Southern District of New York
Press releases recorded for this federal judicial district.
Texas Man Pleads Guilty in Manhattan Federal Court to Multimillion-Dollar Wire FraudRead the Press Release
Preet Bharara, the 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 that LAWRENCE OBRACANIK pled guilty today before U.S. District Judge Ronnie Abrams to one count of wire fraud for his theft of more than $5 million from the bank at which he worked (“Bank-1”) through fraudulent wire transfers.
U.S. Attorney Preet Bharara said: “As Lawrence Obracanik admitted in court today, for nearly two years he stole in excess of $5 million from his employer to line his own pockets and pay off his debts. In the end, however, Obracanik’s fraud has led to a federal criminal conviction.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “As he admitted, Obracanik, a bank employee, cashed in on a deal to pay his debts and leave his employer with millions of dollars in losses. But the endgame left him with few options, and he’s admitted to his crime today.”
According to the Complaint, the Information, and statements made during today’s guilty plea:
Between July 2014 and February 2016, OBRACANIK was an Operations Manager for Bank-1’s Broker Dealer Services. During that time, OBRACANIK was responsible for a series of fraudulent and unauthorized wire transfers from Bank-1 to an individual account at another bank (the “Bank-2 Account”) totaling more than $5 million. The wire transfers were made either directly or through book transfers using an intermediate company (“Company-1”). OBRACANIK reported to Company-1 personnel that the book transfers were accidental and the money should be wired to the Bank-2 Account. OBRACANIK later admitted that the transfers were intentional and had, in fact, been intended to pay OBRACANIK’s personal debts.
* * *
OBRACANIK, 42, of Fort Worth, Texas, pled guilty to one count of wire fraud affecting a financial institution, which carries a maximum sentence of 30 years in prison and a maximum fine of $1 million, 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.
OBRACANIK will be sentenced by Judge Abrams on July 7, 2017, at 11 a.m.
Mr. Bharara praised the outstanding investigative work of the FBI.
The prosecution is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Lara Pomerantz is in charge of the prosecution.
Racketeering Kingpin Sentenced to Life in PrisonRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that MANUEL GEOVANNY RODRIGUEZ-PEREZ, a/k/a “Shorty,” was sentenced today by U.S. District Judge Laura Taylor Swain to spend the remainder of his life in prison for his role as a leader of a massive and violent racketeering organization (the “Rodriguez Enterprise”) whose members sold large quantities of marijuana, murdered and attempted to murder nearly 20 people, transported and laundered millions of dollars, obstructed justice and committed perjury, and engaged in firearms offenses.
RODRIGUEZ-PEREZ was previously charged in connection with “Operation Green Venom,” a coordinated multi-agency investigation that was led by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“ICE HSI”), and first announced in October 2010. On June 7, 2016, RODRIGUEZ-PEREZ pled guilty before Judge Swain to one count of racketeering conspiracy, and accepted responsibility for dozens of illegal acts associated with that conspiracy, including nine murders and 10 attempted murders in the United States and the Dominican Republic.
Manhattan U.S. Attorney Preet Bharara said: “By his own admission, Manuel Geovanny Rodriguez-Perez is a cold-blooded murderer who was responsible for the executions of nine people and attempts on the lives of 10 more. He ruled over his drug enterprise with an iron fist and ruthlessly protected his turf. Today Rodriguez-Perez received a sentence that will ensure he poses no further danger to the people of New York – life behind bars.”
According to the allegations contained in the criminal Indictment and Information, other documents in the public record, and statements made in court: RODRIGUEZ-PEREZ was the highest ranking leader of a narcotics organization involved in a wide range of criminal activity, including the murders of the following victims:
- Francisco Perez, a/k/a “Francie,” on October 26, 1997: Perez was murdered at RODRIGUEZ-PEREZ’s direction and under his watch after RODRIGUEZ-PEREZ decided that Perez was a rival with whom RODRIGUEZ-PEREZ no longer wished to compete. Perez was shot and killed outside a nightclub in upper Manhattan. Rodriguez watched this murder from the safety of a nearby pool hall and later informed a cooperating witness that he had “given himself” this murder as a “birthday present.”
- Antonio Kasse, a/k/a “Toasty,” on December 13, 1998: RODRIGUEZ-PEREZ murdered Kasse because RODRIGUEZ-PEREZ suspected Kasse in the theft of a relatively small amount of marijuana from one of RODRIGUEZ-PEREZ’s stash houses. In the shooting that resulted in Kasse’s death, the hitmen hired by RODRIGUEZ-PEREZ also struck an innocent bystander, permanently paralyzing that victim.
- FNU LNU, a/k/a “Carlos Valentin,” a/k/a “Campi,” in or about 2000: Campi – whose true identity remains unknown – was strangled to death by RODRIGUEZ-PEREZ and his underlings in a public park in the Bronx. Campi was a low-level employee of RODRIGUEZ-PEREZ’s drug business whom RODRIGUEZ-PEREZ suspected of having stolen a small amount of marijuana. RODRIGUEZ-PEREZ buried Campi in a pre-dug grave, and later returned in an unsuccessful effort to locate, exhume, and destroy his victim’s remains.
- Noel Herrera, on December 29, 2001: Herrera was a rival drug dealer murdered by RODRIGUEZ-PEREZ in order to increase the Rodriguez Organization’s profits. He was murdered in the Dominican Republic at RODRIGUEZ-PEREZ’s direction by a team of paid assassins.
- Kelly Perez, a/k/a “Red” on September 16, 2002: RODRIGUEZ-PEREZ ordered the murder of this low-level employee of his business because he believed Perez to have stolen a small amount of marijuana and money, with which he had purchased a particular firearm. Before attempting multiple times to murder Perez, RODRIGUEZ-PEREZ forced Perez to return that firearm and, in spite, ensured that Perez died from a shot fired by the same weapon.
- Marino Molina, on January 11, 2003, and Wilfredo Molina, a/k/a “Willie,” on May 3, 2004: The Molina brothers were rivals of the Rodriguez Organization and associates of RODRIGUEZ-PEREZ’s first victim, Francisco Perez. Marino was murdered by a team of hitmen in the Dominican Republic while attending a baseball game, and Wilfredo was murdered in the drive-way of his family home in the presence of his young son.
- Manuel Rivas, a/k/a “Tony el Mono,” on October 29, 2005: Rivas was a former employee of the Rodriguez Organization whom RODRIGUEZ-PEREZ believed to be cooperating with law enforcement in the investigation of his drug empire. Rivas was murdered in the Dominican Republic by hitmen hired by RODRIGUEZ-PEREZ.
- Richard Cabrera, a/k/a “Bori,” on January 16, 2006: The murder of Richard Cabrera demonstrates RODRIGUEZ-PEREZ’s ruthlessness in support of his narcotics business. Cabrera had been a hitman for RODRIGUEZ-PEREZ in the murder of Francisco Perez, described above, and RODRIGUEZ-PEREZ murdered Cabrera in order to safeguard against the possibility of Cabrera revealing RODRIGUEZ-PEREZ’s role in that earlier murder.
Noel Herrera, Marino Molina, and Manuel Rivas were each murdered by or at the command of RODRIGUEZ-PEREZ in the Dominican Republic. Wilfredo Molina was murdered at the command of RODRIGUEZ-PEREZ in New Jersey, and the remaining victims were murdered in New York City.
Additionally, RODRIGUEZ-PEREZ was ordered to pay $25 million as a forfeiture penalty, which is the approximate amount of gross proceeds received by RODRIGUEZ-PEREZ derived from racketeering activities, properties in New York, Florida, and the Dominican Republic, and cash and jewelry seized by law enforcement officers.
RODRIGUEZ-PEREZ, age 43, has been in federal custody since October 15, 2010, when he was arrested during a takedown of more than 50 members of a massive marijuana trafficking ring that transported ton-quantities of marijuana from Florida and California for distribution in the greater New York area from the early 1990’s to 2010.
In sentencing RODRIGUEZ-PEREZ, Judge Swain said a life sentence was warranted because of the “breadth and violence” of his criminal conduct, which showed an “immense willingness and capacity to exact vengeance and violence.” Judge Swain described the “collateral damage caused” by RODRIGUEZ-PEREZ’s crimes as “catastrophic and immeasurable.”
Mr. Bharara praised the outstanding investigative work of ICE HSI, the New York City Police Department, and the U.S. Drug Enforcement Administration. He also thanked the U.S. Marshals Service, the Bergen County, New Jersey, Prosecutor’s Office, the Englewood, New Jersey, Police Department, the U.S. Department of Housing and Urban Development, and the New York City Department of Investigation for their assistance, and added that the investigation is continuing.
The investigation and prosecution of the cases arising from “Operation Green Venom” has been overseen by the Office’s Violent and Organized Crimes Unit. Assistant U.S. Attorney Andrew C. Adams is responsible for the prosecution.
Manhattan Man Pleads Guilty to Scheme to Defraud Car Buyers over the InternetRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that DAVON DAVIS pled guilty today to wire fraud charges in connection with a scheme to defraud prospective car buyers over the Internet. DAVIS pled before U.S. Magistrate Judge Lisa M. Smith in White Plains federal court.
DAVIS is charged with one count of conspiracy to commit wire fraud.
Manhattan U.S. Attorney Bharara stated: “Davon Davis brazenly defrauded individuals who thought they were purchasing cars with their hard-earned money, but in fact there were no cars to be sold. Davis has now admitted his crime and will face the consequences of his actions.”
According to the Information filed in White Plains federal court and public information:
From late 2013 through early 2015, DAVIS and others defrauded individuals who sought to purchase cars over the Internet from businesses they believed were located in White Plains, New York, and other locations. In reality, the address in White Plains and the businesses did not exist, and DAVIS and his co-conspirators did not own or legally possess any of the cars that were supposedly for sale on the Internet. DAVIS and his co-conspirators stole close to $200,000 from car buyers located all over the United States.
* * *
DAVIS faces a maximum sentence of 20 years in prison on the charge in the Information. The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.
DAVIS will be sentenced by U.S. District Judge Kenneth M. Karas on a date to be determined.
Mr. Bharara praised the outstanding efforts of the Federal Bureau of Investigation, the Westchester County District Attorney’s Office, and the White Plains Police Department.
This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney John P. Collins Jr. and Special Assistant United States Attorney Lauren Abinanti of the Westchester County District Attorney’s Office are in charge of the prosecution.
U.S. Attorney Sues Developer, Builder, and Architect for Disability Discrimination in Design and Construction of Mount Kisco CondominiumRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has filed a lawsuit against BEDFORD DEVELOPMENT LLC (“BEDFORD”), CARNEGIE CONSTRUCTION CORP. (“CARNEGIE”), JOBCO INC. (“JOBCO”), ROBERT PASCUCCI (“PASCUCCI”), the sole shareholder of BEDFORD and CARNEGIE and the president of JOBCO, and WARSHAUER MELLUSI WARSHAUER ARCHITECTS, P.C. (“WMW ARCHITECTS”), for violating the Fair Housing Act. The Government alleges that these defendants discriminated against disabled residents of the Sutton Manor condominium in Mount Kisco, New York, by failing to design and construct Sutton Manor so as to be accessible to persons with disabilities.
Manhattan U.S. Attorney Preet Bharara said: “The Fair Housing Act mandates accessibility in design and construction. Through this lawsuit – like the many other similar suits brought by this Office – we intend to hold these defendants accountable for their failure to adhere to the laws that ensure equal access to housing for New Yorkers with disabilities.”
As alleged in the Complaint filed in White Plains federal court:
The Fair Housing Act’s accessible design and construction provisions require new multifamily housing complexes constructed after January 1993 to have basic features accessible to persons with disabilities.
Sutton Manor is a residential condominium building located in Mount Kisco, New York, that was built and advertised as a “55+ Adult Community” and as being “[Americans with Disabilities Act] compliant.” But the building, a three-story elevator building with 47 units, a community room, and underground and outdoor parking, was designed and constructed with numerous inaccessible features, including insufficient clear opening width at, and excessive force required to operate, the doors to the elevator lobbies, excessively high thresholds at the entrances to the patios or balconies from within individual units and from the community room, insufficient clear opening width of each panel of the double-leaf doors leading to the patio or balcony in individual units, excessively high thresholds at the entrances to showers, and insufficient clear floor space in the hallways and kitchens for maneuvering by persons who use wheelchairs.
Michael and Linda Tracey, Mark and Gloria Koller, and Ina Grober (“Complainants”) each purchased and moved into units at Sutton Manor in 2007. One of the reasons the Kollers, Traceys, and Ms. Grober purchased units at Sutton Manor was because the defendants advertised Sutton Manor as being accessible to persons with disabilities. Ms. Tracey, Ms. Koller, and Ms. Grober each has a disability that limits her mobility. Ms. Tracey uses an electric wheelchair and Ms. Koller and Ms. Grober each use a walker. Between August 2007 and April 2010, the Traceys, Kollers, and Ms. Grober, along with several other unit owners, repeatedly notified the defendants about numerous inaccessible features in the common areas and individual units at Sutton Manor and requested that the accessibility problems be remedied. Despite direct complaints from the residents, demands for a response to their complaints made by Westchester Residential Opportunities, Inc., and a lawsuit filed against the defendants by the Westchester County Human Rights Commission, the defendants failed to adequately correct many of the inaccessible features.
The Traceys, Kollers, and Ms. Grober initially filed an administrative complaint with the Department of Housing and Urban Development (“HUD”). Upon investigation, HUD determined that there was reasonable cause to believe that the Fair Housing Act had been violated by BEDFORD, CARNEGIE, and WMW ARCHITECTS. Thereafter, the Traceys, Kollers, and Ms. Grober elected, pursuant to the Fair Housing Act, to have HUD’s determination resolved in federal court.
In these circumstances, the Fair Housing Act authorizes the Department of Justice to commence an action in United States District Court on behalf Complainants. The United States may also assert other claims as warranted. The Complaint is brought on behalf of the Traceys, Kollers, and Ms. Grober against BEDFORD, CARNEGIE, and WMW ARCHITECTS, and on behalf of the United States against BEDFORD, CARNEGIE, WMW ARCHITECTS, JOBCO, and PASCUCCI, and seeks declaratory and injunctive relief and monetary damages for Complainants and other individuals injured by the defendants’ discriminatory conduct.
Mr. Bharara thanked HUD for its efforts in the investigation.
The case is being handled by the Office’s Civil Rights Unit. Assistant U.S. Attorney Christine S. Poscablo is in charge of the case.
Former Mamaroneck Teacher Sentenced for Possessing Child PornographyRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that LYLE KAMLET, a former teacher at a school in Mamaroneck, was sentenced yesterday by the Honorable Kenneth M. Karas to 39 months in prison for possessing child pornography.
Manhattan U.S. Attorney Preet Bharara stated: “Child pornography victimizes the most innocent and vulnerable in our communities. And when a former teacher like Lyle Kamlet possesses child pornography, it is doubly dangerous and disturbing. Thanks to the efforts of the United States Postal Inspection Service, Kamlet’s illicit conduct was brought to light, and he will now face time in prison for his crime.”
KAMLET previously pled guilty to one count of possessing child pornography.
According to the Information previously filed in White Plains federal court and public information:
From in or about 2008 through 2010, on a number of occasions, KAMLET ordered child pornography videos – some of which he directed to be mailed to the school where he was then employed. During a search of his residence, law enforcement seized those videos and also found home movies that he had created that contained images of naked children.
* * *
Mr. Bharara praised the outstanding investigative work of the United States Postal Inspection Service.
The prosecution is being overseen by the Office’s White Plains Unit. Assistant United States Attorney John P. Collins Jr. is in charge of the prosecution.
Eight Defendants Charged in Manhattan Federal Court with Bank Fraud and Mail Theft Conspiracy in the BronxRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), today announced the unsealing of an Indictment charging a total of eight defendants with engaging in mail theft and bank fraud conspiracies in the Bronx, New York. Five defendants were arrested today, and two defendants remain at large; the eighth will voluntarily appear later this week for arraignment. The five defendants who are in custody will be presented and arraigned before U.S. Magistrate Judge Sarah Netburn later today. The case is assigned to U.S. District Judge Gregory H. Woods.
Manhattan U.S. Attorney Preet Bharara said: “These eight defendants allegedly hatched a scheme to steal mail from Bronx residents, specifically targeting mail they thought would contain checks or money orders, then depositing stolen funds into their own and others’ accounts. Now, thanks to the work of the U.S. Postal Inspection Service, these alleged mail fraudsters have been delivered to the criminal justice system.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “When I think of the brazenness of these individuals to allegedly steal U.S. Mail coupled with their total disregard for the financial well-being of the communities impacted by their crimes, it takes the word insolent to new heights. Let today’s arrests serve as an example to those who believe they can steal from the US Postal Service and get away with it. Postal Inspectors and their law enforcement partners will find you, arrest you and bring you to justice for your crimes against the US Postal Service and their customers. That is something you can take to the bank.”
As alleged in the Indictment unsealed today in Manhattan federal court[1]:
Since 2015, USPIS and other local and federal agencies, including the New York City Police Department (“NYPD”), Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, have been investigating mail theft from mailboxes in the Bronx, New York. The investigation has revealed that individuals steal mail by either illicitly obtaining mail box keys or by “fishing.” Fishing involves inserting homemade mail theft devices into mailboxes located on street corners or other publicly accessible places. After gaining access to the mail in the mailbox, a thief typically will remove any mail that appears to contain checks or money orders. During the beginning and end of the month when many people mail checks for rent and bills, a thief can steal checks worth tens of thousands of dollars in a single night.
After perpetrators fish checks and money orders out of mailboxes, they sell the checks and money orders to others, remove the payees’ names by “washing” the checks and money orders, or simply deposit the checks and money orders into a bank account. In various iterations of the scheme, those bank accounts have belonged to the mail thieves, to complicit accountholders, or to unsuspecting third parties whose debits cards or personal identifying information has been stolen.
Since late 2015, USPIS and NYPD enforcement operations have resulted in over 50 state arrests of individuals in an area of the Bronx in the vicinity of Claremont Park for theft of mail, and over $750,000 in checks and money orders has been traced to these mail theft schemes. Between May 2015 and at least January 2017, BRIAN MARTE, a/k/a “Trini Rabiia,” ERICKSON BATISTA, a/k/a “Niike Batista,” JUNIOR TAVERAS, a/k/a “Tuh Relambio,” ANGEL ARISTY, a/k/a “Frekiitho Lindo Colon,” LUIS ROSADO, a/k/a “El Menolsito Tejada,” EOSCATERYS POLANCO, BRAYAN RODRIGUEZ, a/k/a “New Black El Paisano,” and RONARDO BAEZ, a/k/a “Tuchokoo Baez,” the defendants, each participated in these related schemes to steal mail and deposit stolen checks and money orders using other individuals’ debit cards.
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Each of the defendants is charged with one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison; one count of conspiracy to commit mail theft, which carries a maximum sentence of five years in prison; and one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison. MARTE is also charged with one count of mail theft, which carries a maximum sentence of five years in prison. The charges also carry a maximum fine of $1 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 sentencings of the defendants would be determined by the judge.
A chart containing the names, ages, and residences of the defendants is below.
Mr. Bharara praised the outstanding investigative work of the United States Postal Inspection Service, Homeland Security Investigations, the New York City Police Department, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
These cases are being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Catherine Geddes and Stephanie Lake 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.
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NAME
AGE
RESIDENCE
Brian Marte
20
Bronx, NY
Erickson Batista
24
Bronx, NY
Junior Taveras
19
Bronx, NY
Angel Aristy
18
Bronx, NY
Luis Rosado
19
Bronx, NY
Eoscaterys Polanco
23
Bronx, NY
Brayan Rodriguez
23
Bronx, NY
Ronardo Baez
20
Bronx, NY
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Cardiologist, Neurologist, and Others Charged in $50 Million Health Care Fraud Scheme, and Civil Suit Filed Against Clinic and Participants in the FraudRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Scott J. Lampert, Special Agent-in-Charge of the New York Regional Office of the United States Department of Health and Human Services Office of the Inspector General (“HHS-OIG”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today criminal and civil actions relating to a 12-year scheme to defraud Medicaid, Medicare, and other private health insurance companies out of more than $50 million. Today’s actions include the unsealing of an Indictment charging ASIM HAMEEDI, FAWAD HAMEEDI, MICHELLE LANDOY, DESIREE SCOTT, EMAD SOLIMAN, and ARIF HAMEEDI with, among other things, health care fraud, identity theft, and making false statements, and the filing of a civil fraud lawsuit against CITY MEDICAL ASSOCIATES, P.C., and ASIM HAMEEDI, among others, seeking treble damages and civil penalties under the False Claims Act for the fraudulent claims for reimbursement submitted by CITY MEDICAL ASSOCIATES to Medicare and Medicaid between 2003 and November 2015.
ASIM HAMEEDI was arrested this morning in Manhattan. FAWAD HAMEEDI was arrested this morning on Long Island. LANDOY and SCOTT were each arrested this morning in Queens, New York. SOLIMAN was arrested this morning in Westchester County. ARIF HAMEEDI is outside the United States and has not yet been arrested. All of the defendants in custody will be presented later today in Manhattan federal court before Magistrate Judge Sarah Netburn.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, these defendants that included a cardiologist and neurologist ran a medical practice that for years bilked public health care programs and private insurance companies of more than $50 million. Thanks to the hard work of federal and state investigators, this fraud has been revealed and the alleged perpetrators forced to face the consequences of their actions.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. stated: “Public health insurance programs, like Medicare and Medicaid, are not a personal pocketbook for criminals seeking to exploit a program designed to help those who need these programs the most. As alleged, the six defendants carried out a massive health care fraud scheme against these programs and private insurance companies for over twelve years and submitted more than $50 million in fraudulent claims. The FBI is committed to working with our law enforcement partners to bring to justice those who defraud taxpayer funded programs.”
HHS-OIG Special Agent-in-Charge Scott J. Lampert said: “Health care fraud schemes like the one alleged here loot government health programs, compromise patient well-being, and undermine the public’s trust in the health profession. You can bet our agents will continue to thoroughly investigate such allegations and hold fraudsters accountable for their crimes.”
NYPD Commissioner James P. O’Neill said: “As alleged, this investigation revealed numerous calculated actions that occurred for more than a decade which resulted in more than $50 million in fraudulent claims. I commend the NYPD investigators and FBI agents who uncovered these criminal activities and whose efforts resulted in a thorough investigation and arrests related to this ill-fated scheme.”
According to the allegations in the Indictment and the Civil Complaint:[1]
ASIM HAMEEDI, a board-certified interventional cardiologist who was the president and owner of City Medical Associates, a cardiology and neurology clinic based in Bayside, New York (“CMA””), together with others employed by CMA, conducted a massive health care fraud scheme spanning 12 years and involving more than $50 million in fraudulent claims. ASIM HAMEEDI conducted this scheme with others employed at or associated with CMA, including ASIM HAMEEDI’s nephew, FAWAD HAMEEDI, ASIM HAMEEDI’s brother, ARIF HAMEEDI, MICHELLE LANDOY, and DESIREE SCOTT, who were also employees of CMA, and EMAD SOLIMAN, a board-certified neurologist with his own practice in Westchester, New York.
The multi-faceted scheme included, among other things: (1) making false representations to insurance providers, including providers paid through Medicaid and Medicare, about the medical condition of patients in order to obtain preauthorization for medical tests and procedures; (2) submitting false claims to insurance providers for tests and procedures that were not performed and/or medically unnecessary, as well as for drug items not used or provided; (3) paying exorbitant kickbacks to local primary care medical offices in exchange for lucrative referrals from these offices; (4) and accessing, without authorization, electronic health records of patients at a particular hospital based on Long Island, New York (“Hospital-1”), in violation of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) in order to identify patients to be recruited to CMA.
