies might be dangerous.”

CROWELL’s sentence marks the culmination of a six-year investigation by the U.S. Attorney’s Office in conjunction with the Federal Bureau of Investigation into a massive, nationwide healthcare fraud scheme involving the resale of black market medications worth more than $500 million. Including CROWELL, 57 defendants have been charged and convicted for their roles in the scheme. Through these prosecutions, hundreds of millions in restitution and criminal forfeiture have been recovered for victims, including Medicaid.

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

From early 2010 until at least July 2012, CROWELL, who was the owner and operator of a licensed wholesale distributor of prescription medications based in St. George, Utah (“Wholesaler-1”), participated in a sophisticated scheme to defraud health insurance companies and government programs such as Medicaid out of hundreds of millions of dollars by trafficking prescriptions through a nationwide black market. CROWELL, through Wholesaler-1, purchased more than $100 million worth of prescription medications from this black market at a fraction of the legitimate prices for these drugs, before selling the same as new, legitimate bottles of medication to pharmacies all over the country.

To maximize their profits, CROWELL and his co-conspirators focused on some of the most expensive medications on the market, including those used to treat HIV/AIDS. The profitable scheme was potentially dangerous to the tens of thousands of patients ultimately receiving and taking these prescription drugs. Many of the bottles purchased through the underground market and then distributed as safe, legitimate medications by CROWELL and Wholesaler-1 had in fact been previously dispensed to others, including individuals based in the Southern District of New York. To conceal the fact that they had been previously dispensed, the bottles were typically “cleaned” with hazardous chemicals such as lighter fluid before being transported and stored in conditions that were frequently unsanitary and insufficient to ensure the safety and efficacy of the medication.

Rather than purchasing medications from manufacturers or legitimate authorized distributors at full price, scheme participants, including CROWELL, created and exploited an underground market for these prescription drugs. Scheme participants targeted the cheapest possible source of supply for these drugs – Medicaid patients and other individuals who received these prescription drugs on a monthly basis for little or no cost, and who were then willing to sell their medicines rather than taking them as prescribed (the “Insurance Beneficiaries”).

Insurance Beneficiaries had prescriptions filled for medications each month at pharmacies across the country, including in Manhattan and the Bronx, and then sold their medications to low-level participants (“Collectors”) in the scheme who worked on street corners and bodegas and would pay cash – typically as little as $40 or $50 per bottle. Health care benefit programs would not have paid for the medications issued by pharmacies to the Insurance Beneficiaries had these health care benefit programs known that the Insurance Beneficiaries were selling their drugs to others, rather than taking them as prescribed.

Collectors then sold these second-hand drugs to higher-level scheme participants (“Aggregators”) who bought dozens, and sometimes hundreds, of bottles at a time from multiple collectors before selling them to higher-level scheme participants with direct access to legitimate distribution channels, including corrupt wholesale companies like Wholesaler-1. The corrupt wholesale companies, including Wholesaler-1, then resold the bottles as new, at full price, to pharmacies, including potentially the very same pharmacies that initially dispensed these medications. In so doing, CROWELL and other corrupt wholesale companies intentionally misrepresented where these medications were coming from and, in particular, concealed the fact that these prescription drugs had been obtained from an illegal and illegitimate black market.

Between 2010, when Wholesaler-1 was created by CROWELL, and July 2012, Wholesaler-1 had no legitimate sources of supply. Instead, CROWELL caused Wholesaler-1 to purchase exclusively from illegitimate sources – including the so-called “Aggregators” – who sold to CROWELL at substantially reduced rates, sometimes as much as 50 percent less than the price of acquiring these medications from legitimate sources. Consistent with their illegitimate origins, inbound shipments of prescription drugs frequently arrived at Wholesaler-1 improperly packaged in unsealed, unsecure cardboard boxes. On some occasions, bottles of medication arrived at Wholesaler-1 with the initial patient labels still affixed to them. On other occasions, bottles arrived having already been opened, or containing what appeared to be the wrong medication. At the direction of CROWELL, employees of Wholesaler-1 then inventoried these bottles, attempted to remove any bottles that still had patient labels affixed to them or were otherwise visibly used or damaged, and then arranged for the medications to be shipped out to Wholesaler-1’s customers – pharmacies all over the country, including pharmacies in Manhattan and the Bronx.

To effectuate the scheme – and, in particular, to convince pharmacies to buy these medications, and health care benefit programs to pay for them, CROWELL and others made false and fraudulent representations about the origins of these medications. Specifically, CROWELL and others acting at his direction created false and fraudulent documents known as “pedigrees” for these medications, which purported to document the legitimate movement of these medications bought and sold by Wholesaler-1 from a manufacturer to the pharmacy.

In order to evade detection, CROWELL took additional steps to conceal the unlawful nature of his activities, including using the name “Roger,” frequently changing or “dropping” the phones he used to communicate with co-conspirators, and paying co-conspirators through front or “sham” companies.

* * *

In addition to the term of imprisonment, CROWELL, 56, of Henderson, Nevada, was sentenced to three years of supervised release, ordered to forfeit $13,046,635.00, and ordered to pay restitution of $65 million to Medicaid.

Mr. Kim praised the investigative work of the FBI.

The prosecution of this case is being overseen by the Office’s Money Laundering and Asset Forfeiture Unit. Assistant U.S. Attorneys Edward B. Diskant and Matthew Podolsky are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that HAMLET PERALTA pled guilty today to wire fraud in connection with his scheme to obtain money from investors by fraudulently representing that he was using their investments to further a profitable, multimillion-dollar wholesale liquor business. PERALTA pled guilty before United States District Judge Katherine B. Forrest. Sentencing has been scheduled for September 8, 2017, at 10:00 a.m.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Hamlet Peralta swindled millions of dollars from unsuspecting investors who trusted him because of his reputation in the community as a business owner and restaurateur. As Peralta has now admitted, instead of being an honest broker, he stole their money and used it to fund his own lavish lifestyle and to further a massive Ponzi scheme.”

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

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

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

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

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

* * *

PERALTA, 37, of the Bronx, New York, has pled guilty to one count of wire fraud, which carries a maximum term of 20 years in prison. The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Ashan M. Benedict, the Special Agent in Charge of the New York Field Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), announced today the filing of a criminal complaint charging JORDANY FRIAS-ROSARIO, a/k/a “Julio,” and PEDRO CASTILLO, a/k/a “Juan Antonio Frias,” with robbery, kidnapping, and use of a firearm during the commission of a crime of violence. As alleged, FRIAS-ROSARIO and CASTILLO committed a home invasion robbery in the Bronx on March 30, 2017, and forcefully tied up two victims, including a 7-year-old boy with autism. FRIAS-ROSARIO was arrested in Utica, New York, this morning and will be presented this afternoon before the Honorable Thérèse Wiley Dancks. CASTILLO is still at large, and the general public is encouraged to contact Crime Stoppers at 800-577-TIPS (800-577-8477) with any information on CASTILLO’s whereabouts.

Acting Manhattan U.S. Attorney Joon H. Kim said: “The defendants are charged with a callous crime of violence. They allegedly terrorized two people at gunpoint during a home invasion robbery, tying up a 7-year-old autistic child and pistol-whipping an adult. We commend our partners at the ATF and NYPD for the exemplary work that led to the charges today.”

ATF SAC Ashan M. Benedict said: “The defendants are alleged to have brazenly and viciously committed a gunpoint home invasion, during which one victim was tied up and violently assaulted in the presence of the second victim, an autistic child, who was also tied up. Such acts of violence and depravity will not be tolerated, and the defendants will now face justice for their actions. I would like to express my gratitude to the ATF Special Agents and NYPD Detectives assigned to the ATF SPARTA Task Force for their hard work throughout this investigation, and the many others in which they are successfully targeting armed robbers for arrest and prosecution. I would also like to thank the United States Attorney’s Office for their continued partnership and dedication in pursuing the prosecution of violent offenders.”

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

On March 30, 2017, JORDANY FRIAS-ROSARIO, a/k/a “Julio,” and PEDRO CASTILLO, a/k/a “Juan Antonio Frias,” committed a home invasion robbery in the Bronx, New York (the “Robbery”). During the course of the Robbery, FRIAS-ROSARIO and CASTILLO brandished a firearm and forcefully tied up two victims (“Victim-1” and “Victim-2”). Victim-1, a 66-year-old man, was pistol whipped, leaving a deep gash over his left ear. Victim-2, a 7-year-old boy with autism, was also tied up during the course of the Robbery.

* * *

FRIAS-ROSARIO, 24, of the Bronx, was arrested this morning. CASTILLO, 56, also of the Bronx, is still at large and the general public is encouraged to call Crime Stoppers with any information on CASTILLO’s whereabouts. FRIAS-ROSARIO and CASTILLO are each charged with robbery, kidnapping, and using a firearm during the commission of a crime of violence; the charge carries a maximum sentence of life in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Kim praised the efforts of the NYPD and ATF in this investigation, specifically the Bronx Robbery Squad and the Joint Robbery Task Force.

This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jacob Warren and Michael Longyear 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 forth herein constitute only allegations, and every fact described should be treated as an allegation.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Scott Lampert, Special Agent in Charge of the New York Regional Office for the Office of Inspector General for the Department of Health and Human Services (“HHS-OIG”), announced today that the United States simultaneously filed and settled a civil fraud lawsuit against benefits management company CaRECORE NATIONAL LLC (“CARECORE”), now part of eviCore healthcare, for authorizing medical diagnostic procedures paid for with Medicare and Medicaid funds over a period of at least eight years without properly assessing whether the procedures were necessary or reasonable. The settlement, approved in Manhattan federal court by U.S. District Judge Richard J. Sullivan, resolves CARECORE’s civil liabilities to the United States under the federal False Claims Act. Under the settlement, CARECORE must pay a total of $54 million, of which $45 million will be paid to the United States and $9 million will be paid to the states that are named as plaintiffs in the suit. CARECORE also admitted and accepted responsibility for, among other things, improperly approving prior authorizations requests for hundreds of thousands of diagnostic procedures paid for with Medicare Part C and Medicaid funds.

Acting U.S. Attorney Joon H. Kim said: “Benefit management companies are supposed to determine whether medical diagnostic procedures paid for with Medicare and Medicaid funds are necessary and reasonable. Instead, CareCore blindly approved hundreds of thousands of medical procedures over a period of many years, leaving Medicare and Medicaid to foot the bill. This lawsuit and settlement shows our commitment to ensuring that fraud and waste involving federal funds will be identified and stopped.”

HHS-OIG Special Agent in Charge Scott J. Lampert said: “CareCore’s irresponsible behavior compromised the integrity of the Medicare and Medicaid programs, and wasted millions of taxpayer dollars. HHS-OIG will continue to ensure that companies that do business with federally-funded health care programs do so in an honest fashion.”

The United States Complaint-In-Intervention (the “Complaint”) alleges that starting in as early as 2005, CARECORE, which performs prior authorization review for diagnostic procedures on behalf of many insurers, including those providing insurance through Medicare Part C and Medicaid Managed Care, was unable to review prior authorization requests in a timely fashion, and in order to avoid contractual penalties for failing to timely process the requests, CARECORE instituted a practice of improperly approving prior authorization requests. By 2007, CARECORE had formalized this practice into the “PAD program.” Between 2007 and 2013, through the PAD program, CARECORE improperly authorized over 200,000 diagnostic procedures.

As part of the settlement, CARECORE must pay $54,000,000 to resolve both federal and state false claims act claims, the latter of which will be the subject of a separate settlement agreement between CARECORE and the states. In the settlement, CARECORE admits, acknowledges and accepts responsibility for the following conduct:

1. CARECORE provides services to health insurers, including managed care organizations that provide services to beneficiaries of the Medicare Part C and Medicaid programs (collectively, “MCOs”). CARECORE provides prior authorization services, which consist of screening prior authorization requests for certain procedures for medical reasonableness and necessity. During the times pertinent to this matter, CARECORE’s Clinical Reviewers, who generally were nurses, received information from the treating physicians and input that information into CARECARE’s proprietary software system. That software system, based on the information provided, either recommended approval of the prior authorization or recommended further review by a physician.

1. Under the applicable regulations and contractual provisions, if a plan decides to implement prior medical necessity review in order to cover physician-ordered services, only a physician or other appropriate health care professional with sufficient expertise has the authority to deny a procedure. Thus, if a prior authorization could not be issued based on the information currently supplied by the treating physician, the prior authorization request, including all of the related information, was placed in an electronic queue, the Medical Review Queue. The prior authorization request could be accessed in the Medical Review Queue by a CAERCORE Medical Director, who is a physician retained by CARECORE, who would review the information and determine whether to conduct a peer call with the treating physician or appraise information gathered after the initial request in order to determine whether prior authorization of the procedure was appropriate, or should be denied.

1. In order for the MCOs to meet timelines in the applicable regulations and/or pursuant to its contractual obligations and provisions, CARECORE was required to issue a determination on prior authorization requests within fixed time periods known as “Turn Around Times,” or “TATs”, often as little as 4 hours for urgent requests, and 48 hours for non-urgent requests. CARECORE was also subject to contractual monetary penalties if it failed to maintain performance standards, including meeting the processing deadlines set forth in the regulations and contracts.

1. Starting in at least 2007, CARECORE developed the “Process As Directed,” or “PAD” Program. Under the PAD Program, CARECORE’s Clinical Reviewers would approve certain prior authorization requests awaiting physician review that had been on the queue for nearly the entire applicable TAT. The PAD Program consisted of Clinical Reviewers improperly approving certain prior authorization requests on the Medical Review Queue without having obtained any new objective medical information about the request, and without a Medical Director having independently reviewed the prior authorization request. These prior authorization requests (“padded requests”) were then transmitted to CARECORE’s client insurers, including MCOs, as preauthorized requests.

1. In 2007, the PAD Program was formalized into corporate policy, which included detailed training materials and daily reporting of the number of padded requests to high-level executives then-employed at CARECORE. When daily regular review of the Medical Review Queue showed the volume of cases in the Medical Review Queue was too high to make a timely decision for a significant volume of requests for prior authorization, certain Clinical Reviewers were directed by then-management to approve requests for prior authorization without obtaining or considering any new medical information.

1. From 2007 through June 13, 2013, CARECORE padded between 200,000 and 300,000 prior authorization requests.

1. In CARECORE’s role managing the prior authorization process, it had medical information of the beneficiaries seeking prior authorization. When CARECORE approved padded requests, CARECORE made a representation that it had appropriately reviewed the requests when it knew it had not. Thus, those padded requests incorporated CARECORE’s false representation that it had approved a case after completing the required review process. The MCOs thereafter provided coverage based on CARECORE’s approval of the prior authorizations.