In furtherance of the scheme, and to hide from the insurance providers the huge volume of claims, including fraudulent claims, being submitted by CMA, ASIM HAMEEDI, FAWAD HAMEEDI, ARIF HAMEEDI, MICHELLE LANDOY, and DESIREE SCOTT submitted claims to the insurance providers falsely representing that medical tests had been ordered or performed by doctors who did not work at CMA and who had not ordered or performed the tests. These doctors included EMAD SOLIMAN, who knowingly participated in the scheme to allow CMA to submit false claims to the insurance providers in his name, as well as two other doctors who did not know that their identities were being used to further the fraud (“Doctor-1” and “Doctor-2”).
In addition, ASIM HAMEEDI and FAWAD HAMEEDI, with the assistance of ARIF HAMEEDI, used various unlawful means to obtain and maintain a high volume of patients for use in the fraudulent scheme, including, among other things, paying exorbitant kickbacks to local primary care offices and practitioners in exchange for referrals of patients by those offices and practitioners to CMA. Moreover, ASIM HAMEEDI and FAWAD HAMEEDI repeatedly, and without authorization, accessed information in electronic health records of patients of Hospital-1 to identify and recruit patients to the practice of ASIM HAMEEDI and CMA.
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The charges against the defendants alleged in the Indictment, and the maximum penalties for those charges, are set forth in a chart below. Also set forth below is a chart with the defendants’ names, ages, and residences.
The Civil Complaint joins a civil fraud lawsuit previously filed under seal by a whistleblower under the False Claims Act. The civil case is pending before Judge Paul G. Gardephe.
Mr. Bharara praised the outstanding investigative work of the FBI, HHS-OIG, the NYPD, and the New York State Department of Financial Services.
The criminal case is being handled by the Complex Frauds and Cybercrime Unit, and Assistant U.S. Attorney Elisha J. Kobre is in charge of the prosecution. The civil case is being handled by Assistant U.S. Attorney Jacob M. Bergman of the Office’s Civil Frauds Unit.
CHARGE
DEFENDANTS
MAXIMUM PENALTIES
Count One
Conspiracy to Commit Health Care Fraud and Wire Fraud in violation of 18 U.S.C. § 1349
ASIM HAMEEDI,
FAWAD HAMEEDI,
MICHELLE LANDOY,
DESIREE SCOTT,
EMAD SOLIMAN, and
ARIF HAMEEDI
20 years in prison
Count Two
Health Care Fraud, in violation of 18 U.S.C. §§ 1347 and 2
ASIM HAMEEDI,
FAWAD HAMEEDI,
MICHELLE LANDOY,
DESIREE SCOTT,
EMAD SOLIMAN, and
ARIF HAMEEDI
10 years in prison
Count Three
Wire Fraud, in violation of 18 U.S.C. §§ 1343 and 2
ASIM HAMEEDI,
FAWAD HAMEEDI,
MICHELLE LANDOY,
DESIREE SCOTT,
EMAD SOLIMAN, and
ARIF HAMEEDI
20 years in prison
Count Four
False Statements Relating to Health Care Matters, in violation of 18 U.S.C. §§ 1035 and 2
ASIM HAMEEDI,
FAWAD HAMEEDI,
MICHELLE LANDOY,
DESIREE SCOTT,
EMAD SOLIMAN, and
ARIF HAMEEDI
5 years in prison
Count Five
Conspiracy to Violate the Anti-Kickback Statute, in violation of 18 U.S.C. § 371
ASIM HAMEEDI,
FAWAD HAMEEDI, and
ARIF HAMEEDI
5 years in prison
Count Six
Conspiracy to Wrongfully Obtain and Disclose Individually Identifiable Health Information, in violation of 18 U.S.C. § 371
ASIM HAMEEDI and
FAWAD HAMEEDI
5 years in prison
Count Seven
Conspiracy to Commit Fraud in Connection
with Identification Information, in violation of 18 U.S.C. § 1028(f)
ASIM HAMEEDI,
FAWAD HAMEEDI,
MICHELLE LANDOY,
DESIREE SCOTT, and
EMAD SOLIMAN
15 years in prison
Count Eight
Conspiracy to Commit Money Laundering, in violation of 18 U.S.C. § 1956(h)
ASIM HAMEEDI,
FAWAD HAMEEDI, and
ARIF HAMEEDI
20 years in prison
Count Nine
Aggravated Identity Theft, in violation of 18 U.S.C. § 1028A
ASIM HAMEEDI,
FAWAD HAMEEDI,
MICHELLE LANDOY, and
DESIREE SCOTT
Mandatory minimum of 2 years in prison
Count Ten
False Statements to a Federal Agent, in violation of 18 U.S.C. § 1001
EMAD SOLIMAN
5 years in prison
DEFENDANT
AGE
RESIDENCE
ASIM HAMEEDI
46
Manhattan, New York and
FAWAD HAMEEDI
31
Long Island, New York
MICHELLE LANDOY
35
Queens, New York
DESIREE SCOTT
37
Queens, New York
EMAD SOLIMAN
47
Westchester County, New York
ARIF HAMEEDI
56
Queens, New York
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and Civil Complaint and the descriptions of the Indictment and Civil Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
U.S. Attorney Settles Civil Rights Lawsuit to Allow Tenant to Keep an Assistance AnimalRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has simultaneously filed and settled a civil rights lawsuit against Friedman Residence, LLC, Breaking Ground, and The Actors Fund of America, for violating the Fair Housing Act. Specifically, the lawsuit alleges that Friedman Residence, LLC, Breaking Ground, and The Actors Fund of America discriminated against a tenant (the “Tenant”) of the Dorothy Ross Friedman Residence (the “Friedman Residence”), by failing to permit a reasonable accommodation of the Tenant’s psychiatric disability. The consent decree was approved on February 24, 2017, by U.S. District Court Judge P. Kevin Castel.
U.S. Attorney Preet Bharara said: “This is yet another lawsuit brought to enforce the rights of tenants with disabilities to live with assistance animals. Through this settlement, Friedman Residence, LLC, Breaking Ground, and The Actors Fund of America will improve housing accessibility for all residents of the Dorothy Ross Friedman Residence.”
As alleged in the Complaint filed in federal court:
Friedman Residence, LLC, Breaking Ground, and The Actors Fund of America are the owner, manager, and sponsor of the Friedman Residence, which provides supportive housing in shared and single-occupancy apartments to special low-income groups, including seniors, working professionals, and persons living with HIV/AIDS. The Friedman Residence has a “no pet” policy.
The Tenant shared an apartment at the Friedman Residence, and has a psychiatric disability. In February 2013, the Tenant asked that the Friedman Residence grant him a reasonable accommodation to live with an emotional support dog that alleviates the symptoms of his disability. The Tenant provided a letter from his long-time therapist explaining that the emotional support dog was a “necessary form of support” for him. Despite the Tenant’s request for a reasonable accommodation, the Friedman Residence served him with a Notice of Termination and a petition seeking a final judgment of eviction.
Under the consent decree approved on February 24, 2017, Friedman Residence, LLC, Breaking Ground, and The Actors Fund of America will adopt a new reasonable accommodation policy regarding assistance animals that is incorporated into the consent decree. Friedman Residence, LLC, Breaking Ground, and The Actors Fund of America have further agreed to comply with certain notice, training, and recordkeeping requirements to ensure that their employees are knowledgeable about and comply with the requirements of the Fair Housing Act, and to allow the United States to monitor compliance with the consent decree. In addition, Friedman Residence, LLC, Breaking Ground, and The Actors Fund of America have agreed to pay the Tenant $20,000 in compensatory damages and to place the Tenant on the waitlist for a single-occupancy apartment at the Friedman Residence.
Mr. Bharara thanked HUD for its efforts in the investigation.
The case is being handled by the Office’s Civil Rights Unit. Assistant United States Attorney Talia Kraemer is in charge of the case.
Medical Doctor Charged in Manhattan Federal Court for Fentanyl-Related Overdose DeathRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a complaint charging AVINOAM LUZON with selling fentanyl that resulted in the death of an Upper West Side man.
The complaint alleges that, on or about October 22, 2016, LUZON distributed fentanyl that resulted in the death of Gabriel Tramiel, age 32, of Manhattan. LUZON was arrested this morning and will be presented today before United States Magistrate Judge Sarah Netburn.
Manhattan U.S. Attorney Preet Bharara said: “As a medical doctor and graduate student in public health, Avinoam Luzon was supposed to help the sick get healthy, but instead he allegedly helped fuel the nation’s most serious health crisis, the opioid abuse epidemic. As an alleged drug dealer with a medical degree, Luzon sold fentanyl to Gabriel Tramiel, a 32-year-old New Yorker, and it allegedly killed him.”
NYPD Commissioner James P. O’Neill said: “We will continue to investigate every single overdose across this city and to make arrests like this. Our goal: to protect life and deter those who peddle these deadly opioids.”
According to the allegations in the Complaint[1] filed in federal court:
Gabriel Tramiel was found dead by his wife in the early morning hours of October 23, 2016. Tramiel was transported to the hospital and was examined by a medical examiner from the New York City Office of the Chief Medical Examiner who determined that a fentanyl overdose was the cause of Tramiel’s death. Text messages recovered from Tramiel’s phone show a conversation with LUZON the evening of October 22, 2016, in which LUZON requested payment from Tramiel for narcotics and the two arranged a meeting to exchange narcotics for payment. Surveillance video recovered from the apartment building where Tramiel died shows Tramiel inhaling the contents of a nasal spray bottle in the building elevator several hours before he was found dead.
* * *
LUZON, 32, of New York, New York, has been charged with one count of narcotics distribution resulting in the death of another, which carries a maximum sentence of life in prison, and a mandatory minimum 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 sentence for the defendant will be determined by the judge.
Mr. Bharara praised the outstanding work of the NYPD for its investigative efforts and ongoing support and assistance with the case. He also thanked the New York State Department of Health’s Bureau of Narcotics Enforcement for their assistance with this investigation.
The prosecution of this case is being overseen by the Office’s Narcotics Unit. Assistant U.S. Attorney Karin Portlock is in charge of the case.
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 descriptions of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
Clinic Owner Sentenced in Manhattan Federal Court to Five Years in Prison in $70 Million Scheme to Defraud Medicare and MedicaidRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that VICTOR LIPKIN, a former owner of a health care clinic in Brooklyn, New York, was sentenced to five years in prison for his role in a massive health care fraud scheme through which three medical clinics in Brooklyn and Queens submitted over $70 million in fraudulent claims to Medicaid and Medicare. On August 3, 2016, LIPKIN pled guilty to conspiracy to commit wire fraud, mail fraud, and health care fraud. LIPKIN was sentenced last Friday, February 24, in Manhattan federal court by the Honorable Ronnie Abrams.
Manhattan U.S. Attorney Preet Bharara said: “Victor Lipkin spearheaded a scheme that involved recruiting disadvantaged and homeless people to undergo expensive and unnecessary medical tests. Lipkin and his co-defendants submitted over $70 million in bogus claims to Medicare and Medicaid, burdening those programs while enriching themselves.”
According to the Superseding Indictment to which LIPKIN pled guilty, and other publicly filed information in this case:
The Heath Care Fraud Scheme
From 2005 to November 2014, LIPKIN, Vadim Zubkov, Eduard Zavalunov, Nikoloz Chochiev, Anatoliy Fatkhov, Mariana Swaffar, Jacqueline Pinez, Jonathan Oliver, Jason Brissett, Gilbert Trotman, and Giorgi Buleishvili engaged in a scheme to operate three medical clinics in Brooklyn and Queens, through which they recruited financially disadvantaged and homeless people insured by Medicare and/or Medicaid (the “Phony Patients”) to undergo unnecessary medical tests, typically performed by unlicensed personnel, at the clinics in exchange for cash, and then billed the insurers for administering those unnecessary tests. Beginning in or about 2005, LIPKIN and Zubkov recruited and paid a particular licensed physician (the “Doctor”) to act as the nominal owner and/or physician under whose name three purported medical clinics would bill Medicare, Medicaid, and private insurance providers (the “Insurance Providers”) for unnecessary services and tests – including sleep tests and stress tests – performed at the clinics. The clinics were located on Avenue V in Brooklyn, New York – the clinic owned and operated by LIPKIN – and on Hillside Avenue and Elmhurst Avenue, respectively, in Queens, New York. LIPKIN and Zubkov were, in fact, the beneficial owners of the clinics, but they concealed their ownership through the Doctor’s nominal affiliation with the clinics, and by laundering the proceeds of the clinics’ operation through shell companies that they owned and controlled. LIPKIN, Zubkov, Zavalunov, and Buleishvili operated and controlled the clinics, and ran the clinics’ day-to-day operations, despite the fact that they were not licensed physicians, as required by New York law.
At the direction of LIPKIN, Zubkov, Zavalunov, and Buleishvili, other members of the scheme, including Oliver, Brissett, and Trotman (the “Runners”), as well as Chochiev, recruited financially disadvantaged individuals with Medicaid and/or Medicare insurance to act as Phony Patients and undergo unnecessary medical tests at the clinics in exchange for cash payments. The Runners often recruited such individuals from soup kitchens and local welfare offices, and coached them on what to say on various medical forms in order to make it falsely appear that the medical tests to which the defendants intended to subject them were medically necessary. In furtherance of the scheme, Chochiev also made threats of physical violence to individuals who Chochiev believed owed money to the scheme members.
Also in furtherance of the scheme, before the medically unnecessary tests were performed on the Phony Patients, Swaffar and Pinez obtained the Phony Patients’ Medicaid and/or Medicare insurance information, and then contacted the Insurance Providers to confirm that the Insurance Providers would reimburse for the tests. Swaffar and Pinez engaged in such conduct knowing that the Phony Patients were being recruited and paid by the Runners to undergo the tests. Once they determined that a particular Phony Patient’s insurance would pay out claims made by the clinic for the planned medical tests, Swaffar and Pinez notified the Runners that the individuals were eligible and could be brought to the clinic to undergo such tests.
After the Phony Patients had been recruited, confirmed to be Medicare and/or Medicaid eligible, and transported to one of the clinics by the Runners or Chochiev, in many instances certain individuals who were not physicians administered a host of unnecessary medical tests to them. In particular, for example, Fatakhov administered unnecessary medical tests, including stress tests, to the Phony Patients of the Elmhurst Avenue Clinic. Fatakhov administered these tests outside the presence and supervision of the Doctor or other licensed physician, despite knowing that the presence or supervision of a licensed physician was required. After the unnecessary medical tests were administered, the Phony Patients were paid cash kickbacks. The defendants, through the clinics, then submitted fraudulent claims to Medicaid and Medicare seeking reimbursement for the unnecessary medical tests. In total, in the course of the scheme, the defendants fraudulently billed over $70 million to Medicaid and Medicare, for which they received over $25 million in reimbursements.
* * *
In addition to the prison term, Judge Abrams ordered LIPKIN, 51, of Brooklyn, New York, to serve three years of supervised release and to pay over $8 million in restitution and forfeiture
As set forth below, all of the other defendants charged in this matter have pled guilty. On January 13, 2017, Pinez was sentenced to six months in prison. The remaining defendants are pending sentencing.
Vadim Zubkov, 49, pled guilty on January 13, 2017, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Nikoloz Chochiev, 42, pled guilty on August 11, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Anatoliy Fatakhov, 59, pled guilty on July 28, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Mariana Swaffar, 51, pled guilty on August 15, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Jacqueline Pinez, 33, pled guilty on July 11, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Jonathan Oliver, 53, pled guilty on September 6, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Giorgi Buleishvili, 42, pled guilty on January 31, 2017, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Eduard Zavalunov, 35, pled guilty on February 7, 2017, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Mr. Bharara praised the outstanding investigative work of the Federal Bureau of Investigation, the New York Police Department, and the U.S. Department of Health and Human Services. He also thanked the New York State Office of the Medicaid Inspector General for its assistance.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Daniel Tehrani, Patrick Egan, and Timothy T. Howard are in charge of the prosecution.
Florida Man Pleads Guilty to Attempting to Gain Unauthorized Access and Cause Damage to the Computer Network of A Global Charitable OrganizationRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that TIMOTHY SEDLAK pled guilty in Manhattan federal court to attempting to access without authorization the computer network of a global charitable organization based in New York, New York (the “Organization”), and as a result of such conduct, recklessly causing damage to computers of the Organization. He pled guilty before U.S. District Judge Ronnie Abrams.
Manhattan U.S. Attorney Preet Bharara said: “Although ultimately unsuccessful, Timothy Sedlak attempted hundreds of thousands of times to hack into a charitable organization, impairing the organization’s work. Today, Sedlak admitted to his crime and now awaits his sentence.”
According to the Superseding Information, other documents filed in Manhattan federal court, and statements made at various proceedings in this case, including today’s guilty plea:
SEDLAK made hundreds of thousands of attempts to gain access without authorization to the computer network systems of the Organization, and in so doing, impaired the availability of the email accounts and web-based applications of more than 10 employees of the Organization.
From in or about June 2015, up to and including in or about July 2015, computers associated with two particular internet protocol addresses (the “IP Addresses”) made nearly 400,000 attempts to gain unauthorized access to the Organization’s computer network. As a result, numerous Organization employees experienced difficulty accessing their Organization email accounts, and were disrupted in their ability to conduct regular business functions. Both of the IP Addresses were subscribed to SEDLAK at SEDLAK’s residence in Florida (the “Sedlak Residence”).
In particular, between June 22, 2015, and July 8, 2015, from one of the IP Addresses, there were approximately 195,000 attempts to log into approximately 20 email accounts of the Organization. Between July 8, 2015, and July 10, 2015, from the other IP Address, there were an additional approximately 195,000 attempts to log into approximately six email accounts of the Organization. SEDLAK has never been employed by the Organization, and was not authorized to access any email accounts of the Organization.
On or about September 11, 2015, United States Secret Service (“USSS”) agents executed a search warrant at the Sedlak Residence, from which they seized, among other things, (i) approximately 30 computers connected to the same internal network, which enabled each computer to communicate with the others (the “Sedlak Computers”); (ii) notes pertaining to the Organization, an executive of the Organization (“Individual-1”), and an individual who has been publicly affiliated with the Organization (“Individual-2”), including email addresses, registrant information for certain website domain names, and certain IP address information associated with the Organization, Individual-1, and/or Individual-2; and (iii) lists of email addresses and email servers, many of which included the word “jihad.” The Sedlak Computers contained, among other things, a list of certain Organization employees’ email account usernames, and a “brute force” password-cracking tool. Such a tool is designed to launch a relentless barrage of potential passwords at an email account in an attempt to guess the account’s password.
On or about September 11, 2015, USSS agents interviewed SEDLAK, who claimed to be using the Sedlak Computers to conduct “research” into charitable organizations in the course of his work as a private investigator. In particular, SEDLAK claimed to be trying to determine if such organizations are unintentionally financing jihadist groups by sending, to charitable organizations in the Middle East, funds that are then seized by jihadist groups. When asked about notes pertaining to Individual-1 and Individual-2 found at the Sedlak Residence, SEDLAK claimed that he came across such information in his “research” into the financing of jihadist groups. SEDLAK claimed that he hoped to sell the information he found.
* * *
SEDLAK, 43, of Ocoee, Florida, faces a maximum of five years in prison and three years of supervised release. The statutory maximum 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. SEDLAK is scheduled to be sentenced by Judge Abrams on June 6, 2017, at 1:00 p.m.
Mr. Bharara praised the investigative work of the United States Secret Service.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Kristy J. Greenberg and Jennifer L. Beidel are in charge of the prosecution.
Eight Defendants Charged in Manhattan Federal Court with Narcotics Trafficking in the BronxRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, James J. Hunt, Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), today announced the unsealing of an Indictment charging a total of eight defendants with engaging in the distribution of crack cocaine and marijuana in the vicinity of the Soundview Houses housing project in the 43rd Precinct, in the Bronx, New York. One of the defendants, ELLIOT JAMES, a/k/a “L Boogie,” a/k/a “Ace,” was also charged with using a firearm in furtherance of his drug trafficking crimes. Seven defendants were arrested today, and one defendant remains at large. The seven defendants who are in custody will be presented and arraigned before U.S. Chief Magistrate Judge Debra Freeman later today. The case is assigned to U.S. District Judge Naomi Reice Buchwald.
Manhattan U.S. Attorney Preet Bharara said: “The Soundview Houses residents deserve to live free of drug-dealing and guns in their neighborhood, something that the eight defendants charged today allegedly made difficult. We thank our partners at the DEA and NYPD for their efforts in this and other investigations aimed at keeping our communities safe from drugs and gun violence.”
DEA Special Agent in Charge James J. Hunt said: “These eight defendants allegedly made the Soundview Houses their stomping ground for drug trafficking. No one chooses to live next door to drug dealers and today’s arrests have paved ground for a safer neighborhood with less drugs and drug-related crimes.”
Police Commissioner James P. O’Neill said: “As alleged, these individuals distributed narcotics in and around the Soundview Houses and by doing so, endangered the safety of surrounding residents with their criminal enterprise. An investigation conducted by the NYPD’s Gun Violence Suppression Division and our law enforcement partners strategically targeted this illegal activity and as a result, effected the arrests of several individuals responsible for trafficking narcotics. I commend the work of the investigators and prosecutors who committed themselves to this investigation.”
As alleged in the Indictment unsealed today in Manhattan federal court[1]:
Between 2014 and February 2017, ELLIOT JAMES, a/k/a “L Boogie,” a/k/a “Ace,” JAMEL DAVIS, a/k/a “Pootie,” TYLER MASSEY, a/k/a “Gordo,” DONOVAN MOSS, a/k/a “Don,” JONATHAN NUNEZ, a/k/a “Munna,” BRANDON RAMSEUR, a/k/a “BR,” JONATHAN REYES, a/k/a “Grillz,” and JAMEL SIMS, a/k/a “Jamal Brown,” conspired to sell crack cocaine and marijuana in the vicinity of the Soundview Houses in the Bronx. During the course of the conspiracy, the defendants sold crack cocaine to confidential informants and undercover law enforcement officers on numerous occasions. Certain defendants also sold crack cocaine to the undercover officers on behalf of their co-conspirators or worked together to complete the sales to the undercover officers.
* * *
The defendants face maximum terms of life in prison and mandatory minimum terms of 10 years in prison. The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the Court.
A chart containing the names, ages, and residences of the defendants who were arrested today is below.
Mr. Bharara praised the outstanding investigative work of the DEA and the NYPD.
These cases are being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Michael Longyear, Jessica Fender, and Scott Hartman 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. Elliot James, et al.
NAME
AGE
RESIDENCE
Elliot James, a/k/a “L Boogie,” a/k/a “Ace”
27
Bronx, NY
Jamel Davis, a/k/a “Pootie”
25
Bronx, NY
Tyler Massey, a/k/a “Gordo”
22
Bronx, NY
Donovan Moss, a/k/a “Don”
22
Bronx, NY
Jonathan Nunez, a/k/a “Munna”
19
Bronx, NY
Brandon Ramseur, a/k/a “BR”
19
Bronx, NY
Jonathan Reyes, a/k/a “Grillz”
21
Bronx, NY
Jamel Sims, a/k/a “Jamal Brown”
25
Bronx, NY
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
California Auctioneer Charged in Rhinoceros Horn Smuggling ConspiracyRead the Press Release
Jacob Chait, 34, the head of acquisitions and auctioneer of a Beverley Hills, California gallery and auction house (“Auction House #1”), appeared yesterday in Manhattan federal court in New York to face charges of conspiring to smuggle rhinoceros horns, in violation of the Lacey Act. A one-count indictment charging Chait was returned by a federal grand jury on February 15.
Acting Assistant Attorney General Jeff Wood for the Department of Justice’s Environment and Natural Resources Division, U.S. Attorney Preet Bharara for the Southern District of New York and Acting Director Jim Kurth for the U.S. Fish and Wildlife Service made the announcement.
“The defendant and his co-conspirators are alleged to have engaged in a scheme to illegally traffic in the horns of highly protected rhinoceros,” said Acting Assistant Attorney General Wood. “Illegal wildlife trafficking is a serious crime under federal law and should be vigorously prosecuted.”
“As alleged, Jacob Chait trafficked in and smuggled rhinoceros horns, further threatening an already endangered species. Rhinoceros have no known predators other than humans, and yet, driven by the illegal trade in their horns, literally worth more than their weight in gold in the black market, rhinoceros are on their way to extinction. This Office, along with our partners at the Department of Justice’s Environmental and Natural Resources Division, as well as the U.S. Fish and Wildlife Service, will continue to combat the illegal trade of rhinoceros horns fueling the senseless poaching of this critically endangered animal,” said U.S. Attorney Bharara.
“Illegal trafficking like that allegedly conducted by these defendants is fueling the unprecedented slaughter of wild rhinos,” said Acting Director Kurth. “In Africa, a rhino is currently poached every eight hours - a rate that threatens to make the rhino extinct in the wild in less than 15 years. Our Special Agents will continue to work with the Justice Department to aggressively investigate and secure the prosecutions of individuals and criminal organizations engaged in rhino horn trafficking to protect wild populations of this imperiled species.”
According to allegations contained in the indictment:
From approximately 2009 and 2012, Chait and his co-conspirators purchased rhinoceros horns and taxidermy mounts in the U.S. and sought to sell them to foreign buyers in private deals, including in at least eight separate deals or attempted deals involving 15 rhinoceros horns worth an estimated $2.4 million. This included one alleged incident in which Chait personally smuggled two endangered black rhino horns to China in his luggage. Rhinoceros horns are worth more per pound than gold due to the high demand in Asia and increasing scarcity of supply.
Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. The trade in rhinoceros horn and elephant ivory have been restricted since 1976 under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 180 countries around the world.
Chait is charged in one count of conspiring to smuggle rhinoceros horns and to violate the Lacey Act. The charge carries a maximum penalty of five years in prison. The maximum 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. The case is assigned to U.S. District Judge Jesse M. Furman, whom Chait will appear before on Februar 27.
On June 22, 2016, Joey Chait, the Senior Auction Administrator of Auction House #1, was sentenced by the Honorable J. Paul Oetken to one year and one day for conspiring to smuggle wildlife products made from rhinoceros horn, elephant ivory and coral with a market value of at least $1 million, and to violate the Lacey Act.
This matter is part of Operation Crash, a continuing nation-wide crackdown by the Department of the Interior’s Fish and Wildlife Service and the Department of Justice on illegal trafficking in rhinoceros horns and other wildlife crimes. A “crash” is the term for a herd of rhinoceros. This indictment represents the sixth Operation Crash case to be brought in the Southern District of New York.
An indictment contains allegations that crimes have been committed. A defendant is presumed innocent until proven guilty beyond a reasonable doubt.
U.S. Attorney Bharara and Acting Assistant Attorney General Wood thanked the U.S. Fish and Wildlife Service for its work in this investigation. This case is being prosecuted by the U.S. Attorney Office’s Complex Frauds and Cybercrime Unit and the Environmental Crimes Section of the Department of Justice. Assistant U.S. Attorney Elizabeth Hanft and Senior Litigation Counsel Richard A. Udell with Department of Justice’s Environmental Crimes Section in Washington, D.C. are in charge of the prosecution.
Beverly Hills Auctioneer Charged in Rhinoceros Horn Smuggling ConspiracyRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Jeffery Wood, Acting Assistant Attorney General for the Department of Justice’s Environment and Natural Resources Division, and Jim Kurth, Acting Director for the U.S. Fish and Wildlife Service, announced that JACOB CHAIT, the head of acquisitions and the auctioneer of a Beverly Hills, California gallery and auction house (“Auction House #1”), was presented yesterday in U.S. Magistrate’s Court in Manhattan on a one-count Indictment charging a conspiracy to smuggle rhinoceros horns and violate the Lacey Act. The Indictment was returned on February 15, 2017.
Manhattan U.S. Attorney Preet Bharara said, “As alleged, Jacob Chait trafficked in and smuggled rhinoceros horns, further threatening an already endangered species. Rhinoceros have no known predators other than humans, and yet, driven by the illegal trade in their horns, literally worth more than their weight in gold in the black market, rhinoceros are on their way to extinction. This Office, along with our partners at the Department of Justice’s Environmental and Natural Resources Division, as well as the U.S. Fish and Wildlife Service, will continue to combat the illegal trade of rhinoceros horns fueling the senseless poaching of this critically endangered animal.”
Acting Assistant Attorney General Wood said, “The defendant and his co-conspirators are alleged to have engaged in a scheme to illegally traffic in the horns of highly protected rhinoceros. Illegal wildlife trafficking is a serious crime under federal law and should be vigorously prosecuted.”
Acting U.S. Fish & Wildlife Service Director Jim Kurth said, “Illegal trafficking like that allegedly conducted by the defendant is fueling the unprecedented slaughter of wild rhinos. In Africa, a rhino is currently poached every eight hours - a rate that threatens to make the rhino extinct in the wild in less than 15 years. Our Special Agents will continue to work with the Justice Department to aggressively investigate and secure the prosecutions of individuals and criminal organizations engaged in rhino horn trafficking to protect wild populations of this imperiled species."
According to allegations contained in the indictment[1]:
From approximately 2009 to 2012, Chait and his co-conspirators purchased rhinoceros horns and taxidermy mounts in the U.S. and sought to sell them to foreign buyers in private deals, including in at least eight separate deals or attempted deals involving 15 rhinoceros horns worth an estimated $2.4 million. This included one alleged incident in which Chait personally smuggled two endangered black rhino horns to China in his luggage. Rhinoceros horn is worth more per pound than gold due to the high demand in Asia and increasing scarcity of supply.
Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. The trade in rhinoceros horn and elephant ivory has been restricted since 1976 under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 180 countries around the world.
* * *
Chait, 34, is charged in one count of conspiring to smuggle rhinoceros horns and to violate the Lacey Act. The charge carries a maximum penalty of five years in prison. The maximum 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. The case is assigned to U.S. District Judge Jesse M. Furman, before whom Chait will appear on February 27, 2017.
On June 22, 2016, Joey Chait, the Senior Auction Administrator of Auction House #1, was sentenced by the Honorable J. Paul Oetken to one year and one day for conspiring to smuggle wildlife products made from rhinoceros horn, elephant ivory, and coral with a market value of at least $1 million, and to violate the Lacey Act.
This matter is part of Operation Crash, a continuing nation-wide crackdown by the Department of the Interior’s Fish and Wildlife Service and the Department of Justice on illegal trafficking in rhinoceros horns and other wildlife crimes. A “crash” is the term for a herd of rhinoceros. This indictment represents the sixth Operation Crash case to be brought in the Southern District of New York.
An indictment contains allegations that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt.
U.S. Attorney Bharara and Acting Assistant Attorney General Wood thanked the U.S. Fish and Wildlife Service for its work in this investigation. This case is being prosecuted by the U.S. Attorney Office’s Complex Frauds and Cybercrime Unit and the Environmental Crimes Section of the Department of Justice. Assistant U.S. Attorney Elizabeth Hanft and Senior Litigation Counsel Richard A. Udell with Department of Justice’s Environmental Crimes Section in Washington, D.C. are in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Managing Director of Investment Bank Sentenced to 3 Years in Prison for Insider TradingRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that SEAN STEWART, a former managing director at an investment advisory firm headquartered in Manhattan, was sentenced today to 36 months in prison by U.S. District Judge Laura Taylor Swain for tipping his father and co-defendant Robert Stewart with inside information about five health care company mergers and acquisitions before they were publicly announced. SEAN STEWART was convicted after a jury trial that ended on August 17, 2016.
Manhattan U.S. Attorney Preet Bharara said: “As proven at trial, Sean Stewart used his position as an investment banker to feed confidential inside information about clients to his father so that he could profit illegally from well-timed trades. Despite his various efforts to cover-up his scheme, including claiming he did not recognize his own father’s name on a FINRA list of those who had traded in advance of an acquisition, Stewart has been held to account by a jury and sentenced to three years in federal prison. This case and today’s sentence is a victory for all who believe in a fair securities market.”
According to the allegations contained in the Indictment as well as the evidence presented during trial:
In early 2011, SEAN STEWART, who at the time held the position of Vice President in the Healthcare Investment Banking Group of a global bank headquartered in Manhattan (“Investment Bank A”), began tipping his father, Robert Stewart, with material nonpublic information about upcoming mergers and acquisitions, including with the names of the companies that were acquisition targets, both when the target was an Investment Bank A client and when the bank represented the acquirer, as well as with information that indicated the likely timing of an upcoming deal.
The first of these deals involved the acquisition of Kendle International Inc. by INC Research, LLC, which was announced publicly on May 4, 2011. SEAN STEWART worked on the deal, representing Kendle. Robert Stewart made about $7,900 in profits on purchases of Kendle stock executed in February and March of 2011. When questioned by the Securities and Exchange Commission about his Kendle trades in May 2013, Robert Stewart reported that he used the proceeds of those trades to pay expenses related to SEAN STEWART’s June 2011 wedding.
The second deal about which SEAN STEWART tipped Robert Stewart was the acquisition of Kinetic Concepts, Inc. (“KCI”) by Apax Partners, announced on July 13, 2011. Although Robert Stewart purchased some stock in KCI based on SEAN STEWART’s tip, he sold that stock before the acquisition was announced, around the same time that SEAN STEWART learned the Financial Industry Regulatory Authority (“FINRA”) was conducting an inquiry into Robert Stewart’s Kendle trading.
Also around this time, in the spring of 2011, Robert Stewart expressed a concern to co-conspirator Richard Cunniffe that Robert Stewart was “too close to the source” to be trading in KCI stock his own account, and asked Cunniffe to make purchases of KCI call options for Robert Stewart in Cunniffe’s brokerage account. Cunniffe agreed to do so, and also mirrored for his own benefit the KCI trades that Robert Stewart was directing.
In connection with the FINRA inquiry, FINRA prepared a list of persons and entities that had traded in advance of the Kendle deal. The list included Robert Stewart’s name. When Investment Bank A asked SEAN STEWART whether he knew anyone on the list, he initially denied recognizing the name of his father; later, when confronted by lawyers from Investment Bank A, SEAN STEWART acknowledged that his father was on the list but told a series of lies designed to make it seem as if Robert Stewart had independently decided to invest in Kendle. SEAN STEWART told these lies one day after meeting with his father to apprise his father of the FINRA inquiry and to get their stories straight.
When the KCI/Apax Partners deal was announced, Robert Stewart and Cunniffe reaped profits totaling approximately $107,790. At around this time, Robert Stewart told Cunniffe that the source of the KCI tip and the earlier Kendle tip had been Robert’s son. Later, around the spring of 2012, Robert Stewart clarified for Cunniffe that the son in question was SEAN STEWART, who worked on the “sell side” on Wall Street.
In October 2011, SEAN STEWART left Investment Bank A. A few months later, he joined an investment banking advisory firm headquartered in Manhattan (“Investment Bank B”) as a managing director.
During SEAN STEWART’s tenure with Investment Bank B, based on tips concerning nonpublic acquisition-related information supplied by SEAN STEWART, Robert Stewart had Cunniffe conduct options trading in advance of the public announcements of three more deals: (1) the acquisition of Gen-Probe Inc. by Hologic, Inc., announced on April 30, 2012; (2) the acquisition, by tender offer, of Lincare Holdings Inc. by Linde AG, announced on July 1, 2012; and (3) the acquisition of CareFusion Corp. by Becton, Dickinson & Co. (“Becton”), announced on October 5, 2014. Investment Bank B represented Hologic in connection with its acquisition of Gen-Probe; Linde in connection with its acquisition of Lincare; and CareFusion in connection with its acquisition by Becton. The profits that Robert Stewart and Cunniffe reaped from illegal insider trading in advance of the announcements of these three deals totaled over $1 million.
During the course of the scheme, SEAN STEWART became aware that his father was having financial problems. Rather than loan his father money, SEAN STEWART gave his father stock tips, the proceeds of which Robert Stewart used to benefit himself and his son.
In March and April of 2015, Cunniffe, who was then cooperating with the Government, recorded meetings he had with Robert Stewart. During one such meeting, Robert Stewart accepted a payment of $2,500 cash from Cunniffe, which was the balance of the proceeds owed to Robert Stewart for profitable trading executed in Cunniffe’s account in advance of the CareFusion acquisition announcement. Also during this meeting, Robert Stewart admitted that SEAN STEWART once chastised him for failing to make use of a tip, saying, “I can’t believe I handed you this on a silver platter and you didn’t invest in it.”
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In addition to his prison sentence, SEAN STEWART, 35, of New York, New York, was sentenced to three years of supervised release, which includes one year of home detention. Judge Swain will set a restitution amount at a future proceeding.
Robert Stewart pled guilty on August 12, 2015, to one count of conspiracy to commit securities fraud and fraud in connection with a tender offer and was sentenced to four years’ probation, with the first year to be served in home detention, and $150,000 in forfeiture.
Richard Cunniffe pled guilty on May 12, 2015, to one count of conspiracy to commit securities fraud and fraud in connection with a tender offer, one count of conspiracy to commit wire fraud, three counts of securities fraud, and one count of fraud in connection with a tender offer.
Mr. Bharara praised the investigative work of the FBI and also thanked the Securities and Exchange Commission.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Sarah K. Eddy and Brooke E. Cucinella are in charge of the prosecution.
Michigan Art Dealer Sentenced to More Than 3 Years in Prison for Defrauding Collectors of $1.45 Million Through Sale of Forged ArtworksRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that ERIC IAN HORNAK SPOUTZ, a/k/a “Robert Chad Smith,” a/k/a “John Goodman,” a/k/a “James Sinclair,” was sentenced today to 41 months in prison by U.S. District Judge Lewis A. Kaplan for wire fraud charges arising out of his sale of dozens of forged artworks purportedly by renowned American artists such as Willem De Kooning, Franz Kline, and Joan Mitchell.
Manhattan U.S. Attorney Preet Bharara said: “Eric Spoutz made a lucrative ‘career’ selling forged art as originals from American masters like De Kooning, Kline and Mitchell. From creating fake documents to assuming new identities, Spoutz used the full palette of deception to complete his decade-long work of fraud, swindling art collectors out of more than a million dollars. Now, thanks to the dedicated work of the FBI and the prosecutors in my Office, Spoutz will spend time in a federal prison.”
According to the allegations contained in the criminal complaint and information and other documents in the public record, and statements made in court:
Since at least 2006, SPOUTZ engaged in a fraudulent scheme to sell works of art he falsely claimed were by well-known artists, using forged documents to convince buyers of the authenticity of those works. During the course of the scheme, SPOUTZ sold dozens of fraudulent works of art – which he attributed to, among others, Willem De Kooning, Franz Kline, and Joan Mitchell – through various channels, including auction houses and on EBay.
SPOUTZ was publicly accused of selling forged works of art as early as 2005, after which he began selling them under various aliases, particularly “Robert Chad Smith” and “John Goodman.” To deceive his victims into believing the works of art were authentic, SPOUTZ created and provided forged receipts, bills of sale, and letters from deceased attorneys and other individuals.
These documents falsely indicated that SPOUTZ, in the guise of one of his false identities, had inherited or purchased dozens of works by these artists. Despite his efforts to create false histories for the artwork, investigators identified multiple inconsistencies and errors in SPOUTZ’s forged provenance documents. Many of the purported transactions took place before SPOUTZ was born, and the forged letters included nonexistent addresses both for the purported sender and various parties referenced as sources of the artworks. SPOUTZ also consistently used a single distinctive typesetting when forging documents purportedly authored by entirely different art galleries in different decades regarding unrelated transactions. In one instance, investigators located the original letter used by SPOUTZ as a model for one of his forgeries in a collection at a private university, which holds letters from the individual whose identity SPOUTZ used to create a false story of inheritance.
In total, SPOUTZ stole at least $1,450,000 from his victims over the course of a decade of fraudulent art sales.
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In addition to the prison sentence, SPOUTZ, 33, of Mount Clemens, Michigan, was sentenced to three years of supervised release. Judge Kaplan also ordered SPOUTZ to forfeit $1,450,000 in ill-gotten gains and to pay restitution in the amount of $154,100.
Mr. Bharara praised the outstanding investigative work of the FBI’s Art Crime Team.
The case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit. Assistant United States Attorney Andrew C. Adams is in charge of the prosecution.
Father and Son Sentenced in Manhattan Federal Court for Market Manipulation SchemeRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JOHN GALANIS and his son DEREK GALANIS were each sentenced today to six years in prison for manipulating the market for Gerova Financial Group, Ltd. (“Gerova”), a publicly traded company listed on the New York Stock Exchange, and defrauding the shareholders of that company. JOHN GALANIS and DEREK GALANIS each pled guilty to one count of conspiracy to commit securities fraud and one count of securities fraud, on July 20, 2016, and August 15, 2016, respectively. Both were sentenced today by United States District Judge P. Kevin Castel.
U.S. Attorney Preet Bharara said: “John and Derek Galanis conspired to have more than $70 million worth of stock issued, hiding Jason Galanis’s control of those shares, so that they could cash out at the expense of unwitting victim investors. Today, they have been sentenced to prison for their securities fraud.”
According to the allegations contained in the Indictment filed against JOHN GALANIS, DEREK GALANIS, and their co-conspirators, and statements made in related court filings and proceedings:
The Gerova Scheme
From 2009 to 2011, JOHN GALANIS, DEREK GALANIS, and co-conspirators Jason Galanis, Gary Hirst, Ymer Shahini, and Gavin Hamels, engaged in a scheme to defraud the shareholders of Gerova, and the investing public, by effecting securities transactions in Gerova stock for the purpose of conferring millions of dollars of undisclosed remuneration on the co-conspirators, without adequate disclosure of Jason Galanis’s role in directing the transactions or the benefits received by Jason Galanis and his co-conspirators.
As a part of the scheme to defraud, Jason Galanis obtained sufficient control over Gerova to be able to cause Gerova to enter into transactions of his design, and for his benefit, including the issuance of Gerova stock. Jason Galanis obtained this control without causing himself to be identified as an officer or director of Gerova in order to appear to abide by an SEC-imposed bar that forbade him from holding such positions at publicly traded companies. Among other means and methods, Jason Galanis, with the assistance of Hirst, caused over five million shares of Gerova stock, which represented nearly half the company’s public float and which were intended for Jason Galanis’s ultimate benefit, to be issued to and held in the name of Ymer Shahini, who knowingly served as a foreign nominee for Jason Galanis. DEREK GALANIS recruited his longstanding friend Shahini to the scheme, telling Shahini in an email, “All we need is a foreign national we trust which is where you come in my friend.” DEREK GALANIS, JOHN GALANIS, Jason Galanis, Hirst, and Shahini understood that the purpose of the stock grant to Shahini was to disguise Jason Galanis’s ownership interest in the stock, and to evade the SEC’s regulations for issuing unregistered shares of stock.
At the same time, and as a further part of the scheme to defraud, JOHN GALANIS, with the assistance of DEREK GALANIS and the knowledge and approval of Jason Galanis, opened and managed brokerage accounts in the name of Shahini (the “Shahini Accounts”), effected the sale of Gerova stock from the Shahini Accounts, and received and concealed the proceeds, knowing that this activity was designed to conceal from the investing public Jason Galanis’s ownership of and control over the Gerova stock.
Jason Galanis, among others, also fraudulently induced investment advisers, including Gavin Hamels, to purchase shares of Gerova stock in the investment advisers’ client accounts by offering compensation and/or other benefits to the respective investment adviser. JOHN GALANIS and Jason Galanis thereafter coordinated the purchase of Gerova stock at the time, quantity, and/or price of their choosing, thus effectuating the sale of large quantities of Gerova stock from the Shahini Accounts while artificially maintaining the price of Gerova stock through match trading. Such coordinated trading served to manipulate the market for Gerova stock and deceive the investing public. In total, JOHN GALANIS, DEREK GALANIS, Jason Galanis, and their co-conspirators sold nearly $20 million worth of Gerova shares from the Shahini accounts for their own benefit.
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In addition to the prison terms, JOHN GALANIS, 73, and DEREK GALANIS, 44, were each sentenced to three years of supervised release, and each ordered to forfeit $19,038,650.53. Judge Castel will set a restitution amount for each at a future proceeding.
Jason Galanis, who pled guilty to two counts of conspiracy to commit securities fraud, one count of securities fraud, and one count of investment adviser fraud, was sentenced to a term of 135 months in prison on February 15, 2017. Jared Galanis, who pled guilty to misprision of a felony, was sentenced to a term of 150 days in prison on January 11, 2017. Gary Hirst, who was found guilty after trial of conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, and wire fraud, is scheduled to be sentenced on March 17, 2017. Defendant Ymer Shahini remains a fugitive. The allegations contained in the Indictment as to Shahini are merely accusations, and he is presumed innocent unless and until proven guilty.
Mr. Bharara praised the work of the U.S. Postal Inspection Service and the Federal Bureau of Investigation, and thanked the SEC.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais, Aimee Hector, and Rebecca Mermelstein are in charge of the prosecution.
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Manhattan U.S. Attorney Announces Federal Civil Rights Charges Against Correction Officer in Sexual Assault of Inmate at Bedford Hills Correctional Facility for WomenRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Anthony J. Annucci, Acting Commissioner of the New York State Department of Corrections and Community Supervision (“DOCCS”), announced today the unsealing of a criminal complaint charging a former New York State Correction Officer in the sexual assault of a female inmate (“Victim-1”) at the Bedford Hills Correctional Facility for Women (the “Bedford Facility”). JEFFREY GREEN, then a correction officer at the Bedford Facility, was charged with assaulting and forcing himself upon Victim-1 by licking, biting, kissing, fondling, groping, and restraining her against her will, in violation of her civil rights under the United States Constitution. GREEN was arrested today on charges contained in a Criminal Complaint and is expected to be presented in federal court later today.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Jeffrey Green, a former New York State correction officer at Bedford Hills Correctional Facility, entered a prison cell, pushed a defenseless female inmate against a wall, and sexually assaulted her. Green’s alleged predatory conduct not only betrayed his duty as an officer to protect those under his charge, but violated our Constitution. The protections of our Constitution do not end at our prisons’ walls, and when inmates’ civil rights are violated, as they allegedly were here, we will act.”
DOCCS Acting Commissioner Anthony J. Annucci said: “DOCCS has zero tolerance for any criminal activity involving staff or inmates within our facilities. This latest arrest highlights the successful investigation by the Department’s Office of Special Investigations, Westchester County District Attorney and the US Attorney’s Office for the Southern District, all cooperating in this pursuit of justice.”
According to the Complaint[1] unsealed today in Manhattan federal court:
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. The assault stopped only when GREEN was 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. Surveillance video and audio recordings from the Bedford Facility show GREEN entering Victim-1’s cell without any other correction officer the evening of March 10 and also audibly saying at one point “[y]ou ready [unintelligible] me my blow job?”
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JEFFREY GREEN, 48, of Brooklyn, New York, is charged with one count of deprivation of rights under color of law, which carries a maximum penalty of 10 years in prison.
The statutory maximum penalty 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. Bharara 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.
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.
The charges and 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 below constitute only allegations, and every fact described should be treated as an allegation.