1. MCOs would only pay for procedures that require a prior authorization if the prior authorization was granted in a manner consistent with the MCO’s policies and procedures. Thus, the PAD Program resulted in insurance claims related to the padded requests being presented to the MCOs for payment with federal and/or state government funds, and MCOs actually paid insurance claims made in connection with the padded requests.

The Complaint in this case was filed under the federal False Claims Act, which punishes violators who submit false claims or make false statements material to claims submitted to entities administering programs funded by the government. The allegations of fraud stated in the Complaint were first brought to the attention of the government by a whistleblower, who filed a lawsuit under the qui tam provisions of the False Claims Act. Those provisions allow private parties who have knowledge of fraud committed against the government to file suit on behalf of the government and share in any recovery. The United States may then intervene and file a complaint, as it did here.

* * *

Mr. Kim praised the investigative work of the Offices of the State Attorneys General of the 29 states also named as plaintiffs in the qui tam complaint. He also thanked the U.S. Department of Health and Human Services, Office of Inspector General, for its assistance in this case.

The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Arastu K. Chaudhury is in charge of this matter.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that WALTER C. LITTLE, a/k/a “Chet,” a former partner at an international law firm (the “Firm”), and ANDREW BERKE, a business associate of LITTLE, were arrested this morning and charged with insider trading. LITTLE and BERKE collectively made approximately $1 million in profits in connection with options and stock trading based on material nonpublic information that LITTLE improperly accessed from the Firm’s databases and then provided to BERKE. LITTLE and BERKE were arrested today and presented before a Magistrate Judge in the Middle District of Florida.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Walter Little, a former partner at a major international law firm, allegedly used confidential information – entrusted to the firm by its clients – to illegally trade for personal gain. Although he billed no work for these clients, Little allegedly used his position at the firm to access and share their nonpublic business information. As alleged, Little and Andrew Berke then used that inside information to make approximately $1 million in illegal profits. We continue the fight against illegal insider trading, and are committed, along with our partners at the FBI and the SEC, in ensuring fairness and integrity in our financial markets.”

FBI Assistant Director William F. Sweeney Jr. said: “Little and Berke allegedly used Little’s position at the firm to access material, nonpublic information and engage in insider trading – a scheme that ultimately resulted in collective profits of approximately $1 million. Having access to this type of information is a privilege, one that is extended in furtherance of trusted business-related matters. When clients’ proprietary information is used in this way, they’re not the only ones at risk of losing; keeping our markets fair for all investors remains a top priority for the FBI. We will continue to work with our law enforcement partners to bring charges against those who use illegal and unfair advantages in our securities markets.”

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

Between February 2015 and May 2016, LITTLE was employed at the Firm as a partner. During that time, the Firm provided transactional and regulatory legal advice to a wide variety of corporations, among other services. Clients regularly entrusted the Firm with nonpublic information and the Firm consequently enacted policies requiring its employees to keep such information confidential. LITTLE, however, failed to abide by these policies. Even though he did not perform any billable work for the associated clients, LITTLE accessed documents relating to seven different companies containing material nonpublic information about (1) a client’s anticipated delisting from the NASDAQ stock exchange; (2) multiple clients’ involvement in mergers and acquisitions; (3) multiple clients’ anticipated earnings announcements; and (4) a securities offering being planned by a client. LITTLE then purchased and sold stock and options based on the information contained in these documents, making profits of over approximately $320,000.

In addition to trading on the information himself, LITTLE also provided the information to BERKE, his business associate and friend. BERKE also traded on the information, making profits of over approximately $660,000. For example, on or about July 23, 2015, LITTLE accessed a document on the Firm’s document management system entitled “Revised Merger Agreement,” which contained material nonpublic information about an upcoming merger of a Firm client. The following morning, between approximately 8:31 a.m. and 8:34 a.m., LITTLE and BERKE exchanged approximately six text messages. Approximately an hour later, at 9:41 a.m., BERKE purchased hundreds of shares of stock in the relevant company. The merger referenced in the document that LITTLE had accessed became public approximately three days later, resulting in significant profits for BERKE.

* * *

LITTLE, 43, of Tampa, Florida, and BERKE, 49, of Apollo Beach, Florida, are each charged with one count of conspiring to commit securities fraud and six counts of securities fraud. LITTLE is also charged with an additional five counts of securities fraud. The charge of conspiring to commit securities fraud carries a maximum sentence of five years in prison, and each securities fraud count carries 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 statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.

Mr. Kim praised the investigative work of the FBI and thanked the SEC, which has filed civil charges in a separate action. He added that the FBI’s investigation is ongoing.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Robert Allen is in charge of the prosecution. The allegations contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ALEKSANDR BURMAN, a/k/a “Alexander Burman,” was sentenced today by U.S. District Judge Paul G. Gardephe to 10 years in prison. BURMAN organized and managed a large health care fraud scheme through six medical clinics in Brooklyn, through which BURMAN and his co-conspirators defrauded the Medicare and New York State Medicaid (“Medicaid”) programs of more than $26 million. As part of the scheme, BURMAN and his co-conspirators paid cash kickbacks to elderly and financially disadvantaged patients insured by Medicare and/or Medicaid, to induce those patients to receive medically unnecessary medical services and equipment, and then to bill Medicare and Medicaid for those unnecessary services or for additional non-existent services and equipment. BURMAN pled guilty on March 18, 2016, before U.S. Magistrate Judge Henry B. Pitman to conspiring to commit wire fraud and health care fraud, health care fraud, and committing an offense while on pretrial release in an earlier criminal case.

Acting U.S. Attorney Joon H. Kim said: “Aleksandr Burman victimized both patients and taxpayers. He established and operated six fraudulent medical clinics, bilking Medicare and Medicaid out of more than $26 million. Medicare and Medicaid were established to assist the elderly and disadvantaged, not to enrich corrupt fraudsters.”

According to the Information to which BURMAN pled guilty, other filings in Manhattan federal court, and statements made in connection with BURMAN’s sentencing:

ALEKSANDR BURMAN established six clinics in Brooklyn (the “BURMAN Clinics”) that operated between 2007 and July 2013, which purported to offer medical services and diagnostic testing performed by or under the supervision of licensed medical doctors. Although BURMAN in fact owned and operated the Clinics, he caused them to employ three doctors (the “Clinic Doctors”) and arranged for these doctors to be listed as the respective nominal owners of the Clinics, since New York State law requires that such clinics be owned by health care professionals. Under BURMAN’s direction, employees of the Clinics paid cash kickbacks to elderly and disadvantaged people insured by Medicare and/or Medicaid to undergo unnecessary medical tests and procedures, and then fraudulently billed Medicare and Medicaid for such visits. The bills submitted to Medicare and Medicaid were fraudulent because, among other things, (a) they were for medically unnecessary treatment; (b) patients were paid kickbacks for receiving treatment; and (c) the bills fraudulently claimed that the Clinic Doctors had treated the patients. In other cases, BURMAN and his co-conspirators billed Medicare and Medicaid for medical services and supplies that were not provided at all.

The fraud also extended to other companies. For example, prescriptions from the doctors at the BURMAN clinics were used by a supply company that BURMAN partly owned to bill Medicaid for more than $3.5 million in durable medical equipment such as adult diapers, many of which were never provided to patients. Similarly, referrals from these same doctors were used by transportation companies to bill Medicaid for millions of dollars for medically unnecessary ambulette services.

* * *

In addition to his prison term, BURMAN, 55, a resident of Manhattan, was ordered to pay $16,686,811 in forfeiture, of which $1.8 million, plus 22 pieces of real estate, have already been forfeited. BURMAN was also sentenced to three years of supervised release and a restitution order of $18,683,691. BURMAN was immediately remanded to the custody of the U.S. Bureau of Prisons.

Nine former employees of the BURMAN clinics, as well an additional associate, are facing charges in a separate case for related conduct. Those defendants are awaiting trial before United States District Judge Lorna G. Schofield in United States v. Vaid.

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation and the New York State Office of the Medicaid Inspector General (“OMIG”).

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JEFFREY HERRING, 27, was convicted today of robbing and murdering Michael Northcote on October 12, 2015, in Swan Lake, New York, as well as racketeering charges in connection with his membership in the Askari, a Bloods gang. The jury convicted HERRING on all five counts in the controlling indictment following a two-week trial before U.S. District Judge Kenneth M. Karas.

Acting U.S. Attorney Joon H. Kim stated: “Jeffrey Herring, as a member of the Bloods gang Askari, carried out a violent home-invasion robbery with fellow gang members and senselessly murdered Michael Northcote. Today, a unanimous jury convicted him of racketeering and murder, holding him accountable for his brutal crimes. We want to thank our law enforcement partners – federal, state, and local – for their outstanding work on this case. We are particularly grateful to Sullivan County District Attorney James Farrell for his extraordinary partnership with our Office on this and so many other cases. We hope the jury’s verdict brings some comfort and justice to the family of the victim of Herring’s crimes.”

According to court papers and evidence admitted at trial:

From 2014 to May 2016, JEFFREY HERRING was a member of the Askari in Sullivan County. The Askari is a subset of the Bloods gang that engaged in, among other things, robberies, shootings, and drug dealing. On October 12, 2015, HERRING and several other individuals, including other Askari members, carried out a home-invasion robbery of Michael Northcote, a marijuana dealer, at 177 Cohen & Cohen Road, Swan Lake, New York. In the course of that robbery, HERRING shot and killed Northcote.

For these activities, HERRING was convicted of one count of conspiracy to commit robbery, which carries a maximum sentence of 20 years; one count of robbery, which carries a maximum sentence of 20 years; one count of murder through the use of a firearm, which carries a mandatory minimum sentence of 10 years, to be served consecutively to any other sentence, and a maximum sentence of life; conspiring to violate the racketeering laws, which carries a maximum sentence of 20 years; and felony murder in aid of racketeering, which carries a mandatory minimum sentence of life imprison. 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.

HERRING is scheduled to be sentenced on November 16, 2017, before Judge Karas.

Acting U.S. Attorney Kim praised the Sullivan County District Attorney, the FBI, the New York State Police, the Sullivan County Sheriff’s Office, the Village of Monticello Police Department, and the Village of Liberty Police Department for their outstanding work in this investigation.

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

A Bronx, New York attorney, who ran a tax preparation business, was sentenced to serve 24 months in prison today for filing thousands of fraudulent tax returns that claimed more than $6 million in bogus deductions, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Joon H. Kim for the Southern District of New York.

“William Doonan used his status as an attorney to attract clients to his tax preparation business,” said Acting Deputy Assistant Attorney General Goldberg. “But instead of performing honest and professional work, he routinely falsified their returns, adding more than $6 million in phony deductions and causing the Internal Revenue Service (IRS) to incur more than $1.8 million in lost taxes. Doonan’s prison sentence today makes clear that those who prepare and file fraudulent returns face significant penalties.”

William Doonan’s so-called ‘business’ didn’t prepare taxes, it manufactured lies and false tax returns that resulted in more than $1.8 million in lost revenue for the IRS,” said Acting U.S. Attorney Kim. “In filing thousands of federal tax returns, Doonan used his legal knowledge to circumvent the law. Thanks to the dedicated investigators of the IRS, he will be held to account for his criminal misdeeds.”

“Doonan wreaked havoc on the taxpayers whose returns he prepared,” said Chief Richard Weber of IRS Criminal Investigation (CI). “Return preparer fraud is a priority for IRS CI and we are committed to investigating and putting a stop to unscrupulous criminals who take advantage of their clients. But, taxpayers must be diligent too and be careful when choosing a return preparer. It is important to know that even if someone else prepares your return, you are ultimately responsible for all the information on the tax return.”

According to documents and allegations in the Information to which William Doonan, pleaded guilty, other documents filed in Manhattan federal court, and statements made in court proceedings:

Doonan, 69, a New York licensed attorney since 1982, ran a tax preparation business in the Bronx using the firm name, “William Doonan, Esq.” Every year from 2010 through 2013, Doonan prepared and filed between 3,000 and 5,000 federal tax returns with the IRS for taxpayer-clients in exchange for a fee. Several thousand of these returns were fraudulent and reported bogus “consulting” businesses and business losses, while others claimed fake deductions based on false medical and dental expenses, state and local taxes, home mortgage interest, charitable donations and job expenses. In total, Doonan included more than $6 milion in fabricated and inflated items on his clients’ federal tax returns and caused a tax loss of more than $1.8 million.

In addition to the term of prison imposed, U.S. District Judge Vernon S. Broderick also ordered Doonan to serve one year of supervised release, to pay $65,820 in restitution to the IRS and to pay a fine of $10,000. Doonan previously pleaded guilty in November 2016 to aiding and assisting in the preparation of a false tax return and obstructing and impeding the due administration of internal revenue laws.

Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Kim praised special agents of IRS–Criminal Investigation, who conducted the investigation, and Assistant Chief Jorge Almonte of the Tax Division, who prosecuted the case.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Stuart M. Goldberg, the Acting Deputy Assistant Attorney General for the Tax Division of the Department of Justice, announced today that WILLIAM DOONAN, an attorney who operated a tax preparation business in the Bronx, New York, was sentenced today to 24 months in prison by U.S. District Judge Vernon S. Broderick for preparing and filing thousands of false and fraudulent returns that claimed more than $6 million in bogus deductions. DOONAN pled guilty on November 1, 2016, before Judge Broderick to one count of aiding and assisting in the preparation of a false tax return, and one count of obstructing and impeding the due administration of internal revenue laws.

Acting Manhattan U.S. Attorney John H. Kim said: “William Doonan’s so-called ‘business’ didn’t prepare taxes, it manufactured lies and false tax returns that resulted in more than $1.8 million in lost revenue for the IRS. In filing thousands of federal tax returns, Doonan used his legal knowledge to circumvent the law. Thanks to the dedicated investigators of the IRS, he will be held to account for his criminal misdeeds.”

Acting Deputy Assistant Attorney General Stuart M. Goldberg said: “William Doonan used his status as an attorney to attract clients to his tax preparation business. But instead of performing honest and professional work, he routinely falsified their returns, adding more than $6 million in phony deductions and causing the IRS to incur more than $1.8 million in lost taxes. Doonan’s prison sentence today makes clear that those who prepare and file fraudulent returns face significant penalties.”