Man Charged in Manhattan Federal Court with Multimillion-Dollar Scheme to Defraud Financial Services FirmRead the Press Release
Preet Bharara, the 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 CHRISTOPHER CANALE was charged with wire fraud, bank fraud, and aggravated identity theft for allegedly using his position at a global financial services firm (the “Firm”) to defraud the Firm out of at least $7 million over a thirteen-year period. CANALE was arrested this morning in Poughkeepsie, New York, and will be presented later today in federal court in the Southern District of New York.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Christopher Canale took advantage of his position as an accounts payable manager and used his employer’s bank accounts as his own, siphoning off millions to pay for personal expenses, including an outdoor pool, vacations, and luxury cars. Thanks to the efforts of the FBI and prosecutors in our Office, Christopher Canale’s alleged thirteen-year fraud scheme has come to an end.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “It would make most of our lives easier to know there was a large stash of cash in the bank, and we didn’t have to worry about the cost of landscaping the yard, putting in a pool or buying a luxury car. However in this case, the alleged suspect did those things using money that wasn’t his. Making matters worse, he’s accused of forging his boss’s name. The FBI is dedicated to the pursuit of those who steal from our financial community.”
According to the allegations in the Complaint unsealed today in Manhattan federal court:[1]
From 2003 to September 2016, CANALE, a former accounts payable manager at the Firm, abused his position at the Firm to embezzle at least $7 million. CANALE accomplished this fraud by making unauthorized wire transfers and by cashing checks without authorization.
In some instances, CANALE effected the fraud by inputting fake invoices and wire transfer instructions into one of the Firm’s software programs. In other instances, CANALE made checks out to petty cash, forged the name of his former supervisor on those checks, and kept the cash.
CANALE used the Firm’s funds to pay for numerous exorbitant personal expenses, including an outdoor pool, an outdoor sound system, landscaping for his home, and at least one luxury car. CANALE also paid bills for a credit card account and sent approximately $40,000 in wire transfers to another individual.
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CANALE, 47, of Poughkeepsie, New York, is charged with one count of wire fraud, which 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, and one count of bank fraud, which carries a maximum sentence of 30 years in prison and a maximum fine of $1 million or twice the gross gain or loss from the offense. CANALE is also charged with one count of aggravated identity theft, which carries a mandatory consecutive sentence of two 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.
Mr. Bharara praised the work of the FBI. He added that the investigation is continuing.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Jennifer L. Beidel is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Jason Galanis Sentenced to More Than 11 Years in Prison for Securities FraudRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JASON GALANIS was sentenced today to 135 months in prison for manipulating the market for Gerova Financial Group, Ltd. (“Gerova”), a publicly traded company listed on the New York Stock Exchange, and to defrauding the shareholders of that company. JASON GALANIS was also sentenced for defrauding the clients of an investment advisory firm. JASON GALANIS pled guilty on July 21, 2016, to two counts of conspiracy to commit securities fraud, one count of securities fraud and one count of investment adviser fraud. GALANIS was sentenced today by United States District Judge P. Kevin Castel.
U.S. Attorney Preet Bharara said: “As he previously admitted in his guilty plea, Jason Galanis swindled the shareholders and clients of Gerova Financial and Tag Virgin Islands out of tens of millions of dollars in a massive fraud scheme. Today, he was sentenced to a lengthy prison term for his participation in these fraud schemes.”
According to the allegations contained in the Indictment filed against JASON GALANIS and his co-conspirators and statements made in related court filings and proceedings:
The Gerova Scheme
From 2009 to 2011, JASON GALANIS, along with his co-conspirators John Galanis, Gary Hirst, Derek Galanis, Ymer Shahini, and Gavin Hamels, engaged in a scheme to defraud the shareholders of Gerova and the investing public by effecting securities transactions in Gerova stock for the purpose of conferring millions of dollars of undisclosed remuneration on JASON GALANIS and his co-conspirators, without adequate disclosure of JASON GALANIS’s role in directing the transactions or the benefits received by JASON GALANIS and his co-conspirators.
As a part of the scheme to defraud, JASON GALANIS obtained sufficient control over Gerova to be able to cause Gerova to enter into transactions of his design, and for his benefit, including the issuance of Gerova stock. JASON GALANIS obtained this control without causing himself to be identified as an officer or director of Gerova in order to appear to abide by an SEC-imposed bar that forbade him from holding such positions at publicly traded companies. Among other means and methods, JASON GALANIS, with the assistance of Hirst, caused over five million shares of Gerova stock, which represented nearly half the company’s public float and which were intended for JASON GALANIS’s ultimate benefit, to be issued to and held in the name of Ymer Shahini, who knowingly served as a foreign nominee for JASON GALANIS. JASON GALANIS, John Galanis, Derek Galanis, Hirst, and Shahini understood that the purpose of the stock grant to Shahini was to disguise JASON GALANIS’s ownership interest in the stock, and to evade the SEC’s regulations for issuing unregistered shares of stock.
At the same time, and as a further part of the scheme to defraud, JASON GALANIS’s co-conspirators, with his knowledge and approval, opened and managed brokerage accounts in the name of Shahini (the “Shahini Accounts”), effected the sale of Gerova stock from the Shahini Accounts, and received and concealed the proceeds, knowing that this activity was designed to conceal from the investing public JASON GALANIS’s ownership of and control over the Gerova stock.
JASON GALANIS, among others, also fraudulently induced investment advisers, including Gavin Hamels, to purchase shares of Gerova stock in the investment advisers’ client accounts by offering compensation and/or other benefits to the respective investment adviser. By causing the purchase of Gerova stock at the time, quantity, and/or price of their choosing, JASON GALANIS and others were able to, among other things, effectuate the sale of large quantities of Gerova stock from the Shahini Accounts that JASON GALANIS controlled while artificially maintaining the price of Gerova stock through coordinated match trading. Such coordinated trading served to manipulate the market for Gerova stock and deceive the investing public. As a result, JASON GALANIS and his co-conspirators reaped nearly $20 million in profits.
The Scheme to Defraud Clients of TAG Virgin Islands, Inc.
From 2007 to 2010, JASON GALANIS, along with an investment adviser named James Tagliaferri, participated in a scheme to defraud the clients of Tagliaferri’s investment advisory firm, which was called TAG Virgin Islands, Inc. (“TAG”). Often in exchange for compensation from JASON GALANIS, Tagliaferri caused TAG’s clients to invest in notes issued by entities associated with JASON GALANIS.
When obligations owed by entities associated with JASON GALANIS became due, Tagliaferri used client funds to purchase either notes issued by other entities associated with JASON GALANIS or publicly traded shares held by such entities. The funds generated were then used to pay the original obligations owed to other TAG clients. Through these securities trades, funds in client accounts of one set of TAG investors were used to pay obligations owed to a different set of TAG investors by entities associated with JASON GALANIS.
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In addition to the prison term, GALANIS, 46, was sentenced to three years of supervised release, and was ordered to forfeit $37,591,681.10, as well as his interests in properties in New York and Los Angeles. Judge Castel will set a restitution amount at a future proceeding.
JASON GALANIS’s co-defendant Jared Galanis, who pled guilty to misprision of a felony in connection with the Gerova scheme, was sentenced to a term of 150 days in prison on January 11, 2017. John Galanis and Derek Galanis, each of whom pled guilty to conspiracy to commit securities fraud and securities fraud in connection with the Gerova scheme, are scheduled to be sentenced on February 16, 2017. Gary Hirst, who was found guilty after trial of conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, and wire fraud, is scheduled to be sentenced on March 17, 2017.
Defendant Ymer Shahini remains a fugitive. The allegations contained in the Indictment as to Shahini are merely accusations, and he is presumed innocent unless and until proven guilty.
Mr. Bharara praised the work of the U.S. Postal Inspection Service and the Federal Bureau of Investigation, and thanked the SEC.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais, Aimee Hector, and Rebecca Mermelstein are in charge of the prosecution.
9 Defendants Charged in White Plains Federal Court with Narcotics Offenses in Orange CountyRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), 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”), George Beach, the Superintendent of the New York State Police (“NYSP”), Carl E. Dubois, the Sheriff of Orange County, and Daniel C. Cameron, Chief of the City of Newburgh Police Department, today announced the unsealing of two Indictments charging 10 members of two drug trafficking organizations based in Orange County, New York, with conspiracy to distribute cocaine. Additionally, two other members were arrested on separate complaints. In a coordinated operation earlier today, federal, state, and local law enforcement officers arrested eight defendants in Orange County and the Bronx. One of the charged defendants had already been arrested and presented. Most of the defendants are expected to be presented in White Plains federal court today before U.S. Magistrate Judge Judith C. McCarthy.
Manhattan U.S. Attorney Preet Bharara stated: “The narcotics charges brought today strike at the heart of an entrenched group of alleged drug dealers operating out of Newburgh and the surrounding areas of Orange County. With today’s charges, made possible by the outstanding work of the FBI, ICE HSI, and our state and local law enforcement partners, we seek to help stem the flow of cocaine in Orange County.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. stated: “The ultimate goal in an investigation like this is to take out the leadership of these groups. It’s not just the drugs that take a toll on the communities where these subjects were operating, it’s the crime accompanying the drugs that impacts everyone. The FBI Hudson Valley Safe Streets Task Force and our law enforcement partners will continue to do all we can to stop the spread of the drug trade and the criminals who support it.”
HSI Special Agent-in-Charge Angel Melendez said: “With many of the individuals arrested today facing up to 40 years in prison if convicted, we have sent a clear message to drug dealers in Orange County that they should immediately seek other employment. HSI will remain steadfast in its commitment to working with its law enforcement partners to dismantle these drug trafficking organizations that destroy our neighborhoods with their poison.”
NYSP Superintendent George P. Beach II said: “Today’s arrests are a result of an aggressive strategy to stop illegal drug trafficking and keep cocaine and other deadly substances off our streets. Together, with our partners in federal, local and state law enforcement, we can combat the infiltration of narcotics into our communities and continue to put dangerous individuals like these 11 criminals behind bars.”
Orange County Sheriff Carl E. DuBois stated: “These arrests prove once again that agencies cooperating with each other benefit the communities they serve. The FBI Safe Streets Task Force has been instrumental in dismantling drug networks in the Hudson Valley area, and the Orange County Sheriff’s Office is proud to participate with and support the FBI, the U.S. Attorney’s office and other participating agencies.”
City of Newburgh Police Chief Daniel C. Cameron stated: “Collaborative efforts like this are critical to targeting high level narcotics traffickers who plague our cities. When we all work together in this capacity, we can truly improve the quality of life for the residents in Newburgh, Orange County, and across the state.”
As alleged in the Indictments unsealed today in White Plains federal court[1]:
RIGOBERTO DIAZ, JAIRO ESQUIVIAS, a/k/a “Jalisco,” JUAN ROMERO, SAUL GARZON, ANDRES RIOS, and JUAN SANCHEZ PEREZ are charged in an indictment with conspiring to distribute and possess with intent to distribute 500 grams of cocaine, from 2013 to September 2016. DIAZ and his alleged co-conspirators distributed cocaine in and around the City of Newburgh, New York, and other locations in Orange County, New York.
ADAN SOLIS-TEYO, a/k/a “Adan Hernandez,” CHRISTOPHER POOL, LUIS SANCHEZ, a/k/a “Eito,” and LUIS MEJIA, a/k/a “Miguel Contreras,” are charged in an indictment with conspiring to distribute and possess with intent to distribute 500 grams of cocaine, from 2014 to February 2017. SOLIS-TEYO and his alleged co-conspirators distributed cocaine in and around the City of Newburgh, New York, and in the Bronx, New York.
WILLIAM PERELDA, a/k/a “William Peralda,” a/k/a “Arturo Pelez-Gonzalez,” was charged by complaint and arrested on February 11, 2017. PERELDA is charged with conspiracy to distribute and possess with intent to distribute 500 grams and more of cocaine. PERELDA is also charged with five counts of distribution of cocaine based on sales of cocaine to a cooperating witness.
All of the defendants except SOLIS-TEYO and MEJIA were arrested today.
* * *
Charts containing the names of the defendants who were charged today, and the charges and maximum penalties they face, are attached. The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the respective judges.
Mr. Bharara praised the outstanding investigative work of the FBI, the Department of Homeland Security, Homeland Security Investigations, the New York State Police, the Orange County Sheriff’s Department, the City of Newburgh Police Department, and the Village of Port Chester Police Department.
These cases are being handled by the Office’s White Plains Division. Assistant United States Attorneys Jennifer Burns, Lauren Schorr, and Olga Zverovich are in charge of the prosecutions.
The charges contained in the Indictments and Complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
CHARGE(S)
DEFENDANT(S)
MAXIMUM PENALTIES
Narcotics conspiracy – Cocaine
(conspiracy to distribute and possess with intent to distribute cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) & 841(b)(1)(B))
RIGOBERTO DIAZ, JAIRO ESQUIVIAS, a/k/a “Jalisco,” JUAN ROMERO, SAUL GARZON, ANDRES RIOS, and JUAN SANCHEZ PEREZ, ADAN SOLIS-TEYO, a/k/a “Adan Hernandez,” CHRISTOPHER POOL, LUIS SANCHEZ, a/k/a “Eito,” LUIS MEJIA, a/k/a “Miguel Contreras,” WILLIAM PERELDA, a/k/a “William Peralda,” a/k/a “Arturo Pelez-Gonzalez,”
40 years in prison
Mandatory minimum: Five years in prison
Narcotics distribution
(distribution of cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) & 841(b)(1)(C))
WILLIAM PERELDA, a/k/a “William Peralda,” a/k/a “Arturo Pelez-Gonzalez”
40 years in prison
Narcotics distribution
(distribution of cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) & 841(b)(1)(C))
WILLIAM PERELDA, a/k/a “William Peralda,” a/k/a “Arturo Pelez-Gonzalez”
40 years in prison
Narcotics distribution
(distribution of cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) & 841(b)(1)(C))
WILLIAM PERELDA, a/k/a “William Peralda,” a/k/a “Arturo Pelez-Gonzalez”
40 years in prison
Narcotics distribution
(distribution of cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) & 841(b)(1)(C))
WILLIAM PERELDA, a/k/a “William Peralda,” a/k/a “Arturo Pelez-Gonzalez”
40 years in prison
Narcotics distribution
(distribution of cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) & 841(b)(1)(C))
WILLIAM PERELDA, a/k/a “William Peralda,” a/k/a “Arturo Pelez-Gonzalez”
40 years in prison
[1] As the introductory phrase signifies, the entirety of the text of the Indictments and the descriptions of the Indictments set forth below constitute only allegations, and every fact described should be treated as an allegation.
Vermont Man Pleads Guilty in Manhattan Federal Court to A Fatal Shooting in Lower ManhattanRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that FRANK JENKINS, 23, pled guilty today before the Honorable John G. Koeltl to shooting and killing Rashaun Nicholson on or about December 28, 2014, in furtherance of a narcotics distribution conspiracy. The charges to which JENKINS pled guilty are set forth in a seven-count superseding indictment (the “Indictment”), which was filed in December 2015.
Manhattan U.S. Attorney Preet Bharara said: “Frank Jenkins not only supplied a large part of the New York City-to-Bennington pipeline of crack and heroin, but as part of that drug business, he shot and killed a man in lower Manhattan, just a few blocks from the Manhattan federal courthouse. Today, in that courthouse, Jenkins pled guilty to his crimes and faces a lengthy prison sentence.”
As alleged in the Superseding Indictment and in other documents previously filed in Manhattan federal court and in statements made during court proceedings:
On December 28, 2014, in connection with a narcotics trafficking offense, FRANK JENKINS shot and killed Rashaun Nicholson in the vicinity of 78 Catherine Street, New York, New York. The narcotics trafficking conspiracy in which JENKINS was a participant involved the sale of controlled substances, including crack cocaine and heroin, in Vermont and elsewhere. Specifically, between 2014 and 2015, JENKINS, together with other members of the conspiracy, obtained crack and heroin from locations in New York City, including Manhattan and the Bronx, and then transported the crack and heroin to Vermont, for distribution in and around Bennington, Vermont.
As a result of his plea, JENKINS faces a mandatory minimum sentence of 10 years in prison, and a maximum sentence of life. JENKINS is scheduled to be sentenced by Judge Koeltl on June 2, 2017, at 10:00 a.m.
* * *
Mr. Bharara praised the outstanding investigative work of the Bureau of Alcohol, Tobacco, Firearms and Explosives, the New York City Police Department, the United States Marshals, the Vermont State Police, and the Bennington Police Department. Mr. Bharara also thanked the United States Attorney’s Office for District of Vermont for assisting his Office at all stages of the investigation.
The prosecution is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorneys Michael Gerber, Hadassa Waxman, Andrew Adams, and Margaret Graham are in charge of the prosecution.
U.S. Attorney Files Suit and Reaches Agreement with Real Estate Developer to Increase Accessibility at Three Manhattan Apartment BuildingsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has settled a federal civil rights lawsuit against ALBANESE ORGANIZATION, INC. (“ALBANESE”) and three of its affiliates, NORTH END ASSOCIATES, LLC, RIVER TERRACE ASSOCIATES, LLC, and CHELSEA ASSOCIATES, LLC (together, the “DEVELOPER DEFENDANTS”), by consent decree. Under the settlement, ALBANESE has agreed to make retrofits at The Verdesian, a rental complex located at 211 North End Avenue in Manhattan, in order to comply with the federal Fair Housing Act (“FHA”) and make The Verdesian more accessible to individuals with disabilities. The DEVELOPER DEFENDANTS also have agreed to inspect two additional rental complexes in Manhattan, The Solaire and The Vanguard Chelsea, and, where necessary, make retrofits at those buildings as well. Additionally, ALBANESE commits in the consent decree to establish procedures to ensure that its ongoing and future development projects will comply with the accessibility requirements of the FHA. Finally, as part of the consent decree, the DEVELOPER DEFENDANTS have agreed to provide up to $500,000 to compensate aggrieved persons and pay a civil penalty of $45,000. The consent decree was approved late yesterday by U.S. District Judge Jed S. Rakoff.
Manhattan U.S. Attorney Preet Bharara said: “This lawsuit – the fifteenth of its kind filed in recent years – is another step in our ongoing effort to ensure equal accessibility for New Yorkers with disabilities. Today’s settlement not only provides compensation for those who have been aggrieved by existing inaccessible conditions, but also provides that Albanese and its affiliates will implement procedures to guarantee accessibility at The Verdesian, The Solaire, The Vanguard Chelsea, and future development projects.”
The FHA’s accessible design and construction provisions require new multifamily housing complexes constructed after January 1993 to have basic features accessible to persons with disabilities. According to the allegations in the Complaint, Verdesian, a rental complex with 253 rental units, was designed and constructed with numerous inaccessible features, including excessively high thresholds interfering with accessible routes in the public and common areas as well as into and within individual units, and insufficient widths, clearance, and clear floor space in bedrooms, bathrooms, closets, and kitchens for maneuvering by people who use wheelchairs.
Under the settlement, ALBANESE agrees to make extensive retrofits at The Verdesian to make it accessible. The DEVELOPER DEFENDANTS also agree to arrange for inspections of two additional rental complexes in Manhattan, The Solaire, located at 20 River Terrace, and The Vanguard Chelsea, located at 77 West 24th Street, and, where necessary, to make retrofits at those properties. Together, The Verdesian, The Solaire, and The Vanguard Chelsea contain more than 800 rental apartments.
The settlement also requires ALBANESE to establish procedures to ensure FHA compliance at its ongoing and future development projects, including retaining an FHA compliance consultant to ensure that each residential building developed by ALBANESE will, as constructed, comply with the FHA. The FHA consultant also will conduct a site visit to identify non-compliant conditions and recommend appropriate solutions prior to the completion of construction. In addition, ALBANESE agrees to institute policies and training to ensure that its employees and agents will comply with the FHA’s accessibility requirements.
Finally, the settlement requires the DEVELOPER DEFENDANTS to provide up to $500,000 to compensate aggrieved persons. The DEVELOPER DEFENDANTS also agree to pay a civil penalty of $45,000.
The government’s lawsuit also asserts claims against the architect of The Verdesian, SLCE Architects, LLP. Those claims remain pending.
Aggrieved individuals may be entitled to monetary compensation from the fund created through today’s settlement. Aggrieved individuals may include those who:
-
Were discouraged from living at The Verdesian, Vanguard Chelsea, or The Solaire because of the lack of accessible features;
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Have been hurt in any way by the lack of accessible features at The Verdesian, Vanguard Chelsea, or The Solaire;
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Paid to have an apartment at The Verdesian, Vanguard Chelsea, or The Solaire made more accessible to persons with disabilities; or
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Otherwise were discriminated against on the basis of disability at The Verdesian, Vanguard Chelsea, or The Solaire as a result of the inaccessible design and construction of the properties.
Any individual who may be entitled to compensation should file a claim by contacting the Civil Rights Complaint Line at (212) 637-0840, using the Civil Rights Complaint Form available on the United States Attorney’s Office’s website http://www.justice.gov/usao/nys/civilrights.html, or by sending a written claim to:
U.S. Attorney’s Office, Southern District of New York
86 Chambers Street, 3rd Floor
New York, New York 10007
Attention: Chief, Civil Rights Unit
The case is being handled by the Office’s Civil Rights Unit. Assistant U.S. Attorneys Jessica Jean Hu, Natasha W. Teleanu, Li Yu, and Jacob Lillywhite are in charge of the case.
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Former Baruch College Basketball Coach and Athletics Official Charged with EmbezzlementRead the Press Release
Preet Bharara, the 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 MACHLI JOSEPH was arrested this morning and charged in Manhattan federal court with embezzling more than half a million dollars in funds intended for Baruch College for the rental of their athletic facilities. JOSEPH was arrested by ED-OIG agents in New Jersey. He will be presented before Magistrate Judge Gabriel Gorenstein in Manhattan this afternoon.
Manhattan U.S. Attorney Preet Bharara said: “Machli Joseph, Baruch College’s former basketball coach, allegedly drew up his own game plan for fraud, stealing more than half a million dollars meant for the college that he instead spent on himself. Embezzling money from a public college is no game, and for allegedly taking criminal advantage of his control over Baruch’s basketball courts, Joseph will now face federal charges in a court of law. We thank the New York State Inspector General and Department of Education Office of Inspector General for their excellent investigative work in this case.”
New York State Inspector General Catherine Leahy Scott said: “This once-trusted college athletic official allegedly abused his position and the facilities he was entrusted with to steal more than a half million dollars in public funds to use for his own personal benefit. These crimes, as alleged, were clearly symptoms of the problematic policies and oversight throughout CUNY facilities that I am currently investigating as a separate matter. I truly believe critical criminal cases like this one today come together only through effective law enforcement partnerships, and I thank U.S. Attorney Bharara and Agent-in-Charge Hickey and their offices for their work on this case.”
ED-OIG Special Agent-in-Charge Brian M. Hickey said: “Today’s action alleges that Mr. Joseph knowingly abused his position of trust to steal funds from the very ones he promised to serve – Baruch College students. That is unacceptable. As the law enforcement arm of the U.S. Department of Education, we will continue to aggressively pursue those who misappropriate education funds for their own purposes. America’s students and taxpayers deserve nothing less.”
According to the allegations in the Complaint filed yesterday in Manhattan federal court[1]:
MACHLI JOSEPH served as an athletic department official at Baruch College between 2002 and 2016. He served as Baruch’s women’s basketball head coach between 2004 and 2014, its men’s basketball coach in 2002, as assistant athletic director from 2003 to 2011 and as associate athletic director from 2011 until August 2016. At times when the Baruch College gym was not being used by the school’s athletic teams, it could be rented out to outside parties. In his administrative capacity, JOSEPH had sole control over those gym rentals and their scheduling.
On numerous occasions between 2010 and 2016, JOSEPH rented the gym to outside parties, ostensibly on behalf of Baruch College. In instructing the renting parties on how to provide payment, however, JOSEPH directed that payment be made to entities that were not, in fact, connected to Baruch College. Instead, they were entities with bank accounts over which JOSEPH had personal control, some of which merely sounded like Baruch-affiliated entities. On several occasions, JOSEPH simply directed that payment be made directly to himself or individual associates of his. Many of these funds were ultimately spent on personal expenses and items for JOSEPH and his family, including renovations to his home in New Jersey. All told, and as alleged in the Complaint, the scheme improperly diverted approximately $600,000 of payments intended for Baruch College.
* * *
JOSEPH, 42, of Elizabeth, New Jersey, has been charged with one count of embezzlement and misapplication concerning a program receiving federal funds. The charge carries a maximum term of 10 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Bharara praised the investigative work of ED-OIG and the New York State Inspector General’s Office, and noted that the investigation is continuing.
This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys Martin S. Bell and Catherine E. Geddes are in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Emergency Medical Technician for the Fire Department of the City of New York Arrested for Possessing and Receiving Child PornographyRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced the arrest of ALFRED PABON, an Emergency Medical Technician with the Fire Department of the City of New York, stemming from his possession and receipt, as well as distribution of child pornography. PABON was arrested today and presented in Manhattan federal court before U.S. Magistrate Judge Gabriel W. Gorenstein.
U.S. Attorney Preet Bharara said: “As alleged, Alfred Pabon frequented online chat groups for the explicit purpose of finding children and child pornography. In one his chats, Pabon allegedly expressed interest in taking a trip to Mexico in search of ‘something teenish.’ Thanks to the work of Homeland Security Investigations, Pabon’s alleged predatory search for children and child pornography has been brought to an end.”
HSI Special Agent-in-Charge Angel Melendez said: “Using online chat groups to post photos and videos of children being sexually exploited is a sickening crime made even more disturbing when it is committed by an individual who holds the public's trust as a member of the FDNY. Every day HSI agents stationed around the country, use innovative techniques to search the internet and chat rooms to bring these pedophiles to justice and keep our children safe.”
According to the Complaint filed today in Manhattan federal court[1]:
From in or about November 2015, up to and including at least in or about January 2017, ALFRED PABON, an Emergency Medical Technician for the Fire Department of the City of New York, posted images and videos containing child pornography in chat groups of an online messaging application. The chat groups were used almost exclusively to trade child pornography, discuss child pornography, and/or discuss engaging in sexual activity with minors. In or about December 2015, PABON exchanged private messages through the online messaging application with an undercover HSI Special Agent (“UC-1”). Through these exchanges, PABON, using a particular account username (the “Pabon Account”) indicated to UC-1 that he was interested in a trip to Mexico and was looking for “something teenish.” PABON posted an image of two girls, who appear to be prepubescent minors, posing nude on a bed as an example of the type of girls in whom he was interested. In August 2016, a second undercover HSI Special Agent (“UC-2”) observed additional postings by PABON in another online chat room, at least one of which appeared to include an image of child pornography. UC-2 later used a link that PABON had posted to download approximately 33 videos, most of which contained child pornography.
PABON was arrested at his residence in the Bronx, New York. On the morning of his arrest, he admitted to law enforcement that he was the user of the Pabon Account and had used that account to copy and forward images and videos containing child pornography as recently as within the last month.
* * *
ALFRED PABON, 49, of the Bronx, New York, is charged with one count of distribution and receipt of child pornography, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison, and one count of possession of child pornography, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Any individuals who believe they have information concerning ALFRED PABON that may be relevant to the investigation should contact HSI at its toll-free hotline: 1-866-DHS-2ICE; TTY for hearing impaired: (802) 872-6196. This hotline is staffed around-the-clock by investigators.
Mr. Bharara praised the efforts of HSI in this investigation. He added that the investigation is continuing.
The prosecution is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Lara Pomerantz 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.
Defendants Charged in $5 Million Investor Fraud Scheme Relating to Fuel Cell CompanyRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an indictment charging GEORGE DOUMANIS, EMANUEL PANTELAKIS, a/k/a “Manny,” and DANNY PRATTE with orchestrating a scheme to defraud investors of at least approximately $5 million.
DOUMANIS and PANTELAKIS will be presented and arraigned later today before United States Magistrate Judge Gabriel W. Gorenstein. PRATTE is expected to surrender today to the FBI in Denver, Colorado. United States District Judge Andrew L. Carter Jr. will hold an initial conference in the case on March 6, 2017, at 1:00 pm.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, George Doumanis, Emanuel Pantelakis, and Danny Pratte deceived investors with a fraudulent plan to invest in fuel cell technology. In reality, all they were allegedly fueling was their own greed-inspired scheme to bilk investors and use the money to pay credit card bills, for a Mercedes Benz, and a horse trainer. Doumanis and Pantelakis allegedly committed their fraud scheme after being banned for life from the securities industry by the SEC and FINRA.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Doumanis, Pantelakis, and Pratte are charged with defrauding Terminus investors by selling them shares of a product that was, essentially, nonexistent. They allegedly did so while intentionally misrepresenting to investors the rate of commission individuals acting as broker-dealers would receive for Terminus stock sold. In the end, as alleged, nearly three quarters of the money obtained by investors was swindled for the collective benefit of those involved. Despite the fact that Doumanis and Pantelakis had been disciplined in the past for their role in other fraudulent securities-related activities, they allegedly participated in this scheme undeterred. Investors deserve to be told the truth, plain and simple, and we’re committed to uncovering it.”
According to the Indictment unsealed today in Manhattan federal court:[1]
In September 2003, DOUMANIS was convicted in the United States District Court for the Southern District of Florida of conspiring to commit securities fraud, wire fraud, and mail fraud. In addition, in or about June 2005, as a result of an action brought by the United States Securities and Exchange Commission (“SEC”), DOUMANIS was permanently barred from, among other things, participating in any offering of any penny stock and from any association with any securities broker or dealer.
In March 2008, PANTELAKIS was permanently barred by the Financial Industry Regulatory Authority (“FINRA”), a self-regulatory body for the securities industry, from association with any FINRA member in any capacity, following allegations that he “fraudulently misrepresented and omitted material facts to public customers in connection with the sale of securities.”
From at least in or about February 2008 through at least in or about 2014, DOUMANIS, PANTELAKIS, and PRATTE engaged in a fraudulent scheme to defraud investors by inducing them to purchase shares of Terminus Energy, Inc. (“Terminus”), through false and misleading representations and then misappropriating the victims’ funds for their own purposes. PRATTE was the Chief Executive Officer of Terminus, a company that was purportedly working to develop a “fuel cell,” a type of alternative energy source. As set forth in more detail below, contrary to representations made to potential investors, Terminus never had a working fuel cell prototype, was never close to manufacturing a commercially viable fuel cell, and never sold any fuel cells.
Between 2008 and 2011, Terminus entered into a number of contractual agreements with third parties, the stated purpose of which was to develop a fuel cell. In each and every case, however, Terminus made only one or two payments on these contracts before ceasing payments. As a result, the third parties ceased work pursuant to the contracts and terminated the agreements.
Notwithstanding the utter lack of progress and the cancellation of Terminus’s contractual relationships, DOUMANIS, PANTELAKIS, and PRATTE drafted and caused Terminus to distribute false and misleading press releases, private placement memorandums, business plans, and other documents that touted the existence of a fuel cell, the existence of Terminus’s contractual relationships, and the use of investor proceeds to make payments on the contracts.
In addition, DOUMANIS, PANTELAKIS, and PRATTE drafted and distributed private placement memorandums that falsely stated that registered broker-dealers would be paid no more than a 10 percent sales commission plus three percent unaccountable expenses for all Terminus shares sold through their efforts. In truth, unregistered salespeople sold Terminus shares in return for undisclosed commissions far in excess of 13 percent.
Rather than use investor funds as promised, DOUMANIS, PANTELAKIS, and PRATTE misappropriated the money for their own purposes. Of the more than approximately $5 million raised from investors: (a) PRATTE received at least $990,000; DOUMANIS, certain entities affiliated with DOUMANIS, and certain of his family members received at least $570,000, a portion of which was utilized for items such as making payments to various credit cards and payments toward DOUMANIS’s residential mortgage; (c) PANTELAKIS and certain of his family members received at least $420,000, a portion of which was utilized to make payments to various credit cards and for his wife’s Mercedes-Benz; (d) one unregistered salesperson (the “Salesperson”) received payments of at least $540,000, an entity associated with the Salesperson received at least $100,000, and a horse trainer working for the Salesperson received at least $132,000; and (e) other unregistered brokers selling Terminus shares collectively received payments of at least $1,019,624. Thus, in total more than 70% of the investor funds obtained by Terminus were misappropriated by DOUMANIS, PANTELAKIS, and PRATTE, the defendants, or used to pay commissions to unregistered salespeople.
* * *
DOUMANIS, 58, of Rocky Point, New York, was arrested today in Suffolk County. PANTELAKIS, 42, of Flushing, New York, was arrested today in Queens. PRATTE, 62, of Columbia, Missouri, is expected to turn himself in to the FBI in Denver, Colorado, today. Each of the defendants are charged with one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison; and one count of securities fraud, one count of conspiracy to commit mail and wire fraud, and one count of wire fraud, each of which carries a maximum sentence of 20 years. 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 sentencings of the defendants would be determined by the judge.
Mr. Bharara praised the investigative work of the FBI, and thanked the SEC, which has filed civil charges in a separate action.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Rebecca G. Mermelstein and Christine I. Magdo are in charge of the prosecution.
The allegations contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Bronx Man Sentenced to 25 Years in Prison for Production of Child PornographyRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that KELVIN ACOSTA was sentenced to 300 months in prison and supervised release for 10 years for producing child pornography. ACOSTA pled guilty on September 26, 2016, before U.S. District Judge Paul A. Crotty, who also imposed today’s sentence. In imposing sentence, the Court characterized the defendant’s misconduct as the “most deplorable, depraved act that I can imagine.”
U.S. Attorney Preet Bharara stated: “For years, Kelvin Acosta preyed on our community’s youth by tricking them into supplying personal information, using that information to hack their email accounts, and then extorting them into producing child pornography for him. Today, he has been sentenced to federal prison for his predatory criminal behavior.”
According to documents filed in this case and statements made in related court proceedings:
From at least December 2013 through November 2015, KELVIN ACOSTA engaged in a pattern of “sextortion” by hacking into email accounts belonging to teenage girls and extorting them into producing child pornography for him. ACOSTA did so by messaging the girls on Facebook and tricking them into revealing personal information, which he exploited to hack their email accounts. ACOSTA then told his minor victims that he had hacked their email accounts and found compromising material (sex videos and/or nude photographs), which he threatened to send their family, friends, and schools – unless they created child pornography for him via video chat and/or paid him money.
On March 29, 2016, ACOSTA was arrested in the Bronx. On that day, ACOSTA admitted that, for years, he had hacked and extorted girls and women, aged 13 to 25; he had exploited about 40 to 50 accounts of minors that had nude photographs or sex videos, which he viewed; he had about 10 to 20 minors produce child pornography for him; and he had extorted at least three victims – including at least one minor – into bringing him money.
* * *
ACOSTA, 27, of the Bronx, New York, pled guilty on September 26, 2016, to one count of sexual exploitation of a child, in violation of Title 18, United States Code, Sections 2251(a), (e), and 2.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation and the New York City Police Department, and thanked the Brooklyn District Attorney’s Office for its valuable cooperation in this matter.
This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorney Michael D. Neff is in charge of the prosecution.
17-050
Two Men Charged with Racketeering, Including A 2013 Mob Murder and an Attempted Murder of A Bonanno SoldierRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the filing of an Indictment charging CHRISTOPHER LONDONIO and TERRANCE CALDWELL with offenses related to their alleged role in the November 15, 2013, murder of Michael Meldish, as well as their participation in a long-running racketeering conspiracy composed of leaders, members, and associates of La Cosa Nostra, also known as the “Mafia.” LONDONIO and CALDWELL are charged with racketeering conspiracy, conspiracy to commit murder, murder, and firearms offenses. CALDWELL is also charged with assault and attempted murder in aid of racketeering, in connection with his alleged role in the shooting of a Bonanno Family member on May 29, 2013.
CALDWELL was presented last Friday, February 10, 2017, before the Honorable Lisa Margaret Smith at the United States Courthouse in White Plains, New York. LONDONIO was already in custody on state charges and will be transferred to federal custody and is expected to be presented in White Plains federal court today. The case is assigned to United States District Judge Nelson S. Román.
An initial pre-trial conference is scheduled for February 15 at 1:45 p.m. before Judge Román.
Manhattan U.S. Attorney Preet Bharara said: “The mob continues to kill and maim in the name of La Cosa Nostra, and as alleged, Christopher Londonio and Terrance Caldwell did just that. In a misguided show of allegiance to this violent way of life, Londonio and Caldwell allegedly murdered Michael Meldish and attempted to kill a Bonanno Family soldier. We thank the FBI, the NYPD, and the Bronx County District Attorney’s Office for their dedication that led to the federal racketeering charges announced today.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Hollywood and popular fiction almost romanticize the mob, so much so the general public may not know it exists in real life anymore. However, the crimes members are accused of taking part in are violent and all too real for their victims. The men charged in this case allegedly committed murder, robbery, dealing illegal drugs and extortion to only name a few. The FBI Organized Crime Task Force investigates these families and their string of criminal behavior each day, proving the mob is still a legitimate threat to the community.”
NYPD Commissioner James P. O’Neill said: “This is further proof that the mob’s rackets, schemes, and violence are persistent. As alleged, the defendants engaged in ruthless violence, including the murder of Michael Meldish in the Bronx and the attempted murder of a Bonanno solider in Manhattan both in 2013. Our thanks to the thorough work of NYPD detectives, FBI agents, and prosecutors in the Southern District that led to today’s indictment.”
According to the allegations in the Indictment, which was filed in White Plains federal court on February 8, 2017[1]:
La Cosa Nostra is composed of leaders, members, and associates who work together and coordinate to engage in a multitude of criminal activities. La Cosa Nostra operates through entities known as “Families.” In the New York City area, those families include the Genovese, Gambino, Luchese, Bonanno, Colombo, and Decavalcante Families. Each Family operates through groups of individuals known as “crews” and “regimes.” Each “crew” has as its leader a person known as a “Caporegime,” “Capo,” “Captain,” or “Skipper,” who is responsible for supervising the criminal activities of his crew and providing “Soldiers” and associates with support and protection. In return, the Capo typically receives a share of the illegal earnings of each of his crew’s Soldiers and associates, which is sometimes referred to as Atribute.@
Each crew consists of “made” members, sometimes known as “Soldiers,” “wiseguys,” “friends of ours,” and “good fellows.” Soldiers are aided in their criminal endeavors by other trusted individuals, known as “associates,” who sometimes are referred to as “connected” or identified as “with” a Soldier or other member of the Family. Associates participate in the various activities of the crew and its members. In order for an associate to become a made member of the Family, the associate must first be of Italian descent and typically needs to demonstrate the ability to generate income for the Family and/or the willingness to commit acts of violence.
From in or about 2011 up to and including in or about 2017, LONDONIO and CALDWELL, along with other members and associates of La Cosa Nostra, committed a wide range of crimes, including murder, attempted murder, assault, robbery, extortion, gambling, and narcotics trafficking. In particular, and as charged in the Indictment, on May 29, 2013, CALDWELL attempted to murder a Bonanno Soldier in the vicinity of First Avenue and 111th Street, in Manhattan. Separately, and as also charged in the Indictment, on November 15, 2013, LONDONIO and CALDWELL together murdered Michael Meldish in the vicinity of Baisley Avenue and Ellsworth Avenue in the Bronx.
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CHRISTOPHER LONDONIO, 43, of Hartsdale, New York, and TERRANCE CALDWELL, 58, of Manhattan, New York, are each charged with conspiracy to commit racketeering, in violation of Title 18, United States Code, Section 1962(d), conspiracy to commit murder in aid of racketeering, in violation of Title 18, United States Code, Section 1959(a)(5); murder in aid of racketeering, in violation of Title 18, United States Code, Sections 1959(a)(1) and 2; possessing a firearm in furtherance of a crime of violence resulting in death, in violation of Title 18, United States Code, Section 924(j); and possessing a firearm in furtherance of a crime of violence on dates other than November 15, 2013, in violation of Title 18, United States Code, Section 924(c). CALDWELL is also charged with assault and attempted murder in aid of racketeering, in violation of Title 18, United States Code, Sections 1959(a)(3), 1959(a)(5), and 2. A chart showing the charges and maximum penalties for each count of the Indictment is below. The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.
Mr. Bharara praised the outstanding investigative work of the FBI’s Organized Crime Task Force, which comprises agents and detectives of the FBI, NYPD, Homeland Security Investigations, and the Waterfront Commission of New York Harbor. He also thanked the Bronx County District Attorney’s Office. He added that the investigation is continuing.
Assistant U.S. Attorneys Jennifer E. Burns, Scott Hartman, and Hagan Scotten are in charge of the prosecution. The case is being handled by the Office’s Violent and Organized Crime Unit and White Plains Division.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
United States v. Christopher Londonio and Terrance Caldwell, 17 Cr. 89
COUNT
CHARGE
DEFENDANTS
MAXIMUM PENALTIES
1
Conspiracy to commit racketeering
CHRISTOPHER LONDONIO and TERRANCE CALDWELL
Life in prison
2
Conspiracy to murder in aid of racketeering
CHRISTOPHER LONDONIO and TERRANCE CALDWELL
10 years in prison
3
Murder in aid of racketeering
CHRISTOPHER LONDONIO and TERRANCE CALDWELL
Mandatory life in prison or the death penalty
4
Assault and attempted murder in aid of racketeering
TERRANCE CALDWELL
20 years in prison
5
Carrying and using a firearm during and in relation to, and possessing a firearm in furtherance of, a crime of violence, resulting in the death of another
CHRISTOPHER LONDONIO and TERRANCE CALDWELL
Life in prison or the death penalty
Mandatory minimum 5 years in prison consecutive to any other sentence
6
Carrying and using a firearm, which was discharged, during and in relation to a crime of violence
CHRISTOPHER LONDONIO and TERRANCE CALDWELL
Mandatory minimum 10 years in prison consecutive to any other sentence
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Property Manager of Poughkeepsie Housing Project Sentenced for Stealing HUD FundsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that CARL IMMICH, formerly the property manager of Harriet Tubman Terrace Apartments, a Section 8 Housing Complex in Poughkeepsie, New York, was sentenced to 18 months in prison. United States District Judge Cathy Seibel imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara stated: “Repeatedly and routinely, Carl Immich stole public money meant to subsidize housing for indigent tenants, and used it to dine out, travel, renovate his house, and play golf. For his brazen fraud, Immich was sentenced today to time in federal prison.”
According to the allegations contained in the Complaint, the Indictment, and statements made during court proceedings in the case:
Tubman Terrace is a large, low-income apartment complex in Poughkeepsie, New York. The rental payments for nearly all of the apartments are subsidized by the U.S. Department of Housing and Urban Development (“HUD”) pursuant to Section 8 of the United States Housing Act of 1937, 42 U.S.C. § 1437f. From in or about June 2010 through in or about November 2014, HUD provided approximately $150,000 to $160,000 each month to Tubman Terrace.
From in or about 2009, Tubman Terrace was managed by a management company, of which IMMICH is the principal and sole owner. In that capacity, IMMICH served as the management agent and property manager of Tubman Terrace since in or about 2009.
From at least in or about December 2010 until at least in or about March 2015, IMMICH fraudulently obtained at least approximately $150,000 of HUD funds from the operating account of Tubman Terrace, which were paid to him or used for personal expenditures. IMMICH did so through as least three different schemes: (1) he used credit cards intended for Tubman Terrace business expenses for personal expenses, which were then paid through Tubman Terrace’s operating bank account; (2) he obtained check payments from the Tubman Terrace operating bank account to cover other personal expenses; and (3) he obtained payroll checks for himself and his daughter reflecting no work or other entitlement by them to such salary.
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IMMICH, 54, of Rhinebeck, New York, pled guilty to theft concerning a program receiving government funds, and theft of government property. In addition to the prison sentence, IMMICH was also sentenced to three years of supervised release and ordered to pay $150,001 in restitution.
Mr. Bharara praised the outstanding investigative work of the HUD Office of Inspector General.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Lauren Schorr and Benjamin Allee are in charge of the prosecution.
Narcotics Dealer Charged in Manhattan Federal Court for Overdose DeathRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, James J. Hunt, the 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 the unsealing of a complaint charging VICTOR PETERSON, 54, with selling fentanyl-laced heroin that resulted in the death of a 39-year-old Upper West Side man.
The complaint alleges that, on or about October 20, 2016, PETERSON distributed heroin laced with fentanyl that resulted in the death of Kevin Coombs, age 39, of Manhattan. The complaint also alleges that PETERSON sold heroin and crack cocaine to undercover NYPD officers on other occasions. PETERSON was arrested this morning and will be presented today before United States Magistrate Judge James L. Cott. PETERSON faces a mandatory minimum term of 20 years in prison.
Manhattan U.S. Attorney Preet Bharara said: “The opioid abuse epidemic has claimed far too many lives, and 39-year-old Kevin Coombs was one such life cut short. As alleged, Victor Peterson sold the fentanyl-laced heroin that tragically killed Kevin Coombs. Thanks to the outstanding partnership with the DEA and the NYPD, we continue to combat the deadly opioid crisis one alleged drug dealer at a time.”
DEA Special Agent-in-Charge James J. Hunt said: “Last year the CDC announced that there were over 52,000 fatal drug overdoses in the US; here in NYC, three people died everyday as a result of a drug overdose. DEA is focusing our enforcement efforts on major heroin and fentanyl distribution organizations, in addition to investigating and arresting the street dealers who sell the fatal dose that takes the life of another.”
Commissioner James P. O’Neill said: “The defendant in this case is facing the possibility of life in prison for allegedly selling fentanyl-laced heroin to a 39-year-old man who died of an overdose. Law enforcement is committed to investigating overdoses like this to hold those who sell these deadly opioids criminally responsible. I want to thank the NYPD detectives, DEA agents, and US Attorney Preet Bharara for their work that led to today’s arrest.”
According to the allegations in the Complaint[1] filed in federal court:
Kevin Coombs was found unresponsive by NYPD officers and paramedics on the afternoon of October 21, 2016. Coombs was transported to the hospital, but later died from an overdose of heroin and fentanyl. Prior to Coombs’s death, Coombs composed, but did not send, a text message to PETERSON in which Coombs stated, “Man that shit is so good. I literally just finished the last o[n]e.”
An NYPD undercover officer subsequently contacted PETERSON by cellphone and arranged to purchase narcotics. PETERSON sold the undercover officer crack cocaine on three occasions and heroin on one occasion in December 2016 and January 2017.
* * *
PETERSON, 54, of New York, New York, has been charged with one count of narcotics distribution resulting in the death of another, which carries a maximum sentence of life in prison, and a mandatory minimum sentence of 20 years in prison. PETERSON has also been charged with four counts of narcotics distribution, each of which carries a maximum sentence of 20 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.
Mr. Bharara praised the outstanding work of the NYPD and DEA’s Tactical Diversion Squad for their investigative efforts and ongoing support and assistance with the case. The Drug Enforcement Administration's Tactical Diversion Squad (Group TDS-NY) comprises agents and officers from the U.S. Drug Enforcement Administration (DEA), the New York City Police Department, the New York State Police, and NYC Health and Hospitals Office of the Inspector General.
The prosecution of this case is being overseen by the Office’s Narcotics Unit. Assistant U.S. Attorney Andrew Thomas is in charge of the case.