According to the allegations in the Information to which DOONAN pled guilty, other documents filed in Manhattan federal court, and statements made in court proceedings:

DOONAN, a New York-licensed attorney since 1982, carried out a tax preparation business in the Bronx using the firm name “William Doonan, Esq.” Every year from 2010 through 2013, DOONAN prepared and filed between 3,000 and 5,000 federal tax returns with the Internal Revenue Service (“IRS”) for taxpayer-clients in exchange for a fee. Several thousands of these returns were false and fraudulent in that they attached Schedules C to the clients’ returns that reported “consulting” businesses the clients did not own, operate, or materially participate in, and business losses that the relevant clients did not incur. DOONAN also prepared returns that attached Schedules A that reported false medical and dental expenses, state and local taxes, home mortgage interest, gifts to charity, job expenses, and other miscellaneous deductions. Between tax year 2009 through tax year 2012, DOONAN included in excess of $6 million in these fabricated and inflated items on his clients’ federal tax returns. As part of his plea, DOONAN agreed that he caused a tax loss of between $1.5 and $3.5 million.

* * *

In addition to the term of imprisonment, DOONAN, 69, of the Bronx, New York, was sentenced to one year of supervised release, ordered to pay $65,820 in restitution to the IRS, and ordered to pay a fine of $10,000.

Mr. Kim and Mr. Goldberg praised the outstanding efforts of IRS-Criminal Investigation in the investigation.

This case is being handled by the U.S. Attorney’s Office’s Complex Frauds and Cybercrime Unit. Special Assistant U.S. Attorney Jorge Almonte of the Department of Justice’s Tax Division is in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Kenneth A. Blanco, the Acting Assistant Attorney General of the Department of Justice’s Criminal Division, announced that MAHMOUD THIAM was convicted in Manhattan federal court yesterday of money laundering charges stemming from his scheme to launder $8.5 million in bribes that THIAM received from senior representatives of a Chinese conglomerate. THIAM was charged with using his official position as Minister of Mines for the Republic of Guinea to facilitate the award to the Chinese conglomerate of exclusive and highly valuable investment rights in various sectors of the Guinean economy. THIAM was convicted after a seven-day trial before U.S. District Judge Denise L. Cote.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As a New York federal jury has now found, Thiam abused his official government position to enrich himself at the expense of one of Africa’s poorest countries. Thiam laundered the proceeds of his bribery scheme into the United States to fund his lavish lifestyle, buying a multi-million dollar estate in Dutchess County, and paying for private schools for his children. Thanks to the work of the FBI, Thiam’s scheme was exposed and he was swiftly convicted.”

Acting Assistant Attorney General Kenneth A. Blanco said: “As a high-level Minister in Guinea, Thiam sold out his country and then used U.S. banks and real estate to hide millions in bribes paid to him by a Chinese conglomerate. Corruption is a global disease that undermines the rule of law everywhere. The Justice Department is committed to investigating and prosecuting those who commit these crimes and use the U.S. financial system and free marketplace to conceal and benefit from their crimes.”

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

THIAM, a United States citizen who was Minister of Mines and Geology of the Republic of Guinea in 2009 and 2010, engaged in a scheme to accept bribes from senior representatives of a Chinese conglomerate and to launder that money into the United States and elsewhere. In exchange for these multimillion-dollar bribe payments, THIAM used his position as Minister of Mines to facilitate the award to the Chinese conglomerate of exclusive and highly valuable investment rights in a wide range of sectors of the Guinean economy, including near-total control of Guinea’s significant mining sector.

In order to receive the bribes covertly, THIAM opened a bank account in Hong Kong (the “Hong Kong Account”) and misreported his occupation to the Hong Kong bank to conceal his status as a public official in Guinea. Upon receiving the bribes, THIAM transferred millions of dollars in bribe proceeds from the Hong Kong Account to, among others, THIAM’s bank accounts in the United States; a Malaysian company that facilitated and concealed THIAM’s purchase of a $3,750,000 estate in Dutchess County, New York; private preparatory schools in Manhattan attended by THIAM’s children; and at least one other West African public official.

To further conceal the unlawful source of the bribery proceeds that THIAM transferred from the Hong Kong Account to banks in the United States, THIAM lied to two banks based in Manhattan and on tax returns filed with the Internal Revenue Service regarding the bribe payments, his position as a foreign public official, and the source of the funds in the Hong Kong Account. In total, THIAM received approximately $8.5 million in bribes from the Chinese conglomerate.

* * *

THIAM, 50, of Manhattan, was convicted of one count of transacting in criminally derived property, which carries a maximum sentence of 10 years in prison, and one count of money laundering, which carries a maximum sentence of 20 years in prison. THIAM is scheduled to be sentenced before Judge Cote on August 11, 2017, at 10:00 a.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 defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation. The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter. The Office is grateful to the government of Guinea for providing substantial assistance in gathering evidence during this investigation.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Elisha J. Kobre and Christopher J. Dimase and Trial Attorney Lorinda I. Laryea of the Fraud Section of the Justice Department’s Criminal Division are in charge of the prosecution.

A former Minister of Mines and Geology of the Republic of Guinea, has been convicted by a federal jury for his role in a scheme to launder bribes paid to him by executives of China Sonangol International Ltd. (China Sonangol) and China International Fund, SA (CIF). The jury reached its verdict yesterday after five hours of deliberations, following a seven-day trial.

Acting Assistant Attorney General Kenneth Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joon Kim for the Southern District of New York, Assistant Director Stephen Richardson of the FBI’s Criminal Investigative Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office announced the conviction.

Mahmoud Thiam, 50, of New York, was convicted of one count of transacting in criminally derived property and one count of money laundering. According to the charges, the funds that were laundered were proceeds derived through violations of Guinean bribery laws.

“As a high-level Minister in Guinea, Thiam sold out his country and then used U.S. banks and real estate to hide millions in bribes paid to him by a Chinese conglomerate,” said Acting Assistant Attorney General Blanco. “Corruption is a global disease that undermines the rule of law everywhere. The Justice Department is committed to investigating and prosecuting those who commit these crimes and use the U.S. financial system and free marketplace to conceal and benefit from their crimes.”

“As a New York federal jury has now found, Thiam abused his official government position to enrich himself at the expense of one of Africa’s poorest countries,” said Acting U.S. Attorney Kim. “Thiam laundered the proceeds of his bribery scheme into the United States to fund his lavish lifestyle, buying a multi-million dollar estate in Dutchess County, and paying for private schools for his children. Thanks to the work of the FBI, Thiam’s scheme was exposed and he was swiftly convicted.”

“This conviction showcases the FBI’s commitment to combatting corruption domestically and abroad,” said Assistant Director Stephen Richardson. “Thiam’s misuse of his official position for personal gain violated federal law and the trust of the Guinean people. I applaud the excellent work that our employees put into this case and thank all of our partners who helped bring Thiam to justice.”

“The conviction of Thiam demonstrates that no one who violates public office is above the law when they are involved in corruption,” said Assistant Director in Charge Sweeney. “The FBI’s International Corruption Squads were established to take on foreign corruption cases like this that use money laundering and lies to deceive the trust in public office.”

According to evidence presented at trial, China Sonangol, CIF and their subsidiaries signed a series of agreements with Guinea that gave them lucrative mining rights in Guinea, and Thiam influenced the Guinean government’s decision to enter into those agreements while serving as Guinea’s Minister of Mines and Geology from 2009 to 2010.

The evidence showed that Thiam participated in a scheme to launder money from 2009 to 2011, during which time China Sonangol and CIF paid him $8,500,000 to a bank account in Hong Kong. Thiam then transferred approximately $3,900,000 to the United States through bank accounts and other means, and used the money to pay for luxury goods and other expenses, according to trial evidence. To conceal the bribe payments, Thiam falsely claimed to banks in Hong Kong and the United States that he was employed as a consultant and that the money was income from the sale of land which he earned before he was a minister, according to the evidence.

The purpose of the bribes, according to the evidence presented at trial, was to obtain substantial rights and interests in natural resources in Guinea, including the right to be the first and strategic shareholder with Guinea of a national mining company into which Guinea had to, among other things, transfer all of its stakes in various mining projects and future mining permits or concessions that the government decided to develop on its own. China Sonangol and CIF, through their subsidiaries, also obtained exclusive and valuable rights to conduct business operations in a broad range of sectors of the Guinean economy, including mining, according to the trial evidence.

Thiam was detained pending trial and is still in the custody of the U.S. Marshals. Sentencing is scheduled for Aug. 11, 2017.

Trial Attorney Lorinda Laryea of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Elisha Kobre and Christopher DiMase of the Southern District of New York are prosecuting the case. Fraud Section Assistant Chief Tarek Helou, Senior Trial Attorney Jason Linder, Trial Attorney Sarah Edwards, and Money Laundering and Asset Recovery Section Senior Trial Attorney Stephen Parker and Trial Attorney Alexis Loeb previously investigated the case. The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter. The department is grateful to the government of Guinea for providing substantial assistance in gathering evidence during this investigation. The department also thanks Israel and Switzerland for their assistance in the department’s investigation.

The FBI’s International Corruption Squads in New York City and Los Angeles are investigating the case. In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption.

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

To learn more about the government’s FCPA enforcement efforts, go to www.justice.gov/criminal/fraud/fcpa.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Jamal El-Hindi, the Acting Director of the Financial Crimes Enforcement Network (“FinCEN”), announced today that the United States Department of the Treasury (the “Treasury Department”) has settled its claims under the Currency and Foreign Transactions Reporting Act of 1970 (“Bank Secrecy Act” or “BSA”) against THOMAS E. HAIDER (“HAIDER”), the former chief compliance officer of MoneyGram International, Inc. (“MoneyGram”). During the relevant time period, MoneyGram operated a money transfer service that enabled its customers to transfer money from one MoneyGram outlet to another. In the settlement – which resolves claims that HAIDER is liable under the BSA for failing to ensure that MoneyGram implemented and maintained an effective anti-money laundering (“AML”) program and filed timely suspicious activity reports (“SARs”) with FinCEN – HAIDER has agreed to a three-year injunction barring him from performing a compliance function for any money transmitter. HAIDER has also agreed to pay $250,000, and has admitted, acknowledged, and accepted responsibility for, among other things, (1) failing to terminate specific MoneyGram outlets after being presented with information that strongly indicated the outlets were complicit in consumer fraud schemes, (2) failing to implement a policy for terminating outlets that presented a high risk of fraud, and (3) structuring MoneyGram’s AML program such that information that MoneyGram’s Fraud Department had aggregated about outlets, including the number of reports of consumer fraud that particular outlets had accumulated over specific time periods, was not generally provided to the MoneyGram analysts who were responsible for filing SARs.

The settlement was approved yesterday by U.S. District Judge David S. Doty of the U.S. District Court for the District of Minnesota.

Acting U.S. Attorney Joon H. Kim said: “Compliance officers perform an essential function, serving as the first line of defense in the fight against fraud and money laundering. Unfortunately, as today's settlement shows, Thomas Haider violated his obligations as MoneyGram's chief compliance officer. By failing to terminate MoneyGram outlets that presented a high risk for fraud and to take other actions clearly required of him, Haider allowed criminals to use MoneyGram to defraud innocent consumers. We are committed to working with FinCEN to enforce the requirements of the Bank Secrecy Act and to hold individuals like Haider accountable.”

Acting FinCEN Director Jamal El-Hindi said: “FinCEN relies on compliance professionals from every corner of the financial industry. FinCEN and our law enforcement partners need their judgment and their skills to effectively fight money laundering, fraud, and terrorist financing. Compliance professionals occupy unique positions of trust in our financial system. When that trust is broken, it is important that we take action so that the reputations of thousands of talented compliance officers are not diminished by any one individual’s outlying egregious actions. We have repeatedly said that when we take an action against an individual, the record will clearly reflect the basis for that action. Here, despite being presented with various ways to address clearly illicit use of the financial institution, the individual failed to take required actions designed to guard the very system he was charged with protecting, undermining the purposes of the BSA. Holding him personally accountable strengthens the compliance profession by demonstrating that behavior like this is not tolerated within the ranks of compliance professionals.”

As part of the settlement, filed in federal court in Minneapolis, HAIDER has admitted, acknowledged, and accepted responsibility for the below-described conduct that occurred during the period 2003 through May 23, 2008 (the “Covered Period”).

MoneyGram operated a money transfer service that enabled its customers to transfer money to and from various locations in the United States and abroad through MoneyGram’s global network of agents and outlets.

HAIDER was MoneyGram’s chief compliance officer, and was the most senior MoneyGram employee with direct oversight over MoneyGram’s Fraud Department and AML Compliance Department. As such, HAIDER had the authority to implement a policy for terminating or otherwise disciplining MoneyGram agents and outlets. In 2006 and 2007, members of MoneyGram’s Fraud Department proposed that MoneyGram implement a policy for terminating or otherwise disciplining agents and outlets that presented a high risk of fraud. A draft policy was provided to HAIDER no later than March 2007. However, MoneyGram’s Sales Department objected to a discipline/termination policy for high-fraud agents and outlets, and therefore, during HAIDER’s employment at MoneyGram, no such policy was implemented.

In addition, in April 2007, MoneyGram’s Fraud Department recommended terminating a number of specific MoneyGram outlets that were located in Canada. To support this recommendation, the Director of Fraud provided HAIDER and other senior managers with specific information on 49 Canadian outlets, which included spreadsheets analyzing the 49 outlets’ money transfer activity during the six-month period from September 2006 through February 2007. The spreadsheets revealed that the 49 outlets accounted for approximately 58% of all reported fraud involving money sent through MoneyGram’s money transfer system to Canada during this six-month period. The spreadsheets also reflected, among other things, that each of the 49 outlets had characteristics that HAIDER and the other members of the Fraud and AML Compliance Departments who reported to him viewed as strong indicators that an outlet was complicit in consumer fraud schemes. Among the 49 outlets were four outlets that were owned and/or operated by the same individual, James Ugoh. The April 2007 spreadsheets revealed that, during the six-month period, the four Ugoh outlets alone had collectively accumulated 150 consumer fraud reports, totaling more than $300,000 in consumer losses. Ugoh has since pled guilty to various crimes relating to consumer fraud, and he has admitted that almost all of the money his outlets received constituted fraud proceeds.

HAIDER had ultimate authority to terminate agents and outlets because of fraud or AML compliance concerns, but in the face of pushback from the Sales Department did not exercise that authority with respect to the vast majority of the 49 outlets identified in the April 2007 spreadsheets.