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 descriptions of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
Heroin Trafficker Sentenced to 12 Years for Heroin Overdose DeathsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that ROOSEVELT WILLIAMS, a/k/a “Mumsie,” 59, was sentenced to a term of 12 years in prison, and forfeiture of over $100,000 in drug proceeds and property, for his extensive heroin dealing in and around Poughkeepsie, New York. As set forth in WILLIAMS’s plea agreement, and the materials submitted in connection with sentencing, the distribution of that heroin resulted in both fatal and non-fatal overdoses. He was sentenced today in White Plains federal court by U.S. District Court Judge Nelson S. Román. On November 10, 2016, Tony Reynolds, 58, was sentenced, also by Judge Román to a term of 13 years in prison, and to forfeit $5,000 in drug proceeds, for his role in distributing heroin with WILLIAMS.
U.S. Attorney Preet Bharara stated: “Roosevelt Williams sold what became notorious in and around Poughkeepsie as a highly potent brand of heroin. And even as overdoses from Williams’s heroin grew, he continued to sell. For his cold-hearted drug dealing that contributed to the devastation of heroin abuse in our communities, the Court has handed down a stiff sentence of 12 years in prison. We hope this prosecution gives some measure of closure and comfort for the victims’ families, and we thank the Drug Enforcement Administration and our many local law enforcement partners for their extraordinary efforts on this case.”
According to the Complaints and Information filed in White Plains federal court, as well as statements made in connection with the plea and sentencing proceedings:
Over the course of several months, WILLIAMS and Reynolds conspired to sell significant quantities of a highly potent brand of heroin, dubbed “Empire” by a stamp on each bag sold, which had a devastating impact on users in and around Poughkeepsie, New York. The Empire brand became notorious among heroin users in the area as being particularly strong and posing a high risk of overdose. Even as this reputation and the number of overdoses grew, the defendants continued to sell significant quantities of Empire heroin virtually every day.
From at least in or about November 2015 through December 2015, law enforcement engaged in controlled purchases of Empire heroin on five occasions. Each of these sales was made by either WILLIAMS or Reynolds. Law enforcement recovered over $100,00 in cash and two firearms from WILLIAMS’s residence.
* * *
Mr. Bharara praised the outstanding investigative work of the DEA and the Dutchess County Drug Task Force.
These cases are being handled by the Office’s White Plains Division. Assistant United States Attorneys Jennifer Burns, Maurene Comey, and Douglas Zolkind are in charge of the prosecutions.
Former DEA Agent Sentenced for Making False Statements Regarding Employment at Adult Entertainment EstablishmentRead the Press Release
Preet Bharara, United States Attorney for the Southern District of New York, announced today that DAVID POLOS, formerly an Assistant Special Agent-in-Charge with the Drug Enforcement Administration (“DEA”), was sentenced to one year of probation, 250 hours of community service, and $5,300 in financial penalties for conspiracy and making false statements to the government regarding his and a DEA colleague’s employment at an adult entertainment establishment. POLOS, who was convicted at trial along with co-conspirator and former DEA colleague Glen Glover on June 9, 2016, was sentenced today by U.S. District Judge Paul G. Gardephe. In sentencing POLOS, Judge Gardephe said that POLOS’s behavior was “truly shocking” for a law enforcement official who held “a great deal of responsibility.”
Manhattan U.S. Attorney Bharara said: “David Polos, a former supervisory DEA agent, was sentenced today for lying on his national security forms. Even more so than others, federal agents, sworn to enforce the law, must first obey it themselves. Polos violated his oath and broke the law. He now stands a convicted felon.”
According to the evidence established at trial:
POLOS, who supervised the Organized Crime and Drug Enforcement Strike Force as an Assistant Special Agent-in-Charge, and Glover lied about his employment at, and ownership interests in, an adult entertainment establishment (the “Club”) in Northern New Jersey in connection with a background check that was specifically designed to determine their suitability as employees of a federal law enforcement agency with access to classified information. POLOS also failed to disclose, in response to a question about his relationships with foreign nationals, his intimate relationship with a Brazilian national who danced at the Club. The national security forms POLOS and Glover submitted in connection with the background check required disclosure of outside employment in part due to concerns attendant to certain types of employment, including proximity to crime and persons involved in crime and the risk of employee blackmail.
Glover and POLOS submitted national security forms in August and September 2011, respectively, that stated, among other things, that they did not have employment other than their DEA jobs within the previous seven years, and that POLOS had not had any close, continuing contact with foreign nationals during that same period of time. In fact, Glover was the part owner of, and POLOS had a convertible ownership interest in, the Club. POLOS had, at the time he submitted his form, begun an intimate relationship with a foreign national from Brazil who worked as a dancer at the Club. POLOS and Glover had been warned by others, including Club employees, that at times drug use, drug sales, and illicit sexual activity appeared to be taking place at and outside the Club, which also operated as an all-cash business and did not pay required taxes during its first year in operation.
POLOS and Glover both worked regular managerial shifts at the Club in the months prior to and following their submission of the national security forms. They also hired, fired, and paid bartenders, dancers, and bouncers; supervised the Club’s renovation, advertised the Club in local periodicals; manned a back office available only to employees; remotely monitored video camera feed from the Club when not present; and generally tended to various Club-related matters. POLOS and Glover at times attended to Club matters during DEA work hours.
Had POLOS and Glover truthfully disclosed their employment at the Club, their ownership and involvement in the affairs of the Club would have been investigated as part of their background checks, and the security clearances that they were required to maintain as federal law enforcement employees likely would have been denied.
* * *
POLOS, 51, of West Nyack, New York, and Glover, 45, of Lyndhurst, New Jersey, were convicted of one count of conspiracy to make false statements, and were each convicted of one count of making false statements, in connection with their work at the Club. POLOS was convicted of an additional count of false statements in connection with his failure to disclose his relationship with a foreign national. Glover is due to be sentenced on February 10, 2017.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation and the Department of Justice Office of the Inspector General. He also thanked the Internal Revenue Service-Criminal Investigation Division for its assistance.
This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys Martin S. Bell, Andrew D. Goldstein, and Paul M. Monteleoni are in charge of the prosecution.
14 Defendants Charged in Manhattan Federal Court with Narcotics Distribution and Firearms Possession in the Bronx and Yonkers, and Four Defendants with Armed Commercial Robberies in the Bronx and ManhattanRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), Ashan M. Benedict, the Special Agent-in-Charge of the New York Field Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), and James J. Hunt, the Special Agent-in-Charge of the New York Field Office of the U.S. Drug Enforcement Administration (“DEA”), announced the unsealing of an Indictment charging 14 defendants with participation in narcotics and firearms offenses in the Bronx and Yonkers. The Indictment also charges four of these defendants with participating in robberies of commercial establishments in the Bronx and Manhattan, and three of these defendants for participating in firearms trafficking.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, the defendants arrested today plagued the Bronx and Yonkers with drug dealing, guns, and commercial robberies. Thanks to the outstanding and cooperative efforts of the ATF, NYPD, and DEA, the defendants’ rash of alleged crimes has been brought to an end.”
NYPD Commissioner James P. O’Neill said: “The 14 defendants in this case face drug and gun charges after a multi-year investigation into the heroin, crack cocaine and marijuana trade in the Bronx and Yonkers. Four of the defendants are charged in connection with armed robberies in the Bronx and Manhattan and three are accused of firearms trafficking. Our neighborhoods are safer with these people – and the drugs and guns – off of our streets. I want to thank the US Attorney for the Southern District, Preet Bharara, Ashan Benedict, Special Agent-in-Charge of the New York Field Office of the ATF, James Hunt, Special Agent-in-Charge of the New York Field Office of the DEA, and the members of the NYPD for their contributions to this investigation.”
ATF SAC Ashan M. Benedict said: “Today’s indictment demonstrates the dangerous intersection between firearms trafficking, narcotics trafficking, the illicit possession and use of firearms, and violent crime. These defendants allegedly engaged in an alphabet soup of criminal activity, spreading poison, fear, and violence in their wake. Thanks to the outstanding work of the Special Agents, Detectives, and prosecutors involved in this investigation, they will now face well-deserved justice for their alleged actions. I would like to extend my gratitude to the members of ATF, DEA, NYPD, and the U.S. Attorney’s Office for their hard work and collaboration in putting a stop to these individuals.”
DEA SAC James J. Hunt said: “As alleged, a violent drug crew has been taken off the streets today. For years, they allegedly acted like outlaws; selling drugs, brandishing guns and robbing businesses like they were in a time warped Wild West movie. But reality hit them today when they were arrested and brought to court.”
The Indictment[1] charges 10 defendants with participating in a narcotics conspiracy based in the vicinity of Decatur Avenue and East 194th and 195th Streets in the Bronx, New York. Specifically, the following defendants – RENE RUIZ, a/k/a “Lil’ Rene,” a/k/a “Nae Nae,” WILFREDO GONZALEZ, a/k/a “Alfredo Gonzalez,” a/k/a “Freddy,” DOMINGO RAMOS, a/k/a “Mingo,” JASON POLANCO, a/k/a “Jin,” AMAR AHMED, a/k/a “Omar,” a/k/a “O,” ZAIE ESCRIBANO, a/k/a “Zaieto,” a/k/a “Z,” JAIME GONZALEZ, a/k/a “Jimbo,” JORDAN MCDONALD, a/k/a “Umi,” EDWARD NELSON, a/k/a “Boo,” a/k/a “Bugatti,” and CHRISTOPHER CORREA, a/k/a “Chris” – are charged with conspiring to distribute, and to possess with intent to distribute, heroin, crack cocaine, and marijuana from about 2011 up to about early 2017. Eight of these defendants are also charged with using, carrying, and possessing firearms during the narcotics conspiracy.
The Indictment also charges seven defendants with participating in a narcotics conspiracy that operated in the Bronx and in Yonkers. Specifically, the following defendants – DOMINGO RAMOS, a/k/a “Mingo,” CARLOS OSORIO-PEREZ, a/k/a “C,” DENNIS POMALES, a/k/a “D,” JORDAN MCDONALD, a/k/a “Umi,” CHRISTOPHER CORREA, a/k/a “Chris,” MARK FERNANDEZ, a/k/a “Mark,” and WILLIAM RUSSELL, a/k/a “Billy” – are charged with conspiring to distribute, and to possess with the intent to distribute, heroin, cocaine, and crack cocaine from about 2011 up to about early 2017. Four of these defendants are also charged with using, carrying, and possessing firearms during the narcotics conspiracy.
The Indictment also charges four defendants – JASON POLANCO, a/k/a “Jin,” WILFREDO GONZALEZ, a/k/a “Alfredo Gonzalez,” a/k/a “Freddy,” AMAR AHMED, a/k/a “Omar,” a/k/a “O,” and ZAIE ESCRIBANO, a/k/a “Zaieto,” a/k/a “Z” – with conspiring to rob the proceeds of commercial establishments in the Bronx and Manhattan, from about 2014 up to about January 1, 2015. Three of these defendants are also charged with committing the robbery of a pizzeria in the vicinity of Jerome Avenue and East 179th Street in the Bronx, on or about October 31, 2014. All four defendants are also charged with committing the robbery of a gas station in the vicinity of Pelham Parkway South and Boston Road in the Bronx, on or about November 24, 2014. In addition, all four defendants are charged with the use, carrying, and possession of firearms during and in relation to the robbery conspiracy and the November 2014 gas station robbery, during which a firearm was brandished and discharged.
Finally, the Indictment charges three defendants – WILFREDO GONZALEZ, a/k/a “Alfredo Gonzalez,” a/k/a “Freddy,” AMAR AHMED, a/k/a “Omar,” a/k/a “O,” and ZAIE ESCRIBANO, a/k/a “Zaieto,” a/k/a “Z” – with the unlawful trafficking of firearms from in or about 2014 through in or about 2015.
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Of the 14 defendants named in the Indictment, six were taken into custody in a sweep jointly conducted by the NYPD, ATF, and DEA, beginning last night in the Bronx and Yonkers (RAMOS, AHMED, OSORIO-PEREZ, POMALES, CORREA, and FERNANDEZ). The defendants who were taken into custody will be presented and arraigned in Manhattan federal court this afternoon before Magistrate Judge James L. Cott. Five defendants are presently detained in either state or federal custody on unrelated charges, and are being brought into federal custody on writs (RUIZ, POLANCO, ESCRIBANO, JAIME GONZALEZ, and MCDONALD). Three defendants remain at large (WILFREDO GONZALEZ, NELSON, and RUSSELL). The case is assigned to U.S. District Judge Laura Taylor Swain.
Mr. Bharara thanked the Westchester County Police Department and the Putnam County Sheriff’s Office for their assistance in the investigation.
The prosecution is being handled by the Office’s Violent and Organized Crime Unit and its White Plains Division. Assistant U.S. Attorneys Justina L. Geraci, Jordan L. Estes, Christopher J. Clore, and Amanda L. Houle 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 Indictment and the description of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Clinic Manager Pleads Guilty in $70 Million Scheme to Defraud Medicare and MedicaidRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that EDUARD ZAVALUNOV, a manager of two health care clinics in Queens, New York, pled guilty today before U.S. District Judge Ronnie Abrams to conspiracy to commit wire fraud, mail fraud, and health care fraud, for his role in a massive health care fraud scheme through which three medical clinics in Brooklyn and Queens submitted over $70 million in fraudulent claims to Medicaid and Medicare.
Manhattan U.S. Attorney Preet Bharara said: “Eduard Zavalunov has admitted to his role in this $70 million health care fraud conspiracy. Zavalunov and his conspirators recruited people from soup kitchens and welfare offices and arranged for them to get medically unnecessary procedures, all so that they could falsely bill Medicaid, Medicare and private insurers.”
According to the Superseding Indictment to which ZAVALUNOV pled guilty, and other publicly filed information in this case:
The Heath Care Fraud Scheme
From 2005 to November 2014, ZAVALUNOV, Victor Lipkin, Vadim Zubkov, Nokoloz Chochiev, Anatoliy Fatkhov, Mariana Swaffar, Jacqueline Pinez, Jonathan Oliver, Jason Brissett, Gilbert Trotman, and Giorgi Buleishvili engaged in a scheme to operate three medical clinics in Brooklyn and Queens, through which they recruited financially disadvantaged and homeless people insured by Medicare and/or Medicaid (the “Phony Patients”) to undergo unnecessary medical tests, typically performed by unlicensed personnel, at the clinics in exchange for cash, and then billed the insurers for administering those unnecessary tests. Beginning in or about 2005, Lipkin and Zubkov recruited and paid a particular licensed physician (the “Doctor”) to act as the nominal owner and/or physician under whose name three purported medical clinics would bill Medicare, Medicaid, and private insurance providers (the “Insurance Providers”) for unnecessary services and tests – including sleep tests and stress tests – performed at the clinics. The clinics were located on Avenue V in Brooklyn, New York, and on Hillside Avenue and Elmhurst Avenue, respectively, in Queens, New York. Lipkin and Zubkov were, in fact, the beneficial owners of the clinics, but they concealed their ownership through the Doctor’s nominal affiliation with the clinics, and by laundering the proceeds of the clinics’ operation through shell companies that they owned and controlled. ZAVALUNOV, Lipkin, Zubkov, and Buleishvili operated and controlled the clinics, and ran the clinics’ day-to-day operations, despite the fact that they were not licensed physicians, as required by New York law.
At the direction of ZAVALUNOV, Lipkin, Zubkov, Buleishvili, and other members of the scheme, including Oliver, Brissett, and Trotman (the “Runners”), as well as Chochiev, recruited financially disadvantaged individuals with Medicaid and/or Medicare insurance to act as Phony Patients and undergo unnecessary medical tests at the clinics in exchange for cash payments. The Runners often recruited such individuals from soup kitchens and local welfare offices, and coached them on what to say on various medical forms in order to make it falsely appear that the medical tests to which the defendants intended to subject them were medically necessary. In furtherance of the scheme, Chochiev also made threats of physical violence to individuals who Chochiev believed owed money to the scheme members.
Also in furtherance of the scheme, before the medically unnecessary tests were performed on the Phony Patients, Swaffar and Pinez obtained the Phony Patients’ Medicaid and/or Medicare insurance information, and then contacted the Insurance Providers to confirm that the Insurance Providers would reimburse for the tests. Swaffar and Pinez engaged in such conduct knowing that the Phony Patients were being recruited and paid by the Runners to undergo the tests. Once they determined that a particular Phony Patient’s insurance would pay out claims made by the clinic for the planned medical tests, Swaffar and Pinez notified the Runners that the individuals were eligible and could be brought to the clinic to undergo such tests.
After the Phony Patients had been recruited, confirmed to be Medicare and/or Medicaid eligible, and transported to one of the clinics by the Runners or Chochiev, in many instances certain individuals who were not physicians administered a host of unnecessary medical tests to them. In particular, for example, Fatakhov administered unnecessary medical tests, including stress tests, to the Phony Patients of the Elmhurst Avenue Clinic. Fatakhov administered these tests outside the presence and supervision of the Doctor or other licensed physician, despite knowing that the presence or supervision of a licensed physician was required. After the unnecessary medical tests were administered, the Phony Patients were paid cash kickbacks. The defendants, through the clinics, then submitted fraudulent claims to Medicaid and Medicare seeking reimbursement for the unnecessary medical tests. In total, in the course of the scheme, the defendants fraudulently billed over $70 million to Medicaid and Medicare, for which they received over $25 million in reimbursements.
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ZAVALUNOV, 36, pled guilty to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Victor Lipkin, 52, pled guilty on August 3, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Vadim Zubkov, 49, pled guilty on January 13, 2017, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Nikoloz Chochiev, 42, pled guilty on August 11, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Anatoliy Fatakhov, 60, pled guilty on July 28, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Mariana Swaffar, 52, pled guilty on August 15, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Jacqueline Pinez, 33, pled guilty on July 11, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Jonathan Oliver, 54, pled guilty on September 6, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Giorgi Buleishvili, 42, pled guilty on January 31, 2017, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.
Conspiracy to commit wire fraud, mail fraud, and health care fraud 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 sentences for the defendants will be determined by the judge.
Mr. Bharara praised the outstanding investigative work of the Federal Bureau of Investigation and the Department of Health and Human Services.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Daniel Tehrani, Patrick Egan, and Timothy T. Howard are in charge of the prosecution.
Manhattan U.S. Attorney and NYPD Commissioner Announce Arrest of Narcotics Dealer Responsible for Heroin Overdose DeathRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a complaint charging FABRICE DIAZ, 24, with narcotics dealing that resulted in the overdose death of a 25-year-old man.
The complaint alleges that DIAZ participated in a conspiracy to distribute heroin, and that heroin distributed by DIAZ resulted in the death of Robert Vivolo, age 25, of the Bronx, New York, on October 21, 2016. DIAZ was arrested this morning and will be presented later today in Manhattan federal court before United States Magistrate Judge Katharine H. Parker. DIAZ faces a mandatory minimum term of 20 years in prison.
U.S. Attorney Preet Bharara stated: “Once again, we are confronted with the lethal effects of the opioid abuse epidemic. As alleged, Fabrice Diaz sold the heroin that sadly killed Robert Vivolo. Thanks to the outstanding partnership with the New York City Police Department, we seek to combat the deadly opioid crisis one alleged drug dealer at a time.”
According to the Complaint[1]:
From at least in or about October 2016 up to January 2017, in the Southern District of New York and elsewhere, FABRICE DIAZ and others conspired to sell heroin. As part of that conspiracy, on or about October 21, 2016, DIAZ exchanged text messages with Robert Vivolo, a 25-year-old heroin addict who lived on City Island, in the Bronx, New York. In those messages, DIAZ arranged to sell heroin to Vivolo, and DIAZ delivered heroin to Vivolo’s home. A short time later, Vivolo overdosed on that heroin and died.
After Vivolo’s death, DIAZ was arrested on separate charges in New Rochelle, New York, on or about January 11, 2017, in possession of 17 envelopes of heroin.
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DIAZ faces a maximum sentence of life in prison, and a mandatory minimum sentence of 20 years in prison.
The statutory maximum sentence is prescribed by Congress and is provided here for information purposes only, as any sentencing of the defendant would be determined by a judge.
Mr. Bharara praised the investigative work of the NYPD. Mr. Bharara also thanked the Westchester County District Attorney’s Office and the New Rochelle Police Department for their assistance in the investigation. Mr. Bharara noted that the investigation remains ongoing.
This matter is being handled by the Office’s Narcotics Unit. Assistant United States Attorney David W. Denton Jr. is in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
Manhattan Man Sentenced to More Than 6 Years in Prison for Child Pornography OffensesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that PAAL KLYKKEN, 35, was sentenced to 78 months in prison and supervised release for seven years for distributing and receiving child pornography. KLYKKEN pled guilty on September 1, 2016, before U.S. District Judge Valerie E. Caproni, who also imposed today’s sentence.
U.S. Attorney Preet Bharara stated: “Paal Klykken admitted to serially taking advantage of and victimizing his minor neighbor. Today, he has been sentenced to prison for his predatory criminal behavior.”
According to documents filed in this case and statements made in related court proceedings:
From at least early 2015 up to and including January 2016, KLYKKEN communicated by email and a social messaging app with a minor girl (the “Minor Victim”) who lived in a neighboring apartment. Because of the relative positions of their respective apartments, KLYKKEN was able to view inside the Minor Victim’s bedroom from his own apartment window while they communicated. The communications were often sexual, and KLYKKEN repeatedly enticed the Minor Victim to pose in sexual positions and engage in sexually explicit conduct while KLYKKEN watched from his home, often with the aid of a camera.
On March 18, 2016, KLYKKEN was arrested in Manhattan. After his arrest, KLYKKEN admitted, among other things, that, in addition to the conduct with the Minor Victim, for approximately 18 years, he had live-streamed and downloaded child pornography.
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Mr. Bharara praised the efforts of the Federal Bureau of Investigation and expressed deep appreciation for the contribution of the New York City Police Department Vice Major Case Squad to this investigation.
The prosecution is being handled by the Office’s General Crimes Unit. Assistant United States Attorney Jonathan Rebold is in charge of the prosecution.
Former Treasurer of Patterson Fire Department Sentenced to 33 Months in Prison for Embezzlement and Filing False Tax ReturnsRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that ALBERT MELIN, the former treasurer of the volunteer Patterson Fire Department (“PFD"), was sentenced today by U.S. District Judge Nelson S. Roman to 33 months in prison for fraud and tax charges arising out of his embezzlement of more than $1.1 million from the PFD.
According to documents filed in court, MELIN, a chiropractor, was elected treasurer of the PFD in 2013. From in or about December 2013 to in or about October 2015, MELIN embezzled PFD funds under his control by writing checks to the two businesses he owned, 211 Medical, P.C. (“211 Medical”), and N.A.S. Management Co., Inc. (“N.A.S.”). MELIN then deposited the checks to bank accounts held by 211 Medical or N.A.S. MELIN also charged expenses of 211 Medical and N.A.S. to the PFD’s debit card.
MELIN embezzled more than $1.1 million by writing more than 130 fraudulent checks. He used the money to support 211 Medical and N.A.S., to make payments on his home mortgage loan and to pay personal expenses, including the costs of family vacations. MELIN failed to report this income on his personal return for 2014 and falsely reported some of the embezzled funds as revenue on the corporate return for 211 Medical in an effort to disguise their source.
On November 2, 2016, MELIN pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of subscribing to false tax returns, which carries a maximum sentence of three years in prison.
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In addition to the prison sentence, MELIN, 46, of Cary, North Carolina, was sentenced to three years of supervised release. Judge Roman also ordered MELIN to forfeit $1,151,665.76 in ill-gotten gains and to pay $1,349,318.76 in restitution.
Mr. Bharara praised the outstanding investigative work of the IRS, FBI, New York State Comptroller, and New York State Police. He thanked the Putnam County District Attorney’s Office for its assistance in the investigation.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorney James McMahon is in charge of the prosecution.
Former Financial Adviser at Global Bank Charged in Manhattan Federal Court with Multimillon-Dollar Scheme to Defraud ClientsRead the Press Release
Preet Bharara, the 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 BARRY CONNELL was charged with wire fraud and aggravated identity theft for allegedly using his position as a financial adviser at a global financial institution based in New York City (the “Bank”) to defraud multiple Bank clients out of at least $5 million over a one-year period. CONNELL was arrested this morning in Henderson, Nevada, and will be presented later today in federal court in Las Vegas, Nevada.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Barry Connell used his clients’ bank accounts as his own, siphoning off millions of dollars to pay for his extravagant lifestyle, including a country club membership and private jet expenses.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “The reliability of our banking system is paramount to the success of our economy and ability of our markets to flourish. But when that confidence deteriorates because people allegedly breach the expectation of trust, we all suffer. There’s no excuse for this type of alleged crime, especially when a client’s hard-earned money is involved.”
According to the allegations in the Complaint unsealed today in Manhattan federal court:[1]
From December 2015 to November 2016, CONNELL, a former financial adviser at the Bank, effected numerous unauthorized transactions from five accounts belonging to a single family of Bank clients, and as a result defrauded the clients of at least approximately $5 million.
In some instances, CONNELL effected the fraudulent transactions by submitting Bank forms falsely stating that he had received client instructions authorizing wire transfers to third parties for the client’s benefit, when in fact he had not received client authorization and the wire transfers were for CONNELL’s own benefit. In other instances, CONNELL effected the fraudulent transactions by using one client’s checks, which had been intended only to pay the client’s bills, to instead pay for CONNELL’s own expenses.
CONNELL used the client funds to pay for numerous exorbitant personal expenses, including a year’s rent for a house near Las Vegas, country club membership fees, and private jet expenses. CONNELL also paid bills for a credit card account in his spouse’s name, and made payments for his own benefit to automobile dealerships, an entertainment company, and a yacht company.
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CONNELL, 50, of Chester, New Jersey, is charged with one count of wire fraud affecting a financial institution, which carries a maximum sentence of 30 years in prison and a maximum fine of $1 million or twice the gross gain or loss from the offense, and one count of aggravated identity theft, which carries a mandatory consecutive sentence of two 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.
Mr. Bharara praised the work of the FBI and thanked the U.S. Securities and Exchange Commission for its assistance. Mr. Bharara also thanked the Chester Township, New Jersey, Police Department and the Henderson, Nevada, Police Department for their assistance. He added that the investigation is continuing.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Won S. Shin is in charge of the prosecution.
The charges contained in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Manhattan U.S. Attorney Announces Arrival of Four Defendants from Kenya Charged with Trafficking in Massive Quantities of Heroin and MethamphetamineRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Raymond Donovan, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), today announced that four individuals charged with participating in a narcotics importation conspiracy arrived in New York from Kenya.
BAKTASH AKASHA ABDALLA, a/k/a “Baktash Akasha,” IBRAHIM AKASHA ABDALLA, a/k/a “Ibrahim Akasha,” GULAM HUSSEIN, a/k/a “Hussein Shabakhash,” a/k/a “Hadji Hussein,” a/k/a “Old Man,” and VIJAYGIRI ANANDGIRI GOSWAMI, a/k/a “Vijay Goswami,” a/k/a “Vicky Goswami,” were arrested in Mombasa, Kenya, on November 9, 2014, pursuant to a United States request, based on charges filed in the Southern District of New York arising out of their participation in a conspiracy to import kilogram quantities of heroin and methamphetamine into the United States. On November 10, 2014, a superseding Indictment was returned also charging the defendants with narcotics importation offenses based on their delivery of 99 kilograms of heroin and two kilograms of methamphetamine in Kenya, which they intended would be imported into the United States. The four defendants will be presented and arraigned in Magistrate Court later today.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, the four defendants who arrived yesterday in New York ran a Kenyan drug trafficking organization with global ambitions. For their alleged distribution of literally tons of narcotics – heroin and methamphetamine – around the globe, including to America, they will now face justice in a New York federal court.”
DEA Special Operations Division Special Agent in Charge Raymond Donovan said: “DEA pursues the most dangerous global drug traffickers who pose a direct threat to safety and stability around the world. We are relentlessly pursuing these criminal groups and their facilitators at every level with our law enforcement partners and we value and appreciate the work of our Kenyan counterparts. It is critical that we attack these dangerous networks before they can do even more damage worldwide and threaten innocent lives.”
According to the allegations in the superseding Indictment[1]:
From in or about March 2014 through the date of their arrests, BAKTASH AKASHA, IBRAHIM AKASHA, HUSSEIN, and GOSWAMI conspired to import kilogram-quantities of heroin into the United States. During the same period, BAKTASH AKASHA, IBRAHIM AKASHA, and GOSWAMI conspired to import kilogram quantities of methamphetamine into the United States.
BAKTASH AKASHA is the leader of an organized crime family in Kenya (the “Akasha Organization”) responsible for the production and distribution of ton quantities of narcotics within Kenya and throughout Africa. Moreover, the Akasha Organization’s distribution network extends beyond the African continent to include the distribution of narcotics for importation into the United States. IBRAHIM AKASHA is the brother and deputy of BAKTASH AKASHA. GOSWAMI manages the Akasha Organization’s drug business, including the production and distribution of methamphetamine and the procurement and distribution of heroin. HUSSEIN – a resident of Pakistan and a long-time associate of GOSWAMI – heads a transportation network that distributes massive quantities of narcotics throughout the Middle East and Africa, and has acknowledged responsibility for transporting tons of kilograms of heroin by sea.
Over the course of several months, during telephone calls and meetings in Nairobi and Mombasa, Kenya, the defendants agreed to supply, and in fact did supply, multi-kilogram quantities of heroin and methamphetamine to individuals they believed to be representatives of a South American drug-trafficking organization, but who were in fact confidential sources (the “CSes”) working at the direction and under the supervision of the DEA. BAKTASH AKASHA, IBRAHIM AKASHA, and GOSWAMI negotiated on behalf of the Akasha Organization to procure and distribute hundreds of kilograms of heroin from suppliers in the Afghanistan/Pakistan region and to produce and distribute hundreds of kilograms of methamphetamine, which they understood would ultimately be imported into the United States. At the same time, HUSSEIN agreed to transport heroin from the Akasha Organization’s supplier in the Afghanistan/Pakistan region to East Africa, so that it could be delivered to the CSes.
During a meeting in Mombasa, Kenya, in April 2014, BAKTASH AKASHA introduced a CS via Skype to one of his heroin suppliers in Pakistan, who said he could provide 420 kilograms of 100 percent pure heroin – which he called “diamond” quality – for distribution in the United States. Thereafter, in June 2014, GOSWAMI began discussing with the CSes his ability to procure methamphetamine precursor chemicals and to establish labs to produce methamphetamine for importation to the United States. In a meeting in Mombasa in September 2014, BAKTASH AKASHA introduced HUSSEIN as a narcotics transporter from Afghanistan who moves ton quantities of narcotics using ships. BAKTASH AKASHA and GOSWAMI described the supplier of heroin for their deal with the CSes, to whom they referred as “the Sultan,” as the top supplier of white heroin in the world.
In September and October 2014, IBRAHIM AKASHA personally delivered one-kilogram samples of methamphetamine and heroin to the CSes in Nairobi on behalf of the Akasha Organization. Thereafter, during a telephone call in October 2014 between BAKTASH AKASHA, GOSWAMI, and one of the CSes, GOSWAMI reported that 98 “chickens” had arrived, referring to 98 kilograms of heroin. GOSWAMI said that the South American drug organization would only need to pay for half of the 98 kilograms of heroin because the Akasha Organization would cover the cost of remaining kilograms. Then, in early November, IBRAHIM AKASHA personally delivered 98 kilograms of heroin to the CSes in Nairobi on behalf of the Akasha Organization. A few days later, IBRAHIM AKASHA also delivered another kilogram of methamphetamine.
In the course these negotiations, the Akasha Organization provided a total of 99 kilograms of heroin and two kilograms of methamphetamine to the confidential sources, and agreed to provide hundreds of kilograms more of each. The defendants were arrested on November 9, 2014, in Mombasa, Kenya, prior to another planned meeting with the CSes.
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BAKTASH AKASHA, 40, is a Kenyan national and a resident of Kenya. IBRAHIM AKASHA, 28, is also a Kenyan national and a resident of Kenya. HUSSEIN, 61, is a Pakistani national and a resident of Pakistan. GOSWAMI, 55, is an Indian national and a resident of Kenya. The defendants are charged with conspiring to import heroin into the United States (Count One), conspiring to import methamphetamine into the United States (Count Two), distributing heroin for unlawful importation into the United States (Count Three), and distributing methamphetamine for unlawful importation in the United States (Count Four). Each count carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. The minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Bharara praised the outstanding efforts of the DEA’s Special Operations Division’s Bilateral Investigations Unit. The Department of Justice’s Office of International Affairs also provided assistance in bringing the defendants to the United States to face charges. Mr. Bharara also thanked the DEA’s Nairobi Country Office, the Government of the Republic of Kenya, the Kenyan National Police Services Anti-Narcotics Unit, and members of the Kenyan DEA Formal Vetted Unit.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys Michael D. Lockard and Emil J. Bove III are in charge of the prosecution.
The charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the 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.
Bronx Teacher Charged with Animal Welfare Violations for Cockfighting VentureRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, Bethanne M. Dinkins, Special Agent-in-Charge of the U.S. Department of Agriculture, Office of Inspector General (“USDA-OIG”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced that HECTOR M. CRUZ was arrested today for possessing, selling, and transporting roosters for purposes of participation in animal fights around the United States. The defendant is expected to be presented today in Manhattan federal court before U.S. Magistrate Judge Katharine H. Parker.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Hector Cruz ran a cruel and illegal business of raising and selling roosters for the purpose of vicious cockfights where knives and other sharp instruments are attached to the fighting roosters’ legs. Thanks to the work of the U.S. Department of Agriculture, Office of the Inspector General and the NYPD, Cruz’s days of allegedly profiting from this inhumane business are over.”
Special Agent-in-Charge Dinkins said: “The provisions of the Animal Welfare Act were designed to protect animals from being used in illegal fighting ventures, which often entail other forms of criminal activity involving drugs, firearms and gambling. Together with the Department of Justice, animal fighting is an investigative priority for USDA-OIG, and we will work with our law enforcement partners to investigate and assist in the criminal prosecution of those who participate in animal fighting ventures.”
NYPD Commissioner James P. O’Neill stated: “Cockfighting often leads to the cruel killing of roosters. Hector Cruz’s arrest will stop the breeding and training of roosters for cockfighting at his facility in the Bronx.”
According to the allegations in the Complaint unsealed today in Manhattan federal court[1]:
Cockfighting is an activity in which knives, gaffs, or other sharp instruments are attached to the legs of roosters for the purpose of fighting each other. The fights between roosters end when one rooster is dead or refuses to continue to fight. If not killed during the fight, the losing rooster is typically killed afterwards. Roosters involved in cockfighting will often be mutilated in preparation for fights, typically by cutting off the rooster’s comb and wattle and shaping the rooster’s spur. Individuals who breed roosters for cockfights often cross-breed particular types of roosters in order to produce hybrid breeds that will excel as fighters.
From December 2012 up to January 2017, HECTOR M. CRUZ, a New York City public school teacher, maintained a rooster farm at a location in the Bronx, where he bred, raised, and trained roosters for cockfighting. CRUZ sold and shipped his roosters to individuals across the country, knowing that the birds were intended for cockfights. CRUZ communicated with customers through social media and received payments of as much as $600 for fighting birds.
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CRUZ, 59, of the Bronx, New York, is charged with selling, possessing, and transporting animals for purposes of participation in an animal fight, which carries a maximum penalty of five years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the outstanding investigative work of the USDA-OIG and the NYPD Animal Cruelty Investigation Squad and thanked them for their ongoing support and assistance with the case.
The prosecution of this case is being overseen by the Office’s General Crimes Unit. Assistant U.S. Attorneys Michael C. McGinnis and Alison G. Moe are in charge of the case.
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.
“2fly” Gang Leader Pleads Guilty to Racketeering and Firearms ChargesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that LAQUAN PARRISH, a/k/a “MadDog,” a/k/a “Quanzaa,” pled guilty today to racketeering and firearms charges in connection with his leadership of the “2Fly YGz” (“2Fly”) gang, a violent street gang that operated in and around the Eastchester Gardens public housing development (“ECG”) in the Bronx. As part of his guilty plea, PARRISH admitted his involvement in a shootout with rival gang members on August 7, 2012, during which three victims – including a 14-year-old girl caught in the crossfire – were shot in a Bronx park. PARRISH faces a maximum term of life in prison, and will be sentenced before United States District Judge Lewis A. Kaplan on May 10, 2017, at 3:00 p.m.
U.S. Attorney Preet Bharara said: “For far too long, Laquan Parrish and his cohorts with the 2Fly street gang terrorized the Bronx with violence, robberies, and drug dealing. Today’s guilty plea by one of 2Fly’s leaders, Laquan Parrish, to federal firearms and racketeering charges, including an admission to a shootout in which a 14-year old girl and two others were shot in a Bronx park, makes the community around Eastchester Gardens safer. That is why we bring these cases – to make our neighborhoods free from gang violence and drugs – and that is what today’s plea helped achieve.”
According to the Indictment and other documents filed in the case, as well as statements made during the plea proceedings:
PARRISH was a leader of 2Fly, a subset of the “Young Gunnaz,” or “YGz” street gang, which operates throughout New York City. 2Fly is based in the Bronx, within and around ECG and in an area called the “Valley” or the “V,” which is in the vicinity of Gun Hill Road. ECG is a rectangular complex of residential buildings bordered by Burke, Adee, Yates, and Bouck Avenues, in the middle of which is a playground. The gang war between 2Fly and rival street gangs has led to an enormous amount of fatal and non-fatal violence between 2007 and 2016 in the Northern Bronx, including shootings, stabbings, slashings, beatings, and robberies. Members and associates of 2Fly controlled the narcotics trade at ECG, which took place in the open air at the playground and in apartments at ECG. 2Fly primarily sold marijuana and crack cocaine, but also sold powder cocaine and prescription pills, such as oxycodone. 2Fly members and associates stored guns at the playground or in nearby apartments or cars in order to protect the narcotics business and for protection against rival gangs.
As part of his involvement in 2Fly, PARRISH participated with other 2Fly members in a shootout with rival gang members on August 7, 2012, in a public park in the Bronx. Three victims were shot, including a 14-year-old girl caught in the crossfire.
PARRISH was arrested in this case as a result of a multi-year investigation by the New York City Police Department’s Bronx Gang Squad (the “Bronx Gang Squad”), U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Violent Gang Unit (“HSI”), the New York Field Division of the Drug Enforcement Administration (“DEA”), and the Joint Firearms Task Force of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) into gang violence in the Northern Bronx. On April 27, 2016, the Indictment was unsealed, charging 57 members and associates of 2Fly with racketeering conspiracy, narcotics conspiracy, narcotics distribution, and/or firearms charges. To date, 42 of these defendants have pled guilty.
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PARRISH, 27, of the Bronx, New York, was brought from state custody into federal custody on April 27, 2016. PARRISH pled guilty today to one count of racketeering conspiracy, which carries a maximum sentence of life in prison, and one count of firearms possession, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of life in prison. The mandatory minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as the defendant’s sentence will be determined by the judge.
Mr. Bharara 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.
Wall Street Investment Analyst Found Guilty in Manhattan Federal Court of Insider TradingRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JOHN AFRIYIE, a former analyst at the Manhattan-based private investment fund (the “Fund”) was found guilty this afternoon in Manhattan federal court of securities fraud and wire fraud for committing insider trading. AFRIYIE made approximately $1.5 million in profits in connection with stock options he purchased based on material nonpublic information he misappropriated from the Fund about an impending acquisition of ADT Corporation (“ADT”).
Manhattan U.S. Attorney Preet Bharara said: “As a unanimous jury found today, John Afriyie, an investment fund analyst, made $1.5 million in illegal profits by trading in ADT stock, using inside information about ADT that he had obtained from the fund’s servers. To cover up his insider trading scheme, Afriyie destroyed incriminating emails and even claimed his own voice on a recorded call to his broker was actually his mother’s. The jury saw through Afriyie’s deception, and he now stands convicted of federal crimes.”
According to the Indictment other filings in Manhattan federal court and the evidence presented at trial:
In January 2016, Apollo Investment Management LLC (“Apollo”) contacted the Fund to discuss whether the Fund would provide debt financing for Apollo’s potential acquisition of ADT. The Fund entered into a non-disclosure agreement with Apollo and was granted access to confidential documents related to the ADT transaction. As an investment analyst at the Fund, AFRIYIE had access to the Fund’s network server, which maintained, among other things, electronic shared directory file folders containing material nonpublic information, including information about Apollo’s acquisition of ADT.
In violation of the Fund’s policies and in breach of his duties to the Fund, AFRIYIE repeatedly accessed material nonpublic information about Apollo’s pending acquisition of ADT in an electronic shared drive folder on the Fund’s network server. In approximately 28 separate transactions between January 28, 2016, and February 12, 2016, AFRIYIE purchased approximately 2,279 ADT call options for a total of $24,254.02 before the public announcement of that transaction. AFRIYIE purchased the ADT call options through a brokerage account in the name of AFRIYIE’s mother, which AFRIYIE controlled. AFRIYIE did not reveal his trades or the existence of the brokerage account to the Fund. As cover for his criminal scheme, AFRIYIE repeatedly pretended to be his mother in recorded telephone calls with his broker.
The public announcement of Apollo’s acquisition of ADT in February 2016 caused ADT shares to increase in value from $29.20 per share on the day AFRIYIE began purchasing ADT options to $39.64 per share, resulting in a corresponding increase in the value of the call options AFRIYIE had purchased. Upon subsequently selling the ADT options, AFRIYIE generated over $1.5 million in illicit profits.
In connection with his arrest, AFRIYIE lied to agents of the Federal Bureau of Investigation (“FBI”) about his ADT options trades and falsely claimed that his own voice on a recorded call with his broker was really his mother’s voice. Following his arrest, AFRIYIE also attempted to delete the contents of an email account that he had used to communicate with his broker.
While the guilt phase of the trial has concluded, AFRIYIE has requested a jury determination as to whether certain assets are subject to forfeiture as proceeds of the offenses for which he was found guilty. That forfeiture proceeding remains ongoing and will resume tomorrow.
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AFRIYIE, 29, of Freehold, New Jersey, was convicted of one count of securities fraud and one count of wire fraud, each of which carries a statutory maximum sentence of 20 years in prison. AFRIYIE was remanded on January 23, 2016, after he refused to appear in court for trial, and he remains in custody. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the investigative work of the FBI and the Office’s Criminal Investigators. He also thanked the Securities and Exchange Commission for its assistance.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Edward A. Imperatore and Christine I. Magdo are in charge of the prosecution. Assistant U.S. Attorney Jennifer L. Gachiri is handling the forfeiture aspects of this prosecution.
Statement of U.S. Attorney Preet Bharara on the Conviction of Arizona Man Charged with Providing Material Support to ISISRead the Press Release
“Once again, we have shown that terrorists and terrorist enablers can be brought to justice fairly, openly, and swiftly in the crown jewel of our justice system -- civilian courts. Today, a jury in federal court in Manhattan convicted Ahmed Mohammed El Gammal of material support of terrorism. To grow their brand of hate-filled violence and radicalization, terrorist organizations like ISIS need facilitators and promoters around the world. And the jury found today that Ahmed Mohammed El Gammal was one such terrorist facilitator. An Ambassador for ISIS right here in America, El Gammal actively touted and glamorized ISIS online, ultimately recruiting and helping a New York college student travel to an ISIS camp in Syria for military training. That New Yorker died waging jihad, and for El Gammal’s active role in sending him down that trail to terror, he now stands convicted of federal terrorism crimes.”
New York Man Found Guilty on Narcotics Trafficking ChargesRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that STEVEN WILLIAMS was found guilty Friday of conspiring to distribute kilogram quantities of heroin and cocaine. WILLIAMS was convicted after a one-week jury trial before U.S. District Judge Lorna G. Schofield.
Manhattan U.S. Attorney Preet Bharara said: “As the jury swiftly found, Steven Williams used his music business as a front to traffic in massive quantities of cocaine and heroin. For pumping 100 kilograms of cocaine and more than 40 kilograms of heroin into New York City streets, Williams now stands convicted of federal narcotics conspiracy.”
According to the evidence introduced at trial, other proceedings in this case, and documents previously filed in Manhattan federal court:
Between 2009 and August 2015, WILLIAMS conspired with others to traffic in excess of 100 kilograms of cocaine and 40 kilograms of heroin from California to New York. WILLIAMS held himself out to be in the music business, and used his music business as a front to ship multi-kilogram quantities of heroin and cocaine across the country via industrial freight shipping companies, with heroin and cocaine hidden in speakers, amplifiers, and copy machines.
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WILLIAMS, 46, of New York, faces a mandatory minimum sentence of 10 years in prison, and a maximum sentence of life 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. A sentencing date has not yet been scheduled before Judge Schofield.
Mr. Bharara praised the outstanding investigative work of the DEA’s New York Organized Crime Drug Enforcement Strike Force, which comprises agents and officers of the DEA, the New York City Police Department, Immigration and Customs Enforcement – Homeland Security Investigations (HSI), the New York State Police, the U. S. Internal Revenue Service, Criminal Investigation Division, the Federal Bureau of Investigation, U.S. Secret Service, the U.S. Marshal Service, New York National Guard, the New York Department of Taxation and Finance, the Rockland County Sheriff’s Office, the Clarkstown Police Department, the Port Washington Police Department, and the New York State Department of Corrections and Community Supervision. The Strike Force is partially funded by the New York/New Jersey High Intensity Drug Trafficking Area (HIDTA), which is a federally funded crime fighting initiative.
This case is being prosecuted by the Office’s Narcotics Unit. Assistant United States Attorneys Rebekah Donaleski and Lara Pomerantz are in charge of the prosecution.
Arizona Man Convicted in Manhattan Federal Court for Material Support to ISISRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that AHMED MOHAMMED EL GAMMAL, a resident of Arizona, was convicted today of multiple terrorism offenses in connection with his efforts to help Samy El-Goarany join and train with the Islamic State of Iraq and the Levant, a/k/a the Islamic State of Iraq and al-Sham, a/k/a the Islamic State of Iraq and Syria (“ISIS”), a designated foreign terrorist organization. EL GAMMAL was convicted of providing and conspiring to provide material support to ISIS, aiding and abetting the receipt of military-type training from ISIS, and conspiring to receive such training. EL GAMMAL was convicted following a three-week jury trial presided over by U.S. District Judge Edgardo Ramos.
U.S. Attorney Preet Bharara said: “Once again, we have shown that terrorists and terrorist enablers can be brought to justice fairly, openly, and swiftly in the crown jewel of our justice system – civilian courts. Today, a jury in federal court in Manhattan convicted Ahmed Mohammed El Gammal of material support of terrorism. To grow their brand of hate-filled violence and radicalization, terrorist organizations like ISIS need facilitators and promoters around the world. And the jury found today that Ahmed Mohammed El Gammal was one such terrorist facilitator. An Ambassador for ISIS right here in America, El Gammal actively touted and glamorized ISIS online, ultimately recruiting and helping a New York college student travel to an ISIS camp in Syria for military training. That New Yorker died waging jihad, and for El Gammal’s active role in sending him down that trail to terror, he now stands convicted of federal terrorism crimes.”