By April 2007, HAIDER was aware that MoneyGram’s Fraud Department had the ability to aggregate – and had been aggregating – information relating to MoneyGram’s agents and outlets, including the number of consumer fraud reports particular outlets had accumulated over specific time periods. However, HAIDER structured MoneyGram’s AML program such that this information was not generally provided to the MoneyGram analysts who were responsible for filing SARs. During the Covered Period, there were numerous outlets that the Fraud Department identified as having accumulated a disproportionate number of consumer fraud reports, but for which MoneyGram did not file SARs. In addition, MoneyGram’s AML Compliance Department failed to conduct adequate audits of many of those agents/outlets, and certain of the agents were permitted to open additional outlets.

* * *

The Treasury Department filed its complaint in this lawsuit in the United States District Court for the Southern District of New York in December 2014. In March 2015, the parties agreed to transfer the case to the United States District Court for the District of Minnesota, where MoneyGram was headquartered for the period of time relevant to the Government’s complaint.

Mr. Kim thanked FinCEN’s Enforcement Division, Office of Chief Counsel, and Office of Special Investigations for their extraordinary assistance with this case.

This case has been handled at all times by the Civil Frauds Unit of the United States Attorney’s Office for the Southern District of New York. Assistant United States Attorneys Christopher B. Harwood, Jessica Jean Hu, Caleb Hayes-Deats, and Elizabeth M. Tulis are in charge of the case, having been designated as Special Assistant United States Attorneys for the District of Minnesota for that purpose.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Andriana Vamvakas, District Director of the Office of Labor-Management Standards, U.S. Department of Labor (“OLMS”), announced today the arrest of VICTOR DAVILA, the former president of the Hunts Point Police Benevolent Association (“HPPBA”), for embezzling union funds. As alleged in a Complaint unsealed today, DAVILA stole more than $35,000 from the HPPBA by fraudulently charging personal expenses to the HPPBA and by withdrawing thousands of dollars in cash from union accounts for his own purposes. DAVILA will be presented this afternoon before U.S. Magistrate Judge Sarah Netburn.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Victor Davila allegedly embezzled thousands of dollars from the union he was entrusted to serve as its president. Instead of serving his fellow police officers, he allegedly stole from them, using union funds to pay for his own travel to Puerto Rico, meals, and other personal expenses.”

DOL-OLMS District Director Andriana Vamvakas said: “Union officials are required to use the union’s funds only for legitimate purposes, not their own personal gain. Financial mismanagement by union officials not only breaks the law, it betrays the trust their membership placed in them.”

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

The HPPBA is the union for peace officers who work at and patrol the Hunts Point Market in the Bronx, New York. DAVILA served as the elected president of the HPPBA from in or about March 2011 through in or about March 2014. Beginning in at least July 2011, only months after becoming the union’s president, through February 2014, DAVILA stole money from the union by using an HPPBA debit card, linked to an HPPBA checking account, to charge expenses with no apparent relation to the business of the HPPBA, including, among other things: (1) multiple charges at a wholesale club in Westchester, New York, including for the purchase of eggs, soap, facial cream, a baking set, a waterproof camcorder, flowers, a video game, a mystery novel, women’s clothing, and a showerhead, (2) multiple charges at fast food and other restaurants, and (3) multiple charges for plane tickets to Puerto Rico. In addition, DAVILA withdrew thousands of dollars in cash from the HPPBA checking account using ATMs, and frequently then deposited corresponding amounts of cash into his own bank account. Based on the investigation to date, it appears that DAVILA stole more than $35,000 in total from the HPPBA.

* * *

DAVILA, 50, of the Bronx, New York, was arrested this morning in Manhattan. DAVILA was charged with embezzling union funds, 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. Kim praised the efforts of the United States Department of Labor, Office of Labor-Management Standards, in this investigation.

This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorney Jacob Warren is in charge of the prosecution.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JEFFREY GREEN, a former correction officer at the Bedford Hills Correctional Facility for Women (the “Bedford Facility”), pled guilty today before U.S. Magistrate Judge Paul E. Davison to violating the constitutional civil rights of an inmate by sexually assaulting her at the Bedford Facility.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As he admitted in court today, Jeffrey Green sexually assaulted a defenseless female inmate. Green betrayed his duty as a correction officer and violated the Constitution. The protections of our Constitution do not end at our prisons’ walls.”

According to the allegations contained in the Information to which GREEN pled guilty today, and the related Complaint in which he was originally charged on February 15, 2017:

The Bedford Facility is a jail complex located in Bedford Hills, in Westchester County, New York, maintained by the New York State Department of Corrections and Community Supervision. At the time of the assault, Victim-1 was an inmate incarcerated at the Bedford Facility.

In the late evening hours of March 10, 2016, GREEN unlocked and opened the cell of Victim-1, and entered her cell unaccompanied by any other correction officer or other Bedford Facility staff. GREEN then grabbed Victim-1 by her arms, held her with her back against the wall of her cell, and began to lick, kiss, and bite her neck area, and to fondle her chest. After Victim-1 pushed GREEN away, he grabbed her, pushed her up against the wall of her cell, and again forced himself on her. GREEN then pulled up the shirt and bra of Victim-1 and bit, licked, and kissed her neck, chest, and breast and nipple areas, and fondled Victim-1’s groin area. GREEN was subsequently interrupted by the arrival of another correction officer knocking on a door to be admitted into the unit, upon which GREEN immediately departed Victim-1’s cell.

Victim-1 reported the assault the following morning, and a medical examination produced samples taken from Victim-1’s neck, left breast, and right breast that gave positive results with a presumptive test for saliva. A swab from Victim-1’s left breast generated a single-source male profile.

* * *

JEFFREY GREEN, 48, of Brooklyn, New York, pled guilty to one count of violating the constitutional civil rights of an inmate by subjecting her to cruel and unusual punishment, by subjecting her to abusive sexual contact, which carries a maximum sentence of one year 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.

GREEN is scheduled to be sentenced by Judge Davison on August 7, 2017.

Mr. Kim praised the investigative work of the New York State Department of Corrections and Community Supervision Office of Special Investigations and the Criminal Investigators at the United States Attorney’s Office. He also thanked the Westchester County District Attorney’s Office for their assistance in the investigation.

This case is being handled by the Office’s Civil Rights and Public Corruption Units. Assistant U.S. Attorneys Alex Rossmiller and Ellen Blain are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Philip R. Bartlett, the Inspector in Charge of the U.S. Postal Inspection Service, and David E. Beach, Special Agent in Charge of the New York Field Office of the U.S. Secret Service, announced the indictment and arrest today of MICHAEL MENDLOWITZ, a/k/a “Moshe Mendlowitz,” and RICHARD D. HART, a/k/a “Rick Hart,” on charges of fraudulently operating a payment card processing company that operated under various names including Commerce Payment Systems (“CPS”). MENDLOWITZ, the chief executive officer and part owner of CPS, and HART, a CPS vice president and director of sales and the president of a number of CPS affiliated companies, are charged with masterminding a years-long scam that took more than $30 million from more than 10,000 small businesses, who relied upon CPS to help them process debit card and credit card sales. MENDLOWITZ and HART were arrested this morning and will be presented and arraigned later today before U.S. District Judge Vernon S. Broderick.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Michael Mendlowitz and Richard Hart, executives of a credit card processing company, allegedly preyed on small business owners, defrauding over ten thousand businesses of over $30 million. Small businesses – like all businesses – are entitled to be treated fairly and to have their bills honestly reflect the services they received. That is not what the businesses that Mendlowitz and Hart dealt with got. Instead, they allegedly got a series of lies and misrepresentations to support tens of millions of dollars in overbilling.”

U.S. Postal Inspector in Charge Philip R. Bartlett said: “In an economy where small businesses are already struggling, it’s disappointing these individuals allegedly devised a scheme to prey upon these business owners by lying and manipulating the fees they are required to pay for debit and credit transactions. Postal Inspectors reminds fraudsters that defrauding members of the business community will never be tolerated. We will find you and bring you to justice for misuse of the US Mail.”

Secret Service Special Agent in Charge David E. Beach said: “Technological advancements have led to the sophistication of fraudulent schemes. While these schemes have a profound impact on our financial crimes investigations, this case demonstrates the combined power of law enforcement and our federal partners to share information and resources, and ultimately bring the alleged perpetrators to justice.”

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

MENDLOWITZ and HART operated a fraud scheme founded on false claims of very low fees, along with false promises that there were “no hidden fees,” and that rates were “guaranteed for life.” In truth, however, CPS customers were charged all manner of hidden fees, and MENDLOWITZ subsequently altered customer accounts to add even higher fees. Among other deceptive tactics, MENDLOWITZ and HART used a “cost comparison calculator” that ostensibly showed potential customers a direct comparison between what they were currently paying versus what they would pay if they became customers of CPS. However, these cost comparison calculators were intentionally designed to conceal many of the fees that the customers would be charged.

In furtherance of their fraud, MENDLOWITZ and HART also concealed from customers pages of contract terms that directly contradicted representations made to customers during the sales process. When internet ratings of CPS became particularly negative, MENDLOWITZ and HART surreptitiously created a series of other corporate names, each with its own email domain, internet web page, and phone number, to operate their scheme free of the negative reviews. These brand-new affiliates were marketed under false brochures and websites that falsely claimed that the affiliate had been in business for many years, had “300,000 satisfied customers,” and that those customers included major national hotel chains, restaurant chains, and a university.

* * *

MENDLOWITZ, 42, of Woodmere, Long Island, and HART, 36, of East Meadow, Long Island, are each charged in three counts, with wire fraud, mail fraud, and conspiracy to commit wire and mail fraud. Each charge 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 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 work of the U.S. Postal Inspection Service and the United States Secret Service, as well as the Office of the Special Investigator General for the Troubled Asset Relief Program (“SIGTARP”).

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

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Philip R. Bartlett, Inspector in Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), Adolphus P. Wright, the Special Agent in Charge of the Miami Field Division of the Drug Enforcement Administration (“DEA”), James J. Hunt, the Special Agent in Charge of the New York Field Division of the DEA, Peter Forcelli, Special Agent in Charge of the Miami Field Division and Puerto Rico Field Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), 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”), James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and  George P. Beach II, the Superintendent of the New York State Police (“NYSP”), announced the unsealing today of an Indictment charging eight members and associates of La Organizacion de Narcotraficantes Unidos (“La ONU”) with various racketeering, drug trafficking, and firearms offenses, including six murders. 

Five of the defendants are already in custody for other offenses.  The remaining three defendants – OSCAR VALDES-GARCIA, a/k/a “Pony,” WILLIAM VASQUEZ-BAEZ, and RALPH LABOY – will be presented today in the District of Puerto Rico before U.S. Magistrate Judge Silvia Carreno-Coll.  VASQUEZ-BAEZ was an active member of the Puerto Rico Police Department when he allegedly committed the May 9, 2007, murder of Anthony Castro-Carrillo, as charged in Counts 13 and 14 of the Indictment.  LABOY had recently resigned from the Puerto Rico Police Department when he allegedly committed the Castro-Carillo murder.  The case has been assigned to United States District Judge Jesse M. Furman in Manhattan.

All eight defendants are charged with murder.  In connection with the racketeering conspiracy and a narcotics conspiracy, members and associates of La ONU are charged in the Indictment with committing the following murders in Puerto Rico:

• The April 9, 2005, murder of Crystal Martinez-Ramirez.
• The June 23, 2006, double murder of Ken Gonzalez-Rodriguez and Jean Adorno-Caballero.
• The December 28, 2006, murder of Israel Crespo-Cotto.
• The May 9, 2007, murder of Anthony Castro-Carrillo.
• The March 20, 2009, murder of Carlos Barbosa.

Acting U.S. Attorney Joon H. Kim said: “Members and associates of a violent drug trafficking organization, La ONU, allegedly committed six ruthless murders to further a drug trade that funneled massive quantities of cocaine from Puerto Rico to New York. Frighteningly, one of those six murders allegedly was committed by an active and a former member of the Puerto Rico Police Department. As alleged, when police officers, sworn to protect the citizens they serve, instead kill to protect drug trafficking profits, that tears at the very fabric of civilized society. Such alleged lawlessness simply cannot be left unchecked. We thank all of our federal and local law enforcement partners for their tireless investigative work to bring these defendants to justice in a court of law.”

USPIS Inspector in Charge Philip R. Bartlett said:  “This criminal enterprise stopped at nothing to allegedly move drugs from Puerto Rico to the Bronx; it was all about money.  They didn’t care who or what got in their way, and based on the indictment, they ‘got rid’ of their perceived obstacles. Fortunately, members of this criminal enterprise underestimated the power of interagency cooperation and collaboration. These individuals will be brought to justice for their alleged heinous crimes against the community and the misuse of the US Mail to facilitate the transport of illegal drugs into the United States.”

DEA Special Agent in Charge Adolphus P. Wright said:  “Through this collaborative effort with our law enforcement partners, drug traffickers committing not only drug violations, but also other equally egregious and violent crimes, have been taken off the streets. We remain committed to pursuing their prosecution to the fullest extent of the law.”

DEA Special Agent in Charge James J. Hunt said:  “A 2013 investigation grew legs into something much more dangerous than a local drug distribution organization operating out of a daycare center in the Bronx. It led investigators to identifying the organization’s alleged source of supply comprising corrupt cops and violent thugs who were arrested today in Puerto Rico. This is a great example of collaborative law enforcement efforts.”

ATF Special Agent in Charge Peter Forcelli said:  “For years, ATF has made combatting violent crime its top priority and this case is a perfect example of our commitment to making our communities safer.  We will work tirelessly with our state, local, and federal partners to identify, investigate, and prosecute those who use or traffic in illegal firearms, regardless of where they engage in criminal activity. This case is a clear example of interagency teamwork and collaboration across several jurisdictions and I’m proud of the work that was done here.”

Superintendent George P. Beach II said:  “This investigation is yet another example of law enforcement partners working collaboratively to get dangerous individuals and drugs off our streets.  The expertise and dedication of our law enforcement colleagues charges eight individuals in multiple murders in Puerto Rico. Two of the individuals were police officers, trusted with enforcing the law, and were instead breaking it and causing terror in communities.  I thank all of our law enforcement partners for their hard work, professionalism and commitment to making our neighborhoods safer.”

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

La ONU was a criminal enterprise involved in the trafficking of cocaine from Puerto Rico to the Bronx, New York. The cocaine was distributed in New York, including out of a daycare center in the Bronx, New York.  Members and associates of La ONU engaged in acts of violence, including murder, to protect and expand the enterprise’s criminal operations and in connection with rivalries with other criminal organizations.  In particular, members of the enterprise shot and killed suspected rival drug trafficking members.

Count One of the Indictment charges JULIO MARQUEZ ALEJANDRO, a/k/a “Chino Montero,” LUIS BLONDET, a/k/a “Cabezon,” OSCAR VALDES-GARCIA, a/k/a “Pony,” JASON DONES-GONZALEZ, a/k/a “Jason,” a/k/a “Arrabal,” JOSE VICTOR PELLOT CARDONA, a/k/a “Vitito,” and REINALDO CRUZ-FERNANDEZ with participating in a racketeering conspiracy for criminal involvement in La ONU. 

Counts Two and Three of the Indictment charge LUIS BLONDET with the murder of Crystal Martinez-Ramirez in aid of racketeering, and a related firearms offense.

Counts Four, Five, and Six of the Indictment charge JULIO MARQUEZ ALEJANDRO and OSCAR VALDES-GARCIA with the murder of Jean Adorno-Caballero in aid of racketeering and in connection with a drug crime, as well as a related firearms offense.

Counts Seven, Eight, and Nine of the Indictment charge JULIO MARQUEZ ALEJANDRO and OSCAR VALDES-GARCIA with the murder of Ken Gonzalez-Rodriguez in aid of racketeering and in connection with a drug crime, as well as a related firearms offense.

Counts 10, 11, and 12 of the Indictment charge JULIO MARQUEZ ALEJANDRO and OSCAR VALDES-GARCIA with the murder of Israel Crespo-Cotto in aid of racketeering and in connection with a drug crime, as well as a related firearms offense.

Counts 13 and 14 of the Indictment charge RALPH LABOY and WILLIAM VASQUEZ-BAEZ with the murder of Anthony Castro-Carrillo in connection with a drug crime, as well as a related firearms offense.

Counts 15, 16, and 17 of the Indictment charge JULIO MARQUEZ-ALEJANDRO, JASON DONES-GONZALEZ, JOSE VICTOR PELLOT-CARDONA, and REINALDO CRUZ-FERNANDEZ with the murder of Carlos Barbosa in aid of racketeering and in connection with a drug crime, as well as a related firearms offense.

* * *

Charts containing the names, ages, 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 USPIS, the DEA, the ATF, and the NYPD. He also thanked the United States Attorney’s Office for the District of Puerto Rico, U.S. Attorney’s Office for the Middle District of Pennsylvania, the Office of the Special Narcotics Prosecutor for the City of New York, and the Puerto Rico Police Department for their support in this ongoing investigation.

This case is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Jordan Estes, Dina McLeod, Andrew Thomas, and Lara Pomerantz 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)

JULIO MARQUEZ-ALEJANDRO (age 47)

LUIS BLONDET (age 42)

OSCAR VALDES-GARCIA (age 35)

JASON DONES-GONZALEZ (age 37)

JOSE VICTOR PELLOT-CARDONA (age 38)

REINALDO CRUZ-FERNANDEZ (age 43)

Life in prison

2

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

LUIS BLONDET

Death penalty, or life in prison

3

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

LUIS BLONDET

Death penalty, or life in prison

4

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

5

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

6

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

7

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

8

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

9

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

10

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

11

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

12

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

13

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

RALPH LABOY (age 36)

WILLIAM VASQUEZ-BAEZ (age 48)

Death penalty, or life in prison

14

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

RALPH LABOY

WILLIAM VASQUEZ-BAEZ

Death penalty, or life in prison

15

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

JULIO MARQUEZ-ALEJANDRO

JASON DONES-GONZALEZ

REINALDO CRUZ-FERNANDEZ

JOSE VICTOR PELLOT-CARDONA

Death penalty, or life in prison

16

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

JULIO MARQUEZ-ALEJANDRO

JASON DONES-GONZALEZ

REINALDO CRUZ-FERNANDEZ

JOSE VICTOR PELLOT-CARDONA

Death penalty, or life in prison

17

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

JULIO MARQUEZ-ALEJANDRO

JASON DONES-GONZALEZ

REINALDO CRUZ-FERNANDEZ

JOSE VICTOR PELLOT-CARDONA

Death penalty, or life in prison

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that KWAME INSAIDOO, the former executive director of United Block Association (“UBA”), a New York-based non-profit organization, and his wife ROXANNA INSAIDOO, were found guilty in Manhattan federal court of embezzlement from a federally funded program, money laundering, and defrauding their mortgage lender. KWAME INSAIDOO was also found guilty of defrauding the City of New York in connection with UBA’s contracts to operate senior centers in Upper Manhattan. The jury convicted KWAME and ROXANNA INSAIDOO on all counts in the superseding indictment following a one-week trial before U.S. District Judge Valerie E. Caproni.

​Acting U.S. Attorney Joon H. Kim said: “As a unanimous jury found today, Kwame Insaidoo and his wife Roxanna Insaidoo stole hundreds of thousands of dollars from a government-funded non-profit organization that operated senior centers in Manhattan, and used that money to pay for luxury cars and personal expenses. The defendants’ brazen theft deprived some of the City’s neediest residents of public money for healthy meals and senior citizen programs. Despite efforts to hide their schemes, including the use of a fake charity, the outstanding investigative work of our partners at the New York City Department of Investigation exposed the defendants’ conduct, and the jury swiftly convicted them.”

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

UBA is a non-profit organization headquartered in New York, New York, that was controlled by KWAME INSAIDOO, its former Executive Director. UBA received funding from New York City’s Department for the Aging to operate and provide healthy meals and programming at four senior centers in Upper Manhattan. From in or about July 2008 through March 2015, the Department for the Aging paid UBA more than $8,700,000 in federal, state, and local funds to provide such services.

As found by the jury, ​KWAME INSAIDOO, with the assistance of his wife ROXANNA INSAIDOO, abused his authority as UBA’s executive director by embezzling over $580,000 from UBA. KWAME INSAIDOO and ROXANNA INSAIDOO, who were both signatories on a UBA bank account that was not subject to audits by the City, wrote hundreds of checks from that UBA account to themselves, their son, and a fake charity they used to launder some of the money. The defendants used the stolen funds to pay for personal expenses, including their home mortgage, the purchase of a Mercedes Benz and a Cadillac, and telephone bills and other personal utilities. They also wired more than $300,000 abroad.

​In addition, KWAME INSAIDOO repeatedly lied to the Department for the Aging in an effort to evade scrutiny for these unauthorized payments and to maintain UBA’s funding.

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

* * *

KWAME INSAIDOO, 60, and ROXANNA INSAIDOO, 63, both of Bay Shore, Long Island, were each found guilty of embezzlement from a federally funded program, conspiracy to commit money laundering, wire fraud of their mortgage lender, and conspiracy to commit wire fraud of their mortgage lender, each of which carries a maximum penalty of 20 years in prison, and also each was found guilty of conspiracy to embezzle from a federally funded program, which carries a maximum penalty of five years in prison. KWAME INSAIDOO was also found guilty of one count of defrauding the City of New York, which carries a maximum penalty of 20 years in prison. Their sentencings are set for August 11, 2017, before the Honorable Valerie E. Caproni.

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.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, James G. Hunt, Special Agent in Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging seven members of the “MMOB” drug trafficking organization with participating in a narcotics trafficking conspiracy.  The case has been assigned to United States District Judge Paul G. Gardephe.  Six of the defendants are currently in custody, and were presented before United States Magistrate Judge Kevin Nathaniel Fox later this afternoon. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “With today’s indictment of seven alleged members of a drug trafficking organization, we seek to stem the flow of drugs and the havoc they wrought on the Norwood neighborhood of the Bronx. As the Indictment alleges, these defendants trafficked in all types of drugs, including crack cocaine, cocaine, oxycodone and marijuana, and peddled them on the streets, by delivery, and out of apartment buildings in the area. I thank our partners at the NYPD and DEA for their continued commitment to combatting drug trafficking and making our city safer.”  

Special Agent in Charge James J. Hunt said:  “Law enforcement’s collaboration since last summer has led to the indictments of members of the MMOB crew on narcotics conspiracy charges. The Norwood section of the Bronx has been plagued by these individuals for some time and today’s efforts are a step in reclaiming this neighborhood for the community. These gang members allegedly trafficked a myriad of drugs to include strong prescription narcotics, which is a focus of our current investigative efforts, as these drugs are causing serious issues for our citizens.”        

Police Commissioner James P. O’Neill said:  “This indictment is another example of the NYPD’s commitment to hold responsible those who distribute narcotics into our communities. I commend the work of the NYPD investigators involved and our federal partners who continue to work tirelessly to protect our communities.”

As alleged in the Indictment and in other court papers[1]: 

The MMOB crew (“Mosholu Money Over Bitches”) is a group of individuals who are engaged in narcotics trafficking in the vicinity of Gates Place, Knox Place, and Mosholu Parkway, in the Norwood neighborhood of the Bronx (the “MMOB DTO”).  From July 2016 up to April 2017, in the Southern District of New York and elsewhere, JOSHUA PEREZ a/k/a “Link,” JAVIER COLLAZO, HIRAM COLLAZO, a/k/a “Alex, NATALIE JUSINO, KEVIN MIESES, AMAURY MODESTO, and ANDREW PEREZ conspired to distribute significant amounts of narcotics, including crack cocaine, cocaine, oxycodone, and marijuana, in and around the Norwood neighborhood of the Bronx, on a daily basis.  The MMOB DTO controlled narcotics sales between Gates Place and Knox Place, primarily between Mosholu Parkway and West Gun Hill Road, including by selling on the streets and in and around apartment buildings in that area. 

Each defendant is charged with one count of conspiracy to distribute narcotics, which carries a maximum sentence of life in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.  A chart with the defendants’ ages and residences is below.

All of the defendants except for JOSHUA PEREZ, who remains at large, are in custody.    

Mr. Kim thanked the DEA and the NYPD for their work on the investigation.

The case is being prosecuted by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Eli J. Mark and Jilan J. Kamal are in charge of the prosecution. 

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

DEFENDANT

AGE

RESIDENCE

JOSHUA PEREZ a/k/a “Link”

30

Bronx, New York

JAVIER COLLAZO

20

Bronx, New York

HIRAM COLLAZO, a/k/a “Alex”

19

Bronx, New York

NATALIE JUSINO, a/k/a “Papo”

34

Bronx, New York

KEVIN MIESES

25

Bronx, New York

AMAURY MODESTO

37

Bronx, New York

ANDREW PEREZ

24

Bronx, New York

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

A former resident of Poughkeepsie, New York, pleaded guilty today in U.S. District Court in the Southern District of New York to filing fraudulent tax returns for others and for himself, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Joon H. Kim for the Southern District of New York.

“Just about a week ago, many Americans did their civic duty and sent off their returns to the IRS, enclosing checks for taxes duly owed,” said Acting Deputy Assistant Attorney General Goldberg. “They have the right to expect that those like Damyon Shuler who threaten the integrity of the tax system by preparing fraudulent returns and submitting false refund claims will be fully prosecuted.”

“Damyon Shuler stole from the U.S. Treasury by preparing and filing false tax returns,” said Acting U.S. Attorney Kim. “We thank our partners at the Justice Department’s Tax Division and IRS Criminal Investigations for their work in bringing Shuler’s crimes to light.”

“People who create and promote fraudulent tax schemes against the United States, will be held accountable,” said Special Agent in Charge James D. Robnett of the IRS-CI New York Field Office. Today’s guilty plea by Mr. Shuler again emphasizes that IRS-Criminal Investigation will continue their aggressive pursuit of those who would attempt to defraud America’s tax system.”

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

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

Sentencing is scheduled for Sept. 14. Shuler faces a statutory maximum sentence of three years in prison for each count of filing a fraudulent return, a period of supervised release, restitution and monetary penalties.

Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Kim praised the outstanding work of special agents of IRS–CI, who conducted the investigation, and Assistant Chief Andrew J. Kameros of the Tax Division and Assistant U.S. Attorney Olga I. Zverovich, who are prosecuting the case.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Stuart M. Goldberg, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division, and James D. Robnett, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigations (“IRS-CI”), announced that DAMYON SHULER pled guilty today to charges relating to his preparation and filing of federal income tax returns that sought refunds based on the fraudulent claim that the taxpayers were entitled to slave-reparations payments.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Damyon Shuler stole from the U.S. Treasury by preparing and filing false tax returns. We thank our partners at the Justice Department’s Tax Division and IRS Criminal Investigations for their work in bringing Shuler’s crimes to light.”

Tax Division Acting Deputy Assistant Attorney General Stuart M. Goldberg said: “Just about a week ago, many Americans did their civic duty and sent off their returns to the IRS, enclosing checks for taxes duly owed. They have the right to expect that those like Damyon Shuler who threaten the integrity of the tax system by preparing fraudulent returns and submitting false refund claims will be fully prosecuted.”

IRS-CI Special Agent in Charge James D. Robnett said: “People who create and promote fraudulent tax schemes against the United States will be held accountable. Today’s guilty plea by Mr. Shuler again emphasizes that IRS-Criminal Investigation will continue their aggressive pursuit of those who would attempt to defraud America’s tax system.”

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

In January 2011, SHULER prepared a 2010 federal income tax return for a client claiming a bogus refund of $61,300. To generate the fraudulent refund, SHULER reported a fake capital gain of $60,575 and a tax paid on that income in the exact same amount. He also attached to the return a form falsely reporting that a Treasury Department office or program identified as “Overpayment of Taxes Black Investme (sic)” had paid the taxes to the IRS. To conceal that he prepared this return, SHULER did not list himself as the preparer.

In February 2010, SHULER also prepared a 2009 federal income tax return for himself that included a false Form 2439 claiming that taxes had been paid to the IRS on his behalf in the amount of $50,575 and fraudulently claiming a refund of $46,685.

SHULER has agreed to pay restitution to the IRS in the amount of $1,233,130 for this tax scheme.

* * *

SHULER, 47, pled guilty to the filing of his own false income tax return and the preparation and filing of a return on behalf of one of his clients. SHULER faces a statutory maximum sentence of three years in prison and a $250,000 fine on each of the two counts to which he pled guilty, and will be sentenced before United States District Judge Nelson S. Román on September 14, 2017, at 9:30 a.m.

Mr. Kim praised the outstanding work 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 prosecution.