According to documents publicly filed in this case and evidence presented at trial:
Beginning in at least April 2014, EL GAMMAL was an outspoken supporter on social media of ISIS and ISIS’s Caliphate, or Islamic government, in Syria. Among other things, EL GAMMAL announced that he was with “[t]he State of Iraq and the Levant,” referring to ISIS; celebrated ISIS’s achievements in battle and announcement of the establishment of a Caliphate; proclaimed that he “support[s] jihad everywhere”; and declared that “[b]eheadings have a magical effect.” EL GAMMAL additionally announced that “[i]f Daesh [i.e., ISIS] gets to Egypt, I will go join them, so I can torture the Egyptians, and whip them.”
As of at least August 2014, a 24-year-old New York City resident named Samy El-Goarany began to express his support for ISIS on social media as well. On August 14, 2014, El-Goarany heard that EL GAMMAL had made comments supportive of ISIS. Minutes later, El-Goarany contacted EL GAMMAL and they communicated via an encrypted communications platform. Less than an hour after this online conversation, EL GAMMAL sent El-Goarany a documentary on life in the Islamic State that outlined the type of training ISIS provides. Over the next several months, EL GAMMAL and El-Goarany continued corresponding over the Internet, although EL GAMMAL and El-Goarany deleted almost all of these exchanges.
In the midst of these communications, in October 2014, EL GAMMAL traveled to New York City, where El-Goarany was enrolled in college, and met with El-Goarany. During this October 2014 trip, EL GAMMAL provided El-Goarany with the phone number for EL GAMMAL’s contact in Turkey, Ateia Aboualala, who would be responsible for helping El-Goarany travel from Turkey across the border to ISIS in Syria. While in New York City, EL GAMMAL also contacted Aboualala in Turkey regarding El-Goarany’s plans to travel. EL GAMMAL later provided El-Goarany with social media contact information for Aboualala. Thereafter, in a coded conversation, EL GAMMAL assured Aboualala that he had vetted El-Goarany and El-Goarany could be trusted.
In late January 2015, El-Goarany left New York City for Istanbul, Turkey. Upon arriving in Turkey, El-Goarany immediately reached out to Aboualala. While El-Goarany was in Turkey, EL GAMMAL continued to communicate with El-Goarany over the Internet, providing advice on traveling toward Syria and on meeting with Aboualala. After arriving in Syria, El-Goarany received religious training and advanced military-type training from ISIS throughout 2015. On May 7, 2015, in the midst of his training with ISIS, El-Goarany reported to EL GAMMAL that “everything [was] going according to plan.” A few months later, on July 16, 2015, El-Goarany wrote to EL GAMMAL: “Life has changed a lot for me at this new job but I love it and I don’t regret taking up the offer,” and “May God reward you with goodness,” to which EL GAMMAL responded, “Great.”
In May 2015, El-Goarany’s father traveled to Turkey and met with Aboualala, in an attempt to locate his son. Upon learning of this, EL GAMMAL instructed Aboualala, “Don’t ever ever mention me. Not even my name[,]” and urged Aboualala not to meet with El-Goarany’s father. On May 5, 2015, Aboualala reported back to EL GAMMAL, assuring EL GAMMAL that, when Aboualala met up with El-Goarany’s father, “I covered up for you.”
In coded messages in mid-2015, EL GAMMAL reached out to El-Goarany to inquire about the possibility of his (EL GAMMAL’s) traveling to ISIS in Syria. On July 13, 2015, El-Goarany, again in a coded message, responded that he needed to ask his “supervisors at work first,” but commented that “it’s risky because the parking lot these days is going under a lot of renovation, especially in the north side,” alluding to military operations occurring in northern Syria at the time.
On November 23, 2015, El-Goarany’s brother received a message from a member of ISIS with an attached letter from El-Goarany. The letter read: “if you’re reading this then know that I’ve been killed in battle and am now with our Lord, inshaAllah. Remember what I told you . . . we will win this war one day, this war between Iman (Belief) and Kufr (Disbelief) between Good and Evil. . . .”
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EL GAMMAL, 44, of Avondale, Arizona, was convicted of one count of providing material support to a designated foreign terrorist organization and one count of conspiring to provide material support to a designated foreign terrorist organization, each of which carries a maximum sentence of 20 years in prison; one count of receiving military-type training from a designated foreign terrorist organization, which carries a mandatory sentence of 10 years in prison or a fine; and one count of conspiring to receive military-type training from a designated foreign terrorist organization, 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 Judge Ramos. A sentencing date has not yet been set.
Mr. Bharara praised the outstanding investigative work of the Federal Bureau of Investigation’s (“FBI”) New York Joint Terrorism Task Force – which principally consists of agents from the FBI and detectives from the New York City Police Department. Mr. Bharara also thanked the Counterterrorism Section of the Department of Justice’s National Security Division, the U.S. Attorney’s Office for the District of Arizona, and the Phoenix Field Office of the FBI for their assistance.
The prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Negar Tekeei, Brendan F. Quigley, and Andrew J. DeFilippis are in charge of the prosecution, with assistance from Trial Attorney Ranganath Manthripragada of the Counterterrorism Section.
Woman Convicted by Jury in Manhattan Federal Court of Impersonating A Federal OfficialRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and David E. Beach, Special Agent in Charge of the U.S. Secret Service New York Field Office (“USSS”), announced today that SANDRA ZONGO, a/k/a “Sandra Nelson,” a/k/a “Akiwa Gizzel,” was convicted today by a jury of impersonating an officer or employee of the United States, passing fictitious government obligations, wire fraud, and attempting to commit wire fraud in seeking benefits from the Human Resources Administration. ZONGO was convicted following a nine-day trial in Manhattan before U.S. District Judge Kimba M. Wood.
U.S. Attorney Preet Bharara said: “Today, a unanimous jury convicted Sandro Zongo of posing as a federal government employee and using fake documents to steal hundreds of thousands of dollars in goods and services from her victims. Claiming she was a Commissioner for a made-up organization with ties to the United Nations, Zongo defrauded hotels, restaurants and other vendors with fake invoices and went as far as defraud a charity for military veterans.”
Special Agent in Charge David Beach said: “The Secret Service places a priority on investigating criminals, who prey on the residents of this city and their businesses through deceit and false solicitations for real charities. Working with our partners with the NYPD to arrest these criminals and deter others from committing similar schemes, the Secret Service pursues complex crimes with significant community impact.”
According to the allegations in the Indictment, other documents publicly filed in Manhattan federal court, and the evidence introduced at trial:
In October 2014, the United States Secret Service began investigating ZONGO, who had been holding herself out as the “Deputy Commissioner” of the “Office of the Commissioner.” The “Office of the Commissioner” purported to be an “Intergovernmental Organization” and claimed to be funded by the federal government in doing work with the United Nations. In fact, the organization was not federally funded and had no affiliation with the United Nations. While purporting to be a “Deputy Commissioner,” ZONGO obtained hundreds of thousands of dollars in goods and services from hotels, restaurants, and other Manhattan vendors using fake government purchase orders, certificates of indebtedness, and other fraudulent documents. Among other things, ZONGO defrauded a charity holding an event designed to benefit injured veterans of $150,000.
While ZONGO was claiming to be the “Deputy Commissioner of Foreign Affairs,” she also submitted fraudulent documents to the Human Resources Administration in her application for housing benefits, including letters in which she claimed to be an “intern.”
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ZONGO, 47, of New York, New York, was convicted of one count of passing fictitious obligations, which carries a maximum sentence of 25 years in prison; one count of impersonating an official or employee of the United States government, which carries a maximum sentence of three years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; and one count of attempted wire fraud, which carries a maximum sentence of 20 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the work of the United States Secret Service, and thanked the Criminal Investigators of the Southern District New York, the New York City Police Department, the Human Resources Administration, the United States Postal Service–Office of Inspector General, as well as the United States Postal Inspection Service.
The case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorneys Jessica Fender, Kiersten Fletcher, Janis Echenberg, and Christopher DiMase are in charge of the prosecution; paralegal specialist Jenny Satinover provided additional support.
Two Individuals Arrested and Charged in Manhattan Federal Court with Securities and Wire Fraud for Participating in A Multimillion-Dollar Ponzi SchemeRead the Press Release
Joon H. Kim, the Deputy 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 STEVEN SIMMONS and JOSEPH MELI were arrested this morning on conspiracy, securities fraud, and wire fraud charges stemming from their participation in a scheme to defraud investors and provide those fraud proceeds to earlier investors in a hedge fund (the “Hedge Fund”). MELI is also charged with wire fraud in connection with a related fraudulent scheme in which MELI solicited investments through false representations that MELI had entered into an agreement to purchase tickets to a particular Broadway show (the “Show”), which MELI could then resell for a profit.
SIMMONS and MELI are expected to be presented today in Magistrate Court before the Honorable James C. Francis IV.
Deputy U.S. Attorney Joon H. Kim said: “As alleged, while soliciting funds from investors for legitimate-sounding investments, Steven Simmons and Joseph Meli were in fact running Ponzi schemes. Meli allegedly made up out of whole cloth purported deals to buy Broadway tickets that he could later sell at a profit. But as alleged, Meli was just robbing Peter to pay Paul. Thanks to the work of the FBI, the curtain has fallen on Simmons and Meli's alleged fraud scheme.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “When fraudsters think they’re going to get away with scheming investors out of money, they tend to forget that at some point the money will run out. It’s the way a Ponzi scheme ends. At some point, the original investors will want to see returns on their investments, and they’re going to demand an explanation as to why there isn’t any money. The men arrested in this case even allegedly joked about the scheme, calling it a ‘shell game.’ This should serve as a warning to others playing the same games, at some point, the FBI and our law enforcement partners will discover the fraud and will make sure the criminals behind it are held accountable.”
According to the Complaint unsealed today in Manhattan federal court[1]:
Beginning in at least November 2015 through in or about January 2017, SIMMONS and MELI solicited investments by falsely representing to the investors that their funds would be used for legitimate, specified, investment purposes. SIMMONS represented that investor funds would be invested in securities by the Hedge Fund and MELI represented that investor funds would be used to purchase a large number of tickets for the Show which would then be resold by MELI for a profit. In fact, SIMMONS and MELI failed to invest the investor monies as promised, but rather used the money, in a Ponzi-like fashion, to fund the repayment of earlier investors in the Hedge Fund whose redemption requests could not be forestalled, and diverted investor monies to their own use.
Among other false and misleading statements, SIMMONS told one investor (“Victim Entity-1”) that its funds would be placed by the Hedge Fund with a highly successful group of portfolio managers, and provided performance information for these portfolio managers. In truth and in fact, SIMMONS solicited those investment funds from Victim Entity-1 for the purpose of repaying an earlier investor in the Hedge Fund that had demanded the return of its investment. Most of Victim Entity-1’s funds were, within minutes of their receipt by the Hedge Fund, wired to the earlier investor. The following day, $50,000 was wired by the Hedge Fund to an account controlled by SIMMONS. In a later consensually recorded conversation with a cooperating witness (the “CW”), SIMMONS expressed concern that Victim Entity-1 would contact the portfolio managers with whom it believed its funds were invested and learn that “there’s no . . . money.”
MELI also solicited at least three investors in a separate business run by MELI by falsely representing that he had entered into an agreement with the producer of the Show under which MELI would purchase a large number of tickets to the Show and then resell those tickets at a profit. MELI promised these investors a share in these profits. In truth and in fact, MELI had not entered into an agreement to purchase tickets to the Show but rather diverted investor money to his own personal use, including spending more than $200,000 at a luxury car dealership, and used investor monies to repay earlier investors in both his own Ponzi-like ticket resale scheme and the Hedge Fund. In later consensually recorded conversations with the CW, MELI discussed his “fraudulent ticket deal” and described playing a “shell game” with investor monies.
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SIMMONS, 48, of Wilton, Connecticut, and MELI, 42, of Manhattan, were arrested this morning. SIMMONS is charged with one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, and one count of wire fraud. MELI is charged with one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, and two counts of wire fraud. The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense. The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.
Mr. Kim praised the work of the FBI and thanked the Securities and Exchange Commission for its assistance. He added that the investigation is continuing.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Elisha J. Kobre 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.
Queens Man Sentenced to Life in Prison for Murder-For-HireRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, announced that JOSE LUIS GRACESQUI was sentenced today to life in prison after having been convicted at trial of conspiracy to commit murder-for-hire, murder-for-hire, and murder in connection with a narcotics conspiracy for his role in the murder of a 28-year-old Manhattan man in 1999. U.S. District Judge P. Kevin Castel, who presided over the three-week jury trial, imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Thanks to the efforts of the dedicated agents, detectives, and prosecutors who never gave up, this cold-case murder of an innocent 28-year-old man has been solved and the perpetrator brought to justice. The person responsible for that murder has been sentenced to life in prison, bringing to a close this tragic and senseless crime. We hope this brings some measure of peace to Richard Diaz’s family.”
According to the evidence introduced at trial, other proceedings in this case, and documents previously filed in Manhattan federal court:
JOSE LUIS GRACESQUI, a/k/a “Luis Perez,” a/k/a “Ramon Ortiz,” a/k/a “Onel Colon,” a/k/a “Muffler,” was a member of a crew that committed violent robberies, kidnappings, and beatings of drug dealers. In the summer of 1999, GRACESQUI was hired by a major drug dealer in Upper Manhattan to kill one of the drug dealer’s customers (“Intended Victim-1”) after Intended Victim-1 and a number of his associates stole heroin from the drug dealer.
On the night of July 19, 1999, GRACESQUI and a member of his crew saw Intended Victim-1 in a car with another person and began following Intended Victim-1 through Manhattan. When the car with Intended Vicitm-1 stopped at a red light, GRACESQUI got out of the car that he had been in, approached the car with Intended Victim-1, and began shooting. The shots hit both Intended Victim-1 and the driver of the car, Richard Diaz. Richard Diaz was able to drive a short distance to the Henry Hudson Parkway, until Diaz lost consciousness and died. Intended Victim-1 sustained injuries but did not die.
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GRACESQUI, 46, is from Queens, New York. Mr. Bharara praised the investigative work of the DEA and the NYPD.
This case is being prosecuted by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Laurie A. Korenbaum, Brendan F. Quigley, and Rebekah Donaleski are in charge of the prosecution.
Owner of Bus Repair and Transportation Company Charged with Defrauding Rockland BocesRead the Press Release
Former Rockland BOCES Official Pleads Guilty to Fraud, Theft, Bribery,
and Obstruction of Justice
Preet Bharara, the 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”), and Thomas Zugibe, the Rockland County District Attorney, today announced the unsealing of an Indictment charging RICHARD BREGA with conspiracy, fraud, theft, bribery, and obstruction of justice. The charges arise from an alleged scheme to defraud the Rockland Board of Cooperative Educational Services (“BOCES”) by billing it for bus maintenance that was not performed. Bharara also today announced the guilty plea of WILLIAM POPKAVE, a former official with Rockland BOCES, to conspiracy, fraud, theft, bribery, and obstruction of justice, charged in a five-count Information unsealed today.
Manhattan U.S. Attorney Preet Bharara stated: “Richard Brega and William Popkave allegedly engaged in a corrupt scheme to charge Rockland County school districts for school bus repairs and maintenance that were never actually performed, then tried to cover their tracks through fake invoices and deceptive money transactions. The defendants’ alleged fraud and corruption not only betrayed the public trust, but risked making school buses, including some used for disabled children, less safe. Thanks to the work of the FBI and the Rockland County District Attorney’s Office, this allegedly callous scheme has been exposed.”
FBI Assistant Director-in-Charge William F. Sweeney Jr. stated: “Brega’s company was responsible for servicing a fleet of Rockland BOCES buses, some of which were used for physically disabled students. Checks were supposed to include repairs, preventative maintenance, and inspection. As alleged, Brega billed for services that were never completed. In fact, many of the buses hadn’t even been brought to the repair shop where the work would have been performed. As charged, with the help of Popkave, one of their own officials, Rockland BOCES was taken for a ride—even if their buses were not.”
Rockland County District Attorney Thomas Zugibe stated: “As alleged in the federal Indictment, Richard Brega, Jr., the Rockland BOCES vendor, submitted false invoices for school bus maintenance that was never provided. William Popkave would knowingly approve these invoices for payment, notwithstanding the fact that these services were never provided. Rockland BOCES administrators were unaware of the wrongdoing of its former employee. The allegations in this case highlights the essence of greed and extremely poor judgment by a former employee and the operator of Rockland County's largest provider of public transportation. With these charges, the Joint Public Corruption Task Force continues its mission to root out fraud and abuse at all levels. We are proud to be a part of it.”
As alleged in the Indictment and Information unsealed today in White Plains federal court[1]:
BREGA owned and controlled vehicle repair and transportation companies in Rockland County. Brega D.O.T. Maintenance Corp. (“Brega DOT”) was a fleet maintenance repair shop owned and controlled by BREGA.
Rockland BOCES serves eight school districts in Rockland County. Among the services that Rockland BOCES offers to its students is transportation, for which it has a fleet of buses and other vehicles (hereinafter collectively referred to as “Rockland BOCES’ buses” and “bus fleet”), some of which are specially equipped for students with physical disabilities. Rockland BOCES receives federal funding each year, significantly in excess of $10,000, including more than $1 million some years.
From in or about 2008 or 2009, through in or about 2015, Brega DOT provided vehicle repair service and maintenance for Rockland BOCES’ bus fleet. The service of Rockland BOCES’ buses by Brega DOT included regular preventive maintenance (“Preventive Maintenance”). To perform Preventive Maintenance on a Rockland BOCES bus, Brega DOT was supposed to, among other things, receive the bus at Brega DOT’s facility, inspect the bus, and, ordinarily, drive the bus. To obtain payment for Preventive Maintenance, Brega DOT created invoices documenting the work done, provided the invoices to Rockland BOCES, and, once CC-1 approved the bill, received payment from Rockland BOCES.
From in or about 2012 through in or about 2014, BREGA conspired to and did steal money from Rockland BOCES by, among other things, billing Rockland BOCES for vehicle repair services that, as BREGA well knew, were never performed. To do so, BREGA had fraudulent invoices made, to give the false appearance that his company had performed regular Preventive Maintenance on certain buses, when in fact those buses were not even brought to Brega DOT.
To create the fraudulent invoices, and to obtain payment from Rockland BOCES for work that was never performed, BREGA bribed WILLIAM POPKAVE – the employee of Rockland BOCES at the time who oversaw upkeep and maintenance of its buses – with tens of thousands of dollars’ worth of free personal vehicle repairs. POPKAVE emailed BREGA lists of buses and their mileages for purposes of creating fraudulent invoices, and thereafter approved payment of the fraudulent invoices at Rockland BOCES.
In addition, during the investigation of the criminal conspiracy, BREGA obstructed justice by attempting to cover up his bribery of POPKAVE with a series of financial transactions designed to conceal BREGA’s provision of free personal vehicle services to POPKAVE.
The conspiracy was accomplished through, among other things, the following means and methods:
From in or about 2009 through in or about 2014, BREGA provided POPKAVE with free vehicle repairs for POPKAVE’s personal vehicles and those of his friends and family. At one point, the value of the free vehicle services that Brega DOT provided to POPKAVE totaled approximately $47,000.
From in or about 2012 through in or about 2014, BREGA caused Brega DOT to bill Rockland BOCES for Preventive Maintenance that, as BREGA well knew, Brega DOT never performed. Brega DOT, in fact, billed Rockland BOCES for more than $86,000 for claimed instances of Preventive Maintenance when, in those instances, the bus at issue was never even brought to Brega DOT.
In addition, BREGA caused Brega DOT to automatically and routinely overcharge Rockland BOCES for labor and parts.
To bill Rockland BOCES for work that was not done, on buses that were not brought to Brega DOT, BREGA, POPKAVE and another co-conspirator (“CC-2”), along with others acting on their behalf, created fraudulent invoices. POPKAVE emailed BREGA lists of buses and their respective mileages. BREGA then caused CC-2 and others to create invoices, listing the mileages provided by POPKAVE, falsely documenting that the bus had undergone Preventive Maintenance at Brega DOT, when in fact, as BREGA well knew, it had not.
Once the fraudulent bills were sent from Brega DOT to Rockland BOCES, POPKAVE authorized payment. Payments were mailed from Rockland BOCES. POPKAVE did so because, among other things, Brega DOT was servicing POPKAVE’s vehicles and those of his family and friends for free.
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BREGA was arrested this morning and will be arraigned today on the charges in the Indictment before United States Magistrate Judge Judith C. McCarthy in the White Plains federal courthouse.
BREGA, 49, of Rockland County, is charged with five counts: (1) conspiracy to commit mail fraud; (2) mail fraud; (3) bribery concerning a program receiving federal funds; (4) theft concerning a program receiving Federal funds; and (5) obstruction of justice. The offenses carry a combined maximum penalty of eighty years in prison and a $250,000 fine.
POPKAVE, 61, of Rockland County, New York, pled guilty to five counts: (1) conspiracy to commit mail fraud; (2) mail fraud; (3) theft concerning a program receiving Federal funds; (4) bribery concerning a program receiving federal funds; and (5) obstruction of justice. The offenses carry a combined maximum penalty of eighty years in prison and a $250,000 fine.
The statutory maximum 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. POPKAVE will be sentenced at a future date. The case is assigned to U.S. District Judge Vincent Briccetti.
Mr. Bharara praised the outstanding investigative work of the FBI, the Rockland County District Attorney’s Office, and the United States Department of Transportation Office of Inspector General.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Michael Maimin and Benjamin Allee are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.
Website Operator Charged with Defrauding More Than 2,000 Victims in New York City Apartment Search ScamRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced today the filing of a criminal complaint charging ROBERT GUZMAN with mail fraud in connection with a fraudulent apartment rental scheme that claimed more than 2,000 victims. As alleged, GUZMAN posted apartments supposedly available for rent in New York City on websites he operated, amazingapartmentrentals.com and www.equityproject.net (the “Websites”), that charged a fee to view the apartments on the Website. Between 2013 and 2016, victims paid GUZMAN (who has no real estate licenses) more than $100,000, but were never able to view the apartments purportedly available for rent on the Websites, some of which were not, in fact, in New York City, and others of which were not, in fact, available for rent. GUZMAN was arrested this morning and will be presented before the Honorable James C. Francis IV later today.
Manhattan U.S. Attorney Preet Bharara said: “Robert Guzman allegedly defrauded more than 2,000 victims who were searching for a place to live in New York City. He allegedly created websites that took advantage of these victims’ desire to find affordable housing in New York city, taking fees from victims to view apartments, when in fact some of the apartments were not even in New York or available for rent. Thanks to the work of the U.S. Postal Inspection Service, Guzman’s alleged scam has been put to an end.”
USPIS Inspector-in-Charge Philip R. Bartlett said: “Mr. Guzman took advantage of the need for affordable housing by allegedly devising a scheme to defraud those who could least afford to lose their hard-earned funds to a scam. Today’s arrest by Postal Inspectors, exemplifies our Agency’s commitment to bring individuals to justice whose greed overshadows honesty and decency.”
According to the Complaint[1]:
From 2013 through the present, GUZMAN would post on the Websites apartments supposedly available for rent in New York City, and would charge a fee to view the apartments (the “Application Fee”). The Website included listings for apartments that were not, in fact, in New York City, as well as some that were, in fact, listed for sale, not for rent, by actual real estate companies. After the victims mailed the Application Fee to a P.O. box GUZMAN provided on the Website, the victims would never be able to view the apartments purportedly available for rent. Between 2013 and 2016, GUZMAN defrauded more than 2,000 victims of over $100,000.
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GUZMAN, 42, of the Bronx, New York, was arrested this morning in the Bronx. GUZMAN was charged with mail fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the efforts of the USPIS in this investigation.
This case is being handled by the Office’s General Crimes 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.