This case is being handled by the Office’s White Plains Division. Assistant Chief Andrew J. Kameros of the Tax Division and Assistant U.S. Attorney Olga I. Zverovich are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Anthony Levey, Region 2 Director of the Federal Protective Service (“FPS”), announced today the unsealing of criminal charges against EDWIN CABAN, a Protective Security Officer, in the assault of a member of the public at a branch of the Social Security Administration (“SSA”). CABAN was charged with violating the civil rights of the victim by pushing the victim over a desk and then repeatedly punching the victim in the ribs without physical provocation. CABAN also is charged with filing a false report and making false statements to FPS agents to cover up the incident. CABAN was arrested this morning and is expected to be presented in federal court later today.

Acting Manhattan U.S. Attorney Joon H. Kim said: “The Federal Protective Service’s mission is to protect federal facilities, including employees and visitors. But in this case, we’ve alleged, an innocent visitor needed protection from a violent and unprovoked attack by Protective Security Officer Edwin Caban, which fractured the visitor’s ribs. Officer Caban then allegedly lied about the incident, falsely claiming the victim was disruptive and required removal from the building.”

FPS Region 2 Director Anthony Levey said: “The Federal Protective Service relies heavily on security guard contract vendors and the security guards they employ to assist in our mission of securing federal facilities throughout the nation. We recognize the importance of citizens being able to conduct business with their government safely and free from mistreatment, and will not tolerate conduct that infringes on this ability. We are taking these allegations of misconduct seriously. As soon as FPS learned of the allegations, we immediately took steps to remove this PSO from his position at the SSA building, and FPS agents were assigned to investigate further. FPS agents conducted interviews, collected evidence, and as a result, a complaint was filed by the United States Attorney’s Office for the Southern District of New York. SDNY issued an arrest warrant which was promptly executed, safely and professionally, by FPS law enforcement members. We would like to thank our colleagues in the United States Attorney’s Office for their guidance, assistance, and support throughout the course of this investigation.”

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

The SSA has multiple branch offices located throughout New York City, where claimants may request SSA services and make inquiries regarding social security benefits and Social Security cards. One branch office is located at 123 William Street (the “123 William Office”), in Manhattan. The 123 William Office is staffed by two Protective Security Officers, who are employees of a contractor for the Federal Protective Service of the United States Department of Homeland Security. The 123 William Office has several surveillance cameras, which captured the assault.

The Assault and Cover-Up
 

At approximately 12:37 p.m. on June 22, 2016, the victim (“Victim-1”) entered the 123 William Office, wheeling an elderly gentleman in a wheelchair into the reception area. CABAN attempted to move the wheelchair, which Victim-1 asked him not to do. After CABAN stepped away, Victim-1 withdrew a cellphone from his pocket. CABAN then walked back to Victim-1 and repeatedly accused him of taking a picture with his cellphone, which Victim-1 denied.

As recorded by security camera footage obtained from the SSA, CABAN at this point reached out toward Victim-1, and Victim-1 put both of his hands up in the air, with his palms facing CABAN. CABAN then took hold of Victim-1’s waist with both hands, pivoted, turned Victim-1 around, and then pushed Victim-1 backward toward the elevator bank. CABAN continued to push Victim-1 backward, toward a desk adjacent to the opening to the elevator bank, until Victim-1 fell backward over the desk. CABAN then took hold of Victim-1’s arms, and, as Victim-1 struggled to shake free of CABAN’s hold, CABAN took Victim-1 into the elevator bank.

After a brief struggle in the elevator bank, CABAN pushed Victim-1 up against a wall. Placing his left hand at the base of Victim-1’s throat, CABAN pinned Victim-1 against the wall. As Victim-1 stood there, not moving, with his hands up in the air in a gesture of surrender, CABAN punched Victim-1 four times in the chest and ribs. Victim-1 collapsed forward, and CABAN continued to hold on to Victim-1 as Victim-1 remained bent forward, clutching his abdomen.

At this point, CABAN’s partner, another Protective Security Officer (“PSO-1”), arrived in the elevator bank from a back area of the office and approached CABAN and Victim-1. CABAN let go of Victim-1, who remained against the wall, not moving. As PSO-1 stood a few feet away, CABAN punched Victim-1 again in the chest. After several minutes passed, CABAN and PSO-1 escorted Victim-1 out of the elevator bank and back into the main floor area, back toward where the man in the wheelchair was waiting.

As a result of the attack, Victim-1 suffered bodily injuries, including fractured ribs, bruising, and physical pain.

Shortly after the assault, Victim-1 called 911 and two New York City Police Department officers responded. One of these officers (“Officer-1”) entered the 123 William Office and spoke with CABAN about Victim-1’s allegations. CABAN stated to Officer-1 that he put his hands on Victim-1 to remove him from the office, at which point Victim-1 “flopped” onto the desk, knocking things over. CABAN denied touching Victim-1 after that point and denied entering the elevator bank during the incident.

That same afternoon, CABAN placed a telephone call to an FPS reporting center, in which CABAN made an oral report about the incident. CABAN stated that there was “a disruptive client in here that needed to be escorted out;” he did not disclose that he struck Victim-1.

After the incident, CABAN and PSO-1 discussed the event. PSO-1 wrote and submitted a Security Incident Report. CABAN asked PSO-1 to show him the report, which PSO-1 did. In that report, the only reference to use of force is PSO-1’s note that CABAN was “attempting to detain [Victim-1]” when PSO-1 arrived in the elevator bank. PSO-1 did not state in that report that CABAN struck Victim-1.

CABAN also wrote and submitted a Security Incident Report. In that report, CABAN stated that, as he “attempted to guide [Victim-1] out” of the office, Victim-1 “yelled and jumped onto the security desk flairing [sic] arms and legs knocking equipment around.” CABAN then stated that he placed Victim-1 in an “arm bar” and “took him by the elevator banks,” that Victim-1 “tried to break [his] hold” at which point CABAN “grabbed him under his chin” and “mainta[ined] a hold of his arm.” CABAN stated that PSO-1 then arrived. CABAN reported no other use of force against Victim-1. In particular, nowhere in the report did CABAN state that he struck Victim-1.

CABAN was interviewed twice by FPS agents. During the course of the first interview, CABAN hand-wrote and signed an affidavit. In those interviews and in that affidavit, CABAN denied that he spoke with PSO-1 about the incident after it occurred and denied seeing PSO-1’s report, though he did both. CABAN also falsely stated that Victim-1 threw himself over the desk, when in fact CABAN pushed Victim-1 over the desk, and that Victim-1 was resisting detention when CABAN struck him, when in fact Victim-1 was not resisting at that time.

* * *

CABAN, 55, of Astoria, 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 and making false statements, 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.

Mr. Kim praised the investigative work of the FPS.

The case is being handled by the Office’s Public Corruption and Civil Rights Units. Assistant U.S. Attorneys Alison Moe and Jacob Lillywhite 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 phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations and every fact described should be treated as an allegation.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a superseding indictment charging ANTHONY DODAJ, 46, and DUANE MARTINEZ, 44, with narcotics dealing that resulted in the heroin overdose death of a 41-year-old patient in a hospital rehabilitation clinic.

On April 20, 2017, a grand jury returned an indictment charging DODAJ and MARTINEZ with conspiracy to distribute heroin. The indictment alleges that heroin distributed by DODAJ and MARTINEZ on January 1, 2017, resulted in the death of Ivy Katz, age 41.

DODAJ was arrested on a complaint on March 27, 2017, and was held without bail. MARTINEZ will be presented in federal court in Manhattan before U.S. Magistrate Judge Kevin Nathaniel Fox later today. The case has been assigned to U.S. District Judge Vernon S. Broderick. DODAJ and MARTINEZ each face a mandatory minimum term of 20 years in prison.

Acting U.S. Attorney Joon H. Kim stated: “As alleged, Duane Martinez and Anthony Dodaj worked together to deliver a fatal dose of heroin to Ivy Katz, even as she was a patient in a hospital rehabilitation clinic. Martinez and Dodaj will now be held to account for their role in fueling the tragic overdose death crisis in New York City.”

NYPD Commissioner James P. O’Neill stated: “These defendants face 20-years-to-life in prison in connection with the overdose death of a 41-year-old woman. Those who sell heroin should know that the NYPD is committed to investigating overdoses to hold dealers responsible for their deaths. I want to thank the U.S. Attorney’s Office and the NYPD detectives who worked on this case. Together, we’re fighting the alarming rise in overdoses with every tool we have.”

As alleged in the Indictment against DODAJ and MARTINEZ[1]:

From at least in or about September 2016 through in or about March 2017, in the Southern District of New York and elsewhere, ANTHONY DODAJ and DUANE MARTINEZ, the defendants, and others conspired to sell heroin. In addition, the use of controlled substances distributed by DODAJ and MARTINEZ on or about January 1, 2017, resulted in the death of Ivy Katz.

* * *

ANTHONY DODAJ, 46, and DUANE MARTINEZ, 44, each face a maximum of life in prison, and a mandatory term of 20 years in prison.

The statutory maximum sentences are prescribed by Congress and are provided here for information purposes only, as any sentencing of the defendants would be determined by the 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 Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today that PAUL DEAN, ROBERT ESPINEL, GAETANO VALASTRO, a/k/a “Guy,” and JOHN CHAMBERS were arrested and charged in Manhattan federal court with conspiracy to commit bribery, among other offenses, in connection with a scheme involving the approval of gun licenses by the NYPD License Division in exchange for cash payments and non-monetary bribes.  Acting U.S. Attorney Kim also announced the unsealing of the guilty pleas of David Villanueva, a former NYPD Sergeant assigned to the License Division, and Frank Soohoo, a gun license expediter.  In connection with their guilty pleas, Villanueva and Soohoo have agreed to cooperate with the Government.

DEAN and ESPINEL were arrested and charged in Manhattan federal court with two counts of conspiracy to commit bribery, and one count of extortion; VALASTRO was arrested and charged in Manhattan federal court in the same case with two counts of conspiracy to commit bribery, and one count of making false statements.  CHAMBERS was arrested and charged separately in Manhattan federal court with one count of conspiracy to commit bribery and one count of bribery.  All four defendants were arrested this morning by FBI agents and officers from the NYPD’s Internal Affairs Bureau (“IAB”), and will be presented before U.S. Magistrate Judge Kevin Nathaniel Fox in Manhattan this afternoon.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Corruption was allegedly pervasive at the NYPD’s License Division going up as high as Lieutenant Paul Dean, until recently the Division’s second in command, and including three other officers, Sergeant David Villanueva, Officer Robert Espinel and Officer Richard Ochetal.  Corruption at the License Division also spawned a cottage industry of parasitic profiteers, alleged bribers masquerading as so-called expediters, that included other former police officers and John Chambers, a lawyer and former Brooklyn prosecutor.  As alleged, for the police officers and expediters charged in this case, the critically important police function of issuing and controlling gun licenses was one they were willing to pervert for personal profit.  When police officers violate their oath in this way, they not only betray the public they have sworn to protect, but their fellow officers who do their jobs the right way, remaining faithful to the duties they owe to the public and to each other.  This Office, along with our partners at the FBI and NYPD, remain as committed as ever to ensure that public servants serve the public, not their personal pocketbooks.” 

FBI Assistant Director William F. Sweeney Jr. said:  “Law enforcement officials are granted authority to uphold the fundamental rule of law. But any abuse of this power – no matter how great or how small – is nothing short of a crime in and of itself.  Today, as alleged, a series of gun expediters and former NYPD officers of various ranks face charges for their alleged role in a scheme that threatened the safety of our communities.  The vast majority of NYPD officers who willingly protect our city each and every day, no matter the risks, shouldn’t be associated with a select few who, as charged, placed a higher priority on satisfying their desires than upholding the law.”

NYPD Commissioner James P. O’Neill said:  “Over the past three years, the NYPD’s Internal Affairs Bureau has conducted a thorough and comprehensive investigation in coordination with the FBI.  The behavior, as alleged in today’s charging documents, is intolerable. The charges reflect a serious violation of the oath these officers swore to uphold, eroding at the trust the public has in this Department.  The NYPD will continue to investigate alleged wrongdoing and root out corruption wherever it might be found.”

According to the allegations in the Complaints unsealed today in Manhattan federal

court[1]:

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

From at least 2013 through 2016, DEAN, ESPINEL, Villanueva, and Police Officer Richard Ochetal solicited and accepted bribes from gun license expediters in exchange for providing assistance to the expediters’ clients in obtaining gun licenses quickly and often with little to no diligence.   They obtained bribes from at least three expediters: VALASTRO, Soohoo, and Alex Lichtenstein, a/k/a “Shaya.”  VALASTRO was a former NYPD Detective who retired in 1999, and who operated a gun store out of which he sold guns, gun paraphernalia, and gun safety courses.

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

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

*                *                *

In addition to this bribery scheme, JOHN CHAMBERS, a former Assistant District Attorney in Kings County, was arrested for a separate bribery conspiracy with Villanueva.  CHAMBERS is an attorney who represents individuals before the License Division, and who markets himself to potential clients as the “Top Firearms Licensing Attorney in NY.”  From at least 2010 through 2015, CHAMBERS gave Villanueva numerous valuable items, including tickets to sporting and entertainment events for Villanueva and his family, free dinners and lunches for Villanueva, sports memorabilia, and a wristwatch valued at approximately $8,000.

In exchange, Villanueva assisted CHAMBERS’s clients in several ways.  He ensured that renewal applications submitted by CHAMBERS’s clients, which typically take 30 to 40 days for approval, were renewed more expeditiously, sometimes as quickly as within one day.  In addition, in evaluating “incidents” – investigations to determine whether an individual’s gun license should be suspended or revoked – Villanueva expedited the investigations, and then shortened the suspension periods, for CHAMBERS’s clients.
           
Villanueva also helped CHAMBERS renew gun licenses for clients before the Pistol Section of the Nassau County Police Department, where Villanueva had contacts.  Starting in or about 2012, CHAMBERS brought his clients’ renewal applications to Villanueva at One Police Plaza, and Villanueva mailed those applications to the Pistol Section using his NYPD License Division stationery.  Villanueva did so knowing that because he was submitting the renewal applications using his NYPD License Division stationery, the renewals would be approved in a significantly faster time for CHAMBERS’s clients than for other applicants.  In exchange, CHAMBERS paid Villanueva several times in cash, as well as with tickets to sporting and entertainment events for Villanueva and his family.  CHAMBERS typically mailed Villanueva the cash by taping it to the inside of a magazine.      

*                *                *

DEAN, 44, who resides in Wantagh, New York, has been charged with two counts of conspiracy to commit bribery, each of which carries a maximum term of five years in prison, and one count of extortion, which carries a maximum term of 10 years in prison.

ESPINEL, 47, who resides in Seaford, New York, has been charged with two counts of conspiracy to commit bribery, each of which carries a maximum term of five years in prison, and one count of extortion, which carries a maximum term of 10 years in prison.

VALASTRO, 58, who resides in Queens, New York, has been charged with two counts of conspiracy to commit bribery, each of which carries a maximum term of five years in prison, and one count of making false statements, which also carries a maximum term of five years in prison.

CHAMBERS, 62, who resides in Manhattan, New York, has been charged with one count of bribery, which carries a maximum term of 10 years in prison, and one count of conspiracy to commit bribery, which carries a maximum term of five years in prison.

Villanueva, 43, pled guilty in February 2017 to one count of conspiracy to commit bribery, four counts of bribery, and one count of making false statements.

Soohoo, 55, pled guilty in October 2016 to one count of conspiracy to commit bribery, one count of bribery, one count of making false statements, and one count of mail fraud.

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 investigative work of the FBI and the NYPD Internal Affairs Bureau, and noted that the investigation is continuing.  

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

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

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

There will be a press conference today to announce federal public corruption charges relating to the New York City Police Department. Relevant charging documents are attached.

WHO:

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

William F. Sweeney, Special Agent-in-Charge of the New York Field Office of the Federal Bureau of Investigation

 James P. O’Neill, Commissioner of the Police Department for the City of New York

WHEN:

Tuesday, April 25, 2017

11:00 a.m.

WHERE:

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

1 St. Andrew’s Plaza

New York, NY 10007

CONTACT:

James Margolin, Dawn Dearden, Nicholas Biase

(212) 637-2600

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 AVANEESH KRISHNAMOORTHY, who works as a vice president and risk management specialist for a Manhattan-based investment bank (the “Investment Bank”), was arrested this morning and charged with insider trading. KRISHNAMOORTHY made approximately $48,000 in connection with stock and options trading based on material nonpublic information he misappropriated from the Investment Bank and its parent company (the “Company”), about a private equity fund’s potential acquisition of a publicly traded company.

KRISHNAMOORTHY was presented today in Manhattan federal court before United States Magistrate Judge Kevin Nathaniel Fox.

Acting U.S. Attorney Joon H. Kim said: “Avaneesh Krishnamoorthy is charged with violating his duty to his company and trading on insider information. He allegedly exploited his access to information about a pending acquisition to purchase stock and options, making tens of thousands of dollars in illegal profit for himself. This Office remains committed to enforcing the nation’s securities laws to protect the fairness and integrity of the markets.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “When one has access to material nonpublic information, they are afforded significant knowledge that could give them a competitive edge in stock and options trading. But, as we all know, it’s illegal to use this information in furtherance of personal gain. As alleged today, Krishnamoorthy ignored these rules, using the information at his fingertips to his advantage, and made personal profits in the tens of thousands. The FBI and our partners will continue to investigate and prosecute those who cheat the system in this way.”

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

As a vice president and risk management specialist, KRISHNAMOORTHY had access to material nonpublic information concerning mergers and acquisitions for which the Investment Bank might potentially provide financing. In November 2016, a private equity fund (the “Fund”) contacted the Investment Bank concerning financing for the Fund’s acquisition of Neustar, Inc. (“Neustar”), a publicly traded company whose shares trade on the New York Stock Exchange. Around that time, KRISHNAMOORTHY received multiple emails regarding the Investment Bank’s potential involvement in the transaction, including emails that summarized the details of the deal. In violation of the Company’s policies and in breach of his duties to the Company, KRISHNAMOORTHY used this material nonpublic information to acquire Neustar stock and options. In the days and weeks after receiving the emails, and prior to the public announcement of the Fund’s acquisition of Neustar, KRISHNAMOORTHY purchased numerous Neustar call options and shares of Neustar stock. Purchases of Neustar securities took place in brokerage accounts held in the names of both KRISHNAMOORTHY and his spouse. Contrary to the policies of the Company, KRISHANMOORTHY did not reveal these trades or the existence of these brokerage accounts to the Company.

The public announcement of the Fund’s acquisition of Neustar on December 14, 2016, resulted in an approximately 20 percent increase in the value of Neustar stock in the hours following the announcement, resulting in a corresponding increase in the value of the call options and equity stock held by KRISHNAMOORTHY and his spouse. As a result of the insider trading alleged in the Complaint, KRISHNAMOORTHY generated at least $48,000 in profits.

* * *

KRISHNAMOORTHY is charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The 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 the judge.

Mr. Kim praised the investigative work of the FBI and thanked the SEC, which has filed civil charges in a separate action. He added that the FBI’s investigation is ongoing.

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

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

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

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

The announcement was made by Acting Assistant Attorney General for National Security Mary B. McCord and Acting U.S. Attorney Joon H. Kim for the Southern District of New York. The plea was entered before U.S. District Judge Alvin K. Hellerstein.

“Today, Sun admitted to attempting to procure high-grade carbon fiber – which has sophisticated aerospace and defense applications – for the Chinese military. The defendant was willing to pay a premium to evade U.S. export laws and illegally transfer this highly protected material,” said Acting Assistant Attorney General McCord. “The National Security Division will continue to identify those who violate IEEPA and other laws that protect our national assets from reaching the hands of potential adversaries.”

“As Fuyi Sun admitted today in court, he tried to skirt U.S. export laws by hiding his purchase of high-grade carbon fiber for the Chinese military. Sun used fraudulent documents and code words in his efforts to obtain this highly protected material, which is used in aerospace and defense programs, and to avoid detection,” said Acting U.S. Attorney Kim. “Together with our law enforcement partners, we will continue to enforce the laws that protect our national security.”

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

Since approximately 2011, Sun has attempted to acquire extremely high-grade carbon fiber, including Toray type M60JB-3000-50B carbon fiber (“M60 Carbon Fiber”). M60 Carbon Fiber has applications in aerospace technologies, unmanned aerial vehicles (commonly known as drones) and other government defense applications. Accordingly, M60 Carbon Fiber is strictly controlled – including that it requires a license for export to China – for nuclear non-proliferation and anti-terrorism reasons.

In furtherance of his attempts to illegally export M60 Carbon Fiber from the U.S. to China without a license, Sun contacted what he believed was a distributor of carbon fiber – but which was, in fact, an undercover entity created by HSI and “staffed” by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) undercover special agents (the “UC Company”). Sun inquired about purchasing the M60 Carbon Fiber without the required license. In the course of his years’ long communications with the undercover agents and UC Company, Sun repeatedly suggested various security measures that he believed would protect them from “U.S. intelligence.”

Among other such measures, at one point, Sun instructed the undercover agents to use the term “banana” instead of “carbon fiber” in their communications. Consequently, soon thereafter he inquired about purchasing 450 kilograms of “banana” for more than $62,000. In order to avoid detection, Sun also suggested removing the identifying barcodes for the M60 Carbon Fiber, prior to transshipment, and further suggested that they identify the M60 Carbon Fiber as “acrylic fiber” in customs documents.

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

On April 12, 2016, Sun agreed to purchase two cases of M60 Carbon Fiber from the UC Company. On that date, Sun paid the undercover agents purporting to represent the UC Company $23,000 in cash for the carbon fiber, as well as an additional $2,000 as compensation for the risk he believed the UC Company was taking to illegally export the carbon fiber to China without a license. Sun was arrested the next day on April 13, 2016.

Attempting to violate IEEPA carries a maximum sentence of 20 years in prison. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors. Sun is scheduled to be sentenced by Judge Hellerstein on July 26 at 11:00 a.m.

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

This prosecution is being handled the Office’s Terrorism and International Narcotics

and Complex Fraud and Cybercrime Units. Assistant U.S. Attorneys Matthew Podolsky, Patrick Egan and Nick Lewin of the Southern District of New York are in charge of the prosecution, with assistance from Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Mary B. McCord, the Acting Assistant Attorney General for the National Security Division of the Department of Justice (“NSD”), announced that FUYI SUN, a/k/a “Frank,” a citizen of the People’s Republic of China (“China”), pled guilty today before U.S. District Judge Alvin K. Hellerstein to violating the International Emergency Economic Powers Act (“IEEPA”) in connection with a scheme to illegally export to China, without a license, high-grade carbon fiber, which is used primarily in aerospace and military applications.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As Fuyi Sun admitted today in court, he tried to skirt U.S. export laws by hiding his purchase of high-grade carbon fiber for the Chinese military. Sun used fraudulent documents and codewords in his efforts to obtain this highly protected material, which is used in aerospace and defense programs, and to avoid detection. Together with our law enforcement partners, we will continue to enforce the laws that protect our national security.”

NSD Acting Assistant Attorney General Mary McCord said: “Today, Fuyi Sun admitted to attempting to procure high-grade carbon fiber – which has sophisticated aerospace and defense applications – for the Chinese military. The defendant was willing to pay a premium to evade U.S. export laws and illegally transfer this highly protected material. The National Security Division will continue to identify those who violate IEEPA and other laws that protect our national assets from reaching the hands of potential adversaries.”

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

Since approximately 2011, SUN has attempted to acquire extremely high-grade carbon fiber, including Toray type M60JB-3000-50B carbon fiber (“M60 Carbon Fiber”). M60 Carbon Fiber has applications in aerospace technologies, unmanned aerial vehicles (commonly known as “drones”) and other government defense applications. Accordingly, M60 Carbon Fiber is strictly controlled – and requires a license for export to China – for nuclear non-proliferation and anti-terrorism reasons.

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

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

On April 12, 2016, SUN agreed to purchase two cases of M60 Carbon Fiber from the UC Company. On that date, SUN paid the undercover agents purporting to represent the UC Company $23,000 in cash for the carbon fiber, as well as an additional $2,000 as compensation for the risk he believed the UC Company was taking to illegally export the carbon fiber to China without a license. SUN was arrested the next day, April 13, 2016.

* * *

SUN, 53, pled guilty today to attempting to violate IEEPA, 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. SUN is scheduled to be sentenced by Judge Hellerstein on July 26, 2017 at 11:00 a.m.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), and James J. Hunt, the Special Agent-in-Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), announced charges yesterday against 19 members and associates of the “Slut Gang,” a violent street gang operating in the Bronx, New York, primarily at the Boston Secor public housing development (“Secor”). The defendants are charged with racketeering conspiracy, narcotics conspiracy, robbery conspiracy, extortion, and firearms offenses.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Today’s indictment charges members and associates of a violent street gang with allegedly wreaking havoc on the streets of the Northern Bronx for years, committing countless acts of violence against rival gang members and innocents alike. Thanks to the terrific investigative work of the NYPD’s Bronx Gang Squad, HSI’s Violent Gang Unit, and the New York Field Division of the DEA, these alleged criminals will face justice in federal court.”

NYPD Commissioner James P. O’Neill said: “This gang allegedly acted with impunity in the Bronx. But this morning, detectives and agents carried out precise, targeted arrests against the defendants who, as alleged, committed robberies, shootings, and other violence to protect their drug trade. Tonight, the Bronx will be even safer because of the persistence of our detectives, DEA and HIS agents, and prosecutors in the Southern District who brought today’s charges.”

HSI Special Agent-in-Charge Angel M. Melendez said: “Drugs, guns, and robbery are just the beginning of the charges faced by members of the Slut Gang. This is a violent street gang with alleged involvement in shootings, stabbings, and beatings over several years. The collaboration between federal and local law enforcement agencies is paramount to gang investigations in New York and forcing gang members to face charges for their actions.”

DEA Special Agent-in-Charge James J. Hunt said: “Gangs in New York that allegedly traffic drugs throughout our city streets fuel addiction and violent crime. Law enforcement’s focused efforts to reclaim our city from these gangs have led to numerous takedowns over the past three years and yesterday’s arrests.”

According to the Superseding Indictment[1] unsealed in Manhattan federal court and other publicly filed documents:

The Superseding Indictment arises from a joint investigation, beginning in 2014, by the NYPD, HSI, the DEA, and the Bureau of Alcohol, Tobacco, Firearms & Explosives into a number of warring street gangs in the Northern Bronx. On April 27, 2016, 120 members of two of these gangs – the Big Money Bosses (“BMB”) and the 2Fly YGz (“2Fly”) – were charged in two cases pending now before United States District Judges Alison J. Nathan and Lewis A. Kaplan – U.S. v. Nico Burrell et al., and U.S. v. Laquan Parrish et al. Forty-seven of 63 defendants in Burrell have already pled guilty, and 49 of 57 defendants in Parrish have already pled guilty.

One of the primary rivals of BMB and 2Fly was the Slut Gang. The Superseding Indictment charges members and associates of the Slut Gang with numerous acts of fatal and non-fatal violence during last several years, including shootings, stabbings, slashings, beatings, extortion, and robberies, as well as drug dealing.

To date, agents and officers have seized, among other evidence, quantities of crack, heroin, MDMA, and marijuana, as well as firearms and ammunition. During the investigation, pursuant to court-authorized electronic surveillance, agents and officers also intercepted hundreds of phone calls, during many of which various members and associates of the

Slut Gang discussed their racketeering and narcotics activities.

* * *

In a coordinated operation, 12 defendants were arrested in New York Wednesday and yesterday. They were presented yesterday afternoon in Manhattan federal court. Defendant KERMIT IRIZARRY was in custody on state charges and was transferred to federal custody. Defendant MAURICE STEELE was arrested and was presented yesterday in the Middle District of Florida. Defendant STEVE BORIA was already in federal custody on a related charge. The following defendants are still being sought: NIORGE LOPEZ, JONATHAN FERRELL, DAYVON WILSON, and ISAIAH GRANT. Charts identifying each defendant, the charges, and the maximum penalties are attached to this release.

The case is assigned to U.S. District Judge Ronnie Abrams.

Mr. Kim praised the outstanding investigative work of the NYPD’s Bronx Gang Squad, HSI’s Violent Gang Unit, and the New York Field Division of the DEA, as well as the United States Marshals’ Service, New York State Office of Probation, and New York State Division of Parole for their assistance in yesterday’s arrests. He also thanked the Bronx County District Attorney’s Office and the Department of Investigation for their support in this ongoing investigation.

The Office’s Violent and Organized Crime Unit is overseeing the case. Assistant U.S. Attorneys Rachel Maimin, Hagan Scotten, Jessica Feinstein, Drew Johnson-Skinner, and Alison Moe are in charge of the prosecution.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that TRAVELL THOMAS, the owner, chief executive officer (“CEO”), and president of Four Star Resolution (“Four Star”), a Buffalo, New York-based debt collection company, was sentenced in Manhattan federal court to 100 months in prison for orchestrating a scheme to coerce thousands of victims across the country, through false threats and representations, into paying a total of more than $31 million to Four Star to resolve debts these victims purportedly owed.  All 14 individuals charged in connection with the Four Star scheme have been convicted.  THOMAS pled guilty on November 1, 2016, to conspiracy to commit wire fraud and wire fraud before U.S. District Court Judge Katherine Polk Failla, who also imposed today’s sentence.

Acting U.S. Attorney Kim said:  “Travell Thomas was the mastermind behind the largest criminal debt collection scheme ever charged.  Using abusive and outrageous threats to take advantage of vulnerable Americans, Thomas and his co-conspirators defrauded victims out of $31 million and Thomas made a small fortune for himself.  Thomas will now serve a significant term in federal prison.  This Office is committed to prosecuting those who prey and abuse everyday consumers.”

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

Between 2010 and February 2015, THOMAS was the co-owner, CEO, and president of Four Star. In that capacity, Thomas oversaw four debt collection offices operated by Four Star in Buffalo and a team of managers and debt collectors. As part of his scheme to defraud individuals throughout the United States, THOMAS falsely inflated the balances of debts owed by individuals in Four Star’s debt collection software so that THOMAS’s debt collectors could collect more money from the victims than the victims actually owed, a practice known within Four Star as “juicing” balances. THOMAS also placed purported debts with more than one of his offices so that multiple collectors from within Four Star could solicit and coerce a particular victim to repay a debt more than once.

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

In total, from about January 2010 through November 2014, Four Star collected more than $31 million from thousands of victims across the United States. Of the money that Four Star took in from victims, approximately $1.5 million was paid in cash to THOMAS and his co-owner and co-defendant, Maurice Sessum, approximately $1.4 million was withdrawn from banks and ATMs, and hundreds of thousands of dollars were used to pay for THOMAS’s gambling expenses, season tickets for professional sports games, THOMAS’s wedding reception, and jewelry, among other expenses.

*          *          *

In addition to his prison term, THOMAS, 38, of Orchard Park, New York, was sentenced to three years of supervised release, and ordered to forfeit $31 million.

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

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

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Eric S. Benderson, the Acting General Counsel of the U.S. Small Business Administration (“SBA”), announced today that the United States has settled a civil fraud lawsuit against HSBC BANK USA, N.A. (“HSBC”). The Government’s complaint, filed on April 10, 2017 (the “Complaint”), sought damages and civil penalties under the False Claims Act for misconduct in connection with HSBC’s participation in the SBAExpress loan program, which was designed to help start-ups and existing small businesses. The Complaint alleged that, as part of an internal review designed to identify reasons for defaults on loans to small and medium-size enterprises, HSBC identified dozens of SBAExpress loans as fraudulent or potentially fraudulent, since borrowers appeared to have submitted false information to HSBC to obtain the loans. The Complaint further alleged that after 42 of these loans defaulted, HSBC sought reimbursement from the SBA without revealing the facts suggesting that borrowers submitted false information to HSBC to obtain many of the loans, or the fact that HSBC had included the loans on an internal list of fraudulent or potentially fraudulent loans. In the settlement approved today by U.S. District Judge Lorna G. Schofield, HSBC agreed to pay $2,118,861.36 to resolve the Government’s claims, and admitted, acknowledged, and accepted responsibility for conduct alleged in the Complaint.

Manhattan Acting U.S. Attorney Joon H. Kim said: “Lenders must disclose material information for our agency partners like the SBA, who administer federal loan programs. When they fail to do so – as HSBC did here, by submitting loans for repayment on SBA guarantees without disclosing that the loans had been identified as potentially fraudulent – they need to be held to account. This settlement reflects the Office’s continuing commitment to keep lenders who participate in federal lending programs honest.”

SBA Acting General Counsel Eric S. Benderson said: “This case is yet another example of the tremendous results achieved through the joint efforts of the SBA and the Department of Justice to uncover and forcefully respond to civil fraud committed by those who participate in SBA’s lending programs. Identifying and aggressively pursuing instances of civil fraud by participants in the Agency’s lending programs is one of SBA’s top priorities.”

The Government’s lawsuit alleged as follows:

In or around 2006, HSBC conducted an internal review to identify reasons for the default rates on loans it had made to small and medium-size enterprises, including but not limited to loans issued pursuant to SBAExpress. HSBC created a list of known fraud accounts as part of the review. HSBC identified many SBAExpress loans as fraudulent or potentially fraudulent in which borrowers may have submitted false information to HSBC in obtaining their loans, including 42 loans (the “Loans”) referenced in an exhibit attached to the Complaint.

After the Loans defaulted, HSBC sought reimbursement from SBA for the guaranteed amount on each of these Loans (up to 50 percent of the principal of the Loans) without telling SBA that many of the Loans were fraudulent or potentially fraudulent. Specifically, HSBC did not inform SBA of all of the facts indicating that borrowers may have submitted false information to HSBC in connection with the origination of many of the Loans, or that HSBC had included these Loans on an internal list of fraudulent or potentially fraudulent loans. HSBC’s failure to disclose that it had determined that many of the Loans were fraudulent or potentially fraudulent rendered HSBC’s reimbursement requests for losses incurred in connection with the Loans false, misleading, and/or fraudulent. The submissions made to SBA in connection with seeking reimbursement on many of these Loans contained half-truths and material omissions by failing to disclose facts about fraud or potential fraud by borrowers when the Loans were originated.

The case was initially brought by a whistleblower under the False Claims Act, and the Government intervened in the case.

Pursuant to the settlement, HSBC will pay the United States $2,118,861.36. As part of the settlement, the bank admitted, acknowledged, and accepted responsibility for the following conduct:

• In or around 2006, HSBC voluntarily commenced an internal effort to gain an understanding of the reasons for the default rates on loans that it had made to small and medium-size enterprises, including but not limited to loans issued pursuant to the SBAExpress program. HSBC’s efforts included an attempt to identify whether any of the loans involved fraud or potential fraud by borrowers;

   

• As part of this effort, HSBC identified a number of loans as fraudulent or potentially fraudulent in which borrowers may have submitted false information to HSBC in obtaining their loans, including the Loans;

   

• HSBC subsequently sought from SBA the guaranteed amounts on each of these Loans (i.e., up to fifty percent of the principal of the Loans) after the loans defaulted;

   

• In submitting the requests for payment to SBA of the guaranteed amounts of certain Loans, HSBC did not inform SBA of all of the facts indicating that borrowers may have submitted false information to HSBC in connection with the origination of these loans, or that as a result HSBC had identified these loans as fraudulent or potentially fraudulent.

* * *

Mr. Kim thanked SBA for its investigative efforts and assistance with the case.

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

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 DMITRY SAZONOV was charged with attempted theft of trade secrets for his alleged attempted theft of proprietary computer code for a trading platform from his employer, a financial services firm with an office in New York, New York, that trades securities and other financial products (“Firm-1”). SAZONOV was arrested yesterday afternoon and presented today before U.S. Magistrate Judge Andrew J. Peck in federal court.

Acting U.S. Attorney Joon H. Kim said:  “As alleged, Dmitry Sazonov attempted to steal valuable proprietary computer code that took his employer years to develop.  Sazonov allegedly took elaborate steps to conceal his attempted theft, including camouflaging pieces of source code within harmless-looking draft emails on his work computer.  Thanks to the FBI, Sazonov has been stopped and is now in custody.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “As we allege, Sazonov went to great lengths to conceal source code for a trading platform in order to steal it from his former employer.  He researched and ultimately used the technique of steganography to hide the code within other PDF files like personal tax and immigration documents on his work computer. He also uploaded encrypted zip files to a third-party website to complete his heist.  Stealing from an employer is a serious offense especially when it comes to proprietary source code that companies have invested heavily in, and that they rely on to generate revenue.  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 acts as a market maker, facilitating trading and liquidity in a variety of financial markets.  A substantial portion of the trading done by Firm-1’s employees is facilitated by a proprietary computer trading platform (the “Trading Platform”), which deploys a computer program to take in many different pieces of market data, to use that data to develop trading strategies, and then to generate orders and automatically submit those orders to an exchange or market center.  Firm-1’s use of the Trading Platform accounts for a substantial volume of Firm‑1’s total trading activity.  For example, Firm-1 executes approximately $300 million in options trades through the Trading Platform every day.  The strategies and efficiency resulting from Firm-1’s use of the Trading Platform contribute substantially to Firm-1’s market share in the financial markets in which Firm-1 trades and to its overall trading profits. 

For at least approximately five years, Firm 1 has been in the process of developing an updated and improved version of the Trading Platform (the “Updated Trading Platform”).  Firm‑1 has, to date, invested more than approximately $5 million in the development of the Updated Trading Platform.  The Updated Trading Platform is expected by representatives of Firm-1 to continue to enhance the position of Firm-1 in the markets in which it participates and to contribute substantially to Firm-1’s market share and profits.  Accordingly, Firm-1 has put in place measures designed to protect the computer source code (the “Source Code”) underlying the Updated Trading Platform.

From July 2004 through February 6, 2017, SAZONOV was employed as a software engineer by Firm-1.  In that role, SAZONOV was involved in the development of trading strategies to be implemented in conjunction with the deployment of the Updated Trading Platform; as a result, SAZONOV had access to the Source Code.  On February 2, 2017, SAZONOV learned that his immediate supervisor at Firm-1 had resigned and began looking for a new job outside of Firm-1.  On Friday, February 3, 2017, SAZONOV learned that he would be meeting with another supervisor about the future of his role at Firm-1 the following Monday.   

Before that meeting took place, SAZONOV took various steps to attempt to steal the Source Code.  On the morning of February 6, 2017, SAZONOV downloaded the Source Code to his Firm-1 computer.  He ran Internet searches and viewed websites related to steganography, the practice of concealing messages or data within other files, among other things.  SAZONOV then deployed a computer program that appears to have used steganography, in order to break up a PDF file believed to contain the Source Code, and append pieces of the PDF file to various apparently innocuous documents and files contained in a folder on SAZONOV's desktop computer, including personal tax and immigration documents and images taken from the Internet, among others (the “Payload Documents”).  The program also appears to have produced a manifest, permitting the reassembly of the Source Code from the various Payload Documents.  SAZONOV used his Firm-1 computer to upload an encrypted zip file containing the manifest to a third-party website.  He also saved two draft emails to his Firm-1 email account, attaching the encrypted zip file containing the manifest to one email and a zip file containing the Payload Documents to the other email; the draft emails were addressed to an email address associated with SAZONOV.  SAZONOV did not send the emails before reporting to the meeting with the supervisor.  In the course of that meeting, SAZONOV was fired by Firm-1.  After being fired, SAZONOV repeatedly asked to be permitted to return to his desk to retrieve files from his computer.  Pursuant to Firm‑1 policy, however, SAZONOV was not permitted to return to his desk prior to being escorted out of Firm-1’s New York, New York, office.    

On multiple occasions following his termination by Firm-1, SAZONOV contacted individuals employed by Firm-1 by telephone and by email seeking the return of computer files on his Firm-1 desktop computer, which he claimed were personal documents.  Indeed, SAZONOV repeatedly requested that Firm-1 return to him the documents contained in the file in which the Payload Documents were saved.  On April 12, 2017, SAZONOV reported to the lobby of the building in which the New York, New York, office of Firm-1 is located and retrieved a disk he believed contained those files.  He was subsequently arrested.

*                *                *

SAZONOV, 44, of Rockland County, New York, is charged with one count of attempted 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. 

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Katherine Reilly 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 phase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Joon H. Kim, Acting United States Attorney for the Southern District of New York, and James J. Hunt, Special Agent in Charge, New York Field Division of the Drug Enforcement Administration (“DEA”), today announced that an indictment was returned by a grand jury charging MATTHEW DRAPER, a/k/a “Mata,” a resident of Haverstraw, New York, with allegedly trafficking wholesale amounts of cocaine in and around Rockland County, New York. DRAPER was arrested on a criminal complaint on October 6, 2016, and has been in custody since that date.

According to the allegations contained in the Indictment and the Complaint[1] charging DRAPER:

DRAPER was part of a cocaine distribution conspiracy responsible for transporting wholesale amounts of cocaine from the Dominican Republic to the New York area on commercial airline flights. The conspiracy relied on contacts working in airports both in the Dominican Republic and in the United States to facilitate the deliveries. From in or around September 2016 through October 5, 2016, DRAPER worked with a confidential informant and a supplier in the Dominican Republic to facilitate the transport of approximately 20 kilograms of cocaine from the Dominican Republic to New York. DRAPER intended to have the confidential informant retrieve the cocaine from the airport and provide it to DRAPER at a predetermined location. On October 5, 2016, DEA agents learned from the confidential informant that the 20 kilograms of cocaine DRAPER purchased from the Dominican Republic had been secreted in luggage, and placed on an airplane scheduled to arrive at JFK Airport. DEA agents were able to locate the airplane and the luggage in question. DEA agents recovered approximately 20 kilograms of cocaine that had been wrapped and sealed in a clear vacuum-sealed bag. DRAPER was arrested that same day attempting to obtain the cocaine from the confidential informant at the predetermined location. Upon his arrest, law enforcement recovered approximately $23,000 in cash and what appeared to be an additional kilogram of cocaine from DRAPER’s vehicle. Law enforcement agents also executed a search warrant on DRAPER’s residence. During the search, agents recovered an additional half-kilogram of a substance that appeared to be cocaine.

* * *

DRAPER, 49, of Haverstraw, New York, is charged with one count of conspiracy to distribute narcotics, which carries a maximum sentence of life in prison, and one count of possession of narcotics with intent to distribute, which also carries a maximum sentence of life 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 Court.

Mr. Kim praised the outstanding investigative work of the Drug Enforcement Administration. Mr. Kim also thanked the Rockland County Drug Task Force and the Town of Haverstraw Police Department Street Crime Unit for their cooperation and assistance in this investigation.

The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Jennifer Burns, Lauren Schorr, and Christopher J. Clore are in charge of the prosecution.

The charges contained in the Indictment and 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 texts of the Indictment and the Complaint, and the descriptions of the Indictment and the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

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

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. 

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.”

*                      *                      *

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.  

“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.”

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.

*                      *                      *

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.  

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.

*                *                *

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.

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.    

*                *                *

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.

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.

*                *                *

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.

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.

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.